Lancaster marine group planning for future after reverse takeover

Lancaster-based OTAQ Group completed its reverse takeover by Hertsford Capital this morning.

OTAQ is a marine technology products and solutions group for the global aquaculture and offshore oil and gas industries.

The reverse takeover also includes an equity placing raising £1.5m.

Following the takeover, Hertsford Capital announced its admission to the Official List and initiation of trading on the London Stock Exchange’s main market at 8am today (March 31), under the ticker OTAQ.

Hertsford proposes to change its name to OTAQ PLC, with Alex Hambro assuming the role of non-executive chairman, and Sarah Gills continuing as a non-executive director.

As a developer of products for aquaculture, in particular salmon farms, offshore energy, renewables and oceanographic research, OTAQ operates in strong growth markets.

Its core aquaculture product, Sealfence, significantly improves yields for the salmon farming industry by reducing the frequency of predator attacks using acoustic technology.

The International Salmon Farmers Association 2018 Report stated that salmon farming was worth almost £12.53bn per annum, while finfish farming is a £138.5bn annual turnover industry.

Farm-raised seafood is expected to rise to 62% of all consumed by 2030, up from 49% in 2012.

OTAQ holds a 42% market share of predator-defence technology in Scotland, with expected equivalent market share growth in Chile, the world’s second-largest salmon farming country with around 6,000 cages.

The combination of 12- and 48-month rental contracts and recurring monthly purchase orders underpins strong earnings visibility.

OTAQ’s blue chip client base includes The Scottish Salmon Company, Mowi, Scottish Sea Farms and Multiexport Foods, and it is set to benefit from continued growth in global salmon production.

Other products include a range of sub-sea cameras, laser measuring devices, leak detection systems and high-integrity electrical connectors for use in the offshore oil and gas market.

The business has a diverse geographical reach – including Scotland, Chile, Scandinavia and Russia.

During the year ended March 31, 2019, OTAQ generated revenues of £1.58m (2018: £919,000), and EBITDA of £50,000 (2018 loss: £361,000).

Unaudited interim results for the half year ended September 30, 2019, revealed total revenues of £1.76m, and EBITDA of £315,000.

The company is set to expand its offering by designing, developing and launching new products including biomass measurement and bloom and plankton detection.

On admission, the company will have 30,548,599 ordinary shares, and a market capitalisation of £17.6m on admission at the placing price of 57.5p.

The strategy of the enlarged group is to build a business of significance within the aquaculture industry, focused on helping salmon farmers become more effective and helping them overcome challenges in their operations.

Over time, the enlarged group intends to have a range of products designed to meet these needs that are based on a common infrastructure and a cloud-based information system.

The strategy is to design, develop, install and support these products on an ‘Infrastructure as a Service’ basis on long-term rental contracts.

Harry Hyman and Rodger Sargent have resigned as directors of the company.

The directors are chief executive Philip Newby, who joined OTAQ in June 2014 as commercial director and was appointed chief executive in March 2016, chief financial officer Simon Walters, and non-executive director George Watt.

Philip Newby said: “We are excited by the opportunity we now have to develop our operations and products, building on the rapid progress we have made in recent years.

“This listing and additional capital will allow us take advantage of the many growth opportunities we have, and accelerate the development of new products.”

A specialist team from Burnetts Solicitors, including corporate solicitors Michael Walby, Vaughan Jones and Becky Brook, advised OTAQ Group on the reverse takeover, alongside its other advisers.

Michael Walby said: “We are delighted for Phil and the entire team, and we wish OTAQ every success with its exciting growth plans as a listed company on the London Stock Exchange.”