RNS Number : 4472K
Innovision Research&Technology PLC
19 December 2008
INNOVISION RESEARCH & TECHNOLOGY PLC
Results for six months ending 30 September 2008.
Innovision Research & Technology plc today announces its interim results for the six months ending 30 September 2008.
Highlights
* Substantial order won for Jewel tickets.
* A further �1m invested in development NFC intellectual property (IP) which is now giving us a recognised technology advantage in
ongoing customer negotiations
* First complete production tags delivered to customers
* Advanced UHF tag completed for Active RFID/EPC market
* New advanced NFC and ticketing tag prototyped and strong customer interest shown
* Turnover hit by unexpected corporate disruption within a major customer;
* Cash at �4.3m gives a sustainable working capital base moving forward
* Dr Steve Morris joined the Board as CTO
Commenting on the results, David Wollen, Chief Executive said:
"During the first six months we have completed projects, invested heavily in our IP and been in negotiations for major new pieces of
business. Despite the prevailing uncertain climate, there is no doubt we have made major progress in being selected as the best technical
solution to provide NFC IP to some major semiconductor companies, so we are certainly disappointed by the delays in concluding the final
commercial negotiations. Nonetheless we confidently look forward to doing so and to move on from some unexpected problems caused by one
customer experiencing disruption in today's turbulent market environment"
18 December 2008
Enquiries:
For further information please contact:
Innovision Research and Technology plc: 01285 888200
David Wollen, Chief Executive
Brian McKenzie, Finance Director
KBC Peel Hunt (Nominated Adviser & Broker) 020 7418 8900
David Anderson
The Chairman's and Chief Executive's Statement
The Near Field Communications (NFC) market is showing very good signs with positive statements from the mobile network operators and
handset manufacturers. Even so, the semiconductor industry is greatly affected by the current general economic conditions and there is
specific turmoil with mergers, acquisitions, redundancy and reorganisations affecting most of the major semiconductor companies who are our
customers and prospects. This has caused unexpected delays and suspensions of ongoing development programmes with a specific customer which
has resulted in a lower revenue figure.
Despite this the company has made very significant progress in the NFC market over the six months by further developing its intellectual
property (IP) and working towards securing a number of major new engagements. Inevitably the prevailing environment has slowed progress but,
we expect positive outcomes to the ongoing negotiations before the end of this financial year. These negotiations relate to projects for
delivery into handsets likely to be shipping in 2010 and 2011.
We were also delighted to announce a substantial order for complete Jewel� tickets with prospects for follow on orders looking very
encouraging.
Results for the six months (unaudited)
Overall revenue was significantly lower than the comparative six months at �0.8m (2007: �1.7m) with virtually all revenue related to
pre-existing contracted development services. Re-organisation within a major customer's business and the divesting of its wireless division
lead to an unexpected shortfall in development programmes and loss of licence income in relation to the existing activity.
At 30 September 2008, we had cash deposits of �4.3m (2007: �7.2m) and additional net current assets of �1.9m (2007: �0.9m). Net cash
outflow was �1.3m (2007: �5.5m inflow including �6.2m net proceeds from the share placing). However the disruption to the customer business
referred to above has delayed receipts on the existing contracts from them and a significant proportion of the additional net current assets
should convert to cash over the next 6 months.
We continued our direct investment in the completion of our GemTM IP, the development of future generations, and new tag products at
�1.0m (2007: �0.7m). We will continue this investment based on the positive market indications from handset manufacturers and others for
system-on-chip (SoC) NFC solutions where NFC Intellectual Property is combined with other systems on the same chip.
Excluding the investment in research and development, the administrative overheads were held flat with the same period last year at
�1.2m (2007: �1.2m). With the cost base remaining constant, the reduced gross margin has increased the loss after tax for the 6 months to 30
September 2008 to �1.1m (2007: �0.7m).
Operations Review
We continued to enhance our Integrated Circuit (IC) design capability based in Cirencester with emphasis on near-field data
communications and RFID. We have brought in new staff and invested further in Electronic Design Automation (EDA) tools which allow our IP to
be taken to state of the art processes.
Innovision continues to play a strong role in the NFC standards body (see www.nfc-forum.org) and has also joined European
Telecommunications Standards Institute (ETSI) (see www.etsi.org) in order to influence related standards within the telecoms arena.
We began the year with five major development programmes in progress. Two have been completed; another relates to the customer that is
going through dramatic organisational changes which have put the design programmes on hold; and the other two should complete by the year
end.
Within the product supply area we have worked to reduce the number of steps in the production process and thereby make it more cost
effective. We have had some success selling complete tags and by becoming more closely integrated with our supply chain we make the supply
of complete tags and tickets in production volumes more readily deliverable.
Current trading and outlook
We remain focussed on the NFC market where we believe we have unrivalled IP for SoC solutions and a roadmap to maintain this position.
NFC market expectations are becoming more solid however the general outlook for the broader handset market is tempering our expectations and
causing some delays to decision making within the major manufacturers and suppliers to the consumer market. We expect mass market consumer
handsets with fully integrated NFC to start shipping in 2010 and for volumes to grow through 2011 to 2015.
The business model for the company in NFC is to propagate its IP with major semiconductor vendors for use in combination chips designed
for the mobile handset and consumer device market. This requires some initial engineering effort to customise the IP for use on a particular
semiconductor process.
Once the combination chips are designed into the devices, the company will both earn a licence fee and royalties based on the shipments
of the combination chips, and sell tags for use with these devices.
We believe the potential for the tag market may ultimately be greater than the royalty stream from the devices themselves. Each device
will create a market for multiple tags in applications such as smart posters, business cards, quick texting, staff location, service
initiation, loyalty/top-up cards, anti-counterfeiting and website redirection. The list is likely to extend rapidly as new applications are
conceived and brought online so we have invested in the development of the EmeraldTM platform designed to allow us to create optimised tag
ICs for individual applications. This leaves us well placed to respond quickly to new use cases and attack this market with a series of
niche products.
We are making good progress towards securing a number of substantial design wins for our IP with major semiconductor vendors however we
remain heavily dependent on signing some of these new contracts to reap the rewards in the later stages of the business model.
As a complement to NFC, we continue to build on our expertise within the broader RFID market. We look for specific applications where we
have strong patents/IP and/or particular expertise (e.g. Active EPC, UHF, low power memory) so that we can bring real value to the customer
and gain suitable rewards. The market in China is an exciting potential opportunity for us and we expect to show results with initial
customer engagements during the next year. Our priority however remains to secure existing NFC business before this.
We are pleased to have reported a significant order for complete Jewel� tickets including antenna, paper, and custom printing alongside
the IC into mass transport systems. The market for limited use contactless ticketing is continuing to develop at a moderate pace and we are
maximising the opportunity to obtain a return from this area by moving up the value chain.
We have started 2008/09 by completing pre-existing projects and continuing negotiations for major new pieces of business. Despite the
prevailing uncertain climate, there is no doubt we have made major progress in being selected as the best technical solution to provide NFC
IP to some major semiconductor companies and we are certainly disappointed by the delays in concluding the final commercial negotiations.
The remainder of the year is focussed on securing and kicking off those programmes which will have a significant effect on the financial
results but predominantly impacting in future years.
Malcolm Baggott David Wollen
Chairman Chief Executive
18 December 2008 18 December 2008
Notes 6 months ended 30 6 months ended 30 12 months ended 31 March
September September 2008
2008 2007 �'000
�'000 �'000
Revenue 2 830 1,718 3,400
Cost of sales (492) (950) (1,623)
Gross profit 338 768 1,777
Administrative expenses (1,675) (1,606) (4,150)
OPERATING LOSS (1,337) (838) (2,373)
Investment Income 142 110 298
LOSS BEFORE TAXATION (1,195) (728) (2,075)
Tax 3 100 37 119
LOSS FOR THE PERIOD (1,095) (691) (1,956)
LOSS PER SHARE Pence per share Pence per share Pence per share
Basic and diluted 4 (1.78) (1.30) (3.41)
The results were all derived from continuing operations.
The loss for the period is wholly attributable to the equity shareholders of Innovision Research & Technology plc.
Innovision Research & Technology plc
INTERIM BALANCE SHEET (unaudited)
30 September 2008
As at 30 September As at 30 September As at
2008 2007 31 March
�'000 �'000 2008
�'000
Non-Current Assets
Property, plant & equipment 159 247 206
Intangible assets 412 28 202
Other receivables 3 483 238
574 758 646
Current Assets
Inventories 40 15 6
Trade and other receivables 2,343 1,717 2,115
Current tax asset 75 174 135
Cash and cash equivalents 4,274 7,208 5,588
6,732 9,114 7,844
TOTAL ASSETS 7,306 9,872 8,490
Current Liabilities
Trade and other payables 531 738 617
Provisions 37 35 35
568 773 652
Non-Current Liabilities
Other payables - 12 -
Long-term provisions - 37 19
- 49 19
TOTAL LIABILITIES 568 822 671
NET ASSETS 6,738 9,050 7,819
Equity
Share Capital 615 615 615
Share Premium Account 21,735 21,735 21,735
Retained Earnings (15,612) (13,300) (14,531)
TOTAL EQUITY ATTRIBUTABLE TO EQUITY
SHAREHOLDERS OF THE COMPANY 6,738 9,050 7,819
Innovision Research & Technology plc
INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
30 September 2008
As at 30 September As at 30 September As at
2008 2007 31 March
�'000 �'000 2008
�'000
At beginning of period 7,819 3,481 3,481
Loss for the period (1,095) (691) (1,956)
Total recognised income and (1,095) (691) (1,956)
expense
Employee share option scheme 14 33 67
Issue of share capital - 6,502 6,502
Share issue costs - (275) (275)
14 6,260 6,294
At end of period 6,738 9,050 7,819
There are no gains or losses recognised directly in equity.
Innovision Research &
Technology plc
INTERIM CASH FLOW STATEMENT
30 September 2008
Note 6 months ended 30 6 months ended 30 12 months ended 31 March
September September 2008
2008 2007 �'000
�'000 �'000
Cash utilised in operations 5 (1,047) (406) (2,038)
Tax credit received 160 - 120
Net cash used in operating (887) (406) (1,918)
activities
Investing activities
Interest received 112 63 282
Purchases of property, plant & (25) (23) (61)
equipment
Investment in intangible (514) (315) (778)
assets
Net cash used in investing (427) (275) (557)
activities
Financing activities
Proceeds on issue of shares - 6,502 6,502
Share capital issue costs - (275) (275)
Net cash from financing - 6,227 6,227
activities
Net (decrease) / increase in (1,314) 5,546 3,752
cash & cash equivalents
Cash & cash equivalents at the 5,588 1,836 1,836
beginning of the period
Cash & cash equivalents at the 4,274 7,382 5,588
end of the period
Innovision Research & Technology plc
NOTES
For the six months ended 30 September 2008
1 BASIS OF PREPARATION
Innovision Research & Technology plc is a public limited company incorporated in the United Kingdom under the Companies Act 1985. The
Company is domiciled in the United Kingdom and its ordinary shares are traded on the Alterative Investment Market (AIM).
The annual financial statements of Innovision Research & Technology plc are prepared in accordance IFRS as adopted by the European
Union. These interim financial statements do not constitute statutory accounts within the meaning of section 240 Companies Act 1985.
Statutory accounts for the year ended 31 March 2008 were approved by the Board of Directors on 26 June 2008 and delivered to the Registrar
of Companies. The report of the auditor on those accounts was unqualified and did not contain a statement under section 237(2) or (3)
Companies Act 1985.
The interim results, which have been reviewed but not audited, have been prepared using accounting policies consistent with those used
in the preparation of the annual report and accounts for the year ended 31 March 2008.
As permitted this interim report has been prepared in accordance with UK AIM listing rules and not in accordance with IAS 34 "Interim
Financial Reporting" therefore it is not fully in compliance with IFRS.
The interim financial statements are presented in sterling and all values are rounded to the nearest thousand pounds (�'000) except when
otherwise indicated.
2 REVENUE
6 months ended 30 6 months ended 30 September 12 months ended 31 March
September 2007 2008
2008 �'000 �'000
�'000
By Geographical
Area:
United Kingdom 73 478 924
Rest of Europe 660 404 944
North America 74 442 1,095
Asia-Pacific and 23 394 437
China
830 1,718 3,400
By Type:
Development 810 1,266 2,320
Engineering
Licence fees & - 396 954
Royalties
Product Sales 20 56 126
830 1,718 3,400
3 TAXATION
Taxation for the six months to 30 September 2008 is based on the estimated tax credits for Research and Development.
4 LOSS PER SHARE
Basic loss per share has been calculated by dividing the loss for the period attributable to ordinary shareholders by the weighted
average number of shares in issue during the period.
For diluted earnings 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 30 September 2008 the
average market price of the company's ordinary shares was more than the exercise price of the options and consequently the shares
in question are excluded from the diluted EPS calculation. There is therefore no dilution as a result of outstanding options.
6 months ended 30 6 months ended 30 September 12 months ended 31
September 2007 March
2007 2008
Loss for the period (�1,095,000) (�691,000) (�1,956,000)
Weighted average 61,556,121 53,041,183 57,298,652
number of shares
Loss per share (1.78) (1.30) (3.41)
(basic & diluted) -
pence per share
5 RECONCILIATION OF LOSS BEFORE TAX TO CASH UTILISED BY OPERATIONS
6 months ended 30 6 months ended 30 12 months ended 31
September September March
2008 2007 2007
�'000 �'000 �'000
Loss before tax (1,195) (728) (2,075)
Adjustments for:
Depreciation of 70 84 164
property, plant &
equipment
Loss on disposal of 2 - -
property, plant &
equipment
Amortisation of 304 307 596
intangible fixed
assets
Share based payments 14 34 68
Decrease in (17) (17) (35)
provisions
Investment income (142) (110) (298)
Operating cash flows (964) (430) (1,580)
before movements in
working capital
(Increase) / (34) - 9
decrease in
inventories
Decrease / 37 33 (325)
(increase) in
receivables
Decrease in payables (86) (9) (142)
Cash utilised by (1,047) (406) (2,038)
operations
6 APPROVAL OF THE INTERIM FINANCIAL STATEMENTS
The interim financial statements were approved and authorised for issue by the directors on 18 December 2008.
7 Copies of this report will be sent to all shareholders. Further copies of this report are available from the Company Secretary, 33
Sheep Street, Cirencester, Gloucestershire, GL7 1RQ, United Kingdom for a period of one month from today's date and thereafter from the
Company's website at www.innovision-group.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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