REG - Digital Barriers plc - Trading Update <Origin Href="QuoteRef">DGB.L</Origin>

ThruvisionAnnouncement

26/02/2015 07:12

RNS Number : 9056F
Digital Barriers plc
26 February 2015
26 February 2015
Digital Barriers plc 
("Digital Barriers")
Trading Update
The Board of Directors (the "Board") of Digital Barriers (AIM: DGB) (the "Group"), the specialist provider of advanced surveillance technologies to the security and defence sectors, provides an update on trading for the current financial year, ending on 31 March 2015.
Trading
The Group continues to secure contract awards with key customer organisations in both domestic and international markets, further examples of which have been announced separately today. However, the timing of two expected significant contract awards in relation to the Group's financial year-endmeans that revenues for the period will fall below the Board's initial expectations, although they are expected to be stronger than the prior year (FY14: 19.0m). As a result, losses for the period will also exceed Board expectations, although they are expected to show a year-on-year improvement (FY14: Adjusted Loss before Tax* 12.0m). Cash at the year-end is expected to be approximately 8.0m, compared to 14.2m on 31 March 2014.
The two contracts in question are now expected to close and be delivered early in the first half of the coming financial year and the Group's broader sales pipeline remains strong. On account of this, and coupled with the operational improvements outlined below, the Board expects that the revenue risk associated with deal closure timings will now begin to reduce. Consequently, the Board still aims for the Group's performance by the end of the financial year ending 31 March 2016 to be break-even.
Operational Improvements and Focus
In October 2014, the Group changed its senior management arrangements, appointing Zak Doffman to the position of Chief Executive Officer. Led by Mr Doffman, the senior team subsequently initiated a detailed review of its operations, which has now concluded. Improvements to sales and technical leadership teams; an increased focus on maximising the opportunities presented by key accounts; and an ambition to deliver a larger number of follow-on sales to existing customers have been three key focus points following this review.
Improvements to the Group's sales operations are best evidenced by new sales leadership appointed in three of the Group's four international regions. The Group also now has a much tighter strategic focus, balancing the ongoing sale of advanced surveillance solutions built around the Group's intellectual property with a parallel, longer-term focus on licensing or selling its intellectual property through partnerships with a number of the industry's leading technology and services companies. Some of these partnerships are already in place.
This stronger sales leadership has already enabled the Group to close material opportunities from its sales pipeline. The most significant of these closures have been in the Group's UK/Europe region, where new sales leadership was appointed in October 2014. Changes to the management arrangements in the Group's Americas and Middle East/Africa regions were made in January 2015, and are expected to yield similarly positive results in due course.
The Groupremains focused on securing new flagship government and commercial organisations as customers for its class-leading technical solutions. With increasing numbers of these organisations having adopted the Group's technologies, each of the Group's regions is also focused on key account management to secure follow-on sales. An increased volume of existing technologies sold into existing customers should lead to enhanced forward visibility and improved sales forecasting. 
Taken together, these changes and their early positive impacts, combined with further planned restructuring of the Group's operational cost base, give the Board confidence in the trading ambition outlined above.
Zak Doffman, Chief Executive Officer of Digital Barriers commented:
"It is frustrating that the timing of sales closures has impacted our performance this year, but we firmly believe that we remain on the right long-term course. In recent weeks we have seen encouraging progress with our first sales secured into leading transportation, energy and industrial services companies. During the period we have also seen our technology selected by government agencies in the US, Asia, the Middle East and Europe. Our focus now is to turn modest initial sales into material follow-on sales from next year.
To achieve this goal, we have carried out a granular operational review. This review has brought about three key changes: significantly improving sales leadership, focusing harder on key accounts, and pursuing follow-on sales with greater determination. These changes are already yielding results and position us well to reach our long-stated break-even goal."
For further information, please contact:
Digital Barriers plc
Tel: 020 7940 4740
Zak Doffman, Chief Executive Officer
Sharon Cooper, Finance Director
Investec Investment Banking
Tel: 020 7597 5970
Andrew Pinder/ Dominic Emery
FTI Consulting
Tel: 020 3727 1000
Edward Bridges/ Matt Dixon/ Rob Mindell
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

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