IndigoVision Group plc

Presentation of 2002

1st Half Results

Oliver Vellacott – CEO

Alan Bennie – CFO

IndigoVision proprietary data p2 IV 1H02 results - rev 1.4 – 14 March, 2002

First half progress

• Turnover up 50% on 1H01 to £1.1m

• 1 new licensee and 3 repeat licensees

• Gross profit up from 57% to 67%

• Monthly cash burn reduced from £800k to £700k

• Cash balances of £27.8m

• Broadened channel reach outside CCTV

IndigoVision proprietary data p3 IV 1H02 results - rev 1.4 – 14 March, 2002

H1 operational highlights

• New licensee: Spawar

• 3 repeat licensees: Baxall, Cirrus and Ultrak

• Licensee unit shipments overtook our own in Q2

• Strategic alliance with StorageTek

• 3 major product launches

• Additional airport implementation: Schipol

IndigoVision proprietary data p4 IV 1H02 results - rev 1.4 – 14 March, 2002

Consolidated Profit & Loss Account

£000

6 months to 31 January

2002

6 months to 31 January

2001Year to 31 July 2001

Turnover 1,063 692 1,809

Cost of sales 352 340 779

Gross profit 711 352 1,030

Research & development 1,561 892 2,007Other overhead 4,079 3,042 6,804

Operating loss (4,929) (3,582) (7,781)

Interest receivable 630 1,044 1,922Interest payable (6) (7) (14)

Loss before taxation (4,305) (2,545) (5,873)

Loss per share (6.29p) (3.71p) (8.57p)

IndigoVision proprietary data p5 IV 1H02 results - rev 1.4 – 14 March, 2002

Revenue (£000)

0

100

200

300

400

500

600

700

800

Q101 Q201 Q301 Q401 Q102 Q202

In Q2 02:

• Revenue doubled on Q1

• Strong contribution across all business areas

- £0.25m in license revenues

- Highest platform revenues

- Highest royalty revenues

IndigoVision proprietary data p6 IV 1H02 results - rev 1.4 – 14 March, 2002

Revenue (£000)

1063

692

0

200

400

600

800

1000

1200

1H 01 1H 02

In the half year: • Record half year revenue

• 54% increase over 1H 01

IndigoVision proprietary data p7 IV 1H02 results - rev 1.4 – 14 March, 2002

Revenue by geography (£000)

230

83

• North America revenue increased by 127% over 1H 01

- strong growth in Q2

• Tokyo office staffed from Q1 02- Asia revenue now includes significant platform

sales

IndigoVision proprietary data p8 IV 1H02 results - rev 1.4 – 14 March, 2002

Revenue by source£000

0

200

400

600

800

1000

1200

1H 2001 1H 2002

Platform Development Systems

Dev Consultancy License

Maintenance Royalty

• 1H 02 Licence and related revenues = £0.6M+ 100% on 1H 01

• 1H 02 Licence/platform revenue split = 60/40 (1H 01 = 46/54)

IndigoVision proprietary data p9 IV 1H02 results - rev 1.4 – 14 March, 2002

Platform shipments + licensed product

0

200

400

600

800

1000

1200

1400

Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02

• Baxall and Ultrak now generating royalties

• Panasonic royalties in 2nd half 2002

IndigoVision proprietary data p10 IV 1H02 results - rev 1.4 – 14 March, 2002

Consolidated Profit & Loss Account

£000

6 months to 31 January

2002

6 months to 31 January

2001Year to 31 July 2001

Turnover 1,063 692 1,809

Cost of sales 352 340 779

Gross profit 711 352 1,030

Research & development 1,561 892 2,007Other overhead 4,079 3,042 6,804

Operating loss (4,929) (3,582) (7,781)

Interest receivable 630 1,044 1,922Interest payable (6) (7) (14)

Loss before taxation (4,305) (2,545) (5,873)

Loss per share (6.29p) (3.71p) (8.57p)

IndigoVision proprietary data p11 IV 1H02 results - rev 1.4 – 14 March, 2002

Gross profit

Gross profit percentage up a further 10 points to 67%

Improvement generated from:

- further cost reduction in product designs

- proportionate growth in licence and related revenue

IndigoVision proprietary data p12 IV 1H02 results - rev 1.4 – 14 March, 2002

Consolidated Profit & Loss Account

£000

6 months to 31 January

2002

6 months to 31 January

2001Year to 31 July 2001

Turnover 1,063 692 1,809

Cost of sales 352 340 779

Gross profit 711 352 1,030

Research & development 1,561 892 2,007Other overhead 4,079 3,042 6,804

Operating loss (4,929) (3,582) (7,781)

Interest receivable 630 1,044 1,922Interest payable (6) (7) (14)

Loss before taxation (4,305) (2,545) (5,873)

Loss per share (6.29p) (3.71p) (8.57p)

IndigoVision proprietary data p13 IV 1H02 results - rev 1.4 – 14 March, 2002

Research & development

R&D spend £1.6M, up 75% on 1H 01

Headcount now 61

Further additions subject to roadmap justification

IndigoVision proprietary data p14 IV 1H02 results - rev 1.4 – 14 March, 2002

Consolidated Profit & Loss Account

£000

6 months to 31 January

2002

6 months to 31 January

2001Year to 31 July 2001

Turnover 1,063 692 1,809

Cost of sales 352 340 779

Gross profit 711 352 1,030

Research & development 1,561 892 2,007Other overhead 4,079 3,042 6,804

Operating loss (4,929) (3,582) (7,781)

Interest receivable 630 1,044 1,922Interest payable (6) (7) (14)

Loss before taxation (4,305) (2,545) (5,873)

Loss per share (6.29p) (3.71p) (8.57p)

IndigoVision proprietary data p15 IV 1H02 results - rev 1.4 – 14 March, 2002

Other overhead

Spend £4.1M, up 37% on 1H 01

Sales & marketing & field engineers headcount now 36

- additions in US and EU

- Tokyo additions planned in Q3

Investment in CRM system

- essential to manage partner programme

IndigoVision proprietary data p16 IV 1H02 results - rev 1.4 – 14 March, 2002

Employees

0

20

40

60

80

100

120

Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02

UK- based Overseas - based Contractors

• Headcount up from 98 to 114

• Contract engineering staff reduced

IndigoVision proprietary data p17 IV 1H02 results - rev 1.4 – 14 March, 2002

Consolidated Balance SheetAs at 31 January As at 31 January

2002 2001£000 £000 £000 £000

Fixed assetsTangible fixed assets 289 163Investments - 30

289 193Current assets:Stock 565 267Debtors 1,331 788Cash 27,833 35,734

29,729 36,789Creditors: amounts falling due within one year (1,650) (1,405)

Net current assets 28,079 35,384

Total assets less current liabilities 28,368 35,577

Creditors: amounts falling due after more than one year (83) (128)

Deferred income (72) (12)Provisions for liabilities and charges (78) (46)

Net assets 28,135 35,391

Capital and reservesCalled up share capital 6,849 6,849Share premium account 28,849 28,849Other reserve 8,563 8,563Profit & loss account (16,126) (8,870)

Shareholders' funds 28,135 35,391

IndigoVision proprietary data p18 IV 1H02 results - rev 1.4 – 14 March, 2002

Current assets

Stocks up to £0.6M

=> 3.3 months’ forward demand

Debtors up to £1.3M

=> Trade debtors 88 days

Cash £27.8M

Cash burn reduced to £0.7M per month

IndigoVision proprietary data p19 IV 1H02 results - rev 1.4 – 14 March, 2002

Live Networked Video (LNV) solutions

CA

ME

RA

IP N

ET

WO

RK

ST

OR

AG

E

IP N

ET

WO

RK

AP

PL

ICA

TIO

N

IndigoVision proprietary data p20 IV 1H02 results - rev 1.4 – 14 March, 2002

Our marketing strategy

PUSH

PULL

CHANNEL

TECHNOLOGY

IndigoVision proprietary data p21 IV 1H02 results - rev 1.4 – 14 March, 2002

Push design licenses at OEMs

NVR-SDK VBDKIP CAMERA

MAINSTREAM

Strategy is to win CCTV OEMs first

Use Mainstream to win camera OEMs

PUSH

IndigoVision proprietary data p22 IV 1H02 results - rev 1.4 – 14 March, 2002

Push enabling products at channel

NVRCONTROL CENTRE

IP CAMERAVB6000

PUSH

Strategy is to win channel adoption

Will move to pure OEM licensing ultimately

IndigoVision proprietary data p23 IV 1H02 results - rev 1.4 – 14 March, 2002

Releases: Digital IP cameraavailable as product & design license

IndigoVision proprietary data p24 IV 1H02 results - rev 1.4 – 14 March, 2002

Releases: Web serverLive Networked Video on web pages

IndigoVision proprietary data p25 IV 1H02 results - rev 1.4 – 14 March, 2002

Releases: Control Centreavailable as product & design license

IndigoVision proprietary data p26 IV 1H02 results - rev 1.4 – 14 March, 2002

Enable channel pull

CCTV CHANNEL

NETWORK CHANNEL

STORAGE CHANNEL

IT APPLICATION CHANNEL

PULL

Partner Programme provides training, consultancy, major-bid support,connection to OEM licensees, technical support

IndigoVision proprietary data p27 IV 1H02 results - rev 1.4 – 14 March, 2002

We need to work across whole marketto establish it as a standard

CAMERA RECORDER APPLICATION

CHIP

CCTV CHANNEL

NETWORK CHANNEL

STORAGE CHANNEL

IT APPLICATION CHANNEL

IndigoVision proprietary data p28 IV 1H02 results - rev 1.4 – 14 March, 2002

Hence…key deals this halfCIRRUS

x11 PARTNERS

CCTV CHANNEL

NETWORK CHANNEL

STORAGE CHANNEL

IT APPLICATION CHANNEL

MILESTONE

STORAGETEK

SPAWAR

IndigoVision proprietary data p29 IV 1H02 results - rev 1.4 – 14 March, 2002

Key deals: Spawar

• US Space & Warfare Systems Command agency

• IndigoVision video in Spawar robots at Ground Zero

• License to manufacture IndigoVision-powered cameras

• Spawar will mandate relicense into defence applications

• Key supplier to US DoD

CCTV CHANNEL

NETWORK CHANNEL

STORAGE CHANNEL

IT APPLICATION

CHANNEL

MILESTONESPAWAR

CIRRUS

IndigoVision proprietary data p30 IV 1H02 results - rev 1.4 – 14 March, 2002

Key deals: Cirrus Logic

• Agreement to design ASIC based on Mainstream

– Further license fee

– Royalty per chip

– July 2002 tape-out

• Targeting networked video market, US & Asia

• Other consumer video applications

CCTV CHANNEL

NETWORK CHANNEL

STORAGE CHANNEL

IT APPLICATION

CHANNEL

MILESTONESPAWAR

CIRRUS

IndigoVision proprietary data p31 IV 1H02 results - rev 1.4 – 14 March, 2002

Key deals: Milestone

• Danish-based developer of Windows apps

• World market leader in security & access control apps

• Milestone channel for IndigoVision-enabled products

• Milestone adds support for IndigoVision to its apps

• IndigoVision channel gets Milestone apps

CCTV CHANNEL

NETWORK CHANNEL

STORAGE CHANNEL

IT APPLICATION

CHANNEL

MILESTONESPAWAR

CIRRUS

IndigoVision proprietary data p32 IV 1H02 results - rev 1.4 – 14 March, 2002

11 CCTV joiners to partner programme

Channel partners Geography

Sensormatic (Pty) Limited

Richardson Electronics Limited

SmartTelecom Comunicacion SL

KM Group, Inc

Revenga Ingenieros SA

Intruder International plc

System Automation and Controls srl

Computer Network Ltd

e-Vision Technologies Inc

Milestone a/s

C-Ways Limited

South Africa

EU

Spain

Canada

Spain

UK

Italy

UK

US

Scandinavia

UK

CCTV CHANNEL

NETWORK CHANNEL

STORAGE CHANNEL

IT APPLICATION

CHANNEL

IndigoVision proprietary data p33 IV 1H02 results - rev 1.4 – 14 March, 2002

StorageTek strategic alliance

4 StorageTek VARs promoting IndigoVision products

15/20 sales offices per VAR across North America

160 sales personnel

Worldwide, but in North America alone:

CCTV CHANNEL

NETWORK CHANNELSTORAGE

CHANNEL

IT APPLICATION

CHANNEL

IndigoVision proprietary data p34 IV 1H02 results - rev 1.4 – 14 March, 2002

Addressable market

CCTV All apps

Applications Analog today

Digital today

Digital future

Digital future

Cameras p.a. 5m 50k 50m 500m

Revenue per camera

n/a $100 $25 $12.5

Addressable market

n/a $5m $1.25b $6.25b

IndigoVision proprietary data p35 IV 1H02 results - rev 1.4 – 14 March, 2002

Outlook

• License funnel strong

– Get CCTV OEMs first

– Get camera OEMs using Mainstream

• Channel pull increasing

– Control Centre complete application for security

– Channel can deploy without waiting for 3rd party apps

– Access non-CCTV channels thru alliances

IndigoVision proprietary data p36 IV 1H02 results - rev 1.4 – 14 March, 2002

Summary

• New & repeat licensing improving

• Significant gross margin improvement

• Technology lead extended by Mainstream

• Channel reach extending beyond security

• Strong balance sheet

• Careful cost management

• Positive outlook