25 May 2016

("21st Century" or "the Group")

Final results for the year ended 31^st December 2015

21^st Century Technology Plc, the specialist provider of tailored solutions to the transport community, solving complex operational requirements both on and off vehicle, today announces its results for the full year ended 31^st December 2015.

Financial Highlights

·     Sales increased 36% from 9.0m to £12.2m (including 8 months trading of RSL)

·     Gross margins increased from 36% to 45%

·     Underlying profit before tax of £52,000 (2014: underlying loss £129,000)

·     Underlying profit per share 0.06p (2014: Loss 0.14p)

·     Goodwill impairment of £4.3m relating to acquired goodwill in 21^st Century Technology Solutions Limited from 2005; reflecting previously announced downturn in trading conditions

·     Loss per share 5.17p (2014: 0.41p);

·     Cash at year-end £1.0m (2014: £2.7m) partially due to £1.1m acquisition costs of RSL Group and increased working capital requirements

Operational Highlights

·     Acquisition of RSL Group to expand the capability of 21^st Century off the vehicle, bringing:

o  Increase customer base to include local authorities and PTEs

o  In-house software development team

·     Breakthrough rail orders:

o  In-carriage CCTV; building on Forward Facing CCTV solution

o  Platform and infrastructure CCTV at a network of rail stations

·     Initial UK evaluations of advanced integrated on-vehicle solutions amongst bus fleet operators

Russ Singleton, Chief Executive Officer, said: "We made a lot of progress in 2015 in developing 21^st Century's capabilities in stand-alone CCTV and on-board IT sub-systems integration, building towards our goal of fully connected systems; on and off vehicles in towns and cities and on the transport network's bus and rail stations. The acquisition of RSL Group provided some unforeseen challenges, though with these issues now behind us we are accelerating the integration of the two businesses with RSL becoming our Passenger Systems team, complementing our existing Fleet Systems team. Whilst progress in the early part of 2016 has been slower than expected with a number of contracts now expected to fall into the second half, we are starting to see some new opportunities emerging that were previously unavailable to us."

A digital copy of this announcement and the full annual report for the year ended 31 December 2015 is available on the Group's website: www.21stplc.com

Enquiries:

Notes to editors:

'Connected Systems for Connected Journeys'

21st Century Technology is the specialist provider of tailored solutions to the transport community, solving complex operational requirements both on and off the vehicle.

Fleet solutions include video surveillance to improve passenger & driver safety, vehicle & driver performance monitoring and automatic passenger counting.

Passenger information solutions include the necessary hardware and software for electronic passenger information systems, off-vehicle smart ticketing and way-finding.

With over 20 years' experience in the transport industry, 21st Century Technology specialises in providing innovative technology solutions to improve the passenger experience and provide operational benefits to fleet and network operators. Comprised of an on-vehicle systems division and a passenger information division, 21st Century Technology provides integrated solutions both on and off the vehicle and is now combining the two in order to deliver 'connected systems for connected journeys'.

Further information on the company is available on www.21stplc.com or search for 21st Century Technology on LinkedIn and @21stCenturyLtd on Twitter.

Chairman's statement

In April 2015 the Company acquired RSL Group in accordance with its strategy to diversify and build in related markets. This accelerates the transformation of 21st Century from providing stand-alone, on-vehicle CCTV and IT sub-systems integration towards providing fully connected systems on and off vehicles in towns and cities and in the transport network's bus and rail stations. RSL Group was run as a family business for many years and came with a number of risks and issues that were identified during due-diligence; however, it also presented several unexpected post-acquisition challenges to the executive team. Concentrated effort has been required to successfully resolve these and to lay the groundwork for integration.

The anticipated benefits are starting to be realised, helping us to diversify our customer base and access new markets, although we do still have an over-reliance on a small number of customers. The acquisition has increased our software ownership and capabilities, which will be a major focus for us in the future.

Whilst we would have hoped to have progressed faster than has been achieved, timing of acquisitions is difficult to control and the investment and lead time in tendering for large or long-term framework agreements can be significant and subject to delays outside our control. We have recently completed an internal reorganisation of sales and marketing efforts across the Group, focusing our strengths in this area, and we remain selective in those projects at which we direct resource.

Trading results

Group results for the year ended 31 December 2015 show a small underlying profit before tax of £52,000 (2014: underlying loss of £129,000).

The effect of share based payments, reorganisation, one off legal and acquisition costs and goodwill impairment resulted in a loss before tax of £4.8m (2014: loss of £417,000). The basic loss per share is 5.17p (2014: 0.41p).

The goodwill impairment represents 100% of 21^st Century Technology Solutions Ltd goodwill created in 2005 and reflects the previously reported recent downturn in trading conditions.

People

We are fortunate to have many talented and loyal staff at 21^st Century and the acquisition of RSL Group gives me the pleasure of being able to warmly welcome new team members to our growing business.  Our team continues to show commitment and dedication through what is a difficult period of consolidation. I would like to pass on my sincere thanks and that of the Board to them all as we build a more capable and successful business.

Outlook

As already announced, the start to the current year has been slower than anticipated with expected orders delayed into the second half of the year. We are currently consolidating into a more focused and streamlined business, with a reduced cost-base.

The issues and challenges following the RSL Group acquisition have now been dealt with and we are starting to see new sales opportunities emerge, as anticipated. 

We continue to be invited to participate in significant tenders and our expectation is to build on the relationships and contract wins announced last year with a number of framework agreements and successful bids and tenders currently under negotiation.

We are also investing in a small team to enter more specialised market segments where we believe that our scale and expertise will provide a distinct competitive advantage as we develop new, higher value-added solutions. While it is early days we are encouraged by the interest shown and initial orders received.

Software skills remain a focus for the profitable growth of the business and forms a key element of long term relationships with our customers. The appointment of a Group leader for our technology is an important aspect of this and in January this year we welcomed Dr Andy Houghton to the senior team, who brings with him significant experience in developing innovative products for niche markets from small and agile development teams.

At the Group's Annual General Meeting, the CEO, Russ Singleton, will review these areas in more detail and a copy of his presentation will be added to our website.

Mark Elliott

Non-executive Chairman

24 May 2016

Consolidated statement of comprehensive income

for the year ended 31 December 2015

Consolidated statement of changes in equity

for the year ended 31 December 2015

Consolidated statement of financial position

at 31 December 2015

Consolidated statement of cash flows

for the year ended 31 December 2015

Notes to the results announcement for the year ended 31 December 2015

1. Basis of preparation

The Group financial statements are prepared in accordance with International Financial Reporting Standards and IFRIC interpretations issued and effective (or adopted early) and endorsed by the European Union at the time of preparing these financial statements and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention.

The financial information contained in this announcement does not constitute statutory accounts for the year ended 31 December 2015 or 31 December 2014.  The financial information for the years ended 31 December 2015 and 31 December 2014 is derived from the statutory accounts for those periods which include audit reports which are unqualified, do not contain a statement under either Section 498(2) or Section 498(3) of the Companies Act 2006 and do not include references to any matters to which the auditor drew attention by way of emphasis.  The statutory accounts for the year ended 31 December 2014 have been delivered to the Registrar of Companies.  The statutory accounts for the year ended 31 December 2015 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

Going concern

The Group's business activities together with factors likely to affect its future development, performance and position are set out in the Strategic Report within the statutory financial statements and in the Chairman's Statement. The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and for at least twelve months from the date of this report. Consequently, these Group financial statements are prepared on the going concern basis.

2. Segmental reporting

IFRS 8 requires operating segments to be determined on the basis of those segments whose operating results are regularly reviewed by the Board of Directors (the Chief Operating Decision Maker as defined by IFRS 8) to make strategic decisions.

Last year, the Directors considered the Group to have only one segment in terms of products and services, being the supply and installation of CCTV, black-box and other monitoring systems for use on public transport vehicles both in the UK and overseas. Comparatives are only given for the revenue and gross profit.

This year, with the acquisition of RSL Group (note 6), we have two strategic operating segments: Fleet Systems and Passenger Systems. In addition, there are central functions that provide services to the two strategic operating segments. During the year there were no revenue transactions between operating segments.

As the Board of Directors reviews revenue, gross profit and operating loss on the same basis as set out in the consolidated statement of comprehensive income, no further reconciliation is considered to be necessary.

Major customers

In the year, three customers within the Fleet Systems segment each accounted for over 10% of Group revenue at 19%, 18% and 11%. In the prior year, there were three Fleet Systems customers that each accounted for over 10% of revenue at 42%, 23% and 14%. There were no major customers within the Passenger Systems segment.

Net assets attributed to each business segment represent the net external operating assets of that segment, excluding goodwill, bank balances and borrowings which are shown as unallocated amounts, together with central assets and liabilities.

Geographical segments

Assets and liabilities by location

All non-current assets are located within the United Kingdom.

3. Loss per Ordinary Share

Basic earnings per share (EPS) is calculated by dividing the earnings attributable to Ordinary Shareholders by the weighted average number of Ordinary Shares in issue during the year.

For diluted earnings, the weighted average number of Ordinary Shares in issue is adjusted to assume conversion of all dilutive potential Ordinary Shares.

The dilutive effect of share options has not been disclosed within the consolidated statement of comprehensive income for EPS as the effect is anti-dilutive (i.e. decrease loss per share).

Details of the weighted average number of Ordinary Shares used as the denominator in calculating the earnings per Ordinary Share are given below:

4. Goodwill

Goodwill acquired in a business combination is allocated at acquisition to the cash generating units that are expected to benefit from that business combination. The carrying amount of goodwill has been allocated as follows:

Before recognition of impairment losses, the carrying amount of goodwill has been allocated to cash generating units as follows; £4,318k to Fleet Systems and £1,345k to Passenger Systems.

The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired. The recoverable amounts of the cash generating units are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding cash flow forecasts, growth rates and discount rates. The cash flow forecasts are derived from the most recent financial budgets for the next five years approved by management and extrapolated in perpetuity assuming no growth. The discount rates needed to equate the net present value from these cash flows to the carrying value of goodwill are then compared to the required rate of return from the cash generating unit based upon an assessment of the time value of money, prevailing interest rates and the risks specific to the cash generating unit. If this discount rate is in excess of the required rate of return then it is assumed that no impairment has occurred to the carrying value of goodwill.

Fleet Systems has a required rate of return from the cash generating unit of 16%. The forecasts for Fleet Systems have taken into account our past forecasting experiences and a current worsening of trading conditions, as substantiated by delays in order intake and through conversations with key clients on the timing and amount of trade, The short-term forecast suggests a broadly neutral cash flow with sensitivities and as such the Directors consider that the Fleet Systems goodwill is fully impaired.

For Passenger Systems, the acquired RSL Group, the discount rate applied to equate the net present value of the forecast cash flows to the carrying value of goodwill was 34%, whereas the required rate of return from the cash generating unit is deemed to be 14%. In view of this, the Directors consider that no impairment of goodwill is required.

5. Reconciliation of operating loss to net cash (outflow)/inflow from operating activities

6. Acquisition

On 30 April 2015, 21^st Century Technology Solutions Limited acquired the entire issued share capital of Region Consultants Ltd, Region Services Ltd and RSL Cityspace Ltd (together the "RSL Group"). Total consideration for the acquisition of RSL Group was £1.3m and was satisfied with £1.1m in cash and a three-year loan note of £0.2m bearing interest at 6%. During due-diligence on the acquisition it was apparent that RSL Group had no formal stock control systems and inadequate controls on revenue recognition and cost accruals. Subsequent to the year end a warranty claim was agreed against the management accounts balance sheet warranty in the share purchase agreement reducing the price paid by £290k, which was satisfied by cancelling the loan note and the £90k balance in cash. These amounts are adjusted in the presentation of the accounts.

RSL Group is one of the UK's market leaders in developing and supplying public information systems for bus travel, such as interactive terminals, real-time display screens and kiosk-based ticketing machines. Founded over 20 years ago, RSL Group has built an enviable reputation for high quality design and installation of travel information display and ticketing systems in bus and rail hubs. Its customers include passenger transport executives (PTEs) and local authorities and their technologies are installed in many towns and cities around the UK. RSL Group has its own development team and its industry-proven electronic passenger information (EPI) software is now in its fourth generation.

The acquisition of RSL Group gives us:

·      a strong presence in the local authority market place from which we intend to develop new service offerings;

·      software skills to improve our innovation capability for our Fleet Systems customers;

·      potential future synergy opportunities.

The effects of the acquisition of RSL Group on revenues and profit are fully analysed in the segmental reporting note 2 since the Passenger Systems segment is the RSL Group. It is not possible to accurately estimate the revenue and profit or loss of RSL Group as though the acquisition date had been as of the beginning of the annual reporting period as the accounting records and policies are not adequate to produce materially accurate accounts for the period prior to acquisition.

The assets and liabilities as at 30 April 2015 arising from the acquisition were as follows:

7. Availability of audited accounts:

Copies of the 2015 audited accounts will be made available following the announcement of the date of our AGM. They will also be available on the Company's website (www.21stplc.com) for the purposes of AIM Rule 26 and will be posted to shareholders in due course.