REG - Digital Barriers plc - Final Results <Origin Href="QuoteRef">DGB.L</Origin> - Part 1

ThruvisionAnnouncement

16/07/2015 12:08

RNS Number : 8915Q
Digital Barriers plc
23 June 2015
23 June 2015
Digital Barriers plc
("Digital Barriers'' or the ''Group")
Preliminary Results for the year ended 31 March 2015
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 2015.
Key Highlights
 Performance for the year in line with February 2015 guidance
 Group revenues of 19.4 million (2014: 19.0 million) and adjusted losses of (10.5 million) (2014: 12.0 million)
 International revenues increased 42% and are now 37% of total revenues (2014: 26%)
 Transition from selling discrete products to fully integrated solutions
 First TVI and ISP solution sales into critical infrastructure, transportation, construction, defence, security and law enforcement
 Most successful year yet for the Group's ThruVision product and UK Services business
 Zak Doffman appointed Chief Executive Officer with Tom Black continuing as Chairman of the Board and more experienced regional sales leadership brought into the Group
 7.1 million (net of placing costs) raised through new share issue in January 2015
Commenting on the results Zak Doffman, CEO of Digital Barriers, said:
"This has been a pivotal year for Digital Barriers. We have firmly established our portfolio of world-class technical solutions,significantly strengthened our regional leadership and broadened our addressable market. The strength of our international sales growth, spearheaded by Asia Pacific, gives a clear indication of the compelling opportunity for us to sell our technology to flagship customers around the world. 
Now our focus is on delivering stronger progress in the US and Middle East, continued success in Asia Pacific, and a renewed impetus in the UK and Europe where we are securing new strategic government and commercial accounts. We also have the potential to accelerate our growth through key industry partnerships, OEM channels to market and our Cloud Video Platform, benefiting from the intensifying global appetite for wireless network video and advanced surveillance technologies."
For further information, please contact:



Digital Barriers plc
Tel: 0203 553 5888
Zak Doffman, Chief Executive Officer

Sharon Cooper, Chief Financial Officer



Investec Investment Banking
Tel: 020 7597 5970
Andrew Pinder / Dominic Emery



FTI Consulting
Tel: 020 3727 1000
Edward Bridges / Rob Mindell / Harry Staight

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
The Group's results were broadly flat on the prior year, but we made significant strategic progress on a number of fronts during the period. Although revenues were only modestly ahead of last year at 19.4 million (2014: 19.0 million), that masks a very strong year for our international revenues which were 42% ahead of the prior year and now account for around 37% of our total revenues and 59% of our product revenues. International growth would have been even stronger except for two material contracts which were delayed but are expected to close this current year. 
Asia Pacific performed particularly well during the period, doubling its revenues from the prior year with key contract wins in Singapore, Japan, Malaysia and Indonesia for our core TVI and ISP solutions. We also secured a notable follow-on order for our ThruVision product in Hong Kong towards the end of the period, completing the best ever year of sales for this technology. The US and Middle East regions were more challenging, although we did deliver a $1.5 million TVI video surveillance hardware contract into a major US Federal agency. Longer than anticipated sales cycles, including funding delays for a large wireless video programme in the US, had an effect on key contracts expected late in the period and these are now expected to contribute positively this year. 
In reviewing our international performance during the year, we decided to improve the quality of sales leadership in both the US and Middle East regions, bringing much stronger access to senior customers across a wide range of government and commercial organisations. 
Our strong trading performance in Asia Pacific has continued since the period-end, and includes our first ISP solution sale into a new and very significant Ministry of Defence customer in the region for integrated maritime border protection. This was secured with strong UK government support and constitutes the first part of one of the delayed contracts referenced above. In the US we have seen a positive impact from the new leadership now in place, with strong sales momentum since the period-end. We now have material contract discussions ongoing with several federal agencies for procurements during the current financial year, including the second of the delayed contracts referenced above and new requirements for our technology. We have also seen initial purchases from commercial organisations looking to adopt our technology. In the Middle East our new leadership is also proving effective, with ongoing engagement with government agencies and commercial organisations expected to contribute positively this year. The same is true in West Africa, with continuing sales opportunities in government and oil and gas, and in India, where we have received government accreditation for our ISP critical infrastructure and border protection solution. 
Unfortunately strong international growth during the period was undermined by disappointing performance in our UK products division. This was due to continued pressure on public sector budgets which meant we were unsuccessful in replacing prior year revenues from a large programme we completed for the Ministry of Defence. We addressed this performance midway through the year, bringing in new more experienced leadership for our UK and Europe region and combining our UK products and services divisions under a single management team. With new leadership in place, the UK division improved its performance in the second half of the year, securing very notable strategic product sales with new accounts in a variety of sectors, including construction, energy and transportation. The year also saw significant growth in UK services, including the delivery of a large project into a major UK sporting event. 
We expect the UK to be particularly second-half weighted this current year, given delays in government contract awards after the general election period, but we will offset this where possible with strategic account management and a continued focus on securing new opportunities in the commercial sector for integrated solutions and services sales. 
In addition to international revenue growth, I would highlight four other significant areas of strategic progress for the Group during the period.
First, we made material progress during the year in transitioning our products division from the development and marketing of discrete hardware and software products to the design, development and delivery of integrated solutions, built around our world-class intellectual property. Our solutions provide customers with fully functioning capabilities that we deploy with local integration partners, helping to secure longer-term relationships between customer organisations and our technologies. We are standardising our offerings with repeat sales of these solutions, adding greater value for our customers and securing larger contract values. For example, until recently we marketed 'black box' TVI video encoding units for law enforcement vehicles, with the customer or their technology partners adding required cameras and accessories. Now we market a fully integrated vehicle surveillance solution that combines our TVI technology with cameras, peripherals and a body worn accessory for when personnel exit the vehicle. The response from both government and commercial customers to this transition to solutions has been resoundingly positive and is driving our forward sales pipeline.
Second we are now developing new channels to market for the Group's class-leading TVI technology. TVI can stream live real-time video, at almost zero latency, across limited or constrained bandwidths such as cellular and satellite networks. It offers compelling performance improvements and bandwidth cost savings over competing technologies and has already been sold to customers in more than thirty countries, including some of the most prominent defence and security organisations in the world. Now we have started to work with manufacturers of cameras and video management systems to widen the market for TVI. Streaming live real-time video across wireless networks is extremely challenging but it offers materially reduced infrastructural and deployment costs as well as new levels of operational flexibility. TVI addresses the fundamental constraints of wireless video and we believe we can work with industry partners to drive significant growth for the technology over the coming years. Our partnership with Milestone, announced since the period-end, is illustrative of this, and we have other partnerships in discussion which we expect to announce during the course of this year.
Third, as prefaced during our 2014 Interim Statement, we have launched our Cloud Video Platform (CVP) for this current year. CVP provides an extremely flexible and scalable channel for our TVI and video analytics capabilities. Embracing new video tools is usually time consuming and expensive for customers, prolonging procurement timescales and delaying implementation.CVP places our existing class-leading video transformation tools and high-performance analytics directly into cloud-accessible services, making them quick to adopt and removing barriers to entry. CVP has been in trial with key customers during our first quarter, and has now fully launched to provide our intellectual property to a wider client-base, with subscription and per-use billing rather than our traditional perpetual licensing model.This will, over time, provide us with increasing recurring revenues with modest incomes projected this year but rising through next year. 
Finally, we made significant changes to our management arrangements during the year, most notably Zak Doffman's appointment as Chief Executive Officer, with me continuing to Chair the Board in a non-executive capacity. This change to a more traditional management structure has always been our intention and has allowed Zak to build a much stronger and more experienced leadership team than we have had previously. This includes new high-calibre sales leadership in three of our four regions, as well as Colin Evans being appointed Chief Operating Officer with responsibility for technology, engineering and the development of new partner channels as detailed above. Sharon Cooper, our Chief Financial Officer, has broadened her role to manage our integrated back-office functions, which have reduced in cost in the last year through efficiencies. With all outstanding integration activities now complete, the focus of our unified leadership team and organisation is entirely on growth. We continue to rely on the expertise and commitment of our staff and we have placed a greater emphasis on our people agenda. At this stage, our headcount of 150 gives us the right balance between investment and achieving critical mass in our key markets.
We remain extremely proud of the strong support we continue to receive from our shareholders, and during the year we raised a further 7.1 million to fund ongoing expenses, to strengthen our balance sheet and to provide working capital for growth. These funds remained on the balance sheet at the year-end, with the cash position at 8.7 million.
Although the Group operates in markets with sales cycles that can be protracted and unpredictable, we have now sold into our key regions for a number of years and have a better understanding of the purchasing behaviours of key government and commercial organisations. We have also enhanced our channels to market and improved our regional sales leadership. Notable well-qualified opportunities in our sales pipeline include flagship US law enforcement and defence agencies, where we have successfully established the operational benefits of our core technologies and expect material purchases to follow. In Asia Pacific we have strong UK government support for a number of major border programmes where we expect our Integrated Surveillance Platform to be procured. We are seeing strong traction for our TVI and ThruVision solutions into law enforcement and civil security, we have a strong sales pipeline in a number of markets across the region, including Singapore, Malaysia, Japan, Indonesia, Australia, Philippines, Hong Kong and the Republic of Korea, and have launched one of our core technologies into Mainland China with immediate customer interest. In the Middle East, where anticipated spend on security and defence technologies reflects the ongoing threat context. We operate in UAE, Qatar and Saudi Arabia, as well as West Africa and India, and have material opportunities for law enforcement, border security and oil and gas protection in those geographies. In the UK and Europe we are balancing existing government customer relationships with new commercial accounts in critical infrastructure, transportation and industrial services. 
Looking forward, I remain confident our technologies are uniquely positioned in the international marketplace, playing an increasingly important role as organisations seek a more agile alternative to conventional surveillance and security systems, as well as opening new opportunities in the broader wireless video domain. The combination of stronger management with repeatable solutions, scalable cloud offerings and new industry channels to market, provides us with the depth of capabilities and commercial flexibility to grow revenues this year and beyond. The Board remains comfortable with its expectations for this financial year driven by continued strong international growth, notwithstanding that the current timing of UK government contracting will contribute to a second-half weighting.
Update on Strategy
We continue to pursue 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. As our strategy continues to develop we are seeing increasing opportunities to leverage our core intellectual property across the wider wireless video domain. We have broadened beyond discrete product sales into integrated solution sales, we are working with industry technology partners and we have launched a cloud service to secure new channels to market. We are also pursuing opportunities for our technology in adjacent commercial sectors. This includes specialist safety applications, such as for construction site monitoring, and offerings for mainstream security, such as SafeZone-edge for Stanley Security and MiniCam for BT Redcare. 
At IPO in 2010 we outlined three phases of our development, from the initial acquisitions phase, through integration and international expansion, to further geographical and product expansion. In the last year we completed our transition from phase two to phase three, making significant progress in widening our product portfolio and transitioning from 'boxes' to solutions. This better enables us to exploit our TVI, RDC, video analytics and ThruVision technologies, as well as to secure a greater share of total contract value and more closely manage customer requirements. Our product expansion also encompasses OEM and utility-based cloud offerings to deliver our technology through new revenue models. These enable enterprise-wide adoption of our products, integrating them with existing surveillance and security infrastructures.
With new regional leadership in place, we have the foundations to drive the adoption of these expanded solution offerings. Our assessment of the growth potential within our market remains unchanged. The defence, homeland security, critical infrastructure, oil and gas and transportation sectors continue to face persistent threats, often beyond the capabilities of conventional security systems. Beyond these markets, we are well positioned to exploit broader security opportunities as well as adjacent offerings for our core technologies. This is reinforced by the wider market access provided by our strategic alliance partners across the industry ecosystem.
Global spending in both core and adjacent markets remains strong across our regions and broader technology imperatives such as the growth in wireless network video is shaping our focus areas:
 Strong strategic account management in the UK, supplementing core defence sales with sales into broader security and commercial sectors, providing fully integrated offerings. 
 Established presence in Asia Pacific, with doubling of revenues last year and a pipeline of repeatable solution sales and larger multi-year programmes albeit with longer sales cycles.
 Significant market opportunity in the US for our solutions and our new regional leadership will accelerate our traction with Federal agencies as well as increasing the focus on other government and commercial opportunities.
 Much stronger Middle East business, with experienced leadership and a clear focus on security opportunities across the Gulf, India and West Africa.
 Continued shift towards mobility in surveillance and security operations, driving the adoption of wireless connected video solutions.
 Commoditisation of mainstream CCTV and a shift in focus to add intelligence and value to existing camera estates, leveraging the flexibility of both 'edge' and 'cloud'.
Our solutions address a wide range of surveillance and security requirements. For smaller-scale opportunities, this facilitates customer adoption and integration with existing systems. The strong interest we see in our vehicle-based surveillance offering is a prime example of this. On larger programmes, our solution focus enables us to assemble a range of modular capabilities, providing more rapidly deployable and affordable options than conventional systems. Our positions on large national security procurements, involving multi-faceted requirements, are evidence of this resonating with customers. This traction, along with the international security and technology context, confirms that our original strategy, although expanding, remains valid and we will continue to pursue it.
Business review
Introduction
During the period we focused on developing complete solutions built on our unique and proven core products. By providing standardised and integrated offerings to customers to solve specific problems, we can access a greater share of total contract value. 
This shift in focus has already delivered results, with a number of key sales in the year coming from these solution offerings. This included the 0.9 million initial sale of a new construction site solution in the UK, the 0.8 million initial sale of a law enforcement vehicle surveillance solution in Indonesia, and the 0.6 million initial sale of a critical infrastructure perimeter security solution in the UK. 
Performance in Asia Pacific through the year reflected both our solutions focus and strong sales leadership, with revenues doubling year on year. The second half of the year showed an improvement in performance in the UK, with new leadership driving the solutions agenda and delivering key sales into new sectors. We are replicating this approach in the Americas and Middle East regions, with more experienced sales leadership now in place.
Complementing this solutions focus, we launched a recurring revenue and subscription model, with a particular focus around our virtualised Cloud Video Platform, which we expect to become an increasing revenue contributor in the coming year and beyond.
Services
Our UK-based Services business recorded its strongest ever year with revenues of 7.5 million, representing growth of 65% over the prior year. 
Key customer contracts delivered in the period included a material framework programme with one of our UK government customers (0.9 million) and a major contract for a flagship sporting event in the UK (3.1 million). The period also saw closer integration between our UK Services and UK Products businesses as we evolve towards integrated solutions. In the UK such solutions include deployment and support, leveraging our Services infrastructure. 
In delivering strong growth and closer ties with our Products business, our Services business is well positioned to consolidate the growth it achieved during the period into the coming year and beyond. 
Products
We achieved a number of notable contract wins in the year, successfully launching solution sales into core sectors and delivering strong international sales growth:
 First solution sale to the construction industry - 0.9 million sale of a monitoring solution for tower cranes to improve operational efficiency and site safety. Such video solutions are likely to become more standardised across the industry and extended to other types of construction equipment.
 Multiple site solution sale within critical national infrastructure market - 0.6 million sale of a perimeter monitoring solution to secure remote energy facilities across multiple initial sites. We anticipate follow on orders in the current year and interest from other organisations with similar requirements.
 Strategic sale of new TVI hardware products- 1.0 million ($1.5 million) sale of high-definition TVI devices to a US government agency for operational surveillance requirements as part of a new integrated requirement and broader agency adoption of TVI.
 First major sale of vehicle solutions to an enterprise customer - 0.8 million sale of vehicle surveillance solution kits for a law enforcement agency in Indonesia. The solution includes a body worn option and is the initial phase of a wider deployment.
 ThruVision sales into key markets- sales during the year included Turkey, Japan, Hong Kong, US and the Philippines, with the improved performance and functionality of our updated product driving strong customer traction.
 Surveillance networking equipment sales in Singapore - 1.8 million of sales into the transportation sector for major rail surveillance projects, we expect material follow-on sales with continued infrastructure investment.
 Remote site security solution sale- 0.3 million sale of facility monitoring equipment to the Nigerian government for the protection of a secure government site, although delayed by Ebola and the election we have on-going opportunities in this country.
Our sales pipeline continues to build, with traction focused on our new range of integrated solutions that build on our core intellectual property, namely:
 Our TVI Video Distribution Platform includes vehicle surveillance solutions, covert and tactical law enforcement and defence solutions and specialist industrial solutions. Our customers see these rapidly deployable, proven solutions as a unique approach to video transmission and viewing from anywhere to anywhere. Over time we will continue to expand this range. 
 Our Integrated Surveillance Platform combines our RDC sensors with TVI, allowing unauthorised intrusions to be viewed securely and remotely. Our customers see this rapidly deployable covert solution as the ideal approach for pre-emptive instead of reactive security. We are working with lead customers for a number of new vertical market solutions, including a new critical national infrastructure protection solution.
 Our Cloud Video Platform brings our TVI and analytics capabilities to a cloud environment. This allows CCTV, public transportation and body worn cameras to be viewed in real-time from anywhere by authorised users. It also includes class-leading video analytics in the cloud that can be used to analyse video from any system on demand, both live and archived, to increase intelligence without the need for dedicated infrastructure and investments from multiple agencies.
 Our Safe Search People Screening Solution based on our ThruVision product facilitates the screening of people without the need for time-consuming, intrusive 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 Markets- We have continued our strategy of targeting key markets with material defence and security budgets across the Americas, Asia Pacific and the Middle East and Africa regions. In FY15 we achieved international growth of 42%, with International now representing 59% of all our product sales. With the change of sales leadership in the Middle East and US, we are now working with larger partners in these regions to provide improved market access. We have also continued to strengthen our direct customer relationships.
In Asia Pacific, we remained focused on key markets, including the Republic of Korea, Hong Kong, Japan, Singapore, Malaysia, Indonesia and Australia. The year saw new customers secured in Japan, Hong Kong and the Philippines, including key reference customers for TVI and ThruVision. Solution sales have been a key part of driving growth in Asia Pacific, and in the current year we expect to see these new solutions continue to be a key driver of growth.
In the Middle East and Africa we are focused on the key GCC states and have followed early sales successes to achieve repeat sales and commitments from larger partners. Our partners in this region have a particular interest in off-the-shelf solutions that can be more easily adopted, with our construction and law enforcement offerings being well positioned.
The US market remains challenging because of longer than expected sales cycles, however there have been a number of landmark sales. These include a ThruVision sale to a major metropolitan police department and a $1.5 million sale of our TVI video surveillance hardware into a major US Federal agency.
UK Market - The UK Government market remained challenging, with the General Election delaying some major procurement decisions late in the year. Although we saw an impact from a decline in our defence sales, we have been working to open up new strategic accounts in the critical national infrastructure, transportation and construction markets.
We introduced new leadership into our UK and Europe region midway through the year, which gave impetus to a diversification of accounts and a sharper focus on solution sales. During the year we also combined our UK Services and UK Products businesses to create an integrated UK organisation to better leverage solution sales into our customer base. The UK Services business continues to perform well, reflecting the enduring strength and value of long-standing customer relationships. We have also brought focused sales resource into the team to expand on our existing sales into Europe.
New Commercial Channels to Market
The mainstream, non-security market is witnessing an unprecedented shift to digital distribution of video over IP networks, fuelling rapid growth. Large technology firms are now entering the market through internal product development and acquisitions. This creates a number of opportunities for Digital Barriers to wirelessly enable market leaders in the Camera and Video Management System (VMS) fields, where our TVI technology has compelling benefits over its competition for wireless video streaming.
Our relationship with Axis, one of the world's leading network camera manufacturers, continues to develop strongly and we anticipate leveraging this to help drive adoption of our products alongside their cameras and VMS. Monthly sales of our SafeZone-edge product have increased ten-fold since launch and we are developing other services to deliver on this platform. We also have interest from other manufacturers to adopt our edge solutions or create open platforms which we can leverage for wider distribution.
VMS vendors remain key to the enterprise video market due to the high cost of switching from an incumbent supplier. We have agreements with the largest VMS vendors, including one of the market leaders Milestone, to integrate TVI and we expect other market leading VMS providers to follow. As mainstream technology companies enter the network video and CCTV markets, VMS vendors are moving more into the mainstream and creating Visual Solutions aimed at new types of customers. They are demonstrating strong interest in adopting our solutions for construction site safety and ambulance patient management systems as well as the application of TVI and analytics into the broad commercial market.
We are also investing in technology to make it easier for third parties to adopt TVI and our analytics without any additional investment from us for each new partner. Given the fragmented nature of the VMS and broader video market we view this standardised technology approach as a way to become an industry standard. One example of the benefits of our ability to integrate TVI's unique capabilities into third party solutions is the opportunities we are seeing in the body worn market to add wireless capability to devices which already have a very large install base.
Technology and Products
During the course of the year, we continued to focus on our four core product families - TVI, RDC, ThruVision and analytics - developing a set of end-to-end solutions for key vertical markets, leveraging the unique and complementary characteristics of our products.
Although our focus is now firmly on integrated solutions rather than discrete product 'boxes', it is imperative that each underlying product remains disruptive in its respective category, occupying a clearly differentiated position and embodying class-leading intellectual property that is both protected and difficult to replicate. Significantly, these core product families have been reinforced with additional capabilities to form the new solutions propositions which are driving international sales activity. It is the maturity of our product development that has enabled us to deliver the new solutions into key industry verticals over the last year. We will continue to invest in adding the incremental capability to our products to enable us to take our technology to wider enterprise markets.
Tactical Visual Intelligence (TVI) - TVI represents the largest market opportunity for us. As a proven, world-class video distribution technology, it offers large organisations the ability to adopt video as an affordable, core enterprise tool for a range of surveillance and security applications in the first instance, but increasingly for more mainstream 'enterprise applications'. We continue to make progress in adding features to make TVI suitable for commercial applications.
Highlights include:
 Addition of multi-camera HD support on the IP Series - primarily developed to meet the needs of vehicle-based law enforcement, the IP450 was launched in July. The product is quickly gaining traction and, due to its versatility and performance, has been selected as the basis for a number of our new solution packages.
 Launch of a new smart phone and desktop viewing software - developed to support our mission-critical surveillance and ISP propositions and introduced at a specialist user exhibition in March. It will also provide the technical foundations to enable greater third-party interoperability of TVI to simplify customer adoption.
Plans for the coming year include developing new body worn video solutions and boosting the scalability of the TVI platform with technical and enterprise features. We increasingly see demands for TVI deployments with ever-larger numbers of cameras and users and we will continue to scale the platform and enhance integration with other systems.
Remote Detection and Classification (RDC) - RDC is our unique ground sensor for the remote detection and classification of unauthorised people or vehicles in remote locations - particularly where network and power infrastructure is limited. RDC has been deployed for a wide range of remote security applications, including the protection of defence forces, wide-area border monitoring, oil and gas security, critical infrastructure asset protection and the monitoring of secure sites.
Our key differentiation remains the combination of a rapidly deployable covert form factor, reliable sensing technology, low power wireless networking and tight coupling with TVI to enable real-time video verification of threats. Together, these form a key component of our Integrated Surveillance Platform, providing a practical and cost-effective approach to the monitoring of wide areas, remote locations or in other situations where conventional security systems are impractical.
RDC is now tightly integrated with TVI at a hardware and software level, the combination is being used for an ever-increasing number of applications.
Highlights include:
 Launch of new CNI and oil and gas proposition - developed around existing products and the requirements of lead customers in both sectors, this solution is also being evaluated by further customers in the CNI and oil and gas sectors.
 Launch of RDC-enabled homeland security solutions - the introduction of a range of scalable remote security and wide-area surveillance solutions that are based on the RDC sensor, including force protection and border security.
 Launch of UltraMesh networking firmware- we launched a next generation wireless networking technology to enhance the node-to-node transmission of alerts.
Plans for the coming year include the addition of intelligent 'trigger and cue' nodes that bring the RDC wireless alarm and triggering technology to a wider range of applications, as well as continued integration of RDC and TVI for both configuration and operations.
ThruVision -ThruVision is our passive, standoff people screening technology for the 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.
Highlights include:
 Launch of a new adaptive scan mechanism - developed to make the device more practical to operate in concealed deployments and significantly boost operations.
 Development of new core components - developed to reduce unit cost and weight as well as decrease unit operating costs and operational noise.
Plans for the coming year include further improvements to the operator software that is used to screen individuals, including automated threat detection (ATD), as well as customer-funded developments to improve performance in different environments. 
Cloud Video Platform (CVP) - CVP places our existing market leading video transformation tools and high performance analytics directly into cloud accessible services - making them quick to adopt and removing barriers to entry.Deriving value from video and distributing the video to where it's needed is a huge challenge for organisations. Video is typically locked within an organisation's data stores, rarely looked at and rarely shared due to the cost and complexity of video analytics and the impact of bandwidth constraints on moving the video.Embracing new video tools is time consuming and expensive, the high barrier to adoption prolonging procurement timescales and delaying implementation. 
We can deploy CVP and its analytics on a public or private cloud or at the edge, providing flexibility to perform processing where it is most economic.The use of readily available commercial cloud services also gives us automatic scalability and resilience, allowing our server capacity and costs to flex with demand.
Highlights include:
 Launch of the platform to selected customers- our first suite of analytics, developed to make it easier to monitor large fleets of cameras, have entered evaluation trials with a number of monitoring and video management service providers including major Alarm Receive Centres (ARCs).The ARC sector is key for us as they aggregate camera customers whilst continually seeking ways to reduce costs and offer innovative service options to the market.
 Launch of our developer tools to selected customers - our developer focused analytics products have entered trials with one of the world's largest management consulting and technology outsourcing firms for developing end-customer applications based upon our cloud ready services.
 Industry recognition of SafeZone-edge- SafeZone-edge was the winner of Intruder Alarm or Exterior Deterrent Product of the Year at IFSEC's Security & Fire Excellence Awards 2014. SafeZone Edge has now been extended to support the third-party Axis video cloud platform (AVHS), creating the SafeZone ARC product.
Plans for the coming year include continued platform development and commercial product launch, development of new and enhanced algorithms, and implementing subscription models for our edge analytics products. We plan to release new CVP video tools and analytics approximately every two months, including TVI video transformation in the cloud - allowing organisations to distribute existing video sources wirelessly, and also cloud access to our facial detection and recognition tools.
Operational review
People
We made significant changes to the management team during the year, including the appointment of Zak Doffman as Chief Executive Officer with Tom Black becoming Non-Executive Chairman. We also significantly strengthened our regional sales leadership and organised our technology and delivery functions to ensure we can support the Group through its next phases of growth. 
We endeavour to provide exciting careers for highly talented sales and engineering staff, with a common culture of innovation and engineering excellence and collaboration across our geographies and engineering teams. This enables a sophisticated level of integration across our products and solutions.
In the last year we have put in place a formal mentoring programme that has given greater emphasis to our people agenda, providing staff with career development direction outside of the line management structure and crossing geographic and product boundaries.
Cost base
During the period a cost reduction programme reduced our overall net cost base by 3.0 million. Operational efficiencies allowed for further investment in international sales and engineering whilst still maintaining the lower cost base. 
Infrastructure
We have expanded our TVI engineering office in Glasgow and invested in our Oxfordshire hub to increase ThruVision manufacturing and broader solution delivery capacity. This year we invested 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: 19.4 million for the year under review (2014: 19.0 million);
 International revenues: 37% of total revenues (2014: 26%);
 Gross margin: 35% for the year under review (2014: 46%);
 Adjusted loss before tax: 10.5 million for the year under review (2014: 12.0 million);
 Central costs: 4.0 million for the year under review (2014: 6.5 million);
 Number of employees: 150 at 31 March 2015 (2014: 193); and
 Cash: 8.7 million at 31 March 2015 (2014: 14.2 million).
Financial review
For the year ended 31 March 2015, Digital Barriers delivered revenue of 19.4 million (2014: 19.0million) generating an adjusted loss before tax of 10.5 million (2014 loss: 12.0 million) and adjusted loss per share of 14.12 pence (2014 loss: 21.49 pence). On an unadjusted basis, the loss before tax was 18.7 million (2014 loss: 15.1 million) and loss per share was 25.85 pence (2014 loss: 25.87 pence).
Revenue and margins
Of the 19.4 million of revenue in year, 11.9 million (2014: 14.5 million) was delivered from Product revenue streams, with 7.5 million (2014: 4.5 million) from the Services division. 
Within the Products division international revenues grew 42%, with sales in the Asia Pacific regions doubling year on year. This growth was offset by a reduction in UK revenues as the region looks to augment less predictable government spend with value-driven sales into the commercial sector. The reduction in UK revenues led to a fall in total Product revenues in the year of 18% (2014: 15%). 
International Product revenues now account for 59% of total Product sales, up from 34% in the prior year. 
All Product sales are now strategic to the Group, with legacy products (and associated revenues) now immaterial to the Group. 
Results by division are detailed below: 
Revenue
Reported 2015
'000
Reported 2014
'000
Products:


International
7,093
5,004
UK
4,849
9,511
Products total
11,942
14,515
Services
7,460
4,527




19,402
19,042
Revenue from the Services division grew 65% year on year to 7.5 million. This growth was underpinned by the delivery of a large system into major UK sporting event in the first half of the year. 
Revenue in the year was split 62%:38% (2014: 76%:24%) between Products and Services respectively. The strength of Services revenue in the year, along with a significant acceleration of ThruVision revenues (unit sales up from 8 to 33) has resulted in a decrease in the Group's gross margin from 46% to 35%.
2015
Product
'000
Services
'000
Total
'000
Revenue
11,942
7,460
19,402
Segment gross margin
5,155
1,670
6,825
 Gross margin %
43%
22%
35%
2014



Revenue
14,515
4,527
19,042
Segment gross margin
7,860
863
8,723
 Gross margin %
54%
19%
46%
Services gross margin increased to 22% in the year (2014: 19%), as a result of strong project management and tightercost control. Products gross margin was 43% (2014: 54%). This decrease is largely associated with sales mix, with a reduction in the proportion of software sales in the year, alongside an increase in ThruVision sales which attract a lower gross margin. 
Overheads
Administration costs are broken down as follows:
Overheads
Reported 2015
'000
Reported 2014
'000
Products administration costs
12,201
15,117
Services administration costs
1,132
960
Amortisation of intangibles initially recognised on acquisition
1,865
1,733
Central costs


Board, operations, finance and facilities 
3,578
4,147
LTIP charge
438
524
Reorganisation costs 
-
1,860

4,016
6,531
Total administration costs 
19,214
24,341
Administration costs within the Products division largely consist of sales and marketing costs, together with research and development spend. Services divisional overheads arepredominantly made up of sales and operations costs. 
In total, administration costs in the year have been reduced by 21% to 19.2million (2014: 24.3million). This reduction is the result of a restructuring programme undertaken in the prior year to rationalise the cost base of the Group and concentrate resources on strategic products. As a result of this programme 1.86million in reorganisation costs were incurred in the prior year, with over 3million of annual cost savings realised. These savings were largely within the Products division and central spend. 
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 10.5 million (2014: 12.0 million) and is detailed in the table below:

2015
'000
2014
'000
Loss before tax
(18,697)
(15,067)
Add back:


Amortisation of intangibles initially recognised on acquisition
1,865
1,733
Loss on disposal of businesses(i)
103
-
Adjustments to deferred consideration(ii)
-
(679)
Reorganisation costs(iii)
-
1,860
Impairment of goodwill and intangibles(iv)
6,250
160
Adjusted loss before tax
(10,479)
(11,993)
(i) Relates to the disposals of two wholly owned subsidiaries, Margaux Matrix Limited and Visimetrics (UK) Limited. Each were disposed of for 1 consideration during the year. The Group did not sell any intellectual property as part of these transactions.
(ii) Relates to the release of deferred consideration payable against the Zimiti and Visimetrics acquisitions plus reassessment of the remaining Visimetrics deferred considerations balance to zero, partly offset by the unwind of discount. 
(iii) Relates to the restructuring programme to rationalise the Group's cost base and concentrate its resources on strategic Products. As the expenditure relates to transforming the divisions for the future these costs are not directly related to continued operations. 
(iv) Relates to the reassessment of the carrying value of goodwill and intangibles within the Products division. The impairment of goodwill reflects a period of product development which has impacted the Group's ability to leverage value from the integrated businesses in the original timeframes expected. 
The reduction in the adjusted loss year on year has been driven by three key factors:
 growth in international Product revenues 
 continued investment in sales and marketing required to drive international expansion
 reduction in overheads in connection with non-strategic products 
The unadjusted loss before tax for the year amounts to 18.7 million (2014 loss: 15.1 million). The increase in the loss is principally the result of an impairment charge of 6.25 million recorded during the year. This reflects the reassessment of the carrying value of goodwill within the Products division following a period of product development which has impacted the Group's ability to leverage value from the integrated businesses in the original timeframes expected. Further details on Product goodwill can be found in note 7. 
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 0.8 million (2014: 0.5 million) principally relates to R&D tax credits. At 31 March 2015, the Group had unutilised tax losses carried forward of approximately 47.5 million (2014: 44.0 million). Given the varying degrees of uncertainty as to the timescale of utilisation of these losses, the Group has not recognised 8.6 million (2014: 8.5 million) of potential deferred tax assets associated with 42.9 million (2014: 42.3 million) ofthese losses.
At 31 March 2015, the Group's net deferred tax liability stood at 0.1million (2014: 0.2 million).
Loss per share 
The reported loss per share is 25.85 pence (2014 loss: 25.87 pence). The adjusted loss per share is14.12 pence (2014 loss: 21.49 pence).
Cash and treasury
The Group ended the year with a cash balance of 8.7million (2014: 14.2 million).
The 5.5 million year on year decrease in net cash consists of 7.1 million (net of placing costs) proceeds from an equity fund raise less (12.1) million (2014: (8.5) million) outflow from operating activities and (0.5) million (2014: (0.8) million) investing spend. No new businesses were acquired during the year.
The (12.1) million (2014: (8.5) million) outflow from operating activities included a 1.9 million net working capital outflow (2014: 2.3 million inflow), largely the result of higher fourth quarter revenues than in the prior year, along with 0.4 million (2014: 1.0 million) of payments in relation to reorganisation activities undertaken in late FY14. The balancing (9.8) million outflow from operating activities (2014: (9.8) million outflow) relates principally to the "cash" operating loss (operating loss excluding non-cash items).
Investing spend included (0.6) million of capital expenditure, mainly demonstration stock to support sales activities.
In April 2015 an agreement was signed with HSBC Bank plc for a 5.0million secured working capital facility to provide pre and post-shipment finance in relation to export activities across the Group. The facility is partially guaranteed by the UK Export Finance Guarantees Department. The interest rate for any borrowings under this facility is 3% over the bank's sterling base rate. The facility will be reviewed on an annual basis as part of our wider banking facilities with HSBC Bank Plc in September each year. 
Dividends
The Board is not recommending the payment of adividend (2014: nil).
DIGITAL BARRIERS PLC
Consolidated income statement
for the year ended 31 March 2015

Note
Year ended 31 March 2015
'000
Year ended 31 March 2014
'000
Revenue
2
19,402
19,042
Cost of sales

(12,577)
(10,319)
Gross profit

6,825
8,723
Administration costs

(19,214)
(24,341)
Other income

-
706
Other costs

(6,353)
(160)
Operating loss

(18,742)
(15,072)
Finance revenue

45
32
Finance costs

-
(27)
Loss before tax

(18,697)
(15,067)
Income tax

785
458
Loss after tax attributable to owners of the parent

(17,912)
(14,609)








Adjusted loss:
3


Loss before tax

(18,697)
(15,067)
Amortisation of intangibles initially recognised on acquisition

1,865
1,733
Loss on disposal of businesses

103
-
Adjustments to deferred consideration

-
(679)
Reorganisation costs

-
1,860
Impairment of goodwill

6,250
-
Impairment of intangibles

-
160
Adjusted loss before tax for the year

(10,479)
(11,993)








(Loss) per share - basic
4
(25.85p)
(25.87p)
(Loss) per share - diluted
4
(25.85p)
(25.87p)
(Loss) per share - adjusted
4
(14.12p)
(21.49p)
(Loss) per share - adjusted diluted
4
(14.12p)
(21.49p)
The results for the year and the prior year are derived from continuing activities.
DIGITAL BARRIERS PLC
Consolidated statement of comprehensive income
for the year ended 31 March 2015


Year ended 31 March 2015
'000
Year ended 31 March 2014
'000
Loss for the year

(17,912)
(14,609)
Other comprehensive income



Other comprehensive income that may be subsequently reclassified to profit and loss: 



Exchange differences on retranslation of foreign operations

(656)
9
Net other comprehensive income to be reclassified to profit or loss in subsequent years

(656)
9
Total comprehensive loss attributable to owners of the parent

(18,568)
(14,600)
DIGITAL BARRIERS PLC
Consolidated statement of financial position
at 31 March 2015

Note
31 March 2015
'000
31 March 2014
'000
Assets







Non-current assets



Property, plant and equipment

683
1,108
Goodwill
7
18,186
24,802
Other intangible assets

2,092
3,857


20,961
29,767
Current assets



Inventories

4,499
3,895
Trade and other receivables
5
8,869
7,706
Current tax recoverable

1,513
826
Cash and cash equivalents

8,701
14,246


23,582
26,673
Total assets

44,543
56,440




Equity and liabilities



Attributable to equity holders of the Parent



Equity share capital
8
845
646
Share premium

82,757
75,879
Capital redemption reserve

4,786
4,786
Merger reserve

454
454
Translation reserve

(868)
(212)
Other reserves

(307)
(307)
Retained earnings

(48,826)
(31,352)
Total equity

38,841
49,894




Non-current liabilities



Deferred tax liabilities

116
194
Provisions

134
161


250
355
Current liabilities



Trade and other payables
6
5,261
5,608
Financial liabilities

163
163
Provisions

28
420


5,452
6,191
Total liabilities

5,702
6,546
Total equity and liabilities

44,543
56,440
DIGITAL BARRIERS PLC
Consolidated statement of changes in equity
for the year ended 31 March 2015

Share capital
'000
Share premium account '000
Capital redemption reserve '000
Merger reserve '000
Translation reserve '000
Other reserves '000
Profit and loss reserve '000
Total equity '000
At 31 March 2013
510
57,989
4,735
454
(221)
(307)
(17,267)
45,893
Loss for the year
-
-
-
-
-
-
(14,609)
(14,609)
Other comprehensive loss
-
-
-
-
9
-
-
9
Total comprehensive loss
-
-
-
-
9
-
(14,609)
(14,600)
Share placement
133
18,567
-
-
-
-
-
18,700
Share issue costs
-
(677)
-
-
-
-
-
(677)
Incentive share conversion
3
-
51
-
-
-
-
54
Share based payment credit
-
-
-
-
-
-
524
524
At 31 March 2014
646
75,879
4,786
454
(212)
(307)
(31,352)
49,894
Loss for the year
-
-
-
-
-
-
(17,912)
(17,912)
Other comprehensive loss
-
-
-
-
(656)
-
-
(656)
Total comprehensive loss
-
-
-
-
(656)
-
(17,912)
(18,568)
Share placement
199
7,151
-
-
-
-
-
7,350
Share issue costs
-
(273)
-
-
-
-
-
(273)
Share based payment credit
-
-
-
-
-
-
438
438
At 31 March 2015
845
82,757
4,786
454
(868)
(307)
(48,826)
38,841
DIGITAL BARRIERS PLC
Consolidated statement of cash flows
for the year ended 31 March 2015


Year ended 31 March 2015
'000
Year ended 31 March 2014
'000
Operating activities



Loss before tax

(18,697)
(15,067)
Non-cash adjustment to reconcile loss before tax to net cash flows



Depreciation of property, plant and equipment

630
739
Amortisation of intangible assets

1,971
1,819
Impairment of goodwill

6,250
-
Impairment of intangible assets

-
160
Share-based payment transaction expense

438
524
Unrealised (gains) / loss on foreign exchange

(95)
-
Release of deferred consideration 

-
(494)
Reassessment of deferred consideration

-
(212)
Disposal of fixed assets

56
178
Finance income

(45)
(32)
Finance costs

-
27
Working capital adjustments:



(Increase) / decrease in trade and other receivables 

(1,262)
5,353
Increase in inventories

(604)
(2,116)
Decrease in trade and other payables

(62)
(919)
 (Decrease) / increase in deferred revenue

(285)
704
 (Decrease) / increase in provisions

(419)
581
Cash utilised in operations

(12,124)
(8,755)
Tax received

3
220
Net cash flow from operating activities

(12,121)
(8,535)
Investing activities



Purchase of property, plant and equipment

(532)
(624)
Expenditure on intangible assets

(3)
(8)
Payment of deferred consideration

-
(188)
Interest received

45
32
Net cash flow utilised in investing activities

(490)
(788)
Financing activities



Proceeds from issue of shares

7,350
18,700
Share issue costs

(273)
(677)
Net cash flow from financing activities

7,077
18,023
Net (decrease)/ increase in cash and cash equivalents

(5,534)
8,700
Cash and cash equivalents at beginning of year

14,246
5,544
Effect of foreign exchange rate changes on cash and cash equivalents

(11)
2
Cash and cash equivalents at end of year

8,701
14,246
Notes to the financial information
1. Accounting policies
Basis of preparation
The Annual Financial Report announcement was approved by the Board of Directors on 22 June 2015. 
The financial information set out in this Annual Report results announcement for the year ended 31 March 2015 does not constitute the Group's statutory accounts as defined by s435 of the Companies Act but has been extracted from the 2015 statutory accounts on which an unqualified audit report has been made by the auditors, and which did not contain an emphasis of matter paragraph nor a statement under section 498(2) or (3) of CA 2006. The financial information included in the Annual Report announcement for the prior year ended 31 March 2014 has been extracted from the 2014 statutory accounts on which an unqualified audit report has been made by the auditors, and which did not contain an emphasis of matter paragraph nor a statement under section 237(2) or (3) of CA 1985. 
The Group's consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU"). The accounting policies have been consistently applied to all periods presented and are consistent with those presented in the 2015 statutory accounts. 
The audited financial statements for the year ended 31 March 2014 have been delivered to the Registrar of Companies. The Annual Report for the year ended 31 March 2015 will be mailed to shareholders at the end of July 2015 and will be delivered to the Registrar of Companies following the Annual General Meeting which will be held in September 2015 at the Company's office at Cargo Works, 1-2 Hatfields, London SE1 9PG. 
Going concern
The Group's net loss for the year was 17.9 million (2014: 14.6 million). As at 31 March 2015 the Group had net current assets of 18.1 million (2014: 20.5 million) and cash reserves of 8.7 million (2014: 14.2 million). 
In April 2015 an agreement was signed with HSBC Bank plc for a 5.0 million secured working capital facility to provide pre and post-shipment finance in relation to export activities across the Group. The facility is partially guaranteed by the UK Export Finance Guarantees Department. The interest rate for any borrowings under this facility is 3% over the bank's sterling base rate. The facility will be reviewed on an annual basis as part of our wider banking facilities with HSBC Bank Plc in September each year. There are no indications that the facility (along with our wider banking facilities) will not be renewed in September and as a result this facility has been factored in to cash flow projections for the Group. Should the facility not be renewed in September, mitigating actions can be taken to manage our cash flows.
The Board has reviewed these cash flow forecasts for the period up to and including 30 September 2016. These forecasts and projections take into account reasonably possible changes in trading performance and show that the Group will be able to operate within the level of current funding resources. The Directors therefore believe there is sufficient cash available to the Group to manage through these requirements. 
As with all businesses, there are particular times of the year where the Group's working capital requirements are at their peak. However, the Group is well placed to manage business risk effectively and the Board reviews the Group's performance against budgets and forecasts on a regular basis to ensure action is taken where needed. 
The Directors therefore 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 financial statements.
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. Managers have been appointed within Services andProducts, who report to members of the Board. These are the reportable operating segments in accordance with IFRS 8 'Operating Segments'.

Services
2015
'000
Products
2015
'000
Central
2015
'000
Total
2015
'000
Total segment revenue
7,460
12,272
-
19,732
Inter-segment revenue
-
(330)
-
(330)
Revenue
7,460
11,942
-
19,402
Depreciation
55
575
-
630





Segment adjusted operating profit/(loss)
538
(7,046)
(4,016)
(10,524)
Amortisation of intangibles initially recognised on acquisition
(430)
(1,435)
-
(1,865)
Loss on disposal of businesses
-
(103)
-
(103)
Impairment of goodwill
-
(6,250)
-
(6,250)
Segment operating profit/(loss)
108
(14,834)
(4,016)
(18,742)
Finance income



45
Loss before tax



(18,697)
Income tax credit



785
Loss for the year



(17,912)

Services
2014
'000
Products
2014
'000
Central
2014
'000
Total
2014
'000
Total segment revenue
4,527
14,696
-
19,223
Inter-segment revenue
-
(181)
-
(181)
Revenue
4,527
14,515
-
19,042
Depreciation
70
669
-
739





Segment adjusted operating loss
(97)
(7,257)
(4,671)
(12,025)
Amortisation of intangibles initially recognised on acquisition
(432)
(1,301)
-
(1,733)
Adjustments to deferred consideration
-
706
-
706
Impairment of intangible assets
-
(160)
-
(160)
Reorganisation costs
-
-
(1,860)
(1,860)
Segment operating loss
(529)
(8,012)
(6,531)
(15,072)
Finance income



32
Finance costs



(27)
Loss before tax



(15,067)
Income tax credit



458
Loss for the year



(14,609)
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 behelpful 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:

2015
'000
2014
'000
Amortisation of intangibles initially recognised on acquisition
1,865
1,733
Loss on disposal of businesses (i)
103
-
Adjustments to deferred consideration (ii) 
-
(679)
Reorganisation costs 
-
1,860
Impairment of goodwill and intangibles (note 7) (iii)
6,250
160
Total adjustments
8,218
3,074
(i) During the year ended 31 March 2015 Margaux Matrix Limited and Visimetrics (UK) Limited, two wholly owned subsidiaries, were each disposed of for 1 consideration
(ii) Adjustments to deferred consideration in the prior year comprise releases of 494,000 and reassessments of 212,000 partly offset by the unwind of discount on deferred consideration balances of 27,000.
(iii) A 6.25m non-cash impairment charge has been recorded against the carrying value of goodwill within the Products division and has been separately disclosed within Other Costs in the Consolidated Income Statement. This impairment reflects a period of product development, which has delayed the Group's ability to leverage value from the integrated businesses in the expected timeframes, along with delays in sales cycles as reported to the market by the Group on 11 August 2014. Further detail is given in note 7. 
In the prior year a restructuring programme resulted in an impairment, within the products operating segment, of certain customer relationships and intellectual property in relation to the LMW and Visimetrics acquired businesses. The total impairment of 160,000 was separately disclosed within Other Costs in the Consolidated Income Statement. As a result the intangible assets of each entity have been impaired by 67,000 and 93,000 respectively, the carrying value of these assets is now nil.
4. Loss per share
Unadjusted loss per share

Loss after taxation 2015
'000
Weighted average number of shares 2015 No.
Loss per share 2015 Pence
Loss after taxation 2014
'000
Weighted average number of shares 2014 No.
Loss per share 2014 Pence
Basic loss per share
(17,912)
69,305,105
(25.85)
(14,609)
56,472,084
(25.87)
Diluted loss per share
(17,912)
69,305,105
(25.85)
(14,609)
56,472,084
(25.87)
Adjusted loss per share

Loss after taxation 2015
'000
Weighted average number of shares 2015
No.
Loss per share 2015 Pence
Loss after taxation 2014
'000
Weighted average number of shares 2014
No.
Loss per share 2014 Pence
Loss attributable to ordinary shareholders
(17,912)
69,305,105
(25.85)
(14,609)
56,472,084
(25.87)
Add back:






Amortisation of acquired intangible assets, net of tax
1,771
-
2.56
1,559
-
2.76
Disposal of businesses
103
-
0.15
-
-
-
Adjustments to deferred consideration
-
-
-
(679)
-
(1.20)
Reorganisation costs
-
-
-
1,432
-
2.54
Impairment of goodwill
6,250
-
9.02
-
-
-
Impairment of acquired intangibles
-
-
-
160
-
0.28
Basic adjusted loss per share
(9,788)
69,305,105
(14.12)
(12,137)
56,472,084
(21.49)
Diluted adjusted loss per share
(9,788)
69,305,105
(14.12)
(12,137)
56,472,084
(21.49)
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 2015 and based on the share price of 0.385 (2014: 0.875) on that day, no (2014: no) 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.
5. Trade and other receivables

Gross carrying amounts
2015
'000
Provision for impairment
2015
'000
Net carrying amounts
2015
'000
Gross carrying amounts
2014
'000
Provision for impairment
2014
'000
Net carrying amounts
2014
'000
Trade receivables
9,112
(1,208)
7,904
6,562
(499)
6,063
Prepayments 
439
-
439
430
-
430
Accrued income
350
-
350
119
-
119
Amounts recoverable on contracts
-
-
-
692
-
692
Other receivables
176
-
176
402
-
402

10,077
(1,208)
8,869
8,205
(499)
7,706
The Group has experienced credit risk which reflects its early stage of development into international markets, as reflected in the provision for doubtful debts. As the Group further establishes itself and its products into new and existing geographies, so its exposure to credit risk is expected to reduce. 
6. Trade and other payables

2015
'000
2014
'000
Current


Trade payables
3,100
3,096
Accruals
1,296
1,173
Deferred income
419
704
Social security and other taxes
279
520
Other payables
167
115

5,261
5,608
7. Goodwill

Goodwill
'000
At 31 March 2013 and 31 March 2014
24,802
Impairment of goodwill
(6,250)
Exchange movements
(366)
At 31 March 2015
18,186
Carrying amount of goodwill allocated to operating segments

2015
'000
2014
'000
Services
3,582
3,582
Products
14,604
21,220

18,186
24,802
Goodwill acquired through business combinations has been allocated for impairment testing purposes to two groups of cash-generating Units ('CGUs'). These groups of CGUs are its two operating segments 'Services' and 'Products' as the goodwill relates to synergies at this level. The Group conducts annual impairment tests on the carrying value of the CGUs in the statement of financial position. Although required to perform annual impairment tests, these do not have to take place at 31 March but the test should be consistently carried out at the same time annually. The Group carries out its annual impairment testing as at 28 February each year. Impairment testing is only re-performed if an impairment triggering event occurs in the intervening period. As announced on 11 August 2014, the Group's original forecasts for the year ended 31 March 2015 were revised downwards. As a result the Group conducted an impairment test on the carrying value of the Product division as at 30 September 2014. 
Value in use calculations were used to determine the recoverable amount of the Product cash-generating unit at that time. The key assumptions for the value in use calculations were the forecast revenue growth of the CGU, cost allocations, the discount rate applied and the long-term growth rate of the net operating cash flows. In determining the key assumptions, management took into consideration the nature of the markets in which it operates, the ability of the CGU to exploit those opportunities and the current economic climate, the resulting impact on expected growth, cost base and pre-tax discount rates, and the pressure this placed on impairment calculations.
The Group prepared cash flow forecasts for the cash-generating unit based on the most recent two and a half year detailed financial forecasts at that time. These forecasts had been revisited in light of the announcement on 11 August 2014 and progression of the business through its phases of development. The cash flow forecasts were based on an internal assessment of the strength of the CGU in the markets in which it operates, the costs attributable to the CGU and the expected growth in revenue and margins, reflecting the size and opportunities in its core strategic markets. Revenue growth in years two and three was forecast at 40% and 20% per annum respectively based on lowered forecast, with revenue growth of 2.5% assumed from year four onwards, being an external estimate of the UK's long-term growth rate. A discount rate of 11.6% was applied. Based on these assumptions the recoverable amount was determined to be 24.5 million and an impairment charge of 6.25 million arose. 
A further impairment test has been performed on both the Product and Services divisions as at 28 February 2015 consistent with annual review cycles. 
Value in use calculations are again used to determine the recoverable amount of cash-generating units. The key assumptions for the value in use calculations remain the forecast revenue growth of each CGU, the discount rate applied and the long-term growth rate of the net operating cash flows, along with the gross margin for Products. In determining the key assumptions, management have taken into consideration the expected growth of the markets in which it operates, the ability of the CGU to exploit those opportunities and the current economic climate, the resulting impact on expected growth and pre-tax discount rates, and the pressure this places on impairment calculations. The cost base of the company has stabilised following the restructuring programme undertaken by the Group in the prior year and as a result the cost base is not considered to be a key assumption. 
The Group prepares cash flow forecasts for these cash-generating units based on the most recent three-year detailed financial forecasts. The table below sets out the key assumptions included in these forecasts:

Products
Services

2015
2014
2015
2014
Revenue growth compound from FY15 to FY18 (years one to three)(1)
46%
40%
0%
20%
Revenue growth from FY19 onwards (year four onwards) (2)
2.5%
2.5%
2.5%
2.5%
Gross margin improvement compound from FY15 to FY18 (years one to three) (3)
8%
0%
0%
16%
Discount rate (4)
10.6%
11.6%
10.0%
10.9%
(1) Forecasts are based on an internal assessment of the strength of the CGU in the markets in which it operates with the expected growth reflecting the opportunities in its core strategic markets, sales pipeline and relationships being developed. 
(2) Revenue growth of 2.5% is an external estimate of the UK's long-term growth rate.
(3) Product gross margin is forecast to improve against FY15 as the product mix evolves through the next three years to include a greater proportion of software and standard solution sales. The forecast gross margin is in line with gross margins achieved by the Products segment in the recent past. 
(4) Discount rate is based on the weighted cost of capital applying to businesses in the same sector, and reflects the current market assessments of the time value of money and of the risks specific to the cash generating units. 
As a result of these assumptions, no impairment losses have been recognised to date for Services. No further impairment loss arises for Products based on these base assumptions and a full three-year detailed forecast, compared to a two and a half year detailed forecast as at 30 September 2014.
The Directors consider that an absolute change in the key assumptions set out below is reasonably possible. 

Products
Services
Reduction in forecast revenue growth compound from FY15 to FY18 (years one to three)
-5%
-2%
Reduction in forecast revenue growth FY19 onwards (year four onwards)
-2.5%
-2.5%
Reduction in gross margin improvement compound from FY15 to FY18 (years one to three)
-3%
n/a
Increase in discount rate (4)
2.5%
2.5%
If these assumptions were to change in isolation, they would not result in an impairment charge of goodwill within either Services or Products. The value in use calculations are most sensitive to changes in assumptions around forecast revenue growth and gross margin improvement. An absolute reduction in the forecast revenue growth of 7% (compound over years one to three) or a 4% reduction in gross margin improvement (compound over years one to three) would result in the recoverable amount of Products goodwill being equal to the carrying amount (a reduction in the headroom from 14.4 million to nil). 
If all key assumptions were to change in combination, a further impairment charge would be recognised for the current carrying value of goodwill in relation to the Products segment. There would be no impairment charge within Services. 
8. Share capital

Number
'000
Authorised, allotted, called-up and fully paid


Ordinary Shares of 1 pence each


At 31 March 2013
50,959,590
510
Shares issued in the year
13,665,026
136
At 31 March 2014
64,624,616
646
Shares issued in the year
19,864,865
199
At 31 March 2015
84,489,481
845
On 5 January 2015 19,864,865 Ordinary Shares were issued at 37 pence per share for a total cash consideration of 7,350,000.

This information is provided by RNS
The company news service from the London Stock Exchange
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