Final Results

Vislink PLC 25 March 2002 Vislink plc Preliminary results for the year ended December 31, 2001 Key announcements • The Group increased sales from continuing operations by 25.9% to £75.87 million (2000- £60.25 million) • Operating profit from continuing operations before exceptional inventory write down and goodwill amortisation, increased by 25.1% to £3.48 million (2000 - £2.78 million) • Cash generation of £2.46 million reduced gearing at December 31, 2001 to 28.9% (2000 - 35.3%) • The Group ended 2001 with a strong outstanding order book of £20.78 million, up from £17.57 million in 2000. • Earnings per share increased to 2.78 pence (2000 - 2.74 pence) before goodwill and all exceptional items Commenting on the preliminary announcement, Bob Morton, Chairman of Vislink plc said: 'The investments made in research and development, together with the benefits to come from the rationalisation of the Broadcast Division, augur well for the future. The Group has made a good start to the year with order intake ahead of the same period last year and, with a strong order book, the Board considers the prospects for the year ahead to be encouraging.' - Ends - For further information on March 25, 2002, please contact: Ian Scott-Gall 01488 685 500 Chief Executive, Vislink plc James Trumper 01488 685 500 Finance Director, Vislink plc 020 7950 2898 Trevor Bass Fleet Financial Communications Limited Chairman's Statement Introduction Although 2001 evolved into a very challenging year, the Board is pleased to report that the Group has grown its Broadcast business outside of the domestic UK market, and its Video Division in the Marine sector, against the background of a lengthening order cycle and a general economic slowdown. Strategic Review The Group continues to focus on developing its share of global markets and has reduced its dependence on UK and European markets. In creating that focus we have been carrying out a strategic review of the Broadcast businesses. The results of the review have been that • In the UK, we have transferred the production and development functions of Multipoint Communications (Multipoint) into Advent Communications (Advent) and they now trade together under the name Vislink Communications Ltd, whilst maintaining their brand identities • In the US, we have transferred the domestic US business of our smaller Connecticut based company, RF Technology, Inc, into Microwave Radio Communications, Inc (MRC) and their international sales into Continental Microwave Limited (CML) • The rationalisation is expected to be completed by the end of this year and to reduce overheads by £0.80 million, on an annualised basis • The pace of change from analogue products will continue to accelerate as more customers switch to digital systems and we introduce common product platforms. Recognising this, an in depth assessment of both the likely future demand for existing analogue products and the inventories of the businesses being transferred into Advent and MRC, resulted in an exceptional inventory write down of £2.23 million • Our product development and engineering development programmes remain firmly directed towards launching more digital systems into the market. Financial results for the year The Group has increased sales from continuing operations by 25.9% to £75.87 million (2000 - £60.25 million). Operating profit, from continuing operations before the exceptional inventory write down and goodwill amortisation, increased by 25.1% to £3.48 million (2000 - £2.78 million). The Group has made a net loss for the year before taxation of £0.81 million (2000 - £1.01 million profit) after providing and charging for • The results of the strategic review of the Broadcast division, which led to an exceptional charge of £2.23 million in respect of the inventories affected by the change in technology and business rationalisations • Goodwill amortisation of £1.20 million (2000 - £0.79 million), being a full year's charge for Advent and MRC • Income from discontinued activities of £0.03 million (2000 - £0.03 million) • Non operating exceptional credits of £0.12 million (2000 - £0.55 million charge) • Net interest costs of £1.01 million (2000 - £0.46 million) which reflect the full year costs of loans taken out to make the MRC acquisition Cash of £2.46 million was generated during the year which has reduced the Group's net debt at December 31, 2001 to £9.50 million (2000 - £11.85 million) and its gearing to 28.9% (2000 - 35.3%). The year finished with a strong outstanding order book of £20.78 million, up from £17.57 million in 2000. Dividend In the light of the overall net loss for the year, the Board has reviewed the level of the dividend and considers it appropriate in the circumstances to recommend the payment of a reduced dividend of 0.1 pence, compared with last year's 0.4 pence dividend. The dividend, subject to shareholder approval, will be paid on July 26, 2002 to shareholders on the register at July 5, 2002. Earnings per share Earnings per share before goodwill and all exceptional items increased to 2.78 pence (2000 - 2.74 pence). The loss per share after exceptional items and goodwill was 0.72 pence per share (2000 - 0.79 pence earnings per share). Operational review of the year In the Broadcast Division, the results for the year include full year contributions from the acquisitions of Advent and MRC, made on April 18 and July 28, 2000, respectively. In the USA, MRC has maintained its sales whilst achieving good margins on its digital ready studio to transmitter microwave radio products. Sales in the USA now represent 41.4% of the Broadcast Division's turnover. Both Advent and CML have contributed to increased sales into Asia and other areas, largely the Middle East, which have risen to £19.34 million (2000 - £10.68 million) and now account for 31.7% of the Broadcast Division's sales. UK business has been disappointing as the opportunities for terrestrial digital TV become less likely to materialise in the short term. This has contributed to a decline in UK sales to £6.30 million (2000 - £8.19 million), which now represent only 10.3% of the Broadcast Division's sales. In the Video Division, Hernis, our Norwegian based manufacturer of high quality CCTV systems for the marine and hazardous markets, has had an excellent year, achieving 25.6% sales growth and 13% profit growth. Hernis has continued its product development for integrated camera systems, particularly for the cruise liner market. In Active Imaging, the development of the multi media server system for Internet video transmission has been completed, with lower development costs this year of £0.36 million (2000 - £0.54 million) and the first production units have now been shipped to customers. Employees On behalf of the Board, I would like to thank all our employees for their support and dedication in meeting and dealing with the many challenges which arose during the year. Strategy and Prospects The Broadcast Division should during 2002, continue to benefit from market growth outside of the UK and European markets. In particular, the prospects in the South American, Middle East and West African markets remain strong. Furthermore MRC with its significant market US share will benefit from the ongoing momentum of the US digital TV rollout. In the Video Division, Hernis continues to grow its business and has an encouraging order book. American Auto Matrix, the US building controls business, has started to ship new products into the access control sector of its markets. The Division is also looking for increased sales of its video image capture and transmission products during this year. The investments made in research and development, together with the benefits to come from the rationalisation of the Broadcast Division, augur well for the future. The Group has made a good start to the year with the order intake ahead of the same period last year, and, with a strong order book, the Board considers the prospects for the year ahead to be encouraging. ALR Morton Chairman March 25, 2002 Group Profit and Loss Account for the year ended December 31, 2001 Before Exceptional Before Exceptional Note Exceptional Items Total Exceptional Items Total Items (note 2) 2001 Items (note 2) 2000 2001 2001 2000 2000 £'000 £'000 £'000 £'000 £'000 £'000 Turnover Continuing operations 75,869 - 75,869 60,248 - 60,248 Discontinued operations 560 - 560 797 - 797 ------------ ------------ ------------ ------------ ------------ ------------ 1 76,429 - 76,429 61,045 - 61,045 ------------ ------------ ------------ ------------ ------------ ------------ Operating profit Continuing operations before exceptional inventory write down and goodwill amortisation 3,725 (242) 3,483 3,326 (542) 2,784 Exceptional inventory write - (2,227) (2,227) - - - down ------------ ------------ ------------ ------------ ------------ ------------ Continuing operations before 3,725 (2,469) 1,256 3,326 (542) 2,784 goodwill amortisation Goodwill amortisation (1,199) - (1,199) (796) - (796) ------------ ------------ ------------ ------------ ------------ ------------ Continuing operations 2,526 (2,469) 57 2,530 (542) 1,988 Discontinued operations 33 - 33 30 - 30 ------------ ------------ ------------ ------------ ------------ ------------ 1 2,559 (2,469) 90 2,560 (542) 2,018 Profit on disposal of 2 - 15 15 - - - businesses Profit on disposal of freehold 2 - 100 100 - - - land Costs associated with change of - - - - (549) (549) domicile ------------ ------------ ------------ ------------ ------------ ------------ Profit on ordinary activities 2,559 (2,354) 205 2,560 (1,091) 1,469 before interest Interest receivable 214 - 214 605 - 605 Interest payable (1,226) - (1,226) (1,067) - (1,067) ------------ ------------ ------------ ------------ ------------ ------------ (Loss) profit on ordinary 1,547 (2,354) (807) 2,098 (1,091) 1,007 activities before taxation Tax on (loss) profit on 3 76 - 76 (245) - (245) ordinary activities ------------ ------------ ------------ ------------ ------------ ------------ (Loss) profit for the financial 1,623 (2,354) (731) 1,853 (1,091) 762 year Dividends 4 (101) - (101) (405) - (405) ------------ ------------ ------------ ------------ ------------ ------------ Transfer (from) to reserves 1,522 (2,354) (832) 1,448 (1,091) 357 ====== ====== ====== ====== ====== ====== Basic (loss) earnings per share 5 1.60p (2.32)p (0.72)p 1.92p (1.13)p 0.79p ------------ ------------ ------------ ------------ ------------ ------------ Diluted (loss) earnings per 5 1.60p (2.32)p (0.72)p 1.89p (1.11)p 0.78p share ------------ ------------ ------------ ------------ ------------ ------------ Basic earnings per share excluding goodwill amortisation 5 2.78p (2.32)p 0.46p 2.74p (1.13)p 1.61p ------------ ------------ ------------ ------------ ------------ ------------ Dividend per share 0.10p 0.40p ------------ ------------ ------------ ------------ ------------ ------------ Statement of retained profits 2001 2000 £'000 £'000 Profit and loss account brought 2,729 2,018 forward Arising in the financial year (832) 357 Foreign exchange 337 354 ------------ ------------ Profit and loss account carried 2,234 2,729 forward ------------ ------------ Statement of Total Recognised Gains and Losses for the year ended December 31, 2001 2001 2000 £'000 £'000 (Loss) profit for the financial year (731) 762 Translation difference on foreign currency net investments 337 354 ------------ ------------ (394) 1,116 ====== ====== Reconciliation of Movements in Shareholders' Funds for the year ended December 31, 2001 2001 2000 £'000 £'000 (Loss) profit for the financial year (731) 762 Dividends (101) (405) ------------ ------------ (832) 357 Value of share issues in year - 5,375 Change in value of shares to be issued (222) 438 Translation difference on foreign currency net investments 337 354 ------------ ------------ (717) 6,524 Opening equity shareholders' funds 33,596 27,072 ------------ ------------ Closing equity shareholders' funds 32,879 33,596 ====== ====== Balance Sheet as at December 31, 2001 Group Company 2001 2000 2001 2000 £'000 £'000 £'000 £'000 Fixed assets Intangible assets 21,965 23,466 - - Tangible assets 6,032 6,372 21 - Investments 15 19 25,393 27,266 ------------ ------------ ------------ ------------ 28,012 29,857 25,414 27,266 ------------ ------------ ------------ ------------ Current assets Stocks 13,217 17,120 - - Debtors 18,183 18,101 1,458 750 Cash at bank and in hand 3,450 3,450 1,171 1,750 ------------ ------------ ------------ ------------ 34,850 38,671 2,629 2,500 ------------ ------------ ------------ ------------ Creditors - amounts due within one year 18,828 21,120 6,356 4,196 ------------ ------------ ------------ ------------ Net current assets (liabilities) 16,022 17,551 (3,727) (1,696) ------------ ------------ ------------ ------------ Total assets less current liabilities 44,034 47,408 21,687 25,570 Creditors - amounts due after more than one year 10,697 12,956 13,268 15,422 Provisions for liabilities and charges 458 856 - - ------------ ------------ ------------ ------------ Net Assets 32,879 33,596 8,419 10,148 ====== ====== ====== ====== Capital and reserves Called up share capital 2,534 2,534 2,534 2,534 Shares to be issued 216 438 216 438 Merger reserve 27,895 27,895 - - Profit and loss account 2,234 2,729 5,669 7,176 ------------ ------------ ------------ ------------ Equity shareholders' funds 32,879 33,596 8,419 10,148 ====== ====== ====== ====== Group Cash Flow Statement for the year ended December 31, 2001 Notes 2001 2000 £'000 £'000 Net cash inflow from operating activities 6 4,651 676 ------------ ------------ Returns on investments and servicing of finance Interest received 214 739 Interest paid (1,633) (646) ------------ ------------ (1,419) 93 ------------ ------------ Taxation paid (17) (105) ------------ ------------ Capital expenditure Purchase of tangible fixed assets (839) (1,650) Proceeds from sale of tangible assets 277 35 ------------ ------------ (562) (1,615) ------------ ------------ Acquisitions and disposals Purchase of subsidiary undertakings - (27,050) Net debt acquired with subsidiary - (401) Costs of change of domicile - (549) Proceeds from sale of businesses 215 350 ------------ ------------ 215 (27,650) ------------ ------------ Equity dividends paid (405) (275) ------------ ------------ ------------ ------------ Net cash inflow (outflow) before financing 2,463 (28,876) ------------ ------------ Financing Issue of ordinary share capital - 4,988 New long term loans - 11,637 Repayment of bank loans (2,243) (507) Finance lease repayments (104) (287) ------------ ------------ (2,347) 15,831 ------------ ------------ ------------ ------------ Increase (decrease) in cash 116 (13,045) ====== ====== Reconciliation in Net Cash Flow to Movement in Net Debt 2001 2000 £'000 £'000 Increase (decrease) in cash 116 (13,045) Cash inflow from increase in loans - (11,637) Repayment of bank loans 2,243 507 Finance lease payments 104 287 ------------ ------------ Change in net debt cash resulting from cash flows 2,463 (23,888) Effect of foreign exchange changes (120) (41) ------------ ------------ Movement in net cash (debt) 2,343 (23,929) Opening net (debt) cash (11,847) 12,082 ------------ ------------ Closing net (debt) 6 (9,504) (11,847) ====== ====== 1. Segmental Analysis Turnover Operating Profit Net Assets Total Total Total Total Total Total 2001 2000 2001 2000 2001 2000 £'000 £'000 £'000 £'000 £'000 £'000 By division: Broadcast 60,993 46,222 3,835 3,458 14,943 18,451 Video Technology 14,876 14,026 868 947 6,946 5,915 Central - - (978) (1,079) 10,990 9,230 ------------ ------------ ------------ ------------ ------------ ------------ 75,869 60,248 3,725 3,326 32,879 33,596 Other exceptional costs (note 2) - - (242) (542) - - ------------ ------------ ------------ ------------ ------------ ------------ 75,869 60,248 3,483 2,784 32,879 33,596 Exceptional inventory write - - (2,227) - - - down (note 2) Goodwill amortisation - - (1,199) (796) - - ------------ ------------ ------------ ------------ ------------ ------------ Continuing operations 75,869 60,248 57 1,988 32,879 33,596 Discontinued operations 560 797 33 30 - - ------------ ------------ ------------ ------------ ------------ ------------ Total 76,429 61,045 90 2,018 32,879 33,596 ====== ====== ====== ====== ====== ====== Net assets within Central includes group debt, capitalised goodwill and dividends. The exceptional inventory write down and other exceptional costs can be allocated as £1,918,000 (2000 - £nil) to the Broadcast Division and £551,000 (2000 - £542,000) to the Video Technology Division. Goodwill amortisation in the continuing operations is in respect of Advent Communications Limited, Multipoint Communications Limited and in the business of Microwave Radio Communications all of which are within the Broadcast Division. The discontinued operations relate to the Video Technology Division. Turnover Analysis Broadcast Video Technology Discontinued Operations Total 2001 2000 2001 2000 2001 2000 2001 2000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 By market: UK & Ireland 6,302 8,191 2,655 3,471 551 774 9,508 12,436 Rest of Europe 6,660 9,311 3,393 2,648 9 12 10,062 11,971 North America 25,256 11,304 5,327 5,423 - - 30,583 16,727 Asia 11,744 5,756 2,426 2,111 - 11 14,170 7,878 Africa 3,430 6,733 - 15 - - 3,430 6,748 Other 7,601 4,927 1,075 358 - - 8,676 5,285 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 60,993 46,222 14,876 14,026 560 797 76,429 61,045 ====== ====== ====== ====== ====== ====== ====== ====== By origin: UK & Ireland 35,266 33,622 2,890 3,983 560 797 38,716 38,402 Rest of Europe - - 7,549 5,838 - - 7,549 5,838 North America 25,727 12,600 4,437 4,205 - - 30,164 16,805 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 60,993 46,222 14,876 14,026 560 797 76,429 61,045 ====== ====== ====== ====== ====== ====== ====== ====== Net Assets Analysis Total 2001 2000 £'000 £'000 By market: United Kingdom & Ireland 21,308 23,239 Rest of Europe 2,695 2,516 North America 8,876 7,841 ------------ ------------ 32,879 33,596 ====== ====== 2. Exceptional items a) Operating exceptional items 2001 2000 £'000 £'000 Exceptional development costs (355) (542) Redundancy costs (313) - Exceptional credits relating to fair value provisions 426 - ------------ ------------ (242) (542) Exceptional inventory write down (2,227) - ------------ ------------ (2,469) (542) ====== ====== In the year ended December 31, 2001 the Group has made an exceptional provision of £2,227,000 against inventory held in the Broadcast Division following an in depth review of the product lines and the likely future requirements for existing analogue products as more customers switch to digital technology, and the associated future service requirements. In addition, the review of inventory included redundant product lines resulting from the move to common platforms as a result of the further integration of the operating companies. The redundancy costs have also been incurred as part of the integration process. The exceptional credits are in respect of the release of customer and supplier related provisions made at Microwave Radio Communications as part of the fair value adjustments on acquisition. These matters have now been resolved and the amount shown is the net release of provisions no longer required. The exceptional development costs were incurred by Active Imaging in completing the development of the Active Imaging Multi Media Server product, which commenced in 2000. b) Non-operating exceptional items 2001 2000 £'000 £'000 Change of domicile expenses - (549) Profit on disposal of freehold land in continuing business 100 - Profit on disposal of business 110 - Provision against leased properties associated with businesses previously (95) - disposed of ------------ ------------ 115 (549) ====== ====== On July 27, 2001 the business assets of Codepoint Systems were sold for £215,000. The net book value of the assets sold, together with associated costs of disposal were £105,000. On December 21, 2001 the Group disposed of freehold land with a net book value of £90,000 for £190,000. 3. Taxation 2001 2000 £'000 £'000 UK Corporation tax at 30% (2000 - 30%) - - Adjustment in respect of prior years (229) - Overseas taxation 153 245 ------------ ------------ (76) 245 ====== ====== The tax credit of £76,000 is after the utilisation of group losses available for the period of £313,000 (2000: £310,000). 4. Dividends 2001 2000 £'000 £'000 Final - 0.10p per share (2000 - 0.40p per share) 101 405 ====== ====== 5. Earnings per Ordinary Share Earnings per ordinary share is calculated by reference to a weighted average of 101,377,000 (2000 - 96,643,000) ordinary shares in issue through out the year and on the loss after tax of £731,000 (2000 - £762,000 profit). Diluted earnings per share are after taking account of a further 310,000 (2000 - 1,491,000) shares being the dilutive effect of share options. Earnings per share before goodwill and exceptional items excludes after tax amounts relating to goodwill of £1,199,000 (2000: £796,000) and exceptional items of £2,354,000 (2000: £1,091,000). At the date of issue of the report the total number of shares in issue were 101,377,000. Basic Diluted Basic Diluted 2001 2001 2000 2000 £'000 £'000 £'000 £'000 Basic and diluted (loss) earnings per share (0.72)p (0.72)p 0.79p 0.78p Adjustments: Goodwill 1.18p 1.18p 0.82p 0.81p Exceptional items 2.32p 2.32p 1.13p 1.11p ------------ ------------ ------------ ------------ Earnings per share before goodwill and exceptional items 2.78 p 2.78p 2.74 p 2.70 p ====== ====== ====== ====== 6. Notes to the Statement of Cash Flows (a) Reconciliation of operating profit to net cash inflow from operating activities Total Total 2001 2000 £'000 £'000 Operating profit 90 2,018 Depreciation 1,084 920 Amortisation of goodwill 1,199 796 Provision against investments 4 - (Profit) loss on sale of fixed assets (29) 1 Decrease (increase) in stocks 4,016 (2,013) Decrease (increase) in debtors 39 (4,495) (Decrease) increase in creditors (1,259) 3,915 (Decrease) in provisions (493) (466) ------------ ------------ Net cash inflow from operating activities 4,651 676 ====== ====== (b) Analysis of net debt At January 1 Cash Flow Other non-cash Exchange At December 31 movements 2001 2001 Movements £'000 £'000 £'000 £'000 £'000 Cash at bank and in hand 3,450 116 - (116) 3,450 Loans (15,185) 2,243 - (4) (12,946) Finance leases (112) 104 - - (8) ------------ ------------ ------------ ------------ ------------ (11,847) 2,463 - (120) (9,504) ====== ====== ====== ====== ====== 7. Directors Responsibilities The financial information for the year ended December 31, 2001 has been extracted from the full accounts of the Group which contain an unqualified audit report and will be filed, in due course, with Companies House. The auditors have reported on those accounts; their report was unqualified and did not contain statements under section 237 (2) or (3) of the Companies Act 1985. 8. Report and Accounts Copies of the Report and Accounts will be sent to shareholders in due course and will then be available from the registered office at Marlborough House, Charnham Lane, Hungerford, Berkshire, RG17 0EY. This information is provided by RNS The company news service from the London Stock Exchange FFIF

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