Final Results - Year to 31 Dec 1999 & Acquisition

Vislink PLC 29 March 2000 28/03/00 Vislink plc Preliminary results for the year ended 31 December 1999 and announcement of the proposed acquisition of Advent Communications Limited Key announcements - Disposal programme of non-core businesses completed, raising £26.7 million net of costs, resulting in net free cash at year end of £12.1 million - Acquisition of Advent Communications Limited for £14.08 million creates a broader-based satellite communications business - Re-branding of the Company as Vislink plc - New management team focused on the strategy to develop the Group's opportunities in digital wireless technology and video on the internet Results for the year ended 31 December 1999 - continuing operations - Continuing businesses report an operating profit of £2.0 million (1998 - £2.1 million) - Earnings per share on continuing businesses up 36% to 1.31p (1998 - 0.96p) - The Board are recommending a final dividend of 0.3p (1998 final dividend - 1.0p) Group results for the year ended 31 December 1999 - Operating loss on discontinued businesses of £2.2million (1998 - profit of £1.9 million) and exceptional loss on sale of businesses of £20.3 million (1998 - £3.7 million) - Group loss for the year after taxation of £21.8million (1998 - £1.5 million) - Loss per share 23.81p (1998 - 1.63p) Bob Morton, Chairman of Vislink, commented on the announcement: '1999 was a year of significant change. Following the appointment of our new Chief Executive on 24 March 1999, we have achieved the first part of our declared strategy by disposing of our non-core businesses and generating funds for investment in growth opportunities. 'The Group is carefully looking at opportunities for expansion, both organically and through acquisition, as part of its strategy to focus on, and invest in, the higher-growth technology businesses. 'The acquisition of Advent provides the opportunity to create and grow a much broader-based satellite, broadcast and telecommunications business. 'The enlarged Group will be able to benefit from the growth in telecommunications and broadcasting markets arising from the development of internet data and broadcast quality digital video.' For further information on Wednesday 29 March 2000, please contact: Ian Scott-Gall 020 7353 1500 Chief Executive, Vislink plc James Trumper 020 7353 1500 Finance Director, Vislink plc Andrew Sharkey/Emmanuel Kenning 020 7353 1500 Luther Pendragon Chairman's Statement 1999 was a year of significant change. Following the appointment of our new Chief Executive on 24 March 1999, we have achieved the first part of our declared strategy by disposing of our non-core businesses and generating funds for investment into future growth opportunities. The Group is carefully looking at opportunities for expansion, both organically and through acquisition, as part of its strategy to focus on and invest in the higher-growth technology businesses, which form the core of the Group. Strategy The new name and the new management team represent a new beginning for the Group. The focus on the Broadcast and Telecommunications and Video Technology Divisions, together with the opportunities afforded to them by the growth in digital wireless technology and video on the internet, provides the platform for significant future growth. Acquisition of Advent Communications Limited I am pleased to announce that we have reached agreement to purchase the entire issued share capital of Advent Communications Limited ('Advent'). The Company has conditionally agreed to acquire Advent for a consideration of £14.08 million, to be satisfied by the payment of £12.46 million in cash and the issue of 1.2 million new Ordinary Shares (valued at £1.62 million on the basis of the closing mid-market price of an ordinary share of 135.0p on 28 March 2000, being the last business day prior to the publication of this announcement). In addition, Advent will pay £1.14 million in pre-sale dividends to its current shareholders and post-completion pension contributions of £0.88 million to its current directors. A further announcement will be made shortly and further details of the transaction and the business of Advent are set out in a circular to be sent to shareholders. The acquisition of Advent provides the opportunity to create a much broader-based satellite communications business and to grow our overall broadcast and telecommunications business. The enlarged Broadcast and Telecommunications Division will be able to benefit from the growth in telecommunications and broadcasting markets arising from the development of internet data and broadcast quality digital video. New Management Team On 1 December 1999, the Board announced the appointment of James Trumper as Finance Director with effect from 24 January 2000 following the resignation of Piero Fileccia. James was formerly Finance Director of Mitsubishi Electric Corporation PC Division and Bluebird Toys plc. On 1 September 1999, Ian Macfarlane was appointed as Managing Director of the Video Technology Division. Ian Aizlewood continues as Managing Director of the Broadcast and Telecommunications Division. The new team are working closely with the Chief Executive, Ian Scott-Gall, to implement the strategy for the growth of the Group. Disposal Programme In my interim statement of 23 September 1999, I reported the sale of the US Aerospace business and also, subject to shareholder approval which was subsequently given at the Extraordinary General Meeting held on 11 October 1999, the sale of the UK Aerospace Division and the Electrical Division. On 4 October 1999, we announced the sale of the business and assets of the UK Security Division together with the shares in the related Belgium and Dutch distribution companies and our Security Division interests in Singapore and Thailand. The printed circuit board manufacturing company, Tru-Lon Printed Circuits (Royston) Limited, was sold on 21 October 1999 and the 49 per cent interest in our joint venture company, Automotive Motion Technology Limited, was sold on 21 December 1999. This completed the disposal and reorganisation programme, which realised £28.1 million of gross proceeds before disposal costs. Reduction in Share Premium Account On 18 November 1999, I wrote to you setting out the proposal to reduce the Company's share premium account by £23.83 million. The underlying reasons behind the proposal were given in that letter. The High Court in Dublin approved the proposed reduction in the share premium on 20 December 1999 and this reduction is reflected in the Company's balance sheet. Results for the Year The overall Group results were dominated by the loss arising from writing back £20.0 million of goodwill, previously written off to reserves, in respect of the businesses and assets disposed of during the year. The losses on disposal were £20.3 million. Together with the trading losses of the discontinued businesses to their point of sale, which amounted to £2.2 million, the total loss arising from the businesses and assets that were sold was £22.5 million. The continuing businesses, our core companies for the future, generated an operating profit of £3.4 million on sales of £43.4 million. Central costs of £1.4 million and net interest charges in the year of £0.7 million, however, reduced the ongoing businesses' pre tax profit to £1.3 million for the year. Earnings Per Share The earnings per share of the continuing businesses were 1.31p (1998 - 0.96p) being an increase of 36% on the previous year. The loss per share attributed to the discontinued businesses and exceptional items was 25.12p (1998 - 2.59p). This has resulted in an overall loss per share of 23.81p (1998 - 1.63p). Dividend The Board is recommending a dividend of 0.3p (1998 full year dividend - 1.5p) for the year in line with the Group's strategy to grow by investment in our core businesses and by acquisition. It is the Board's intention to recommend only an annual dividend in future. The dividend, subject to shareholder approval at the next Annual General Meeting, will be paid on 4 July 2000 to shareholders on the register at 14 April 2000. Employees On behalf of the Board I would like to express our appreciation and thanks to all our employees for their support and commitment during a year of significant change. Retirement Ted Russell, our President since 1988 and a former Chairman from 1950 to 1988, has decided to retire with effect from 31 December 1999. On behalf of the Board, I would like to thank Ted for his total support and commitment to the Group over the years. Current Trading and Prospects The Group, after two months trading, is currently performing in line with its budgets. Across the Group a number of interesting orders have recently been won. These include orders for our internet web image products supplied by our Active Imaging business, orders to equip two cruise liners being built for Royal Caribbean Cruises Limited with an integrated CCTV system for both external and internal use and an order to supply satellite systems to provide high speed internet access combined with voice, data and fax traffic in one corporate communications system for a customer's European regional offices. The Board considers that prospects for continuing growth in the Group's two divisions remain good. A L R Morton Chairman Group Profit and Loss Account for the year ended 31 December 1999 Note 1999 1998 £'000 £'000 Turnover Continuing operations 43,383 43,639 Discontinuing operations 38,770 70,539 ________________ 1 82,153 114,178 ________________ Operating profit (loss) Continuing operations 1,969 2,145 Discontinuing operations (2,154) 1,943 ________________ 1 (185) 4,088 ________________ Exceptional loss on sale of businesses (including goodwill of £20.0 million previously written off (1998 - £75,000)) 2 (20,332) (3,703) ________________ (Loss) profit on ordinary (20,517) 385 activities before interest Interest payable (829) (1,111) Interest receivable 176 - ________________ Loss on ordinary activities before taxation (21,170) (726) ________________ Tax on loss on ordinary activities 3 (679) (770) Loss for the financial year (21,849) (1,496) Dividends Paid - 459 Proposed 275 918 ________________ 4 275 1,377 ________________ Transfer from reserves (22,124) (2,873) ________________ ________________ Basic and diluted loss per share 5 (23.81)p (1.63)p ________________ ________________ Earnings per share from continuing operations 5 1.31p 0.96p ________________ ________________ Statement of Total Recognised Gains and Losses for the year ended 31 December 1999 1999 1998 £'000 £'000 Loss for the financial year (21,849)(1,496) Translation difference on foreign currency net investments 8 (78) ________________ (21,841) (1,574) ________________ ________________ Reconciliation of Movements in Shareholders' Funds for the year ended 31 December 1999 1999 1998 £'000 £'000 Loss for the financial year (21,849)(1,496) Dividends (275)(1,377) ________________ (22,124)(2,873) Value of share issues in year - 11 Goodwill written off on prior year acquisitions - (241) Goodwill on the disposal of businesses 19,955 75 Translation difference on foreign currency net investments 8 (78) ________________ (2,161) (3,106) Opening equity shareholders' funds 29,233 32,339 ________________ Closing equity shareholders' funds 27,072 29,233 ________________ ________________ Balance Sheet as at 31 December 1999 Group Company 1999 1998 1999 1998 £'000 £'000 £'000 £'000 Fixed assets Intangible assets 2,652 2,796 - - Tangible assets 3,876 11,851 - - Financial assets 19 46 9,908 52,792 _______________________________ 6,547 14,693 9,908 52,792 _______________________________ Current assets Stocks 8,403 21,720 - - Debtors 9,350 27,755 1,427 835 Cash at bank and in hand 16,466 1,052 14,514 5 ________________________________ 34,219 50,527 15,941 840 ________________________________ Creditors - amounts due within one year 8,781 30,242 498 1,246 ________________________________ Net current assets (liabilities) 25,438 20,285 15,443 (406) ________________________________ Total assets less current 31,985 34,978 25,351 52,386 liabilities Creditors - amounts due 3,591 4,646 30 60 after one year Provisions for liabilities 1,322 1,099 100 - and charges ________________________________ Net Assets 27,072 29,233 25,221 52,326 ________________________________ ________________________________ Capital and reserves Called up share capital 2,182 2,182 2,182 2,182 Share premium account 21,422 45,255 21,422 45,255 Other reserves 1,450 1,450 1,450 1,450 Profit and loss account 2,018 (19,654) 167 3,439 ________________________________ Equity shareholders' funds 27,072 29,233 25,221 52,326 ________________________________ ________________________________ Group Cash Flow Statement for the year ended 31 December 1999 1999 1998 £'000 £'000 Net cash inflow from 4,455 2,043 operating activities ________________ Returns on investments and servicing of finance Interest received 32 - Interest paid (796) (1,117) ________________ (764) (1,117) ________________ Taxation paid (1,407) (844) ________________ Capital expenditure Purchase of tangible fixed assets (1,817) (1,989) Proceeds from sale of fixed assets 270 214 ________________ (1,547) (1,775) ________________ Acquisitions and disposals Purchase of subsidiary undertakings (30) (1,888) Purchase of investments - (6) Proceeds from sale of businesses 24,718 - ________________ 24,688 (1,894) ________________ Equity dividends paid (918) (1,300) ________________ Net cash inflow (outflow) before financing 24,507 (4,887) ________________ ________________ Financing Issue of ordinary share capital - 11 New long term loans 360 2,000 Repayment of bank loans (547) (543) Finance lease repayments (836) (751) ________________ (1,023) 717 ________________ Increase (decrease) in cash 23,484 (4,170) ________________ ________________ Reconciliation of Net Cash Flow to Movement in Net Debt 1999 1998 £'000 £'000 Increase (decrease) in cash 23,484 (4,170) Cash inflow from increase in loans (360) (2,000) Repayment of bank loans 547 543 Finance lease payments 836 751 ________________ Change in net cash (debt) resulting from cash flows 24,507 (4,876) Purchase of tangible fixed (414) (1,046) assets with finance leases Finance leases of 850 8 undertakings sold Bank loans of undertakings sold 28 - Effect of foreign exchange 11 14 changes ________________ Movement in net cash (debt) 24,982 (5,900) Opening net debt (12,900) (7,000) ________________ Closing net cash (debt) 12,082(12,900) ________________ ________________ 1. Segmental Analysis Turnover Operating Net Assets Profit Total Total Total Total Total Total 1999 1998 1999 1998 1999 1998 £'000 £'000 £'000 £'000 £'000 £'000 By division: Broadcast and 28,540 26,391 2,537 2,535 9,148 6,923 Telecommunications Video Technology 14,843 17,248 901 1,037 5,172 4,647 Central - - (1,325) (1,355) 12,752 (9,520) Goodwill - - (144) (72) - - amortisation _______________________________________________ Continuing 43,383 43,639 1,969 2,145 27,072 2,050 operations Discontinuing 38,770 70,539 (2,154) 1,943 - 27,183 operations _______________________________________________ Total 82,153 114,178 (185) 4,088 27,072 29,233 _______________________________________________ _______________________________________________ Goodwill amortisation is in respect of Multipoint Communications Limited, a Broadcast and Telecommunications Division company. Net assets included within Central include group debt, capitalised goodwill and dividends. Turnover Analysis Total Broadcast & Video Discontinued Telecom- Technology Operations communications 1999 1998 1999 1998 1999 1998 1999 1998 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 By market: UK & 46,901 73,900 12,914 13,025 4,366 5,806 29,621 55,069 Ireland Rest of 13,497 15,664 6,492 5,117 3,117 3,320 3,888 7,227 Europe North 9,562 11,206 1,466 1,703 4,771 5,555 3,325 3,948 America Asia 5,492 5,512 2,490 1,540 2,021 2,017 981 1,955 Other 6,701 7,896 5,178 5,006 568 550 955 2,340 ______________________________________________________________ 82,153 114,178 28,540 26,391 14,843 17,248 38,770 70,539 ______________________________________________________________ ______________________________________________________________ By origin: UK & 66,424 95,483 25,785 22,529 4,492 6,709 36,147 66,245 Ireland Rest of 6,192 6,952 - - 5,817 5,746 375 1,206 Europe North 9,537 11,743 2,755 3,862 4,534 4,793 2,248 3,088 America ______________________________________________________________ 82,153 114,178 28,540 26,391 14,843 17,248 38,770 70,539 ______________________________________________________________ ______________________________________________________________ Net Asset Analysis Total 1999 1998 £'000 £'000 By market: United Kingdom & Ireland 21,318 21,052 Rest of Europe 2,228 2,463 North America 3,526 5,718 ________________ 27,072 29,233 ________________ ________________ 2. Exceptional items 1999 1998 £'000 £'000 Loss on disposal of Aerospace Division 1,454 - Loss on disposal of Electrical Division 3,391 - Loss on disposal of Security Division 15,013 - Provision against investment in - 3,250 Automotive Motion Technology Limited (Profit) on sale of investment in (572) - Automotive Motion Technology Limited Loss on the disposal of other businesses 1,046 75 Adjustment to the sale of businesses - 378 in prior years ________________ 20,332 3,703 ________________ ________________ 3. Taxation 1999 1998 £'000 £'000 UK Corporation tax at - 600 30.25% (1998 - 31%) Advance corporation tax written off 733 - Adjustment in respect of prior years 631 450 Overseas taxation 115 170 Deferred taxation (800) (450) _______________ 679 770 _______________ _______________ 4. Dividends 1999 1998 £'000 £'000 Interim - nil (1998 - - 459 0.50p per share) Final - 0.30p per share 275 918 (1998 - 1.00p per share) _______________ 275 1,377 _______________ _______________ In 1999 there is no UK tax credit (1998 - 0.25p) attached to the final dividend. 5. Earnings (loss) per Ordinary Share Earnings (loss) per ordinary share is calculated by reference to a weighted average of 91,767,000 (1998 - 91,754,000) ordinary shares in issue during the period. Earnings per share from continuing operations excludes after tax losses relating to discontinued operations of £2,718,000 (1998 - profit of £1,943,000) and exceptional items of £20,332,000 (1998 - £4,323,000). At the date of the preliminary announcement the number of shares in issue was 92,959,000. 1999 1998 £'000 £'000 Basic and diluted earnings per share (23.81)p (1.63)p Adjustments: Loss (profit) after taxation 2.96p (2.12)p from discontinued operations Exceptional items 22.16p 4.71p __________________ Earnings per share from 1.31p 0.96p continuing operations __________________ __________________ 6. Notes to the Group Cash Flow Statement (a) Reconciliation of operating (loss) profit to net cash inflow from operating activities 1999 1998 £'000 £'000 Operating (loss) profit (185) 4,088 Depreciation 1,710 2,067 Amortisation of goodwill 144 72 Provision against investments 6 20 (Profit) on sale of fixed assets (10) (54) (Increase) in stocks (1,477) (1,924) Decrease (increase) in debtors 6,581 20 (Decrease) in creditors (1,854) (1,902) (Decrease) in provisions (460) (344) _________________ Net cash inflow from 4,455 2,043 operating activities _________________ _________________ (b) Analysis of net debt Other At 1 Cash non- Exchange At 31 January flow cash movements December movements £'000 £'000 £'000 £'000 £'000 Cash at bank and in hand 1,052 15,415 - (1) 16,466 Bank overdrafts (8,069) 8,069 - - - Loans (4,284) 187 28 12 (4,057) Finance leases (1,599) 836 436 - (327) ________________________________________________ (12,900) 24,507 464 11 12,082 ________________________________________________ ________________________________________________ (c) Cash flow from disposals The non-core businesses which were disposed of during the year contributed £1,817,000 to the net operating cash flows and paid £211,000 in respect of interest, £699,000 in respect of capital expenditure and £154,000 in respect of taxation, giving rise to a net cash inflow before financing of £753,000. 7. Subsequent Events On 29 March 2000 the Company announced its intention to acquire the entire issued share capital of Advent Communications Limited for a consideration of £14,078,000 to be satisfied by the payment of £12,458,000 in cash on completion of the acquisition, the issue of 504,000 new ordinary shares to the Advent Directors on completion and the issue of 696,000 ordinary shares to the Advent Directors on the second anniversary of completion if they remain employed by Advent at that date. On the basis of the closing mid-market price of an ordinary share of 135.0p on 28 March 2000, being the last business day prior to the publication of this statement, the 1.2 million new ordinary shares to be issued in connection with the Acquisition Agreement are valued at £1,620,000. In addition, a pre-sale dividend of £1,142,000 will be paid by Advent to its current shareholders and a post-completion pension contribution of £880,000 in aggregate will be paid by Advent to the Advent Directors' occupational pension schemes. The acquisition is subject to the approval of shareholders at an Extraordinary General Meeting to be held on 17 April 2000. 8. Directors Responsibilities The financial information summarised above does not constitute statutory accounts within the meaning of Section 19 of the Companies (Amendment) Act 1986 of Ireland. The financial information for the year ended 31 December 1999 has been extracted from the full accounts of the Group which contain an unqualified audit report and will be filed, in due course, with the Companies Registration Office in Ireland. 9. Report and Accounts Copies of the Report and Accounts will be sent to shareholders in due course and will be available from the registered office at Brookfield House, Brookfield Terrace, Blackrock, Co. Dublin, Ireland.

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