RNS Number:4971E
Visual Defence Inc.
25 September 2007
Visual Defence Inc
("Visual Defence", the "Company" or the "Group")
Interim Results for Six Months Ended 30 June 2007
RICHMOND HILL, ONTARIO - September 25, 2007 - Visual Defence, the security
convergence company, today announces interim results for the six months ended 30
June 2007. All Dollar amounts are in Canadian Dollars.
Financial Highlights
* Revenues increased by 32 per cent. against the comparative period last
year to $10.2 million (six months 30 June 2006: $7.7 million).
* Revenue growth recorded in all geographic regions including a 67 per
cent. increase against the comparative period last year in Europe, Middle
East and Africa.
* Excluding stock based compensation, amortization, depreciation and
financial expenses, losses were reduced to $2.0 million compared with $2.1
million in the prior year.
* Balance sheet remains strong, with cash and equivalent balances of $14.5
million (as at 31 December 2006: $14.6 million).
Operating Highlights
*Significant contract wins included:
o the extension of the US National Guard intrusion detection system to
include installations in a total of 30 states;
o the supply of an audio, video and control system to a British
Columbia based Convention Centre and British Columbia based High School;
o the provision of an intelligent transport system to a Quebec based
transit system covering installations on 225 buses;
o the extension of the Israel Ministry of Defence project; and
o the extension of the Massachusetts Bay Transportation Authority
system to handle 2,100 video streams
*Continuing project development activities included:
o completing the installation of Visual Defence video management
technology platforms for British Airport Authority at Terminals 2,3, 4
and the newly commissioned T5 of the London Heathrow airport
o completing the integration of additional video management technology
and cameras for the Canadian Border Services Agency;
o completing the installation and integration of video management
technology for Air Canada's Toronto Operation Control Centre;
o completing the installation of Visual Defence's 3C Command and
Control technology platform for video, event management and mapping
capabilities at 100 transit stations for Stokholm Lokaltrafik (SL)
o completing the installation and delivery of the first 200 DVSSm
mobile IP digital video storage devices (DVSSm) for Phase 2 of the SL
project covering the transit authority's 2,100 buses; and
o completing technical and manufacturing design of the IP based Help
Phone of which 250 will be installed at SL transit stations and managed
by Visual Defence's Intercom Management System (IMS).
*Product development activities included:
o the integration of the IP Mobile Digital Video Storage Solution (IP
DVSSm) with the Virtual Matrix System (VMS) software module, creating a
centrally managed environment for mobile storage devices;
o releasing the second generation of the Command and Control Center
(3C), our common management software platform for comprehensive security
management; and
o completing the design and specifications for a new IP Help Phone
incorporating video capture and two way voice that will be managed by
the Company's Intercom Management System and seamlessly integrated
within the 3C platform
Oved Tal, Chairman, commented:
"I am pleased to report strong growth in our business, continued investment in
management, sales strength and product development. The first six months of 2007
have yielded substantially improved results from the previous year and we carry
a strong momentum into the second half of the year. I am confident of the
Company's prospects for 2007 and expect the Company to deliver strong full year
results."
About Visual Defence
Visual Defence, the security convergence company, provides advanced solutions
that manage mission critical systems for leading organizations around the world.
The Company provides government, airport, public transportation and commercial
customers with public safety and security solutions that increase management
efficiency while leveraging existing security infrastructure. With its Common
Management Platform, Visual Defence provides customers with customizable and
scaleable solutions that meet their business goals. Visual Defence is
headquartered in Canada. Additional information is available at http://
www.visualdefence.com
Enquiries:
Visual Defence Inc +(1) 905 731 1254
Dagan Sadeh, Chief Executive Officer
Bill Watson, Chief Financial Officer
KBC Peel Hunt Ltd, Nominated Adviser and Broker +(44)20 7418 8900
David Anderson
Visual Defence Inc
("Visual Defence", the "Company" or the "Group")
Chairman's Statement
The six months to June 30 2007 was one of satisfying growth for Visual Defence
in terms of revenue, project delivery and research and development.
Revenue increased 32 per cent. over the comparative period in 2006, major
project delivery milestones were met, new versions of our products and platforms
were released and the Company continued to make significant advances in the
development of its infrastructure.
Results
I was pleased to see the overall revenue growth of 32 percent. and particularly
the 67 per cent. growth in revenue in the EMEA markets. Gross margins declined
to 31.8 per cent. due to the increase of hardware sales in the period of which
have lower margins than software. However, I expect the 2007 year end margins to
be consistent with the 2006 levels achieved.
Operating expenses have been managed with only marginal increases over the prior
year. Improvements in delivery and infrastructure have come as a result of
internal reallocation of resources rather than an increase in overall costs as
overhead expenses excluding depreciation and amortization increased $0.26
million or 5.2 per cent. versus the comparative period in 2006.
Financial expenses increased in the period largely due to unrealized losses in
foreign exchange valuations of Pounds Sterling and US Dollar bank balances and
inter-company balances due to the rapid increase in value of the Canadian Dollar
versus both the US Dollar and Pounds Sterling. As the Company reports its
financials in Canadian Dollars but transacts much of its business outside of
Canada the Company is subject to variations in the foreign exchange markets.
Share based compensation expenses decreased consistent with plan.
Cash and cash equivalent balances remained strong at $14.5 million versus $14.6
million as at 31 December 2006. The Company continued with its conservative
investment policy of investing in only Canadian Bank issued investments.
Accounts receivable and accounts payable are comfortably within operating
expectations.
Overall the Company's operating loss of $2.0 million and net loss of $3.8
million represents improvements over the prior year (six months ended 30 June
2006: $2.1 million and $4.6 million respectively).
New Contracts
The Company's sales focus in 2007 is to expand into key verticals and geographic
segments:
US Homeland Defence
The Company secured a large extension of our contract with the US National Guard
to deploy intrusion detection systems in armories. The extension means that VDI
technology will be in place across 30 states in the US and represents a
confirmation of the Company's strategy to focus on the large US Homeland
Security market.
Hospitality and Education - Canada
The Company's Vancouver office secured two large contracts to supply advanced
Audio Visual solutions to a convention centre and a high school, both are key
new business development sectors (hospitality and education) for the Company.
Public Transit - Canada
The Company secured a $2.6 million contract to supply advanced intelligent
transit solutions to a large public transit organization in the Montreal area.
This success is the Company's first major win in the Province of Quebec and
re-affirms the Company's position as a leading supplier of advanced solutions to
the public transit industry.
Military - Israel
The Israel Ministry of Defence extended its order for proprietary security
solutions from the Company. The Company believes the opportunity to extend its
relationship as supplier to the MOD will provide substantial direct and indirect
future benefits.
Public Transit - United States
The Company received an order as an extension of the contract with the
Massachusetts Bay Transportation Authority for an additional 2,100 video
streaming licenses reaffirming the Company's capability to handle large
enterprise wide video management installations.
Product Development
The Company's IP centric products and platforms provide our customers with
leading edge solutions. The integration of our DVSSm mobile video recording
solution with our Virtual Matrix System provides customers with an integrated
solution to handle mobile video including remote tagging and downloading of key
video events. The success of this device was recognized by the industry as the
DVSSm was a finalist for Product of the Year at the 2007 IFSEC show.
Our Command and Control Center platform, 3C, continued its enhancement
development plan with the release of version 2.0, increasing the capability of
the system to handle up to 100,000 events or alarms per day. The 3C was built
specifically for large campus and enterprise wide installations that have
extensive alarm and subsystem requirements.
Project Deployment
The continued deployment of VDI technology across the globe has resulted in the
installation of our video management platform at Terminals 2,3,4 and the newly
commissioned T5 of London Heathrow airport managed by BAA, new installations
with Air Canada and the Canadian Border Service Agency at Pearson Airport in
Toronto; the delivery and installation of 100 3C systems (video, event
management and mapping) at Stockholm transit stations; and the current
deployment of over 2,000 DVSSm storage devices on busses also in Stockholm.
Outlook
The demand for integrated IP based security, video and event management
solutions remains very strong worldwide. Visual Defence has a strong order book,
an extensive pipeline as well as leading edge products, services and solutions
that meet the needs of leading customers around the world. The Company has hired
a new Vice President of Sales for North America to continue the growth and
development of this key segment. The Company's focus is to rapidly grow revenue
in key verticals and geographic segments, whilst increasing gross profits and
cash generation. The Company is well positioned to achieve these results in
2007. I am very optimistic on the prospects for Visual Defence in 2007 and
beyond.
Barry (Oved) Tal
Chairman
September 25, 2007
CONSOLIDATED BALANCE SHEETS
Canadian dollars in thousands 30 June 30 June 31 December
2007 2006 2006
(Unaudited) (Audited) (Audited)
--------- --------- ---------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $3,374 $3,453 $1,149
Short-term bank deposits 104 1,463 100
Marketable securities 8,560 14,781 13,401
Restricted cash 2,423 - -
Trade receivables 8,763 6,045 12,500
Other accounts receivable and prepaid
expenses 659 419 755
Inventories 1,402 1,357 1,498
--------- --------- ---------
Total current assets 25,285 27,518 29,403
---------------------- --------- --------- ---------
NON-CURRENT ASSETS:
Property and equipment, net 1,559 1,293 1,221
Other intangible assets, net 3,151 3,916 3,503
Goodwill 7,835 7,835 7,835
--------- --------- ---------
Total non-current assets 12,545 13,044 12,559
-------------------------- --------- --------- ---------
Total assets $37,830 $40,562 $41,962
-------------- ========= ========= =========
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Trade payables $2,645 $1,846 $3,588
Other accounts payable and accrued
expenses 2,007 1,027 2,261
--------- --------- ---------
Total liabilities 4,652 2,873 5,849
------------------- --------- --------- ---------
EQUITY:
Share capital - - -
Additional paid-in capital 51,325 50,253 50,886
Foreign currency translation adjustments 345 112 (42)
Accumulated deficit (18,492) (12,676) (14,731)
--------- --------- ---------
Total equity 33,178 37,689 36,113
-------------- --------- --------- ---------
Total liabilities and equity $37,830 $40,562 $41,962
------------------------------ ========= ========= =========
The accompanying notes are an integral part of the interim consolidated
financial statements.
CONSOLIDATED INCOME STATEMENTS
Canadian dollars in thousands (except share and per share data)
Six months ended Year ended
30 June 31 December
-------------
2007 2006 2006
(Unaudited) (Audited) (Audited)
---------- ---------- ----------
Revenues $10,195 $7,690 $19,868
Cost of revenues 6,953 4,784 12,852
---------- ---------- ----------
Gross profit 3,242 2,906 7,016
---------- ---------- ----------
Operating expenses:
Research and development 1,185 1,157 2,476
Selling and marketing 2,341 2,339 4,542
General and administrative 2,290 2,005 4,786
Share-based compensation 438 2,337 2,969
---------- ---------- ----------
Total operating expenses 6,254 7,838 14,773
-------------------------- ---------- ---------- ----------
Operating (loss) (3,012) (4,932) (7,757)
Financial (expenses) income, net (749) 337 1,107
---------- ---------- ----------
Income (loss) before taxes on income (3,761) (4,595) (6,650)
Taxes on income (tax benefit) - - -
---------- ---------- ----------
Net (loss) ($3,761) ($4,595) ($6,650)
========== ========== ==========
Basic and diluted net (loss) per share ($0.05) ($0.07) ($0.09)
========== ========== ==========
Weighted average number of shares used
in computing (loss) per share 70,601,095 70,453,487 70,487,690
========== ========== ==========
The accompanying notes are an integral part of the interim consolidated
financial statements.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Canadian dollars in thousands (except share data)
Common shares
------------
------
Number of Share Additional Foreign Retained Total equity
shares capital paid- currency earnings -------
-------- ------ capital translation (accumulated
------- adjustments deficit)
-------- --------
Balance as
of
1 January
2006 70,453,487 - 47,916 48 (8,081) 39,883
(Audited)
Share-based
compensation - - 2,337 - - 2,337
Foreign
currency
translation
adjustments - - - 64 - 64
Net loss - - - - (4,595) (4,595)
-------- ------ ------- -------- -------- -------
Balance as
of
30 June 2006 70,453,487 - 50,253 112 (12,676) 37,689
(Audited)
Share-based
compensation - - 632 - - 632
Foreign
currency
translation
adjustments - - - (154) - (154)
Issuance of
Common
Shares
upon
exercise
of share
options 102,608 - 1 - - 1
Net loss - - - - (2,055) (2,055)
-------- ------ ------- -------- -------- -------
Balance as
of
31 December
2006 70,556,095 - 50,886 (42) (14,731) 36,113
(Audited)
Share-based
compensation - - 438 - - 438
Foreign
currency
translation
adjustments - - - 387 - 387
Issuance of
Common
Shares
upon
exercise
of share
options 90,000 - 1 - - 1
Net loss - - - - (3,761) (3,761)
-------- ------ ------- -------- -------- -------
Balance as
of
30 June 2007 70,646,095 - $51,325 $345 ($18,492) $33,178
(Unaudited) ======== ====== ======= ======== ======== =======
The accompanying notes are an integral part of the interim consolidated
financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Canadian dollars in thousands Six months ended Year ended
30 June 31 December
------------ ------------
---------
2007 2006 2006
(Unaudited) (Unaudited) (Audited)
--------- --------- ---------
Cash flows from operating activities:
---------------------------------------
(Loss) before taxes on income ($3,761) ($4,595) ($6,650)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating
activities:
Depreciation and amortization 579 526 1,166
Share-based compensation expense 438 2,337 2,969
Deferred taxes, net - - -
Decrease (increase) in accounts
receivable 3,737 (2,350) (8,819)
Decrease (increase) in other accounts
receivable and prepaid expenses 96 (127) (458)
Decrease (increase) in inventories 96 (59) (193)
Decrease (increase) in trade payables (943) 421 2,144
Decrease (increase) in other accounts
payable and accrued expenses (254) 103 1,328
--------- --------- ---------
Net cash provided by (used in)
operating activities (12) (3,744) (8,513)
--------- --------- ---------
Cash flows from investing activities:
---------------------------------------
Purchase of property and equipment (604) (256) (402)
Proceeds from disposal of property and
equipment 39 - 8
Acquisition of Emergent Systems Corp - (33) (33)
Investment in short-term bank deposits (4) 580 1,943
Investment in marketable securities - (10,473) (9,093)
Proceeds from sale of Marketable
securities 4,841 - -
Investment in terms deposits held as
restricted cash (2,423) - -
--------- --------- ---------
Net cash provided by (used in)
investing activities 1,849 (10,182) (7,577)
--------- --------- ---------
Cash flows from financing activities:
---------------------------------------
Settlement of loan from shareholder - (3,500) (3,500)
--------- --------- ---------
Net cash provided by (used in)
financing activities - (3,500) (3,500)
--------- --------- ---------
Effect of exchange rate differences on
cash and cash equivalents 388 50 (90)
--------- --------- ---------
Increase (decrease) in cash and cash
equivalents 2,225 (17,376) (19,680)
Cash and cash equivalents at the
beginning of the period 1,149 20,829 20,829
--------- --------- ---------
Cash and cash equivalents at the end
of the period $3,374 $3,453 $1,149
========= ========= =========
The accompanying notes are an integral part of the interim consolidated
financial statements.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Canadian dollars in thousands (except share and per share data)
1 Basis of preparation:
The Consolidated Interim Financial Statements have been prepared using
accounting policies consistent with International Financial Reporting Standards
and in accordance with International Accounting Standard (IAS) 34 Interim
Financial Reporting.
2 Significant accounting policies:
The same accounting policies, presentation and methods of computation are
followed in these Consolidated Interim Financial Statements as were applied in
the preparation of the Company's Consolidated financial statements for the year
ended 31 December 2006.
3 Restricted cash:
Restricted cash in the amount of $2,423 as of 30 June 2007 (Nil as of 30 June
2006 and 31 December 2006) consisted of term deposits assigned to a bank for
operating credit facility.
4 Equity
A summary of the Company's share option activity and related information is as
follows:
Number Weighted average exercise price
---------- -----------
Outstanding as of 1 January 2006
(Audited) 1,937,432 $1.01
Granted 890,000 0.79
Exercised - -
Forfeited (470,324) (0.47)
---------- -----------
Outstanding as of 30 June 2006
(Audited) 2,357,108 1.03
Granted - -
Exercised (102,608) (0.01)
Forfeited (130,000)
---------- -----------
Outstanding as of 31 December 2006
(Audited) 2,124,500 1.10
Granted - -
Exercised (90,000) (0.01)
Forfeited (313,500) 0.67
---------- -----------
Outstanding as of 30 June 2007
(Unaudited) 1,721,000 $1.10
========== ===========
Options exercised as of 30 June 2007 were 90,000 at a weighted average exercise
price of $0.01 (Nil & 102,608 as of 30 June 2006 and 31 December 2006
respectively).
5 Depreciation and amortization:
The following table summarizes depreciation and amortization expenses and
impairment losses recorded in the income statement:
Six months ended Year ended
30 June 31 December
----------------
2007 2006 2006
(Unaudited) (Audited) (Audited)
--------- -------- ---------
Research and development $141 $153 $397
Selling and marketing 185 185 370
General and administrative 253 188 399
--------- -------- ---------
$579 $526 $1,166
========= ======== =========
6 Segment revenue and results:
The company manages its business on the basis of one reportable segment. The
following table presents segment revenue information regarding the Group's
geographical segments for the six month period ended 30 June 2007 and 2006 and
the year ended 31 December 2006
Middle East,
North America Europe & Africa Total
--------- --------- --------
Six months ended 30
June 2007 (Unaudited) $4,253 $5,942 $10,195
========= ========= ========
Six months ended 30
June 2006 (Audited) $4,140 $3,550 $7,690
========= ========= ========
Year ended 31 December
2006 (Audited) $10,203 $9,665 $19,868
========= ========= ========
This information is provided by RNS
The company news service from the London Stock Exchange
END
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