Thruvision Grp Regulatory News (THRU)

7 October 2013

Digital Barriers plc

("Digital Barriers" or the "Group")

Trading Update

The Board of Directors (the "Board") of Digital Barriers (the "Group", LSE AIM: DGB), the specialist provider of advanced surveillance technologies to the international homeland security and defence markets, provides an update on trading for the six months ended 30 September 2013 (the "Period").

Financial Summary

The Board can report that it expects Group revenues of £9.0 million for the Period (H1 2012 pro forma: £8.9 million), with strong performance in its Products division, which recorded overall growth of 12% and international growth of 36% over the same period last year. The Group sold its products into thirty countries during the Period, with exports accounting for 33% of revenues (H1 2012: 27%). This offset lower than expected Group revenues in the UK, and in particular in the UK Services division.

Digital Barriers was established to develop and market advanced surveillance technologies across the international defence and homeland security sectors. The Group has three key product areas that are driving international sales: RDC Unattended Ground Sensors, TVI Video Surveillance Platform, including video analytics and the OmniPerception facial recognition technology acquired by the Group in early 2013, and ThruVision Passive People Screening. With this world-class product set now in place, the Group is focusing its financial and operational resources on international sales execution, and having demonstrated considerable progress during the Period will continue to invest in its overseas sales channels as a platform for continued growth.

RDC Unattended Ground Sensors

The Group is seeing significant customer interest around the world for its fully integrated unattended ground sensor solution, and is actively engaged in discussions or trials with customers across twelve countries for major defence and border protection programmes, highlights include:

· In July 2013 the Board announced a contract extension valued at £2.3 million with a UK-based customer for its fully integrated unattended ground sensor solution.

· In September 2013 it announced its first significant overseas sale of the same technology, with an initial contract award valued at £1.0 million for the protection of a high-profile border in the Asia Pacific region.

· The Group has also recently made its first sale of this technology into a major US defence customer, with the successful trial of the technology followed by an initial order valued at $115,000.

· The technology has also been selected for trial by an oil & gas multinational as part of a major facility protection programme in the Middle East.

The Board believes that this international traction is indicative of the significant demand the Group can generate for this technology solution around the world.

TVI Video Surveillance Platform

The Group has continued to export its world-class TVI video surveillance platform internationally, and has sold the technology into eighteen countries during the Period, highlights include:

· Following the announcement in January 2013 that the Group had secured a contract with a US federal agency for the development of a high-definition version of its core TVI video streaming technology, the Group has in the Period secured an enterprise-grade TVI sale into its second US federal agency, with an initial contract valued at approximately $260,000 for TVI products, including the Group's first enterprise sale of TVI encoding software to run on iOS devices operated by frontline law enforcement agents. The opportunity for the TVI surveillance platform to be deployed across defence and law enforcement sectors is now well established, and the Group is focused on securing initial enterprise grade TVI sales that can lead to significant follow-on orders over the coming years.

· The Group now has TVI solutions that operate on its own hardware, on iOS and Android devices, and embedded on third-party products. During the Period, the Group launched a variant of TVI technology to work with IP cameras, opening up significant new markets; and the high-definition version of TVI is scheduled to launch in late 2013. TVI has also been successfully tested on 4G/LTE networks during the Period, with a potential customer organisation in the Middle East.

· In addition to the core TVI video streaming technology, the Group is now working to integrate other technologies from its acquired companies onto the TVI platform to significantly enhance the functionality of its products. This includes real-time video content analytics and facial recognition capabilities that the Group is adapting to operate on its own surveillance products and on smartphones. The Board believes this will significantly increase the market potential for such technology.

· Following the announcement at the beginning of the Period that SingTel had selected TVI as the delivery platform for its video surveillance as a service (VSaaS) offering, the Group is now actively working with SingTel to support their sales efforts into their enterprise customers. In August 2013, the Group announced that it would also supply BT Redcare, the UK's largest provider of CCTV surveillance infrastructure and alarm signalling, with TVI products on an OEM basis. The Group is now developing specifically adapted TVI products for this OEM reseller market; it is expected that these products will be launched in early 2014.

· The Group is actively engaged in discussions with multiple mobile network operators around potential TVI reseller arrangements under similar annuity revenue models. The Board believes that the Group can generate significant revenues in the medium to long term by productising and selling its IP through multinational technology and telecoms organisations. As with the Group's sales into government customers, the pattern of modest initial sales with the potential for very significant follow-on revenues in later years also applies here.

ThruVision Passive People Screening

The Group has made positive progress in the Period with its ThruVision technology. This remains an early stage technology and the Group continues to further develop and promote it within sectors where the Board believes there is short to medium term sales potential. Highlights in the Period include:

· Successfully delivering the significant customs sale into Asia Pacific that was announced last year. This system is now fully operational and further sales are expected to the same customer.

· The force protection sector has continued to show great interest in our ThruVision technology as part of some larger technology deployment programmes.

· ThruVision has been trialled successfully by one of the UK's largest retail organisations to reduce shrinkage within its distribution centres, and the customer now anticipates a wider deployment.

Outlook

With Digital Barriers' technology solutions seeing strong international sales momentum, the outlook for the future prospects of the Group is increasingly compelling as it continues to deliver very strong overseas sales growth and moves towards break-even. The Board remains comfortable with its expectations for this financial year.

The Group expects to announce interim results for the six months ended 30 September on 28 November 2013.

Tom Black, Executive Chairman of Digital Barriers commented:

"We established Digital Barriers with a strategy to sell world-class surveillance technologies into flagship customers around the world, and that is exactly what we are now doing. This period has been characterised by modest initial sales into strategically important international customers, with the potential for very significant follow-on orders with each of these organisations over the next few years. We sold into thirty countries during the period, we secured the first major overseas sale of our ground sensor solution and we sold TVI as an enterprise solution into a second US federal agency. I believe that our strategy is now firmly proven.

Our most notable success came last month, when we were awarded an initial order for unattended ground sensors valued at £1.0 million into a high-profile border protection programme in the Asia Pacific region. Typical of what we are seeing with other sales to international governments, this initial order has been many months in the making, with our technology coming through several competitive trials to secure its position on a very significant national-level programme.

We now sell into such a large number of different countries around the world that any financial period's numbers can only ever tell half the story. We have limited control over the timing of overseas government procurement processes, and as a result it is difficult to influence the timing of sales closures. Despite the inevitable impact that this has on sales timings and working capital requirements, we now have demonstrably increasing overseas sales momentum with exactly those flagship customers we have sought to secure since establishing the Group. This is the best indicator of the future potential of the Group, and it is this above all else that gives me significant confidence in the longer-term prospects of the Group."

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About Digital Barriers

Digital Barriers provides advanced surveillance technologies to the international homeland security and defence markets, specialisingin 'edge-intelligent' solutions that are designed for remote, hostile or complex operating environments. We work with governments, multinational corporations and system integrators in the defence, law enforcement, critical infrastructure, transportation and natural resources sectors. Our surveillance technologies have been successfully proven on some of the most demanding operational and environmental deployments around the world.

www.digitalbarriers.com