Interim Results
Vislink PLC
04 September 2002
Vislink plc
Interim results for the six months ended 30 June 2002
'The Group has benefited from a strong performance by our US business within the
Broadcast Division and from excellent growth from our marine CCTV business
within the Video Division. As a result the Group's sales and profits have
increased over the corresponding period for the prior year.'
Highlights
• The Group's sales from continuing operations were up by 8.4% to £41.33
million (2001 - £38.11 million)
• The Group has increased operating profits by 20.4% to £1.30 million (2001
- £1.08 million)
• Profit on ordinary activities before taxation and goodwill amortisation
increased by 27.4% to £1.49 million (2001 - £1.17 million)
• The Group has increased profit on ordinary activities before taxation by
60.9% to £0.89million (2001 - £0.55 million)
• Earnings per share from continuing operations excluding goodwill
amortisation rose by 17.4% to 1.08 pence (2001 - 0.92 pence)
Commenting on the interim announcement, Bob Morton, Chairman of Vislink plc
said:
'The Board is pleased that the Group has achieved growth in its orders,
sales and profits during the first half. The current global economic
climate continues to dictate longer sales cycles and competitive trading
conditions. The current level of enquiries remains encouraging and given
their timely conversion, the prospects for the second half remain in
line with expectations.'
- Ends -
For further information on September 4th 2002, please contact:
Ian Scott-Gall 01488 685500
Chief Executive, Vislink plc
James Trumper 01488 685500
Group Finance Director, Vislink plc
Chairman's Statement
Introduction
The Board is pleased to report that the Group has increased sales and profits
over the previous half year and has continued to make progress in this first
half in what has been a challenging trading environment. The Group has benefited
from improved margins in the Broadcast Division's US business due to the
continued implementation of digital TV in the US and good growth from the Video
Division's specialised marine CCTV business.
Results for the six months to 30 June 2002
The Group's sales from continuing operations for the period were up by 8.4 per
cent to £41.33 million (2001 - £38.11 million). The Group's order intake in the
first half also showed growth to £41.17 million (2001 - £39.38 million).
The Group increased its operating profit before goodwill amortisation, to £1.90
million (2001 - £1.69 million). Goodwill amortisation for the period was £0.60
million (2001 - £0.62 million).
The profit on ordinary activities before interest and taxation was up 20.4 per
cent to £1.30 million (2001 - £1.08 million). The net interest charge for the
period of £0.41 million (2001 - £0.53 million) was lower than the corresponding
half year due to a lower level of debt in the Group.
The Group's profit on ordinary activities before tax for the period rose by 60.9
per cent to £0.89 million (2001- £0.55 million).
The Group had a positive cash flow from operations of £0.22 million, although
net debt increased slightly from the last year end to £10.08 million (31
December 2001 - £9.50 million).
Earnings per share
The adoption of Financial Reporting Standard 19 'deferred tax' has led to the
previous years' earnings per share being restated.
Earnings per share from continuing operations excluding goodwill amortisation
rose 17.4 percent to 1.08 pence (2001 - 0.92 pence). Basic earnings per share
increased 58.1 per cent to 0.49 pence (2001 - 0.31 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 of the half year
Broadcast Division
Financial review
The Division's sales for the six months increased to £32.11 million (2001 -
£30.90 million). The Division's operating profit before goodwill increased to
£2.39 million (2001 - £2.24 million) before charging exceptional costs of £0.30
million (2001- £nil) in respect of the rationalisation of the smaller operating
companies which commenced in 2001. After goodwill amortisation of £0.60 million
(2001 - £0.62 million) the Division's operating profit before exceptional costs
was £1.79 million (2001 - £1.62 million).
General review
The Broadcast Division operates in global markets through MRC in the US and from
the UK through Continental Microwave, Advent and Multipoint. Its core products
remain broadcast quality microwave links, TV transmitters and satellite
communications.
The US market for Broadcast microwave links has been particularly strong for MRC
as a result of the implementation of the FCC mandated policy for TV stations to
have a Digital TV broadcast capability. MRC supplies the majority of studio to
transmitter microwave links in the US market. Significant contract wins outside
of the US and UK markets included two contracts for the supply of digital TV
systems to a Korean broadcaster and one for a Chinese broadcaster in Hong Kong.
In addition, the ongoing development of new digital radio products is creating
new opportunities for the Division within the 'Homelands' public safety market
in the US and also for mobile, air to ground systems in overseas markets.
Following the resolution of the ITV digital situation with the re-licensing of
the ITV Digital channels, we expect that there will now be a demand, spread over
the next few years, for additional TV transmitters to complete the coverage of
the UK terrestrial digital TV network. CML have continued to win overseas
business including an order for a second transmitter for a state sponsored TV
station in West Africa following on from a successful installation last year.
Demand for satellite communications systems strengthened during the first half,
with growth in both fixed and mobile communication applications. In particular
Advent won orders for systems from UK broadcasters as well as further orders for
mobile satellite communications equipment from Government agencies. Increased
levels of business are also being seen from South America, the Middle East and
Asia.
Video Technology Division
Financial review
The Division's sales for the half year increased to £9.22 million (2001 - £7.21
million) as a result of good sales growth from Hernis, the Division's Norwegian
based specialised marine CCTV business.
The Division's operating profit for the half-year increased to £0.34 million
from £0.30 million in the corresponding period last year, which was before
exceptional costs of £0.28 million associated with development of the Active
Imaging Multi Media Server. The benefits of the sales growth at Hernis have been
eroded by reduced demand for the American Auto-Matrix ('AAM') building control
systems in the US and also limited demand for Active Imaging Internet video
server products.
General review
Hernis has had a record order intake in the first half year with orders of £6.07
million (2001 - £4.22million). Significant orders included two systems for
offshore gas plants, and two systems for onshore refineries. In addition Hernis
won its first US onshore contract for a security and safety CCTV system. Hernis
has established itself as a major global supplier of high quality CCTV systems
to commercial and naval shipping and oil and gas markets.
Data Cell, the image analysis business is trading in line with the prior year.
AAM, our Pittsburgh based buildings control systems business has had a
challenging first half as a result of a depressed US domestic building market
and increased costs associated with launching their access control product
range. Although maintenance and service revenues held up, higher margin new
build and refurbishment projects have been deferred. Corrective action has been
taken with a reduction to the cost base.
Strategy and Prospects
The Group is continuing to invest in developing new products and new market
opportunities.
Within the Broadcast Division, the rationalisation of the smaller companies
undertaken last year has provided a more integrated approach to international
sales and marketing. This will continue to be developed to provide a strong
focus on global opportunities. The US Broadcast sales continue to benefit from
the implementation of digital TV and the US market also has growth opportunities
from the emerging demand for microwave based public safety communications
network systems.
The prospects for the Broadcast Division in both the satellite communications
market and the global market for microwave links remain encouraging. However as
the size and complexity of the systems business being won by the Division
increases, so does the length of the sales cycle.
In the Video Division Hernis has had an excellent first half and is expected to
continue to grow both sales and profits organically.
The Group has maintained its order book at £20.6 million at 30 June (31 December
2001 - £20.7million).
Against the global economic background of longer sales cycles and tougher
trading conditions, the Group has achieved growth in sales and profit during the
first half. Given the timely conversion of the current sales enquiries, the
prospects for the second half remain in line with expectations.
A L R Morton
Chairman
September 4, 2002
GROUP PROFIT AND LOSS ACCOUNT
for the six months ended 30 June 2002
Notes Six months to Six months to Year ended 31
30 June 2002 30 June 2001* Dec 2001*
£'000 £'000 £'000
Turnover
Continuing operations 41,326 38,111 75,869
Discontinued operations - 409 560
2 41,326 38,520 76,429
Operating profit
Continuing operations before goodwill 1,904 1,691 1,256
Goodwill on continuing operations (603) (616) (1,199)
Continuing operations 1,301 1,075 57
Discontinued operations - 6 33
2 1,301 1,081 90
Profit on disposal of business - - 15
Profit on disposal of freehold land - - 100
Profit on ordinary activities before interest 1,301 1,081 205
Interest receivable 22 87 214
Interest payable (433) (615) (1,226)
Profit (loss) on ordinary activities before taxation 890 553 (807)
Tax on profit (loss) on ordinary activities 1,3 (394) (234) (668)
Profit (loss) for the financial period 496 319 (1,475)
Dividends 4 - - (101)
Transfer to (from) reserves 496 319 (1,576)
Basic and fully diluted earnings (loss) per share 5 0.49p 0.31p (1.45)p
Earnings (loss) per share from continuing operations 5 1.08p 0.92p (0.42)p
excluding goodwill
Dividend per share - - 0.10p
*As adjusted for the adoption of FRS19, see note 1.
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the six months ended 30 June 2002
Notes Six months to Six months to Year ended 31
30 June 2002 30 June 2001* Dec 2001*
£'000 £'000 £'000
Profit (loss) for the financial period 496 319 (1,475)
Translation difference on foreign currency net (513) 1,080 337
investments
Total recognised gains and losses for the financial (17) 1,399 (1,138)
period
Prior year adjustment in respect of deferred tax 1 1,009
Total recognised gains and losses since last Annual 992
Report
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the six months ended 30 June 2002
Notes Six months to Six months to Year ended 31
30 June 2002 30 June 2001 Dec 2001
£'000 £'000 £'000
Opening equity shareholders' funds previously reported 32,879 33,596 33,596
Prior year adjustment in respect of deferred tax 1 1,009 1,753 1,753
Opening equity shareholders' funds restated 33,888 35,349 35,349
Profit (loss) for the financial period 496 319 (1,475)
Dividends 4 - - (101)
34,384 35,668 33,773
Value of shares issued in the financial period 223 - -
Change in value of shares to be issued (216) (170) (222)
Translation difference on foreign currency net (513) 1,080 337
investments
Closing equity shareholders' funds 33,878 36,578 33,888
*As adjusted for the adoption of FRS19, see note 1.
GROUP BALANCE SHEET
as at 30 June 2002
Notes 30 June 2002 30 June 2001* 31 Dec 2001*
£'000 £'000 £'000
Fixed assets
Intangible assets 1 20,100 22,236 21,058
Tangible assets 5,809 6,344 6,032
Financial assets 15 19 15
25,924 28,599 27,105
Current assets
Stocks 14,413 16,697 13,217
Debtors 1,7 19,371 19,503 20,099
Cash at bank and in hand 2,071 1,677 3,450
35,855 37,877 36,766
Creditors - amounts falling due within one year
Borrowings 2,252 2,283 2,257
Creditors 15,307 15,273 16,571
17,559 17,556 18,828
Net current assets 18,296 20,321 17,938
Total assets less current liabilities 44,220 48,920 45,043
Creditors - amounts falling due after more than one year
Borrowings 9,896 11,820 10,697
Provisions for liabilities and charges 446 522 458
33,878 36,578 33,888
Capital and reserves
Called up share capital 2,552 2,534 2,534
Share premium account 205 - -
Shares to be issued - 268 216
Merger reserve 27,895 27,895 27,895
Profit and loss account 1,8 3,226 5,881 3,243
Equity shareholders' funds 33,878 36,578 33,888
*As adjusted for the adoption of FRS19, see note 1.
SUMMARISED STATEMENT OF CASH FLOWS
for the six months ended 30 June 2002
Six months to Six months to Year ended 31
30 June 2002 30 June 2001 Dec 2001
£'000 £'000 £'000
Net cash inflow from operating activities 217 714 4,651
Returns on investments and servicing of finance (152) (905) (1,419)
Taxation (160) (130) (17)
Capital expenditure (193) (397) (562)
Acquisitions and disposals - - 215
Equity dividends paid - - (405)
Net cash (outflow) inflow before financing (288) (718) 2,463
Financing (871) (1,194) (2,347)
(Decrease) increase in cash (1,159) (1,912) 116
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
for the six months ended 30 June 2002
Six months to Six months to Year ended 31
30 June 2002 30 June 2001 Dec 2001
£'000 £'000 £'000
(Decrease) increase in cash (1,159) (1,912) 116
Repayment of bank loans 863 1,117 2,243
Finance lease repayments 8 77 104
Change in net debt resulting from cash flows (288) (718) 2,463
Effect of foreign exchange changes (285) 139 (120)
Movement in net debt (573) (579) 2,343
Opening net debt (9,504) (11,847) (11,847)
Closing net debt (10,077) (12,426) (9,504)
NOTES TO THE INTERIM ACCOUNTS
for the six months ended 30 June 2002
1. ACCOUNTING POLICIES
This interim report is unaudited and does not constitute audited accounts within
the meaning of the Companies Act 1985. Except as disclosed below, the interim
results have been prepared using accounting policies and practices consistent
with those used in the preparation of the Annual Report and Accounts for the
year ended December 31, 2001, which should be read in conjunction with this
report. Those accounts (on which the auditors gave an unqualified audit opinion)
have been filed with the Registrar of Companies.
The Group's accounting policy on deferred taxation has been amended following
the adoption of Financial Reporting Standard 19 'Deferred Tax' (FRS 19). FRS19
requires full provision to be made for deferred taxation arising from timing
differences between the recognition of gains and losses in the financial
statements and their recognition in a tax computation.
Previously the Group's accounting policy was to provide for deferred tax
liabilities on timing differences to the extent that they were expected to
become payable in the foreseeable future. The application of the previous
accounting policy resulted in no provision for deferred taxation being
recognised at December 31, 2000, June 30, 2001 and December 31, 2001. Deferred
tax assets have now been recognised in accordance with FRS19 to the extent that
they are regarded as recoverable.
As a result of this change in accounting policy net deferred tax assets have
been recognised and the comparatives have been restated as follows:
Adjustments to the Group balance sheet
Profit and loss account Intangible assets
(retained reserves)
30 June 2001 31 Dec 2001 30 June 2001 31 Dec 2001
£'000 £'000 £'000 £'000
Previously reported 4,214 2,234 23,143 21,965
Prior year adjustment in respect of FRS 19 1,753 1,753 (907) (907)
Period adjustment in respect of FRS 19 (86) (744) - -
Restated now reported 5,881 3,243 22,236 21,058
The adjustment to intangible assets is an adjustment to the goodwill in respect
of the acquisition of MRC to reflect the recognition of deferred tax assets
acquired and not previously recognised.
Debtors
30 June 2001 31 Dec 2001
£'000 £'000
Previously reported 16,929 18,183
Deferred tax provision 2,574 1,916
Restated now reported 19,503 20,099
Adjustments to the Group profit and loss
account statement
Tax on profit (loss) on Basic earnings (loss) per
ordinary activities share
Six months to Year ended Six months to Year ended
30 June 2001 31 Dec 2001 30 June 2001 31 Dec 2001
£'000 £'000 £'000 £'000
Previously reported 148 (76) 0.40 p (0.72)p
Adjustment in respect of FRS 19 86 744 (0.09)p (0.73)p
Restated now reported 234 668 0.31 p (1.45)p
2. SEGMENTAL REPORT
Turnover Operating Profit
Six months Six months Year ended Six months Six months Year ended
to to 31 Dec 2001 to to 31 Dec 2001
30 June 2002 30 June 2001 £'000 30 June 2002 30 June 2001 £'000
£'000 £'000 £'000 £'000
By division:
Broadcast 32,108 30,899 60,993 2,389 2,239 3,835
Video Technology 9,218 7,212 14,876 340 296 868
Central costs - - - (521) (564) (978)
41,326 38,111 75,869 2,208 1,971 3,725
Exceptional inventory write down - - - - - (2,227)
Other exceptional costs (net) - - - (304) (280) (242)
Goodwill amortisation - - - (603) (616) (1,199)
Continuing operations 41,326 38,111 75,869 1,301 1,075 57
Discontinued operations - 409 560 - 6 33
Group total 41,326 38,520 76,429 1,301 1,081 90
Goodwill amortisation in the continuing operations is in respect of the
businesses of Advent Communications, Microwave Radio Communications and
Multipoint Communications, all of which are within the Broadcast Division.
The other exceptional charges in the period are costs associated with the
rationalisation of the Broadcast Division companies, which commenced in 2001.
Turnover Analysis
Turnover
Six months to 30 Six months to Year ended 31
June 2002 30 June 2001 Dec 2001
By market: £'000 £'000 £'000
Continuing operations
UK & Ireland 6,155 5,693 8,957
Rest of Europe 4,398 6,180 10,053
North America 15,364 15,694 30,583
South America 3,869 767 2,946
Asia 6,215 6,094 14,170
Africa 1,893 708 3,430
Other 3,432 2,975 5,730
41,326 38,111 75,869
Discontinued operations
UK & Ireland - 404 551
Rest of Europe - - 9
Asia - 5 -
Group Total 41,326 38,520 76,429
3. TAX ON PROFIT ON ORDINARY ACTIVITIES
The tax charge for the six months ended 30 June 2002 is based on the effective
tax rate which it is estimated will apply to earnings for the full year.
4. DIVIDENDS
No interim dividend is proposed for the period. In 2001 there was no interim
dividend and the final dividend was 0.10 pence.
5. EARNINGS PER ORDINARY SHARE
Earnings per share is calculated by reference to a weighted average of
101,657,000 ordinary shares in issue during the period (30 June and 31 December
2001 - 101,377,000).
The diluted earnings per share is after taking account of a further 118,000
shares (June 30 2001- 1,452,000; December 31, 2001 - 310,000) being the dilutive
effect of share options.
Earnings per share from continuing operations excludes after tax profits
relating to discontinued operations of £nil (30 June 2001 - £6,000; 31 December
2001 - £33,000) and after tax exceptional profits of £nil (30 June 2001 - £nil;
31 December 2001 - £115,000).
Six months to Six months to Year ended 31
30 June 2002 30 June 2001 Dec 2001
Basic earnings (loss) per share 0.49 p 0.31 p (1.45)p
Adjustments:
Goodwill 0.59 p 0.62 p 1.17 p
Result after taxation from operations to be - (0.01)p (0.03)p
discontinued
Non-operating exceptional items - - (0.11)p
Earnings (loss) per share from continuing operations 1.08 p 0.92 p (0.42)p
excluding goodwill
Fully diluted earnings (loss) per share 0.49 p 0.31 p (1.45)p
6. RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOW
FROM OPERATING ACTIVITIES
Six months to Six months to Year ended 31
30 June 2002 30 June 2001 Dec 2001
£'000 £'000 £'000
Operating profit 1,301 1,081 90
Depreciation 470 567 1,084
Amortisation of goodwill 603 616 1,199
Provision against investments - - 4
(Profit) on sale of fixed assets (4) (16) (29)
(Increase) decrease in stocks (1,163) 764 4,016
Decrease in debtors 523 1,459 39
(Decrease) in creditors (1,501) (3,423) (1,259)
(Decrease) in provisions ( 12) (334) (493)
Net cash inflow from operating activities 217 714 4,651
7. DEBTORS
Debtors include deferred tax assets of £1,608,000 (June 30, 2001 - £2,574,000
and December 31, 2001 - £1,916,000).
8. PROFIT AND LOSS ACCOUNT
The profit and loss account comprises:
30 June 30 June 31 Dec
2002 2001* 2001*
£'000 £'000 £'000
Accumulated profits 8,677 10,146 8,091
Goodwill written off (5,451) (4,265) (4,848)
3,226 5,881 3,243
*As adjusted for the adoption of FRS19, see note 1.
INDEPENDENT REVIEW REPORT TO VISLINK PLC
Introduction
We have been instructed by the company to review the financial information set
out on pages 6 to 13. We have read the other information contained in the
interim report for any apparent misstatements or material inconsistencies with
the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors are
responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly we do not express
an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2002.
PricewaterhouseCoopers
Chartered Accountants and Registered Auditors
Bristol
4 September 2002
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