Companies: RCG    VSH   

Industry analysts have long been talking-up the potential of radio frequency identification (RFID) and, at long last, it seems as though the technology – which can be used to identify and track people and objects via radio waves – is starting to hit the mass market, as several recent AIM announcements suggest.

Sparkling full year figures from Hong Kong-based RC Group demonstrate the potential of the technology. March saw the developer and deployer of RFID and biometric software announce that it had grown sales by more than 350 per cent to £15.5 million last year, doubling profits to £4.8 million along the way. Moreover, chairman and chief executive Raymond Chu has high hopes for the future, citing forecasts from research organisation I-Stat predicting the RFID market will grow from $300 million to $2.8 billion in value between 2004 and 2009.

Simplicity in action

To Chu, the appeal and simplicity of RFID is compelling. ‘If you take the example of a laptop computer in an office,’ he explains, ‘RFID can be used to prevent theft, because as soon as someone tries to carry it beyond a certain point you could either trigger an alarm to sound or use GPRS to establish its location.’

This is a very specific example but the potential applications are diverse. Distributors and retailers, for instance, are starting to use RFID to monitor their supply chains, hence a recent contract won by RC to deliver its warehousing and logistics solutions to manufacturers throughout the Xiaolan region of Southern China. Further deals have been signed relating to evidence management, weapons management, visitor check-in, document tracking and car parking.

‘Imagination is the key to this,’ says Chu, ‘but you have to put the infrastructure in place. It’s great to enable new buildings, which is why we’re focusing predominately on developing markets like Malaysia, Dubai and Johannesburg at the moment.’

Given RC’s performance so far and the forecasts of house broker Corporate Synergy (for a £7.7 million profit and £23.7 million of revenues this year) the company remains very attractive. The shares may have risen to a record high of 47.75p on the back of the full year figures, yet they continue to trade on a p/e of just 8.8.  

Venue is where it’s at

One other company with high hopes for RFID is Venue Solutions, which has, in recent weeks, announced a new contract with leisure group Tussauds.

Headed by former film producer Dominic Berger, Venue specialises in supplying and integrating venue management systems at sports grounds, shopping centres, theme parks and the like. The Tussauds deal, for example, will see Venue and partners install a new system at Alton Towers, to enable families to purchase a ‘movie-style’ video of their day at the park. 

As Berger explains, RFID plays an integral part in the proposition. When individuals enter the park they will each be given an RFID bracelet to wear and, throughout the course of the day, this will trigger cameras to film them at various points (on rides, whilst queuing, and so on). Then, at the end of the day, visitors will have a chance to purchase a 30-minute DVD as a souvenir for around £20.

Venue will begin installing the necessary infrastructure when Alton Towers goes into hibernation in November, with the service then launching in March or April next year. Says Berger, ‘this will be the first system of its kind in the world. A number of other people have also said yes to the idea in theory,’ he adds ‘although they want to see an example up and running before they commit further.’

Having generated just £95,000 of revenue last year and losses of £636,797 the company remains a speculative investment. But deals with Tussauds, Middlesbrough FC and Warwickshire County Cricket Club in recent months augur well for the future.