Thruvision Grp Regulatory News (THRU)

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6 December 2012

Digital Barriers plc

Proposed Placing to raise approximately £10m (after expenses)

and

Proposed amendments to rights attaching to the Incentive Shares and the LTIP Rules

Digital Barriers plc ("Digital Barriers" or the "Company"), the specialist provider of advanced surveillance technologies to the international homeland and defence markets, is pleased to announce a conditional placing of 7,172,414 new Ordinary Shares at 145 pence per share to raise approximately £10 million (after expenses) for the Company to further implement its stated strategy.

Background to and reasons for the Placing

The global security context has evolved in recent years. One of the most significant threats to national and homeland security now comes from international and domestic terrorism, organised attacks on high-profile computer systems and networks, and asymmetric warfare including counter-insurgency operations overseas. These evolving threats cross borders and jurisdictions, seeking to exploit vulnerabilities in physical and electronic security systems. These changes to the environment have created a compelling opportunity to create a leading international business working directly with end-customers and through key partner organisations to provide specialist products and services.

Digital Barriers was established in 2009 to meet this market opportunity with the aim of providing advanced surveillance technologies to the international homeland security and defence sectors. Digital Barriers works with governments, multinational corporations and system integrators across defence, law enforcement, critical infrastructure, transport and natural resources, delivering intelligent surveillance information from remote, hostile and mobile environments. Digital Barriers' technology is currently deployed to support the operations of government and law enforcement agencies around the world, and to protect high-profile locations such as borders, airports, military bases and public transportation systems.

During the first half of the financial year ending 31 March 2013, Digital Barriers has carefully assessed the international market appetite for the different technologies within its surveillance portfolio. The results of this exercise have led the Company to focus on the three core technologies that, the Directors believe, offer the greatest strategic opportunity for growth, being:

·; TVI, Digital Barriers' world-class wireless transmission technology for live video streaming. The Company has continued to generate significant interest in TVI and has made sales across all of its target regions. In the UK, the United States and the Middle East for example, Digital Barriers has sold TVI into major law enforcement agencies and specialist parts of the military;

·; RDC, the Company's Remote Detection and Classification ground sensor. Digital Barriers has generated real customer excitement, especially in the border control sector, through the early marketing and trials of this technology. RDC itself is a class-leading product, with superior on-board detection and analysis technology, long battery life, is simply deployed and has a superior performance/price point than competitor products. Used as part of a surveillance system with Digital Barriers' TVI video products, it provides a genuinely disruptive capability to the homeland security market. Advanced customer trials are underway with a major border security customer in Asia Pacific and the sales pipeline is strengthening ahead of the formal product launch in January 2013. The Directors believe that the first orders will be shipped on launch; and

·; ThruVision, which provides a passive stand-off body scanning capability for concealed object detection, for example to identify drugs, weapons or explosives hidden under clothing. This is a differentiated product on the international market, with unique capabilities in terms of its detection range. The Company is in discussions around adoption of this technology with customs & border agencies in a number of key markets and has seen notable early success in Asia Pacific. The Company also continues to develop the next generation of ThruVision technology, now being trialled with core US and UK customers.

The Directors believe that the homeland security and defence markets continue to represent a compelling commercial opportunity and, accordingly, they intend to continue to develop Digital Barriers through further strategic acquisitions and ongoing organic growth.

The Placing

The purpose of the Placing is to raise funds to be used by the Company to further implement its stated strategy. In particular, the Directors intend to use the net Placing proceeds to finance the acquisition of a fourth core technology, which is currently in advanced discussions. The consideration for this acquisition will be less than £10 million. The Company will also continue to seek opportunities to acquire other appropriate businesses or intellectual property and the funds raised from the Placing may be used to provide additional cash resources for this purpose. The Placing proceeds will also provide further general working capital for the Group.

General

The Company has conditionally raised £10.4 million (before expenses) through the proposed issue of the Placing Shares at the Placing Price, which represents a discount of approximately 1.7 per cent. to the closing middle market price of 147.5 pence per existing Ordinary Share on 5 December 2012, being the last practicable date prior to this announcement. The Company's Issued Share Capital is currently 43,787,176 Ordinary Shares. Accordingly, the Placing Shares will represent approximately 14.1 per cent. of the Enlarged Issued Share Capital of 50,959,590 Ordinary Shares. The net proceeds of the Placing are expected to be approximately £10.0 million.

Directors' participation in the Placing

Each of the Directors has irrevocably undertaken to subscribe or apply in aggregate, for 234,479 Placing Shares under the Placing as follows:

The Placing Agreement

Pursuant to the terms of the Placing Agreement, Investec, as agent for the Company, has conditionally agreed to use its reasonable endeavours to procure subscribers for the Placing Shares. Investec has conditionally placed the Placing Shares with certain existing institutional and other investors at the Placing Price. The Placing has been fully underwritten by Investec subject to the terms of the Placing Agreement.

General Meeting and Admission

The Placing Agreement is conditional, inter alia, upon the Company obtaining approval from its Shareholders to grant the Board authority to allot the Placing Shares and to disapply statutory pre-emption rights which would otherwise apply to the allotment of the Placing Shares at the General Meeting to be held at the offices of Osborne Clarke, One London Wall, London EC2Y 5EB at 10.00 a.m. on 27 December 2012 and Admission becoming effective on or before 8.00 a.m. on 2 January 2013 (or such later time and/or date as the Company and Investec may agree, but in any event by no later than 8.00 a.m. on 16 January 2013).

The Placing Agreement contains customary warranties from the Company in favour of Investec in relation to, inter alia, the accuracy of the information in the Circular and other matters relating to the Company and its business. In addition, the Company has agreed to indemnify Investec in relation to certain liabilities it may incur in respect of the Placing. Investec has the right to terminate the Placing Agreement in certain circumstances prior to Admission, in particular, in the event of a material breach of the warranties given to Investec in the Placing Agreement, the failure of the Company to comply in any material respect with any of its obligations under the Placing Agreement, the occurrence of a force majeure event or a material adverse change affecting the condition, or the earnings or business affairs or prospects of the Group as a whole, whether or not arising in the ordinary course of business.

Settlement and dealings

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is expected that Admission will occur on 2 January 2013. Immediately following Admission, the Company will have 50,959,590 Ordinary Shares in issue.

The Placing Shares will, when issued, rank in full for all dividends and other distributions declared, made or paid on the Ordinary Shares following Admission and otherwise pari passu in all respects with the existing Ordinary Shares.

The Circular

The Company will later today publish a Circular containing, inter alia, further details of the Placing and a notice convening the General Meeting at which the Resolutions will be proposed. The Circular will be available at www.digitalbarriers.com.

Trading Update

Digital Barriers announced its unaudited interim results for the six month period ended 30 September 2012 on 22 November 2012, which reflected good growth across both products and services divisions and a particularly strong Asia Pacific performance with flagship customers and partners across the region. Revenues in the period were £8.1 million (2011: £4.8 million) on which the Company recorded an adjusted loss after tax of £5.0 million (2011: £2.9 million), after adding back amortisation of acquired intangibles of £1.1 million, impairment of intangibles of £1.1 million, exceptional costs of £0.4 million relating to acquisition and reorganisation costs, as well as making an adjustment to deferred consideration outstanding of £0.6 million.

Trading since 30 September 2012 has been in line with management expectations.

Digital Barriers announced the award of a contract by an existing UK-based customer, valued at £3.6 million, on 29 November 2012. The contract is for the provision of a fully-integrated technology solution, and includes a range of Digital Barriers' products for unattended ground sensor capabilities. Digital Barriers also announced on the same date the award of a contract from a new and significant Government customer in Asia-Pacific, for the provision of ThruVision passive screening technology for border security, valued at around £400,000.

Proposed amendments to the rights attaching to the Incentive Shares and the LTIP Rules

In addition, the Board also proposes to take this opportunity to seek Shareholder approval to the amendment of certain of the rights attaching to the Incentive Shares held by the Founding Executive Directors and the LTIP Rules.

The Company has established incentive arrangements which only reward the participants if Shareholder value is created, thereby aligning the interests of the participants with those of Shareholders.

In particular, shortly before the IPO, the Founding Executive Directors acquired an aggregate of 217,500 Incentive Shares. Broadly, these Incentive Shares carry the right to 12.5 per cent. of any increase in the value of the Company in excess of the retail prices index after 1 February 2010 and become convertible into Ordinary Shares in two 50 per cent. tranches on each of 1 February 2013 and 1 February 2014. The specific rights attaching to the Incentive Shares are set out in the existing Articles.

The issue of the Incentive Shares recognised the significant investment in both time and money that the Founding Executive Directors had made prior to the IPO, and the fact that their remuneration packages for the initial years following the IPO would be below market rates.

It was also agreed at the time the LTIP Rules were adopted that holders of Incentive Shares would not be entitled to participate in any LTIP awards. Accordingly, the Founding Executive Directors could not be granted awards under the LTIP until their Incentive Shares had fully converted into Ordinary Shares in February 2014.

On this basis, the earliest vesting period under any initial LTIP award would be May 2017, creating a three year gap covering the financial years ended 31 March 2015, 2016 and 2017 where the Founding Executive Directors would have no equity-based incentives vesting.

The Remuneration Committee considers that this is an unattractive situation, since it produces a retention risk on the Company's key executives at an important stage in the Company's development.

The Remuneration Committee, in conjunction with specialist advice from the Company's remuneration consultants, New Bridge Street, therefore evaluated different approaches to address this issue in a way that both maximises alignment with Shareholders' interests and makes the most efficient use of the Company's resources.

Following this evaluation, the Independent Directors, on the recommendation of the Remuneration Committee and after consultation with the Company's principal institutional Shareholders, are proposing that the Incentive Share vesting schedule in the Articles be amended from two 50 per cent. tranches in February 2013 and 2014 to four 25 per cent. tranches in each of 2013, 2014, 2015, and 2016.

In each case, the relevant conversion period will commence on the date being five Business Days after the publication of the Company's preliminary results for the immediately preceding financial year and 31 May of that year, whichever is the earlier.

The Independent Directors believe that these proposed changes would thereby incentivise the Founding Executive Directors to continue their focus on value creation through to mid 2016. Clearly, this provides potentially increased returns to the Founding Executive Directors should the Company outperform, but is also balanced by the downside risk in the event of underperformance.

In order to ensure that there is no similar incentivisation gap after mid 2016, the Remuneration Committee has also recommended that the Founding Executive Directors be allowed to participate in the LTIP from 2014 (should the Remuneration Committee consider it appropriate) to enable equity incentives vesting in 2017 to be awarded.

In order to implement the Share Right Amendment and enable the earlier participation of the Founding Executive Directors in the LTIP, it will be necessary to adopt the New Articles and amend the LTIP Rules.

Recommendation

The Directors consider the Placing to be in the best interests of the Company and its Shareholders as a whole and accordingly intend to unanimously recommend Shareholders to vote in favour of Resolutions 1 and 2 to be proposed at the General Meeting as they intend to do so in respect of their own beneficial holdings amounting, in aggregate, to 4,845,500 existing Ordinary Shares, representing approximately 11.07 per cent. of the Issued Share Capital.

The Independent Directors consider the Share Right Amendment and the LTIP Rules amendment to be in the best interests of the Company and Independent Shareholders as a whole and accordingly intend to unanimously recommend Independent Shareholders to vote in favour of Resolutions 3 and 4 to be proposed at the General Meeting as they intend to do so in respect of their own beneficial holdings amounting, in aggregate, to 3,000 existing Ordinary Shares, representing approximately 0.01 per cent. of the Issued Share Capital.

Tom Black, Executive Chairman, commented:

"Our Shareholders have again demonstrated their continued support for our business and their understanding of our strategy and goals through their response to our Placing. We remain excited by the opportunities for growth that lie ahead."

Enquiries:

Investec Investment Banking, a division of Investec Bank plc, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for the Company in connection with the Placing, and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Investec or for providing advice in relation to the Proposals or any other matter in relation to the contents of this announcement.

This announcement has been issued by Digital Barriers plc and is the sole responsibility of the Company. This announcement has not been approved by Investec for the purposes of section 21 of FSMA. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by Investec or by any of its affiliates or agents as to, or in relation to, the accuracy or completeness of this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

This announcement does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities or any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, such securities by any person in any circumstances, and in any jurisdiction, in which such offer or solicitation is unlawful. Accordingly, copies of this announcement are not being and must not be mailed or otherwise distributed or sent in or into or from the United States, Canada, Australia, Japan, the Republic of South Africa or the Republic of Ireland or any other jurisdiction if to do so would constitute a violation of the relevant laws of, or require registration thereof in, such jurisdiction (each a "Restricted Jurisdiction") or to, or for the account or benefit of, any United States, Canadian, Australian, Japanese, South African or Irish person and any person receiving this announcement (including, without limitation, custodians, nominees and trustees) must not distribute or send it in or into or from a Restricted Jurisdiction.

This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will", or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the Directors' current intentions, beliefs or expectations concerning, among other things, the Company's results of operations, financial condition, liquidity, prospects, growth, strategies and the Company's markets. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual results and developments could differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements in this announcement are based on certain factors and assumptions, including the Directors' current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's operations, results of operations, growth strategy and liquidity. Whilst the Directors consider these assumptions to be reasonable based upon information currently available, they may prove to be incorrect. Save as required by law or by the AIM Rules, the Company undertakes no obligation to publicly release the results of any revisions to any forward-looking statements in this announcement that may occur due to any change in the Directors' expectations or to reflect events or circumstances after the date of this announcement.

Expressions used in this announcement shall have the meanings set out in the Appendix to this announcement.

Appendix

 DEFINITIONS

In this announcement, the following expressions have the following meanings, unless the context requires otherwise: