RNS Number:3282O
Indigo Vision Group PLC
7 December 2001
7th December 2001
INDIGOVISION GROUP PLC
Quarter 1 2002 Results
FIRST QUARTER RESULTS HIGHLIGHTS:
* First quarter revenues up 23%;
* Royalty revenues have commenced;
* Gross profit margin up again to 59%;
* Loss before tax #2m, up from #1.4m;
* Net cash #30m at quarter end;
* Further product licence concluded with Ultrak;
* Partnerships concluded with
- Richardson Electronics (USA and EU)
- DNA Sensormatic (South Africa)
- Ramtech (USA)
- Elsag (Italy)
- ISS Camera Watch
* Strong start to second quarter.
CHIEF EXECUTIVE, OLIVER VELLACOTT, COMMENTED
"The first quarter results were satisfactory, given the temporary slowdown in
capital spend commitment in quarter one which we signalled at the last year
end. This is now abating, with a strong start to the second quarter, which we
expect to show accelerating growth.
The level of interest in licensing continues to grow and partners are winning
an increasing number of projects utilizing our world leading technology".
For further information please contact:
Oliver Vellacott, Chief Executive
Alan Bennie, Finance Director
IndigoVision
Tel: 0131 475 7200
Olivia Cundy
Financial Dynamics
Tel: 020 7831 3113
Results for the three month period to
31 October 2001
Chairman's Statement
At the last year end, we indicated that we expected a weak first quarter as a
result of a slow down in capital spend commitments in the light of poorer
economic conditions and world events. In the event, the first quarter
produced revenue growth of a relatively modest 23% followed by a strong start
to the second quarter, in which we now expect an accelerating rate of growth.
In the quarter, revenues, gross margins and platform shipments all improved,
and the important milestone of billing the first royalties from licences
previously signed was passed. Good progress was also made in the development
of discussions with a record number of potential licencees, in product
launches and engineering development, and in particular on signing up partners
at distributor and integrator level.
Results
Turnover in the quarter to 31 October 2001 was #0.3m, a 23% increase over the
same period last year. During the quarter strong demand was experienced from
the Security Surveillance and Monitoring sector for VideoBridge platform
product. Platform sales accounted for 57% of total revenue in the quarter and
a new record was set for the number of units shipped. The expansion in
Development and Sales & Marketing operations experienced through the previous
financial year has now slowed in line with a lower rate of employee additions.
Total operating costs in the quarter were #2.6m, 28% higher than the previous
year (Q1 2001: #2.0m) but comparable to Q4 2001: (#2.8m). The resultant
operating loss was #2.4m compared to #1.9m in Q1 2001. Interest earnings of #
0.3m reduced the operating loss before taxation to #2.1m (Q1 2001: #1.4m).
A further product development and licence agreement was concluded in October
2001 with Ultrak. Licence revenue from this agreement will not be recognised
until the completion by IndigoVision in January 2002 of the development work
to create the new product design. Licence related revenue in the quarter
included for the first time, royalties from product licences. Maintenance of
licensed software, development consultancy and software development toolkit
sales all contributed strongly in the quarter and accounted for 43% of total
revenue.
Gross profit margin was 59% (Q1 2001: 54%) and continued the improving trend
resulting from higher margin product platform sales and the increasing
proportion of license related revenue.
Research and development expenditure increased to #0.7m (Q1 2001: #0.4m)
reflecting the doubling of headcount over the previous year. Engineering
recruitment has now slowed and the recruitment plan is targeted at a number of
key skills and positions. Other operating overhead was #1.9m (Q1 2001: 1.6m)
and results from a flattening of spend in Sales and Marketing with recruitment
now restricted to specific geographic territories.
The cash balance at 31 October 2001 was #30.0 (2001: #36.8m) and represents a
#2.3m reduction over the quarter.
License agreements
The additional agreement signed with Ultrak in the quarter adds a further
VideoBridge-enabled product to the suite of seven already introduced by Ultrak
since July 2001. The speed of product introduction achieved by Ultrak and
IndigoVision's other licensed partners further demonstrates the significant
reduction in the lead-time to market that can be achieved using the
VideoBridge licence offering. A significant strength of the licence offering
is its completeness in addressing all aspects of reduction in time to market
lead-time. In the quarter two licensed partners elected to benefit from the "
fast-track" manufacturing programme aspect of the offering which provides
access to a qualified manufacturing source, proven test processes,
consolidated component procurement pricing and finished product OEM branding.
Product developments
VideoBridge Web Server has been released and, for the first time, enables any
existing analogue CCTV camera or camera system to be connected to the Internet
and accessed via any web browser. Using the Web Server product, CCTV systems
that were previously "closed" can now be viewed, subject to in-built security
and authentication provisions, anywhere in the world using a conventional web
browser.
Engineering developments
The predicted exponential growth in live networked video devices will be
enabled through low cost, highly integrated camera product platforms. These
platforms will be powered by next generation System on a Chip (SoC) for ultra
low cost product applications or Digital Signal Processors (DSP) chips where
application flexibility may be maximised through software. During the quarter
IndigoVision's MainstreamTM MPEG4 simple profile codec completed verification
and is now released as a licensable technology for incorporation by chip
manufacturers into system on a chip (SOC) designs. DSP solutions remain on our
technology roadmap but have not yet been completed to a licensable offering.
Mainstream is implemented in silicon hardware and is a world leading
technology. The technology is now being offered to chip manufacturers to
license to enable them to provide the chips to power live networked video
devices. We would expect to conclude opportunities to licence Mainstream for
other multimedia chip applications under separate partnering arrangements.
Partner programme
The IndigoVision partner programme launched in October has already begun to
yield benefits. New partners have joined at distributor and integrator levels
and will accelerate the growth in the take up of VideoBridge. Significant
partners signed at distributor level included Richardson Electronics (USA and
EU) and DNA Sensormatic (South Africa). At integrator level Ramtech (USA), ISS
Camera Watch (USA), Elsag (Italy) also joined the partner programme.
In the quarter, partners from the integrator group won significant projects to
use VideoBridge products including the implementation of a live networked
video system over the length of the Panama Canal and a project to provide
distance-learning opportunities to school children over the entire state of
Mississippi. The Mississippi state project is particularly significant in that
it provides further demonstration of multi media applications of VideoBridge
beyond the Security, Surveillance and Monitoring sector. Mississippi is one of
the poorest states in the US and suffers from a chronic teacher shortage,
particularly in specialist areas. The distance-learning project will provide
pupils with video and audio access using VideoBridge products. Pupils from any
school in the state will be able to participate in classes hosted at any other
school in the state.
Outlook
The development of Indigo's business is going well, particularly when viewed
against economic conditions and turbulence in technology markets, and we are
already seeing the benefits of improving our focus internally on targeting
specific market segments and concentrating management effort on improving
execution. The rate of activity is higher than at any time in the company's
history.
Although first quarter revenues were a relatively modest 23% up, the strong
start we have had to the second quarter augurs well for a markedly
accelerating rate of growth in revenues and a good first half overall. We
continue to view the outlook for the year with confidence.
Hamish Grossart
Chairman
7th December 2001
Consolidated profit and loss account
For the 3 months to 31 October 2001
Note 3 months to 31 3 months to 31 Year to 31
October October July
2001 2000 2001
unaudited unaudited Audited
#000 #000 #000
Turnover 345 280 1,809
Cost of sales 143 130 (779)
Gross profit 202 150 1,030
Research and development (730) (439) (2,007)
expenditure
Other operating overhead (1,879) (1,594) (6,804)
expenses
Other operating income - - -
Operating loss (2,407) (1,883) (7,781)
Bank interest receivable 356 506 1,922
Interest payable and similar (3) (4) (14)
charges
Loss on ordinary activities (2,054) (1,381) (5,873)
before taxation
Tax on loss on ordinary - - -
activities
Retained loss for the period (2,054) (1,381) (5,873)
Loss per ordinary share 4
Basic loss per share (2.99p) (2.02p) (8.57p)
Diluted loss per share (2.72p) (1.83p) (7.82p)
Consolidated statement of total recognised gains and losses (unaudited)
For the 3 months ended 31 October 2001
3 months to 31 3 months to 31 Year to 31
October October July
2001 2000 2001
unaudited unaudited Audited
#000 #000 #000
Loss for the period (2,054) (1,381) (5,873)
Loss on foreign currency translation - - (17)
Total recognised gains and losses (2,054) (1,381) (5,890)
relating to the period
Consolidated balance sheet (unaudited)
at 31 October 2001
As at 31 October As at 31 As at 31 July
October
2001 2000 2001
unaudited unaudited Audited
Note #000 #000 #000 #000 #000 #000
Fixed assets
Tangible assets 255 111 228
Investments - 30 -
255 141 228
Current assets
Stocks 649 259 366
Debtors 1,038 757 1,191
Cash at bank and in hand 30,025 36,842 32,359
31,712 37,858 33,916
Creditors: amounts
falling due within one
year (1,436) (1,338) (1,739)
Net current assets 30,276 36,520 32,177
Total assets less 30,531 36,661 32,405
current liabilities
Creditors: amounts
falling due after more
than one year (90) (148) (102)
Deferred income (89) (19) -
Provisions for (63) (39) (59)
liabilities and charges
Net assets 30,289 36,455 32,244
Capital and reserves
Called up share capital 6,849 6,849 6,849
Share premium account 5 28,849 28,849 28,849
Other reserve 8,563 8,563 8,563
Profit and loss account 5 (13,972) (7,806) (12,017)
Shareholders' funds - 30,289 36,455 32,244
equity
Consolidated cash flow statement (unaudited)
For the 3 months to 31 October 2001
6 months to 6 months to Year to
31 October 31 October 31 July
2001 2000 2001
unaudited unaudited Audited
Cash flow statement Note #000 #000 #000 #000 #000 #000
Cash outflow from operating 6 (3,095) (1,540) (7,204)
activities
Returns on investments and
servicing of finance
Interest received 1,044 506 1,922
Interest paid (7) (5) (14)
1,037 501 1,908
Capital expenditure and
financial investment
Purchase of tangible fixed (90) (21) (201)
assets
Realisation of investments - - 30
(90) (21) (171)
Cash outflow before
management of liquid
resources and financing (2,148) (1,060) (5,467)
Financing
Issue of ordinary share 35,456 35,456 35,456
capital
Repayment of loans (38) (19) (77)
Repayment of capital element (3) (2) (3)
of finance leases
35,415 35,435 35,376
Increase/(decrease) in cash 33,267 34,375 29,909
in the period
Reconciliation of net cash
flow to movement in net funds 7
Increase/(decrease) in cash (2,334) 34,375 29,909
in the period
Cash (outflow)/inflow from
(decrease)/increase in debt
and lease financing 20 21 80
Translation adjustment (17)
Movement in net funds in the (2,314) 34,396 29,972
period
Net funds at the start of the 32,209 2,237 2,237
period
Net funds at the end of the 29,895 36,633 32,209
period
Notes:
1. This report has been prepared on the basis of the accounting
policies set out in the annual report for the year ended 31 July 2001.
2. This report was approved by the board of directors on 6 December
2001.
3. The comparative figures for the period ended 31 October 2001 are
not the company's statutory accounts for that period. The comparative figures
for the financial year ended 31 July 2001 are extracted from the full accounts
for that year. Those accounts received an unqualified audit report and have
been filed with the Registrar of Companies.
4. Loss per share
Loss per share is calculated as follows:
Three months Three months Year to
to to
31 October 31 October 31 July
2001 2000 2001
#000 #000 #000
Loss for the period (2,054) (1,381) (5,873)
Number Number Number
Weighted average number of shares in
issue:
For basic loss per share 68,493,520 68,493,520 68,493,520
Shares under option 6,829,600 6,870,100 6,558,504
For diluted loss per share 75,323,120 75,363,620 75,052,024
Basic loss per share (2.99p) (2.02p) (8.57p)
Diluted loss per share (2.72p) (1.83p) (7.82p)
5. Share premium and reserves
Share Premium Other Profit & Loss
Account reserve Account
#000 #000 #000
At beginning of period 28,849 8,563 (12,017)
Retained loss for period - - (2,054)
Premium on shares issued during - - -
period less expenses
Share options charge per UITF 17 - - 99
Currency exchange movements - - -
At end of period 28,849 8,563 (13,972)
6. Reconciliation of operating loss to operating cash flows
Three months Three months Year to
to to
31 October 31 October 31 July
2001 2000 2001
#000 #000 #000
Operating loss (2,407) (1,883) (7,781)
Depreciation 29 16 79
(Increase) in stocks (283) (123) (230)
(Increase)/decrease in debtors 153 (294) (728)
Increase/(decrease) in creditors and (206) 627 1,036
provisions
Share option charges 99 99 396
Amortisation of capital grant - - (1)
Movement in provisions 4 18 25
Net cash inflow/(outflow) from operating
activities (2,611) (1,540) (7,204)
7. Analysis of net debt
Other non cash
changes
At 1 August Cash flow At 31
October
2001 2001
#000 #000 #000 #000
Cash in hand and at 32,359 (2,334) 30,025
bank
Debt due after one (102) 12 (90)
year
Debt due within one (48) 20 (12) (40)
year
Finance leases -
Total 32,209 (2,314) - 29,895
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