Visual Defence Inc (VDI) are quoted on AIM at 13.75p, with a 9.7m m/cap (based on 70.6m shares in issue).

They've just released their 2007 results, in Canadian dollars (say C$2 to the ). Key points at 31 December'07:

- 7.5m of net cash
- 15m of net tangible assets
- 14m of annual sales, up by 43%
- a net profit of 30k in H2'07 (270k operating loss before interest receivable etc in same period)
- an 800k cash inflow from operating activities in 2007
- 25 year agreement re passenger safety and security at Abidjan airport "expected to be worth between $USD 140 million and $USD 250 million over twenty-five years".

Here's the full results:

http://www.londonstockexchange.com/LSECWS/IFSPages/MarketNew...

This is what they do:

http://www.visualdefence.com/htm/main.htm#

"Visual Defence provides advanced solutions that manage mission critical systems for leading organizations around the world. The Company provides government, airport, public transportation and commercial customers with public safety and security solutions that increase management efficiency while leveraging existing security infrastructure."

They divide their servies into three divisions:

(1) Public Safety & Security - safeguarding communities and public spaces with converged security and surveillance solutions to mitigate risk, reduce crime and support emergency response

(2) Homeland Security & Defence - keeping nations safe with advanced technology for situational awareness, command and control, communications and surveillance

(3) Professional Services - focus on your core business while we handle your security. Learn about our suite of professional services designed to help you achieve your goals

As well as the Abidjan airport contract, it's worth noting just some of the deployments of VDI's technology from the results:

"* the installation of our video management platform at Terminals 2,3,4 and the newly commissioned T5 of London Heathrow airport managed by BAA;
* new installations with Air Canada and the Canadian Border Service Agency at Pearson Airport in Toronto;
* the delivery and installation of 100 3C systems (video, event management and mapping) at Stockholm transit stations;
* and the current deployment of over 2,000 DVSSm storage devices on buses also in Stockholm."

I would doubt whether T5 was VDI's fault!

VDI have also "won an important contract in Canada to deliver advanced intelligent transportation solutions to a Montreal area transit organization. The $2.6 million contract is our first major public transit win in the Province of Quebec."

Here's the December'07 RNS re the Abidjan airport contract:

http://www.investegate.co.uk/Article.aspx?id=20071204133000N...

"Visual Defence Inc. (LSE: VDI), the security convergence company, today announced that the organization, along with its 50% owned subsidiary, AviSecure, signed a contract with the government of an African country expected to be worth between $USD 140 million and $USD 250 million over twenty-five years. The contract is for a Build-Operate-Transfer (BOT) passenger safety and security screening project at the country's principal airport.

The airport's passenger safety and security screening BOT project
encompasses risk assessment, security strategy development and complete
strategy implementation including procuring, installing and integrating
identified security technology, as well as hiring, training and managing airport security personnel. AviSecure will oversee project management and general airport security administration."

In addition from the results:

"Installations of our homeland security focused access control and intrusion detection systems reached a milestone with approximately 3500 installations in US military armories. Additionally, we have increased our book of business with the Israel Ministry of Defence with additional revenues in 2007 and orders for 2008."

On Monday VDI announced a cost-saving distribution agreement with Taldor, an Israeli company with $150m of annual revenues and 1,700 employees:

http://www.investegate.co.uk/Article.aspx?id=200804290701342...

Taldor have terrific lists of customers and partners:

http://www.taldor.co.il/general.aspx?FolderID=312〈=en

http://www.taldor.co.il/contactmen.aspx?FolderID=25〈=en

In May the current CEO will step down to a non-exec position, to be replaced by the Chairman, who owns over 30% of the shares. He is therefore well incentivised!

The new CEO was a heavy buyer of shares last year at 17p and 16p:

15-May-07 Buy Oved Tal 17.00p 1,029,000 174,930.00
14-May-07 Buy Oved Tal 17.00p 1,300,000 221,000.00
10-May-07 Buy Oved Tal 16.00p 650,000 104,000.00

Finally, Peel Hunt had this to say last September after the H1'07 interims, when the the share price was 16.5p with an 11.6m m/cap - now the m/cap is 9.7m and VDI has 7.5m of cash:

"Visual Defence (VDI) Interim results. EST: unchanged REC: CORPORATE#

Good interims with sales up 32% and PBIT improved with losses shortening from just under CAD$5m to CAD$3.5m. The cash performance is better with the neutral cash flow for the half and a maintained cash position of CAD$14.6m. The order book is strong and pipeline healthy with new orders coming from a more diverse base of customers and generally showing customers to be taking fuller advantage
of the capabilities of IP video surveillance. This confirms that the transition from analogue to digital surveillance is gaining traction and gives us confidence that the group is capable of pushing through to profitability for the full year at the EBITDA level.

There has been disappointment with this stock before but new management has delivered on its growth promises at the top line, on containment of costs and management of cash. As the IP security market proves out and the returns from VDI become positive, we think that it is time to start taking notice of this business again.

Cash balances represent half the current share price (8.8p) so the trading business, which should be capable of making CAD$2.5m or 1.06m in 2008, is looking lowly valued. The enterprise value is now 5.3m so EV/EBITDA for 2008 is now just 5x. Trust may not yet be fully restored but we believe another six months of strong trading should make the restoration possible and on a 12-month view the shares are beginning the look increasingly undervalued."

The outlook in the results is very bullish, and there should be an AGM statement in May.

My view here is simply that virtually all the m/cap is covered by cash, with the core business seemingly on the turn towards profitability - it's actually better than that since the m/cap is trading at only two-thirds of net tangible assets.

VDI has its own proprietory technology which is being utilised in blue chip customer locations around the world.

And the company's markets will only grow and grow given the current concentration on safety and security.

There has been in the past a large overhang (Emblaze hold 12% so I'm unsure of their intetions as to this stake), but the overhang seems to have disappeared as the share price has inched up on small post-results buying.

It seems to me that VDI is very attractively priced given the above, and the results and H2'07 progress have been somewhat overlooked since this is a small company whose shares have drifted for some time.

more good news today with contract