RNS Number:4885H
Indigo Vision Group PLC
14 February 2003
INDIGOVISION GROUP PLC
Results for the six months to 31 January 2003
First half financial highlights:
* Revenues of #0.7m
* Second quarter revenues at #0.4m up 39% on first quarter
* Product revenues represent 86% of total revenues
* Gross profit margin of 48% reflecting the shift to product focused business
model
* Loss before tax down to #3.0m
* Net cash balances of #19.6m
* Announcement of capital reduction to return at least #11m to shareholders
First half operational highlights:
* Revised strategic focus implemented - changes now being reflected in results
* Launch of new VideoBridgeTM 8000 product incorporating MPEG4 technology
* Shift in business model to product focus and to system integrators
* Restructuring programme largely completed with headcount down to 66
* Appointment of Elliott Mueller as VP Worldwide Sales
Oliver Vellacott, Chief Executive Officer, said:
"In the last few months, we have seen signs of increasing customer interest
in digital video systems in our niche area of security and surveillance. We
are also witnessing a marked increase in the scale and number of medium and
large projects requiring IP video.
"Thanks to the changes made in the past six months to our business model,
structure and products, these positive indicators are reflected in the
second quarter's increase in revenues and provide us with confidence for
further progress in the future."
ENQUIRIES:
IndigoVision Oliver Vellacott (CEO) 0131 475 7200
Alice Patrick (CFO)
Financial Dynamics James Melville-Ross 020 7831 3113
Juliet Clarke
INDIGOVISION GROUP PLC
Results for the six months to 31 January 2003
Chairman's Statement
The last six months has seen a period of tremendous change for the Group and the results for this period are
promising. The strategic review, completed and outlined at the time of our first quarter results in December 2002,
both reaffirmed the existence of the market for video over IP, and provided evidence of signs of growth now occurring
within that market.
The Group now has a very strong strategic focus on selling our VideoBridge products through our system integrator
partners into IP video projects within the security, surveillance and monitoring market. This focus has enabled us to
reduce overhead significantly and, despite the disruption caused by the related restructuring, to achieve a good
second quarter performance in product revenues.
I believe that the Group is now in a stronger position than six months ago, and has a management team well equipped
to continue to improve the financial and commercial performance of the Group over the coming months and years. The
results for the six months to January 2003 indicate that progress has already been made towards this end.
Results
Revenues in the first six months of the year were down to #0.7m (H1 2002: #1.1m) due to the shift away from licensing
activities. Product revenues, which accounted for 86% of total revenue at #0.62m (H1 2002: #0.38m), were up some 60%
on the same period last year. The second quarter performance was particularly strong with total revenue up 39% on the
first quarter at #416k (Q1 2003: #300k), confirming the recent signs of increasing customer interest in our products.
Support, maintenance and training accounted for 9% of total revenues, with license fees and royalties contributing
the remaining 5% of revenues.
The geographic split of revenues during the first half was 51% Europe, 34% North America and 15% Asia.
Gross margin for the half was 48% (H1 2002: 67%), lower than last year reflecting the shift to a product business
model.
Research and development expenditure in the first six months was #1.1m (H1 2002: #1.6m) representing 32% of total
overhead before exceptional items (H1 2002: 28%). Other overhead expenditure, including sales and marketing
expenditure, decreased to #2.3m (H1 2002: #4.1m). Total operating costs before exceptional items were therefore down
39% on the same period last year. The decline in overhead reflects the cost reduction programme implemented in the
first half of the year, including a significant reduction in headcount. An exceptional charge of #0.3m was made in
respect of further restructuring costs.
The operating loss for the period before exceptional items was #3.1m (H1 2002: #4.9m). The second quarter operating
loss before exceptional items was down 29% on the first quarter. After the restructuring charge of #0.3m, and net
interest received of #0.4m (H1 2002: 0.6m), the loss before taxation for the half was #3.0m (H1 2002: #4.3m).
Net cash balances at the close of the first half were #19.6m (Q1 2003: #20.9m) representing a total second quarter
cash burn of less than #1.3m, including cash costs of restructuring. Stock at the end of the period was #0.7m (H1
2002: #0.6m) down from #0.8m at year end.
Product developments
We have launched our new generation MPEG4 product, the VideoBridge 8000 series. We believe that this product offers
significant improvements in video quality over other products available in the market today.
Development of the Mainstream MPEG4 custom chip is largely complete and the chip is due for fabrication over the
coming months. This technology strengthens our competitive position within the market by producing an even higher
quality IP video product at a competitive cost to the end user.
Partner programme
Our work in developing and continuing strong relationships with system integrators in the security, surveillance and
monitoring market has continued. Many of our partners have seen a dramatic increase in their own pipeline of IP video
projects and we are working with them to tender IndigoVision's products into these key projects.
Organisation
The restructuring programme initiated at the end of the last financial year is now largely complete resulting in a
reduction in headcount from 124 at year end to 66 at the end of the half year, and to a current total of 59.
Following the announcement of his appointment at our AGM, Elliott Mueller has joined the Group as VP Worldwide Sales
with effect from 7 February 2003. Elliott's experience in IP networking, and in high growth technology markets in
general, make him a very strong addition to our executive team.
Capital reduction and third party discussions
The Group's proposed capital reduction will be set out in a circular to shareholders to be sent during February 2003.
The discussions with a third party, which commenced in November 2002, have now ended.
Outlook
We are confident that the market is developing and our product set is competitive within that market. We believe that
the business now has the right structure and focus for us to continue to develop our strong partner relationships
with system integrators who we are convinced will help to drive our ongoing growth within this market.
David Sibbald
Chairman
14 February 2003
Consolidated profit and loss account
For the 6 months to 31 January 2003
6 months to 6 months to Year to
Note 31 January 31 January 31 July 2002
2003 2002
Unaudited Unaudited Audited
#000 #000 #000
Turnover 716 1,063 2,251
Cost of sales (374) (352) (1,098)
Gross profit 342 711 1,153
Research and development (1,120) (1,561) (3,267)
expenditure
Other operating overhead
expenses (2,327) (4,079) (7,844)
Exceptional items
(restructuring costs) (266) - (1,400)
Operating loss (3,371) (4,929) (11,358)
Bank interest receivable 372 630 1,088
Interest payable and similar
charges (5) (6) (10)
Loss on ordinary activities
before taxation (3,004) (4,305) (10,280)
Tax on loss on ordinary - - -
activities
Retained loss for the period (3,004) (4,305) (10,280)
Loss per ordinary share
Basic and diluted loss per 3 (4.39p) (6.29p) (15.01p)
share
Loss per share before
exceptional items 3 (4.00p) (6.29p) (12.96p)
Consolidated statement of total recognised gains and losses
For the 6 months to 31 January 2003
6 months to 6 months to Year to
31 January 31 January 31 July 2002
2003 2002
Unaudited Unaudited Audited
#000 #000 #000
Loss for the period (3,004) (4,305) (10,280)
(Loss)/gain on foreign
currency translation (19) (2) 82
Total recognised gains and
losses relating to the period (3,023) (4,307) (10,198)
Consolidated balance sheet
at 31 January 2003
As at 31 January 2003 As at 31 January 2002 As at 31 July 2002
Unaudited Unaudited Audited
Note #000 #000 #000 #000 #000 #000
Fixed assets
Tangible assets 195 289 276
Current assets
Stocks 713 565 791
Debtors 581 1,331 916
Cash at bank and in 19,718 27,833 23,588
hand
21,012 29,729 25,295
Creditors: amounts
falling due within (1,579) (1,728) (1,870)
one year
Net current assets 19,433 28,001 23,425
Total assets less
current liabilities 19,628 28,290 23,701
Creditors: amounts
falling due after
more than one year (46) (83) (65)
Provisions for
liabilities and (64) (72) (1,194)
charges
Net assets 19,518 28,135 22,442
Capital and
reserves
Called up share 6,849 6,849 6,849
capital
Share premium 4 28,849 28,849 28,849
account
Other reserve 4 8,563 8,563 8,563
Profit and loss 4 (24,743) (16,126) (21,819)
account
Shareholders' funds
- equity 19,518 28,135 22,442
Consolidated cash flow statement
For the 6 months to 31January 2003
6 months to 6 months to Year to
31 January 2003 31 January 2002 31 July 2002
Unaudited Unaudited Audited
Note #000 #000 #000 #000 #000 #000
Cash flow statement
Cash outflow from
operating activities 5 (4,199) (4,993) (9,693)
Returns on
investments and
servicing of finance
Interest received 372 630 1,088
Interest paid (5) (6) (10)
367 624 1,078
Capital expenditure
and financial
investment
Purchase of tangible
fixed assets - (125) (190)
Cash outflow before
management of liquid
resources and (3,832) (4,494) (8,805)
financing
Financing
Repayment of loans (19) (30) (48)
Decrease in cash in
the period (3,851) (4,524) (8,853)
Reconciliation of
net cash flow to
movement in net 6
funds
Decrease in cash in
the period (3,851) (4,524) (8,853)
Cash flow from
movement in debt 19 30 48
Translation (19) (2) 82
adjustment
Movement in net
funds in the period (3,851) (4,496) (8,723)
Net funds at the
start of the period 23,486 32,209 32,209
Net funds at the end
of the period 19,635 27,713 23,486
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 2002. 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 2002
have been filed with the registrar of companies. KPMG Audit Plc have reported on these 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 13 February 2003.
3. Loss per share
Loss per share is calculated as follows:
Six months to Six months to Year to
31 January 2003 31 January 2002 31 July
2002
#000 #000
#000
Loss for the period (3,004) (4,305) (10,280)
Exceptional items 266 - 1,400
Loss before exceptional items (2,738) (4,305) (8,880)
Number Number Number
Weighted average number of shares in issue:
For basic and diluted loss per share 68,493,520 68,493,520 68,493,520
Basic and diluted loss per share (4.39p) (6.29p) (15.01p)
Loss per share before exceptional items (4.00p) (6.29p) (12.96p)
4. Share premium and reserves
Share Premium Account Other reserve Profit & Loss Account
#000
#000 #000
At beginning of period 28,849 8,563 (21,819)
Retained loss for period - - (3,004)
Share options charge per UITF 17 - - 99
Currency exchange movements - - (19)
At end of period 28,849 8,563 (24,743)
5. Reconciliation of operating loss to operating cash flows
Six months to Six months to Year
31 January 2003 31 January 2002 to
#000 #000 31 July
2002
#000
Operating loss (3,371) (4,929) (11,358)
Depreciation 81 64 142
(Increase)/decrease in stocks 78 (199) (425)
(Increase)/decrease in debtors 335 (140) 275
Increase/(decrease) in creditors (291) - 142
Share option charges 99 198 396
Movement in provisions (1,130) 13 1,135
Net cash outflow from operating activities (4,199) (4,993) (9,693)
6. Analysis of net funds
At 1 August 2002 Cash flow At 31 January
2003
#000 #000 #000
Cash in hand and at bank 23,588 (3,870) 19,718
Debt due after one year (65) 19 (46)
Debt due within one year (37) - (37)
Total 23,486 (3,851) 19,635
This information is provided by RNS
The company news service from the London Stock Exchange
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