IND.L Regulatory News (IND)

7 Mar 2006 07:02

IndigoVision Group PLC07 March 2006 7 March 2006 IndigoVision Group plc ("IndigoVision") Results for the six months to 31 January 2006 Highlights Financial Highlights • Turnover up 132% to £2.98m• Product revenues up 95% to £2.48m• Gross margin improved from 56% to 68%• Maiden operating profit of £0.15m, an improvement of £1.38m on last year Operating Highlights • Product revenue growth in all markets; - APAC up 446% - EMEA up 104% - Americas up 25%• Sales coverage broadened; - representative offices established in France and Malaysia - direct sales force expanded and strengthened• Product range greatly improved; - powerful real time video analytics introduced - IP video dome cameras launched• Major installations grow in number; - Turin Winter Olympics 2006 - 21st airport project worldwide - plus numerous projects in our other key markets: ports, rail, road, air, banking, casinos, universities, industrial, mining, government, prisons, police, military and schools Oliver Vellacott, Chief Executive, said: "The first six months of this year have produced rapid revenue growth,substantial gross margin improvement and a maiden operating profit earlier thanexpected. More importantly the quality and range that we offer has been takento another level, and our products are now demonstrably becoming the technologyof choice. The shift in our markets from analogue to IP is accelerating. Wetherefore expect growth to continue apace." Notes to Editors About IndigoVision IndigoVision provides complete end-to-end enterprise-class video and alarmmanagement solutions. IndigoVision has developed and owns all its technology,including a rich suite of hardware products and the associated complete systemmanagement software. IndigoVision's 'Control Center' software is a complete enterprise-class digitalvideo and alarm management system, including full administration, livemonitoring, and incident investigation tools. This software drives a suite ofhardware products which connect traditional analogue cameras, monitors andalarms to the network, and which record and playback video over the network toany location. IndigoVision also has a range of sophisticated analytic tools thatsemi-automate the processes of detecting incidents in both live and recordedvideo. The system locates possible incidents, freeing up human operator resourceto verify those incidents. IndigoVision partners with local integrators and installers to deploy systems toend users. These solutions deliver excellent video and audio, markedly reducestorage costs, and enable super-fast access to recorded footage. IndigoVision is headquartered in Edinburgh, Scotland. Enquiries to: IndigoVision plc Oliver Vellacott CEO ++44 (0) 131 475 7200 Marcus Kneen CFO Results for the six months to 31 January 2006 Chairman's Statement The last six months have seen continued strong growth in sales and gross marginas a result of further growth in the sales team, and further market-leadingdevelopments of the product range. The market for IP Video continues to grow atan increasing rate. Results Turnover for the six months to 31 January 2006 increased by 132% to £2.98m (20053/4£1.29m). Product revenue increased by 95% to £2.48m and licensing incomeincreased to £0.50m. Product revenue accounted for five sixths of turnover.The geographical split of revenues was Europe, Middle East and Africa: 53% (20053/461%), Americas: 18% (20053/433%), Asia: 12% (20053/45%) and licensing androyalty: 17% (20053/41%). Europe, Middle East and Africa achieved year on yeargrowth in product sales of 104%, Americas 25%, and Asia 446%. Gross margin percentage increased to 68% (20053/456%). Part of this improvementwas as a result of the increase in licensing income as a proportion of turnover,and part to an increase in the gross margin achieved on products as productionvolumes increased. The higher sales and improved gross margin percentageresulted in the overall gross margin increasing almost threefold to £2.02m.Year on year operating costs were reduced by 4% to £1.87m (20053/4£1.95m).Within overhead is a shift in resource in support of sales and future salesgrowth, and an increase in overall headcount from 44 to 50. As a result of thisimprovement in sales and gross margin and the continuing close control of costs,IndigoVision achieved its first operating profit for a six month period a littleearlier than we expected. Operating profit was £0.15m, an improvement of £1.38mover the operating loss sustained in the first half of last year. Afterinterest income, profit before taxation was £0.18m. For the first time, IndigoVision achieved positive operating cash flow over asix month period. Operating cash flow amounted to £0.20m for the six months to31 January 2006, compared with an outflow of £1.84m in the corresponding periodlast year. The net cash position at 31 January 2006 was £1.39m (20053/4£1.89m).Net cash at the last year end, 31 July 2005, was £1.13m. Operations The first six months have seen a great deal of activity to provide the buildingblocks for continuing growth. There are now over 1,000 installations ofIndigoVision technology worldwide, and through its sales network IndigoVisionserves over 100 system integrators and installer partners across the world.IndigoVision solutions for security and monitoring applications are nowoperating successfully in a broad spectrum of infrastructure and commercialactivities, including ports, rail, road, air, banking, casinos, universitycampuses, industrial, mining, government, prisons, police, the military andschools. During the period the 21st airport project worldwide was won. Thebackbone of the entire security system for both the recent 2006 Winter Olympicsin Turin and the 2004 Olympics in Athens were IndigoVision. This breadth of penetration is a good start to developing the potential of thebusiness. During the half year new representative offices were established inFrance and Malaysia. The direct sales force was further expanded andstrengthened. Further development of the selling network will continue but at apace consistent with a self imposed requirement to fund growth from internallygenerated funds. Excellent progress was made during the half year on the continuing programme ofdeveloping the range and quality of products and applications. Productdevelopments include the introduction of powerful real-time video analytics andthe launch of IP video dome cameras, both of which have received a very positiveresponse from installers and end users. Investment in product development willcontinue to maintain IndigoVision's strong competitive position. The market for IndigoVision is clearly growing. The rate of increase in sales,the increasing number of enquiries, and the substantial growth in the pipelineof potential future business all point to significant acceleration in the rateat which this technology is being adopted at the expense of older, clumsier, andless efficient solutions. This augurs well for the continuing development ofthe business. Current trading and outlook The first half of the year has seen excellent progress for IndigoVision. Asidefrom the improved results, much has been achieved in strengthening the productrange and sales force and in creating a much greater pipeline of potentialfuture business. Achieving better than breakeven and a positive operating cashflow is an important milestone, but further improvements are still required.Once the business is achieving consistent and growing profits and cashgeneration, a more aggressive rate of expenditure on future growth will bepossible. We expect to make further progress towards this objective over thenext eighteen months. Trading since the half year end is well ahead of the corresponding period lastyear, and we are expecting good growth in the second half as a whole as theincreased sales resource takes effect. Looking forward, as larger contracts arewon, it is likely that there will be some gross margin reduction. The focus oncareful control of costs will continue, but we expect overheads for the year asa whole to be higher than last year, as the impact of continuing to expand thesales network takes effect. The Board remains confident that the long-term future for IndigoVision isattractive. The business has positioned its technology intelligently andpractically, and its market is likely to continue to grow quickly as anincreasing number of users realise the operational and financial benefits ofmoving from analogue to IP video. This confidence is underpinned by the qualityof end user, the growing installed base, and the strong competitive positionthat IndigoVision has now established. HAMISH GROSSARTChairman06 March 2006 Consolidated profit and loss accountFor the 6 months to 31 January 2006 Note 6 months to 6 months to Year to 31 July 31 January 31 January 2005 2006 2005 Unaudited Unaudited Audited £000 £000 £000 Turnover 2,978 1,285 3,605 Cost of sales (958) (569) (1,549) Gross profit 2,020 716 2,056 Research and development expenditure (617) (777) (1,447)Other administrative expenses (1,249) (1,168) (2,613) Operating profit / (loss) 154 (1,229) (2,004) Interest receivable and similar income 25 68 102 Interest payable and similar charges - (1) (1) Profit / (loss) on ordinary activitiesbefore taxation 179 (1,162) (1,903)Tax on profit / (loss) on ordinaryactivities 87 87 87 Retained profit / (loss) for the period 266 (1,075) (1,816) Profit / (loss) per ordinary share 3Basic profit / (loss) per share 3.84p (15.53p) (26.23p)Diluted profit per share 3.41p - - Consolidated statement of total recognised gains and lossesFor the 6 months to 31 January 2006 6 months to 6 months to Year to 31 July 31 January 31 January 2005 2006 2005 Unaudited Unaudited Audited £000 £000 £000 Profit / (loss) for the period 266 (1,075) (1,816)Loss on foreign currency translation (28) (5) - Total recognised gains and (losses)relating to the period 238 (1,080) (1,816) Consolidated balance sheetat 31 January 2006 As at 31 January As at 31 January As at 31 July 2006 2005 2005 Unaudited Unaudited Audited Note £000 £000 £000 £000 £000 £000Fixed assetsTangible assets 155 173 159 Current assetsStocks 532 518 353Debtors 1,251 1,008 1,430Cash at bank and in hand 1,388 1,894 1,132 3,171 3,420 2,915 Creditors: amountsfalling due within oneyear (864) (633) (850) Net current assets 2,307 2,787 2,065 Total assets lesscurrent liabilities 2,462 2,960 2,224 Provisions forliabilities and charges (75) (75) (75) Net assets 2,387 2,885 2,149 Capital and reservesCalled up share capital 69 69 69Share premium account 4 23,972 23,972 23,972Other reserve 4 8,563 8,563 8,563Profit and loss account 4 (30,217) (29,719) (30,455) Shareholders' funds -equity 2,387 2,885 2,149 Consolidated cash flow statementFor the 6 months to 31 January 2006 6 months to 31 6 months to 31 Year to 31 January 2006 January 2005 July 2005 Unaudited Unaudited Audited Note £000 £000 £000 £000 £000 £000Cash flow statement Cash inflow / (outflow) fromoperating activities 5 196 (1,837) (2,692) Returns on investments andservicing of financeInterest received 25 68 102Interest paid - (1) (1) 25 67 101Taxation 87 - 87 Capital expenditure andfinancial investmentPurchase of tangible fixedassets (24) (17) (41) Cash inflow / (outflow)before management of liquidresources and financing 284 (1,787) (2,545) FinancingRepayment of loans - (19) (27)Issue of share capital - 1 - - (18) (27) Increase / (decrease) in cashin the period 284 (1,805) (2,572) Reconciliation of net cashflow to movement in net funds 6 Increase / (decrease) in cashin the period 284 (1,805) (2,572) Cash inflow/(outflow) fromincrease/(decrease) in debtand lease financing - 19 28Translation adjustment (28) (5) - Movement in net funds in theperiod 256 (1,791) (2,544) Net funds at the start of theperiod 1,132 3,676 3,676 Net funds at the end of theperiod 1,388 1,885 1,132 Notes to the accounts: 1. The interim financial information has been prepared on the basis of accounting policies consistent with those applied in the accounts for the year ended 31 July 2005. The information is unaudited and does not comprise the statutory accounts of the group. The statutory accounts of IndigoVision Group plc for the year ended 31 July 2005 have been filed with the registrar of companies. KPMG Audit Plc have reported on the statutory accounts; their report was unqualified and did not contain any statement under section 237 of the Companies Act 1985. 2. This report was approved by the board of directors on 6 March 2006. 3. Profit / (loss) per ordinary share Profit / (loss) per share is calculated as follows: Six months to Six months to Year to 31 January 2006 31 January 31 July 2005 2005 £000 £000 £000 Profit / (loss) for the period 266 (1,075) (1,816) Number Number NumberWeighted average number of shares Basic weighted average shares in issue 6,923,976 6,921,976 6,923,976 Potential ordinary shares on exercise of shareoptions 872,100 631,500 559,100 Total number of shares 7,796,076 7,553,476 7,523,076 Basic profit / (loss) per share 3.84p (15.53p) (26.23p) Diluted profit per share 3.41p - - 4. Share premium and reserves Share Premium Other reserve Profit & Loss Account Account £000 £000 £000 At beginning of period 23,972 8,563 (30,455)Retained profit for period - - 266Currency exchange movements - - (28) At end of period 23,972 8,563 (30,217) 5. Reconciliation of operating loss to operating cash flows Six months to Six months to Year to 31 January 2006 31 January 31 July 2005 2005 £000 £000 £000 Operating profit / (loss) 154 (1,229) (2,004)Depreciation 28 38 72Foreign exchange adjustment on fixed assets - - 5Increase in stocks (179) (267) (102)Decrease/(Increase) in debtors 179 203 (306)(Decrease)/increase in creditors 14 (582) (357) Net cash inflow / (outflow) from operatingactivities 196 (1,837) (2,692) 6. Analysis of net funds At 1 August Cash flow Other non At 31 January 2005 cash changes 2006 £000 £000 £000 £000 Cash in hand and at bank 1,132 256 - 1,388 Total 1,132 256 - 1,388 7. Copies of this statement will be sent to all shareholders and will be available for at least one month from the registered office, Charles Darwin House, The Edinburgh Technopole, Edinburgh, EH26 0PJ, UK. This information is provided by RNS The company news service from the London Stock Exchange