Final Results

Ultima Networks Plc("Ultima" or "the Company")

Final Results for the Year Ended 31 December 2014

The Directors are pleased to announce the audited results of the Company and its subsidiaries (together the "Group" or the "Ultima Group") for the year ended 31 December 2014.

The Ultima Group's operations consist of three divisions: IT Services, Green Technology Products and Green Power. These divisions are involved respectively in the sale of software to the legal profession, the development and sale of specialist electrical goods and the development of clean power generation through solar installations in Spain, Italy and the United Kingdom.

FINANCIAL HIGHLIGHTS

· Group revenue is £1,364,000 (2013: £2,261,000)

· Net (loss)/profit after Tax is (£2,394,000) (2013: £156,000)

· Group administration expenses is £2,545,000 (2013: £1,122,000)

· Operating (loss)/profit is (£1,726,000) (2013: £47,000)

· Earnings per share is (0.86p) (2013: 0.06p)

· Cash at bank at the year end was £347,000 (2013: £185,000)

· Net assets is £1,042,000 (2013:£3,452,000)

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STRATEGIC REPORT -

CHAIRMAN'S STATEMENT AND CHIEF EXECUTIVE'S REVIEW

FOR THE YEAR ENDED 31 DECEMBER 2014

Introduction

2014 has been a difficult year for Ultima as it became evident that development projects outside the United Kingdom were becoming increasingly challenging and taking a disproportionate degree of management and financial resources. The Board reviewed the economic outlook in the Eurozone and wider global market place and decided that the group should concentrate effort in its established markets. To achieve these objectives the group has substantially written down the value of its investment in the development of Solar Farms in Italy, suspended development and deployment of its hybrid solar power solutions and concentrated distribution of its electric bicycle range through established UK channels. The group continues to invest in a program of development and improvement in both its legal software and renewable energy solutions and considers this to be crucial for competitive positioning of the Group's current and future products.

Our Products and Commercial Strategy

Renewables

The Green Technology division has developed a range of renewable energy products including hybrid solar generating stations, ground and air source heat solutions and Solar PV. The Board have decided that most progress will be made by concentrating available resource on the supply of Solar Photovoltaic installation on an EPC basis as this represents the best application of the division's skilled personnel and provides the clearest prospect of developing long term sustainable revenues.

Electric bicycles

The Green technology division is responsible for the design and development of the group's range of electric bicycles.

These electrically assisted bicycles have been designed following consultation with resellers to ensure the bicycles meet the needs of potential customers and are sold under the brand names "Powacycle" and "Infineum" through UTN Solutions Limited (a 100% subsidiary of Ultima).

The division holds patent on a custom designed stackable battery pack which is used in most of the models distributed by the division.

Due to disappointing European sales the division began a process of repositioning its sales focus to concentrate on supporting and growing its UK based reseller network where income has been relatively stable and prospects for profitable growth are strongest.

IT Services

The IT Services division operates as Cognito Software and offers a range of legal software application packages.

The latest software is the divisions FiLos software suite which provides solutions for complete management of day to day operation of legal firms. This package is under continuous development as it represents the division's flagship product with existing clients being encouraged to migrate and use its enhanced features. The software has been designed to cover the needs of the divisions existing client base and has features which are expected to attract clients from larger legal practices.

The legal market place remains difficult and continues to see consolidation and this was reflected by sales for the year falling by 7% compared to the same period the previous year. The division continues to generate significant recurring revenue from its support and development services and continues to generate significant cash for the Group.

R&D

All operating divisions have a program of continuous product development and improvement.

IT Services operate in a completive environment where customers expect innovative solutions designed to improve their efficiency and help support the application of legal practices and rules.

The IT division has a group of dedicated software designers who have been involved in designing and development of legal software packages for many years. Their skill is essential to the continued improvement of the range of software offered by the IT division and represents a core activity of the division.

The design and functionality of the group's electric bicycles require attention to customer needs and the ability to provide reliable products. The division is involved in all aspects of design and functionality and developed parts which help differentiate aspects of the electric bicycles from the competition.

Renewable energy solutions require continual attention to changes in technical performance of products being offered to ensure compliance and competitiveness.

Performance measurement

The ongoing performance of the Group is managed and monitored using a number of performance indicators.

The Groups revenues are monitored as follows:

Revenues comprise turnover on sale of products, consumables, service income and installations. The reduction in revenue reflects the restructuring of group activities during 2014.

Profit/(Loss) & cash metrics

The Group's profitability is monitored through monthly forecasting which tracks where the business is and where it is forecast to be at a certain date. The cash position is monitored on a daily basis.

The progress of R&D and general product development is reviewed regularly by the senior management team and updates provided to the Board.

Financial Results and Outlook

In the year ended 31 December 2014, the Group achieved sales of £1,364,000 (2013: £2,261,000) with an operating loss of £1,726,000 (2013: operating loss of £47,000). A non-recurring cost £756,000 relating to restructuring costs and in 2013 a provision for potential legal expenses to defend a claim brought against the IT services division resulted in a pre-tax loss for the Group of £2,487,000 (2013: loss of £184,000). The Research and Development tax credit was £Nil (2013: £28,000) and therefore the loss for the financial year was £2,394,000 (2013: operating loss of £156,000).

Costs relating to the administration of the Group operations are included in the overheads of the parent Company. The costs incurred in 2014 were £190,000 (2013: £190,000). Cash and cash equivalents at the end of the year 2014 were £347,000 (2013: £185,000). Any balance of cash funds not required for working capital purposes is being placed on short term bank deposit to maximize interest receivable. Cash was utilized in the year to support the Green technology division activities. Cash was also used to fund continued development by the IT Products division and the design and development of renewable heat solutions.

IT Services division

Financial

The IT Services division made an operating loss of £1,186,000 (2013: profit £389,000) on sales of £828,000 (2013: £890,000) Sales fell by 7%, compared to the previous year. The division provides computer application software and other related services to small and medium size legal practices in England and Wales.

The division operates from two locations (Midlands and South West England). Since the 1st January 2013 the division has operated as Cognito Software a division of Ultima Networks plc. The division's management team has continued to develop the FiLos software suite which is helping to retain customers and improving the opportunity of attracting larger legal practices.

The market for legal software continues to be very competitive with the potential client base undergoing a degree of restructuring to adapt to changes in government support for legal services. Cognito has remained competitive helping to maintain a relatively stable customer base with clients continuing to migrate to the new FiLos legal software suite.

Outlook

The short term outlook for the division is to maintain its existing client base and continue migration to the latest version of FiLos software. The expectation is that growth will return with the division well placed to maintain and expand market share based upon the quality of the software solutions being offered into a niche market sector and working hard to retain existing clients based upon the loyalty arising from quality customer support and service.

The Green Technology division

Financial

The Green Technology division made an operating loss of £352,000 (2013: £436,000) on sales of £399,000 (2013: £1,371,000). The division suffered from a lack of sales of its premium range of electric bicycles into continental Europe with consumer demand for luxury products in the UK remaining weak. Infineum BV made a loss of £2,534 (2013: £53,000). The UK division of electric bikes and luxury products made a loss of £305,000 compared to a loss of £147,000 the prior year.

Central overheads

Costs relating to the administration of the Group operations are included in the overheads of the parent company.

The costs incurred in 2014 were £190,000 (2013: £190,000).

Outlook

Tough trading conditions in mainland Europe coupled with the cost of restructuring operations severely impacted results for the year, The Group is concentrating activity within the United Kingdom in order to control cost and investment risk and increase market share within its established marketplace. This is expected to deliver more stable growth and result in improved financial performance. The central strategy and philosophy is to grow low risk recurring revenue by maximising demand for existing products and services coupled with continued investment and development of the groups technical and knowledge base to ensure growth through improved product competiveness.

Prof Humayun A Mughal

Chairman and Chief Executive Officer

08 May 2015 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2014

All amounts relate to continuing activities

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2014

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2014

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2014

The Group operates in the United Kingdom, Italy and Spain.

At 31 December 2014, the Group is organised into two principal business segments:

· IT and related services (comprising legal and publishing application software)

· Green technology (comprising electric bicycles, energy saving lamps, educational electronic kits and development of solar power parks)

The segmental results for the year ended 31 December 2014 are as follows:

The segmental results for the year ended 31 December 2013 were as follows:

The statement was approved by the Directors on the 8th May 2015.This statement does not constitute the Group's statutory accounts for the year ended 31 December 2014. Statutory accounts for the year ended 31 December 2014 have been delivered to the Registrar of Companies. The auditor's report for those accounts was unqualified and did not contain any statement under section 495 of the Companies Act 2006. The auditor's report for the accounts to 31 December 2014 is unqualified.

The Annual report and Accounts, including the notice of annual general meeting for 2015, will be made available to the shareholders and the public on the Company's web site (http://www.ultima-networks.co.uk) and the Company will make a further announcement in this regard at the appropriate date.