4th Jan 2006 10:11
Please note:This submission replaces the original issued by PRNewswire at 07:01 today and isbeing reissued to facilitate third party vendors. None of the original announcement content has been changed. The full text appears below. * * * * * * * * * * * * Appian Technology plc ("Appian Technology" or "the Company") Placing and Admission to AIM Appian Technology, the provider of proprietary Automatic Number PlateRecognition ("ANPR") systems and traffic guidance products and solutions,announces that trading in its ordinary shares began on the AIM market today. * The Company has developed high technology proprietary products for automatic number plate recognition, vehicle identification, traffic management, parking guidance and car park management for the surveillance, counter terrorism, access control and congestion charging markets. * Appian has a blue chip client base including police forces, local authorities and government bodies in the UK and internationally. Growth potential is significant due to rise in security and traffic initiatives. By using local partners and distributors Appian has a solid network that can maximise the exposure of its product range. * Competitor differentiation includes accuracy, cost, ease of use, adaptability and portability. Through R&D, Appian's technology is being kept at the forefront of its market. * The Company has raised ‚£2.08 million, before expenses, from a placing by JM Finn & Co. at 5p per ordinary share, valuing the Company at the Placing Price at ‚£5.6 million * The funds raised will be used to increase the Company's sales in the UK and internationally in markets that are expanding in response to rising security and traffic congestion issues worldwide, and to provide additional working capital. Pat Ryan, Executive Chairman of Appian Technology commented:"The UK and international security sector is enjoying strong growth. ANPR hasemerged from its new technology status and is now recognised as an essentialtool in policing, intelligence and counter terrorism operations. We are ideallyplaced to take advantage of this growth, and as our sales figures highlight,our reputation world-wide is increasing rapidly. As an AIM-traded company wewill be placed in a far stronger position to finance any future deals and raiseour global profile."For Enquiries:Appian Technology plcPat Ryan, Executive Chairman Tel: 01628 554750JM Finn & Co. (Broker)Sam Smith Tel: 020 7628 9688John East & Partners Limited (Nominated Adviser)Simon Clements Tel: 020 7628 2200St Brides Media and Finance LimitedHugo de Salis Tel: 020 7242 4477IntroductionAppian Technology is a provider of high technology proprietary products forautomatic number plate recognition, vehicle identification, traffic management,parking guidance and car park management for the surveillance, counterterrorism, access control and congestion charging markets. The Company'sobjectives are to increase its sales in the UK and internationally, in marketsthat are expanding in response to rising security and traffic congestion issuesworldwide. In order to achieve these objectives and continue in itsdevelopment, the Directors have decided to seek admission of the Company'sshares to trading on AIM and to raise ‚£2.08 million, before expenses, by way ofthe Placing.BackgroundFollowing a series of high profile terrorist attacks in the 1980s and early1990s, the UK Government commissioned the development of a high performanceANPR system to help prevent future terrorist incidents. As a result, RacalMessenger Limited developed a neural network based ANPR system, ReseroTechnology Systems Limited developed a vehicle tagging system and AppianTechnology Traffic Technologies plc developed the Navigator parking guidanceinformation system. In 2000 these three companies merged under a new holdingcompany, Appian Technology Plc.ProductsThe Group currently offers hardware and software products for vehicle numberplate recognition and traffic guidance applications.Number Plate RecognitionAppian Technology's number plate recognition system is a data-gathering toolused in a wide variety of static and mobile applications and forms the core ofthe Group's business. The Company has two versions of its system, Talon andTalon SP, and sells both these recognition engines and associated productsbased on them.Talon was developed for large fixed sites using multiple cameras and consistsof Appian Technology's recognition software installed on a dedicated hardwareplatform. Each Talon unit is capable of processing information from up to 28source cameras simultaneously and multiple Talon units can be linked to usegreater numbers in large installations. Talon SP is a software only version ofthe Talon system. Talon SP benefits from the functionality of the Talon systembut without the need for dedicated recogniser hardware boards. Talon SP offers"plug and play" capability and straight forward installation on to a typical PCplatform.The development of low cost, high-powered microprocessors enabled AppianTechnology to develop Talon SP from the original hardware based system. TalonSP is a more advanced version of the Company's core recognition software, whichis installed from disc and can run on any PC equipped with adequate processingpower. The system has certain advantages over Talon in that it is more costeffective, can be installed on a typical PC, is easier to operate and iscapable of reading licence plate information at a variety of angles and undervarious conditions, making it ideal for mobile and smaller scale installations.Talon acts as the "eye" or recognition engine at the front end of processes,providing highly accurate number plate information to the user who can then usethat information for measuring purposes or can match outputs against anexception or inclusion database.When the Talon system is triggered by a number plate entering its field ofview, a series of algorithms are run to identify the position of the plate inthe image, extract the relevant area, apply geometric distortion compensationif necessary and then isolate the individual characters to be read. The systemthen matches each character to its database, applying a confidence scoringsystem which is unique to Talon. The use of a neural network based systemtypically results in a very high level of accuracy.Most ANPR systems are based on template matching which cannot under fieldconditions achieve the accuracy of neural network based systems. Neural networkbased systems achieve higher rates of recognition because the system is basedon recognising the characteristics of each symbol read rather than attemptingto match a character to a preloaded template.Talon and Talon SP are highly flexible products which can be relatively easilyadapted to a wide range of number plate styles including Arabic characters,square licence plates and different colours. The neural network technologyemployed means that Talon is capable of accurately reading data over aconsiderable range of character styles, in effect 'learning' with usage. TheCompany is currently planning to add Chinese characters to the system.Information read by the Talon system can be transmitted via fixed connection,landline or GSM network in real time to external processors for comparisonagainst a database and the report time for a vehicle to be identified andflagged if on a specific inclusion or exclusion list is typically less than onesecond.The Directors believe that the Company's products are superior to those of itscompetitors for the following reasons: * Accuracy: the Talon system frequently wins contracts with accuracy requirements of up to 97 per cent. Rival systems, which rely on template matching, typically score lower levels of recognition. * Cost: Talon SP allows access to a much wider range of customers who would not previously have been able to justify the costs of a full hardware and software system. * Ease of use: Talon SP is designed as a "plug-and-play" application and can rapidly be configured on a typical laptop or desktop computer to operate up to 4 cameras. Once installed the data generated is easily exportable in a variety of data formats. * Portability: Whilst the original Talon system was designed for fixed camera installations, Talon SP uniquely works in a mobile environment or on a normal laptop computer, offering a wide range of surveillance enforcement or revenue applications. Other products developed, in response to customer demand, from Talon and TalonSP include: * Talon Shadow Roadside: a roadside ANPR processor unit designed to withstand extreme environmental conditions and execute real time roadside processing of number plates. The system comprises a shoe box sized fanless computer running Talon SP ANPR software on a windows operating system. * Talon Shadow Mobile: a mobile platform ANPR recognition system designed to be permanently installed and operated in vehicles. Using Talon SP software, the platform is capable of simultaneously processing number plates from four ANPR cameras covering four lanes of high speed, high density traffic. * Talon Sentinel: a PC based with full wireless GSM,GPRS and 3G communication capability, connected to a dual infra-red and overview ANPR camera. Powered by batteries or mains power, the system is able to hibernate during periods of inactivity. * Talon Transportable: an ANPR recognition system designed to operate in vehicles or in static locations. The platform has a number of features and components giving users a complete, fully integrated "one box" ANPR solution that can be moved easily between locations and vehicles. Applications for the Talon and Talon SP systems and derivative Talon productsinclude:Surveillance, crime-reduction and anti-terrorismThe system provides intelligence for the surveillance needs of the police andsecurity services. The system can be used to identify passing vehicles andmatch them against a target list, which can either be held in the system'sintegral database or within a central computer providing an instant warningwhen the vehicle concerned passes by. This has significant benefits fortargeting police resources, improving police efficiency and assistingimplementation of relevant government policies.Site securityThe system provides effective monitoring of entry and exit points, controllingaccess, maintaining an inventory of all vehicles and raising an alarm ondetection of an unauthorised entrance or exit. Examples include monitoring thedeparture and return of hire cars or allowing car park access to members ofstaff and authorised users.Traffic monitoringBy efficiently collecting large volumes of data identifying individualvehicles, the system can provide valuable statistical analysis such as trafficvolumes on highways and parking behaviour in relevant locations.Traffic regulationThe system can capture high-quality, tamper-proof evidential images of vehiclesbreaking traffic regulations, storing them locally or transmitting them to acentral processing site.Parking Guidance Information SystemsThe Company produces the Navigator range of parking guidance informationsystems. Each system comprises vehicle detection processors, variable messagesigns, control processors and a management software suite. The processors countvehicle movements at the entrances and exits, allowing occupancy information tobe displayed in variable message signs, guiding motorists to vacant spaces,reducing congestion and increasing revenue potential. Appian Technology'ssystem differs from rivals in that its detection processors use a series ofinfra-red beams to count traffic, rather than a magnetic loop, thus making themcheaper to install, as the entrances and exits to be monitored do not need tobe disturbed, and more accurate as two vehicles close to each other will not becounted as one as is sometimes the case with other systems.LaserCamAppian Technology is the sole distributor in the UK Market for the LaserCamrange of speed enforcement cameras manufactured by Redflex Traffic Systems PtyLimited. The LaserCam system is a portable speed enforcement camera whichtypically comprises a dual camera unit and a portable field computer.The dual camera unit takes two simultaneous pictures of infringing vehicles: awide angle picture of the vehicle and the surrounding environment and a closeup image of the vehicle including the number plate and drivers' face, ifrequired, making it ideal for use on multi-lane highways and in dense traffic.The digital version of the LaserCam system can even work in complete darknessusing a white light flash which is triggered by the laser detection system.Images taken are stored on a WORM (Write Once Read Many) disk with a time anddate stamp and security signature to prevent tampering. The use of digitalphotography allows near instantaneous access, significantly eases storage andreduces the likelihood of mechanical defects preventing effective enforcement.Intellectual Property RightsThe Group is reliant upon certain of its registrable intellectual propertyrights which are material to its business. The Board has sought to ensure thatregisterable intellectual property rights are protected, so far as is possible,by lodging patent and other applications. The Group seeks advice fromspecialist intellectual property advisers and lawyers in respect of itsintellectual property policies, and while the Board continually seeks toimprove the protection available to the Group by registration, the fact thatkey software remains unpublished is considered by the Directors to be asignificant barrier to competitors entering into the Group's market place, aswell as protection of the Group's core technology.The MarketWorldwide security, traffic monitoring and control pressures are growing,particularly following the events of September 11 2001 in the United States,the Madrid bombings and more recently the London bombings on 7 July 2005. As aresult, police forces, local authorities and government bodies in the UK andinternationally are increasingly looking for automated number plate recognitionand traffic guidance solutions as an intelligence gathering tool and to improvethe effectiveness of policing. Talon, because of its accuracy provides an ANPRsolution for critical and other security applications.The ANPR market is growing strongly in the UK. ANPR systems are frequently usedby specialist police teams in security operations, increasingly being installedin urban CCTV systems and surveillance systems and fitted to police vehicles tomeet a range of policing needs.The police vehicle fit market is growing as police forces seek to broaden theapplication of ANPR systems in police cars away from traffic policing and intowider crime detection and prevention strategies. Historically, traffic policingapplications did not require high levels of detection accuracy. However, themarket is now converging as security concerns increase the need for a higherlevel of accuracy in ANPR systems. Consequently, Appian Technology is nowselling systems into this growing vehicle fit market using a suite of productsdeveloped in 2004 based on Talon SP software.In addition, ANPR systems can now be used in a range of applications includingmore general policing, access control, traffic monitoring and congestioncharging. ANPR technology applications are particularly effective as anenforcement technology where car based recognition technologies are required.The Talon suite of products are suitable for activities that are reliant onhigh levels of accuracy.The UK is a world leader in the application of CCTV and ANPR systems and anumber of countries are now looking to deploy similar systems to those used inthe UK.In the last 18 months, the Company has successfully tendered for numerouscontracts, some of which contain confidentiality clauses and cannot bedisclosed. Contracts the Company has been able to announce include: * an order from British Transport Police (September 2005) for the portable sentinel system for use in station car parks and security points; * initial order from Mexico (July 2005) for Talon ANPR system for 11 police vehicles; * an order from Prudential (February 2005) to supply Talon ANPR to Cribbs Causeway shopping centre for the purposes of security, "Journey Time Analysis", marketing and management of parking resources; * initial sales to the Sacramento Police Department (November 2004), Los Angeles Police Department (November 2004) and police in Alabama (July 2004) of mobile ANPR systems; * installing a parking guidance information system at Edinburgh airport (October 2004); * orders of a fixed site Talon system by a number of UK towns and a major UK west country city; * sales to a large public sector security organisation and defence establishments; and * upgrading an existing closed circuit television network in Avon and Somerset to incorporate the Talon system. The Directors believe that the United States is an enormous potential marketfor Appian Technology, with thousands of police departments and law enforcementagencies as potential customers. Appian Technology is currently in trials witha number of forces and early results from those trials are positive.CompetitionThe Directors believe that the Company's main direct competition comes fromthree ANPR companies, PIPS Technology Limited, CitySync Limited and ComputerRecognition Systems Limited all of which are UK based.The Directors believe that Appian Technology's core Talon ANPR product isdifferentiated from competing ANPR products through its superior recognitionperformance. In counter terrorist `mission critical' applications or revenueapplications, high ANPR performance is typically the key factor involved inselecting an ANPR provider.Appian Technology's high ANPR performance is achieved through the use of neuralnetwork technology rather than template matching technology which tends to beused in competing solutions. In addition, having occupied the ANPR market forsome considerable time Appian Technology has a detailed understanding ofassociated camera and processor technologies enabling them to offer theircustomers `turnkey' ANPR systems.Appian Technology seeks to maintain its market leading technologicalperformance through considerable investment in research and development andsubsequent releases of its Talon ANPR software. Talon version 6.2 will bereleased shortly and the Directors expect this version to offer greateraccuracy performance, thus maintaining the Director's positioning of AppianTechnology as a `best of breed' ANPR company.Financial InformationAppian Technology's size and relatively small balance sheet currently limitsthe potential business opportunities available, particularly those of longerduration, even when it is bidding as part of a consortium as the majority ofclients are governmental or quasi-governmental and have certain minimum balancesheet requirements for suppliers and contracts. Earnings derived from contractswon by Appian Technology are paid unevenly throughout the duration of thecontract. The financial results for 2003 in particular were distorted by alarge contract with the UK police to provide mobile ANPR systems known asProject Spectrum. Year ended 30 September 2003 2004 2005 ‚£'000 ‚£'000 ‚£'000 Turnover 2,689 2,374 2,902 Gross Profit 1,298 1,315 1,425 Operating Loss (1,221) (883) (999) Loss before Taxation (1,206) (782) (941) Net Assets/(Liabilities) 22 98 (495)After adjusting for the Spectrum programme referred to above, the company'sunaudited pro forma financial performance over the same period would be: Year ended 30 September 2003 2004 2005 ‚£'000 ‚£'000 ‚£'000 Turnover 2,689 2,374 2,902 Spectrum (555) - - Turnover excl. Spectrum 2,134 2,374 2,902 Gross Profit 1,111 1,315 1,425Excluding Spectrum, the Company reported growth in its core sales of 36 percent. between 2003 and 2005 and a rise in gross profits of 28.3 per cent. overthe same period.Current Trading and ProspectsIn the year ended 30 September 2005 Appian Technology made significant progressin developing its business.The Company invested heavily in sales and marketing in order to establish thebusiness and build critical mass and brand recognition. As a result, theCompany incurred higher than anticipated costs which, coupled with additionalresearch and development spend and lower gross margins in the second half on afew specific projects, resulted in a greater loss before taxation than thatreported in 2004.Sales and marketing costs increased substantially during the year, as theCompany recruited additional staff. This was partially offset by savings inmanagement and administration costs.Management was strengthened with the recruitment of Tom Keene as sales manager,who has since joined the Board and is now Commercial Director. Following hisappointment, the sales force was reorganised, which coincided with an increasein public and private sector security spending following the recent terroristactivity in London and throughout the world. A number of appointments were madeto enhance the Company's international sales force to take advantage of theincrease in security spending. The increase in turnover and forward pipelineare a direct result of the improvement in the market and the ability of therestructured sales team to convert leads.Research and development expenditure increased due to a number of one offdevelopment projects. A new range of cameras was developed, new products andapplications were devised for specific customers and Appian Technologyparticipated with IBM in the congestion charge trial in Edinburgh, which alsoinvolved development expenditure. This increased expenditure has enhanced therange of applications of the Company's core ANPR product and providedadditional products for sale in the future.A lower gross margin was recorded on sales to a number of new strategiccustomers during the second half of the year. This resulted from the extra costassociated with devising and implementing new applications of the productrange. A review of the gross margin relating to business carried forward fromlast year and pipeline orders indicates that margins have increased comparedwith those experienced in the year to 30 September 2005.The Company's current order book of ‚£1,356,000 comprises ‚£384,000 of ordersrelating to the year ended 30 September 2005 carried forward, ‚£500,000 inrespect of maintenance contracts and ‚£472,000 of orders received since thestart of this financial year.The Company's client base has increased significantly including police forces,local authorities and government bodies both in the UK and internationally, whoare increasing spending as the global security environment necessitates.The Company is looking forward to a further increase in sales in the year toSeptember 2006. Margins are improving and the Company is actively examiningopportunities to reduce costs in the current year.The Directors are confident that, following Admission, the Company will be wellpositioned to take advantage of the significant opportunities available to it.Directors and ManagementDirectorsPat Ryan FCA, 54, Executive ChairmanPat Ryan is Executive Chairman and is also the Chairman of National AvionicsLimited, a significant shareholder in Appian Technology. He has private venturecapital interests with an emphasis on developing businesses and has businessexperience in developing technology businesses and investment banking.David Hearn ACA, 42, Finance DirectorDavid Hearn joined Appian Technology in November 2001 from a position as GroupChief Financial Officer and Operations Director of LinkGuard Limited. Aqualified accountant, David has held various positions in fast growingcompanies including positions as finance director of Modular Technology Plc andPhotobition Group PLC.Tom Keene, 34, Commercial DirectorTom Keene joined the Company in June 2004. He is an experienced sales managerwithin the technology industry, having gained extensive internationalexperience through business development and channel management. Tom has heldsenior positions with Seaeye Marine and Consultronics Limited, as well ashaving been a Commissioned Officer in the British Army.Fred Newton QPM, 54, Non-executive DirectorFred Newton, a former Assistant Chief Constable, was appointed to AppianTechnology's Board in September 2002 following his retirement from the policeservice after 33 years' service. As National Co-ordinator of Ports Policing forthe UK he was involved with counter-terrorism at ports involving theapplication of ANPR technology, and, in particular the development of networkintegration of both fixed sites and mobile systems. He was awarded the Queen'sPolice Medal for services to ports policing in the 2000 New Year's Honours Listand was at one time the Senior Investigating Officer of the Lockerbie AirDisaster.John Finan, 67, Non-executive DirectorJohn Finan completed a decade as Chairman and Chief Executive of WinterthurLife UK, the UK life and pensions arm of the Credit Suisse Group. He was alsoChief Executive and Deputy Chairman of NEL Britannia and Director of Pearl andand General Manager, UK Home Service, for Pearl Assurance. He is soleproprietor of Finan Consulting and his current portfolio includes companies invaried industry sectors who call on his experience in mentoring, strategicplanning, turnaround management, deal making and fundraising. He also worksclosely with the Irish Government through Enterprise Ireland, mentoring youngIrish companies either as a board director or as a consultant in addition torunning business workshops.EmployeesThe Group currently has 31 employees (2003 - 24; 2004 - 29), 30 of whom arelocated in Bourne End and one in the USA (of whom 9 are involved in sales, 4are involved in administration and 18 in operations, including maintenance andresearch and development).Reasons for and details of the Placing and use of the ProceedsUnder the terms of a Placing Agreement JM Finn & Co. has agreed, as agent forthe Company, to use all reasonable endeavours to procure placees for thePlacing Shares at the Placing Price to raise ‚£2.1 million (gross) andapproximately ‚£1.73 million (net of expenses) for the benefit of the Company.The Placing is conditional, inter alia, upon Admission and the PlacingAgreement becoming unconditional and not being terminated in accordance withits terms. The Placing Shares, when issued and fully paid, will rank equally inall respects with the Existing Ordinary Shares, including the right to receiveall dividends and other distributions declared, made or paid after the date ofthis document. The Placing Shares will be allotted and issued prior toAdmission credited as fully paid subject only to Admission. Such allotment andissue will become wholly unconditional on Admission, which is expected to occuron 4 January 2006.The Group intends to apply these funds to provide working capital for the Groupand, pending their use, will be placed on deposit.Dealing RestrictionsAt Admission, the Directors and connected parties will own an aggregate of13,324,428 Ordinary Shares, representing 11.96 per cent. of the enlarged issuedshare capital of the Company. All of the Directors and National AvionicsLimited have undertaken with the Company, John East & Partners Limited and JMFinn & Co. not to dispose of any Ordinary Shares for a period of one yearfollowing Admission and, for a further year, not to sell any Ordinary Shareswithout the consent of John East & Partners and JM Finn & Co., such consent notto be unreasonably withheld or delayed. Any shares must be sold through JM Finn& Co. (provided that JM Finn & Co. is at the time broker to the Company).In addition, St Helens Capital Limited has undertaken with the Company, JohnEast & Partners Limited and JM Finn & Co., subject to the exercise of thewarrant held by it, not to sell any Ordinary Shares, without the consent ofJohn East & Partners Limited and JM Finn & Co., such consent not to beunreasonably withheld or delayed, arising from the exercise of the warrant.Share Option SchemeThe Company has issued options over 4,540,000 Ordinary Shares with exerciseprices ranging from 7.25p to 22.5p per share.Conditional on Admission, options over 390,000 Ordinary Shares, of which200,000 are held by David Hearn, with exercise prices ranging from 15p to 22pper share will lapse and replacement options over the same number of shareswill be issued, exercisable at the Placing Price.The Company proposes to issue further options over 600,000 Ordinary Shares tocertain key employees and options over 2,500,000 Ordinary Shares exercisable atthe Placing Price.Consequently, following Admission the Company will have issued or resolved toissue options over 7,490,000 Ordinary Shares, representing 6.72 per cent. ofthe enlarged issued share capital. The Directors have resolved that options inissue will not exceed 7.5 per cent. of the issued share capital of the Groupfrom time to time.WarrantsThe Company has issued warrants to subscribe for 11,767,316 Ordinary Shareswith exercise prices ranging from 5p to 28p per share.Conditional on Admission, warrants over 200,000 and 400,000 Ordinary Shares,held by Directors, exercisable at 15.5p and 22p per share, respectively, willlapse.The Company proposes to issue 600,000 replacement warrants exercisable at thePlacing Price on or before 4 January 2011.In addition, the Company proposes to issue 400,000 warrants to providers ofservices, exercisable at the Placing Price on or before 3 January 2011.Consequently, following Admission the Company will have issued warrants tosubscribe for 12,167,316 Ordinary Shares, representing 10.92 per cent. of theenlarged issued share capital.ENDAPPIAN TECHNOLOGY PLCRelated Shares:
Applied Nutri