TIDMUBI
RNS Number : 2923A
Ubisense Group PLC
19 March 2013
Ubisense Group plc
Audited results for the year ended 31 December 2012
Ubisense Group plc ("Ubisense" or the "Company") (LSE:
UBI), a market leader in location based smart technology,
has announced its audited results for the year ended
31 December 2012.
Financial
highlights * Group revenue increased by 2.1% to GBP24.3 million
(FY 2011: GBP23.8 million)
* RTLS revenue in the manufacturing sector grew by
57.0%
* Overall RTLS revenues grew by 10.3%
* Geospatial revenues grew 34.7%, made up of 20.4%
organic and 14.3% inorganic, excluding the impact of
a large European telecom customer which undertook a
restructuring. Overall Geospatial revenues reduced by
2.5%
* Improved gross margin of 39.5% (FY 2011: 35.6%)
* Managed services (including M&S contracts) increased
22.3% and represents 25.6% of total revenue (FY 2011:
21.4%)
* Adjusted EBITDA* of GBP1.2m (FY 2011: GBP1.4m)
* Net cash of GBP2.7m following increased investment in
product suite
Operational
highlights * Major new strategic RTLS wins with AGCO, Astrium, BAE
and Hyundai. Over a dozen new installations at
customers such as Renault, Smart and John Deere
* Extended installations with our existing RTLS
customers including Airbus, Aston Martin, BMW,
Continental, Cummins, Daimler and Eurocopter
* New Geospatial wins with Cogeco, IGC, Sovernet,
Cambridge Water, SESW, American Electric Power and
DREWAG/ENSO
* New strategic partnerships with Daifuku and Geoplan
* Increased R&D spending to develop industry solutions
including Ubisense's flagship end-to-end
manufacturing solution Smart Factory System
* Double Queen's Award winner for Innovation and
International Trade
Current trading
& Outlook * Strong start to 2013 with new business momentum
continuing
* Current order book of approximately GBP13m
Richard Green, Chief Executive Officer, commented,
"2012 was a year of significant strategic progress
for the Group. Despite challenging macroeconomic conditions
and the timing of some contracts impacting full year
revenues, we continued to build exposure of our location
solutions with new tier one automotive manufacturers
and further grow our penetration amongst our existing
blue chip customer base.
Our investment in developing a product suite that
is tailored to address industry challenges and deliver
real return on investment for our customers means
we are well positioned to capture the many opportunities
we see for both our RTLS and Geospatial businesses.
With a robust pipeline and strong order book, we remain
confident in our capacity to deliver continued growth
across the Group and achieve an improved financial
performance in 2013."
* Measured as operating profit excluding depreciation,
amortisation, share-based payments charge and non-recurring
costs such as reorganisation costs, AIM listing expenses
and acquisition costs
Contact
Ubisense Group plc Tel: + 44 (0) 1223 535170
Richard Green
Gordon Campbell
Canaccord Genuity Limited Tel: +44 (0) 20 7523 8000
(NOMAD)
Simon Bridges
Lucy Tilley
FTI Consulting Tel: +44 (0) 20 7831 3113
Jon Snowball
Tracey Bowditch
About Ubisense
Ubisense is a market leader of location-based Smart
Factory Solutions which enable companies to optimise
their manufacturing processes. By keeping track of
key assets, Ubisense solutions bring clarity to complex
operations in industries while also improving quality
and reliability. Ubisense uses a unique combination
of advanced industry knowledge and an experienced
team to deliver effective and superior solutions that
offer unprecedented visibility, control and accuracy,
delivering time and cost savings. Ubisense solutions
are easy to implement and flexible to a particular
business's needs, no matter which area of the globe
they operate in.
Ubisense location solutions are used by a growing
number of blue chip customers across the world, such
as BMW, Daimler, Aston Martin, BAE, Airbus, Caterpillar,
Hyundai, Duke Energy, Cox Communications and Deutsche
Telekom. For more information please visit: www.ubisense.net.
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Chairman's statement
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Introduction
I am pleased to report Ubisense's second full year
of results as a listed company, for the year ended
31 December 2012. This has been a crucial year for
the Group, where we have seen significant developments
within both of our operating divisions.
Overview
Group revenue increased by 2.1% to GBP24.3 million
and we achieved an Adjusted EBITDA of GBP1.2 million.
Gross profit increased to GBP9.6 million, representing
an improvement in gross margin to 39.5%. The Group
has a robust balance sheet with Shareholder Funds
of GBP18.9 million, including net cash of GBP2.7 million.
We have continued the strong momentum this year in
both our RTLS and Geospatial divisions, through the
strengthening of key customer relationships, acquisition
of new customers, improved market reach and our approach
to product management. We have ensured that our resources
are fully focused on delivering products for markets
where we add the most value.
Our RTLS division has experienced considerable growth,
through major new strategic client wins, as the use
of location-based manufacturing solutions is becoming
increasingly widespread through many industries. We
remain confident that the Company can capitalise on
the considerable opportunities we see in the high
value manufacturing sector and this will continue
to drive our growth.
In our Geospatial division we have also delivered
excellent progress and further market traction. Our
Geospatial product offering continues to gain acceptance
into the telecoms and utilities markets, extending
our reputation with customers that value reliability
and exceptional service.
Current trading and outlook
In the period since the year end, current trading
has been in line with the Board's expectations. Ubisense
enters 2013 with increasing momentum in the business
and we intend to capitalise on the opportunities ahead.
We will continue to pursue opportunities for growth
both organically and through acquisitions that align
with our strategic objectives, enhance our offering
and deliver value for our shareholders.
Although the world economic outlook remains uncertain,
our ability to provide innovative solutions for major
customers in manufacturing markets remains strong
and we begin 2013 with a robust order book and pipeline.
Awards
The Group has again received a number of awards during
the year, including two prestigious Queen's Awards
for the first time for its outstanding and sustained
achievement in developing innovative products and
solutions, and applying them to create significant
international commercial success.
Conclusion
On behalf of the Board, I would like to thank our
customers, partners and employees for their support
in making 2012 such a strong year for the Ubisense
Group. I look ahead with confidence for the 2013 financial
year.
Andy Hopper
Chairman
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Chief Executive's review
---------------------------------------------------------------------------------------------------
Overview
Ubisense performed well over the year through challenging
economic conditions, delivering growth in revenue
and gross margin and increasing investment in our
product offerings. This was reflected in the growing
awareness and deployment of our leading location solutions
to an increasing number of top tier automotive manufacturers
providing good momentum on our growth strategy.
Our value proposition is one of our main growth drivers
as customers are seeing clear returns on investment
from increased operational efficiencies leading to
reduced operating costs in their manufacturing operations.
Customer Momentum
The market opportunity for Ubisense is ever present.
Within RTLS, we have continued to grow the business
by extending the model in our priority G7 markets,
with a particular focus on high value manufacturing
where we delivered year-on-year growth in revenues
of 57.0%. Our strategy in manufacturing has been to
enter the customer with a single application and then
extend the range of applications as they increasingly
look for an end-to-end location solution.
We have now been installed in 8 out of the top 15
auto manufacturers and we continue to penetrate the
global automotive market with new pilot installations
at more plants in North America, Europe and further
adoptions in South Korea.
During the year we saw new RTLS contracts including
major strategic wins at AGCO, Astrium, BAE and Hyundai.
In addition we established over a dozen new installations
at customers such as Renault, Smart and John Deere
and extended our installations at existing customers
including Airbus, Aston Martin, BMW, Continental,
Cummins, Daimler and Eurocopter.
In the Geospatial division we are pleased to report
new customer wins with Cogeco, IGC, Sovernet, Cambridge
Water, SESW, American Electric Power and DREWAG/ENSO.
New contract wins and managed services contract renewals
with major telecoms and utility companies including
Exelon, HLBG and Swisscom have continued to build
on the growth of the Geospatial division and are consistent
with our plans for organic growth in both established
and emerging markets.
Acquisitions
The successful acquisitions of Realworld OO Systems
Ltd and Integrated Mapping Solutions Inc in 2011 contributed
GBP2.1 million to revenues in 2012. These businesses
are now fully integrated into our existing business
and have consolidated and extended our customer base.
Research and development and marketing activities
have been repatriated and consolidated back into the
UK, giving rise to a reorganisation cost of GBP0.4m.
Strategic Partnerships
Substantial progress was achieved with our strategic
partner Atlas Copco, now with more than 40 installations
deployed. We have also entered into new partnerships
with the Daifuku Corporation and Geoplan in Japan
that are helping with deployment of our RTLS products
into the Asian market.
Our partnership with industrial automation experts,
ATS Global, also saw significant progress with a maiden
installation with the UK's largest manufacturer. This
complementary partnership enables Ubisense to leverage
ATS Global's unrivalled expertise in Manufacturing
Execution Systems (MES) whilst helping ATS 'location
enable' its solutions to afford manufacturing customers
a more compelling combined offering.
We remain committed to developing strong partnerships
that deliver differentiated value propositions which
are beneficial for both our customers and our partners.
Products
We have continued to invest in research and development
in both divisions resulting in a consolidation of
current products into more market focused application
suites such as our flagship, end-to-end manufacturing
solution, the Smart Factory System and our netSolutions
product for the telecommunications market. Feedback
has continued to be very positive and we look forward
to introducing these new application suites in 2013
and extending our order book.
Conclusion
By working in close co-operation with our customers
we have established a strong platform for growth and
are in a good position to build on our successes.
We look forward to the future with confidence.
Richard Green
Chief Executive Officer
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Financial review
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Revenue and Gross Margin
In the year ended 31 December 2012, the Group generated
revenue of GBP24.3 million (2011: GBP23.8 million).
Gross Profit increased to GBP9.6 million (2011: GBP8.5
million), representing an improvement in Gross Margin
to 39.5% (2011: 35.6%).
RTLS
RTLS's revenues increased by 10.3% to GBP9.5 million
(2011: GBP8.7 million). The gross margins on RTLS
revenue improved to 57.3% (2011: 53.6%) as a result
of a higher proportion of proprietary hardware and
software revenue within the mix.
Adjusted EBITDA was up significantly at GBP1.5 million
(2011: GBP0.7 million). The RTLS division continued
to invest in the Atlas Copco relationship who importantly
accelerated the support of their pilot programme,
which is now running across many organisations including
five of the largest car manufacturers in the world.
Headcount increases in our sales and delivery teams,
as well as our R&D team to expand our range of RTLS
applications, resulted in headcount averaging 70 for
the year (2011: 60).
Geospatial
Geospatial revenues reduced by 2.5% to GBP14.8 million
(2011: GBP15.1 million). However, the underlying business
grew by 34.7%, made up of 20.4% organic and 14.3%
inorganic. This excludes the impact of a large European
telecom customer which undertook a restructuring throughout
the year resulting in a drop in revenues of GBP3.6
million from a peak in 2011 - we believe that business
with this customer has returned to more consistent
levels now. The 2011 acquisitions in Geospatial performed
in line with expectations with revenues of GBP2.1
million up from GBP0.7 million in the prior year.
Gross margins improved to 28.0% (2011: 25.4%) as a
result of some higher margin product sales and a reduction
in the number of contractors being used in the business.
Adjusted EBITDA was stable at GBP3.0 million (2011:
GBP3.1 million) with the increased gross profit being
offset by increased R&D and pre-sales expense. Total
Geospatial headcount averaged 94 for the year (2011:
64), 24 of this increase being a result of adding
the staff from the two acquisitions.
Central
Central corporate costs were GBP3.4 million (2011:
GBP2.4 million). The underlying increase in central
corporate costs was due to an increase in headcount
averaging at 20 for the year (2011: 14), marketing,
foreign exchange losses and costs relating to being
a listed company for a full year compared to six months
only in 2011 following the IPO in June 2011.
Group operating profit and profit after tax
Adjusted EBITDA for the Group was GBP1.2 million (2011:
GBP1.4m). The operating loss for the year was GBP0.8
million (2011: profit of GBP0.3 million) including
amortisation and depreciation charges of GBP1.4 million
(2011: GBP0.8 million) and non-recurring reorganisation
costs of GBP0.4 million (2011: non-recurring listing
and acquisition costs of GBP0.4 million). Amortisation
on acquired intangibles of GBP0.3 million (2011: GBP0.1
million) increased as a result of there being a full
year charge in 2012 on the intangibles from the acquisitions
in the second half of 2011. Amortisation of other
intangibles of GBP1.0 million (2011: GBP0.5 million)
was higher as development costs capitalised increased.
Total R&D spend before capitalisation and amortisation
was GBP3.2 million (2011: GBP2.2 million).
Net interest receivable for the period was GBP38,000
(2011: GBP148,000 expense) with interest expense being
virtually eliminated following the conversion of the
Convertible Loans and repayment of the bank loan at
the time of the IPO in June 2011.
Reported loss before tax was GBP0.7 million (2011:
GBP0.1 million profit).
The Group has a net tax credit of GBP90,000, almost
entirely comprising of a cash R&D tax credit of GBP203,000
partially offset by non-cash deferred tax on capitalised
development costs and acquired intangible assets.
Earnings per share and dividend
Adjusted diluted earnings per share was 0.5 pence
(2011: 2.7 pence). Reported basic and diluted loss
per share was 2.8 pence (2011: earnings of 0.2 pence).
The Board do not feel it appropriate at this time
to pay a dividend. The cash held on the balance sheet
will be used to fund growth, R&D and potential acquisitions
in line with the strategy set out when listing on
AIM in June 2011.
Balance sheet and cash
The Group has a robust balance sheet with Shareholder
Funds at 31 December 2012 of GBP18.9 million (2011:
GBP19.2 million), including net cash of GBP2.7 million
(2011: GBP6.0 million) and no outstanding debt. In
November 2012 the Group negotiated a GBP2 million
bank facility to provide additional future working
capital capacity - this facility has yet to be drawn
down.
The main components to the cash movements in 2012
include a reduced cash outflow from operating activities
of GBP0.8 million (2011: GBP2.3 million outflow),
capital investment in product development and plant
and equipment of GBP2.3 million (2011: GBP1.4 million)
and consideration paid of GBP0.4 million (2011: GBP1.6
million) in respect of the Realworld acquisition made
in October 2011.
Capital structure
The issued share capital at 31 December 2012 was 21,919,744
(December 2011: 21,657,698) ordinary shares of GBP0.02
each. The increase of 262,046 shares related to 154,937
employee share option exercises and 107,109 warrant
exercises. The total number of unexercised share options
at 31 December 2012 was 2,057,720. There are no unexercised
warrants at 31 December 2012. The issued share capital
at 18 March 2013 is 21,925,786 shares.
Current trading and outlook
Ubisense enters 2013 with increasing momentum. We
are well placed for growth in 2013, with the Geospatial
acquisitions now fully integrated into our business
and increased penetration of RTLS in the manufacturing
sector.
Gordon Campbell
Chief Financial Officer
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Consolidated income statement
-------------------------------------------------------------------------------------------------------
For the year ended 31 December 2012
2012 2011
Notes GBP'000 GBP'000
========================================== ============= ===== ============ ==================
Revenue 5 24,292 23,785
Cost of sales (14,690) (15,308)
========================================== ============= ===== ============ ==================
Gross profit 9,602 8,477
Administrative expenses (10,368) (8,188)
========================================== ============= ===== ============ ==================
Operating (loss)/profit 5 (766) 289
Analysed as:
Gross profit 9,602 8,477
Other administrative expenses (8,445) (7,029)
========================================== ============= ===== ============ ==================
Adjusted EBITDA 5 1,157 1,448
Depreciation (227) (140)
Amortisation of acquired
intangible assets (257) (112)
Amortisation of other intangible
assets (953) (512)
Share-based payments charge 22.2 (63) (24)
Reorganisation costs 9.2 (423) -
AIM listing expenses - (324)
Acquisition costs - (47)
========================================== ============= ===== ============ ==================
Operating (loss)/profit 5 (766) 289
Finance income 8 38 37
Finance costs 8 - (185)
========================================== ============= ===== ============ ==================
(Loss)/profit before tax 9 (728) 141
Income tax 10.1 90 (107)
========================================== ============= ===== ============ ==================
(Loss)/profit for the year
attributable to the equity
shareholders of the Company (638) 34
Earnings per share (pence)
========================================== ============= ===== ============ ==================
Basic 11 (2.8p) 0.2p
Diluted 11 (2.8p) 0.2p
========================================== ============= ===== ============ ==================
The notes 1 to 27 are an integral part of the preliminary
financial information.
Consolidated statement of comprehensive income
---------------------------------------------------------------------
For the year ended 31 December 2012
====================================================================
2012 2011
Notes GBP'000 GBP'000
-------------------------------------- ------ --------- ---------
(Loss)/profit for the year (638) 34
Other comprehensive income:
Exchange difference on retranslation
of net assets and results of
overseas subsidiaries 23 33 14
--------------------------------------
Total comprehensive income
attributable to equity shareholders
of the Company (605) 48
-------------------------------------- ------ --------- ---------
The notes 1 to 27 are an integral part of the preliminary
financial information.
--------------------------------------------------------------------
Consolidated statement of changes in equity
---------------------------------------------------------------------
For the year ended 31 December 2012
====================================================================
Share Share Other Retained
Capital Premium Reserves Earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January
2011 3042 14,550 953 (4,272) 11,535
================================= ========= =============== ========== ========== =========
Profit for the year - - - 34 34
Exchange difference
on retranslation of
net assets and results
of overseas subsidiaries - - 14 - 14
================================= ========= =============== ========== ========== =========
Total comprehensive
income for the year - - 14 34 48
Reserve credit for
equity-settled share-based
payment - - 45 - 45
Equity component of
loans - - (502) 502 -
Issue of new share
capital 129 - - - 129
Premium on new share
capital - 7,968 - - 7,968
Share issue costs - (487) - - (487)
================================= ========= =============== ========== ========== =========
Transactions with
owners 129 7,481 (457) 502 7,655
================================= ========= =============== ========== ========== =========
Balance at 31 December
2011 433 22,031 510 (3,736) 19,238
================================= ========= =============== ========== ========== =========
Loss for the year - - - (638) (638)
Exchange difference
on retranslation of
net assets and results
of overseas subsidiaries - - 33 - 33
================================= ========= =============== ========== ========== =========
Total comprehensive
income for the year - - 33 (638) (605)
Reserve credit for
equity-settled share-based
payment - - 63 - 63
Issue of new share
capital 5 - - - 5
Premium on new share
capital - 220 - - 220
Transactions with
owners 5 220 63 - 288
================================= ========= =============== ========== ========== =========
Balance at 31 December
2012 438 22,251 606 (4,374) 18,921
================================= ========= =============== ========== ========== =========
The notes 1 to 27 are an integral part of the preliminary
financial information.
A reconciliation of the components of Other reserves
is given in note 23.
Consolidated statement of financial position
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At 31 December 2012
2012 2011
Notes GBP'000 GBP'000
====================================== ====== ======= ========== ========== =========
Assets
Non-current assets
Goodwill 12 7,418 7,418
Other intangible assets 13 2 2,901 2,258
Property, plant and equipment 14 621 366
Total non-current assets 10,940 10,042
========================================= ====== ======= ========== ========== =========
Current assets
Inventories 15 862 1,667
Trade and other receivables 16 10,302 9,498
Cash and cash equivalents 17 2,716 6,034
Total current assets 13,880 17,199
Total assets 24,820 27,241
========================================= ====== ======= ========== ========== =========
Liabilities
Current liabilities
Trade and other payables 18 (5,246) (7,294)
Total current liabilities (5,246) (7,294)
========================================= ====== ======= ========== ========== =========
Non-current liabilities
Deferred income tax liabilities 10 (653) (549)
Other liabilities 20 - (160)
Total non-current liabilities (653) (709)
Total liabilities (5,899) (8,003)
Net assets 18,921 19,238
========================================= ====== ======= ========== ========== =========
At 31 December 2012
2012 2011
Notes GBP'000 GBP'000
====================================== ====== ======= ========== ========== =========
Equity attributable to owners
of the parent company
Share capital 21 438 433
Share premium account 21 22,251 22,031
Other reserves 23 606 510
Retained earnings (4,374) (3,736)
Total equity 18,921 19,238
========================================= ====== ======= ========== ========== =========
The notes 1 to 27 are an integral part of the preliminary
financial information.
The preliminary financial information was approved
by the Board of Directors on 18 March 2013 and signed
on its behalf by:
Richard Green, Chief Executive Officer Gordon Campbell,
Chief Financial Officer
Ubisense Group plc
Registered Number: 05589712
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Consolidated statement of cash flows
----------------------------------------------------------------------------------------------------
For the year ended 31 December 2012
2012 2011
Notes GBP'000 GBP'000
====================================== ====== ======= ========== ========== =========
(Loss)/profit before tax (728) 141
Adjustments for:
9,
Depreciation 14 227 140
9,
Amortisation 13 1,210 624
Loss on the disposal of property, 5 -
plant and equipment 9
6.2,
Share-based payments charge 22.2 63 24
Finance income 8 (38) (37)
Finance costs 8 - 185
========================================= ====== ======= ========== ========== =========
Operating cash flows before
working capital movements 739 1,077
Change in inventories 805 (1,303)
Change in receivables (839) (2,065)
Change in payables (1,691) (96)
Cash used in operations
before tax (986) (2,387)
Net income taxes received 203 102
Net cash flows from operating
activities (783) (2,285)
========================================= ====== ======= ========== ========== =========
Cash flows from investing
activities
Acquisition of subsidiaries,
net of cash acquired 26 (400) (1,600)
Purchases of property,
plant and equipment (492) (256)
Proceeds on disposal of property, 1 -
plant and equipment
Expenditure on intangible
assets (1,849) (1,130)
Interest received 38 33
Net cash flows from investing
activities (2,702) (2,953)
========================================= ====== ======= ========== ========== =========
Cash flows from financing
activities
Repayment of borrowings - (1,014)
Interest paid - (47)
Proceeds from the issue
of ordinary share capital 225 5,238
Net cash flows from financing
activities 225 4,177
========================================= ====== ======= ========== ========== =========
Net decrease in cash and
cash equivalents (3,260) (1,061)
Cash and cash equivalents
at start of period 6,034 7,130
Exchange differences on cash
and cash equivalents (58) (35)
Cash and cash equivalents
at end of period 17 2,716 6,034
========================================= ====== ======= ========== ========== =========
The notes 1 to 27 are an integral part of the financial
information.
Notes to the Preliminary financial information
--- --------------------------------------------------------------------------------------
1 General information
Ubisense Group plc ("the Company") and its subsidiaries
(together, "the Group") deliver mission-critical enterprise
asset tracking and geospatial systems.
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 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, US, Canada,
France, and Germany and sells mainly in North America,
Europe and Asia.
The Group legally consists of seven companies headed
by Ubisense Group plc (UK). The subsidiaries are all
100 per cent owned by Ubisense Group plc and are:
Ubisense Limited (UK); Ubisense AG (Germany); Ubisense,
Inc. (US); Ubisense Solutions, Inc. (Canada); Ubisense
SAS (France) and Geospatial Systems Limited (UK).
The Board of Ubisense Group plc approved the release
of this audited preliminary announcement on on 18
March 2013.
The preliminary financial information does not constitute
statutory financial statements for the years ended
31 December 2012 and 2011 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
2011 have been delivered to the Registrar of Companies.
Statutory accounts for the year ended 31 December
2012 will be delivered to the Registrar of Companies
following the Company'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.
2 New accounting standards
=== ======================================================================================
For the purposes of the preparation of the preliminary
financial information, the Group has applied all standards
and interpretations that are effective for accounting
periods beginning on or after 1 January 2012.
No new standards, amendments or interpretations to
existing standards that have been published and that
are mandatory for the Group's accounting periods beginning
on or after 1 January 2013, or later periods, have
been adopted early. The Directors do not consider
that the adoption of these standards and interpretations
would have a material impact on the Group's financial
statements.
The principal accounting policies applied in the preparation
of the preliminary financial information are set out
below. These policies have been consistently applied
to all the years presented, unless otherwise stated.
Basis of preparation
The preliminary financial information of Ubisense
Group plc has 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 preliminary financial information
has been prepared under the historical cost convention.
The preliminary financial information is presented
in Sterling and all values are rounded to the nearest
thousand pounds (GBP'000) except when otherwise indicated.
3 Summary of significant accounting policies
=== ======================================================================================
The preparation of the preliminary financial information
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 preliminary financial information, are disclosed
in note 4.
Going concern basis
The Group meets its day-to-day working capital requirements
through its bank facilities. The Group had cash of
GBP2.7 million at the balance sheet date along with
a GBP2 million undrawn bank facility as well as an
order book equivalent to 47% of annual revenue. In
this context, the Group's forecasts and projections,
taking account of reasonably possible changes in trading
performance, support the conclusion that there is
a reasonable expectation that the Company and the
Group have adequate resources to continue in operational
existence for the foreseeable future, a period of
not less than twelve months from the date of this
report. The Group, therefore, continues to adopt the
going concern basis in preparing its 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 so as to obtain benefits from its activities.
The 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.
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 preliminary financial information
is presented in Sterling, which is the Company's functional
and presentation currency.
(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 "administrative 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 preliminary financial
information, 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 Sterling are translated into Sterling
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
The Group is organised on a global basis into two
operating segments, being the Real-Time Location Systems
("RTLS") and Geospatial divisions. Centrally incurred
costs not directly attributable to operating segments
are reported under "Central".
This is based upon the Group's internal organisation
and management structure and is the primary way in
which the Chief Operating Decision Maker (CODM) and
the rest of the Board are provided financial information.
The Directors believe that the CODM is the Chief Executive
Officer of the Group.
Revenue recognition
Revenue represents amounts derived from the provision
of goods and services which fall within the Group's
ordinary activities, exclusive of 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
rateably 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. Equity-settled share-based payments
are measured at fair value at the date of grant using
the Black-Scholes pricing model. The fair value is
expensed on a straight-line basis over the vesting
period, together with a corresponding increase in
equity, 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
(a) Rental expense
Operating lease rentals are charged as other administrative
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.
(b) 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.
Exceptional items
Exceptional 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 non-recurring
items of income or expense that have been shown separately
due to the significance of their nature or amount.
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 to 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.
(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 preliminary financial information 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 fair values at the acquisition
date. 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 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 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
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 on 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 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 to 5 years. 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 administrative expenses in the income
statement.
The useful economic lives of the other intangible
assets are as follows:
* Software products recognised on acquisition: 3 years
* Customer relationships recognised on acquisition: 5
years
* Order backlog: based on contract life, 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: 5 to 8 years, or period of the
lease if shorter
* Computer equipment: 3 years
* Demonstration equipment: 1 year
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 administrative 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 annually
for impairment. 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). Non-financial assets other than goodwill that
suffered an impairment are reviewed for possible reversal
of the impairment at each reporting date.
Inventories
Inventories are stated at the lower of cost and net
realisable value. Cost is based on the cost of purchase
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 pre-payment for liquidity
services and amortised over the period of the facility
to which it relates.
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.
4 Critical accounting estimates and judgements
=== ======================================================================================
The Group makes estimates and assumptions concerning
the future. Actual results may differ from these estimates.
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 other intangible assets
The Group tests goodwill for impairment annually.
This requires an estimation of the value in use of
the cash-generating units to which the goodwill is
allocated. Estimating the value in use requires the
Group to make an estimate of the expected future cash
flows from the cash-generating unit and also to choose
a suitable discount rate in order to calculate the
present value of those cash flows. The Group uses
pre-tax discount rates of between 9.7% and 12.5% for
this purpose. The carrying amount of goodwill at 31
December 2012 is GBP7,418,000. Further consideration
of the impairment of goodwill is included in note
12.
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 2012
is GBP2,110,000.
Revenue recognition
Significant management judgement is applied in determining
the allocation and timing of the recognition of revenue
on 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 amount of amounts
recoverable on contracts at 31 December 2012 is GBP2,439,000.
Provision for impairment of trade receivables
The Group assesses trade receivables for impairment
which requires the directors to estimate the likelihood
of payment forfeiture by customers.
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 or 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.
Valuation of separately identifiable intangible assets
As detailed in note 3, separately identifiable intangible
assets are identified and amortised over defined periods.
The Directors use an acknowledged valuation approach
but this is reliant upon certain judgements which
they determine are reasonable by reference to companies
in similar industries.
The Directors do not consider that there are any other
critical accounting judgements or key sources of estimation
uncertainty.
5 Segment information
=== ======================================================================================
5.1 Operating segments
Management has determined the operating segments to
be the Group's two divisions based on the reports
reviewed by the Chief Executive Officer, who is the
Chief Operating Decision Maker.
The Real-Time Location Systems division ("RTLS") delivers
mission-critical enterprise asset tracking solutions
utilising ultra-wideband ("UWB") technology to locate
people and assets in 3D, bringing visibility and control
to industrial business processes. The Geospatial division
delivers core location-based solutions, typically
to blue chip utility and communications companies,
to allow them to better plan and maintain their dispersed
network of assets. Centrally incurred costs not directly
attributable to operating segments are reported under
"Central".
Each of these operating segments is managed separately
as each deal with different technologies and predominantly
different customer bases. The performance of the operating
segments is assessed on a measurement of Adjusted
EBITDA. The measurement basis excludes depreciation,
amortisation, share-based payments charge, non-recurring
expenditure such as reorganisation costs, acquisition
costs and AIM listing expenses, finance income and
expense and income taxes. This is the measure reported
to the Chief Operating Decision Maker for the purposes
of resource allocation and assessment of segment performance.
Segment revenue represents revenue generated from
external customers, there is no inter-segment revenue.
The results of each segment have been prepared using
accounting policies consistent with those of the Group
as a whole.
Year ended 31 December RTLS Geospatial Central Total
2012 GBP'000 GBP'000 GBP'000 GBP'000
===================================== =========== =========== ========== =========
Revenue 9,540 14,752 - 24,292
Cost of sales (4,072) (10,618) - (14,690)
============================================ =========== =========== ========== =========
Gross profit 5,468 4,134 - 9,602
Other administrative expenses (3,946) (1,101) (3,398) (8,445)
============================================ =========== =========== ========== =========
Adjusted EBITDA 1,522 3,033 (3,398) 1,157
Depreciation - - (227) (227)
Amortisation of acquired
intangible assets - (257) - (257)
Amortisation of other
intangible assets (640) (222) (91) (953)
Share-based payments charge - - (63) (63)
Reorganisation costs (157) (209) (57) (423)
============================================ =========== =========== ========== =========
Operating profit/(loss) 725 2,345 (3,836) (766)
Finance income - - 38 38
Profit/(loss) before tax 725 2,345 (3,798) (728)
Income tax - - 90 90
Profit/(loss) after tax 725 2,345 (3,708) (638)
Year ended 31 December RTLS Geospatial Central Total
2011 GBP'000 GBP'000 GBP'000 GBP'000
===================================== =========== =========== ========== =========
Revenue 8,650 15,135 - 23,785
Cost of sales (4,012) (11,296) - (15,308)
============================================ =========== =========== ========== =========
Gross profit 4,638 3,839 - 8,477
Other administrative expenses (3,936) (738) (2,355) (7,029)
============================================ =========== =========== ========== =========
Adjusted EBITDA 702 3,101 (2,355) 1,448
Depreciation - - (140) (140)
Amortisation of acquired
intangible assets - (112) - (112)
Amortisation of other
intangible assets (437) (57) (18) (512)
Share-based payments charge - - (24) (24)
AIM listing expenses - - (324) (324)
Acquisition costs - - (47) (47)
============================================ =========== =========== ========== =========
Operating profit/(loss) 265 2,932 (2,908) 289
Finance income - - 37 37
Finance costs - - (185) (185)
Profit/(loss) before tax 265 2,932 (3,056) 141
Income tax - - (107) (107)
Profit/(loss) after tax 265 2,932 (3,163) 34
============================================ =========== =========== ========== =========
5.2 Geographical areas
The Group's operating segments operate in four main
geographical areas, even though they are managed on
a global basis. Revenue and non-current assets (excluding
goodwill) by geographical area are as follows:
Non-current
Revenue assets
2012 2011 2012 2011
GBP'000 GBP'000 GBP'000 GBP'000
===================================== =========== =========== ========== =========
UK 1,441 1,471 2,216 1,760
Germany 8,328 11,469 176 224
US 8,141 8,853 1,035 635
Asia Pacific 2,733 406 - -
Other 3,649 1,586 63 5
Total 24,292 23,785 3,490 2,624
============================================ =========== =========== ========== =========
Revenues from external customers in the Group's domicile,
the UK, as well as its major markets, Germany, US
and Asia Pacific, have been identified on the basis
of the customer's geographical location. Non-current
assets are allocated based on their physical location.
5.3 Information about major customers
During 2012, revenues of GBP2.9 million (2011: GBP1.3
million) derived from one Geospatial customer in the
US, revenues of GBP2.6 million (2011: GBP2.1 million)
and GBP1.7 million (2011: GBP5.3 million) derived
from two Geospatial customers based in Germany and
revenues of GBP1.0 million (2011: GBP2.6 million)
from one RTLS customer based in both Germany and the
US.
6 Employee information
=== ===================================== =========== =========== ========== =========
6.1 Employee numbers
The average monthly number of people, including Executive
Directors, employed by the Group during the year was:
2012 2011
Number Number
=============================================================== ========== =========
By activity
Technical consultants 96 75
Sales and Marketing 37 28
Research and Development 31 21
Administration 20 14
Total average number of
employees 184 138
============================================ =========== =========== ========== =========
By segment
Geospatial 94 64
RTLS 70 60
Central 20 14
Total average number of
employees 184 138
============================================ =========== =========== ========== =========
The total number of employees at 31 December 2012
was 175 (2011: 172)
6.2 Employee benefits
2012 2011
Notes GBP'000 GBP'000
===================================== ====== === =========== ========== =========
Wages and salaries 12,286 10,236
Social security costs 1,265 979
Contributions to defined contribution
pension arrangements 562 419
Share-based payments 22.2 63 24
Total aggregate employee
benefits 14,176 11,658
============================================ ====== === =========== ========== =========
Included in the above are termination benefits of
GBP404,000 (2011: GBPnil) which are presented as reorganisation
costs in the income statement - see note 9.2.
6.3 Key management compensation
Key management includes Directors (Executive and non-executive)
and members of the Global Management Team. During
the year, there were 13 key management personnel (2011:
14). The compensation paid or payable to key management
for employee services is shown below:
2012 2011
GBP'000 GBP'000
===================================== ====== === =========== ========== =========
Short-term employee benefits
Wages and salaries 879 925
Social security costs 84 59
Other benefits 21 29
============================================ ====== === =========== ========== =========
984 1,013
============================================ ====== === =========== ========== =========
Post-employment benefits
Contributions to defined contribution
pension arrangements 52 74
Share-based payments
Equity-settled share-based
payments 24 11
============================================ ====== === =========== ========== =========
Total key management compensation 1,060 1,098
============================================ ====== === =========== ========== =========
7 Directors' remuneration and interests
=== =========================================================================================
7.1 Directors' remuneration
Employer's
contributions
to defined
contribution
Basic Performance Benefits pension Total Total
salary payments in kind Subtotal arrangements 2012 2011
Director GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================== ========= ============ ========= ========= ================ ========= =========
Gordon Campbell* 96 12 1 109 15 124 106
Richard Green* 135 50 3 188 13 201 137
Peter Harverson 15 - - 15 - 15 16
Andrew Hopper 25 - - 25 - 25 15
J Keith Lomas 15 - - 15 - 15 6
Richard Newell 15 - - 15 - 15 -
Robert Sansom** - - - - - - -
Paul Taylor 15 - - 15 - 15 13
================== ========= ============ ========= ========= ================ ========= =========
Total 316 62 4 382 28 410 293
================== ========= ============ ========= ========= ================ ========= =========
* The directors are remunerated through the Company's
flexible benefits scheme under which they can elect
to switch basic salary into pension contributions
and other benefits. The basic salary entitlement in
the year was: Richard Green GBP140,000; Gordon Campbell
GBP105,000.
** Robert Sansom has waived his entitlement to annual
remuneration in the year of GBP15,000
7.2 Directors' interests - share options
Awards
Awards Awards exercisable
outstanding Granted Exercised Lapsed outstanding at
at during during during at 31
Award Exercise 1 January the the the 31 December December
date Vests Expires price 2011 year year year 2012 2011
Director Years Years Year GBP number number number number number number
=========== ======= ========= ========= ========= ============ ======== ========== ======= ============ ============
Gordon
Campbell 2010 2011-13 2020 0.140 120,500 - - - 120,500 80,335
2011 2012-14 2021 1.050 32,500 - - - 32,500 10,834
2012 2013-15 2022 2.125 - 40,000 - - 40,000 -
======= ========= ===================== ========= ============ ======== ========== ======= ============ ============
153,000 40,000 - - 193,000 91,169
Richard
Green 2010 2011-13 2020 0.140 76,278 - - - 76,278 50,853
2011 2012-14 2021 1.050 100,000 - - - 100,000 33,334
2012 2013-15 2022 2.125 - 60,000 - - 60,000 -
======= ========= ===================== ========= ============ ======== ========== ======= ============ ============
176,278 60,000 - - 236,278 84,187
======================================= ========= ============ ======== ========== ======= ============ ============
Peter
Harverson 2010 2011-13 2020 0.140 91,333 - - - 91,333 60,889
Andrew
Hopper 2010 2011-13 2020 0.140 20,278 - - - 20,278 13,519
Richard
Newell 2010 2011-13 2020 0.140 1,056 - - - 1,056 704
=========== ======= ========= ========= ========= ============ ======== ========== ======= ============ ============
Total 441,945 100,000 - - 541,945 250,468
========================================== ========= ============ ======== ========== ======= ============ ============
The 2012 grants vest subject to meeting performance
criteria set out in the long-term incentive plan ("LTIP").
No other Directors have been granted share options
in the Company or other Group entities. None of the
terms and conditions of the share options were varied
during the year. All options were granted in respect
of qualifying services. There have been no options
granted to or exercised by Directors between 31 December
2012 and 18 March 2013.
The market price of the Company's shares at the end
of the financial year was GBP2.315. The range of market
prices during the year was between GBP1.825 and GBP2.325.
7.3 Directors' interests - shares
Directors' interests in the ordinary shares of Ubisense
Group plc, at 31 December 2012 and 31 December 2011,
were as follows:
2012 2011
Number Number
================================== ============ ============
Gordon Campbell 87,987 87,987
Richard Green 1,543,011 1,543,011
Peter Harverson 65,161 65,161
Andrew Hopper 225,000 225,000
J Keith Lomas 47,712 47,712
Richard Newell 643,354 643,354
Robert Sansom 2,493,676 2,493,676
====================================== ============ ============
Total 5,105,901 5,105,901
====================================== ============ ============
There has been no change in the interests set out
above between 31 December 2012 and 18 March 2013.
8 Finance income and costs
=== ==============================================================
2012 2011
GBP'000 GBP'000
---------------------------------- ------------ ------------
Interest income from cash
and cash equivalents 38 37
====================================== ============ ============
Finance income 38 37
====================================== ============ ============
Interest payable - bank - (26)
Interest payable - other
loans - (159)
============================ === ======
Finance costs - (185)
---------------------------- --- ------
Net finance income/(costs) 38 (148)
---------------------------- --- ------
9 Profit before tax: analysis of expenses by nature
=== ====================================================================
9.1 Expenses by nature
The following items have been charged/(credited) to
the income statement in arriving at profit before
tax:
2012 2011
Notes GBP'000 GBP'000
------------------------------------- ------- --------- ---------
Amortisation of acquired
intangible assets 13 257 112
Amortisation of other intangible
assets 13 953 512
Depreciation of owned property,
plant and equipment 14 227 140
Loss on disposal of property, 5 -
plant and equipment
Operating lease rental
charges - land and buildings 355 320
Operating lease rental
charges - other 124 134
Research and development
costs expensed 1,312 1,109
Net foreign currency losses 153 12
Reorganisation costs 9.2 423 -
AIM listing expenses - 324
Acquisition costs - 47
Auditors' remuneration 9.3 81 165
========================================= ======= ========= =========
9.2 Reorganisation costs
During the year, the Group incurred reorganisation
costs totalling GBP423,000 comprising mainly redundancy
costs in order to integrate the Geospatial acquisitions
made in 2011 and to centralise the Research and Development
and Sales and Marketing functions of both divisions.
9.3 Auditors' remuneration
During the year the Group (including its overseas
subsidiaries) obtained the following services from
the Company's auditor and its associates:
2012 2011
Notes GBP'000 GBP'000
------------------------------------ --------- ---- --------- ----------- ---------
Fees payable to the Group's
auditor for the audit of:
Parent Company and consolidated
financial statements 14 13
Financial statements of subsidiaries,
pursuant to legislation 43 27
===================================================== ========= =========== =========
57 40
===================================================== ========= =========== =========
Fees payable to the Group's
auditor for other services:
Tax services 15 5
Other services 9 120
==================================== ================= ========= =========== =========
24 125
==================================== ================= ========= =========== =========
Auditors' remuneration 9.1 81 165
==================================== ================= ========= =========== =========
The auditor of Ubisense Group plc is Grant Thornton
UK LLP.
10 Income tax
===== ========================================================================================
10.1 Income tax recognised in the income
statement
2012 2011
GBP'000 GBP'000
------------------------------------ --------- ---- --------- ----------- ---------
Current tax
UK Corporation Tax - -
Foreign tax 9 (9)
Research and development tax
credits - prior years (203) (124)
=============================================== ======= ========= =========== =========
Total current tax credit (194) (133)
==================================== ================= ========= =========== =========
Deferred tax
Origination and reversal
of temporary differences 104 240
==================================== ================= ========= =========== =========
Total deferred tax expense 104 240
==================================== ================= ========= =========== =========
Total income tax (credit)/expense (90) 107
=============================================== ======= ========= =========== =========
The tax credit (2011: expense) differs from the standard
rate of corporation tax in the UK for the year of
24% (2011: 26%) for the following reasons:
2012 2011
GBP'000 GBP'000
==================================== ========= ==== ========= =========== =========
(Loss)/profit before tax (728) 141
==================================== ================= ========= =========== =========
(Loss)/profit before tax multiplied
by the standard rate of corporation
tax in the UK of 24% (2011: 26%) (175) 37
Tax effects of:
Expenses not deductible
for tax purposes 21 113
Accrued contingent consideration released (38) -
not subject to tax
Utilisation of previously (259) -
unrecognised tax losses
Tax losses for which no deferred tax
asset was recognised 832 14
Tax unprovided in prior 9 -
years
Research and development
tax credits - prior years (203) (124)
Differential on overseas
tax rates (233) (8)
Remeasurement of deferred
tax - change of rate (58) (5)
Other temporary differences 14 80
==================================== ================= ========= =========== =========
Total income tax (credit)/expense (90) 107
==================================== ================= ========= =========== =========
10.2 Factors that may affect future tax charges
The Group has tax losses of GBP4.4 million (2011:
GBP2.9 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.
As a result of the reduction in the UK corporation
tax rate to 23% that was substantively enacted on
3 July 2012 and effective from 1 April 2013, the deferred
tax balances have been remeasured. The proposed reduction
of the main rate of corporation tax to 22% from1 April
2014 is expected to be enacted separately later in
2013. This change has not been substantively enacted
at the balance sheet date and, therefore, is not recognised
in the financial statements.
10.3 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
------------------------------------ --------------------------- -----------------------
2012 2011 2012 2011
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ ---------------- --------- ----------- ----------
At 1 January - - (549) (140)
Arising on acquisition
of subsidiaries - 119 - (288)
Deferred tax credited
to the income statement - - 88 32
Deferred tax charged to
the income statement - (119) (192) (153)
==================================== ================ ========= =========== ==========
At 31 December - - (653) (549)
==================================== ================ ========= =========== ==========
The components of deferred tax included in the Consolidated
statement of financial position are as follows:
2012 2011
GBP'000 GBP'000
==================================== ========= ==== ========= =========== =========
Development costs capitalised (485) (293)
Intangible assets recognised
on acquisition of subsidiaries (168) (256)
Total deferred income tax
liabilities (653) (549)
==================================== ================= ========= =========== =========
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:
2012 2011
GBP'000 GBP'000
==================================== ========= ==== ========= =========== =========
Tax losses carried forward 1,343 851
Equity-settled share options
temporary differences 289 168
Total unrecognised deferred
tax assets 1,632 1,019
==================================== ================= ========= =========== =========
11 Earnings per share
===== ========================================================================================
Basic and diluted earnings
per share 2012 2011
------------------------------------ --------- ---- --------- ----------- ---------
Earnings
(Loss)/profit for the period
(GBP'000) (638) 34
==================================== ================= ========= =========== =========
Earnings for the purposes of
diluted earnings per share (GBP'000) (638) 34
===================================================== ========= =========== =========
Number of shares
Basic weighted average
number of shares ('000) 21,764 18,897
Effect of dilutive potential
ordinary shares:
Share options ('000) 1,383 1,423
Warrants ('000) - 57
==================================== ================= ========= =========== =========
Diluted weighted average
number of shares ('000) 23,147 20,377
==================================== ================= ========= =========== =========
Basic earnings per share
(pence) (2.8p) 0.2p
==================================== ================= ========= =========== =========
Diluted earnings per share
(pence) (2.8p) 0.2p
==================================== ================= ========= =========== =========
Basic earnings per share is calculated by dividing
profit for the period attributable to ordinary shareholders
of the Company by the weighted average number of ordinary
shares outstanding during the period. For diluted
earnings per share, the weighted average number of
shares is adjusted to allow for the effects of 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 expenditure such as reorganisation costs,
AIM listing expenses and acquisition costs from the
measurement of profit for the period.
Adjusted diluted earnings
per share Notes 2012 2011
--------------------------------------- ---------------- ------ -----
Earnings for the purposes of
diluted earnings per share (GBP'000) (638) 34
Adjustments:
Reversal of amortisation on
acquired intangible assets (GBP'000) 9, 13 257 112
Reversal of share-based payments
charge (GBP'000) 9 63 24
Reversal of reorganisation costs 9 423 -
Reversal of AIM listing expenses
(GBP'000) 9 - 324
Reversal of acquisition costs
(GBP'000) 9 - 47
--------------------------------------- ---------------- ------ -----
Net adjustments (GBP'000) 743 507
--------------------------------------- ---------------- ------ -----
Adjusted earnings (GBP'000) 105 541
--------------------------------------- ---------------- ------ -----
Adjusted diluted earnings
per share (pence) 0.5p 2.7p
--------------------------------------- ---------------- ------ -----
12 Goodwill
=== =========
Goodwill
GBP'000
------------------------------------------- --------------
Balance at 1 January and
31 December 2012 7,418
=========================================== ==============
Impairment testing for cash-generating units containing
goodwill
Goodwill acquired through business combinations is
allocated to groups of cash generating units ('CGU's)
for impairment testing as follows:
2012 2011
GBP'000 GBP'000
--------------------------- --------- ------ ---------- -----------
RTLS 3,256 3,256
Geospatial 4,162 4,162
============================================== ===== ========== ===========
Total 7,418 7,418
============================================== ===== ========== ===========
The recoverable amounts of all CGUs have been determined
from value-in-use calculations based on 5 year forecasts
projected from the 2013 annual operating plan approved
by the Board for each CGU with an assumed terminal
growth rate of nil and no improvement in relative
operating margin during or after the forecast period.
This is considered prudent when compared to recent
experience and current expectations of the long-term
industry growth rate for both CGUs.
A discount rate of 12.5% for RTLS and 9.7% for Geospatial
has been estimated using pre-tax rates that reflect
current market assessments of the time value of money
and the risks specific to each CGU.
Revenue growth assumptions are based on the annual
operating plan taking into account industry growth
rates and Ubisense's historical experience in the
context of the wider industry and economic conditions.
The underlying organic revenue growth rate for RTLS
is assumed to be 20% with the division expected to
continue at above-average rates for the foreseeable
future as a result of significant investment in research
and development and a growing opportunity customer
base and sector presence. The underlying organic growth
rate for Geospatial is assumed to be 10% reflecting
steady growth in a more mature market where the division
is increasing its presence in key sectors where it
has acknowledged expertise.
The Board has considered reasonable possible sensitivities
in key assumptions on which the value-in-use calculations
are based. For RLTS, sensitivity analysis shows that
if the underlying organic revenue growth rate was
below 6%, or if the discount rate is increased in
isolation above 21%, the estimated recoverable amount
is equal to carrying value. For Geospatial, if the
underlying organic revenue growth rate reduced to
0%, or if the discount factor increased to 20%, this
would not cause the carrying value to exceed estimated
recoverable amount.
There was no impairment of goodwill as the estimated
recoverable amount exceeded the carrying value for
all CGUs.
13 Other intangible assets
==== ==========================================================================
Acquired
customer
Capitalised Acquired relationships
Development Software and order
Costs Software Products backlog Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================ ============== ========= ========== =============== =========
Cost
At 1 January 2011 1,476 11 - - 1,487
Reclassifications - 56 - - 56
Additions 1,103 225 - - 1,328
Acquisition of subsidiaries - 3 529 449 981
============================= ============= ========= ========== =============== =========
At 31 December 2011 2,579 295 529 449 3,852
============================= ============= ========= ========== =============== =========
Effects of movement
in exchange rates - (12) - - (12)
Additions 1,845 16 - - 1,861
At 31 December 2012 4,424 299 529 449 5,701
============================= ============= ========= ========== =============== =========
Accumulated amortisation
At 1 January 2011 958 4 - - 962
Reclassification - 8 - - 8
Charge for the year 494 18 44 68 624
============================= ============= ========= ========== =============== =========
At 31 December 2011 1,452 30 44 68 1,594
============================= ============= ========= ========== =============== =========
Effects of movement
in exchange rates - (4) - - (4)
Charge for the year 862 91 177 80 1,210
============================= ============= ========= ========== =============== =========
At 31 December 2012 2,314 117 221 148 2,800
============================= ============= ========= ========== =============== =========
Net book amount
============================= ============= ========= ========== =============== =========
At 31 December 2012 2,110 182 308 301 2,901
============================= ============= ========= ========== =============== =========
At 31 December 2011 1,127 265 485 381 2,258
============================= ============= ========= ========== =============== =========
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 software assets represent assets purchased from
third parties.
The acquired software products, customer relationships
and order backlog assets arose on the acquisitions
in 2011 of Integrated Mapping Solutions, Inc. (now
merged into Ubisense Inc) and Realworld OO Systems
Limited (now re-named Geospatial Systems Limited).
14 Property, plant and equipment
==== =======================================================================================================
Fixtures
and Computer
Fittings Equipment Total
GBP'000 GBP'000 GBP'000
============================== ======= ==== ========== =========== ===========
Cost 2
At 1 January 2011 174 440 614
Effect of movements
in exchange rates (3) (5) (8)
Reclassification - (56) (56)
Additions 47 213 260
Acquisition of subsidiaries 3 14 17
Disposals - (1) (1)
============================== ======= ==== ========== =========== ===========
At 31 December 2011 221 605 826
============================== ======= ==== ========== =========== ===========
Effect of movements
in exchange rates (7) (13) (20)
Reclassification 31 (31) -
Additions 321 174 495
Disposals (23) (218) (241)
============================== ======= ==== ========== =========== ===========
At 31 December 2012 543 517 1,060
============================== ======= ==== ========== =========== ===========
Accumulated depreciation
At 1 January 2011 95 240 335
Effect of movements
in exchange rates (1) (5) (6)
Charge for the year 34 106 140
Reclassification - (8) (8)
Disposals - (1) (1)
============================== ======= ==== ========== =========== ===========
At 31 December 2011 128 332 460
============================== ======= ==== ========== =========== ===========
Effect of movements
in exchange rates (6) (7) (13)
Charge for the year 77 150 227
Reclassification 20 (20) -
Disposals (20) (215) (235)
============================== ======= ==== ========== =========== ===========
At 31 December 2012 199 240 439
============================== ======= ==== ========== =========== ===========
Net book amount
At 31 December 2012 344 277 621
============================== ======= ==== ========== =========== ===========
At 31 December 2011 93 273 366
============================== ======= ==== ========== =========== ===========
15 Inventories
===== ==================================================================================
2012 2011
GBP'000 GBP'000
--------------------------------------- ---------- ----------- -----------
Raw materials 182 -
Finished goods 680 1,667
------------------------------------------ ---------- ----------- -----------
Total inventories 862 1,667
------------------------------------------ ---------- ----------- -----------
Included in the analysis above are impairment provisions
against inventory amounting to GBP44,000 (2011: GBP56,000).
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 cost of inventories recognised as an expense and
included in "cost of sales" amounted to GBP1,571,000
(2011: GBP1,426,000).
16 Trade and other receivables
===== ==================================================================================
2012 2011
Notes GBP'000 GBP'000
--------------------------------------- ---------- ----------- -----------
Trade receivables, gross 7,390 7,541
Allowances for doubtful
debts 16.1 (80) (7)
========================================== ========== =========== ===========
Trade receivables, net 16.2 7,310 7,534
Amounts recoverable on
contracts 2,439 1,588
Other receivables 40 21
Prepayments and accrued
income 502 314
VAT and taxation receivable 11 41
========================================== ========== =========== ===========
Total trade and other receivables 10,302 9,498
========================================== ========== =========== ===========
All amounts disclosed are short term. The carrying
value of trade receivables is considered a reasonable
approximation of fair value.
Due to having a blue-chip customer base and effective
credit control procedures, the Group is not significantly
exposed to the risk of bad debt. 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. Any impairment is assessed
on a customer-by-customer basis following a 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.
16.1 Movement in allowance for doubtful debts
2012 2011
GBP'000 GBP'000
------------------------------- --------- ---------
At 1 January (7) (83)
Exchange differences - 1
Amounts recovered in the year 7 82
Allowance made (80) (7)
At 31 December (80) (7)
=============================== ========= =========
16.2 Ageing of past due but not impaired receivables
2012 2011
GBP'000 GBP'000
----------------------------------- ---------- ---------
Neither past due nor impaired 5,360 6,120
Past due but not impaired:
0 to 90 days overdue 1,360 881
More than 90 days overdue 590 533
Total 7,310 7,534
=================================== ========== =========
17 Cash and cash equivalents
===== ===========================================================================
2012 2011
GBP'000 GBP'000
-------------------------------- --- ------- --------- ------------
Cash at bank and in hand 2,716 3,367
Short-term bank deposits - 2,667
========================================= ======= ========= ============
Cash and cash equivalents 2,716 6,034
========================================= ======= ========= ============
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:
2012 2011
By currency GBP'000 GBP'000
-------------------------------- --- ------- --------- ------------
British Pound (GBP) 723 3,939
Euro (EUR) 1,101 1,619
US Dollar (USD) 847 414
Canadian Dollar (CAD) 45 62
========================================= ======= ========= ============
Cash and cash equivalents 2,716 6,034
========================================= ======= ========= ============
18 Trade and other payables
===== ===========================================================================
2012 2011
Notes GBP'000 GBP'000
-------------------------------- --- ------- --------- ------------
Payments received on account 1,002 1,995
Trade payables 1,936 2,110
Trade accruals 1,404 1,633
Other taxation and social
security 612 817
Other payables 292 339
Other liabilities - contingent
consideration 26 - 400
========================================= ======= ========= ============
Total trade and other payables 5,246 7,294
========================================= ======= ========= ============
All amounts disclosed are short-term. The carrying
value of trade payables is considered a reasonable
approximation of fair value.
19 Loans and borrowings
===== ===========================================================================
In November 2012, the Group agreed a new annual bank
facility of up to GBP2.0 million to provide additional
future working capital capacity. Interest is payable
at LIBOR plus 3.00% and the facility is secured on
the fixed and floating assets of the Group. The facility
is subject to certain operating performance and net
worth covenants of the business. As at 31 December
2012, and as at 18 March 2013, the facility is undrawn.
20 Other liabilities
===== ===========================================================================
2012 2011
Notes GBP'000 GBP'000
-------------------------------- --- ------- --------- ------------
Other liabilities - contingent
consideration 26 - 160
21 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 2011 15,211,490 304 14,550 14,854
Share issue 2,777,778 56 4,944 5,000
Share issue costs - - (486) (486)
Issued under share-based
payment plans 376,308 8 125 133
Issued on conversion of
Convertible Loan 3,176,772 63 2,796 2,859
Issued on exercise of
warrants 115,350 2 102 104
============================ ============ ========= ========= =========
Change in year 6,446,208 129 7,481 7,610
============================ ============ ========= ========= =========
Balance at 31 December
2011 21,657,698 433 22,031 22,464
============================ ============ ========= ========= =========
Issued under share-based
payment plans 154,937 3 29 32
Issued on conversion of
warrants 107,109 2 191 193
Change in year 262,046 5 220 225
============================ ============ ========= ========= =========
Balance at 31 December
2012 21,919,744 438 22,251 22,689
============================ ============ ========= ========= =========
The Company has one class of ordinary shares which
carry no right to fixed income.
During the period, the Company issued 262,046 shares,
increasing the total number of shares in issue from
21,657,698 to 21,919,744 as follows:
* 154,937 shares as a result of options exercised with
a weighted average exercise price of GBP0.21 per
share for total cash consideration of GBP32,461;
107,109 shares as a result of exercise of warrants
at GBP1.80 per share for cash consideration of GBP192,796.
22 Share-based payments: options and warrants
===== ===========================================================================
22.1 Equity-settled share-based payment arrangements
a) Share option plans
The Group operates a number of plans to award options
over shares in the Company to the best-performing
employees of the Group around the world.
Options are generally granted at an exercise price
equal to the market price of the shares under option
at the date of the grant. The options generally vest
evenly over three years on the anniversary from the
date of the grant or entirely on the third anniversary
from the date of grant, depending on continuing service
during the vesting period. The contractual life of
the options is ten years from the date of grant after
which they expire if unexercised.
b) Warrants
During 2011 at the time of the initial public offering
on AIM, the Group granted warrants to a professional
adviser in lieu of fees. The warrants were granted
at a subscription price equal to the market price
of the shares under warrant at the date of the grant.
The warrants were exercisable immediately and had
a contractual life of eighteen months from the date
of grant after which they expire if unexercised. The
warrants were exercised in their entirety during 2012
and no further warrants have been granted.
22.2 Analysis of amounts recognised in the financial
statements
a) Analysis of amounts recognised in the Consolidated
income statement
2012 2011
GBP'000 GBP'000
---------------------------------------------------- --------- ---------
Total share-based payments charge recognised
in operating profit 63 24
==================================================== ========= =========
b) Analysis of amounts recognised in the Consolidated
statement of changes in equity in the year
2012 2011
GBP'000 GBP'000
---------------------------------------------------- --------- ---------
Net credit to the share-based payments
reserve 63 46
Charge to the share premium account - (22)
==================================================== ========= =========
Net share-based payments credit recognised
in Equity 63 24
==================================================== ========= =========
c) Cumulative amounts included within Equity in the
Consolidated statement of financial position
2012 2011
GBP'000 GBP'000
==================================================== ========= =========
Cumulative reserve credit for share-based
payments 654 591
==================================================== ========= =========
22.3 Reconciliation of movements in equity-settled
share-based payment arrangements in the year
Awards
Awards Awards exercisable
outstanding Granted Exercised Forfeited outstanding at
at during during during at 31
Award Exercise 1 January the the the 31 December December
date Vests Expires price 2012 year year year 2012 2012
Arrangement Year Years Year GBP number number number number number number
============= ======= ========= ========= ========= ============ ======== ========== ========== ============ ============
Options 2006 2007-09 2016 0.900 2,500 - - - 2,500 2,500
2007 2008-10 2017 0.900 300 - - - 300 300
2008 2009-11 2018 0.900 650 - - - 650 650
2009 2009 2019 0.900 4,457 - - - 4,457 4,457
2010 2011-13 2020 0.140 1,404,647 - (143,102) (17,730) 1,243,815 726,658
2011 2012-14 2021 1.050 488,800 - (11,835) (49,499) 427,466 141,630
2011 2012-14 2021 1.980 32,532 - - - 32,532 10,845
2012 2013-15 2022 2.125 - 347,000 - (1,000) 346,000 -
======= ========= ======================= ========= ============ ======== ========== ========== ============ ============
Options 1,933,886 347,000 (154,937) (68,229) 2,057,720 887,040
============================================ ========= ============ ======== ========== ========== ============ ============
Warrants 2011 2011 2012 1.800 107,109 - (107,109) - - -
============= ======= ========= ========= ========= ============ ======== ========== ========== ============ ============
Total 2,040,995 347,000 (262,046) (68,229) 2,057,720 887,040
============================================ ========= ============ ======== ========== ========== ============ ============
Weighted average exercise
price (pence) 0.477 2.125 0.860 0.829 0.695 0.315
======================================================= ============ ======== ========== ========== ============ ============
The weighted average share price at the date of exercise
for options exercised during the year was GBP2.126
(2011: GBP1.950)
22.4 Principal assumptions
The fair value of share-based payments grants has
been valued using the Black-Scholes option-pricing
model. Expected volatility was determined based on
the historic volatility of comparable companies. The
expected life is the expected period from grant to
exercise based on management's best estimate of the
effects of non-transferability, exercise restrictions
and behavioural considerations. The risk-free rate
of return is an average yield on the zero-coupon UK
Government Bond in issue at the date of grant with
a similar life to the option or warrant.
The following assumptions were used in the model for
options and warrants granted during the years ended
31 December 2012 and 31 December 2011:
Instrument Option Option Warrant Option
========================== ====== ======== =========== ======== ===========
Number granted 347,000 32,532 107,109 491,300
Grant date 29 26 22 16
June September June May
2012 2011 2011 2011
Share price at grant
date (GBP) 2.125 1.980 1.800 1.050
Exercise price (GBP) 2.125 1.980 1.800 1.050
Fair value per option
(GBP) 0.6 0.31 0.20 0.18
Expected life (years) 3.0 3.0 1.5 3.0
Expected volatility
(%) 20.00% 20.00% 20.00% 20.00%
Risk-free interest
rate (%) 0.87% 1.40% 2.03% 2.30%
Expected dividends
expressed as a dividend
yield% 0.00% 0.00% 0.00% 0.00%
================================== ====== ======== =========== ======== ===========
23 Other reserves
==== ===================================================================================
Equity
component
of
convertible
loans Share-based
and Payment Translation
warrants Reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000
------------- ------------
Balance at 1 January 2011 502 546 (95) 953
Exchange difference on
retranslation of net assets
and results of overseas
subsidiaries - - 14 14
Reserve credit for equity-settled
share-based payment - 45 - 45
Equity component of loans (502) - - (502)
====================================== ============= ============ =========== =========
Balance at 31 December
2011 - 591 (81) 510
====================================== ============= ============ =========== =========
Exchange difference on
retranslation of net assets
and results of overseas
subsidiaries - - 33 33
Reserve credit for equity-settled
share-based payment - 63 - 63
Balance at 31 December
2012 - 654 (48) 606
============= ============
Share-based payment reserve
The share-based payment reserve relates to 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 Sterling are recognised
directly in other comprehensive income and accumulated
in the translation reserve.
24 Operating lease commitments
Leases as lessee
At 31 December 2012, the Group has lease agreements
in respect of property and equipment for which payments
extend over a number of years. The Group enters into
these arrangements as these are a cost-efficient way
of obtaining the short-term benefits of these assets.
The Group lease rental charge is disclosed in note
9. There are no other material off-balance sheet arrangements.
The Group's future aggregate minimum lease payments
under non-cancellable operating leases are as follows:
Land and buildings Other
2012 2011 2012 2011
GBP'000 GBP'000 GBP'000 GBP'000
No later than one year 360 326 111 125
Later than one year and
no later than five years 1,512 635 91 95
Later than five years 853 535 - -
Total 2,725 1,496 202 220
============= ============
The above table reflects the committed cash payments
under operating leases, rather than the expected charge
to the income statement in the relevant periods. The
effect on the income statement will differ to the
above figures due to the amortisation of rent-free
and discounted rent periods included in a new property
lease signed in 2012. The expected charge in 2013
for operating leases is expected to be GBP103,000
higher than the committed cash payments shown above.
The Group has guaranteed rent bonds issued by its
banks on its behalf totalling GBP125,000 as at 31
December 2012 (2011: GBP nil). These are not expected
to result in any material financial loss.
25 Principal subsidiaries
The Company's subsidiary undertakings at 31 December
2012 are shown below. All are included in the Group
financial statements and wholly owned directly by
the Company. All subsidiaries prepare accounts up
to 31 December each year except for Geospatial Systems
Limited (formerly Realworld OO Systems Limited) which
prepares accounts up to 31 March.
Subsidiary Country of incorporation Principal activity
Ubisense Limited UK Location solutions
Ubisense AG Germany Location solutions
Ubisense SAS France Location solutions
Ubisense Inc. US Location solutions
Ubisense Solutions Canada Location solutions
Inc
Geospatial Systems UK Location solutions
Limited
26 Contingent consideration
Under the contingent cash consideration arrangement,
the Group is required to pay additional amounts to
the vendors of Realworld OO Systems Limited (now Geospatial
Systems Limited) based on the achievement of two separate
performance milestones that may have arisen between
2011 and 2013 with a combined undiscounted range of
outcomes between nil and GBP1,150,000. A liability
of GBP560,000 was recognised at the acquisition date,
based on management's best estimate of the probability-adjusted
expected cash outflow from the arrangement. GBP400,000
was paid in the year relating to the first milestone
and the amount recognised for the second milestone
has been reduced to nil based on most recent management
estimates.
The maturity of contingent consideration is
as follows:
2012 2011
Notes GBP'000 GBP'000
Current 18 - 400
Non-current 20 - 160
==================================== ======= ========= =============== =========
Total - 560
==================================== ======= ========= =============== =========
27 Financial risk management
27.1 Risk management objectives and policies
The Group is exposed to various risks in relation
to financial instruments. The Group's financial assets
and liabilities by category are summarised below.
The main types of risks are market risk, credit risk
and liquidity risk. The Group is exposed to market
risk through its use of financial instruments and
specifically to currency risk and interest rate risk,
which result from its operating activities.
The Group's risk management is coordinated at its
headquarters, in close cooperation with the Board
of Directors, and focuses on actively securing the
Group's short to medium-term cash flows. The Group
does not actively engage in the trading of financial
assets for speculative purposes. The most significant
financial risks to which the Group is exposed are
described below.
27.2 Foreign currency risk management
The Group undertakes certain transactions denominated
in foreign currencies. The Group's policy is to maintain
natural hedges where possible, by matching foreign
currency revenue and expenditure. The Group does not
enter into forward exchange contracts to mitigate
the exposure to foreign currency risk as the Group's
currency transactions are not considered significant
enough to warrant this.
The carrying amounts of the Group's foreign currency
denominated monetary assets and liabilities at the
reporting date, not denominated in the local functional
currency, are as follows:
US Dollars Euros
2012 2011 2012 2011
GBP'000 GBP'000 GBP'000 GBP'000
Assets 752 539 817 485
Liabilities (16) (7) (3) -
================ ========== =========
27.3 Foreign currency sensitivity analysis
The Group is mainly exposed to US Dollars and Euros.
The Group seeks to manage cash inflows and outflows
in each currency to mitigate currency exposure and
exchange risk. The following table details the Group's
sensitivity to a 5% increase and decrease in the Sterling
exchange rate against the relevant foreign currencies.
The sensitivity analysis includes only outstanding
foreign currency denominated monetary items and adjusts
their translation at the period end for a 5% change
in foreign currency rates. A positive number indicates
an increase in profit or equity.
US Dollars Euro
2012 2011 2012 2011
GBP'000 GBP'000 GBP'000 GBP'000
Effect of a 5% strengthening
in relevant exchange rate on:
Income statement 37 25 39 23
Equity 37 25 39 23
Effect of a 5% weakening in relevant
exchange rate on:
Income statement (40) (28) (43) (26)
Equity (40) (28) (43) (26)
27.4 Interest rate sensitivity
During 2012, the Group had no outstanding debt facilities
and so the Group's exposure to interest rates is minimal.
The Group's exposure to market risk for the changes
in interest rates relates primarily to the Group's
bank deposits. The Group's policy is to maintain flexibility
and preserve capital rather than to optimise interest
rates on bank deposits held, but the exposure to interest
rate fluctuations on its deposits is reduced by placing
these at fixed rates of interest with varying maturity
dates.
The aggregate amount of the Group's cash deposits
on fixed interest terms as at 31 December 2012 was
GBPnil (2011: GBP2.7 million). The weighted average
fixed interest rate on the cash balances during the
year was 1.28% (2011: 1.21%) and the weighted average
period for which the rate is fixed was 31 days (2011:
40 days). The aggregate amount of cash deposits on
variable interest terms held with clearing bankers
as at 31 December 2012 was GBP2.7 million (2011: GBP3.3
million).
The following table illustrates the sensitivity of
the net profit of the Group for the year and equity
to a possible change in interest rates of +0.5% and
-0.5%, with effect from the beginning of the year.
A positive number indicates an increase in profit
or equity.
2012 2011
GBP'000 GBP'000
Effect of a 0.5% strengthening
in interest rate on:
Income statement 17 32
Equity 17 32
Effect of a 0.5% weakening in
interest rate on:
Income statement 16 (20)
Equity 16 (20)
27.5 Credit risk analysis
The Group's maximum exposure to credit risk is limited
to the carrying amount of financial assets recognised
at the reporting date, as summarised in note 27.8,
which are principally cash and cash equivalents and
trade receivables.
Cash and cash equivalents are held at banks with good
independent credit ratings in accordance with the
Group Treasury policy. The Group continuously monitors
defaults of customers and other counterparties, identified
either individually or by group, and incorporates
this information into its credit risk controls. Where
available at reasonable cost, external credit ratings
and/or reports on customers and other counterparties
are obtained and used.
The Group's policy is to deal only with creditworthy
counterparties. The Group's management considers that
its financial assets that are not impaired or past
due for each of the reporting dates under review are
of good credit quality. All receivables are subject
to regular review to ensure that they are recoverable
and any issues identified as early as possible. In
order to manage credit risk the Directors set limits
for customers based on a combination of payment history
and third party credit references. Credit limits are
reviewed by the credit controller on a regular basis
in conjunction with debt ageing and collection history.
In addition, many of the Group's customers, and approximately
80% by balance at any given time, are large utility
companies and other blue-chip companies that would
be considered a low credit risk.
None of the Group's financial assets are secured by
collateral or other credit enhancements.
27.6 Liquidity risk analysis
Liquidity risk is the risk arising from the Group
not being able to meet its obligations as they fall
due. The Group seeks to manage this risk by ensuring
sufficient liquidity is available to meet the foreseeable
needs and to invest cash assets safely and profitably.
The Group policy throughout the year has been to place
surplus funds on short-term treasury deposit or interest
bearing reserve accounts based on its cash flow forecasting.
The Group manages its liquidity needs by carefully
monitoring forecast cash inflows and outflows due
in day-to-day business. Net cash requirements are
compared to balances in order to determine headroom
or any shortfalls. As disclosed in note 19, the Group
entered into a bank facility of up to GBP2 million
in November 2012 which had not been drawn down as
at 31 December 2012.
The Group's financial liabilities have contractual
maturities as summarised below:
Current Non-current
Between Between Later
Within 6 1 than
6 and 12 and 5 5
months months years years
GBP'000 GBP'000 GBP'000 GBP'000
As at 31 December 2012
Trade and other payables 3,632 - - -
As at 31 December 2011
Trade and other payables 4,482 - 160 -
Financial assets used for managing liquidity risk
Cash flows from trade and other receivables are contractually
due within six months. Cash is generally held in accounts
with immediate notice. Where surplus cash deposits
are identified these are placed in accounts with access
terms of no more than three months.
27.7 Capital risk management
The Group manages its capital to ensure that entities
in the Group will be able to continue as going concern
whilst maximising the return to stakeholders. The
capital structure of the Group consists of cash and
cash equivalents and capital and reserves attributable
to the owners of the Company, as disclosed in the
consolidated statement of financial position, with
no outstanding debt as at 31 December 2012 or 31 December
2011.
In order to maintain or adjust the capital structure,
the Group may issue shares, take on debt, sell assets
to raise cash, adjust the amount of dividends payable
to shareholders or return capital to shareholders.
The Group is not subject to externally imposed capital
requirements. The capital structure is continually
monitored by the Group. As disclosed in note 19, the
Group entered into a bank facility of up to GBP2 million
in November 2012 which had not been drawn down as
at 31 December 2012.
27.8 Categories of financial instruments
Details of the significant accounting policies and
methods adopted, including the criteria for recognition,
the basis of measurement and the basis on which income
and expenses are recognised in respect of each class
of financial asset, financial liability and equity
instrument, are disclosed in the accounting policies
in note 3. The carrying amounts presented in the Consolidated
Statement of Financial Position relate to the following
categories of financial instrument:
2012 2011
Notes GBP'000 GBP'000
====== ===== ========= =============
Financial assets
Loans and receivables:
* Trade receivables 16 7,310 7,534
* Amounts recoverable on contracts 16 2,439 1,588
* Other receivables 16 40 21
* Cash and cash equivalents 17 2,716 6,034
====== ===== ========= =============
Total financial assets 12,505 15,177
====== ===== ========= =============
Financial liabilities
Amortised cost:
* Trade payables 18 1,936 2,110
* Trade accruals 18 1,404 1,633
* Other payables 18 292 339
* Contingent consideration 26 - 560
====== ===== ========= =============
Total financial liabilities 3,632 4,642
====== ===== ========= =============
This information is provided by RNS
The company news service from the London Stock Exchange
END
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