Final Results

23 September 2014

REGENERSIS PLC

(AIM: "RGS")

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2014

Regenersis Plc ("Regenersis" or the "Group") is pleased to announce its final results for the year ended 30 June 2014, which show a strong financial performance and good growth, along with a number of positive corporate developments, including acquisitions after the year end.

Group Financial Highlights

· Revenue increased by 10% to £197.5 million (2013: £179.7 million) - up 18% in constant currency.

· Headline Operating Profit* ("HOP") increased by 16% to £11.0 million (2013: £9.5 million) - up 22% in constant currency.

· Operating Profit decreased to £0.5 million (2013: £7.1 million) primarily as a result of exceptional acquisition and restructuring costs.

· The recommended final dividend per ordinary share is 2.68p (2013: 1.83p), giving a total dividend for the year of 4.0p (2013: 2.5p) - up 60%.

· The Group's investment in capital expenditure and research and development increased to £6.7 million (2013: £4.3 million).

· Headline operating cash flow** of £4.5 million (2013: £12.9 million) with headline cash conversion of 41% (2013: 135%), being lower than previous periods primarily due to working capital investments made in the rapidly growing Advanced Solutions division.

· Equity fundraising of £100 million in April 2014, including the acquisition of Blancco Oy Limited ("Blancco").

· Net cash at the year end was £20.6 million (FY 2013: £1.9 million net debt), following the equity fund raising in April 2014.

· Adjusted EPS*** decreased by 4% to 16.16p (2013: 16.80p) and basic EPS decreased by 48% to (5.45p (2013: 10.53p). The decrease in the Adjusted EPS is a result of the Placing undertaken in April 2014, without which the adjusted EPS would have been 18.19p, an increase of 8%.

*'Headline Operating Profit' is the key profit measure used by the Board to assess the underlying financial performance of the operating divisions and the Group as a whole. 'Headline Operating Profit' is stated before amortisation or impairment of acquired intangible assets, exceptional acquisition and restructuring costs and share-based payments.

**'Headline operating cash flow' is a key internal measure used by the Board to evaluate the cash flow of the Group. It is defined as operating cash flow excluding taxation, interest payments and receipts, exceptional acquisition and restructuring costs.

***'Adjusted EPS' is an adjusted measure of earnings per share based on adjusted earnings. Adjusted earnings are stated before amortisation or impairment of acquired intangible assets, exceptional acquisition and restructuring costs, share-based payments, unwinding of the discounted contingent consideration and adjustments to estimates of contingent consideration

Divisional Highlights

· Advanced Solutions divisional HOP of £7.5 million (2013: £3.6 million) - up 108%.

· Emerging Markets divisional HOP of £6.7 million (2013: £5.9 million) - up 14%.

· 91% of divisional HOP generated by the strategically important Advanced Solutions and Emerging Markets segments.

· Total HOP before central corporate costs increased to £15.6 million (2013: £11.7 million) - up 33%, while central corporate costs of £4.6 million (2013: £2.2 million) increased, as the Group invested in senior management and other aspects of its future growth platform.

Operating Highlights

· The senior management team was significantly strengthened, most notably with new roles: Chief Operating Officer; Managing Director, Renew; Chief Information Officer; and Director of Sales, Innovation and Marketing.

· Regional operations were brought fully into an integrated global operations structure for the first time under the new COO and the Group's Kaizen continuous improvement programme was extended from the UK to Poland and Spain.

· New technical capabilities were introduced, including notably: an advanced LCD screen delamination/relamination and refurbishment facility in Romania, Europe's first facility of this type; introduction of B2B operations to the United States (Memphis); installation of Xcaliber smartphone diagnostic systems in the Group's largest mobile phone repair facilities; and roll-out of in-house developed Oktra set top box diagnostics systems into our set top box repair facilities.

· Digital Care won the principal smartphone insurance contract at each of the top three mobile operators in Poland with its innovative service offer. This outstanding result positions Digital Care as the clear market leader in mobile insurance in Poland and provides an excellent platform for international expansion.

· In April 2014, Blancco agreed a partnership with Kroll Ontrack, previously its largest competitor, whereby Kroll Ontrack promotes Blancco's data erasure software solutions. This partnership has started well and is already delivering new business.

· Elsewhere there was a significant increase in the quantity and quality of new business won in the second half, including a large contract with an industrial Group in Europe to provide repair and reverse logistics for a range of payment devices and a series of insurance-related fulfilment and repair contract for clients in Mexico, Poland, Romania, and other territories.

Corporate actions and M&A update

· As part of the £100 million fundraising, Regenersis acquired Blancco, a global market leader in the provision of data erasure software, for €60 million in April 2014.

· Blancco has performed ahead of management's initial expectations and the business is expected to show continued significant growth in the next financial year to 30 June 2015. Blancco is planned to become the focal point of a portfolio of software products and services which the Group is in the process of expanding by acquisition.

· In July 2014, Regenersis increased its equity stake in Xcaliber Technologies ("Xcaliber") to 49% by injecting US$3.25 million of cash funding into the business. Xcaliber and Blancco have several significant areas of synergy including the opportunity to launch bundled smartphone diagnostics and erasure propositions, and to share sales and operational resources.

· In September 2014, Regenersis acquired 100% of the share capital of SafeIT Security Sweden AB ("SafeIT") for SEK 16.0 million (£1.4 million). SafeIT is a leading specialist cloud data erasure business in the emerging field of virtual and server data erasure management. Its services and solutions help clients to identify and permanently erase data in complex cloud environments. This acquisition extends Blancco's market leading position in data erasure into the rapidly growing cloud storage market.

The M&A pipeline remains strong, with opportunities to further extend the Advanced Solutions portfolio around the Blancco brand. Globally the sector remains immature and therefore ripe for consolidation.

Regenersis also announces the retirement of Michael Peacock, Non-executive Director and Senior Independent Director from the Board with effect from 26 November 2014. Michael joined the Board in 2011 and has played an important role in the growth of the Company. A search for a replacement Senior Independent Director has now been commenced and Regenersis would like to make an appointment as quickly as possible, recognising the importance of this position for maintaining best practice corporate governance.

Strategy Update

Regenersis strategy focuses around two client deliverables:

· Delivering consistent high quality Depot repair services across the world; and

· Developing innovative Advanced Solutions services, which improve our clients' businesses and enhance Regenersis's position as a partner.

The acquisition of Blancco has transformed the Advanced Solutions portfolio, making it the majority of the Group in terms of share of likely future profitability and value potential. The business specialises in data erasure solutions and represents a growth in the service range that the Advanced Solutions division offers customers. Additionally Blancco has opened up a new set of M&A opportunities, leveraging its market-leading brand, customer relationships, and large direct sales force. The recent Xcaliber and SafeIT transactions are the first steps in this direction.

Blancco has outstanding opportunities because it has unique technical capabilities which address new, high growth areas in data erasure:

Xcaliber Technologies brings complementary capabilities to Blancco and Regenersis is integrating these businesses at various levels to realise this opportunity fully. There exists product/proposition and operating/salesforce synergies with the potential to enhance the growth and competitiveness of both businesses.

Elsewhere in the organic development of the business, new business wins during the year just ended again populated new "pixels" in the matrix of countries and services of the Group (from 45 to 79). It also further shifted the business mix towards the operator segment (including mobile, pay TV, insurance companies and other corporates) as compared to OEMs) from 21% to 28%. The Blancco acquisition has additionally extended the number of territories in which Regenersis has a physical presence to 22. In the remainder of the Group, the focus has been on building the quality of the business within the operating footprint.

The most notable success in terms of organic business development in the year was achieved by Digital Care in Poland, as noted above in the operating highlights. This success clearly validates Digital Care's unique proposition, which is the result of two years of development. The Group is looking to extend this success across other geographies.

In conclusion the Group continued to evolve its mix of current and future opportunities towards Advanced Solutions during the year, notably with Blancco, Xcaliber, and Digital Care. The strategy remains fundamentally unchanged: pursuing depth and breadth in a portfolio of Emerging Markets and Advanced Solutions business; and achieving this goal through a focus on people, global integration, and M&A.

Outlook

· Current trading in local currency terms is in line with our expectations and the Group continues to target double digit growth in revenue and profitability.

· Strong sterling pressures felt in the last financial year have continued in the year to date.

· New business wins have progressed very well and are significantly ahead of the run rate at this stage for last year.

· Advanced Solutions as a proportion of Group revenue is expected to continue to increase rapidly.

· Opportunities for global growth, both organically and by acquisition, remain strong.

Matthew Peacock, Executive Chairman of Regenersis, said: 

"Overall the year just ended was transformative in terms of the shape of the Group and its prospects for the future. The Group has become an exciting Advanced Solutions-led business growing via organic progress and M&A. The formula for this development over the last few years has been our focus on the three "game changers" - people, global integration, and M&A - and we will continue to follow this approach next year and beyond. I am looking forward to further expanding a number of strong performing divisions (organically and via bolt-on M&A) which are demonstrating a proven track record of growth."

Enquiries:

STRATEGIC BUSINESS MODEL

At a glance

Regenersis provides a suite of product life cycle support services designed to help companies and their customers successfully deploy, protect, sustain, retire and re-use digital technology.

The world is experiencing explosive growth in the number of connected devices (the Internet of Things and the Digital Home), and in the power and complexity of mobile computing platforms, resulting in an increasing need for sophisticated technology and user support. Regenersis is addressing those needs with a growing portfolio of software-rich services building on a strong heritage of repair operations, customer service and data erasure management.

Our clients, who include leading brands in the Technology, Media and Telecommunications (TMT) sector, entrust to Regenersis the execution of key services that improve customer experience and add value to technology assets. Such life cycle support activities are a cornerstone of how our clients seek to differentiate their brands and increase customer loyalty.

By combining our capabilities in innovative ways, tailored to individual client needs, we deliver unique service propositions that reinforce trust in our client's brands and create value for our business partners and shareholders.

Life cycle services

Our international network of repair centres provides product repair, refurbishment, parts management and logistics services for mobile, IT and B2B infrastructure product vendors and their sales channels as well as their insurers, and end users. Our technically-advanced repair capabilities enjoy a solid reputation with our TMT sector clients, combining service excellence with continuous gains in cost efficiency.

Our industry-leading fault diagnostics and issue resolution technologies, including the In-field Tester (for set top boxes) and SmartChk applications suite (for smartphones) improve consumer satisfaction with their devices and materially reduce the incidence and cost of product returns for our clients.

Our Digital Care operations, in partnership with leading insurers, deliver innovative product insurance and extended warranty programmes for our clients, protecting customers' investments in mobile technology products.

Blancco is the global leader in data erasure, providing comprehensive data erasure for every type of electronic and magnetic storage media (ranging from portable flash drives and mobile phone memory to solid state drives, networked storage and hosted data), as well as implementing robust programmes to track and analyse compliance with data protection policies and legislation.

Regenersis is a leading proponent of re-use to reduce waste and promote sustainability.

Regenersis around the world

Our clients are increasingly seeking partners who can deliver cost-effective and innovative aftermarket solutions on a global basis. Since 2011, Regenersis has expanded its geographical footprint from five territories to 15. With the acquisition of Blancco in April 2014, this has now increased to 22 territories.

Our business model

Our clients provide reliable recurring revenue streams and also, as some of the largest companies in the world, huge opportunities for growth into new countries and new product lines.

In order to capture this opportunity Regenersis is required to achieve two client deliverables:

(1) Deliver consistent high quality service across the world.

(2) Introduce innovative services, which improve our clients' businesses and enhance Regenersis's position as a partner.

These two deliverables are challenging to achieve, providing a competitive advantage to a company like Regenersis which can build the scale and culture required. Regenersis has identified three capabilities required to achieve consistent quality and innovation, and which reliably provide competitive differentiation in their own right.

(1) Global integration of business methodologies, IT systems and operational processes.

(2) Hiring and retaining the best talent available in order to support the anticipated business growth.

(3) M&A: acquiring businesses which improve our geographical and service capabilities.

By building up scale in geographical presence and expanding its range of services, Regenersis is able to replicate success and share costs across a broad base, to attract the best people, and execute M&A deals on the most attractive terms. 

www.regenersis.com

CHAIRMAN'S STATEMENT

I am pleased to be able to report a year of significant progress for the Group, both financially and in terms of the execution of our strategy. In the financial year just ended, Regenersis delivered a revenue increase of 10% and a Headline Operating Profit increase of 16%, making this the fifth consecutive year of double digit revenue and Headline Operating Profit growth. Strategically, the dominant feature of the year was the acquisition of Blancco, completed in April 2014.

Financial progress was delivered this year against the challenge of a strong pound sterling, and the need to build the senior management team to drive the next phase of growth (new senior roles included Group COO, MD Renew, Group CIO, and Director of Sales, Innovation and Marketing). In constant currency terms, revenue growth in the year was 18%; while Headline Operating Profit before central costs increased by 33% to £15.6 million. We are continuing to invest as we grow.

The Emerging Markets and Advanced Solutions divisions delivered Headline Operating Profit growth of 14% and 108% respectively - and in combination generated 91% of Group divisional HOP. With this shift towards Advanced Solutions business, our divisional Headline Operating Profit margin (i.e. before central costs) increased to 7.9% (2013: 6.5%). The combination of predominantly organic profit growth in Advanced Solutions this year, and the Blancco acquisition (completed ten weeks before the year-end) marks a major shift towards Advanced Solutions in the business mix of the Group going forward.

The acquisition of Blancco was clearly the headline event of the year just ended. The integration of the acquisition is proceeding according to plan and we are expecting strong growth in FY15, led by exciting areas such as corporate data erasure management and virtual data erasure in cloud environments. I recommend viewing the Blancco information video now available in the investor relations section of our website.

I see Blancco as the anchor of an expanding portfolio of software products, leveraging its brand, client list and large direct sales force. This is taking our M&A activity in a new and exciting direction with significant value potential. In this vein, Regenersis recently expanded its investment in Xcaliber Technologies, the smartphone diagnostics and issue resolution specialist, to 49%. Typically clients requiring smartphone diagnostics, such as mobile operators when they take back devices from customers, also require data erasure. Similarly, clients buying smartphone data erasure today, such as the asset disposition partners of mobile operators, also perform functional checks on the devices manually and are interested in automated diagnostic tests. Blancco and Xcaliber are therefore highly complementary businesses, so we are integrating some of their functions to maximise the potential synergies.

The recent acquisition of SafeIT is another complementary opportunity coming out of Blancco. SafeIT is the leader in cloud erasure, in effect, helping managers of remote, virtual data volumes to erase them with the same confidence as managers of physical hard drives. This is a relatively new and technically challenging field where SafeIT brings the capabilities and Blancco brings the distribution power to reach customers.

While the M&A focus was on software, there was organic Advanced Solutions growth in other areas. The In-field Tester (IFT) solution made good progress in Europe with Virgin Media and a new client, a major set top box manufacturer, and steady progress in the US, although we have yet to achieve the large breakthrough the Group hopes for. Virgin Media was during the year acquired by the international TV operator Liberty Global with the opportunity for increased volumes of business in continental Europe and a new project to develop a global testing solution deployable around the Liberty Global Group in a development of the IFT programme.

Overall the year just ended was transformative in terms of the shape of the Group and its prospects for the future. The Group has become an exciting Advanced Solutions-led business growing via organic progress and M&A. The formula for this development over the last few years has been our focus on the three "game changers" - people, global integration, and M&A - and we will continue to follow this approach next year and beyond. I am looking forward to further expanding a number of strong performing divisions (organically and via bolt-on M&A) which are demonstrating a proven track record of growth.

Our other Advanced Solutions businesses are Recommerce and Digital Care, where a mixed picture of performance and potential emerged. There were significant changes to the Recommerce market in 2014, with various OEMs, Mobile Operators, and large distributors each making aggressive moves to control the value of the market in pre-owned devices. As a result a decision was taken to reduce the size of and investment in Recommerce and in particular to remove stock risk from the business model. Regenersis now is focused on delivering service and value to existing clients with a sensible risk profile and large global OEM clients. Our Digital Care business had an outstanding year, winning the main mobile insurance business of three of the mobile operators in Poland with its innovative service proposition. This is now a platform for growth into other territories. The success of Digital Care also illustrates the important role our Repair business continues to play as the foundation of our client relationships and credibility to bring new high-value services to market.

In line with our stated dividend policy, the Board is recommending a final dividend of 2.68 pence per ordinary share. This gives a full year dividend of 4.0 pence per ordinary share, which represents a 60% increase on the prior year and is a sign of the Board's ongoing confidence.

Michael Peacock will retire as Non-executive Director and Senior Independent Director from the Board with effect from 26 November 2014. Michael joined the Board in 2011 and has played an important role in the continued growth of the Company. A search for a replacement Senior Independent Director has now been commenced. Regenersis would like to make an appointment as quickly as possible, recognising the importance of this position for maintaining best practice corporate governance. On behalf of the Board, I would like to express our thanks to Michael Peacock for his valuable contribution during his time with us and wish him well for the future.

Finally, I would like to thank all of our employees and customers for their part in making this year a success.

I am looking forward in financial year 2015 to Advanced Solutions contributing the majority of the profits of the business for the first time.

Outlook

· Current trading in local currency terms is in line with our expectations and the Group continues to target double digit growth in revenue and profitability.

· Strong sterling pressures felt in the last financial year have continued in the year to date.

· New business wins have progressed very well and are significantly ahead of the run rate at this stage for last year.

· Advanced Solutions as a proportion of Group revenue is expected to continue to increase rapidly.

· Opportunities for global growth, both organically and by acquisition, remain strong.

Matthew Peacock

Executive Chairman

BUSINESS REVIEW

Our markets

Regenersis primarily serves large multinational telecommunications operators, mobile phone retailers, and mobile phone and IT device OEMs, with a range of aftermarket services: i.e. services which occur past the point of original sale to a consumer. These services include:

· Depot-based repair of non-functioning devices and refurbishment of devices;

· Device insurance and extended warranty provision (Digital Care);

· Diagnosis and resolution of device issues in the consumer's hands (IFT and Xcaliber); and

· Permanent certified erasure of data from devices (Blancco).

These markets present a range of size, growth/maturity, and competitive intensity: however in general, Regenersis is one of the leading players in the services and geographies in which it operates; and at a Group level Regenersis is among the top three global aftermarket services providers by revenue.

Regenersis seeks to position itself in the most attractive segments of the marketplace, exhibiting rapid growth and potential for strong profitability, as described in the strategy section below.

Our strategy

Our strategy is to direct our innovation - organically and via M&A - towards areas which address attractive markets (large, high growth and high margin) and which have synergies with existing business (in clients, operations and/or services). This includes two main axes of development:

· Adding new Advanced Solutions to our portfolio.

· Building the most attractive geographic footprint of operations to serve our large multinational clients.

Depot Solutions

Our clients are global market leaders in their respective fields. Historically, they have outsourced their repair services to partners like Regenersis but on a one country at a time basis. Increasingly, our customers are managing the delivery of the aftermarket services through either a regional or global basis.

As a result, our strategy is to build the most attractive geographic footprint of operations to serve our large multinational clients' growing international needs.

Advanced Solutions

Advanced Solutions includes device insurance and extended warranty business (Digital Care), remote diagnosis and resolution business (IFT and Xcaliber) and most recently the data erasure business (Blancco).

The first Advanced Solutions service line to be developed was the In-field Tester technology (IFT), a disruptive solution for the CATV market (set top boxes) which eliminates returns ("no fault founds") and reduces end-customer frustration and lost content. This product addresses a market of some 150 million set top boxes returned annually around the world.

The next wave of expansion included focus on new developments in Digital Care because it is a fundamentally larger and more valuable market than Repair.

Recently the front line has shifted to software services; specifically mobile diagnostics and repair avoidance which we have via our investment in Xcaliber Technologies, and data erasure addressed via our acquisition of Blancco. These new software businesses have good synergies with existing divisions (for example: repair avoidance is a part of an integrated repair solution and data erasure customers are a very good channel to acquire devices for Recommerce).

Service Lines

* Green = Regenersis

**Red = SmartChk  

***Blue = Blancco and SafeIT

Putting our strategy into action

We have identified three "game changers" which form an integral part of the operating platform of the business:

Integration - Global consistency of processes

People - Building the best team in our sector

M&A - Innovation and global footprint

Focus on these three areas is the key to successfully delivering the service quality and innovation which fuels client satisfaction and recurring income. Examples of recent progress in these areas include:

· Integration - New global sales force and divisional operating structure;

· People - New senior management; and

· M&A - Investment in Xcaliber Technologies and acquisition of Blancco.

Within each of our service lines (for example Digital Care, Data Erasure and IFT) we have specific objectives and plans to win new business, improve profitability, and increase competitive advantage.

Results

The financial performance of the business has once again shown significant forward momentum with:

· Revenue of £197.5 million (2013: £179.7 million, growth 10%);

· Headline Operating Profit before corporate costs of £15.6 million (2013: £11.7 million, growth 33%);

· Headline Operating Profit after corporate costs of £11.0 million (2013: £9.5 million, growth 16%);

· Headline Operating Profit on constant currency bases of £11.6 million (2013: reported HOP £9.5 million, growth 22%); and

· Headline Operating Profit margin of 5.6% (2013: 5.3%).

Operating profit was £0.5 million (2013: £7.1 million), lower as a result of significant exceptional acquisition and restructuring costs incurred in the year.

Headline operating cash flow was £4.5 million (2013: £12.9 million), with net cash at the end of the period of £20.6 million (June 2013: £1.9 million net debt) following the fund-raising in April 2014.

Headline Operating Profit growth and margin improvement before corporate costs has outpaced revenue growth, as this profit growth has come from new, higher margin revenue streams in Advanced Solutions.

Segmental Results

Depot Solutions Division

The Depot Solutions division has shown flat revenue and Headline Operating Profit with an unchanged operating margin. During the year the regional operations were brought fully into an integrated Global Operations structure for the first time under the new COO.

The division comprises the:

· Emerging Markets segment; and

· Western Europe and North America segment.

Emerging Markets

The Emerging Markets segment includes Poland, Romania, Russia, South Africa, Turkey, Mexico, Argentina and India (from September 2013). Overall, revenue increased to £76.0 million. Headline Operating Profit increased by 14% to £6.7 million.

The operating margin declined to 8.8% (2013: 10.6%), primarily as a result of some transfer of margins between the Western Europe and North American segment and the Emerging Markets segment as part of a combined EMEA pricing approach.

Financial and operational highlights included:

· Poland and Romania are performing well, having won and implemented new and innovative solutions for new and existing customers in more complex repair services;

· Significant new business implementations have included: Nokia making use of our depot services in South Africa; a new contract with a German insurer supported through Poland; and a deal to support Vodafone in their sizeable German insurance programme through our Romanian facility;

· Russia changed from being a joint venture to a wholly owned subsidiary on 26 December 2013 but made no material profit contribution for the period. This acquisition was a strategic move to better serve pan-Global customers;

· The most recent addition to the segment, India, has been integrated well but is performing behind the Board's initial expectations. The growth opportunities remain significant; and

· The other countries in this segment continue to perform in line with the Board's expectations.

Western Europe and North America

Overall, revenue decreased to £75.2 million. Headline Operating Profit decreased to £1.5 million. The Western Europe and North America segment includes UK (excluding Advanced Solutions) at Huntingdon and Normanton (closed in April 2014); Germany at Schloss Holte and Sommerda; Sweden; Spain; and new for the period was Portugal (from December 2013) and Memphis (from April 2014). Profitability at established sites was offset by start up losses in new sites in the USA (Memphis) and Portugal.

The operating margin decreased to 2.0% (2013: 2.3%), primarily as a result of pricing pressure in the UK business.

Financial and operational highlights included:

· The B2B business based largely in Germany continued to perform well despite having some pricing pressure from clients;

· The most recent addition to the segment was Bitronic Germany which has been successfully integrated and is performing in line with the Board's expectations. The acquisition so far is delivering expected cost synergy (as it was based alongside our Sommerda operations) and access to new opportunities such as insurance repair and fulfilment;

· Spain is a key country in this segment and after an initially difficult start to the year is performing well again. During the year, a new contract was implemented to deliver an innovative solution for a major Spanish insurer in the management and supply of refurbished mobile handsets;

· Regenersis also won a multi-year, multi-service contract for a global mobile operator covering Iberia, which is the first significant business for the Group with this client. This started implementation in Spain during December 2013 and as a result, Regenersis also opened its first Portuguese depot facility in December 2013;

· In April 2014 the B2B business entered the US market, with a new depot facility opened in Memphis on behalf of our customer Wincor Nixdorf. This is very much in a ramp up phase and is performing in line with expectations; and

· The business experienced weak volume and margin pressure in the UK and Sweden.

Advanced Solutions Division

Revenue increased by 64.0% to £46.3 million (2013: £28.2 million). Headline Operating Profit increased 108% to £7.5 million (2013: £3.6 million), generating a significant improvement in operating margin to 16.2% (2013: 12.8%).

The Advanced Solutions division includes:

· The Renew business - which is made up of the Digital Care, Recommerce and Refurbishment activities;

· The set top box activities in Glenrothes;

· The set top box Remote Diagnostics business - which is made up of the In-field Tester ("IFT") business and other remote diagnostics capabilities covering countries such as UK, South Africa and Belgium;

· The Mobile Remote Diagnostics business - which is made up of new diagnostics capabilities secured through the Group's strategic investment in Xcaliber; and

· From April 2014 the newly acquired Blancco business - providing data erasure software to recycling customers and global corporate customers around the world

Financial and operational highlights included:

· Significant new business implementations such as: several new contracts with Nokia around the world covering motherboard repair and screen refurbishment activities; and closed loop refurbishment and insurance fulfilment activities from the Group's refurbishment facilities in Romania, UK and Sweden;

· New technical capabilities were introduced, including notably an advanced LCD screen delamination/relamination and refurbishment facility in Romania, Europe's first facility of this type;

· Digital Care won the principal smartphone insurance contract at each of the top three mobile operators in Poland, with its innovative service offer. These are expected to make a significant profit contribution in FY15;

· Material profit growth from the set top box remote diagnostics business which benefited from the first full year of IFT royalty revenue from Virgin Media;

· Roll-out of an in-house developed Oktra set top box diagnostics system into our set top box repair facilities;

· Expansion of the set top box remote diagnostics offerings to clients in Europe, which will begin to make a profit contribution from FY15;

· Extension of the trial with a US based customer of the set top box remote diagnostics solution from two states to three states;

· The Xcaliber business undertook trials of its mobile remote diagnostic solution with a range of customers in Europe, although larger contracts are expected to be 12 months off;

· Installation of Xcaliber smartphone diagnostic systems in our largest mobile phone repair facilities;

· The Blancco business is in the process of being integrated and has performed ahead of management's initial expectations and the business is expected to show continued significant growth in the next financial year to 30 June 2015; and

· In April 2014, Blancco agreed a partnership with Kroll Ontrack, previously its largest competitor, whereby Kroll Ontrack promotes Blancco's data erasure software solutions. This partnership has started well and is already delivering new business.

Corporate Costs

Corporate costs of £4.6 million (2013: £2.2 million) have increased primarily as a result of significant investment in senior management, the global sales force and re-focusing the resource base on the central global people with the necessary skills to support the continued ramp up of the business during the next phase of growth.

Currency hedging activities and constant currency

One of the risks that the Group faces in doing business in overseas markets is currency fluctuations. The Group takes the following approach to managing currency fluctuations:

· The CFO conducts a quarterly review of the Group's currency hedging activities; and

· A formal recommendation for any changes is then made to the Board every half year.

The Group's hedging policy is the responsibility of the Board. The Group adopts the following hedging activities:

· We undertake a limited number of forward contracts for some payments and receipts, where the amounts are large, are not denominated in the local country's functional currency, where the timing is known in advance, and where the amount can be predicted with certainty;

· We undertake natural hedging between the cash and loan balances of different currencies;

· We undertake natural hedging by structuring and paying future earn-outs on acquisitions in the target companies local currency;

· We do not undertake any hedging activities in respect of tangible and intangible fixed assets, working capital such as stock, debtors, or creditors, or other balance sheet items, as these are generally small in nature in any one individual country; and

· We do not undertake any cash flow or profit hedging activities to insulate from currency movements in respect of overseas earnings, as the earnings cannot be assessed with a sufficiently high degree of accuracy in terms of timings and amounts.

During the year, we experienced significant headwinds in the translation of the Euro, US dollar, South African Rand and Argentine Peso particularly in the second half of the year. The applicable exchange rates for the current and prior year ends are set out in the table below:

The Group has a good mix of business across 22 different territories and this does provide some degree of smoothing of currency movements in any one country through a portfolio effect. Nonetheless the continued strength of Sterling has resulted in continuing pressure (on translation of foreign earnings into GBP) in the latter part of the year and this is expected to continue in the coming year.

In constant currency terms, Headline Operating Profit for the year would have been £0.6 million higher and Operating Profit £1.0 million higher if they had been restated at the average exchange rates that were expected to be in place for the year ended 30 June 2014. A reconciliation of actual results for 2014 to results restated in this way is set out below:

The cumulative effect of exchange rate movements on the Group's net assets is reflected in the Consolidated Statement of Comprehensive Income.

Mergers and Acquisition activity

The Group has been busy pursuing M&A opportunities. For the Depot Solutions division acquisitions have been completed in India and Russia. For the Advanced Solutions division, the Group has invested in Xcaliber and acquired Blancco.

Acquisition of Digicomp

On 10 September 2013 the Group completed the acquisition of 80% of the issued share capital of Digicomp Complete Solutions Limited ("Digicomp") for a consideration of INR 451 million (£4.5 million). Key features of Digicomp include:

· A high-quality business in India with a 65% market share in approved laptop repair;

· One main depot facility in Bangalore with 92 owned and franchised stores in the major Indian cities;

· Key OEM customers, including Dell, HP, Lenovo and Acer and market leading accreditations with Foxconn and Pegatron;

· A unique laptop recovery offering, which is growing rapidly, and is similar to the Group's mobile Recommerce business; and

· The market penetration for laptops in India is less than 10% of the total population and less than 5% for smartphones - both presenting very significant growth opportunities for Digicomp.

The acquired business has been integrated well but is performing behind the Board's expectations. The growth opportunities remain significant.

The initial consideration of INR 451 million (£4.5 million) cash was funded through the Group's existing revolving credit facility. In addition to the initial consideration, an earn-out could be payable in March 2015 based upon a fixed earnings multiple above a pre-defined level of profitability, using the annualised EBIT achieved in the 17 month period 1 August 2013 to 31 December 2014.

In September 2016, Regenersis will acquire the remaining 20% of the issued share capital of Digicomp, based upon a fixed earnings multiple applied to the EBIT achieved in the 12 month period ending 31 March 2016.

Investment in Xcaliber

On 21 November 2013 we completed the acquisition of 15% of the issued share capital of Xcaliber Technologies LLC and Xcaliber Infotech PVT Ltd (together "Xcaliber") for a consideration of US$1.2 million (£0.75 million).

Xcaliber is a US based software business with a market leading mobile diagnostic technology which adds to our existing diagnostic offering in Europe, the US and globally.

Regenersis will become Xcaliber's route to market around the world, with exclusivity in EMEA. This will build Regenersis' share of the economics of Xcaliber significantly beyond our equity stake.

Key features of Xcaliber:

· A developer of telecoms solutions primarily focused on remote diagnostics software for smartphones;

· Xcaliber's most important application is the SmartChk diagnostics software for Windows, Android and iOS platforms, which is designed to drive down 'No Fault Found' rates for operators and OEMs on smartphones; and

· As well as providing Xcaliber with finance to fund growth, the Group has also assisted by providing access to our global sales resources in the marketing of the SmartChk application by utilising our existing relationships with OEMs and operators. Regenersis has commenced use of this application within our own facilities in order to automate and increase the efficiency of the screening and quality assurance phases of our repair process.

The initial consideration of US$1.2 million cash was funded through the Group's revolving credit facility.

On 11 July 2014, the Group increased its investment in the issued share capital of Xcaliber Technologies LLC from 15% to 49% for a consideration of US$3.25 million (£2.0 million) funded through the Group's cash reserves.

This additional investment will be used to secure the growth of the business and the large potential contracts that already exist, as well as to progress a bundled diagnostic platform with Blancco and other growing Regenersis technologies.

Acquisition of Regenersis Russia

On 26 December 2013 we completed the acquisition of remaining 50% of the issued share capital of Regenersis Russia for a consideration of £0.4 million. This now becomes a wholly-owned subsidiary and benefits from all of the Group's sales resource and efforts to grow further into this potentially significant emerging market.

The consideration of £0.4 million was funded through the Group's revolving credit facility.

Acquisition of Blancco

On 17 April 2014, Regenersis completed the acquisition of all of the issued share capital of Blancco Oy Ltd and controlling stakes in its major sales offices (together comprising "Blancco"), for a consideration of €60 million on a debt-free basis comprising approximately €58.7 million (£48.5 million) in cash and €1.3 million (£1.0 million) in Consideration Shares.

Key features of Blancco include:

· A global market leader by revenue and number of accreditations in the provision of data erasure software. It was founded in 1997, has approximately 130 employees and is headquartered in Finland;

· Global presence with major sales offices in Finland, the United Kingdom, Germany and the United States and additional sales offices in Australia, Canada, France, Germany, Japan, Malaysia, Mexico, New Zealand, Russia and Sweden;

· Key customers include blue chip corporates, government organisations, aftermarket operations and suppliers of telecoms operators and OEMs;

· Data erasure is an attractive market, which is expected to show strong growth over the next few years, that complements Regenersis' Advanced Solutions business;

· New European legislation is due to come into force in 2015, and is likely to make it mandatory for some companies to appoint a data protection officer, to adopt and keep records of a process-based approach to data protection compliance; and to introduce fines for data breaches of up to 5% of annual worldwide turnover; and

· Data erasure represents (increasingly as new rules come into force) a large corporate risk but a very small cost, this suggests that Blancco's strong market position is likely to become increasingly valuable as clients seek credible options to deal with data erasure problems.

The Board believes that the acquisition will provide:

· A new way to leverage the Regenersis global sales team and its relationships with major global mobile operators and OEMs, supplementing a locally-driven sales approach; and

· A one stop solution to Regenersis' existing repair clients for accredited repair/refurbishment and erasure solutions.

Of the €60 million consideration paid for Blancco, €58.7 million was funded through the Placing of new shares.

Placing

On 17 April 2014, the Group raised £100 million (before expenses) through a Placing of 28,986,000 new ordinary shares at a price of 345 pence per share. The New Ordinary Shares (and the shares issued as part of the consideration for Blancco) ranked in full for all dividends and other distributions declared, made or paid on Ordinary Shares by reference to record dates falling after their date of issue and otherwise ranked pari passu in all respects with the existing Ordinary Shares, save that they did not entitle the holder to receive the interim dividend of 1.32 pence per ordinary share payable in respect of the six months to 31 December 2013 declared on 17 March 2014.

The Operating Matrix

The Group now has a footprint of 21 depot sites, runs 217 "retail units" in 22 territories and employs over 4,200 people. Seven of these territories were opened and one new service was established in the last 12 months. We have continued to fill the operating matrix with 34 new product/service line combinations in the last 12 months, achieving a total of 79 combinations.

This matrix of geographies and products is important, firstly, because it is how we leverage and build on our strengths, assets and relationships and, secondly, it is how we translate our strategy for growth in Emerging Markets and Advanced Solutions into action on the ground.

The operating matrix diagram is shown in the Annual Report and Accounts.

Exceptional acquisition and restructuring costs

Acquisition costs amounted to £5.0 million (2013: £1.9 million) with the largest costs relating to the acquisitions of Blancco and Digicomp.

Exceptional restructuring costs amounted to £4.4 million (2013: nil) and related primarily to:

· Right sizing and re-focusing the senior management resource towards the Advanced Solutions division;

· De-layering middle management in the Depot Solutions division to produce a more centrally controlled structure, to better serve our global clients on a consistent basis; and

· Re-focusing the resource base on the central global people with the necessary skills to support the continued ramp up of the business during the next phase of growth.

Amortisation of intangible assets

Other costs excluded from Headline Operating Profit included the amortisation of acquired intangible assets amounting to £0.6 million (2013: £0.1 million). These increased in the year due to the acquisition of Blancco and the amortisation of the acquired Blancco brand and Intellectual Property.

Share based payments

Share based payments amounting to £0.7 million (2013: £0.5 million) were also excluded from Headline Operating Profit. These increased in the year due to the issue of new awards under Incentive Share Plan 3, which is outlined in more detailed in the Directors' Remuneration Report in the Annual Report and Accounts.

Net financing income

Net financing income was £2.4 million (2013: £1.4 million net charge). The main changes in the year have arisen from a full year unwind of the discount factor on the Digicomp contingent consideration and revaluation of the HDM contingent consideration, further details are included the Annual Report and Accounts.

Taxation

The total tax credit was £0.4 million (2013: £1.0 million charge). The Group has a permanent benefit from being in territories where the local taxation rates are lower than the UK rate, for example in Poland and Romania. The blended underlying corporation tax rate on Headline Operating Profit for the year for the Group in 2014 was 14% (2013: 17%). The tax credit in the period was primarily due to one off tax deductions obtained on share option payments and exceptional acquisitions costs.

Earnings per share

Adjusted earnings per share decreased 3.8% to 16.16 pence (2013: 16.80 pence) due to the Placing of 28,986,000 new ordinary shares on 17 April 2014. Had this not occurred adjusted EPS would have been 18.19 pence, which would represent growth of 8.3% over the 2013 Adjusted EPS.

Basic EPS decreased by 48.2% to 5.45p (2013: 10.53p), primarily as a result of exceptional acquisition and restructuring costs noted above, as well as the impact of the Placing.

Cash flow

Headline operating cash flow of £4.5 million (2013: £12.9 million) and operating cash outflow of £5.8 million (2013: inflow of £9.9 million), are both lower than previous periods primarily due to working capital investments made in the rapidly growing Advanced Solutions division. In addition there was a timing issue caused by a significant customer receipt being received early in June 2013 instead of July 2013, which inflated the FY13 cash conversion and deflated the FY14 cash conversion.

Net cash at the end of the period was £20.6 million (30 June 2013: £1.9 million net debt and December 2013: £13.8 million net debt) following the fund raising in April 2014.

Working capital increased by £8.6 million due to an increase in the size of the business. The key working capital metrics that are monitored are:

· Debtor days which increased to 64 days (2013: 42 days);

· Stock days which decreased to 28 days (2013: 30 days); and

· Creditor days which increased to 47 days (2013: 37 days).

Tax paid was £0.8 million (2013: £0.8 million), and is in line with the prior period.

Net interest paid was £0.7 million (2013: £0.3 million) and is higher than the prior year due to increased use of the revolving credit facility during the first half of FY2014 primarily to fund the acquisitions of Digicomp, Xcaliber and Regenersis Russia.

Capital expenditure increased to £6.7 million (2013: £4.3 million). Within this, expenditure on intangible assets amounted to £3.9 million (2013: £2.5 million) and comprised further investment in:

· R&D investment in the next phase of IFT;

· Investment in depot automation, and diagnostic technology;

· Development of Refurbishment technology; and

· Development of bespoke IT systems to support the Digital Care businesses.

Expenditure on tangible assets amounted to £2.8 million (2013: £1.8 million) and comprised leasehold improvements and technical equipment.

Banking facility

In December 2013, the Group increased its banking facility with HSBC from £23 million to £39 million to support Regenersis' growth plans both organically and through acquisitions. The term of the facility has been extended from October 2015 to October 2016, which gives Regenersis clear certainty of funding over the next two years. The costs of borrowing and the covenants remain unchanged.

All banking covenants have been passed and show significant headroom for the foreseeable future.

Net cash

Year-end net cash comprised gross borrowings of £0.7 million, in Sterling, South African Rand and Euros (2013: £6.5 million), cash and cash equivalents of £20.8 million (2013: £4.5 million) and the deferred arrangement fees of £0.5 million (2013: £0.2 million).

Key performance indicators

The Group has a range of performance indicators, both financial and non-financial, to monitor and manage the business and ultimately to improve performance. These are set at the individual customer level and for business units as well as for the Group as a whole. The Group's key performance indicators ("KPIs") are outlined below:

*or local country equivalent.

Dividend

In line with our stated dividend policy, the Board is recommending a final dividend of 2.68 pence per ordinary share to be paid on 5 December 2014 to shareholders on the register on 7 November 2014. This gives a full year dividend of 4.0 pence per ordinary share, which represents a 60% increase on the prior year

Post balance sheet events

Acquisition of Safe IT

On 2 September 2014, the Group completed the acquisition of 100% of the share capital of SafeIT Security Sweden AB ("SafeIT") for SEK 16.0 million (£1.4 million). SafeIT is a specialist cloud data erasure business in the field of virtual and server data erasure management. Its services and solutions help clients to identify and permanently erase data in complex cloud environments. This acquisition extends Blancco's market leading position in data erasure into the rapidly growing cloud storage market.

Additional investment in Xcaliber

On 11 July 2014, the Group increased its investment in the issued share capital of Xcaliber Technologies LLC from 15% to 49% for a consideration of US$3.25 million (£2.0 million). This additional investment will be used to secure the growth of the business and the large potential contracts that already exist, as well as to progress a bundled diagnostic platform with Blancco and other growing Regenersis technologies.

Buy out of non-controlling interest in Blancco Sweden

On 2 September 2014, the Group acquired the share capital it did not already own in Blancco Sweden for a consideration of SEK 2.8 million (£0.2 million). The acquisition increased the equity stake in the company from 75% to 100% and demonstrates the Group's continued commitment to grow the newly acquired Blancco Group.

Conflict minerals

Regenersis recognises the risks of significant adverse impacts which may be associated with extracting, trading, handling and exporting minerals from conflict affected areas. The sale of conflict minerals can be used to fund rebel armies, fuelling conflict and human rights abuses.

Our aim is for all products, which are manufactured, or contracted to be handled by Regenersis to be DRC Conflict-Free.

Where Regenersis finds products that contain conflict minerals, we will work with suppliers towards removal of conflict minerals from the product. Additionally, Regenersis may suspend purchasing new products from the supplier until the issue is resolved. If a supplier refuses to cooperate and take action towards removal of the conflict mineral source(s) from the products supplied to Regenersis, we may suspend our relationship with the supplier.

As part of the Regenersis process for the implementation of new suppliers, our supplier evaluation checklist helps ensure that materials we purchase do not contain conflict minerals and a self-declaration is also required that the full supply chain process of the suppliers has been examined to confirm this.

In addition, we have also reviewed our existing supply base, and there was no indication that any products handled by Regenersis contained conflict minerals.

Principal Risks and Uncertainties

The Board is responsible for determining the nature and extent of the risks it is willing to take in delivering Regenersis' strategic objectives, and is in the process of setting up an enhanced framework to manage these risks, called the Regenersis Risk Management Framework.

This enhanced framework is being created as a result of the increasing size and complexity of the Group's operations, which is giving rise to an increased number and scale of risks.

Risk Agenda

Regenersis' new risk agenda is to be delivered through an appropriate and embedded risk management culture and framework. This will help to ensure that appropriate and proportionate resources are allocated to risk management, in order to ensure the activities of risk assessment and risk response are further embedded in Regenersis' governance processes going forward.

Risk Assessment

In identifying risks we will consider both the external factors, arising from the environment in which we operate and the internal factors arising from the nature of our business, our controls and processes and our decision making.

Business Unit Managing Directors will own their respective risks and, with support from the newly established Internal Audit function, will be required to record the causes and consequences, together with mitigating factors to reduce the risks that they have identified. Each risk will be evaluated based on its likelihood of occurrence and severity of impact (on strategy, profit, regulatory compliance, reputation and/or people) and positioned on a risk ranking matrix that is in the process of being established.

This approach is expected to allow the easy identification of the significant material risks, and allow management to consider the effect of any mitigating actions that they may be able to put in place. Each risk will also be assessed as to whether it is within the Group's risk appetite.

After this initial assessment, which will be completed shortly, the objective is that strategic risk appetite for the business will be reviewed annually as part of the annual budgeting process by the Board. The Board will be asked to assess whether risks are within the Group's risk appetite.

Risk Response

As a result of this assessment and recording of risks, each Business Unit Managing Director will formulate an appropriate response for each risk, i.e. whether to tolerate, treat, or terminate the threat to the Group.

Appropriate actions will be agreed, for example to mitigate, transfer (through insurance), or eliminate (by ceasing) the risk. The objective will be to continually challenge the efficiency and effectiveness of controls.

Regenersis Risk Management Framework

The new Risk management Framework will operate as follows:

· The Board - Will annually undertake a formal review of the effectiveness of the Regenersis Risk Management Framework, policy and procedures, and performance of the newly established Risk Management Committee. Twice yearly the Board will review the key risks in the Group's risk register, thereby allowing it the opportunity to review the level of risk that the Board is prepared to accept in pursuit of the Group's strategic objectives;

· The Audit Committee - Reviews the Group's system of internal control, including financial, operational, compliance and risk management, as well as reviewing the system's effectiveness. Such a system is primarily designed to mitigate risk to an acceptable level, support compliance with laws and regulations, and protect against material misstatement or loss;

· The Risk Management Committee - The Board will be supported in its responsibilities by the newly established Risk Management Committee, which is chaired by the Chief Operating Officer, and is responsible for ensuring that all significant Management and Operational risks facing the Group are reduced to an acceptable level. During the course of the year, the Committee met twice. This Committee comprises of the Head of Internal Audit, and other senior management team members; and

· Internal Audit - During the year the Group created an internal audit function and appointed a Head of Internal Audit who reports to the CFO and has a dotted line to the Audit Committee Chairman. The Internal Audit function will support the Audit Committee in its review of the effectiveness of the system of internal control. There is a rolling programme of Internal Audit review carried out across the Group. During the course of the year the Internal Audit function undertook eight reviews.

Principal Risks

It is recognised that the Group's strategic objectives can only be achieved if risks are taken and managed effectively. The risks below are those considered principal to delivering our strategy and are specific to the nature of our business, although there are other risks that may occur and impact the Group's performance.

Cautionary statement

Regenersis's business and share price may be affected by a number of risks, trends, factors and uncertainties, not all of which are in our control. The process Regenersis has in place for identifying, assessing and managing risks is set out in the Risk Management section of the Annual Report and Accounts.

This review has been prepared solely to provide additional information to shareholders to assess the Group's strategy and the potential of that strategy to succeed and should not be relied upon by any other party or for any other purpose. It contains certain forward-looking statements with respect to the financial condition, results, operations and businesses of Regenersis Plc.

These statements and forecasts involve risk and uncertainty because they relate to events and depend upon the circumstances that may occur in the future.

There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Nothing in this review should be construed as a profit forecast.

Matthew Peacock

Executive Chairman

Jog Dhody

Chief Financial Officer

Consolidated Income Statement

for the year ended 30 June 2014

Consolidated Statement of Comprehensive Income

for the year ended 30 June 2014

Consolidated Balance Sheet

as at 30 June 2014

Company number: 05113820

Consolidated Statement of Changes to Equity

for the year ended 30 June 2014

Consolidated Cash Flow Statement

for the year ended 30 June 2014

Notes to the Accounts

for the year ended 30 June 2014

The audited consolidated financial statements of Regenersis plc for the year ended 30 June 2014 have been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006.

The preliminary statement of results was approved by the Board on 22 September 2014. The preliminary statement is derived from but does not represent the full Group statutory financial statements of Regenersis plc and its subsidiaries which will be delivered to the Registrar of Companies in due course. The financial information for the year ended 30 June 2013 has been extracted from the Annual Report and Financial Statements, as filed with the Registrar of Companies. The current auditor, KPMG LLP, has reported on the year ended 30 June 2014 and the year ended 30 June 2013. Their reports were (i) unqualified, (ii) did not include reference to any matters to which the auditor drew attention by way of emphasis without qualifying their reports and (iii) did not contain certain statements under section 498(2) and (3) of the Companies Act 2006.

Advanced Solutions Division

This division focuses on new products and powerful propositions that are developed and marketed to our Global clients;

· The Renew business - which is made up of the Digital Care, Recommerce and Refurbishment activities.

· The set top box activities in Glenrothes.

· The set top box Remote Diagnostics business - which is made up of the In-field Tester ("IFT") business and other remote diagnostics capabilities covering countries such as UK, South Africa and Belgium.

· The Mobile Remote Diagnostics business - which is made up of new diagnostics capabilities secured through the Group's strategic investment in Xcaliber.

· And from April 2014 the newly acquired Blancco business - covering data erasure software to global customers and other corporate customers around the world.

Depot Solutions Division

This division provides the Group's geographic infrastructure and core repair service and whose focus is on continuous improvement, common operating practices, IT platforms and efficiency. It consists of the:

At the year end internal reporting was based on these three reporting segments - Advanced Solutions, Emerging Markets and Western Europe and North America which reflected the way the business was managed and reviewed.

Within Emerging Markets, Western Europe and Advanced Solutions there are three customers who individually account for more than 10% of Group's revenue and had total revenues of: £28,264,525 £23,920,662; and £20,112,833 (2013: £28,874,000; £26,176,000 and £18,005,000 respectively). The revenues from the three largest customers were split across the segments as follows: Emerging Markets £49,728,105 (2013: £28,923,723), Western Europe £21,235,503 (2013: £44,211,858) and Advanced Solutions £1,334,412 (2013: £nil). These are significant in the context of the Group although we contract with them under several service agreements in several different countries.

Geographical information

The following geographical information is based on the location of the business units of the Group:

Acquisition costs relate to the M&A activity within the year, with the most significant relating to the acquisitions of Digicomp and Blancco.

Exceptional redundancy and restructuring costs relate primarily to:

· Right sizing and re-focusing the senior management resource towards the Advanced Solutions division.

· De-layering middle management in the Depot Solutions division to produce a more centrally controlled structure, to better serve our global clients on a consistent basis.

· Re-focusing the resource base on the central global people with the necessary skills to support the continued ramp up of the business during the next phase of growth.

The main changes in the year have arisen from the effect of the unwind of the discount factor on Digicomp contingent consideration and revaluation of the HDM contingent consideration.

The HDM contingent consideration is payable on an earn out based on the EBIT as at 30 June 2015. The amount payable varies depending on reaching certain thresholds of EBIT at this date. As at 30 June 2014, the EBIT forecast for the year ending 30 June 2015 was reviewed and earn out recalculated based on the current earnings projection. As a result, the fair value of the contingent consideration assessed at 30 June 2014 fell from £8,628,000 to £3,933,000 and the resulting movement of £4,695,000 is shown in the statement of comprehensive income.