RNS Number : 2032Y
Vigilant Technology
03 July 2008
Vigilant Technology Limited
Unaudited preliminary results for the year ended 31 December 2007
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 unaudited preliminary results for the
year ended 31 December 2007. Trading in Vigilant's shares is currently suspended and will remain suspended until the working capital
position is clarified and the Company's annual report and accounts receives its audit report and is sent to shareholders.
Highlights
* Revenue of U$6.7 million in 2007
* Gross Profit of U$2.3 million compared to a gross loss of U$0.2 million for 2006
* Product investment resulted in the successful launch of a number of new products during 2007. Further new products launched in early
2008 with additional upgrades planned
* Revenues and secured backlog of over U$6 million for 2008 to date
* �0.25 million of new equity has been raised in 2008
* The Company is currently working on a solution to its immediate working capital issues as the Company does not have sufficient cash to
satisfy more than its short term operational requirements. The Company expects to issue a further announcement within the next few days.
During 2007 Vigilant was awarded several major contracts in the UK. In addition to its traditional markets (retail, shopping centres,
local government and correctional facilities), the Company won its first contract in the healthcare sector. New customers wins included:
Selfridges, Bentalls and Sainsbury's, Corby Willow Place, Almondvale Phase 3, Princess Hay and Bridges Centre, Watford, Hounslow, Kings
Lynn, Fakenham, Lichfield, Luton, London Borough of Sutton, Her Majesty's Prison Service, European Medicines Agency, Leeds Teaching Hospital
NHS Trust and the new headquarters of Knight Frank at 55 Baker Street; indicating the continuation of a strong relationship with our
business partners. Outside the UK, Vigilant has secured leading projects such as the Hong Kong International Airport and several Airports in
Cyprus and a Casino chain in the US.
Moshit Yaffe-Blushinsky, Chief Executive Officer of Vigilant Technology: "Vigilant made solid progress during 2007, both in the UK and
the US. We continued to grow our market presence in our existing markets, and have broken into new markets. All of this has been made
possible due to our strong relationships with our key partners".
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
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 20 December 2005.
Visit www.vglnt.com for more information.
Statement from the Chairman and the Chief Executive
Financial Overview
Revenues for 2007 were U$6.7 million compared to U$1 million in 2006, comprising U$3.2 million from the UK, U$2.5 million from the US
and U$1 million from the rest of the world. Due to certain disputes and difficulties in collection for payments for systems sold during
2005, the Company decided during 2006 and 2007 to collect systems from customer's sites and to reverse revenues of U$0.55 million in 2007
and U$1.6 million in 2006 which related to 2005.
Gross profit for the period ended 31 December 2007 was U$2.3 million compared to a gross loss of U$0.2 million in 2006. The gross margin
in 2007 increased dramatically to 35 per cent compared to a 21.9 per cent gross loss in 2006.
The Company recorded an operating loss for the period ended 31 December 2007 of U$7.7 million, compared to an operating loss of U$9.3
million for 2006. This reflects the increase in revenues which was partly offset by higher spending on research and development during the
period (which increased by 37% from U$3.2 million in 2006 to U$4.4 million in 2007), and the Company's expenses in developing and improving
new products. In addition, there has also been a change in accounting policy regarding research and development grant participations
resulting in this expenditure being expensed as incurred. The Company's full liability for royalty payments to be paid in future years is
presented in the balance sheet among liabilities and the change in fair value of this liability is charged to the statement of operations.
Selling and marketing expenses rose by 23% from U$3.5 million in 2006 to U$4.3 million in 2007 with the expansion of Vigilant's sales
force and marketing infrastructure. General and administrative expenses decreased by 42% from U$2.4 million in 2006 to U$1.4 million in
2007, partly reflecting a decrease in bad debt expenses.
The headcount at the end of 2007 was 70 employees. By year end, and following the completion of a continuous development process, the
Company reduced its R&D investment further which resulted in a reduction in headcount to 60 employees.
Financial expenses amounted to U$0.2 million in 2007 compared to financial income of U$0.6 million in 2006, mainly as a result of
exchange rate fluctuations and a reduction in financial income due to a reduced cash balance.
In 2007, Vigilant received a single payment of U$0.5 million from its insurance provider as compensation for fire damages which occurred
in an adjoining warehouse during 2006.
Net loss for 2007 decreased to U$7.4 million, compared to a net loss for the corresponding period of U$11.4 million.
The Company recorded a basic loss per share for 2007 of U$0.13 per share compared to U$0.2 loss per share in 2006.
Balance Sheets and Cash Flows
The balance sheet as at 31 December 2007 showed a capital deficiency of U$2.9 million compared to shareholders' equity of U$4.3 million
at 31 December 2006. This decrease reflects the Company's net loss of U$7.4 million during 2007 and amounts assigned to employees and
director stock-based compensation.
Other accounts payable increased from U$1.1 million as at the end of December 2006 to U$2.2 million at the end of December 2007, mostly
reflecting advance payments from customers and increased royalties to the Office of Chief Scientist of the Ministry of Industry, Trade and
Labour and the Korea-Israel Industrial R&D Foundation.
The Company's net cash position decreased from U$3.5 million at the end of 2006 to U$2.1 million at the end of 2007, mainly reflecting
cash used for operating activities. During 2007, the Company arranged a bank loan for U$3 million that is outstanding at 31 December 2007.
Subsequent events in 2008
* The Company raised �0.2 million from Syntek Capital AG and an additional �0.05 million from Goldrock Capital in April 2008 and May
2008 respectively
* Yoram Sagher (Executive Deputy Chairman) and Ronen Saggir (Director of R&D and Chief Technical Officer) no longer have executive
roles in the Company.
* The Company is currently working on a solution to its immediate working capital issues and expects to issue a further announcement
within the next few days.
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 continued its product development during 2007 in the following principal areas:
* Open IP architecture - Vigilant has developed a core solution architecture that is designed for an 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;
and
* Surveillance centre solution - Vigilant has released a new version of its NetView solution, an innovative surveillance centre
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. A new module was developed during 2007 which is a novel touch-screen based graphical
control application.
Sales and Marketing
Sales appointments made during 2006 and 2007 delivered the large increase in sales revenues generated during 2007 and the backlog of
U$4.5 million for 2008 that the company had as at 31 December 2007. The sales force focuses on several vertical markets globally, including
city centres, public spaces, traffic and transportation hubs, correctional facilities, gaming and financial institutions and the recent
addition of educational facilities.
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. Vigilant has won prestigious projects within a
range of vertical markets. It has continually expanded its security systems installed within the London boroughs and in the following
locations: Kirklees district Council, Swale Borough Council, Blackburn District Council, 55 Baker Street and The European Medicines Agency -
London. From the correctional vertical market, Vigilant has recently won contracts with Her Majesty's Prison (HMP) Cookham Wood, HMP
Frankland and HMP Swaleside.
These recent wins reflect a high level of confidence in Vigilant's systems. To date, the UK market has been the most successful market
for Vigilant.
In the US, the Company continues to build its direct sales force. During the last quarter of 2007, Vigilant won a significant contract
to become the sole supplier of a gaming corporation which currently owns and operates six casinos throughout North America. This contract
includes a flagship property in Las Vegas and a new casino and resort to be constructed in the North East, which is projected to be the
largest in the state. The project value amounts to approximately U$4 million over the next three years. The Company has continued leveraging
its footprint at leading North American casinos during 2008.
Strategy
Vigilant's business strategy is to leverage its technical expertise in combination with a number of major players in the security
industry, by forging partnerships with these market leaders. The market is moving decisively in the direction of network based solutions, to
which 3rd Generation solutions are ideally suited.
The business model is based on the following approach:
* Innovation - leading the wave of 3rd Generation security technology;
* Flexibility - small, quick and responsive;
* Quality - leading technology;
* Team work - pre-sales, sales and support; and
* Meeting the timetable - mission critical solutions.
Fundraising
On 3 June 2008 the Company announced that it was proposing to raise further equity capital of between �1.5 million and �2 million. The
Company also announced that if it did not raise the additional equity, then it would have to consider other strategic options. The Company
is currently working on a solution to the working capital issues that it faces and expects to make a further announcement within the next
few days.
Outlook
The Company will be focusing on revenue growth in key markets and segments. The Company will continue to reduce operational expenses
while maintaining adequate levels of investment in new product development that will enable the Company's to deliver cutting edge technology
solutions to its customers.
Consolidated statement of operations
Year Year
ended ended
31 December, 31 December,
2007 2006
Unaudited Unaudited
U$ U$
In Thousands
Revenues 6,699 985
Cost of revenues 4,369 *1,201
Gross profit/ (loss) 2,330 (216)
Research and development costs, net 4,424 *3,193
Selling and marketing expenses 4,245 3,479
General and administrative expenses 1,367 2,429
Operating loss 7,706 9,317
Financial (expenses)/ income, net (169) 573
Insurance recovery/ damage (costs) 518 (1,518)
Income from fire event
Net loss before income taxes 7,357 10,262
Income taxes - 1,133
Net loss for the year 7,357 11,395
(Loss) earnings per ordinary share
and ordinary share equivalent
Basic loss per share U$0.13 U$$0.2
Diluted loss per share U$0.13 U$$0.2
* Restated to reflect a change in accounting policy
Consolidated balance sheets
31 December, 31
December,
2007 2006
Unaudited Unaudited
U$ U$
In thousands
Assets
Current assets:
Cash and cash equivalents 2,064 3,474
Trade accounts receivable, net 1,825 849
Other accounts receivable 573 387
Inventories 1,551 2,054
Total current assets 6,013 6,764
Non - current assets:
Property and equipment, net 708 516
Other assets, net 94 372
Total non - current assets 802 888
6,815 7,652
Liabilities and shareholders' equity
Current liabilities:
Bank Loans 3,067 -
Trade accounts payable 2,179 1,064
Other accounts payable 2,201 *1,096
Total current liabilities 7,447 2,160
Non current liabilities:
Liability for royalty payments 1,768 *1,041
Liability for employee rights upon retirement, 354 157
net
Deferred revenues 134 -
Total non current liabilities 2,256 1,198
Commitments, contingent liabilities and lien on
assets
Shareholders' equity (2,888) *4,294
6,815 7,652
* Restated to reflect a change in accounting policy
Consolidated statements of cash flows
Year Year
ended ended
31 December, 31 December,
2007 2006
Unaudited Unaudited
U$ U$
In Thousands
Cash flows used in operating
activities:
Net loss (7,357) *(11,395)
Adjustments required to reconcile
net loss to net cash used in
operating activities:
Income and expenses not involving
cash flows:
Depreciation and amortization 208 197
Impairment loss for software license 310
Provision for doubtful accounts (16) 727
Changes in accrued liability for 197 3
employee rights upon Retirement
Increase in deferred taxes - 1,133
Recognition of compensation related 175 238
to employee stock option plan
Loss from disposal of fixed assets 4
Changes in operating assets and
liabilities items:
Increase/ (decrease) in trade (960) 2,529
accounts receivable
Increase/ (decrease) in other (229) 2
accounts receivable
Income tax paid (10) (9)
Increase/ (decrease) in inventories 503 (534)
Increase/ (decrease) in trade 1,115 (381)
accounts payable
Increase/ (decrease) in other 1,099 *(1,488)
accounts payable
Increase/ (decrease) in royalty 727 (86)
payment
Increase in deferred revenues 134 -
Net cash used in operating (4,100) (9,064)
activities
Cash flows used in investing
activities:
Purchase of property and equipment (376) (423)
Software license (7) (190)
Net cash used in investing (383) (613)
activities
Cash flows from financing
activities:
Short-term bank loan and credit, net 3,067 -
Interest received (paid), net 6 297
Net cash provided by financing 3,073 297
activities
Increase/ (decrease) in cash and (1,410) (9,380)
cash equivalents
Balance of cash and cash equivalents 3,474 12,854
at beginning of year
Balance of cash and cash equivalents 2,064 3,474
at end of year
Supplemental disclosure of non-cash
investing and financing activities:
Investment in software license 155
against a liability
* Restated to reflect a change in accounting policy
Notes to consolidated financial statements
Note 1 - General
The preliminary results for the year ended 31 December, 2007 and the Comparative 2006 information are presented in accordance with
International Financial Reporting Standards ("IFRS").
Note 2 - Loss per share
Loss per share is based on the weighted average number of shares in issue for the year of 56,569,478.
Note 3 - Restatement
The Company has restated its financial statements for the years ended 31 December, 2006 and 2005, in order to reflect a change in
accounting policy regarding research and development grants participations. Therefore, the Company liability for royalty payments is
presented in the balance sheet among liabilities and the change in the fair value of this liability is recorded to statement of operation.
Note 4 - Reconciliation of movements in shareholders' equity
Additional
Number paid-in Accumulated
of shares Amount capital deficit Total
U$ U$ U$
In thousands
Balance at 31 December, 2006 56,569,478 60 24,419 *(20,185) 4,294
Changes during 2007:
Amounts assigned to employees - - 175 - 175
and director stock-based
compensation
Net loss - - (7,357) (7,357)
Balance at 31 December, 2007 56,569,478 60 24,594 (27,542) (2,888)
* Restated to reflect a change in accounting policy
Note 5 - Unaudited results
These results are unaudited. The Company has been informed by its auditor that the report and accounts, when released, will be qualified
as to going concern unless additional working capital is injected into the Company..
This information is provided by RNS
The company news service from the London Stock Exchange
END
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