TIDMIND
RNS Number : 3209G
IndigoVision Group PLC
01 March 2018
IndigoVision Group plc ("IndigoVision" or "The Group")
Final results for the year ended 31 December 2017
IndigoVision (AIM: IND.L), a leader in intelligent networked
video security systems for government, critical infrastructure,
transport, city monitoring and casinos, announces its results for
the year ended 31 December 2017.
Financial Highlights
-- Revenues of $42.3m (2016: $45.9m)
-- Operating loss $2.8m (2016 profit: $0.1m)
-- Underlying operating loss(1) $2.4m (2016 Operating profit: $0.4m)
-- North American expansion costs of $2.0m
-- Net cash balance of $2.6m (2016: $6.2m)
-- Basic and diluted loss per share 34.9 cents (2016: 37.3 cents)
-- Adjusted loss per share(2) 29.6 cents (2016 adjusted earnings
per share: 9.0 cents) before deferred tax
-- No final dividend proposed (2016: 3.0 pence per share)
Operating Highlights
-- New Chief Executive appointed to lead the business into a growth phase
-- Expansion of the North American sales and support team by 60%, under a new leadership team
-- Launch of CyberVigilant(R), cyber security protection
designed specifically for CCTV networks
-- Introduction of analytics incorporating artificial intelligence
-- Replacement ERP system successfully implemented January 2018
George Elliott, Chairman
"The Group's financial performance in 2017 and indeed, prior
years, has not been acceptable and IndigoVision is not achieving
its full potential. This has resulted in significant changes in the
Board and senior management. The leadership team are committed to
improving standards and performance at all levels in the Group, and
under this new leadership, the Group's strategic direction has been
set to better serve our shareholders, customers, employees,
partners and other stakeholders.
It is expected that considerable progress in delivering the
Group's strategy will be made in 2018 but this will not be
reflected fully in it's operating results until 2019, consequently
management is targeting to at least break even in the current
year."
Pedro Simoes, Chief Executive
"Since joining the Group in late 2017, I have been excited to
meet my new colleagues and explore the potential within our product
development teams. I recently met with the Group's leadership team
to outline my vision for growth, making sure we have the right
products and approach to address all parts of the market. While our
markets remain competitive, I am confident that after a period of
stabilisation, during which new people and new systems bed in,
IndigoVision is well positioned for growth."
(1) Underlying operating loss represents operating loss of
$2.82m prior to the exceptional compensation and settlement costs
of $0.40m
(2) Adjusted loss per share is based on the 2017 loss after tax
of $2.60m prior to the exceptional compensation and settlement
costs of $0.40m
Notes to editors
About IndigoVision
IndigoVision designs and manufactures high performance, video
security systems for a wide range of users from large scale and
complex security installations to small, eight camera systems. From
video capture and transmission to analysis and storage,
IndigoVision networked video security systems provide the best
quality and most secure video evidence, using market leading
compression technology to minimise network bandwidth usage and
reduce storage costs.
Enquiries to:
IndigoVision Group George Elliott
plc (Chairman) +44 131 475 7200
Pedro Simoes (CEO)
Chris Lea (CFO)
N+1 Singer, Nominated
Advisor Sandy Fraser +44 207 496 3000
Charlotte Street Malcolm Robertson +44 7788 567680
Partners, Media Enquiries Martha Walsh +44 7876 245962
Shareholder information
Our website can be accessed at www.indigovision.com and contains
substantial information about our business. The website also
carries copies of prior year accounts and stock exchange
announcements.
Shareholder calendar
17 May 2018 Annual General Meeting
Chairman's Statement
Overview
The Group made an operating loss of $2.8m in the year ended 31
December 2017 compared to a small operating profit of $0.1m the
previous year.
The Group's financial performance in 2017 and indeed, prior
years, has not been acceptable and IndigoVision is not achieving
its full potential. This has resulted in significant changes in the
Board and senior management. The leadership team are committed to
improving standards and performance at all levels in the Group, and
under this new leadership, the Group's strategic direction has been
set to better serve our shareholders, customers, employees,
partners and other stakeholders.
Strategy
As reported previously the Group's strategy to grow its market
share and profitability is to increase and improve the quality of
its sales presence in key geographies, develop differentiated
products in collaboration with other software developers to meet
the growing demand for cyber security and intelligent video
security systems, work closely with our OEM partners, improve
productivity and efficiency and control costs.
Sales
During the year significant investment has been made in
strengthening the Group's sales presence in North America, in
particular the United States, which is beginning to show positive
results.
In addition, in the last three months there has been a
determined effort to strengthen links with existing and prospective
customers by improving service and support levels. This initiative
is being led by the Group's Chief Executive Officer and is
recognised as an essential element in building the Group's customer
base.
Product roadmap
The Group's current product range has been reviewed and
repositioned to be more competitive. New products in the pipeline
have also been reviewed to ensure that priority in the development
process is given to those products with the benefits and features
that our customers need and differentiate our products, with the
focus on cyber security and artificial intelligence. Relationships
with third party software developers have also been strengthened
during the year.
Relationship with equipment suppliers
We are working closely with our hardware equipment suppliers to
provide our customers with the best integrated end-to-end solution
for their security needs, allowing them to take maximum advantage
of IndigoVision's software.
Results
Revenue in the year ended 31 December 2017 was $42.3m which was
in line with revenue expectations ranging from $41m to $43m
outlined in the Group's November 2017 trading update. Overall
revenues of $42.3m were, however, $3.7m (8%) lower than 2016
($45.9m), principally because of more challenging market conditions
in the enterprise project sector of the Middle East region, where
revenues were 53% lower than 2016. The lower level of trading in
this region more than accounted for the entire sales shortfall
against last year.
With the exception of the Middle East and Latin America, mid to
high single digit sales growth was seen in all other regions of the
world.
Encouragingly, gross margin improved substantially in the year
to 53.8% from 50.9% in 2016, continuing the trend seen in the
latter half of 2016. This was achieved, primarily, by improved
warranty cost management, a shift towards more profitable
geographic markets and a continuing switch into the Group's lower
cost GX and BX camera ranges.
In line with the strategy to drive significant revenue growth in
North America, the Board elected to increase the sales team by more
than 60% during the year, investing to build a national sales team
structure covering the entire region. The overall cost of this
investment was in excess of $2.0m with the expanded team expected
to drive revenue growth in 2018.
The overall result for the year was an operating loss of $2.8m
(2016: operating profit $0.1m). The operating loss before
exceptional items was $2.4m (2016: operating profit before
exceptional items of $0.4m).
Board Changes
After 20 years with the Group, Hamish Grossart stepped down as
chairman on 1 July 2017 and from the Board on 31 July 2017. I was
appointed to the Board as a Non-Executive Director on 1 June 2017
and succeeded Hamish as chairman on 1 July 2017.
Max Thowless-Reeves was appointed as a Non-Executive Director on
1 June 2017.
Andrew Fulton retired from the Board on 31 December 2017.
Marcus Kneen resigned from the Board and ceased to be Chief
Executive Officer on 23 November 2017 and was replaced, initially
on an interim basis, by Pedro Simoes, who was subsequently
appointed to the Board and to the role of Chief Executive Officer
on 8 January 2018.
Prior to his appointment as Chief Executive Officer, Pedro was
appointed Senior Vice President - Global Sales in October 2017,
following a search for an experienced global sales leader in the
security industry. Pedro brings to the Group over 13 years'
experience in the sector and nearly six years with Avigilon
Corporation where he was ultimately responsible for leading its
global salesforce and driving revenue worldwide.
Cash and Dividends
The net cash balance at 31 December 2017 was $2.6m (2016:
$6.2m). In addition, the Group has unutilised overdraft facilities
of $4.0m.
Given the results for the year, the Company will not pay a
dividend this year (2016: 3.0p).
During 2017, the Company purchased 95,000 IndigoVision shares,
which are currently held in Treasury. The Board retains the ability
to purchase further shares up to a maximum aggregate of 375,000, in
line with the announcement on 23 May 2017.
Outlook
Although only two months into the Group's first quarter, both
actual sales to date and the increase in the sales pipeline have
been encouraging. The investments made in 2017 in North America and
the launch of new products targeted at the different market
segments, together with innovative new products planned for the
second quarter are expected to drive revenue growth in 2018.
It is anticipated that the Board and senior management will make
significant progress in delivering the Group's strategy in 2018 but
this will not be reflected fully in its operating results until
2019 and consequently management is targeting to at least break
even in the current year.
George Elliott
Chairman
28 February 2018
Operating and Financial Review
Operational Review
2017 was a year of change. As well as the Board and senior
management changes already highlighted in the Chairman's Statement,
IndigoVision set a new strategic direction, focussing on delivering
greater value to customers through innovation in its proprietary
video management software.
During the year, the Company developed its CyberVigilant(R)
technology, using software to identify and report on anomalies
within a customer's CCTV network. This new technology is protected
by IndigoVision's first ever patent (pending), filed earlier in the
year. This retro-fit device, launched in September, allows
customers to add an extra layer of cyber protection to their
existing network at a reasonable cost, without the need to replace
most of the hardware. The next generation of IndigoVision's cyber
technology is to embed its cyber protection software within the
camera, allowing for real time protection at the edge of the
network and differentiating the Company's products from the
competition. This new technology will be officially launched at the
ISC West trade show in Las Vegas, in April 2018.
The tiered software offering launched in late 2016 has not
delivered the revenue growth anticipated from the SME market. As a
result, the software tiers have been reviewed and many more
valuable features have recently been made available in the
IndigoLite and IndigoPro software tiers, providing greater value
for our customers with systems of less than 50 cameras.
One year ago, the Board highlighted North America as an area for
major investment and growth. Our investment began in April 2017,
with a relaunch of the IndigoVision brand at the industry's most
important trade show, ISC West. This was followed by a period of
intense recruitment of a number of experienced sales professionals,
starting with the restructuring of the USA into three regions and
the appointment of senior sales directors for each of USA North
East, USA South East, USA West and Canada. Thereafter, the regional
sales teams were expanded to provide coverage for all
states/provinces, supported by the technical expertise of a
locally-focused sales engineering team. Overall, the North American
sales and sales engineering team has increased by more than 60%
since the end of 2016, putting in place improved capability to take
the Company's products to this important market.
Markets and Products
IndigoVision products are deployed in many market sectors for a
variety of customers from small and medium sized enterprises to
large and multinational corporations. The Group is particularly
well known in the enterprise markets of airports, safe cities,
banks, casinos and law enforcement. End users value the quality,
reliability and scalability of the IndigoVision system, together
with the end-to-end customised solutions achieved through an
extensive suite of integration modules with operational and other
security software. 2017 saw major project wins in safe city
projects, airports, shopping malls and a number of casinos.
IndigoVision's product strategy continues to be the design and
sale of a complete end-to-end video security solution, inclusive of
video management software, cameras, encoders, storage devices and
integration to security and operational systems. There are few
competitors that provide a full end-to-end solution, and buyers
value the system reliability produced by designing the complete
solution, as well as the ease of one-stop sourcing.
Business Model
IndigoVision designs and manufactures high performance, video
security systems for a wide range of users from large scale and
complex security installations to small, eight camera systems. From
video capture and transmission to analysis and storage,
IndigoVision networked video security systems provide the best
quality and most secure video evidence, using market leading
compression technology to minimise network bandwidth usage and
reduce storage costs.
The Group develops its end-to-end networked video systems
through in-house design, use of OEM manufacturers and working with
technology partners. Product is manufactured in Asia and Europe and
brought into inventory based on forecast sales.
The Group utilises both in-house and third party warehouses in
Europe, North America, South America and Asia to store product,
enable timely order despatch to its global customer base and offer
local product repair services.
The Group sells its products and services through a global
network of authorised partners who install the Group's systems at
end user sites. The Group's partners vary in size from large
international security companies to local systems integrators;
value added resellers; and distributors in limited geographies.
These companies offer first line technical support to the end users
and can maintain the system post sale. The Group provides second
line technical support to authorised partners.
The Group is structured into four regional sales and support
teams, with people in 24 countries, generating sales across many
more countries.
Strategy
Key areas of strategic development for the business include:
Technology innovation
New products are brought to market regularly to compete as
technology advances. The Group operates a dual development strategy
of in house software development and OEM product sourcing and
qualification. The in-house engineering team ensures all products
supplied within the end-to-end offering are tested robustly and
fully optimised as a complete solution to deliver market leading
performance and reliability. Hardware life-cycles in the security
market are reducing and, by sourcing products from a number of
suppliers, the Group can offer a broader product range and increase
speed to market for new technology. The Group's in-house
development resource is strategically weighted towards software
development, to meet increased market demand for intelligent video
systems for both security and operational needs.
Sales and marketing
New and repeat business is being won continually; new markets
have been developed in line with the Group's strategy; key customer
relationships are monitored on a regular basis and the performance
of the regional sales teams is continually reviewed to ensure
appropriate development is provided and teams resourced
accordingly. The sales and marketing team structure is evolving to
manage the targeted growth.
Supply chain and logistics
The Group sources products from multiple suppliers in Asia and
Europe, and consolidates these in three main logistics centres in
Malaysia, the USA and the UK, operated by third parties. The Group
also operates service centres in Colombia and Brazil. The Group
continually strives to improve efficiency in the supply chain and
logistics functions, to provide market leading service to our
global customer base.
Employees
The continuing success of the Group primarily depends on its
employees across the world, who contribute daily to the achievement
of the organisational goals. The Group respects its staff and
recognises that they are its most valuable asset. The Group
recruits and retains staff globally by offering challenging
opportunities, competitive compensation packages and a good working
environment.
The Group strives to provide a working environment which
encourages continuous learning and development for all employees
and is committed to effective investment in training and
development to achieve the business goals. The Group conducts an
annual staff engagement survey to gauge employees' professional and
emotional commitment to the Group and to seek feedback to drive
continuous improvement.
The Group is committed to employee involvement throughout the
business and operates a number of share option, share incentive and
long term incentive plans along with a variety of cash bonus
schemes. The Group has established an employee benefit trust in
connection with these share option plans.
Financial Review
Results
In the year to 31 December 2017 revenue was $42.3m (2016:
$45.9m), a fall of 8%. The headline revenue fall masks
significantly different performances across the regions. The Middle
East region, where revenues were 53% lower than 2016, was
responsible for over 100% of the revenue shortfall. All other
regions except Latin America showed single digit revenue growth
over 2016.
The volume of cameras sold in the period decreased by 2%, but
encouragingly, average prices were in line with last year, a period
of relative stability after significant price falls throughout
2016. The number of software licences sold increased marginally,
however the trend of lower average selling prices continued. The
Company's premium "Ultra" software still accounts for the majority
of licence sales.
In line with the Group's strategic focus on the North American
market, the Group implemented a major change in its North American
operations in mid-2017, with a number of changes in personnel,
strengthened management, expanded sales and sales support team and
a re-positioning of the IndigoVision brand. North American revenues
grew 6% in 2017.
Within EMEA itself, performance was mixed, with a 6% improvement
in UK/Northern Europe more than offset by a 53% fall in Middle East
sales.
Within Latin America, the Group started 2017 strongly and
delivered a number of successful safe city projects across the
region, however difficult market conditions in the second half of
the year led to an overall fall in revenues of 8%.
APAC revenues grew 5% in 2017, as the Group continues to focus
on the key markets of Australia and South East Asia.
The gross margin improved substantially in the year to 53.8%
from 50.9% in 2016, continuing the trend seen in the latter half of
2016. This was achieved, primarily, by improved warranty cost
management as the increasing proportion of OEM hardware passes more
of th risk back to the supplier, a shift towards more profitable
geographic markets and a continuing switch into the Group's lower
cost GX and BX camera ranges.
Overheads, at $25.4m, were 8% higher than last year (2016:
$23.5m), following the decision to expand the North American sales
team and a strengthening of sterling against the US dollar
adversely impacting UK head office costs. The overall investment in
North America in 2017 exceeded $2.0m, with customer-facing sales
and sales support teams expanded, positioning the Group for growth
in this key market.
Research and development spend has been broadly maintained at a
consistent level to enable the Group to continue to differentiate
its offering through innovation, with research and development now
focused on software-led end-to-end video security.
The operating loss for the year was $2.8m (2016: operating
profit of $0.1m). The operating loss before exceptional costs for
the year ended 31 December 2017 was $2.4m (2016: operating profit
before exceptional costs of $0.4m). The loss after tax was $2.3m
(2016: $2.8m), representing a loss per share of 30.9 cents (2016:
37.3 cents).
Cash
The net cash balance at 31 December 2017 was $2.6m (2016:
$6.2m). Cash balances are mainly held in US dollars, sterling,
euros and Canadian dollars. Cash reserves in excess of current
requirements are placed on a variety of term deposits. Term
deposits are placed with banks from the list of the Group's
approved institutions. Cash on term deposits is included within
cash and cash equivalents on the balance sheet.
The Group's currently has an unutilised overdraft facility of
$4.0m, secured by a bond and floating charge. In addition, the
Group has finance leases of $0.1m (2016: $0.1m) in relation to
computer hardware.
Dividends
It is also the Board's policy that dividends should reflect
earnings and, given the full year loss, the Company will not pay a
dividend this year.
Systems
In January 2018, the Group successfully implemented a new ERP
system, facilitating an improvement in operational processes,
internal controls and management information. The new system is
integral to driving operational efficiencies within the
business.
Pedro Simoes Chris Lea
Chief Executive Officer Chief Financial Officer
Edinburgh
28 February 2018
Consolidated statement of comprehensive income
For the year ended 31 December 2017
2017 2016
$'000 $'000
--------------------------------------------- ---- ---------- ---------
Revenue 42,331 45,923
Cost of sales (19,558) (22,558)
--------------------------------------------------- ---------- ---------
Gross profit 22,773 23,365
Research and development expenses (3,090) (3,358)
Selling and distribution expenses (17,081) (15,574)
Administrative expenses (5,699) (4,605)
Foreign exchange gain 281 231
--------------------------------------------------- ---------- ---------
Operating profit /(loss) (2,861) 59
--------------------------------------------------- ---------- ---------
Analysed as:
Underlying operating profit/(loss) (2,420) 359
Exceptional salary costs (396) -
Exceptional bad debt expense - (300)
--------------------------------------------------- ---------- ---------
Financial income 12 -
--------------------------------------------- ---- ---------- ---------
(Loss)/profit before tax (2,804) 59
Income tax credit/(charge) 204 (2,851)
--------------------------------------------------- ---------- ---------
Loss for the period attributable
to equity holders of the parent (2,600) (2,792)
--------------------------------------------------- ---------- ---------
Analysed as:
Underlying (loss)/profit for
the period attributable to
equity holders of the parent (2,204) 672
Exceptional salary costs (396) -
Exceptional bad debt expense - (300)
Deferred tax adjustment - (3,164)
--------------------------------------------------- ---------- ---------
Other comprehensive income
Foreign exchange translation
differences on foreign operations (255) (510)
--------------------------------------------------- ---------- ---------
Total comprehensive loss for
the year attributable to equity
holders of the parent (2,855) (3,302)
--------------------------------------------------- ---------- ---------
Basic loss per share (cents) (34.9) (37.3)
--------------------------------------------------- ---------- ---------
Diluted loss per share (cents) (34.9) (37.3)
--------------------------------------------------- ---------- ---------
Adjusted (loss)/profit per
share (cents) (29.6) 9.0
--------------------------------------------------- ---------- ---------
Consolidated balance sheet
As at 31 December 2017
2017 2016
$'000 $'000
------------------------------------- ---- ------- -------
Non-current assets
Property, plant and equipment 1,504 1,236
Intangible assets 352 22
Deferred tax 1,846 1,687
------------------------------------------- ------- -------
Total non-current assets 3,702 2,945
------------------------------------------- ------- -------
Current assets
Inventories 8,936 8,072
Trade and other receivables 12,869 12,772
Cash and cash equivalents 2,574 6,203
------------------------------------------- ------- -------
Total current assets 24,379 27,047
------------------------------------------- ------- -------
Total assets 28,081 29,992
------------------------------------------- ------- -------
Current liabilities
Trade and other payables 10,950 9,990
Provisions 138 138
------------------------------------------- ------- -------
Total current liabilities 11,088 10,128
------------------------------------------- ------- -------
Non-current liabilities
Provisions 45 45
Other non-current liabilities 17 33
------------------------------------------- ------- -------
Total non-current liabilities 62 78
------------------------------------------- ------- -------
Total liabilities 11,150 10,206
------------------------------------------- ------- -------
Net assets 16,931 19,786
------------------------------------------- ------- -------
Equity
Called up share capital 120 120
Share premium account 2,684 2,684
Other reserve 8,080 8,080
Translation reserve (596) (341)
Treasury/own share reserve (268) -
Profit and loss account 6,911 9,243
------------------------------------------- ------- -------
Total equity attributable to equity
holders of the parent 16,931 19,786
------------------------------------------- ------- -------
Group statement of changes in equity
For the year ended 31 December 2017
Share Share Other Treasury Translation Retained Total
capital premium reserve / own reserve earnings equity
share
reserve
---------------------------
Group $'000 $'000 $'000 $'000 $'000 $'000 $'000
--------------------------- --------- --------- --------- --------- ------------ ---------- --------
Balance at 31 December
2015 120 2,684 8,080 - 169 12,293 23,346
Total comprehensive
income
Loss for the year - - - - - (2,792) (2,792)
Difference on translation - - - - (510) - (510)
--------------------------- --------- --------- --------- --------- ------------ ---------- --------
Total comprehensive
income - - - - (510) (2,792) (3,302)
--------------------------- --------- --------- --------- --------- ------------ ---------- --------
Transactions with
the owners of the
Company
Equity-settled
transactions, including
deferred tax effect - - - - - 28 28
Dividends paid
to equity holders - - - - - (286) (286)
--------------------------- --------- --------- --------- --------- ------------ ---------- --------
Total transactions
with the owners
of the Company - - - - - (258) (258)
--------------------------- --------- --------- --------- --------- ------------ ---------- --------
Balance at 31 December
2016 120 2,684 8,080 - (341) 9,243 19,786
Total comprehensive
income
Loss for the year - - - - - (2,600) (2,600)
Difference on translation - - - - (255) - (255)
--------------------------- --------- --------- --------- --------- ------------ ---------- --------
Total comprehensive
income - - - - (255) (2,600) (2,855)
--------------------------- --------- --------- --------- --------- ------------ ---------- --------
Transactions with
the owners of the
Company
Equity-settled - - - - - - -
transactions, including
deferred tax effect
Purchase of own
shares - - - (268) - 268 -
Dividends paid - - - - - - -
to equity holders
--------------------------- --------- --------- --------- --------- ------------ ---------- --------
Total transactions
with the owners
of the Company - - - (268) - 268 -
--------------------------- --------- --------- --------- --------- ------------ ---------- --------
Balance at 31 December
2017 120 2,684 8,080 (268) (596) 6,911 16,931
--------------------------- --------- --------- --------- --------- ------------ ---------- --------
Consolidated statement of cash flows
For the year ended 31 December 2017
2017 2016
$'000 $'000
Cash flows from operating activities
Loss for the year (2,600) (2,792)
Adjusted for:
Depreciation and amortisation 850 906
Financial income (12) -
Share based payment expense 36 38
Foreign exchange gain (281) (231)
Loss on disposal of fixed assets 133 104
Income tax (credit)/charge (204) 2,851
(Increase)/decrease in inventories (864) 1,422
Decrease in trade and other
receivables 570 491
Increase in trade and other
payables 927 2,304
Increase in provisions - 1
--------------------------------------- -------- --------
Cash (absorbed by)/generated
from operations (1,445) 5,094
Income taxes repaid 179 (708)
--------------------------------------- -------- --------
Net cash (outflow)/inflow from
operating activities (1,266) 4,386
--------------------------------------- -------- --------
Cash flows from investing activities
Interest received 12 -
Acquisition of property, plant
and equipment (1,139) (663)
Acquisition of intangible assets (414) (41)
Proceeds from the sale of fixed
assets 28 4
--------------------------------------- -------- --------
Net cash outflow from investing
activities (1,513) (700)
--------------------------------------- -------- --------
Cash flows from financing activities
Purchase of own shares (268) -
Finance lease payments (18) -
Dividends paid (289) (286)
--------------------------------------- -------- --------
Net cash outflow from financing
activities (575) (286)
--------------------------------------- -------- --------
Net (decrease)/increase in cash
and cash equivalents (3,333) 3,400
Cash and cash equivalents at
31 December 6,203 2,763
Effect of exchange rate fluctuations
on cash held (297) 40
--------------------------------------- -------- --------
Cash and cash equivalents at
31 December 2,574 6,203
--------------------------------------- -------- --------
Notes to the accounts:
1. Principal activities
The principal activity of the Group continues to be the design,
development, manufacture and sale of networked video security
systems. Cameras, encoders, network video recorders and software
are designed both internally and with technology partners and
manufactured in Asia and Europe. The Group's end to end IP video
security systems allow full motion video to be transmitted
worldwide, in real time, with digital quality and security, over
local or wide area networks, wireless links or the internet, using
market leading compression technology to minimize usage of network
bandwidth
2. Basis of preparation and accounting policies
The financial statements are presented in US Dollars, rounded to
the nearest thousand. They are preared on a historical cost
basis.
The accounting policies used in preparing the financial
statements are set out in note 1 of the IndigoVision Group plc
Annual Report 2017.
3. Annual accounts
The financial information set out in this announcement does not
constitute the Group's statutory accounts for the year ended 31
December 2017 but is derived from those accounts. The statutory
accounts of IndigoVision Group plc for 2016 have been delivered to
the Registrar of Companies and those for 2017 will be delivered to
the Registrar of Companies following the Company's annual general
meeting. The auditors have reported on those accounts; their
reports were unqualified and did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
4. Segment reporting
The Board reviews the Group's internal reporting in order to
assess performance and to allocate resources. The Board assesses
the performance of the following geographical sales regions:
primarily Europe; Middle East and Africa; North America; Latin
America; and Asia Pacific and has therefore determined these as the
operating segments.
The Board considers the performance of the operating segments
based on regional sales and Group-wide gross margin before warranty
costs. The operating segments derive their revenue from the sale of
software, hardware products and services. Capital is not allocated
to geographical regions and substantially all of the Group's income
and expenditure is incurred by its UK trading subsidiary,
IndigoVision Limited. The information currently provided to the
Board is measured in a manner which is consistent with the
financial statements.
Segment information is also presented in the respect of the
Group's products and services which have different economic
characteristics, including the sale of end-to-end video security
solutions, consultancy services and multi-year software upgrade
plans.
Operating segments
Regional Sales 2017 2016
$'000 $'000
-------------------------------- ------- -------
Europe, Middle East and Africa 18,468 22,491
North America 12,188 11,470
Latin America 6,250 6,799
Asia Pacific 5,425 5,163
-------------------------------- ------- -------
42,331 45,923
-------------------------------- ------- -------
All sales are to third parties and all segment results are from
continuing activities. The gross margin earned in each region is
comparable and the majority of overheads are incurred centrally and
are therefore unallocated to each region.
Revenues derived from external customers based in the UK were
$6,794,000 (2016: $6,675,000)
Analysis of revenue
2017 2016
$'000 $'000
---------------------------- ------- -------
Revenues from:
Products/solutions 39,277 43,107
Support services 113 220
Software Upgrade Contracts 2,941 2,596
---------------------------- ------- -------
42,331 45,923
---------------------------- ------- -------
5. Operating (loss)/profit
2017 2016
$'000 $'000
--------------------- --------------------- ---- ------- -------
Operating (loss)/profit is stated
after charging:
Depreciation and amortisation 850 906
Exceptional salary costs(1) 396 -
Exceptional bad debt expense - 300
Allowance for doubtful trade
receivables 385 22
Net write down of inventories
to realisable value 379 499
Research & development expenditure 3,090 3,358
Share based payment expense 36 38
Redundancy costs - 122
Fees payable to the Group's
auditor:
Audit of these financial statements
(Group and Company) 17 15
Audit of subsidiary companies 33 29
All other services 12 -
-------------------------------------------- ---- ------- -------
(1) The exceptional salary costs relate to compensation and
settlement payments made to Marcus Kneen who resigned on 23
November 2017.
6. Income Taxes
2017 2016
$'000 $'000
------------------------------------------------------- ---- ------- -------
Current tax (credit)/expense
UK tax (236) (373)
UK tax - prior year adjustment 191 40
Overseas tax 12 20
Overseas tax - prior year adjustment (9) -
------------------------------------------------------- ---- ------- -------
(42) (313)
------------------------------------------------------------ ------- -------
Deferred tax (credit)/expense
Origination and reversal of temporary differences (183) 2,361
Reduction in tax rates 21 308
Adjustments relating to prior year trading losses - 495
------------------------------------------------------------- -------
(162) 3,164
------------------------------------------------------------ -------
Total income tax (credit)/expense in income statement (204) 2,851
------------------------------------------------------------- ------- -------
7. Earnings per share
2017 2016
$'000 $'000
-------------------------------------------- ---- -------- --------
Earnings per share
Loss for the year attributable
to equity shareholders (basic
and diluted) (2,600) (2,792)
Exceptional compensation and 396 -
settlement costs
Exceptional bad debt expense - 300
Deferred tax adjustment - 3,164
-------------------------------------------- --------- -------- --------
Adjusted (loss)/profit for the
year attributable to equity shareholders (2,204) 672
-------------------------------------------- --------- -------- --------
Cents Cents
-------------------------------------------- ---- -------- --------
Basic earnings per share (34.9) (37.3)
Diluted earnings per share (34.9) (37.3)
Adjusted earnings per share (29.6) 9.0
-------------------------------------------- --------- -------- --------
The weighted average number of ordinary shares used in the
calculation of basic and diluted earnings per share for each period
were calculated as follows:
2017 2016
Number Number of
of shares shares
------------------------------------- ----------- -----------
Issued ordinary shares at start of
year 7,610,756 7,610,756
Effect of purchase of own shares (170,763) (134,238)
------------------------------------- ----------- -----------
Weighted average number of ordinary
shares for the year - for earnings
per share 7,439,993 7,476,518
------------------------------------- ----------- -----------
The calculation of adjusted earnings per share for the year
ended 31 December 2017 was based on the loss attributable to equity
shareholders of $2,600,000 (2016 loss: $2,792,000), to which the
exceptional compensation/settlement costs of $396,000 (2017: $0)
have been added back. A weighted average number of ordinary shares
during the year ending 31 December 2017 of 7,439,993 (2016:
7,476,518), calculated as shown above.
Adjusted earnings per share has been presented as the movements
related to deferred tax are dependent on a series of assumptions
with associated inherent uncertainties which introduce substantial
volatility in the deferred tax income/expense from year to year.
The Board believes an adjusted earnings per share measure is
required to reflect its view of the underlying performance and to
align more closely with management targets and rewards.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UWAORWKAUUUR
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