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Results for six months ending 30 September 2009
Monday 14th December, 2009
ANNOUNCEMENT
INNOVISION RESEARCH & TECHNOLOGY PLC
Results for six months ending 30 September 2009.
Innovision Research & Technology plc today announces its interim results for the six months ending 30 September 2009.
Highlights:
- Progress made on new development programmes with Tier 1 suppliers into the mobile telecoms industry - implementation remains the focus over the coming months
- Delivered technology to first Chinese customer - early test results encouraging
- Completed successful share placing raising £5.2m;
- Additional time and resource invested in Innovision's 1.8volt generation NFC IP* - remain on track to deliver to customer volume production requirements and timescales.
- Progress in shipping Jewel® into transport ticketing applications.
Commenting on the results, David Wollen, Chief Executive said:
"The Company recently engaged with semiconductor industry leaders creating analogue and RF designs on state of the art processes. We continue to develop well in this environment meeting the challenges that present themselves in order to deliver to time and specification. The main focus of our activity is NFC and whilst the exact timing of volume deployment remains difficult to predict, we do expect shipments of combo devices with NFC to start in late 2011 or 2012"
Enquiries:
Innovision Research & Technology plc Tel: 01285 888200
David Wollen, Chief Executive Officer
Brian McKenzie, Finance Director
* Near Field Communication Intellectual Property
See www.nfc-forum.org
The Chairman's and Chief Executive's Statement
This six-month period has been focused on the first phase of implementation of several major contracts with Tier 1 suppliers into the mobile telecoms industry. These contracts are for integration of Innovision's Near Field Communication (NFC) intellectual property (IP) into chips which combine several wireless functions onto one chip ("combo" chips). Completion of the 1.8volt generation of our NFC IP from the previous 3.3volt version has been more involved and taken longer than planned. Due to the timing of customer requirements to deliver initial test devices the intensity on their programmes has been raised, However, the Company remains on track to generate significant royalties arising from mobile handset shipments starting in 2011/12.
In China, we have delivered our technology to our first customer, and this has been incorporated into an initial chip. Early results from the initial testing and evaluation of samples have been encouraging. Once qualified, we expect royalties from product sales to begin in the second half of 2010.
In July, we completed a successful placing of 30 million shares raising £5.2m net of expenses. This funding is designated to support development of the NFC IP business until royalty flow, and, the development of the NFC product/tag business. On the back of the contracts won, we increased the engineering team headcount by 40% with a combination of shorter-term contract staff and planned permanent employees in order to fulfil the customer commitments and maintain the investment in our market leading NFC IP.
Results for the six months (unaudited)
The Company is still in the pre-royalty phase and therefore the majority of revenue again relates only to development services. Overall revenue was £1.0m (2008: £0.8m). Of the total revenue, 84% (2008: 98%) relates to design services provided to major semiconductor customers in order to customise our background IP for inclusion into their products.
As expected, gross profit on engineering has been impacted by the reduction in development funding available from customers. There has also been incremental engineering resource required to address the technical and customer-specific challenges earlier than planned, which has come at a higher effective man-day rate as we are using contractors to maintain flexibility through peak periods. These factors have contributed to the increase in direct costs to £1.1m (2008 £0.5m).
At 30 September 2009, we had cash deposits of £7.1m (2008: £4.3m) and additional net current assets of £0.4m (2008: £1.9m). Net cash outflow was £1.6m excluding the £5.2m net proceeds from the share placing (2008: £1.3m) and is in line with the loss for the period. The reduction in other net current assets reflects the timing of milestone payments on the major contracts.
We continued to invest in our background NFC IP and the new Emerald tag platform, spending £0.8m (2008: £1.0m) for the six months under review. This investment in background IP has been an important element in securing the NFC business and the major engineering focus over the last year. In the second half the focus will switch to the customisation of this IP directly for customers. Administrative overheads were in line with the same period last year at £1.7m (2008: £1.7m).
With the reduced gross margin and lower investment income as interest rates have fallen, the loss after tax for the 6 months to 30 September 2009 was £1.6m (2008: £1.1m).
Operations Review
Over the period, we have strengthened our IC design capability and maintained our position as a leading company in our field. This has included investment in transferring our IP to state of the art manufacturing processes.
The primary focus for our design team is the work on existing development programmes for our major customers and the continued development of our background IP to meet the market demands for existing and prospective customers. Good progress has been made in all areas though at the cost of additional resources. As a result, it is unlikely that we will take on major new in-house development programmes until next year. We are focussing on new projects that require less customisation by our engineering teams and, in due course, we expect this IP transfer model to become more prevalent.
In the tag area, we have made good progress both on technology development and production costs. We expect to start production for a specific large customer in the second half of 2010. The volume of NFC-related tag sales is starting to increase and we are investing now to take advantage of what we believe will be a very attractive market in the medium term.
We have completed the relocation of the system design facility in Wokingham and are actively reviewing cost effective options to move our Cirencester headquarters to more appropriate premises from which to manage the next stages of the company's development.
Current trading and outlook
Consumer handsets with NFC based on stand-alone controllers will be available from 2010/11 with fully integrated NFC handsets based on our IP following from 2011/12. We expect volumes to grow through 2012 to 2015. Once the "combo" chips are designed into devices, the company will generate revenue from licence fees, royalties based on the shipments of the combination chips and the sales of tags for use with these devices. The market for tags may ultimately be greater than the royalty stream from the devices themselves.
Our focus for the remainder of this financial year is moving forward with the implementation phases of our current development programmes and securing additional IP and product-based contracts for next year. We are entering a number of months of concentrated development effort to achieve our customers' aggressive goals. This additional effort and cost will continue to impact us for the rest of this year but it is encouraging that there is growing visibility of NFC in future mobile handsets and this gives us confidence in achieving our long-term goals.
| Malcolm Baggott Chairman 11 December 2009 | David Wollen Chief Executive 11 December 2009 |
INTERIM STATEMENT OF COMPREHENSIVE INCOME
30 September 2009 (unaudited)
| 6 months ended 30 September 2009 £'000 | 6 months ended 30 September 2008 £'000 | 12 months ended 31 March 2009 £'000 | ||
| Revenue | 2 | 1,042 | 830 | 1,192 |
| Cost of sales | (1,105) | (492) | (600) | |
| Gross profit | (63) | 338 | 592 | |
| Administrative expenses | (1,737) | (1,675) | (3,731) | |
| OPERATING LOSS> | (1,800) | (1,337) | (3,139) | |
| Investment Income | 45 | 142 | 216 | |
| LOSS BEFORE TAXATION | (1,755) | (1,195) | (2,923) | |
| Tax | 3 | 126 | 100 | 334 |
| LOSS FOR THE PERIOD | (1,629) | (1,095) | (2,589) | |
| Other comprehensive income for the period | - | - | - | |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | (1,629) | (1,095) | (2,589) | |
| LOSS PER SHARE | Pence per share | Pence per share | Pence per share | |
| Basic and diluted | 4 | (2.26) | (1.78) | (4.20) |
The results were all derived from continuing operations.
The total comprehensive income for the period is wholly attributable to the equity shareholders of Innovision Research & Technology plc.
INTERIM STATEMENT OF FINANCIAL POSITION
30 September 2009 (unaudited)
| As at 30 September 2009 £'000 | As at 30 September 2008 £'000 | As at 31 March 2009 £'000 | ||
Non-Current Assets | ||||
| Property, plant & equipment | 241 | 159 | 217 | |
| Intangible assets | 1,063 | 412 | 646 | |
| Other receivables | 2 | 3 | 2 | |
| 1,306 | 574 | 865 | ||
| Current Assets | ||||
| Inventories | 81 | 40 | 80 | |
| Trade and other receivables | 692 | 2,343 | 1,125 | |
| Current tax asset | 125 | 75 | 310 | |
| Cash and cash equivalents | 7,100 | 4,274 | 3,585 | |
| 7,998 | 6,732 | 5,100 | ||
| TOTAL ASSETS | 9,304 | 7,306 | 5,965 | |
| Current Liabilities | ||||
| Trade and other payables | 495 | 531 | 607 | |
| Provisions | - | 37 | 99 | |
| TOTAL LIABILITIES | 495 | 568 | 706 | |
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).