TIDMDGB
RNS Number : 1257U
Digital Barriers plc
28 November 2013
28 November 2013
Digital Barriers plc
("Digital Barriers" or the "Group")
Interim Results for the six months ended 30 September 2013
Digital Barriers (LSE AIM: DGB), the specialist provider of
advanced surveillance technologies to the international homeland
security and defence markets, announces unaudited results for the
six months ended 30 September 2013.
Key Highlights
-- Group revenues increased 12% to GBP9.0m (2012: GBP8.1m) in
the six-month period to 30 September 2013, with international
product revenues increasing 36% and exports now accounting for 33%
of Group revenues (2012: 27%).
-- The Group raised GBP18.0m (net of placing costs) through the
issue of new ordinary shares on 4 November 2013 to further
implement its stated strategy and address its working capital
requirements.
-- The Group has seen significant interest for its RDC ground
sensors during the period, including a GBP2.3m contract extension
with a UK customer and its first major overseas sale in the form of
an initial GBP1.0m contract with an Asia Pacific government
customer.
-- The Group is also continuing to see increasing exports of its
TVI video surveillance platform, with sales to 18 countries during
the period, including its second major US federal agency and OEM
arrangements with both SingTel and BT Redcare.
Commenting on the results, Tom Black, Executive Chairman of
Digital Barriers, said:
"We are delivering increased sales momentum overseas with
exactly those flagship customers we sought to secure since
establishing the Group. We track this strategic sales momentum
around the world and we continue to see increasing demand across
each of our regions, with our world-class TVI and RDC technologies
seeing especially strong interest across major government and
commercial customers. This is the best indicator of the future
potential of the Group. The recent share placing also demonstrated
the excellent ongoing support we have from existing shareholders
and attracted significant new investors into the Group. Both the
traction of our disruptive technologies and the ongoing shareholder
support, reaffirm my confidence in the longer-term prospects for
the Group"
For further information please contact:
Digital Barriers plc +44 (0)20 7940 4740
Tom Black, Executive Chairman
Colin Evans, Managing Director
Zak Doffman, Managing Director
Investec Investment Banking +44 (0)20 7597 5970
Andrew Pinder / Dominic Emery /
Patrick Robb
FTI Consulting +44 (0)20 7831 3113
Edward Bridges / Matt Dixon / Elodie
Castagna
About Digital Barriers
Digital Barriers provides advanced surveillance technologies to
the international homeland security and defence markets,
specialising in 'edge-intelligent' solutions that are designed for
remote, hostile or complex operating environments. We work with
governments, multinational corporations and system integrators in
the defence, law enforcement, critical infrastructure,
transportation and natural resources sectors. Our surveillance
technologies have been successfully proven on some of the most
demanding operational and environmental deployments around the
world.
www.digitalbarriers.com
Chairman's Statement
Introduction
This period has been characterised by several strategically
important international contract wins where initial sales value is
modest but with the potential for very significant follow-on orders
with each of these organisations over the next few years. We have
sold into 30 countries during the period and the 36% increase in
international product revenues, which made up 33% of Group revenues
in the period, was very encouraging.
During the period, we secured the sale of our TVI video
technology as an enterprise solution into a second US federal
agency and received an initial order for unattended ground sensors
valued at GBP1.0m into a high-profile border protection programme
in the Asia Pacific region. This is typical of what we are seeing
with other sales to international governments because the initial
order has been many months in gestation with our technology coming
through several extensive and competitive trials to secure its
position on a very significant national-level programme.
We continue to experience greater levels of seasonality than
originally envisaged which is exacerbating the peaks and troughs of
our sales and delivery cycles. This, combined with the need to
purchase and integrate third-party equipment into large-scale
solutions built around Digital Barriers' intellectual property for
delivery to customers, places increased demands on our cash
resources. Therefore on 4 November we raised an additional GBP18.0m
(net of placing costs) from existing and new shareholders.
Our Services business continues to operate in the UK only. The
focus of this division remains the provision of integration
services for government departments, which has been a challenging
sector given the current spending climate in the UK. This has
inevitably led to revenues from our Services division declining in
the period, although we are now seeing material interest from
customers within our Services division in technology offerings such
as TVI video streaming solutions.
Our very clear focus is on developing our international product
revenues and, in the short to medium term, our growth will continue
to be built on the significant market traction we are seeing for
RDC and TVI, whilst ThruVision remains a compelling medium-term
opportunity.
RDC Unattended Ground Sensors
The Group is seeing significant customer interest around the
world for its fully integrated unattended ground sensor solution,
and is actively engaged in discussions or trials with customers
across twelve countries for major defence and border protection
programmes. Highlights include:
-- In July 2013 the Board announced a contract extension valued
at GBP2.3m with a UK-based customer for its fully integrated
unattended ground sensor solution.
-- In September 2013 it announced its first significant overseas
sale of the same technology, with an initial contract award valued
at GBP1.0m for the protection of a high-profile border in the Asia
Pacific region.
-- The Group has also recently made its first sale of this
technology into a major US defence customer, with the successful
trial of the technology followed by an initial order valued at
GBP0.1m.
-- The technology has been selected for trial by an oil and gas
multinational as part of a major facility protection programme in
the Middle East.
The Board believes that this international traction is
indicative of the significant demand the Group can generate for
this technology solution around the world.
TVI Video Surveillance Platform
The Group has continued to export its world-class TVI video
surveillance platform internationally and has sold the technology
into eighteen countries during the period, highlights include:
-- Following the announcement in January 2013 that the Group had
won a contract with a US federal agency for the development of a
high-definition version of its core TVI video streaming technology,
the Group has in the period secured an enterprise-grade TVI sale
into its second US federal agency, with an initial contract valued
at GBP0.2m for TVI products, including the Group's first enterprise
sale of TVI encoding software to run on iOS devices operated by
frontline law enforcement agents. The opportunity for the TVI
surveillance platform to be deployed across defence and law
enforcement sectors is now well established, and the Group is
focused on securing initial enterprise grade TVI sales that can
lead to significant follow-on orders over the coming years.
-- The Group now has TVI solutions that operate on its own
hardware, on iOS and Android devices, and embedded in third-party
products. During the period, the Group launched a variant of TVI
technology to work with IP cameras, opening up significant new
markets and the high-definition version of TVI is scheduled to
launch in late 2013. TVI has also been successfully tested with a
potential customer organisation in the Middle East on 4G/LTE
networks during the period.
-- In addition to the core TVI video streaming technology, the
Group is now working to integrate key technologies from its
acquired companies onto the TVI platform to significantly enhance
the functionality of its products. This includes real-time video
content analytics and facial recognition capabilities that the
Group is adapting to operate on its own surveillance products and
on smartphones.
-- The Group's OmniPerception technology, acquired in January
2013, is now being adapted to operate as an embedded technology on
platforms including TVI devices, smartphones and IP cameras. The
Board believes this represents a larger opportunity than marketing
facial recognition technology on specialist dedicated hardware and
will significantly increase the market potential for such
technology.
-- Following the announcement at the beginning of the period
that SingTel had selected TVI as the delivery platform for its
video surveillance as a service ("VSaaS") offering, the Group is
now actively working with SingTel to support their sales efforts
into their enterprise customers. In August 2013, the Group
announced that it would also supply BT Redcare, the UK's largest
provider of CCTV surveillance infrastructure and alarm signalling,
with TVI products on an OEM basis. The Group is now developing
specifically adapted TVI products for this OEM reseller market; it
is expected that these products will be launched early in 2014.
-- The Group is actively engaged in discussions with multiple
mobile network operators around potential TVI reseller arrangements
under similar annuity revenue models. The Board believes that the
Group can generate significant revenues in the medium to long term
by productising and selling its IP through multinational technology
and telecoms organisations. As with the Group's sales into
government customers, the pattern of modest initial sales with the
potential for very significant follow-on revenues in later years
also applies here.
-- The Group announced in October, post period end, the sale of
its first video management solution into a major public
transportation network in the Asia Pacific region. The contract,
valued at approximately GBP0.75m, is expected to be fulfilled
during the course of this financial year and next, and lead to
follow-on orders with the same customer. The contract represents a
significant early reference for the Group's newly launched video
management capabilities within the transportation sector.
ThruVision Passive People Screening
The Group has made positive progress in the period with its
ThruVision technology. This remains an early stage technology and
the Group continues to further develop and promote it within
sectors where the Board believes there is short to medium term
sales potential. Highlights in the period include:
-- Successfully delivering the significant customs sale into
Asia Pacific that was announced last year. This system is now fully
operational and further sales are expected to the same
customer.
-- The force protection sector has continued to show great
interest in our ThruVision technology as part of some larger
technology deployment programmes.
-- ThruVision has been trialled successfully by one of the UK's
largest retail organisations to reduce shrinkage within its
distribution centres, and the customer now anticipates a wider
deployment.
Financials
Group
Revenue in the period was GBP9.0m (2012: GBP8.1m), generating a
gross profit of GBP3.8m (2012: GBP3.7m) and margin of 42% (2012:
46%). The lower gross margin is due to both product mix as well as
a low margin in the Services division, in line with expectations
and is forecast to increase in the second half. The adjusted loss
before tax was GBP(6.8)m (2012: GBP(5.0)m) and on an unadjusted
basis was GBP(7.2)m (2012: GBP(7.1)m). The increased adjusted loss
is driven by higher Corporate overheads at GBP(4.6)m (2012:
GBP(3.3)m), reflecting strategic investment in sales and marketing,
some additional central overheads and an increased charge for
LTIPs.
Revenue
Product revenue in the period increased 12% to GBP7.3m (2012 pro
forma(1) : GBP6.5m), driven by TVI and RDC, which in combination
grew 255% to GBP3.9m (2012: GBP1.1m). Services revenue in the
period contracted 30% to GBP1.7m (2012: GBP2.4m), reflecting a
tightening in UK government spending and longer sales lead
times.
Export product revenue accounted for 33% of Group revenue (2012:
27%), the majority of which was to Asia Pacific and North
America.
(1) Assuming all prior period acquisitions occurred on 1 April
2012 and excluding all current year acquisitions.
Cash
The Group ended the period with a GBP1.1m cash balance (31 March
2013: GBP5.5m). Net cash outflow from operating activities was
GBP(3.9)m including a GBP2.1m working capital inflow less GBP(6.0)m
of other operating flows, primarily cash loss before tax. The other
GBP(0.5)m of outflows is mostly capital expenditure and payments of
deferred consideration.
The working capital inflow is driven by a GBP6.0m decrease in
trade and other receivables, reflecting an unwind of the
significant GBP13.2m 31 March 2013 balance caused by high March
2013 monthly revenues. Trade and other payables decreased
GBP(1.9)m, also impacted by the high March 2013 revenues, whilst
inventory increased by GBP(2.0)m.
Outlook
With our technology solutions seeing strong international sales
momentum, the outlook for the future prospects of the Group is
increasingly compelling as it continues to deliver very strong
overseas sales growth and moves towards break-even.
The Board remains comfortable with its expectations for this
financial year.
Independent review report to Digital Barriers plc
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
6 months ended 30 September 2013 which comprises the consolidated
income statement, the consolidated statement of comprehensive
income, the consolidated balance sheet, the consolidated statement
of changes in equity, the consolidated statement of cash flows, and
related notes 1 to 7. We have read the other information contained
in the half-yearly financial report and considered whether it
contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial
statements.
This report is made solely to the Company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half-yearly financial report in accordance with
International Accounting Standards 34, "Interim Financial
Reporting," as adopted by the European Union and the AIM Rules
issued by the London Stock Exchange.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standards 34, "Interim
Financial Reporting, " as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the 6 months ended 30
September 2013 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by
the European Union and the AIM Rules issued by the London Stock
Exchange.
Ernst & Young LLP
London
27 November 2013
DIGITAL BARRIERS PLC
Consolidated income statement
for the six months ended 30 September 2013
6 months 6 months
ended ended Year ended
30 September 30 September
2013 2012 31 March 2013
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
----------------------------- ----- ------------- ------------- --------------
Revenue 2 9,009 8,078 23,272
Cost of sales (5,223) (4,353) (13,322)
----------------------------- ----- ------------- ------------- --------------
Gross profit 3,786 3,725 9,950
Administration costs (11,490) (10,299) (20,823)
Other income 489 647 1,484
Other costs - (1,087) (1,336)
----------------------------- ----- ------------- ------------- --------------
Operating loss (7,215) (7,014) (10,725)
Finance revenue 1 15 69
Finance costs (20) (62) (100)
----------------------------- ----- ------------- ------------- --------------
Loss before tax (7,234) (7,061) (10,756)
Income tax 334 417 840
----------------------------- ----- ------------- ------------- --------------
Loss for the period /
year (6,900) (6,644) (9,916)
----------------------------- ----- ------------- ------------- --------------
Adjusted loss: 3
Loss before tax (7,234) (7,061) (10,756)
Amortisation of intangibles
initially recognised
on acquisition 867 1,123 2,029
Acquisition costs - 35 369
Adjustments to deferred
consideration (472) (585) (1,384)
Impairment of intangibles - 1,087 1,336
Reorganisation costs - 372 769
Adjusted loss before
tax for the period (6,839) (5,029) (7,637)
----- ------------- -------------
(Loss) per share - basic 4 (13.54p) (15.18p) (21.78p)
(Loss) per share - diluted 4 (13.54p) (15.18p) (21.78p)
(Loss) per share - adjusted 4 (12.87p) (11.06p) (16.45p)
(Loss) per share - adjusted
diluted 4 (12.87p) (11.06p) (16.45p)
----------------------------- ----- ------------- ------------- --------------
The results for the period and the prior period are derived from
continuing activities
DIGITAL BARRIERS PLC
Consolidated statement of comprehensive income
for the six months ended 30 September 2013
6 months 6 months
ended ended Year ended
30 September 30 September
2013 2012 31 March 2013
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
------------------------------ ------ ------------- ------------- --------------
Loss for the period /
year (6,900) (6,644) (9,916)
Other comprehensive income
to be reclassified to
profit or loss in
subsequent periods
------------------------------ ------ ------------- ------------- --------------
Exchange differences
on retranslation of foreign
operations (27) 13 25
-------------------------------------- ------------- ------------- --------------
Net other comprehensive
income to be reclassified
to profit or
loss in subsequent periods (27) 13 25
-------------------------------------- ------------- ------------- --------------
Total comprehensive loss
attributable to owners
of the parent (6,927) (6,631) (9,891)
-------------------------------------- ------------- ------------- --------------
DIGITAL BARRIERS PLC
Consolidated balance sheet
at 30 September 2013
30 September 30 September
2013 2012 31 March 2013
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
------------------------------ ----- ------------- ------------- --------------
Assets
Non current assets
Property, plant and
equipment 1,245 1,197 1,370
Goodwill 24,647 21,880 24,647
Other intangible assets 4,931 5,986 5,828
------------------------------ ----- ------------- ------------- --------------
30,823 29,063 31,845
Current assets
Inventories 3,743 2,896 1,779
Trade and other receivables 7,261 5,523 13,239
Current tax recoverable 1,102 761 972
Cash and cash equivalents 1,145 7,258 5,544
------------------------------ ----- ------------- ------------- --------------
13,251 16,438 21,534
------------------------------ ----- ------------- ------------- --------------
Total assets 44,074 45,501 53,379
------------------------------ ----- ------------- ------------- --------------
Equity and liabilities
Attributable to owners
of the parent
Equity share capital 6 510 438 510
Share premium 57,989 48,012 57,989
Capital redemption
reserve 4,735 4,735 4,735
Merger reserve 454 454 454
Translation reserve (248) (233) (221)
Other reserves (307) (307) (307)
Retained earnings (23,904) (14,177) (17,267)
------------------------------ ----- ------------- ------------- --------------
Total equity 39,229 38,922 45,893
Non current liabilities
Deferred tax liabilities 305 184 363
Financial liabilities 207 1,031 202
------------------------------ ----- ------------- ------------- --------------
512 1,215 565
Current liabilities
Trade and other payables 4,115 4,170 6,038
Financial liabilities 218 1,194 883
------------------------------ ----- ------------- ------------- --------------
4,333 5,364 6,921
Total liabilities 4,845 6,579 7,486
------------------------------ ----- ------------- ------------- --------------
Total equity and liabilities 44,074 45,501 53,379
------------------------------ ----- ------------- ------------- --------------
DIGITAL BARRIERS PLC
Consolidated statement of changes in equity
for the 6 months ended 30 September 2013
Profit
Share Capital and
Share premium redemption Merger Translation Other loss Total
capital account reserve reserve reserve reserves reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- --------- --------- ------------ --------- ------------ ---------- --------- --------
At 31 March
2012 437 48,012 4,735 348 (246) (307) (7,687) 45,292
--------------------- --------- --------- ------------ --------- ------------ ---------- --------- --------
Total comprehensive
income / (loss) - - - - 13 - (6,644) (6,631)
Share-based
payment credit - - - - - - 154 154
Issue of shares
regarding the
acquisition
of Keeneo 1 - - 106 - - - 107
--------------------- --------- --------- ------------ --------- ------------ ---------- --------- --------
At 30 September
2012 438 48,012 4,735 454 (233) (307) (14,177) 38,922
--------------------- --------- --------- ------------ --------- ------------ ---------- --------- --------
Total comprehensive
income / (loss) - - - - 12 - (3,272) (3,260)
Share-based
payment credit - - - - - - 182 182
Share issue
cost - (351) - - - - - (351)
Share placement 72 10,328 - - - - - 10,400
At 31 March
2013 510 57,989 4,735 454 (221) (307) (17,267) 45,893
--------------------- --------- --------- ------------ --------- ------------ ---------- --------- --------
Total comprehensive
loss for the
period - - - - (27) - (6,900) (6,927)
Share-based
payment credit - - - - - - 263 263
--------------------- --------- --------- ------------ --------- ------------ ---------- --------- --------
At 30 September
2013 510 57,989 4,735 454 (248) (307) (23,904) 39,229
--------------------- --------- --------- ------------ --------- ------------ ---------- --------- --------
DIGITAL BARRIERS PLC
Consolidated statement of cash flows
for the 6 months ended 30 September 2013
6 months 6 months
ended ended Year ended
30 September 30 September 31 March
2013 2012 2013
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------------------- ------------- ------------- -----------
Operating activities
Loss before tax (7,234) (7,061) (10,756)
Non-cash adjustment to reconcile
loss before tax to net cash flows
Depreciation of property,
plant and equipment 394 318 771
Amortisation of intangible
assets 929 1,168 2,102
Impairment of intangible assets - 1,087 1,336
Share-based payment transaction
expense 263 154 336
Release of deferred consideration (260) (647) (678)
Reassessment of deferred consideration (229) - (805)
Disposal of fixed assets (2) - 226
Finance income (1) (15) (69)
Finance costs 20 62 100
Working capital adjustments:
Decrease / (increase) in trade
and other receivables 5,966 1,260 (6,096)
(Increase) / decrease in inventories (1,964) (959) 351
Decrease in trade and other
payables (1,937) (2,637) (1,163)
---------------------------------------- ------------- ------------- -----------
Cash utilised in operations (4,055) (7,270) (14,345)
Tax received 146 81 275
----------------------------------------- ------------- ------------- -----------
Net cash flow from operating
activities (3,909) (7,189) (14,070)
----------------------------------------- ------------- ------------- -----------
Investing activities
Sale of property, plant & equipment 2 - -
Purchase of property, plant &
equipment (269) (616) (1,453)
Expenditure on intangible assets (32) (33) (97)
Acquisition of subsidiaries - (144) (3,349)
Payment of deferred consideration (188) (60) (822)
Acquisition of cash and cash
equivalents of subsidiaries - - (41)
Interest received 1 15 69
----------------------------------------- ------------- ------------- -----------
Net cash flow from investing
activities (486) (838) (5,693)
----------------------------------------- ------------- ------------- -----------
Financing activities
Proceeds from issue of shares - - 10,400
Share issue costs - - (351)
Interest paid (3) - -
----------------------------------------- ------------- ------------- -----------
Net cash flow from financing
activities (3) - 10,049
----------------------------------------- ------------- ------------- -----------
Net decrease in cash and cash
equivalents (4,398) (8,027) (9,714)
Cash and cash equivalents at
beginning of period / year 5,544 15,289 15,289
Effect of foreign exchange rate
changes on cash and cash equivalents (1) (4) (31)
----------------------------------------- ------------- ------------- -----------
Cash and cash equivalents at
end of period / year 1,145 7,258 5,544
----------------------------------------- ------------- ------------- -----------
DIGITAL BARRIERS PLC
Notes to the financial statements
for the 6 months ended 30 September 2013
1. Accounting policies
Basis of preparation
The consolidated interim financial statements include those of
Digital Barriers plc and all of its subsidiary undertakings
(together "the Group") drawn up at 30 September 2013, and have been
prepared in accordance with International Accounting Standard 34,
"Interim Financial Reporting" ("IAS 34") as adopted for use in the
European Union ("EU"). The consolidated interim financial
statements have been prepared using accounting policies and methods
of computation consistent with those applied in the financial
statements for the period ended 31 March 2013. The Group's
forecasts and projections, taking account of reasonably possible
changes in trading performance, show that the Group should be able
to operate within its current level of cash reserves of GBP1.1m, as
at 30 September 2013, and the equity fund raise of GBP18.0m, net of
expenses, received on 4 November 2013. The Directors have a
reasonable expectation that the Group has adequate resources to
continue operating for the foreseeable future, and for this reason
they have adopted the going concern basis in these consolidated
interim financial statements.
The annual consolidated financial statements of the Group are
prepared on the basis of International Financial Reporting
Standards ("IFRS"). The consolidated interim financial statements
are presented on a condensed basis as permitted by IAS 34 and
therefore do not include all the disclosures that would otherwise
be required in a full set of financial statements and should be
read in conjunction with the most recent Annual Report and Accounts
which were approved by the Board of Directors on 28 May 2013 and
have been filed with Companies House. The condensed interim
financial statements do not constitute statutory accounts as
defined in Section 434 of the Companies Act 2006 and are unaudited
for all periods presented. The financial information for the 12
month period ended 31 March 2013 is extracted from the financial
statements for that period. The auditors' report on those financial
statements was unqualified and did not contain an emphasis of
matter reference and did not contain a statement under section
498(2) or (3) of the Companies Act 2006.
The Company is a limited liability company incorporated and
domiciled in England & Wales and whose shares are quoted on
AIM, a market operated by The London Stock Exchange.
The following new and revised international financial reporting
standards are effective for this interim period:
IAS 1 Presentation of Items of Other Comprehensive Income -
Amendments to IAS 1. Effective for annual periods beginning on or
after 1 July 2012. IAS 1 changes the grouping of items presented in
OCI. Items that could be reclassified to profit and loss at a
future point in time are presented separately from items that will
never be reclassified. This amendment will affect presentation in
these financial statements.
IFRS 13 Fair Value Measurement. Effective for annual periods
beginning on or after 1 January 2013. IFRS 13 provides guidance on
how to measure fair value, but does not change when fair value is
required or permitted under IFRS. The standard is not expected to
significantly affect the Group's results or financial position.
2. Segmental information
The Group is organised into the Services and Products divisions
for internal management, reporting and decision-making, based on
the nature of the products and services of the Group's businesses.
These are the reportable operating segments in accordance with IFRS
8 "Operating Segments". As the Group continues to develop and
change, the Directors closely monitor these reporting operating
segments to ensure they remain relevant to the management of the
Group.
6 months ended 30 September 6 months ended 30
2013 September 2012
---------------------------------- ----------------------------------
Services Products Total Services Products Total
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ---------- ---------- ---------- ---------- ---------- ----------
Total segment revenue 1,672 7,414 9,086 2,395 5,926 8,321
Inter-segment revenue - (77) (77) - (243) (243)
----------------------- ---------- ---------- ---------- ---------- ---------- ----------
Revenue 1,672 7,337 9,009 2,395 5,683 8,078
----------------------- ---------- ---------- ---------- ---------- ---------- ----------
Segment operating
(loss) / profit (290) (1,904) (2,194) 150 (1,808) (1,658)
Corporate overheads (4,626) (3,324)
Net adjusted loss
items (see note 3) (395) (2,032)
Operating loss (7,215) (7,014)
----------------------- ---------- ---------- ---------- ---------- ---------- ----------
Finance income 1 15
Finance costs (20) (62)
----------------------- ---------- ---------- ---------- ---------- ---------- ----------
Loss before tax (7,234) (7,061)
----------------------- ---------- ---------- ---------- ---------- ---------- ----------
Income tax 334 417
----------------------- ---------- ---------- ---------- ---------- ---------- ----------
Loss for the period (6,900) (6,644)
----------------------- ---------- ---------- ---------- ---------- ---------- ----------
Year ended 31 March 2013
-------------------------------
Services Products Total
Audited Audited Audited
GBP'000 GBP'000 GBP'000
----------------------- --------- --------- ---------
Total segment revenue 6,289 17,324 23,613
Inter-segment revenue - (341) (341)
----------------------- --------- --------- ---------
Revenue 6,289 16,983 23,272
----------------------- --------- --------- ---------
Segment operating
profit / (loss) 735 (1,455) (720)
Corporate overheads (6,886)
Net adjusted loss
items (see note 3) (3,119)
Operating loss (10,725)
----------------------- --------- --------- ---------
Finance income 69
Finance costs (100)
----------------------- --------- --------- ---------
Loss before tax (10,756)
----------------------- --------- --------- ---------
Income tax 840
----------------------- --------- --------- ---------
Loss for the year (9,916)
----------------------- --------- --------- ---------
3. Adjusted loss before tax
An adjusted loss before tax measure has been presented as the
Directors believe that this is a more relevant measure of the
Group's underlying performance. Adjusted loss is not defined under
IFRS and has been shown as the Directors consider this to be
helpful for a better understanding of the performance of the
Group's underlying business. It may not be comparable with
similarly titled measurements reported by other companies and is
not intended to be a substitute for, or superior to, IFRS measures
of profit. The net adjustments to loss before tax are summarised
below:
6 months 6 months
ended ended Year ended
30 September 30 September 31 March
2013 2012 2013
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------------------- ------------- ------------- -----------
Amortisation of intangibles initially
recognised on acquisition 867 1,123 2,029
Acquisition costs - 35 369
Adjustments to deferred consideration
(i) (472) (585) (1,384)
Impairment of intangible assets - 1,087 1,336
Reorganisation costs - 372 769
--------------------------------------- ------------- ------------- -----------
Total adjustments 395 2,032 3,119
--------------------------------------- ------------- ------------- -----------
(i) The final financial target was not met in relation to the
Zimiti acquisition, resulting in the release of GBP260,000 of
deferred consideration. The potential deferred consideration in
respect of the Visimetrics acquisition has been reassessed with
reference to performance to date and future expectations resulting
in a reduction to the short term deferred consideration of
GBP229,000. The longer term fair value of deferred consideration of
GBP207,000 is unchanged. These amounts were offset by the unwind of
the discount on deferred consideration of GBP17,000.
4. Loss per share
The basic loss per share is calculated on the loss after tax and
the weighted average number of shares in issue during the
period.
The basic adjusted loss per share is calculated on the adjusted
loss after tax and the weighted average number of shares in issue
during the period.
Diluted earnings per share measures are calculated using the
same number of shares as the basic loss per share measures, as the
inclusion of potential Ordinary Shares arising from share options
and Incentive Shares in issue would be anti-dilutive.
The following reflects the loss and share data used in the basic
and diluted loss per share calculations:
6 months ended 6 months ended Year ended
30 September 30 September 31 March
2013 2012 2013
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Loss after tax (6,900) (6,644) (9,916)
Amortisation of acquired intangible
assets, net of tax 815 1,044 1,658
IPO, placing and deal costs - 35 369
Adjustments to deferred consideration (472) (585) (1,384)
Impairment of intangibles, net
of tax - 936 1,015
Reorganisation costs - 372 769
--------------------------------------- --------------- --------------- -----------
Adjusted loss after tax (6,557) (4,842) (7,489)
--------------------------------------- --------------- --------------- -----------
Weighted average number of shares 50,963,166 43,776,498 45,530,712
--------------------------------------- --------------- --------------- -----------
Basic and diluted loss per share (13.54p) (15.18p) (21.78p)
--------------------------------------- --------------- --------------- -----------
Basic and diluted adjusted loss
per share (12.87p) (11.06p) (16.45p)
--------------------------------------- --------------- --------------- -----------
5. Business combinations
Business combinations during the 6 months ended 30 September
2013
There have been no acquisitions by the Group in the 6 months
ended 30 September 2013.
Business combinations during the 12 months ended 31 March
2013
On 23 April 2012, the Group acquired the complete product set
and intellectual property, along with certain customer contracts,
of Enterprise Technologies (UK) Limited ("E-Tech"). The initial
cash consideration paid on completion was GBP149,000. In addition,
deferred consideration of GBP200,000 has been paid.
On 4 January 2013, the Group acquired 100% of the voting equity
interests in Visimetrics (UK) Limited ("Visi") including its
subsidiary OmniPerception Limited. The initial cash consideration
paid on completion was GBP3,200,000. No deferred consideration has
been paid.
Movements on deferred consideration
Since 31 March 2012 the following movements in the amounts
recognised for deferred consideration have taken place:
Zimiti Keeneo Stryker LMW E-Tech Visi Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- -------- -------- -------- -------- -------- -------- --------
At 31 March 2012 1,606 107 729 90 - - 2,532
---------------------- -------- -------- -------- -------- -------- -------- --------
On acquisition - - - - 227 - 227
Unwind of discount 42 - 16 - 4 - 62
Paid (i) - (107) - (60) - - (167)
Released (617) - - (30) - - (647)
---------------------- -------- -------- -------- -------- -------- -------- --------
At 30 September 2012 1,031 - 745 - 231 - 2,007
---------------------- -------- -------- -------- -------- -------- -------- --------
On acquisition - - - - - 421 421
Unwind of discount 27 - 5 - - 5 37
Paid - - (750) - (12) - (762)
Released - - - - (31) - (31)
Reassessed (805) - - - - - (805)
---------------------- -------- -------- -------- -------- -------- -------- --------
At 31 March 2013 253 - - - 188 426 867
---------------------- -------- -------- -------- -------- -------- -------- --------
Unwind of discount 7 - - - - 10 17
Paid - - - - (188) - (188)
Released (260) - - - - - (260)
Reassessed - - - - - (229) (229)
At 30 September 2013 - - - - - 207 207
---------------------- -------- -------- -------- -------- -------- -------- --------
(i) Final Keeneo payment settled via the issue of Ordinary Shares.
As at 30 September 2013, the maximum deferred consideration
payable in the future is GBP4.7m (31 March 2013: GBP8.6m), up to
GBP3.5m (31 March 2013: GBP5.4m) of which may be satisfied through
the issue of new Ordinary Shares, and the remainder satisfied in
cash. The deferred consideration at 30 September 2013 is payable
over the period to 31 December 2014 subject to revenue and profit
targets. Up to GBP2.35m of the deferred consideration is based on
revenue and profit targets for the year ended 31 December 2013 and
a further GBP2.35m on the year ended 31 December 2014.
Deferred consideration is carried at fair value applying a Level
3 fair value hierarchy technique based on the probability weighted
average of expected cash flows. All other financial instruments are
carried at amortised cost and the directors consider that their
carrying value is not significantly different to their fair
value.
6. Issued share capital
On 5 September 2013, 25,171 Ordinary Shares were issued to
satisfy obligations under the long term incentive plan.
As at 30 September 2013, there were 50,984,761 Ordinary Shares
in issue (30 September 2012: 43,787,176, 31 March 2013:
50,959,590).
7. Post Balance Sheet Event
On 4 November 2013, the Group raised GBP18.0m cash, net of
GBP0.7m placing costs, by way of a share placing of 13,357,143 new
Ordinary Shares at 140 pence per share. Following the placing,
there were 64,341,904 Ordinary Shares in issue.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGGUCGUPWGBM
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