TIDMDGB
RNS Number : 1727I
Digital Barriers plc
28 May 2014
RNS
28 May 2014
Digital Barriers plc
("Digital Barriers or the "Group")
Preliminary Results for the year ended 31 March 2014
The Board of Digital Barriers plc (AIM:DGB), the specialist
provider of advanced surveillance technologies to the security and
defence sectors, announces audited results for the year ended 31
March 2014.
Key Highlights
-- Group revenues for the year were GBP19.0 million (2013: GBP23.3 million).
-- Revenues from Core Products grew 18% to GBP9.9 million (2013:
GBP8.4 million) and now account for 52% of Group revenue (2013:
36%).
-- International revenue from Core Products increased by 78% and
covered a significantly expanded geographic footprint.
-- GBP18.0 million (net of placing costs) raised through the
issue of new ordinary shares in November 2013.
-- Restructuring programme undertaken to rationalise cost base
and concentrate resources on Core Products.
-- 8 new products launched to extend and enhance our key product platforms.
-- Q4 FY14 represented our best ever sales quarter for the Group.
Commenting on the results Dr Tom Black, Executive Chairman of
Digital Barriers said:
"Looking forward, the volatile international security context
confirms that the market for security products such as ours will
continue to grow rapidly. This, combined with our new generation of
products which have been designed specifically to combat this
threat, and the sales traction which we have achieved thus far,
give me confidence that Digital Barriers is on track to become an
important player in the international security marketplace. We
therefore look forward to significant growth in revenues and
reiterate our aspiration to move towards breakeven in the current
financial year."
For further information, please contact:
Digital Barriers plc Tel: 020 7940 4740
Tom Black, Executive Chairman
Sharon Cooper, Finance Director
Investec Investment Banking Tel: 020 7597 5970
Andrew Pinder / Dominic Emery
FTI Consulting Tel: 020 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
This last year proved to be one of mixed fortunes for Digital
Barriers. Whilst our reported revenues are somewhat lower than
FY13, we made very significant progress in shaping the Group for
the growth which we expect in the current financial year and in
growing the contribution to revenues from our core product set.
Revenues were GBP19.0m of which 52% came from sales of our three
core product ranges TVI, RDC and ThruVision ("Core Products" (FY13:
36%).
The drop in revenues was due to three factors: a declining
contribution from legacy or non-core products, longer-than expected
customer procurement cycles and delays in bringing our new
generation of products to market. The first of these was expected
and is of little strategic importance as we focus increasingly on
Core Products. The second is an ongoing feature of our business,
although its impact will reduce as we grow. The third has been
overcome and we saw a range of new products come to market in our
fourth quarter, resulting in our best ever quarterly sales
performance, although much of this did not convert to revenues in
the year but remained as sales backlog to be fulfilled this
year.
During the year we raised a further GBP18m from shareholders to
fund the losses incurred, to strengthen the balance sheet and to
provide working capital for growth. The vast majority of this cash
remained on the balance sheet at the year-end (GBP14.2m). We also
transitioned emphatically from our acquisition phase to focus on
business rationalisation, sales team development and product
development. The rationalisation project has resulted in a lower
headcount and fewer offices, thereby reducing our cost base by some
GBP3m per annum and, equally importantly, allowing us to invest in
our sales teams and our engineering capability.
In particular, our US sales team has been significantly upgraded
and we saw the fruits of this investment towards the end of the
year with material sales of our new products into US Federal and
Defense Agencies. Elsewhere we added a range of new customers in
countries as diverse as Nigeria, Turkey and Japan. In the
commercial sector we saw the first material sales of our TVI-based
Minicam product through a major telecoms operator mostly into the
UK Local Authority marketplace. Our UK Services business navigated
a difficult year with UK budget constraints much in evidence,
although recent sales successes suggest that the current year will
see a return to modest growth in this area.
Our engineering teams worked hard through the year to bring to
market an entirely new generation of products. Our TVI video range
was extended to include High Definition and IP variants, which open
up entirely new markets for us in the US, Asia Pacific and the
Middle East. We also launched a software version of TVI which runs
on iOS devices and which was sold successfully at enterprise level
to a US Federal Agency during the year. Our RDC product, which was
launched towards the end of the previous year, achieved good market
traction during the year and forms a major part of our FY15 sales
pipeline. RDC also provides additional impetus to our TVI range as
RDC sales are almost always combined with TVI to produce our
Integrated Surveillance Platform, a compelling solution for the
protection of borders or vulnerable facilities. ThruVision, our
personnel scanning technology, was a modest contributor to revenues
but was developed significantly during the year resulting in an
important new product launch and significant sales success in the
final quarter.
Although Digital Barriers' success will be built in large part
on the quality of our products, these in turn depend on high
quality and dedicated staff. Our headcount reduced to 163 at the
date of this announcement as a result of our strategic re-focus and
rationalisation project and voluntary departures remained rare. The
tempo of the business remained high and the commitment and
professionalism demonstrated by all staff was exemplary. I would
like to extend a warm personal thanks to all of my colleagues for
their hard work and dedication. Our Board saw only one change with
the addition of Sharon Cooper as CFO who joined us in March from
Sophos and is already making a full contribution.
Looking forward, the fragile international security context
confirms that the market for security products such as ours will
continue to grow rapidly. This, combined with our new generation of
products which have been designed specifically to combat this
threat, and the sales traction which we have achieved thus far,
give me confidence that Digital Barriers is on track to become an
important player in the international security marketplace. We
therefore look forward to significant growth in revenues and
reiterate our aspiration to move towards breakeven in the current
financial year.
Operational strategic review
Since our IPO in 2010 we have made strong progress in validating
our strategy of providing advanced surveillance technologies to
governments, multinational corporations and system integrators in
the international defence, law enforcement, critical
infrastructure, transportation and natural resources sectors.
At IPO we described the three phases of our growth strategy in
the following way:
-- Phase One: to undertake acquisitions to collate core products
to drive Digital Barriers' organic growth; integration will be
limited at this early stage.
-- Phase Two: to focus on international development and
additional material acquisitions to enhance the scale of our
business. This will coincide with further integration and a
deepening of specialist prime system integrator and other channel
sales partner relationships.
-- Phase Three: to focus on further geographical and product expansion.
We are currently transitioning from Phase Two to Phase Three. No
further acquisitions were undertaken during FY14 and our internal
focus was on the final stages of integration and rationalisation as
outlined in the Chairman's Statement above. We did, however, expend
considerable effort in developing a new generation of products
across our core technologies of TVI, RDC and ThruVision and
extending our geographic reach into numerous additional countries,
including Nigeria, Turkey and Japan.
Our assessment of the growth potential that our market offers
remains unchanged. Global spending remains strong with a number of
notable trends emerging in the last year, namely:
-- Continued demand for upgrading capability in established
markets (core UK and US) for leading agencies, as well as the
adoption of UK-proven technology overseas.
-- Recovery in US Federal Government budgets and, because of
major changes to telecoms video transmission costs, major
investment in wireless video technology refresh.
-- Ongoing weekly insurgency and terrorist attacks in high-risk
countries in the Middle East, Africa and parts of Asia, continuing
to drive demand for border and wide-area surveillance, VIP and
natural resources protection, and transportation security.
-- Continued long-term trends around cross-border terrorism and
organised crime driving demand for enhanced border check-point
security measures, critical national infrastructure protection and
tactical law enforcement surveillance capability.
-- Increasing adoption of mainstream commercial solutions such
as mobile handsets, cellular and satellite networks to satisfy
demand for wide distribution of video and data.
Our new products are well positioned to address these critical
trends and we continue to position ourselves as providers, in the
first instance, of sophisticated new tactical capability.
Increasingly, however, we are being seen as credible providers of
"Enterprise-grade" technology, allowing us to access our customers'
spend on much larger programmes.
The growing international customer interest and engagement,
combined with the sales traction that we have seen in the last
year, confirms that our original strategy remains valid and we will
continue to pursue it.
Business Review
Introduction
FY14 was a year in which we focused our attention on extending
our international sales capability and developing new products in
all three of our core technology areas - TVI, RDC and ThruVision.
With 8 new products coming to market in the year across these
areas, we achieved a number of landmark sales in terms of scale and
strategic importance. These have also underpinned our three new
propositions that are driving growth in major international
customer accounts.
Sales
Headlines
We achieved a number of notable successes in terms of
international reach and successful new product launches in the last
year, including:
-- First "enterprise-grade" sale of TVI - GBP1.8m sale of 3,000
TVI iPhone licences following ongoing work with a major US law
enforcement customer. This capability will provide a range of
benefits including increased surveillance effectiveness, situation
awareness and officer safety.
-- Landmark ThruVision sale into Middle East - GBP2.0m sale via
a partner into the government of a major country in the Middle East
for the protection of key government facilities and airports, to be
delivered over the course of FY15.
-- Strategic adoption by major Asian ally for critical defence
surveillance - GBP1.0m sale after a year of extended trials, RDC
has been adopted as the core sensor as part of its national-level
strategic surveillance investment programme.
-- Launch and initial sale of new 'Safe City' camera product -
developed in partnership with the UK's largest telecoms operator,
the MiniCam was launched in March to take the UK public safety CCTV
market wireless. It offers the potential to extend our managed
service offering moving forward.
-- First sale of RDC in the Oil and Gas sector - initial sale of
our RDC solution to a multi-national oil company to help protect
key assets in a Middle Eastern country.
-- Initial sales of a range of new TVI products - our High
Definition and IP camera variants, launched in Q4, achieved initial
sales into customers in each of our regions.
-- Prestige integration services contract win - GBP2.1m sale of
security system integration services, via a major system integrator
into a major UK sporting event, to be delivered over the course of
FY15.
-- Other noteworthy sales - we announced repeat sales of GBP2.3m
and GBP0.75m to existing UK Government RDC and Asian transportation
customers, respectively.
-- Sales traction continuing - since the period end, we have
secured a further major contract in our Middle East and Africa
region, with an initial contract valued at GBP1.5 million for the
protection of key government facilities, to be delivered over the
course of FY15.
Our sales pipeline continues to build with international
interest in our three new key 'proposition' areas, namely:
-- Our "Integrated Surveillance Platform" combining our RDC
sensors with TVI, allowing unauthorized intrusions to be viewed
securely anywhere in the world. Our customers see this rapidly
deployed, covert solution as the ideal way to meet a number of
requirements, including protection of hostile borders, oil
pipelines, government buildings and remote military facilities.
-- Our "Video Distribution Platform", based on TVI and providing
our customers with the ability to wirelessly enable their legacy
fixed security video infrastructure and add the ability to send and
watch live video using smart phones and tablets. Demand is
expanding out from our traditional government security market,
through Smart City initiatives into the broader corporate
world.
-- Our "Safe Search People Screening" solution uses our
ThruVision product set to facilitate the screening of people
without the need for intrusive and time consuming physical
searches. Our customers see this "virtual pat-down" as an
efficient, repeatable and reliable procedure for looking for
weapons, contraband or stolen goods in a safe and respectful
manner.
International expansion
We continued our strategy of targeting key nations with material
defence and security budgets across the US, Asia Pacific and the
Middle East and Africa regions. With the support of the UK
government where necessary, we aim to build relationships with key
government agencies and procurement authorities and move through an
increasingly streamlined evaluation cycle. This approach, coupled
with the appointment and management of a number of local partner
companies, resulted in sales to numerous new countries as well as
repeat sales to existing ones in the last 12 months.
Our principal export market remains the US and we made very
strong progress here after the hiatus of sequestration in FY13.
With an expanded sales presence, we have established strong
positions in agencies across the Departments of Defense, Justice
and Homeland Security. With a number of market trends in our
favour, including new investment in wireless video capability,
ongoing investment in counter-insurgency and counter-IED
technology, and ongoing investment in border surveillance
technology, we are now poised for strong growth here across all of
our key technologies.
Asia Pacific is a more fragmented region and we have been
focused on a number of key countries including the Republic of
Korea, Japan, Singapore, Malaysia, Indonesia, Hong Kong and
Australia. Our focus is on a number of strategic border and
maritime surveillance initiatives and achieving further TVI
penetration into national law enforcement agencies. We have
established a permanent presence in Seoul on the strength of the
strategic interest shown by major Korean government agencies in
RDC.
In the Middle East and Africa, we are focused on a number of key
Gulf states, notably Qatar and UAE, and other key regional powers
including Turkey and Nigeria, and we have achieved early sales
successes in all of these. Given the heightened security state in
several of these countries, we see strong interest in ThruVision
for protective security, and our Integrated Surveillance Platform
for force protection, border surveillance and critical asset
protection including oil and gas.
UK market
The UK Government market has continued to see spend being
tightly controlled. We continue to focus on working closely with
the Home Office and its agencies, major law enforcement
organisations, large public sector transport operators and the
Ministry of Defence. As well as generating revenue, these close
working relationships remain vital for our broader export efforts
in terms of direct UK Government support and the implicit comfort
this gives our foreign government customers.
With our expanding product range, we are also seeing increasing
interest from the more mainstream "CCTV" market in the UK. This
interest is coming from both the local authority market, from the
security departments of commercial organisations and from large
security service providers.
With this growing domestic interest, and after a relatively weak
year for the division, we are starting to make increasing use of
our Integration Services business to sell, deploy and maintain TVI
solutions into this broader security equipment market. We also
intend using its 24/7 support and callout infrastructure as an
integral part of our post-sales support capability moving
forward.
OEMs and other commercial models
We noted twelve months ago that we were seeing interest from the
broader commercial market, principally via telecoms operators, in
TVI. This is because we are able to offer a fully mobile,
affordable and real-time video capability at a level of quality
unmatched by any competing technologies. This meets the needs of a
number of industry trends. These include the ongoing rollouts of
city-wide wifi networks and national 4G wireless infrastructure,
and the continued focus by network operators on selling "Machine to
Machine" (M2M) data plans to maintain data revenue growth.
This commercial interest represents another large, high growth
market for us, and one that is potentially less prone to slower
government sales cycles. We have invested in both sales and product
development resource over the last year to build our presence here
and exploit this leveraged sales route to market. We are now
engaged with five international telecoms providers where our TVI
technology, through its highly efficient bandwidth management, has
the potential to help better monetise cellular, wifi and satellite
communication infrastructures. We also continue to partner with the
world's largest system integrators on embedding our TVI and broader
video analytics capability into their global 'smart city' and
'mobile workforce' propositions.
Finally, we have also made very good progress with achieving
tight technical and commercial integration with other video
industry vendors, again to exploit a leveraged sales model. Most
advanced is our relationship with Axis Communications, one of the
world leaders in IP cameras. By embedding our new video analytics
product, SafeZone Edge, on Axis cameras, we both differentiate
Axis' offering and open up its distribution network in 70 countries
to our products.
Technology and Products
Introduction
Substantial effort has been invested in the last year driving
our product portfolio forward in our three core product families -
TVI, RDC and ThruVision - that now represent the key focus of the
business, representing 52% of FY14 revenues (FY13 36%). We remain
confident that all three families are highly disruptive, occupy
clearly differentiated positions in the market, are internationally
scalable and are built on class-leading intellectual property. Most
significantly, these core product families have been rounded-out
with additional capabilities to form our new propositions that are
driving international sales activity.
With a number of products being delivered to market later in Q4
than we had planned, we have now introduced a new Product
Management process to significantly improve our product development
and launch capabilities. This will ensure that we optimise the use
of finite development resource to produce differentiated products
on schedule. It will also make sure we continue to identify
significant and growing market niches and ensure our products
contain the features that our increasingly large and international
customer base demands.
We have continued the process of retiring non-core products and
technologies that do not have differentiation and scalability,
helping us sharpen our focus and increase resource in those areas
that are strategically important.
TVI
TVI represents the largest market opportunity for us. As a
proven, world-class video distribution technology, it offers large
organisations the opportunity, for the first time, to adopt video
as an affordable, core enterprise tool for a range of security
applications in the first instance, but increasingly for more
mainstream "enterprise applications" moving forward.
We have made significant progress in the last year moving TVI
from its tactical roots to focus on products for both our
specialist market (law enforcement, defence) and, increasingly, on
the wider commercial security market. This has involved embracing a
number of significant video industry technology trends and
'benchmarks', including High Definition (HD) video, IP video and
video management system compatibility (through the ONVIF
standard).
These developments, as well as meeting the needs of a rapidly
increasing number of potential customers, have also ensured we
remain very confident about our competitive positioning.
Highlights in FY14 included:
-- Launch of new HD video product - developed to meet the needs
of top-end law enforcement agencies around the world, the HD-S600
was launched in March. Combining highly efficient, wireless HD
video streaming with local recording functionality, we achieved
initial sales in a number of UK and international customers.
-- Launch of new 'Safe City' camera product - developed in
partnership with the UK's largest telecoms operator, The MiniCam
was launched in March to enter the UK public safety CCTV market
wireless.
-- Launch of new IP product series - developed as highly
cost-effective general purpose wireless video recording and
streaming devices, our one-and four-camera models support customers
migrating from analogue to IP cameras. We launched in March and
immediately sold into both the US law enforcement and UK
transportation security markets. We have since sold our TVI IP
products into customers in each of our regions.
-- Launch of new man-wearable military product - developed to
meet emerging needs of UK/US military, we launched in March and
sold to both UK and other allied military customers.
Plans for the coming year include expanding our HD range,
developing a number of team-working tools for TVI on smart phones,
scaling the server software and releasing software development kits
for use by third party developers.
RDC
RDC is our unique ground sensor for the Remote Detection and
Classification of unauthorised people or vehicles in locations
where communications and power infrastructure are limited.
Following its introduction around 18 months ago and its initial
sale to a major UK government organisation, RDC has been deployed
for a wide range of protection applications, including defence
force/bases, oil and gas pipelines and VIP locations as well as
more traditional border surveillance and control.
Our key differentiation remains the combination of seismic
sensor algorithms, with mesh radio and tight coupling to real-time
video. Taken together, these form our Integrated Surveillance
Platform and provide a cost effective way of maintaining real-time
"eyes on" coverage of large swathes of territory and we therefore
remain confident about our competitive positioning.
In the last year RDC has moved from 'pathfinder projects' and
early adopter trials to a pipeline of mature procurements and,
perhaps most encouragingly, repeat sales from existing customers.
The breadth of live opportunities across all regions provides
confidence for realising further growth in the coming year and
beyond.
Highlights include:
-- Continued development of our sensor node detection algorithm
for US government - we have broadened the range of threats that we
can detect to meet specific operational needs.
-- Continued development of node 'mesh' networking - we launched
"multi-hop" capability to our sensor nodes to allow them to operate
in long-linear arrays. This makes them ideal for protecting assets
such as oil pipelines.
Plans for the coming year include continued work on improving
the range of threats that can be detected and further tightening of
the integration with TVI.
ThruVision
ThruVision is our passive, standoff people screening technology
for protection of high-profile buildings and VIPs, the detection of
concealed contraband by Customs organisations, high-threat military
checkpoint screening and the efficient searching of employees to
reduce theft in retail and distribution environments.
Based on patented intellectual property in the field of
Terahertz scanning, the last year has seen further fundamental
improvements in both image quality and use of video processing
techniques to automatically detect concealed items of interest.
This, combined with further manufacturing improvements to reduce
the cost of production, has generated much broader market
interest.
Highlights include:
-- Assessed as 'operationally proven' following extensive
testing by UK Government - We are now embarked on a number of
operational trials with various UK agencies in a range of security
and contraband applications.
-- Launch of new "SafeSearch" proposition - bringing our new
technology advances together, we have improved system usability by
increasing the speed with which individuals can be scanned in
partnership with a major British retailer. This 'virtual pat-down'
now forms a proven new security procedure.
Plans for the coming year include the addition of a "zoom"
function to enhance detection capability, improving the software
interface to improve usability and continued work to allow future
scaling of production.
Face recognition and video analytics applications
We have concluded that the major value from the OmniPerception
acquisition is most likely to come through software implementation
of face recognition on the TVI platform, although some alternative
opportunities for the OmniPerception product set will still
occur.
Accordingly, our face recognition and video applications work
aims to ensure that, as TVI achieves increased international
traction, we can maintain our strategic differentiation by offering
mission-critical video tools running within TVI's video
distribution architecture.
With this in mind we have been investing in redeveloping our
applications from server-based systems to software that we can
embed on a range of devices including smart phones, tablets, our
own TVI products and an emerging range of high performance IP
cameras. We believe this strategy will create new markets by
offering a disruptive combination of performance, simplicity and
affordability.
Highlights include:
-- Achieved the highest level of UK Home Office "iLids" approval
for performance - Our SafeZone Edge product, an automated intrusion
detection application, achieved this internationally recognised
standard in [April 2014].
-- Adoption by Axis, the world's leading IP camera manufacturer
- we have embedded SafeZone Edge on Axis' latest range of IP
cameras and have agreed a leveraged channel sales model with Axis.
We believe this partnership will allow us to assess the potential
to exploit leveraged sales models.
-- Ongoing refinement of face recognition algorithms - we have
re-engineered our face recognition technology to operate solely in
the visible light domain (as opposed to IR) as part of our plan to
integrate face recognition within our Video Distribution
Platform.
Plans for the coming year are to maintain the good progress we
have made to integrate these applications into our Video
Distribution Platform.
Mature and Non-Strategic products
We continue to generate profitable but increasingly modest
revenues from our legacy products family (ie fixed infrastructure
video management and transmission systems). These derive
principally from the transportation and natural resources sectors,
including a number of international customers.
During the year, we have exited non-strategic products where
there is insufficient scope for differentiation or scalability. We
also decided to cease offering bespoke video R&D services to UK
customers due to the lack of scalability offered by this service
line.
Operational review
People
We continue to aim to provide exciting careers for highly
talented sales and engineering staff who, despite the
geographically distributed nature of the business, are integrating
into an increasingly recognisable culture of innovation.
In the last year, we have substantially strengthened our US team
and have recruited our first permanent Korean staff into a new
office in Seoul. We have substantially increased the size of our
TVI engineering team in Glasgow and we have strengthened our
pre-sales capability across all products.
With voluntary attrition already very low, we plan to introduce
a Save-As-You-Earn share option scheme to enable staff to benefit
from the company's growth moving forward and build long-term
careers with us.
Cost base
Through the second half of the last year, we conducted a major
strategic review of activities to ensure all our resources were
focused on the most compelling growth opportunities in a fully
integrated way. This contributed to a cost reduction programme that
has reduced our overall net cost based by GBP3.0m, and allowed
further investment in international sales and engineering. We also
started the process of centralising a number of support functions
to achieve improved service levels and better economies of
scale.
Infrastructure
We further consolidated key activities into a smaller number of
principal offices to improve effectiveness and focus. This resulted
in the closure of 5 offices around the UK.
Looking forward, we plan further expansion of our TVI
engineering office in Glasgow and investment in our Oxfordshire hub
to increase ThruVision manufacturing and broader product delivery
capacity. We are also investing in a new, secure, group-wide IT
infrastructure to allow more efficient working for our staff around
the world, while also better securing our core intellectual
property.
Performance Indicators
We monitor a number of metrics, both financial and
non-financial, on a monthly basis. The most important of these are
as follows:
-- Revenue: GBP19.0million for the year under review (2013: GBP23.3 million);
-- International revenues: 26% of total (2013: 29%);
-- Gross margin: 45.8% for the year under review (2013: 42.8%);
-- Sales & Marketing costs: GBP5.4 million for the year (2013: GBP3.8 million);
-- Corporate overheads: GBP4.7 million for the year (2013: GBP3.1 million);
-- Number of employees: 193 at 31 March 2014 (2013: 212); and
-- Cash: GBP14.2 million at 31 March 2013 (2013: GBP5.5 million).
Financial review
For the year ended 31 March 2014, Digital Barriers delivered
revenue of GBP19.0 million (2013: GBP23.3 million) generating an
adjusted loss before tax of GBP12.0 million (2013 loss: GBP7.6
million) and adjusted loss per share of 21.49 pence (2013 loss:
16.45 pence). On an unadjusted basis, the loss before tax was
GBP15.1 million (2013 loss: GBP10.8 million) and loss per share was
25.87 pence (2013 loss: 21.78 pence).
Revenue and margins
Of the GBP19.0 million of revenue in the year, GBP14.5 million
was delivered from Product revenue streams, with GBP4.5 million
from the Services Division.
The decrease in revenue over the prior year was due to three
factors: a declining contribution from legacy or non-core products,
longer-than expected customer procurement cycles and delays in
bringing our new generation of products to market, now addressed.
There were no acquisitions in the year.
Results by division are discussed below:
Reported 2014 Reported 2013
Revenue GBP'000 GBP'000
--------------------- -------------- --------------
Services 4,527 6,289
--------------------- -------------- --------------
Products:
--------------------- -------------- --------------
Core Products(i) 9,927 8,421
--------------------- -------------- --------------
Mature(ii) 2,497 4,705
--------------------- -------------- --------------
Non-strategic(iii) 2,091 3,857
--------------------- -------------- --------------
14,515 16,983
--------------------- -------------- --------------
19,042 23,272
--------------------- -------------- --------------
(i) Core Products: greatest strategic opportunity for growth.
(ii) Mature products: established in the market and capable of
steady on-going profitable revenue.
(iii) Non-strategic products: underlying IP being transferred into Core product families.
Revenue from the Services division declined GBP(1.8) million
(28%) on the prior year, reflecting a difficult year with UK budget
constraints. This contraction in revenues led to a GBP(0.8) million
fall from GBP0.7 million segmental operating profit to a GBP(0.1)
million operating loss.
Products division revenue declined GBP(2.5) million (15%) on the
prior year, with all the reduction in Mature and Non-Strategic
categories. Core Products increased GBP1.5 million (18%), primarily
driven by TVI growth, with International Core Products revenues up
78% and UK revenues down 2%. The operating loss associated with the
Products division increased GBP(0.4) million in the year to
GBP(1.9)m as a result of reduced revenues.
Services Products Total
2014 2014 2014
GBP'000 GBP'000 GBP'000
-------------------------------- --------- --------- ---------
Revenue 4,527 14,515 19,042
-------------------------------- --------- --------- ---------
Segment loss (97) (1,854) (1,951)
-------------------------------- --------- --------- ---------
Corporate overheads (10,074)
-------------------------------- --------- --------- ---------
Adjusted group operating loss (12,025)
-------------------------------- --------- --------- ---------
Interest 32
-------------------------------- --------- --------- ---------
Adjusted group loss before tax (11,993)
-------------------------------- --------- --------- ---------
Revenue in the year was split 76%: 24% (2013: 73%: 27%) between
Products and Services respectively. The continuing trend towards
products reflects the on-going strategic focus of the Group and
drives the improvement in gross margin, increasing from 42.8% to
45.8%.
The Services gross margin decreased to 19.1% in the year (2013:
29.0%), driven by the reduction in revenues and a higher proportion
of lower margin project work, with higher product costs elements
compared to the prior year. The Products gross margin was 54.2%
(2013: 47.9%). This increase is largely associated with sales mix
with a marked increase in software sales in the year, alongside a
reduction in product hardware sales with a lower gross margin.
Adjusted loss
An adjusted loss before tax figure is presented as the Directors
believe that this is a more relevant measure of the Group's
underlying performance. For the year this was GBP12.0 million
(2013: GBP7.6 million) and is detailed in the table below:
2014 2013
GBP'000 GBP'000
----------------------------------------------------------------- --------- ---------
Loss before tax (15,067) (10,756)
----------------------------------------------------------------- --------- ---------
Add back:
----------------------------------------------------------------- --------- ---------
Amortisation of intangibles initially recognised on acquisition 1,733 2,029
----------------------------------------------------------------- --------- ---------
Acquisition costs - 369
----------------------------------------------------------------- --------- ---------
Adjustments to deferred consideration(i) (679) (1,384)
----------------------------------------------------------------- --------- ---------
Reorganisation costs(ii) 1,860 769
----------------------------------------------------------------- --------- ---------
Impairment of intangibles(iii) 160 1,336
----------------------------------------------------------------- --------- ---------
Adjusted loss before tax (11,993) (7,637)
----------------------------------------------------------------- --------- ---------
(i) Relates to the release of deferred consideration payable
against the Zimiti and Visimetrics acquisitions plus reassessment
of the remaining Visimetrics deferred consideration balance to
zero, partly offset by the unwind of discount.
(ii) Relates to a restructuring programme to rationalize the
Group's cost base and concentrate its resources on Core Products.
As the expenditure relates to transforming the divisions for the
future these costs are not directly related to current
operations.
(iii) Relates to certain intangibles acquired with Visimetrics
and LMW which are no longer seen as core to the business and
generate returns below the level used to determine the value of the
assets initially recognised on acquisition.
The increased year on year adjusted loss has been driven by
three key factors:
-- continued investment in sales and marketing required to drive international expansion;
-- investments in operations, particularly in new product
releases to address customer demand; and
-- lower group revenues (referred to above)
Central overheads are broken down as follows:
2014 2013
GBP'000 GBP'000
-------------------------------------------------------------------- --------- ---------
Sales and marketing 5,403 3,824
-------------------------------------------------------------------- --------- ---------
Other corporate overheads:
-------------------------------------------------------------------- --------- ---------
Central costs, including board, operations, finance and facilities 4,147 2,726
-------------------------------------------------------------------- --------- ---------
LTIP charge 524 336
-------------------------------------------------------------------- --------- ---------
4,671 3,062
-------------------------------------------------------------------- --------- ---------
Total 10,074 6,886
-------------------------------------------------------------------- --------- ---------
Sales and marketing costs have increased GBP1.6 million to
GBP5.4 million (2013: GBP3.8 million) as existing regional sales
teams have been expanded and strengthened, and investments have
been made into new sales and marketing teams internationally. These
investments enable a greater level of engagement in both
established and high-potential markets, building customer
relationships and pipeline to drive sales growth.
The operations teams have also been strengthened in the year to
further support product development and customer procurement
processes. This, along with investment in the IT infrastructure,
are the key drivers of the GBP1.4 million increase to GBP4.1
million (2013: GBP2.7 million) in central overheads.
Taxation
As a result of losses acquired through acquisitions and central
overheads we do not expect to pay the full rate of UK corporation
tax for a number of years. The Income Statement tax credit for the
year of GBP0.5 million (2013: GBP0.8 million) principally relates
to R&D tax credits. At 31 March 2014, the Group had unutilised
tax losses carried forward of approximately GBP44.0 million (2013:
GBP26.4 million). Given the varying degrees of uncertainty as to
the timescale of utilisation of these losses, the Group has not
recognised GBP8.5 million (2013: GBP5.6 million) of potential
deferred tax assets associated with GBP42.3 million (2013: GBP23.7
million) of these losses.
At 31 March 2014, the Group's net deferred tax liability stood
at GBP0.2 million (2013: GBP0.4 million), relating to acquired
intangible assets of GBP0.6 million (2013: GBP1.0 million), offset
by GBP0.4 million (2013: GBP0.6 million) relating to tax
losses.
Loss per share
The reported loss per share is 25.87 pence (2013 loss: 21.78
pence). The adjusted Loss per share is 21.49 pence (2013 loss:
16.45 pence).
Cash and treasury
The Group ended the year with a cash balance of GBP14.2 million
(2013: GBP5.5 million).
The GBP8.7 million year on year increase in net cash consists of
GBP18.0 million (net of placing costs) proceeds from an equity fund
raise less GBP(8.5) million (2013: GBP(14.1)million outflow)
outflow from operating activities and GBP(0.8)million
(2013:GBP(5.7) million) investing spend. No new businesses were
acquired during the year.
The GBP(8.5) million (2013:GBP(14.1) million)outflow from
operating activities included a GBP2.3 million net working capital
inflow / reduction (2013: GBP(6.9) million outflow), largely as a
result of lower fourth quarter revenues than in the prior year,
partially offset by an inventory increase. The balancing GBP(10.8)
million outflow from operating activities (2013: GBP(7.2) million
outflow) relates principally to the "cash" operating loss
(operating loss excluding non-cash items).
Investing spend included GBP(0.6) million of capital
expenditure, mainly demonstration stock, and a GBP(0.2) million
payment made to e-Tech in relation to a deferred consideration earn
out due.
Dividends
The Board is not recommending the payment of a dividend (2013:
GBPnil).
Consolidated income statement
for the year ended 31 March 2014
Year ended 31 March 2014 Year ended 31 March 2013
Note GBP'000 GBP'000
--------------------------------------------------------- ----- ------------------------- -------------------------
Revenue 19,042 23,272
--------------------------------------------------------- ----- ------------------------- -------------------------
Cost of sales (10,319) (13,322)
--------------------------------------------------------- ----- ------------------------- -------------------------
Gross profit 8,723 9,950
--------------------------------------------------------- ----- ------------------------- -------------------------
Administration costs (24,341) (20,823)
--------------------------------------------------------- ----- ------------------------- -------------------------
Other income 706 1,484
--------------------------------------------------------- ----- ------------------------- -------------------------
Other costs (160) (1,336)
--------------------------------------------------------- ----- ------------------------- -------------------------
Operating loss (15,072) (10,725)
--------------------------------------------------------- ----- ------------------------- -------------------------
Finance revenue 32 69
--------------------------------------------------------- ----- ------------------------- -------------------------
Finance costs (27) (100)
--------------------------------------------------------- ----- ------------------------- -------------------------
Loss before tax (15,067) (10,756)
--------------------------------------------------------- ----- ------------------------- -------------------------
Income tax 458 840
--------------------------------------------------------- ----- ------------------------- -------------------------
Loss after tax attributable to owners of the parent (14,609) (9,916)
--------------------------------------------------------- ----- ------------------------- -------------------------
Adjusted loss: 2
--------------------------------------------------------- ----- ------------------------- -------------------------
Loss before tax (15,067) (10,756)
--------------------------------------------------------- ----- ------------------------- -------------------------
Amortisation of intangibles initially recognised on
acquisition 1,733 2,029
--------------------------------------------------------- ----- ------------------------- -------------------------
Acquisition costs - 369
--------------------------------------------------------- ----- ------------------------- -------------------------
Adjustments to deferred consideration (679) (1,384)
--------------------------------------------------------- ----- ------------------------- -------------------------
Reorganisation costs 1,860 769
--------------------------------------------------------- ----- ------------------------- -------------------------
Impairment of intangibles 160 1,336
--------------------------------------------------------- ----- ------------------------- -------------------------
Adjusted loss before tax for the year (11,993) (7,637)
--------------------------------------------------------- ----- ------------------------- -------------------------
(Loss) per share - basic 4 (25.87p) (21.78p)
--------------------------------------------------------- ----- ------------------------- -------------------------
(Loss) per share - diluted 4 (25.87p) (21.78p)
--------------------------------------------------------- ----- ------------------------- -------------------------
(Loss) per share - adjusted 4 (21.49p) (16.45p)
--------------------------------------------------------- ----- ------------------------- -------------------------
(Loss) per share - adjusted diluted 4 (21.49p) (16.45p)
--------------------------------------------------------- ----- ------------------------- -------------------------
The results for the year and the prior year are derived from
continuing activities.
Consolidated statement of comprehensive income
for the year ended 31 March 2014
Year Year
ended ended
31 March 31 March
2014 2013
GBP'000 GBP'000
--------------------------------------------------- ---------- ----------
Loss for the year (14,609) (9,916)
--------------------------------------------------- ---------- ----------
Other comprehensive income
--------------------------------------------------- ---------- ----------
Other comprehensive income that may be
subsequently reclassified to profit and
loss:
--------------------------------------------------- ---------- ----------
Exchange differences on retranslation
of foreign operations 9 25
--------------------------------------------------- ---------- ----------
Net other comprehensive income to be reclassified
to profit or loss in subsequent years 9 25
--------------------------------------------------- ---------- ----------
Total comprehensive loss attributable
to owners of the parent (14,600) (9,891)
--------------------------------------------------- ---------- ----------
Consolidated balance sheet
at 31 March 2014
31 March 31 March
2014 2013
Note GBP'000 GBP'000
---------------------------------------------- ----- --------- ---------
Assets
---------------------------------------------- ----- --------- ---------
Non-current assets
---------------------------------------------- ----- --------- ---------
Property, plant and equipment 1,108 1,370
---------------------------------------------- ----- --------- ---------
Goodwill 24,802 24,802
---------------------------------------------- ----- --------- ---------
Other intangible assets 3,857 5,828
---------------------------------------------- ----- --------- ---------
29,767 32,000
---------------------------------------------- ----- --------- ---------
Current assets
---------------------------------------------- ----- --------- ---------
Inventories 3,895 1,779
---------------------------------------------- ----- --------- ---------
Trade and other receivables 5 7,706 13,084
---------------------------------------------- ----- --------- ---------
Current tax recoverable 826 972
---------------------------------------------- ----- --------- ---------
Cash and cash equivalents 14,246 5,544
---------------------------------------------- ----- --------- ---------
26,673 21,379
---------------------------------------------- ----- --------- ---------
Total assets 56,440 53,379
---------------------------------------------- ----- --------- ---------
Equity and liabilities
---------------------------------------------- ----- --------- ---------
Attributable to equity holders of the Parent
---------------------------------------------- ----- --------- ---------
Equity share capital 646 510
---------------------------------------------- ----- --------- ---------
Share premium 75,879 57,989
---------------------------------------------- ----- --------- ---------
Capital redemption reserve 4,786 4,735
---------------------------------------------- ----- --------- ---------
Merger reserve 454 454
---------------------------------------------- ----- --------- ---------
Translation reserve (212) (221)
---------------------------------------------- ----- --------- ---------
Other reserves (307) (307)
---------------------------------------------- ----- --------- ---------
Retained earnings (31,352) (17,267)
---------------------------------------------- ----- --------- ---------
Total equity 49,894 45,893
---------------------------------------------- ----- --------- ---------
Non-current liabilities
---------------------------------------------- ----- --------- ---------
Deferred tax liabilities 194 363
---------------------------------------------- ----- --------- ---------
Financial liabilities 7 - 202
---------------------------------------------- ----- --------- ---------
Provisions 161 -
---------------------------------------------- ----- --------- ---------
355 565
---------------------------------------------- ----- --------- ---------
Current liabilities
---------------------------------------------- ----- --------- ---------
Trade and other payables 6 5,608 6,038
---------------------------------------------- ----- --------- ---------
Financial liabilities 7 163 883
---------------------------------------------- ----- --------- ---------
Provisions 420 -
---------------------------------------------- ----- --------- ---------
6,191 6,921
---------------------------------------------- ----- --------- ---------
Total liabilities 6,546 7,486
---------------------------------------------- ----- --------- ---------
Total equity and liabilities 56,440 53,379
---------------------------------------------- ----- --------- ---------
Consolidated statement of changes in equity
for the year ended 31 March 2014
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) - - - - 25 - (9,916) (9,891)
----------------------- --------- --------- ------------ --------- ------------ ---------- --------- ---------
Share-based payment
credit - - - - - - 336 336
----------------------- --------- --------- ------------ --------- ------------ ---------- --------- ---------
Share placement 72 10,328 - - - - - 10,400
----------------------- --------- --------- ------------ --------- ------------ ---------- --------- ---------
Share issue cost - (351) - - - - - (351)
----------------------- --------- --------- ------------ --------- ------------ ---------- --------- ---------
Issue of shares
regarding the
acquisition
of Keeneo 1 - - 106 - - - 107
----------------------- --------- --------- ------------ --------- ------------ ---------- --------- ---------
At 31 March 2013 510 57,989 4,735 454 (221) (307) (17,267) 45,893
----------------------- --------- --------- ------------ --------- ------------ ---------- --------- ---------
Share placement 133 18,567 - - - - - 18,700
----------------------- --------- --------- ------------ --------- ------------ ---------- --------- ---------
Share issue costs - (677) - - - - - (677)
----------------------- --------- --------- ------------ --------- ------------ ---------- --------- ---------
Incentive share
conversion 3 - 51 - - - - 54
----------------------- --------- --------- ------------ --------- ------------ ---------- --------- ---------
Share based payment
credit - - - - - - 524 524
----------------------- --------- --------- ------------ --------- ------------ ---------- --------- ---------
Loss for the year - - - - - - (14,609) (14,609)
----------------------- --------- --------- ------------ --------- ------------ ---------- --------- ---------
Other comprehensive
loss - - - - 9 - - 9
----------------------- --------- --------- ------------ --------- ------------ ---------- --------- ---------
At 31 March 2014 646 75,879 4,786 454 (212) (307) (31,352) 49,894
----------------------- --------- --------- ------------ --------- ------------ ---------- --------- ---------
Consolidated statement of cash flows
for the year ended 31 March 2014
Year Year
ended ended
31 March 31 March
2014 2013
GBP'000 GBP'000
---------------------------------------------------------- ---------- ----------
Operating activities
---------------------------------------------------------- ---------- ----------
Loss before tax (15,067) (10,756)
---------------------------------------------------------- ---------- ----------
Non-cash adjustment to reconcile loss before
tax to net cash flows
---------------------------------------------------------- ---------- ----------
Depreciation of property, plant and equipment 739 771
---------------------------------------------------------- ---------- ----------
Amortisation of intangible assets 1,819 2,102
---------------------------------------------------------- ---------- ----------
Impairment of intangible assets 160 1,336
---------------------------------------------------------- ---------- ----------
Share-based payment transaction expense 524 336
---------------------------------------------------------- ---------- ----------
Release of deferred consideration (494) (678)
---------------------------------------------------------- ---------- ----------
Reassessment of deferred consideration (212) (805)
---------------------------------------------------------- ---------- ----------
Disposal of fixed assets 178 226
---------------------------------------------------------- ---------- ----------
Finance income (32) (69)
---------------------------------------------------------- ---------- ----------
Finance costs 27 100
---------------------------------------------------------- ---------- ----------
Working capital adjustments:
---------------------------------------------------------- ---------- ----------
Decrease/ (increase) in trade and other receivables 5,353 (6,096)
---------------------------------------------------------- ---------- ----------
(Increase)/ decrease in inventories (2,116) 351
---------------------------------------------------------- ---------- ----------
(Decrease)/ increase in trade and other payables (919) (1,163)
---------------------------------------------------------- ---------- ----------
Increase in deferred revenue 704 -
---------------------------------------------------------- ---------- ----------
Increase in provisions 581 -
---------------------------------------------------------- ---------- ----------
Cash utilised in operations (8,755) (14,345)
---------------------------------------------------------- ---------- ----------
Tax received 220 275
---------------------------------------------------------- ---------- ----------
Net cash flow from operating activities (8,535) (14,070)
---------------------------------------------------------- ---------- ----------
Investing activities
---------------------------------------------------------- ---------- ----------
Purchase of property, plant and equipment (624) (1,453)
---------------------------------------------------------- ---------- ----------
Expenditure on intangible assets (8) (97)
---------------------------------------------------------- ---------- ----------
Acquisition of subsidiaries - (3,349)
---------------------------------------------------------- ---------- ----------
Payment of deferred consideration (188) (822)
---------------------------------------------------------- ---------- ----------
Acquisition of cash and cash equivalents of subsidiaries - (41)
---------------------------------------------------------- ---------- ----------
Interest received 32 69
---------------------------------------------------------- ---------- ----------
Net cash flow utilised in investing activities (788) (5,693)
---------------------------------------------------------- ---------- ----------
Financing activities
---------------------------------------------------------- ---------- ----------
Proceeds from issue of shares 18,700 10,400
---------------------------------------------------------- ---------- ----------
Share issue costs (677) (351)
---------------------------------------------------------- ---------- ----------
Interest paid - -
---------------------------------------------------------- ---------- ----------
Net cash flow from financing activities 18,023 10,049
---------------------------------------------------------- ---------- ----------
Net increase/(decrease) in cash and cash equivalents 8,700 (9,714)
---------------------------------------------------------- ---------- ----------
Cash and cash equivalents at beginning of year 5,544 15,289
---------------------------------------------------------- ---------- ----------
Effect of foreign exchange rate changes on cash
and cash equivalents 2 (31)
---------------------------------------------------------- ---------- ----------
Cash and cash equivalents at end of year 14,246 5,544
---------------------------------------------------------- ---------- ----------
1. Accounting policies
Basis of preparation
The consolidated financial statements for the year include those
of Digital Barriers plc and all of its subsidiary undertakings
(together 'the Group') drawn up at 31 March 2014. The Financial
Statements were authorised for issue by the Board of Directors on
27 May 2014 and the Balance sheet was signed on the Board's behalf
by Colin Evans and Sharon Cooper.
Subsidiary undertakings are those entities controlled directly
or indirectly by the Company. Control arises when the Group has the
power to govern the financial and operating policies of an entity
so as to obtain benefits from its activities. 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. Subsidiaries are
consolidated using the Group's accounting policies. Business
combinations are accounted for using the acquisition method of
accounting except for the acquisition of Digital Barriers Services
Limited by Digital Barriers plc which has been accounted for using
the pooling of interests method. All inter-company balances and
transactions, including unrealised profits arising from them, are
eliminated on consolidation.
All values are rounded to GBP'000 except where otherwise
stated.
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.
The Group's financial statements have been prepared in
accordance with International Financial Reporting Standards
('IFRSs') as adopted by the European Union as they apply to the
financial statements of the Group for the year ended 31 March 2014
and applied in accordance with the Companies Act 2006. The
accounting policies which apply in preparing the financial
statements for the period are set out below.
The Group's financial statements have been prepared on a going
concern basis. Forecasts and projections, taking into account
reasonably possible changes in trading performance, show that the
Group will be able to operate within the level of current funding
resources. Given this and in view of the cash reserves of GBP14.2
million held on the balance sheet, the Directors are satisfied that
the Group has adequate resources to continue operating for the
foreseeable future. For this reason they have adopted the going
concern basis in preparing the accounts.
2. 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:
2014 2013
GBP'000 GBP'000
----------------------------------------------------------------- --------- ---------
Amortisation of intangibles initially recognised on acquisition 1,733 2,029
----------------------------------------------------------------- --------- ---------
Acquisition costs - 369
----------------------------------------------------------------- --------- ---------
Adjustments to deferred consideration (i) (ii) (679) (1,384)
----------------------------------------------------------------- --------- ---------
Reorganisation costs 1,860 769
----------------------------------------------------------------- --------- ---------
Impairment of intangible assets (iii) 160 1,336
----------------------------------------------------------------- --------- ---------
Total adjustments 3,074 3,119
----------------------------------------------------------------- --------- ---------
(i) Adjustments to deferred consideration in the current year
comprise releases of GBP494,000 and reassessments of GBP212,000
partly offset by the unwind of discount on deferred consideration
balances of GBP27,000. In relation to the e-Tech acquisition
deferred consideration of GBP188,000 was paid in the year clearing
the remaining balance. The remaining GBP260,000 balance at Zimiti
was released in the year as the target was not achieved. At
Visimetrics GBP234,000 was released and the remaining GBP212,000
balance has all been reassessed. The releases and reassessments of
deferred consideration totalling GBP706,000 have been separately
disclosed within Other Income in the Consolidated Income
Statement.
(ii) Adjustments to deferred consideration in the prior year
comprise releases of GBP678,000 and reassessments of GBP805,000
partly offset by the unwind of discount on deferred consideration
balances of GBP99,000. In relation to the LMW acquisition deferred
consideration of GBP60,000 was paid in the year and the remaining
balance of GBP30,000 was released. An interim time-constrained
financial target was not met in relation to the Zimiti acquisition,
resulting in the release of GBP617,000 of deferred consideration;
the remaining balance held in respect of Zimiti has been reassessed
and reduced by GBP805,000 to GBP253,000. In relation to the E-Tech
acquisition deferred consideration of GBP12,000 was paid in the
year with a further GBP188,000 paid after year-end in April 2013;
the remaining balance of GBP31,000 was released. The releases and
reassessments of deferred consideration totalling GBP1,484,000 have
been separately disclosed within Other Income in the Consolidated
Income Statement.
(iii) The restructuring programme has resulted in an impairment
in the year of customer relationships and intellectual property in
relation to the LMW and Visimetrics acquired businesses. The total
impairment of GBP160,000 has been separately disclosed within Other
Costs in the Consolidated Income Statement.
In the prior year the performance of the Keeneo, Waterfall and
Codestuff entities were below the level used to determine the
intangible assets initially recognised on acquisition. The carrying
value of the intangible assets has been re-evaluated using a value
in use model, with discount rates of between 10.8% and 11.7%. As a
result the intangible assets of each entity have been impaired by
GBP577,000, GBP630,000 and GBP129,000 respectively. The total
impairment of GBP1,336,000 has been separately disclosed within
Other Costs in the Consolidated Income Statement.
3. Reorganisation costs
2014 2013
GBP'000 GBP'000
------------------------ --------- ---------
Redundancy and related 1,167 657
------------------------ --------- ---------
Office closure 466 -
------------------------ --------- ---------
Other 227 112
------------------------ --------- ---------
Total pre-tax charge 1,860 769
------------------------ --------- ---------
During the year the Group recognised GBP1,860,000 of pre-tax
reorganisation costs in relation to a restructuring programme to
rationalise its cost base and concentrate resources on its
strategic products. Office closure relates to five properties and
covers rent, rates and dilapidation costs. Other primarily relates
to stock write-down.
Reorganisation costs in the prior year relate to the
rationalisation of the organisational and geographical design,
information systems and support functions within both the Services
and Products Divisions. As the expenditure relates to transforming
the divisions for the future these costs are not directly related
to current operations.
4. Loss per share
Unadjusted loss per share
Weighted Weighted
Loss average Loss average
after number Loss after number Loss
taxation of shares per share taxation of shares per share
2014 2014 2014 2013 2013 2013
GBP'000 No. Pence GBP'000 No. Pence
------------------------ ---------- ----------- ----------- ---------- ----------- -----------
Basic loss per share (14,609) 56,472,084 (25.87) (9,916) 45,530,712 (21.78)
------------------------ ---------- ----------- ----------- ---------- ----------- -----------
Diluted loss per share (14,609) 56,472,084 (25.87) (9,916) 45,530,712 (21.78)
------------------------ ---------- ----------- ----------- ---------- ----------- -----------
5. Adjusted loss per share
Weighted Weighted
Loss average Loss average
after number after number Loss
taxation of shares Loss per taxation of shares per share
2014 2014 share 2013 2013 2013
GBP'000 No. 2014 Pence GBP'000 No. Pence
--------------------------------------- ---------- ----------- ------------ ---------- ----------- -----------
Loss attributable to ordinary
shareholders (14,609) 56,472,084 (25.87) (9,916) 45,530,712 (21.78)
--------------------------------------- ---------- ----------- ------------ ---------- ----------- -----------
Add back:
--------------------------------------- ---------- ----------- ------------ ---------- ----------- -----------
Amortisation of acquired
intangible assets, net of
tax 1,559 - 2.76 1,658 - 3.64
--------------------------------------- ---------- ----------- ------------ ---------- ----------- -----------
IPO, placing costs and acquisition
costs - - - 369 - 0.81
--------------------------------------- ---------- ----------- ------------ ---------- ----------- -----------
Adjustments to deferred consideration (679) - (1.20) (1,384) - 3.04)
--------------------------------------- ---------- ----------- ------------ ---------- ----------- -----------
Reorganisation costs 1,432 - 2.54 769 - 1.69
--------------------------------------- ---------- ----------- ------------ ---------- ----------- -----------
Impairment of acquired intangibles 160 - 0.28 1,015 - 2.23
--------------------------------------- ---------- ----------- ------------ ---------- ----------- -----------
Basic adjusted loss per share (12,137) 56,472,084 (21.49) (7,489) 45,530,712 (16.45)
--------------------------------------- ---------- ----------- ------------ ---------- ----------- -----------
Diluted adjusted loss per
share (12,137) 56,472,084 (21.49) (7,489) 45,530,712 (16.45)
--------------------------------------- ---------- ----------- ------------ ---------- ----------- -----------
The Directors consider that adjusted loss per share better
reflects the underlying performance of the Group.
The inclusion of potential Ordinary Shares arising from LTIPs
and Incentive Shares would be anti-dilutive. Basic and diluted loss
per share has therefore been calculated using the same weighted
number of shares. If the Incentive Shares had become convertible on
31 March 2014 and based on the share price of GBP0.875 (2013:
GBP1.850) on that day, no (2013: 1,540,401) Ordinary Shares would
have been issued in respect of the Incentive Share conversion. Full
details of the basis of calculation is given in the Admission
Document available on the Company's website. The Incentive Shares
will immediately vest on change of control of the Company.
6. Trade and other receivables
Gross Gross
carrying Provision Net carrying carrying Provision Net carrying
amounts for impairment amounts amounts for impairment amounts
2014 2014 2014 2013 2013 2013
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ---------- ---------------- ------------- ---------- ---------------- -------------
Trade receivables 6,562 (499) 6,063 9,344 (34) 9,310
------------------------ ---------- ---------------- ------------- ---------- ---------------- -------------
Prepayments 430 - 430 733 - 733
------------------------ ---------- ---------------- ------------- ---------- ---------------- -------------
Accrued income 119 - 119 2,273 - 2273
------------------------ ---------- ---------------- ------------- ---------- ---------------- -------------
Amounts recoverable on
contracts 692 - 692 718 - 718
------------------------ ---------- ---------------- ------------- ---------- ---------------- -------------
Other receivables 402 - 402 50 - 50
------------------------ ---------- ---------------- ------------- ---------- ---------------- -------------
8,205 (499) 7,706 13,118 (34) 13,084
------------------------ ---------- ---------------- ------------- ---------- ---------------- -------------
The Group's credit risk on trade and other receivables is
primarily attributable to trade receivables and amounts recoverable
on contracts. One customer represents GBP1,103,000 (2013:
GBP2,426,000) of the Group's trade receivables at 31 March 2014.
There is no other significant concentration of credit risk.
In the prior year fair values of the assets and liabilities
arising from the Visimetrics acquisition were provisional.
Acquisition accounting allows for a review of these values within a
12 month period post acquisition. This has resulted in a GBP155,000
reduction in the fair value of trade receivables and consequent
equal increase in goodwill in the prior year.
7. Trade and other payables
2014 2013
GBP'000 GBP'000
--------------------------------- --------- ---------
Current
--------------------------------- --------- ---------
Trade payables 3,096 3,892
--------------------------------- --------- ---------
Accruals 1,173 887
--------------------------------- --------- ---------
Deferred income 704 190
--------------------------------- --------- ---------
Social security and other taxes 520 861
--------------------------------- --------- ---------
Other payables 115 208
--------------------------------- --------- ---------
5,608 6,038
--------------------------------- --------- ---------
8. Financial liabilities
2014 2013
GBP'000 GBP'000
------------------------ --------- ---------
Current
------------------------ --------- ---------
Incentive shares 163 218
------------------------ --------- ---------
Deferred consideration - 665
------------------------ --------- ---------
163 883
------------------------ --------- ---------
Non-current
------------------------ --------- ---------
Deferred consideration - 202
------------------------ --------- ---------
9. Issued Share Capital
On 5 September 2013, 25,171 Ordinary Shares were issued to
satisfy obligations under the Long Term Incentive Plan.
On 4 November 2013, 13,357,143 Ordinary Shares were issued at
140 pence per share for a total cash consideration of
GBP18,700,000.
On 16 December 2013, 54,376 incentive shares were converted into
282,712 Ordinary Shares.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FMGZKMNMGDZZ
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