IND.L Regulatory News (IND)

14 Oct 2005 07:00

IndigoVision Group PLC14 October 2005 14 October 2005 IndigoVision Group plc ("IndigoVision") Preliminary Results for the year to 31 July 2005 Highlights Financial Highlights • Product revenues increased by 100% from £1.7m to £3.5m• Total revenues increased by 60% from £2.3m to £3.6m• Gross margin percentage increased from 52% to 57%• Gross margin increased 74% from £1.2m to £2.1m• Loss before taxation reduced from £2.7m to £1.9m• Net cash balances of £1.1m at year end Operating Highlights • EMEA product revenues increased 86% from £1.3m to £2.4m• North American product revenues increased by 122% from £0.4m to £0.9m• Sales offices established in Singapore, Australia and Latin America• New range of powerful real time video analytics• Major new installations and orders secured in the year and customer numbers doubled Oliver Vellacott, Chief Executive, said: "IndigoVision's IP video and alarm management solutions are field-proven inmission critical applications across the world. These demonstrate both therobustness and cost effectiveness of our technology. We currently expect salesfor the first quarter of this year to be approximately double the correspondingperiod last year. We remain confident of substantial revenue growth for theyear as a whole, as the rapid market shift from analogue to IP video continues." Enquiries to: IndigoVision plc Oliver Vellacott CEO ++44 (0) 131 475 7200 Marcus Kneen CFO IndigoVision Group plc ("IndigoVision") Preliminary Results for the year to 31 July 2005 Chairman's Statement The year to 31 July 2005 was one of good growth for IndigoVision followingcompletion of the group's product range. Turnover and gross margin improvedstrongly, costs were held steady, and as a result, operating losses werereduced. The group now has over 10,000 units operating successfully in thefield, and the spread of customers again grew, as the market rate of adoption ofinternet protocol (IP) video technology built steadily. There seems littledoubt that the market is set for continued long term growth and the prospectsfor further rapid increases in sales look strong. Results Turnover for the year to 31 July 2005 increased by 60% to £3.6m (20043/4£2.3m)with product revenues doubling to record levels. Gross margin percentageimproved to 57% (20043/452%), with a resultant 74% increase in gross margin to£2.1m (20043/4£1.2m). North American sales increased 122% compared with 2004.Europe, Middle East and Africa sales increased 86% compared with 2004. Thegeographical split of revenues was Europe, Middle East and Africa: 67% (20043/457%), North America: 25% (20043/419%) and Asia: 8% (20043/424%). Operatingcosts increased by 2%. Headcount increased from 42 to 44. The cash out-flow from operating activities increased from £2.6m to £2.7m forthe year, although the net cash outflow reduced materially by the second halfyear at £0.9m. The net cash balance at 31 July 2005 was £1.1m (20043/4£3.7m)and net cash balances remain above £1m. About IndigoVision IndigoVision has been a pioneer in the IP Video market for some years, and isnow starting to see significant growth, shown in doubled product revenues, asthe market shifts from analogue to IP. IndigoVision is unique in developing and owning the complete end-to-end solutionin-house, from the MPEG-4 compression chip which powers IndigoVisiontransmitters, through to its complete enterprise video and alarm managementsoftware. Geographical market reach also continues to grow, with new sales andsupport offices being established in Asia Pacific and Latin America. IndigoVision is at the forefront of IP Video technology, with unique sellingpoints delivering major benefits for the end user. For example, the retrievaland display of 24 hours of recorded video as stills / thumbnails is achievedwithin just 6 seconds. IndigoVision's video analytics are unsurpassed in theirability to locate evidence fast and accurately. Field Proven Worldwide There are now 18 airports worldwide that have adopted a complete IndigoVision IPVideo solution. IndigoVision supplied the backbone for the entire securitysystem for the 2004 Athens Olympics and is also supplying the complete IP Videosolution for the 2006 Winter Olympics in Italy. IndigoVision has now suppliedsecurity for two G8 summits. Recently great progress has been made in thefinancial sector, with one of the world's largest banks committing to useIndigoVision across all their HQ sites. Airports, ports, highways and railwaysremain key markets for IndigoVision. Why IP Video? Analogue Closed Circuit Television (CCTV) is called 'closed' for a very goodreason. Each CCTV system can only operate over a limited distance, withtypically a limited recorded frame rate, limited user control, and extremelylimited review of evidence. One effect is that organisations end up with manyseparate, isolated CCTV systems each with its own infrastructure and overheads.With analogue, enterprises cannot unlock the benefits of having a single,integrated video management system operating seamlessly across theirorganisation. IndigoVision's networked video and alarm management system changes all that byencompassing an entire organisation. This can reduce operating costsdramatically, greatly improve security assurance and provide much greaterflexibility for future organizational change. Incident management is quicker,cheaper, more effective and focused using IndigoVision systems. Chairman's report (continued) Complete IP Video Solutions IndigoVision is at the forefront in the development of complete enterprise videoand alarm management systems. Development of IndigoVision's "Control Center"application software has continued with the addition of enterprise level alarmmanagement functionality, allowing use within alarm receiving centres. IndigoVision is still the only IP Video manufacturer in the world with a rangeof standalone Networked Video Recorders (NVRs). These rack-mounted units areLinux powered, are rated to higher temperatures and are more reliable thanPC-based recorders and Digital Video Recorders (DVRs). NVR's make IP Videosolutions easier to deploy and more reliable. IndigoVision's new range of sophisticated powerful video analytics is uniquewithin IP Video in that it runs both in real time at the camera and also duringpost-processing of recorded footage within "Control Center". This gives endusers the best of both worlds: the ability to pick up events as they happen andalso to analyse and re-analyse recorded footage to test various scenarios. Financial Position The Group had net cash balances of £1.1m at the year end, and no borrowings.Since the year end, notwithstanding that cash balances have increased above the£1.1m on hand at the year end, bank facilities of £0.5m are currently beingfinalised and the Board considers that there are sufficient financial resourceswithin the Group to finance the development of the business through to breakevenprofitability. The Board will continue to keep the Group's financial positionunder regular review to ensure that IndigoVision is adequately resourced toexploit the opportunities before it. Current trading and outlook The Group's products are well developed and the expanding installed basedemonstrates strong market belief in the quality and cost effectiveness ofIndigoVision solutions. This has resulted in a significant increase in bothopportunities and the sales pipeline. The Group is therefore continuing toincrease investment in its sales network. Sales are expected to continue to increase substantially in the current year andthe Group expects to be able broadly to maintain the improved margin evident inlast year's results. Notwithstanding an increase in selling overhead, overallcosts will continue to be tightly controlled and the Board therefore expects theGroup to make significant progress during the current financial year. Since the year end trading has continued to be strong with markets continuing todevelop. Sales for the first quarter are expected to be approximately doublethe corresponding period last year. Looking to the medium and longer term, theBoard remains confident that IndigoVision's strong technology and clearcommercial focus position the Group to benefit from the accelerating marketshift from analogue to IP Video. Consolidated profit and loss account for the year ended 31 July 2005 Note 2005 2004 £000 £000 Group Turnover 4 3,605 2,255Cost of sales (1,549) (1,074) Gross profit 2,056 1,181Research and development expenditure (1,447) (1,502)Other administrative expenses (2,613) (2,463) Group operating loss (2,004) (2,784)Interest receivable and similar income 102 162Interest payable and similar charges (1) (35) Loss on ordinary activities before (1,903) (2,657)taxationTax on loss on ordinary activities 87 293 Loss for the financial year (1,816) (2,364) Loss per ordinary shareBasic and diluted loss per share 5 (26.23p) (34.16p) Turnover and loss on ordinary activities before taxation for the current andprevious year relate wholly to continuing activities. Consolidated balance sheet at 31 July 2005 Note 2005 2005 2004 2004 £000 £000 £000 £000Fixed assetsTangible assets 159 195 Current assetsStocks 353 251Debtors 1,430 1,124Cash at bank and in hand 1,132 3,704 2,915 5,079Creditors: amounts falling due withinone year (850) (1,235) Net current assets 2,065 3,844 Total assets less current liabilities 2,224 4,039Provisions for liabilities and charges (75) (75) Net assets 2,149 3,964 Capital and reservesCalled up share capital 6 69 69Share premium account 7 23,972 23,971Other reserve 7 8,563 8,563Profit and loss account 7 (30,455) (28,639) Shareholders' funds - equity 2,149 3,964 Consolidated cash flow statement for the year ended 31 July 2005 Note 2005 2004 £000 £000 Cash flow statement Cash out-flow from operating activities 8 (2,692) (2,571)Returns on investments and servicing of finance 101 127Taxation 87 110Capital expenditure (41) (189) Cash outflow before financing (2,545) (2,523) Financing (27) (37) Decrease in cash in the year (2,572) (2,560) Reconciliation of net cash flowto movement in net funds 9 Decrease in cash in the year (2,572) (2,560) Cash outflow from debt repayment 28 37 Change in net debt resulting from cash flows (2,544) (2,523)Foreign currency translation differences - (19) Movement in net funds in the period (2,544) (2,542)Net funds at the start of the period 3,676 6,218 Net funds at the end of the period 1,132 3,676 Consolidated statement of total recognised gains and losses for the year ended 31 July 2005 Group 2005 2004 £000 £000 Loss for the financial year (1,816) (2,364)Exchange differences on the retranslation of net investments - (19) Total recognised gains and losses relating to the financial year (1,816) (2,383) Reconciliations of movements in shareholders' funds for the year ended 31 July 2005 Group Company 2005 2004 2005 2004 £000 £000 £000 £000 Loss for the financial year (1,816) (2,364) (2,359) (2,739) Other recognised gains and losses relating - (19) - -to the yearIncrease in share capital 1 - 1 - Net reduction in shareholders' funds (1,815) (2,383) (2,358) (2,739)Opening shareholders' funds 3,964 6,347 3,608 6,347 Closing shareholders' funds 2,149 3,964 1,250 3,608 Notes to the accounts: 1 Principal activity The principal activity of the group is the design, manufacture, sale andlicensing of software and hardware products. 2 Accounting policies Basis of preparation The preliminary financial information has been prepared on the basis of theaccounting policies set out in the most recent set of financial statements forthe year ended 31 July 2004. These policies are detailed on pages 13 and 14 ofThe IndigoVision Group plc annual report for 2004. This report was approved by the board of directors on 13 October 2005. 3 Annual accounts The financial information set out in this announcement does not constitute theGroup's Statutory Accounts for the year ended 31 July 2004 or 2005 but isderived from those accounts. Statutory Accounts of IndigoVision Group plc for2004 have been delivered to the Registrar of Companies and those for 2005 willbe delivered to the Registrar of Companies following the Company's annualgeneral meeting. The auditors have reported on those accounts; their reportswere unqualified and did not contain a statement under section 237(2) or (3) ofthe Companies Act 1985. This report was approved by the Board of directors on 13 October 2005. 4 Segmental information 2005 2004 £000 £000Turnover by destinationEurope, Middle East & Africa 2,412 1,293Asia 287 548Americas 906 414 3,605 2,255 5 Loss per share Loss per share is calculated as follows: 2005 2004 £000 £000 Loss for the financial year (1,816) (2,364) Basic and diluted loss per share (26.23p) (34.16p) All calculations of earnings per share are based on the weighted average numberof ordinary shares in issue during the year 6,923,976 (20043/46,919,976). 6 Called up share capital 2005 2004 £000 £000AuthorisedEquity: Ordinary shares of 1p each 14,922 14,922 Allotted, called up and fully paidEquity: 6,923,976 Ordinary shares of 1p each 69 69 (20043/46,919,976) 69 69 During the year 4,000 ordinary shares of 1p each were issued at 35p per sharepursuant to the exercise of options. 7 Share premium and reserves Share Profit premium Other and loss account Reserve accountGroup £000 £000 £000 At beginning of year 23,971 8,563 (28,639)Retained loss for the year - - (1,816)Premium on share capital 1 - - At end of year 23,972 8,563 (30,455) 8 Reconciliation of operating loss to operating cash flows 2005 2004 £000 £000 Operating loss (2,004) (2,784)Depreciation 72 116(Increase)/decrease in stocks (102) 155(Increase) in debtors (306) (474)(Decrease)/increase in creditors (357) 364Foreign exchange adjustment on fixed 5 5assetsMovement in warranty provisions - 47 Net cash outflow from operating activities (2,692) (2,571) 9 Analysis of net funds At beginning Cash flow At end of of year year £000 £000 £000 Cash in hand, at bank 3,704 (2,572) 1,132 Debt due within one year (28) 28 - Total 3,676 (2,544) 1,132 This information is provided by RNS The company news service from the London Stock Exchange