RNS Number:6576Y
Vigilant Technology
20 June 2007
20 June 2007
Vigilant Technology Limited
Preliminary Results for the year ended 31 December 2006
Vigilant Technology Limited ("Vigilant" or the "Company"), the AIM-listed
Company (VGT), which designs and manufactures sophisticated, "intelligent"
solutions for the high-end CCTV security and surveillance market, today
announces its preliminary results for the year ended 31 December 2006.
* Revenues for 2006 were not representative of the actual level of sales
activity. The value of goods invoiced and shipped to customers for the
year ended 31 December 2006 was US$2.6 million vs. revenue of US$1
million (2005: US$8.2 million)
* Gross loss for the period ended 31 December 2006 was $0.3 million
(2005 gross profit: $5 million)
* Extensive product investment in the period, with first phase of new
products already on the market in early 2007, with extremely positive
feedback
* International coverage improved through strengthening of sales force
Moshit Yaffe-Blushinksy, Chief Executive Officer, commenting on the results
announcement said:
"Despite the disappointing results of 2006, the business is showing encouraging
signs of improvement in 2007. The total revenue and backlog at the end of May
2007 was circa US$3.5 million which includes prestigious projects in Luton,
Sutton, Corby, Fakenham, Huntingdon, Kings Lynn, and Lewisham Borough Councils
and the Isle of Man's Jurby Prison. The Company's product development programme
and substantially enhanced product range will position it as a leading provider
of intelligent IP surveillance and security solutions."
For further information, please contact:
Vigilant Technology Limited +972 3 6491110
Moshit Yaffe-Blushinsky - CEO
Eran Edri - CFO
Shore Capital +44 (0)20 7408 4090
Graham Shore/Dru Danford
Citigate Dewe Rogerson +44 (0)20 7638 9571
David Westover/Hannah Seward
Notes to Editors
* Vigilant Technology is a pioneering developer and manufacturer of
intelligent video recording and surveillance solutions for mission-critical
applications. The focus is on adding value to the video that is captured by
customers' CCTV networks.
* Vigilant's high frame rate solutions allow customers to break free from
ineffective time lapse recording solutions. They enable demanding
environments such as airports, banks, casinos, hospitals, prisons, schools
and universities to gain maximum benefit from today's digital video
recording technology.
* Vigilant Technology was listed on AIM on 20th December 2005.
Visit www.vigilanttechnology.com for more information.
Statement from the Chairman and the Chief Executive
Financial Overview
Revenues for 2006 were $1 million (2005: $8.2 million). However this very low
figure is not representative of the actual level of sales activity. The value of
goods invoiced and shipped to customers for the year ended 31 December 2006 was
$2.6 million.
Certain equipment which was shipped in 2005 and included in that year's
revenues, but for which no payment was received, was collected back by the
company between November 2006 and April 2007. As a result, reported revenues for
the year ended 31 December 2006 were reduced by $1.6 million. The Company's
decision to collect the equipment was partially influenced by the fire in the
adjoining warehouse, reported in the company's 13th December 2006 press release,
which forced the company to find new equipment to fulfil open orders as soon as
possible. This has led to accounting adjustments significantly reducing
revenues for 2006 and created a further expense of $1.5 million for inventory
damaged as a result of the fire.
Gross loss for the period ended 31 December 2006 was $0.3 million (2005 gross
profit: $5 million). This decline is attributable to the fall in revenues
during the period. The gross margin fell to a 33% loss in 2006 from a 60% margin
in 2005, reflecting the fixed cost element of the cost of revenues.
The Company recorded an operating loss for the period ended 31 December 2006 of
$9.2 million, compared to an operating profit of $0.8 million for 2005. This
reflects the decline in revenues as well as higher spending on R&D, (which rose
50% from $2 million in 2005 to $3 million in 2006) selling and marketing
expenses (which rose 133% from $1.5 million in 2005 to $3.5 million in 2006 with
the expansion of Vigilant's sales infrastructure to achieve effective
international coverage) and general and administrative expenses (which rose 300%
from $0.6 million in 2005 to $2.4 million in 2006, partly reflecting the running
costs of being a public company and a provision for doubtful accounts).
Headcount increased from 47 employees at the end of 2005 to 65 employees by 31
December 2006.
Financial income rose to $0.6 million in 2006 compared to financial expenses of
$0.15 million in 2005, reflecting exchange rate benefits and interest income
earned on the net IPO proceeds of $14.5 million from the Company's share
offering and listing on AIM in December 2005.
Loss before tax for 2006 was $10.1 million, compared to a profit before tax for
the corresponding period in 2005 of $0.65 million. (Including the loss of $1.5
million caused by the fire in the adjoining warehouse as mentioned above).
As at 31 December 2006, the Company had carried forward tax losses of
approximately $12.6 million, which are available to use against future taxable
income of the Company, and which the Company has not recognised as a deferred
tax asset. In the final accounts for 2006 the Company has provided against a
previously recognised deferred tax asset of $1.3 million.
The Company recorded a basic loss per share for 2006 of $0.2 per share (($0.047
earnings per share in 2005) while the diluted loss per share in 2006 was also
$0.2 per share ($0.046 earnings per share in 2005).
Balance Sheets and Cash Flows
The balance sheet as at 31 December 2006 showed shareholders' equity of $5.6
million, compared to $16.6 million at the end of December 2005. This decrease
reflects the Company's net loss of $11.2 million.
Inventories increased by $0.5 million due to the need to replace inventories
lost as a result of the fire.
Trade accounts receivable decreased by $3.2 million as a result of low revenues
and an increase in doubtful debtors.
Total accounts payable decreased from $3.5 million as at the end of December
2005 to $1.9 million as at the end of December 2006, reflecting debts which were
repaid after the IPO.
The Company's net cash position decreased from $12.8 million at the end of 2005
to $3.5 million at the end of 2006, mainly reflecting cash used for operating
activities of $9 million.
Business Review
Product Development
In order to implement its strategy of delivering innovative, end-to-end video
surveillance solutions for high-end security applications, Vigilant invested
heavily in product development during 2006 in 3 principal areas:
o Open IP architecture - Vigilant has developed a core solution
architecture that is designed for the open, IP environment. Its main components
include: (a) network based, distributed video server, enabling storage and
viewing of live/playback streams from anywhere in the network; (b) remote viewer
application, specifically designed to deliver high-quality video, live or
playback, over any bandwidth-limited WAN; and (c) a set of certified encoders
and IP & analogue cameras to ensure an end-to-end solution suiting the
customer's requirements.
o Surveillance center solution - Vigilant has released its NetView
solution, an innovative surveillance center control application. The solution
includes a comprehensive set of capabilities such as an industry-leading virtual
matrix, pro-active alarm management, unlimited channels and monitor scalability.
o Intelligent video solution - continuing its commitment to deliver an
end-to-end, best-of-breed solution to its customers, Vigilant has incorporated a
market leading video content analysis (VCA) module as an integrated part of its
solution. Vigilant leveraged its video handling and processing competence to
enhance and integrate the video analytics into a coherent, mature, and
invaluable solution to its customers.
Initial phases of this extensive product investment were already released to the
market in early 2007. The end-to-end solution was demonstrated in both ISCWest
in Las Vegas and IFSEC in Birmingham, the industry leading trade shows, where it
has received extremely positive feedback.
Sales and Marketing
A Vice President of global sales, with strong sales management experience, was
appointed in March 2006. He has initiated a substantial expansion of the sales
force and organised it globally into three regions, focusing on several vertical
markets, including city centres, public spaces, traffic and transportation hubs,
correctional facilities, gaming and financial institutions. Sales appointments
were made progressively during 2006 and are now producing results.
In the UK the Company continues to build upon existing relationships and
establish new ones with a number of high profile national security systems
installers and integrators as well as leading security-consulting firms.
Relationships were further developed with Siemens Building Technologies,
particularly in Scotland, and with Quadrant Video Systems, in securing and
concluding projects within a range of vertical markets. It has continually
expanded its security systems installed within the London boroughs of Reading
and Hackney and won new projects such as the Princesshay shopping mall, an
exciting new shopping and leisure center in Exeter and Total Oil's Midlands fuel
distribution depot in Tamworth, near Birmingham.
These wins show a high level of confidence in Vigilant's systems and make the UK
market currently the most successful market for Vigilant.
In the US the Company continued to build its direct sales force as well as
developing strategic relationships with key end-user customers and consultants
under a new general manager.
In addition to the appointment of a Vice President in charge of global sales,
Vigilant has recently appointed a Vice President responsible for marketing.
In the first quarter of 2006, Vigilant announced that its non-exclusive OEM
(original equipment manufacturer) agreement with Pelco for the US market had
been extended for a further year. However, orders from Pelco during 2006 were at
a much reduced level than in 2005. The Company has not yet received any
significant orders for the TBTA project and given the delays is no longer
treating this as part of its sales pipeline.
Strategy
Vigilant's business strategy is to leverage its technical expertise in
combination with a number of major players in the security industry, by forging
partnerships with these market leaders. The market is moving decidedly in the
direction of network based solutions, to which 3rd Generation solutions are
ideally suited.
The business model is based on the following approach:
* Innovation - leading the wave of 3rd Generation security technology
* Flexibility - small, quick and responsive
* Quality - leading technology
* Team work - pre-sales, sales & support
* Meeting the timetable - mission critical solutions
Outlook
Against the backdrop of a very poor 2006, sales progress in 2007 is encouraging.
The Company has achieved a revenue and order backlog for the first five months
of circa $3.5 million, including prestigious projects in Luton, Sutton, Corby,
Fakenham, Huntingdon, Kings Lynn and Lewisham Borough Councils and the Isle of
Man's Jurby Prison.
Based on the exposure of its IP end-to-end solution to the market at the ISCWest
in Las Vegas and the IFSEC in Birmingham, we are very encouraged by the level of
interest from prospective customers. We are confident of our ability to achieve
and maintain a position of technology leadership and to develop sales and
marketing programmes to build our revenues.
The Board therefore believes that the Company is beginning to show the benefits
of the investment which has been made.
Consolidated statement of operations
Year Year
ended ended
31 December 31
2006 December
2005
U.S.$ U.S.$
In Thousands
Revenues 985 8,169
Cost of revenues 1,316 3,210
Gross (loss) profit (331) 4,959
Research and development costs, net 2,976 2,027
Selling and marketing expenses 3,479 1,556
General and administrative expenses 2,429 586
Operating (loss) profit (9,215) 790
Financial income (expenses), net 573 (148)
Damage costs from fire event (1,518) -
Net (loss) profit before income taxes (10,160) 642
Income taxes (1,133) 691
Net (loss) profit for the year (11,293) 1,333
(Loss) earnings per ordinary share and
ordinary share equivalent
Basic (loss) earnings per share U.S$(0.2) U.S$0.047
Diluted (loss) earnings per share U.S$(0.2) U.S$0.046
Consolidated balance sheets
31 31
December December
2006 2005
U.S.$ U.S.$
In thousands
Assets
Current assets:
Cash and cash equivalents 3,474 12,854
Trade accounts receivable, net 849 4,105
Other accounts receivable 387 376
Inventories 2,054 1,520
Total current assets 6,764 18,855
Non - current assets:
Property and equipment, net 558 297
Deferred income tax - 1,133
Other assets, net 330 24
Total non - current assets 888 1,454
7,652 20,309
Liabilities and shareholders' equity
Current liabilities:
Trade accounts payable 1,064 1,290
Other accounts payable 878 2,257
Total current liabilities 1,942 3,547
Liability for employee rights upon retirement, net 157 154
Commitments, contingent liabilities and lien on assets
Shareholders' equity 5,553 16,608
7,652 20,309
Consolidated statements of cash flows
Year Year
ended ended
31 December 31 December
2006 2005
U.S.$ U.S.$
In Thousands
Cash flows used in operating activities:
Net (loss) profit (11,293) 1,333
Adjustments required to reconcile net (loss) profit to net cash
used in operating activities:
Income and expenses not involving cash flows:
Depreciation and amortisation 197 113
Provision for doubtful accounts 727 -
Changes in accrued liability for employee rights upon Retirement 3 (76)
Decrease (increase) in deferred taxes 1,133 (691)
Recognition of compensation related to employee stock option plan 238 44
Changes in operating assets and liabilities items:
Decrease (increase) in trade accounts receivable 2,529 (3,155)
Decrease (increase) in other accounts receivable 2 (77)
Income tax paid (9) (6)
Decrease (increase) in deferred costs - 924
Increase in inventories (534) (639)
(Decrease) increase in trade accounts payable (381) 337
(Decrease) increase in other accounts payable (1,676) 1,268
(Decrease) increase in deferred revenues - (1,369)
Net cash used in operating activities (9,064) (1,994)
Cash flows used in investing activities:
Purchase of property and equipment (423) (140)
Software license (190) -
Net cash used in investing activities (613) (140)
Cash flows from financing activities:
Short-term bank loan and credit, net - (579)
Interest received (paid), net 297 (127)
Proceeds from issuance of share capital, net of issuance costs - 14,522
Net cash provided by financing activities 297 13,816
(Decrease) increase in cash and cash equivalents (9,380) 11,682
Balance of cash and cash equivalents at beginning of year 12,854 1,172
Balance of cash and cash equivalents at end of year 3,474 12,854
Supplemental disclosure of non-cash investing and financing
activities:
Investment in software license against a liability 155 -
Notes to consolidated financial statements
Note 1 - General
The preliminary results for the year ended 31st December 2006 and the
Comparative 2005 information are presented in accordance with International
Financial Reporting Standards ("IFRS").
Note 2 - Earnings (loss) per share
Earnings (loss) per share is based on the weighted average number of shares in
issue for the year of 56,569,478 (2005: 28,106,546). The number of additional
shares used for the calculation of the diluted loss per share (assuming
conversion of share options and warrants for 2005, which includes the effect of
dilutive stock option plans) is 884,758 shares.
Note 3 - Reconciliation of movements in shareholders' equity
Additional
Number paid-in Accumulated
of shares Amount capital deficit Total
US$ US$ US$
In thousands
Balance at 31 December, 2005 56,569,478 60 24,181 (7,633) 16,608
Changes during 2006:
Amounts assigned to employees and - - 238 - 238
director stock-based compensation
Net loss - - (11,293) (11,293)
Balance at 31 December, 2006 56,569,478 60 24,419 (18,926) 5,553
Note 4 - Availability of accounts
Copies of these accounts are available at Vigilant Technology Ltd. Offices at 34
Habarzel Street, Tel Aviv, Israel and from the Company's website
www.viglianttechnology.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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