Interim Results

Vislink PLC 4 September 2001 4 September 2001 Vislink plc Interim results for the six months ended 30 June 2001 'The Group has benefited from its acquisitions and continues to make progress' Highlights * The Group's sales were up by 93 per cent. to £38.52 million (2000 - £19.94 million). The sales growth has been achieved through a good contribution from the acquisitions made last year and a 6 per cent. increase from the continuing businesses * The Group has increased its EBITA by 209 per cent., helped by acquisitions. The Group's operating profit before goodwill amortisation (EBITA) is £1.7 million (2000 - £0.55 million) * The Group has increased profit before interest and tax by 223 per cent. to £1.1million (2000 - £0.34 million) * Earnings per share from continuing operations excluding goodwill amortisation rose by 69 per cent. to 1.00 pence (2000 - 0.59 pence) * In July the business and certain assets of Codepoint, the Video Division's access control business, were sold for net cash of £0.28 million Commenting on the interim announcement, Bob Morton, Chairman of Vislink plc said: 'The current global economic climate has undoubtedly lengthened the sales cycle and made trading tougher. The Group has achieved an acceptable level of orders and sales during the first half and under these conditions the prospects for the second half remain satisfactory.' - Ends - For further information on 4 September 2001, please contact: Ian Scott-Gall 01488 685500 Chief Executive, Vislink plc James Trumper 01488 685500 Group Finance Director Richard Dyett 020 7597 5033 Investec Henderson Crosthwaite Chairman's Statement Introduction I am pleased to report that the Group has continued to make progress in a challenging trading environment. Results for the six months to 30 June 2001 The Group's sales for the period were up by 93 per cent. to £38.52 million (2000 - £19.94 million). The sales growth has been achieved through a good contribution from the acquisitions made last year and a 6 per cent. increase from the continuing businesses. The Group's order intake in the first half was £39.80 million (2000 - £26.94 million). The Group significantly increased its operating profit before goodwill amortisation, to £1.69 million (2000 - £0.55 million). Goodwill amortisation for the period was £0.62 million (2000 - £0.21 million). The profit before interest and tax at £1.08 million was well ahead of last year's £0.34 million. In the half year there was a net interest charge of £0.53 million compared with a net interest receipt of £0.09 million for the previous half year. This charge reflects the cost of the increased Group debt following the acquisition of Microwave Radio Communications, in July 2000. The Group's profit on ordinary activities before tax for the period rose by 31 per cent. to £0.55 million (2000 - £0.42 million). The Group had a positive cash flow from operations of £0.71 million, although net debt increased slightly in the period to £12.43 million (31 December 2000 - £11.84 million). Earnings per share Earnings per share from continuing operations excluding goodwill amortisation rose 69 per cent. to 1.00 pence (2000 - 0.59 pence). Basic earnings per share increased 11 per cent. to 0.40 pence (2000 - 0.36 pence). Dividends As in previous years the Board is not recommending an interim dividend for the half year in line with the Group's stated strategy only to recommend an annual dividend. Business Review Broadcast and Telecommunications Division Financial review The Division's sales for the six months were £30.90 million (2000 - £12.7 million). Satisfactory contributions were made by the recent acquisitions, Microwave Radio Communications ('MRC') of £11.2 million (2000 - nil) and Advent Communications Limited ('Advent') of £8.18 million (2000 - £1.92 million). Continental Microwave ('CML'), the larger of the original divisional companies has also made a positive contribution to the half year with sales of £7.6 million (2000 - £5.9 million). The Division's operating profit before goodwill increased to £2.24 million (2000 - £0.81 million). The goodwill amortisation was £0.62 million (2000 - £ 0.21 million) giving a net operating profit of £1.62 million (2000 - £0.60 million). General review The Division started the year with a good order book. Trading during the first half has been tougher, particularly in the second quarter when there was a noticeable lengthening of the sales cycle. However the Division has won some significant orders and has maintained its order book at £13.8 million. During the first half year, the general economic slow down was felt mainly by our customers in the UK and the US and therefore the larger contract wins have been from outside these markets. The most notable included a £1.0m contract won by CML from a Taiwanese broadcaster for the supply of a digital microwave system that will carry digital television signals through the majority of the island. CML has also won a second £2.30 million order for a state sponsored TV station and transmitter system for a West African country following on from a successful installation last year. A Middle East customer has awarded Multipoint a US$0.9 million (£0.65 million) contract for the design, manufacture, installation and commissioning of a large fixed satellite up-link which will have the capability of simulcasting multiple analogue and digital signals from a single antenna. MRC has won contracts to supply two Korean broadcast companies with digital TV systems which have a contract value of US$1.0 million (£0.72 million). Advent has won four projects for £1.0 million of satellite equipment for a Middle East customer and also a £1.4 million contract to supply portable satellite communications equipment to a Far East customer. In addition, we remain the nominated supplier on two large contracts which are still expected to make a contribution to the fourth quarters sales with the balance being shipped next year. In the US Broadcast TV market, the FCC mandated timetable for the stations to have Digital TV broadcast capability continues to benefit MRC which is receiving an encouraging level of orders for its studio to transmitter microwave links. Video Technology Division Financial review The Division's sales for the half year increased to £7.21 million (2000 - £6.89 million) as a result of good sales growth from Hernis, Datacell and American Auto-Matrix ('AAM'). Active Imaging had lower comparative sales due to the reduced demand for Internet based products. The Division's operating profit for the half year at £0.30 million was slightly behind the previous year's £0.43 million due to the latter including the £0.11 million one-off sale of intellectual property rights by AAM, our US buildings control business. General review Hernis, our Norwegian based high quality CCTV systems integrator, has had a record order intake in the first half year with orders of £4.22 million (2000 - £3.23 million). Significant orders included systems for two onshore gas plants, worth £0.5 million and ten systems for liquid natural gas vessels worth £0.6 million. In addition, in May, Hernis won the contract to supply the on-board security and safety CCTV system to the 'World' - the world's first residential ocean going resort liner. These orders have come from a number of shipping and oil and gas companies and underline the global strength of Hernis. AAM has won a US$1.0 million (£0.72 million) maintenance, service and installation contract for a key local customer in Pittsburg. This represents the first of such installation and service contracts and is expected to generate a satisfactory result for AAM over the next 12 months. The Division's order book has increased, as a result of the strong order input in the half year, to £4.9 million (December 31, 2000 - £3.6 million). We have continued the investment program to enhance the Internet video based systems developed by Active Imaging. The Active Imaging Multimedia Server (AIMMS) project is currently at beta testing stage and the product will be launched in the second half. Disposal of Codepoint On July 28 we announced the sale of the business and certain assets of Codepoint, the Division's access control business. Codepoint had sales of £ 0.79 million and an operating profit of £0.03 million for the year ended 31 December 2000. The sale is expected to generate net cash of £0.28 million and a modest gain, which will be included in the full year results. Strategy and Prospects The Broadcast and Telecommunications Division continues to work on the integration of its businesses through the joint development of new products and the co-ordinated management of its international sales and marketing. The global reach of the Division has been demonstrated by its success in winning orders outside of the UK and US markets. The US market for digital TV continues to be underpinned by the firm position being taken by the Federal Communications Commission (FCC) for the dates by which the TV stations have to have a digital capability. The UK market would benefit from a similar clear statement, without which the roll out of the next phase of the UK's Digital Terrestrial TV network will continue to drift. The Video Technology Division has had an encouraging first half and is expected to continue to grow organically. The current global economic climate has undoubtedly lengthened the sales cycle and made trading tougher. The Group has achieved an acceptable level of orders and sales during the first half and under these conditions the prospects for the second half remain satisfactory. A L R Morton Chairman 4 September 2001 GROUP PROFIT AND LOSS ACCOUNT for the six months ended 30 June 2001 Six months Six months Year to to ended 30 June 30 June 31 Dec 2001 2000 2000 £'000 £'000 £'000 Turnover Continuing operations 38,111 19,590 60,255 Discontinued operations 409 354 790 ---------- ---------- ---------- 38,520 19,944 61,045 ---------- ---------- ---------- Operating Profit Continuing operations before goodwill 1,691 553 2,784 Goodwill on continuing operations (616) (210) (796) ---------- ---------- ---------- 1,075 343 1,988 Discontinued operations 6 (8) 30 ---------- ---------- ---------- 1,081 335 2,018 ---------- ---------- ---------- Exceptional costs from change of domicile - - (549) ---------- ---------- ---------- Profit on ordinary activities before interest 1,081 335 1,469 Interest payable (615) (178) (1,067) Interest receivable 87 265 605 ---------- ---------- ---------- Profit on ordinary activities before taxation 553 422 1,007 Tax on profit on ordinary activities (148) (88) (245) ---------- ---------- ---------- Profit for the financial period 405 334 762 Dividends - - (405) ---------- ---------- ---------- Transfer to reserves 405 334 357 ===== ===== ===== Basic earnings per share 0.40p 0.36p 0.79p ===== ===== ===== Fully diluted earnings per share 0.39p 0.35p 0.78p ===== ===== ===== Earnings per share from continuing operations 1.00p 0.59p 2.15p excluding goodwill ===== ===== ===== Dividend per share - - 0.40p ===== ===== ===== STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for the six months ended 30 June 2001 Six months to Six months to Year ended 30 June 2001 30 June 2000 31 Dec 2000 £'000 £'000 £'000 Profit for the financial period 405 334 762 Translation difference on foreign 1,080 276 354 currency net investments ---------- ---------- ---------- Total recognised gains and losses 1,485 610 1,116 ===== ===== ===== RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS for the six months ended 30 June 2001 Six months to Six months to Year ended 30 June 2001 30 June 2000 31 Dec 2000 £'000 £'000 £'000 Profit for the financial period 405 334 762 Dividends - - (405) ---------- ---------- ---------- 405 334 357 Value of share issues in year - 1,010 5,375 Value of shares to be issued (170) - 438 Translation difference on foreign 1,080 276 354 currency net investments ---------- ---------- ---------- 1,315 1,620 6,524 Opening equity shareholders' funds 33,596 27,072 27,072 ---------- ---------- ---------- Closing equity shareholders' funds 34,911 28,692 33,596 ===== ===== ===== GROUP BALANCE SHEET as at 30 June 2001 30 June 2001 30 June 2000 31 Dec 2000 £'000 £'000 £'000 Fixed assets Intangible assets 23,143 16,074 23,466 Tangible assets 6,344 5,257 6,372 Financial assets 19 19 19 ---------- ---------- ---------- 29,506 21,350 29,857 ---------- ---------- ---------- Current assets Stocks 16,697 10,558 17,120 Debtors 16,929 11,153 18,101 Cash at bank and in hand 1,677 2,090 3,450 ---------- ---------- ---------- 35,303 23,801 38,671 ---------- ---------- ---------- Creditors - amounts falling due within one year Borrowings 2,283 716 2,341 Creditors 15,273 10,752 18,779 ---------- ---------- ---------- 17,556 11,468 21,120 ---------- ---------- ---------- Net current assets 17,747 12,333 17,551 Total assets less current liabilities 47,253 33,683 47,408 Creditors - amounts falling due after more than one year Borrowings 11,820 3,659 12,956 Creditors 0 37 0 ---------- ---------- ---------- 11,820 3,696 12,956 ---------- ---------- ---------- Provisions for liabilities and charges 522 1,295 856 ---------- ---------- ---------- 34,911 28,692 33,596 ===== ===== ===== Capital and reserves Called up share capital 2,534 2,340 2,534 Shares to be issued 268 0 438 Merger reserve 27,895 23,724 27,895 Profit and loss account 4,214 2,628 2,729 ---------- ---------- ---------- Equity shareholders' funds 34,911 28,692 33,596 ===== ===== ===== SUMMARISED STATEMENT OF CASH FLOWS for the six months ended 30 June 2001 Six months to Six months to Year ended 30 June 2001 30 June 2000 31 Dec 2000 £'000 £'000 £'000 Net cash inflow (outflow) from 714 (1,212) 676 operating activities Returns on investments and servicing (905) 93 93 of finance Taxation (130) (66) (105) Capital expenditure (397) (807) (1,615) Acquisitions and disposals - (12,994) (27,650) Equity dividends paid - - (275) ---------- ---------- ---------- Net cash outflow before financing (718) (14,986) (28,876) Financing (1,194) 547 15,831 ---------- ---------- ---------- Decrease in cash (1,912) (14,439) (13,045) ===== ===== ===== RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT Six months Six months Year ended to to 31 Dec 30 June 2001 30 June 2000 2000 £'000 £'000 £'000 Decrease in cash (1,912) (14,439) (13,045) Cash inflow from increase in loans - (335) (11,637) Repayment of bank loans 1,117 289 507 Finance lease repayments 77 124 287 ---------- ---------- ---------- Change in net debt resulting from cash (718) (14,361) (23,888) flows Effect of foreign exchange changes 139 (6) (41) ---------- ---------- ---------- Movement in net debt (579) (14,367) (23,929) Opening net (debt) cash (11,847) 12,082 12,082 ---------- ---------- ---------- Closing net debt (12,426) (2,285) (11,847) ===== ===== ===== NOTES TO THE INTERIM ACCOUNTS for the six months ended 30 June 2001 1. SEGMENTAL REPORT Turnover Operating Profit Six Six Year Six Six Year months to months to ended months to months to ended 30 June 30 June 31 Dec 30 June 30 June 31 Dec 2001 2000 2000 2001 2000 2000 By Division: £'000 £'000 £'000 £'000 £'000 £'000 Broadcast and 30,899 12,701 46,222 2,239 806 3,458 Telecommunications Video Technology 7,212 6,889 14,033 296 431 947 Central costs - - - (564) (577) (1,079) ---------- ---------- -------- ----- ------- -------- 38,111 19,590 60,225 1,971 660 3,326 Exceptional - - - (280) (107) (542) development costs Goodwill - - - (616) (210) (796) amortisation ---------- ---------- ---------- ------- ------- ------- Ongoing operations 38,111 19,590 60,225 1,075 343 1,988 ---------- ---------- ---------- ------- ------- ------- Discontinued 409 354 790 6 (8) 30 operations ---------- ---------- ---------- ------- ------- ------- Group total 38,520 19,944 61,045 1,081 335 2,018 ===== ===== ===== ===== ===== ===== Goodwill amortisation is in respect of Advent Communications Limited, Multipoint Communications Limited and Microwave Radio Communications LLC. All the companies are within the Broadcast and Telecommunications Division. Turnover Analysis Turnover Six months to Six months to Year ended 30 June 2001 30 June 2000 31 Dec 2000 By market: £'000 £'000 £'000 Continuing operations UK & Ireland 5,693 5,225 11,661 Rest of Europe 6,180 4,072 11,971 North America 15,694 3,503 16,727 Asia 6,094 2,740 7,867 Africa 708 2,301 6,748 Other 3,742 1,749 5,281 ---------- ---------- ---------- 38,111 19,590 60,255 Discontinued operations UK & Ireland 404 337 775 Rest of Europe - 12 - North America - 5 - Asia 5 - 11 Africa - - - Other - - 4 ---------- ---------- ---------- Group Total 38,520 19,944 61,045 ===== ===== ===== 2. TAX ON PROFIT ON ORDINARY ACTIVITIES The tax charge for the six months ended 30 June 2001 is based on the effective tax rate which it is estimated will apply on earnings for the full year. 3. DIVIDENDS No interim dividend is proposed for the period. In 2000 there was no interim dividend and the final dividend was 0.4 pence. 4. EARNINGS PER ORDINARY SHARE Earnings per share is calculated by reference to a weighted average of 101,377,000 ordinary shares in issue during the period (30 June 2000 - 92,988,000; 31 December 2000 - 96,643,000). The fully diluted earnings per share is based on 102,829,000 ordinary shares in issue during the period (30 June 2000 - 94,771,000; 31 December 2000 - 98,134,000). Earnings per share from continuing operations excludes after tax profits relating to discontinued operations of £6,000 (30 June 2000 - £8,000 loss and 31 December 2000 - £30,000 profit). Six months to Six months to Year ended 30 June 2001 30 June 2000 31 Dec 2000 Basic earnings per share 0.40p 0.36p 0.79p Adjustments: Goodwill 0.61p 0.22p 0.82p Result after taxation from operations (0.01)p 0.01p (0.03)p to be discontinued Non-operating exceptional items - - 0.57p ---------- ---------- ---------- Earnings per share from ongoing 1.00p 0.59p 2.15p operations before goodwill ---------- ---------- ---------- Fully diluted earnings per share 0.39p 0.35p 0.78p ===== ===== ===== 5. RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOW FROM OPERATING ACTIVITIES Six months Six months Year ended to to 31 Dec 30 June 30 June 2000 2001 2000 £'000 £'000 £'000 Operating profit 1,081 335 2,018 Depreciation 567 400 920 Amortisation of goodwill 616 210 796 (Profit) loss on sale of fixed assets (16) - 1 Decrease (increase) in stocks 764 49 (2,013) Decrease (increase) in debtors 1,459 (777) (4,495) (Decrease) increase in creditors (3,423) (1,402) 3,915 (Decrease) in provisions (334) (27) (466) ---------- ---------- ---------- Net cash inflow (outflow) from operating 714 (1,212) 676 activities ===== ===== ===== 6. PROFIT AND LOSS ACCOUNT The profit and loss account comprises: 30 June 2001 30 June 2000 31 Dec 2000 £'000 £'000 £'000 Accumulated profits 8,479 5,691 6,378 Goodwill written off (4,265) (3,063) (3,649) ---------- ---------- ---------- 4,214 2,628 2,729 ===== ===== ===== 7. POST BALANCE SHEET EVENTS On July 28, 2001 the Company sold the business and assets of the trade of Codepoint, the buildings access control business to Total Security Protection Limited for a consideration of £0.22 million (before costs). The book value of the assets disposed of was £0.07 million. 8. BASIS OF PREPARATION The interim accounts, which are unaudited, have been prepared in accordance with the accounting policies set out in the Annual Report and Accounts for the year ended 31 December 2000. The financial information for the preceding year is based upon the statutory accounts for the ended 31 December 2000, upon which the auditors gave an unqualified opinion and which have been delivered to Companies House.

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