TIDMUBI
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 GBP26.5 million (2015: GBP22.0
million) led by growth in software revenue.
-- Order book as at 31 December 2016 of GBP12.6 million (2015: GBP9.6 million).
-- Gross margin increased to 39% (2015: 35%) due to improved
software revenue mix and focus on cost management.
-- Adjusted EBITDA of GBP0.3 million (2015: GBP5.2 million loss)
reflecting increased gross profit and the efficient management of
our cost base.
-- Operating loss reduced to GBP6.2 million (2015: GBP17.0
million) due to improved trading performance and non-recurring
income.
-- GBP4.8 million (gross) raised from shareholders in April
2016, stabilising the balance sheet.
-- Cash balance of GBP3.5 million (2015: GBP5.4 million) and net
cash of GBP0.2 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
GBPm GBPm
----------------- ----- ------
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 2016 % of 2015 % of Year on
division GBP m total GBP m total year growth
revenue revenue
--------------- ------- --------- ------- --------- -------------
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 GBP26.5 million (2015:
GBP22.0 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 2016 % of 2015 % of Year on
division GBP m total GBP m total year growth
revenue revenue
--------------- ------- --------- ------- --------- -------------
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 % of 2015 % of Year
GBP total GBP total on year
m revenue m revenue 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 GBP29.3
million (2015: 19.2 million). GBP10.8 million of this related to
RTLS (2015: GBP5.1 million) and GBP18.5 million to Geospatial
(2015: GBP14.1 million).
Order book provides visibility over future revenues. The order
book as at 31 December 2016 was GBP12.6 million (31 December 2015:
GBP9.6 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 2016 Gross 2015 Gross Gross
by division GBP m margin GBP m margin 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 GBP0.4 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 GBP16.4 million (2015: GBP24.7 million)
and are summarised as follows:
2016 2015
GBP m GBP 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 GBP1.9 million of unrealised foreign
exchange gains on intercompany trading balances (2015: GBPnil),
GBP0.1 million of reorganisation costs (2015: GBP3.2 million) and a
GBP0.4 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 GBP0.3 million
(2015: GBP5.2 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 GBP0.3 million (2015:
GBP0.3 million).
Income tax
The Group has a net tax credit of GBP1.1 million (2015: GBP0.6
million) as a result of cash received of GBP0.6 million under the
UK R&D tax credit regime and GBP0.5 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 GBP6.4 million (2015: GBP17.3
million) and loss after tax reduced to GBP5.3 million (2015:
GBP16.6 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 GBP4.8 million with the placement of 19,230,000 new
ordinary shares at a price of GBP0.25 per share primarily with
existing shareholders. The net proceeds of GBP4.5 million from the
placing were used by the Group to repay GBP0.5 million of the HSBC
working capital facility and to provide additional funding to grow
the business.
In October 2016, the GBP8.0 million HSBC working capital
facility was further restructured, becoming a GBP4.0 million
repayment loan with GBP0.75 million repayable on or before 31
December each year. GBP0.75 million of this facility was repaid in
December 2016.
As at 31 December 2016, the Group had a positive net cash
position of GBP0.2 million (2015: GBP0.2 million net debt) being
GBP3.5 million of cash and GBP3.3 million of debt.
Non-current assets
Total non-current assets were GBP4.4 million (2015: GBP10.7
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 GBP4.3 million
goodwill provision (2015: GBP4.0 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
GBPnil (2015: GBP4.3 million).
Impairment charges of GBP1.0m 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 GBP1.9 million (2015: GBP2.5 million) were recognised in
2016 reflecting the smaller size of organisation, and offset by
amortisation of GBP2.6 million (2015: GBP2.6 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 GBP17.8 million (2015: GBP17.5
million).
Trade receivables net of provisions increased to GBP9.2 million
(2015: GBP5.7 million) driven primarily by orders received towards
the end of the year.
Amounts recoverable on contracts totaled GBP2.9 million (2015:
GBP2.1 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 GBP1.1 million (2015:
GBP2.8 million) as the Group improves the sales forecasting process
and management of working capital, noting also that a GBP0.4
million provision was made against older sensors and components
during the year.
Total assets
Total assets decreased to GBP22.1 million (2015: GBP28.2
million).
Current liabilities
Total current liabilities decreased to GBP9.0 million (2015:
GBP9.8 million). Trade payables reduced to GBP1.5 million (2015:
GBP2.1 million) which was partly due to reduction of inventory
purchases close to the year end.
Non-current liabilities
Total non-current assets decreased to GBP3.4 million (2015:
GBP6.5 million) following the reduction in long-term debt from
GBP4.5 million to GBP2.5 million as at 31 December 2016.
Net assets
Net assets decreased to GBP9.8 million (2015: GBP12.0 million)
following the impairment of historic goodwill.
Cash and cash flow
Operating cash flow before working capital movement was GBP0.3
million inflow (2015: GBP9.2 million outflow)
Operating cash outflows from operating activities after
adjusting for working capital were GBP2.0 million (2015: GBP3.5
million). Working capital increased at year end with an increase in
debtors by GBP4.0 million (2015: GBP6.3 million decline) due to end
of year contracts being won. This working capital decline was
offset partially by a reduction in inventory of GBP1.8 million
(2015: GBP0.1 million).
The Group had investment outflows of GBP2.0 million (2015:
GBP2.8 million), which is largely made up of expenditure on product
development.
Cash inflows from financing activities were GBP1.8 million
(2015: GBP7.8 million). This included net proceeds from placings of
GBP4.5 million (2015: GBP9.6 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
2016 2015
Notes GBP'000 GBP'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 2015
GBP'000 GBP'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
based Non-controlling
Share Share payment Translation Retained Sub-total interest
capital premium reserve reserve earnings GBP'000 GBP'000 Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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
2016 2015
Notes GBP'000 GBP'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
=============================== ====== ========= =========
.
2016 2015
Notes GBP'000 GBP'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
2016 2015
Notes GBP'000 GBP'000
------------------------------- ------ --------- ---------
Loss before tax (6,444) (17,268)
Adjustments for:
8,
Depreciation 12 345 388
8,
Amortisation and impairment 11 8,366 7,294
Adjustments to contingent (355) -
consideration 8
Loss on the disposal of 24 -
property, plant and equipment
8
Revaluation of intercompany (1,877) -
balances
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 (GBP'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 GBP3.5 million at the balance sheet date.
As disclosed in note 17, the Group restructured its working capital
facilities in October 2016, becoming a GBP4.0 million repayment
loan with covenants requiring GBP0.75 million repayable on or
before 31 December each year, GBPnil operating cashflow before
working capital adjustments in 2017, and GBP1 million operating
cashflow in future years. The balance of this facility as at 31
December 2016 was GBP3.25 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 GBP0.75 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
GBP4.3 million (2015: GBP4.0 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 GBPnil (2015: GBP4.3 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 GBP1.0 million (2015:
GBPnil) 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 GBP3.3 million (2015: GBP4.0 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 GBP2.9 million (2015: GBP2.1 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 RTLS Geospatial Central Total
2016 GBP'000 GBP'000 GBP'000 GBP'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 RTLS Geospatial Central Total
2015 GBP'000 GBP'000 GBP'000 GBP'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.
Non-current
Revenue assets
-------------------- -------------------------- --------------------------
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'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. GBP3.7 million was generated
from a European customer and GBP3.4 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 Average monthly
at 31 December number of people
------------------------ ------------------------ ------------------------
2016 2015 2016 2015
By activity Number Number Number Number
------------------------ ----------- ----------- ----------- -----------
Technical consultants 59 89 64 103
38 38
31 31
22 22
180 180
Sales & marketing 38 38 42 45
Research & development 22 31 25 33
Administration 23 22 23 27
142 180 154 208
======================== =========== =========== =========== ===========
2016 2015 2016 2015
By geography Number Number Number 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:
2016 2015
Notes GBP'000 GBP'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 GBP0.1 million (2015: GBP2.0 million) which are
presented as non-recurring costs in the income statement - see note
8.2.
7 Finance income and costs
2016 2015
GBP'000 GBP'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:
2016 2015
Notes GBP'000 GBP'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 24 -
property, plant and
equipment
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 2015
GBP'000 GBP'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 GBP1.9 million of unrealised foreign
exchange gains on intercompany trading balances (2015: GBPnil),
GBP0.1 million of reorganisation costs (2015: GBP3.2 million) and a
GBP0.4 million gain in respect of adjustments to deferred
consideration (2015: GBPnil).
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 2015
GBP'000 GBP'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 2015
GBP'000 GBP'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 2015
GBP'000 GBP'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 GBP17.6 million (2015: GBP10.5
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 Deferred income
tax assets tax liabilities
---------------------------- ---------------------------- --------------------------
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'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 2015
GBP'000 GBP'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 2015
GBP'000 GBP'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
(GBP'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 (GBP'000) (5,196) (16,569)
Adjustments:
Amortisation and impairment
of acquired intangible assets
(GBP'000) 8, 11 1,223 309
Impairment of goodwill (GBP'000) 8, 11 4,271 4,043
Reversal of share-based payments
charge (GBP'000) (20) 54
Reversal of non-recurring
items (GBP'000) 8 (2,222) 4,075
------------------------------------ ------ -------- ---------
Net adjustments (GBP'000) 3,252 8,481
------------------------------------ ------ -------- ---------
Adjusted earnings (GBP'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
Acquired
customer Capitalised
relationships Acquired product
and order software development
Goodwill backlog products costs Software Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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 GBP4.3 million (2015: GBP4.0 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 GBPnil (2015: GBP4.3 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 GBP1.0 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 Computer
and fittings equipment Total
GBP'000 GBP'000 GBP'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) (178)
--------------------------- ---- ---- -------------- ----------- --------------
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 2015
GBP'000 GBP'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 GBP0.4
million (2015: GBPnil).
14 Trade and other receivables
2016 2015
Notes GBP'000 GBP'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 2015
GBP'000 GBP'000
---------------------------- --------- ---------
At 1 January (1,691) (68)
Exchange differences (158) (10)
Amounts recovered in the 6 -
year
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 GBP2,065,000 (2015: GBP1,626,000) 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 2015
GBP'000 GBP'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 2015
GBP'000 GBP'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:
2016 2015
By currency GBP'000 GBP'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 2015
GBP'000 GBP'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 (GBPnil to GBP892,000). During 2016, the
liability has been reduced to GBP197,000 (2015: GBP448,000,
presented as a non-current liability within note 18) with
GBP355,000 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 GBP8.0 million HSBC working capital facility
was restructured, becoming a GBP4.0 million repayment loan with
GBP0.75 million repayable on or before 31 December each year.
GBP0.75 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 GBP2.25 million negative, 2017
GBPnil, 2018 and beyond GBP1 million positive.
18 Other payables
2016 2015
Notes GBP'000 GBP'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 Share Share
of GBP0.02 capital premium Total
each GBP'000 GBP'000 GBP'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 GBP0.25 per share for a total gross
consideration of GBP4,808,000 with share issue costs of GBP295,000
written off against share premium; and
-- 32,907 shares as a result of options exercised with a
weighted average exercise price of GBP0.14 per share for total cash
consideration of GBP5,000.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR URVWRBAAOUAR
(END) Dow Jones Newswires
March 21, 2017 03:00 ET (07:00 GMT)
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