Final Results

Vislink PLC 27 March 2001 Vislink plc Preliminary results for the year ended 31 December 2000 Key announcements * We made two strategically important acquisitions by re-investing the proceeds from the disposal programme completed in 1999. * The Broadcast and Telecommunications Division is now a leading global designer and manufacturer of microwave transmission equipment for broadcast quality television. * Successfully re-listed as a UK company on the London and Dublin stock exchanges. Now classified in the techMARK index. Group results for the year ended 31 December 2000 * Positive contributions from both Advent and MRC since their acquisition. * The satisfactory level of orders reported at the start of the second half of last year has continued. * The Group's profit before goodwill, non-operating exceptional items and taxation was £2.35 million for the year, an increase of 61% over the continuing businesses' pre-tax profits before goodwill in 1999 of £1.46 million. * The Board is recommending an increased dividend of 0.4 pence (1999 - 0.3 pence). * Basic earnings per share on continuing businesses before goodwill and non-operating exceptional items were 2.18 pence (1999 - 1.47 pence), an increase of 48.3%. Bob Morton, Chairman of Vislink, commented on the announcement: 'The Group is now focussed and is well on the way to achieving its stated growth strategy. The acquisitions of Advent and MRC represent a tremendous achievement towards the creation of a global business with critical mass in its international markets. The growth of digital TV on a global basis will generate significant opportunities for the Group. The Group has started 2001 with an order book of £19.3 million (December 1999 - £6.4million) and a satisfactory start has been made to the current year. The Board considers that prospects for continuing growth of the Group remain encouraging.' For further information on Tuesday 27 March 2001, please contact: Ian Scott-Gall Chief Executive, Vislink plc 01488 685 500 James Trumper Finance Director, Vislink plc 01488 685 500 Trevor Bass Fleet Financial Communications Limited 020 7601 1066 Chairman's Statement Introduction 2000 has been another year of significant progress. We have re-invested the proceeds from the Group's reorganisation and disposal programme completed in 1999 by making two strategically important acquisitions. Our Broadcast and Telecommunications Division is now a leading global designer and manufacturer of microwave transmission equipment for broadcast quality television. In addition, our Video Technology Division has benefited from the commitment to invest in the opportunities for video transmission over the Internet together with continuing developments in image processing and specialist CCTV video applications. The Group is now included in the techMARK index following the successful scheme of arrangement to re-list with a new UK holding company on the London and Dublin stock exchanges. The results for the year show the expected return to profitability and include a positive contribution from the acquisitions. The Group is now focussed and is well on the way to achieving its stated growth strategy. Acquisitions We completed the first of our strategic acquisitions, that of Advent Communications Limited ('Advent') on 18 April, 2000. Advent has a strong market position for the satellite news gathering ('SNG') market, having pioneered the concept. Advent continues to design and manufacture equipment for both portable and vehicle based SNG systems and permanent fixed earth stations. The consideration was £13.3 million, satisfied by £12.5 million in cash and the issue of 1.2 million new ordinary shares (valued at £0.8 million). On July 28, 2000 we completed our next strategic acquisition, the Microwave Radio Communication ('MRC') business of Adaptive Broadband Corporation. MRC is based near Boston in the United States of America and is considered to be the major supplier of broadcast quality microwave terrestrial links in the USA, with an estimated market share in excess of 50%. MRC is involved in the design, manufacture and marketing of digital and analogue microwave radio systems for studio to transmitter links together with portable and vehicle based electronic newsgathering applications for the broadcast industry. The consideration was $18.9 million (equivalent to approximately £12.5 million). The Company announced a placing at the same time as the acquisition, which raised £4.5 million (before expenses) to finance part of the consideration. These two acquisitions have provided the Group with the opportunities to create a much broader based satellite communications business, develop our presence in the US market and to strengthen our international position for both digital and analogue broadcast quality television transmission equipment. The Board is pleased with the progress these companies have made within the Broadcast and Telecommunications Division. Scheme of Arrangement and re-listing In my interim statement, I stated that the Board believed that there would be a significant advantage to the Company becoming a UK rather than an Irish registered company. As a result, on October 24, 2000, the Board announced proposals to establish a new UK holding company for the Vislink Group to be effected by a scheme of arrangement under section 201 of the Companies Act, 1963 of Ireland. The scheme was approved by shareholders at an Extraordinary General Meeting on November 17, 2000 and subsequently approved by the High Court in Ireland on November 27, 2000. The scheme became effective on December 5, 2000, when the re-listing took effect and the Group was included in the techMARK index. Results for the year The results for the year include positive contributions from both Advent and MRC since their date of acquisition. The Group's net operating profits before goodwill and exceptional items were £3.4 million, well ahead of last year's £ 2.1 million. The satisfactory level of orders reported at the start of the second half of last year has continued. However in the UK, demand was lower than expected within the Broadcast and Telecommunications Division's continuing business, due to the second phase of the UK terrestrial digital TV roll out, which had been expected during 2000, being deferred. It is now expected to commence during the second half of 2001 and we continue to remain well placed to win this second phase. Sales of the continuing operations including acquisitions were £61.0 million (1999 - £82.2 million including discontinued businesses of £38.8 million). The Group's normalised profit before taxation, (being profit before taxation, goodwill and the non-operating exceptional costs from the change of domicile), was £2.35 million for the year, an increase of 61% over the continuing businesses' normalised pre-tax profits in 1999 of £1.46 million. After charging goodwill of £0.8 million and non-operating exceptional costs relating to the change of domicile of £0.5 million, the Group's net profit before taxation was £1.0 million. This shows the substantial turn round that has been achieved from the net loss before taxation incurred in 1999 of £21.2 million, which was after exceptional costs relating to the disposal of non-core activities of £20.3 million. Earnings per share Basic earnings per share on continuing businesses before goodwill and non-operating exceptional items were 2.18 pence (1999 - 1.47 pence) an increase of 48.3%. The basic earnings per share after goodwill and non-operating exceptional costs were 0.79 pence (1999 - loss of 23.81 pence). Dividend The Board is recommending an increased dividend of 0.4 pence (1999 - 0.3 pence). The dividend, subject to shareholder approval, will be paid on July 4, 2001 to shareholders on the register at June 8, 2001. Board changes Following the re-registration of the company in England, two of our non-executive directors, Peter Ledbetter and George Russell, decided to retire from the Board with effect from December 31, 2000. In addition Iain Dale has decided not to offer himself for re-election at the Annual General Meeting. On behalf of the Board I would like to express my grateful thanks to Peter, George and Iain for their total support and commitment to the Group over many years. The Board announced the appointment of Tim Trotter as a non-executive director on December 31, 2000. Tim is currently non-executive Vice Chairman of Illuminator PLC, non-executive director of Citywire Holdings Limited and Flying Brands Limited. He was previously Chairman and Chief Executive of Ludgate Group Limited. Employees & share save scheme On behalf of the board I would like to welcome the new employees from MRC and Advent and express the Board's appreciation and thanks to all our employees for their support and commitment during the year. The Board believes that it is important for the success of Vislink that the interests of all eligible employees are aligned with that of the shareholders and therefore a Sharesave Scheme is to be introduced. The Scheme was approved by shareholders at an Extraordinary General Meeting on November 17, 2000. Strategy The growth in digital TV on a global basis will generate significant opportunities for the Group. The acquisitions of Advent and MRC represent a tremendous achievement towards the creation of a global business with critical mass in its international markets, for the Broadcast and Telecommunications Division. The Group will continue to develop this division organically through both market growth and product developments in digital TV broadcasting and telecommunications. The Video Technology Division is expected to achieve future growth by capitalising on the opportunities for video over the internet and CCTV applications through the continued investment in internet video systems, image processing and specialist CCTV video applications. With our recent acquisitions and continuing investment in new wireless products and systems for the transmission of video over the Internet, the Board believes that focus on the two divisions remains key to the Group's success. Current trading and prospects The Group has started 2001 with an order book of £19.3 million (December 1999 - £6.4million) and a satisfactory start has been made to the current year. As the integration of Advent and MRC into the Broadcast and Telecommunication Division continues the Board considers that prospects for the continuing growth of the Group remain encouraging. ALR Morton Chairman 27 March 2001 Group Profit and Loss Account for the year ended 31 December 2000 Note Before Exceptional Before Exceptional Items Items Exceptional Total Exceptional Total Items Items 2000 2000 2000 1999 1999 1999 £'000 £'000 £'000 £'000 £'000 £'000 Turnover Continuing operations - ongoing 40,870 - 40,870 43,383 - 43,383 - acquisitions 20,175 - 20,175 - - - --------- ------ ------- --------- --------- ------- 61,045 - 61,045 43,383 - 43,383 Discontinued - - - 38,770 - 38,770 operations --------- ------ ------- --------- --------- ------- 1 61,045 - 61,045 82,153 - 82,153 --------- ------ ------- --------- --------- ------- Operating profit (loss) Continuing operations before goodwill: - ongoing 1,924 (542) 1,382 2,113 - 2,113 - acquisitions 1,432 - 1,432 - - - --------- ------ ------- --------- --------- ------- 3,356 (542) 2,814 2,113 - 2,113 Goodwill amortisation: - ongoing (144) - (144) (144) - (144) - acquisitions (652) - (652) - - - --------- ------ ------- --------- --------- ------- Continuing 2,560 (542) 2,018 1,969 - 1,969 operations Discontinued - - - - (2,154) (2,154) operations --------- ------ ------- --------- --------- ------- 1 2,560 (542) 2,018 1,969 (2,154) (185) --------- ------ ------- --------- --------- ------- Exceptional 2 - (549) (549) - - - costs from change of domicile Exceptional loss on sale of businesses 2 - - - - (20,332) (20,332) (including goodwill of £ 20.0 million previously written off) --------- ------ ------- --------- --------- ------- Profit (loss) 2,560 (1,091) 1,469 1,969 (22,486) (20,517) on ordinary activities before interest Interest (1,067) - (1,067) (829) - (829) payable Interest 605 - 605 176 - 176 receivable --------- ------ ------- --------- -------- ------- Profit (loss) 2,098 (1,091) 1,007 1,316 (22,486) (21,170) on ordinary activities before taxation Tax on profit 3 (245) - (245) (115) (564) (679) (loss) on ordinary activities --------- ------ ------- --------- --------- ------- Profit (loss) 1,853 (1,091) 762 1,201 (23,050) (21,849) for the financial year Dividends 4 (405) - (405) (275) - (275) --------- ------ ------- --------- --------- ------- Transfer to 1,448 (1,091) 357 926 (23,050) (22,124) (from) reserves ====== ===== ====== ====== ======== ======== Basic 5 1.92p (1.13)p 0.79p 1.31p (25.12)p (23.81)p earnings (loss) per share --------- ------ ------- --------- ------- ------- Fully diluted 5 1.89p (1.11)p 0.78p 1.31p (25.12)p (23.81)p earnings (loss) per share Basic earnings per share from 5 2.74p (0.56)p 2.18p 1.47p - 1.47p continuing operations before, goodwill and non-operating exceptional items Note: Profit 2,894 (542) 2,352 1,460 (2,154) (694) (loss) on ordinary activities before taxation, goodwill and non-operating exceptional items (£'000) Statement of Total Recognised Gains and Losses for the year ended 31 December 2000 2000 1999 £'000 £'000 Profit (loss) for the 762 (21,849) financial year Translation difference on 354 8 foreign currency net investments --------- ----------- 1,116 (21,841) ===== ====== Reconciliation of Movements in Shareholders' Funds for the year ended 31 December 2000 2000 1999 £'000 £'000 Profit (loss) for the financial year 762 (21,849) Dividends (405) (275) --------- --------- 357 (22,124) Value of share issues in year 5,375 - Shares to be issued 438 - Goodwill on the disposal of businesses - 19,955 Translation difference on foreign currency 354 8 net investments ---------- ---------- 6,524 (2,161) Opening equity shareholders' funds 27,072 29,233 ---------- ---------- Closing equity shareholders' funds 33,596 27,072 ===== ====== Balance Sheet as at 31 December 2000 Group Company 2000 1999 2000 £'000 £'000 £'000 Fixed assets Intangible assets 23,466 2,652 - Tangible assets 6,372 3,876 - Investments 19 19 27,266 ---------- ---------- ---------- 29,857 6,547 27,266 ---------- ---------- ---------- Current assets Stocks 17,120 8,403 - Debtors 18,101 9,350 750 Cash at bank and in hand 3,450 16,466 1,750 ---------- ---------- ---------- 38,671 34,219 2,500 ---------- ---------- ---------- Creditors - amounts due within one 21,120 8,781 4,196 year ---------- ---------- ---------- Net current assets (liabilities) 17,551 25,438 (1,696) ---------- ---------- ---------- Total assets less current liabilities 47,408 31,985 25,570 Creditors - amounts due after one year 12,956 3,591 15,422 Provisions for liabilities and charges 856 1,322 - ---------- ---------- ---------- Net Assets 33,596 27,072 10,148 ===== ===== ===== Capital and reserves Called up share capital 2,534 2,534 2,534 Shares to be issued 438 - 438 Merger reserve 27,895 22,520 - Profit and loss account 2,729 2,018 7,176 ---------- ---------- ---------- Equity shareholders' funds 33,596 27,072 10,148 ===== ===== ===== The 1999 consolidated balance sheet has been restated as a consequence of the use of merger accounting principles in relation to the Scheme of Arrangement under section 201 of the Companies Act 1963 of Ireland, pursuant to which Vislink plc acquired the entire issued share capital of Vislink plc (incorporated in Ireland) on 5 December 2000. The Company was incorporated on 27 September 2000 for the purposes of the Scheme of Arrangement. Group Cash Flow Statement for the year ended 31 December 2000 Notes 2000 1999 £'000 £'000 Net cash inflow from operating 6 676 4,455 activities -------- --------- Returns on investments and servicing of finance Interest received 739 32 Interest paid (646) (796) -------- ----------- 93 (764) --------- ---------- Taxation paid (105) (1,407) --------- ---------- Capital expenditure Purchase of tangible fixed assets (1,650) (1,817) Proceeds from sale of fixed assets 35 270 --------- ---------- (1,615) (1,547) --------- ---------- Acquisitions and disposals Purchase of subsidiary undertakings (27,050) (30) Net debt acquired with subsidiary (401) - Costs of change of domicile (549) - Proceeds from sale of businesses 350 24,718 --------- ---------- (27,650) 24,688 --------- ---------- Equity dividends paid (275) (918) --------- ---------- Net cash (outflow) inflow before (28,876) 24,507 financing ====== ====== Financing Issue of ordinary share capital 4,988 - New long term loans 11,637 360 Repayment of bank loans (507) (547) Finance lease repayments (287) (836) --------- ---------- 15,831 (1,023) --------- ---------- (Decrease) increase in cash (13,045) 23,484 ====== ====== Reconciliation of Net Cash Flow to Movement in Net Debt 2000 1999 £'000 £'000 (Decrease) increase in cash (13,045) 23,484 Cash inflow from increase in loans (11,637) (360) Repayment of bank loans 507 547 Finance lease payments 287 836 -------- --------- Change in net (debt) cash resulting from (23,888) 24,507 cash flows Purchase of tangible fixed assets with - (414) finance leases Finance leases of undertakings sold - 850 Bank loans of undertakings sold - 28 Effect of foreign exchange changes (41) 11 ---------- ------- Movement in net (debt) cash (23,929) 24,982 Opening net cash (debt) 12,082 (12,900) --------- -------- Closing net (debt) cash 6 (11,847) 12,082 ====== ====== 1. Segmental Analysis Turnover Operating Net Assets Profit Total Total Total Total Total Total 2000 1999 2000 1999 2000 1999 £'000 £'000 £'000 £'000 £'000 £'000 By division: Broadcast and Telecommunications - ongoing 26,047 28,540 2,026 2,537 13,020 9,148 - acquisitions 20,175 - 1,432 - 5,431 - --------- ---------- ---------- ---------- --------- 46,222 28,540 3,458 2,537 18,451 9,148 Video Technology 14,823 14,843 977 901 5,915 5,172 Central - - (1,079) (1,325) 9,230 12,752 --------- ---------- ---------- ---------- --------- 61,045 43,383 3,356 2,113 33,596 27,072 Exceptional development - - (542) - - - costs Goodwill amortisation - - - (144) (144) - - ongoing Goodwill amortisation - - - (652) - - - acquisitions --------- ---------- ---------- ---------- --------- Continuing operations 61,045 43,383 2,018 1,969 33,596 27,072 Discontinued operations - 38,770 - (2,154) - - --------- ---------- ---------- ---------- --------- Total 61,045 82,153 2,018 (185) 33,596 27,072 ===== ===== ===== ===== ===== ===== 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 Broadcast & Video Discontinued Total Telecommunications Technology Operations 2000 1999 2000 1999 2000 1999 2000 1999 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 By market: UK & 8,191 12,914 4,245 4,366 - 29,621 12,436 46,901 Ireland Rest of 9,311 6,492 2,660 3,117 - 3,888 11,971 13,497 Europe North 11,304 1,466 5,423 4,771 - 3,325 16,727 9,562 America Asia 5,756 2,490 2,122 2,021 - 981 7,878 5,492 Africa 6,733 1,654 15 39 - - 6,748 1,693 Other 4,927 3,524 358 529 - 955 5,285 5,008 ---------- ---------- ---------- ---------- --------- ------ ------ 46,222 28,540 14,823 14,843 - 38,770 61,045 82,153 ====== ====== ====== ====== ====== ====== ====== ====== By origin: UK & 33,622 25,785 4,780 4,492 - 36,147 38,402 66,424 Ireland Rest of - - 5,838 5,817 - 375 5,838 6,192 Europe North 12,600 2,755 4,205 4,534 - 2,248 16,805 9,537 America ---------- ---------- ---------- ---------- --------- ------- ----- 46,222 28,540 14,823 14,843 - 38,770 61,045 82,153 ====== ====== ====== ====== ====== ====== ====== ====== Net Asset Analysis Total 2000 1999 £'000 £'000 By market: United Kingdom & Ireland 23,239 21,318 Rest of Europe 2,516 2,228 North America 7,841 3,526 -------- ---------- 33,596 27,072 ===== ===== 2. Non-operating exceptional items 2000 1999 £'000 £'000 Costs of change of domicile 549 - Loss on disposal of Aerospace Division - 1,454 Loss on disposal of Electrical Division - 3,391 Loss on disposal of Security Division - 15,013 (Profit) on sale of investment in Automotive Motion - (572) Technology Limited Loss on the disposal of other businesses - 1,046 ------- ------ 549 20,332 ===== ===== 3. Taxation 2000 1999 £'000 £'000 UK Corporation tax at 30% (1999 - - - 30.25%) Advance corporation tax written off - 733 Adjustment in respect of prior years - 631 Overseas taxation 245 115 Deferred taxation - (800) -------- ---------- 245 679 ====== ====== The tax charge of £245,000 has been reduced by £310,000 as a result of the utilisation of group losses available for the period. 4. Dividends 2000 1999 £'000 £'000 Final - 0.40p per share (1999 - 0.30p per 405 275 share) ==== ==== 5. Earnings (loss) per Ordinary Share Earnings (loss) per ordinary share are calculated by reference to a weighted average of 96,643,000 (1999 - 91,767,000) ordinary shares in issue during the period. Diluted earnings per share are after taking account of a further 1,491,000 (1999 - nil) shares being the dilutive effect of share options. Earnings per share from continuing operations excludes after tax amounts relating to the discontinued operations of £nil (1999 - £2,718,000) and exceptional items of £549,000 (1999 -£20,332,000). At the date of the preliminary announcement the number of shares in issue was 101,377,000. Basic Diluted Basic Diluted 2000 2000 1999 1999 £'000 £'000 £'000 £'000 Basic and diluted earnings per share 0.79p 0.78p (23.81)p (23.81)p Adjustments: - - 2.96p 2.96p Loss after taxation from discontinued operations Non-operating exceptional items 0.57p 0.56p 22.16p 22.16p Goodwill 0.82p 0.81p 0.16p 0.16p ------ ----- ------ --------- Earnings per share from continuing operations 2.18p 2.15p 1.47p 1.47p before goodwill and non-operating exceptional items ===== ===== ===== ===== 6. Notes to the Group Cash Flow Statement a. Reconciliation of operating profit (loss) to net cash inflow from operating activities Ongoing Acquisitions Total Total 2000 2000 2000 1999 £'000 £'000 £'000 £'000 Operating profit (loss) 1,238 780 2,018 (185) Depreciation 651 269 920 1,710 Amortisation of goodwill 144 652 796 144 Provision against investments - - - 6 Loss (profit) on sale of fixed 4 (3) 1 (10) assets (Increase) decrease in stocks (2,999) 986 (2,013) (1,477) (Increase) decrease in debtors (3,376) (1,119)(4,495) 6,581 Increase (decrease) in creditors 3,203 712 3,915 (1,854) (Decrease) in provisions (466) - (466) (460) ---------- -------- ------- -------- Net cash (outflow) inflow from (1,601) 2,277 676 4,455 operating activities ====== ====== ====== ====== b. Analysis of net debt At Other Exchange At movements 1 Cash non-cash 31 January flow movements December £'000 £'000 £'000 £'000 £'000 Cash at bank and in 16,466 (13,045) - 29 3,450 hand Loans (4,057) (11,130) - 2 (15,185) Finance leases (327) 287 (70) (2) (112) ---------- --------- ---------- ---------- ---------- 12,082 (23,888) (70) 29 (11,847) ====== ====== ====== ====== ====== 7. Directors Responsibilities The financial information for the year ended 31 December 2000 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.

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