Preliminary Results

RNS Number : 7346Y

Ubisense Group PLC

06 March 2012

 



Ubisense Group plc ("Ubisense" or "the Group")

Unaudited results for the year ended 31 December 2011

Ubisense Group plc (AIM: UBI, "Ubisense" "the Group"), the market-leading location solutions company, has announced its preliminary results for the year ended 31 December 2011.

Financial   highlights

·      Revenue increased 34.4% to £23.8 million (2010: £17.7 million) ·      Gross Margin up from 33.5% to 35.6% ·      Adjusted EBITDA* increased 39.1% to £1.4 million (2010: £1.0 million) ·      Adjusted operating profit, excluding AIM admission and acquisition costs, increased 6.0% to £0.7 million (2010: £0.6 million); reported operating profit of £0.3 million (2010: £0.6 million) ·      Adjusted diluted EPS** 5.5p (2010: 5.7p). EPS 0.2p (2010:3.3p) ·      Net cash of £6.0 million (2010: £3.5 million)

Other           highlights

·      Substantially oversubscribed initial public offering on AIM, raising £5.0 million before expenses for the Group and £3.7 million for selling shareholders ·      Substantial new contracts with Automotive and Energy customers ·      Global license agreements with BMW and EADS, deepening existing long term customer relationships ·      Increased R&D spend as Geospatial division commences product development ·      Two acquisitions completed, integrated and performing in line with expectations

Richard Green, Chief Executive, commented,

"2011 was a tremendous year in our history, with the listing on AIM, two Geospatial acquisitions and further endorsement of our Real Time Location Solutions by new customers such as Eurocopter, Toyota and Hyundai. We have also entered into global licence agreements with both BMW and EADS during the year.

We continue to gain momentum with RTLS in the automotive and aerospace sectors, and have also secured significant contract wins in the energy sector in the second half of the year, both for our Real-Time Location and Geospatial Solutions.

We start 2012 with a record order book and expect 2012 to be another strong year for Ubisense."

* Measured as operating profit excluding depreciation, amortisation, share-based payments charge, AIM listing expenses and acquisition costs

** Earnings measured as profit for the period excluding amortisation, share-based payments charge, AIM listing expenses and acquisition costs

Highlights

Enquiries:

Ubisense www.ubisense.net	Tel:  [phone]
Richard Green, Chief Executive Officer
Gordon Campbell, Chief Financial Officer
FTI Consulting	Tel: [phone]
James Melville-Ross / Jon Snowball
Canaccord Genuity Limited	Tel: [phone]
Nominated Advisor and Broker
Simon Bridges / Henry Fitzgerald-O'Connor

Note to editors

Ubisense is the market-leading location solutions company, delivering mission-critical enterprise asset tracking and geospatial systems that bring visibility and control to previously intractable business processes. The Group operates in two divisions, RTLS and Geospatial.

Through its RTLS division, Ubisense is a world leader in real-time location solutions allowing companies to track assets (such as tools, people and vehicles) within factories and other indoor environments in real time in three dimensions. Ubisense's end-to-end RTLS solutions provide dynamic and precise indoor tracking of assets helping its clients, which are primarily in the automotive, aerospace and transportation industries, to bring visibility and control to business processes thereby helping to lower costs and drive logistical efficiencies.

The Geospatial division uses Ubisense's expertise in location solutions to help large infrastructure companies, such as utilities and telecom companies, to map, plan, manage and optimise their networks across large geographic areas. Ubisense is headquartered in Cambridge, UK, and has offices in the USA, Canada, France, Germany, Singapore and Korea. For more information please visit: www.ubisense.net

Chairman's statement

Introduction

It has been a year of remarkable progress for Ubisense. Since the IPO in June 2011, the Group has shown solid forward momentum to deliver a strong financial performance at our maiden full year results as a listed company.

Overview

The Board is very pleased with the performance for the financial year ended December 31 2011, where Group revenue grew by 34.4% to £23.8 million and we achieved an operating profit, excluding AIM admission and acquisition costs, of £0.7 million.  Gross Profit increased from £5.9 million to £8.5 million, representing an improvement in Gross Margin from 33.5% to 35.6%.

We delivered adjusted EBITDA of £1.4 million, while adjusted diluted EPS for FY 2011 is 5.5p from 5.7p in FY 2010.  The Group has also ended the year with a healthy net cash figure of £6.0 million.

We saw a strong performance from both of our operating divisions. RTLS and Geospatial achieved considerable growth and displayed momentum which we expect to continue into 2012.

Ø  Our RTLS division has seen excellent progress with a number of blue chip customers in automobile and aerospace manufacturing.  Two of our biggest customers, EADS and BMW, grew from single RTLS deployments to multiple installations across their global operations. We have continued to leverage partners' brands and customers to accelerate growth. Our most notable partnership here is with Atlas Copco, a leading industrial tool manufacturer.

Ø  In our Geospatial division, we delivered both organic and inorganic growth and the merits of our strategy can be seen in the strategically important acquisitions we made in 2011.

In September 2011, we acquired Integrated Mapping Services, Inc. ("InMaps"), a US-based company which strengthened our offering in the electricity and gas industries.

In October 2011, Ubisense acquired Realworld OO Systems Limited ("Realworld"), a UK-based company with considerable expertise in providing location solutions to telecoms companies throughout the world.  This acquisition saw our customer base in the UK expand to include Cable and Wireless Communications and Global Crossing.

Both of these acquisitions are performing in line with Board expectations.

Strategy

The opportunity for Ubisense continues to be huge and the Group continues to grow in an agile and prudent way.  The Board's focus in the coming year is on growing the business by extending the model in its priority G7 markets, particularly in the key Asian markets of Korea and Japan, and to capture new customers through new strategic partnerships like the one in place with Atlas Copco. Our aim is to create long lasting customer relationships with major global businesses in high value markets.

The Board is also committed to continuing to grow through acquisitions and continues to evaluate any suitable opportunities in this area.

Current trading and outlook

In the period since the year end, current trading has been in line with the Board's expectations and is ahead of the prior year.

New network build outs in the telecoms industry and continued regulation in the energy sector set the scene for another positive year of demand in our Geospatial division.  In RTLS, the recovery in the automotive sector continues and the dynamics for the aerospace and transportation industries also look positive.  Asia is also likely to be a driver of growth for Ubisense in the year ahead following our first installations in the Korean automotive market. 

We begin 2012 with a record order book and the Board looks forward to the year ahead with confidence.

Conclusion

Finally, it was fantastic to see the continued long-term support of our investors rewarded with an IPO which in turn has positioned Ubisense strongly for its next growth phase.

I would like to thank all of our employees, strategic partners and customers for their contributions and support in making 2011 such a successful year for our shareholders.

Andy Hopper

6 March 2012

Chief executive's review

Overview

Ubisense performed very well over the year delivering record growth in revenue and adjusted EBITDA. This reflected the growing awareness and deployment of our market leading location solutions to top tier organisations around the world and the continuing execution of our proven growth strategy.

This growth was delivered in both the Real-time location and Geospatial divisions. This reflects improving market conditions in the manufacturing sector and our success in building on our long term customer relationships in both divisions. Following flotation in June 2011, we made two further acquisitions in the UK and North America strengthening our presence, skill base, software product portfolio and customer list in both territories.

Customer momentum

In September we extended our reach into China when we signed a global license agreement with BMW.  Our system is now operational in five out of their eight plants worldwide. We estimate that more than one million cars have been tagged and processed by our system since installation, making it the most widely deployed system of its kind in the world.

EADS continued the trend and placed an order for a global license agreement in December. They are deploying  the system across each major aircraft program at Airbus, including the A320, A330, A340, A350, A380 and A400M, along with additional deployments at Eurocopter. 

Our continued success with new wins and contract extensions for our manufacturing accounts led to the establishment of a subsidiary in France during the year.

Researchers continue to deploy our RTLS technology across multiple applications. The most significant project in 2011 was University of South Florida ("USF") working with the US Department of Veteran Affairs ("VA") on their Smart home project which was very high profile in the US.

In our Geospatial division, Deutsche Telekom continued to develop as a strategic customer with the roll out of a Fibre Planning System across 2000 users.  We also took the lead in geospatial projects in North America, with new wins at Atmos Energy and Puget Sound Energy.

Acquisitions

Significant progress was made in integrating our two acquisitions, InMaps in North America and Realworld in the UK, into the business. Both companies brought with them intellectual property which has the potential to be introduced into the rest of our customer base around the world.

We continue to look for acquisition opportunities to enhance our product portfolio and geographical footprint.

Strategic Partnerships

Atlas Copco continued to introduce us to their customer base world-wide which resulted directly or indirectly in system sales to Audi, Jaguar Land Rover, GM, Hyundai and Paccar, all of which represent multiple site opportunities in the future.

Last month, we added to our roster of strategic partnerships when we reached an agreement with ATS Global ("ATS"), a global company serving the Manufacturing Execution Systems market.  The alliance will allow our joint customers to benefit from even greater levels of flexibility and traceability, supporting manufacturing efficiency goals such as automation, process control and error proofing. 

Products

Continued investment in research and development led to the release of new applications in both divisions. Transit Yard Manager ("TYM"), Assembly Control System ("ACS"), Fibre Planning System ("FPS") and myWorld were all introduced during the year at early customer sites for evaluation.  Feedback so far has been very positive and we look forward to an order book developing for these products.

Richard Green

Chief Executive Officer

6 March 2012

Financial review

In the year ended 31 December 2011, the Group generated revenue of £23.8 million (2010: £17.7 million).  The 2011 revenue figures include the effect of the acquisitions of InMaps and Realworld from the beginning of October.

Gross Profit increased to £8.5 million (2010: £5.9 million), representing an improvement in Gross Margin to 35.6% (2010: 33.5%). Operating profit in 2011 was £0.3 million (2010: £0.6 million) as the Group continues to invest in research and development activities.  In 2011 the Group commenced research and development activities in its Geospatial business and this investment was further enhanced by the two acquisitions.

Adjusted EBITDA is calculated as operating profit adding back depreciation and amortisation, share-based payment charges, acquisition costs and AIM listing expenses. Adjusted EBITDA in 2011 was £1.4 million (2010: £1.0 million).

Profit before tax was £0.1 million (2010: £0.4 million) and profit after tax was £0.03 million (2010: £0.4 million).  The Group has utilised tax losses carried forward in several of its subsidiaries and has received an R&D Tax Credit in the UK, the impact of which means that current tax liabilities on profits are minimal. Deferred tax movements, relating primarily to intangible assets, result in a net tax charge to the income statement of £0.1m. The above profit figures for 2011 include non-recurring items relating to the Initial Public Offering ("IPO") in June and the acquisition costs of Realworld and InMaps.  Excluding these charges, the adjusted profit after tax was £0.4 million (2010: £0.4 million).

Based on the average number of shares in issue during the year, diluted earnings per share were 0.2 pence (2010: 3.2 pence) and adjusted diluted earnings per share were 5.5 pence (2010: 5.7 pence).

Revenue from the RTLS Division was £8.7 million, compared with £5.7 million in 2010.  This 51% growth in revenues was driven principally by sales to new customers as well as increased penetration into existing customer accounts.  The top 10 customers accounted for 66% of the revenue in 2011 (2010: 45%). Revenue from the Geospatial Division was £15.1 million including acquisitions, compared with £12.0 million in 2010.  This 26.5% growth in revenues was driven by a number of factors including (i) two significant new customer wins in the USA (Puget Sound Energy and Atmos Energy); (ii) increased products sales; (iii) the impacts of the two acquisitions and (iv) increased engagement with our existing customer base.  The top 10 customers accounted for 89% of the revenue in 2011 (2010: 81%).

The Group has a strong balance sheet with Shareholder Funds at 31 December 2011 of £19.2 million, equivalent to 89 pence per share (2010: Shareholder Funds of £11.5 million equivalent to 76 pence per share).  The cash position was strengthened by the IPO, such that net cash at 31 December 2011 was £6.0 million (2010: £3.5 million). Funds raised from the IPO have been used to (i) repay the bank loans, (ii) increase the inventory levels of the Groups RTLS products, (iii) fund the acquisitions and (iv) pay for the costs of the IPO.

Operating cash flows before working capital were £1.1 million (2010: £1.0 million). After working capital, cash used by operations was £2.3 million (2010: £0.7 million generated), reflecting increases in inventory levels and trade receivables.  Consistent with the Group's defined strategy of investing available funds in organic and inorganic growth opportunities, the Board is not proposing to pay a dividend for 2011 (2010: nil).

Gordon Campbell

Chief Financial Officer

6 March 2012

Consolidated income statement

For the year ended 31 December 2011

	Notes		2011 £'000	2010 £'000
Revenue	6		23,785	17,697
Cost of sales			(15,308)	(11,762)
Gross Profit			8,477	5,935
Administrative expenses			(8,188)	(5,308)
Operating profit	6		289	627
Analysed as:
Adjusted EBITDA			1,448	1,041
Depreciation			(140)	(97)
Amortisation			(624)	(299)
Share-based payments charge			(24)	(18)
AIM listing expenses			(324)	-
Acquisition costs			(47)	-
Operating profit	6		289	627
Finance income	8		37	5
Finance costs	8		(185)	(237)
Profit before tax			141	395
Income tax	9		(107)	3
Profit for the period attributable to the equity shareholders of the Company			34	398
Earnings per share (pence)
Basic	10		0.2p	3.3p
Diluted	10		0.2p	3.2p

Consolidated statement of comprehensive income

For the year ended 31 December 2011

			2011 £'000	2010 £'000
Profit for the period			34	398
Other comprehensive income:
Exchange difference on retranslation of net assets and results of overseas subsidiaries			14	(29)
Total comprehensive income attributable to equity shareholders of the Company			48	369

Consolidated statement of changes in equity

For the year ended 31 December 2011

	Share capital £'000	Share premium £'000	Other reserves £'000	Retained earnings £'000	Total £'000
Balance at 1 January 2010	235	9,773	961	(4,670)	6,299
Profit for the period	-	-	-	398	398
Exchange difference on retranslation of net assets and results of overseas subsidiaries	-	-	(29)	-	(29)
Total comprehensive income for the period	-	-	(29)	398	369
Reserve credit for equity-settled share-based payment	-	-	18	-	18
Equity component of loans	-	-	3	-	3
Issue of new share capital	69	-	-	-	69
Premium on new share capital	-	4,973	-	-	4,973
Share issue costs	-	(196)	-	-	(196)
Transactions with owners	69	4,777	21	-	4,867
Balance at 31 December  2010	304	14,550	953	(4,272)	11,535
Profit for the period	-	-	-	34	34
Exchange difference on retranslation of net assets and results of overseas subsidiaries	-	-	14	-	14
Total comprehensive income for the period	-	-	14	34	48
Reserve credit for equity-settled share-based payment	-	-	45	-	45
Equity component of loans converted	-	-	(502)	502	-
Issue of new share capital	129	-	-	-	129
Premium on new share capital	-	7,968	-	-	7,968
Share issue costs	-	(487)	-	-	(487)
Transactions with owners	129	7,481	(457)	502	7,655
Balance at 31 December 2011	433	22,031	510	(3,736)	19,238

A reconciliation of the components of Other reserves is given in note 19.

Consolidated statement of financial position

At 31 December 2011

	Notes		2011 £'000	2010 £'000
Assets
Non-current assets
Goodwill	11		7,418	6,069
Other intangible assets	12		2,258	525
Property, plant and equipment	13		366	279
Total non-current assets			10,042	6,873
Current assets
Inventories			1,667	364
Trade and other receivables	14		9,498	6,900
Cash and cash equivalents			6,034	7,130
Total current assets			17,199	14,394
Total assets			27,241	21,267
Liabilities
Current liabilities
Loans and borrowings	16		-	(2,372)
Trade and other payables	15		(7,294)	(5,974)
Total current liabilities			(7,294)	(8,346)
Non-current liabilities
Loans and borrowings	16		-	(1,246)
Deferred income tax liabilities			(549)	(140)
Other liabilities	17		(160)	-
Total non-current liabilities			(709)	(1,386)
Total liabilities			(8,003)	(9,732)
Net assets			19,238	11,535
Equity attributable to owners of the parent company
Share capital	18		433	304
Share premium account	18		22,031	14,550
Other reserves	19		510	953
Retained earnings			(3,736)	(4,272)
Total equity			19,238	11,535

Consolidated statement of cash flows

For the year ended 31 December 2011

	Notes		2011 £'000	2010 £'000
Profit before tax			141	395
Adjustments for:
Depreciation			140	97
Amortisation			624	299
Share-based payments charge			24	18
Finance income			(37)	(5)
Finance costs			185	237
Foreign exchange differences			12	(12)
Operating cash flows before working capital movements			1,089	1,029
Change in inventories			(1,303)	(100)
Change in receivables			(2,065)	(3,244)
Change in payables			(108)	3,009
Cash (used)/generated by operations before tax			(2,387)	694
Net income taxes received			102	32
Net cash flows from operating activities			(2,285)	726
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired	20		(1,600)	-
Purchases of property, plant and equipment			(256)	(218)
Purchases of intangible assets			(1,130)	(400)
Interest received			33	5
Net cash flows from investing activities			(2,953)	(613)
Cash flows from financing activities
Proceeds from the issue of borrowings			-	150
Repayment of borrowings			(1,014)	(255)
Interest paid			(47)	(108)
Proceeds from the issue of share capital			5,238	4,846
Net cash flows from financing activities			4,177	4,633
Net (decrease)/increase in cash and cash equivalents			(1,061)	4,746
Cash and cash equivalents at start of period			7,130	2,396
Exchange differences on cash and cash equivalents			(35)	(12)
Cash and cash equivalents at end of period			6,034	7,130

	Notes to the preliminary announcement
1	General information

Ubisense Group plc ('the Company') and its subsidiaries (together, 'the Group') deliver mission-critical enterprise asset tracking and geospatial systems.

The Group has operations in the UK, US, Canada, France, Germany, Korea and Singapore and sells mainly in North America and Europe.

The Company is a public limited company which is listed on the Alternative Investment Market ('AIM') of the London Stock Exchange (UBI.L) and is incorporated and domiciled in the UK. The address of its registered office is St. Andrew's House, 90 St. Andrew's Road, Chesterton, Cambridge, CB4 1DL.

The Board of Directors approved the release of this unaudited preliminary announcement on 5 March 2012.

The financial information set out in this unaudited preliminary announcement does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2010 were approved by the Board of Directors on 21 April 2011 and have been delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.

The auditors have yet to report on the statutory accounts for the year ended 31 December 2011. The audited Annual Report for the year ended 31 December 2011 will be posted to shareholders in due course and will be delivered to the Registrar of Companies following the Annual General Meeting of the Company. The report will also be available on the investor relations page of the Company's website.

Further copies will be available on request and free of charge from the Company Secretary.

2	Basis of preparation

The preliminary announcement should be read in conjunction with the annual financial statements of the Group and are prepared in accordance with IFRSs as adopted by the European Union.

Going concern basis

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 its preliminary announcement.

3	Accounting policies

The accounting policies adopted in the preparation of the preliminary announcement are consistent with those followed in the preparation of the Group's consolidated financial statements for the year ended 31 December 2010.

4

Estimates

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

5	Risks and uncertainties

An outline of the key risks and uncertainties faced by the Group was described in the financial statements for the year ended 31 December 2010, including exposure to foreign exchange rate fluctuation, in particular the strength of Sterling relative to the US dollar and Euro. Risk is an inherent part of doing business and the strong cash position of the Group as a result of the fund raising and admission to AIM on 22 June 2011 along with the strong order book leads the Directors to believe that the Group is well placed to manage business risks successfully.

6	Operating segments

Management has determined the operating segments to be the Group's two divisions based on the reports reviewed by the Chief Operating Decision Maker.

The Real-Time Location Systems division ("RTLS") delivers mission-critical enterprise asset tracking solutions utilising ultra-wideband ("UWB") technology to locate people and assets in 3D, bringing visibility and control to industrial business processes.

The Geospatial division delivers core location based solutions, typically to blue chip utility and communications companies, to allow them to better plan and maintain their dispersed network of assets.

Centrally incurred costs not directly attributable to business segments are reported under 'Central'.

Each of these operating segments is managed separately as each deal with different technologies and predominantly different customer bases. The performance of the operating segments is assessed on a measurement of adjusted EBITDA. The measurement basis excludes depreciation, amortisation, share-based payments charge, non-recurring expenditure, finance income and expense and income taxes.Other administrative expenses for the year ended 31 December 2010 have been reclassified to be consistent with current internal management reporting. The effect on the period ended 31 December 2010 was to decrease administrative expenses for RTLS by £727,000 and increase Geospatial and Central by £66,000 and £661,000 respectively.

Year ended 31 December 2011	RTLS £'000	Geospatial £'000	Central £'000	Total £'000
Revenue	8,650	15,135	-	23,785
Cost of sales	(4,012)	(11,296)	-	(15,308)
Gross Profit	4,638	3,839	-	8,477
Other administrative expenses	(3,936)	(738)	(2,355)	(7,029)
Adjusted EBITDA	702	3,101	(2,355)	1,448
Depreciation	-	-	(140)	(140)
Amortisation	(437)	(169)	(18)	(624)
Share-based payments charge	-	-	(24)	(24)
AIM listing expenses	-	-	(324)	(324)
Acquisition costs	-	-	(47)	(47)
Operating profit/(loss)	265	2,932	(2,908)	289
Finance income	-	-	37	37
Finance costs	-	-	(185)	(185)
Profit before tax/(loss)	265	2,932	(3,056)	141

Year ended 31 December 2010	RTLS £'000	Geospatial £'000	Central £'000	Total £'000
Revenue	5,729	11,968	-	17,697
Cost of sales	(2,520)	(9,242)	-	(11,762)
Gross Profit	3,209	2,726	-	5,935
Other administrative expenses	(3,168)	(229)	(1,497)	(4,894)
Adjusted EBITDA	41	2,497	(1,497)	1,041
Depreciation	(2)	-	(95)	(97)
Amortisation	(299)	-	-	(299)
Share-based payments charge	-	-	(18)	(18)
Operating profit/(loss)	(260)	2,497	(1,610)	627
Finance income	-	-	5	5
Finance costs	-	-	(237)	(237)
Profit/(loss) before tax	(260)	2,497	(1,842)	395

7	Employee information

Average monthly number of people, including executive directors employed by the Group during the year was:		2011 Number	2010 Number
By activity
Technical consultants		75	60
Sales & Marketing		28	18
Research & Development		21	12
Administration		14	9
		138	99
By segment
Geospatial		64	45
RTLS		60	45
Central		14	9
		138	99

The total number of employees at 31 December 2011 was 172 (2010: 113)

		2011 £'000	2010 £'000
Wages and salaries		10,236	6,724
Social security costs		979	679
Contributions to defined contribution pension arrangements		419	307
Share-based payments		24	18
		11,658	7,728

8	Finance income and costs

		2011 £'000	2010 £'000
Interest income from cash and cash equivalents		37	5
Finance income		37	5

		2011 £'000	2010 £'000
Interest payable - bank		(26)	(43)
Interest payable - other loans		(159)	(194)
Finance costs		(185)	(237)

Finance costs for the year ended 31 December 2011 includes an imputed non-cash amount of £138,000 relating to interest as a result of conversion of the Convertible Loans into shares and exercise of the warrants attaching to the bank loan (see note 18).

9	Income tax

		2011 £'000	2010 £'000
Current tax
UK Corporation Tax		-	23
Foreign tax		(9)	-
Research and development tax credits - prior years		(124)	(47)
Total current tax credit		(133)	(24)
Deferred tax
Origination and reversal of timing differences		240	21
Total deferred tax		240	21
Total tax charge/(credit) on profit on ordinary activities		107	(3)

The tax charge (2010: credit) differs to the standard rate of corporation tax in the UK for the year of 26% (2010: 28%) for the following reasons:

		2011 £'000	2010 £'000
Profit before tax		141	395
Profit before tax multiplied by the standard rate of corporation tax in the UK of 26% (2010: 28%)		37	111
Tax effects of:
Expenses not deductible for tax purposes		113	37
(Utilisation)/creation of tax losses		14	(73)
Research and development tax credits		(124)	(47)
Differential on tax rates		(8)	(5)
Remeasurement of deferred tax - change of rate		(5)	-
Other temporary timing  differences		80	(26)
Total tax charge/(credit) for the year		107	(3)

10	Earnings per share

		2011	2010
Earnings
Profit for the period (£'000)		34	398
Earnings for the purposes of diluted earnings per share (£'000)		34	398
Number of shares
Basic weighted average number of shares ('000)		18,897	12,034
Effect of dilutive potential ordinary shares:
-       Share options ('000)		334	444
-       Warrants ('000)		59	107
Diluted weighted average number of shares ('000)		19,290	12,585
Basic earnings per share (pence)		0.2p	3.3p
Diluted earnings per share (pence)		0.2p	3.2p

Basic earnings per share is calculated by dividing profit 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 dilutive share options and warrants.

The Group also presents an adjusted diluted earnings per share figure which excludes amortisation, share-based payments charge, AIM listing expenses and acquisition costs from the measurement of profit for the period.

Adjusted diluted earnings per share		2011	2010
Earnings for the purposes of diluted earnings per share (£'000)		34	398
Adjustments
Reversal of amortisation (£'000)		624	299
Reversal of share-based payments charge (£'000)		24	18
Reversal of AIM listing expenses (£'000)		324	-
Reversal of acquisition costs (£'000)		47	-
Net adjustments (£'000)		1,019	317
Adjusted earnings (£'000)		1,053	715
Adjusted diluted earnings per share (pence)		5.5p	5.7p

11

Goodwill

			Goodwilll £'000
Balance at 1 January 2010 and 31 December 2010			6,069
Acquisition of subsidiaries			1,349
Balance at 31 December 2011			7,418

The goodwill arising in the year relates to the acquisitions of Integrated Mapping Solutions, Inc. and Realworld OO Systems Limited which is further described in note 20.

12	Other intangible assets

	Capitalised development costs £'000	Software £'000	Acquired software products £'000	Acquired customer relationships and order backlog £'000	Total £'000
Cost
At 1 January 2010	1,087	-	-	-	1,087
Additions	389	11	-	-	400
At 31 December 2010	1,476	11	-	-	1,487
Reclassification between categories	-	56	-	-	56
Additions	1,103	225	-	-	1,328
Acquisition of subsidiaries	-	3	529	449	981
At 31 December 2011	2,579	295	529	449	3,852
Accumulated amortisation
At 1 January 2010	663	-	-	-	663
Charge  for the year	295	4	-	-	299
At 31 December 2010	958	4	-	-	962
Reclassification between categories	-	8	-	-	8
Charge  for the year	494	18	44	68	624
At 31 December 2011	1,452	30	44	68	1,594
Net book value
At 31 December 2011	1,127	265	485	381	2,258
At 31 December 2010	518	7	-	-	525

The acquired software products, customer relationships and order backlog additions arising in the year relate to the acquisitions of Integrated Mapping Solutions, Inc. and Realworld OO Systems Limited which is further described in note 20.

13	Property, plant and equipment

		Fixtures & Fittings £'000	Computer Equipment £'000	Total £'000
Cost
At 1 January 2010		309	334	643
Effect of movements in exchange rates		(3)	(5)	(8)
Additions		18	200	218
Disposals		(150)	(89)	(239)
At 31 December 2010		174	440	614
Effect of movements in exchange rates		(3)	(5)	(8)
Reclassification between categories		-	(56)	(56)
Additions		47	213	260
Acquisition of subsidiaries		3	14	17
Disposals		-	(1)	(1)
At 31 December 2011		221	605	826
Accumulated depreciation
At 1 January 2010		218	263	481
Effect of movements in exchange rates		(2)	(3)	(5)
Charge  for the year		29	68	97
Disposals		(150)	(88)	(238)
At 31 December 2010		95	240	335
Effect of movements in exchange rates		(1)	(5)	(6)
Reclassification between categories		-	(8)	(8)
Charge  for the year		34	106	140
Disposals		-	(1)	(1)
At 31 December 2011		128	332	460
Net book value
At 31 December 2011		93	273	366
At 31 December 2010		79	200	279

14	Trade and other receivables

			2011 £'000	2010 £'000
Trade receivables, gross			7,541	5,469
Allowances for credit losses			(7)	(83)
Trade receivables net			7,534	5,386
Amounts recoverable on contracts			1,588	555
Other receivables			21	21
Prepayments and accrued income			314	816
VAT and taxation receivable			41	122
			9,498	6,900

15	Trade and other payables

			2011 £'000	2010 £'000
Payments received on account			1,995	2,178
Trade payables			2,110	1,945
Trade accruals			1,633	933
Current tax liability			-	8
Other taxation and social security			817	717
Other payables			339	193
Other liabilities - contingent consideration			400	-
			7,294	5,974

The current element of the contingent consideration relates to the acquisition of Realworld OO Systems Limited in the year which is further described in note 20.

16	Loans and borrowings

			2011 £'000	2010 £'000
Non-current
Bank loan			-	492
Convertible Loan			-	754
Total non-current loans and borrowings			-	1,246
Current
Bank loan			-	398
Convertible Loan			-	1,974
Total current loans and borrowings			-	2,372
Total loans and borrowings			-	3,618

During the period, the bank loan was repaid in full. Of the Convertible Loan, £2,364 was repaid with the remainder converted into ordinary shares (see note 18).

17	Other liabilities

			2011 £'000	2010 £'000
Non-current
Other liabilities - contingent  consideration			160	-

The non-current element of the contingent consideration relates to the acquisition of Realworld OO Systems Limited in the year which is further described in note 20.

18	Share capital and premium

	Number of ordinary shares of £0.02 each	Share capital £'000	Share premium £'000	Total £'000
Balance at 1 January 2010	11,755,265	235	9,773	10,008
Share issue	3,401,360	68	4,932	5,000
Share issue costs	-	-	(196)	(196)
Issued under share-based payment plans	26,500	-	16	16
Issued on conversion of Convertible Loan	28,365	1	25	26
Change in year	3,456,225	69	4,777	4,846
Balance at 31 December 2010	15,211,490	304	14,550	14,854
Share issue	2,777,778	56	4,944	5,000
Share issue costs	-	-	(486)	(486)
Issued under share-based payment plans	376,308	8	125	133
Issued on conversion of Convertible Loan	3,176,772	63	2,796	2,859
Issued on exercise of warrants	115,350	2	102	104
Change in year	6,446,208	129	7,481	7,610
Balance at 31 December 2011	21,657,698	433	22,031	22,464

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

During the period, the Company issued 6,446,208 shares increasing the total number of shares in issue from 15,211,490 to 21,657,698 as follows:

·      2,777,778 shares as a result of new share subscriptions at £1.80 per share for total cash consideration of £5,000,000, with share issue costs of £486,000 charged against the share premium account and listing expenses of £324,000 charged to the income statement. Included in the share issue costs charged to the share premium account is an amount of £22,000 relating to share-based payments in respect of warrants granted to professional advisers in lieu of fees;

·      376,308 shares as a result of options exercised with a weighted average exercise price of £0.36 per share for total cash consideration of £134,099;

·      3,176,772 shares as a result of the Convertible Loans being converted at £0.90 per share for total loan value converted of £2,859,095;

·      115,350 shares as a result of exercise of warrants entitled under the bank loan at £0.90 per share for cash consideration of £103,815.

19	Other reserves

	Equity component of convertible loans and warrants £'000	Share-based payment reserve £'000	Translation reserve £'000	Total £'000
Balance at 1 January 2010	499	528	(66)	961
Exchange difference on retranslation of net assets and results of overseas subsidiaries	-	-	(29)	(29)
Reserve credit for equity-settled share-based payment	-	18	-	18
Equity component of loans	3	-	-	3
Balance at 31 December 2010	502	546	(95)	953
Exchange difference on retranslation of net assets and results of overseas subsidiaries	-	-	14	14
Reserve credit for equity-settled share-based payment	-	45	-	45
Equity component of loans converted	(502)	-	-	(502)
Balance at 31 December 2011	-	591	(81)	510

20	Business Combinations

20.1 Subsidiaries acquired

Subsidiary	Country of incorporation	Principal activity	Date of acquisitions	Proportion of equity interest acquired
Integrated Mapping Services, Inc.	USA	Location Solutions	26 September 2011	100%
Realworld OO Systems Limited	United Kingdom	Location Solutions	4 October 2011	100%

Integrated Mapping Services, Inc. ("InMaps") and Realworld OO Systems Limited ("Realworld") were acquired to continue the expansion of the Group's Geospatial division. Both InMaps and Realworld are location solutions businesses providing geospatial software products and consulting, the former with a focus on the electric and gas sector, the latter on the telecommunications sector. The acquisitions will enhance the Group's product range, product development capability, sector presence and geographical footprint.

20.2 Consideration transferred

		InMaps £'000	Realworld £'000	Total £'000
Cash consideration paid		393	1,250	1,643
Contingent cash consideration arrangement		-	560	560
Consideration transferred		393	1,810	2,203

Under the contingent cash consideration arrangement, the Group is required to pay additional amounts to the vendors of Realworld based on the achievement of two separate performance milestones that may arise between 2012 and 2013 with a combined undiscounted range of outcomes between zero and £1,150,000. A liability of £560,000  was recognised at the acquisition date, based on management's best estimate of the probability-adjusted expected cash outflow from the arrangement. As at 31 December 2011 the amount recognised for this arrangement was unchanged based on the most recent management estimates.

Maturity of contingent consideration is as follows:

	Notes		2011 £'000	2010 £'000
Non-current	17		160	-
Current	15		400	-
Total			560	-

Acquisition-related costs amounting to £47,000 (InMaps: £16,000; Realworld: £31,000) have been excluded from the consideration transferred and have been recognised as an expense in the current year within the 'administrative expenses' line item in the consolidated income statement.

20.3 Assets acquired and liabilities recognised at the date of acquisition

		InMaps £'000	Realworld £'000	Total £'000
Assets
Non-current assets
Software products		191	338	529
Customer relationships		184	218	402
Order backlog		11	36	47
Property, plant and equipment		11	8	19
Deferred income tax assets		32	88	120
Total non-current assets		429	688	1,117
Current assets
Trade and other receivables		83	379	462
Cash and cash equivalents		32	11	43
Total current assets		115	390	505
Total assets		544	1,078	1,622
Liabilities
Current liabilities
Loans and borrowings		(36)	-	(36)
Trade and other payables		(51)	(307)	(358)
Total current liabilities		(87)	(307)	(394)
Non-current liabilities
Loans and borrowings		(86)	-	(86)
Deferred income tax liabilities		(134)	(154)	(288)
Total non-current liabilities		(220)	(154)	(374)
Total liabilities		(307)	(461)	(768)
Fair value of identifiable net assets acquired		237	617	854

The fair value of trade and other receivables of £462,000 includes trade receivables with a fair value and gross contractual value of £415,000 (InMaps: £80,000; Realworld: £335,000), all of which is expected to be collectable.

20.4 Goodwill arising on acquisitions

		InMaps £'000	Realworld £'000	Total £'000
Consideration transferred		393	1,810	2,203
Less: fair value of identifiable net assets acquired		(237)	(617)	(854)
Goodwill arising on acquisitions		156	1,193	1,349

Goodwill arose on the acquisitions of InMaps and Realworld in respect of the benefits of highly knowledgeable workforces, expected operational synergies, revenue growth and future market development. These benefits are not recognised separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets

None of the goodwill arising on these acquisitions is expected to be deductible for tax purposes.

20.5 Net cash outflow on acquisition of subsidiaries

		InMaps £'000	Realworld £'000	Total £'000
Cash consideration paid		393	1,250	1,643
Less: cash and cash equivalent balances acquired		(32)	(11)	(43)
Net cash outflow on acquisition of subsidiaries		361	1,239	1,600

20.6 Impact of acquisitions on the results of the Group

The incremental of acquisitions to the Group's results for the year are set out in the table below:

	Before acquisitions  £'000	InMaps £'000	Realworld £'000	Total £'000
Revenue	23,022	78	685	23,785
Adjusted EBITDA	1,295	(66)	219	1,448
Profit/(loss) before tax	100	(103)	144	141

If the acquisitions were effective from 1 January 2011, the Group's estimated results would have been as follows:

	Before acquisitions £'000	InMaps £'000	Realworld £'000	Total £'000
Revenue	23,022	435	2,080	25,537
Adjusted EBITDA	1,295	(96)	(153)	1,046
Profit/(loss) before tax	100	(133)	(228)	(261)

 

END

 

 

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