Sigma Technology Group plc (AIM: SGM), the technology venture capital and advisory specialist, is pleased to announce that investee company, Vividas Group plc (“Vividas” or “the Company”), a developer and provider of video technology and products, has today been admitted to trading on AIM.
The Company has raised £5.5 million (before expenses) through a successful placing 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 Management Ltd (“STM”), originally invested £966,000 in the Company in August 2003. At flotation, STVF owns 3,353,074 shares corresponding to a 15% holding in the company, and 583,334 warrants to subscribe at the flotation price, valid for 2 years. In addition, STM directly owns options over 350,000 shares at 23p each.
Commenting on today’s announcement, Neil Crabb, Joint Managing Director of Sigma and non-executive board member of Vividas said:
“The flotation of Vividas extends Sigma’s recent successful track record of flotations from its portfolio of investee and advisory clients. During the last nine months three companies have joined AIM, MicroEmissive Displays; Adventis; and today Vividas, raising a total of £24.8 million. MicroEmissive Displays and Adventis continue to trade at a premium to their issue prices. We look forward to their continuing success as public companies."
For more information please contact:
Sigma Technology Group plc www.sigmatech.co.uk
Neil 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 of video technology and products, published its admission document on 30 March 2005 in relation to its flotation on AIM. Teather & Greenwood, Nominated Adviser and Broker to Vividas, has successfully raised £5.5m (before expenses) by way of an institutional 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 percent 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 products which enable straightforward playback on personal computers of full screen, high quality video via discs or over networks, including the Internet, normally without requiring software installation.
Vividas 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.
The Group’s technology can be used across a number of industry verticals in two main areas, namely marketing communications and media distribution, where video plays 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 in October 2004, the Group has secured 30 users including Nissan Australia, Honda, Rip Curl, Spin Communications on behalf of Buena Vista International and a major Australian 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 our investors reflects well on both the quality of our technology and the prospects for the business. The fund-raising will take Vividas into a new and exciting phase of development as we build the business across Australia, North America and the UK.”
The Company has also released separately its interim results for the 6 months ended 31 December 2004.
BACKGROUND INFORMATION ON VIVIDAS
THE BUSINESS
Vividas Group plc is a developer and provider of video technology and products which enable straightforward playback on personal computers of full screen, high quality video via discs or over networks, including the Internet, normally without requiring software installation.
Vividas proprietary technology overcomes the disadvantages in many applications of competing CD and streaming market solutions of which the Directors are aware which typically only offer partial screen, or poor quality full screen, viewing and which generally require the user either to have or to install specialist player software. Currently the majority of video played on personal computers is via installed media players, primarily RealPlayer™, Windows Media Player™, QuickTime™ and Flash Player™.
In the personal computer environment, Vividas enabled CDs have advantages over DVD 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, data capture and knowledge and information communication. Existing users of this product include Hasbro Inc., Nissan Australia, Honda, the Australian Government and Ford, all of which are repeat users. Vividas is also able to apply its technology to DVDs allowing on-line connectivity and better navigation when used on a personal computer. To date the Group has sold or licensed in excess of 3 million CDs.
Vividas streaming technology similarly enables full screen, high quality video to be viewed, normally without requiring software installation, and also enables user tracking and enhanced usability. In addition, this technology can already penetrate many corporate firewalls and it is currently being enhanced with a view to increasing the level of penetration. Other key features of the Vividas streaming technology include synchronisation of audio and video and the efficient use of bandwidth allowing the Group to deliver video to low bandwidth users. Since the launch of the first commercial version of its streaming technology in October 2004, the Group has secured 30 users including Nissan Australia, Honda, Rip Curl, Spin Communications on behalf of Buena Vista International and a major Australian bank.
HISTORY
The Group commenced operations in Australia in 2000 as eGenie Australia Pty Limited to develop and launch the Group’s technology. Having commercialised its core technology through the CD business, the Company was incorporated in May 2003 principally to facilitate the geographical expansion of the business. In July 2003 the Company acquired the entire issued share capital of eGenie Australia Pty Limited. In 2003 the Company established wholly owned subsidiaries in the UK and in the USA to further its international expansion.
THE GROUP’S TECHNOLOGY
The core Vividas technology comprises a proprietary media player incorporating third party video and audio decompression software. The Vividas player is significantly smaller than conventional media players and can be automatically launched in relation to discs and can generally be automatically downloaded in relation to streaming. The compression and de-compression software used by the Group is licensed from third party providers. The Group has applied for 3 patents covering certain aspects of the Group’s technology.
Disc Technology
The Group’s technology can be delivered on standard CDs and DVDs and runs on most PCs and MACs. The Vividas player on the disc can run automatically and is not dependant on any third party software other than the personal computer’s standard operating system. In a corporate environment end users are typically prevented from installing applications due to the standard security features of their systems. The Group’s disc technology neither requires the installation of any software nor modifies the computer’s registry and therefore playback is not prevented by these security features. Streaming Technology
Streaming video is a sequence of sound and/or video played in real time as it is downloaded 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 wait to 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 user needs a player, which is a program that decompresses and sends video data to the display and audio data to speakers. Historically, a player has been either an integral part of a browser or downloaded and is generally installed from the software maker’s web site. However, using Vividas technology, a user is not generally required to install a player.
The Group launched the first commercial version of its streaming technology in October 2004. The Vividas streaming technology uses core elements of the Group’s disc technology which has been further developed to run on a Java Runtime Environment™ (“Java”) on the user’s computer to facilitate playback through a browser. The Vividas streaming technology uses software embedded in the customer’s web page to detect the software configuration of the user’s computer and communicates these back to the server which transmits the appropriate Vividas media player. As the data transfer is small, being currently less than 500 Kilobytes, there is minimal delay between the user click to initiate playback and playback commencing.
The current commercial version of the Vividas streaming player generally requires the presence of Java on the user’s computer. The Directors believe that Java is installed on most personal computers in Europe. Java is installed on approximately 90 per cent. of personal computers in the USA. If a computer user without Java installed attempts to playback using the Vividas streaming technology, the user will normally be prompted to install a Vividas component that facilitates playback, subject to the computer having an adequate specification.
In certain cases where users are on dial up (56 kbps) Internet connections and the source video is of insufficient quality, it may be preferable to use the Vividas streaming technology to deliver partial screen video. As with the Group’s disc technology, end users in a corporate environment will often be prevented from downloading the necessary software required to view certain video content from the Internet due to standard security features of their systems. The Group’s streaming technology normally does not require installation of any software nor modifies the user’s computer registry and therefore playback is not generally prevented by these security features.
REVENUE GENERATION
Disc Technology
The Group generates revenue through its disc technology by selling discs directly to customers on a cost per disc basis, managing the production and delivery process by sub-contractors in-house. In addition, further revenues are generated by licensing the Group’s disc technology. To date the Group has generated 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 to negotiate sales or advertising revenue sharing arrangements and/or exclusivity fees for defined markets with selected partners.
COMMERCIAL APPLICATION AND MARKETS
The Directors believe that the Group’s technology can be used across a number of industry verticals in two main areas, namely marketing communications and media distribution, where video plays an important part of the content. To date the Group has focused on the following vertical sectors:
Toys
Toys have become more interactive and linked to computer usage as well as linked to feature film, television and other video footage. The Group’s technology enables 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 GI Joe™ and Transformers™ Toys.
The Directors believe that Vividas streaming will be attractive to companies in the toy industry. To date, two companies in this industry have expressed an interest in Vividas streaming.
Automotive
The Group has worked with car manufacturers in Australia to produce discs for use in direct mail, digital brochures, sales collateral and training material. Projects have to date been completed for seven car manufacturers, including Nissan Australia, Honda and Ford.
Following the release of the first commercial version of the Group’s streaming technology in October 2004, two car companies, Nissan Australia and Honda, have already started using this technology in Australia for showing adverts on their websites.
Government
The Australian government is currently one of the Group’s largest customers for discs. The Directors believe that there are prospects for working with Governments in the larger markets of Europe and USA. Vividas discs have been used 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 of shortcomings, including cost, which the Vividas technology addresses. The Group has completed disc projects for Tourism Queensland and tca: travel promotions showcasing destinations to potential tourists or travel agents.
Tourism and travel operators are increasingly using the Internet to advertise and sell travel services and the Directors believe the Vividas streaming technology will complement this method of selling.
Sport, Leisure and Entertainment
The Group’s discs have been used by a number of sport and leisure related companies, including Rip Curl (a leading surfing-lifestyle company) and Tabcorp Holdings (a major Australian gambling and entertainment group) to distribute existing sporting video material for promotional purposes. In addition, the Group’s discs have been used by certain Australian sporting associations and clubs.
The Group’s disc technology has also been used, in conjunction with feature film material, in Australia by the Promotions Factory acting for Village Cinemas, a subsidiary of Warner Bros. (Scooby Doo and Spiderman), and Coca-Cola on behalf of Mobil (Ice Age).
The Group is in advanced negotiations with one of the world’s leading manufacturers of CDs and DVDs to enter into an agreement pursuant to which the Group would appoint the manufacturer exclusively to commercialise the Group’s disc technology in the film and music industries in a major territory, with options to extend to other territories across most of the European Union and North America. Under the agreement the Group would convert source material to produce master CDs and DVDs which would then be replicated by the manufacturer and sold on by it. The Group would be paid royalties based on the level of such sales.
In addition, the Group is in negotiations with a leading USA supplier of promotion and sporting memorabilia CDs in relation to the proposed grant of a non-exclusive licence to use the Group’s disc technology in its CD products.
In addition, in November 2004, Spin Communications, on behalf of Buena Vista International, used the Group’s streaming products to preview a 12-minute clip of 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 products to seek to boost circulation and readership and to enhance advertising revenue. These discs, which are often interactive, typically contain promotional content such as music, video, games and information.
To date, the Group has completed projects in Australia with a number of publishers.
The Group is currently in discussions with newspaper publishers relating to the use of the Group’s discs for distribution with newspapers and also with other publishers and media companies relating to the use of the Group’s streaming technology.
In November 2004, the Group began working with John Brown Citrus Publishing, a contract magazine publisher in the UK, to provide video conversion and interactive services in connection with the proposed launch in 2005 of a bi-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 corporate communications to employees of three major companies, including Sensis (a wholly owned subsidiary of Telstra) and Nissan Australia.
In addition, an example of the use of the Group’s disc technology in external corporate communications has been to promote television programmes to international media buyers for National Geographic Channel.
In November 2004, the Group signed an agreement with a major Australian bank to stream, from November 2004 to September 2005, fourteen 10-minute ‘episodes’ of internal corporate communications to over 20,000 staff. The Group is also in discussions with a number of multinational companies for the use of its streaming technology for corporate communications.
FUTURE MARKET OPPORTUNITIES FOR VIVIDAS STREAMING
The Directors believe that the Group’s streaming technology will have applications across a broad range of sectors, including those noted above, but that, at present, the following applications will offer the greatest opportunities 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.