Crimson Tide : Annual Report and Accounts 2018

Annual Report & Accounts 2018

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2018 highlights

Financial Highlights

• Profit Before Tax ahead of market expectations at £69k (2017: £309k) after significant new investments in sales and marketing to accelerate growth potential

• Turnover increased to £2.40m (2017: £2.28m) reflecting higher percentage of SaaS contracts

• Equipment operating lease debt decreased by over 40% to £376k (2017: £639k) with net funds doubling to £237k (2017: £118k)

Operational Highlights

• mpro5's Internet of Things and Time & Attendance modules maturing and seeing first rollouts, including temperature, humidity, lux, motion sensors, NFC, fingerprint, and facial recognition

• New solutions sales channel offering data SIM, Mobile Device Management, and managed hardware subscription services

• Partner network contributing maiden revenues in Rail sector

• NHS contracts expanding

Barrie Whipp, Executive Chairman of Crimson Tide, commented: "A year of significant investment in new Sales & Marketing resource, whilst still producing profitability and net cash, sees Crimson Tide well set for growth. mpro5 has evolved into a gold standard mobility system used in over 260,000 sites and is poised for even wider opportunities"

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Chairman's Statement

Chief Executive's Review

Financial Review

Board of Directors

Directors' Report

Strategic Report

Corporate Governance Statement

Independent Auditor's Report to the Shareholders of Crimson Tide plc Consolidated Income Statement for the year ended 31 December 2018

Consolidated Statement of Comprehensive Income for the year ended 31 December 2018 Consolidated Statement of Financial Position at 31 December 2018

Consolidated Statement of Changes in Equity at 31 December 2018 Consolidated Statement of Cash Flows for the year ended 31 December 2018 Notes to the Consolidated Financial Statements at 31 December 2018 Company Statement of Financial Position at 31 December 2018

Company Statement of Changes in Equity at 31 December 2018 Company Statement of Cash Flows for the year ended 31 December 2018 Officers and Professional Advisors

Notice of Annual General Meeting

Form of Proxy

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Chairman's Statement

Barrie Whipp

Executive Chairman

5 June 2019

2018 was a year when the Board of Crimson Tide plc took the decision to increase the Company's sales and marketing effort quite dramatically, to allow us to create a platform for increased growth in the future. We asked stakeholders to recognise that such investment would be reflected in the bottom line profitability but that it would stand us well in the future. Management expectations were for a break even result for the year. I am very pleased that, in the light of adding some very senior sales people and their associated costs, as well as increasing our marketing, we were not only profitable but exceeded market expectations.

We are very confident in our new sales team, consisting of director level appointments in Partner sales, Enterprise sales and Solution sales and the team has already increased our pipeline. Our first partner sales were reflected in a new sector to Crimson Tide, the rail industry, where we completed transactions with Northern Rail and Chiltern Rail.

We have ambitious plans for growth with both IT channel and OEM partners, where we are now recognised as a Solution Partner for Samsung. In Enterprise sales, we are focused on larger transactions, including international opportunities. We have secured further business from existing clients and are hopeful that our new offerings in solution sales, such as Mobile Device Management, data SIMs and the Internet of Things (IOT) will open opportunities with new and existing clients.

Our marketing efforts are seeing very positive results in terms of pipeline and the gearing that these opportunities give us for 2019 and beyond are in excess of at any time in the past. Internationally, we have restructured our Middle East efforts by appointing a partner to manage the transactions that we have completed and to employ our sales representative in the region. Our partner will manage existing contracts, first line support and will also market mpro5 for us to its own client base. We continue to see interest in Northern Europe for mpro5 including some new interest in Scandinavia.

Our efforts in healthcare have been part of a longer strategy and we continue to see a wide range of opportunity. We are currently enhancing mpro5 for people with autism and our pilots for a global regulatory organisation have been a success, with a substantial increase in reported cases of falsified medicines. We have also completed further work in the reporting of clinical usage of a drug for the treatment of high cholesterol with a large American pharma company. Healthcare business takes some time to come to fruition.

In terms of mpro5, our upgrade to the mobile application with our Apollo release has seen further enhancements in terms of a Time & Attendance module, which has already been sold to a number of clients and a significant upgrade in the underlying codebase allows even more features and improved performance. This has now been followed by an upgrade to our web infrastructure with Project 13, where we have modernised some of our core technologies on Microsoft Azure.

mpro5 is continually improved by client feedback and our two major investments at present are in location-based services and facial and fingerprint recognition. We continue to increase our development staff to ensure that we remain at the cutting edge of both mobile and web technologies.

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In many ways, the most exciting addition to mpro5 has been our Internet of Things module and the certification of related sensors, gateways and network technologies. IOT is now available with mpro5 with approved sensors for temperature, humidity, lux, CO2 and motion sensors, which can trigger mpro5 Jobs and Flows automatically. We are experiencing high levels of interest in mpro5 with IOT and now have a dedicated sales resource and presales consultant.

Crimson Tide's organogram now shows 34 members of staff. I recall that not more than a few years ago this figure was 14. It shows that we have invested short term profits into growth; mpro5 has never been more widely used, with over 260,000 sites benefitting from our technology.

Financially, we grew at the turnover level, and increased the number of software only contracts. Additions to base subscribers were good in the second half of 2018, a trend that has continued into 2019. As I mentioned at the start of my statement, we took controlled risks in terms of growth at the sales level with a view to a breakeven result and overachieved with a small profit. Our cash position improved even in the light of over £250k of device finance repaid. Operationally the day to day running of the business is now in the hands of Luke Jeffrey who, with over a year in the role is now putting his own stamp on the organisation. In 2018 we recruited Peter Hurter as Financial Controller and Peter will succeed Steve Goodwin as Finance Director in 2019. Steve has agreed to remain as a Non-Executive Director.

During 2018, we recognised that we had the capacity to set a strategy for more investments in the Company and that the investment in increased sales and marketing resource was going to be an investment for the future, with associated costs now. The Board believes we took the right decision. We have an enviable pipeline and our sales team is focused on delivery. The Company is set well for the future.

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