RNS Number:7819L
Indigo Vision Group PLC
18 October 2001
IndigoVision Group plc ("IndigoVision")
Preliminary Results for the year to
31 July 2001
IndigoVision, the video over IP networks group which licenses Intellectual
Property and provides product solutions provider to the Security, Surveillance
and Monitoring sectors, announces its results for the year to 31st July 2001,
its first year of trading following its listing on the London Stock Exchange
on 2nd August 2000.
Financial Highlights 18 October 2001
* Revenues doubled to #1.8 million
* Licensing revenues more than doubled to #0.9 million
* Gross margin up from 48% to 57%
* Loss before taxation up from #3.1m to #5.9m, reflecting increased
investment in R&D, sales and marketing
* Net cash balances up from #2.5m to #32.4m following listing in 2000
Operating Highlights
* Five licensing agreements executed, significantly ahead of plan;
* Patents filed for major innovations resulting from semiconductor designs;
* Headcount doubled to 98 with material expansion of US, European and
Japanese sales and marketing capability;
* World's largest digital video security and surveillance project won
through licensed partner and integrator at Brussels Airport;
* Successful introduction of IndigoVision partner programme reinforces
VideoBridge as de facto standard for digital video security and
surveillance;
* MainstreamTM hardware MPEG4 CODEC launched (see attached announcement).
Oliver Vellacott, Chief Executive, commented:
"In a year of turbulence for technology companies, we are happy to report a
good financial outturn in line with expectations and excellent commercial
progress in the adoption rate of our leading technology. The increased
awareness of the benefits of digital security and surveillance through video
over IP should result in a more rapid development of our nascent markets as
the year develops, and should counterbalance the short term slowdown in
capital spend which inevitably arises in weaker economic conditions. We are
fortunate to be entering the current financial year with our technology lead
intact, a very strong balance sheet, and with major partners launching
products based on our technology from which recurring royalty revenue will
flow. Notwithstanding the widespread uncertainty apparent in many markets, we
expect another year of good progress."
Enquiries to:
Oliver Vellacott CEO IndigoVision Group plc
Telephone: +44 (0)207 831 3113 (Today)
Telephone: +44 (0)131 475 7200 (Thereafter)
James Melville-Ross / Olivia Cundy Financial Dynamics
Telephone: +44 (0)207 831 3113
IndigoVision Group plc ("IndigoVision")
Preliminary Results for the year to
31 July 2001
Chairman's Statement
In the year to 31 July 2001, IndigoVision made very good progress in the
development of its business. Turnover doubled and licensing revenues grew
even more rapidly; a total of five licences were executed and for the first
time since IndigoVision was founded, licence and related revenues exceeded
half of total sales; gross margin improved to 57%; and the balance sheet was
significantly strengthened with net cash balances standing at #32.4m at the
year end. In a year of turbulence and uncertainty for technology companies
generally, it is encouraging to be able to report that, on all financial
measures, IndigoVision met or exceeded its plan for the year.
Good progress has also been made operationally. The products designed by
major customers under licence, which incorporate IndigoVision's technologies,
should result in recurring royalty revenues from the second quarter of the
current financial year onwards. Patents have been filed for major innovations
in semiconductor designs for multi media product applications. Headcount has
doubled, with a significant expansion of US, European and Japanese sales and
marketing capability. The world's largest digital video security and
surveillance project, at Brussels Airport, has been won through a licensed
partner and integrator; Videobridge is rapidly becoming established as the de
facto standard for digital video security and surveillance; and VideoBridge 6,
networked video recorders, networked cameras and Mainstream hardware MPEG4
Codec have been launched, substantially extending the product range.
Results
Turnover increased by 97% to #1.8 million (2000: #0.9m) in line with
expectation for the year. Revenue grew strongly across all business areas.
Revenue from licensing and related activities at #0.9 million (2000: #0.3
million) represented 52% of total turnover (2000: 31%) and exceeded revenue
from platform sales to the Security, Surveillance and Monitoring market for
the first time. Reflecting the planned investment in the growth of our sales
and marketing functions and the continued expansion of our engineering group,
total operating costs increased to #8.8 million (2000: #3.8 million) with a
resultant increase in the loss before taxation for the year to #5.9 million
(2000: #3.1 million).
A total of 5 new licence agreements (2000: 1) were concluded over the year and
generated a 224% increase in revenues from this source. All of the agreements
provided revenue contributions through initial licence fees and further income
from development consultancy and the maintenance of licensed software. The
first royalty fees payable under these agreements will begin to flow in the
first half of the current financial year.
Sales of platform products continue to be focused on the Security,
Surveillance and Monitoring market. Over the year our increased sales and
marketing investment delivered a total of 39 new customers, bringing the total
customer base in this sector to 76. The 39% increase in revenue tracked the
increase in the number of units shipped with 1,672 product units shipped in
the year (2000: 1,191).
Gross profit as a percentage of sales improved to 57%, up nine points from 48%
in 2000. Gross profit benefited from the higher proportion of high margin
license income and, in the final quarter of the year, by the introduction of
the VideoBridge 6 range of hardware which in addition to providing a smaller
size, lower power consumption and more fully featured hardware platform, has a
significantly reduced manufacturing cost. We continued our investment in
research and development with expenditure doubling to #2.0 million (2000: #1.1
million) and R&D headcount increasing to 50 at year-end (2000: 31), half the
total headcount. Sales, marketing and general and administrative costs
increased to #6.8 million (2000: #2.7 million). Marketing expenditure and
staffing grew to support the continuing programme to expand the global
awareness and promotion of VideoBridge.
After net interest of #1.9 million, the loss before taxation was #5.9 million
(2000: #3.1 million).
The Group's Balance Sheet benefited from the net proceeds of the placing (#35.1
million) when it listed on The London Stock Exchange on 2 August 2001.
Cash investments at 31 July 2001 were #32.4 million (2000: #2.5 million).
Operating Review
IndigoVision continues to focus on the development and deployment of its
VideoBridge technology for next generation digital video systems communicating
over Internetworking Protocol (IP)-based networks.
Licenses signed
At the time of our listing on The London Stock Exchange in August 2000 we had
expected to sign a further two licence agreements in the year to 31 July 2001
to add to the licence completed with Panasonic in the previous year. Most
satisfactorily, a further five were concluded.
A licence agreement was concluded in January with Cirrus Logic. This agreement
licenses IndigoVision's technology to be incorporated at silicon level in
Cirrus Logic's next generation chips for multi media product applications.
There have been significant innovations arising from development work on this
project and patents to protect the innovations have been filed in the USA and
Europe.
Four licence agreements were concluded with companies operating in the
security, surveillance and monitoring sector, namely Baxall, Videology, Ultrak
and COE. In May IndigoVision's licensed partner Baxall together with its
Benelux integrator were successful in winning a contract at Brussels airport
for the installation of the world's largest digitally networked security and
surveillance system. These agreements further accelerate IndigoVision towards
becoming the de facto standard in this $5 billion market. IndigoVision's
VideoBridge technology has enabled these companies to reduce significantly the
time required to bring new products to market. Each of these companies has now
launched products incorporating VideoBridge and we anticipate the receipt of
royalty income from these products with effect from the first half of 2002.
Product announcements
In March we announced the availability of Videobridge6 with significantly
enhanced performance, reduced power consumption and lower build cost. This
platform is now established as the basis of our wide range of licensed designs
to the Security, Surveillance and Monitoring sector. The range includes video
processing units, network video recorders, networked cameras, monitors and
wireless devices.
The IndigoVision Networked Video Recorder (NVR) technology incorporates
VideoBridge6 as part of its licence offering and has resulted in the
conclusion of six NVR licence agreements since launch.
VideoBridge6 is also the core of IndigoVision's own product platforms and has
accounted for in excess of 500 unit shipments since its introduction in the
fourth quarter.
Organisation
One of the principal uses of the proceeds of the placing in August 2000 was to
enable the company to increase its sales, marketing and development functions.
Overall headcount grew from 53 at the start of year to 98 at year-end. Within
this total, sales and marketing grew from 14 to 31 staff and to accommodate
the growth our Eastern US and Tokyo sales offices moved to larger premises and
European sales headquarters were established in the United Kingdom at Egham.
The development engineering team increased from 31 to 51 over the year. The
silicon group within the development team grew significantly over the year and
was relocated to provide increased accommodation and a quarantined environment
to protect customer and commercially sensitive design data.
Partner programme
On 2nd October 2001 at a major US security and surveillance show, IndigoVision
announced the launch of its Partner Programme. The programme builds on
IndigoVision's pivotal position in leading the conversion of the analogue CCTV
industry to networked digital video. Through the programme, partners are
provided with access to the necessary expertise, tools, support systems,
training and consultancy to enable them to make the transition to networked
digital video as a manufacturer, distributor or integrator.
Outlook
We enter the current financial year in good shape. IndigoVision is a company
still in the early stages of development and growth in nascent markets, but is
soundly managed, well financed, producing world class technology and with
market opportunities which dwarf its current size.
We expect further substantial growth in the current year in customer numbers
and licences and this is underscored by the broad range of opportunities which
are currently the subject of specific discussions or proposals. Recent world
events and economic weakness will inevitably slow the rate of signature of
major capital commitments for a short period. Conversely, increased focus on
security and surveillance is likely to accelerate the market shift from
analogue to digital and increase the ultimate market size.
In targeting a world leading position in potentially enormous markets, careful
planning, execution and control are essential for a successful result. A
great deal of work has been put in this year to infrastructure, product
planning, engineering design, and sales and marketing, and we expect to
benefit from this in the coming year and in subsequent years. We therefore
continue to view the future with confidence and expect to be able to report
further progress in a year's time.
Consolidated profit and loss account (unaudited)
for the year ended 31 July 2001
2001 2000
Notes #000 #000
Turnover 3 1,809 917
Cost of sales (779) (481)
Gross profit 1,030 436
Research and development expenditure (2,007) (1,115)
Other administrative expenses (6,804) (2,662)
Other operating income - 88
Operating loss (7,781) (3,253)
Bank interest receivable and similar 1,922 138
income
Interest payable and similar charges (14) (12)
Loss on ordinary activities before (5,873) (3,127)
taxation
Tax on loss on ordinary activities - -
Retained loss for the year (5,873) (3,127)
Loss per ordinary share 4
Basic loss per share (8.57p) (6.99p)
Diluted loss per share (7.82p) (6.60p)
Consolidated statement of total recognised gains and losses (unaudited)
for the year ended 31 July 2001
2001 2000
#000 #000
Loss for the financial year (5,873) (3,127)
Loss on foreign currency translation (17) -
Total recognised gains and losses relating to (5,890) (3,127)
the year
Consolidated balance sheet (unaudited)
at 31 July 2001
2001 2000
Notes #000 #000 #000 #000
Fixed assets
Tangible assets 228 106
Investments - 30
_______ ________
228 136
Current assets
Stocks 366 136
Debtors 1,191 463
Cash at bank and in hand 32,359 2,467
33,916 3,066
Creditors: amounts falling due
within one year (1,739) (717)
Net current assets 32,177 2,349
Total assets less current 32,405 2,485
liabilities
Creditors: amounts falling due
after more than one year (102) (168)
Deferred income - (1)
Provisions for liabilities and (59) (34)
charges
Net assets 32,244 2,282
Capital and reserves
Called up share capital 6 6,849 242
Share premium account 7 28,849 -
Other reserve 8,563 8,563
Profit and loss account 7 (12,017) (6,523)
Shareholders' funds - equity 32,244 2,282
Consolidated cash flow statement (unaudited)
for the year ended 31 July 2001
2001 2000
Notes #000 #000 #000 #000
Cash flow statement
Cash outflow from operating activities 8 (7,204) (2,927)
Returns on investments and servicing
of finance
Interest received 1,922 138
Interest paid (14) (12)
1,908 126
Capital expenditure and financial
investment
Purchase of tangible fixed assets (201) (105)
Realisation of investments 30 -
(171) (105)
Cash outflow before management of
liquid resources and financing (5,467) (2,906)
Financing
Issue of ordinary share capital 35,456 5,177
Repayment of loans (77) (45)
New loans - 185
Repayment of capital element of (3) (9)
finance losses
35,376 5,308
Increase in cash in the year 29,909 2,402
Reconciliation of net cash flow 9
to movement in net funds
Increase in cash in the year 29,909 2,402
Cash (outflow)/inflow from (decrease)/ 80 (131)
increase in debt and lease financing
Translation adjustment (17) -
Movement in net funds in the year 29,972 2,271
Net (debt) funds at the start of the 2,237 (34)
year
Net funds at the end of the year 32,209 2,237
Notes
1. Basis of consolidation
The consolidated financial statements include the financial statements of the
company and its subsidiary undertakings made up to 31 July 2001.
2. Financial statements
The financial information set out in this announcement does not constitute the
Group's Statutory Accounts for the years ended 31 July 2000 or 2001. The
financial information for 2000 is derived from the Statutory Accounts of
IndigoVision Group plc for 2000 which have been delivered to the Registrar of
Companies. The auditors have reported on these 2000 Statutory Accounts; their
report was unqualified and did not contain a statement under section 237(2) or
(3) of the Companies Act 1985. The Statutory Accounts for 2001 will be
finalised on the basis of the financial information presented by the directors
in this preliminary announcement and will be delivered to the Registrar of
Companies following the company's annual general meeting.
3. Turnover by destination
2001 2000
#000 % #000 %
USA 716 40% 351 38%
Far East 296 16% 308 34%
United Kingdom 520 29% 141 15%
Rest of Europe 263 14% 89 10%
Other 14 1% 28 3%
1,809 100% 917 100%
4. Loss per share.
Loss per share is calculated as follows:
Year to Year to
31 July 2001 31 July 2000
#000 #000
Loss for the financial year (5,873) (3,127)
Number Number
Weighted average number of shares in issue:
For basic loss per share 68,493,520 44,759,879
Shares under option 6,558,504 2,620,840
For diluted loss per share 75,052,024 47,380,719
Basic loss per share (8.57p) (6.99p)
Diluted loss per share (7.82p) (6.60p)
The comparative weighted average number of shares in issue has been adjusted
to reflect the bonus issue of 19 shares for every 1 held on 2 August 2000.
5. Dividend
The company intends to reinvest any future earnings to finance the growth of
the business and does not anticipate paying any dividends in the foreseeable
future.
6. Called up share capital
2001 2000
#000 #000
Authorised
Equity: Ordinary shares of 10p each 10,000 112
'A' Ordinary shares of 10p each - 177
_____ _____
10,000 289
Allotted, called up and fully paid
Equity: Ordinary shares of 10p each 6,849 65
'A' Ordinary shares of 10p each - 177
_____ _____
6,849 242
On 1 August 2000 the company allotted 45,635 ordinary shares with a nominal
value of 10 pence each and a total premium of #279,000 to satisfy options
exercised.
On admission of the whole of the issued share capital of the company to
listing on the official list of the UK Listing Authority on 2 August 2000 the
'A' ordinary shares of 10 pence each were redesignated as ordinary shares of
10 pence each and the authorised share capital was increased to 100 million
ordinary shares of 10 pence each. On admission 19,000,000 ordinary shares of
10 pence each were placed at a premium of #1.80 each.
On the same day #4,701,884 of the company's share premium account was applied
in allotting as fully paid 47,018,844 ordinary shares of 10 pence each to the
holders of the issued share capital immediately prior to admission on the
basis of 19 shares for each share held.
7. Share premium and reserves
Share Premium Other Profit and loss
Account reserve account
#000 #000 #000
At beginning of year - 8,563 (6,523)
Retained loss for year - - (5,873)
Premium on shares issued 34,479 - -
Expenses of share issue (928) - -
Bonus issue (4,702) - -
Share options charge per - - 396
UITF 17
Currency exchange movements - - (17)
At end of year 28,849 8,563 (12,017)
8. Reconciliation of operating loss to operating cash flows
2001 2000
Total Total
#000 #000
Operating loss (7,781) (3,253)
Depreciation 79 46
(Increase) in stocks (230) (74)
(Increase)/decrease in debtors (728) (340)
Increase/(decrease) in creditors and provisions 1,036 493
Share option charges 396 204
Amortisation of capital grant (1) (3)
Movement in provisions 25 -
Net cash inflow from operating activities (7,204) (2,927)
9. Analysis of net funds
At beginning Cash Other non At end of
of year flows cash changes year
#000 #000 #000 #000
Cash in hand and at 2,467 29,892 - 32,359
bank
Debt due after one (168) - 66 (102)
year
Debt due within one (59) 77 (66) (48)
year
Finance leases (3) 3 - -
Total 2,237 29,972 - 32,209
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