Thruvision Grp Regulatory News (THRU)

16 November 2010

Digital Barriers plc

("Digital Barriers" or the "Company")

Interim Results for the seven months ending 30 September 2010

Digital Barriers plc (LSE AIM: DGB), the specialist provider of products and services to the homeland security market, announces unaudited results for the seven months ending 30 September 2010.

Key Highlights

·; Successful AIM IPO in March 2010, raising £20.0 million before expenses

·; Strong early progress made towards our strategic aim of building a leading specialist in the homeland security sector

·; Four acquisitions in the Surveillance, Imaging and Recognition area completed to-date, three in the period, with integration of these businesses now well underway

·; Office established in Singapore

·; Strategy validated by ongoing international terrorist activity and counter-terrorism response, and by UK budget announcements

Commenting on the results Dr Tom Black, Executive Chairman of Digital Barriers plc said:

"I am pleased with the progress that Digital Barriers has made since its IPO in March. We came to market with a plan to build a new leading player in the homeland security market and we have wasted no time in getting to work. Homeland security remains a large, growing and dynamic global market place. Whilst these are still early days, I believe that the four acquisitions we have made so far this year create a solid base on which we can continue to extend the scope and capabilities of our business in the months and years ahead."

For further information please contact:

About Digital Barriers plc:

Founded by the leadership team behind Detica Group plc, Digital Barriers is focused on the provision of specialist products and services to the international homeland security market, where counter-terrorism, the protection of critical computer systems and networks, and support for counter-insurgency operations overseas represent a compelling commercial opportunity. Over time, the Company aims to become a leading specialist, working directly with end-customers and through key partner organisations, providing focused, proportionate and effective solutions across the Secure Government, Border Protection, Defence, Transportation, Energy and Utilities sectors, as well as with organisations responsible for safeguarding crowded public spaces and nationally symbolic locations.

www.digitalbarriers.com 

Chairman's Statement

Introduction

Digital Barriers was established earlier this year to provide specialist products and services to the international homeland security market, which is assessed to be approximately $140 billion a year and growing1. The global security context has evolved in recent years, with the most significant threats now coming from international terrorism against civilian targets, attacks on high-profile computer systems, and asymmetric military operations overseas. This market represents a compelling opportunity to develop a leading international business, working directly with end-customers and through key partner organisations.

Since our IPO on AIM in March this year, these evolving threats have continued to dominate the headlines, with terrorist and cyber attacks against high-profile targets in different countries around the world. In our domestic market, this has resulted in the UK's National Security Strategy, and in budget commitments for counter-terrorism and new funding for cyber security as set out in the Defence and Security Review and the Comprehensive Spending Review. The incoming UK Government is also strongly supporting the export of leading technology and capabilities through UK Trade and Investment initiatives. This has the potential to benefit Digital Barriers as we engage with potential customers in key markets around the world where we have already identified significant demand for specialist homeland security products and services.

1 Source: Visiongain: 'Global Homeland Security 2009-2019', June 2009

Our strategy

Digital Barriers' strategy is to combine consulting and system integration services with IP-rich solutions that address specific client requirements across the international homeland security and defence sectors. We focus on counter-terrorism, cyber security and specialist areas of defence, helping our clients select, design and deploy effective and proportionate solutions to enhance the physical and electronic security of high profile, high value targets.

Digital Barriers provides consulting services, integration services and specialist solutions. We work directly with government departments and commercial organisations, and also through prime system integration partners. Our consultants, operational security practitioners, technologists and systems engineers are adept at complex problem solving, and have often played a leading role on national-level programmes.

Our plan is to work with clients around the world through hub offices in key locations, the first of which has been established in Singapore. Through our acquisitions, we have international reference installations that enable us to transfer capabilities and experiences from complex security programmes, including major international airports, large metropolitan transportation networks and high-security government locations.

Progress in period

We have made good progress since raising £20 million through our IPO. In particular, we have:

·; acquired four businesses, three in the period, which have secured key, referenceable UK and overseas client relationships and an office in Singapore,

·; established a central sales function to extend the reach of the capabilities we acquire and to manage relationships with key partner organisations, this function also manages our relationships with key strategic advisers,

·; put in place a central services function to focus on strategy, programme delivery, acquisition and integration, and financial governance,

·; invested in an organic consulting and pre-sales service through the hiring of subject matter experts and the development of specific offerings, and,

·; taken steps towards establishing the embryonic Digital Barriers brand as a premium player in the mid-market sector.

Financials

These interim results reflect the phased acquisitions by the Company during the period and ongoing central costs. As such, they are not representative of the current trading performance of the Company.

Revenues in the period were £1.32 million. We recorded an adjusted loss before tax of £1.18 million, after adding back amortisation of acquired intangibles of £0.15 million, IPO costs of £0.19 million, and acquisition costs of £0.5 million. Consideration for acquisitions in the period totalled £9.22 million, with £8.52 million of this paid in cash in the period. The cash balance at the end of the period was £13.95 million, before the acquisition of Waterfall Solutions Limited in October 2010.

Acquisitions

·; Security Applications Limited (trading as DFA), acquired in March 2010, a specialist installer and integrator of thermal imaging for high-profile targets.

·; Overtis Solutions (now trading as Integration Services), acquired in July 2010, a specialist provider of integrated security solutions for the protection of high-value assets.

·; COE Group plc, acquired in September 2010, an innovative provider of high-end video surveillance products and solutions for complex operating environments across the homeland security market.

·; Waterfall Solutions Limited, acquired after the period-end in October 2010, a specialist in advanced image processing and data and image fusion for defence and homeland security.

Integration of these businesses under the Digital Barriers brand and operating model is now well underway.

Outlook

We see the opportunity for Digital Barriers as very compelling over the medium to long term. To capitalise on this, we intend to acquire additional capabilities, establish regional overseas hubs for our services and solutions, build our central sales and services functions, and develop strong relationships with key partner organisations.

Given the current global preoccupation with counter-terrorism and cyber security, we believe that our strategy has been validated during our first few months of operation, and that our access to clients, to potential acquisition targets, and to high-quality people will enable us to execute it successfully.

We anticipate making further strategic acquisitions to secure technologies and capabilities that fall within our areas of focus; primarily businesses with revenues of up to £10 million. In parallel, we will integrate our acquisitions, continue to develop our UK and Singapore locations, and establish the demand for our services and capabilities in the US and the Middle East.

It is important that we continue to develop the Digital Barriers brand in the minds of our clients and partners to ensure that we become a globally recognised and respected homeland security and defence specialist. We are pleased with the progress made since our IPO, and remain confident about the prospects for developing the Company as a leading specialist over the coming years.

DIGITAL BARRIERS PLC

Consolidated Statement of Comprehensive Income

for the seven months ended 30 September 2010

The results for the period are derived from continuing activities

DIGITAL BARRIERS PLC

Consolidated Balance Sheet

at 30 September 2010

DIGITAL BARRIERS PLC

Consolidated statement of changes in equity

at 30 September 2010

DIGITAL BARRIERS PLC

Consolidated statement of cash flows

for the period to 30 September 2010

DIGITAL BARRIERS PLC

Notes to the financial statements

for the period to 30 September 2010

1. Accounting policies

Basis of preparation

The consolidated interim financial statements include those of Digital Barriers plc and all of its subsidiary undertakings (together "the Group") drawn up at 30 September 2010. Subsidiary undertakings are those entities controlled directly or indirectly by the Company. Control arises when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Subsidiaries are consolidated using the Group's accounting policies. Business combinations are accounted for using the acquisition method of accounting except for the acquisition of Digital Barriers Services Limited by Digital Barriers plc which has been accounted for using the pooling method. All inter-company balances and transactions, including unrealised profits arising from them, are eliminated on consolidation.

The company is a limited liability company incorporated and domiciled in England & Wales and whose shares are quoted on AIM, a market operated by The London Stock Exchange.

The financial statements have been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards as adopted by the European Union ('IFRS') and are consistent with those which will be adopted in the annual statutory financial statements for the year ended 31st March 2011.

While the financial information included has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards as adopted by the European Union (EU), this announcement does not in itself contain sufficient information to comply with IFRS's.

New holding company

On 8 February 2010, Digital Barriers plc was incorporated as a new holding company and parent company of the Group. On 22 February 2010 the former shareholders of Digital Barriers Services Limited ("DBSL") were issued new shares in Digital Barriers plc in a share for share exchange. Immediately following the share for share exchange the former shareholders of DBSL held the same economic interest in Digital Barriers plc as they held in DBSL immediately prior to the exchange.

The acquisition of DBSL by Digital Barriers plc falls outside the scope of IFRS3R "Business Combinations" and has been accounted for in these financial statements using the pooling of interests method which reflects the economic substance of the transaction. In accordance with the requirements of the pooling of interests method, the assets and liabilities of Digital Barriers plc and DBSL are recognized and measured in these financial statements at their pre-combination carrying amounts.

Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition costs incurred are expensed and included in administrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

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 acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within equity.

Goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred and the amount recognised for 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.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

Impairment of Goodwill

The determination of whether or not goodwill has been impaired requires an estimate to be made of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation includes estimates about the future financial performance of the cash-generating units, including management's estimates of long-term operating margins and long-term growth rates.

Intangible Assets

In accordance with IFRS 3 "Business combinations" goodwill arising on the acquisition of subsidiaries is capitalised and included in intangible assets. IFRS 3 also requires the identification of other intangible assets acquired. The method used to value intangible assets is the "income approach" The Income Approach indicates the fair value of an asset based on the value of the cash flows that the asset mightreasonably be expected to generate.

Other intangible assets

Intangible assets acquired from a business combination are capitalised at fair value as at the date of acquisition and amortised over their estimated useful economic life. An intangible asset acquired as part of a business combination is recognised outside goodwill if the asset is separable or arises from contractual or other legal rights and if its fair value can be measured reliably. The estimated useful lives of the intangible assets are as follows: Customer relationships and order book 3-5 years, Intellectual Property 1-7 years and trademarks 10 years. Intangible assets, other than development costs, created within the business are not capitalised and expenditure thereon is charged to the income statement in the period in which the expenditure is incurred.

The carrying value of other intangible assets is reviewed for impairment when events or changes in circumstance indicate that it may be impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. The asset's recoverable amount is the higher of the asset's fair value less costs to sell and its value in use. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which it belongs.

Revenue and Profit Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received, excluding discounts, rebates, VAT and other sales taxes. Revenue derived from professional fees billed to clients on a time and materials or fixed-price basis represents the value of work completed, including attributable profit, based on the stage of completion achieved on each project. For time and materials projects, revenue is recognised as services are performed. For fixed-price projects, revenue is recognised according to the stage of completion which is determined using the percentage-of-completion method based on the Directors' assessment of progress against key project milestones and risks, and the ratio of costs incurred to total estimated project costs. Revenue from support contracts is spread evenly over the period of the support contract. Revenue from the sale of products is recognised at the point at which goods are supplied to the client. Revenue from recharging to clients the cost of specialist managed subcontractors and the purchase of software or hardware for client assignments, together with associated mark-up, is recognised as these costs are incurred. Where the Group acts as agent in the transaction, only the mark up is recognised as Group revenue. The cumulative impact of any revisions to the estimate of percentage-of-completion of any fixed-price contracts is reflected in the period in which such impact becomes known. Licence income is recognised in accordance with the substance of the agreement. Revenue from licence agreements which have no significant remaining performance obligations is recognised where there is persuasive evidence that an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable.

Revenue recognised in this interim period arises largely from the sale of products.

Amounts recoverable on contracts

Amounts recoverable on contracts represent revenue recognised to date less amounts invoiced to clients. Full provision is made for known or anticipated project losses.

Payments Received on Account

Payments received on account represent amounts invoiced to clients in excess of revenue recognised to date.

Trade and other receivables

Trade receivables are recognised and measured at their original invoiced amount less provision for any uncollectible amounts. An estimate for doubtful debts is made when the collection of the full amount is no longer probable. Bad debts are written off to the income statement when they are identified.

Provisions

Provisions are recognised in the balance sheet when there is a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the obligation.

Income taxes

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted by the balance sheet date.

Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements, with the following exceptions:

• where the temporary difference arises from the initial recognition of goodwill

• or of an asset or liability in a transaction that is not a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss;

• in respect of taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future; and

• deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carried forward tax credits or tax losses can be utilised.

Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the balance sheet date.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date. Deferred income tax assets and liabilities are offset, only if a legally enforcement right exists to set off current tax assets against current tax liabilities, the deferred income taxes relate to the same taxation authority and that authority permits the group to make a single net payment.

Income tax is charged or credited to other comprehensive income if it relates to items that are charged or credited to other comprehensive income. Similarly, income tax is charged or credited directly to equity if it relates to items that are credited or charged directly to equity. Otherwise income tax is recognised in the income statement.

Equity

Equity comprises the following: Share capital represents the nominal value of equity shares. Share premium represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue. Profit and loss reserve represents retained profits.

Research and Development Costs

Research expenditure is charged to income in the year in which it is incurred.

Expenditure incurred in the development of software and hardware products for use or sale by the business, and their related intellectual property rights, is capitalised as an intangible asset only when:

• Technical feasibility has been demonstrated;

• Adequate technical, financial and other resources exist to complete the development, which the Group intends to complete and use;

• Future economic benefits expected to arise are deemed probable; and

• The costs can be reliably measured.

Development costs not meeting these criteria are expensed in the income statement as incurred. When capitalised, development costs are amortised on a straight-line basis over their useful economic lives once the related software and hardware products are available to use. During the period of development the asset is tested for impairment annually. No research and development costs have been capitalised in the period.

Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses. Depreciation is charged on the following bases to reduce the cost of the Company's property, plant, and equipment to their residual values over their expected useful lives at the following rates:

Leasehold improvements - 20% straight line,

Office furniture and equipment - 20% straight line,

Computer equipment - 33% straight line,

Demonstration Stock - 14% to 20% straight line.

The carrying value of property, plant and equipment is reviewed for impairment when events or changes in circumstances indicate the carrying value may be impaired.

Inventories

Inventories are valued at the lower of cost and net realisable value on a first in first out basis. In the case of finished goods, cost includes all direct expenditure and production overheads based on the normal level of activity. Where necessary, an appropriate allowance is made for obsolete, slow-moving and defective inventories. In certain instances stock items are used for Demonstration purposes, in this case the stock item is classified as a fixed asset and depreciated in line with the group depreciation policy.

Trade and other payables

Trade and other payables are initially recognised at fair value. Subsequent to initial recognition, they are measured at amortised cost.

Cash Equivalents

Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.

Deferred Income

Deferred income represents amounts received in advance from clients less turnover recognised to date.

Financial Instruments

The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement.

Foreign Currency Translation

The functional and presentation currency of the Group is Sterling. Transactions denominated in foreign currencies are translated into Sterling at the rates of exchange ruling on the date of the transaction. Monetary assets and liabilities are translated into Sterling at the rate of exchange ruling at the balance sheet dates. All other exchange differences are dealt with through the income statement.

Retirement benefits

The Group operates defined contribution pension schemes for certain employees, and makes contributions to a Group personal pension plan for the majority of employees. Pension costs are calculated annually and charged to the income statement as they arise.

Share Based Payments

Certain employees of the Group receive remuneration in the form of share-based payment transactions, whereby employees render services in exchange for rights over shares under the Long-Term Incentive Plan ("LTIPs"). The LTIP performance and service conditions are all non-market conditions. The total amount to be expensed over the vesting period of the options and LTIPs is determined by reference to the fair value at the date at which the options or LTIPs are granted and the number of awards that are expected to vest. The fair value is determined using a Black Scholes model. The assumptions underlying the number of options expected to vest are adjusted to reflect conditions prevailing at the balance sheet date. At the vesting date, the cumulative expense recognised in the income statement is adjusted to take account of the awards that actually vest.

The executive directors have subscribed an aggregate of £217,500 for incentive shares. The incentive shares only reward participants if shareholder value is created, thereby aligning the interests of the executive directors with those of shareholders. The incentive shares carry the right to 12.5 percent of any increase in the value of the company in excess of the retail prices index after 1 February 2010. The incentive shares do not carry any voting or dividend rights and are not transferable except in limited circumstances. The total amount to be expensed over the vesting period of the incentive shares is determined by reference to the fair value at the date at which the incentive shares were acquired. The fair value is determined using a stochastic model. The cash subscribed for the incentive shares has been recognised as a current liability on the balance sheet as it becomes repayable if the executive directors leave office. The fair value of the incentive shares has been determined to be equivalent to the amount subscribed and hence no share based payment charge has been recognised.

Employee Benefit Trust

The Digital Barriers Group Employee Benefit Trust (the "Trust"), which purchases and holds ordinary shares of the Company in connection with employee share schemes, is consolidated in the Group financial statements. Any consideration paid or received by the Trust for the purchase or sale of the Company's own shares is shown as a movement in shareholders' equity.

Lease commitments and hire purchase contracts

Assets acquired under finance leases and hire purchase contracts are capitalised and disclosed under property, plant and equipment at their estimated fair value, or, if lower, the present value of the minimum lease payments on the inception of each lease or contract and depreciated over their estimated useful lives. The capital element of the future payments is treated as a liability and the total finance charge is allocated over the period of the lease or contract in such a way as to give a constant charge on the outstanding liability.

Leases in which a significant proportion of the risk and rewards of ownership are retained by the lessor are classified as operating leases. Operating lease rentals payable or receivable are charged or credited to the income statement on a straight-line basis over the lease term.

Dividends

Dividends proposed by the Directors and unpaid at the year end are not recognised in the financial statements until they have been approved by shareholders at a general meeting of the Company. Interim dividends are recognised when they are paid.

Adoption of new and revised International Financial Reporting Standards

The Group's accounting policies have been prepared in accordance with IFRS effective as for its reporting date of 31 March 2011.

2. Segmental information

At this stage of the Group's development, the directors are of the opinion that there is only one reportable segment within the activities of the Group relating to the provision of specialist Digital Security and Surveillance Technology and Services. This is the business segment used for internal reporting purposes and reviewed by the Directors to assess performance and allocate resources.

3. Adjusted loss

An adjusted loss measure has been presented which excludes the amortisation of intangibles (£151,000), the cost of the initial public offering (£185,000) and the costs of acquisitions (£500,000) as the directors believe that this is a more relevant measure of the group's underlying performance.

4. Taxation on ordinary activities

It is anticipated that there will be no charge to United Kingdom corporation tax for the period to 31st March 2011. The tax credit recognised in the interim period arises from the unwinding of the deferred tax liability recognised on acquisition.

5. Loss per share

The loss per share is calculated on the loss after tax of £1,993,000 and the average number of shares in issue during the period of 22,183,000.

Diluted earnings per share are calculated as above as the inclusion of potential ordinary shares arising from share options in issue would be anti-dilutive.

The adjusted loss per share is calculated on the adjusted loss before tax of £1,184,000 and the average number of shares in issue during the period of 22,183,000.

Diluted adjusted earnings per share is calculated as above as the inclusion of potential ordinary shares arising from share options in issue would be anti-dilutive.

6. Acquisitions

Digital Barriers Services Limited

On 22nd February 2010, Digital Barriers plc acquired 100% of the shares of Digital Barriers Services Limited to form the Digital Barriers group via a share for share exchange. Digital Barriers plc issued 4,782,500 £1 ordinary shares and 217,500 incentive shares at £1 to acquire 100% of the share capital of Digital Barriers Services Limited. This transaction has been accounted for using the pooling of interests method. Digital Barriers Services Limited is the main operating business of the group.

The carrying value of the assets and liabilities of Digital Barriers Services Limited at the transaction date are set out below.

The difference of £307,000 between the carrying value of the net assets acquired and the £5,000,000 of shares issued in consideration has been recognised in reserves on consolidation.

Security Applications Limited

On 23rd March 2010, the group acquired the entire issued share capital of Security Applications Ltd (SAL), (trading as D Ford Associates).

SAL is a UK-based specialist supplier, installer and integrator of thermal imaging equipment for perimeter surveillance, law enforcement and the protection of high-profile target locations. SAL supplies customised equipment and associated installation and maintenance services on a project-by-project basis to a highly-concentrated customer base through a framework agreement with a major UK Government department.

The provisional fair value of the identifiable assets and liabilities of SAL at acquisition date are set out below.

The goodwill of £1,417,000 comprises the value of expected synergies arising from the acquisition and the workforce, which is not separately recognised. None of the goodwill recognised is expected to be deductible for income tax purposes. The deferred consideration represents an earn-out based on revenue and profit targets for the period ending 31 July 2011.

Overtis Solutions

On 23rd July 2010 the group acquired the business and assets of the Solutions division of Overtis Group for £3.20m in cash.

Overtis Solutions is a UK-based specialist provider of integrated security solutions used in the protection of high value physical, human and information assets on a global basis held by high risk government departments, public sector bodies and major corporations.

The provisional fair value of the identifiable assets and liabilities of Overtis Solutions at acquisition date are set out below.

The goodwill of £1,825,000 comprises the value of expected synergies arising from the acquisition and the workforce, which is not separately recognised. All of the goodwill recognised is expected to be deductible for income tax purposes.

COE Group plc

On the 20th of August 2010 the groups recommended cash offer for the issued share capital of COE Plc for £3.3m in cash became unconditional, and the group took control of Coe Group plc.

COE's focus has been to specialise in bringing innovative products to the video surveillance market. This has culminated in the successful development of COE's product range which offer high levels of video quality and technological integration for surveillance activities across IP, fibre and hybrid networks.

The provisional fair value of the identifiable assets and liabilities of COE Group plc at acquisition date are set out below.

The goodwill of £2,823,000 comprises the value of expected synergies arising from the acquisition and the workforce, which is not separately recognised. None of the goodwill recognised is expected to be deductible for income tax purposes.

7. Issued capital and reserves

On 22nd February 2010 the Company issued 4,782,500 Ordinary Shares of £1 each in a share for share exchange to acquire Digital Barriers Services Ltd. These shares were subsequently sub-divided into 4,782,500 shares of £0.01 each and 4,782,500 Deferred Shares of £0.99 each. The Deferred Shares were bought back by the Company for a total consideration of £1 from the proceeds of the IPO, resulting in a capital redemption reserve of £4,735,000.

On 4th March 2010 the Company issued 20,000,000 £0.01 Ordinary shares for a total consideration of £20,000,000.

8. Post Balance Sheet Events

On the 20th October 2010, Digital Barriers acquired the entire share capital of Waterfall Solutions Limited for a maximum consideration of £5.5m in cash and loan notes. The initial consideration of £3.9m was paid in cash. Deferred consideration of up to £0.85 million is payable in cash and loan notes on completion of Waterfall's current financial year, ending 30 September 2011, and an additional sum of £0.75 million is payable in cash and loan notes on completion of the subsequent financial year, ending on 30 September 2012, subject to the satisfaction of certain performance conditions.

Waterfall is as UK-based provider of advanced technology solutions and related consulting services, specialising in the areas of image processing, data fusion, modelling and simulation, and fits neatly with Digital Barriers existing acquired assets. Waterfall works directly with government and commercial clients in the defence and security sectors as well as through strategies partnerships and prime systems integrators.