RNS Number:6684Y
Innovision Research&Technology PLC
19 June 2007
Innovision Research & Technology plc
("Innovision" or the "Company")
Preliminary results for the year ended 31 March 2007
HIGHLIGHTS
*The Company has made good progress in the last 12 months with further
investment in the business and its Intellectual Property (IP) and the
winning of significant new contracts for the Near Field Communications (NFC)
market.
*The financial results show that 2006/07 was the highest ever revenue for
the Company. The revenue for the year has more than doubled to #3.5 million
(2006: #1.7 million).
*The loss halved in the year to #1.5 million (2006: #3.0 million). This
translates to a loss per share of approximately 3.1 pence (2005/06: 6.4
pence).
*Three existing projects progressed to prototype design, one uniquely
integrating NFC with Bluetooth and two others offering advanced
multi-frequency RFID solutions.
*Engineering capability was enhanced through hiring of additional
designers and further investment in industry-standard design tools.
*The Company will announce today a placing of approximately 14.45 million
new ordinary shares of 1 pence each raising approximately #6.5 million
before expenses (approximately #6.2 million net of expenses).
David Wollen, Chief Executive Officer said:
" We are very pleased with the progress the Company has made during the last
year, especially in securing new contracts with major customers for the NFC
market and with our in-house development of key NFC Intellectual Property. Our
increasingly high quality prospect list gives us confidence as we move into the
new year."
Enquiries:
Innovision Research & Technology plc Tel: 01285 888 200
David Wollen, Chief Executive Officer
Brian McKenzie, Finance Director
KBC Peel Hunt Ltd Tel: 020 7418 8900
Oliver Scott
David Anderson
STATEMENT FROM THE CHAIRMAN AND THE CHIEF EXECUTIVE
Summary
Over the past year the Company has made good progress winning and extending
contracts and, in particular, won a major new contract during the year and
another since the year end. There has also been significant recruitment of new
staff, improvements to the engineering tools, investment in developing our
Intellectual Property (IP) base and improvement in the financial performance.
The Company is in a good position to exploit the market opportunities in the
near and medium term.
Financial Results
The financial results also show a marked improvement from 2005/06. With the
benefit of high royalty and licence revenues, turnover has more than doubled to
#3.5 million (2006: #1.7 million). The loss has halved to #1.5 million (2006:
#3.0 million).
The investment in research and development increased to #1.7 million (2006: #0.6
million) of which #1.4 million related to the development of IP aimed primarily
at the Near Field Communications (NFC) market, though with general relevance to
a number of complementary RFID areas. This is a significant investment, but it
has already been endorsed with the signing of a recent three year framework
agreement and it puts us in a strong position going forward to capitalise on NFC
market growth through licence income and development revenue relating to the
customisation for specific customers. We intend to continue to invest in this
area to keep ourselves at the leading edge of designs and design techniques.
Development funding from customers was relatively unchanged at #1.2 million
(2006: #1.3 million) while there was a notable increase in royalty and licence
revenue to #1.8 million (2006: #0.3 million). The Company also generated #0.4
million income (2006: nil) from product sales related to wafer shipments.
Cash reserves at year end stood at #1.8 million (2006: #4.1 million). The net
cash movement for the year has been negatively impacted by the timing of some
significant payments (approximately #1.1 million) on long term contracts which
are anticipated to reverse in the first half of 2007/08.
However we believe we need to invest ahead of the predicted revenues and will
require additional cash resources. The Company will therefore announce today a
placing of 14.45m new ordinary shares of 1 pence each raising approximately #6.5
million before expenses (#6.2 million net of expenses).
Contracts
We have moved forward on the RFID contracts in progress at the beginning of the
year. Three designs progressed to initial prototype design and chips were
delivered into a novel toy application for a large US company. There has also
been significant progress within the contactless ticketing activity for mass
transport with the first order of a new multi-million unit design win received
in May 2007.
During the year, the Company secured a major new contract in the Near Field
Communications (NFC) area and since the year-end we have signed a significant
three year framework agreement for a series of Integrated Circuit (IC) designs
for NFC. Both contracts are with major semiconductor companies selling into the
mobile handset market, which endorses the IP, skills and knowledge we have built
up in NFC.
Strategy
The Company's strategy remains the development and licensing of IC designs and
IP for the near-field data communications market and recent contract wins and
current opportunities support our belief that we have a strong and unique
offering in this sector.
Our current focus is on NFC and our presence as a key player on the NFC Forum,
our custom IC design capability and our investment in growing the IP portfolio
provide a solid base on which to grow as the NFC market develops. We will
continue to look for additional opportunities to apply our design skills and IP
within other near-field data communications and RFID markets both in
engineering, licensing and product development at chip level (such as Jewel(R)
and Topaz(R)) and at systems level.
We are seeking to develop partnerships with leading companies whose market,
geographic reach and capabilities complement our own. Through these partnerships
we will continue to offer standards-based products and capabilities specifically
tailored to the market they serve.
Markets
We are seeing increasing prominence given to Near Field Communications (NFC),
with the mobile operators in the GSM Association promoting NFC through white
papers, statements from certain operators that NFC is part of their future
requirements, mobile handset manufacturers identifying NFC on their product
roadmaps and numerous successful trials underway, including use of NFC for
contactless payments and ticketing, both of which are applications targeted by
the Company. The indications are that mass market devices will start to be
shipped during 2008/09 with growth predicted over the following years.
Our expertise in value-added RFID tags has enabled us to tape-out two designs in
this area which we believe are market leading technology. We are targeting
further RFID designs and expect royalties from these products to begin towards
the end of the 2007/08 and to be material in 2008/09.
Mass Transit remains a potentially large market for our contactless ticketing
chip, Jewel. Overall uptake of contactless ticketing by mass transit
organisations is slower than anticipated and Jewel's market share is lower than
we would have liked. However, we have recently shipped an initial batch to a
large transport customer and have received a first order of a new multi-million
unit design win. We continue to promote Jewel and whilst we have scaled back our
expectations we are confident this can be a solid revenue stream in the future.
We are constantly looking to find additional markets to which our core skills
can add value. We believe that a standards-based approach can be successful in a
number of markets, both geographic and technology specific. Our strategy to
enter new markets is to work with credible partners who have the appropriate
knowledge, contacts and existing market presence to exploit the opportunities
presented. We have identified potential partners in a number of key markets and
will continue these discussions over the coming months.
Operations
The last financial year saw a significant expansion of our IC design team and
other functions in Cirencester, with more than twenty new hires. We invested
heavily in new Electronic Design Automation (EDA) design tools from Cadence and
Mentor Graphics, which enable us to more easily interface with our sophisticated
global semiconductor customers in a world-class design environment.
The Company plays a strong role in the NFC standards body (see www.nfc-forum.org
), where we continue to chair a key technical committee and now a key marketing
committee. The Company is recognised as a leader in custom IC design for this
market place and our profile within the NFC Forum and the global NFC community
in general, combined with the IP base and design capability, puts us in a strong
position to exploit the new opportunities as they arise.
Our experience in custom tag and reader IC design combined with strong systems
design skills enabled us to deliver approximately 8 million tag chips in the
first half of the year. Furthermore we have invested in our chip testing
facility and in production planning in anticipation of mass-market chips and
tags demand over the next few years.
Outlook
The Company is confident of building on the achievements of the past year with
good prospects of further contract wins. As ever, the exact timing and nature of
contracts is difficult to predict, although there has been a steady increase in
the interest in and demand for our capabilities and business offering from a
steadily growing prospect list. This is made up primarily of top global
semiconductor corporations who see our IP and custom development capabilities as
a way to add considerable value to their own products whilst reducing their
risk, time to market, cost and deployment of precious design resources to add
unique NFC capability.
Malcolm Baggott David Wollen
Chairman Chief Executive Officer
June 2007 June 2007
PROFIT AND LOSS ACCOUNT
Notes 2007 2006
#'000 #'000
as restated
Turnover 2 3,485 1,650
Cost of sales (295) (101)
-------- --------
Gross profit 3,190 1,549
Administrative expenses
Operating costs (4,940) (4,347)
Exceptional items - (556)
-------- --------
Operating loss (1,750) (3,354)
Interest receivable 143 252
-------- --------
Loss on ordinary activities before
taxation 3 (1,607) (3,102)
Taxation 4 136 80
-------- --------
Loss for the year (1,471) (3,022)
======== ========
Earnings per share Pence per share Pence per share
Basic and diluted 5 (3.12) (6.42)
The operating loss for the year arises from the Company's continuing operations.
BALANCE SHEET
Notes 2007 2006
#'000 #'000
as restated
Fixed assets
Tangible assets 309 283
-------- --------
309 283
-------- --------
Current assets
Stocks 15 16
Debtors 2,149 1,370
Cash at bank and in hand 6 1,836 4,075
-------- --------
4,000 5,461
Creditors: Amounts falling due within one year (759) (742)
Net current assets 3,241 4,719
-------- --------
Total assets less current liabilities 3,550 5,002
Provisions for liabilities and charges (89) (190)
-------- --------
Net assets 3,461 4,812
======== ========
Capital and reserves
Called up share capital 7 471 470
Share premium 15,652 15,641
Profit and loss account 8 (12,662) (11,299)
-------- --------
Equity shareholders' funds 9 3,461 4,812
-------- --------
CASH FLOW STATEMENT
Notes 2007 2006
#'000 #'000
Net cash outflow from operating activities 10 (2,273) (3,282)
-------- --------
Returns on investments and servicing of finance
Interest received 145 256
-------- --------
Taxation 85 100
-------- --------
Capital expenditure and financial investment
Purchase of tangible fixed assets (208) (165)
Sale of tangible fixed assets - 1
-------- --------
Net cash flow for capital expenditure and financial
investment (208) (164)
-------- --------
Cash outflow before use of liquid resources and (2,251) (3,090)
financing
Management of liquid resources
Decrease in treasury deposit account 2,310 2,432
Financing
Net proceeds from share issue 12 428
-------- --------
Increase / (Decrease) in cash in year 71 (230)
======== ========
Reconciliation of net cash flow to movement in net
funds
Increase / (Decrease) in cash in year 71 (230)
Cash outflow in liquid resources (2,310) (2,432)
-------- --------
Change in net funds resulting from cash flow (2,239) (2,662)
Opening net funds 4,075 6,737
-------- --------
Closing net funds 11 1,836 4,075
======== ========
NOTES TO THE ACCOUNTS (EXTRACTED)
1 Accounting Policies
Basis of Preparation
The financial statements have been prepared under the historical cost convention
and in accordance with United Kingdom accounting standards.
The accounting policies used are consistent with those contained in the Group's
last annual report and accounts for the year ended 31 March 2006, with the
exception that following the implementation of FRS 20 - Share Based Payment, the
fair value of share options granted is recognised as a cost on the face of the
profit and loss account (see note 8).
Share-based payment
The financial statements reflect the initial adoption of FRS 20, 'Share-based
payment'. In accordance with the transitional provisions, FRS 20 has been
applied to all grants of equity instruments after 7 November 2002 that were
unvested as at 1 January 2006.
Equity-settled share based payments are measured at fair value (including the
effect of non market-based vesting conditions) at the date of grant. The fair
value is recognised on a straight line basis over the vesting period, based on
the Company's estimate of shares that will eventually vest and adjusted for the
effect of non market-based vesting conditions. Fair value is measured by use of
the Black-Scholes pricing model.
The adoption of this standard represents a change in accounting policy and the
comparative figures have been restarted accordingly. Details of the prior year
adjustment are given in notes 8 and 9.
2 Turnover
The Company's turnover was all derived from its principal activities and was
made to the following geographical markets:
2007 2006
#'000 #'000
United Kingdom 1,952 22
Rest of Europe 147 571
United States of America 620 765
Rest of the World 766 292
------- -------
3,485 1,650
======= =======
Sales by business activity were as follows:
Development engineering 1,240 1,325
Licence fees and Royalties 1,807 325
Product Sales 438 -
------- -------
3,485 1,650
======= =======
3 Loss on ordinary activities before taxation has been 2007 2006
stated after charging / (crediting):
#'000 #'000
Amounts payable to Baker Tilly UK Audit LLP (2006 Baker
Tilly) in respect of both audit and non-audit services
Audit services: Statutory audit 19 21
Audit related regulatory reporting 5 8
Tax services: Compliance services 3 3
Advisory services - 3
Government grants receivable (57) (51)
Depreciation of tangible fixed assets 182 161
Loss on disposal of fixed assets - 3
Exchange rate loss 43 6
Research & development costs 1,737 629
Operating lease rentals:
Land and buildings 262 185
Exceptional items: relocation and restructuring costs - 556
======= =======
4 Employees 2007 2006
No. No.
Marketing and administration 19 21
Research and engineering 31 28
------- -------
50 49
------- -------
2007 2006
#'000 #'000
Staff costs for the above persons:
Wages and salaries 2,570 2,307
Social security costs 298 262
Pension contributions 89 88
Cost of employee share schemes 108 101
------- -------
3,065 2,758
------- -------
Directors' emoluments 2007
Basic Benefits Total Pension Share Total
Salary #'000 Excl. option 2007
#'000 Pension #'000 gains #'000
#'000 #'000
Malcolm Baggott 40 - 40 - - 40
David Wollen 175 28 203 9 - 212
Marc Borrett 102 12 114 9 - 123
Heikki Huomo 90 12 102 9 - 111
Dr Ian Buckley-Golder 20 - 20 - - 20
Brian McKenzie
(appointed 01/07/06) 40 - 40 4 - 44
Michael Wroe
(resigned 01/07/06) 27 4 31 3 - 34
Paul Trevor Crotch-Harvey
(resigned 11/07/06) 77 4 81 8 - 89
571 60 631 42 - 673
5 Earnings per share
Basic earnings per share has been calculated by dividing the loss for the
year of #1,468,000 (2006: #3,022,000) by the weighted average number of
shares in issue during the year of 47,088,391 (2006: 47,038,890).
For diluted earnings per share, the weighted average number of ordinary
shares is adjusted to assume conversion of all dilutive potential ordinary
shares. Dilutive potential ordinary shares arise from employee share
options. At 31 March 2007 the average market price of the Company's
ordinary shares was less than the exercise price of the vast majority of
share options (namely 14,750 share options) and consequently the shares in
question are excluded from the diluted earnings per share calculation.
There is therefore no dilution in the earnings per share as a result of
outstanding options.
6 Financial instruments
The Company's financial instruments comprise cash balances as follows:
2007 2006
#'000 #'000
Sterling bank deposits 1,534 3,844
Current accounts - Sterling 180 122
Current accounts - Euro 23 77
Current accounts - Dollar 99 32
------- -------
1,836 4,075
------- -------
7 Share capital 2007 2006
#'000 #'000
Authorised:
60,000,000 ordinary shares of 1p each 600 600
======= =======
Allotted, issued and fully paid:
47,097,268 (2006: 47,057,268) ordinary shares of 1p each 471 470
======= =======
8 Profit and loss account 2007 2006
#'000 #'000
1 April (11,299) (8,378)
Loss for the financial year as previously reported (1,471) (2,921)
Prior year adjustment relating to the implementation - (101)
of FRS 20, 'Share-based payment'
-------- --------
Loss for the financial year (1,471) (3,022)
Adjustment in respect of employee share schemes 108 101
-------- --------
31 March (12,662) (11,299)
-------- --------
9 Reconciliation of movement in shareholders' funds 2007 2006
#'000 #'000
Loss for the financial year as previously reported (1,471) (2,921)
Prior year adjustment relating to the implementation of - (101)
FRS 20, 'Share-based payment'
Loss for the financial year (1,471) (3,022)
-------- --------
Proceeds from share issue 6 428
Refund re share issue costs 6 -
Adjustment in respect of employee share schemes 108 101
-------- --------
Net addition to shareholders' funds (1,351) (2,493)
Opening shareholders' funds 4,812 7,305
-------- --------
Closing shareholders' funds 3,461 4,812
-------- --------
10 Reconciliation of operating loss 2007 2006
to net cash outflow from
operating activities #'000 #'000
as restated
Operating loss (1,750) (3,354)
Depreciation 182 161
Loss on sale of fixed assets - 3
Decrease/ (increase) in stocks 1 (16)
Increase in debtors (730) (476)
Increase in creditors 17 109
(Decrease)/ increase in (101) 190
provisions for liabilities and
charges
Other non Cash changes 108 101
-------- --------
Net cash outflow from operating activities (2,273) (3,282)
======== ========
11 Analysis of changes in net funds At 1 April Cash At 31
2006 flows March 2007
#'000 #'000 #'000
Other cash at bank and in hand 231 71 302
Short term bank deposits 3,844 (2,310) 1,534
------- ------- -------
4,075 (2,239) 1,836
------- ------- -------
Copies of the Final Report
Copies of the final report will be dispatched to shareholders and will be
available to the public at the Registered Office, 33, Sheep Street, Cirencester,
Gloucestershire, GL7 1RQ.
Financial Information
The financial information set out above does not constitute the statutory
accounts of Innovision Research & Technology plc for the year ended 31 March
2007 and the year ended 31 March 2006. For the year ended 31 March 2007 the
financial information is derived from the statutory accounts of the Company.
For the year ended 31 March 2006 the financial information is derived from the
statutory accounts delivered to the Registrar of Companies. The statutory
accounts for the year ended 31 March 2007, which were approved by the Directors
and authorised for issue on 19 June 2007, will be delivered following the
Company's Annual General Meeting. The auditors have reported on the accounts
for both periods; their reports were unqualified and did not contain statements
under section 237(2) or (3) of the Companies Act 1985.
This information is provided by RNS
The company news service from the London Stock Exchange
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