Vigilant Technology Limited, 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.
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.
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.
More on Vigilant Technology Limited