IND.L Regulatory News (IND)

5 Mar 2007 07:01

IndigoVision Group PLC05 March 2007 IndigoVision Group plc ("IndigoVision") Results for the six months to 31 January 2007 Highlights Financial Highlights • Turnover up 108% to £6.2m• Product revenues up 148%• Gross margin increased 88% to £3.8m• Gross margin percentage 61% compared with 68% last year• Operating profit up four fold to £0.35m Operating Highlights • Product revenue growth in all markets - Americas up 140% to £1.3m - APAC up 255% to £1.3m - EMEA up 127% to £3.6m • Licensing less than £0.1m compared with £0.5m last year • Sales coverage extended, direct sales force expanded and strengthened • Product range broadened - Next generation H.264 compression launched (9000 range) - IP Camera range expanded - Cost effective new entry levels introduced • Major installations in all geographies - 600 cameras at Doha International Airport in Qatar - 1300 cameras in Vancouver rail networks, Canada - 550 cameras at Hollywood Casino in Florida, USA - Budapest city centre monitoring in Hungary Oliver Vellacott, Chief Executive, said: "The first six months of this year have shown accelerating product revenuegrowth with healthy product gross margins and an operating profit matching thatachieved for the whole of the previous year. Substantial investment has beenmade in the direct sales force in support of the continuing market shift fromanalogue to IP video and we expect good growth rates in revenue for theremainder of the year." Notes to Editors About IndigoVision IndigoVision is a leading manufacturer of complete end-to-end IP video and alarmmanagement solutions. IndigoVision is widely chosen for applications inairports, city centers, ports, mines, road and rail systems, education, banking,casinos, prisons, government and the military. These enterprise-class systemsimprove organisations' operational efficiency, enhance public safety and enabletimely emergency response. IndigoVision is headquartered in Edinburgh UK, withlocal sales & support offices across the world. IndigoVision partners with some150 authorised system integrators and installers in 30 countries to providelocal system design, installation and service to end users. Enquiries to: IndigoVision plc Oliver Vellacott CEO ++44 (0) 131 475 7200 Marcus Kneen CFO Bell LawrieNominated Advisor Kenneth Fleming ++44 (0) 141 221 7733 INDIGOVISION GROUP PLC Results for the six months to 31 January 2007 Chairman's Statement The last six months have seen continued strong and accelerating growth in sales.Key factors driving greater sales are expansion in the sales team, furthermarket-leading development of the product range and the rate of growth in themarket for IP Video. Results Turnover for the six months to 31 January 2007 increased by 108% to £6.2m (20063/4£3.0m). Product revenue increased by 148% to £6.2m with licensing income nowless than 1% of sales. The split of revenues was Europe, Middle East and Africa(EMEA): 58% £3.6m (20063/453% £1.6m), Americas: 21% £1.3m (20063/418% £0.5m),Asia Pacific: 21% £1.3m (20063/412% £0.3m) and licensing and royalty: less than1% (20063/417% £0.5m). Product sales growth was excellent in all regions; EMEAachieved year on year growth in product sales of 127%, Americas 140%, and AsiaPacific 255%. Gross margin percentage reduced to 61% (20063/468%). Part of this reduction wasas a result of the reduction in licensing income as a proportion of turnover,and part was as a result of expected lower margins on larger orders. Highersales were partially offset by the lower gross margin percentage but, despitethis, overall gross margin increased by 88% to £3.8m (20063/4£2.0m). Year onyear operating costs increased by 78% to £3.4m (20063/4£1.9m). The bulk of thisincrease was in support of sales and future sales growth. Overall headcountincluding retained sales agents rose from 63 to 83. Operating profit was £0.35m (2006 restated3/4£0.09m), an improvement of 302%.Last year's numbers for operating costs and profit have been restated to reflectFRS20 on share based payments, resulting in a charge to other administrativeexpenses of £0.10m (20063/4£0.07m). After interest income, profit beforetaxation was £0.36m (2006 restated3/4£0.11m). Cash flow from operating activities for the six months was an outflow of £0.6m(20063/4inflow £0.2m) reflecting increased debtors on the higher sales. The netcash position at 31 January 2007 was £0.8m (20063/4£1.4m). Net cash at the lastyear end, 31 July 2006, was £1.4m. Operations The senior management team has recently been strengthened with the addition of aChief Marketing Officer and a Supply Chain Director. We have also completed theappointment of five regional Sales Directors (Asia Pacific, Americas, EMEA, UK,Rest of World), reporting direct to the Chief Executive, as part of ourfoundations for continued growth in the sales team. Again in preparation forhigher levels of sales, we have established three worldwide regional hubs(Singapore, USA, UK) to locate stocking, service and support closer to ourpartners. We continue to push forward the boundaries of IP Video technology, with keydifferentiating features being added to our enterprise-class video managementsoftware and a broadening range of hardware. Our strongest market sector remainsTransportation (airports, rail, ports, roads), with a particularly strong run ofrecent contract wins in Rail bringing us to 7 major rail systems in total. Weare also pushing into other key sectors including City Centres, Casinos, Policeand Campuses. The IP Video market continues to develop strongly, with variousmarket research analysts reporting annual growth rates of 30% to 40%. Current trading and outlook The first half of the year saw excellent sales growth and the rate of growthaccelerated through the period. The sales force is more extensive, marketgrowth appears to be accelerating, and the product range is broadening andcontinues to attract repeat orders. Sales in February were over double the same month last year, and the salesopportunity pipeline continues to predict rapid growth. As we said in Marchlast year higher sales revenues are likely to mean some gross margin reduction,but we expect margins going forward to be at healthy and profitable levels. Therate of growth in overhead in the first half, which reflects increasedinvestment in the future of the business, is expected to be less rapid in thesecond half, in order to ensure that sales growth is turned into improvedoperating performance. Although increased sales have inevitably resulted in greater investment inworking capital, particularly debtors, the business still ended the half yearwith net cash of £0.8m and no borrowings. A short-term multi option facility of£2m was arranged during the first half from The Royal Bank of Scotland tosupport IndigoVision's growth. As we have said for some time, the long-term future for IndigoVision isattractive. We are now seeing the beginnings of a transition of that view intoactual performance. The board is confident that the second half will showcontinuing strong growth in sales, although work remains to be done to turn thatgrowth into acceptable levels of profitability. The quality and positioning ofthe company's products coupled with a much strengthened sales and managementinfrastructure and a growing market give the board good reason to maintain ahigh level of confidence in the short, medium and long term prospects for yourcompany. HAMISH GROSSARTChairman05 March 2007 Consolidated profit and loss accountFor the 6 months to 31 January 2007 Note 6 months to 31 6 months to 31 Year to 31 January 2007 January 2006 July 2006 Unaudited Unaudited Audited Restated Restated £000 £000 £000 Turnover 6,186 2,978 7,574 Cost of sales (2,395) (958) (2,853) Gross profit 3,791 2,020 4,721 Research and development expenditure (847) (617) (1,376)Other administrative expenses (2,594) (1,316) (2,997) Operating profit 350 87 348 Interest receivable and similar income 13 25 44Interest payable and similar charges - - (80) Profit on ordinary activities beforetaxation 363 112 312Tax on profit on ordinary activities 7 - 87 87 Retained profit for the period 363 199 399 Profit per ordinary share 3Basic profit per share 5.2p 2.8p 5.8p Diluted profit per share 4.6p 2.6p 5.1p Consolidated statement of total recognised gains and lossesFor the 6 months to 31 January 2007 6 months to 31 6 months to 31 Year to 31 January 2007 January 2006 July 2006 Unaudited Unaudited Audited Restated Restated £000 £000 £000 Profit for the period 363 199 399 Loss on foreign currency translation (1) (28) - Total recognised gains relating to theperiod 362 171 399 Prior year adjustment (127)Total recognised gains since last annualreport 235 Consolidated balance sheetat 31 January 2007 As at 31 January As at 31 January As at 31 July 2007 2006 2006 Unaudited Unaudited Audited Note £000 £000 £000 £000 £000 £000 Fixed assetsTangible assets 285 155 240 Current assetsStocks 437 532 398Debtors 2,808 1,251 2,105Cash at bank and in hand 781 1,388 1,454 4,026 3,171 3,957 Creditors: amountsfalling due within oneyear (1,056) (864) (1,431) Net current assets 2,970 2,307 2,526 Total assets lesscurrent liabilities 3,225 2,462 2,766 Provisions forliabilities and charges (90) (75) (90) Net assets 3,165 2,387 2,676 Capital and reservesCalled up share capital 70 69 69Share premium account 4 23,996 23,972 23,974Other reserve 4 8,562 8,563 8,562Profit and loss account 4 (29,463) (30,217) (29,929) Shareholders' funds -equity 3,165 2,387 2,676 Consolidated cash flow statementFor the 6 months to 31 January 2007 6 months to 31 6 months to 31 Year to 31 January 2007 January 2006 July 2006 Unaudited Unaudited Audited Note £000 £000 £000 £000 £000 £000 Cash flow statement Cash (outflow)/ inflowfrom operating activities 5 (607) 196 334 Returns on investmentsand servicing of financeInterest received 13 25 44Interest paid - - - 13 25 44 Taxation - 87 87 Capital expenditure andfinancial investmentPurchase of tangiblefixed assets (102) (24) (144) Cash (outflow)/ inflowbefore management ofliquid resources andfinancing (696) 284 321 FinancingIssue of share capital 23 - 1 23 - 1 (Decrease)/ Increase incash in the period (673) 284 322 Reconciliation of netcash flow to movement innet funds 6 (Decrease)/ Increase incash in the period (673) 284 322 Translation adjustment - (28) - Movement in net funds inthe period (673) 256 322 Net funds at the start ofthe period 1,454 1,132 1,132 Net funds at the end ofthe period 781 1,388 1,454 Notes to the accounts: 1. The interim financial information has been prepared applying theaccounting policies and presentation that were applied in the preparation of theCompany's published consolidated accounts for the year ended 31 July 2006 exceptfor the implementation of FRS20 (Share Based Payment) which has been adopted inthe current period. As a result of the introduction of FRS 20 a charge forshare based payments of £104,000 has been made in the financial period to 31January 2007. In addition a prior year adjustment has been made in respect ofprevious periods (January 2006 £67,000, July 2006 £127,000) and the comparativesfor these periods have been restated accordingly. There is a correspondingcredit to the profit and loss reserve and accordingly there is nil effect to thenet assets at the end of the reported periods. The information is unaudited anddoes not comprise the statutory accounts of the group. The comparative figuresfor the financial year ended 31 July 2006 are not the Company's statutoryaccounts for that financial year. The statutory accounts of IndigoVision Groupplc for the year ended 31 July 2006 have been filed with the registrar ofcompanies. KPMG Audit Plc has reported on the statutory accounts; their reportwas unqualified and did not contain any statement under section 237 of theCompanies Act 1985. 2. This report was approved by the board of directors on 5 March2007. 3. Profit per ordinary share Profit per share is calculated as follows: 6 months to 6 months to Year to 31 January 2007 31 January 2006 31 July Unaudited Unaudited 2006 Restated Audited £000 £000 Restated £000 Profit for the period 363 199 399 Weighted average number of shares Number Number Number Basic weighted average shares in issue 6,951,828 6,923,976 6,927,976 Potential ordinary shares on exerciseof share options 866,000 872,100 878,200 Total number of shares 7,817,828 7,796,076 7,806,176 Basic profit per share 5.2p 2.8p 5.8p Diluted profit per share 4.6 p 2.6p 5.1p 4. Share premium and reserves Share Premium Other reserve Profit & Loss Account Account £000 £000 £000 At beginning of period 23,974 8,562 (29,929) Retained profit for period - - 363Currency exchange movements - - (1)Charge in relation to share based - - 104paymentIncrease in share capital 22 - -At end of period 23,996 8,562 (29,463) 5. Reconciliation of operating loss to operating cash flows 6 months to 6 months to Year to 31 January 31 January 2006 31 July 2007 Unaudited 2006 Unaudited Restated Audited £000 Restated £000 £000 Operating profit 350 87 348Depreciation 58 28 61Foreign exchange adjustment on fixed (2) - (78)assets(Increase)/ Decrease in stocks (39) (179) (45)(Increase)/ Decrease in debtors (703) 179 (675)(Decrease)/increase in creditors (375) 14 581Movement in warranty provisions - - 15 Charge in respect of share based 104 67 127payments Net cash (outflow)/ inflow fromoperating activities (607) 196 334 6. Analysis of net funds At 1 August Cash flow At 31 January 2006 2007 £000 £000 £000 Cash in hand and at bank 1,454 (673) 781 Total 1,454 (673) 781 7. Taxation As at 31 January 2007 the Group has significant tax losses that are expected tobe available for offset against future taxable profit. No taxation charge hasbeen provided in the financial period 8. Copies of this statement will be sent to all shareholders andwill be available for at least one month from the registered office, CharlesDarwin House, The Edinburgh Technopole, Edinburgh, EH26 0PJ, UK. This information is provided by RNS The company news service from the London Stock Exchange