16 September 2014

Highlights
Ubisense Group plc
Interim results for the six months ended 30 June 2014
Ubisense Group plc (“Ubisense” or the “Company”) (AIM: UBI), a market leader in enterprise location intelligencesolutions, has announced its interim results for the six months ended 30 June 2014.

Delivering on our
strategy

Financialhighlights

Operational
highlights

Order book, up 12% year-on-year to £15.8m as at 30 June (H1 2013 £14.1m),
continues to provide good revenue visibilityGeoplan acquisition integrated and performing in line with Board expectations



Total revenue increased by £4.9m or 40% to £17.3m (H1 2013: £12.4m)

Solutions revenue up 46% to £8.5m (H1 2013: £5.8m) driven by increasing market
traction for Smart Factory System and myWorld products

Proportion of revenues from higher margin Solutions up to 49% (H1 2013: 47%)and increased to 62% of organic business revenues

Recurring revenues up £0.2m to £3.5m (H1 2013: £3.3m)

Gross margin up 5.2 bps to 33.9% (H1 2013: 28.7%)

Adjusted EBITDA* profit of £0.2m (H1 2013: £0.4m loss)

Reported operating loss of £2.0m (H1 2013: £1.5m loss)

Adjusted diluted loss per share** 5.5p (H1 2013: 5.4p loss)Placing to institutional investors raising £4.2m before expenses to fund investment
in growing the Solutions business

Cash and cash equivalents of £5.5m and net funds of £0.8m

Additional £2.0m bank facility signed in August 2014 to provide funding forstrategic aims. Total debt facilities of £7.8m, of which £4.8m drawn at 30 June

Significant orders during the period from both new and existing customers;
European and Korean automotive manufacturers, leading European and US
telecoms network operators and a large US electricity utilities provider

Ubisense Smart Factory System deployed in 7 OEMs across Europe, Asia and theUSASmart Warehouse System launched in conjunction with our strategic partner inJapan, Daifuku

Robert Parker appointed as CFO, Ian Kershaw appointed as Non-Executive Director
and Management team strengthened

Richard Green, Chief Executive, commented,“We have continued to execute our strategic shift to software solutions, resulting in a significant gross margin increase.
We have seen increased sales and delivery of Smart Factory and myWorld applications, with a number of milestones
achieved in the period. In the utility market, we secured the largest deployment of myWorld to date, with a leading US
energy company. We now have more than 25 installations of this enterprise location intelligence platform, which has beenendorsed by our partner Google through their Google Maps for Business program. The Group has started the second halfof 2014 with good momentum in the business and will continue to pursue growth both organically and via selective
acquisitions. As a result the Group is confident it is on track to deliver results in line with the Board's expectations.”* Measured as operating profit excluding depreciation, amortisation, share-based payments charge and non-recurring costs such as
acquisition and reorganisation costs.
** Earnings measured as profit for the period excluding amortisation on acquired intangible assets, share-based payments charge
and non-recurring costs such as acquisition and reorganisation costs.

Page 1 of 19

Contact
Ubisense Group plc
Richard Green
Robert Parker
Canaccord Genuity Limited(NOMAD)
Simon Bridges
Lucy Tilley
Brendan Gulston
FTI Consulting
Jon SnowballTel: + 44 (0) 1223 535170

Tel: + 44 (0) 20 7523 8000

Tel: +44 (0) 20 3727 1000

About Ubisense
Founded in 2002, Ubisense serves 500 customers across 50 countries with headquarters in Cambridge (UK) andoffices in the US, Canada, France, Germany, Japan, S. Korea, the Philippines and Singapore.
Ubisense is a leading provider of enterprise solutions based on Location Intelligence to the world’s largest
manufacturing, utilities and telecommunications companies including AGCO, Airbus, Aston Martin, BMW, Cablevision,
Daimler, Deutsche Telekom, Duke Energy, John Deere, Hyundai, MINI and VW.
Ubisense solutions acquire location data and combine it with data from a range of other sources and transform it into
vital business insights. Through standard, open and flexible interfaces, solutions deliver exactly what our customers
need, when and where they need it.
Ubisense Enterprise Location Intelligence brings previously inaccessible efficiencies to complex manufacturing
processes, and revolutionises the management of huge networks in the utilities sector.
Ultimately, Ubisense systems provide enhanced clarity and control to our customers’ operations, significantly
increasing the profitability of their businesses.

Page 2 of 19

Interim management report

Overview
The Group is delighted to report significant progress in the first half of 2014. The strategic changes we have
implemented in how we go to market with our leading location technology solutions tailored to our customers’ needs
have delivered considerable momentum during the period.
Strategy
The strategy of the Group is to:






Continue to evolve as a global, scalable Solutions-based business supported by Services
Develop next-generation applications that deliver strong ROI to our customers
Focus direct business on our core markets of Telecoms, Manufacturing and Utility enterprises
Use channel partners to extend reach within our vertical markets at low cost of sale; andContinue to pursue growth both organically and through acquisitions that align with our strategic objectives.

Customer adoption of our Enterprise Location Intelligence solutions has been accelerated by several factors including
the consumerisation of maps led by Google, the drive to significantly increase production flexibility, the proliferationof smart devices and the growth in cloud technologies. Ubisense’s software products and services capability benefits
from these trends enabling enterprises across the manufacturing, utility and telecommunications sectors to deliversignificant improvements in efficiency and cost savings.
The business focuses its resources on delivering the leading location intelligence technology in markets where we add
the most value. As our market footprint increases, our reputation with all our customers continues to be one of value,
reliability and exceptional service.
Business development
Considerable effort and investment in both Europe and North America has resulted in Ubisense securing contracts
with major manufacturing customers with global presence. Several deployment extensions have been secured, with
Smart Factory being implemented by a growing number of OEMs and across an ever increasing number of productionlines. This repeat business allows for ROI enhancement through our systems provided to customers and is a key driver
for the widespread adoption of Smart Factory implementations to manufacturers around the globe. As a result, thiswill drive long-term and sustainable profitability for Ubisense.
Our network business continues to demonstrate strong growth with contract wins for the myWorld application in twolarge US communication network operators, a leading European telecommunications provider and one of the largest
electricity companies in the United States. Our position in the North American market is strengthening supported byour continued shift towards a Solutions-focused model.
Following the acquisition of the Geoplan group in December 2013, our market presence in Asia has improved
significantly. The Geoplan group is performing as expected and, consistent with Group strategy, is undergoing thetransformation from a services to a Solutions-focused business.
Partnerships
Our partnership channel has contributed to the continued strength of the customer order book in the first half. We
expanded our relationship with Google becoming an Authorised Partner of solutions based on Google’s Enterprise
Maps for Business technologies. In a significant boost for the Group, Google has endorsed our myWorld product on
the Google Business Maps homepage.
Our relationship with our strategic partner Daifuku to develop a Smart Warehouse system is a valuable asset, enabling
deepening penetration of this, and other Ubisense products, into Daifuku’s extensive, existing customer base. The
activity generated across our partner channel gives us confidence in achieving our goals for the second half.

Page 3 of 19

Interim management report

Board changes and management team
We have strengthened the Ubisense Board and management team with key appointments during the period and after
the period end. In February 2014, Robert Parker joined the business as Chief Financial Officer from Optitune Group, aFinnish technology company. Ian Kershaw, a Managing Director of Ricardo Strategic Consulting, was appointed as a
non-executive director on the Board in May 2014. In September 2014, a Chief Marketing Officer and Head of
Organisational Development were appointed to the executive management team, both of who were senior executives
at i2.
Operating and financial review
Orders
The first half of 2014 saw new customer orders of £14.2 million (H1 2013: £17.2 million comprising a number of major
new contract awards as well as extensions to existing contracts). The orders in the first half included a number ofmulti-year managed services deals. Since the period-end this momentum has continued and the business hasannounced further major Solutions deals which are expected to drive second half performance including an initial$1.5 million contract for myWorld with one of the largest electric power utilities in the United States.
The customer order book as at 30 June 2014 stood at £15.8 million (H1 2013: £14.1 million) – a 12% increase yearon-year. This continues the trend of an increasing order book and gives the Company good visibility on revenues forthe rest of 2014 and beyond.
Revenue
The Group is organised as a single Enterprise Location Intelligence business integrating both RTLS and geospatial
technologies, with two distinct revenue streams:

Solutions – revenues driven from the Ubisense product suites (Smart Factory System, myWorld), technicalexpertise and exclusive reseller arrangements. A solution sale will include a mixture of application software(licences in perpetuity and subscription based), installation and commissioning services, hardware andmaintenance and support. Margins in any given period will vary depending upon the make-up and phase of thegiven set of Solutions being delivered. The Company sees this revenue stream as critical to driving the growth andprofitability of the business.
Services – revenues not involving the Ubisense product suites as defined above. These revenues are typicallylong-term managed services contracts, consultancy and training. The Company generally has good visibility on
future revenue from services and believes it is critical to driving customer loyalty and providing a customer baseinto which it can sell its Solutions.

In the six month period under review, total revenues grew by 40% to £17.3 million (H1 2013: £12.4 million). Solutions
revenue grew by 46% to £8.5 million (H1 2013: £5.8million), with continued growth expected in the second half as
has been the trend in prior years as manufacturing customers deploy their capital budgets later in the year. Services
revenue grew to £8.9 million (H1 2013: £6.6 million) primarily as a result of a number of new, large long-term
contracts with networks customers in Americas and Europe being deployed, as well as the incremental revenues of£4.2 million from the Geoplan acquisition in the Asia Pacific region.
The majority of our revenues relate to a small number of large deals, the timing of which is not solely within ourcontrol, and each can carry a significant impact on our results in any single reporting period. However, revenues frommanaged services, maintenance and support grew to £3.5 million (H1 2013: £3.3 million) or 20.1% of total revenues(H1 2013: 26.8%) as the installed base of products increased and more customers adopted our managed services
offering. This increase serves to stabilise revenue trends as the business grows.
As a global business with activities focused in Europe, the Americas and Asia Pacific, the reported results are subject
to exchange rate volatility. During the period, sterling has strengthened against the US dollar, Euro and Japanese Yen;currencies in which the Group derives a significant proportion of its revenues. If currency exchange rates had
remained constant in H1 2014 compared to H1 2013, the Board estimates that Group reported revenues would havebeen £1.4m higher and adjusted EBITDA doubled compared to the results reported.

Page 4 of 19

Interim management report

Operating and financial review (continued)
To mitigate currency effects, the Group’s policy is to maintain natural hedges where possible by matching foreign
currency revenues and expenditure. The Board regularly reviews the forecast currency requirements and at this stage,
does not consider external hedging arrangements for profit and loss items to be appropriate for the Group.
Gross margin
The gross margin increased by 5.2 basis points to 33.9% (H1 2013: 28.7%). This was primarily the result of therevenue mix with an increase in the proportion of Solutions revenues, which are generally higher margin than Services
revenues.
Operating expenses
Operating expenses increased to £7.9 million (H1 2013: £5.0 million) due to the enlarged size of the Group following
the Geoplan acquisition in December 2013 and higher amortisation charges. Operating expenses include sales &marketing, product marketing, product development, general & administration and foreign exchange.
Gross expenditure on product development increased 17% to £1.8 million (H1 2013: £1.5 million) reflecting increased
investment in our flagship Smart Factory and myWorld products. Capitalised product development costs at £1.3
million (H1 2013: £1.1 million) represented 74% (H1 2013: 72%) of gross development spend whilst amortisation of
the capitalised development costs was £1.2 million (H1 2013: £0.6 million).
The Group incurred exceptional costs of £315,000 relating to integration costs following the acquisition of Geoplan
group in December 2013.
EBITDA and operating profit
Group Adjusted EBITDA for the period was a profit of £0.2 million (H1 2013: £0.4 million loss). The operating loss forthe period was £2.0 million (H1 2013: £1.5 million loss) and loss before tax for the period was £2.1 million (H1 2013:£1.5 million loss). The operating loss and loss before tax includes amortisation and depreciation charges of £1.8
million (H1 2013: £0.9 million) which have increased due to the higher amortisation on acquired intangible assets
following the Geoplan acquisition in December 2013 and higher amortisation on capitalised product development
costs reflecting the increased spend in recent years.
Interest and tax
Net interest payable for the period was £64,000 (H1 2013: £6,000) mainly reflecting the finance charge on £4.8 million
in bank loans.
The Group has a net tax credit of £84,000 (H1 2013: £82,000 net expense), as a result of non-cash deferred tax on
capitalised development costs and acquired intangible assets and a small tax charge in two subsidiary companies.
Management’s best estimate of the effective current tax rate in all other group companies is nil due to the availabilityof prior years’ losses.
EPS and dividends
Adjusted diluted loss per share was 5.5 pence (H1 2013: 5.4 pence loss). Reported basic and diluted loss per share
was 8.8 pence (H1 2013: 7.0 pence loss). The Board does not feel it appropriate at this time to commence paying
dividends.
Balance sheet, cash and cash flow
The Group has a robust balance sheet with shareholder funds at 30 June 2014 of £21.1 million (31 December 2013:£19.2 million). Due to the proximity to the year end of the Geoplan acquisition in December 2013, the fair values ofassets and liabilities acquired were provisional at 31 December 2013 in line with IFRS 3. The post-acquisition reviewof the net assets acquired has been conducted in the current period and as a result, the balance sheet at 31 December
2013 restated.
The Group has a three year working capital facility of £5.0 million agreed with HSBC in 2013 of which £4.0 million was
drawn down at 30 June 2014 (31 December 2013: £3.5 million).

Page 5 of 19

Interim management report

Operating and financial review (continued)
In June 2014, a 130 million Japanese Yen denominated loan (£0.8 million) was agreed with Mizuho Bank and fully
drawn down, taking advantage of the low interest rates available in that region and acting as a natural hedge against
the Group’s assets in Asia.
Since the period end, the Group agreed an additional £2.0 million four-year term loan with HSBC to provide funds for
future acquisitions. This facility has yet to be drawn upon as at 16 September 2014.
Cash held on the balance sheet at 30 June 2014 was £5.5 million (31 December 2013: £4.0 million) and net funds at
30 June 2014 were £0.8 million (31 December 2013: £0.5 million).
The main components of the cash movements in the first six months of 2014 included net receipts of £4.0 million froma placing to institutional shareholders (H1 2013: £nil); the receipt of the new bank loans of £1.3 million (H1 2013:£2.0 million); outflows of £1.9 million (H1 2013: £1.2 million) for capital investment product development and plantand equipment; and an operating cash outflow of £1.7 million (H1 2013: £1.6 million outflow).
Capital structure
The issued share capital at 30 June 2014 was 25,037,652 (31 December 2013: 23,079,146) ordinary shares of £0.02
each. The increase of 1,958,506 shares relates to 1,929,589 shares issued in the April 2014 placing and 28,917 shareoption exercises by employees. 447,500 share options were granted to employees on 23 May 2014 at an exercise
price of £2.25, being the share price at the time. 192,500 options vest after 3 years, depending on continued service
during the vesting period. 255,000 options also have certain performance criteria attached in order to vest. The total
number of unexercised share options at 30 June 2014 was 2,430,347.
Risks and uncertainties
The Board continuously assesses and monitors the key risks of the business. The key risks that could affect the Group’s
medium term performance, and the factors which mitigate these risks, have not significantly changed from those setout on pages 15 to 17 of the Group’s Annual Report for 2013, a copy of which is available from our website
www.ubisense.net.
Current trading and outlook
Ubisense has started the second half of 2014 with strong momentum. We will continue to grow our Solutions businessboth organically and via selective acquisitions, which will enhance our position in the Manufacturing,
Telecommunications and Utility sectors. As a result, the Group is confident it is on track to deliver results in line with
the Board's expectations.

Page 6 of 19

Interim income statement
For the six months ended 30 June 2014
Six months to

Six months to

12 months to

30 June 2014

30 June 201331 December 2013

unauditedunaudited

audited

Notes

£’000

£’000

£’000

4

17,331

12,38527,002(11,455)(8,827)(17,761)

5,876

3,558

9,241

Operating expenses(7,891)(5,013)(10,867)

Operating loss

(2,015)(1,455)(1,626)

5,876

3,558

9,241

(5,695)(3,958)(8,100)

181

(400)

1,141

Depreciation

(170)

(130)

(266)

Amortisation of acquired intangible assets

(374)

(128)

(313)

(1,300)(643)(1,332)

(37)

(40)

(92)

(315)

(114)

(764)

Operating loss

(2,015)(1,455)(1,626)

Net finance costs

(64)

(6)

(93)

Loss before tax(2,079)(1,461)(1,719)

84

(82)

(219)

(1,995)(1,543)(1,938)(2,121)(1,543)(1,968)

126

-

30

Revenues
Cost of revenues
Gross profit

Analysed as:
Gross profit
Other operating expenses
Adjusted EBITDA

Amortisation of other intangible assets
Share-based payments charge
Exceptional costs

5

Income tax
Loss for the period
Loss attributable to:Equity shareholders of the Company
Non-controlling interest
Loss per share attributable to equity shareholdersof the parent (pence)
Basic

6

(8.8)

(7.0)

(8.9)

Diluted

6

(8.8)

(7.0)

(8.9)

The notes 1 to 11 are an integral part of these condensed interim financial statements.

Page 7 of 19

Interim statement of comprehensive income
For the six months ended 30 June 2014

Loss for the period

Six months to
30 June 2014
unaudited£’000

Six months to
30 June 2013
unaudited£’000

12 months to
31 December 2013
audited£’000(1,995)(1,543)(1,938)

(208)

(110)

(203)

(2,203)(1,653)(2,141)Other comprehensive income:Items that may be reclassified subsequently to profit and loss
Exchange difference on retranslation of net assets and results ofoverseas subsidiaries
Total comprehensive income for the period

Page 8 of 19

Interim statement of changes in equity
For the six months ended 30 June 2014

Sharecapital
£’000

Share
premium
£’000

Share
based
payment
reserve£’000

438

22,251654(48)(4,374)18,921-

18,921

Loss for the period--£’000--(1,543)(1,543)-(1,543)

Exchange difference on retranslationof net assets and results of overseas
subsidiaries

-

-

-

(110)

-

(110)

-

(110)

Total comprehensive income for the period

-

-

-

(110)

(1,543)(1,653)-(1,653)

Reserve credit for equity-settled
share-based payment

-

-

40

-

-

40

-

40

Issue of new share capital

2

-

-

-

-

2

-

2

Premium on new share capital

-

18

-

-

-

18

-

18

Transactions with owners

2

18

40

-

-

60

-

60

440

22,269694(158)(5,917)

17,328-17,328Loss for the period

-

-

-

-

(425)

(425)

30

(395)

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

-

-

-

(63)

-

(63)

(30)

(93)

Total comprehensive income for the period

-

-

-

(63)

(425)

(488)

-

(488)

Reserve credit for equity-settled
share-based payment

-

-

52

-

-

52

-

52

Non-controlling interest in new subsidiary

-

-

-

-

-

-

554

554

21

-

-

-

-

21

-

21

-

1,781

-

-

-

1,781

-

1,781

Transactions with owners

21

1,781

52

-

-

1,854

554

2,408

Balance at 31 December 2013 (audited,
restated)

461

24,050746(6,342)

18,694554

19,248Loss for the period

-

-

-

-

(2,121)(2,121)126(1,995)

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

-

-

-

(173)

-

(173)

(35)

(208)

Total comprehensive income for the period

-

-

-

(173)

(2,121)(2,294)91(2,203)

Reserve credit for equity-settled
share-based payment

-

-

37

-

-

37

-

37

40

-

-

-

-

40

-

40

Premium on new share capital

-

4,222

-

-

-

4,222

-

4,222

Share issue costs

-

(229)

-

-

-

(229)

-

(229)

Transactions with owners

40

3,993

37

-

-

4,070

-

4,070

Balance at 30 June 2014 (unaudited)

501

28,043783(394)(8,463)

20,470645

21,115

Balance at 1 January 2013 (audited)

Balance at 30 June 2013 (unaudited)

Issue of new share capital
Premium on new share capital

Issue of new share capital

Translation
reserve£’000

Retainedearnings
£’000

(221)

Subtotal£’000

Noncontrollinginterest
£’000

Total
£’000

Page 9 of 19

Interim statement of financial position
At 30 June 2014

Notes

At
30 June2014
unaudited£’000

At
30 June2013
unaudited£’000

RestatedAt
31 December
2013
audited£’000

715,834

10,662

16,247

819

564

628

16,653

11,226

16,875Inventories

3,031

1,330

2,588

Trade and other receivables

11,015

11,621

11,547

Cash and cash equivalents

5,537

2,038

3,964

Total current assets

19,583

14,98918,099Total assets

36,236

26,21534,974(758)(2,000)-Trade and other payables(8,450)(6,157)(10,023)

Total current liabilities(9,208)(8,157)(10,023)(1,479)(730)(1,773)

AssetsNon-current assets
Intangible assets
Property, plant and equipment
Total non-current assets
Current assets

Liabilities
Current liabilities
Bank loans10

Non-current liabilities
Deferred tax liability
Bank loans

10(4,000)-(3,500)

Other liabilities

9

(434)

-

(430)

Total non-current liabilities(5,913)(730)(5,703)

Total liabilities(15,121)(8,887)(15,726)

21,115

17,32819,248

501

440

461

28,043

22,26924,050

783

694

746

Translation reserve

(394)

(158)

(221)

Retained earnings(8,463)(5,917)(6,342)Equity attributable to owners of the parent company

20,47017,32818,694

645

-

554

21,115

17,32819,248

Net assets
EquityEquity attributable to owners of the parent company
Share capital
Share premium
Share based payment reserve

Non-controlling interests
Total equity

8

The notes 1 to 11 are an integral part of these condensed interim financial statements.
Page 10 of 19

Interim statement of cash flows
For the six months ended 30 June 2014

Notes

Six months to
30 June2014
unaudited£’000

Six months to
30 June2013
unaudited£’000

12 months to
31 December
2013
audited£’000

11(1,853)(1,573)

(747)

141

(5)

(7)

(1,712)(1,578)(754)

Acquisition of subsidiaries, net of cash acquired

(176)

-

1,846

Purchases of property, plant and equipment

(345)

(93)

(140)

(1,403)(1,125)(3,085)15

6

10(1,909)(1,212)(1,369)

1,258

2,000

3,500

(84)

(12)

(92)

4,033

20

111

Net cash flows from financing activities

5,207

2,008

3,519

Net increase in cash and cash equivalents

1,586

(782)

1,396

Cash and cash equivalents at start of period

3,964

2,716

2,716

(13)

104

(148)

5,537

2,038

3,964

Cash used in operations before tax
Net income taxes received/(paid)
Net cash flows from operating activities
Cash flows from investing activities

Expenditure on intangible assets
Interest received
Net cash flows from investing activities
Cash flows from financing activities
Receipt of new bank loan
Interest paid
Proceeds from the issue of share capital

Exchange differences on cash and cash equivalents
Cash and cash equivalents at end of period8

The notes 1 to 11 are an integral part of these condensed interim financial statements.

Page 11 of 19

Notes to the interim financial statements
1 General information
Ubisense Group plc (‘the Company’) and its subsidiaries (together, ‘the Group’) deliver mission-critical location-based
smart technology which enables companies to optimise their business processes.
The Group has operations in the UK, USA, Canada, France, Germany, Japan, South Korea, the Philippines and Singapore
and sells mainly in the Americas, Europe and Asia Pacific.
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 UK. The address of its registered office is St. Andrew’s
House, St. Andrew’s Road, Chesterton, Cambridge, CB4 1DL.
The condensed consolidated interim financial statements were approved by the Board of Directors for issue on 15
September 2014.
The condensed consolidated interim financial statements do not comprise statutory accounts within the meaning ofsection 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2013 were approved by
the Board of Directors on 24 March 2014 and delivered to the Registrar of Companies. The report of the auditors on
those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement
under section 498 of the Companies Act 2006.
The condensed consolidated interim financial statements have been reviewed, not audited.

2 Basis of preparation
The condensed consolidated interim financial statements should be read in conjunction with the annual financial
statements of the Group and are prepared in accordance with IFRSs as adopted by the European Union.
Going concern basis
The Group’s forecasts and projections, taking account of reasonably possible changes in trading performance, support
the conclusion that there is a reasonable expectation that the Company and the Group have adequate resources tocontinue in operational existence for the foreseeable future, a period of not less than twelve months from the date ofthis report. The Group therefore continues to adopt the going concern basis in preparing its condensed consolidated
interim financial statements.

3 Accounting policies
The accounting policies adopted in the preparation of the condensed consolidated interim financial statements areunchanged from those set out in the Group’s consolidated financial statements for the year ended 31 December 2013.
These policies have been consistently applied to all the periods presented.
The operations of the Group display a degree of seasonality with stronger performance typically seen in the second
half of the year. This is due to customers’ budgetary cycles and the capital nature of the products sold by the Group.

Page 12 of 19

Notes to the interim financial statements
4 Segmental Information
IFRS 8 requires a “management approach” under which information in the financial statements is presented on thesame basis as that used for internal management reporting purposes. The Group is organised on a global basis as asingle Enterprise Location Intelligence business. This is the basis of the Group’s external market offering and internalorganisational and management structure and is the primary way in which the Chief Executive Officer, who is the Chief
Operating Decision Maker, receives financial information to assess Group performance. As a result, the Group has
therefore determined that it has only one reportable segment as defined by IFRS 8.
The internal management accounting information is prepared on an IFRS basis but has a non-GAAP “Adjusted EBITDA”
as the primary measure of profit and this is reported on the face of the income statement.
In addition, the Board and the Executive Management Team consider the business to have two revenue streams withdifferent characteristics, Solutions and Services, which are generated from the same asset and cost base.

4.2 Revenue by nature
Six months to
30 June2014
unaudited£’000

Six months to
30 June2013
unaudited£’000

12 months to
31 December
2013
audited£’000

Solutions

8,476

5,802

13,375Services

8,855

6,583

13,627

Total revenues

17,331

12,38527,002Six months to
30 June2014
unaudited£’000

Six months to
30 June2013
unaudited£’000

12 months to
31 December
2013
audited
£’000

189

609

539

Americas

7,269

6,090

11,988Europe

5,614

5,451

12,478Asia Pacific

4,259

235

1,997

Total revenues

17,331

12,38527,0024.2 Revenue by geography

United Kingdom

Revenues from external customers in the Group’s domicile, the UK, as well as its major markets, Europe, Americas andAsia Pacific, have been identified on the basis of the customer’s geographical location.

5 Exceptional items
During the period, the Group incurred reorganisation costs totaling £315,000 comprising mainly redundancy costs
and other one-off expenses in order to integrate the Geoplan acquisition made in December 2013.
During 2013, the Group incurred exceptional items of £764,000. £114,000 was incurred in the first half of 2013 mainlycomprising professional fees in connection with an acquisition that did not proceed and a further £650,000 in thesecond half of 2013 was relating to the acquisition of Geoplan.
Page 13 of 19

Notes to the interim financial statements
6

Earnings per share
Six months to
30 June2014
unaudited

Six months to
30 June2013
unaudited

12 months to
31 December
2013
auditedLoss for the period (£’000)(2,121)(1,543)(1,968)Loss for the purposes of diluted earnings per share (£’000)(2,121)(1,543)(1,968)24,036

21,953

21,984- Share options (‘000)

1,141

1,281

1,034

Diluted weighted average number of shares (‘000)

25,177

23,23423,018

Basic loss per share (pence)

(8.8)

(7.0)

(8.9)

Diluted loss per share (pence)

(8.8)

(7.0)

(8.9)

Earnings

Number of shares
Basic weighted average number of shares (‘000)
Effect of dilutive potential ordinary shares:

Basic earnings per share is calculated by dividing profit for the period attributable to ordinary shareholders of theCompany by the weighted average number of ordinary shares outstanding during the period. For diluted earnings per
share, the weighted average number of shares is adjusted to allow for the effects of dilutive share options. Options haveno dilutive effect in loss-making years, and hence the diluted loss per share for the periods ended 30 June 2014 and2013 and 31 December 2013 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 acquisition and reorganisation
costs from the measurement of profit for the period.
Six months to
30 June2014
unaudited

Six months to
30 June2013
unaudited

12 months to
31 December
2013
audited(2,121)(1,543)(1,968)

Reversal of amortisation on acquired intangible assets (£’000)

374

128

313

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

37

40

92

Reversal of exceptional items (£’000)

315

114

764

Net adjustments (£’000)

726

282

1,169

(1,395)(1,261)

(799)

(5.5)

(5.4)

(3.5)

Adjusted diluted earnings per share

Loss for the purposes of diluted earnings per share (£’000)
Adjustments

Adjusted earnings (£’000)
Adjusted diluted (loss)/earnings per share (pence)

Page 14 of 19

Notes to the interim financial statements
7

Intangible assets
At
30 June2014
unaudited£’000

At
30 June2013
unaudited£’000

RestatedAt
31 December
2013
audited£’000

Goodwill

9,587

7,418

9,619

Capitalised product development costs

4,056

2,597

3,920

Software

373

166

411

Acquired software products

377

220

523

Acquired customer relationships and backlog

1,441

261

1,774

Total other intangible assets

15,834

10,662

16,247

Allotted, called-up and fully paidAt
30 June2014
unaudited£’000

At
30 June2013
unaudited£’000

At
31 December
2013
audited£’000

Ordinary shares of £0.02 each

501

440

461

Movement in number of sharesAt
30 June2014
unaudited£’000

At
30 June2013
unaudited£’000

At
31 December
2013
audited£’000

Number of shares at beginning of period

23,079,146

21,919,744

21,919,744

Issued under placing

1,929,589--

28,917

95,644

399,593--759,809

Change in number of shares in period

1,958,506

95,644

1,159,402

Number of shares at end of period

25,037,652

22,015,388

23,079,146

Net book amount

8

Share capital

Issued under share-based payment plans
Issued on acquisition of subsidiary

Share capital movements
During the period, the Company issued 1,958,506 shares increasing the total number of shares in issue from 23,079,146
to 25,037,652 as follows:

1,929,589 shares at £2.20 per share for a total gross cash consideration of £4,246,000, with share issue costs of£229,000 written off against the share premium account; and28,917 share options exercised with a weighted average exercise price of £0.53 per share for total cash
consideration of £15,500.

Page 15 of 19

Notes to the interim financial statements
9Business combinations

9.1 Assets acquired and liabilities recognised at date of acquisition
The Geoplan Interworks K.K group of companies ("Geoplan") was acquired on 3 December 2013. As at 31 December
2013, the fair values of acquired assets, liabilities and goodwill for Geoplan were determined on a provisional basis dueto the proximity of the acquisition to the year end.
The post-acquisition review of the fair value of the net assets acquired was completed in the current period. The
following amendments have been retrospectively applied to net assets acquired and liabilities recognised at the dateof acquisition.

At
31 December
2013
audited£’000

Fair value
adjustment
£’000

At
31 December
2013
Restated
£’000

626

(218)

408

1,593

-

1,593

Software

173

-

173

Property, plant and equipment

132

-

132

2,524

(218)

2,306

Inventories

1,605

(518)

1,087

Trade and other receivables

1,080

-

1,080

Cash and cash equivalents

2,481

-

2,481

Total current assets

5,166

(518)

4,648

Trade and other payables(4,500)-(4,500)Total current liabilities(4,500)-(4,500)

Deferred income tax liabilities

(843)

83

(760)

Total non-current liabilities

(843)

83

(760)

Non-controlling interest

(704)

150

(554)

Fair value of identifiable net assets acquired

1,643

(503)

1,140

Goodwill arising on acquisition

1,697

503

2,200

Fair value of consideration transferred

3,340

-

3,340

AssetsNon-current assets
Acquired software products
Acquired customer relationships and backlog

Total non-current assets
Current assets

Liabilities
Current liabilities

Non-current liabilities

Page 16 of 19

Notes to the interim financial statements
9.2 Contingent considerationAt
31 December
2013
audited£’000

Effect ofexchange
rates
unaudited£’000

Paid in the
periodunaudited£’000

At 30 June2014
unaudited£’000

Contingent consideration - non-current

430

4

-

434

Contingent consideration - current

355

4

-

359

Total contingent consideration

785

8

-

793

Deferred consideration

172

7

(179)

-

Total

957

15

(179)

793

The consideration to acquire Geoplan included cash, issue of Ubisense shares, deferred consideration and contingent
consideration. The deferred consideration was paid in full in January 2014.
Under the contingent cash consideration arrangement, the Group is required to pay additional amounts to vendors
based on the achievement of two separate performance milestones that may arise between 2014 and 2017 withcombined undiscounted range of outcomes between nil and 149 million Japanese Yen (£nil to £892,000).
At acquisition, the fair value of the contingent consideration was 136 million Japanese Yen (£816,000) being
management’s best estimate of the probability-adjusted estimated discounted future cashflows. The fair value of theamount recognised is unchanged since acquisition although as the liability is denominated in Japanese Yen, its sterling
equivalent has reduced to £793,000 at 30 June 2014.

10 Bank loans

In March 2014, the Group drew down a further £0.5 million on the £5.0 million bank loan facility agreed in August 2013
to provide additional working capital. This loan is repayable in full in August 2016 by Ubisense Ltd, is secured on the
fixed and floating assets of the Group and attracts an interest charge of LIBOR + 3%. As at 30 June 2014, £4.0 million ofthe £5.0 million facility is drawn down and is subject to certain operating and net worth covenants of the business.
The Group agreed a one year loan of 130 million Japanese Yen in June 2014, which is repayable in June 2015. The loan
is unsecured and interest is payable at 0.99%.
In August 2014 the Group agreed a new, additional 4 year bank loan facility of £2.0 million to provide funds foracquisitions and is repayable in quarterly installments. Interest is payable at Bank of England base rate + 3% and thefacility is secured on the fixed and floating assets of the Group. The facility is subject to certain operating and net worthcovenants of the business.

Page 17 of 19

Notes to the interim financial statements
11 Cash generated from operations
Six months to
30 June2014
unaudited£’000

Six months to
30 June2013
unaudited£’000

12 months to
31 December
2013
audited£’000(2,079)(1,461)(1,719)Depreciation

170

130

266

Amortisation

1,674

771

1,645

Share-based payments charge

37

40

92

Finance income

(15)

(6)

(10)

Finance costs

79

12

103

Operating cash flows before working capital movements

(134)

(514)

377

Change in inventories

(443)

(469)

(639)

Change in receivables

490(1,536)242

Change in payables(1,766)

946

(727)

Cash used in operations before tax(1,853)(1,573)(747)

Loss before tax
Adjustments for:Page 18 of 19

Independent review report to Ubisense Group plc

Introduction
We have been engaged by the company to review the financial information in the half-yearly financial report for thesix months ended 30 June 2014 which comprises the interim income statement, interim statement of comprehensive
income, interim statement of changes of equity, interim statement of financial position, interim statement of cash flows
and the related notes. We have read the other information contained in the half yearly financial report and considered
whether it contains any apparent misstatements or material inconsistencies with the information in the condensed
set of financial statements.
This report is made solely to the company in accordance with guidance contained in ISRE (UK and Ireland) 2410,'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review work has
been undertaken so that we might state to the company those matters we are required to state to them in a review
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility toanyone other than the company, for our review work, for this report, or for the conclusion we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The AIM rules of the
London Stock Exchange require that the accounting policies and presentation applied to the financial information in
the half-yearly financial report are consistent with those which will be adopted in the annual accounts having regard
to the accounting standards applicable for such accounts.
As disclosed in Note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted
by the European Union. The financial information in the half-yearly financial report has been prepared in accordancewith the basis of preparation in Note 2.
Our responsibility
Our responsibility is to express to the Company a conclusion on the financial information in the half-yearly financial
report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410,'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards
on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the financial information in thehalf-yearly financial report for the six months ended 30 June 2014 is not prepared, in all material respects, inaccordance with the basis of accounting described in Note 2.
Grant Thornton UK LLP
Chartered Accountants
Registered Auditor
Cambridge
15 September 2014

Page 19 of 19