RNS Number:1056A
Vigilant Technology
21 March 2006
21 March 2006
Vigilant Technology Limited
Maiden Preliminary Results for the period ended 31 December 2005
Reports Record Revenues and
First-ever full year Operating Profit and Net Profit
Vigilant Technology Limited ("Vigilant" or the "Company"), the AIM-listed
company (ticker: VGT), which designs and manufactures sophisticated, "
intelligent" solutions for the high-end CCTV security and surveillance market,
today announces its maiden preliminary results.
Highlights
* Revenues increased by 33% to US$8.2 million (2004: US$6.2 million)
* Gross Margin rose to 61% (2004: 49%)
* Operating Profit turnaround to US$0.8 million (2004: Operating loss of
US$0.7 million)
* Net Profit Before Tax of US$0.64 million (2004: Net loss before tax
US$0.8 million)
* Net Profit after tax income of US$1.34 million (2004: Net loss of
US$0.8 million)
* Net cash position of US$12.9 million and zero debt on balance sheet as
at end 2005
* Strong pipeline to be fulfilled
* Additional sales resources added
Since period end:
* Non-exclusive OEM agreement in US with Pelco extended in January 2006
for a further year until the end of 2006
* Won several significant tenders in 2006
* Appointment of Vice President sales
* New 3rd generation offering to be launched on 5 April 2006
Moshit Yaffe-Blushinksy, Chief Executive Officer, commenting on the results
announcement said:
"We are pleased to announce our first set of results as a public company since
listing on AIM in December last year. We have delivered a strong set of results
for the year with organic revenue growth of 33% and a gross margin of over 60%.
This has generated our first ever full year profit.
The Company has won several significant tenders in addition to orders under
longer-standing arrangements. The outlook is therefore for further growth this
year as we gain customers from the expansion of our direct sales force in the US
and the growth of our blue-chip customer base in the UK, Europe and the rest of
the world. We are in an excellent position to capitalise further on the growing
global demand for "intelligent" security and surveillance solutions, against the
backdrop of rising terrorism and security concerns. "
- ends -
For further information, please contact:
Citigate Dewe Rogerson +44 (0)20 7638 9571
Sally Marshak/Hannah Seward
Commitment IR
Yael Nevat +972 50 762 6215
Vigilant Technology Limited +972 50 87 89 898
Moshit Yaffe-Blushinsky
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 developing market due in large part
to the growing 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. Shore Capital acts as nominated adviser and broker to the
Company.
* 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.
* Over the six years since its foundation, Vigilant has won a "blue-chip"
customer list, which is growing as new products and security solutions come
on stream. Large-scale installations using Vigilant's products include
local authorities, correctional facilities, airports, transport hubs, banks,
shopping malls and casinos. For example, Vigilant's systems are currently
installed in the London Boroughs of Hackney, Hillingdon, Barking and
Dagenham as well as the Bluewater shopping centre and Tel Aviv Ben Gurion
Airport. Other projects in the pipeline include casino projects in the US,
a project with a leading South African systems integrator to upgrade seaport
security systems and a project to upgrade the security for railway stations
in Spain.
* In addition, Vigilant has a strong research and development programme and
is currently trialing its next generation (the 'Third Generation') of
digital surveillance technology.
* Vigilant is based in Israel while currently over 95 per cent of its
revenues are derived from exports. The Company has supplied large systems in a
number of major countries, including the USA, UK, France, Spain, Italy, Greece,
South Africa and Argentina. The Group has marketing and support offices in both
New York and London, through two wholly-owned subsidiaries, Vigilant Technology
Inc. in the US and Vigilant Technology UK Limited in the UK.
Financial Summary
2005 2004
US$ US$
('000) ('000)
Revenues 8,169 6,157
Cost of revenues 3,210 3,132
Gross profit 4,959 3,025
As a % of Revenues 60.7% 49.1%
R&D 2,027 1,781
As a % of Revenues 24.8% 28.9%
S&M 1,556 1,235
G&A 586 728
Operating Profit (loss) 790 (719)
As a % of Revenues 9.7% -11.7%
Financial Expenses 148 86
Net profit (loss) before income 642 (805)
taxes
As a % of Revenues 7.9% -13.1%
Income Taxes 691 0
Net Profit (loss) 1,333 (805)
Overview of Financial Results
Revenues for the year to December 31 2005 were US$8.2 million up 33% on the
prior year (2004: US$6.2 million). This is primarily attributable to a rise in
revenues from the UK and the Rest of the World ("ROW") in 2005, partially offset
by a decline in US revenues over the same period. UK revenues grew by 138% in
2005 to US$1.1 million while ROW revenues rose more than seven-fold to US$3.4
million over the same period. During 2005 10 new projects were added from the
ROW region resulting from sales in 9 countries compared to 3 countries in 2004,
with the result that the ROW's share of total revenues rose from 6% in 2004 to
41% in 2005. In the UK 6 new projects were won during 2005, including three for
town centres (the London Borough of Bromley, St. Edmunds/Haverhill and Barking &
Dagenham) as well as the penetration of a new vertical market for police custody
facilities with a technically challenging project for Staffordshire Police. The
rise in UK and ROW revenues during 2005 reflects the Company's stronger position
worldwide and the expansion of the Company's direct distribution and sales
channels in those markets.
As a result of changes in sales and distribution arrangements, our revenues in
the US declined by 30% in 2005 to US$3.7 million compared to 2004. However,
because the gross margin was significantly higher we achieved the same gross
profit from the US as in 2004. (Gross margins in H2 2005 were at a record high
of 64%). Vigilant's non-exclusive OEM agreement with Pelco in the US was
extended in January 2006 for a further year and the Company continues to
collaborate successfully with Pelco, for example on the TBTA (Triboro Bridge and
Tunnel Authority) project in New York City. The Directors believe that the
continued growth of direct US sales in 2006 will be one of the Company's main
growth drivers in terms of both revenues and profit.
Gross profit for the period was US$5.0 million, (2004: US$3.0 million). This is
attributable to the increase in direct sales over 2004. As a result the gross
margin rose from 49% in 2004 to 61% in 2005.
Operating profit in 2005 was US$0.8 million compared to an operating loss in
2004 of US$0.7 million. The turnaround in operating profit is primarily the
result of a strong rise in gross margins offset by related increases in R&D and
sales & marketing expenditure (14% and 26% respectively).
Net profit before tax for 2005 was US$0.64 million compared to a net loss in
2004 of US$0.8 million.
Financial expenses in 2005 amounted to $148,000 in 2005 ($68,000 in 2004).
However, since all bank debt was repaid at the end of 2005, we do not expect to
incur such expenses in 2006.
The carry forward losses at the end of 2005 amounted to $5.4 million. Tax income
of US$691,000 is an allowance arising from IFRS rules.
Basic earnings per share after tax income for 2005 are 4.7 cents per share (3.1
cents loss per share in 2004) while diluted earnings per share for 2005 are 4.6
cents per share.
2005 Geographic Revenues Breakdown:
2005 % of Total 2004 % of Total Y/Y growth
US$ US$
('000) ('000)
USA 3,687 45.1% 5,300 86.1% -30.4%
Direct 2,003 24.5% 0 0.0%
Pelco 1,684 20.6% 5,300 86.1% -68.2%
UK 1,132 13.8% 476 7.7% 137.8%
Greece 1,005 12.3% 0 0.0%
ROW 2,352 28.8% 381 6.2% 781.1%
Total 8,176 100.0% 6,157 100.0% 32.8%
2005 Analysis of Revenues by Sector:
Transportation 35%
Casinos 24%
Town centre, shopping centres, public safety (Homeland 19%
Security)
Finance 12%
Other 10%
Balance Sheet and Cash Flow
The balance sheet as at 31 December 2005 showed net assets of US$16.6 million
compared to net assets of US$267,000 at the end of December 2004. This
primarily reflects the Company's net proceeds of US$14.5 million from its share
offering and listing on AIM in December 2005. The increase in accounts
receivable reflects the increase of revenues in the latter part of the year. The
Company had zero debt on its balance sheet at the end of 2005.
The Company's net cash position increased from US$0.6 million as at the end of
December 2004 to US$12.9 million at the end of December 2005, primarily
reflecting the net proceeds of US$14.5 million from the share offering in
December 2005, offset by the repayment of the bank loan and bank credit.
Operating cash outflow was US$1.9 million, largely the result of the increase in
accounts receivable.
Business Review
Operations
During 2005 Vigilant won over 15 new projects. These included a very large
project for the Bank of Greece to bring a digital video recording solution in
the highest resolution in full frame rate to more than 20 of its branches; this
represents the largest high-end CCTV installation in the Greek market to date.
Vigilant also won a project to provide a new digital video recording solution
for Buenos Aires airport in Argentina. Additionally the Company was selected to
provide a digital video recording solution to three seaports in South Africa.
In Israel, Vigilant won a project to provide a full CCTV digital solution, both
video recording and virtual matrix, for Israel's two largest banks.
In the last quarter of 2005 we completed installation of a custom-built digital
video recording system for two Paradise Casinos in the US. Elsewhere in the US
Vigilant continued to progress its existing TBTA (Triboro Bridge and Tunnel
Authority) project. This moved ahead slower than hoped in 2005 and the early
part of 2006, but we expect faster implementation for the rest of 2006.
In the UK Vigilant secured orders for three new town centre projects the London
Borough of Bromley, St. Edmunds/Haverhill and Barking & Dagenham. The Company
also successfully penetrated a new vertical market, police custody facilities,
with the installation of a technically challenging system for Staffordshire
Police. The relationship with Land Securities continued with an additional
shopping centre installation in Leeds, as well as significant additions to the
pipeline for 2006. A further project was secured with Hammersons, for the
replacement of a legacy digital recording system at the Oracle Centre in
Reading.
Product Development
Vigilant's strong R&D function ensures that the Company stays at the
cutting-edge of technical innovation in the sector. In 2005 Vigilant broadened
its product offering, migrating its digital video recorder to a total solution
IP surveillance system. New products launched during the year to accomplish
this included the Vigilant Virtual Matrix and Event Handling NetView; this is
designed to replace legacy analogue systems, and provides the functionality of a
fully operational control centre. Customer benefits include better efficiency,
flexibility and profitability.
The Company introduced the Vigilant IP NetStreamTM video server together with
the NetStoreTM storage manager, providing a unique state-of-the-art solution,
which complies with today's high-performance CCTV standards in a full networking
environment.
We plan to unveil our 3rd generation offering, including an all IP functionality
and features offering advanced automation of surveillance, at IST West in Las
Vegas on 5 April 2006.
Sales and Marketing
In the US Vigilant has continued to build its direct sales force as well as
developing strategic relationships with key end-user customers and consultants.
Direct sales enabled Vigilant to achieve a significantly higher gross margin.
In the UK Vigilant continued to build upon existing relationships and
established new ones with a number of high profile national security system
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. We have also developed
additional consultancy relationships in the UK during the year.
Developments in 2006
We are pleased to report that we have won a number of significant tenders since
our IPO in December 2005. These include a further two casinos in the US, a
major Australian customer and an important site in Israel.
Strategy
In 2006, Vigilant is continuing to build its "blue-chip" customer base and
increasing its presence in the UK and US. The Directors believe that Vigilant
will grow at a significant rate in the coming years by addressing three
different types of demand:
* Replacement and upgrading of older analogue CCTV systems with more
efficient digital technologies. Vigilant is a technical leader on two
fronts of the digital revolution: the development of more active,
intelligent security systems as well as the move towards an IP-based
infrastructure to replace old analogue systems;
* New installations in newly constructed, large developments deploying the
latest technology; and
* Upgrading existing customer installations through add-on software
solutions
Vigilant will focus on the further development of its technical and marketing
infrastructure, utilising the funding from its recent IPO, in order to support
significant sales growth in 2006 and 2007.
In the US, Vigilant is continuing to focus on building its direct sales team and
developing strategic relationships with key end-user customers and advisers to
drive growth and margins.
Outlook
The Company has won several significant tenders in addition to orders under
longer-standing arrangements, although there have been some delays in deliveries
in the first two months. We have continued to broaden our range of customers and
to win business in new territories.
AS part of its planned expansion, Vigilant has appointed a Vice President in
charge of global sales, reporting to the CEO. In all its markets, Vigilant has
substantially increased its sales force. We have begun to implement a structured
brand building and marketing plan which, together with high profile exposure
within major trade exhibitions and sector specific press, has already begun to
yield benefits and we therefore expect strong growth in 2006.
Looking further ahead, the Company will continue to focus on building its
technical and marketing infrastructure to support expected significant growth in
2006 and 2007. Vigilant has also identified a number of new potential target
markets that intend to adopt the digital and full IP solutions for CCTV due to
the increasing awareness of security and anti-terrorism. The Board therefore
views the future prospects of the Company with confidence.
Consolidated Statements of Operations
Year Year Year
ended ended ended
December December 31, December
2004
31, 2005 31, 2003
U.S.$ U.S.$ U.S.$
In thousands
Revenues 8,169 6,157 3,319
Cost of revenues 3,210 3,132 1,799
Gross profit 4,959 3,025 1,520
Research and development costs, net 2,027 1,781 1,334
Selling and marketing expenses, net 1,556 1,235 1,387
General and administrative expenses 586 728 580
Operating profit (loss) 790 (719) (1,781)
Financial expenses, net 148 86 82
Other expenses - - 11
Net profit (loss) before income taxes 642 (805) (1,874)
Income taxes 691 - -
Net profit (loss) for the year 1,333 (805) (1,874)
U.S.$ U.S.$ U.S.$
Earnings (loss) per ordinary share and
ordinary share equivalent
Basic earnings (loss) per share 0.047 (0.031) (0.071)
Diluted earnings (loss) per share 0.046 (0.031) (0.071)
Consolidated Balance Sheets
December 31 December 31
2005 2004
U.S.$ U.S.$
In thousands
Assets
Current assets:
Cash and cash equivalents 12,854 1,172
Restricted bank deposit 6 6
Trade accounts receivable, net 4,105 950
Other accounts receivable 370 277
Deferred costs - 924
Inventories 1,520 881
Total current assets 18,855 4,210
Non - current assets:
Property and equipment, net 297 270
Deferred income tax 1,133 -
Other assets 24 34
Total non - current assets 1,454 304
20,309 4,514
Liabilities and shareholders' equity
Current Liabilities
Bank loan and credit - 579
Trade accounts payable 1,290 953
Other accounts payable 2,257 1,116
Deferred revenues and advances - 1,369
Total Current Liabilities 3,547 4,017
Liability for employee rights 154 230
upon retirement, net
Shareholders' equity 16,608 267
20,309 4,514
Consolidated Statements of Cash Flows
Year Year Year
ended ended ended
December 31, December 31, December 31,
2005 2004 2003
U.S.$ U.S.$ U.S.$
In thousands
Cash flows used in operating activities:
Net profit (loss) 1,333 (805) (1,874)
Adjustments required to reconcile net profit (loss) to net cash
used in operating activities:
Income and expenses not involving cash flows:
Depreciation and amortization 113 113 146
Loss on abandonment of equipment - - 11
Provision for doubtful accounts - 4 24
Changes in accrued liability for employee rights upon (76) 24 (23)
Retirement
Increase in deferred taxes (691) - -
Recognition of compensation related to employee stock option 44 22 -
plan
Changes in operating assets and liabilities items:
(Increase) decrease in trade accounts receivable (3,155) (646) 42
(Increase) decrease in other accounts receivable (77) (3) 90
Income tax paid (6) (8) (13)
Decrease (Increase) in deferred costs 924 (924) 30
(Increase) decrease in inventories (639) (42) 38
Increase (decrease) in trade accounts payable 337 388 (206)
Increase in other accounts payable 1,268 247 179
(Decrease) increase in deferred revenues and advances (1,369) 1,369 (130)
Net cash used in operating activities (1,994) (261) (1,686)
Cash flows used in investing activities:
Purchase of property and equipment (140) (103) (40)
Investment in restricted bank deposit - (6) -
Net cash used in investing activities (140) (109) (40)
Cash flows from financing activities:
Short-term bank loan and credit, net (579) 26 31
Interest paid, net (127) (43) (53)
Proceeds from issuance of share capital, net of issuance costs 14,522 - -
Net cash provided by (used in) financing activities 13,816 (17) (22)
Increase (decrease) in cash and cash equivalents 11,682 (387) (1,748)
Balance of cash and cash equivalents at beginning of year 1,172 1,559 3,307
Balance of cash and cash equivalents at end of year 12,854 1,172 1,559
This information is provided by RNS
The company news service from the London Stock Exchange
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