Final Results

RNS Number : 0081A
Ubisense Group PLC
21 March 2017
 

Ubisense Group plc

("Ubisense" or the "Company")

Final results for the year ended 31 December 2016

Ubisense Group Plc (AIM: UBI) a leader in high performance Enterprise Location Intelligence systems, announces its final results for the year ended 31 December 2016.

 

Strategic highlights

·      2016: Strong progress was demonstrated in terms of revenue growth, margins, cost management and order book.

·      Organisation: Restructured and strengthened the organisation, appointing Richard Petti as CEO and Tim Gingell as CFO.

·      RTLS customer wins: Important RTLS customer wins in automotive manufacturing including a worldwide corporate software licence, together with installations at multiple customer locations.

·      Geospatial customer wins: Announced in March 2016, $3 million of new contracts for managed services were sold alongside additional myWorld licence extensions with key customers.

·      RTLS product development: Re-defined the enterprise software platform to address Industry 4.0 and emerging opportunities for Industrial Internet of Things ("IIoT") applications.

·      Geospatial product development: New myWorld product launches have extended enterprise geomobility to GIS data via iOS, Android and Windows operating systems in line with our "Any data, Anywhere, Any device" strategy.

·      Partner development: Appointed a new partner for delivery and support of key RTLS customers - enhanced further with a Value Added Reseller (VAR) relationship. For the Geospatial business, a new partner was appointed in Q4 and made an early sale of myWorld to a large communications company in North America.

 

Financial highlights

·      Revenue increased 21% to £26.5 million (2015: £22.0 million) led by growth in software revenue.

·      Order book as at 31 December 2016 of £12.6 million (2015: £9.6 million).

·      Gross margin increased to 39% (2015: 35%) due to improved software revenue mix and focus on cost management.

·      Adjusted EBITDA of £0.3 million (2015: £5.2 million loss) reflecting increased gross profit and the efficient management of our cost base.

·      Operating loss reduced to £6.2 million (2015: £17.0 million) due to improved trading performance and non-recurring income.

·      £4.8 million (gross) raised from shareholders in April 2016, stabilising the balance sheet.

·      Cash balance of £3.5 million (2015: £5.4 million) and net cash of £0.2 million (2015: net debt of 0.2 million).

 

Peter Harverson, Chairman of Ubisense, commented:

"I am pleased to report that, following the restructuring of the Group, we have made good progress in terms of revenue growth, margins, cost management and order book. The business is now operating at a significantly reduced cost run-rate from that of 2015 and so our increased revenues during the period have delivered an adjusted EBITDA profit."

 

Contacts

Ubisense Group plc

+44 (0)1223 535 170

Richard Petti

 

Tim Gingell

 

 

 

Numis Securities Limited

+44 (0)20 7260 1000

Simon Willis

 

Jamie Lillywhite

 

Toby Adcock

 

 

 

Redleaf Communications

+44 (0)20 7382 4730

Rebecca Sanders-Hewett

ubisense@redleafpr.com

David Ison

 

Sam Modlin

 

About Ubisense

Ubisense (AIM: UBI), a global leader in Enterprise Location Intelligence solutions, helps manufacturing, communications and utility companies improve operational efficiency and boost profitability. Ubisense location intelligence systems bring clarity to complexity, enabling customers to revolutionise their operational effectiveness in a measurable way. Founded in 2002, Ubisense is headquartered in Cambridge, England, with offices in North America, France, Germany and Japan. For more information visit: www.ubisense.net.

 

 

 

 

Strategic Report: Executive Chairman's statement

 

Introduction

I am pleased to report that, following the restructuring of the Group, we have made good progress in terms of revenue growth, margins, cost management and order book. The business is now operating at a significantly reduced cost run-rate from that of 2015 and so our increased revenues during the period have delivered an adjusted EBITDA profit.

We have refocused our sales effort and development of the two product portfolios - our Real-Time Location System (RTLS) and myWorld geomobility enterprise software platforms.

We demonstrated our first success in signing a global licence agreement for our RTLS enterprise software platform with a major automotive manufacturer, which will become the cornerstone of their vision of a paperless factory, leading to improved production flexibility, increased productivity and higher product quality.

Our myWorld geomobility enterprise software platform also gained excellent references within the telecoms and utility sectors. Demonstrating productivity gains and enabling cost reductions, it has delivered a new level of connected mobility and visualisation of GIS data to our customers' field operations.

Reflections on 2016

Going into 2016 we had executed a major cost reduction programme resulting in substantial reductions in headcount across the business. We used this opportunity to review the productivity and direction of our two core divisions - RTLS solutions and Geospatial's myWorld geomobility enterprise platform with its attached services.

Historically, the RTLS business has been driven by the hardware element of the solution and the myWorld platform hidden to some extent by the wider range of GIS services delivered by the Geospatial business. The Company has consistently made investments in both platforms over a number of years, but has not succeeded in maximising value creation for the business. Therefore, a new emphasis has been given to focus on the platform capability and benefit it can deliver for our customers, leading to a new segmentation of the RTLS platform (currently termed SmartSpace) and the launch of geomobility enhancing myWorld product releases.

Europe

We increased our momentum in Europe with a major win for our RTLS enterprise location software platform to the automotive sector, as well as a number of hardware deployments for that customer which we expect to extend to additional sites worldwide. We also closed another significant RTLS solution sale with the expectation of additional orders to expand it into our largest single site deployment. In Central Europe, we also agreed an important partner relationship to support and deliver installation services to our customers in the region.

North America

We continued our investment in North America and although sales cycles have been longer than anticipated, we believe this is an important territory for both divisions. We have some excellent customer relationships, with significant deployments in production or being expanded, including a large agricultural equipment manufacturer for RTLS and leading telecommunication services businesses for Geospatial. We also appointed a new partner, Frontier Geotek, and made an early sale of myWorld licences to a major telecoms operator.

Japan

I am pleased to report that our RTLS business grew by 25% from partners including Meiji Denki, as well as new customers in the automotive industry such as Vuteq. The Japan business was acquired at the end of 2013 with a 3 year growth plan, built on the existing GIS services business. At the end of 3 years, a review of the business acknowledged that while the business showed early signs of progression, anticipated growth had not matched expectations, and the Board has decided to take a further impairment charge against the goodwill and customer intangibles established at the time of acquisition. The Company also disposed of a small CAD business to improve productivity.

Board of Directors

In May this year, Richard Green stepped down as CEO after 14 years in the role and I'd like to thank him for his contribution. While we searched for a replacement, my remit was expanded from Non-Executive Chairman to Executive Chairman, taking on responsibility for the management and operations of the Company. I am pleased to welcome Richard Petti to the Board, who was appointed as Chief Executive Officer in December, and I anticipate resuming a Non-Executive Chairman position in the first half of 2017.

Recognising the support and significant interest of our lead investor Kestrel, Oliver Scott was invited to join the Board in May 2016.

In August 2016, we appointed Tim Gingell as Chief Financial Officer and member of the Board. Tim has worked at Ubisense since February 2015, and since June 2015 as Interim Chief Financial Officer and Company Secretary.

Corporate social responsibility

We are committed to corporate social responsibility that is tangible, practical and fits with the ethos of the business; this ensures that it is widely adopted, and supported, globally. We therefore always act in a socially responsible manner, taking into account relevant social and environmental factors to facilitate creating tangible value for all our employees, customers, shareholders and communities.

During 2016, we introduced a charity day, for employees to take time off to support their charity of choice as well as organising local fundraising events. We collaborated with local and national organisations to engage interns, industrial placements, apprenticeships and mentoring schemes, as well as being members of local networks and clubs.

Outlook

The market opportunity for the Company is excellent, with both our software platforms demonstrating measurable return on investment for our customers. However, the Company is in a recovery phase and we continue to be prudent in managing our operating costs in line with the near term revenue opportunity. 

We will look to build on our successes in the RTLS business, delivering on deals signed in 2016 and targeting new opportunities in existing markets and new verticals, while developing our partner business.

Looking forward on the Geospatial business, we see an excellent opportunity for the myWorld geomobility platform and its valuable attached services. However, we anticipate that the historic GIS services will show some decline in both revenues and potentially margin. The highly specialist skills required to deliver myWorld services have been built on our long history of working with customers' GIS databases, and this transition will continue, leading to an expected improvement in margins and better penetration of our current and future customer base. On this basis, we fully expect some older GIS consultancy services contracts not to renew and the associated revenue stream to begin to decline through 2017 and 2018, which we will look to offset with higher margin myWorld software sales and related services. 

Under the management of our newly appointed CEO, Richard Petti, we will continue to focus on productivity of the organisation, with the objective of building a first-class enterprise and support offering, alongside an enhanced partner programme.

2016 was a challenging year for our staff. I would like to take this opportunity to thank them for their dedication and ongoing commitment. Finally, we would like to express our gratitude to our shareholders for their continued support.

 

Peter Harverson

Chairman

20 March 2017

 

 

 

 

 

 

 

 

 

 

 

Strategic Report: Chief Executive's statement

 

As I only recently joined Ubisense, I am focused on the future rather than looking back on the performance of the business in 2016, but I felt it would be useful to outline some of my initial insights.

Q: What are your first impressions of the business?

A:  The depth and quality of Ubisense's customer portfolio is impressive. We are a global business with installations running day in, day out across the world. From automotive producers in China, Germany, North America and elsewhere, to aerospace customers in Europe and utility businesses in North America and Japan, we have an enviable collection of blue-chip customers trusting their location intelligence needs to us. This footprint represents a huge opportunity for Ubisense to continue working closely with customers to successfully develop and improve their industrial operations through the use of location information. The Ubisense team has deep knowledge and experience, which can be harnessed to evolve our product sets to solve issues that have not yet been explored.

A combination of upskilling our commercial teams, strengthening market messages and branding, and intelligently targeting opportunities will help to grow our pipeline. We will continue the trend of acquiring customers requiring enterprise rather than point solutions, leveraging partners where appropriate.

Q: What have you observed that differentiates Ubisense from the competition?

A: Ubisense is a true market leader both with its RTLS and Geospatial technology. Leadership of this quality comes from our in-depth understanding of customers' needs through years of working with them. We have competencies in automotive, utility, logistics, telecoms, aerospace, healthcare and transit and these have been invested into our product lines through a process of continuous improvement. Today, this gives us unique advantages in terms of our ability to solve customers' requirements with ultra-reliable, leading-edge location solutions.

Across the verticals that Ubisense serves, we're seeing the first generation of Industrial Internet of Things (IIoT) projects being implemented using our Enterprise Software platforms, delivering strong ROI to our customers in terms of reduced costs, improved quality and increased customer satisfaction.

Q: What do you see as the greatest opportunities for Ubisense?

A: The greatest opportunity for Ubisense is the digitisation of the industrial workplace, which is ultimately driven by more personalised and lower cost products and services. On the manufacturing side this means paperless factories which are enabled by machine-to-machine or machine-to-human interaction. Digitisation will be the key to flexible factories that allow our customers to meet ever more complex production demands while reducing cost and improving quality. Concerning the Geospatial business, digitisation means greater customer satisfaction, improved asset management, increased geomobility and lower cost of operations.  Consumer demand and the competitive landscape for all our customers means digitisation is moving quickly from being "future state" to mission-critical. Ubisense is poised to capture this digitisation growth cycle which will be the dominant theme over the next decade.

In summary, the Company is well positioned to play an important role in the emerging IIoT world.

 

 

Richard Petti

Chief Executive Officer

20 March 2017
 

Strategic Report: CFO statement

 

"The successful placing in April 2016 provided stability to the Group's balance sheet, allowing the further development and growth of the business."

The restructuring of the business has resulted in stronger conversion in the sales pipeline alongside the ability to manage the cost base more efficiently. The impact of this is an improvement to the Group's financial performance.

Financial Key Performance Indicators

 

2016

2015

 

£m

£m

Revenue

26.5

22.0

Order book

12.6

9.6

Adjusted EBITDA

0.3

(5.2)

Cash and cash equivalents

3.5

5.4

Net cash/(debt)

0.2

(0.2)

 

Revenue

The restructuring of the Group into two core divisions in 2015, RTLS and Geospatial, increased the emphasis of sales leadership and pipeline conversion through the targeting of distinct sets of customers. This strategy, alongside a positive foreign exchange impact, resulted in increased revenue during 2016 and strengthening of the order book as at 31 December 2016.

The revenue composition by division is summarised in the table below:

Revenue by division

2016

£ m

% of total revenue

2015

£ m

% of total revenue

Year on year growth

RTLS

9.1

34%

6.5

30%

40%

Geospatial

17.4

66%

15.5

70%

13%

Total revenue

26.5

100%

22.0

100%

21%

 

Total revenue increased by 20.7% to £26.5 million (2015: £22.0 million).

Noting that substantially all of the revenues are generated outside of the UK, the significant change in exchange rates for USD, EUR and JPY against GBP during 2016 enhanced the revenue performance. Restating revenue at 2015 rates would have produced revenues as follows:

Revenue by division

2016

£ m

% of total revenue

2015

£ m

% of total revenue

Year on year growth

RTLS

8.1

35%

6.5

30%

25%

Geospatial

15.3

65%

15.5

70%

(1%)

Total revenue

23.4

100%

22.0

100%

6%

 

Revenue composition by revenue stream is summarised in the table below;

Revenue stream

2016

£ m

% of total revenue

2015

£ m

% of total revenue

Year on year growth

Software

3.2

12%

1.4

6%

129%

Maintenance and support

1.4

5%

1.0

4%

40%

Hardware

3.8

14%

3.2

15%

19%

Services

18.1

69%

16.4

75%

10%

Total revenue

26.5

100%

22.0

100%

21%

 

Maintenance and support relates to Ubisense's RTLS and myWorld products. These revenues are recurring contracts which can be renewed annually by our customers.

Services revenue includes installation and deployment of Ubisense's own RTLS and myWorld products, as well as revenues associated with third-party and non-core products.

RTLS revenue stream

During the year we increased our momentum in Europe with significant contract wins in the automotive sector, closing a global software platform sale together with contracts for extensions and new deployments at multiple sites for a range of customers. The majority of our revenues relate to a small number of large deals, the timing of which is not solely within our control and can carry a significant impact on results in a single reporting period.

Geospatial revenue stream

The Geospatial revenue stream includes both revenues directly associated with the myWorld enterprise geomobility platform as well as the provision of services on third-party GIS databases and non-core technologies, which do not directly involve the myWorld platform. These revenues are typically multi-year or annually renewed managed service and maintenance contracts, but also include consultancy and training.

Orders

Improvements in pipeline conversion resulted in a number of significant new contracts being awarded as well as extensions to existing contracts. Total new orders for the period were £29.3 million (2015: 19.2 million). £10.8 million of this related to RTLS (2015: £5.1 million) and £18.5 million to Geospatial (2015: £14.1 million).

Order book provides visibility over future revenues. The order book as at 31 December 2016 was £12.6 million (31 December 2015: £9.6 million), most of which will be recognised during 2017.

Gross margin

The Group gross margin increased from 35.0% in 2015 to 38.6% in 2016.

Gross margin by division is summarised as follows;

Gross margin by division

2016

£ m

Gross margin %

2015

£ m

Gross margin %

Gross margin % difference

RTLS

4.0

44%

2.8

43%

1%

Geospatial

6.2

36%

4.9

32%

4%

Total gross margin

10.2

39%

7.7

35%

4%

 

The increase in gross margin is due to the improved sales mix, driven by the increase in software sales, together with the full year impact of the cost reductions initiated in 2015.

The RTLS gross margin includes a £0.4 million provision against stock of the older version of the sensor and its components due to the increased speed of adoption of the newer D4 product by customers.

Operating expense and adjusted EBITDA

Operating expenses were £16.4 million (2015: £24.7 million) and are summarised as follows:

 

2016

2015

 

£ m

£ m

Other operating expense

9.9

12.9

Depreciation

0.3

0.4

Amortisation and impairment

8.4

7.3

Non-recurring items

(2.2)

4.1

Total operating expense

16.4

24.7

 

Other operating expenses include sales, marketing, product development, administration and share based payments expense. The reduction is primarily due to the continued focus on managing the efficiency of our resources following the major restructuring programme undertaken in 2015.

Non-recurring items include £1.9 million of unrealised foreign exchange gains on intercompany trading balances (2015: £nil), £0.1 million of reorganisation costs (2015: £3.2 million) and a £0.4 million gain in respect of adjustments to deferred consideration.

Adjusted EBITDA excludes amortisation and impairment, depreciation and non-recurring items and is reported as it reflects the performance of the Group. Adjusted EBITDA was £0.3 million (2015: £5.2 million loss) with improvements to both gross margin and a reduction to other operating expenses driving the increase.

Finance costs

Net interest payable for the period was £0.3 million (2015: £0.3 million).

Income tax

The Group has a net tax credit of £1.1 million (2015: £0.6 million) as a result of cash received of £0.6 million under the UK R&D tax credit regime and £0.5 million of non-cash deferred tax movements. The Group does have substantial tax losses carried forward but does not currently recognise a deferred tax asset in respect of these losses.

Earnings and dividend

Loss before tax reduced to £6.4 million (2015: £17.3 million) and loss after tax reduced to £5.3 million (2015: £16.6 million).

The adjusted diluted loss per share was 3.9 pence (2015: 25.2 pence loss per share). Reported basic and diluted loss per share was 10.4 pence (2015: 52.3 pence).

The Board does not propose a dividend for the year.

Consolidated statement of financial position

In March 2016, the Mizuho Bank JPY 200 million facility was repaid.

In April 2016, the Group completed a share placing raising gross proceeds of £4.8 million with the placement of 19,230,000 new ordinary shares at a price of £0.25 per share primarily with existing shareholders. The net proceeds of £4.5 million from the placing were used by the Group to repay £0.5 million of the HSBC working capital facility and to provide additional funding to grow the business.

In October 2016, the £8.0 million HSBC working capital facility was further restructured, becoming a £4.0 million repayment loan with £0.75 million repayable on or before 31 December each year. £0.75 million of this facility was repaid in December 2016.

As at 31 December 2016, the Group had a positive net cash position of £0.2 million (2015: £0.2 million net debt) being £3.5 million of cash and £3.3 million of debt.

Non-current assets

Total non-current assets were £4.4 million (2015: £10.7 million).

The goodwill balance was established over 10 years ago in the combination of Ubisense Limited and the Ten Sails businesses. The Group undertook a detailed review of the historic business rationale and outlook at the point of acquisition, together with a review of the direction of our 2 divisions following the business restructuring. Resulting from this review, a £4.3 million goodwill provision (2015: £4.0 million relating to the Geospatial division) was made. This year has seen a material review of the business following management changes and the restructuring of all aspects of the business. While prospects for the business remain good, it has proven very difficult to assess these against a materially historic position. Therefore the Board considers it appropriate to make an impairment charge in 2016, reducing the goodwill intangible assets covering both RTLS and Geospatial to £nil (2015: £4.3 million).

Impairment charges of £1.0m were made relating to the acquired customer relationships resulting from the Geoplan acquisition in Japan in 2013, which has not delivered the growth trajectory originally anticipated. 

Capitalised development costs represent the key intangible assets of the Group as this investment in products will deliver the current and future growth of the business. Capitalised development costs of £1.9 million (2015: £2.5 million) were recognised in 2016 reflecting the smaller size of organisation, and offset by amortisation of £2.6 million (2015: £2.6 million). The appropriateness of the assessment of the useful life of current development projects was reviewed, but no change has been made to the current three year amortisation period, due to the fast moving nature of the technology and recognising the early stage of the emerging IIoT market.

Current assets

Total current assets increased to £17.8 million (2015: £17.5 million).

Trade receivables net of provisions increased to £9.2 million (2015: £5.7 million) driven primarily by orders received towards the end of the year.

Amounts recoverable on contracts totaled £2.9 million (2015: £2.1 million) which are generated primarily from services contracts or end of period deliveries, and invoiced in the following month or as the relevant milestone is reached.

Hardware inventories were reduced to £1.1 million (2015: £2.8 million) as the Group improves the sales forecasting process and management of working capital, noting also that a £0.4 million provision was made against older sensors and components during the year.

Total assets

Total assets decreased to £22.1 million (2015: £28.2 million).

Current liabilities

Total current liabilities decreased to £9.0 million (2015: £9.8 million). Trade payables reduced to £1.5 million (2015: £2.1 million) which was partly due to reduction of inventory purchases close to the year end.

Non-current liabilities

Total non-current assets decreased to £3.4 million (2015: £6.5 million) following the reduction in long-term debt from £4.5 million to £2.5 million as at 31 December 2016.

Net assets

Net assets decreased to £9.8 million (2015: £12.0 million) following the impairment of historic goodwill.

Cash and cash flow

Operating cash flow before working capital movement was £0.3 million inflow (2015: £9.2 million outflow)

Operating cash outflows from operating activities after adjusting for working capital were £2.0 million (2015: £3.5 million). Working capital increased at year end with an increase in debtors by £4.0 million (2015: £6.3 million decline) due to end of year contracts being won. This working capital decline was offset partially by a reduction in inventory of £1.8 million (2015: £0.1 million).

The Group had investment outflows of £2.0 million (2015: £2.8 million), which is largely made up of expenditure on product development.

Cash inflows from financing activities were £1.8 million (2015: £7.8 million). This included net proceeds from placings of £4.5 million (2015: £9.6 million) offset by repayment of borrowings and interest on those borrowings.

Non-financial key performance indicators

Non-financial key performance indicators for the Group include:

·      Quantity and quality of lead generation, pipeline and conversions to deals in the sales pipeline.

·      Project duration including installation service days.

·      Our reaction and solution times to customer requests.

The Board regularly reviews the KPIs in respect of changes within periods and changes between the reporting periods.

 

Tim Gingell

Chief Financial Officer

20 March 2017

 

 

 

Consolidated income statement

For the year ended 31 December 2016

 

 

Notes

 

 

2016

£'000

2015 

£'000

 

Revenue

5

 

 

26,523

21,982

 

Cost of revenues

 

 

 

(16,280)

(14,290)

 

Gross profit

 

 

 

10,243

7,692

 

Operating expenses

 

 

 

(16,408)

(24,671)

 

Operating loss

 

 

 

(6,165)

(16,979)

 

Analysed as:

 

 

 

 

 

 

Gross profit

 

 

 

10,243

7,692

 

Other operating expenses

 

 

 

(9,919)

(12,914)

 

Adjusted EBITDA

 

 

 

324

(5,222)

 

Depreciation

12

 

 

(345)

(388)

 

Amortisation and impairment of acquired intangible assets

11

 

 

(1,223)

(309)

 

Amortisation and impairment of other intangible assets

11

 

 

(7,143)

(6,985)

 

Non-recurring items

8

 

 

2,222

(4,075)

 

Operating loss

 

 

 

(6,165)

(16,979)

 

Finance income

7

 

 

44

12

 

Finance costs

7

 

 

(323)

(301)

 

Loss before tax

 

 

 

(6,444)

(17,268)

 

Income tax     

9

 

 

1,136

632

 

Loss for the year

 

 

 

(5,308)

(16,636)

 

Loss attributable to:

 

 

 

 

 

 

-       Equity shareholders of the Company

 

 

 

(5,196)

(16,569)

 

-       Non-controlling interest

 

 

 

(112)

(67)

 

 

 

 

 

(5,308)

 

(16,636)

 

 

 

 

 

 

 

 

Loss per share attributable to the equity shareholders of the parent (pence)

 

 

 

Basic

11

 

 

(10.4p)

(52.3p)

Diluted

11

 

 

(10.4p)

(52.3p)

The notes are an integral part of these consolidated financial statements.

 


 

 

Consolidated statement of comprehensive income

For the year ended 31 December 2016

 

 

 

 

 

 

 

 

 

 

2016

£'000

2015

£'000

Loss for the year

 

 

 

(5,308)

(16,636)

Other comprehensive income:

 

 

 

 

 

Items that may be reclassified subsequently to profit and loss

Exchange difference on retranslation of net assets and results of overseas subsidiaries

 

 

 

 

(1,357)

139

 

 

 

Total comprehensive loss for the year

 

 

(6,665)

(16,497)

 

 

 

 

 

Attributable to:

 

 

 

 

-       Equity shareholders of the Company

 

 

(6,682)

(16,423)

-       Non-controlling interest

 

 

17

(74)

Total comprehensive loss for the year

 

 

(6,665)

(16,497)

The notes are an integral part of these consolidated financial statements.


 

 

Consolidated statement of changes in equity

For the year ended 31 December 2016

 

 

 

Attributable to equity shareholders of the parent company

 

 

 

 

 

 

 

Share capital £'000

Share premium £'000

Share based payment reserve £'000

Translation reserve £'000

Retained earnings £'000

 

 

Sub-total   £'000

 

Non-controlling interest £'000

Total

£'000

 

 

Balance at 1 January 2015

501

28,051

821

(685)

(10,427)

18,261

530

18,791

 

 

Loss for the year

-

-

-

-

(16,569)

(16,569)

(67)

(16,636)

 

 

Exchange difference on retranslation of net assets and results of overseas subsidiaries

-

-

-

146

-

146

(7)

139

 

 

Total comprehensive loss for the year

-

-

-

146

(16,569)

(16,423)

(74)

(16,497)

 

 

Reserve credit for equity-settled share-based payment

-

-

54

-

-

54

-

54

 

 

Issue of new share capital

231

-

-

-

-

231

-

231

 

 

Premium on new share capital

-

9,845

-

-

-

9,845

-

9,845

 

 

Share issue costs

-

(474)

-

-

-

(474)

-

(474)

 

 

Transactions with owners

231

9,371

54

-

-

9,656

-

9,656

 

 

Balance at 31 December  2015

732

37,422

875

 

(539)

(26,996)

11,494

 

456

11,950

 

 

Loss for the year

-

-

-

-

(5,196)

(5,196)

(112)

(5,308)

 

 

Exchange difference on retranslation of net assets and results of overseas subsidiaries

-

-

-

(1,486)

-

(1,486)

129

(1,357)

 

 

Total comprehensive loss for the year

-

-

-

(1,486)

(5,196)

(6,682)

17

(6,665)

 

 

Reserve credit for equity-settled share-based payment

-

-

(52)

-

-

(52)

-

(52)

 

 

Issue of new share capital

386

-

-

-

-

386

-

386

 

 

Premium on new share capital

-

4,427

-

-

-

4,427

-

4,427

 

 

Share issue costs

-

(295)

-

-

-

(295)

-

(295)

 

 

Transactions with owners

386

4,132

(52)

-

-

4,466

-

4,466

 

 

Balance at 31 December 2016

1,118

41,554

823

(2,025)

(32,192)

9,278

473

9,751

 

 
                             

The notes are an integral part of these consolidated financial statements.


 

 

Consolidated statement of financial position

For the year ended 31 December 2016

 

 

 

 

 

 

Notes

 

 

2016

 £'000

2015

  £'000

Assets

 

 

 

 

 

Non-current assets

 

 

 

 

 

Intangible assets

11

 

 

3,616

9,786

Property, plant and equipment

12

 

 

745

943

Total non-current assets

 

 

 

4,361

10,729

Current assets

 

 

 

 

 

Inventories    

13

 

 

1,064

2,815

Trade and other receivables

14

 

 

13,221

9,277

Cash and cash equivalents

15

 

 

3,498

5,392

Total current assets

 

 

 

17,783

17,484

Total assets    

 

 

 

22,144

28,213

Liabilities        

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

16

 

 

(8,239)

(8,629)

Bank loans    

17

 

 

(750)

(1,123)

Total current liabilities

 

 

 

(8,989)

(9,752)

Non-current liabilities

 

 

 

 

 

Deferred income tax liabilities  

9

 

 

(683)

(1,157)

Trade and other payables

 

 

 

(42)

(203)

Bank loans

17

 

 

(2,500)

(4,500)

Other payables

18

 

 

(179)

(651)

Total non-current liabilities

 

 

 

(3,404)

(6,511)

Total liabilities

 

 

 

(12,393)

(16,263)

Net assets

 

 

 

9,751

11,950

 
 

 

.

 

 

 

 

Notes

 

 

2016

£'000

2015

£'000

 

 

 

 

 

 

Equity attributable to owners of the parent company

 

 

 

 

Ordinary share capital

19

 

 

1,118

732

Share premium

19

 

 

41,554

37,422

Share based payment reserve

 

 

 

823

875

Translation reserves

 

 

 

(2,025)

(539)

Retained earnings

 

 

 

(32,192)

(26,996)

Equity attributable to shareholders of the Company

 

 

 

9,278

11,494

Non-controlling interests

 

 

 

473

456

Total equity

 

 

 

9,751

11,950

The notes are an integral part of these consolidated financial statements.

The financial statements were approved by the Board of Directors on 20 March 2017 and signed on its behalf by:

 

 

 

 

Richard Petti,                                                                                                        Tim Gingell,

Chief Executive Officer                                                                                        Chief Financial Officer

 

Ubisense Group plc

Registered Number: 05589712


 

 

Consolidated statement of cash flows

For the year ended 31 December 2016

 

 

 

 

 

Notes

 

 

2016

£'000

2015

£'000

Loss before tax

 

 

 

(6,444)

(17,268)

Adjustments for:

 

 

 

 

 

Depreciation

8, 12

 

 

345

388

Amortisation and impairment

8, 11

 

 

8,366

7,294

Adjustments to contingent consideration                                       8

 

 

(355)

-

Loss on the disposal of property, plant and equipment                                                                                                                           8

 

 

24

-

Revaluation of intercompany balances

 

 

(1,877)

-

Share-based payments charge

 

 

 

(20)

54

Finance income

7

 

 

(44)

(12)

Finance costs

7

 

 

323

301

Operating cash flows before working capital movement

 

 

 

318

(9,243)

Change in inventories

 

 

 

1,751

66

Change in receivables

 

 

 

(3,941)

6,264

Change in payables

 

 

 

(743)

(1,010)

Cash used in operations before tax

 

 

 

(2,615)

(3,923)

Net income taxes received

 

 

 

579

436

Net cash flows from operating activities

 

 

 

(2,036)

(3,487)

Cash flows from investing activities

 

 

 

 

 

Disposal of subsidiaries, net of cash disposed

 

 

 

-

(3)

Purchases of property, plant and equipment

 

 

 

(26)

(196)

Proceeds on disposal of property, plant and equipment

 

 

-

4

Expenditure on intangible assets

 

 

 

(2,059)

(2,652)

Interest received

 

 

 

44

12

 

Net cash flows from investing activities

 

 

 

(2,041)

(2,835)

Cash flows from financing activities

 

 

 

 

 

Proceeds of borrowings

 

 

 

-

522

Repayment of borrowings

 

 

 

(2,373)

(2,000)

Interest paid

 

 

 

(352)

(277)

Proceeds from the issue of ordinary share capital

 

 

 

4,518

9,602

Net cash flows from financing activities

 

 

 

1,793

7,847

Net (decrease)/increase in cash and cash equivalents

 

 

 

(2,284)

1,525

Cash and cash equivalents at start of period

 

 

 

5,392

3,697

Exchange differences on cash and cash equivalents

7

 

 

390

170

Cash and cash equivalents at end of period

15

 

 

3,498

5,392

The notes are an integral part of these consolidated financial statements.

 

 

 

Notes to the Company financial statements

 

1   General information

Ubisense Group plc ("the Company") and its subsidiaries (together, "the Group") deliver Enterprise Location Intelligence solutions that enable customers with complex operations to track the precise location of assets across their business in real-time and is proven to deliver efficiencies, increase flexibility, quality, and reduce costs. We offer in-depth knowledge of the sectors in which we operate and have long-standing relationships with many of our customers across target markets including automotive, aerospace, logistics, communications and utilities.

The Company is a public limited company which is listed on the Alternative Investment Market ("AIM") of the London Stock Exchange (UBI) and is incorporated and domiciled in the United Kingdom. The value of Ubisense Group plc shares, as quoted on the London Stock Exchange at 31 December 2016, was 41.5 pence per share (31 December 2015: 43.0 pence).

The Company was incorporated as Ubisense Trading Limited on 11 October 2005 and changed its name to Ubisense Group plc on 31 May 2011 ahead of its initial public offering and listing on AIM on 22 June 2011. The address of its registered office is St. Andrew's House, St. Andrew's Road, Chesterton, Cambridge, CB4 1DL.

The Group has its main operations in the UK, USA, Canada, Germany, France and Japan and sells mainly in North America, Europe and Asia. The Group legally consists of ten companies headed by Ubisense Group plc.

These consolidated financial statements have been approved for issue by the Board of Directors on 20 March 2017.

2   New accounting standards

For the purposes of the preparation of these consolidated financial statements, the Group has applied all standards and interpretations as adopted in the European Union that are effective for accounting periods beginning on or after 1 January 2016.

The accounting policies used are the same as set out in detail in the Report and Accounts 2015 and have been applied consistently to all periods presented in these financial statements. No new standards or amendments or interpretations to existing standards that became effective during the year were material to the Group. No new standards, amendments or interpretations to existing standards having an impact on these financial statements that have been published and that are mandatory for the Group's accounting periods beginning on or after 1 January 2017, or later periods, have been adopted early.

Standards and interpretations not yet applied by the Group 

The following new Standards and Interpretations, which are yet to become mandatory, have not been applied in the Group's financial statements.

·      IFRS 9 'Financial Instruments' (effective date financial year commencing on/after 1 January 2018)

·      IFRS 15 'Revenue from contracts with customers' (effective date financial year commencing on/after 1 January 2018)

·      IFRS 16 'Leases' (effective date financial year commencing on/after 1 January 2019)

IFRS 15 presents new requirements for the recognition of revenue, replacing IAS 18 'Revenue', IAS 11 'Construction Contracts', and several revenue-related Interpretations. The new standard establishes a control-based revenue recognition model and provides additional guidance in many areas not covered in detail under existing IFRSs, including how to account for arrangements with multiple performance obligations, variable pricing, customer refund rights, and other common complexities.  Management intends to adopt the Standard retrospectively, recognising the cumulative effect of initially applying this Standard as an adjustment to the opening balance of retained earnings on the initial date of application. Under this method, IFRS 15 will only be applied to contracts that are incomplete as at 1 January 2018.

Management has started to assess the impact of the new standard. The Group enters into arrangements which have multiple performance obligations which may include hardware sales, software sales, maintenance & support, and service revenues. Therefore, the application of IFRS 15 will impact the Financial Statements.

IFRS 16 will replace IAS 17 and three related interpretations. Leases will be recorded on the statement of financial position in the form of a right-of-use asset and a lease liability. Management is yet to fully assess the impact of the Standard and therefore is unable to provide quantified information.

The Directors are of the opinion, that the application of IFRS 9 is unlikely to have a significant impact, other than increased disclosures, on the Financial Statements of the Group.

3   Summary of significant accounting policiesThe principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Basis of preparation

The consolidated financial statements of Ubisense Group plc have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union (IFRSs as adopted by the EU) and the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention. The consolidated financial statements are presented in GBP and all values are rounded to the nearest thousand pounds (£'000) except when otherwise indicated.

The Board of Ubisense Group plc approved the release of this preliminary announcement on 21 March 2017.

The preliminary financial information does not constitute statutory financial statements for the year ended 31 December 2016 within the meaning of section 435 of the Companies Act 2006, but is extracted from those financial statements. Statutory accounts for Ubisense Group plc for the year ended 31 December 2015 have been delivered to the Registrar of Companies. Statutory accounts for the year ended 31 December 2016 will be delivered to the Registrar of Companies following the Group's Annual General Meeting.

The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and (iii) did not contain statements under section 498(2) or (3) of the Companies Act 2006.

The preparation of these financial statements in conformity with IFRS requires the Directors to make certain critical accounting estimates and judgements that affect the amounts reported in the financial statements and accompanying notes. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in note 4.

Going concern basis

In determining the basis for preparing the Consolidated Financial Statements, the Directors are required to consider whether the Company can continue in operational existence for the foreseeable future, being a period of not less than twelve months from the date of the approval of the Consolidated Financial Statements. In reaching their conclusion they recognise that the Group meets it's day-to-day working capital requirements through its bank facilities.

The Group had cash of £3.5 million at the balance sheet date.  As disclosed in note 17, the Group restructured its working capital facilities in October 2016, becoming a £4.0 million repayment loan with covenants requiring £0.75 million repayable on or before 31 December each year, £nil operating cashflow before working capital adjustments in 2017, and £1 million operating cashflow in future years. The balance of this facility as at 31 December 2016 was £3.25 million.

Management prepares detailed working capital forecasts which are reviewed by the Board on a regular basis. The forecasts include assumptions regarding the opportunity funnel from both existing and new clients, growth plans, risks and mitigating actions. In particular, operating cashflow and profitability are highly sensitive to revenue mix and the positive contribution of continuing growth in software sales.

In reaching their going concern conclusion, the Directors have considered the following points:

-               It is not anticipated that the Group will breach the covenants of the existing working capital facility which are described in note 17.

-               The Group will be in a position to meet the next repayment instalment of £0.75 million on or before 31 December 2017.

The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, support the conclusion that there is a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future, a period of not less than twelve months from the date of this report. The Group, therefore, continues to adopt the going concern basis in preparing the Consolidated Financial Statements.

Consolidation

The Group financial statements include the results, financial position and cash flows of the Company and all of its subsidiary undertakings. Subsidiary undertakings are those entities controlled directly or indirectly by the Company. Control arises when the Company has the power to govern the financial and operating policies of an entity, uses this power to affect the returns from that entity and has exposure to variable returns from its investment in the entity.

Co-terminus financial statements of the subsidiaries are prepared for the same reporting year as the Company, using consistent accounting policies. Businesses acquired or disposed during the year are accounted for using acquisition method principles from, or up to, the date control passed. Intra-group transactions and balances are eliminated on consolidation. All subsidiaries use uniform accounting policies for like transactions and other events and similar circumstances.

Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group's equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling interest's share of changes in equity since the date of combination.

Foreign currencies

(a)   Functional and presentation currency

The functional currency of each Group entity is the currency of the primary economic environment in which each entity operates. The consolidated financial statements are presented in GBP.

(b)   Transactions and balances

Foreign currency transactions are translated into the functional currency of each Group entity using the exchange rates prevailing at the dates of transactions. Monetary assets and liabilities denominated in foreign currencies are translated at rates ruling at the period end date. Such exchange differences are included in the income statement within "operating expenses". Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.

(c)    Consolidation

For the purpose of presenting consolidated financial statements, the results and financial position of all the Group entities (none of which have the currency of a hyperinflationary economy) that have a functional currency other than GBP are translated into GBP as follows:

·     assets and liabilities for each statement of financial position are translated at the exchange rate at the period end date;

·     income and expenses for each income statement are translated at the exchange rate ruling at the time of each period the transaction occurred; and

·     all resulting exchange differences are recognised in other comprehensive income.

 

 

Segment reporting

IFRS 8 requires a "management approach" under which information in the financial statements is presented on the same basis as that used for internal management reporting purposes.

The Group is organised on a global basis into two operating segments based on the Group's divisions: Real-Time Location Systems (RTLS) and Geospatial. The Directors believe that the Chief Operating Decision Maker (CODM) is the Chief Executive Officer of the Group. The CODM and the rest of the Board are provided with information on a divisional basis to assess the financial performance of, and allocate resources to, the Group.

The internal management accounting information is prepared on an IFRS basis but has a non-GAAP "Adjusted EBITDA" as the primary measure of profit and this is reported on the face of the income statement.

Revenue recognition

Revenue represents amounts derived from the provision of goods and services which fall within the Group's ordinary activities, exclusive of discounts, value added tax and other similar sales taxes. Revenue is measured by reference to the fair value of consideration received or receivable.

Revenues on product sales are recognised at the time that units are shipped, except for shipments under arrangements involving significant acceptance requirements. Under such arrangements, revenue is recognised when the Group has substantially met all its performance obligations.

Revenue earned from sales under licence agreements is recognised when the software is made available. When the sale includes a period of support and maintenance, a proportion of the revenue is deferred and recognised straight line over the period of support. For licence rental fees, amounts are recognised over the period of the contract, commencing from when the software is available for use.

Services and training revenue from time and materials contracts is recognised in the period that the services and training are provided on the basis of time worked at agreed contractual rates and as direct expenses are incurred.

Revenue from fixed price, long-term customer specific contracts, including customisation and modification, is recognised on the stage of completion of each assignment at the period end date compared to the total estimated service to be provided over the entire contract where the outcome can be estimated reliably. If a contract outcome cannot be estimated reliably, revenues are recognised equal to costs incurred, to the extent that costs are expected to be recovered. An expected loss on a contract is recognised immediately in the income statement.

Where bundled sales including a combination of some or all of the above are made, the revenue attributable to the deal is apportioned across the constituents of the bundle, and then recognised according to the policies stated above.

Employee benefits

(a)    Retirement benefits

The Group operates various defined contribution pension arrangements for its employees.

For defined contribution pension arrangements, the amount charged to the income statement represents the contributions payable in the period. Differences between contributions payable in the period and contributions actually paid are shown as either accruals or prepayments in the statement of financial position.

(b)    Share-based payments

The Group issues equity-settled share-based payments to certain employees. Vesting conditions are continuing employment and can include, for senior employees, a diluted EPS performance target or share price target.  Equity-settled share-based payments are measured at fair value at the date of grant using an appropriate pricing model. The fair value is expensed on a straight-line basis over the vesting period, together with a corresponding increase in equity in the share-based payment reserve, based on the Group's estimate of the number of shares that will eventually vest. 

(c)     Termination benefits

Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognised as an expense if the Group has made an offer of voluntary redundancy, it is probable the offer will be accepted, and the number of acceptances can be estimated reliably. If benefits are payable more than twelve months after the reporting date, then they are discounted to their present value.

Operating lease income and expense

The Group as the lessor

(a) Rental income

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating the lease are recognised straight-line over the lease term.

The Group as the lessee

(b) Rental expense

Operating lease rentals are charged as operating expenses to the income statement in equal annual amounts over the lease term. Assets leased under operating leases are not recorded in the statement of financial position because the lessor retains a significant portion of the risks and rewards of ownership.

(c) Lease incentives

The benefit of lease incentives such as rent-free periods or up-front cash payments are spread equally on a straight-line basis over the lease term.

Non-recurring items

Non-recurring items are disclosed separately in the financial statements where it is necessary to do so to provide further understanding of the financial performance of the Group. They are material one-off items of income or expense that have been shown separately due to the significance of their nature or amount and do not reflect the ongoing cost base or revenue-generating ability of the Group.

Interest income and expense

Interest income and expense is included in the income statement on a time basis, using the effective interest method by reference to the principal outstanding.

Tax

The tax charge or credit comprises current tax payable and deferred tax:

(a)    Current tax

The current tax charge represents an estimate of the amounts payable or receivable to or from tax authorities in respect of the Group's taxable profits and is based on an interpretation of existing tax laws. Taxable profit differs from profit before tax as reported in the income statement because it excludes certain items of income and expense that are taxable or deductible in other years or are never taxable or deductible. Taxation received is recognised only when it is probable that the Group is entitled to the asset.

(b)    Deferred tax

Deferred income taxes are calculated using the liability method on temporary differences. This involves the comparison of the carrying amounts of assets and liabilities in the consolidated financial statements with their respective tax bases. In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability, unless the related transaction is a business combination or affects tax or accounting profit.

Deferred tax liabilities are always provided in full. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the reporting date. Deferred tax is recognised as a component of tax expense in the income statement, except where it relates to items charged or credited directly to other comprehensive income or equity when it is recognised in other comprehensive income or equity.

Business combinations

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their provisional fair values at the acquisition date. Fair values are reassessed during the measurement period and updated if required. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of the acquiree's identifiable net assets.

Acquisition-related costs are expensed as incurred.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not remeasured and its subsequent settlement is accounted for within equity.

Goodwill

Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

Goodwill arising on an acquisition of a business is the difference between the fair value of the consideration paid and the net fair value of the assets and liabilities acquired. Goodwill is carried at cost less accumulated impairment losses.

Research and development

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditure is only capitalised if all of the following conditions are met:

·      completion of the intangible asset is technically feasible so that it will be available for use or sale;

·      the Group intends to complete the intangible asset and use or sell it;

·      the Group has the ability to use or sell the intangible asset;

·      the intangible asset will generate probable future economic benefits. Among other things, this requires that there is a market for the output from the intangible asset or for the intangible asset itself, or, if it is to be used internally, the asset will be used in generating such benefits;

·      there are adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

·      the expenditure attributable to the intangible asset during its development can be measured reliably.

Internally-generated intangible assets, consisting mainly of direct labour costs, are amortised on a straight-line basis over their useful economic lives. Amortisation is shown within administrative expenses in the income statement. The estimated useful lives of current development projects are three years. Upon completion the assets are subject to impairment testing.

Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred.

Other intangible assets

Intangible assets that are purchased separately, such as software licences that do not form an integral part of related hardware, are capitalised at cost and amortised on a straight-line basis over their useful economic life which is typically 3 years.

Acquired intangible assets

Intangible assets acquired through a business combination are initially measured at fair value and amortised on a straight line basis over their useful economic lives. Amortisation is shown within operating expenses in the income statement. The useful economic lives of the intangible assets recognised on acquisition are as follows:

·      Software products recognised on acquisition: 3 years

·      Customer relationships recognised on acquisition: 3 years

·      Order book: based on contract life recognised on acquisition, typically less than 1 year

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Depreciation is charged to the income statement so as to write off the cost or valuation less estimated residual values over their expected useful lives on a straight-line basis over the following periods:

·      Fixtures and fittings: 3 to 10 years, or period of the lease if shorter

·      Computer equipment: 3 years

Residual values and useful economic lives are assessed annually. The gain or loss on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in operating expenses.

 

 

Impairment of non-financial assets

Assets that have an indefinite useful life - for example, goodwill or intangible assets not ready to use - are not subject to amortisation and are tested at least annually for impairment and whenever there is an indication that the asset may be impaired. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Impairment losses are recognised immediately in profit or loss.

Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. Where an impairment loss is reversed, it is reversed to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is the actual cost of third-party components and labour, and is applied on a first in, first out basis. Net realisable value is based on estimated selling price less additional cost to completion and disposal. Provision is made for obsolete, slow moving or defective items where appropriate and are recognised as an expense in the period in which the write-down or loss occurs.

Trade receivables

Trade receivables are amounts due from customers for products sold or services performed in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

Cash and cash equivalents

In the Consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less.

Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

Fees paid on the establishment of debt facilities are recognised as transaction costs of the debt to the extent that it is probable that some or all of the facility will be drawn-down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

All borrowing costs are recognised in the income statement in the period they are incurred.

Share capital and share premium

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. The nominal value of shares issued is classified as share capital and the amounts paid over the nominal value in respect of share issues, net of related costs, is classified as share premium.

Share-based payment reserve

The share-based payment reserve relates to a cumulative charge made in respect of share options granted by the Company to the Group's employees under its employee share option plans.

Translation reserve

Exchange differences relating to the translation of the results and net assets of the Group's foreign operations from their functional currencies to the Group's presentation currency of GBP, are recognised directly in other comprehensive income and accumulated in the translation reserve.

 

4   Critical accounting judgements and key sources of estimation and uncertainty

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

Impairment of goodwill and intangible assets

The Group tests goodwill and intangible assets for impairment annually in accordance with the accounting policy stated in note 3. During the year the Group undertook a detailed review of the historic business rationale and outlook at the point of acquisition, together with a review of the direction of our 2 divisions following the restructure. As a result of this review, a £4.3 million (2015: £4.0 million relating to the Geospatial division) impairment charge has been made in 2016 reducing the goodwill intangible assets net book value in both RTLS and Geospatial to £nil (2015: £4.3 million). In reaching the conclusion that the underlying business rationale for the historic acquisitions no longer has relevance to the future direction of our 2 business units requires significant management judgement.  Additionally, an impairment expense of £1.0 million (2015: £nil) was recognised in respect of customer relationships which arose on the acquisition of the Geoplan group of companies in 2013 and has not delivered the growth trajectory originally anticipated. 

Capitalisation of development costs

The point at which development costs meet the criteria for capitalisation is critically dependent on management's judgement of the point at which technical and commercial feasibility is demonstrable. The carrying amount of capitalised development costs at 31 December 2016 is £3.3 million (2015: £4.0 million).

Revenue recognition

Significant management judgement is applied in determining the allocation and timing of the recognition of revenue on fixed price, long-term customer specific contracts. In this process management takes into account milestones, hardware supplied, actual work performed, and further obligations and costs expected to complete the work. The carrying value of amounts recoverable on contracts at 31 December 2016 is £2.9 million (2015: £2.1 million).

Inventories

The provision for obsolete, slow-moving or defective inventory is based on management's estimation of the commercial life of inventory lines and is applied on a prudent basis. In assessing this, management takes into consideration the sales history of products and the length of time that they have been available for resale.

Deferred tax

A deferred tax asset is recognised where the Group considers it probable that future tax profits will be available against which the tax credit will be utilised in the future. This specifically applies to tax losses and to outstanding vested share options at the statement of financial position date. In estimating the amount of the deferred tax asset that should be recognised, the Directors make judgements based on current budgets and forecasts about the amount of future taxable profits and the timings of when these will be realised. No deferred tax asset is currently recognised.

 

5   Segment information

5.1 Operating segments

Management has determined the operating segments to be the Group's divisions based on the information reported to the Chief Operating Decision Maker (CODM) for the purpose of assessing performance and allocating resources. The CODM is the Chief Executive Officer.

The Real-Time Location Systems (RTLS) division takes real-time location data from Ubisense's own sensing hardware, or from standards based integration with 3rd party hardware, and transforms this data into high value spatial event information, delivering highly reliable, automatic, adaptive asset identification, precise real-time location and spatial-monitoring to offer meaningful insights that help businesses make smarter decisions.

The Geospatial division delivers software solutions that integrate data from any source - geographic, real-time asset, GPS, location, corporate and external cloud-based sources - into a live geospatial common operating picture, empowering all users in the customer's organisation to access, input and analyse operational intelligence to proactively manage their networks, respond quickly to emergency events and effectively manage day-to-day operations.

Each operating segment is managed separately by a business unit leader as each deals with different technologies and predominately a different customer base. The performance of the operating segments is assessed on a measure of contribution, being gross profit less sales and business unit marketing expenditure. Assets and liabilities are not presented to the CODM on a divisional basis.

Costs incurred centrally or not directly attributable to either the RTLS or Geospatial divisions are reported in the Central division. The results of each segment are prepared using accounting policies consistent with those of the Group as a whole. No intra-segmental transactions are reported.

 

 

 

 

 

 

Year ended 31 December 2016

 

RTLS

£'000

Geospatial

£'000

Central

£'000

Total

£'000

Revenues

9,113

17,410

-

26,523

Cost of revenues

(5,097)

(11,183)

-

(16,280)

Gross profit

4,016

6,227

-

10,243

Sales and marketing costs

(2,931)

(1,792)

(91)

(4,814)

Contribution

1,085

4,435

(91)

5,429

Other operating costs

 

 

(5,105)

(5,105)

Adjusted EBITDA

 

 

(5,196)

324

Depreciation

 

 

(345)

(345)

Amortisation and impairment of intangibles

 

 

(8,366)

(8,366)

Non-recurring items

 

 

2,222

2,222

Operating loss

 

 

(11,685)

(6,165)

Finance costs

 

 

(279)

(279)

Loss before tax

 

 

(11,964)

(6,444)

Income tax

 

 

1,136

1,136

Loss after tax

 

 

(10,828)

(5,308)

 

 

Year ended 31 December 2015

 

RTLS

£'000

Geospatial

£'000

Central

£'000

Total

£'000

Revenues

6,445

15,458

79

21,982

Cost of revenues

(3,694)

(10,545)

(51)

(14,290)

Gross profit

2,751

4,913

28

7,692

Sales and marketing costs

(2,810)

(1,800)

(472)

(5,082)

Contribution

(59)

3,113

(444)

2,610

 

Other operating costs

 

 

(7,832)

(7,832)

Adjusted EBITDA

 

 

(8,276)

(5,222)

Depreciation

 

 

(388)

(388)

Amortisation and impairment of intangibles

 

 

(7,294)

(7,294)

Non-recurring items

 

 

(4,075)

(4,075)

Operating loss

 

 

(20,033)

(16,979)

Finance costs

 

 

(289)

(289)

Loss before tax

 

 

(20,322)

(17,268)

Income tax

 

 

632

632

Loss after tax

 

 

(19,690)

(16,636)

 

 

 

5.2 Geographical areas

The Board and Management Team also review the revenues on a geographical basis, based around the regions where the Group has its significant subsidiaries or markets.

The Group's revenue from external customers in the Group's domicile, the UK, and its major worldwide markets have been identified on the basis of the customers' geographical location. Non-current assets are allocated based on their physical location.

 

Revenue

Non-current assets

 

2016

£'000

2015

£'000

2016

£'000

2015

£'000

UK

365

487

3,940

6,412

France

313

616

3

4

Germany

 

6,456

3,074

 

 

106

1,242

Europe other

 

 

936

580

-

-

USA

 

12,325

12,131

183

1,008

Canada

1,664

1,423

-

2

Japan

4,328

3,330

129

2,061

Asia Pacific other

91

337

-

-

Rest of World

 

45

4

-

-

 

26,523

21,982

4,361

10,729

5.3 Information about major customers

During 2016, the Group had two customers who generated revenues of greater than 10% of total revenue. £3.7 million was generated from a European customer and £3.4 million was generated from a US customer.

During 2015, no single customer contributed 10% or more to the Group's revenue.

 

 

 

6   Employee information

6.1 Employee numbers

The average monthly number of people, including Executive Directors, employed by the Group during the year was:

 

Actual number of people as at    31 December

Average monthly number of people

By activity   

2016

Number

2015

Number

2016

Number

2015

Number

Technical consultants

59

38

31

22

180

89

64

38

31

22

180

103

Sales & marketing

38

38

42

45

Research & development

22

31

25

33

Administration

23

22

23

27

 

142

180

154

208

 

By geography

2016

Number

2015

Number

2016

Number

2015

Number

United Kingdom

43

44

46

 

54

Europe

19

39

26

44

Americas

53

63

57

71

Asia

27

34

25

39

 

142

180

154

208

 

6.2 Employee benefits

The aggregate employee benefit expense, including Executive Directors, comprised:

 

 

 

 

 

Notes

2016

£'000

2015

£'000

Wages and salaries

 

 

 

12,392

15,768

Social security costs

 

 

 

1,162

1,362

Contributions to defined contribution pension arrangements

 

 

521

581

Share-based payments

 

 

 

(20)

54

Total aggregate employee benefits

 

 

 

14,055

17,765

Included in the wages and salaries figure above are termination benefits of £0.1 million (2015: £2.0 million) which are presented as non-recurring costs in the income statement - see note 8.2.

 

 

 

 

7   Finance income and costs

 

 

 

 

2016

 £'000

2015

£'000

 

 

Interest income from cash and cash equivalents

 

 

 

44

12

 

 

Finance income

 

 

 

44

12

 

 

Interest payable - bank

 

 

 

(302)

(287)

 

 

Interest payable - other

 

 

 

(21)

(14)

 

 

Finance costs

 

 

 

(323)

(301)

 

 

Net finance costs

 

 

 

(279)

(289)

 

 

 

 

8   Loss before tax: analysis of expenses by nature

8.1 Expenses by nature

The following items have been charged/ (credited) to the income statement in arriving at loss before tax:

 

 

 

 

 

Notes

2016

£'000

2015

£'000

Amortisation and impairment of acquired intangible assets

 

 

11

1,223

309

Amortisation and impairment of other intangible assets

11

7,143

6,985

Depreciation of owned property, plant and equipment

12

345

388

Loss on disposal of property, plant and equipment

 

 

 

24

-

Operating lease rental charges - land and buildings

 

 

 

625

677

Operating lease rental charges - other

 

 

 

89

63

Inventory recognised as an expense

 

 

 

1,532

1,478

Research & development costs expensed

 

 

 

466

581

Net foreign currency (gains)/losses

 

 

 

(350)

175

Non-recurring items (excluding impairment of goodwill)

 

 

8.2

(2,222)

4,075

Auditors' remuneration

 

 

8.3

212

163

 

 

 

8   Loss before tax: analysis of expenses by nature (continued)

8.2 Non-recurring items

 

 

 

 

 

2016

£'000

2015

£'000

Reorganisation costs

 

 

 

139

3,163

Adjustment to contingent consideration

 

(355)

-

Disposal of subsidiary companies

 

-

809

Unrealised foreign exchange (gains)/losses on intercompany trading balances

 

(1,877)

37

Aborted acquisition costs

 

-

7

Others

 

(129)

59

Total non-recurring items

 

(2,222)

4,075

Non-recurring items include £1.9 million of unrealised foreign exchange gains on intercompany trading balances (2015: £nil), £0.1 million of reorganisation costs (2015: £3.2 million) and a £0.4 million gain in respect of adjustments to deferred consideration (2015: £nil).

During 2015, the Group disposed of two subsidiary companies and incurred costs relating to exits from these markets.

8.3 Auditors' remuneration

During the year the Group (including its overseas subsidiaries) obtained the following services from the Company's auditor and its associates:

 

 

 

 

 

2016

£'000

2015

£'000

Fees payable to the Group's auditor for the audit of:

 

 

 

 

 

Parent Company and consolidated financial statements

 

 

28

25

Financial statements of subsidiaries, pursuant to legislation

 

89

90

Interim reporting fees

 

15

11

Total audit fees

 

132

126

Fees payable to the Group's auditor for other services:

 

 

 

Tax services

 

 

 

25

24

Other services

 

 

 

55

13

Total non-audit fees

 

 

 

80

37

Total auditors' remuneration

 

 

 

212

163

The auditor of Ubisense Group plc is Grant Thornton UK LLP.

 

 

 9   Income tax

 

9.1 Income tax recognised in the income statement

 

 

 

 

 

 

 

2016

£'000

2015

£'000

 

Current tax

 

 

 

 

 

 

UK corporation tax

 

 

 

-

-

 

Foreign tax

 

 

(2)

69

 

Research & development tax credits - prior years

 

 

(579)

(524)

 

Total current tax credit

 

 

 

(581)

(455)

 

Deferred tax

 

 

 

 

 

 

Origination and reversal of temporary differences    

 

 

 

(555)

(177)

 

Total deferred tax credit

 

 

 

 

(555)

(177)

 

Total income tax credit

 

 

 

(1,136)

(632)

 

 

 

 

 

 

 

The tax credit differs from the standard rate of corporation tax in the UK for the year of 20.0% (2015: 20.3%) for the following reasons:

 

 

 

 

 

 

 

2016

£'000

2015

£'000

Loss before tax

 

 

 

(6,444)

(17,268)

Loss before tax multiplied by the standard rate of corporation tax in the UK of 20.0%

(2015: 20.3%)

(1,289)

(3,505)

Tax effects of:

 

 

 

 

Expenses not deductible for tax purposes

 

 

 

780

829

Utilisation of previously unrecognised tax losses

 

 

 

(270)

(94)

Tax losses for which no deferred tax asset was recognised

498

3,526

Tax unprovided in prior years

 

 

 

-

54

Research & development tax credits - prior years

 

 

 

(579)

(524)

Difference on tax treatment of share options - unrecognised

 

 

 

(4)

(223)

Re-measurement of deferred tax - change of tax rate

 

 

 

-

(42)

Differential on overseas tax rates

 

 

 

(224)

(712)

Other unrecognised temporary  differences

 

 

 

(48)

59

Total income tax credit

 

 

 

(1,136)

(632)

 

 

 

9   Income tax (continued)

9.2 Factors that may affect future tax charges

The Group has tax losses of £17.6 million (2015: £10.5 million) that are available for offset against future taxable profits of those subsidiary companies in which the tax losses arose. Deferred tax assets have not been recognised in respect of these losses as they may not be used to offset taxable profits elsewhere in the Group, and they have arisen in subsidiaries whose future taxable profits are uncertain. No deferred tax has been recognised on the unremitted earnings of overseas subsidiaries, because the earnings are continually reinvested by the Group and no tax is expected to be payable on them in the foreseeable future.

On 26 October 2015, the UK Government substantially enacted reductions to the UK corporation tax rates. Effective from 1 April 2017, the UK corporation tax rate will reduce to 19% from 20% and effective from 1 April 2020, the rate will further reduce to 18%. As a result, the deferred tax balances have been measured at 19%, the rate of realisation expected.

9.3 Deferred tax

The movement in deferred tax in the Consolidated statement of financial position during the year is as follows:

 

Deferred income tax assets

Deferred income tax liabilities

 

 

 

2016

£'000

2015

£'000

2016

£'000

2015

£'000

At 1 January

-

-

(1,157)

(1,336)

Deferred tax credited to the income statement

-

-

958

780

Deferred tax charged to the income statement

-

-

(403)

(603)

Foreign exchange movements

-

-

(81)

-

At 31 December

-

-

(683)

(1,157)

The components of deferred tax included in the Consolidated statement of financial position are as follows:

 

 

 

 

 

 

 

2016

£'000

2015

£'000

Development costs capitalised

 

 

 

(669)

(797)

Intangible assets recognised on acquisition of subsidiaries

 

 

-

(360)

Other

 

 

(14)

-

Total deferred income tax liabilities

 

 

 

(683)

(1,157)

Deferred tax assets have not been recognised in respect of the following items because it is not probable that future taxable profits will be available against which the Group can utilise the benefits:

 

 

 

 

 

 

 

2016

£'000

2015

£'000

Tax losses carried forward

 

 

 

4,823

2,864

Equity-settled share options temporary differences

 

 

18

24

Total unrecognised deferred tax assets

 

 

 

4,841

2,888

 

 

 

10   Earnings per share (EPS)

 

 

 

Basic and diluted earnings per share

 

 

 

 

2016

2015   

Earnings

 

 

 

 

 

Earnings for the purposes of basic and diluted EPS being net loss attributable to equity holders of the parent company (£'000)

 

(5,196)

(16,569)

Number of shares

 

 

 

 

 

Weighted average number of ordinary shares for the purposes of basic EPS ('000)

49,756

31,657

Effect of dilutive potential ordinary shares:

 

 

 

 

 

-       - Share options ('000)

 

 

 

211

418

Weighted average number of ordinary shares for the purposes of diluted EPS ('000)

49,967

32,075

Basic EPS (pence)

 

 

 

(10.4)

(52.3)

Diluted EPS (pence)

 

 

 

(10.4)

(52.3)

Basic earnings per share is calculated by dividing profit/(loss) for the period attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. For diluted earnings per share, the weighted average number of shares is adjusted to allow for the effects of all dilutive share options and warrants outstanding at the end of the year. Options have no dilutive effect in loss-making years, and hence the diluted loss per share for the year is the same as the basic loss per share.

The Group also presents an adjusted diluted earnings per share figure which excludes amortisation on acquired intangible assets, share-based payments charge and non-recurring items/impairment from the measurement of profit for the period.

 

 

 

Adjusted diluted earnings per share

 

 

 

Notes

2016

2015  

Earnings for the purposes of diluted EPS being net loss attributable to equity holders of the parent company (£'000)

 

(5,196)

(16,569)

Adjustments:  

 

 

 

 

 

Amortisation and impairment of acquired intangible assets (£'000) 

8, 11

1,223

309

Impairment of goodwill (£'000)

8, 11

4,271

4,043

Reversal of share-based payments charge (£'000)

 

(20)

54

Reversal of non-recurring items (£'000)

 

 

8

(2,222)

4,075

Net adjustments (£'000)

 

3,252

8,481

Adjusted earnings (£'000)

 

(1,944)

(8,088)

Adjusted diluted EPS (pence)

 

 

 

(3.9)

(25.2)

 

The adjusted EPS information is considered to provide a fairer representation of the Group's trading performance. Options have no dilutive effect in loss-making years, and hence the diluted loss per share for the year is the same as the basic loss per share.
 

11   Intangible assets

 

Goodwill

£'000

Acquired customer relationships and order backlog       £'000

Acquired software products

£'000

Capitalised product development costs      

£'000

Software       £'000

Total

£'000

Cost

 

 

 

 

 

 

At 1 January 2015

9,416

1,837

885

10,417

1,139

23,694

Exchange difference

91

63

16

-

68

238

Additions

-

-

-

2,499

152

2,651

Disposals

(1,193)

-

(338)

(511)

(59)

(2,101)

At 31 December 2015

8,314

1,900

563

12,405

1,300

24,482

Exchange difference

491

340

87

-

150

1,068

Additions

-

-

-

1,948

111

2,059

Disposals

-

-

-

-

(315)

(315)

At 31 December 2016

 

8,805

2,240

650

14,353

1,246

27,294

Accumulated amortisation

 

 

 

 

 

 

At 1 January 2015

(1,192)

(805)

(657)

(6,190)

(487)

(9,331)

Effects of movement in exchange rates

-

(24)

(11)

-

(52)

(87)

Charge for the year

-

(189)

(119)

(2,609)

(279)

(3,196)

Elimination on disposal

1,192

-

338

429

57

2,016

Impairment for the year

(4,043)

-

-

(55)

-

(4,098)

At 31 December 2015

(4,043)

(1,018)

(449)

(8,425)

(761)

(14,696)

Effects of movement in exchange rates

(491)

(134)

(66)

-

(240)

(931)

Charge for the year

-

(119)

(135)

(2,585)

(287)

(3,126)

Elimination on disposal

-

-

-

-

315

315

Impairment for the year

(4,271)

(969)

-

-

-

(5,240)

At 31 December 2016

(8,805)

(2,240)

(650)

(11,010)

(973)

(23,678)

Net book amount

 

 

 

 

 

 

At 31 December 2016

-

-

-

3,343

273

3,616

At 31 December 2015

4,271

882

114

3,980

539

9,786

Goodwill

The goodwill balance was established over 10 years ago in the combination of Ubisense Limited and Ten Sails businesses. The Group undertook a detailed review of the historic business rationale and outlook at the point of acquisition, together with a review of the direction of our 2 divisions following the restructure. As a result of this review, a £4.3 million (2015: £4.0 million relating to the Geospatial division) impairment charge has been made in 2016, reducing the goodwill intangible assets net book value in both RTLS and Geospatial to £nil (2015: £4.3 million).

 

 

 

11   Intangible assets (continued)

Other intangible assets

The acquired software products, customer relationships and order backlog assets arose on the acquisition in 2013 of the Geoplan group of companies and in 2011 of Integrated Mapping Solutions, Inc. (now merged into Ubisense Inc.) and Realworld OO Systems Limited (now re-named Geospatial Systems Limited).

During the year, an impairment expense of £1.0 million was recognised in respect of customer relationships which arose on the acquisition of the Geoplan group of companies in 2013 and has not delivered the growth trajectory originally anticipated. 

Capitalised development assets relate to expenditure that can be applied to a plan or design for the production of new or substantially improved products and processes. The impairment of capitalised development costs in 2015 writes off expenditure on products that will not be launched to the market.

The software assets represent assets purchased from third parties.

 

 

 

 

 

 

 

 

 

 

 

 

 

12   Property, plant and equipment

 

 

 

 

 

Fixtures and fittings             £'000

Computer equipment       £'000

         Total £'000

Cost

 

 

 

 

 

At 1 January 2015

 

 

891

887

1,778

Effect of movements in exchange rates

 

 

58

(71)

(13)

Transfers

 

 

(194)

194

-

Additions

 

 

78

118

196

Disposals

 

 

(35)

(11)

(46)

Disposal of subsidiary

 

 

(12)

-

(12)

At 31 December 2015

 

 

786

1,117

1,903

Effect of movements in exchange rates

 

88

211

299

Additions

 

 

7

19

26

Disposals

 

 

(47)

(131)

At 31 December 2016

 

 

834

1,216

2,050

Accumulated depreciation

 

 

 

 

 

 

At 1 January 2015

 

 

(138)

(528)

(666)

 

Effect of movements in exchange rates

 

 

(1)

43

42

 

Transfers

 

 

181

(181)

-

 

Charge  for the year

 

 

(233)

(155)

(388)

 

Elimination on disposals

 

 

35

10

45

 

Disposal of subsidiary

 

 

7

-

7

 

At 31 December 2015

 

 

(149)

(811)

(960)

 

Effect of movements in exchange rates

 

 

10

(164)

(154)

 

Transfers

 

 

-

-

-

 

Charge  for the year

 

 

(197)

(148)

(345)

 

Elimination on disposals

 

 

41

113

154

 

At 31 December 2016

 

 

(295)

(1,010)

(1,305)

 

Net book amount

 

 

 

 

 

 

At 31 December 2016

 

 

539

206

745

 

At 31 December 2015

 

 

638

305

943

 
                         
 

 

13   Inventories

 

 

 

 

 

 

 

 

 

2016

£'000

2015

£'000

Raw materials

 

 

 

845

1,348

Finished goods

 

 

 

219

1,467

Total inventories

 

 

 

1,064

2,815

 

The Group's inventories are comprised of products which are not generally subject to rapid obsolescence on account of deterioration in condition, market trends or technological reasons.  The balance as at 31 December 2016 includes an impairment provision of £0.4 million (2015: £nil).

 

14   Trade and other receivables

 

 

 

 

 

 

 

 

Notes

2016

£'000

2015

£'000

Trade receivables, gross

 

 

 

11,304

7,421

Allowances for doubtful debts

 

 

14.1

(2,151)

(1,691)

Trade receivables, net

 

 

14.2

9,153

5,730

Amounts recoverable on contracts

 

 

 

2,912

2,067

Other receivables

 

 

 

220

199

Prepayments

 

 

 

933

882

Corporation tax recoverable

 

 

 

3

1

VAT and taxation receivable

 

 

 

-

 

398

Total trade and other receivables

 

 

 

13,221

9,277

 

All amounts disclosed are short term. The carrying value of trade receivables is considered a reasonable approximation of fair value. 

The following disclosures are in respect of trade receivables that are either impaired or past due. The individually impaired receivables mainly relate to customers who are in unexpectedly difficult economic situations, and are assessed on a customer-by-customer basis following detailed review of the particular circumstances. To the extent they have not been specifically provided against, the trade receivables are considered to be of sound credit rating.

 

 

14   Trade and other receivables (continued)

 

14.1 Movement in allowance for doubtful debts

 

 

 

 

 

 

2016

£'000

2015

£'000

At 1 January

 

 

 

(1,691)

(68)

Exchange differences

 

 

(158)

(10)

Amounts recovered in the year

 

 

6

-

Amounts written off in the year

 

 

-

43

Allowance made

 

 

(308)

(1,656)

At 31 December

 

 

 

(2,151)

(1,691)

 

As at 31 December 2016, the allowance for doubtful debts includes £2,065,000 (2015: £1,626,000) in respect of amounts owed by two entities in the Asia Pacific region. Provision has been made against these balances as their recoverability is uncertain.

14.2 Ageing of past due but not impaired receivables

 

 

 

 

 

 

2016

£'000

2015

£'000

Neither past due nor impaired

 

 

 

7,179

3,506

Past due but not impaired:

 

 

 

 

 

0 to 90 days overdue

 

 

1,227

920

More than 90 days overdue

 

 

747

1,304

Total

 

 

 

9,153

5,730

 

 

 

15   Cash and cash equivalents

 

 

 

 

 

 

 

2016

£'000

2015

£'000

Cash at bank and in hand

 

 

 

3,498

5,392

Cash and cash equivalents

 

 

 

3,498

5,392

The carrying amount approximates to fair value because of the short-term maturity of these instruments, being no greater than three months.

Cash at bank earns interest at floating rates based on daily bank overnight deposit rates. Short-term cash deposits earn interest at fixed rates for the term of the deposit.  The composition of cash and cash equivalents by currency is as follows:

 

 

 

 

 

 

By currency

 

2016

£'000

2015

£'000

British Pound  (GBP)

 

 

 

320

1,718

Euro (EUR)

 

 

 

675

1,151

US Dollar (USD)

 

 

 

1,947

2,216

Japanese Yen (JPY)

 

 

 

 

335

130

Canadian Dollar (CAD)

 

 

 

221

177

Cash and cash equivalents

 

 

 

3,498

5,392

 

16   Trade and other payables

 

 

 

 

 

 

 

 

2016

£'000

2015

£'000

Payments received on account

 

 

 

2,279

2,017

Trade payables

 

 

 

1,549

2,148

Trade accruals

 

 

 

2,919

3,668

Other taxation and social security

 

 

 

1,223

661

Contingent consideration

 

 

 

197

-

Other payables

 

 

 

72

135

Total trade and other payables

 

 

 

8,239

8,629

All amounts disclosed are short term. The carrying value of trade payables is considered a reasonable approximation of fair value.

Ubisense Group plc acquired the Ubisense Inc (formerly named Geoplan Interworks K.K.) group of companies ("Geoplan") in December 2013.  The purchase consideration contained a contingent cash element, under which the Group is required to pay additional amounts to the vendors of Geoplan based on the achievement of two separate performance milestones that may arise between 2014 and 2016, with a combined undiscounted range of outcomes between JPY nil and JPY 149 million (£nil to £892,000). During 2016, the liability has been reduced to £197,000 (2015: £448,000, presented as a non-current liability within note 18) with £355,000 released to the consolidated income statement and presented as an exceptional item.

 

 

17  Bank loans

In March 2016, a JPY 200 million facility with the Mizunho Bank was repaid in full.

In October 2016, an £8.0 million HSBC working capital facility was restructured, becoming a £4.0 million repayment loan with £0.75 million repayable on or before 31 December each year. £0.75 million of this facility was repaid in December 2016.

This loan is secured on the fixed and floating assets of the Group and attracts an interest charge of LIBOR + 3%.  The loan is subject to an operating covenant linked to "operating cash flow" performance (profit or loss before tax adding back any non-recurring items, finance costs, foreign exchange costs, depreciation, amortisation or capitalisation of product development) as follows: 2016 £2.25 million negative, 2017 £nil, 2018 and beyond £1 million positive.

 

18  Other payables

 

 

 

 

 

 

Notes

2016

£'000

2015

£'000

Contingent consideration

 

 

16

-

448

Property provisions

 

 

 

179

179

Rent deposit repayable

 

 

 

-

24

Total other payables

 

 

 

179

651

In September 2014, Ubisense Limited entered a new 10 year lease on the Group's headquarter offices. The property provision is a dilapidation provision to restore the office to its original state. It is included in fixtures and fittings within Property, plant and equipment and is being depreciated over the lease term.

 

 

19  Share capital and premium

 

Number of

ordinary shares

 of £0.02 each

Share capital £'000

Share premium £'000

Total

£'000

Balance at 1 January 2015

                   25,062,842

501

28,051

28,552

Issued under share-based payment plans

446,293

9

67

76

Issued on placing to institutional shareholders

11,111,112

222

9,304

9,526

Change in year

11,557,405

231

9,371

9,602

Balance at 31 December 2015

36,620,247

732

37,422

38,154

Issued under share-based payment plans

32,907

1

4

5

Issued on placing to institutional shareholders

19,230,000

385

4,128

4,513

Change in year

19,262,907

386

4,132

4,518

Balance at 31 December 2016

55,883,154

1,118

41,554

42,672

The Company has one class of ordinary shares which carry no right to fixed income.

During the period, the Company issued 19,262,907 shares, increasing the total number of shares in issue from 36,620,247 to 55,883,154 as follows:

·      19,230,000 shares at £0.25 per share for a total gross consideration of £4,808,000 with share issue costs of £295,000 written off against share premium; and

 

·      32,907 shares as a result of options exercised with a weighted average exercise price of £0.14 per share for total cash consideration of £5,000.      

 


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