T h r u v i s i o n G r o u p p l c A n n u a l R e p o r t a n d A c c o u n t s 2 0 2 3 Annual Report and Accounts 2023 Cautionary statement This annual report 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 annual report reflect management’s view with respect to future events as at the date of this annual report. Save as required by applicable law, the Company undertakes no obligation to publicly revise any forward-looking statements in this annual report, whether following any change in its expectations or to reflect events or circumstances after the date of this annual report. Overview 1 Highlights Strategic report 2 3 4 6 9 Chairman’s statement CEO statement Business review Financial review Principal risks and uncertainties 10 Section 172 disclosures Governance 13 14 20 28 36 Directors’ biographies Directors’ report Corporate governance report Remuneration report Directors’ responsibility statement – Group financial statements Financial statements 37 43 44 45 46 47 48 74 76 77 78 79 Independent auditor’s report to the members of Thruvision Group plc Consolidated income statement Consolidated statement of comprehensive income Consolidated statement of financial position Consolidated statement of changes in equity Consolidated statement of cash flows Notes to the financial information APPENDIX – Alternative Performance Measures (APMs) Statement of Directors’ responsibilities – Company financial statements Company balance sheet Company statement of changes in equity Notes to the Company balance sheet Other information 84 89 Thruvision Group plc Notice of Annual General Meeting Officers and professional advisors Highlights Strong revenue growth and approaching break even Revenue Adjusted gross margin2 £12.4m 47.0% 48.0% 46.7% 51.5% £8.0m £6.7m £8.4m 2020 2021 2022 2023 2020 2021 2022 2023 Adjusted EBITDA loss2 Loss before tax (£1.8m) (£1.7m) (£2.8m) (£1.0m) (£1.5m) (£1.9m) (£1.0m) (£0.2m) 2020 2021 2022 2023 2020 2021 2022 2023 Continuing operations Headlines 2023 £’000 2022 £’000 Change • Revenue was up 49% to £12.4 million (2022: £8.4 million). Statutory measures: Revenue1 Gross profit3 Gross margin3 Operating loss Loss before tax Loss per share (pence) Alternative measures2: Adjusted gross profit Adjusted gross margin Adjusted EBITDA loss Adjusted loss before tax Adjusted loss per share (pence) 12.4 5.8 47.0% (1.0) (1.0) (0.55) 6.4 51.5% (0.2) (0.8) (0.46) 8.4 3.4 +49% +71% 40.8% +6.2pp +48% +48% +52% (1.9) (1.9) (1.14) 3.9 +64% 46.7% +4.8pp +87% +62% +67% (1.7) (2.3) (1.39) • Multi-year framework contract awarded by US Customs and Border Protection (‘CBP’) and related orders from the same customer delivered revenue of £8.3 million (2022: £3.7 million). • Adjusted gross margin2 up 4.8pp to 51.5% resulting from positive product mix and higher margin software revenue, with statutory gross margin3 growing 6.2pp to 47.0% reflecting production efficiencies. • Adjusted EBITDA2 loss was £0.2 million (2022: loss £1.7 million). • Operating loss was £1.0 million (2022: loss £1.9 million). • Cash balance as at 31 March 2023 was £2.8 million (31 March 2022: £5.4 million), with cash at 20 July 2023 of £2.4 million. 1 Re-translation of 2023 US$ entity revenues at prior year exchange rates results in a constant currency increase in Group revenue of 37%. 2 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. 3 As restated see note 22 to the Group Financial Statements. 1 Annual Report and Accounts 2023 Thruvision Group plcOverviewStrategic reportGovernanceFinancial statementsOther information Strategic report Chairman’s statement This was a breakthrough year for the Group where we delivered very strong revenue growth and took a significant step towards sustainable profitability. I am delighted with the excellent progress we made towards our strategic objective of becoming the leading provider of walk-through security technology to the international market. It was very pleasing to see such strong revenue growth during the year to 31 March 2023. This was based on a combination of adding new customers, often as a result of recommendations from existing users and, equally encouragingly, from those existing customers extending and upgrading their use of our solutions. This supports our long-held view that Thruvision technology adds significant value for our customers which underpins our long-term confidence in the business. We are now a leader in the development, manufacture and supply of walk-through security technology to the international market. Our systems are used by a growing number of both government and commercial organisations in a variety of security situations, where, typically, large numbers of people need to be screened quickly, safely and cost-effectively for items hidden in their clothing. Although we have an established product range now in place, we continued to invest in R&D. This paid off with the highly successful launch of our “WalkTHRU” solution, based on our latest AI-driven detection software and developed in close cooperation with NEXT plc, a long-term user and one of our most highly-valued customers. This new offering enables very high numbers of people per hour to be checked for all types of concealed item, allowing NEXT to security screen 100% of staff leaving its Distribution Centre at the end of their shift, thereby maximising deterrence and reducing theft rates. Such capability meets a very clear market need and we are delighted to be unique in the market with such a solution. 2 Our decision to focus our efforts primarily on International Customs Agencies and on the Retail Distribution (previously called Profit Protection) markets has paid off. Significant progress with US Customs and Border Protection (‘CBP’) led to very strong demand from the Customs market which offset a weaker performance in Retail Distribution which was not surprising given the strong headwinds faced by the retail sector. We remain confident that both markets represent significant growth opportunities and that their complementary nature provides us with a high degree of resilience to economic cycles. We continued to strengthen our leadership team during the year. The most significant arrival was Victoria Balchin, our new Chief Financial Officer (‘CFO’), who joined last Autumn. More recently, we promoted Nick Graham-Rack to Chief Technology Officer (‘CTO’) to accelerate the development of our new software capabilities. John Woollhead, our Company Secretary, retired in December after 12 years of service with the Group and was replaced by Hannah Platt. John was a first-class and trusted colleague for almost 20 years, and we will greatly miss his wise counsel and good humour. On behalf of the Board, I would like to express our thanks to all our staff who have worked so hard to grow the business during the year. Many are long-term employees, and some have been with Thruvision since its inception, and I am delighted that they are now seeing the Group starting to fulfil its undoubted potential. Outlook Having proved the value of our solutions beyond doubt, the focus of the business is now moving towards scaling as rapidly as our markets and resources will allow. We believe that our target markets are significant and should impose no foreseeable limits on our growth. Our growing sales team will focus equally on acquiring new customers, particularly in the US, and on increasing the Thruvision presence in existing customers. Meanwhile, our technology investment will ensure that we build an even greater lead over our competition. The past year, combined with current activity levels, have reinforced our confidence that Thruvision will continue to grow well and become the solution of choice for walk-through security. Tom Black Chairman 20 July 2023 Thruvision Group plc Annual Report and Accounts 2023 During the year we also established that, in many cases, existing customers purchase upgrades for their existing systems if available rather than wait to replace old systems at end-of- life. This point was well illustrated by US Customs and Border Protection’s (‘CBP’) decision to upgrade its systems to the latest high-performance version during the year and purchase our AI-software algorithm to run on them. In the light of this strong interest in walk-through security and a willingness by customers to upgrade, we have refined our technology strategy and will be launching a series of new products and product upgrades in FY24. These will extend our walk-through product range and offer the opportunity to further extend system functionality in the form of software upgrades which we will be able to license separately. Strategic market focus We have now firmly established ourselves in two strategic markets: International Customs Agencies and Retail Distribution, and these are described in more detail in the Business Review. With differing economic drivers, together these markets are sizeable enough to offer us a very significant growth opportunity, particularly given the increasing reliance our existing customers have on our technology. Furthermore, the two markets offer us revenue diversity and, over time, will help ensure our growth prospects are resilient to economic cycles. A key strategic achievement in the year was the award of a multi-year CBP contract in September 2022, and CBP is already delivering operational success from these new systems. The adoption by CBP of our technology assists our broader sales efforts with other international Customs agencies. Retail Distribution, we believe, is ultimately our largest target market and, as such, offers us the greatest growth potential. Given economic challenges, employee theft is increasingly problematic for the retail industry and, despite challenging trading conditions for our customers, our performance in Retail Distribution remained resilient. We made progress in opening up Europe and the US, and we continued to add new customers as well as receiving further orders from existing customers. We remain confident that the very rapid return on investment reported by our Retail Distribution customers (with many citing a payback period of less than one year) means that our performance in this market will return to growth as economic conditions recover. Leadership team strengthening As reported in the Chairman’s statement, we continued the process of strengthening the leadership within the business and appointed a new CFO and a CTO in the period. To complete our investment in senior leadership, we have recently recruited a very senior sales leader with 20 years’ experience working for one of the global security equipment vendors. With this strengthened leadership, we now have an established infrastructure, encompassing technology, operations, finance, sales and commercial, that is capable of supporting our continued international growth. 3 CEO statement Strategic update Our strategy is to build on our market-leading position as a developer, manufacturer and supplier of walk-through security technology. We aim to become a mainstream provider and increase our market-share in a number of growing and established international markets. We expect that our continued investment in improving our patented, AI-enhanced Terahertz (THz) imaging technology will maintain our significant advantage over our competition. Business performance We took a significant step forward towards meeting a key strategic goal of sustainable profitability in the reporting period. Revenue grew strongly by 49% to £12.4 million (2022: £8.4 million) and, driven by the uptake of our new, higher performance products and AI software licences, Adjusted gross margin increased by 4.8 percentage points to 51.5% (2022: 46.7%). For the first time software license revenues made a modest but meaningful, contribution at £0.5 million (2022: nil). We see software licences as an important new and margin-enhancing revenue stream and expect to add further licensable software functionality in FY24. Statutory gross margin grew by 6.2 percentage points to 47.0% reflecting increasing economies of scale in our manufacturing operations. Given this performance, the Board decided to award bonuses across the business for the first time. These totalled £0.5 million (2022: £0.1 million) and rewarded all employees for achieving such strong growth. While leading to a small Adjusted EBITDA loss, the Board believes this award is in the best long-term interests of the Group. Technology strategy Walk-through security – the ability to screen 100% of people for all types of concealed items at walking pace – is seen by many customers as their ultimate requirement. Derived from our R&D work in the Aviation sector, we were therefore delighted to be able to be the first company to offer this capability to the market in the form of our new “WalkTHRU” security system in October 2022. NEXT, Selfridges and Saks Fifth Avenue all bought walk-through lanes in the second half of the financial year and we see growing interest for this solution from a broader range of existing and new customers. OverviewAnnual Report and Accounts 2023 Thruvision Group plcStrategic reportGovernanceFinancial statementsOther information Strategic report continued Business review Markets As discussed above, while we operate in four distinct markets, our strategic focus is on two, Customs and Retail Distribution, which represented 93% of our revenue in the year (2022: 90%). We remain active in the other two markets, Aviation and Entrance Security, but we are not expecting strong growth in either in the short term and these are not therefore a current focus. We report and review performance internally as one segment. Customs Thruvision is used by international customs agencies to screen people who travel for drugs, cash and other contraband. We already have systems deployed with agencies in nine countries. Our investment in the US also started to deliver results with new customers including Saks Fifth Avenue and Clarins. We are confident that a very large opportunity exists for the Group in the US and we expect to continue to invest here to build the business. Although progress in Europe has been impacted by economic challenges, we did receive orders from two new customers. With conditions stabilising, we are seeing renewed interest levels and expect to make further progress moving forwards. Aviation Thruvision is approved for airport employee screening in the US and has equipment in use with three US airports. We are seeking formal US Government accreditation to compete with airport body scanners for the aviation passenger screening market. Very much driven by CBP in the US, revenue here more than doubled to £9.2 million (2022: £3.9 million). We successfully delivered all the upgraded and new high-performance systems that had been ordered in the two contracts we received in September 2022. Deployed at a range of land border crossings, international airports and cruise liner terminals, CBP is already achieving operational success with these systems where, at some locations, 100% of legal entrants to the US are being screened using our technology. As expected, there was minimal sales activity in this sector through the year, with revenue of £0.2 million (2022: £0.2 million). This constituted a single sale to an existing US airport employee screening customer which upgraded its Thruvision technology to the latest high-performance camera. We have seen a gradual uptick in interest from other US airports for staff screening applications, driven by possible future changes in US Government policy, and we will respond quickly as circumstances change. With the multi-year CBP framework purchasing agreement secured by our US distribution partner in September 2022 and running to September 2026, we expect further orders, noting that CBP normally places new orders during the latter part of the US Government fiscal year, which ends on 30 September. Elsewhere, we delivered an order for a sixth tranche of systems to an existing Asian customer in March 2023 and have several significant opportunities with other Customs Agencies, where we expect to see progress in FY24. Retail Distribution Retailers and their logistics partners use our technology to check employees as they leave Distribution Centres (‘DCs’) for a wide range of items that they may be trying to steal. Our analysis shows there are around 20,000 DCs in UK, US and Europe which could use Thruvision systems. Retail Distribution delivered revenue of £2.4 million (2022: £3.8 million). However, FY22 performance was boosted by a single major sale, and without this, revenue was broadly flat year to year. Given the challenging trading environment currently faced by the retail industry, we believe this represents a resilient result. We continue to focus on major retailers and their third-party logistics (‘3PL’) partners and were particularly pleased that over half of our revenues in Retail Distribution came from the purchasing of further new systems, or upgrading of systems, by existing customers. Such high levels of customer loyalty demonstrates the value our technology provides and further reinforces the very rapid return on investment (‘RoI’) that Thruvision offers. Although we are already used to security screen employees in airports in the US, we require formal US Government Transportation Security Administration (‘TSA’) accreditation to compete with airport body scanners for the passenger screening market. We started this process in 2020 and, after several COVID-related delays, it restarted during the period. Some further progress has been made through what we continue to expect to be a protracted process. Entrance Security Thruvision is used by a wide variety of venues ranging from high-security government sites to public museums to check visitors for concealed weapons. We saw a modest improvement in revenue of £0.6 million (2022: £0.5 million) as a number of delayed opportunities in the Middle East re-engaged after the Pandemic. We expect to make some further progress in this area with the launch of our WalkTHRU solution but continue to see this as a fragmented, high cost of sale market. Routes to market For our core geographies, UK, US and Europe, we retain our own sales force, and we tend to sell directly to end customers (noting that, with CBP, we contract via a third-party). In Retail Distribution, we have a small number of partnerships with large-scale security system integrators that serve this market. We saw good progress with new customer sales through this channel in the period, with Saks Fifth Avenue and Clarins examples of new customers that were added. Outside our core geographies, we work with a range of smaller Value-Added Resellers across a broader set of international markets. Each of these tends to bring very specific domain expertise and each is typically focused on specific foreign government departments of interest to us. 4 Thruvision Group plc Annual Report and Accounts 2023 Manufacturing and support We remain confident about the effectiveness of our manufacturing capability across the UK and US. We set a new record in our fourth quarter when, in one month, we delivered 40 cameras as we worked through the large order backlog we had in H2. Despite some challenges with the availability of various components, our manufacturing capability has remained effective through the year. Component shortages were limited to various types of commercial electronics where we can “design around” to maintain production levels. While we remain vigilant, we do not currently foresee any material problem in this area moving forward. We continue to work very closely with suppliers of the highly specialised THz components and will continue to buy specialist components ahead of forecast demand to guarantee availability. Our post-sales support has now matured and is now increasingly being provided by local partners which offers us an effective means of scaling up as the number of deployed systems increases. We remain confident about the reliability of our equipment. People Average headcount increased from 40 to 43 staff during the year. This was driven by an increase in software R&D capability and manufacturing management. Colin Evans Chief Executive Officer 20 July 2023 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). With the major innovations on our hardware sensor successfully completed with US Government funding three years ago, our focus is now on broadening the number of sensor types we can offer at differing price / performance levels. This sensor range utilises the same underlying modular hardware design meaning we get economies of scale in sourcing components and manufacturing, resulting in a lower cost per sensor as we grow volumes. The focus of our more recent investment in R&D, led by our newly appointed CTO, has been making significant improvements to our image processing software. Encouraged by the commercial success of our AI-based automated detection algorithm, we have made further significant progress and expect to launch further new software capability in FY24. Importantly, this will include software licensing capability which will enable us to deliver on, in due course, our ambition to increasingly monetise our software functionality. The Group’s patent strategy is designed to cover the IP value in the Group 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 purpose-developed image processing software. As we invest more in our R&D, we continue to manage our patent portfolio carefully and ensure our IP and broader information assets are well protected. We remain comfortable with the position as it stands and will maintain a proactive stance regarding patenting new innovations as they are developed. Competition We remain very confident that we are the clear market leader in our two key markets, Customs and Retail Distribution. In these markets, items being searched for are predominantly non-metallic, so metal detectors are completely ineffective. Airport body scanners use active millimetre-wave technology to detect all types of material. However, they are too large and too slow for use in Retail Distribution where we consistently win any head-to-head competitions. In the passive THz field, we have still not seen any evidence that an advertised Chinese manufactured product has successfully been operationally deployed. We believe we beat this nascent competitor in a recently won Asian contract award. We continue to believe that our technology delivers superior operational performance. 5 OverviewAnnual Report and Accounts 2023 Thruvision Group plcStrategic reportGovernanceFinancial statementsOther information Revenue is split by market sector and geographical region below: Revenue by market sector Retail Distribution Customs Aviation Entrance Security Revenue by geographical region UK and Europe Americas Rest of World 2023 £’000 2,429 9,165 246 580 12,420 2023 £’000 2,249 9,223 948 12,420 2022 £’000 3,756 3,947 179 479 8,361 2022 £’000 3,508 4,445 408 8,361 Revenue benefitted from translational exchange as the depreciation in the US$ exchange rates improved revenue by approximately £1.0 million, compared to the prior year average exchange rate experienced. This resulted in constant currency growth in revenue of 37%. Gross Profit Adjusted gross profit, defined as gross profit excluding production overheads, is used to enable a like-for- like comparison of underlying sales profitability. Production overheads are excluded due to recent changes in product mix and investments in the production team which have improved capacity and therefore changed the labour and overhead absorption rates in the current year. As a result, adjusted gross profit is the Alternative Performance Measure (‘APM’) used to represent this metric, see Appendix for calculation. Statutory gross profit for 2022 has been restated to include production overheads within cost of sales rather than administrative expenses in accordance with IAS 2 (see note 22). 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 and software revenue. This contributed to the 4.8pp increase in adjusted gross margin for the full year, with statutory gross margin up by 6.2pp including a 1.4pp benefit from manufacturing efficiencies as we increased production throughput. Statutory gross margin benefitted from translational exchange as the depreciation in the US$ exchange rates improved revenue by approximately £0.2 million, compared to the prior year average exchange rate experienced. Strategic report continued Financial review Highlights Revenue for the year to 31 March 2023 was up 49% to £12.4 million (2022: £8.4 million) benefiting particularly from a large order for CBP. Adjusted gross margin improved by 4.8pp to 51.5% (2022: 46.7%) mainly due to increased sales of higher performance products and software. Statutory gross margin was up 6.2pp to 47.0%1 additionally reflecting production efficiencies as volumes increased. Operating loss in the period was £1.0 million (2022: loss £1.9 million), with an Adjusted EBITDA loss of £0.2 million (2022: loss £1.7 million). Adjusted loss before tax of £0.8 million improved by 62% (2022: loss £2.3 million) with statutory loss before tax of £1.0 million (2022: loss £1.9 million). Cash as at 31 March 2023 was £2.8 million (31 March 2022: £5.4 million). The majority of the reduction in year-end cash relates to the net working capital outflow of £2.3 million caused principally by higher trade receivables at the end of the year, primarily related to CBP for which settlement occurs as equipment is deployed in the field. Revenue Revenue is split between our two principal activities below: Product Support and Development 2023 £’000 11,782 638 12,420 2022 £’000 7,667 694 8,361 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. 1 As restated see note 22. 6 Thruvision Group plc Annual Report and Accounts 2023 Adjusted gross profit and statutory gross profit are shown below. Revenue Adjusted gross profit Adjusted gross margin Statutory gross profit Statutory gross margin 2022 £’000 (as restated see note 22) 2023 £’000 12,420 8,361 6,401 3,902 51.5% 46.7% 5,837 3,413 47.0% 40.8% Administrative expenses Administrative expenses increased as expected by 29% (£1.5 million) to £6.8 million with overheads up by 19% (£0.9 million) to £6.1 million. The ratio of overheads to revenue fell to 49% from 62% last year demonstrating continued operational leverage. The anticipated payment of a bonus to all employees for the first time, accounted for almost half of the increase in overheads in the year. Administrative expenses include share-based payment charges, depreciation and amortisation and impairment of intangible assets, but these are excluded from overheads. Overheads were impacted by translational exchange as the depreciation in the US$ exchange rates increased overheads by approximately £0.2 million, compared to the prior year average exchange rate experienced. Administrative expenses are analysed as follows: Sales and marketing Engineering Management PLC costs Property and administration Bonus Foreign exchange gains Overheads Depreciation and amortisation Share based payments charge / (credit) Impairment of intangible assets Administrative expenses 2022 £’000 (as restated see note 22) 1,945 1,300 685 663 494 84 (6) 5,165 500 (366) – 5,299 2023 £’000 2,215 1,359 1,046 829 417 458 (198) 6,126 569 96 36 6,827 The increase in overheads is driven by higher staff costs including investments in headcount and related costs. Sales and marketing expenditure increased due to higher sales commissions resulting from revenue growth and travel to support growth in our European and US Retail Distribution markets. Engineering costs, including R&D costs, were up as a result of increased headcount in our software team as we continue to scale up to support new product offerings going forward. Management and PLC costs were higher, driven by one-off costs relating to the CFO replacement, higher insurance costs and professional fees. Loss after tax and loss per share Statutory loss after tax improved by 51% to a loss of £0.8 million with the adjusted loss after tax of £0.7 million improving by 67%. The tax credit of £0.2 million (2022: £0.2 million) reflects R&D tax credits receivable. Unrelieved tax losses in the UK available to carry forward indefinitely are £15.2 million (2022: £14.0 million). The loss per share and adjusted loss per share were 0.55 pence and 0.46 pence respectively (2022: loss per share and adjusted loss per share of 1.14 pence and 1.39 pence respectively) and reflected the movements in adjusted and statutory loss after tax. Cash flow The decrease in cash and cash equivalents during the year of £2.6 million to £2.8 million as at 31 March 2023, was principally caused by a £2.3 million outflow in net working capital, with an operating cash outflow before working capital movements of £0.2 million and net outflows of £0.1 million each from investing and financing activities. The movements in net working capital were as follows: • Trade and other receivables caused a £2.4 million outflow in the year, driven by higher sales in the final quarter of the year. Included in trade and other receivables of £3.7 million at 31 March 2023 was £2.7 million relating to CBP, £1.7 million of which has been received to date. • Inventory reduced by £0.2 million with tighter inventory management offset by selective forward purchasing of key electronic components where potential global shortages became apparent. • An increase in trade and other payables resulted in an inflow of £0.3 million. Trade payables increased principally due to the volume of stock purchased in the final quarter compared to the prior year. Financing, Treasury and Going Concern Cash and cash equivalents as at 31 March 2023 were £2.8 million (31 March 2022: £5.4 million). In order to manage fluctuations in working capital, the Group has recently agreed an overdraft facility with HSBC of £1.0 million which reduces to £0.25 million from 30 September 2023 and currently expires on 31 May 2024. This remains undrawn to date. The Group has prepared and reviewed cash flow forecasts for the period to 31 July 2024, 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. 7 OverviewAnnual Report and Accounts 2023 Thruvision Group plcStrategic reportGovernanceFinancial statementsOther information Strategic report continued 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 £1.0 million higher, gross margin being £0.2m higher and Adjusted EBITDA £34k higher 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 gains of £0.2m (2022: £6k 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. Average exchange rate for the year Exchange rate at the year end 2023 £’000 1.206 1.236 2022 £’000 1.367 1.312 Other A limited programme of share purchases by the Thruvision plc Employee Benefit Trust is being undertaken over the 12 months from April 2023 with the purpose of partly satisfying future employee exercises of share options. The first share purchase under this programme occurred in April 2023. Key performance indicators for the Group are explained in the Directors’ report. Dividends The Board is not proposing to pay a dividend (2022: none). Events after the balance sheet date The Group has recently agreed an overdraft facility of £1.0 million which reduces to £0.25 million for the period from 30 September 2023 to 31 May 2024 and nil thereafter, in order to support working capital requirements as the business expands. The Group has entered into guarantees in respect of this facility. This facility remained undrawn at the date of publication of these results. Victoria Balchin Chief Financial Officer 20 July 2023 8 Thruvision Group plc Annual Report and Accounts 2023 Principal risks and uncertainties The Audit Committee and the Board formally review and consider the Group’s Risk Register three times a year. This review covers the ranking of risks and the control activities that are in place. Where necessary, new risks that have been identified are added and fully mitigated risks are removed. From this process, the Directors believe the following risks to be the most significant for the Group. However, the risks listed do not necessarily comprise all those associated with the Group. In particular, the Group’s performance may be affected by changes in market, political or economic conditions and by legal, regulatory and tax requirements. If any of the following risks were to materialise, the Group’s business, financial condition, results or future operations could be materially adversely affected. Additional risks and uncertainties not presently known to the Directors, or which the Directors currently deem immaterial, may also have an adverse effect upon the Group. Risks relating to the Group’s business Control actions Retail Distribution sales growth The Group’s growth ambitions depend on its ability to continue to increase sales in the Retail Distribution sector generally and in the UK, US and Europe specifically. This will place demands on sales and marketing, and on pre- and post-sales technical support. Availability of capital and cash flow In order to enable the Group to progress through further stages of development it may be desirable for the Group to raise additional capital and there can be no assurance that such funding, if required, will be available to the Group. Further, the availability of long or short-term bank debt will depend on the Group’s progress with stated strategy and trading prospects. US Government spending A significant portion of the Group’s revenues come from the US Government, specifically Customs and Border Protection. Changes in budget levels and / or budget priorities could adversely affect revenue. TSA accreditation A significant delay in achieving TSA accreditation will slow the Group’s entry into the highly regulated aviation passenger checkpoint market. Such a delay may be caused by the need for further product development or for reasons outside the Group’s control. • The Group has continued to add further sales resource in the US and UK and is in the process of strengthening its Europe, Middle East, Africa and Asia Pacific sales leadership. • Specific Retail Distribution sales opportunities are discussed weekly to ensure appropriate actions are being taken to maximise the likelihood of winning orders. The overall strength of the Retail Distribution sales pipeline is measured monthly. • At 31 March 2023, cash of £2.8 million was available to the Group from its own resources, with trade receivables of £3.7 million relating to sales made in February and March. • The Group has recently agreed an overdraft facility of £1.0 million reducing to £0.25 million for the period 30 September 2023 to 31 May 2024 and nil thereafter, in order to support working capital requirements. • It is expected that this will be sufficient to fulfil the short to medium- term needs of the Group and that the Group is expected to become cash generative in the medium term. • The Group was successful in getting a multi-year CBP purchasing contract vehicle award and works carefully to ensure that high levels of customer satisfaction are being achieved from the systems already deployed. • Further the Group has access to the budget setting and prioritisation community and endeavours to ensure that the operational effectiveness and value for money of its equipment is well understood by it. • The Group continues to work closely with the accrediting authorities to respond quickly to feedback from the testing process and undertakes any necessary product development work as quickly as possible. • The Board does not believe successful accreditation is a necessary condition for continued growth of the Group. 9 OverviewAnnual Report and Accounts 2023 Thruvision Group plcStrategic reportGovernanceFinancial statementsOther information Strategic report continued Risks relating to the Group’s business Control actions Supply chain The Group is reliant on a small number of specialist suppliers and a wider number of more commercial suppliers. Shortages, delays or loss of various components could affect production capability and Group revenue. Intellectual property (‘IP’) The Group’s success depends in part on its ability to protect legally its own intellectual property and to avoid infringing that of others. IP disputes, however they arise, can be expensive, time consuming and distracting. Competition The Group competes both directly and indirectly with a number of different companies and technologies. This competition may offer a better solution to a particular customer need. In addition, competitors may have greater financial or technical resources than the Group. Manufacturing capacity The Group’s manufacturing capability is based at its Oxfordshire facility and loss of this facility would cause a short-term impact on the ability to manufacture and hence deliver systems. • The Group carefully manages its key supplier relationships and aims to ensure steady order flow with medium term order visibility to maximise availability of key parts. All key parts are made in either the UK or US. • Where necessary, the Group may elect to use its cash resources to purchase a sufficient volume of specific components in order to maintain forecast production levels. • The ability to scale manufacturing ahead of planned levels has been successfully tested in previous financial years. • The Group retains highly regarded Washington DC based patent attorneys to support the active management of the Group’s IP protection strategy. • The Group relies upon various intellectual property protections, including patents, copyright, trademarks, trade secrets and contractual provisions to preserve its intellectual property rights. Patent protection is currently being enhanced by way of patent registration applications in key geographies to ensure the Group is adequately protected in the most appropriate manner at all times • A careful watching brief is maintained on competitors to enable the Group to react quickly to any change in circumstance or technical developments from competition. • In addition, we work closely with our clients to ensure that we understand their current and emerging requirements and that these are fed into the Group’s ongoing R&D programme. • Where possible, subsystems are outsourced to third parties and a number of different manufacturing partners have been engaged. This includes a specialist contractor in the US which is now able to fully assemble and test systems ready for sale to the US market. Section 172 disclosures – Engaging with our stakeholders The Directors take their duties under Section 172(1) of the Companies Act 2006 seriously and have acted in a way they consider, in good faith, has promoted the success of the Company for the benefit of its members as a whole, having regard to the stakeholders and matters set out in Section 172(1) (a–f) in the decisions taken during the year ended 31 March 2023. The Group’s commitment to the relationships with stakeholders as true long-term partners is fundamental to the way it achieves sustainable growth and financial returns. This engagement with them sets the context for the strategy, set out on page 14 of the Directors’ Report. The Board considers its key stakeholders to be its employees, customers, partners, shareholders and the communities in which the Group operates. Ongoing engagement with all the stakeholder groups is important in any strategic decision making, with formal and informal feedback from stakeholders being shared at Board meetings and used to inform and influence key matters and decisions made by the Board during 2023, as set out in the Corporate Governance Report. Employees At 31 March 2023, the Group employed 35 people in the UK, seven in the US and one in the Netherlands, and depends on the skills and commitment of its employees in order to achieve its objectives. Personnel at every level are encouraged to make their fullest possible contribution to the success of Thruvision. Employees are kept regularly informed on matters affecting them and on issues affecting the Group’s performance primarily through office briefings, all staff video calls, email updates and one-to-one meetings. The Group introduced its existing LTIP for certain employees in 2010 and updated the LTIP for a further period of 10 years at the AGM held in September 2020. Full details of awards under the scheme and associated performance conditions are given in the Remuneration report on pages 30 to 31. 10 Thruvision Group plc Annual Report and Accounts 2023 Most employees participate in the LTIP via Share Option awards made on joining the Company and on a discretionary basis thereafter. In addition, the Group operates a Sharesave SAYE Share Option Scheme in which all UK-based employees are able to participate. The scheme is normally launched annually after the announcement of interim or final results. The Board is committed to ensuring that a culture free from discrimination and harassment remains embedded within the Group and discrimination of any sort is not tolerated and that human rights are fully respected including full compliance with all laws and regulations. Proper consideration is given to applications for employment from disabled people who are employed whenever suitable vacancies arise. The Group practises equality of opportunity for all employees, irrespective of ethnic origin, religion, political opinion, gender, marital status, disability, age or sexual orientation. The Group is mindful of the impact the cost-of-living is having on employees and their families particularly at the lower end of the pay scale. In 2022 the Group made a one-off discretionary cost of living payment to support these employees. Other stakeholders The Group is driven by a deep understanding of customers’ needs and the challenges they must solve. Thruvision works in close partnership with customers to understand their business and has invested resources to assist customers in articulating their business case and value proposition to their investment committees. The Group undertakes customer satisfaction surveys and invites key customers to innovation days to generate feedback and inform on future product roadmaps. The Group engages with a wide range of technology partners and industry suppliers to create and deliver customer solutions and enable the development of our technology roadmap. In light of the current economic backdrop and the feedback from customers the Group has undertaken to invest in developing the modularity of systems to ensure that key componentry is able to be sourced from multiple suppliers, lead times can be reduced and the system platform is optimised for future hardware and software development and upgrades. The Board is committed to regular, timely and effective communications with investors and other financial stakeholders. The Directors meet with institutional investors regularly and present at private investor events to diversify the investor pool. ESG - Our commitment At Thruvision, we care about our impact on the environment, our contribution to our local communities, and the way we conduct ourselves. We are committed to ensuring the responsible operation of our business and safe, sound, and ethical conduct at all times. Environment We recognise our responsibility to contribute to a sustainable future and to minimise any negative impact that our operations could cause to the environment. Management decisions are considerate to environmental factors, both globally and in our local communities, and we are seeking ways to reduce our environmental impact. Factor Commitment Environmental management • We encourage the use of video and audio-conferencing facilities and maintain the use of electronic communications to reduce the amount of printing waste produced. We ensure that paper and other products are manufactured from recycled products and recycle all waste where possible. Energy management systems Eco-operational efficiency Climate change efficiencies • We continue to review energy consumption across the Group and are investigating the practicality of installing solar panels at our Oxford facility. • We return obsolete and unused components to suppliers to be recycled and upgraded where possible. • All new Group vehicles are low CO2 emission vehicles and charging points are provided to all staff, free of charge, at our Oxfordshire facility. Employees are encouraged to car share and use public transport when efficient to do so. Air travel is only taken once alternative working methods and processes have been explored. • We maintain an outsourced component procurement and manufacturing capability of Thruvision systems, via a subcontractor, in the US thus negating the requirement to transport systems from the UK to this major market. We would expect to implement a similar policy should other regions provide sufficient volume to warrant this investment. Social Through our people we deliver our strategy, vision, and purpose – and uphold our values. We are committed building an inclusive and diverse culture which supports and reflects the communities we operate in. 11 OverviewAnnual Report and Accounts 2023 Thruvision Group plcStrategic reportGovernanceFinancial statementsOther information Strategic report continued Factor Commitment Diversity, Equality and Inclusion • We provide equal opportunities to all our employees irrespective of race, nationality, gender, sexual orientation, marital status, religious belief, disability or age. • All employees are treated equally in respect of pay and benefits and we remain mindful during the recruitment processes of developing diversity within the employee group subject to the constraints of the pool of candidates available. • The Group looks to accommodate flexible working patterns to support diversity, help employees improve their work life balance, and build trust between the company and employee. • All eligible employees are invited to participate in a save-as-you-earn (‘SAYE’) scheme and offered long term incentive plan (‘LTIP’) shares where appropriate. This encourages a wider sense of purpose and company ownership. • The Group is mindful of the impact the cost-of-living is having on employees and their families particularly at the lower end of the pay scale. In 2022 the Group made a one-off discretionary cost of living payment to support these employees. Health and safety • The Group has implemented mandatory online training for all employees in health and safety. Relevant employees are first aid and fire trained and all accidents are logged appropriately and reviewed to minimise future occurrence. An external health and safety audit is performed annually. • The company is mindful of mental health and wellbeing and offers eligible employees the option to partake in the private medical scheme which has counselling and support services included. • The Group contributes to charitable and community initiatives and supports the efforts of individual employees with charitable contributions. During the year employees donated produce to the local foodbank. • Employees are encouraged to maintain professional subscriptions and work towards new qualifications. • The Group has a graduate and apprentice recruitment scheme in place to ensure we are developing new talent. Community relations Workforce training and development Governance In addition to complying with the QCA Corporate Governance Code and all other applicable laws and regulations, we are committed to conducting business in an ethical and responsible manner. We require all our employees and all third parties acting on our behalf to behave honestly and to operate with integrity. Through procedures and policies that are currently in place, Thruvision aims to: Factor Commitment Executive compensation • Executive compensation is reviewed at the Remuneration Committee and set to ensure it attracts and retains the best leadership talent. The gap in compensation between executives and other employees is monitored. Board diversity, equity, and inclusion Corporate governance policies Compliance • Women represent 50% of the Board, and the Board incorporates inclusion into the way it operates. all opinions are welcomed and respected • Thruvision adopts the Quoted Companies Alliance 2018 Corporate Governance code. Full details of the governance process and procedures within the Group are given in the Corporate Governance report on pages 20 to 24. • Thruvision complies with all environmental regulations, labour laws, financial regulations and customer data privacy. Risk management, internal controls, audits and inspections, and corrective actions all form part of governing activities. Code of ethics • The Group has a detailed policy relating to anti-bribery and anti-corruption and will not tolerate such behaviour in any form. All senior management and sales executives are required to certify, at least every six months, that they are not aware of any behaviour transgressing these policies. • All suppliers, sub-contractors, and other business partners are required, under contract, to comply with these policies. The Strategic Report has been approved by the Board of Directors. Colin Evans Chief Executive Officer Tom Black Chairman 20 July 2023 12 Thruvision Group plc Annual Report and Accounts 2023 Directors’ biographies Tom Black, (63) Non-Executive Chairman Colin Evans, (55) Chief Executive Officer Tom was appointed a Director on 8 February 2010 and is the Non-Executive Chairman of Thruvision Group plc. Prior to joining the Company, Tom spent over 20 years with Detica Group plc, where he led Colin was appointed a Director on 8 February 2010 and was appointed Chief Executive of Thruvision Group plc on 1 November 2017, having previously served in a number of senior management positions. He is the management buyout in 1997 and the Group’s flotation on the London Stock Exchange in April 2002. He then oversaw the acquisition of Detica by BAE Systems in 2008. He is also a Trustee of the Black Family Charitable Trust and the Edward Barnsley Educational Trust. Tom is a member of the Nomination Committee of Thruvision Group plc. responsible for all aspects of the business and draws upon his 24 years’ experience delivering innovative new technology to the international security industry and, in particular, to the US Federal Government. Prior to joining Thruvision, Colin spent 15 years with Detica Group plc, where he was Group Chief Operating Officer. He is currently a Non-Executive Director at 6point6 Limited and Cloud Gateway Holdings Limited and their associated companies. Victoria Balchin, (49) Chief Financial Officer Richard Amos, (56) Non-Executive Director Victoria Balchin was appointed Chief Financial Officer on 1 October 2022. Victoria is a qualified Chartered Accountant and has held a number of finance roles within British Sky Broadcasting group plc (2000 to 2005) and SABMiller plc (2005 to 2017) before joining Spectris plc in 2017 as Group Financial Controller. In 2019, she was appointed CFO of Brüel & Kjær Vibro, a Spectris business headquartered in Germany, which was sold by Spectris in March 2021 to a large Japanese listed group. Richard was appointed a Non-Executive Director on 1 March 2021. He is a qualified Chartered Accountant who started his career at EY in 1988 and has subsequently served in a number of senior finance roles. Richard has served on the boards of five companies listed on the London Stock Exchange, most recently as CFO of Wilmington plc (2018 to 2020), CFO of Plant Impact plc (2016 to 2018) and Group Finance Director of Anite plc (2009 to 2015). He is currently Non-Executive Chair at Skillcast Group plc and a Non-Executive Director at Xaar plc. Richard is the Chair of the Audit and Nomination Committees and a member of the Remuneration Committee of Thruvision Group plc and the Senior Independent Director. Katrina Nurse, (52) Non-Executive Director Hannah Platt, (36) Company Secretary Katrina was appointed a Non-Executive Director on 1 April 2022. She is a qualified Management Accountant with over 30 years’ experience in the retail sector, 20 of which operating at board level. Most recently she served as the VP George Clothing and VP Commercial Finance Asda, CFO of Pentland Brands Ltd and Finance Director of Selfridges Retail Ltd prior to which she spent 25 years at the Arcadia Group. She is currently a Non-Executive Director of UK Biocentre and Fashion & Retail Awards, a subsidiary of the Fashion & Retail Academy, an educational establishment based in London. Katrina is the Chair of the Remuneration Committee and a member of the Audit and Nomination Committees of Thruvision Group plc. Hannah Platt was appointed Company Secretary on 1 January 2023 and is responsible for the core Governance and Company Secretarial function within the Group and also manages the HR, Insurance, Property, Intellectual Property and a number of other functions. Hannah qualified as a Chartered Accountant in 2012 with EY and has previously acted as Group Commercial Director to Digital Barriers. Hannah is Secretary to the Board and its Committees. 13 Strategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcGovernanceFinancial statementsOther information Directors’ report The Directors of Thruvision Group plc (the ‘Company’) present the Annual Report to Shareholders together with the audited financial statements of the Company and its subsidiaries for the year ended 31 March 2023. In respect of compliance with all aspects of Corporate Governance, please see the separate Corporate Governance report on pages 20 to 27, which forms part of this Directors’ report. The Group is committed to appropriate standards of corporate governance as an efficient and effective approach to managing the Company and its subsidiaries. Principal activities The principal activities of the Group are the development, manufacture and supply of walk-through security technology to the global security market. Further information can be found within the Business review section on pages 4 to 5. Strategy and business model Summary The Group’s strategy is to build on its position as the unique provider of Terahertz (THz) walk-through security technology, in order to increase its market share in emerging and established sectors. Technology The Group’s technology strategy is driven by its principal customer requirement which is to detect as wide a range of hidden items, in terms of size and material, as fast as possible. This means the Group’s Research & Development (‘R&D’) is driven by trying to find ways to continue to improve detection performance and throughput rate. Another aspect of technology strategy is to shift an increasing amount of product value from hardware to software. This is to increase overall profitability of the product and provide the option for better revenue visibility in the future in the form of software licensing. A key focus is taking advantage of the latest in Artificial Intelligence (‘AI’) algorithm development techniques to improve detection performance. The Group recognises the value of its Intellectual Property (‘IP’). A core activity is therefore looking to patent, where possible, new innovations as they are invented. Market focus In seeking to grow as quickly as possible, the Group’s market strategy is to identify market sectors where it can compete effectively. In two sectors, international Customs agencies and Retail Distribution, the Group’s technology has very significant competitive advantage, and together these sectors offer a very large addressable market. For these reasons, the Group has chosen to focus on them. The Group also operates in two other large and more established sectors, Aviation and Entrance Screening. In both cases, the Group’s competitors have well-established positions meaning that revenue growth is harder for the Group to achieve. While the Group will continue to operate in these sectors, they are not a core focus. Manufacturing The Group’s technology is based on deep competencies in THz waveband and satellite-grade manufacturing. Significant investment is required to build a scalable manufacturing capability in this field and this acts as a barrier to entry. The Group’s strategy is to ensure its manufacturing capacity is always ahead of forecast demand levels and, for geopolitical reasons, to ensure it has manufacturing capability in the US. Business model The Group’s business model is to sell its products with support contracts, to incrementally increase the amount of revenue it can derive from software licence sales, and to offer hardware and software-based upgrade paths for customers with existing product. Key Performance Indicators The following Key Performance Indicators are used to manage the operating performance of the Group. In addition, Revenue and Adjusted EBITDA are used to set targets for incentive purposes. • Revenue • Adjusted Gross margin1 • Adjusted EBITDA1 • Adjusted loss before tax1 • Average employee numbers 1 Adjusted measures are reconciled to the relevant statutory measures in the Appendix. 14 Thruvision Group plc Annual Report and Accounts 2023 Going concern The Board has taken the cashflow forecast for the period to 31 July 2024, reviewed the key assumptions unpinning 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, smaller sales and large, multi-unit sales. Alternative scenarios included a general downgrading of sales volumes and a reduction in 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 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 2024. In addition, in order to manage fluctuations in working capital, the Group has recently agreed an overdraft facility with HSBC of £1.0 million which reduces to £0.25 million from 30 September 2023 and currently expires in May 2024. This remains undrawn to date. 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. Group results The Group’s Consolidated income statement set out on page 41 shows revenue from continuing operations for the year of £12.4 million (2022: £8.4 million), and an operating loss for the year of £1.0 million (2022: loss £1.9 million). Details are given in the Financial review on pages 6 to 8. Dividends The Directors are not recommending a dividend in respect of the year ended 31 March 2023 (2022: none). Governance During the year under review, the Board has maintained the internal controls and processes to ensure as far as possible compliance with the Code by way of regular Board meetings and management team meetings and upward reporting from all divisions. Further explanation of the high-level corporate governance principles is given in the Corporate governance section of this report on pages 20 to 27 and in connection with Directors’ remuneration in the relevant section of the Remuneration report on pages 28 to 35. It is the responsibility of the Board to prepare the Annual Report and Accounts. The Board considers that the Annual Report and Accounts, when taken as a whole, is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Group’s position and performance, business model and strategy. 15 Strategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcGovernanceFinancial statementsOther information Directors’ report continued Share capital The issued Share capital of the Company, together with details of movements in the Company’s issued Share capital during the financial period, are shown in note 17 to the financial statements. As at the date of this report, 147,275,810 Ordinary Shares of 1 pence each (‘Ordinary Shares’) were in issue and fully paid with an aggregate nominal value of £1,472,758. On 28 August 2013, the Company was granted a Blocklisting authority over 600,000 Ordinary 1 pence Shares in order to satisfy awards that have vested and are capable of exercise under the Long-Term Incentive Plan. On 13 June 2022, the Company was further granted a Blocklisting authority over an additional 2,000,000 Ordinary 1 penny Shares in order to satisfy awards that have vested and are capable of exercise under the Long-Term Incentive Plan. From 28 August 2013 to 31 March 2023, 500,500 Shares had been issued from the Blocklisting facility. Accordingly, at 31 March 2023, 2,099,500 (2022: 204,500) Shares remain outstanding to be issued from the Blocklisting facility. On 27 October 2021, the Company was granted a Blocklisting authority over 1,281,600 Ordinary 1 pence Shares in order to satisfy awards that have vested and are capable of exercise under the Sharesave Share Option scheme. On 15 December 2022, the Company was further granted a Blocklisting authority over 195,650 Ordinary 1 pence Shares in order to satisfy awards that have vested and are capable of exercise under the Sharesave Share Option scheme. From 27 October 2021 to 31 March 2023, 1,363,121 Shares had been issued from the Blocklisting facility. Accordingly, at 31 March 2023, 114,129 (2022: 471,600) Shares remain outstanding to be issued from the Blocklisting facility. The holders of Ordinary Shares are entitled to receive the Company’s reports and accounts, to attend and speak at general meetings of the Company, to appoint proxies and to exercise voting rights. To be effective, electronic and paper proxy appointments and voting instructions must be received at the Company’s registered office, or such other place in the UK specified in the relevant notice of meeting, not later than 48 hours before a general meeting. Subject to applicable statutes, there are no restrictions on transfer or limitations on the holding of Ordinary Shares and no requirements for prior approval of any transfers other than: • certain restrictions may from time to time be imposed by laws and regulations (for example insider trading laws); and • pursuant to the Company’s Share dealing code whereby the Directors and certain senior employees of the Company require approval to deal in the Company’s Shares. None of the Shares carry any special rights with regard to control of the Company. There are no known arrangements under which financial rights are held by a person other than the holder of the Shares and no known agreements on restrictions on Share transfers or on voting rights. The Company established an Employee Benefit Trust (‘EBT’) in 2010, which in certain circumstances holds Shares in connection with the Group’s employee Share incentive plans. As the registered holder, the voting rights in the Shares are exercisable by the trustee. However, the trustee does not ordinarily exercise those rights. At 31 March 2023, the EBT did not hold any Shares in the Company. The Articles may only be amended by a special resolution at a general meeting of Shareholders. The Group does not have agreements with any Director or employee that would provide compensation for loss of office or employment resulting from a change of control. Further details of the Directors’ service contracts can be found in the Remuneration report on page 32. The provisions of the Company’s Long Term Incentive Plan (‘LTIP’) may cause options and awards granted to employees under such schemes and plans to vest on a change of control. Issue of Shares At the general meeting held on 26 October 2022, Shareholders granted authority to the Board under the Articles and Section 551 of the Companies Act 2006 (the ‘Act’) to exercise all powers of the Company to allot relevant securities up to an aggregate nominal amount of £490,552. It is proposed at the forthcoming Annual General Meeting (‘AGM’) to renew the authority to allot relevant securities up to an aggregate nominal amount of £490,919, being one third of the nominal value of the current issued Share capital. Also, at the general meeting held on 26 October 2022, Shareholders granted authority to the Board under the Articles and Section 570(1) of the Act to exercise all powers of the Company to allot equity securities wholly for cash in certain circumstances, including in connection with a rights issue or otherwise up to an aggregate nominal amount of £73,582 for general purposes and an additional £73,582 in connection with an acquisition or specified capital investment, without application of the statutory pre-emption rights contained in Section 561(1) of the Act. It is proposed at the forthcoming AGM to renew the authority to allot relevant securities wholly for cash, including in connection with a rights issue or otherwise, up to an aggregate nominal amount of £147,276, being 10% of the current nominal value of the issued Ordinary Share capital, for general purposes and an additional £147,276 being 10% of the current nominal value of the issued Ordinary Share capital, to be used in connection with an acquisition or specified capital investment, in each case without application of the statutory pre-emption rights. 16 Thruvision Group plc Annual Report and Accounts 2023 Purchase of own Shares At the AGM held on 26 October 2022, Shareholders granted authority for the Company to make market purchases of up to 22,074,857 of its own Shares provided that the maximum price (excluding expenses) which may be paid for an Ordinary Share is an amount equal to 105% of the average of the middle market quotations for an Ordinary Share derived from the AIM appendix of the Daily Official List of the Exchange for the five business days immediately prior to the day on which the Share is contracted to be purchased and the minimum price is 1 pence exclusive of attributable expenses payable by the Company. It is proposed to renew the above authority at the forthcoming AGM for the Company to make market purchases of up to 22,091,371 of its own Shares, retaining the provision that the maximum price (excluding expenses) that may be paid for an Ordinary Share up to an amount equal to 105% of the average of the middle market quotations for an Ordinary Share derived from the AIM appendix of the Daily Official List of the Exchange for the five business days immediately prior to the day on which the Share is contracted to be purchased. Accordingly, the required resolution is set out in the Notice of Meeting on page 85 of this report. Significant agreements – change of control A change of control of the Company following a takeover bid may cause a number of agreements to which the Company or its subsidiaries are party to take effect, alter or terminate. These include client contracts, leases, supplier contracts and provisions relating to the LTIP. No individual contract is considered to be significant in terms of its potential impact on the business of the Group as a whole. Substantial shareholdings As at 16 June 2023, the Company was aware of the following Shareholdings representing 3% or more in the Company’s existing issued Ordinary Share capital. Schroder Investment Management Canaccord Wealth Management Lombard Odier Asset Management Herald Investment Management Tom Black Janus Henderson Investors Invesco Perpetual Investment Management Directors No. of Shares 25,780,040 23,844,150 15,584,436 15,329,712 13,272,540 11,998,449 11,445,657 Percentage of issued Share capital 17.51 16.19 10.58 10.41 9.01 8.15 7.77 The names and biographical details of the current Directors of the Group are given on page 13. Tom Black (Chairman) and Colin Evans (Chief Executive) were appointed Directors on 8 February 2010, prior to the IPO. Richard Amos (Non-Executive Director) was appointed on 1 March 2021, Katrina Nurse (Non-Executive Director) was appointed on 1 April 2022 and Victoria Balchin (Chief Financial Officer) was appointed on 1 October 2022. Adrian Crockett was appointed a Director on 1 May 2019, and stepped down as a Director on 14 April 2022. He was on garden leave until 1 July 2022 on which date he left the employment of the Group. Hannah Platt was appointed Company Secretary on 1 January 2023 following the retirement of the Company Secretary, John Woollhead, on 31 December 2023 Richard Amos and Katrina Nurse are considered to be Independent Non-Executive Directors. The rules on appointment, re-appointment and retirement by rotation of Directors are contained in the Articles. A Director may be appointed by Shareholders’ Ordinary resolution or by the Board. The current Articles require that all Directors are subject to election at the first AGM following appointment and thereafter to re-election at least every three years. However, in line with governance best practice, all Directors are submitting themselves for re-election at the forthcoming AGM. A review of Director performance was undertaken in March 2023. Directors’ interests Details of the interests in the Shares of the Company of the Directors holding office as at the date of this report, and their immediate families, appear in the Remuneration report on page 28. Details of the Directors’ service contracts and letters of appointment appear in the Remuneration report on pages 28 to 35. 17 Strategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcGovernanceFinancial statementsOther information Directors’ report continued During the year Thruvision entered into a contract for £15,000 with 6Point6 Limited for IT services. Colin Evans is a Non-Executive Director of 6Point6 Limited. During the year Thruvision entered into a contract for £2,486 with Skillcast Group PLC for the provision of e-learning training. Richard Amos holds a position of Non-Executive Director of Skillcast Group PLC. Procedures for dealing with Directors’ conflicts of interest are in place and are operating effectively. Directors’ and Officers’ indemnities and insurance The Company maintains liability insurance for its Directors and Officers. The Directors and Officers have also been granted a qualifying third-party indemnity provision under the Act. That indemnity provision has been in force throughout the year and remains in force at the date of this report. Research and development The Group is active in the development of software and hardware in respect of people screening technologies and intends to remain so involved in the future. In the year under review, expenditure totalling £0.6 million (2022: £0.6 million) related to development of such technologies. Pensions A defined contribution scheme, in accordance with the auto enrolment regulations, is in operation for all UK-based employees unless an individual employee has waived their rights under the legislation. With effect from 1 April 2019, employee pension contributions have been made via a salary sacrifice scheme. Health and safety The Group aims to provide and maintain a safe environment for all employees, customers and visitors to its premises and to comply with relevant health and safety legislation. Day-to-day health and safety management is delegated to operational managers with oversight from the Company Secretary. External advice is utilised as appropriate and satisfactory external audits have recently been undertaken. During the year and to the date of this report, there have been no RIDDOR reportable incidents (2022: nil) Financial instruments The Group’s financial risk management objectives and policies are discussed in the Financial review on pages 6 to 8 and in note 20 of the financial statements. Post-balance sheet events The Group has recently agreed an overdraft facility with HSBC of £1.0 million, reducing to £0.25 million for the period from 30 September 2023 to 31 May 2024 and nil threeafter, in order to further support working capital requirements as the business expands. This facility remained undrawn at the date of signing of these financial statements. As a result, a fixed charge over the assets of Thruvision Group plc and Thruvision Limited has been entered into in favour of HSBC and Thruvision Group plc and Thruvision Limited have entered into a cross-company guarantee in respect of this facility. From 1 April 2023 to the date of this report, 309,619 of Shares in the Company have been purchased by the EBT with a nominal value of £3,096 for total consideration of £80,000. Political donations No political donations were made during the year (2022: nil). Disclosure of information to the auditor So far as each Director in office at the date of approval of this report is aware, there is no relevant audit information of which the Company’s external auditor RSM UK Audit LLP is unaware. Each of the Directors has taken all steps that they ought to have taken in performing their roles as Directors to exercise due care, skill and diligence in order to make themselves aware: (i) of any relevant audit information; and (ii) to establish that the Company’s external auditor is aware of such information. 18 Thruvision Group plc Annual Report and Accounts 2023 For the purposes of this statement on disclosure of information to the external auditor, ‘relevant audit information’ is the information needed by the Company’s external auditor in connection with the preparation of its report on pages 37 to 42. Annual General Meeting The Annual General Meeting (the ‘AGM’) will be held at Investec Bank plc, 30 Gresham Street, London EC2V 7QP on Thursday 21 September 2023 at 10.00 a.m. The notice convening the AGM (the ‘Notice of AGM’) is set out on pages 84 and 88 of this report together. Auditor Grant Thornton UK LLP stepped down as auditor on 6 January 2023 following a tender process. RSM UK Audit LLP were appointed as the Company’s auditor on 11 January 2023. A resolution to re-appoint RSM UK Audit LLP as the Company’s auditor will be put to the forthcoming AGM. Approved by the Board of Directors and signed by order of the Board. Hannah Platt Company Secretary 20 July 2023 19 Strategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcGovernanceFinancial statementsOther information Corporate governance report This report for Shareholders sets out Thruvision’s approach to Corporate Governance. The Company is listed on AIM and accordingly is not required to comply with the provisions contained in the 2018 UK Corporate Governance Code (‘the Code’) published by the Financial Reporting Council, available at www.frc.org.uk. However, the Directors have agreed to adopt, as far as practicable, many of the principles contained in the Code. The Company formally reports against the QCA code on Corporate Governance details of which are available at www.theqca.com. The Board The Board recognises its responsibility to provide entrepreneurial and responsible leadership to the Group within a framework of prudent and effective controls as described below allowing assessment and management of the key issues and risks impacting the business. The Board sets Thruvision’s overall strategic direction as set out on page 14 of the Directors’ Report, which is underpinned by feedback it obtains for its stakeholder groups as set out on pages 10 to 11 of the Section 172 disclosure. The Board reviews management performance and ensures that the Group has the necessary financial and human resources in place to meet its objectives. The Board is satisfied that the necessary controls and resources exist within the Group to enable these responsibilities to be met. The Board terms of reference are available on request. Under these terms of reference certain matters are reserved for Board decision, further detail is given on pages 21 to 25. The Chairman is responsible for the leadership of the Board and ensuring its effectiveness. The Directors maintain their knowledge through a combination of reading of technical and market bulletins and attendance at relevant seminars and events. The Company Secretary is responsible for bringing new legal and regulatory requirements to the attention of the Board. The Group strive to maintain an overall balance of experience, skills and knowledge to ensure the Board operates effectively and to create long-term sustainable value for the Group and its shareholders. Following the conclusion of the AGM on 26 October 2022, Tom Black moved from Executive Chairman to assume the role of Non- Executive Chairman. Tom Black is not considered independent. During the year, the Board had two independent Non-Executive Directors, Richard Amos and Katrina Nurse, and accordingly the Company complies with both the Code and the Quoted Companies Alliance Corporate Governance Code in this regard. Due to the nature and complexity of the business and its current stage of development and the fact that a qualified Company Secretary is retained to ensure appropriate governance arrangements, the Board is satisfied that it had the right balance of Board membership during the year under review. Operational management of the Group is delegated to the Executive Directors and functional heads who meet regularly to discuss such matters. These matters include project delivery, product development, resource allocation, sales, customer relationships and initial due diligence on mergers and acquisitions. All decisions taken by both the Board and the Management team take due regard of the longer-term impact of that decision on the success of the Group, the impact on wider stakeholders and the impact of business operations on wider society. As far as possible all stakeholders are treated equally and fairly but it is not always possible to balance the interests of the Group with those of all stakeholders and accordingly it is not always possible to fully align the interests of all stakeholders. At the date of this report, the Board comprises two Executive and three Non-Executive Directors whose Board and Committee responsibilities are set out below. Tom Black Colin Evans Victoria Balchin Richard Amos Katrina Nurse Non-Executive Chairman Chief Executive Officer Chief Financial Officer Non-Executive Director Non-Executive Director Board Chair Member Member Member Member Audit – – – Chair Member Remuneration – – – Member Chair Nomination Member – – Chair Member Biographies of each of the current Directors and their responsibilities can be found on page 13. During the year, Tom Black, Richard Amos and Katrina Nurse confirmed to the Board that they had sufficient time available to fulfil their obligations as Directors and, should their circumstances change, that they would inform the Board. 20 Thruvision Group plc Annual Report and Accounts 2023 After careful review, the Board concluded that Richard Amos and Katrina Nurse were independent during the year under review and remain independent at the date of this report. In coming to these assessments, the Board considered their strength of character and independence of judgement and opinion, and the fact that they both: • have never been an employee of the Group; • have not had a material business relationship with the Group; • receive no remuneration other than fees; • have no close family ties with advisors, other Directors or senior management of the Group; • have no significant links with other Directors through involvement with other companies; • do not represent a significant Shareholder; and • have not served on the Thruvision Board for more than nine years. In the year under review, the Board met on 11 scheduled occasions; further meetings and conference calls are held as and when necessary. Details of Directors’ attendance at scheduled meetings during the year are set out in the table below: Tom Black Colin Evans Victoria Balchin Richard Amos Katrina Nurse Scheduled Board meetings attended 11/11 11/11 6/6 11/11 11/11 During the year, the Chairman met with the Non-Executive Directors without the Executives present, at the conclusion of each Audit Committee meeting. The Board also ensures that the principal goal of the Company is to create Shareholder value, while having regard to other stakeholder interests, and takes responsibility for setting the Company’s values and standards. Accordingly, the long-term interests of Shareholders, together with consideration of the wider community of interests represented by employees, customers and suppliers, and community and the environment are factored into the Group’s management processes. They are reinforced through employee participation in Equity Incentive Schemes. The steps taken to achieve these goals are communicated to Shareholders and other interested parties through the Company’s website (www.thruvision.com) and to employees via formal and informal briefings. Through formal policies, the Board seeks to engender a culture where business ethics, integrity and fairness are values that all employees endorse and apply in their everyday conduct. There is a documented schedule of matters reserved for the Board, the most significant of which are: • responsibility of the overall strategy and management of the Group; • approval of strategic plans, profit plans and budgets and any material changes to them; • approval of the acquisition or disposal of subsidiaries and major investments, projects and contracts; • oversight of the Group’s operations ensuring competent and prudent management, sound planning and management of adequate accounting and other records; • changes relating to the Group’s capital structure; • final approval of the annual and interim financial statements and accounting policies; • approval of the dividend policy; • ensuring an appropriate system of internal control and risk management is in place; • approval of changes to the structure, size and composition of the Board; • review of management structure and senior management responsibilities; • with the assistance of the Remuneration Committee, approval of remuneration policies across the Group; • delegation of the Board’s powers and authorities including the division of responsibilities between the Chairman and the Executive Directors; • consideration of the independence of the Non-Executive Directors; and • receiving reports on the views of the Company’s Shareholders. 21 Strategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcGovernanceFinancial statementsOther information Corporate governance report continued During the year, the Board received monthly briefings on the Group’s performance (including detailed commentary and analysis) and key issues and risks affecting the Group’s business. Amongst other matters, it reviewed the content of the Group’s risk register and the Group’s health and safety policies, processes and performance. Reports on Group operations, human resources, governance and regulatory matters affecting the Group were provided to the Board on a regular and timely basis. Briefings on customer activity, together with the views of Shareholders, were also provided to the Board. Procedures exist to allow the Directors to seek independent legal and professional advice in respect of their duties at the Company’s expense where the circumstances are appropriate. All Directors have access to the Company Secretary for advice. The process for appraising the Chairman’s performance is set out on page 26. Board Committees Summary There are three principal Board Committees: Audit; Remuneration; and Nomination. The roles and responsibilities of each of these Committees are detailed below. Currently, Richard Amos is Chair of the Audit Committee and Nomination committee with Katrina Nurse as a member of both Committees and Tom Black as a member of the Nomination Committee. Katrina Nurse is Chair of the Remuneration Committee with Richard Amos as a member of the Committee. Tom Black stepped down as a member of the Audit and Remuneration Committee on 26 October 2022 following the conclusion of the AGM. The Committees are provided with sufficient resources via the Company Secretary and, where necessary, have direct access to independent professional advisors to undertake their duties. Audit Committee Richard Amos was Chairman for the year under review to the date of this report. Richard Amos is a Chartered Accountant and is deemed by the Board to have recent and relevant financial experience and is independent for the purposes of the Code. In line with good practice Tom Black stepped down as a formal member of the Committee following the appointment of Katrina Nurse on 1 April 2023. Katrina is a qualified Management Accountant. All Committee members have extensive commercial experience, the details of which, along with their qualifications, are set out in the Directors’ biographies on page 13. Further information on the work of the Audit Committee during the year is given below. Terms of reference The Audit Committee’s terms of reference are available on request. The Audit Committee reviewed and re-approved its terms of reference in February 2023. Under its terms of reference, the Committee is responsible for providing advice to the Board on the Group’s interim results and final financial statements, on accounting policies, critical accounting judgements and estimates and on the control of its financial and business risks as well as reviewing the work of the external auditor. Frequency of meetings The Audit Committee met three times during the year under review. The Chairman of the Audit Committee provided a report on the work of the Committee and any significant issues that may have arisen at the Board meeting following each Committee meeting. Attendees at meetings The Executive Directors and Chairman attend Committee meetings by invitation of the Committee. Representatives of the Group’s external auditor also attend these meetings by invitation. During the year, the external auditor attended meetings, had direct access to the Committee during the meetings and time was also set aside for it to have private discussions (jointly and independently) with the Committee, in the absence of management. The attendance of individual Committee members at Audit Committee meetings during the year under review is shown in the table below: Richard Amos Katrina Nurse Tom Black (resigned from the Committee 26 October 2022) Meetings attended 3/3 3/3 1/1 Audit Committee activity The purpose of the Audit Committee is to assist the Board in the discharge of its responsibilities for financial reporting and corporate control and to provide a forum for reporting by the external auditor. The responsibilities of the Audit Committee include: • to monitor the integrity of the financial statements of the Company, and any formal announcements relating to the Group’s financial performance, including reviewing significant financial reporting judgements and any disclosures contained in them; 22 Thruvision Group plc Annual Report and Accounts 2023 • to review the Group’s internal financial controls and its internal control and risk management systems including the management of intellectual property and to make recommendations to the Board; • to consider the requirement for an internal audit function; • to make recommendations to the Board, for it to be put to the Shareholders for their approval in general meeting, in relation to the appointment, re-appointment and removal of the external auditor and to approve the remuneration and terms of engagement of the external auditor; • to agree the nature and scope of the external audit; • to review and monitor the external auditor’s independence and objectivity and the effectiveness of the audit process, taking into consideration relevant UK professional and regulatory requirements; • to review the Group’s policy on the engagement of the external auditor to supply non-audit services and report to the Board, identifying matters in respect of which it considers action or improvement is needed and make recommendations as to the steps to be taken; • to review the Group’s whistle-blowing procedures; and • to review the effectiveness of the audit process. The Audit Committee’s work during the year and up to the date of this report included: • reviewing the interim results, preliminary announcement and the Annual Report and Accounts prior to their submission to the Board; • reviewing significant accounting policies, financial reporting issues and judgements used in the preparation of the Company’s preliminary announcement and interim results and final financial statements; • reviewing management’s Letters of Representation in connection with the Group’s financial statements; • approval of the Audit Engagement Letters and fee proposal, and satisfied itself as to the auditor’s ability to conduct an effective audit for such fee; • review and assessment of the external auditor’s independence and objectivity taking into account relevant UK professional and regulatory requirements. In doing so, the Committee reviewed the external auditor’s own policies and procedures to safeguard its objectivity, independence and integrity, together with its representations as to independence. The Committee received assurances from the Audit Engagement Partner that the external auditor’s reward and remuneration structure includes no incentives for audit engagement partners to cross-sell non-audit services to audit clients; • review of the findings of the audit, including discussion of any major issues arising, any accounting and audit judgements and the internal control reports (including responses from management and any proposed remedial action); • approving the external audit plan (including audit scope, level of materiality, resources dedicated to the audit engagement, the seniority, expertise and experience of the engagement team), and satisfying itself as to the appropriateness and adequacy of the plan; • evaluating the performance of the external auditor and satisfying itself as to the effectiveness of the audit. Following this the Committee undertook a tender exercise for the provision of external audit services for the year ended 31 March 2023 the outcome of which being the Committee recommended to the Board the appointment of RSM UK Audit LLP as external auditor; • reviewing the Group’s risk management processes and controls, and their effectiveness; • reviewing the effectiveness of the Group’s whistle-blowing procedures and satisfying itself that they allow for appropriate investigation and suitable follow-up actions; and • reviewing the effectiveness of the Committee. At the conclusion of each meeting of the Audit Committee, the Non-Executive Directors met with the external auditor without the Executives present. In addition, the Audit Committee Chair met with the external auditor to discuss the audit review process and other relevant matters. Auditor independence The Audit Committee and the Board consider auditor objectivity and independence ensuring, in particular, that it is not compromised where the auditor provides non-audit services. It is the Group’s policy to use the services of advisors other than the external auditors for non-audit work unless the nature of the non-audit work makes it more timely, efficient or cost-effective to select advisors who already have a good understanding of the Group. The Chairman of the Audit Committee is consulted prior to each major non-audit engagement where the use of the auditor is proposed. During the year under review, the non-audit-related work undertaken by RSM UK Audit LLP was nil. 23 Strategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcGovernanceFinancial statementsOther information Corporate governance report continued Details of audit and non-audit-related fees paid to RSM UK Audit LLP in the year under review are given in note 4 to the Group financial statements. Internal audit function The Audit Committee concluded that an internal audit function is not appropriate given the size of the Group, number of employees, centralised nature of management control and current stage of the Group’s development. Appointment of RSM UK Audit LLP On 6 January 2023, following a competitive tender process, Grant Thornton LLP stepped down as external auditor. The Company appointed RSM UK Audit LLP as external auditor on 11 January 2023 to undertake the audit for the year end 31 March 2023. There are no contractual restrictions on the Company with regard to its appointment. At its meeting in July 2023, the Audit Committee considered the appropriateness of the re-appointment of RSM UK Audit LLP as the Group’s external auditor for the year to 31 March 2024 and concluded that it should recommend to the Board the re-appointment of RSM UK Audit LLP as the Company’s and Group’s external auditor at the AGM to be held on 21 September 2023. Remuneration Committee Richard Amos was Chair of the Committee from 1 April 2022 until 26 October 2022 when he stepped down to become a member of the Committee. Katrina Nurse was appointed to the Committee on 1 April 2022 and appointed Chair of the Committee from the conclusion of the AGM on 26 October 2022, to the date of this report. The Remuneration Committee is responsible for reviewing remuneration arrangements for the Executive Directors and other senior employees of the Group and for providing general guidance on aspects of remuneration policy throughout the Group. Alvarez & Marsal are retained as independent external advisors in order to assist the Committee in setting appropriate remuneration arrangements. During the year and up to the date of this report, the Remuneration Committee made recommendations to the Board regarding: • basic salary and other benefits of the Executive Directors and other senior employees of the Group; • bonus payable to Executive Directors in respect of the year ended 31 March 2023; • bonus arrangements for Executive Directors and other employees in respect of the year to 31 March 2024; • policy regarding the provision of equity incentive for Executive Directors and senior management; • awards made under the EMI and unapproved Share option scheme in 2022 and to the date of this report; • remuneration on leaving in respect of John Woollhead and Adrian Crockett; • remuneration of Victoria Balchin who commenced as Chief Financial Officer on 1 October 2022 and the remuneration of Hannah Platt who commenced as Company Secretary on 17 October 2022; and • the appointment of Alvarez & Marsal as Remuneration Consultants. The terms of reference of the Remuneration Committee are available on request. The Chairman of the Remuneration Committee provided a report to the Board following each meeting of the Remuneration Committee. The attendance of individual Committee members at Remuneration Committee meetings during the year under review are shown in the table below: Katrina Nurse (appointed to the Committee 1 April 2022) Richard Amos Tom Black (resigned from the Committee 26 October 2022) The Remuneration report is set out on pages 28 to 35. Meetings attended 9/9 10/10 3/3 24 Thruvision Group plc Annual Report and Accounts 2023 Nomination Committee Richard Amos was Chairman of the Committee for the year under review to the date of this report. Katrina Nurse was appointed to the Committee on 1 April 2022. The Nomination Committee meets as and when required. During the year under review, it met two times and details of Directors’ attendance at that meeting are set out in the table below. Company executives and advisors attend meetings by invitation only. The Nomination Committee updates the Board and makes recommendations as and when required. The terms of reference of the Nomination Committee are available on request. The Nomination Committee is responsible for succession planning at Board level, overseeing the selection and appointment of Directors and making its recommendations to the Board. It is also responsible for evaluating the commitments of individual Directors and the balance of skills, knowledge and experience on the Board and ensures that the membership of the Board and its principal Committees are refreshed periodically. Where appropriate, the Nomination Committee will prepare an outline of the role and capabilities required for particular appointments and use an external search consultancy and/or advertising in relation to Board appointments. During the year under review and up to the date of this report, the Nomination Committee met and made recommendations to the Board regarding: • the appointment of Victoria Balchin as Chief Financial Officer; • the proposed re-election of Tom Black at the forthcoming AGM; • the proposed re-election of Colin Evans at the forthcoming AGM; • the proposed re-election of Richard Amos at the forthcoming AGM; • the proposed re-election of Katrina Nurse at the forthcoming AGM; and • the proposed re-election of Victoria Balchin at the forthcoming AGM. The recruitment of Victoria Balchin as Chief Financial Officer concluded in the year under review, with a resultant commencement date of 1 October 2022. A detailed specification for the role was prepared in order to facilitate the identification of suitable candidates. Rockwell Search was retained as an independent consultant in order to assist the search and prepare a shortlist for consideration. A number of candidates were met by the Nomination Committee including the Chairman with the recommended candidate being met by the other Directors prior to appointment. The attendance of individual Nomination committee members at Nomination Committee meetings during the year under review is shown in the table below: Richard Amos Tom Black Katrina Nurse (appointed to the Committee 1 April 2022) Meetings attended 2/2 2/2 2/2 Chairman and Executive Directors During the year and to the date of this report, there is a clear division of responsibilities between the role of the Chairman (who served in an Executive role from 1 November 2017 and stepped down to assume a Non-Executive role from September 2022) and the other Executive Directors, which is set out in writing and which has been approved by the Board. Appointments to the Board Appointments to the Board and its Committees are reserved for the Board, based on recommendations from the Nomination Committee. The appointment and removal of the Company Secretary is a matter reserved for the Board as a whole. Information and professional development Under the Chairman’s stewardship the Company Secretary advises the Board on all governance matters and ensures Board procedures are followed and applicable rules and regulations complied with. The Company Secretary ensures that Directors undergo a comprehensive induction programme on appointment. All Directors individually, and each of the Board Committees, have access to the advice and services of the Company Secretary. There are also procedures in place enabling Directors in the furtherance of their duties to seek independent professional advice at the Company’s expense. 25 Strategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcGovernanceFinancial statementsOther information Corporate governance report continued Performance evaluation A formal appraisal process for the Board and its Committees was undertaken in December 2022. This was an internal process using detailed questionnaires completed by all relevant Directors and collated and summarised by the Company Secretary. As a result of this process certain actions were agreed and are being implemented. The questionnaire in respect of the Board, Audit, Remuneration and Nomination Committees covered objectives and strategy, management oversight, Board performance, meetings, external relationships, governance, succession planning and Board/Committee constitution. The results of the exercise were discussed by the Board who concluded that the Board and its Committees were operating effectively. In the year under review the Board have continued to address the recommendations raised at the September 2021 Board effectiveness review by setting a guiding strategy for the Group, underpinned by sector focus, and closely monitored its implementation and communication to employees. The Board have addressed objectives around successions planning and gender balance through the appointment of two female Directors and a female Company Secretary. The management team has also been strengthened to ensure company knowledge and responsibility is devolved where appropriate. In March 2023, the Chairman reviewed the performance of the Chief Executive, the Senior Independent Director reviewed the performance of the Chairman and the Board reviewed the performance of the Senior Independent Director. As part of this process the training needs of all Directors were reviewed. The process confirmed that all Directors continued to contribute effectively, and with sufficient commitment to their roles in order to facilitate the progress of the Group. Re-election The current Articles require that all Directors are subject to election by Shareholders at the first AGM following appointment and thereafter to re-election at least every three years. The AGM of the Company will be held on 21 September 2023. In accordance with good corporate governance practice, all Directors will be offering themselves for re-election at the forthcoming AGM. Internal control The Board is responsible for establishing and maintaining the Group’s system of internal control and for reviewing the effectiveness of those controls. Internal control systems are designed to meet the particular needs of the Group and the risks to which it is exposed. By their nature however, internal control systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and can provide only reasonable and not absolute assurance against material errors, losses, fraud or breaches of laws and regulations. The systems of internal control have been maintained during the year as the Group has developed. The effectiveness of these systems has been periodically reviewed by the Audit Committee and the Board. The systems of internal control are based on an on-going process of identifying, evaluating and seeking to manage key risks and include the preparation and refreshment of Group risk registers, together with appropriate risk mitigation activities along with the other risk management processes as set out below. With oversight from the Board and Audit Committee, individual members of the Group’s Board are responsible for the ownership and mitigation of significant risks. The Audit Committee and the Board regularly review the identified risks, changes in their status and the composition of the Group’s risk register. Key elements of the internal control system are described below: • clearly defined management structure and delegation of authority to Board Committees and business units; • high recruitment standards to ensure integrity and competence of staff; • regular and comprehensive information provided to management, covering financial and non-financial performance indicators; • technical, financial and legal due diligence undertaken prior to acquisitions; • a detailed budgeting process where business units prepare budgets for the coming year for Board approval; • monthly monitoring and re-forecasting of annual and half-yearly results against budget, with major variances followed up and management action taken where appropriate; • procedures for the approval of capital expenditure, investments and acquisitions; • regular review and updating of the Group risk register including the implementation of mitigating actions; and • formal consideration of progress made against significant business risks on a quarterly basis. The above system was in place for the year under review and up to the date of this report and has been used in the preparation of the consolidated financial statements as at 31 March 2023. 26 Thruvision Group plc Annual Report and Accounts 2023 The Board, with the assistance of the Audit Committee, has conducted its annual review of the effectiveness of the system of internal control based on a review of significant risks identified, external audits and reports from management and concluded that the system of internal control is adequate given the stage of the Group’s development. Group culture The Group and the Thruvision brand is well respected in its industry and amongst its customers and suppliers for its principled trading and its integrity. In light of the growth of the business and its future strategy as set out in the Directors’ Report the Group has revisited and updated its core values to be pioneering, responsive, collaborative, reputable and accountable, and reframed it’s vision statement to be “the leading provider of walk-through security technology”. These updates ensure the Group vision and values remain the backbone of our corporate culture in terms of ethical values and behaviours. All employees partake in an annual performance review process where they are rated against their objectives and set new objectives for the forthcoming year. The process encourages open and honest two-way feedback between employees and the Group with scores, suggestions and future development needs reviewed by the Executive Directors and feedback to the Board. The Group has launched a mandatory online training and learning platform for all employees covering areas such as anti-bribery and corruption, health and safety, and diversity and equality in the workplace. By doing so, we strive to maintain a secure, compliant, and safe environment for ourselves, our colleagues, our business, and our customers. Communication with investors and other stakeholders The Group believes it is important to explain business developments and financial results to its Shareholders and to understand any Shareholder views and concerns, and that suitable arrangements are in place to ensure a balanced understanding of the issues and concerns of major Shareholders. The Chairman, the Chief Executive Officer and the Chief Financial Officer have primary responsibility for investor relations. Meetings are held with institutional Shareholders to discuss strategy, financial performance and investment activities immediately after the full year and interim results announcements. The Group also encourages communication with private Shareholders throughout the year by attending investor events, webinars, and welcoming their participation at Shareholder meetings. The Annual Report and the interim results are available on the Company’s website. The Non-Executive Directors are available to meet with major Shareholders, if such meetings are required. Further financial and business information is available on the Investor section of the Company’s website. Feedback from meetings with Shareholders is provided to the Board to ensure that the Non-Executive Directors have a balanced understanding of the issues and concerns of major Shareholders. In the year under review, feedback from investors included: charting segmental growth, the Group’s presentation of results, and requesting to look at how the Group can increase future revenue visibility, which is being addressed through the R&D strategy to build a more explicit software licensing element to the technology. Further details in relation to feedback from other stakeholders and actions taken is set out on page 11 of section 172 of this report. Annual General Meeting (‘AGM’) Where possible arrangements are made for all Directors to attend the AGM and to be available to answer Shareholders’ questions. Further details regarding the AGM planning can be found in the Directors’ report on page 14 and in the Notice of the Annual General Meeting on page 84. The Notice of the AGM is, in accordance with the applicable Companies Act and the Articles, either posted in hard copy to Shareholders or posted on the Company’s website at least 21 days before the date of the AGM. Resolutions are proposed for each substantially separate issue and details of the proxy voting on each resolution are announced at the AGM after the results of the show of hands is known and are posted on the Company’s website following the conclusion of the meeting. The Company counts all proxy votes and indicates the level of proxies lodged on each resolution. It also publishes the level of votes for and against resolutions and the number of votes withheld. The Company ensures that votes cast are properly received and recorded. 27 Strategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcGovernanceFinancial statementsOther information Remuneration report Composition of the Remuneration Committee Richard Amos was Chairman of the Committee until he stepped down as Chairman on 26 October 2022 to be a member of the Committee. Katrina Nurse joined the Committee on appointment to the Board on 1 April 2022 and was appointed Chair of the Committee on 26 October 2022 following the AGM. Tom Black stepped down from the Committee on 26 October 2023 in line with Corporate Governance best practice. Neither Richard Amos or Katrina Nurse have a potential conflict of interest arising from cross-directorships and they are not involved in the day-to-day running of the Company. The Remuneration Committee has appointed Alvarez & Marsal to provide advice on executive remuneration including the valuation of awards under the Equity Incentive Programme. Alvarez & Marsal is an independent advisor to the Remuneration Committee. Alvarez & Marsal further advised on a Loan Agreement between the Employee Benefit Trust and the Company during the year under review. Role of the Remuneration Committee The Remuneration Committee is responsible for the Board policy with respect to senior executives’ salary and other remuneration. It specifically determines within remuneration principles agreed with the Board, the total remuneration package of each Executive Director and reviews the remuneration packages for other senior executives. A copy of the terms of reference is available on request. The Committee met 10 times during the year. Details of attendance are shown in the Corporate Governance report on page 24. Remuneration policy The Group’s policy is to provide Executive Directors with a competitive market-based package in order to reward individual and Group performance and deliver outstanding Shareholder returns. The Remuneration Committee is committed to ensuring that the Company’s key executive team is incentivised to drive sustainable earnings growth and returns to Shareholders, thereby creating a genuinely strong alignment of interests between management and investors. A robust, strategically focused equity-based long-term incentive policy is a key ingredient of this. Key Remuneration Decisions in the Year Ending 31 March 2023 During the year the Remuneration Committee, in conjunction with its advisers Alvarez & Marsal, conducted a review of the remuneration policy with regard to the Chief Executive. This review included a benchmarking exercise against other similar organisations including those listed on AIM. The review concluded that base salary, pension, bonus and other benefits were broadly in line with typical ‘market’ arrangements, whereas the LTIP arrangements were below the expected level of an organisation of Thruvision’s size and complexity. It was agreed to review this arrangement at the next grant. Alvarez & Marsal conducted a similar review to benchmarking the remuneration of the Chairman of the Board. It was agreed no material change was required outside of the normal inflationary considerations. The Committee resolved that discretion was required in awarding the 2023 bonus under the strict interpretation of the scheme rules. The Committee noted that whilst mathematical outcomes give a strong indication of appropriate remuneration, it is the Committee’s role to assess this in the context of the wider environment in which the Company operates. The Committee took into account: • the strong growth of the business, delivering revenue of £12.4 million (2022: £8.4 million) and an adjusted EBITDA loss of £0.2 million (2023: loss £1.7 million); • the individual performance of the Directors in delivering resilient results in key markets; and • that it was consistent with the approach of performance related remuneration for the wider workforce. The Committee resolved and were delighted to award a discretionary bonus to all eligible employees in the company recognising their contribution in delivering this significant improvement in performance. The Committee supported a discretionary one-off cost of living payment of £1,000 (net of tax and national insurance) to be paid to all staff earning less than £50,000 basic salary during December 2022. The Executive and Non-Executive Directors, and Senior Leadership Team did not benefit from this payment. 28 Thruvision Group plc Annual Report and Accounts 2023 Remuneration report continued Year ending 31 March 2023 It is the policy of the Company that Executive Directors receive a basic salary, a bonus opportunity, a company car if appropriate, life assurance of four times salary, private medical insurance and pension fund membership. Base salary During the year under review, the base salary of Colin Evans was £250,000 (2022: £235,000), the base salary of Tom Black was £45,000 (2022: £45,000) and the base salary of Victoria Balchin was £195,000 per annum of which she received £97,500 pro-rated for her period of employment. Bonus scheme For the year to 31 March 2023, a maximum bonus entitlement of base salary for the CEO of 100% and for the Chief Financial Officer of 80% was in place, subject to the strict interpretation of the performance conditions. In line with the performance conditions a bonus of £101,667 (2022: £20,000) was awarded to Colin Evans and a pro-rated bonus of £29,900 was awarded to Victoria Balchin for the period of her employment. Long Term Incentive Plan Awards were made to the Executive Directors in November 2022 under the EMI Share option scheme and unapproved share option scheme as detailed on pages 33 to 35 of this report. Pension The Company introduced a Defined Contribution pension scheme, in line with legislation, for all employees (including Executive Directors) in October 2015. The scheme provides for employer and employee contributions to be made at the rate of 3% and 5% respectively. Tom Black, Colin Evans and Victoria Balchin did not participate in the scheme or any other pension scheme operated by the Company. Full-time Executive Directors who do not participate in the pension scheme are entitled to a cash payment of 3% of base salary in compensation for the employer contribution that would be paid if they participated in the scheme. For the year under review, Colin Evans receives 3% on his base salary as a taxable cash payment as compensation for the 3% employer pension contribution he would have received had he been a member of the scheme. This amounted to £7,500 in the year to 31 March 2023 (2022: £7,050). With effect from 1 October 2022, Victoria Balchin receives 3% on her base salary as a taxable cash payment as compensation for the 3% employer pension contribution she would have received had she been a member of the scheme. This amounted to £2,925 in the year to 31 March 2023 (2022: nil). Tom Black does not receive this compensation. Other benefits Colin Evans receives Life Assurance benefit of four times base salary, private medical cover and a fully expensed company car. Victoria Balchin receives Life Assurance benefit of four times base salary. Tom Black does not receive any of the above benefits. Year ending 31 March 2024 and subsequent periods A similar structure of remuneration will be payable for the year ending 31 March 2024 in respect of base salary, life assurance, private medical insurance, company car, bonus and pension fund. It is anticipated that a further award under the EMI Share Option scheme and/or the unapproved share option scheme will be made in the year. Base salary With effect from 1 April 2023 the base salary of Tom Black has been increased by 5% to £47,250, the base salary of Colin Evans increased by 5% to £262,500, and the base salary of Victoria Balchin has increased by 5% to £204,750. This was in line with the average increase given to employees of 5% reflecting the economic backdrop and the increased cost of living. Bonus opportunity A bonus scheme is in place, based on revenue in the year to 31 March 2024. This scheme provides a maximum bonus opportunity of 100% of base salary for the CEO and 80% for the Chief Financial Officer. The scheme has lower entitlements at its entry point and for the achievement of budget revenue levels. In each case the payment of the bonus is dependent on acceptable profitability levels. In order to achieve the maximum bonus payable, revenue of £19.8 million is required in the year ending 31 March 2024. Long Term Incentive Plan It is expected that annual awards will be made under the LTIP. 29 Strategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcGovernanceFinancial statementsOther information Remuneration report continued Pension The Company will continue to operate a Defined Contribution pension scheme, in line with legislation, for all employees (including Executive Directors) and provide for employer and employee contributions to be made at the rate of 3% and 5% respectively. Victoria Balchin will participate in the Defined Contribution pension scheme. Full-time Executive Directors who do not participate in the pension scheme will be entitled to a cash payment of 3% of base salary in compensation for the employer contribution that would be paid if they participated in the scheme. Colin Evans will receive 3% on his base salary as a taxable cash payment as compensation for the 3% employer pension contribution they would have received had they been a member of the scheme. Tom Black does not receive this compensation. Other benefits No changes will be made to the benefits provision for Executive Directors for the year ending 31 March 2024. Equity incentives Enterprise Management Incentive Scheme (‘EMI’) With effect from 1 November 2017, the Remuneration Committee agreed that future equity awards would be made, as far as possible, under the EMI Section of the LTIP. Awards under the EMI scheme provide tax efficient Share options up to certain limits as set by HMRC. Awards have been made under the EMI scheme as detailed on page 33 of this report. Performance Conditions apply to awards made since 1 January 2019, the details of which are given on page 34. Performance Conditions do not apply to awards made prior to 31 December 2018. In all cases the option price is payable by the employee concerned on exercise. Unapproved options and awards to overseas employees Awards are made under an unapproved scheme in the case where no further awards can be made under the EMI scheme or where awards are to be made to overseas employees. Awards have been made under the unapproved scheme as detailed on page 34 of this report. Performance Conditions apply to awards made since 1 January 2019, the details of which are given on page 34. Performance Conditions do not apply to awards made prior to 31 December 2018. In all cases the option price is payable by the employee concerned on exercise. Renewal of Long-Term Incentive Plan At the Annual General Meeting held on 22 September 2020, shareholder approval was given for the extension of the Long-Term Incentive Plan (‘LTIP’) which was originally implemented in 2010. All awards under the EMI, Unapproved and Overseas schemes are made under the umbrella of the LTIP. Sharesave Scheme At the General Meeting held on 1 November 2013, the introduction of a Sharesave Scheme (‘the Scheme’) was approved by Shareholders. The Scheme was launched in June 2014. Outstanding awards under this scheme are detailed below; • An award of 1,443,600 options was made on 21 September 2018, of which 1,281,600 options vested on 1 November 2021. In the period 1 November 2021 to 31 March 2022, 810,000 options were exercised by employees. In the period 1 April 2022 to 31 March 2023, 471,600 options were exercised by employees. Accordingly, on 31 March 2023 all options have been exercised. • An award of 410,863 options was made on 30 October 2019, of which 195,650 vested on 1 December 2022. In the period 1 December 2022 to 31 March 2023 81,521 options were exercised and 89,673 were lapsed by employees. Accordingly, on 31 March 2023, 24,456 vested options were outstanding to be exercised. • An award of 173,072 options was made on 23 July 2020, of which 17,307 options remained outstanding on 31 March 2023. • An award of 996,417 options was made on 25 January 2022, of which 305,352 remained outstanding on 31 March 2023. • An award of 1,242,062 options was made on 3 February 2023, of which 1,160,615 remained outstanding on 31 March 2023. Details of awards made to the Executive Directors under this scheme are given on page 35. There are no other share option schemes operated by the Group. 30 Thruvision Group plc Annual Report and Accounts 2023 Dilution limits and Employee Benefit Trust It is the policy of the Company that awards made under the LTIP (including the EMI scheme), the Sharesave Scheme, and any other long-term incentive scheme which are to be satisfied by new issue Shares will, in total, not exceed 1% per annum on average of the issued Share capital over the medium to long term. However, in the short term, awards may be made which would exceed 1% in any one particular year. At 31 March 2023, Share options that have been exercised, and potentially dilutive awards that have been made and are still outstanding are detailed below: If all the above equity awards were to vest, dilution on the current Share capital would amount to 9.12%. Awards made under the LTIP may be satisfied by Shares held in the Thruvision Group plc Employee Benefit Trust (‘EBT’). The Company has confirmed to the EBT that sufficient Shares will be made available prior to the requirement to satisfy the exercise of awards under the LTIP. At 31 March 2023, nil shares were held by the EBT (2022: nil). The Committee resolved to commence a small monthly programme of share purchases by the EBT commencing in April 2023. As of 3 July 2023, 309,619 shares were held by the EBT. Full details of awards made under the LTIP, the EMI scheme and the Sharesave Scheme during the year are given in note 18 in the Consolidated Financial Statements. Remuneration of the Non-Executive Directors The remuneration of the Non-Executive Directors comprises solely of fixed fees which are set by the Board. Advice is taken on appropriate levels taking account of the development of the Group, market practice, time commitment and responsibility. Directors are not involved in discussions relating to their own salary, benefits or fees. The total fees for Non-Executive Directors remain within the aggregate limit of £250,000 per annum as set out in the Articles. There are no pre-determined special provisions for Non-Executive Directors with regard to compensation in the event of loss of office. In the year under review, the annual fee payable to Richard Amos was £35,000 (2022: £35,000) per annum. The annual fee payable to Katrina Nurse was £35,000 (2022: £nil). With effect 1 April 2023 the annual fee of Richard Amos and Katrina Nurse has been increased by 5% to £36,750. Directors’ remuneration for the year ended 31 March 2023 Executive Directors Colin Evans Victoria Balchin Non-Executive Directors Tom Black Richard Amos Paul Taylor Katrina Nurse Total Basic salary/fees 2023 £’000 Pension 2023 £’000 Other 2023 £’000 Benefits 2023 £’000 Bonus 2023 £’000 Remuneration 2023 £’000 2022 £’000 250 97 45 35 – 35 462 – – – – – – – 15 3 – – – – 18 1 – – – – 1 102 30 – – – – 132 368 130 45 35 – 35 613 269 – 45 35 17 – 366 Tom Black, Colin Evans, Richard Amos and Katrina Nurse were in office during the year and remuneration has been presented from 1 April 2022 to 31 March 2023. Victoria Balchin was appointed on 1 October 2022 and her remuneration is presented from 1 October 2022 to 31 March 2023. Adrian Crockett stepped down as a Director on 14 April 2022. He was on garden leave receiving full prorated salary of £40,527, pension contribution of £1,216 and benefits of £306 until 1 July 2022 on which date he left the employment of the Group. On leaving the Group he received three months’ base salary in lieu of notice of £39,912, payment in respect of 19.5 days of accrued but untaken holiday of £11,973 and a termination payment of £30,000. Total remuneration for the year was £124,000 (2022: £166,000). 31 Strategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcGovernanceFinancial statementsOther information Remuneration report continued Service contracts Tom Black and Colin Evans are subject to rolling service contracts with a notice period of one year. Victoria Balchin is subject to a rolling service contract with a notice period of six months. Payments on termination for Executive Directors, other than on grounds of incapacity or in circumstances justifying summary termination, are restricted to the value of any unexpired notice period and the cost of providing other contractual benefits during the unexpired notice period. The letter of appointment in respect of Richard Amos is for a fixed period of three years and may be terminated by either party giving to the other not less than one month’s notice. The letter of appointment in respect of Katrina Nurse is for a fixed period of three years and may be terminated by either party giving to the other not less than one month’s notice. Details of the Directors offering themselves for re-election at the forthcoming Annual General Meeting are set out in the Directors’ Report on page 13. The service contracts and letters of appointment include the following terms: Executive Chairman Tom Black Executive Chairman Colin Evans Victoria Balchin Independent Non-Executive Director Richard Amos Katrina Nurse TSR performance Date of contract 12 January 2018 Date of contract 23 October 2009 1 October 2022 Letters of appointment 1 March 2021 1 April 2022 Notice period (months) 12 Notice period (months) 12 6 Notice period (months) 1 1 The graph below sets out for the period from 1 April 2017 to 31 March 2023 the Total Shareholder Return of Thruvision Group plc and the performance of FTSE AIM sector and the FTSE All Share Electronic and Electrical equipment index. 250 200 150 100 50 0 Mar 18 Mar 19 Mar 20 Mar 21 Mar 22 Mar 23 THRU FTSE AIM (rebased) FTSE All Share Electronic and Electrical Equipment The Share price of the Company on 8 February 2010 (being the date of the Company’s IPO) was £1. During the year under review, the Share price varied between 34.3 pence and 21.1 pence and at 31 March 2023 was 24.0 pence. 32 Thruvision Group plc Annual Report and Accounts 2023 Share awards to Directors under the EMI scheme held at 31 March 2023 At 1 April 2022 Awarded during the year Lapsed during the year Exercised during the year At 31 March 2023 Grant date Exercisable from Share price at grant Exercise price Tom Black EMI Share options awarded in January 2018 Colin Evans EMI Share options awarded in January 2018 Victoria Balchin EMI share options awarded in November 2022 Adrian Crockett EMI Share options awarded in October 2019 EMI Share options awarded in June 2020 EMI Share options awarded in November 2021 Total 585,175 1,625,487 – – – 400,000 – – – – 585,175 17/01/18 17/01/21 to 17/01/28 15.38p 15.38p – 1,625,487 17/01/18 17/01/21 to 17/01/28 15.38p 15.38p – 400,000 08/11/22 08/11/24 to 08/11/31 22.10p 22.10p 400,000 250,000 – – 400,000 250,000 – – – – 08/10/19 08/10/22 to 08/10/29 27.60p 27.60p 15/06/20 15/06/23 to 15/06/30 20.00p 20.00p 200,000 3,060,662 – 400,000 200,000 850,000 – – – 2,610,662 30/11/21 30/11/24 to 30/11/31 18.75p 18.75p All of the awards to Adrian Crockett lapsed on his leaving the Company, following a period of garden leave, on 1 July 2022. 33 Strategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcGovernanceFinancial statementsOther information Remuneration report continued Share awards to Directors under the unapproved Share option scheme held at 31 March 2023 At 1 April 2022 Awarded during the year Lapsed during the year Exercised during the year At 31 March 2023 Grant date Exercisable from Share price at grant Exercise price Colin Evans Unapproved Share options awarded in January 2018 Unapproved Share options awarded in January 2019 (note 1) Unapproved Share options awarded in October 2019 (note 1) Unapproved Share options awarded in June 2020 (note 2) Unapproved Share options awarded in November 2021 Unapproved Share options awarded in November 2022 Total 374,513 – – – 374,513 17/01/18 17/01/21 to 17/01/28 15.38p 15.38p 870,370 – 870,370 – – 18/01/19 18/01/22 to 18/01/29 27.00p 27.00p 851,449 – 851,449 800,000 – 800,000 – – – 08/10/19 08/10/22 to 08/10/29 27.60p 27.60p – 15/06/20 15/06/23 to 15/06/30 20.00p 20.00p 800,000 – – – 800,000 30/11/21 30/11/24 to 30/11/31 18.75p 18.75p – 3,696,332 800,000 – 800,000 2,521,819 800,000 08/11/22 08/11/24 to 08/11/31 – – 1,974,513 22.10p 22.10p Note 1. The Remuneration Committee resolved that these options lapsed in June 2022 as the performance condition had not been met. Note 2. The Remuneration Committee resolved that 50% of these options lapsed in June 2022 as the performance condition had not been met. The Remuneration committee resolved that the balancing 50% of these options lapsed on 31 March 2023 as the performance condition had not been met. Performance conditions in respect of the awards detailed above Awards made in November 2022 Awards made in November 2022 under both the EMI scheme and the Unapproved scheme are subject to a performance condition based on revenue in the period 1 April 2022 to 31 March 2025 as follows: • 25% of the award will vest if the total revenue in the period 1 April 2022 to 31 March 2025 is equal to £40,200,000. • 100% of the award will vest if the total revenue in the period 1 April 2022 to 31 March 2025 is £48,800,000. • If revenue is between £40,200,000 and £48,800,000 the award will vest on a straight-line basis between 25% and 100%. • The award will only vest if adjusted EBITDA in the year 1 April 2024 to 31 March 2025 is breakeven or better. Awards made in November 2021 Awards made in November 2021 under both the EMI scheme and the Unapproved scheme are subject to a performance condition based on revenue in the period 1 April 2021 to 31 March 2024 as follows: • 50% of the award will vest if total revenue in the period 1 April 2021 to 31 March 2024 is equal to £36,000,000. • 100% of the award will vest if total revenue in the period 1 April 2021 to 31 March 2024 is equal to £43,000,000. • If revenue is between £36,000,000 and £43,000,000 the award will vest on a straight-line basis between 50% and 100%. 34 Thruvision Group plc Annual Report and Accounts 2023 Share awards made to Executive Directors under the Sharesave Scheme at 31 March 2023 At 1 April 2022 Awarded during the year Lapsed during the year Exercised during the year At 31 March 2023 Grant date Exercisable from Share price at grant Exercise price Colin Evans Sharesave option granted January 2022 Adrian Crockett Sharesave option granted October 2019 Victoria Balchin Sharesave option granted February 2023 Total 64,285 – – – 64,285 25/01/22 25/01/25 to 25/07/25 25.80p 22.40p 8,152 – 8,152 – – 03/10/19 03/10/22 to 03/04/23 27.60p 22.08p – 72,437 81,447 81,447 – 8,152 – – 81,447 03/02/23 03/02/26 to 03/08/26 145,732 22.10p 17.68p All awards to Adrian Crockett lapsed on his leaving the Company, following a period of garden leave, on 1 July 2022. Directors’ interests in Shares The Executive Directors are strongly encouraged to hold Shares in Thruvision Group plc to the value of at least 2x base salary. Tom Black and Colin Evans currently comply with this requirement. A newly appointed Director is expected to build the stake over time using post-tax bonus payments, base salary increases and vested options under the LTIP scheme. The interests of the Directors, and their Closely Associated Persons, at the end of the year in the Share capital of the Company were as follows: Tom Black Colin Evans Victoria Balchin Richard Amos Katrina Nurse As at 31 March 2023 Ordinary Shares 13,272,540 2,513,900 90,804 450,000 134,000 As at 31 March 2022 Ordinary Shares 13,272,540 2,513,900 – 450,000 – No Director holds a non-beneficial interest in the Company’s Share capital. On 20 April 2022 Katrina Nurse (including her Closely Associated Persons) purchased 134,000 Shares in the Company. On 20 December 2022 Victoria Balchin (including her Closely Associated Persons) purchased 90,804 Shares in the Company. There have been no other changes in Directors’ Shareholdings between 31 March 2023 and 20 July 2023. Approved by the Board and signed on its behalf: Katrina Nurse Chair, Remuneration Committee 20 July 2023 35 Strategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcGovernanceFinancial statementsOther information Directors’ responsibility statement – Group financial statements The Directors are responsible for preparing the Strategic Report, the Directors’ Report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare Group and Company financial statements for each financial year. The Directors have elected under company law and are required by the AIM Rules of the London Stock Exchange to prepare Group financial statements in accordance with UK-adopted International Accounting Standards. The Group financial statements are required by law and UK-adopted International Accounting Standards to present fairly the financial position and performance of the Group. The Companies Act 2006 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation. 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 of the profit or loss of the Group for that period. In preparing the Group 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 they have been prepared in accordance with UK-adopted International Accounting Standards; • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of 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 Thruvision website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Tom Black Chairman 20 July 2023 Colin Evans Chief Executive Officer 20 July 2023 36 Thruvision Group plc Annual Report and Accounts 2023 Independent auditor’s report to the members of Thruvision Group Plc Opinion We have audited the financial statements of Thruvision Group plc (the ‘parent Company’) and its subsidiaries (the ‘Group’) for the year ended 31 March 2023 which comprise the Consolidated income statement, Consolidated statement of comprehensive income, Consolidated statement of financial position, Consolidated statement of changes in equity, Consolidated statement of cashflows, Company balance sheet, Company statement of changes in equity and Notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and UK-adopted International Accounting Standards. The financial reporting framework that has been applied in the preparation of the parent Company financial statements is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice). In our opinion: • the financial statements give a true and fair view of the state of the Group’s and of the parent Company’s affairs as at 31 March 2023 and of the Group’s loss for the year then ended; • the Group financial statements have been properly prepared in accordance with UK-adopted International Accounting Standards; • the parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Group and the parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Summary of our audit approach Key Audit Matters Group • Revenue recognition – Bill and Hold • Inventory valuation Parent Company • No key audit matters Materiality Group • Overall materiality: £124,000 • Performance materiality: £87,300 Parent Company • Overall materiality: £62,000 • Performance materiality: £43,400 Scope Our audit procedures covered 100% of revenue, total assets and profit before tax. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Group and parent Company financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on the overall audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the Group financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate 37 GovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcFinancial statementsOther information Independent auditor’s report to the members of Thruvision Group plc continued opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report. Refer to the accounting policy on page 53, Note 1, together with significant accounting and estimates in applying the Group’s accounting policies. As at the year end the Group had recognised £0.3 million of bill and hold revenue in accordance with the criteria of IFRS 15. Management is required to exercise judgement in determining that these criteria have been met and the amount of bill and hold revenue to recognise. We obtained a breakdown of the revenue recognised and for each transaction assessed whether the relevant IFRS 15 criteria had been met. This included obtaining correspondence with customers and confirming the inventory was separately identified with an allocated serial number and ready for collection at year end. Furthermore, we challenged management on the completeness of their bill and hold revenue with reference purchase orders which were open at year end. We also evaluated the related accounting policy and disclosure to determine whether it appropriately reflected management’s application of their internal revenue recognition policies. Refer to the accounting policy on page 51, Note 1, together with significant accounting and estimates in applying the Group’s accounting policies. There are two key estimates with respect to the valuation of inventory. Firstly, the amount of labour and overhead absorption involves assumptions in respect of the allocation of certain costs as well as the annual production capacity. Secondly management is required to determine whether a provision for slow moving and obsolete inventory is required and to ensure it is stated at the lower of cost or net realisable value in accordance with IAS 2. Management use their knowledge and experience to determine the required provision accordingly there is a high degree of estimation uncertainty. We reviewed and understood the Group’s accounting policy and how this satisfied the requirements of IAS2 ‘Inventories’. We challenged management’s application of their accounting policy in respect of labour and overhead cost absorption. As a consequence, management amended their calculations and appropriately included labour and overhead costs in the closing inventory balance and restated the prior year cost of sales and administrative expenses as detailed in note 22. We challenged the year-end inventory provisions recognised with reference to historical sales and usage data to identify any inventory items for which there was a potential exposure and were not provided for. For a sample of these items, we obtained explanations from management as to how they were recoverable and supporting evidence where appropriate. Revenue recognition – Bill and Hold Key audit matter description How the matter was addressed in the audit Inventory valuation Key audit matter description How the matter was addressed in the audit 38 Thruvision Group plc Annual Report and Accounts 2023 Our application of materiality When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing and extent of our audit procedures. When evaluating whether the effects of misstatements, both individually and on the financial statements as a whole, could reasonably influence the economic decisions of the users we take into account the qualitative nature and the size of the misstatements. Based on our professional judgement, we determined materiality as follows: Overall materiality Group £124,000 Basis for determining overall materiality 1% of revenue Parent Company £62,000 5% of Total Assets (restricted for the purpose of the Group audit) Rationale for benchmark applied Revenue is the primary focus during this growth period. Parent company is primarily a holding company. Performance materiality £87,300 £43,400 Basis for determining performance materiality Reporting of misstatements to the Audit Committee 70% of overall materiality 70% of overall materiality Misstatements in excess of £6,240 and misstatements below that threshold that, in our view, warranted reporting on qualitative grounds. Misstatements in excess of £3,100 and misstatements below that threshold that, in our view, warranted reporting on qualitative grounds. An overview of the scope of our audit The Group consists of 3 components, 2 of which are based in the UK and the other is based in the USA. Full scope audits were performed by the Group audit team for all 3 components. The coverage achieved by our procedures was: Full scope audit Total Conclusions relating to going concern Number of components 3 3 Revenue Total assets 100% 100% 100% 100% Loss before tax 100% 100% In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group’s and parent Company’s ability to continue to adopt the going concern basis of accounting included: • Understanding how the cash flow forecasts for the going concern period had been prepared and the assumptions adopted; • Testing the integrity of the forecasted models (including sensitivities) to ensure its mathematical accuracy; • Challenging the key assumptions within the forecasts with reference to historical forecasting accuracy and performing procedures to evidence the sales pipeline; • Reviewing and challenging the appropriateness of the sensitivity analysis performed by management including assessing the plausibility and quantum of the expected savings for actions which could be taken should performance be behind expectations; and • Performing a reverse stress test to calculate the deterioration in future performance required to erode the liquidity headroom and evaluating the likelihood of this scenario. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group’s or the parent Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. 39 GovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcFinancial statementsOther information Independent auditor’s report to the members of Thruvision Group plc continued Other information The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The Directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Opinions on other matters prescribed by the Companies Act 2006 In our opinion, based on the work undertaken in the course of the audit: • the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and • the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements. Matters on which we are required to report by exception In the light of the knowledge and understanding of the Group and the parent Company and their environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: • adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or • the parent Company financial statements are not in agreement with the accounting records and returns; or • certain disclosures of Directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit. Responsibilities of Directors As explained more fully in the Directors’ responsibilities statement set out on page [X], the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the Group’s and the parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. 40 Thruvision Group plc Annual Report and Accounts 2023 The extent to which the audit was considered capable of detecting irregularities, including fraud Irregularities are instances of non-compliance with laws and regulations. The objectives of our audit are to obtain sufficient appropriate audit evidence regarding compliance with laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements, to perform audit procedures to help identify instances of non-compliance with other laws and regulations that may have a material effect on the financial statements, and to respond appropriately to identified or suspected non-compliance with laws and regulations identified during the audit. In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the financial statements due to fraud, to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud through designing and implementing appropriate responses and to respond appropriately to fraud or suspected fraud identified during the audit. However, it is the primary responsibility of management, with the oversight of those charged with governance, to ensure that the entity’s operations are conducted in accordance with the provisions of laws and regulations and for the prevention and detection of fraud. In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, the Group audit engagement team: • obtained an understanding of the nature of the industry and sector, including the legal and regulatory frameworks that the Group and parent Company operates in and how the Group and parent Company are complying with the legal and regulatory frameworks; • inquired of management, and those charged with governance, about their own identification and assessment of the risks of irregularities, including any known actual, suspected or alleged instances of fraud; • discussed matters about non-compliance with laws and regulations and how fraud might occur including assessment of how and where the financial statements may be susceptible to fraud The most significant laws and regulations were determined as follows: Legislation / Regulation UK-adopted IAS, FRS101 and Companies Act 2006 Tax compliance regulations Additional audit procedures performed by the audit engagement team included: Review of the financial statement disclosures and testing to supporting documentation; Completion of disclosure checklists to identify areas of non-compliance Review of information submitted to HMRC, for consistency with other financial information reported and inspection of any correspondence with local tax authorities. The areas that we identified as being susceptible to material misstatement due to fraud were: Risk Revenue recognition Audit procedures performed by the audit engagement team: The key audit matters section of our report explains this matter in relation to bill and hold revenue. In relation to non-bill and hold revenue, we performed test of details for a sample of transactions either side of the year end to determine whether revenue had been recorded in the correct financial period. Management override of controls Testing the appropriateness of journal entries and other adjustments; Assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and Evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. 41 GovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcFinancial statementsOther information Independent auditor’s report to the members of Thruvision Group plc continued Use of our report This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Andrew Williams (Senior Statutory Auditor) For and on behalf of RSM UK Audit LLP, Statutory Auditor Chartered Accountants 103 Colmore Row Birmingham West Midlands B3 3AG 20 July 2023 42 Thruvision Group plc Annual Report and Accounts 2023 Consolidated income statement for the year ended 31 March 2023 Revenue Cost of sales Gross profit Administrative expenses Operating loss Financial income Finance costs Loss before tax Taxation credit Loss for the year Loss per share Loss per share – basic and diluted All operations are continuing. Year ended 31 March 2023 £’000 12,420 (6,583) 5,837 (6,827) (990) 26 (15) (979) 174 (805) Year ended 31 March 2022 £’000 (As restated see note 22) 8,361 (4,948) 3,413 (5,299) (1,886) 17 (20) (1,889) 231 (1,658) (0.55p) (1.14p) Notes 3 4 6 6 7 8 43 GovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcFinancial statementsOther information Consolidated statement of comprehensive income for the year ended 31 March 2023 Loss for the year attributable to owners of the parent Other comprehensive loss – items that may be subsequently reclassified to profit or loss: Exchange differences on retranslation of foreign operations Total other comprehensive loss Total comprehensive loss attributable to owners of the parent Year ended 31 March 2023 £’000 (805) Year ended 31 March 2022 £’000 (1,658) (50) (50) (855) (6) (6) (1,664) 44 Thruvision Group plc Annual Report and Accounts 2023 Consolidated statement of financial position at 31 March 2023 Assets Non-current assets Property, plant and equipment Intangible assets Current assets Inventories Trade and other receivables Current tax recoverable Cash and cash equivalents Total assets Current liabilities Trade and other payables Lease liabilities Provisions Net current assets Non-current liabilities Trade and other payables Lease liabilities Provisions Total liabilities Net assets Equity Share capital Share premium Capital redemption reserve Translation reserve Retained earnings Total equity attributable to owners of the Company The financial statements on pages 43 to 73 were approved by the Board of Directors on 20 July 2023 and were signed on its behalf by: Colin Evans Chief Executive Officer Victoria Balchin Chief Financial Officer Notes 31 March 2023 £’000 31 March 2022 £’000 9 10 11 12 13 14 15 16 14 15 16 17 17 17 17 1,173 109 1,282 3,639 4,342 375 2,810 11,166 12,448 (2,690) (121) (107) (2,918) 8,248 (72) (604) (38) (714) (3,632) 8,816 1,472 325 163 11 6,845 8,816 1,175 79 1,254 3,868 1,982 210 5,441 11,501 12,755 (2,344) (150) (178) (2,672) 8,829 (97) (503) (38) (638) (3,310) 9,445 1,466 201 163 61 7,554 9,445 45 GovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcFinancial statementsOther information Consolidated statement of changes in equity for the year ended 31 March 2023 At 1 April 2021 Shares issued Share-based payment credit Transactions with Shareholders Loss for the year Other comprehensive loss Total comprehensive loss At 31 March 2022 Shares issued Share-based payment charge Transactions with Shareholders Loss for the year Other comprehensive loss Total comprehensive loss At 31 March 2023 Share capital £’000 1,458 8 – 8 – – – 1,466 6 – 6 – – – 1,472 Share premium £’000 47 154 – 154 – – – 201 124 – 124 – – – 325 Capital redemption reserve £’000 163 – – – – – – 163 – – – – – – 163 Translation reserve £’000 67 – – – – (6) (6) 61 – – – – (50) (50) 11 Retained earnings £’000 9,578 – (366) (366) (1,658) – (1,658) 7,554 – 96 96 (805) – (805) 6,845 Total equity £’000 11,313 162 (366) (204) (1,658) (6) (1,664) 9,445 130 96 226 (805) (50) (855) 8,816 46 Thruvision Group plc Annual Report and Accounts 2023 Consolidated statement of cash flows for the year ended 31 March 2023 Operating activities Loss after tax Adjustments for: Taxation credit Financial income Finance costs Depreciation of property, plant and equipment Profit on disposal of property, plant and equipment Amortisation of intangible assets Impairment of intangible assets Share-based payment charge/(credit) Operating cash outflow before changes in working capital and provisions Increase in trade and other receivables (Increase)/decrease in inventories Increase/(decrease) in trade and other payables (Decrease)/increase in provisions Cash utilised in operations Net income taxes received Net cash outflow from operating activities Investing activities Purchase of property, plant and equipment Purchase of intangible assets Proceeds from disposal of property, plant and equipment Interest received Net cash outflow from investing activities Financing activities Proceeds from issue of shares Payments on principal portion of lease liabilities Interest paid on lease liabilities Net cash outflow from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at 1 April Effect of foreign exchange rate changes Cash and cash equivalents at 31 March Year ended 31 March 2023 £’000 Note Year ended 31 March 2022 (As restated see note 22) £’000 (805) (1,658) 7 6 6 9 10 10 4 13 (174) (26) 15 619 (10) 20 36 96 (229) (2,360) (183) 321 (71) (2,522) – (2,522) (37) (86) 11 26 (86) 130 (180) (15) (65) (2,673) 5,441 42 2,810 (231) (17) 20 546 – 15 – (366) (1,691) (540) 621 (378) 3 (1,985) 399 (1,586) (187) (46) – 17 (216) 162 (168) (13) (19) (1,821) 7,268 (6) 5,441 47 GovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcFinancial statementsOther information Notes to the financial information 1. Accounting policies a) Basis of preparation 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. Basis of accounting The consolidated 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. The financial statements have been prepared on a historical cost basis. These consolidated 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 20 July 2023 and the Statement of Financial Position was signed on the Board’s behalf by Colin Evans and Victoria Balchin. The consolidated financial statements set out on pages 43 to 73 have been prepared on a historical cost basis. The accounting policies which apply in preparing the consolidated financial statements for the period are set out below. New standards and interpretations adopted In the current year there are no new standards and interpretations that have had a material impact on the Group’s Statement of Financial Position. New accounting standards and interpretations not yet adopted At the date of authorisation of these Consolidated Financial Statements, the Group has not applied the following new and revised IFRS Standards that have been issued but are not yet effective: • Amendments to IAS 1 Classification of liabilities as current or non-current • Amendments to IAS 1 and IFRS Practice Statement 2 Disclosure of accounting policies • Amendments to IAS 1 Non-current liabilities with covenants • Amendments to IAS 8 Definition of accounting estimates • Amendments to IAS 12 Deferred tax related to assets and liabilities arising from a single transaction • Amendments to IFRS 16 Lease liability in a sale and leaseback • IFRS 17 Insurance Contracts The Directors do not expect that the adoption of the IFRS Standards listed above will have a material impact on the Consolidated Financial Statements of the Group in future periods. Basis of consolidation The consolidated financial statements for the year include those of Thruvision Group plc and all of its subsidiary undertakings (together ‘the Group’) at 31 March 2023. Subsidiary undertakings are those entities controlled directly or indirectly by the Company. Control is achieved when the Group is exposed or has rights to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Assets, liabilities, revenue and costs of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary. Subsidiaries are consolidated using the Group’s accounting policies. All inter-company balances and transactions, including unrealised profits arising from them, are eliminated on consolidation. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value. Classification as a discontinued operation occurs on disposal or, when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative income is re-presented as if the operation had been discontinued from the start of the comparative year. 48 Thruvision Group plc Annual Report and Accounts 2023 1. Accounting policies continued Going concern The Group’s loss before tax from continuing operations for the year was £1.0 million (2022: £1.9 million). As at 31 March 2023 the Group had net current assets of £8.2 million (31 March 2022: £8.8 million) and cash and cash equivalents of £2.8 million (31 March 2022: £5.4 million). The Board has taken the cash flow forecast for the period to 31 July 2024, reviewed the key assumptions unpinning 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, smaller sales and large, multi-unit sales. Potential scenarios included a general downgrading of smaller units 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 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 2024. 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. 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. In addition, in order to manage fluctuations in working capital, the Group has recently agreed an overdraft facility with HSBC of £1.0 million reducing to £0.25 million for the period from 30 September 2023 to 31 May 2024 and nil thereafter. This facility has remained undrawn to date. Significant accounting estimates and judgements In preparing the consolidated financial statements, management has to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities, income and expenses. These judgements and estimates involve assumptions in respect of future events, the outcomes of which can vary from what is anticipated. The critical judgements made in preparing the consolidated financial statements are detailed below. Revenue from contracts with customers The business sometimes sells units to customers under a bill-and-hold type arrangement. In each instance of a sale an assessment is made to establish when control has been transferred to the customer, even though the customer does not have physical possession of the goods. Revenue is recognised when control of the goods transfers to the customer subject to the following criteria having also been met: • the reason for the bill-and-hold arrangement must be substantive (for example, the customer has requested the arrangement and is expecting to pay in accordance with agreed terms); • products must be identified separately as belonging to the customer; • products must be ready for physical transfer to the customer; and • products cannot be used or directed to another customer and a serial number has been allocated to the customer sale. In the determination of revenue recognition, an assessment is made of the customer’s ability and intention to pay the consideration when it is due. 49 GovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcFinancial statementsOther information Notes to the financial information continued 1. Accounting policies continued Probability of vesting of equity instruments granted in terms of share-based payment schemes At each year end the Remuneration Committee of the Group considers outstanding awards under the Long Term Incentive Plan that have yet to vest and are subject to performance conditions. Whether or not awards vest is determined by the attainment of pre-prescribed revenue targets, which are both annual and cumulative. If the Remuneration Committee considers that the awards will not vest, or that future targets cannot be attained and therefore awards are not capable of vesting, the cumulative charge for the relevant tranche of share options is reversed, and this is credited to Administration costs on the Income statement. If the Remuneration Committee considers that the awards are capable of vesting at the end of the performance period in full no adjustment is made in respect of these awards and the calculated charge is included within Administration costs. In making its considerations in respect of outstanding awards the Remuneration Committee necessarily exercises judgement when reviewing all the information available and pertinent to the forecasting of annual revenue. In doing so the Committee completes a comprehensive assessment of the following: • the latest business performance and revenue forecasts discussed by the Board; • the current pipeline of potential sales opportunities, supported by recent and on-going discussions with existing and prospective customers; • prior experience of sales opportunity conversions; • market and economic trends that may impact the prospects of revenue realisation; • supply chain and manufacturing capacity constraints that determine the ability to satisfy potential orders; and • the differentiation between, and impact of, small orders and large, multi-unit orders when considering the composition and accuracy of annual revenue forecasts. Where the Remuneration Committee consider a partial vesting is likely for a particular grant then that percentage is applied to the cumulative share-based payment charge. Inventories In recognising the net realisable values of inventories, Management utilises the most reliable information available at each reporting date. Management reviews inventories bi-annually, identifying where necessary allowances for obsolete, slow moving or defective inventories. The carrying balance of inventories as at 31 March 2023 is detailed in note 11. The inventory provision at 31 March 2023 was £713k. This provision includes an appropriate allowance for obsolete, slow-moving and defective inventories deemed unsaleable in the current operating cycle. If all inventories which had been held for longer than 24 months old had been fully provided this would have meant an additional provision of £202k would have been recorded. b) Summary of significant accounting policies The accounting policies set out below have been applied consistently to all years presented in these Consolidated Financial Statements. Property, plant and equipment Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for any long-term construction projects if the recognition criteria are met. Subsequent expenditure is capitalised only when it is probable that the future economic benefits associated with the expenditure will flow to the Group. All other repair and maintenance costs are recognised in administration expenses within the income statement as these costs are incurred. Depreciation is charged to reduce the cost of the Company’s property, plant, and equipment to their residual values on a straight-line basis over their expected useful lives at the following rates: Leasehold improvements – over the life of the lease (typically 20% to 33%); Right-of-use assets – over the life of the lease; Office furniture and equipment – 20%; Computers, ancillary equipment and electronic test equipment – 20% to 33%; Demonstration equipment – 20% to 50%; and Plant and equipment – 20% to 33%. In the case of right-of-use assets, expected useful lives are determined by reference to comparable owned assets or the lease term, if shorter. The carrying value of property, plant and equipment is reviewed for impairment when events or changes in circumstances indicate the carrying value may be impaired. 50 Thruvision Group plc Annual Report and Accounts 2023 1. Accounting policies continued An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognised. The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate. Depreciation is charged to administration expenses in the income statement. Intangible assets Intangible assets relate to externally purchased items of software and capitalised costs on patents and trademarks. The estimated useful lives of intangible assets are as follows: • Software – 20% to 33%; • Patents and trademarks – 5% to 20%. Amortisation is charged to administration expenses in the Consolidated income statement on a straight-line basis. The carrying value of intangible assets are reviewed for impairment when events or changes in circumstance indicate that these may be impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. The recoverable amount is estimated to be the higher of the other intangible assets fair value less costs of disposal and its value in use, and is determined for an individual asset unless the asset does not generate cash flows that are largely independent of those from other assets of groups of assets. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which it belongs. Inventories Inventories are valued at the lower of cost and net realisable value on a first-in first-out basis. In the case of finished goods, cost includes all direct expenditure and production overheads based on the normal level of activity. Where necessary, an appropriate allowance is made for obsolete, slow-moving and defective inventories. Slow-moving inventory is defined as inventory, which although saleable, is likely to take more than 24 months to use or sell. In certain instances, stock items are used for demonstration purposes, in which case the stock item is classified as a fixed asset and depreciated in line with the Group depreciation policy. Financial instruments Recognition and derecognition Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires. Classification and initial measurement of financial assets Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable). The Group’s financial assets comprise of Trade and other receivables and cash balances. Financial assets are classified into the following categories: • amortised cost; • fair value through profit or loss (‘FVTPL’); and • fair value through other comprehensive income (‘FVOCI’). In the periods presented the Group did not have any financial assets categorised as FVOCI or FVTPL. The classification is determined by both: • the Group’s business model for managing the financial asset; and • the contractual cash flow characteristics of the financial asset. All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables and contract assets which are presented separately in the income statement, if material. 51 GovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcFinancial statementsOther information Notes to the financial information continued 1. Accounting policies continued Subsequent measurement of financial assets Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL): • they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows; and • the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding. After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments. Trade and other receivables Trade and other receivables are held in order to collect the contractual cash flows and are initially measured at the transaction price and are subsequently measured at amortised cost using the effective interest method loss allowance. Typical payment terms offered are 50% payment on order placement and 50% prior to delivery of equipment. Contract assets Contract assets are in relation to the Group’s right for consideration in exchange of goods and services that the Group has transferred to a customer. Contract assets represents: • revenue recognised to date less amounts invoiced to customers; and • prepaid cost of sales to be released against future revenue. There are no significant estimates made in determining the amount of the costs incurred to obtain or fulfil a contract with a customer. Revenue and cost of sales are recognised over the life of the contract, as well as any amounts not yet invoiced to the customer. Impairment of financial assets The Group assesses each trade receivable individually in making its judgement as to whether any impairment to the expected amount receivable is necessary, given the number of sales recorded. The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets, and records the loss allowance as lifetime expected credit losses in accordance with IFRS 9. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the Group uses its historical experience, external indicators and forward- looking information to calculate the expected credit losses. Classification and measurement of financial liabilities The Group’s financial liabilities include trade and other payables and lease liabilities. Financial liabilities are initially measured at fair value and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss. Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss. All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included within finance costs or finance income. Cash and cash equivalents Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less. Trade and other payables Trade and other payables are initially recognised at fair value. Subsequent to initial recognition, they are measured at amortised cost. Leases The Group makes the use of leasing arrangements principally for the provision of the main warehouse and related facilities, office space, and motor vehicles. The rental contracts for offices are typically negotiated for terms of between 3 and 5 years. Lease terms for motor vehicles have lease terms of between 2 and 4 years without any extension terms. The Group does not enter into sale and leaseback arrangements. All the leases are negotiated on an individual basis with annual inflationary uplifts in some cases. The Group assesses whether a contract is or contains a lease at inception of the contract. A lease conveys the right to direct the use and obtain substantially all of the economic benefits of an identified asset for a period of time in exchange for consideration. 52 Thruvision Group plc Annual Report and Accounts 2023 1. Accounting policies continued Some lease contracts contain both lease and non-lease components. These non-lease components are usually associated with facilities management services at offices, and servicing and repair contracts in respect of motor vehicles, which are separated out and non-lease components expensed as incurred. Measurement and recognition of leases as a lessee At lease commencement date, the Group recognises a right-of-use asset and a lease liability in its consolidated statement of financial position. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to decommission the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received). The Group depreciates the right-of-use asset on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist. At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the Group’s incremental borrowing rate because as the lease contracts are negotiated with third parties it is not possible to determine the interest rate that is implicit in the lease. The incremental borrowing rate is the estimated rate that the Group would have to pay to borrow the same amount over a similar term, and with similar security to obtain an asset of equivalent value. This rate is adjusted should the lessee entity have a different risk profile to that of the Group. Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised. Subsequent to initial measurement, the liability will be reduced by lease payments that are allocated between repayments of principal and finance costs. The finance cost is the amount that produces a constant periodic rate of interest on the remaining balance of the lease liability. The lease liability is reassessed when there is a change in the lease payments. Changes in lease payments arise from a change in the lease term or a change in the assessment of an option to purchase a leased asset. The revised lease payments are discounted using the Group’s incremental borrowing rate at the date of reassessment when the rate implicit in the lease cannot be readily determined. The amount of the remeasurement of the lease liability is reflected as an adjustment to the carrying amount of the right-of-use asset, the exception being when the carrying amount of the right-of-use asset has been reduced to zero then any excess is recognised in profit or loss. Payments under leases can also change when there is either a change in the amounts expected to be paid under residual value guarantees or when future payments change through an index or a rate used to determine those payments, including changes in market rental rates following a market rent review. The lease liability is remeasured only when the adjustment to lease payments takes effect and the revised contractual payments for the remainder of the lease term are discounted using an unchanged discount rate. The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. These leases relate to items of office equipment such as desks, chairs and certain IT equipment. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term. Provisions Provisions are recognised in the statement of financial position when there is a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the obligation; discounting at a pre-tax discount rate when the time value of money is material. Onerous contract provisions are recognised for unavoidable costs of meeting the obligations under a contract that exceed the economic benefits expected to be received under the contract. Revenue recognition Revenue arises mainly from the sale of hardware consisting of Thruvision units and accessories, and after-sales maintenance and extended warranty services. Revenue is also derived from bespoke development solutions, short-term rental and long-term leasing options, and delivery revenue resulting from shipping recharges. Software is also sold with the product but, as this is integral to the operation of the unit, this is not unbundled. 53 GovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcFinancial statementsOther information Notes to the financial information continued 1. Accounting policies continued To determine whether to recognise revenue, the Group follows a five-step process: 1. Identifying the contract with a customer. 2. Identifying the performance obligations. 3. Determining the transaction price. 4. Allocating the transaction price to the performance obligations. 5. Recognising revenue when/as performance obligation(s) are satisfied. A standard sale entered into with a customer will contain a bundle of products and services comprising Thruvision units as well as accessories, software, delivery and installation and related after-sales service. The contract is then assessed to determine whether it contains a single combined performance obligation or multiple performance obligations. If applicable the total transaction price is allocated amongst the various performance obligations based on their relative stand-alone selling prices. On a typical sale these will be: • Hardware (unit and accessories) • Hardware (computer equipment including standard software) • Extended warranty or support • Installation, commissioning and on-site training • Delivery to site The relevant proportion of the total transaction price allocated to unsatisfied or partially unsatisfied performance obligations are deferred, and this is shown within contract liabilities. In identifying the contract with a customer, an assessment is made of the customer’s ability and intention to pay the consideration when it is due. If the ability and intention is reliant on a separate event, were it to occur, which management considers the customer would not intend to pay the consideration, revenue is not recognised. Revenue is recognised either at a point in time or over time, when, or as, the Group satisfies performance obligations by transferring the promised goods or services to its customers. The Group recognises contract liabilities for consideration received in respect of unsatisfied performance obligations and reports these amounts as other liabilities in its consolidated statement of financial position. Similarly, if the Group satisfies a performance obligation before it receives the consideration, the Group recognises either a contract asset or a receivable in its consolidated statement of financial position, depending on whether something other than the passage of time is required before the consideration is due. The practical expedient included in IFRS 15 is used such that the Group does not adjust the promised amount of consideration for the effects of a significant financing component if the Group expects, at contract inception, that the period between when the goods or services are transferred to the customer and when the customer pays for that goods or services will be one year or less. Hardware sales Revenue from the sale of Thruvision units and accessories is recognised when or as the Group transfers control of the asset to the customer. For Ex-works (Incoterms 2020) sales this is at the point the goods are made available to the customer for collection. Bill-and-hold arrangements occur when the Group invoices a customer for equipment that is transferred at a point in time, but retains physical possession of the equipment until it is transferred to the customer in the future. This might occur to accommodate delays in a customer’s readiness for installation, or a customer’s lack of available space for the product. Non-customised software is supplied under licences with an indefinite licence period which convey a right to use software as it exists at the start of the licence period. Revenue is recognised in full when the licence period commences. Other Incoterms are used and these, in addition to, when control is deemed to have been passed to the Customer, are used to determine the point of revenue recognition. The Group sometimes uses alternative terms of sales, including those where Thruvision takes on all the risks and costs of delivery of goods to an agreed upon location. In these situations, revenue is recognised after delivery has taken place and the Customer has taken control of the goods. Warranty arrangements The Group provides a basic one-year product warranty on Thruvision units and accessories whether sold on a stand-alone basis or as part of an integrated system. Under the terms of this warranty customers can return the product for repair or replacement if it fails to perform in accordance with published specifications. These assurance-type warranties are not considered to be a separate performance obligation and so revenue is not allocated to this. The estimated costs of serving these warranties are recognised as provisions under IAS 37 ’Provisions, Contingent Liabilities and Contingent Assets’. 54 Thruvision Group plc Annual Report and Accounts 2023 1. Accounting policies continued Extended warranties and enhanced support The Group enters into fixed price maintenance and extended warranty contracts with its customers for non-cancellable terms between one and five years in length. Customers are required to pay in advance, with payments received in advance of the performance obligation being satisfied recognised as contract liabilities. • Extended warranty programme – these agreements cover repairs and after-sales support for Thruvision hardware outside the Group’s standard warranty period. This service involves an indeterminate number of acts as the Group is required to ‘stand ready’ to perform whenever a request falling within the scope of the programme is made by a customer. The benefits of the Group standing ready are received and consumed immediately and the service has therefore been assessed as a single performance obligation that is transferred over time (i.e. the extended warranty period). Revenue is recognised on a straight-line basis over the term of the contract. This method best depicts the transfer of services to the customer because: a) the Company’s historical experience demonstrates no statistically significant variation in the quantum of services provided in each year of a multi-year contract; and b) no reliable prediction can be made as to if and when any individual customer will require service. • Enhanced support – these agreements provide customers with a faster response time, free functionality upgrades, free spare system provision as well as regularly scheduled maintenance on hardware purchased from the Group. The contracts consist of a single performance obligation that is transferred over time (i.e. the contract period) because they involve a series of services that are substantially the same and the benefit of each service is received and consumed immediately. Revenue is recognised over the time of the contract on a straight-line basis as it best reflects the transfer of the services to the customer. Research and development costs Research expenditure is charged to the income statement in the year in which it is incurred. Expenditure incurred in the development of software and hardware products for use or sale by the business, and their related intellectual property rights, is capitalised as an intangible asset only when: • technical feasibility has been demonstrated; • adequate technical, financial and other resources exist to complete the development, which the Group intends to complete and use; • future economic benefits expected to arise are deemed probable; and • the costs can be reliably measured. Development costs not meeting these criteria are expensed in the income statement as incurred. When capitalised, development costs are amortised on a straight-line basis over their useful economic lives once the related software and hardware products are available to use. During the period of development, the asset is tested for impairment annually. No development costs have been capitalised in the period (2022: nil). Retirement benefits The Group operates a defined contribution personal pension plan for certain employees. Pension costs are charged to the income statement as they are incurred. Income taxes Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted by the statement of financial position’s date. Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements, with the following exceptions: • where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss; • in respect of taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future; and • deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carried forward tax credits or tax losses can be utilised. 55 GovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcFinancial statementsOther information Notes to the financial information continued 1. Accounting policies continued Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the statement of financial position date. Income tax is charged or credited to other comprehensive income if it relates to items that are charged or credited to other comprehensive income. Similarly, income tax is charged or credited directly to equity if it relates to items that are credited or charged directly to equity. Otherwise income tax is recognised in the income statement. Foreign currency translation The Group’s consolidated financial statements are presented in Sterling, which is also the Parent Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded in the entity’s functional currency by applying the spot exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the statement of financial position’s date. All differences are taken to the income statement, except for differences on monetary assets and liabilities that form part of the Group’s net investment in a foreign operation. These are taken to other comprehensive income until the disposal of the net investment, at which time they are reclassified from equity to profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. The assets and liabilities of foreign operations are translated into Sterling at the rate of exchange ruling at the statement of financial position’s date. Income and expenses are translated using actual daily rates. The resulting exchange differences are recognised in other comprehensive income. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the income statement. The USD/GBP exchange rates used in the consolidated financial statements is as follows: Average exchange rate for the year Exchange rate at the year end 2023 1.206 1.236 2022 1.367 1.312 Share-based payments Certain employees of the Group receive part of their remuneration in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions). The cost of equity-settled transactions with employees is measured at fair value at the date at which they are granted and the fair value at the grant date is expensed on a straight-line basis over the vesting period based on the Group’s estimate of shares that will eventually vest. The estimate of the number of awards likely to vest is reviewed at each Consolidated Statement of Financial Position reporting date up to the vesting date, at which point the estimate is adjusted to reflect the actual outcome of awards which have vested. No adjustment is made to the fair value after the vesting date even if the awards are forfeited or not exercised. 2. Segmental information The business is run as one segment although we sell our products into a number of sectors with differing needs 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, and consequently the results of the business are only presented as continuing (and discontinued last year). 56 Thruvision Group plc Annual Report and Accounts 2023 2. Segmental information continued The Directors believe that allocating overheads by department provides a suitable level of business insight. The overhead department cost centres comprise: • Engineering (including R&D); • Sales and marketing; • Property and administration; • Management; and • Plc costs. The split of costs is shown in the Strategic report on page 7. Whilst, as noted in the Strategic report, the Group sells into multiple sectors, there is only considered to be one operating segment in line with IFRS 8 based on the information reviewed by the Chief Operating Decision Maker. In accordance with IFRS 8, the Group has derived the information for its operating segments using the information used by the Chief Operating Decision Maker and supplemented this with additional analysis to assist readers of the Annual Report to better understand the impact of the Group’s current trading performance. The Group has identified the Board of Directors as the Chief Operating Decision Maker as it is responsible for the allocation of resources to operating segments and assessing their performance. The Group’s revenue by market sector, geographical region and type is detailed below: Revenue by market sector Retail Distribution Customs Aviation Entrance Security Revenue by geographical region UK and Europe Americas Rest of World Revenue by type Product Support and Development Total The Group’s non-current assets by geography are detailed below: UK United States of America 3. Revenue The Group derives its revenue from the provision of goods and services both at a point in time and over time: Revenue recognised at point in time Revenue recognised over time – extended warranty and support revenue 2023 £’000 2,429 9,165 246 580 12,420 2023 £’000 2,249 9,223 948 12,420 2023 £’000 11,782 638 12,420 2023 £’000 1,027 255 1,282 2023 £’000 11,888 532 12,420 There has been one individually material customer (comprising over 10% of total revenue) in the year (2022: two customers). This customer represented £8,286k (or 66%) of revenue for the year (2022: £3,740k (44%) and £1,059k (13%)). 2022 £’000 3,756 3,947 179 479 8,361 2022 £’000 3,508 4,445 408 8,361 2022 £’000 7,667 694 8,361 2022 £’000 1,157 97 1,254 2022 £’000 7,718 643 8,361 57 GovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcFinancial statementsOther information Notes to the financial information continued 4. Operating loss The operating loss is stated after charging/(crediting): Cost of inventories recognised as an expense – restated 2022 see note 22 Research and development expense Net impairment (credit)/charge on trade receivables and contract assets Share based payments charge/(credit) Depreciation of property, plant and equipment Profit on disposal of property, plant and equipment Expenses relating to short-term and low-value leases Amortisation of intangible assets Impairment of intangible assets Exchange gains 2023 £’000 5,457 598 (57) 96 619 (10) 3 20 36 (198) 2022 £’000 4,414 631 57 (366) 546 – 3 15 – (6) Auditor’s remuneration The following table shows an analysis of all fees payable to RSM UK Audit LLP, the Group’s auditor for the year ended 31 March 2023 and Grant Thornton UK LLP, the Group’s auditor for the year ended 31 March 2022 Fees payable to the Company’s auditor for the audit of the Company’s financial statements Fees payable to the Company’s auditor for the audit of the Company’s subsidiaries, pursuant to legislation Fees payable to the Company’s auditor for other services Other non-audit services 2023 £’000 28 90 118 – – 2022 £’000 98 58 156 10 10 The non-audit services in 2022 relate to professional advice on the assessment of distributable reserves as part of an exercise undertaken to liquidate various dormant group companies. 5. Employee numbers and costs The average number of full-time equivalent employees (excluding three non-executive directors) during the year as follows: Engineering (manufacturing and R&D) Sales and marketing Administration and Management The employee benefit expense for the year, including Directors’ remuneration, amounted to: Salaries and short-term employee benefits Social security costs Pension costs Share-based payment charge/(credit) The details of individual directors’ remuneration can be found in the remuneration report on page 31. 2023 Average Number 23 14 6 43 2023 £’000 4,249 453 74 96 4,872 2022 Average Number 20 14 6 40 2022 £’000 3,443 364 70 (366) 3,511 58 Thruvision Group plc Annual Report and Accounts 2023 6. Financial income and finance costs Financial income Bank interest receivable Other income receivable Finance costs Lease interest Net finance (income)/costs 7. Taxation credit Current tax R&D tax credit receivable Adjustment in respect of prior year Overseas tax Deferred tax Total tax credit for the year 2023 £’000 (22) (4) (26) 2023 £’000 15 (11) 2023 £’000 161 14 (1) 174 – 174 2022 £’000 (13) (4) (17) 2022 £’000 20 3 2022 £’000 210 28 (7) 231 – 231 The tax credit for the year is lower (2022: lower) than the standard rate of corporation tax in the UK applied to the loss before tax. The differences are explained below: Loss before tax Tax at the UK corporation tax rate of 19% (2022: 19%) Tax effects of: Adjustment in respect of prior year Effects of foreign currency Expenses not deductible for tax purposes Taxation adjustments relating to share options Deferred tax not recognised Unrecognised deferred tax on unrelieved tax losses R&D tax credit receivable Taxation credit Unrecognised deferred tax assets Fixed assets Temporary differences1 Tax losses 2023 £’000 (979) (186) (14) (13) 37 (1) 23 141 (161) (174) 2023 £’000 44 622 3,812 4,478 2022 £’000 (1,889) (359) (28) – 169 (75) 27 245 (210) (231) 2022 £’000 47 650 3,558 4,255 1 Temporary differences relate to share based payments and provisions. Unrelieved tax losses in the UK amount to approximately £15.2 million (2022: £14.0 million), of which £7.3 million (2022: £7.2 million) relate to trading losses which are available indefinitely for offset against future taxable trading profits. The remaining losses are attributable to Thruvision Group plc and, because the Company does not trade, these losses are only available to offset against future taxable trading profits of the Company. 59 GovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcFinancial statementsOther information Notes to the financial information continued 7. Taxation credit continued The final losses as at 31 March 2023, will be determined after the Group Companies have filed the relevant tax returns. A deferred tax asset has not been recognised on these tax losses on the basis that there is insufficient evidence that this asset will be recoverable within the foreseeable future. An asset will only be recognised with improved certainty and quantification of taxable profits. 8. Loss per share Basic earnings/(loss) per share amounts are calculated by dividing net profit/(loss) for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year (excluding treasury shares). Diluted earnings/(loss) per share amounts are calculated by dividing the net profit/(loss) attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year but adjusted for the effects of dilutive options. This additional adjustment is not made when there is a net loss attributable to ordinary shareholders. The key features of the Company’s share option schemes are described in note 18. Loss after tax (£’000) Weighted average number of shares outstanding (number) Basic and diluted loss per share (pence) 2023 (805) 2022 (1,658) 147,138,774 145,853,091 (1.14p) (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. 60 Thruvision Group plc Annual Report and Accounts 2023 9. Property, plant and equipment Leasehold improvements £’000 Right-of-use assets £’000 Office furniture and equipment £’000 Computers, ancillary equipment and electronic test equipment £’000 Demonstration equipment £’000 Plant & equipment £’000 Cost At 1 April 2021 Additions Transfers to inventory Disposals At 31 March 2022 Additions Transfers from inventory Transfers to inventory Re-measurement Disposals Exchange movements At 31 March 2023 Accumulated depreciation At 1 April 2021 Charge for the year Transfer to inventory Disposals Exchange movements At 31 March 2022 Charge for the year Disposals Transfers to Inventory At 31 March 2023 Net book value At 31 March 2023 At 31 March 2022 580 9 – – 589 – – – – – – 589 457 77 – – – 534 44 – – 578 11 55 613 502 – – 1,115 271 – – (26) (15) (2) 1,343 280 169 – – 1 450 172 (14) – 608 735 665 67 3 – – 70 3 – – – – – 73 51 6 – – – 57 7 – – 64 9 13 150 20 – (1) 169 28 – – – (9) – 188 92 36 – (1) – 127 31 (9) – 149 39 42 748 152 (117) – 783 – 412 (260) – – – 935 254 230 (47) – – 437 336 – (186) 587 348 346 185 3 – – 188 6 – – – – – 194 106 28 – – – 134 29 – – 163 31 54 Total £’000 2,343 689 (117) (1) 2,914 308 412 (260) (26) (24) (2) 3,322 1,240 546 (47) (1) 1 1,739 619 (23) (186) 2,149 1,173 1,175 Depreciation is charged to the Income statement within cost of sales and administration costs. The net book value of right of use assets at 31 March 2023 relates to leasehold property £683,000 (2022: £615,000) and vehicles £52,000 (2022: £50,000). 61 GovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcFinancial statementsOther information Notes to the financial information continued 10. Intangible assets Cost At 1 April 2021 Additions At 31 March 2022 Additions Disposals At 31 March 2023 Accumulated amortisation At 1 April 2021 Charge for the year At 31 March 2022 Charge for the year Impairment Disposals At 31 March 2023 Net book value At 31 March 2023 At 31 March 2022 Patents and trademarks £’000 Software £’000 Software – Assets under construction £’000 7 – 7 80 – 87 3 1 4 4 – – 8 79 3 104 10 114 6 – 120 60 14 74 16 – – 90 30 40 – 36 36 – (36) – – – – – (36) 36 – – 36 Total £’000 111 46 157 86 (36) 207 63 15 78 20 (36) 36 98 109 79 Amortisation is charged to the Income statement within administrative expenses. 11. Inventories Raw materials Work in progress Finished goods and goods for resale 2023 £’000 2,162 774 703 3,639 2022 £’000 1,472 1,007 1,389 3,868 In the ordinary course of business, the Group makes provision for slow-moving, excess and obsolete inventory to write it down to its net realisable value based on an assessment of technological and market developments, and an analysis of projected usage on an individual item or product line basis. The movement on the inventory provision during the year is set out below: 2023 £’000 522 (87) 278 713 2022 £’000 470 (5) 57 522 At 1 April Utilised Charged to income statement At 31 March 62 Thruvision Group plc Annual Report and Accounts 2023 12. Trade and other receivables Current Trade receivables Prepayments Contract assets VAT recoverable Other receivables 2023 £’000 3,685 139 93 424 1 4,342 2022 £’000 1,729 128 84 – 41 1,982 Trade receivables and contract assets are non-interest bearing. Standard credit terms offered to customers differ according to business and country and are typically 30 to 60 days. Trade receivables are stated after provision for impairment of nil (2022: £57k). There are no trade and other receivables expected to be received in more than one year. The fair value of trade and other receivables approximates to its’ carrying amount due to the short-term maturities associated with these items. There is no impairment risk identified with other receivables where no amounts are past due. The ageing of gross trade receivables at 31 March was: Not past due One month past due Two months past due Three months past due Four months past due More than four months past due Gross trade receivables Provision for impairment of trade receivables Trade receivables Expected credit losses – trade receivables The movement in the expected trade receivables provision for impairment is as follows: At 1 April Provision for impairment of trade receivables Reversal of impairment of trade receivables At 31 March 2023 £’000 2,756 902 9 – – 18 3,685 – 3,685 2023 £’000 57 – (57) – 2022 £’000 1,711 – 2 – – 73 1,786 (57) 1,729 2022 £’000 – 57 – 57 There was no indicator of impairment in trade receivables which were past due. All amounts two months or more past due were received in April 2023 and as at the date of signing the accounts 75% of trade receivables at 31 March 2023 had been received. There was no loss allowance for contract assets in either year. 63 GovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcFinancial statementsOther information Notes to the financial information continued 13. Cash and cash equivalents GBP cash USD cash EUR cash GBP short-term deposits 2023 £’000 1,314 621 125 750 2,810 2022 £’000 1,030 2,405 542 1,464 5,441 All of the Group’s cash and cash equivalents was either available immediately for use or were held on a maximum of 90-day notice period with the exception of £42k (2022: £40k) which was held in USD cash as security for a lease. This security expired on 31 May 2023 and the restriction on cash lifted during June 2023. The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets is disclosed in note 20. 14. Trade and other payables Current Trade payables Accruals Customer advances Contract liabilities Social security and similar taxes payable VAT payable Overseas corporation tax payable Other payables Non-current Contract liabilities 2023 £’000 1,115 1,264 126 76 97 – 1 11 2,690 2023 £’000 2022 £’000 866 809 62 496 85 12 11 3 2,344 2022 £’000 72 97 The fair value of trade and other payables approximates to their carrying amount due to the short-term maturities associated with these items. Contract liabilities for extended warranty and enhanced support contracts are expected to be recognised as revenue as follows: Contract liabilities at 31 March 2023 Contract liabilities at 31 March 2022 Revenue recognition profile for contract liabilities Within one year £’000 (76) (496) One to two years £’000 (52) (54) Two to three years £’000 (19) (33) Three to four years £’000 (1) (9) After four years £’000 – (1) Total £’00 (148) (593) During the year £545k of contract liabilities were recognised as revenue (2022: £1,078k). The reduction was driven by the expiry of a large US governmental support contract won in previous years. 15. Lease liabilities Lease liabilities are analysed as follows: Current Non-current 2023 £’000 121 604 725 2022 £’000 150 503 653 Lease liabilities are calculated as the present value of the future lease obligations of the Group. The future lease obligations were discounted using relevant UK and US local borrowing rates estimated at 7.1% (2022: 5%). 64 Thruvision Group plc Annual Report and Accounts 2023 15. Lease liabilities continued The movement in lease liabilities is shown below: At 1 April 2021 New leases Interest charge Cash outflows Foreign exchange difference At 31 March 2022 New leases Remeasurement of lease liability Interest charge Cash outflows Foreign exchange difference At 31 March 2023 Property £’000 237 505 9 (131) (11) 609 218 13 11 (105) (2) 722 Motor vehicles £’000 88 4 3 (50) (1) 44 45 – 4 (90) – 3 Total £’000 325 509 12 (181) (12) 653 263 13 15 (195) (2) 725 The new property lease during the year related to the extension of the lease for the Ashburn office in the US (2022: lease extension for the Didcot, UK office lease). 16. Provisions Current Warranty provisions Non-current Dilapidations 2023 £’000 (107) 2023 £’000 (38) 2022 £’000 (178) 2022 £’000 (38) Warranty provisions This provision is to cover expected costs to be incurred for the repair of items under warranty, including the provision of hot swap units and shipping costs incurred. It is expected that a proportion of the carried forward provision will be utilised in the next financial year in meeting warranty claims from customers, although given the nature of the provision the amount and timing of these outflows is not known, therefore the provision is classified as current. The carried forward provision has been assessed at the year end and no change to the carried forward balance was considered necessary. Provisions are released for individual units when the warranty period for that unit comes to an end. Warranty costs include the cost of stock and shipping costs incurred by the Group under the terms of the warranty, in order to repair items. The analysis below explains the movement in the provision relating to warranties. Current At 1 April Provided for during the year Provisions released Provisions utilised At 31 March 2023 £’000 (178) (118) 121 68 (107) 2022 £’000 (175) (121) 101 17 (178) Dilapidations The dilapidation provision is considered to be due in after one year since neither of the property leases expire during the next 12 months. It is expected that these amounts would only become payable should the lease revert back to our landlords. There has been no utilisation of this provision in either year. 65 GovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcFinancial statementsOther information Notes to the financial information continued 17. Share capital and reserves Authorised, allotted, called-up and fully paid Ordinary Shares of 1 pence each At 1 April 2021 Shares issued(1) At 31 March 2022 Shares issued(2) At 31 March 2023 Number £’000 145,779,118 810,000 146,589,118 658,121 147,247,239 1,458 8 1,466 6 1,472 (1) Issued to certain employees who exercised SAYE share options. As a result, the share premium account increased by £154,000. (2) Issued to certain employees who exercised SAYE share options. As a result, the share premium account increased by £124,000. Rights, preferences and restrictions attached to Ordinary Shares are as follows: The holders of Ordinary Shares are entitled to receive the Company’s reports and accounts, to attend and speak at general meetings of the Company, to appoint proxies and to exercise voting rights. To be effective, electronic and paper proxy appointments and voting instructions must be received at the Company’s registered office, or such other place in the UK specified in the relevant notice of meeting, not later than 48 hours before a general meeting. Subject to applicable statutes, there are no restrictions on transfer or limitations on the holding of Ordinary Shares and no requirements for prior approval of any transfers other than: • certain restrictions may from time to time be imposed by laws and regulations (for example insider trading laws); and • pursuant to the Company’s Share dealing code whereby the Directors and certain senior employees of the Company require approval to deal in the Company’s Shares. None of the Shares carry any special rights with regard to control of the Company. There are no known arrangements under which financial rights are held by a person other than the holder of the Shares and no known agreements on restrictions on Share transfers or on voting rights. Share premium Share premium represents the excess of nominal value over the fair value of consideration received for equity shares, net of expenses of the share issue. Capital redemption reserve The capital redemption reserve represents a historic balance transferred from deferred shares which failed to vest. These shares were cancelled on 25 September 2019. Translation reserve The translation reserve represents the impact of currency translation on the foreign currency net investment in Thruvision Inc. 18. Employee share schemes Sharesave Scheme The Group has established the Thruvision Group Sharesave Scheme, which allows eligible employees to use regular savings to purchase shares. Options are granted at a discount of 20% of the market value of the shares. No financial performance criteria are attached to these options, and they vest three years from the date of grant with an exercise period of six months. There are no cash settlement alternatives. Enterprise Management Incentive Scheme (“EMI Options”) All awards under the EMI Scheme are subject to service conditions and performance conditions that relate to revenue and profit. These performance conditions are explained in more detail in the Remuneration report on page 34. Unapproved Share Option Scheme (“Unapproved Options”) All awards under the Unapproved Share Option Scheme are subject to service conditions and performance conditions that relate to revenue and profit. These performance conditions are explained in more detail in the Remuneration report on page 34. It is the intention of the Group that shares needed to satisfy awards will be purchased in the market to the extent that they are not already held by the Group’s employee share trust, unless it is in the interests of the Group to issue new shares. 66 Thruvision Group plc Annual Report and Accounts 2023 18. Employee share schemes continued Sharesave Scheme Outstanding at 1 April Granted Exercised Forfeited Outstanding at 31 March Exercisable at 31 March For the year ended 31 March: Range of exercise prices Weighted average remaining contractual life Enterprise Management Incentive Scheme Outstanding at 1 April Granted Exercised Forfeited Outstanding at 31 March Exercisable at 31 March For the year ended 31 March: Range of exercise prices Weighted average remaining contractual life Unapproved Share Option Scheme Outstanding at 1 April Granted Forfeited Outstanding at 31 March Exercisable at 31 March For the year ended 31 March: Range of exercise prices Weighted average remaining contractual life 2023 2022 Weighted average exercise price £ 0.217 0.177 0.203 0.218 0.190 0.221 Number of options 1,805,762 1,242,062 (553,121) (865,157) 1,629,546 114,129 Number of options 1,709,143 996,417 (810,000) (89,798) 1,805,762 471,600 Weighted average exercise price £ 0.204 0.224 0.200 0.215 0.217 0.200 £0.177 to £0.224 2.296 years £0.200 to £0.221 2.450 years 2023 2022 Weighted average exercise price £ 0.190 0.221 0.177 0.244 0.180 0.160 Number of options 7,789,36.5 1,647,787 (105,000) (2,814,259) 6,517,893 4,165,662 Weighted average exercise price £ 0.197 0.198 – 0.231 0.190 0.161 Number of options 6,744,365 1,095,000 – (50,000) 7,789,365 4,270,662 £0.154 – £0.221 7.052 years £0.128 to £0.276 6.391 years 2023 2022 Weighted average exercise price £ 0.216 0.221 0.244 0.185 0.154 Number of options 6,572,629 852,213 (3,973,116) 3,451,726 1,124,513 Number of options 5,172,629 1,475,000 (75,000) 6,572,629 1,124,513 Weighted average exercise price £ 0.225 0.188 0.264 0.216 0.154 £0.154 – £0.221 7.970 years £0.154 to £0.282 7.760 years 67 GovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcFinancial statementsOther information Notes to the financial information continued 18. Employee share schemes continued The share options outstanding at the end of the year have the following expiry dates and exercise prices. Grant Date EMI Unapproved SAYE EMI Unapproved SAYE Exercise Price £ Expiry date Share options 31 March 2023 Share options 31 March 2022 03/02/23 08/11/22 25/01/22 30/11/21 04/08/21 09/10/20 23/07/20 15/06/20 30/10/19 08/10/19 18/01/19 21/09/18 28/08/18 17/01/18 – 1,575,287 – 576,944 200,000 – – – – – – – 275,000 3,890,662 6,517,893 – 852,213 – 1,475,000 – – – – – – – – 1,124,513 3,451,726 1,160,615 – 337,495 – – 17,307 – 114,129 – – – – – 1,629,546 – – – 1,095,000 – – – 685,000 950,000 788,703 – 300,000 3,970,662 7,789,365 – – – 1,475,000 – 75,000 – 1,575,000 1,182,931 1,140,185 – – 1,124,513 6,572,629 – – 996,417 – 60,575 – 277,170 – – 471,600 – – 1,805,762 0.177 0.221 0.224 0.188 0.244 0.282 0.208 0.200 0.221 0.276 0.270 0.200 0.250 0.154 01/09/26 08/11/32 01/09/25 30/11/31 04/08/31 09/10/30 01/03/24 15/06/30 01/06/23 08/10/29 18/01/29 01/05/22 28/08/28 17/01/28 Share-based payment expense Share options are valued using the Black-Scholes model, with support from an independent remuneration consultant. For options granted in 2023 and 2022, the fair value of options granted and the assumptions used in the calculation, are as follows: EMI Options 4 August 2021 200,000 £0.114 £0.244 £0.244 3 48.32% 0.34% 6.5 nil Unapproved Options 30 November 2021 1,475,000 £0.092 £0.195 £0.188 3 47.08% 0.57% 6.5 nil Unapproved Options 8 November 2022 852,213 £0.114 £0.221 £0.221 3 47.23% 3.56% 6.5 nil EMI Options 30 November 2021 895,000 £0.092 £0.195 £0.188 3 47.08% 0.57% 6.5 nil EMI Options 8 November 2022 1,647,787 £0.114 £0.221 £0.221 3 47.23% 3.56% 6.5 nil SAYE Options 25 January 2022 996,417 £0.089 £0.258 £0.224 3 39.43% 0.94% 3.34 nil SAYE Options 3 February 2023 1,242,062 £0.086 £0.221 £0.177 3 35.91% 2.94% 3.3 nil Number granted Fair value per option Share price on date of grant Exercise price Vesting period (years) Volatility Risk-free rate of return Expected life (years) Expected dividend yield Number granted Fair value per option/award Share price on date of grant Exercise price Vesting period (years) Volatility Risk-free rate of return Expected life (years) Expected dividend yield 68 Thruvision Group plc Annual Report and Accounts 2023 18. Employee share schemes continued The volatility is based on historical volatility calculated over the period of time commensurate with the expected award term immediately prior to the date of grant. The expected life is the average expected period to exercise. The risk-free rate of return is the yield on zero-coupon UK government bonds of a term consistent with the assumed option life. It has been assumed that there will not be any early exercise of awards. The weighted average share price at the date of exercise for share options exercised in 2023 was 30.81 pence (2022: 25.43 pence). The Group recognised a total share-based payment charge of £96k during the year (2022: credit of £366k) in the Consolidated Income Statement. Employee Benefit Trust The Thruvision Group Plc Employee Benefit Trust’s (the ‘Trust’) objective is to hold shares in Thruvision Group Plc to satisfy awards under the Long-Term Incentive Plan. Costs of running the Trust are charged to the Consolidated Income statement. Shares held by the Trust are deducted from the profit and loss reserve and held at cost to the Trust. At 31 March 2023 the Trust did not hold any shares in the Company (2022: nil). Subsequent to 31 March 2023, the Trust purchased 309,619 shares in the Company. 19. Financial instruments Fair value hierarchy The Group’s applies the following hierarchy for determining and disclosing the fair values of financial instruments: • Level 1: The fair value of financial instruments traded in an active market. • Level 2: The fair value of financial instruments not traded in an active market. • Level 3: The fair value of financial instruments is calculated using one of more significant inputs not based on observable market data. The Group has no level 2 or level 3 financial liabilities. The fair values of other financial assets and liabilities, which are short term, are not disclosed as the Directors estimate that the carrying amount of the financial assets and liabilities are not significantly different to their fair value. These financial assets and liabilities are carried at amortised cost. Trade and other receivables excluding prepayments and contract assets Cash and cash equivalents Financial assets Trade and other payables excluding contract liabilities and customer advances Lease liabilities Financial liabilities 2023 £’000 3,686 2,810 6,496 (2,390) (725) (3,115) 2022 £’000 1,770 5,441 7,211 (1,678) (653) (2,331) Trade and other payables are substantially due within one year (see note 14). The amounts below for lease payments are contractual undiscounted cash flows and include both interest and principal amounts. Future minimum lease payments at 31 March 2023 were due as follows: Lease payments Finance charges Net present value at 31 March 2023 Net present value at 31 March 2022 Within one year £’000 (168) 47 (121) (150) Minimum lease payments due One to two years £’000 (176) 41 Two to three years £’000 (190) 31 Three to four years £’000 (197) 19 Four to five years £’000 (128) 6 More than five years £’000 (10) – (135) (159) (96) (94) (178) (112) (122) (130) (10) (71) Total £’000 (869) 144 (725) (653) 69 GovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcFinancial statementsOther information Notes to the financial information continued 20. Financial risk management The main risks faced by the Group relate to the availability of funds to meet business needs and the risk of credit default by customers. The Group’s overall risk management programme focuses on the unpredictability of the currency markets, and its on-going operating activities, seeking to minimise potential adverse effects on the Group’s financial performance. The Group has a centralised treasury function, providing a service to the Group for funding and foreign exchange management. Treasury activities are managed under policies and procedures approved and monitored by the Board. These are designed to reduce the financial risks faced by the Group, which primarily relate to credit risk, foreign currency risk, interest rate risk and liquidity risk. The Group undertook no trades in financial instruments during the year (2022: none). Credit risk Credit risk is the risk that a counterparty fails to discharge an obligation to the Group. The Group is exposed to credit risk from financial assets including cash and cash equivalents held at banks, trade and other receivables. The maximum exposure to credit risk for trade receivables at 31 March by geographic region was: UK and Europe USA Rest of world 2023 £’000 870 2,744 71 3,685 2022 £’000 533 1,167 29 1,729 The Group monitors its exposure to customer concentration risk on an on-going basis. In trade receivables, at 31 March 2023, one customer represented a significant concentration of credit risk with £2,666k owed by this customer at the year end. At 31 March 2022, one customer represented a significant concentration of credit risk with £964k owed by this customer at the year end. The Group’s policy is to only extend credit to creditworthy counterparties and utilises the services of a credit check agency to determine creditworthiness of new and existing customers. The Board monitors the Group’s exposure to credit risk on an on-going basis through monthly review of the aged trade receivables. Cash investments are only allowed in liquid securities with major financial institutions that satisfy specific criteria. The maximum credit risk exposure at the statement of financial position’s date is represented by the carrying value of financial assets. Cash investments have been held with two (2022: two) major financial institutions during the year. The Board carries out a formal review of its banking arrangements on a six-monthly basis. Foreign currency risk Operations are subject to foreign exchange risk from committed transactions denominated in currencies other than their functional currency and, once recognised, the revaluation of foreign currency denominated assets and liabilities. Foreign currency denominated financial assets and liabilities which expose the Group to currency risk are disclosed below. The amounts shown are translated into GBP at the closing rate: Exposure by currency GBP £’000 2,365 (2,572) (207) GBP £’000 3,140 (2,101) 1,039 USD £’000 3,368 (519) 2,849 USD £’000 3,529 (219) 3,310 EUR £’000 763 (24) 739 EUR £’000 542 – 542 Other £’000 – – – Other £’000 – (11) (11) Total £’000 6,496 (3,115) 3,381 Total £’000 7,211 (2,331) 4,880 At 31 March 2023 Financial assets Financial liabilities Total exposure At 31 March 2022 Financial assets Financial liabilities Total exposure 70 Thruvision Group plc Annual Report and Accounts 2023 20. Financial risk management continued A sensitivity analysis has been performed on the financial assets and liabilities to a sensitivity of 10% increase/decrease in the exchange rates for USD and EUR. A 10% increase/decrease has been used as it represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only foreign currency denominated net financial assets at 31 March 2023 and 31 March 2022 and adjusts their translation at the period end for a 10% change in foreign currency rates. A positive number below indicates an increase in profit/equity where Sterling weakens by 10% against the relevant currency. £’000 USD EUR Profit (or loss) 10% strengthening in currency Profit (or loss) 10% weakening in currency 31 March 2023 (259) (67) 31 March 2022 (301) (49) 31 March 2023 316 82 31 March 2022 368 60 Approximately 73% (2022: 60%) of revenue was invoiced in USD and 7% (2022: 11%) of revenue was invoiced in EUR with the remainder in GBP. To mitigate foreign exchange risk arising from transactions denominated in other currencies, forecast revenues and costs are regularly reviewed to assess any potential currency exposures and whether forward currency contracts should be put in place. No forward currency contracts or hedges were entered into during the year, because the anticipated financial risk arising from foreign currency transactions was not deemed sufficient to warrant a purchase of these instruments. As a result, there was no profit or loss from forward currency contracts or hedges during the year (2022: nil). Cash balances denominated in non-GBP currencies are maintained at balances to support ongoing local currency operating requirements, for example payroll. Any surplus non-GBP cash is converted into GBP as soon as practicable. The Group is also exposed to movements in foreign currency exchange rates in respect of the translation of net assets and income statements of foreign subsidiaries. However, this translation risk is not hedged as it is immaterial to the Group. Interest rate risk At 31 March 2023, the Group had £750k of cash on fixed rate deposits with maturity of less than 90 days (2022: nil), and nil (2022: £1,464k) on floating rate deposits. A reasonably possible change in interest rates is 50 basis points. An increase of 50 basis points would give rise to an additional £4k (2022: £10k) of finance income. A decrease of 50 basis points would give rise to a reduction in finance income of £4k (2022: £10k). The Group is not exposed to interest rate risks on other assets and liabilities, which are transacted on normal commercial terms. Liquidity risk The Group’s policy is to maintain sufficient headroom to meet its foreseeable financing requirements. The Group’s objective is to maintain sufficient levels of immediately available cash to meet its liquidity requirements for 30-day periods at a minimum. This objective was met for the reporting period. The Group considers expected cash flows from financial assets in assessing and managing liquidity risk, in particular its cash resources and trade receivables. The Group has recently agreed an overdraft facility of £1.0 million reducing to £0.25 million on 30 September 2023 in order to further support working capital requirements as the business expands. This facility remained undrawn at the date of signing of these financial statements. The Group’s existing cash resources and trade receivables combined with the facility exceed the current cash outflow requirements. Further information on the Group’s cash position can be found in the Financial review on pages 6 to 8 and in note 13. The Group manages liquidity risk by regularly monitoring forecast and actual cash flows in the long and short term. Capital risk management The Group defines its capital as its total equity. At this stage of the Group’s development, its policy is to have available the The Group defines its capital as its total equity. At this stage of the Group’s development, its policy is to have available the necessary financial resources to allow the Group to invest in areas that may deliver future benefit to investors and to fund its existing operations. The Group reviews the capital structure on a regular basis and considers the cost of capital and the risks and benefits associated with different forms of capital available to the Group. At 31 March 2023, total equity amounted to £8,816k (2022: £9,445k). 71 GovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcFinancial statementsOther information Notes to the financial information continued 20. Financial risk management continued The Board encourages employees to hold shares in the Company. This is carried out through the Sharesave Plan, as well as Long Term Incentive Plans. Details of these schemes are given in note 18. The declaration and payment by the Group of any future dividends on the Ordinary Shares and the amount will depend on the results of the Group’s operations, its financial condition, cash requirements, future prospects, profits available for distribution and other factors deemed to be relevant at the time. However, given the Group’s early stage of development, the Directors do not envisage that the Group will pay dividends in the foreseeable future and intend to reinvest surplus funds in the development of the Group’s business. The Board will regularly review the appropriateness of its dividend policy. 21. Related party transactions The Group has related party relationships with its subsidiaries (a list of all related undertakings is shown in Note 10 to the Company financial statements) and with its Executive Directors. Transactions with key management personnel In accordance with IAS 24 ‘Related Party Disclosures’, key management personnel are those having authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly. Key management personnel comprise the Board of Thruvision Group plc. Short-term benefits including social security Equity-settled share-based payment charge/(credit) Post-employment benefits 2023 £’000 696 32 – 728 2022 £’000 589 (139) 5 455 Further details of the remuneration of the Board are included in the Remuneration Report on pages 28 to 31. During the year the Group purchased services from 6Point6 and Skillcast for which Colin Evans and Richard Amos respectively are Non-Executive Directors. The cost to the company was £15k and £2k respectively and these services were purchased on an arms- length basis. Both amounts were included in Trade and other payables at 31 March 2023. 72 Thruvision Group plc Annual Report and Accounts 2023 22. Restatements Income statement In 2022, gross margin has been restated to correctly classify certain fixed and variable production overheads including production staff costs and related overheads to cost of sales from administrative expenses. The total costs reclassified in 2022 from administrative expenses to cost of sales was £0.5 million. There is no impact on operating profit. Cash flow statement The cash flow statement has been restated to correct non-cash movements relating to leases. A new lease entered into during 2022 had incorrectly been grossed up and presented as a lease property addition outflow within investing activities and the respective lease liability had been presented as a new lease cash inflow within financing activities. The impact is a reduction in investing activities of £0.5 million and a reduction in financing activities of £0.5 million. There is no impact on cash and cash equivalents. For both restatements there was no impact on the basic and diluted EPS figures as reported or on the Statement of Financial Position for the 2022 financial year. 23. Events after the balance sheet date The Group has recently agreed an overdraft facility of £1.0 million, reducing to £0.25 million on 30 September 2023, and expiring on 31 May 2024, in order to further support working capital requirements as the business expands. The Group has entered into guarantees in respect of this facility. This facility remained undrawn at the date of signing of these financial statements. From 1 April 2023 to the date of this report, 309,619 shares in the Company have been purchased by the EBT with a nominal value of £3,096 for total consideration of £80,000. 73 GovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcFinancial statementsOther information 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 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. The Group excludes certain items, which management have defined for 2023 and 2022 as: - - Share based payments charge or income Impairments of intangible assets Gross profit, excluding production overheads, is used to enable a like-for-like comparison of underlying sales profitability. Production Gross profit, excluding production overheads, is used to enable a like-for-like comparison of underlying sales profitability. Production overheads are excluded due to recent changes in product mix and investments in the production team which have improved capacity and therefore changed the labour and overhead absorption rates in the current year. As a result, adjusted gross profit is a new APM this year used to represent this metric. Based on the above, the adjusted performance measures are derived from the statutory figures as follows a) Adjusted gross profit Gross profit Add back: Production overheads Adjusted gross profit b) Adjusted EBITDA Statutory operating loss Add back: Depreciation and amortisation Impairment of intangible assets Share-based payment charge/(credit) Adjusted EBITDA c) Adjusted loss before tax Statutory loss before tax Add back: Impairment of intangible assets Share-based payment charge/(credit) Adjusted loss before tax 74 2023 £’000 5,837 564 6,401 2023 £’000 (990) 639 36 96 (219) 2023 £’000 (979) 36 96 (847) 2022 £’000 3,413 489 3,902 2022 £’000 (1,886) 561 – (366) (1,691) 2022 £’000 (1,889) – (366) (2,255) Thruvision Group plc Annual Report and Accounts 2023 Adjusted measures continued d) Adjusted loss per share Statutory loss after tax Add back: Impairment of intangible assets Share-based payment charge/(credit) Adjusted loss after tax Weighted average number of shares Statutory loss per share (pence) Adjusted loss per share (pence) 2023 £’000 (805) 36 96 (673) 2022 £’000 (1,658) – (366) (2,024) 147,138,774 145,853,091 (0.55) (0.46) (1.14) (1.39) 75 GovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcFinancial statementsOther information Statement of Directors’ responsibilities – Company financial statements The Directors are responsible for preparing the Strategic Report and the Directors’ 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 elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 Company and of the profit or loss of the company for that period. In preparing those 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 UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the 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 Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. 76 Thruvision Group plc Annual Report and Accounts 2023 Company balance sheet at 31 March 2023 Non-current assets Investments in subsidiary undertakings Current assets Trade and other receivables Cash and cash equivalents Total assets Current liabilities Trade and other payables Total liabilities Net assets Equity and liabilities Share capital Share premium Capital redemption reserve Other reserves Retained earnings Total equity 31 March 2023 £’000 31 March 2022 £’000 Note 4 5 6 7 17,209 13,650 524 328 852 18,061 1,088 3,954 5,042 18,692 (418) (418) 17,643 (352) (352) 18,340 1,472 325 163 409 15,274 17,643 1,466 201 163 350 16,160 18,340 The Directors have taken advantage of the exemption available under Section 408 of the Companies Act and have not presented a statement of comprehensive income for the Company. The Company’s loss for the year was £923,000 (2022: £658,000). The financial statements on pages 77 to 83 were approved by the Board of Directors on 20 July 2023 and were signed on its behalf by: Colin Evans Chief Executive Officer Company registration number: 07149547 Victoria Balchin Chief Financial Officer 77 GovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcFinancial statementsOther information Company statement of changes in equity for the year ended 31 March 2023 At 1 April 2021 Shares issued Share-based payment credit Transactions with shareholders Loss for the year At 31 March 2022 Shares issued Share-based payment charge Transactions with shareholders Loss for the year At 31 March 2023 Share capital £’000 1,458 8 – 8 – 1,466 6 – – – 1,472 Share premium £’000 47 154 – 154 – 201 124 – – – 325 Capital redemption reserve £’000 163 – – – – 163 – – – – 163 Other reserves £’000 541 – (191) (191) – 350 – 59 59 – 409 Retained earnings £’000 16,993 – (175) (175) (658) 16,160 – 37 37 (923) 15,274 Total equity £’000 19,202 162 (366) (204) (658) 18,340 130 96 226 (923) 17,643 Other reserves represent share awards granted to subsidiary employees where no repayment has been sought. For a description of share capital and reserves see note 17 in the Group financial statements. 78 Thruvision Group plc Annual Report and Accounts 2023 Notes to the Company balance sheet at 31 March 2023 1. Basis of preparation The Financial Statements have been prepared in accordance with Financial Reporting Standard 101, ‘Reduced Disclosure Framework’ (‘FRS 101’). The Financial Statements have been prepared under the historical cost convention and in accordance with the Companies Act 2006. In preparing these Financial Statements, the Company applies the recognition, measurement and disclosure requirements of International Financial Reporting Standards as adopted by the UK (‘IFRS’), but makes amendments where necessary in order to comply with the Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions has been taken. The Company has taken advantage of the following disclosure exemptions under FRS 101: a) the requirements of IFRS 7 Financial Instruments: Disclosures; b) the requirements of paragraphs 91 – 99 of IFRS 13 Fair Value Measurement; c) the requirements of IAS 7 Statement of Cash Flows; d) the requirements of paragraph 17 of IAS 24 Related Party Disclosures; e) the requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or more members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member; f) the requirements of paragraphs 45(b) and 46 – 52 of IFRS 2 Share Based Payment; g) the requirements of paragraphs 10(d), 10(f), 16, 38A, 38B, 38C, 38D, 40A, 40B, 40C, 40D, 111 and 134 to 136 of IAS 1 ‘Presentation of Financial Statements’; h) the requirement in paragraph 38 of IAS 1 ‘Presentation of Financial Statements’ to present comparative information in respect of paragraph 79(a)(iv) of IAS 1; and i) the requirements of paragraphs 130(f)(ii), 130(f)(iii), 134(d) to 134(f) and 135(c) to135(e) of IAS 36 Impairment of Assets. As permitted by s408 of the Companies Act 2006 the Company has elected not to present its own Income Statement or Statement of Comprehensive Income for the year. The profit attributable to the Company is disclosed in the footnote to the Company’s Statement of Financial Position. The Company’s Financial Statements are presented in GBP and are rounded to the nearest thousand pounds (£’000) except where otherwise stated. The principal accounting policies adopted by the Company are set out in note 2. 2. Accounting policies Going concern The accounts have been prepared on a going concern basis as described in note 1 of the consolidated Group financial statements. The Group cash reserves are forecast to be sufficient for the entire business to remain a going concern, without recourse to alternative sources of finance, for the period to 31 July 2024. Consequently, the on-going ability to redistribute cash between the individual entities within the Group, and the commitment of these entities to provide each other with mutual financial support as required, ensures that the Company will similarly remain a going concern. Significant accounting judgements and estimates The key accounting judgements of the Company are: The carrying value of its investments in subsidiary undertakings. The basis of assessing this is done by reviewing long-term forecasts for Thruvision Limited to determine if the investment requires impairment. Thruvision Limited has net assets, however these are lower than the carrying value of the investment held by the Company and Thruvision Limited was also loss making for the year ended 31 March 2023. As a result, a value-in-use calculation has been carried out. Key assumptions in this model include revenue growth and gross margin performance. A sensitivity analysis has been carried out and there are no reasonably possible changes in assumptions which would result in an impairment being recorded. The Company therefore does not deem its investment in Thruvision Limited to be impaired. The carrying value of amounts due from subsidiary undertakings. Amounts due from subsidiaries are considered to have low credit risk, and the loss allowance recognised during the period is therefore limited to 12 months expected credit losses. Management consider ‘low credit risk’ to be when they have a low risk of default and the issuer has a strong capacity to meet its contractual cash flow obligations in the near term. No expected credit loss has been recognised as the amount is considered to be highly immaterial. 79 GovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcFinancial statementsOther information Notes to the Company balance sheet continued 2. Accounting policies continued Share-based payments The basis of valuation of the equity awards under the various share option schemes, to arrive at the share-based payment charge or credit, are the same as for the Group accounts and detailed in note 1. The Company uses the same basis and judgements for measuring and determining the share-based payment charge/(credit) as used for the Group, which is described in further detail in note 1 to the Group Financial Statements. Summary of significant accounting policies The accounting policies set out below have been applied consistently to all years presented in these financial statements. Investments in subsidiary undertakings Investments in subsidiary undertakings are held at historical cost less any accumulated impairment losses. Share options granted to subsidiary employees are included within capital contributions within fixed asset investments at the amount of the share-based payment charge incurred by the subsidiary. Investments made by way of a capital contribution into the subsidiary are carried at cost. Amounts owed by subsidiary undertakings Amounts owed by subsidiary undertakings are recognised initially at fair value and subsequently at amortised cost using the effective interest rate method, less provision for impairment. Financial instruments Financial assets and financial liabilities are recognised in the Company’s statement of financial position when the Company becomes party to the contractual provisions of the instrument. Financial assets are de-recognised when the contracted rights to the cash flows from the financial asset expire or when the contracted rights to those assets are transferred. Financial liabilities are de- recognised when the obligation specified in the contract is discharged, cancelled or expired. Cash equivalents Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less. Employee Benefit Trust The Thruvision Group Plc Employee Benefit Trust (the ‘Trust’), which purchases and holds Ordinary Shares of the Company in connection with certain employee share schemes, is included in the Company’s financial statements. Any consideration paid or received by the Trust for the purchase or sale of the Company’s own shares is shown as a movement in Shareholders’ equity. Impairment The Company’s accounting policies in respect of impairment of financial assets are consistent with the Group. The carrying values of investments in subsidiary undertakings are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated based upon the higher of value in use or fair value less cost of disposal. Share-based payments Certain employees of the Company receive part of their remuneration in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions). The cost of equity-settled transactions with employees is measured at fair value at the date at which they are granted and the fair value at the grant date is expensed on a straight-line basis over the vesting period based on the estimate of shares that will eventually vest. The estimate of the number of awards likely to vest is reviewed at each Consolidated Statement of Financial Position reporting date up to the vesting date, at which point the estimate is adjusted to reflect the actual outcome of awards which have vested. No adjustment is made to the fair value after the vesting date even if the awards are forfeited or not exercised. Where the Company grants options over its own shares to the employees of its subsidiaries, it recognises an increase in the cost of investment in its subsidiaries equivalent to the equity-settled share-based payment charge recognised in the subsidiary’s Financial Statements with the corresponding credit being recognised directly in equity within other reserves. Foreign currencies The Company’s financial statements are presented in GBP. Transactions in foreign currencies are initially recorded in the entity’s functional currency by applying the spot exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency rate of exchange ruling at the balance sheet date. All differences are taken to the income statement. 80 Thruvision Group plc Annual Report and Accounts 2023 2. Accounting policies continued Income taxes Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted by the balance sheet date. Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements, with the following exceptions: • where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss; • in respect of taxable temporary differences associated with investments in subsidiaries where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future; and • deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carried forward tax credits or tax losses can be utilised. Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the balance sheet date. Income tax is charged or credited to the income statement if it relates to items that are charged or credited to other comprehensive income. Similarly, income tax is charged or credited directly to equity if it relates to items that are credited or charged directly to equity. Otherwise income tax is recognised in the income statement. 3. Employee costs and other information The average number of employees during the year were as follows: Directors and administration The employee costs for the year, including Directors, amounted to: Salaries and short-term employee benefits Social security costs Pension costs Share-based payments charge/(credit) Average 2023 6 2023 £’000 931 126 3 37 1,097 Average 2022 5 2022 £’000 678 86 5 (175) 594 Directors’ remuneration is disclosed in notes 5 and 21 of the Group financial statements. Details of share-based payments are in the Remuneration report on pages 25 to 31. Information on the main employee share-based payments is given in note 18 to the consolidated Group financial statements. Details of the remuneration of key management personnel are given in note 21 to the consolidated Group financial statements. Auditor’s remuneration The fee for the audit of the Company was £28,000 (2022: £98,000). 81 GovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcFinancial statementsOther information Notes to the Company balance sheet continued 4. Investments in subsidiary undertakings Cost At 1 April 2022 Movement relating to share options granted to subsidiary employees Capital contribution At 31 March 2023 Amounts provided At 31 March 2022 and 2023 Net book value At 31 March 2023 At 31 March 2022 Total £’000 17,257 59 3,500 20,816 3,607 17,209 13,650 The capital contribution of £3,500,000 relates to the capitalisation of an intercompany receivable from Thruvision Limited as it was deemed to be an investment that was not expected to be repaid in the current business cycle. All of the Company’s investments are unlisted. Details of the Company’s subsidiary undertakings as at 31 March 2023, are disclosed in note 10. 5. Trade and other receivables Amounts falling due within one year Amounts owed by subsidiary undertakings Prepayments and accrued revenue Other debtors 2023 £’000 509 15 – 524 2022 £’000 1,045 24 19 1,088 Amounts owed by subsidiary undertakings are non-interest bearing and repayable on demand. The provision for expected credit losses was nil (2022: nil). 6. Trade and other payables Current Trade payables Accruals Social security and other taxes 7. Share capital Authorised, allotted, called-up and fully paid At 1 April 2022 Shares issued in the year At 31 March 2023 2023 £’000 56 332 30 418 Number of Ordinary Shares of 1 pence each 146,589,118 658,121 147,247,239 2022 £’000 62 261 29 352 £’000 1,466 6 1,472 The rights preferences and restrictions attached to each class of share are disclosed in the Group financial statements in note 17. Full details on the movements in share capital are provided in note 17 of the Group financial statements. 82 Thruvision Group plc Annual Report and Accounts 2023 8. Related party transactions Transactions with the Directors of the Company are disclosed in the Remuneration report and in note 21 of the Group financial statements. Amounts outstanding due from subsidiary undertakings that have had transactions during the year are detailed below: Amounts owed by subsidiary undertakings 2023 £’000 509 2022 £’000 1,045 Amounts owed by subsidiary undertakings are interest free and repayable on demand. There were no amounts due to other related parties. 9. Post-balance sheet event From 1 April 2023 to the date of this report, 309,619 of Shares in the Company have been purchased by the EBT with a nominal value of £3,096 for total consideration of £80,000. Thruvision Limited has recently agreed an overdraft facility of £1.0 million, reducing to £0.25 million on 30 September 2023 and expiring on 31 May 2024, in order to further support working capital requirements as the business expands. Thruvision Group plc has entered into a guarantee in respect of this facility. 10. Related undertakings The Company is a public limited company incorporated and domiciled in England and Wales. The Company’s Ordinary Shares are listed on the Alternative Investment Market, regulated by the London Stock Exchange. The table below lists the Company’s principal subsidiary undertakings at 31 March 2023. The Company holds 100% of the ordinary share capital of all the subsidiaries directly: Company name Thruvision Limited Thruvision Inc. Thruvis Limited* Principal activity People-screening technology People-screening technology Dormant Registered offices 121 Olympic Avenue, Milton Park, Abingdon, Oxon OX14 4SA 21140, Ashburn Crossing Drive, Suite 140, Ashburn, VA 20147, USA 121 Olympic Avenue, Milton Park, Abingdon, Oxon OX14 4SA Group interest 100% Principally operates in UK 100% USA 100% UK Country of incorporation England & Wales USA England & Wales * Dormant subsidiary exempt from audit under s479A of the Companies Act 2006. An application to strike-off was made on 11 May 2023. No UK subsidiary companies above were exempt from preparing or filing individual accounts with the registrar under s394A and s448A of the Companies Act 2006. Special resolutions to wind up the subsidiary companies detailed below by way of voluntary liquidation were made on 15 December 2021, with the appointment of a liquidator on 29 December 2021: • COE Group Limited (dissolved 16 May 2023); • COE Limited (dissolved 29 March 2023); • Essential Viewing Systems Limited (dissolved 21 March 2023); • Timeload Local Limited (dissolved 29 March 2023); • Timeload Holdings Limited (dissolved 30 March 2023); and • Timeload (UK) Limited (dissolved 30 March 2023). Total costs incurred on this activity in the year amounted to £7,500 (2022: £91,000). All of the above subsidiary companies had coterminous reporting periods with the Company. 83 GovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcFinancial statementsOther information THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in any doubt as to the action you should take, you are recommended to seek your own financial advice from your stockbroker, bank manager, solicitor, accountant or other independent adviser authorised under the Financial Services and Markets Act 2000 if you are resident in the UK or, if you reside elsewhere, another appropriately authorised financial adviser. If you have sold or otherwise transferred your shares in Thruvision Group plc, you should forward this document and other documents enclosed as soon as possible either to the purchaser or transferee or to the person who arranged the sale or transfer so they can pass these documents to the person who now holds the shares. Thruvision Group plc Notice of Annual General Meeting (Incorporated under the Companies Act 2006 and registered in England and Wales with registered number 07149547) NOTICE IS HEREBY GIVEN THAT an Annual General Meeting (the ‘Meeting’ or the ‘AGM’) of Thruvision Group plc (the ‘Company’) will be held at the offices of Investec Bank plc, 30 Gresham Street, London EC2V 7QP at 10.00 a.m. on Thursday, 21 September 2023 to consider and, if thought fit, to pass the following resolutions of which Resolutions 1 to 10 will be proposed as ordinary resolutions of the Company and Resolutions 11 to 14 will be proposed as special resolutions of the Company. Ordinary business 1. To receive and adopt the audited financial statements of the Company for the year ended 31 March 2023 and the reports of the Directors and auditors thereon. 2. To approve the Directors’ remuneration report for the year ended 31 March 2023. 3. To re-elect Tom Black as a Director, who retires in accordance with the Company’s Articles of Association. 4. To re-elect Colin Evans as a Director, who retires in accordance with the Company’s Articles of Association. 5. To re-elect Richard Amos as a Director, who retires in accordance with the Company’s Articles of Association. 6. To re-elect Katrina Nurse as a Director, who retires in accordance with the Company’s Articles of Association. 7. To re-elect Victoria Balchin as a Director, who retires in accordance with the Company’s Articles of Association. 8. To re-appoint RSM UK Audit LLP as auditor of the Company to hold office from the conclusion of the AGM until the conclusion of the next general meeting of the Company at which accounts are laid before the Company. 9. To authorise the Directors to determine the remuneration of the auditor. Special business 10. That, in substitution for any existing authorities and powers granted to the Directors pursuant to Section 551 of the Companies Act 2006 (the ‘Act’) prior to the passing of this resolution, the Directors be and they are hereby generally and unconditionally authorised pursuant to Section 551 of the Act to exercise all powers of the Company to allot shares in the Company, and to grant rights to subscribe for or to convert any security into shares of the Company (such shares, and rights to subscribe for or to convert any security into shares of the Company being ‘relevant securities’) up to an aggregate nominal amount of £490,919 and unless previously renewed, revoked, varied or extended this authority shall expire on the earlier of the conclusion of the next Annual General Meeting of the Company and the date falling 15 months after the date of passing of this resolution, except that the Company may at any time before such expiry make an offer or agreement which would or might require relevant securities to be allotted after such expiry and the Directors may allot relevant securities in pursuance of any such offer or agreement as if this authority had not expired. 11. That, conditional upon the passing of Resolution 10 and in substitution for all existing authorities and powers given to the Directors pursuant to Section 570 of the Act prior to the passing of this resolution, the Directors be and they are hereby empowered pursuant to Section 570(1) of the Act to allot equity securities (as defined in Section 560 of the Act) of the Company wholly for cash pursuant to the authority of the Directors under Section 551 of the Act conferred by Resolution 10 above, and/or where such allotment constitutes an allotment of equity securities by virtue of Section 560(2) of the Act as if Section 561(1) of the Act did not apply to any such allotment, provided that such power conferred by this resolution shall be limited to: a. the allotment of equity securities in connection with an invitation or offer of, or invitation to apply for, equity securities to the holders of Ordinary Shares in the capital of the Company (excluding any shares held by the Company as treasury shares (as defined in Section 724(5) of the Act)) on a fixed record date in proportion (as nearly as practicable) to their respective holdings of such Shares or in accordance with the rights attached to such shares (but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements, record dates or legal or practical problems under the laws of, or the requirements of, any regulatory body or any stock exchange in any territory or otherwise howsoever); and b. the allotment (otherwise than pursuant to paragraph (a) of this resolution) of equity securities up to a maximum nominal amount equal to £147,276; and unless previously renewed, revoked, varied or extended this power shall expire on the earlier of the conclusion of the next Annual General Meeting of the Company and the date falling 15 months after the date of passing of this resolution, except that the Company may before the expiry of this power make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of any such offer or agreement as if this power had not expired. 84 Thruvision Group plc Annual Report and Accounts 2023 12. That, in substitution for any equivalent authorities and powers granted to the Directors prior to the passing of this resolution, the Directors be and they are empowered in addition to the authority granted pursuant to Resolution 11 to allot equity securities (as defined in Section 560 of the Act) of the Company wholly for cash pursuant to the authority of the Directors under Section 551 of the Act conferred by Resolution 10 above (in accordance with Section 570(1) of the Act) and/or by way of a sale of treasury shares (in accordance with Section 573 of the Act), in each case as if Section 561(1) of the Act did not apply to such allotment provided that: a. the power conferred by this resolution shall be: i. limited to the allotment of equity securities up to an aggregate nominal value equal to £147,276; ii. used only in connection with an acquisition or specified capital investment which is announced contemporaneously with the allotment, or which has taken place in the preceding six-month period and is disclosed in the announcement of the allotment for the purposes of financing (or refinancing, if the authority is to be used within 12 months after the original transaction) a transaction which the Board of the Company determines to be either an acquisition or a specified capital investment of a kind contemplated by the Statement of Principles on Disapplying Pre-Emption Rights most recently published by the Pre-Emption Group prior to the date of this notice; and b. unless previously revoked, varied or extended, this power shall expire on the earlier of the conclusion of the next Annual General Meeting of the Company and the date falling 15 months after the date of passing of this resolution, except that the Company may before the expiry of this power make an offer or agreement which would or might require equity securities to be allotted or sold after such expiry and the Directors may allot equity securities in pursuance of such an offer or agreement as if this power had not expired. 13. That the Company be and is hereby generally and unconditionally authorised (pursuant to Section 701 of the Act) to make one or more market purchases (as defined in Section 693(4) of the Act) on the London Stock Exchange (the ‘Exchange’) of any of its own Ordinary Shares of 1 penny each (‘Ordinary Shares’) on such terms and in such manner as the Directors of the Company may from time to time determine provided that: a. the maximum number of Ordinary Shares hereby authorised to be purchased is 22,091,371; b. the maximum price (excluding expenses) which may be paid for an Ordinary Share is an amount equal to 105% of the average of the middle market quotations for an Ordinary Share derived from the AIM appendix of the Daily Official List of the Exchange for the five business days immediately prior to the day on which the Share is contracted to be purchased; c. the minimum price which may be paid for an Ordinary Share is 1 penny exclusive of attributable expenses payable by the Company; and d. the authority conferred by this resolution, unless previously renewed, revoked, varied or extended, shall expire on the earlier of the conclusion of the next Annual General Meeting of the Company and the date falling 15 months after the date of passing this resolution, except that the Company may, before such expiry, enter into one or more contracts for the purchase of Ordinary Shares which may be completed by or executed wholly or partly after the expiration of this authority. 14. That the Directors be and they are hereby authorised to amend the rules of the Thruvision Sharesave Scheme (the ‘Scheme’) referred to in the notice of the Meeting and produced in draft to the Meeting and, for the purposes of identification, initialled by the Chairman, to permit the grant of options in accordance with rules of the Scheme until 20 September 2033 and further that they be authorised to establish similar schemes of the benefit of non-UK employees, taking account of local tax, exchange control or securities laws (on the basis that shares made available under such schemes will count against the Scheme’s limits on individual and overall participation). By order of the Board: Hannah Platt Company Secretary 20 July 2023 Registered Office 121 Olympic Avenue Milton Park Abingdon Oxon OX14 4SA 85 Financial statementsGovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcOther information Thruvision Group plc Notice of Annual General Meeting continued Appendix 1 Explanatory notes to certain resolutions Resolution 10 – Directors’ power to allot relevant securities This resolution grants the Directors authority to allot Shares in the capital of the Company and other relevant securities up to an aggregate nominal value of £490,919, representing approximately one third of the nominal value of the issued Ordinary Share capital of the Company as at 26 June 2023, being the latest practicable date before the publication of this notice. Unless revoked, varied or extended, this authority will expire at the conclusion of the next Annual General Meeting of the Company, or the date falling 15 months from the passing of the resolution, whichever is the earlier. Resolution 11 – Directors’ power to issue Shares for cash This resolution authorises the Directors in certain circumstances to allot equity securities for cash other than in accordance with the statutory pre-emption rights (which require a Company to offer all allotments for cash first to existing Shareholders in proportion to their holdings). The relevant circumstances are either where the allotment takes place in connection with a rights issue or the allotment is limited to a maximum nominal amount of £147,276 representing approximately 10% of the nominal value of the issued Ordinary Share capital of the Company as at 26 June 2023 (being the latest practicable date before the publication of this notice) for general purposes. Unless revoked, varied or extended, this authority will expire at the conclusion of the next Annual General Meeting of the Company or 15 months after the passing of the resolution, whichever is the earlier. Resolution 12 – Directors’ power to issue Shares for cash This resolution authorises the Directors to allot further equity securities for cash in connection with acquisitions or other specified capital investments which are announced contemporaneously with the allotment, or which has taken place in the preceding six-month period and is disclosed in the announcement of the allotment. This authority is limited to a maximum nominal amount of £147,276 which represents approximately 10% of the nominal value of the issued Ordinary Share capital of the Company as at 26 June 2023 (being the latest practicable date before publication of this notice). The Directors consider that the power proposed to be granted by Resolution 12 is necessary to retain flexibility, although they do not have any intention at the present time of exercising such power. Unless revoked, varied or extended, this authority will expire at the conclusion of the next Annual General Meeting of the Company, or 15 months after the passing of the resolution, whichever is the earlier. Resolution 13 – Directors’ authority to purchase shares (market purchases) This resolution authorises the Directors to make market purchases of up to 22,091,371 Ordinary Shares (representing approximately 14.99% of the Company’s issued Ordinary Share capital as at 26 June 2023, being the latest practicable date before publication of this notice). Shares so purchased may be cancelled. The authority will expire at the end of the next Annual General Meeting of the Company or 15 months from the passing of the resolution, whichever is the earlier. The Directors intend to seek renewal of this authority at subsequent Annual General Meetings. The minimum price that can be paid for an Ordinary Share is 1 penny, being the nominal value of an Ordinary Share. The maximum price that can be paid is 5% over the average of the middle market prices for an Ordinary Share, derived from the AIM appendix of the Daily Official List of the London Stock Exchange, for the five business days immediately before the day on which the relevant share is contracted to be purchased. The Directors intend to exercise this right only when, in light of the market conditions prevailing at the time and taking into account all relevant factors (for example, the effect on earnings per Share), they believe that such purchases are in the best interests of the Company and its Shareholders generally. The overall position of the Company will be taken into account before deciding upon this course of action. Resolution 14 – Extension of the life of the Thruvision Sharesave Scheme for a further 10 years This resolution authorises the Directors to extend the life of the Thruvision (originally Digital Barriers) Sharesave Scheme (the ‘Scheme’) by permitting the grant of options until 20 September 2033 and further to continue the Directors’ authority to establish similar schemes for overseas employees (within the Scheme’s limits on participation). A summary of the Scheme, as it is proposed that it should be amended, is set out in Appendix 2. The Scheme is an ‘all-employee’ scheme under which employees can save over three or five years to buy Ordinary Shares on favourable terms. In 2013 Shareholders approved the grant of options until 30 October 2023. The Directors believe that the Scheme has been a success in encouraging employees to identify their interests with those of Shareholders and provide them with an opportunity to share in the success of the Company. A copy of the rules of the Scheme, as it is proposed that they will be amended, will be available for inspection at the offices of Thruvision during normal business hours on any weekday (Saturdays, Sundays and English public holidays excepted) until the close of the AGM and at the place of the AGM for at least 15 minutes prior to and during the AGM. Recommendation The Directors consider that the proposals being put to the Shareholders at the AGM are in the best interests of the Company and of the Shareholders as a whole. Accordingly, the Directors recommend that you vote in favour of the resolutions set out in the Notice of the AGM, as they intend to do in respect of their own beneficial holdings of Ordinary Shares. 86 Thruvision Group plc Annual Report and Accounts 2023 Appendix 2 – Summary of principal terms of the Thruvision Sharesave Scheme (the ‘Scheme’) Tax-advantaged Scheme The Scheme is designed to qualify for reliefs from UK income tax available to certain savings related share option schemes that offer broad-based participation. Options that are not designed to qualify for UK tax relief can also be granted to non-UK employees on slightly different terms (including that they can be settled in cash). Operation Operation of the Scheme is supervised by the Company’s board of directors. Eligibility Employees and full-time directors of the group companies may participate. A qualifying period of service of up to five years may be required. Grant of options Participants enter into an HMRC approved savings contract, (under which monthly savings will be made by deduction from pay over three or five years) and are granted options to buy Ordinary Shares at the end of the savings contract. Options must normally be granted within 30 days of the first day by reference to which the option price is set. Ordinary Shares over which options are granted have a total option price that corresponds to the maturity proceeds of the savings contract. Options may not be granted after 20 September 2033. Individual participation A participant’s monthly savings under all savings contracts linked to options granted under sharesave schemes may not exceed the statutory maximum (currently £500). The Company may apply a lower limit. Option price The price per Ordinary Share payable to exercise an option cannot be less 80 per cent. of the middle-market quotation of an Ordinary Share on the AIM appendix to the Daily Official List of the London Stock Exchange (normally averaged over five dealing days) shortly before the option is granted (or the nominal value of an Ordinary Share if the option relates only to new issue shares). The option price will be determined by reference to dealing days within six weeks after announcement by the Company of its results for any period or at other times in exceptional circumstances. Exercise of options Options are normally exercisable within six months of maturity of the savings contract. Early exercise is permitted for a short period (to the extent of accumulated savings): (a) on cessation of employment within three years of grant for “good leavers” (but options otherwise lapse on cessation). Subsequently, options only lapse where cessation is due to misconduct; and (b) following certain corporate events. Options are not transferable, except on death. Options are not pensionable. Overall Scheme limits The Scheme may operate over new issue Ordinary Shares, Ordinary Shares held in treasury or Ordinary Shares purchased in the market. In any 10 calendar years, the Company may not issue (or grant rights to issue) more than 10 per cent of its issued ordinary share capital under the Scheme and any other employee share scheme it adopts. Ordinary Shares held in treasury count as new issue Ordinary Shares for this purpose unless institutional investor guidelines provide otherwise. Variation of capital The number of Ordinary Shares under option and the option price may be adjusted for variations in the Company’s issued ordinary share capital. Rights attaching to Shares Ordinary Shares allotted under the Scheme rank equally with Ordinary Shares then in issue (except for rights by reference to a record date before their allotment). Alterations to the Scheme The Scheme may be altered provided prior shareholder approval is obtained for alterations to the rules governing eligibility, individual participation limits, limits on the issue of Ordinary Shares or the transfer of Ordinary Shares held in treasury, the basis for determining a participant’s entitlement to, and the terms of, the Ordinary Shares to be acquired and the adjustment of options. Shareholder approval is not, however, required for minor alterations to benefit Scheme administration, to take account of legislative change or to obtain or maintain favourable tax, exchange control or regulatory treatment for participants or for any group company. Overseas schemes Similar schemes may be established for overseas territories taking account of local tax, exchange control or securities laws. Ordinary Shares made available under such schemes count against the Scheme limits on individual and overall participation. 87 Financial statementsGovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcOther information Thruvision Group plc Notice of Annual General Meeting continued Explanatory notes on proxy voting: 1. 2. 3. 4. 5. 6. Every Shareholder has the right to appoint some other person(s) of their choice, who need not be a Shareholder, as his or her proxy to exercise all or any of his or her rights, to attend, speak and vote on their behalf at the AGM. If you wish to appoint a person other than the Chairman, please insert the name of your chosen proxy holder in the space provided on the reverse of the proxy form. If the proxy is being appointed in relation to less than your full voting entitlement, please enter in the box next to the proxy holder’s name on the reverse of the proxy form, the number of Shares in relation to which they are authorised to act as your proxy. If returned without an indication as to how the proxy shall vote on any particular matter, the proxy will exercise his or her discretion as to whether, and if so how, he or she votes (or if this proxy form has been issued in respect of a designated account for a Shareholder, the proxy will exercise his or her discretion as to whether, and if so how, he or she votes). To appoint more than one proxy to exercise rights attached to different Shares, an additional proxy form(s) may be obtained by contacting the Company’s registrar, Computershare Investor Services plc’s helpline on 0370 707 1889 or you may photocopy the proxy form. Please indicate in the box next to the proxy holder’s name on the reverse of the proxy form the number of Shares in relation to which they are authorised to act as your proxy. Please also indicate by marking the box provided if the proxy instruction is one of multiple instructions being given. All forms must be signed and should be returned together in the same envelope. To be valid a proxy form, and the original or duly certified copy of the power of attorney or other authority (if any) under which it is signed or authenticated should reach the Company’s registrar, Computershare Investor Services plc, The Pavilions, Bridgwater Road, Bristol BS99 6ZY by no later than 10.00 am on Tuesday 19 September 2023. You can only appoint a proxy using the procedures set out in these notes and in the notes to the proxy form. The ‘Vote Withheld’ option is provided to enable you to abstain on any particular resolution. However, it should be noted that a ‘Vote Withheld’ is not a vote in law and will not be counted in the calculation of the proportion of the votes ‘For’ and ‘Against’ a resolution. Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001 (as amended), entitlement to attend and vote at the AGM and the number of votes which may be cast thereat will be determined by reference to the Register of Members of the Company at 6.00 pm on Tuesday 19 September 2023 (or if the AGM is adjourned, 48 hours before the time fixed for the adjourned AGM). Changes to entries on the Register of Members after that time shall be disregarded in determining the rights of any person to attend and vote at the AGM. To appoint one or more proxies or to give an instruction to a proxy (whether previously appointed or otherwise) via the CREST system, CREST messages must be received by the issuer’s agent (ID number 3RA50) not later than 10.00 am on Tuesday 19 September 2023 being two working days before the time appointed for holding the AGM. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp generated by the CREST system) from which the issuer’s agent is able to retrieve the message. The Company may treat as invalid a proxy appointment sent by CREST in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001 (as amended). Alternatively, Shareholders can appoint a proxy electronically at www.investorcentre.co.uk/eproxy by following the instructions on the website. Shareholders will need their reference numbers (PIN and control number) set out on the front of their proxy form, or received via email, to complete the online process. 7. The address on the proxy form is how it appears on the Register of Members. If this information is incorrect, please ring the Registrar’s helpline on 0370 707 1889 to request a change of address form or go to www.investorcentre.co.uk to use the online Investor Centre service. 8. Any alterations made to the proxy forms should be initialled. 9. The completion and return of the proxy forms will not preclude a member from attending the AGM and voting in person. 10. In the case of joint holders of Shares, the vote of the first named in the register of members who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of other joint holders. 11. Please note that communications regarding the matters set out in this Notice of AGM will not be accepted in electronic form, other than as specified in the accompanying proxy form. 12. A member that is a Company or other organisation not having a physical presence cannot attend in person but can appoint someone to represent it. This can be done in either one of two ways: Either by appointment of a proxy (described in note 1 above) or of a corporate representative. Members considering the appointment of a corporate representative should check their own legal position, the Company’s Articles of Association, and the relevant provision of the Companies Act 2006. 88 Thruvision Group plc Annual Report and Accounts 2023 Officers and professional advisors Directors and Officers Tom Black Non-Executive Chairman Colin Evans Chief Executive Officer Victoria Balchin Chief Financial Officer Richard Amos Non-Executive Director Katrina Nurse Non-Executive Director Hannah Platt Company Secretary Registered Office 121 Olympic Avenue Milton Park Abingdon Oxon OX14 4SA Registered No: 07149547 Registrars Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS99 6ZZ Auditors RSM UK Audit LLP 10th Floor 103 Colmore Row Birmingham B3 3AG Nominated Advisor Investec 30 Gresham Street London EC2V 7QP Financial PR Meare Consulting Limited Bankers HSBC City of London Corporate Banking Centre 60 Queen Victoria Street London EC4N 4TR Solicitors Osborne Clarke LLP One London Wall London EC2Y 5EB 89 Financial statementsGovernanceStrategic reportOverviewAnnual Report and Accounts 2023 Thruvision Group plcOther information Notes 90 Thruvision Group plc Annual Report and Accounts 2023 Designed and produced by Radley Yeldar www.ry.com Printed on recycled paper. T h r u v i s i o n G r o u p p l c A n n u a l R e p o r t a n d A c c o u n t s 2 0 2 3 Annual Report and Accounts 2023 Thruvision is the leading developer, manufacturer and supplier of walk-through security technology. Its technology is deployed in more than 20 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.
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