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.
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