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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Vividas | LSE:VDS | London | Ordinary Share | GB00B04NK713 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 3.25 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:1565H
Vividas Group plc
07 November 2007
VDS.L
VIVIDAS GROUP PLC
("Vividas" or "the Company")
Announces
Preliminary Results for the year ended 30 June 2007
Vividas has developed market leading video streaming technology.
HIGHLIGHTS
Commercial:
* Business and strategic review by new management completed and new
strategic direction initiated in February 2007
* Key market sectors identified
* Focus on higher margin streaming products for Internet TV and Pay Per View
market (PPV)
* Resources realigned in line with target markets
* Substantial progress made in product development
* New technology releases ensure Vividas has market leading technology to
provide what the Company believes is the only true scalable live streaming
solution
* Significant new contracts secured during year and post year end
including:
- Fox Soccer Channel, part of News Corporation in the US - to stream
top-tier football matches, including Barclays English Premier
League, FA Cup and UEFA Cup
- Sony Pictures, Granada (part of ITV) and Thomson Holidays (part of
TUI AG)
* Good progress with channel partner strategy - new agreements include
Easynet (a Sky company) and Arsenale23 and Vieweb in Italy
* Expansion into new growth market of Asia
- signed a reseller, Magneato, who are already offering two live 24
hour TV channels in the Philippines through their commercial arm,
Netvision
* Pipeline very encouraging
- trials in Australia with ABC Corporation and Thomson Financial
Financial:
* Sales increased by 27% to #1.221m, with sales of streaming products
up by 51% to #1.054m
* Operating loss before amortisation (adjusted for FRS 20) and share of
associate of #2.922m (2006: #2.782m)
* Loss before tax of #3.109m (2006: #2.832m)
* Basic loss per share reduced by 14% to 10.85p and adjusted loss
(before amortisation, associate and FRS 20) per share by 17% to 9.57p
* Net cash balance of #1.877m at 30 June 2007 (2006: #1.201m)
* Placing (subject to shareholder approval) announced today, in a
separate statement, of 10 million Ordinary Shares to raise #2.5m (gross) to
support geographic expansion
David Pearson, Chairman, said:
"Vividas has refocused during the year, has aligned its resources and
development to meet customer and market needs and has a new Executive team to
grow the business. With the release of new products such as VivCast Live
Professional, which the Company believes offers the only truly scalable Internet
TV solution, as well as the signing of significant corporations including Fox
Soccer and Sony Pictures in the USA, the Board believes the Company is well
placed to build on the foundations now laid.
We have today announced details of a placing to raise approximately #2.5 million
(before expenses), subject to shareholder approval. The placing will enable us
to support the ongoing expansion of the business, particularly on the West Coast
of USA, and enter into the key market of Asia as we look to take advantage of
the exciting opportunities available."
Notes for Editors:
Quoted on AIM, Vividas Group plc (VDS.L) has developed and provides video
streaming technology and related products which enable full screen, very high
quality video to be played via networks, including the Internet or via discs,
without normally requiring software installation.
Vividas's proprietary technology overcomes the disadvantages of competing CD and
streaming market solutions. These competing technologies typically offer only
partial screen, or poor quality full screen, viewing and generally require the
user either to have or to install specialist player software.
For more information, visit www.vividas.com.
For further information, please contact:
Vividas Group plc +44 20 7189 5532
Paul Neville, Chief Executive Officer
Greg Minns, Group Finance Director
Biddicks +44 20 7448 1000
Katie Tzouliadis / Sophie Lane
HB Corporate +44 20 7510 8600
Jim McGeever / Rachel Kane
VIVIDAS PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2007
CHAIRMAN'S STATEMENT
I am pleased to present my first Chairman's Statement since being appointed as
Non-Executive Chairman on 9 March 2007. The Company has made significant steps
forward during the year and we see Vividas as having made an important
transition. The business has moved from its position as a beta start up company,
with fantastic but raw technology, to a commercial operation, with a clearly
defined growth strategy and scalable high quality solutions.
Following the appointment of Paul Neville as Chief Executive in August 2006, and
a comprehensive review of the business in December 2006, we have taken key
strategic decisions on how best to drive forward our programme to commercialise
the Company's innovative video streaming technology. As a result, the business
has been refocused around certain key products and market sectors, and we have
strengthened the executive, operations and sales teams. We also remain committed
to our channel partner strategy which should help accelerate both the adoption
and sales of our technology.
The benefits of our new strategy are now being seen in the pipeline but I am
also pleased to highlight the contracts we secured in the year with Fox Sports,
Sony Pictures, Granada, part of ITV, Easynet, a Sky company, and Thomson
Holidays.
The marketplace for video delivered over the internet remains relatively new and
is still in the process of being established. However, it has explosive growth
potential. Vividas's video streaming technology is market leading. It offers
internet users a video viewing experience that is superior to existing solutions
and which, typically, does not require the installation of software beforehand.
For these reasons, we believe that the opportunity for the Company to establish
itself as a leader in video streaming over IP networks is within our reach. We
therefore continue to view prospects for the business very positively.
Capital Raising
In November 2006, #3.1m (gross) was raised in a placing of 7.65 million of new
Ordinary Shares with JHG Investments Models S.L.U ("JHG") at 40p per share.
Additionally, warrants for 0.22m new Ordinary shares exercisable at 40p per
share were granted to JHG. The transaction, approved at an Extraordinary
General Meeting, was completed on 24 November 2006.
JHG is the private investment vehicle of Javier Hidalgo Gutierrez, the General
Director of Globalia Corporacion Empresarial SA ('Globalia'), one of the largest
privately owned businesses in Spain, with sales of Euro2.6 billion. An additional
#0.665m (net) was raised during the year through the exercise of share options
and smaller issues of new shares.
Results
Results for the year are shown following the adoption of FRS 20, "Share-Based
Payments", and comparative results have been restated.
Turnover increased by 27% to #1,221,000, with sales from video streaming
products increasing by 51% to #1,054,000. The result reflects the focus on
streaming products with higher margins but also our decision to introduce a more
competitive pricing structure. The non-performance of a particular channel
partner in the adult entertainment industry meant that expected sales in the
second half of the year were behind our targets.
The operating loss before amortisation increased from #2,782,000 to #2,922,000.
The loss before tax and amortisation was #2,942,000 compared to a loss in the
previous year of #2,672,000. This result is after taking into account Vividas's
33% share in the loss from the new associate company, Dargo Limited, which was
established with JHG in the year. Dargo Limited incurred set up costs of which
Vividas's share was #110,000. The loss before tax was #3,109,000 compared to
#2,832,000 last year. The basic loss per share was reduced by 14% to 10.85 pence
and the adjusted loss per share reduced by 17% to 9.57 pence.
Business Overview
Growth Strategy
Following a comprehensive review in December 2006 of the business and market
opportunity, we have refocused our operations around those market sectors which
we believe provide us with the best growth opportunities and where we offer
significant competitive advantage. These include the entertainment sector,
incorporating films and sports, and the corporate sector. We are tailoring our
product offering and ongoing research and development accordingly.
While Vividas operates its own sales team, in March 2006, we initiated a channel
partner strategy to ensure that the business can scale effectively. We remain
committed to this strategy and now have a network of partners and resellers in
place, which provide additional market credibility, open up new relationships
and provide us with the ability to offer enhanced and fully integrated
solutions. At the year end, there were approximately 25 resellers selling our
products and indirect sales accounted for 19% of the Group's total sales, up
from 4% of sales in the previous year. In 2008, we are targeting further
significant growth in the channel partner revenues.
Development of Product Offering
The Company's key product offering to its chosen market sectors is now centred
around two key products, a broadcast quality video streaming solution, VivStream
Internet TV, and a high quality live/on demand 'Pay Per View' solution,
VivStream PPV. Both products are delivered via our market leading live
technology or on demand.
During the year, we released new products and technology. In March 2007, we
rolled out the new version of VivStream PPV. This product enables broadcasters,
including sports channels and film distributors, to monetise live or 'on demand'
content via the internet in an easy to view, up to high definition, format.
After the year end, in July 2007, we also launched our improved VivStream
Internet TV platform which we believe is the only streaming solution
guaranteeing an uninterrupted online viewing experience, equal to traditional
broadcasters. VivStream Internet TV is one of the most flexible solutions on the
market enabling all traditional broadcast business to be replicated online.
We launched VivCast Live Professional in September 2007. The technology is a
'breakthough' solution, which has the potential to deliver video to millions
rather than thousands of online viewers simultaneously, with no reduction in
picture or delivery quality, as opposed to traditional methods of streaming
offered by competitors, which can only service small numbers of simultaneous
viewers. This is key to the Company's future growth as increasing the number of
videos using Vividas's streaming technology has a direct impact on royalty
revenues. With other improvements, including the live functionality, to be
released imminently, the Company is now well placed to build on its position
offering market leading streaming technology in the future.
Customers and Channel Partners
Vividas is now in a strong position to drive sales of its key products,
VivStream Internet TV and VivStream PPV in its chosen markets. We have made very
encouraging progress in signing major blue chip customers and channel partners,
both during the year and since the year end, across all our geographic
territories, Europe, North America and Asia Pacific.
In the UK and Continental Europe, Vividas signed contracts, with Granada (part
of ITV) and Thomson Travel (part of TUI AG) and channel partner agreements with
Easynet (a Sky company) and both Arsenale23 and Vieweb in Italy. Easynet will
use Vividas technology to deliver video streaming internally across Sky's
operations as well as for external customers.
In the US, we signed a major contract with Fox Sports, part of News Corporation,
in March to stream 10 live football matches in the Copa Libertadores, the South
American equivalent of the Champions League. Since the year end, in August 2007,
we signed a three year contract with Fox Soccer Channel, which offers the most
comprehensive coverage of world-class football available in the US. The contract
is to stream, via www.foxsoccer.com, the Barclays English Premier League matches
in the USA and includes plans to add live streaming of other top-tier football
events including the FA Cup and UEFA Cup matches as well as select European
Championship Qualifiers. We also won work for Sony Pictures, and Evotum, our
newly launched subsidiary, is making good progress.
Asia Pacific represents a key region for Vividas and therefore we were delighted
to sign a channel partner contract with Magneato International Limited. It will
help to widen our market reach into China, Hong Kong, Japan and the Philippines.
Magneato is now running two 24 hours a day/7 days a week, live TV channels and
is screening live boxing with major success. Other reseller agreements we have
signed in the region include, Kojo, Natural Media Productions and Sardine Films.
Since the year end, we signed a contract with Australia's public broadcaster,
ABC Corporation, to stream live foreign correspondents online at the same time
as they are broadcast on screen. We have also commenced a large scale trial with
Thomson Financial.
The Board and Senior Management Team
The business is moving forward with a strengthened team. In August 2006, Paul
Neville, who was appointed Group Finance Director in July 2005, assumed the role
of Chief Executive. In January 2007, Greg Minns was appointed as Group Finance
Director, having worked with Vividas on an interim basis since October 2006. I
was appointed Non-Executive Chairman in March 2007 following the resignation of
Neil Speakman whose role had become non-executive in September 2006. On
completion of JHG's investment in the business, Javier Hidalgo Gutierrez and
Angelo Cortese became Non-Executive Directors in November 2006.
During the year, an Operating Board was established and in May 2007, a key
appointment was made with the hiring of Jeff Paine as Vice President of Product
Development. Jeff was one of Cisco's first 100 employees, working for Cisco for
16 years until 2005, latterly as Director of Corporate Marketing. In July 2007,
Dave Winter stepped down from the Board as Chief Operating and Technical Officer
but remains on the Group's Operating Board with responsibility for developing
the business in the important Asia Pacific region.
Thanks to Staff
I would like to take this opportunity on behalf of the Board to thank all the
Company's employees for their hard work and dedication in helping Vividas during
this period of change. I would particularly like to thank the R&D team in
Melbourne for their extraordinary innovation and pioneering spirit in the video
streaming marketplace.
Outlook
The new management team has refocused the business during the year, and aligned
Vividas's resources and R&D to meet both customer and market needs. These
changes have created a platform for the future growth of the business. The
release of new products, most significantly VivCast Live Professional, which
offers customers, we believe, the only truly scalable Internet TV solution,
further enhances the attraction of our product offering. The signing of
significant corporations, including Fox Soccer and Sony Pictures in the USA, is
testimony to the quality and strength of our product range. We are now making
progress in our key market sectors and the Board believes the Company is well
positioned to build on the foundations now in place.
The Board is pleased to announce today details of a placing of 10.0 million
ordinary shares at 25 pence per share to raise #2.5 million (before expenses).
The placing, which is subject to shareholder approval at an EGM to be convened
on 30 November 2007, will enable us to facilitate the Company's expansion on the
West Coast of USA and entry into the key market of Asia. The proceeds will also
provide general improvements in operations and support, especially for larger
contracts, together with investment in products and marketing.
BUSINESS AND FINANCIAL REVIEW
Market
The Company operates globally within three key regions: Europe, North America
and Asia Pacific. The principal markets addressed through the provision of
Vividas products and technologies in each of the regions are:
* Terrestrial and Sports Broadcasters;
* Content Owners, Distributors and Aggregators;
* Independent Film Makers and Content Owners;
* Event Agencies and Managers;
* Large Corporates; and
* Ad Agencies, TV Advertisers and Specialist Web Agencies.
Vividas operates in a rapidly emerging sector, with consumers spending
increasing time watching video over the Internet. Over one third of broadband
users are interested in watching TV programmes online and 30% are interested in
using the web to watch full length films, while 80% would accept adverts in
return for free online access.* Weekly usage of online video has also risen over
the last year and a majority of online Americans aged 12 to 64 are using online
video once a week or more.* Even more remarkable is the amount of online video
use among young Americans. Among young adult males aged 18 to 24, 35% report
using online video at least once a day and 80% report watching online video at
least once a week.
While commercial models are still being tested by broadcasters and content
owners, Vividas believes that the advertising PPV model works especially well
with video streaming because advertisers can tell how many times adverts are
viewed and whether content is forwarded to other users. Streaming also has the
added advantage of eradicating storage issues for end users and helps to
minimise bandwidth bottlenecks for Internet Service Providers (ISPs) struggling
to cope with large file downloads.
* source - Screen Digest 2007
Strategy
Overall
Following a comprehensive business and market review in December 2006, the
overall business strategy has been reset. We began implementing the necessary
changes to the business during the second half of the year.
We have re-focused the Company on the key products of VivStream Internet TV and
VivStream PPV and our key technology of VivCast Live Professional. We are also
concentrating on certain sectors which offer excellent growth opportunities and
where our products offer significant competitive advantage. VivStream Internet
TV has only recently been launched now that Vividas has partnered with a company
which can offer the full backend Content Management System (CMS) solution and
thereby enable us to provide the complete end to end solution required by
broadcaster and content owners.
The Company's resources have been realigned to ensure that direct sales as well
as indirect sales are focused on our key strategic aims. We have invested in
research and development as well as marketing and product support. In
particular, the research and development team based in Melbourne has been
realigned and increased from 10 to 16 employees, a Vice President of product
development has been recruited, and new marketing and PR agencies hired in North
America and Asia Pacific.
The Asia Pacific region offers us great potential and we have therefore
established an operation there. Dave Winter who was Group Chief Technical
Officer and Chief Executive Officer in Australia has become Chief Executive
Officer for Asia Pacific and we are recruiting a new channel manager.
Sales Channels
We continue to make progress with our indirect sales programme. This is based
around agreements with channel partners, a strategy which was initiated in March
2006. By developing channel partners, Vividas will be able to scale more
effectively and benefit from enhanced market credibility. We also gain access to
partners' established relationships and are able to offer a full integrated
solution, which larger organisations often require.
In the second half of 2007, we reviewed our channel partner network and
terminated underperforming resellers. We now have over 25 resellers selling
Vividas products and in order to support these relationships, we will be
committing more resources, including enhanced training and improved collateral.
Indirect sales have increased from 4% to 19% of total sales for the year ended
30 June 2007 and we are focused on increasing indirect revenues for next
financial year, with a three year plan targeting indirect sales accounting for
approximately half of total revenues.
Product Development
The second part of the strategy, announced at the end of last financial year,
was the sale of encoding suites to ensure that customers have the capability to
encode their own videos into Vividas format and deploy them over the Internet
quickly and effectively. Renamed VivCast Live Professional and VivCast
On-Demand, Vividas now has 44 encoders under licence with customers and
resellers. The first of these licences, which can be for hardware and/or
software, was sold at the end of last financial year and sales in the year to 30
June 2007 increased from #31,000 to #316,000, representing 26% of total sales.
Products and Technology
Vividas has continued to enhance its reputation as the leading provider of
streaming technology through the quality and simplicity of its products. The
Company continues to develop its range of products and services as well as
enhance the technology used in their delivery. The new strategy, implemented in
the second half of the year, will ensure that we are focused on selling our key
products and technology into the markets where we can gain traction quickly or
where it has a significant competitive advantage.
New products and technology have been released during the year and Vividas High
Definition and Digital Rights Management ("DRM") features are leaders in the
industry. Vividas High Definition streams 720p video at only 1.2 Mbps,
significantly lower than any competitors and the DRM has been accredited by the
Yankee Group, the independent technology research and consulting firm. Vividas
has also launched VivCast Live Professional, discussed below, which offers
superior quality and reach to broadcasters wishing to stream live events through
http streaming.
Products
The key VivStream products are Internet TV and PPV.
VivStream Internet TV
VivStream Internet TV is delivered using both live and 'on demand' technology
and was launched in July 2007. We believe it is the only truly scalable solution
for broadcasters and content owners. Traditional cable and satellite providers
will always be limited by finite channel capacity leaving a significant
percentage of the world's valuable video content unavailable. VivStream Internet
TV is a simple, one-stop solution that allows any content owner to quickly go
"live" on the Internet and allows viewers to be in full control, choosing to
watch scheduled channels or pick and choose from a range of 'on demand' content.
Full-screen, high definition content, combined with simple to use back-end
systems covering content management, scheduling, ad-serving, e-commerce and
metadata management, creates an enhanced viewing experience leading to extended
viewing times.
VivStream PPV
Vividas' award winning VivStream PPV delivers full-screen live or 'on demand'
content up to High Definition resolution straight to viewers' computers or
entertainment systems. VivStream PPV video streaming solution securely, reliably
and cost-effectively distributes Pay Per View content over the Internet. This
technology allows independent film makers to deliver their work to viewers
around the world without the complications and expense of dealing with
traditional media channels.
Other VivStream products are as follows:
VivStream Campaign
With an increasingly PC-based audience on hand, VivStream Campaign is the most
powerful solution to assist advertisers reach their global consumers whether at
home or behind corporate firewalls. VivStream Campaign is unaffected by
firewalls, plays on virtually any home or office PC and is delivered full-screen
over any Internet connection. VivStream Campaign is the next generation in high
impact advertising.
VivStream Corporate
When the timing and impact of communications are essential, VivStream Corporate
is an attractive solution. It is simple to implement, effective, reliable in
distribution and secure for the enterprise. VivStream Corporate is the
high-impact corporate communications tool businesses have been searching for. By
delivering broadcast quality, full-screen video to corporate desktops with
minimal impact on internal networks, VivStream Corporate offers a high impact
alternative to email, newsletters and resource-intensive audio/video
conferencing.
VivStream Event
VivStream Event is a breakthrough solution that can beam events to millions of
simultaneous Internet viewers in high quality, full-screen video. This frees
event producers and companies from venue restrictions, unavailability or limited
travel budgets by inviting audiences to take a seat and enjoy a full-screen
engaging view of the event at their PC, live or on-demand. The turn key solution
comes with end to end support and the capacity to reach viewers worldwide.
Technology
The key technologies that are used to deliver the VivStream products are:
VivCast Live Professional
VivCast Live Professional was recently launched in September 2007. We believe it
gives broadcasters the only truly scalable Internet TV solution available today.
VivCast Live Professional is a breakthrough solution that delivers full-screen
broadcast quality video to millions rather than thousands of simultaneous
viewers using less bandwidth than ever before. Furthermore, it is the only
streaming solution giving an uninterrupted viewing experience. Now even 24/7
live programming can be reliably delivered for broadcast quality, full-screen
viewing using http streaming. This enables Vividas to leverage the entire http
caching infrastructure of the Internet to distribute a live stream widely,
unlike other technologies which rely on User Datagram Protocol (UDP)/Real Time
Streaming Protocol (RTSP) multicast servers that provide only a small fraction
of the distribution and are positioned much further from the majority of users.
As a result, the quality of service of conventional live streaming breaks down
for many users as the number of users increases.
VivCast On-Demand
VivCast On-Demand is the core streaming technology. It offers full-screen
broadcast quality with no requirement to install software or plug-ins on the PC.
The technology is as simple as "click and play" with the video at the best
quality and plays on all PCs and Macs including Intel Macs. The technology
delivers streams through corporate firewalls. Features include full on-line
statistics reporting, high definition capabilities at only 1.2Mbps and Digital
Rights Management ("DRM") protection to the highest level. VivCast On-Demand can
also incorporate automatic detection of bandwidth ensuring that there is no
buffering of the video to the end user. The DRM has received full accreditation
from The Yankee Group in the USA.
Commercial Model
The Company derives its revenues from the following sources:
Licence fees for the provision of the encoders for VivCast Live Professional and
On-demand encoding. Licence fees cover the provision of both hardware and
software package or just software. Licence fees are generally annual contracts,
except for temporary, typically live, events, where fees are charged on a daily
basis. Short term hire of encoders to help convert back catalogues are
available. Further charges are made for High Definition encoding software and
DRM features.
Provision of bureau encoding services, where we encode video for either
streaming services or disc-based services. Fees are calculated based on the
duration of video to be encoded, volume of files to encode, and quality of
encoded file required.
Play-out of video encoded in Vividas format. This is a royalty fee for use of
the Vividas technology based on the total number of minutes viewed or data
delivered (Gb). These fees may or may not include the provision of storage and
delivery charges from appropriate Content Distribution Networks (CDN), dependent
on customer requirements.
Professional services fees, covering the provision of consulting services, web
page design and implementation, payment systems, and other services which are
generally outsourced and provided through third party organisations.
Business Sectors and Applications
2007 2006
#'000 #'000
----------------------
VivStream Corporate 175 221
VivStream PPV 57 14
VivStream Campaign 473 431
VivStream Event 33 -
VivCast On-Demand Live licenses 316 31
----------------------
Streaming Total 1,054 697
Discs 167 265
----------------------
Group Sales 1,221 962
----------------------
Streaming
Sales of streaming products increased by 51% from #697,000 to #1,054,000. As
discussed in the strategy section, Vividas is focusing on selling software
licences and on its key products, VivStream Internet TV and VivStream PPV.
VivStream Internet TV has only been launched in the new financial year and
revenues are expected to be generated in the second half. VivStream PPV was
launched fully in March following new functionality in the player and following
the great success of the film, The Secret. The PPV product, complete with High
Definition at only 1.2Mbps and leading DRM, delivered via VivCast Live
Professional or VivCast On-Demand, offers sports broadcasters and film content
owners the best way to monetise their content. In the adult sector, the newly
launched brand, Evotum, is offering the PPV product and encoder licences
enabling content owners to keep control over their content.
VivStream PPV
Sales increased from #14,000 to #57,000. VivStream PPV has been used for live
sporting events using VivCast Live Professional technology and independent films
using the VivCast On-Demand technology. Sales had been forecast to be much
higher following the signing of an exclusive licence with a reseller. However,
the reseller was terminated in August 2007 following disappointing sales
performance.
In September, Vividas received a huge endorsement of its technology with the
signing of a three year contract with Fox Soccer, part of News Corporation in
the US. Fox Soccer is now using the PPV technology to deliver secure content to
the USA only, streaming 'on-demand' English Premier League soccer, FA Cup and
UEFA Cup matches. Other live events streamed during the year were Americas Cup
for Sail.tv, live boxing for Manny "Pacman" Pacquiao and a Mixed Martial Arts
event for ProElite. Customers are able to purchase individual events or
subscriptions to view the games. The VivStream PPV product with Live
Professional enables broadcasters to reach millions of viewers without
significant investment instead of much smaller audiences which most of our
competitors can only deliver.
For Video On Demand (VOD) films, online viewing of The Secret has been a huge
success, following appearances on Larry King Live and Oprah in the USA and there
have now been over 250,000 views of the film online. Vividas now has in excess
of fifteen contracts signed with independent films companies. In Europe, annual
contracts have been signed with Moviepol and Handmade Films to make their
catalogues available to global audiences. Vividas will receive a share of
revenue either through data delivered or per view and therefore the revenue
potential from each film for us varies, dependent on viewing figures.
VivStream Internet TV
VivStream Internet TV was launched in July 2007 and therefore is expected to
contribute in the second half of the financial year to June 2008.
VivStream Corporate TV
The Corporate TV product offers a significant cost saving to companies wishing
to communicate within their businesses using video. Sales decreased in the year
from #221,000 to #175,000 primarily due to reduced pricing and a change in focus
in Europe and North America to concentrate resources on the sports broadcasters
and entertainment industries. Encouragingly, Asia Pacific, and primarily
Australia, had an excellent year with a 74% increase in sales. Additional
business has been won with Westpac Bank and Commonwealth Bank and new business
with Thiess, one of Australasia's largest construction, mining and services
companies. In Europe, work has continued with Thomson, Unilever and Zurich.
VivStream Campaign
VivStream Campaign sales increased by 10% to #473,000 although it is not seen as
a primary product for the future. This is reflected in the fact that it
represented 45% of streaming revenues in the year to 30 June 2007 compared to
62% in 2006. Sales primarily comprise film trailers for the large studios or
campaigns for marketing and advertising on companies' websites. Vividas can
offer full-screen high definition trailers at only 1.2Mbps which gives a much
greater viewing experience for the consumer. Statistics prove that consumers
will watch more of the video in Vividas format. The lower than expected sales
growth is due to focus on key strategic products for the future and a very
competitive environment for short form video where pricing has been reduced
significantly. Encouragingly an annual contract was signed with Sony Pictures in
April to promote all their films in Vividas format and successful campaigns have
been run for the Transformers movie, Sony Playstation 3 and Sony Blue Ray in
Europe and for Fosters beer campaigns in Australia.
VivStream Event
VivStream Event sales of #33,000 reflect the launch of this new product during
the year. Revenues are charged to businesses on a daily basis for a turn key
solution which enables companies to show their event live to millions of
simultaneous viewers. The initial take-up of this product has been from
corporates wishing to inform their worldwide employees of events, CEO addresses
or new products. In the USA, successful live events were streamed for
Telepresence and Sony and in Europe, for Nestle and Nissan (via their agency,
Ogilvy), and for the Internet Advertising Bureau.
VivCast Live and On-Demand licence fees
As mentioned in the commercial model section, Vividas receives licence fees
relating to both hardware and software for the sales on VivCast Live
Professional encoders and VivCast On-Demand encoders. The On-Demand encoders
were launched at the end of the previous financial year and the Live encoders
launched in the very latter part of the current financial year. Sales of the
licences, which enable customers to encode and deliver their own content
themselves increased from #31,000 to #316,000 and represent 30% of streaming
revenues. The number of encoders with customers or resellers is now 44.
Primarily fees are charged for annual licences but where there is a large back
catalogue to convert, encoders are available to be hired on a short term basis.
Since the software is fairly new, the lease of the right hardware has also been
encouraged in the short term but this will increasingly move towards a software
only model.
Discs
Sales of discs decreased by 37% to #167,000 and now represent only 14% of total
sales (2006: 28%). The volume of disc business continues to decline due to the
shift in emphasis towards faster growing streaming services. The majority of
disc business continues to be derived from Australia in the Asia Pacific region,
reflecting the historical position that Vividas has in this region in the
provision of such services. In Europe, disc sales related to the extremely
successful "Dora the Explorer" CD-ROMs which have now been distributed into
France, Belgium and Australia following their success in the UK.
KPIs
The primary Key Performance Indicators ("KPIs") of our operations are the number
of streaming customers acquired, data served per month, number of views of the
video, number of minutes viewed and the number of licences sold.
The Vividas statistics reporting capability also enables customers to access
further information such as geographic information, the time and day the video
was viewed, the length of video watched, repeat users, platform used (Mac or
Windows) and the bandwidth speed chosen. This information is invaluable for
marketing departments and gives real measurable data.
The number of streaming customers who have used our technology has increased
from 205 at June 2006 to 300 at June 2007 of which around 70% have been retained
since streaming launch in March 2005.
Currently, the data served per month and number of views depends upon the mix of
customers and jobs, with trailer promotions generating higher bandwidth and
views. The amount of data served also depends on whether Vividas hosts the
content or the customer does. Our VivStream Corporate product, for example, does
not impact the data delivered, as it is generally delivered via the internal
networks of our corporate customers. Data served increased from 43.7TB to
61.9TB, an increase of 42% primarily as a result of Sony trailers.
The number of views of streamed video increased by 30% to 9.8m and the number of
minutes of video viewed increased by 71% to 43.3m.
The number of licences sold increased to 44 at 30 June 2007.
Operational Review by Region
Asia Pacific
For the year ended 30 June 2007, the Asia Pacific region refers primarily to
Australia and Philippines. Total sales decreased by 6% to #495,000, with disc
sales falling by 49% to #105,000. Disc sales in Australia have decreased by a
total of #354,000 in the last two years (77%). However, streaming sales
increased by 23% to #390,000 during the year and this will be the main focus for
revenue generation going forward.
VivStream Corporate sales grew by 74% with increased business from Westpac and
Commonwealth banks and new business with Theiss. On-demand licence fees of
#46,000 were generated with the Company signing several resellers including
Kojo, Magneato in the Philippines, Natural Media Productions and Sardine Films.
Magneato is now operating two 24/7 live channels through Netvision and has shown
live boxing for the Pacman fights to an extremely enthusiastic audience.
Since the year end Australia's national broadcaster, ABC Corporation, has signed
a contract to stream their foreign correspondents live at the same time as they
are shown on mainstream TV and Thomson Financial, one of the world's leading
information companies, has also signed a large scale trial contract.
The other Asian markets will be the key to the success of the whole region.
Currently contracts are being discussed in Japan and Malaysia and a channel
manager for the region is being recruited.
Europe
Sales in Europe increased by over 51% to #473,000 with streaming revenues
increasing by 71% to #411,000. Streaming revenues for VivStream PPV and
VivStream Event were received for the first time and VivCast On-Demand licence
fees increased from #15,000 to #179,000.
In the UK, strategic partnership and reseller agreements have been signed with a
number of organisations, including Easynet (a Sky company), Granada (part of
ITV) and Thomson Travel (part of TUI AG), all of whom have bought VivCast
On-Demand encoders. A number of trials with ISPs in the UK have not materialised
into revenues due to significant consolidation in that market. Encouragingly,
sales in mainland Europe were 29% of the total with new resellers in Italy (with
Vieweb and Arsenale23), in Poland (with Netshape) and in Spain. Further
expansion of our reseller network is forecast for the current financial year.
For VivStream Corporate, business was secured with Zurich, Unilever, The
Register and Netjets, although prices were reduced during the year to remain
competitive. For VivStream Campaign, trailer campaigns were won with Paramount
for the Transformers movie and Agency Republic for Playstation 3 campaign. For
VivStream Event, live events were streamed via Ogilvy for Nestle and Nissan and
also for the Internet Advertising Bureau.
VivStream PPV revenue was received during the latter part of the financial year
with the live streaming of the Americas Cup through the JV, Dargo Limited, and
the signing of PPV contracts for Moviepol and the movie, Obsession concerning
Radical Islam's War against the West. Since the year end, a contract has been
signed with Handmade Films International to offer its back catalogue on line.
Disc sales of #62,000 primarily reflected the contract with GE Fabbri and John
Brown Publishing for work on the popular "Dora the Explorer" series, which
continues to roll out globally following success in the UK.
North America
North America increased sales by 104% to #252,000. All sales related to
streaming products, but revenues were disappointing. Sales for VivStream
Campaign increased by 81% to #139,000 primarily as a result of the work won for
Sony Pictures. During the second half of the financial year, the region focused
solely on developing the VivStream PPV product in the sports and entertainment
industries.
The region in August 2007 had great success with the signing of Fox Soccer on a
three year contract to stream Live and On-Demand English Premier League, FA Cup
and UEFA Cup matches. The contract was won against stiff competition and was as
a result of the work and relationships built up with the Fox team over the year,
including live trials of Euro Championship qualifiers and games from the Copa
Libertadores in South America. The contract gives a real endorsement to the
Vividas technology and helps establish VivCast Live Professional as, we believe,
the only truly scalable live solution using http streaming over TCP/IP instead
of traditional UDP streaming used by our competitors.
In the VOD market, 9 film contracts were signed during the period including Tony
Robbins, the leading American motivational speaker, Song of Songs, a PPV
relationship film, Disrobing an American Idol, an informed, balanced review of
the $57 billion a year adult industry and Trombone Player Wanted, by Marcus
Buckingham.
Since the year end , we have signed a further eight contracts with studios, the
results of which will only come through in the second half of 2008 financial
year as back catalogues of content are converted into Vividas format and
available to purchase on line.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 30 June
2007 2006
As restated*
Notes #'000 #'000
-----------------------------
Turnover 2 1,221 962
Cost of sales (528) (479)
-----------------------------
Gross profit 693 483
Operating expenses
Selling and marketing expenses (1,180) (1,012)
Administrative expenses (2,775) (2,499)
Other operating income 173 86
-----------------------------
Operating loss before amortisation (2,922) (2,782)
Goodwill amortisation (140) (140)
Intangible amortisation (27) (20)
-----------------------------
Operating loss before share of operating loss
of associate (3,089) (2,942)
Share of operating loss of associate (110) -
-----------------------------
Operating loss (3,199) (2,942)
Net finance income 90 110
-----------------------------
Loss on ordinary activities before taxation (3,109) (2,832)
Taxation - -
-----------------------------
Retained loss for the financial year (3,109) (2,832)
=============================
Basic and diluted loss per share of 1 pence 4 (10.85p) (12.56p)
=============================
All the activities of the Group are classified as continuing.
*The above figures have been restated following the adoption of FRS 20
CONSOLIDATED BALANCE SHEET
as at 30 June
2007 2006
*As restated
#'000 #'000
-------------------------
Fixed assets
Intangible assets 947 1,052
Tangible assets 70 94
-------------------------
1,017 1,146
-------------------------
Current assets
Debtors 437 414
Cash at bank and in hand 1,877 1,201
-------------------------
2,314 1,615
-------------------------
Creditors - Amounts falling due within one year
Finance debt - (3)
Other creditors (1,074) (1,084)
-------------------------
(1,074) (1,087)
-------------------------
Net current assets 1,240 528
-------------------------
Total assets less current liabilities 2,257 1,674
Creditors - Amounts falling due after more than
one year
Finance debt - (10)
-------------------------
Net assets 2,257 1,664
=========================
Capital and reserves
Called up share capital 323 229
Share premium account 10,008 6,477
Merger reserve 921 921
Share based payment reserve 77 74
Profit and loss account (9,072) (6,037)
-------------------------
Shareholders' funds 2,257 1,664
=========================
* The above figures have been restated following the adoption of FRS 20
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 June
2007 2006
#'000 #'000 #'000 #'000
-----------------------------------------
Net cash flow from operating activities (2,908) (2,727)
(note 5)
Returns on investments and servicing of
finance
Net interest received 92 112
Interest element of finance lease payments (2) (2)
------- -------
Net cash inflow from returns on investments
and servicing of finance 90 110
Capital expenditure and investments
Purchase of tangible fixed assets (65) (98)
Disposal of tangible fixed assets 4 -
Purchase of intangible fixed assets (57) (31)
------- -------
Net cash outflow from capital expenditure
and investments (118) (129)
Tax paid - (1)
------- -------
Cash outflow before financing (2,936) (2,747)
Financing (note 6) 3,612 182
------- -------
Increase / (decrease) in cash (note 7) 676 (2,565)
======= =======
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 30 June
2007 2006
#'000 #'000
-----------------------------
Loss for the financial year (3,109) (2,832)
Currency translation differences on foreign
currency net investments (13) (20)
-----------------------------
Total recognised gains and losses for the year (3,122) (2,852)
=============================
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the year ended 30 June
2007 2006
#'000 #'000
-----------------------------
Loss for the financial year (3,109) (2,832)
Currency translation differences on foreign
currency net investments (13) (20)
Share based payments 90 61
New share capital issued 3,625 186
Share issue expenses recovered - 80
-----------------------------
Net increase/(decrease) in shareholders' funds -
as restated 593 (2,525)
Opening shareholders' funds 1,664 4,189
-----------------------------
Closing shareholders' funds 2,257 1,664
=============================
NOTES TO THE PRELIMINARY ANNOUNCEMENT
for the year ended 30 June 2007
1 ACCOUNTING POLICIES AND BASIS OF PREPARATION
The financial statements are prepared in accordance with applicable accounting
standards, all of which have been applied consistently throughout the year and
the preceding year.
The Company has secured additional equity financing of #2.5m (gross) from a
placing of new ordinary shares in order to secure the platform required to
deliver and sustain the Board's growth plans. The success of the finance raising
is subject to approval from shareholders at the Extraordinary General Meeting to
be held on 30 November 2007.
The Directors consider that in preparing the financial statements they have
taken into account all information that could reasonably be expected to be
available. On this basis, they consider that it is appropriate to prepare the
financial statements on the going concern basis. This assumes that the finance
raised through the placing of new shares and plans to raise trade capital will
finance the business for the foreseeable future. The financial statements do not
include any adjustments that would result if the finance raising exercise is not
successful.
The financial statements have been prepared on the basis of the accounting
policies set out in the Group's accounts for the year ended 30 June 2007.
2 ANALYSIS OF RESULTS
The analysis of turnover by geographical origin is as follows:
2007 2006
#'000 #'000
------------------------------------
United Kingdom 473 314
Australia 495 524
North America 253 124
------------------------------------
1,221 962
====================================
The analysis of turnover by geographical destination is as follows:
2007 2006
#'000 #'000
------------------------------------
United Kingdom 336 241
Other EU 137 73
Australia 445 524
North America 253 124
Asia 33 -
Other 17 -
------------------------------------
1,221 962
====================================
The analysis of turnover by revenue stream is as follows:
2007 2006
#'000 #'000
------------------------------------
VivStream Corporate 175 221
VivStream PPV 57 14
VivStream Campaign 473 431
VivStream Event 33 -
VivCast On-Demand (Licence income) 307 31
VivCast Live (Licence income) 9 -
------------------------------------
Streaming Total 1,054 697
Discs 167 265
------------------------------------
1,221 962
====================================
In the opinion of the Directors, further segmental information would be
seriously prejudicial to the interests of the Group.
3 DIVIDENDS
No dividends have been paid or declared (2006: nil).
4 LOSS PER ORDINARY SHARE
Basic loss per ordinary share
Basic loss per share is calculated on the basis of the weighted average of
28,660,919 (2006: 22,540,907) ordinary shares in issue and the retained loss for
the financial year of #3,109,000 (2006 As restated: #2,832,000).
Weighted average number of shares
The prior year weighted average number of shares in issue has been calculated as
follows:
Issued Weighted
No. No.
------------------------------
Shares in issue 1 July 2005 22,126,681 22,126,681
Issue of shares 8 November 2005 350,000 224,384
Issue of shares 21 November 2005 247,500 149,856
Issue of shares 22 February 2006 18,868 6,616
Issue of shares 7 April 2006 20,000 4,603
Issue of shares 21 April 2006 150,000 28,767
------------------------------
Year ended 30 June 2006 weighted average number of
ordinary shares in issue 22,913,049 22,540,907
------------------------------
The current period weighted average number of ordinary shares in issue is
calculated as follows:
Issued Weighted
No. No.
------------------------------
Shares in issue 1 July 2006 22,913,049 22,913,049
Issue of shares 14 August 2006 5,000 4,384
Issue of shares 14 September 2006 1,127,034 892,364
Issue of shares 25 September 2006 84,268 64,182
Issue of shares 10 November 2006 70,000 44,493
Issue of shares 24 November 2006 7,650,106 4,569,105
Issue of shares 29 December 2006 50,000 25,069
Issue of shares 18 January 2007 190,000 84,849
Issue of shares 22 January 2007 25,000 10,890
Issue of shares 5 February 2007 50,000 19,863
Issue of shares 26 March 2007 100,000 26,301
Issue of shares 29 March 2007 25,000 6,370
------------------------------
Year ended 30 June 2007 weighted average number of
ordinary shares in issue 32,289,457 28,660,919
==============================
2007 2006
------------------------------
Loss per share (pence) (10.85p) (12.56p)
==============================
Adjusted loss per ordinary share
Adjusted loss per share is shown by reference to loss before goodwill and
intangible amortisation. The Directors consider that this gives a clearer
indication of the underlying performance of the Group.
2007 2006
#'000 #'000
--------------------------------
Loss for the financial year (3,109) (2,832)
FRS 20 share based payments adjustment 90 61
Share of associate loss 110 -
Goodwill amortisation 140 140
Intangible amortisation 27 20
--------------------------------
Loss before goodwill and intangible amortisation (2,742) (2,611)
--------------------------------
Adjusted loss per share (pence) (9.57p) (11.58p)
================================
5 RECONCILIATION OF OPERATING LOSS TO NET CASH FLOW FROM OPERATING ACTIVITIES
2007 2006
#'000 #'000
------------------------------
Operating loss (3,199) (2,942)
Depreciation 86 53
Goodwill amortisation 140 140
Amortisation of intangible fixed assets 27 20
Foreign exchange movement (20) (13)
Share based payments 90 61
Increase in debtors (23) (81)
(Decrease)/Increase in creditors (9) 35
------------------------------
Net cash flow from operating activities (2,908) (2,727)
==============================
6 ANALYSIS OF CASH FLOW FROM FINANCING
2007 2006
#'000 #'000
-------------------------------
Capital element of finance lease rental
payments (13) (4)
Cash outflow from decrease in debt (13) (4)
Cash inflow from issue of new shares 3,675 186
Cash outflow from expenses of share issues (50) -
-------------------------------
Net cash inflow from financing activities 3,612 182
===============================
7 RECONCILIATION OF NET CASH FLOW TO MOVEMENTS IN NET CASH
2007 2006
#'000 #'000
-------------------------------
Increase/(decrease)in cash in the year 676 (2,565)
Decrease in finance leases 13 4
-------------------------------
Increase/(decrease) in net cash in the year 689 (2,561)
Opening net cash 1,188 3,749
-------------------------------
Closing net cash 1,877 1,188
===============================
8 ANALYSIS OF NET CASH
At 1 July Cash At 30 June
2006 flow 2007
#'000 #'000 #'000
----------------------------------
Cash at bank and in hand 1,201 676 1,877
Finance leases (13) 13 -
----------------------------------
Net cash 1,188 689 1,877
==================================
9 EXCHANGE RATES
The principal exchange rates used in the preparation of the financial statements
are as follows:
2007 2006 2007 2006
Average Average Closing Closing
----------------------------------------
Aus $ 2.459 2.383 2.372 2.490
US $ 1.944 1.781 2.006 1.850
----------------------------------------
10 FINANCIAL INFORMATION
The financial information set out in this preliminary announcement, which has
been extracted from the audited accounts, does not constitute the Company's
statutory accounts for the year ended 30 June 2007 or 2006. The financial
information for the year ended 30 June 2006 is derived from the statutory
accounts for that year, which have been delivered to the Registrar of Companies.
The statutory accounts for the year ended 30 June 2007, which were approved by
the Directors on 7 November 2007, will be delivered to the Registrar of
Companies following the Company's Annual General Meeting. The auditors reported
on the accounts for the years ended 30 June 2006 and 2007; their report was
unqualified and did not contain a statement under s237 (2) or (3) Companies Act
1985. A copy of the Annual Report and Accounts will be sent to all shareholders
shortly and will be available from the Company at 25 Floral Street, London, WC2E
9DS.
The Company's Annual General Meeting will be held at 10 am on 21 December 2007
at Hoodless Brennan, 40 Marsh Wall, Docklands, London E14 9TP. The Notice of
Meeting will be set out in the Annual Report.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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