31st Mar 2005 08:00
Sigma Technology Group PLC31 March 2005 Immediate Release 31st March 2005 SIGMA TECHNOLOGY GROUP PLC Vividas Group plc successful £5.5 million placing and admission to AIM Sigma Technology Group plc (AIM: SGM), the technology venture capital andadvisory specialist, is pleased to announce that investee company, Vividas Groupplc ("Vividas" or "the Company"), a developer and provider of video technologyand products, has today been admitted to trading on AIM. The Company has raised £5.5 million (before expenses) through a successfulplacing with institutions, at a placing price of 84p per ordinary share.Vividas' capitalisation on admission is approximately £18.6 million. Sigma Technology Venture Fund ("STVF"), managed by Sigma Technology ManagementLtd ("STM"), originally invested £966,000 in the Company in August 2003. Atflotation, STVF owns 3,353,074 shares corresponding to a 15% holding in thecompany, and 583,334 warrants to subscribe at the flotation price, valid for 2years. In addition, STM directly owns options over 350,000 shares at 23p each. Commenting on today's announcement, Neil Crabb, Joint Managing Director of Sigmaand non-executive board member of Vividas said: "The flotation of Vividasextends Sigma's recent successful track record of flotations from its portfolioof investee and advisory clients. During the last nine months three companieshave joined AIM, MicroEmissive Displays; Adventis; and today Vividas, raising atotal of £24.8 million. MicroEmissive Displays and Adventis continue to tradeat a premium to their issue prices. We look forward to their continuing successas public companies." For more information please contact: Sigma Technology Group plc www.sigmatech.co.ukNeil Crabb, Joint Managing Director 020 7653 3200 The press release issued today by Vividas follows below. 31 March 2005 VIVIDAS GROUP plc FUND RAISING AND FLOTATION Vividas Group plc ("Vividas" or the "Company"), the developer and provider ofvideo technology and products, published its admission document on 30 March 2005in relation to its flotation on AIM. Teather & Greenwood, Nominated Adviser andBroker to Vividas, has successfully raised £5.5m (before expenses) by way of aninstitutional placing. Dealings in Vividas shares commence today. PLACING STATISTICS • The Placing comprises 6,547,619 Ordinary Shares issued at 84p per share raising £5.5 million before expenses and approximately £4.5 million, net of expenses • The shares issued pursuant to the placing represent approximately 30 per cent. of the enlarged issued share capital following admission • Following admission Vividas will have 22,126,681 Ordinary Shares in issue, valuing the Company at approximately £18.6 million at the placing price of 84p per share • The funds raised will be used for increased investment in international sales and marketing, continued research and development, and working capital • The Company's trading symbol is "VDS" VIVIDAS OVERVIEW Vividas Group plc is a developer and provider of video technology and productswhich enable straightforward playback on personal computers of full screen, highquality video via discs or over networks, including the Internet, normallywithout requiring software installation. Vividas proprietary technology overcomes the disadvantages of competing CD andstreaming market solutions. These competing technologies typically offer onlypartial screen, or poor quality full screen, viewing and generally require theuser either to have or to install specialist player software. The Group's technology can be used across a number of industry verticals in twomain areas, namely marketing communications and media distribution, where videoplays an important part of the content. Vividas currently derives revenue from: Discs: • Disc replication - sale of discs replicated by third party suppliers • Licensing - agreements entered into on a royalty per disc basis Streaming: • Fees for conversion of video to Vividas format (per minute) • Charging on end usage, typically on a per-view basis • Virtual Content Delivery Network (hosting fees through partners) Existing users of Vividas discs include Hasbro Inc., Nissan Australia, Honda,the Australian Government and Ford, all of which are repeat users. Since the launch of the first commercial version of its streaming technology inOctober 2004, the Group has secured 30 users including Nissan Australia, Honda,Rip Curl, Spin Communications on behalf of Buena Vista International and a majorAustralian bank. Commenting on the successful fund raising and flotation, Neil Speakman,Chairman, said: "We are delighted with the success of the placing. The enthusiasm shown by ourinvestors reflects well on both the quality of our technology and the prospectsfor the business. The fund-raising will take Vividas into a new and excitingphase of development as we build the business across Australia, North Americaand the UK." The Company has also released separately its interim results for the 6 monthsended 31 December 2004. For further information please contact: Vividas Group plc 020 7653 3240 Neil Speakman, ChairmanGeoff Hamilton-Jones, Chief ExecutiveDave Winter, Chief Operating Officer and Chief Technical Officer Teather & Greenwood 020 7426 9000 Jeff KeatingJon Drage Gavin Anderson & Company 020 7554 1400 Deborah WalterSimon Maule BACKGROUND INFORMATION ON VIVIDAS THE BUSINESS Vividas Group plc is a developer and provider of video technology and productswhich enable straightforward playback on personal computers of full screen, highquality video via discs or over networks, including the Internet, normallywithout requiring software installation. Vividas proprietary technology overcomes the disadvantages in many applicationsof competing CD and streaming market solutions of which the Directors are awarewhich typically only offer partial screen, or poor quality full screen, viewingand which generally require the user either to have or to install specialistplayer software. Currently the majority of video played on personal computers isvia installed media players, primarily RealPlayerTM, Windows Media PlayerTM,QuickTimeTM and Flash PlayerTM. In the personal computer environment, Vividas enabled CDs have advantages overDVD video such as lower cost, better navigation, better on-line connectivity,better protection of content and better user tracking. For these reasons,Vividas discs have been widely used for direct marketing, sales promotion, datacapture and knowledge and information communication. Existing users of thisproduct include Hasbro Inc., Nissan Australia, Honda, the Australian Governmentand Ford, all of which are repeat users. Vividas is also able to apply itstechnology to DVDs allowing on-line connectivity and better navigation when usedon a personal computer. To date the Group has sold or licensed in excess of 3million CDs. Vividas streaming technology similarly enables full screen, high quality videoto be viewed, normally without requiring software installation, and also enablesuser tracking and enhanced usability. In addition, this technology can alreadypenetrate many corporate firewalls and it is currently being enhanced with aview to increasing the level of penetration. Other key features of the Vividasstreaming technology include synchronisation of audio and video and theefficient use of bandwidth allowing the Group to deliver video to low bandwidthusers. Since the launch of the first commercial version of its streamingtechnology in October 2004, the Group has secured 30 users including NissanAustralia, Honda, Rip Curl, Spin Communications on behalf of Buena VistaInternational and a major Australian bank. HISTORY The Group commenced operations in Australia in 2000 as eGenie Australia PtyLimited to develop and launch the Group's technology. Having commercialised itscore technology through the CD business, the Company was incorporated in May2003 principally to facilitate the geographical expansion of the business. InJuly 2003 the Company acquired the entire issued share capital of eGenieAustralia Pty Limited. In 2003 the Company established wholly owned subsidiariesin the UK and in the USA to further its international expansion. THE GROUP'S TECHNOLOGY The core Vividas technology comprises a proprietary media player incorporatingthird party video and audio decompression software. The Vividas player issignificantly smaller than conventional media players and can be automaticallylaunched in relation to discs and can generally be automatically downloaded inrelation to streaming. The compression and de-compression software used by theGroup is licensed from third party providers. The Group has applied for 3patents covering certain aspects of the Group's technology. Disc Technology The Group's technology can be delivered on standard CDs and DVDs and runs onmost PCs and MACs. The Vividas player on the disc can run automatically and isnot dependant on any third party software other than the personal computer'sstandard operating system. In a corporate environment end users are typicallyprevented from installing applications due to the standard security features oftheir systems. The Group's disc technology neither requires the installation ofany software nor modifies the computer's registry and therefore playback is notprevented by these security features. Streaming Technology Streaming video is a sequence of sound and/or video played in real time as it isdownloaded over the Internet as opposed to storing it in a local file first. With streaming video or streaming media, an Internet user does not have to waitto download a large file before seeing the video or hearing the sound. Instead,the media is sent in a continuous stream and is played as it arrives. The userneeds a player, which is a program that decompresses and sends video data to thedisplay and audio data to speakers. Historically, a player has been either anintegral part of a browser or downloaded and is generally installed from thesoftware maker's web site. However, using Vividas technology, a user is notgenerally required to install a player. The Group launched the first commercial version of its streaming technology inOctober 2004. The Vividas streaming technology uses core elements of the Group'sdisc technology which has been further developed to run on a Java RuntimeEnvironmentTM ("Java") on the user's computer to facilitate playback through abrowser. The Vividas streaming technology uses software embedded in thecustomer's web page to detect the software configuration of the user's computerand communicates these back to the server which transmits the appropriateVividas media player. As the data transfer is small, being currently less than500 Kilobytes, there is minimal delay between the user click to initiateplayback and playback commencing. The current commercial version of the Vividas streaming player generallyrequires the presence of Java on the user's computer. The Directors believe thatJava is installed on most personal computers in Europe. Java is installed onapproximately 90 per cent. of personal computers in the USA. If a computer userwithout Java installed attempts to playback using the Vividas streamingtechnology, the user will normally be prompted to install a Vividas componentthat facilitates playback, subject to the computer having an adequatespecification. In certain cases where users are on dial up (56 kbps) Internet connections andthe source video is of insufficient quality, it may be preferable to use theVividas streaming technology to deliver partial screen video. As with theGroup's disc technology, end users in a corporate environment will often beprevented from downloading the necessary software required to view certain videocontent from the Internet due to standard security features of their systems.The Group's streaming technology normally does not require installation of anysoftware nor modifies the user's computer registry and therefore playback is notgenerally prevented by these security features. REVENUE GENERATION Disc Technology The Group generates revenue through its disc technology by selling discsdirectly to customers on a cost per disc basis, managing the production anddelivery process by sub-contractors in-house. In addition, further revenues aregenerated by licensing the Group's disc technology. To date the Group hasgenerated most of its revenue via disc sales. Streaming Technology The Group generates revenue from streaming by charging: • for the conversion of broadcast quality video provided by customers to the Vividas format on a per minute of video converted basis; and • on an end-usage basis, typically per view; and/or • if video hosting is requested by the customer, a fixed minimum monthly hosting fee with an additional fee payable related to the amount of bandwidth used. The Group has appointed Akamai, which operates more than 14,000 servers in 1,100 networks in 65 countries, to provide this video hosting service. In addition, in appropriate circumstances, the Group intends to seek tonegotiate sales or advertising revenue sharing arrangements and/or exclusivityfees for defined markets with selected partners. COMMERCIAL APPLICATION AND MARKETS The Directors believe that the Group's technology can be used across a number ofindustry verticals in two main areas, namely marketing communications and mediadistribution, where video plays an important part of the content. To date theGroup has focused on the following vertical sectors: Toys Toys have become more interactive and linked to computer usage as well as linkedto feature film, television and other video footage. The Group's technologyenables this content to be produced on CDs which can be packaged with the toys.Hasbro Inc. (USA), a leading toy company, is the Group's largest user to date.Vividas discs containing 2 cartoon episodes per disc have been packaged with GIJoeTM and TransformersTM Toys. The Directors believe that Vividas streaming will be attractive to companies inthe toy industry. To date, two companies in this industry have expressed aninterest in Vividas streaming. Automotive The Group has worked with car manufacturers in Australia to produce discs foruse in direct mail, digital brochures, sales collateral and training material.Projects have to date been completed for seven car manufacturers, includingNissan Australia, Honda and Ford. Following the release of the first commercial version of the Group's streamingtechnology in October 2004, two car companies, Nissan Australia and Honda, havealready started using this technology in Australia for showing adverts on theirwebsites. Government The Australian government is currently one of the Group's largest customers fordiscs. The Directors believe that there are prospects for working withGovernments in the larger markets of Europe and USA. Vividas discs have beenused for: • Social marketing initiatives-for example, National Alcohol Awareness Campaign; • Policy updates to stakeholder groups, including Tourism White Paper and teacher training; • Promotional initiatives to encourage overseas investment and to attract foreign students; and • Sporting body membership and participation in sports-for example, Gymnastics Australia. Tourism and Travel The Directors believe that traditional brochure advertising has a number ofshortcomings, including cost, which the Vividas technology addresses. The Grouphas completed disc projects for Tourism Queensland and tca: travel promotionsshowcasing destinations to potential tourists or travel agents. Tourism and travel operators are increasingly using the Internet to advertiseand sell travel services and the Directors believe the Vividas streamingtechnology will complement this method of selling. Sport, Leisure and Entertainment The Group's discs have been used by a number of sport and leisure relatedcompanies, including Rip Curl (a leading surfing-lifestyle company) and TabcorpHoldings (a major Australian gambling and entertainment group) to distributeexisting sporting video material for promotional purposes. In addition, theGroup's discs have been used by certain Australian sporting associations andclubs. The Group's disc technology has also been used, in conjunction with feature filmmaterial, in Australia by the Promotions Factory acting for Village Cinemas, asubsidiary of Warner Bros. (Scooby Doo and Spiderman), and Coca-Cola on behalfof Mobil (Ice Age). The Group is in advanced negotiations with one of the world's leadingmanufacturers of CDs and DVDs to enter into an agreement pursuant to which theGroup would appoint the manufacturer exclusively to commercialise the Group'sdisc technology in the film and music industries in a major territory, withoptions to extend to other territories across most of the European Union andNorth America. Under the agreement the Group would convert source material toproduce master CDs and DVDs which would then be replicated by the manufacturerand sold on by it. The Group would be paid royalties based on the level of suchsales. In addition, the Group is in negotiations with a leading USA supplier ofpromotion and sporting memorabilia CDs in relation to the proposed grant of anon-exclusive licence to use the Group's disc technology in its CD products. In addition, in November 2004, Spin Communications, on behalf of Buena VistaInternational, used the Group's streaming products to preview a 12-minute clipof the new Walt Disney/Jerry Bruckheimer feature film called "National Treasure"on Buena Vista's Australian website. Publishers/Media The Directors are aware that newspaper and magazine publishers use disc productsto seek to boost circulation and readership and to enhance advertising revenue.These discs, which are often interactive, typically contain promotional contentsuch as music, video, games and information. To date, the Group has completed projects in Australia with a number ofpublishers. The Group is currently in discussions with newspaper publishers relating to theuse of the Group's discs for distribution with newspapers and also with otherpublishers and media companies relating to the use of the Group's streamingtechnology. In November 2004, the Group began working with John Brown Citrus Publishing, acontract magazine publisher in the UK, to provide video conversion andinteractive services in connection with the proposed launch in 2005 of abi-weekly learning and entertainment magazine with a CD featuring a childrens'cartoon character. Corporate Communications In Australia the Group's disc technology has been used in internal corporatecommunications to employees of three major companies, including Sensis (a whollyowned subsidiary of Telstra) and Nissan Australia. In addition, an example of the use of the Group's disc technology in externalcorporate communications has been to promote television programmes tointernational media buyers for National Geographic Channel. In November 2004, the Group signed an agreement with a major Australian bank tostream, from November 2004 to September 2005, fourteen 10-minute 'episodes' ofinternal corporate communications to over 20,000 staff. The Group is also indiscussions with a number of multinational companies for the use of itsstreaming technology for corporate communications. FUTURE MARKET OPPORTUNITIES FOR VIVIDAS STREAMING The Directors believe that the Group's streaming technology will haveapplications across a broad range of sectors, including those noted above, butthat, at present, the following applications will offer the greatestopportunities for the Group's streaming products: • Advertising and promotion through streaming video over the Internet to consumer audiences - examples of this include Buena Vista, Rip Curl and Nissan Australia. The Directors believe that many major corporations, advertising agencies and their customers are increasingly recognising the potential benefits of quality online video advertising; • Internal communications by large companies through streaming video - the Directors believe that the agreement entered into with a major Australian bank described above validates the ability of the Group's streaming technology to conduct effective employee communications utilising quality video without the need for such companies to either upgrade or conform their servers, Internet connections or employee computers; • Pay per View and Video on Demand - as evidenced by the streaming of the Buena Vista film preview, the Group has demonstrated its ability to stream film. The Directors believe the Group is well placed to take advantage of the growth in Pay per View and Video on Demand by providing its products and services to Pay per View and Video on Demand providers. In addition, the Group is developing a Digital Rights Management (DRM) solution for its streaming products which should enable it to work with Pay per View and Video on Demand providers (including cable companies) to stream feature films and other programming content (including sports, music video and adult material) over the Internet; and • Mobile and Wireless Applications - the Directors believe that the Group's streaming technology is potentially suited to these applications. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SGM.L