RNS Number:0975J
Vigilant Technology
18 September 2006
Vigilant Technology Limited
Interim Results for the period ended 30 June 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 interim results.
Highlights
* Revenues of approximately US$1.0 million (H1 2005: $3.2 million)
* Net loss before tax of US$2.9 million (H1 2005: net loss of US$0.2
million)
* Net loss after tax Income of US$1.9 million (H1 2005: net profit after
tax income of US$0.9 million)
* Cash position of US$7.6 million (H1 2005: US$1.4 million)
* Strengthening of the sales force for effective international coverage
* Continuous development of leading intelligent IP surveillance and
security solutions
Order Backlog for 2nd Half 2006
The company received a number of major orders which will be recognised as
revenues in the second half of 2006:
* The Israel Diamond Exchange Ltd to upgrade its entire, fully operating
current analogue system, integrating hundreds of the Exchange's existing cameras
into a new Vigilant digital video system;
* One of Russia's major banks that will enable the recording of a large
number of channels, supported by Vigilant's SmartGuard intelligent video
analytics solution;
* The London Borough of Hackney to expand and upgrade the systems
already installed. Under this expansion, the new system incorporates both
centralised and distributed recording solutions, on a network-distributed
architecture utilising the latest software from Vigilant;
* A large new casino in Florida, initially to support 750 cameras with
an extra 1000 to be added in the next phase; and
* A large shopping centre in Scotland.
In total the Company currently has close to US$2.5 million in its order backlog,
including these new contracts, to be delivered and installed in the second half
of 2006. Additionally the Company has technical approval from further customers
from whom it is confident it will receive orders during 2006.
Product Development
Vigilant is committed to being at the leading edge of technical innovation. It
delivers solutions to support the increasing security and surveillance
challenges faced by the customers whom it serves. In 2006 Vigilant launched a
new control centre product, NetViewTM, which enables control centres to receive
automated real time alarms if pre-programmed events are detected by cameras.
NetView is capable of controlling sites through an intuitive, easy to operate;
map application command set distribution system and remote viewer, over narrow
broadband, such as the Internet and wireless. The Company's new state-of-the-art
solutions accommodate inputs from a wide range of devices including various IP
devices and therefore enable customers to adopt an IP network in addition to
co-axially connected CCTV cameras. The Company is currently developing further
leading products which will be introduced to the market in 2007.
Sales and Marketing
A Vice President of global sales 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,
transportation, correction facilities, gaming and financial institutions. Sales
appointments were made progressively during the first half of 2006 and results
will begin to be seen in the second half of 2006.
Outlook
The Board is confident that the Company's product development programme will
position it as a leading provider of intelligent IP surveillance and security
solutions. Furthermore, the Company has now developed a worldwide team of sales
personnel and product support specialists to deliver these systems to its
customers. Vigilant will be presenting its substantially enhanced product range
in the first half of 2007. The Board therefore views the future with confidence
based on the managerial and technical capabilities which Vigilant represents.
Moshit Yaffe-Blushinksy, Chief Executive Officer, commenting on the results
announcement said:
"We are disappointed by the results of the first half. We have suffered from
delays in the implementation of projects where our products were already
selected as the technical solution. However the Company continues to invest in
the development of its products as a leading provider of intelligent IP
surveillance and security solutions. We are also focusing on further improving
our sales channels. We are now well placed to meet the challenges of our market
in terms of the capabilities of our technical development and our sales
organisation."
- Ends -
For further information, please contact:
Citigate Dewe Rogerson +44 (0)20 7638 9571
Sally Marshak/Hannah Seward
Vigilant Technology Limited +972 526887010
Moshit Yaffe-Blushinsky - CEO
Eran Edri - CFO
Notes to Editors
* Vigilant Technology designs and manufactures sophisticated, "intelligent"
solutions for the high-end CCTV (closed circuit TV) security and
surveillance market. This is a rapidly growing market due in large part to
the increasing threat of terrorism and other security concerns and the
greater recognition of the role live and recorded video can play in
preventing and detecting crime.
* Vigilant Technology was listed on AIM on 20th December 2005, following a
placing of 23,255,814 new ordinary shares, which raised gross proceeds of
#10 million.
* Vigilant's systems use proprietary technology, both hardware and software,
which it developed internally. The Company's systems enable end users to
record, compress, store, retrieve, review and analyse digital video footage
collected from a large number of security cameras.
* Since its inception over six years ago, Vigilant's customer list has grown
as new products and security solutions come on stream. Large-scale
installations using Vigilant's products include government authorities,
correctional facilities, airports & seaports, transport hubs, banks, public
spaces, town centres and casinos. Vigilant's systems are currently
installed in the London Boroughs of Hackney, Hillingdon, Barking and
Dagenham, together with Bluewater shopping centre, a major bank in Russia,
the Israel Diamond Exchange, Tel Aviv Ben Gurion Airport and Buenos Aires
Airport. Other projects include a two-casino project in California, a
project with a leading South African system integrator, the Bank of Greece
and a major public transportation project in Spain.
* In addition, Vigilant has a strong research and development programme and
is currently trailing its next generation (the 'Third Generation') of
digital surveillance technology.
* Vigilant is based in Israel while currently most of its turnover is
derived from exports. The Company has supplied large systems in a number of
major countries, including the USA, UK, France, Spain, Italy, Greece,
Russia, South Africa, Argentina and Israel. The Group has marketing and
support offices in New York and London, through two wholly-owned
subsidiaries, Vigilant Technology Inc. in the US and Vigilant Technology UK
Limited in the UK.
Overview of Financial Results
Revenues for the six months to 30 June 2006 were approximately US$1.0 million,
down 70% on the corresponding prior year period (H1 2005: 3.2 million). The
Company currently has an order backlog of approximately US$2.5 million which is
expected to be recognised as revenues in the second half of 2006.
Gross profit for the six-month period ended 30 June 2006 was US$0.3 million (H1
2005: US$1.8 million). This decline is attributable to the fall in revenues
during the period. The gross profit margin fell to 33% in the first half of
2006 from 56% in the corresponding prior period, reflecting the fixed element of
cost of revenues.
The Company recorded an operating loss for the six-month period to 30 June 2006
of US$3.4 million, compared to an operating loss of US$0.2 million for the
corresponding prior period in 2005. This reflects the decline in revenues and
gross profit as well as higher spending on R&D, selling and marketing expenses
(which rose 118% from US$0.7 million in the six months to 30 June 2005 to US$1.5
million for the corresponding period in 2006 with the expansion of Vigilant's
sales infrastructure to achieve effective international coverage) and general
and administrative expenses (which rose 207% from US$0.3 million in the first
half of 2005 to US$0.9 million in the first half of 2006 reflecting the higher
costs since IPO associated with being a public company). Headcount increased
from 44 employees at the end of June 2005 to 67 employees by 30 June 2006.
Financial income rose to US$0.5 million in the first half of 2006 compared to
US$0.03 million for the first half of 2005, reflecting exchange rate benefits
and interest income earned on the net IPO proceeds of US$14.5 million from the
Company's share offering and listing on AIM in December 2005.
Net loss before tax for the six months to the end of June 2006 was US$2.9
million, compared to a net loss for the corresponding period in 2005 of US$0.2
million.
Tax income of US$1.0 million for the first half of 2006 is an allowance arising
from IFRS rules. As a result, net loss for the first six months of 2006 was
US$1.9 million, compared to a net profit of US$0.9 million for the corresponding
prior period in 2005.
The Company recorded a basic loss per share for the first six months of 2006 of
3.3 cents per share (27 cents earnings per share in H1 2005) while the diluted
loss per share in the first half of 2006 was also 3.3 cents per share (26 cents
earnings per share in H1 2005).
Balance Sheet and Cash Flow
The balance sheet as at 30 June 2006 showed shareholders' equity of US$14.9
million compared to shareholders' equity of US$1.2 million at the end of June
2005. This increase primarily reflects the Company's net proceeds of US$14.5
million from its share offering and listing on AIM in December 2005. US$3.5
million were used to repay all bank loans. Inventories increased by US$1.2
million mainly due to procurement for the new product NetStream which is
scheduled to be delivered in the second half of 2006. Total accounts payable
decreased from US$3.5 million as at the end of December 2005 to US$2.1 million
as at the end of June 2006, reflecting debts which were repaid after the IPO.
The Company's net cash position increased from US$1.4 million at the end of June
2005 to US$7.6 million at the end of June 2006, primarily reflecting the net
proceeds of US$14.5 million from the share offering in December 2005 less the
bank loans repaid. Net cash used in operating activities rose from US$1.3
million for the first half of 2005 to US$5.0 million for the first half of 2006,
reflecting the loss before taxes of $2.9 million, part of the cost of the IPO in
December 2005 and the increase in inventories.
Business Review
Operations
Although sales were disappointing, Vigilant has made progress in improving its
position in the high-end video surveillance market. Through its product
innovation it has secured several orders and is partnering with additional
leading intermediaries around the world. The Company has begun to penetrate new
territories and expects to see initial orders placed over the coming months.
In Israel Vigilant secured an important project with the Israeli Diamond
Exchange. This project supports approximately 800 cameras already installed
within the Exchange and provides a wealth of smart features. The Company also
secured phase two of the project, which includes the installation of NetView (a
Virtual Matrix which will replace the existing analogue solution).
Vigilant enlarged its participation in tenders for the US gaming market. A key
project was signed with a new large Casino in the State of Florida. This project
will support 750 cameras with potentially an additional 1000 added in the next
phase.
In the first quarter of 2006, Vigilant announced the extension for a further
year, of its non-exclusive OEM (original equipment manufacturer) agreement for
the US market with Pelco. Pelco is a US-based leader in the design, development
and manufacture of video security equipment for a broad range of industries and
applications. Orders from Pelco during the first half of 2006 were at a
significantly lower level than compared with previous periods. 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 backlog.
In the UK Vigilant secured an additional order with the London Borough of
Hackney, for a major expansion and upgrade to the current technology. The new
system incorporates both centralised and distributed recording solutions, on a
network-distributed architecture and utilizing the latest software from
Vigilant. This will enable further recording in public spaces such as main
streets, park areas, car parks, youth offender institutes and other public
buildings. The Company also secured an order with a large shopping centre in
Scotland.
Vigilant has recently started to explore new territories within the European
market, and has secured an initial order with major bank in Russia, which will
use Vigilant's SmartGuard intelligent video analytics solution. The Company also
strengthened its presence with its partners in Italy, Greece, France, the Nordic
region and in Asia.
Board appointments
The Company's shareholders approved the appointments of Ofer Bar-Ner and Oshri
Shilo to the board of directors as independent non-executive directors, as
defined by Israeli company law, at its EGM held on today.
Ofer Bar-Ner (41), currently Finance Director of the Israeli, London Stock
Exchange listed company, BATM Advanced Communications, has over 13 years
experience within the technology sector. Ofer joined BATM in 1999 and
additionally, he spent nearly three years in Boston as President of Telco
Systems, BATM's US subsidiary, running all BATM's US operations. Prior to this
he was CFO of Silver Arrow LP, a subsidiary of Elbit Systems and EL-OP.
Oshri Shilo, (39) is currently corporate financial controller of Advanced Vision
Technology Ltd (AVT), listed in Frankfurt. AVT is the world's leading provider
of machine vision-based automatic optical inspection systems for the printing
industry. Oshri has substantial business experience in accounting and finance,
together with expertise in the IPO process. Prior to joining AVT in 1998, Oshri
was a senior auditor with one of the top five accounting firms in Israel.
Condensed Consolidated Interim Statements of Operations
Six months Six months Year
ended ended ended
June 30, June 30, December 31,
2006 2005 2005
Unaudited Audited Audited
U.S.$ U.S.$ U.S.$
In thousands
Revenues 979 3,235 8,169
Cost of revenues 653 1,438 3,210
Gross profit 326 1,797 4,959
Research and development costs, net 1,315 1,043 2,027
Selling and marketing expenses 1,534 705 1,556
General and administrative expenses 893 291 586
Operating (loss) profit (3,416) (242) 790
Financial income (expenses), net 493 28 (148)
Net (loss) profit before income taxes (2,923) (214) 642
Income taxes 1,062 1,097 691
Net (loss) profit for the period (1,861) 883 1,333
U.S. $ U.S. $ U.S. $
Earnings (loss) per ordinary share and ordinary
share equivalent
Basic earnings (loss) per share (0.033) 0.27 0.047
Diluted earnings (loss) per share (0.033) 0.26 0.046
Condensed Consolidated Interim Balance Sheets
June 30, June 30, December 31,
2006 2005 2005
Unaudited Audited Audited
U.S.$ U.S.$ U.S.$
In thousands
Assets
Current assets:
Cash and cash equivalents 7,569 1,400 12,854
Trade accounts receivable, net 3,536 606 4,105
Other accounts receivable 453 171 376
Inventories 2,693 1,475 1,520
Total current assets 14,251 3,652 18,855
Non - current assets:
Property and equipment, net 529 293 297
Deferred income tax 2,195 1,097 1,133
Other assets, net 153 32 24
Total non - current assets 2,877 1,422 1,454
17,128 5,074 20,309
Condensed Consolidated Interim Balance Sheets
June 30 June 30 December 31
2006 2005 2005
Unaudited Audited Audited
U.S.$ U.S.$ U.S.$
In thousands
Liabilities and shareholders' equity
Current liabilities:
Bank loans and credits - 1,040 -
Trade accounts payable 1,222 363 1,290
Other accounts payable 872 1,023 2,257
Total current liabilities 2,094 2,426 3,547
Long - term liabilities:
Bank loans - 1,216 -
Liability for employee rights upon retirement, net 167 256 154
Total long - term liabilities 167 1,472 154
Shareholders' equity 14,867 1,176 16,608
17,128 5,074 20,309
Condensed Consolidated Interim Statements of Cash Flows
Six months Six months Year
ended ended ended
June 30, June 30, December 31,
2006 2005 2005
Unaudited Audited Audited
U.S.$ U.S.$ U.S.$
In thousands
Cash flows used in operating activities:
Net (loss) profit (1,861) 883 1,333
Adjustments required reconciling net profit (loss) to net
cash used in operating activities:
Income and expenses not involving cash flows:
Depreciation and amortization 77 57 113
Provision for doubtful accounts - (2) -
Changes in accrued liability for employee rights upon 13 26 (76)
retirement
Increase in deferred taxes (1,062) (1,097) (691)
Recognition of compensation 120 26 44
related to employee stock option plan
Changes in operating assets and liabilities items:
Decrease (increase) in trade accounts receivable 569 346 (3,155)
(Increase) decrease in other accounts receivable (266) 117 (77)
Income tax paid (4) (3) (6)
Decrease in deferred costs - 924 924
Increase in inventories (1,173) (594) (639)
(Decrease) increase in trade accounts payable (68) (590) 337
(Decrease) increase in other accounts payable (1,385) (94) 1,268
Decrease in deferred revenues and advances - (1,327) (1,369)
Net cash used in operating activities (5,040) (1,328) (1,994)
Cash flows used in investing activities:
Investment in intangible asset (125) - -
Purchase of property and equipment (301) (80) (140)
Net cash used in investing activities (426) (80) (140)
Cash flows from financing activities:
Short-term bank loans and credits, net - 461 (579)
Long-term bank loans - 1,216 -
Interest received (paid), net 181 (41) (127)
Proceeds from issuance of share capital, net of issuance - - 14,522
costs
Net cash provided by financing activities 181 1,636 13,816
(Decrease) increase in cash and cash equivalents (5,285) 228 11,682
Cash and cash equivalents at beginning of period 12,854 1,172 1,172
Cash and cash equivalents at end of period 7,569 1,400 12,854
Notes to the Interim Consolidated Financial Information
1. Basis of preparation
The interim financial information for the six months ended 30 June 2006 has been
prepared under International Financial Reporting Standards ("IFRS") using
policies consistent with those applied to the year ended 31 December 2005 and
the six months ended 30 June 2005. The interim information, together with the
comparative information contained in this report for the year ended 31 December
2005, does not constitute statutory accounts. However, the information has been
reviewed by the Company's auditors, Baker Tilly Oren Horowitz. The IFRS
statutory accounts for the year ended 31 December 2005 have been reported on by
the Company's auditors, Baker Tilly Oren Horowitz. The report of the auditors on
those accounts was unqualified.
2. Earnings per share
Basic earnings per share is calculated on the earnings after taxation and the
weighted average number of shares in issue of 56,569,478 (6 months to 30 June
2005: 26,266,928; Year to 31 December 2005:28,106,546) being the average number
in issue during the period.
A diluted earnings per share is calculated on the basis of full exercise of
options resulting in a diluted weighted average number of ordinary shares of
56,569,478 (6 months to 30 June 2005: 26,862,378; Year to 31 December 2005:
28,802,130).
3. Copies of report
Further copies of this report are available at Vigilant Technology Ltd. offices
at 34 Habarzel Street, Tel Aviv, Israel.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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