IND.L Regulatory News (IND)

12 Mar 2008 10:10

IndigoVision Group PLC12 March 2008 Further to the announcement released at 0700 hours this morning, the followingamendments have been made: 1. Page 1, Heading "Financial Highlights" - Fourth bullet point - Fully diluted earnings per share amended to up '234% to 16.7p' 2. Page 3, Heading "Results" - Third paragraph - Fully diluted earnings per share amended to rose '234% to 16.7p.' IndigoVision Group plc ("IndigoVision") Interim Report 2008 Highlights Financial Highlights • Revenues increased by 48% to £9.18m• Operating profit increased by 269% to £1.29m• Profit before taxation up 251% to £1.27m• Fully diluted earnings per share up 234% to 16.7p Operating Highlights • Revenue growth in all major territories, product range continues to broaden: - Software Integration Kit to support integration with 3rd party systems - Range of IP Cameras expanded - Network Video Recorder range enhanced• Major installations and project wins in all geographies including: - 5 casinos in EMEA and the Americas - First retail projects in both Americas and EMEA Oliver Vellacott, Chief Executive, said: "Having invested significantly in the management and sales teams during the lastfinancial year, the last six months have seen this start to feed through inhigher levels of profitability. Our challenge as we continue to developIndigoVision is to maintain a balance between profitability and investing ingrowth, where our drivers will be to maximise the long-term value of thebusiness and maintain our market leading position. We are fortunate, as signsof weaker corporate spending and possible recession in major markets appear, tobe in a growing market with an enviable range of products and a strong customerbase". 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 centres, 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 and support offices across the world. IndigoVision partners withover 200 authorised system integrators and installers in 40 countries to providelocal system design, installation and service to end users. Shareholder calendar 12 March 2008 2008 Interim results announced25 September 2008 2008 Full Year results announced9 October 2008 Annual Report and Financial Statements circulated Enquiries to: IndigoVision plc Oliver Vellacott CEO +44 (0) 131 475 7200 Marcus Kneen CFO Brewin DolphinNominated Advisor Kenneth Fleming +44 (0) 141 221 7733 Chairman's Statement In the last financial year, IndigoVision invested heavily in sales andmanagement infrastructure to position the business for further growth. Thefirst half of the current year has shown the effect of that investment withrecord sales, profits and earnings per share. Encouragingly, operating margins,which were 14% in the six months to 31 January 2008, are now moving towards ourlong term goal, and as a result the business has started to generate meaningfulpositive cash flow. The market for IP Video has continued to develop rapidly and looks set forfurther growth. In the half year we have also made major improvements in theproduct range, in customer service and support, and in maintaining the very highstandards of product quality. Results Turnover for the six months to 31 January 2008 increased 48% to £9.2m (20073/4£6.2m). Gross margin percentage increased to 71% (20073/463%). The increased marginresulted from an increase in software sales, such as IP Video analytics, abetter mix of sales, and improvements in manufacturing processes. Gross marginincreased 65% to £6.5m (20073/4£3.9m). Operating costs grew 45% to £5.2m (20073/4£3.6m), over half of this increase being attributable to selling anddistribution expenses. Overall headcount, including retained sales agents, rosefrom 99 at last year end to 109. Operating profit was £1.29m (20073/4£0.35m) an improvement of 268%. Operatingmargin increased to 14% from 6%. Profit before taxation grew 251% to £1.27m,and fully diluted earnings per share rose 234% to 16.7p. During the first half, IndigoVision generated a healthy £1.5m of cash fromtrading after adjusting for non cash items. In order to finance the higherlevels of business, £1.2m of this was absorbed by a net increase in workingcapital and the remainder was added to cash balances. The net cash position at31 January 2008 was £0.5m (20073/4£0.8m). Net cash at the last year end, 31July 2007, was £0.2m. The Business IndigoVision solutions are employed across about 20 different market sectors,with strong penetration made recently in casinos, rail and petrochemical.IndigoVision's route to market is through its local partners - systemsintegrators and installers - who receive comprehensive training fromIndigoVision and who provide local system design, installation and support.IndigoVision continues to widen its channel to market with over 200 partners nowauthorised in over 40 countries. IndigoVision provides a complete IP video management solution, which can scalefrom just one camera to many thousands of cameras. The IndigoVision pricelistcontains several hundred items in total - IP cameras, transmitters, receivers,network video recorders, alarm panels and security management system software -and this breadth and depth of products gives IndigoVision's partners huge choiceand power in designing a total video solution as well as providing thefoundation for a much larger business. Some applications demand video to be integrated with other 3rd party systemssuch as access control and IndigoVision integrates using its SoftwareIntegration Kit (SIK). This has already been used by IndigoVision to integratewith GE, Honeywell, Lenel, Software House and ADT, and can also be used by any3rd party to integrate IndigoVision with any other system. Current trading and outlook The first half results are most encouraging and show the returns that arepossible from the substantial investment made in prior periods. Our overarchingaim, however, is to maximise the long-term value of the business, and as we arefortunate to be well positioned in a growing market we will continue to investcarefully for future growth. We are seeing some signs of slower spending by corporate end users and it isclear that some economies are at risk of recession. However, the strength ofour products, the growth in our markets, the quality of our technology, and thecontinuing shift from analogue to IP video should go some way to ameliorate theimpact on the rate of growth that is likely to arise from harsher conditions. HAMISH GROSSARTChairman11 March 2008 Condensed consolidated income statementFor the 6 months to 31 January 2008 Note Interim 2008 Interim 2007 Full Year 2007 Unaudited Unaudited Unaudited £000 £000 £000 Revenue 9,180 6,186 13,385 Cost of sales (2,708) (2,260) (4,610) Gross profit 6,472 3,926 8,775 Research and development expenses (843) (677) (1,490)Selling and distribution expenses (2,617) (1,774) (4,315)Administrative expenses (1,721) (1,125) (2,320) Operating profit 1,291 350 650 Finance income 3 13 21Finance expense (21) - - Profit before tax 1,273 363 671 Taxation 5 47 31 2,125 Profit for the period attributable toequity holders of the parent 1,320 394 2,796 Basic earnings per share 3 18.6p 5.7p 40.0p Diluted earnings per share 3 16.7p 5.0p 35.8p Revenue and profit for the current and comparative periods relate wholly tocontinuing activities. Condensed consolidated statement of recognised income and expenseFor the 6 months to 31 January 2008 Interim 2008 Interim 2007 Full Year 2007 Unaudited Unaudited Unaudited £000 £000 £000 Profit for the period 1,320 394 2,796 Exchange differences on retranslation ofoverseas subsidiaries (5) (6) (11) Total recognised income and expense for theperiod attributable to equity holders ofthe parent 1,315 388 2,785 Condensed consolidated balance sheetat 31 January 2008 Interim 2008 Interim 2007 Full Year 2007 Unaudited Unaudited Unaudited £000 £000 £000 Note Non current assets Intangible assets* 34 - -Plant and equipment 405 285 385Deferred tax 6 3,015 1,236 3,498 Total non current assets 3,454 1,521 3,883 Current assetsInventories 1,507 437 1,533Trade and other receivables 4,981 2,808 4,211Cash and cash equivalents 483 781 179 Total current assets 6,971 4,026 5,923 Total assets 10,425 5,547 9,806 Current liabilitiesTrade and other payables (2,085) (1,056) (2,463)Provisions (120) (70) (120) Total current liabilities (2,205) (1,126) (2,583) Non current liabilitiesProvisions (30) (20) (30) Total liabilities (2,235) (1,146) (2,613) Net assets 8,190 4,401 7,193 EquityCalled up share capital 72 70 71Share premium account 4 24,089 23,996 24,045Other reserve 4 8,562 8,562 8,562Translation reserve 4,6 (16) (6) (11)Profit and loss account 4,6 (24,517) (28,221) (25,474) Total equity attributable to equity 8,190 4,401 7,193holders of the parent * Intangible assets at 31 January 2008 relate to software costs capitalised. Consolidated statement of cash flowsFor the 6 months to 31 January 2008 Interim Interim Full Year 2008 2007 2007 Unaudited Unaudited Unaudited £000 £000 £000Cash flows from operating activities Profit before tax 1,273 363 671Finance costs 21 - -Finance income (3) (13) (21)Depreciation 108 58 130Foreign exchange loss (13) (2) (1)Charge in respect of share based payments 167 104 209Movement in warranty provisions - - 60 Operating profit before movement in workingcapital 1,553 510 1,048 Decrease/(increase) in inventories 26 (39) (1,135)(Increase)/ decrease in receivables (836) (703) (2,040)(Decrease)/increase in payables (378) (375) 1,033 Cash generated by operations 366 (607) (1,094) Taxation 66 - - Net cash from operating activities 431 (607) (1,094) Cash flows from investing activitiesInterest received 3 13 21Purchase of plant and equipment (161) (102) (275) Net cash from investing activities (158) (89) (254) Cash flows from financing activitiesProceeds on issue of shares 45 23 73Interest paid (16) - - Net cash from financing activities 29 23 73 Net increase/(decrease) in cash and cash 302 (673) (1,275)equivalents in the periodCash and cash equivalents at start of period 179 1,454 1,454Effect of exchange rate changes 2 - - Cash and cash equivalents at end of period 483 781 179 Notes to the accounts: 1. Basis of preparation IndigoVision Group plc ("the Company") is domiciled in Scotland. Theconsolidated interim financial statements ("the interim report") of the Companyfor the six months ended 31 January 2008 comprise the Company and itssubsidiaries together referred to as "the Group". The interim report wasapproved by the board of directors on 11 March 2008. The financial information is prepared on a historical cost basis and ispresented in Sterling, rounded to the nearest thousand. The comparative figures for the financial year ended 31 July 2007 are not thecompany's statutory accounts for that financial year. Those accounts, whichwere prepared under UK Generally Accepted Accounting Principles ("UK GAAP"),have been reported on by the company's auditors and delivered to the Registrarof Companies. The report of the auditors was (i) unqualified, (ii) did notinclude a reference to any matters to which the auditors drew attention by wayof emphasis without qualifying their report, and (iii) did not contain astatement under section 237(2) or (3) of the Companies Act 1985. 2. First-time adoption of International Financial Reporting Standards The AIM Rules require that the next annual consolidated financial statements ofthe company, for the year ending 31 July 2008, be prepared in accordance withInternational Financial Reporting Standards (IFRSs) as adopted by the EU ("adopted IFRSs"). The interim report has been prepared on the basis of the recognition andmeasurement requirements of adopted IFRSs as at 31 January 2008 that areeffective (or available for early adoption) at 31 July 2008, the Group's firstannual reporting date at which it is required to use adopted IFRSs. Based on these adopted IFRSs, the directors have applied the accountingpolicies, which they expect to apply when the first annual IFRS financialstatements are prepared for the year ending 31 July 2008. These policies havebeen consistently applied to all the periods presented and in preparing theopening IFRS balance sheet at 1 August 2006 for the purposes of the transitionto IFRS. However, the adopted IFRSs that will be effective (or available forearly adoption) in the annual financial statements for the year ending 31 July2008 are still subject to change and to additional interpretation and thereforecannot be determined with certainty. Accordingly, the accounting policies forthe annual period will only be determined finally when the annual financialstatements are prepared. The disclosures required by IFRS 1 "First-time Adoption of InternationalFinancial Reporting Standards" concerning the transition from UK GAAP to IFRSare given in the reconciliation schedules, presented and explained in note 6. Accounting policies that have not changed significantly as a result oftransition to IFRS are set out in the financial statements for the year ended 31July 2007. Adopted IFRSs accounting policies which are different from previous UK GAAPaccounting policies are as follows: Taxation The tax expense represents the sum of the current taxes payable and deferredtax. Tax is recognised in the income statement except to the extent that itrelates to items recognised directly in equity, in which case it is recognisedin equity. The current tax payable is based on taxable income for the year using tax ratesthat have been enacted or substantively enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amounts of assets and liabilities in the financialstatements and the corresponding tax bases used in the computation of taxableprofit, and is accounted for using the balance sheet liability method. Deferredtax liabilities are generally recognised for all taxable temporary differencesand deferred tax assets are recognised to the extent that it is probable thattaxable profits will be available against which deductible temporary differencescan be utilised. The carrying amount of deferred tax assets is reviewed at eachbalance sheet date and reduced to the extent that it is no longer probable thatsufficient taxable profits will be available to allow the asset recognised to berecovered. Deferred tax is calculated at the tax rates that are expected toapply in the period when the liability is expected to be settled or the asset isexpected to be realised. Intangible assets (i) Research and Development Expenditure on research activities undertaken with the prospect of gaining newscientific or technical knowledge and understanding is recognised in the incomestatement. An internally generated intangible asset arising from the Group's productdevelopment is recognised only if all of the following conditions are met: • an asset is created that can be identified,• the project from which the asset arises meets the Group's criteria for assessing technical feasibility,• it is probable that the asset created will generate future economic benefits, and• the development cost of the asset can be measured reliably. Internally generated intangible assets are amortised on a straight line basisover their useful lives. Where no internally generated intangible asset can berecognised, development expenditure is recognised as an expense in the period inwhich it is incurred. (ii) Computer Software Acquired computer software licenses are capitalised on the basis of thecosts incurred to acquire and bring into use the specific software. These costsare amortised over three years. Costs associated with developing or maintaining computer softwareprogrammes are recognised as an expense as incurred. 3. Earnings per share Interim 2008 Interim 2007 Full Year 2007 Number Number Number 000 000 000 The weighted average number of ordinary shares used inthe calculation of basic and diluted earnings per sharefor each period were calculated as follows: Issued ordinary shares at start of year 7,082 6,928 6,928 Effects of shares issued during the period fromexercise of employee share options 25 24 64 Basic weighted average ordinary shares in issue 7,107 6,952 6,992 Potential ordinary shares on exercise of share options 803 866 819 Diluted weighted average ordinary shares 7,910 7,818 7,811 Basic earnings per share 18.6p 5.7p 40.0p Diluted earnings per share 16.7p 5.0p 35.8p 4. Share premium and reserves Share Profit and Premium Other Translation loss Account Reserve Reserve account £000 £000 £000 £000 At beginning of period 24,045 8,562 (11) (25,474) Profit for the period - - - 1,320Charge in relation to share based - - - 167paymentDeferred tax on share based payment - - - (530)Increase in share capital 44 - - -Currency exchange movements - - (5) - At end of period 24,089 8,562 (16) (24,517) 5. Taxation The tax credit in the current period represents a movement in the deferred taxasset relating to temporary differences on outstanding share option schemes. No provision for corporation tax is required due to the availability ofsubstantial tax losses available for offset against future taxable profits. At31 July 2007 such losses amounted to £24.1 million; using a corporate tax rateof 28% this is equivalent to a deferred tax asset in relation to these tradinglosses of £6.7 million, in respect of which a deferred tax asset of £2.0 millionhas been recognised at 31 January 3008 and 31 July 2007. 6. Explanation of transition to IFRS (a) Reconciliation of profit Interim 2007 Full Year 2007 UK GAAP in UK GAAP in IFRS format IAS 12 IFRS format IAS 12 (i) (ii) IFRS (i) (ii) IFRS £'000 £'000 £'000 £'000 £'000 £'000 Revenue 6,186 - 6,186 13,385 - 13,385 Cost of sales (2,260) - (2,260) (4,610) - (4,610) Gross profit 3,926 - 3,926 8,775 - 8,775 Research and development (677) - (677) (1,490) - (1,490)expensesSelling and distribution (1,774) - (1,774) (4,315) - (4,315)expensesAdministrative expenses (1,125) - (1,125) (2,320) - (2,320) Operating profit 350 - 350 650 - 650 Finance income 13 - 13 21 - 21Finance expense - - - - - - Profit before tax 363 - 363 671 - 671 Taxation - 31 31 2,066 59 2,125 Profit for the periodattributable to equity 363 31 394 2,737 59 2,796holders of the parent (b) Reconciliation of cash flows IAS prescribes both the definition of cash and cash equivalents and the formatfor analysing the changes in cash and cash equivalents in the cash flowstatement. There are no material differences between the cash flows presentedunder IFRS and the cash flow statements presented under UK GAAP other than thechanges in presentation between UK GAAP and IFRS. (c) Reconciliation of equity 1 August 2006 31 January 2007 UK GAAP in IAS 12 IFRS UK GAAP in IAS 12 IFRS IFRS IFRS format format (i) (ii) (i) (ii) £'000 £'000 £'000 £'000 £'000 £'000 Non currentassetsPlant and 240 - 240 285 - 285equipmentDeferred tax - 795 795 - 1,236 1,236 Total non 240 795 1,035 285 1,236 1,521currentassets CurrentassetsInventories 398 - 398 437 - 437Trade and 2,105 - 2,105 2,808 - 2,808otherreceivablesCash and cash 1,454 - 1,454 781 - 781equivalents Total current 3,957 - 3,957 4,026 - 4,026assets Total assets 4,197 795 4,992 4,311 1,236 5,547 CurrentliabilitiesTrade and (1,431) - (1,431) (1,056) - (1,056)otherpayablesProvisions (70) - (70) (70) - (70) Total current (1,501) - (1,501) (1,126) - (1,126)liabilities Non currentliabilitiesProvisions (20) - (20) (20) - (20) Total (1,521) - (1,521) (1,146) - (1,146)liabilities Net assets 2,676 795 3,471 3,165 1,236 4,401 EquityCalled up 69 - 69 70 - 70share capitalShare premium 23,974 - 23,974 23,996 - 23,996accountOther reserve 8,562 - 8,562 8,562 - 8,562Translation - - - (6) - (6)reserveProfit and (29,929) 795 (29,134) (29,457) 1,236 (28,221)loss account Total equity 2,676 795 3,471 3,165 1,236 4,401 (c) Reconciliation of equity (cont) 31 July 2007 UK GAAP in IAS 12 IFRS IFRS format (i) (ii) £'000 £'000 £'000Non currentassetsPlant and 385 - 385equipmentDeferred tax 2,000 1,498 3,498 Total non 2,385 1,498 3,883current assets Current assetsInventories 1,533 - 1,533Trade and 4,211 - 4,211otherreceivablesCash and cash 179 - 179equivalents Total current 5,923 - 5,923assets Total assets 8,308 1,498 9,806 CurrentliabilitiesTrade and (2,463) - (2,463)other payablesProvisions (120) - (120) Total current (2,583) - (2,583)liabilities Non currentliabilitiesProvisions (30) - (30) Total (2,613) - (2,613)liabilities Net assets 5,695 1,498 7,193 EquityCalled up 71 - 71share capitalShare premium 24,045 - 24,045accountOther reserve 8,562 - 8,562Translation (11) - (11)reserveProfit and (26,972) 1,498 (25,474)loss account Total equity 5,695 1,498 7,193 Notes to the reconciliation of profit and reconciliation of equity (i) The following reallocations have been made to present UK GAAP figuresin IFRS format: - The deferred tax asset, included within debtors under UK GAAP is reallocatedto non-current assets. - An element of the provision for warranty costs has been reallocated tocurrent liabilities whereas under UK GAAP the whole amount was shown separatelyunder one category. - IFRS 1 permits certain optional exemptions and accordingly the Group haselected to reset the foreign currency translation reserve to zero at 1 August2006. Going forward, IFRS requires amounts taken to reserves on theretranslation of foreign subsidiaries to be recorded in a separate foreigncurrency translation reserve. (ii) The Group grants share options to its employees and agents and receivestax relief when they are exercised. Under IFRS a temporary difference existsand as such a deferred tax asset has been recognised for the entire differencefor each of the periods presented. This information is provided by RNS The company news service from the London Stock Exchange