Preliminary Results
June 27 2008 - 2:00AM
UK Regulatory
RNS Number : 6726X
Innovision Research&Technology PLC
26 June 2008
INNOVISION RESEARCH AND TECHNOLOGY PLC
PRELIMINARY RESULTS FOR YEAR ENDED 31 MARCH 2008
HIGHLIGHTS
* Two major new contracts with world leaders in the Near Field Communications signed
* Two multi-frequency RFID chip designs delivered
* �6.2m successfully raised through equity placing
* Demonstration of Gem* NFC IP in physical silicon available on evaluation boards
* Marketing activities in China commenced
* Next generation tag platform reached initial tape-out
* Revenue stable at �3.4m (2007:�3.5m)
* Underlying loss reduced to �1.3m (2007:�1.7m) but reported at �2.0m due to exceptional bad debt provision of �0.7m
David Wollen, Chief Executive Officer said:
' The NFC market is firming and Innovision's position within it is strengthening. Our IP offering is technically strong and demonstrably
so. We are pleased with the exciting prospects but predicting the exact timing of new contracts remains difficult in a changing
semiconductor market. '
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
The Company has again made good progress over the year securing two major new contracts with world leaders in the Near Field
Communications (NFC) market and raising finance through a share placement to support its growth plans. We have delivered our first two
multi-frequency RFID chip designs to be marketed in the Asia-Pacific region and US and started our marketing activities in China, which are
encouraging, albeit at a very early stage. Since the year end a financing issue with a customer has negatively impacted our financial
results.
The market for NFC is firming with major operators and banks running trials, major handset manufacturers releasing phones and planning
NFC into their roadmaps, and the business models for transactional revenue sharing becoming better defined. The timing of mass take-up
remains difficult to predict although is expected to be in a timeframe of 3-5 years. Our main offering to the NFC handset and consumer
device market is the provision of IP for System-on-Chip (SoC) solutions. In recent months, major manufacturers have confirmed to our
prospect base the requirement to show a migration path from stand-alone chips to SoC solutions in order to offer cost efficiencies.
Consequently we are experiencing increased interest in our solutions.
In November 2007, we announced that our unique Gem* NFC semiconductor intellectual property (IP) would be available under a licensing
programme. This capability will enable semiconductor companies to implement NFC functionality, either as a stand-alone solution or as an SoC
integrated with other solutions on the same device. Over the past six months, we have developed this programme further and have now created
technical evaluation boards based on physical silicon that show customers the best-in-class features of Gem* working in a real environment.
We see this as a significant step towards securing multiple future licence and royalty-based agreements in the next 18 months.
Complementing the NFC IP business, we continue to build sales and awareness of complete NFC tags under the Topaz� brand. We are
supplying such tags in the consumer "Wallet Phone" trial run in London by O2, which includes Barclaycard Visa, Oyster card, and other
applications integrated into the NFC phone. We also recently announced that we had been chosen to supply tags to be built into Parrot's
Party Black Edition wireless speakers, which enable consumers to instantly play music stored on their phone by simply touching it onto
speakers.
Within the general RFID market, in January 2008, we licensed IP for use in sports-related products in the US and Europe. We also secured
extensions to our existing development contracts and have several good prospects for contract wins in this more established market with
potential to cost reduce solutions with a proven sales track record.
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. We continue to promote Jewel� and opportunities exist for large scale deployments.
Our Research and Development activity continues to be focused on creating re-useable NFC IP under the Gem* banner. We are making great
strides and will continue to extend the IP over the coming year. We have also started work to extend our range of IC solutions for tags and
tickets to allow greater memory, faster performance and more cost effective production techniques.
Financial Results
The financial results show a similar revenue performance to 2007. Development income almost doubled to �2.3 million (2007: �1.2 million)
and represents the progress made towards completing customers' royalty-generating products. These products should come to market over the
next 2-3 years and generate additional royalty streams at that stage. Revenue has remained stable at �3.4 million (2007: �3.5 million)
despite lower licence revenues at �1.0 million (2007: �1.8 million) and no Christmas toy (2007: �0.4 million). Operating loss has increased
to �2.4 million (2007: �1.7 million) due to �0.7m provided against a particular customer account. The loss after interest and tax was �2.0
million (2007: �1.5 million) with increased interest receivable on the higher cash balance following the share placing in July 2007.
Cost of sales has increased with the mix weighted towards development and away from licence revenue. However the underlying margin
within the development services has improved with greater efficiencies in delivery to mitigate some of the impact of the mix change.
The internal cost of investment in research and development was �0.8 million (2007: �0.9 million) of which �0.5 million (2007: �0.7
million) related to the development of IP aimed primarily at the NFC market, though with general relevance to a number of complementary RFID
areas. This is a significant and continuing investment. It has already been endorsed following demonstrations to potential customers and
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.
Since the end of the year we have been advised that a customer has possible funding issues and as a result we have provided �0.7m for
the potential bad debt. This situation will hopefully be resolved with the customer's expectation of a successful new round of fund raising
later this calendar year. However in the current financial climate we feel it is appropriate for us to provide for the possibility that this
does not happen.
Cash reserves at year end stood at �5.6 million (2007: �1.8 million) following a placing of 14.4m new ordinary shares of 1 pence each
raising approximately �6.5 million before expenses (�6.2 million net of expenses) in July 2007. We believe we have sufficient cash to fund
the investment and working capital requirements to implement the current strategy through to cash generation.
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 discussions with major corporations for longer-term engagements give confidence in our approach.
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. However, we will continue to look for additional
areas of opportunity to apply our design skills.
We are actively 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, firmware and capabilities specifically tailored to the
market they serve.
We see the tag supply area as a large niche market within NFC where cost will be a key driver in the medium term. With cost reduction at
the forefront, we have enhanced our test capability and have started work to make the production process even more cost effective. We have
had some success selling complete tags and by becoming more closely integrated with our supply chain we are making the supply of complete
tags and tickets in production volumes more readily deliverable directly to end customers and via distribution channels.
Operations Review
We continued to enhance our IC design capability based in Cirencester and have brought in new staff and invested further in Electronic
Design Automation (EDA) tools. Our engineering team is now recognised globally as a leading centre for NFC technology development.
Innovision also continues to play a strong role in the NFC standards body (see www.nfc-forum.org) and has joined the European
Telecommunications Standards Institute (ETSI) (see www.etsi.org) in order to influence related standards within the telecoms arena.
We have developed new relationships with semiconductor fabrication facilities and test houses and continue to expand options for
low-cost production of complete tags. In addition we have partnered with a major software developer for development of key software to
complement our IP to offer customers a total solution.
The Board of Directors
In January, Heikki Huomo resigned as Technical Director and left Innovision to further his career by taking up a senior position with
one of our major NFC customers. We would like to thank Heikki for his contribution to the Company over the past 2 years.
Marc Borrett, co-founding Director, has announced his intention to leave the company for personal reasons. Marc has made a major
contribution to the development of the company and we wish him well for the future.
Current Trading and Outlook
At the start of the year, we had three major chip development programmes in progress. One completed in the first half, we shipped sales
samples of another in the second half and the third is forecast to reach completion by the end of the year. The level of royalty stream will
clearly be dependent on our customers' success in bringing products to market and promoting each product. We expect that royalties will flow
over the next few years.
The business model remains for the Company to generate a sustainable high level of royalties in the medium to long term and we remain
mainly focused on the NFC market where we believe we have unrivalled IP for SoC solutions.
We are encouraged by the positive specific developments in the market for near-field data communications and the broader RFID markets
and are seeing growing activity in the NFC business with trials being undertaken in many countries by world-class organisations such as
Visa, Mastercard, major banks and mobile phone operators. Barclaycard's launch of its OnePulse card (combined credit, e-wallet and Oyster
card) and O2/Nokia's trial of mobile phones embedded with the same Oyster card/e-wallet functionality, are two recent examples.
We began 2007/08 by signing a significant framework agreement and we also started an engagement with another world leader in this field.
Whilst the second engagement has been significantly delayed due to external global pressures on the customer, we are in active discussions
with a number of high quality prospects for similar scales of business. Although predicting the exact timing and terms of new contracts
remains difficult in a changing semiconductor market, we have good cash coverage for the foreseeable future and we should keep the revenues
at the current sustained level.
We are aiming to be in a position to report the achievement of further milestones for the Company in the next six months.
Malcolm Baggott David Wollen
Chairman Chief Executive Officer
June 2008 June 2008
Income Statement
2008 2007
�'000 (Restated)
�'000
Revenue 3,400 3,485
Cost of sales (1,623) (1,389)
Gross profit 1,777 2,096
Administrative expenses (3,450) (3,826)
Administrative expenses - Exceptional (700) -
OPERATING LOSS (2,373) (1,730)
Investment Income 298 143
LOSS BEFORE TAXATION (2,075) (1,587)
Income Tax 119 136
LOSS FOR THE YEAR ATTRIBUTABLE TO THE (1,956) (1,451)
EQUITY
SHAREHOLDERS OF THE COMPANY
LOSS PER SHARE Pence per share Pence per share
Basic and diluted (3.41) (3.08)
The operating loss for the year arises from the Company's continuing operations
BALANCE SHEET
2008 2007
�'000 (
Restated
)
�'000
Non-Current Assets
Property, plant & equipment 206 309
Intangible assets 202 20
Other receivables 238 233
646 562
Current Assets
Inventories 6 15
Trade and other receivables 2,115 1,780
Current tax asset 135 136
Cash and cash equivalents 5,588 1,836
7,844 3,767
TOTAL ASSETS 8,490 4,329
Current Liabilities
Trade and other payables 617 732
Provisions 35 35
652 767
Non-Current Liabilities
Other payables - 27
Long-term provisions 19 54
19 81
TOTAL LIABILITIES 671 848
NET ASSETS 7,819 3,481
Equity
Share Capital 615 471
Share Premium Account 21,735 15,652
Retained Earnings (14,531) (12,642)
TOTAL EQUITY ATTRIBUTABLE TO EQUITY 7,819 3,481
SHAREHOLDERS OF THE COMPANY
STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
2008 2007
�'000 (
Restate
d)
�'000
At beginning of year 3,481 4,812
Loss for the year (1,956) (1,451)
Issue of share capital 6,502 6
Share issue costs (275) 6
Share based payments 67 108
At end of year 7,819 3,481
CASH FLOW STATEMENT
2008 2007
�'000 (
Restate
d)
�'000
Operating activities
Cash used in operations (2,038) (1,773)
Tax credit received 120 85
Net cash used in operating activities (1,918) (1,688)
Investing activities
Interest received 282 145
Purchases of property, plant & equipment (61) (208)
Investment in intangible assets (778) (500)
Net cash used in investing activities (557) (563)
Financing activities
Proceeds on issue of shares 6,502 6
Share capital issue costs (275) 6
Net cash from financing activities 6,227 12
Net increase / (decrease) in cash & cash equivalents 3,752 (2,239)
Cash & cash equivalents at the beginning of the year 1,836 4,075
Cash & cash equivalents at the end of the year 5,588 1,836
Notes
1. The figures for the year ended 31 March 2008 and 2007 do not constitute statutory accounts within the meaning of S.240 of the
Companies Act 1985. The figures for the year ended 31 March 2008 have been extracted from the statutory accounts for that year which have
yet to be delivered to the Registrar of Companies and on which the auditor has issued an unqualified audit report. The figures for the year
ended 31 March 2007 have been extracted from the statutory accounts for that year, which have been delivered to the Registrar of Companies
and on which the auditor has issued an unqualified audit report, having been restated under International Financial Reporting Standards. No
statement has been made by the auditor under Section 237(2) or (3) of the Companies Act 1985 in respect of either of these sets of accounts.
This announcement was approved by the board of directors on 26 June 2008.
2. The financial statements have, for the first time, been
Prepared in accordance with International Financial Reporting Standards adopted by the International Accounting Standards Board ("IASB")
and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB (together "IFRS") as endorsed by
the European Union. The information in this preliminary announcement has been extracted from the audited financial statements for the year
ended 31 March 2008 and as such, does not contain all information required to be disclosed in the financial statements prepared in
accordance with International Financial Reporting Standards ("IFRS").
These financial statements are presented in sterling as that is the currency of the primary economic environment in which the Company
operates.
3 Loss per share
Basic loss per share is calculated by dividing the loss for the year attributable to
ordinary shareholders for by the weighted average number of shares in issue during the
year. For diluted loss per share, the weighted average number of ordinary shares in
issue is adjusted to assume conversion of all dilutive potential ordinary shares.
Dilutive potential ordinary shares arise from employee share options. At 31 March 2008
no (2007: 14,750) share options had an exercise price less than the current share
price and consequently the shares related to share options are excluded from the
diluted earnings per share calculation and there is no dilution in the earnings per
share as a result of outstanding options.
2008 2007
�'000 (Restated)
�'000
Basic and diluted 1,256 1,451
losses
Number of shares Number of shares
Weighted average 57,298,652 47,088,391
number of shares -
basic and diluted
4. Notes to the Cash Flow Statement
2008 2007
�'000 �'000
(
Restated)
Loss before tax (2,075) (1,587)
Adjustments for:
Depreciation of property, plant & equipment 164 182
Amortisation of intangible assets 596 480
Share based payments 68 108
Decrease in provisions (35) (101)
Investment income (298) (143)
Operating cash flows before movements in working (1,580) (1,061)
capital
Decrease in inventories 9 1
Increase in receivables (325) (730)
(Decrease) / increase in payables (142) 17
Cash utilised in operations (2,038) (1,773)
5. Copies of the 2008 Annual Report and Accounts will be available to shareholders in July from the company's website or may be obtained
by contacting the Company Secretary at registered office. The annual general meeting is to be held at the registered office on 28 August
2008.
About Innovision Research & Technology plc
Innovision Research & Technology plc, is leading the next generation of NFC/RFID solutions. As the leading fabless developer of Short-Range
Data Communication semiconductor and system solutions, with particular focus on NFC/RFID (Radio Frequency Identification) and ultra low-cost
Integrated Circuit (IC) and RF electronic design, IRT is pushing cost performance to enable clients to get maximum utility for minimum cost.
The company develops innovative semiconductor technologies, ICs, RF systems (HF/UHF) and complete end product applications for mass volume
commercialisation and then licenses customers for its incorporation into their own products.
At the heart of the emerging Near Field Communication (NFC) market, Innovision R&T designs and develops NFC/RFID IC solutions for the global
mobile handset and consumer device sectors.
Products include Topaz, mandated by the NFC Forum as the NFC number one tag type format, Jewel for mass transit ticketing applications, and
io, the world's smallest standards compatible Near-Field RFID reader.
Headquartered in the UK, Innovision R&T was listed in 2001 on the Alternative Investment Market (AIM) of the London Stock Exchange (ticker
symbol:INN).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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