28 September 2017
Ubisense Group plc
Interim results for the six months ended 30 June 2017
Ubisense Group plc (“Ubisense” or the “Group”) (AIM: UBI), a market leader in enterprise location intelligencesolutions, is pleased to announce its interim results for the six months ended 30 June 2017.

Overview

 Strong set of financial results delivering significantly improved sales of Ubisense’s
own RTLS SmartSpace and myWorld products Clear enterprise software strategy based on Ubisense’s Industrial Internet of Things(“IIoT”) solutions
 Investment in product roadmap and go-to market strategy for RTLS SmartSpace withincreased software focus and clearer customer benefits – leading directly to a new
major strategic aerospace customer sale in July 2017 initially worth in excess of £1m
 Improved cash position and continued investment in the underlying business

Financialhighlights

 Total revenue increased by 16% to £12.4m (H1 2016: £10.7m)
 Revenue generated by the Group’s own products increased by 58%
 Adjusted EBITDA* loss of £0.4m (H1 2016: £0.6m loss) Adjusted diluted loss per share** 2.7p (H1 2016: 5.0p loss)
 Cash of £6.5m and net funds of £3.2m (31 Dec 2016: cash £3.5m and net funds £0.2m)

Operational
highlights

 New Geospatial myWorld Fiber Planning product launched announced with major
North America win in the telecommunications sector worth in excess of £1m
 RTLS SmartSpace new wins in Turkey and Japan, as well as extension orders fromexisting customers in other regions
 Successful go-live of large RTLS SmartSpace installations in Europe that further
extend Ubisense’s leadership in enterprise IIoT deployments

Richard Petti, Chief Executive Officer, commented,“The strong increase in sales of our two product lines in the period demonstrates our ongoing transition to a software-led
business. Our market positioning is now fully aligned with the emerging market for IIoT (Industrial Internet of Things)
delivers better ROI and operational efficiencies to our customers. We continue our transition towards a higher margin
business and I am pleased with our progress in delivering improved results over the same period in 2016.”* Measured as operating loss excluding depreciation, amortisation, unrealised intercompany foreign exchange and non-recurringcosts.
** Earnings measured as profit for the period excluding amortisation of acquired intangible assets, share-based payments charge,
unrealised foreign exchange gains/losses on intercompany trading balances and non-recurring costs such as acquisition andreorganisation costs.

Contact
Ubisense Group plc
Richard Petti, Tim Gingell

Tel: + 44 (0) 1223 535170

Numis Securities Limited
Simon Willis, Jamie Lillywhite, Toby Adcock

Tel: + 44 (0) 20 7260 1000

Redleaf Communications
David Ison, Sam Modlin

Tel: +44 (0) 20 7382 4730

About Ubisense
Ubisense (AIM: UBI), a global leader in enterprise location intelligence solutions, helps businesses in sectors including
manufacturing, communications and utilities to improve operational efficiency, data quality and boost profitability.
Ubisense location intelligence systems bring clarity to complexity, enabling customers to revolutionise theiroperational effectiveness in a measurable way. Founded in 2002, Ubisense is headquartered in Cambridge, England,with offices in North America, France, Germany and Japan. For more information visit: www.ubisense.net.

Page 1 of 19

Chief Executive’s Statement
Overview
In the first half of 2017, the Group continued to trade in line with the Board’s expectations with both divisions showing
positive revenue growth over the same period in 2016. The Group has demonstrated particular strength in its ability
to grow the sales and delivery of its RTLS SmartSpace and myWorld products where it has focused its efforts on sellingenterprise solutions to new and existing customers in its global locations, whilst retaining tight cost controls.
Strategy
Ubisense maintains the Group’s activities as two separate operating units, which has enabled each division to be runwith a clear and distinct strategy, delivering location based operational productivity solutions for discrete industries
and sets of customers.
The strategy of the Group is to:






Develop enterprise solutions with scalable software components that deliver strong ROI to our customers
Develop strong go-to-market plans that position our best in class IIoT solutions to best enable value to be realised
from our software intellectual property
Drive revenue growth in new markets and new verticals assisted by strategic partners
Maintain and expand deployments of Ubisense solutions with major customers in both divisions
Improve gross margins of the business to over 50% through the increased software focus for Ubisense’s own
products

Business development
In our RTLS SmartSpace business, we have seen substantial year on year growth of hardware and software sales bothwith new and existing customers. The first half of 2017 has seen continued rollout of global deployments with
European customers in their worldwide locations, and the Group has secured new business in markets such as Turkey
and Japan addressing both the automotive sector, where it has traditionally been strong, and also on and off-roadcommercial vehicles.
Our customers have responded positively to the repositioning of the SmartSpace software to be hardware agnostic,
enabling customers to achieve integration into their MES, ERP and other operational systems.
The Geospatial business has shown a strengthened ability to sell more myWorld product in the first half of 2017 bothin the form of contract extensions and new product solutions. Specifically, the Group launched a new Fiber Planning
module based on myWorld but incorporating third party intelligent database components. The Group successfully
closed a significant new contract with a telecoms customer in June thanks to the strong return on investment thisproduct brings to mission critical operations. Continued growth of the myWorld software portfolio will help to offset
the anticipated run-off of service revenues related to providing maintenance and services to third party products asexisting contracts end.
With the objective of maintaining leadership within its enterprise software offerings the Group has strengthened its
organization within both divisions with key appointments in the areas of product management and softwarearchitects, whilst also building the technical skills and domain knowledge of customer facing operations withknowledge management programmes and specific training.
The Group continues to build its partnership activities in both divisions and has signed new distribution agreements
in all the territories it operates in.
Board changes and management teamOn 27 July 2017, the Group announced that Peter Harverson would revert to his role as non-executive chairman
working an average of two days per week effective 1 August 2017.

Page 2 of 19

Chief Executive’s Statement (continued)
Current trading and outlook
Ubisense has started the second half of 2017 well, with a major strategic win for our RTLS software platform(SmartSpace) with a North American aerospace and defence contractor. We anticipate further wins for both platforms- RTLS SmartSpace and myWorld products in the remainder of the year. Overall trading performance for the fiscal
year is expected to be in line with the board’s expectations, demonstrating overall growth over 2016.
As part of our strategy to focus on our own IP, we expect to see over the next 12-18 months a run-off of historiccontracted Geospatial services related to providing maintenance and services to third party products. With our focus
on sales of our two software platforms, we expect gross margins to improve as we move away from providing services
to third party geospatial products.
Following the strong performance in the first half of 2017, in which revenue generated from the Group’s own products
has increased by 58%, the board expects growth from Ubisense’s RTLS SmartSpace and myWorld products for theremainder of this year and beyond, with a continued increase in the pipeline of potential deals and improved grossmargins.

Page 3 of 19

Financial review
Financial key Performance indicators

Revenue

H1 2017£m

H1 2016
£m

12.4

10.7

Bookings

9.3

11.7

Order-book backlog

10.2

10.4

Adjusted EBITDA

(0.4)

(0.6)

Cash and cash equivalents

6.5

5.0

Net cash/(debt)

3.2

1.0

Revenue
The Group is organised into two divisions RTLS SmartSpace and Geospatial:- RTLS SmartSpace offers IIoT software platform and hardware solutions, with associated implementation andmaintenance services, to increase productivity by integrating location into operational systems and processes.
- Geospatial division offers its myWorld software platform with associated maintenance and implementation services,
as well as providing technical services to customers with third party GIS software products. The myWorld software
platform integrates data from any source – geographic, real time asset, GPS, location, corporate and external client
based sources – into a live geospatial common operating picture empowering all users in the customer’s organisationto access, input and analyse operational intelligence.
Each division provides software solutions and services to enterprise customers. The revenue composition by division
is summarised in the table below:
Revenue by division

H1 2017£m% of total
revenue

H1 2016£m% of total
revenueYear on year
growth

RTLS SmartSpace

4.4

35%

2.7

25%

65%

Geospatial

8.0

65%

8.0

75%

-%

Total revenue

12.4

100%

10.7

100%

16%

Revenue is generated from RTLS SmartSpace and myWorld product suites, which are primarily Group owned
intellectual property (“IP”) and from services associated with third-party and non-core products. Revenue
composition by revenue stream is summarised in the table below:
Revenue stream

H1 2017£m% of total
revenue

H1 2016£m% of total
revenueYear on year
growthSoftware

1.1

9%

0.9

8%

22%

Maintenance and support

0.8

7%

0.7

6%

17%

Hardware

1.9

15%

0.8

8%

127%

Services

3.0

24%

1.9

18%

59%

Total revenue generated from Group IP

6.8

55%

4.3

40%

58%

Geospatial services from third party products

5.6

45%

6.4

60%

(12%)

Total revenue

12.4

100%

10.7

100%

16%

Revenue generated from the Group’s own products has increased by 58% as the long-term strategy of the Group
continues to be sales and development of the RTLS SmartSpace and myWorld product suites. The Group has beensuccessful in implementing this strategy in H1 2017, with increased hardware shipments and strong demand fordelivery services in both divisions following the positive momentum achieved towards the end of 2016.

Page 4 of 19

Financial review (continued)
OrdersTotal bookings of new customer orders in the first half of 2017 were £9.3 million (H1 2016: £11.7 million). £3.1 millionof this related to RTLS SmartSpace (H1 2016: £2.1 million), £3.3 million related to Geospatial myWorld (H1 2016: £2.9
million) and £3.0 million to Geospatial Services (H1 2016: £6.7 million).
The order book backlog as at 30 June 2017 was £10.2 million (30 June 2016: £10.4 million), most of which will berecognised during 2017.
Gross margin
The Group gross margin was 38% for the six months ended 30 June 2017 (H1 2016: 41%).
Gross margin by division

H1 2017£m

Grossmargin %H1 2016£m

Grossmargin %Gross margin% difference

RTLS SmartSpace

1.4

32%

1.1

41%

(9%)

Geospatial

3.3

41%

3.2

40%

1%

Total gross margin

4.7

38%

4.3

41%

(3%)

The gross margin of the RTLS SmartSpace division has reduced compared to the first half of 2016 due to revenue mix
with a higher proportion of lower margin hardware and services revenue. The Geospatial division’s gross margin
remained steady in the first half of 2017 balanced between higher margin myWorld related revenues and lower
margin Geospatial Services revenues which deliver approximately 30% gross margin.
Operating expenses and adjusted EBITDA
Operating expenses were £6.6 million (H1 2016: £5.1 million) and are summarised as follows:
H1 2017

H1 2016£m£m

Other operating expenses

5.1

5.0

Depreciation

0.2

0.2

Amortisation and impairment

1.2

1.5

Unrealised foreign exchange on intercompany trading balances

0.1

(1.7)

Non-recurring items-

0.1

Total operating expense

6.6

5.1

Other operating expenses were £5.1 million (H1 2016: £5.0 million) and include sales, marketing, productdevelopment, administration and share based payments. The increase in expense is primarily due to a higher sharebased payment charge.
Adjusted EBITDA excludes amortization and impairment, depreciation, unrealised foreign exchange gains/losses onintercompany trading balances and non-reoccurring items and is reported as it reflects the performance of the Group.
Adjusted EBITDA loss for the period was £0.4 million (H1 2016: £0.6 million).
The operating loss and loss for the period was £1.9 million (H1 2016: £0.8 million)
EPS and dividends
Adjusted diluted loss per share was 2.7 pence (H1 2016: 5.0 pence loss). Reported basic and diluted loss per share
was 3.3 pence (H1 2016: 1.8 pence loss). The Board does not feel it appropriate at this time to commence paying
dividends.
Impact of IFRS 15
IFRS 15 Revenue from Contracts with Customers will replace IAS 18 Revenue. The new standard is applicable from 1
January 2018. IFRS 15 introduces a number of new concepts and requirements, and also provides guidance andclarification on existing practice.
Ubisense are continuing to assess the impact of the first year adoption of IFRS 15.

Page 5 of 19

Financial review (continued)
Ubisense anticipates that some elements of revenue recognition may be deferred as a result of the requirement to
identify when the customer has control over the deliverables provided by Ubisense.
Management believe that the majority of sales orders will be unaffected by the application of IFRS 15, however,significant contracts which involve multiple performance obligations are being reviewed in detail. These obligations
may include a combination of software, hardware, maintenance & support, and service revenues. Accordingly, thesignificance of the impact of IFRS 15 is dependent upon the timing of delivery for significant contracts close to afinancial reporting period end.
Additionally, IFRS 15 states that costs incurred in acquiring and fulfilling a customer contract shall be deferred andrecognised as an expense over a period that is consistent with the transfer to the customer of the goods or services.
Management continue to assess the appropriateness of deferring costs against specific projects.
While management have not quantified the impact of IFRS 15 at this stage, it continues to be reviewed andmanagement expect to fully quantify the impact within the 2017 Annual Report.
Balance sheet, cash and cash flow
Cash held on the balance sheet at 30 June 2017 was £6.5 million (31 December 2016: £3.5 million, 30 June 2016: £5.0
million) and net funds at 30 June 2017 were £3.2 million (31 December 2016: £0.2 million, 30 June 2016: £1.0 million).
The net cash inflows from operating activities were £4.2 million for the period to 30 June 2017 (H1 2016: outflow of£2.6 million). The improvement is due to a reduction in the working capital cycle through collection of tradereceivables.
Capital structure
The issued share capital at 30 June 2017 was 55,890,654 ordinary shares of £0.02 each. No share options were granted
to employees in the six-month period ended 30 June 2017, and the total number of unexercised share options at 30
June 2017 was 6,326,228.
Risks and uncertainties
The Board continuously assesses and monitors the key risks of the business. The key risks that could affect the Group’s
performance, and the factors which mitigate these risks, have not significantly changed from those set out on pages
20 to 23 of the Group’s Annual Report for 2016 (a copy of which is available from our website www.ubisense.net).

Page 6 of 19

Consolidated income statement
For the six months ended 30 June 2017
6 months to

6 months to

12 months to

30 June 201730 June 201631 December 2016

unauditedunaudited

audited

Notes

£’000

£’000

£’000

4

12,38010,674

26,523(7,676)(6,344)(16,280)

4,704

4,330

10,243Operating expenses(6,621)(5,081)(16,408)

Operating loss

(1,917)(751)(6,165)

4,704

4,330

10,243(5,070)(4,967)(9,919)Adjusted EBITDA

(366)

(637)

324

Depreciation

(165)

(175)

(345)

-

(91)

(1,223)(1,253)(1,378)(7,143)

(133)

1,651

1,877

-

(121)

345

Operating loss

(1,917)(751)(6,165)

Net finance costs

(17)

(146)

(279)

Loss before tax(1,934)(897)(6,444)

61

112

1,136

(1,873)(785)(5,308)(1,827)(778)(5,196)

(46)

(7)

(112)

Revenues
Cost of revenues
Gross profit

Analysed as:
Gross profit
Other operating expenses

Amortisation of acquired intangible assets
Amortisation of other intangible assets
Unrealised foreign exchange gains/(losses) onintercompany trading balances
Non-recurring items

5

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

6

(3.3)

(1.8)

(10.4)

Diluted

6

(3.3)

(1.8)

(10.4)The notes 1 to 10 are an integral part of these condensed interim financial statements.

Page 7 of 19

Consolidated statement of comprehensive income
For the six months ended 30 June 2017

Loss for the period

6 months to
30 June 2017
unaudited£’000

6 months to
30 June 2016
unaudited£’000

12 months to
31 December 2016
audited£’000(1,873)(785)(5,308)23(378)(1,357)(1,850)(1,163)(6,665)

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

Consolidated statement of changes in equity
For the six months ended 30 June 2017

Sharecapital
£’000

Share
premium
£’000

Share
based
payment
reserve£’000

732

37,422875(539)

Loss for the period

-

-

-

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

Total comprehensive income for the period-

Reserve credit for equity-settled
share-based payment

Subtotal£’000

Noncontrollinginterest
£’000

Total
£’000

(26,996)

11,494456

11,950

-

(778)

(778)

(7)

(785)

-

(469)

-

(469)

91

(378)

-

-

(469)

(778)

(1,247)84(1,163)

-

-

43

-

-

43

-

43

386

-

-

-

-

386

-

386

-

4,427

-

-

-

4,427

-

4,427

-

(295)

-

-

-

(295)

-

(295)

386

4,132

43

-

-

4,561

-

4,561

1,118

41,554918(1,008)(27,774)

14,808540

15,348Loss for the period

-

-

-

-

(4,418)(4,418)(105)(4,523)

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

-

-

-

(1,017)-(1,017)38(979)

Total comprehensive income for the period

-

-

-

(1,017)(4,418)(5,435)(67)(5,502)

Reserve credit for equity-settled
share-based payment

-

-

(95)

-

-

(95)

-

(95)

Issue of new share capital

-

-

-

-

-

-

-

-

Premium on new share capital

-

-

-

-

-

-

-

-

Share issue costs

-

-

-

-

-

-

-

-

Transactions with owners

-

-

(95)

-

-

(95)

-

(95)

1,118

41,554823(32,192)

9,278

473

9,751

Loss for the period

-

-

-

-

(1,827)(1,827)(46)(1,873)

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

-

-

-

28

-

28

(5)

23

Total comprehensive income for the period

-

-

-

28

(1,827)(1,799)(51)(1,850)Reserve credit for equity-settled
share-based payment

-

-

161

-

-

161

-

161

Issue of new share capital

-

-

-

-

-

-

-

-

Premium on new share capital

-

1

-

-

-

1

-

1

Share issue costs

-

-

-

-

-

-

-

-

Transactions with owners

-

1

161

-

-

162

-

162

1,118

41,555984(1,997)(34,019)

7,641

422

8,063

Balance at 1 January 2016

Issue of new share capital
Premium on new share capital
Share issue costs
Transactions with owners
Balance at 30 June 2016 (unaudited)

Balance at 31 December 2016

Balance at 30 June 2017 (unaudited)

Translation
reserve£’000

Retainedearnings£’000(2,025)

Page 9 of 19

Consolidated statement of financial position
At 30 June 2017

Notes

At
30 June2017
unaudited£’000

At
30 June2016
unaudited£’000

At
31 December
2016
audited
£’000

7

3,187

10,113

3,616

650

871

745

3,837

10,984

4,361

Inventories

1,567

2,703

1,064

Trade and other receivables

7,028

8,946

13,221

Cash and cash equivalents

6,485

5,049

3,498

Total current assets

15,08016,69817,783

Total assets

18,917

27,682

22,144

(750)

-

(750)

Trade and other payables(6,765)(6,420)(8,239)Total current liabilities(7,515)(6,420)(8,989)(617)(1,146)(683)(2,500)(4,000)(2,500)

(222)

(768)

(221)

Total non-current liabilities(3,339)(5,914)(3,404)

Total liabilities(10,854)(12,334)(12,393)

8,063

15,348

9,751

1,118

1,118

1,118

41,55541,55441,554

984

918

823

Translation reserve(1,997)(1,008)(2,025)Retained earnings(34,019)(27,774)(32,192)

7,641

14,808

9,278

422

540

473

8,063

15,348

9,751

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

Liabilities
Current liabilities
Bank loans9Non-current liabilities
Deferred tax liability
Bank loans

9

Other liabilities

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

Equity attributable to owners of the parent company
Non-controlling interests
Total equity

8

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

Consolidated statement of cash flows
For the six months ended 30 June 2017
6 months to
30 June2017
unaudited£’000

6 months to
30 June2016
unaudited£’000

12 months to
31 December
2016
audited£’000(1,934)(897)(6,444)

165

175

345

1,253

1,469

8,366

Adjustments to contingent consideration

-

-

(355)

Loss on disposal of property, plant and equipment

2

10

24

Revaluation of intercompany balances133(1,651)(1,877)

Share-based payment charge

161

27

(20)

Finance income

(16)

(26)

(44)

Finance costs

33

172

323

Operating cash flows before working capital movements

(203)

(721)

318

Change in inventories

(503)

112

1,751

Change in receivables

6,196

331

(3,941)

Change in payables(1,252)(2,295)

(743)

4,238

(2,573)(2,615)

(7)

3

579

4,231

(2,570)(2,036)

Purchases of property, plant and equipment

(54)

(36)

(26)

Payment of contingent consideration

(197)

-

-

Expenditure on intangible assets

(842)

(873)

(2,059)

16

26

44

(1,077)(883)(2,041)-(1,623)(2,373)

(56)

(172)

(352)

Proceeds from the issue of share capital

1

4,517

4,518

Net cash flows from financing activities

(55)

2,722

1,793

Net increase in cash and cash equivalents

3,099

(731)

(2,284)

Cash and cash equivalents at start of period

3,498

5,392

5,392

Exchange differences on cash and cash equivalents

(112)

388

390

Cash and cash equivalents at end of period

6,485

5,049

3,498

Loss before tax
Adjustments for:
Depreciation
Amortisation and impairment

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

Interest received
Net cash flows from investing activities
Cash flows from financing activities
Repayment of borrowings
Interest paid

Page 11 of 19

Notes to the interim consolidated 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 and Japan, selling mainly to customers in theAmericas, 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 27
September 2017.
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 2016 were approved by
the Board of Directors on 20 March 2017 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 2016.
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 consolidated financial statements
4 Segmental information
Management has determined the operating segments to be the Group’s divisions based on the information reported to
the Chief Operating Decision Maker (CODM) for the purpose of assessing performance and allocating resources. The
CODM is the Executive Chairman.
The RTLS SmartSpace division encompasses both a highly scalable IIOT software platform which is hardware agnostic
enabling inputs from all types of location system, and Ubisense’s own sensing solution combining hardware andsoftware for a Real Time Location System (RTLS) using Ultra Wide Band (UWB) technology. The SmartSpace IIOT
platform transforms this data into high value spatial event information, that helps manufacturers tackle the challenges
of managing ever increasing levels of complexity delivering highly reliable, automatic, adaptive asset identification,
precise real-time location and spatial monitoring to offer meaningful insights that help businesses make smarter
decisions. The Group’s IIOT solutions provide real-time Industry 4.0 operational awareness, flexible control and datadriven insights that enable smarter decisions for optimal process execution.
The Geospatial division delivers software solutions that integrates data from any source – geographic, real-time asset,
GPS, location, corporate and external cloud based sources – into a live geospatial common operating picture,empowering all users in the customer’s organisation to access, input and analyse operational intelligence to proactively
manage their networks, respond quickly to emergency events and effectively manage day-to-day operations.
Both operating segments are managed as separate business lines as each addresses different customer opportunities
in distinct vertical markets and have minimal overlap from an operational or development perspective. The
performance of the operating segments is assessed on a measure of contribution, being gross profit less sales andbusiness unit marketing expenditure. Assets and liabilities are not presented to the CODM on a divisional basis.
Costs incurred centrally or not directly attributable to either the RTLS SmartSpace or Geospatial division are reported
in the Central division. The results of each segment are prepared using accounting policies consistent with those of theGroup as a whole. No intra-segmental transactions are reported.

6 months ended 30 June 2017

Revenue
Cost of sales

RTLS
SmartSpace£’000

Geospatial£’000

Central
£’000

Total
£’000

4,372

8,008

-

12,380(2,975)(4,701)-(7,676)

1,397

3,307

-

4,704

(1,412)(894)-(2,306)

(15)

2,413

-

2,398

Other operating costs(2,764)(2,764)

Adjusted EBITDA(2,764)(366)

Amortisation and impairment of intangibles(1,253)(1,253)

Depreciation
Unrealised foreign exchange gains/(losses)
on intercompany trading balances
Non-recurring items

(165)

(165)

(133)

(133)

Gross profit
Sales and marketing costs
Contribution

Operating (loss)/profit
Finance costs(Loss)/profit before tax--(4,315)(1,917)

(17)

(17)

(4,332)(1,934)

Page 13 of 19

Notes to the interim consolidated financial statements
4 Segmental information (continued)

6 months ended 30 June 2016

Revenue
Cost of sales
Gross profit
Sales and marketing costs

RTLS
SmartSpace£’000

Geospatial£’000

Central
£’000

Total
£’000

2,654

7,973

47

10,674(1,553)(4,782)(9)(6,344)

1,101

3,191

38

4,330

(1,165)

(803)

(46)

(2,014)

(64)

2,388

(8)

2,316

Other operating costs(2,953)(2,953)Adjusted EBITDA(2,961)(637)

Amortisation and impairment of intangibles(1,469)(1,469)Depreciation
Unrealised foreign exchange gains/(losses)
on intercompany trading balances
Non-recurring items

(175)

(175)

1,651

1,651

(121)

(121)

(3,075)(751)

Contribution

Operating (loss)/profit
Finance costs(Loss)/profit before tax

(146)

(146)

(3,221)

(897)

RTLS
SmartSpace£’000

Geospatial£’000

Central
£’000

Total
£’000

9,113

17,410-26,523

Cost of sales(5,097)(11,183)-(16,280)

Gross profit

4,016

6,227

-

10,243(2,931)(1,792)(91)(4,814)

1,085

4,435

(91)

5,429

Other operating costs(5,105)(5,105)Adjusted EBITDA(5,196)324

Amortisation and impairment of intangibles(8,366)(8,366)

Depreciation
Unrealised foreign exchange gains/(losses)
on intercompany trading balances
Non-recurring items

(345)

(345)

1,877

1,877

345

345

(11,685)(6,165)

(279)

(279)

(11,964)(6,444)

12 months ended 31 December 2016

Revenue

Sales and marketing costs
Contribution

Operating (loss)/profit
Finance costs(Loss)/profit before tax

Page 14 of 19

Notes to the interim consolidated financial statements
4 Segmental information (continued)
4.1 Revenue by geography
The Board and Management Team also review the revenues on a geographical basis, based around the regions where
the Group has its significant subsidiaries or markets.
The Group's revenue from external customers in the Group's domicile, the UK, and its major worldwide markets havebeen identified on the basis of the customers' geographical location.
6 months to
30 June2017
unaudited£’000

6 months to
30 June2016
unaudited£’000

12 months to
31 December
2016
audited
£’000

251

217

365

Germany

3,902

1,215

6,456

France

201

257

313

Europe other

253

438

936

4,917

5,613

12,325

Canada

922

833

1,664

Japan

1,737

2,085

4,328

Asia Pacific other

43

5

91

Rest of World

154

11

45

12,38010,674

26,5236 months to
30 June2017
unaudited£’000

6 months to
30 June2016
unaudited£’000

12 months to
31 December
2016
audited£’000

Reorganisation costs

-

121

139

Adjustment to contingent consideration

-

-

(355)

Others

-

-

(129)

Total non-recurring items

-

121

(345)

United Kingdom

USA

Total revenues

5 Non-recurring items

Page 15 of 19

Notes to the interim consolidated financial statements
6

Earnings per share
6 months to
30 June2017
unaudited

6 months to
30 June2016
unaudited

12 months to
31 December
2016
auditedLoss for the period (£’000)(1,827)(778)(5,196)

Loss for the purposes of diluted earnings per share (£’000)(1,827)(778)(5,196)55,883

43,52949,756

230

225

211

56,11343,75449,967

Basic loss per share (pence)

(3.3)

(1.8)

(10.4)

Diluted loss per share (pence)

(3.3)

(1.8)

(10.4)

Earnings

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

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 2017 and2016 and 31 December 2016 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, unrealised foreign exchange gains/losses on intercompany tradingbalances and non-recurring expenditure such as reorganisation costs from the measurement of profit for the period.
6 months to
30 June2017
unaudited

6 months to
30 June2016
unaudited

12 months to
31 December
2016
audited

(1,827)(778)(5,196)

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

-

91

1,223

Impairment of goodwill and acquired intangible assets (£’000)

-

-

4,271

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

161

43

(20)

Reversal of unrealised foreign exchange gains/losses on intercompany
trading balances133(1,651)(1,877)

-

121

(345)

294

(1,396)

3,252(1,533)(2,174)(1,944)

(2.7)

(5.0)

(3.9)

Adjusted diluted earnings per share

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

Reversal of exceptional items (£’000)
Net adjustments (£’000)
Adjusted earnings (£’000)
Adjusted diluted loss per share (pence)

Page 16 of 19

Notes to the interim consolidated financial statements
7

Intangible assets
At
30 June2017
unaudited£’000

At
30 June2016
unaudited£’000

At
31 December
2016
audited
£’000

-

4,891

-

3,028

3,604

3,343

159

443

273

Acquired software products

-

75

-

Acquired customer relationships and backlog

-

1,100

-

3,187

10,113

3,616

Allotted, called-up and fully paidAt
30 June2017
unaudited£’000

At
30 June2016
unaudited£’000

At
31 December
2016
audited£’000

Ordinary shares of £0.02 each

1,118

1,118

1,118

Movement in number of sharesAt
30 June2017
unaudited£’000

At
30 June2016
unaudited£’000

At
31 December
2016
audited£’000

55,883,154

36,620,247

36,620,247-

19,230,000

19,230,000

Issued under share-based payment plans

7,500

32,90732,907

Change in number of shares in period

7,500

19,262,907

19,262,907

55,890,654

55,883,154

55,883,154

Net book amount

Goodwill
Capitalised product development costs
SoftwareTotal other intangible assets

8

Share capital

Number of shares at beginning of period
Issued under placing

Number of shares at end of period

Share capital movements
During the period, the Company issued 7,500 shares, increasing the total number of shares in issue from 55,883,154 to
55,890,654 as follows:

97,500 share options exercised with an exercise price of £0.14 per share for total cash consideration of £1,050.

Bank loans

In October 2016, an £8.0 million HSBC working capital facility was restructured, becoming a £4.0 million repaymentloan with £0.75 million repayable on or before 31 December each year. £0.75 million of this facility was repaid in
December 2016.
This loan is secured on the fixed and floating assets of the Group and attracts an interest charge of LIBOR + 3%. The
loan is subject to an operating covenant linked to “operating cash flow” performance (profit or loss before tax adding
back any non-recurring items, finance costs, foreign exchange costs, share based payments, depreciation, amortisationor capitalisation of product development) as follows: 2016 £2.25 million negative, 2017 £nil, 2018 and beyond £1
million positive. Management and HSBC engage in regular performance reviews monitoring the forecast against the
HSBC loan covenant metrics, with HSBC expressing continued support for the business.
Page 17 of 19

Notes to the interim consolidated financial statements
10

Share options

On 14 December 2016 Ubisense Group plc implemented a new long-term incentive share option plan for Executive
Directors and key management. Ubisense Group plc granted 5,600,000 options of 2 pence each in the Company with an
exercise price set at the nominal value. The options vest if the Company’s share price exceeds 70p for 60 consecutive
calendar days between the 2nd and 3rd anniversary of issue and the period of employment continues for over 3 years.
No charge had been recognised in the 2016 financial statements in respect of these share options granted and the
Directors had assessed the impact on the 2016 financial statements to be immaterial.
During H1 2017 the share options have been valued and a share option charge of £158,000 recognised. The shareoptions were valued using a Monte Carlo valuation model. 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 behaviouralconsiderations. The risk-free 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.
The following assumptions were used in the model for options granted during the period;

Instrument
Number granted
Grant date

Option5,600,000
14 Dec 2016

Share price at grant date (£)

0.41

Exercise price (£)

0.02

Fair value per option (£)

0.17

Expected life (years)

4

Expected volatility (%)

45.00

Risk-free interest rate (%)

0.45

Expected dividends expressed as a dividend yield (%)-

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 2017 which comprises the consolidated income statement, consolidated statement ofcomprehensive income, consolidated statement of changes in equity, consolidated statement of financial position,
consolidated statement of cash flows and the related explanatory notes. We have read the other information containedin the half yearly financial report and considered whether it contains any apparent misstatements or materialinconsistencies 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 2017 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
27 September 2017

Page 19 of 19