Interim Results

RNS Number : 6932M

Vislink PLC

29 August 2013

 



Vislink plc

Half year results for the six months ended 30 June 2013

Vislink plc (the "Group"), a global technology business specialising in high performance wireless communications products and services for the broadcast, defence and security markets, today reports its half year results for the six months ended 30 June 2013.

Results for the six months ended 30 June 2013	2013	2012
	£m	£m
Order intake	33.6	25.4
Revenue	28.0	27.5
Adjusted operating profit1	2.0	1.4
Adjusted operating margin1	7.2%	5.0%
Adjusted profit before tax1	2.0	1.4
Reported operating profit and profit before tax	1.4	0.7
Adjusted earnings per share1	1.8p	0.9p
Reported earnings per share	1.3p	0.5p
Cash generated from/(absorbed by) operating activities	1.6	0.5
Net cash	7.2	8.4

¹ Adjusted to exclude the amortisation and impairment of goodwill and acquired intangibles, and other non-recurring costs (note 8). 

Key points

·     Good performance from both Broadcast and Surveillance, with both sectors delivering solid order intake growth

·     Orders received in the period grew 32.3% to £33.6m (H1 2012: £25.4m)

·     Adjusted operating profit was up by 42.9% to £2.0m (H1 2012: £1.4m)

·     Broadcast benefited from strong order intake in the Middle East

·     Surveillance showed further solid progress with good growth in the USA

·     Continued investment in new technology including IP and Cellular whilst keeping costs controlled

·     The Group remains debt free, with net cash of £7.2m

·     Our ongoing strategy for the Group, as announced in November 2011, is on track

Post period end

The Group has today announced separately:

·     The acquisition of Amplifier Technology, a leading RF design and manufacturer of amplifiers and jammers for the defence and surveillance market for a total consideration, including earn out, of £4.0m

·     A global strategic partnership with C-Com Satellite Systems Inc. which will include cross selling of their respective satellite products, R&D cooperation and enable Vislink to extend its product range and open new market sectors 

John Hawkins, Executive Chairman of Vislink, said:

"We are encouraged with these results.  We have delivered the fourth consecutive profitable half year for the Group and order intake has been very strong with orders to sales ratio being better than 1. Our investment in new products including Cellular and Defence & Surveillance is allowing us to accelerate our growth in these markets which complements our core Broadcast business. Our global footprint enables us to continue to grow the business profitably.

The acquisition of Amplifier Technology will further strengthen our Defence & Surveillance business adding RF jamming technology to our portfolio.

The strategic relationship with C-Com Satellite Systems Inc. enables us to expand our portfolio of satcom products and opens up new vertical markets and will enable further growth globally.

We remain on track for our plan to grow the business to £80m, and £8.0m adjusted operating profit by the end of FY 2014, and we intend to support this by way of a number of "bolt on" acquisitions.

The outcome for the full year remains positive and is in line with our growth aspirations. To this end our half year profit of £2.0m includes a provision of £0.5m to cover year end management performance bonuses which can only be earned if we achieve an adjusted operating profit in line with market expectations."

A copy of the half yearly report will be available from the Group's office, Marlborough House, Charnham Lane, Hungerford, Berkshire, RG17 0EY and on the Group's website www.vislink.com.  The half yearly report will also shortly be available for inspection at the UK Listing Authority's National Storage Mechanism website:  http://hemscott.com/nsm.do

- ends -

Enquiries:
Vislink plc: John Hawkins, Executive Chairman	[phone]
Vislink plc: Ian Davies, Finance Director N+1 Singer: Shaun Dobson	[phone] [phone]
Hudson Sandler: Charlie Jack/Katie Matthews	[phone]

About Vislink plc

The Vislink Group is a global technology business specialising in the collection and delivery of high quality video and associated data from the field to the point of usage. Vislink provides solutions to the broadcast market for the collection of live news, sport and entertainment events and to the surveillance market including defence, law enforcement and public safety. With offices in the UK, USA, Australia, UAE, South Africa and Singapore and manufacturing operations in the UK and the USA we employ over 200 people worldwide and have net assets of £48.4m. Our solutions include the design and manufacture of microwave radio, satellite transmission and wireless camera systems.

The Company is fully listed on the London Stock Exchange (LSE: VLK). For further information, visit www.vislink.com.

Forward-looking statements

Certain statements in this announcement are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to be correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. The Group undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise. Nothing in this announcement should be construed as a profit forecast.

Executive Chairman's Statement

For the six months to 30 June 2013

The Group performed in line with management's expectations for the six months ended 30 June 2013, achieving an adjusted operating profit of £2.0m on revenues of £28.0m. This represents the fourth consecutive half of profitability for the Group. Orders received in the period increased by 32.3% to £33.6m.

Economic conditions in our core markets of the US and the UK and Europe remained challenging and we continued to witness relatively long decision making cycles. Nevertheless, against a background of a low opening order book, due to a relatively low order intake in Q4 FY12, we have achieved good levels of business in these regions.

The Group has a well established international sales force and distribution network. Together with our strong brand and product portfolio this has enabled us to secure key business opportunities in other markets. In the Middle East we were successful in winning a contract to supply a major broadcaster that is seeking to expand its international operations. The Group continues to see the Middle East as an opportunity for growth and is actively pursuing further orders in this region.

The Group has continued to invest in developing new products and solutions. Our satellite communications product range has been expanded to build on the success of the Mantis portable lightweight tri-band satellite terminal (MSAT) which was launched last year. The new MSAT range is receiving a very positive reception from both the Broadcast and Surveillance marketplace. We are also on track to obtain WGS certification of MSAT in the fourth quarter, increasing our available markets. The strategic relationship with C-Com Satellite Systems Inc. complements our range of satellite products and will enable expansion into new vertical markets.

The Group has continued to develop a range of bonded cellular products under the LiveGear brand that provide broadcasters with the option of utilising public network connections (cellular). The Group is receiving a very positive response to its hybrid solutions that provide broadcasters with a combination of traditional Electronic News Gathering (ENG), Satellite News Gathering (SNG) with Cellular News Gathering (CNG) capability. A product with this capability, NewStream, was exhibited at the National Association of Broadcasters (NAB) in April and received Broadcast Engineering magazines Pick Hit 2013 award. Vislink will launch new products into the marketplace in H2.

In the period the Group was pleased to announce a 3-year contract as official RF equipment supplier to Dorna Sports SL who hold the exclusive rights to the FIM Road Racing World Championship Grand Prix "MotoGP." The Group believes this demonstrates our ongoing commitment to investing in leading edge solutions for "on-board" broadcasting in technically challenging environments.

The Group continues to see the Defence and Security markets as a key opportunity. In the period, key contracts were secured in the US to provide solutions for homeland security. Further products are being developed for this market place supported by the recruitment of experienced defence and security specialists.

Whilst the Group continues to operate against a background of a challenging economic environment and continued limited order visibility, it is confident that it is successfully executing against its medium term plans that will enable it to deliver its strategic targets.

Financial Results

Group revenue for the six months to 30 June 2013 was £28.0m (H1 2012: £27.5m). Orders received in the period were up 32.3% at £33.6m (H1 2012: £25.4m) with increased demand in both the broadcast and surveillance markets. The strong order intake reflects the improved pipeline seen earlier in the period and has enabled the Group to build an improved order book in comparison with the start of the period. The order book at 30 June was £11.0m (31 December 2012: £5.2m).

The Group's gross margin has improved by 1.2 percentage points to 41.6% (H1 2012: 40.4%) as we continue to drive the cost of products down through lower manufacturing overhead costs and a leaner supply chain.

Overheads remain controlled and in line with expectations. Total overheads fell slightly to £9.6m (H1 2012: £9.8m), being 34% of sales compared with 35% last half-year. R&D overheads show a small decrease and sales expenses an increase which reflects the reallocation of some engineers to customer facing solutions development.

In addition, the Group has included within overheads an accrual for management bonus costs in the first half. The Group's management bonus scheme is based on achievement of a minimum adjusted operating profit in line with market expectations for FY13.

The adjusted operating profit was £2.0m (H1 2012: £1.4m) before charging £0.7m in respect of the amortisation of acquired intangibles (H1 2012: £0.7m). The profit before tax was £1.4m (H1 2012: £0.7m). Net finance income was negligible.

The Group benefited from the US dollar exchange rate of 1.51617 that created a favourable exchange variance on revaluation of dollar-denominated monetary assets and liabilities in the balance sheet at the period end (FY12 1.6170).

At the half year the Group holds inventory of £13.2m (H1 2012: £10.0m) that is significantly up from the prior year due to increased production activity throughout the period.

The Group held net cash of £7.2m at 30 June 2013 (31 December 2012: £8.4m). The continued improvement in the profit generated by the Group has contributed to improved cash generation. There was a net cash inflow from operating activities in the period of £1.6m (H1 2012: £0.5m). The Group continues to view investments in the development of new products as key to future growth. The cash outflow from investing activities amounted to £2.6m (H1 2012: £2.3m) which comprised £0.4m of deferred consideration paid in respect of previous acquisitions and £2.2m in respect of net capital expenditure and the capitalisation of development costs (H1 2012: £1.5m). The Group remains debt free as at 30 June 2013.

Post balance sheet events

The Group announces the completion yesterday of the acquisition of Amplifier Technology for an initial consideration of £2.0m. A further £2.0m payment is subject to earn out.

Earnings per Share

The adjusted earnings per share for the period was 1.8p (H1 2012: 0.9p). After charging non-recurring costs and the amortisation of acquired intangibles, the reported earnings per share from continuing operations was 1.3p (H1 2012: 0.5p).

Dividends

The final dividend of 1.25 pence per share in respect of the year ended 31 December 2012 was paid to shareholders on 19 July 2013. As in previous years, the Board is not declaring an interim dividend.

Business Performance

The table below sets out the key performance indicators that are used by management to measure the performance in the business.

Performance for the six months ended 30 June	2013	2012	Change	FY 2012
Continuing business:
Orders received (£m)	33.6	25.4	32.3%	50.1
Revenue (£m)	28.0	27.5	1.8%	57.2
Book to bill ratio	120.0%	92.4%	27.5 pts	87.6%
Gross margin	41.6%	40.4%	1.1 pts	39.3%
Total operating costs (£m)1	13.0	13.0	0.0%	26.2
Adjusted operating profit (£m)2	2.0	1.4	42.9%	3.1
Adjusted earnings per share 2	1.8p	0.9p		2.5p
Net cash generated from operating activities (£m)	1.6	0.5	227.8%	3.7

¹ Operating costs comprise sales and marketing expenses, administrative expenses, the costs associated with logistics (presented within Cost of sales) and R&D and excludes amortisation of acquired intangibles and non-recurring items.

² Defined as operating profit/(loss) before the amortisation of acquired intangibles and other non-recurring costs. Adjusted EPS is calculated on the same basis after taking account of related tax effects.

Our markets

Orders received from our broadcast market were up 31.6% to £27.9m (H1 2012: £21.2m). Surveillance orders were up 35.7% to £5.7m (H1 2012: £4.2m).

Broadcast revenues declined by 2.9% to £23.5m (H1 2012: £24.2m), but the revenue performance was solid  against the background of a low opening order book brought forward from 2012, and satisfactory performance in challenging economic environments throughout Western Europe and the US. Strong performance in the Middle East and Africa region supported the H1 results. Surveillance revenues increased by 36.4% to £4.5m (H1 2012: £3.3m). 

Revenue by market	H1 2013	H1 2012	Change	FY 2012
	£m	£m	%	£m
Broadcast:
UK & Europe	5.9	8.0	(26.3)	12.3
Americas	9.1	9.6	(5.2)	20.3
Middle East and Africa	6.4	2.9	120.7	8.1
Asia/Pacific	2.1	3.7	(43.2)	6.4
Broadcast	23.5	24.2	(2.9)	47.1
Surveillance	4.5	3.3	36.4	10.1
Total	28.0	27.5	1.8	57.2
Regional operations	H1 2013	H1 2012	Change	FY 2012
	£m	£m	%	£m
Revenues
UK business	19.1	18.3	4.4	37.8
US business	11.8	11.9	(0.8)	25.3
Inter-segmental	(2.9)	(2.7)	7.4	(5.9)
Total revenue	28.0	27.5	1.8	57.2
Adjusted operating profit
UK business	3.1	2.6	19.2	4.9
US business	(0.3)	(0.2)	50.0	0.4
Central costs	(0.8)	(1.0)	(20.0)	(2.2)
Total adjusted operating profit	2.0	1.4	42.9	3.1

Principal risks and uncertainties

The principal risks and uncertainties affecting the business activities of the Group remain those detailed on pages 26 and 27 of the 2012 Annual Report, a copy of which is available on the Group website at www.vislink.com. The Board considers that these remain a current reflection of the risks and uncertainties facing the business for the remaining six months of the financial year. The Group's risk management process remains unchanged from 31 December 2012 and is described in detail in the 2012 Annual Report. The principal risks considered by the Board relate to global economic conditions and those associated with the Group's markets, reputation, overseas operations, customer defaults, senior management and foreign exchange. The principal exchange rates used in the preparation of this condensed consolidated half year financial information are provided in note 15.

The Board and Management

Andrew Sleigh resigned from the Board as non-executive director on 13 May 2013 in order to concentrate on his other business interests.

Strategy and Outlook

Our strategy is to continue to develop our core competence to provide solutions for the broadcast and surveillance markets. We will exploit the strengths of our established brands and continue to invest in our core product development programme, particularly in IT based technologies such as IP transport over 3G/4G and Wi-Fi infrastructures. We will maintain our focus of leveraging opportunities as mature markets transition to HD and less mature markets switch to digital. We have shown that we can develop and bring to market competitive new products quickly, and we expect these to generate incremental revenues in future periods. We have a strong development programme and have actively recruited both graduates and experienced engineers to support this.  

Our intention is to build a clear product, solutions, services and software offering for our customers. This will take time to build but will ultimately provide the recurring revenues and forward visibility that our current business model does not provide us with. We continue to seek "bolt on" acquisitions to strengthen our software and services capabilities that exploit the growth of digital file based work flows and cloud based IP transport technologies.

We believe that the Group is capable of exploiting the continuing growth of video content contribution both in our traditional broadcast market and also in other vertical markets including defence and security. Our three year objective of reaching £80m of sales and £8m adjusted operating profit remains realistic, achievable and on track; developing recurring revenues within our business remains a priority.

We have a strong order book which underpins our third quarter revenue. The Group has net cash of £7.2m. The Board therefore remains confident about the future prospects for the Group and have concluded that it is appropriate to prepare the Group financial statements on a going concern basis.

 

John Hawkins

Executive Chairman

29 August 2013

 

CONSOLIDATED GROUP INCOME STATEMENT

For the six months ended 30 June 2013

CONSOLIDATED GROUP INCOME STATEMENT For the six months ended 30 June 2013		Six months to 30 June 2013	Six months to 30 June 2012	Year ended 31 December 2012
		(Unaudited)	(Unaudited)	(Audited)
	Notes	£000	£000	£000
Continuing operations
Revenue	4	28,028	27,497	57,203
Cost of sales		(16,360)	(16,374)	(34,655)
Gross profit		11,668	11,123	22,548
Sales and marketing expenses		(5,036)	(4,561)	(8,654)
Research and development costs		(2,145)	(2,443)	(5,053)
Administrative costs		(2,458)	(2,751)	(5,751)
Other expenses		(622)	(648)	(883)
Operating profit	4	1,407	720	2,207
Operating profit is analysed as:
Adjusted operating profit		2,029	1,368	3,090
Amortisation of acquired intangibles		(656)	(648)	(1,589)
Non-recurring items	5	34	-	706
Finance income/(costs) - net		12	13	25
Profit before taxation		1,419	733	2,232
Taxation	6	73	(207)	(112)
Profit for the period being profit attributable to equity shareholders		1,492	526	2,120
Basic earnings per share	8	1.3p	0.5p	1.9p

Diluted earnings per share

There is no difference between basic and diluted earnings per share (note 8).

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2013

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the six months ended 30 June 2013	Six months to 30 June 2013	Six months to 30 June 2012	Year ended 31 December 2012
	(Unaudited)	(Unaudited)	(Audited)
	£000	£000	£000
Profit for the period	1,492	526	2,120
Items that may subsequently be reclassified to profit or loss:
Exchange difference on translation of foreign currency net investments	800	(194)	(576)
Total comprehensive income for the period	2,292	332	1,544

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

For the six months ended 30 June 2013

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY For the six months ended 30 June 2013	Share Capital	Share premium account	Capital redemption reserve	Merger reserve	Translation reserve	Retained earnings	Total
	£000	£000	£000	£000	£000	£000	£000
At 1 January 2013	2,848	4,900	617	30,565	4,154	4,293	47,377
Retained profit for the period	-	-	-	-	-	1,492	1,492
Exchange difference on translation of foreign currency net investments	-	-	-	-	800	-	800
Share based payments: value of employee services	-	-	-	-	-	125	125
Dividends payable	-	-	-	-	-	(1,413)	(1,413)
At 30 June 2013	2,848	4,900	617	30,565	4,954	4,497	48,381
At 1 January 2012	2,848	4,900	617	30,565	4,730	3,398	47,058
Retained profit for the period	-	-	-	-	-	526	526
Exchange differences on translation of overseas operations	-	-	-	-	(194)	-	(194)
Share based payments: value of employee services	-	-	-	-	-	82	82
Dividends payable	-	-	-	-	-	(1,413)	(1,413)
At 30 June 2012	2,848	4,900	617	30,565	4,536	2,593	46,059
At 1 January 2012	2,848	4,900	617	30,565	4,730	3,398	47,058
	-	-	-	-	-	-	-
Retained profit for the year	-	-	-	-	-	2,120	2,120
Exchange differences on translation of overseas operations	-	-	-	-	(576)	-	(576)
Share based payments: value of employee services	-	-	-	-	-	188	188
Dividends paid	-	-	-	-	-	(1,413)	(1,413)
At 31 December 2012	2,848	4,900	617	30,565	4,154	4,293	47,377

CONSOLIDATED GROUP STATEMENT OF FINANCIAL POSITION

As at 30 June 2013

CONSOLIDATED GROUP STATEMENT OF FINANCIAL POSITION	Notes	Six months to 30 June 2013	Six months to 30 June 2012	Year ended 31 December 2012
		(Unaudited)	(Unaudited)	(Audited)
		£000	£000	£000
Assets
Non-current assets
Intangible assets	9	29,561	30,197	28,676
Property, plant and equipment	9	2,467	3,050	2,695
Deferred tax assets		1,211	230	1,211
		33,239	33,477	32,582
Current assets
Inventories		13,158	9,995	9,533
Trade and other receivables		13,302	11,591	10,214
Cash and cash equivalents	10	7,243	8,362	8,131
		33,703	29,948	27,878
Liabilities
Current liabilities
Trade and other payables		16,694	15,901	10,893
Current tax liabilities		129	31	70
Provisions for other liabilities and charges	11	1,040	536	838
		17,863	16,468	11,801
Net current assets		15,840	13,480	16,077
Non-current liabilities
Deferred tax liabilities		593	-	700
Provisions for other liabilities and charges	11	105	898	582
		698	898	1,282
Net assets		48,381	46,059	47,377
Shareholders' equity
Ordinary shares		2,848	2,848	2,848
Share premium account		4,900	4,900	4,900
Capital redemption reserve		617	617	617
Merger reserve		30,565	30,565	30,565
Translation reserve		4,954	4,536	4,154
Retained earnings		4,497	2,593	4,293
Total shareholders' equity		48,381	46,059	47,377

CONSOLIDATED GROUP CASH FLOW STATEMENT

For the six months ended 30 June 2013

CONSOLIDATED GROUP CASH FLOW STATEMENT	Notes	Six months to 30 June 2013	Six months to 30 June 2012	Year ended 31 December 2012
		(Unaudited)	(Unaudited)	(Audited)
		£000	£000	£000
Cash flows from operating activities
Cash generated from/(absorbed by) operations	12	1,619	498	3,918
Interest (paid)		-	-	(4)
Taxation (paid)/received		(39)	(16)	(165)
Net cash generated from operating activities		1,580	482	3,749
Cash flows from investing activities
Interest received		12	13	29
Proceeds from sale of property, plant and equipment		29	150	127
Deferred consideration in respect of previous acquisitions		(433)	(815)	(1,312)
Purchase of property, plant and equipment	9	(170)	(196)	(379)
Expenditure on capitalised development costs	9	(2,010)	(1,398)	(2,759)
Net cash used in investing activities		(2,572)	(2,246)	(4,294)
Cash flows from financing activities
Repayment of borrowings	10	-	(37)	(37)
Dividend paid to shareholders		-	-	(1,413)
Net cash used in financing activities		-	(37)	(1,450)
Net decrease in cash and cash equivalents		(992)	(1,801)	(1,995)
Cash and cash equivalents at beginning of period		8,131	10,184	10,184
Effect of foreign exchange rate changes	10	104	(21)	(58)
Cash and cash equivalents at end of period	10	7,243	8,362	8,131

NOTES TO THE HALF YEAR FINANCIAL INFORMATION

For the six months ended 30 June 2013

1.   GENERAL INFORMATION

Vislink plc ("the Company") and its subsidiaries (together "the Group") is a global technology business specialising in the collection and delivery of high quality video and associated data from the field to the point of usage. Vislink provides solutions to the broadcast market for the collection of live news, sport and entertainment events and to the surveillance market including defence, law enforcement and public safety. With offices in the UK, USA, Australia, UAE, South Africa and Singapore and manufacturing operations in the UK and the USA we employ over 200 people worldwide and have net assets of £48.4m. Our solutions include the design and manufacture of microwave radio, satellite transmission and wireless camera systems.

The Company is a public limited company, which is listed on the London Stock Exchange and incorporated and domiciled in the UK. The address of its registered office is Marlborough House, Charnham Lane, Hungerford, Berkshire, RG17 0EY.  The registered number of the Company is 4082188.

This condensed consolidated half year financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2012 were approved by the Board of Directors on 25 March 2013 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.

This condensed consolidated half year financial information has been subject to a review in accordance with ISRE (UK and Ireland) 2410 by our auditors but has not been subject to an audit.

This half year results announcement was approved for issue by the Board of Directors on 23 August 2013.

 

2.   BASIS OF PREPARATION

This condensed consolidated half year financial information for the six months ended 30 June 2013 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34, 'Half year financial reporting' as adopted by the European Union. The condensed consolidated half year financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2012, which have been prepared in accordance with IFRSs as adopted by the European Union.

The preparation of the financial information requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from these estimates.

3.   ACCOUNTING POLICIES

The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2012, as described in those annual financial statements.

Exceptional items are disclosed and described separately in the financial statements where it is necessary to do so to provide further understanding of the financial performance of the Group. They are material items of income or expense that have been shown separately due to the significance of their nature or amount.

Taxes on income in the half year periods are accrued using the tax rate that would be applicable to expected total annual earnings on a country by country basis.

The Group has adopted the revision to IAS1 which is applicable for periods commencing on or after 1 July 2012 and is reflected in this set of financial statements.

4.   SEGMENTAL ANALYSIS

The two markets in each of the UK and US regions are Broadcast and Surveillance.  As the regions manage and control the markets directly, costs are shared across markets in certain regions which means that any allocation of costs to markets would be arbitrary.  The focus of management is to ensure that the appropriate material margins are being achieved in each market as a sub analysis of the regional performance.

The segment information provided to the Executive Management Board for the reportable continuing segments for the period ended 30 June 2013 is as follows:

SEGMENTAL ANALYSIS	UK				US				TOTAL CONTINUING OPERATIONS
	H1 2013	H1 2012	FY 2012		H1 2013	H1 2012	FY 2012		H1 2013	H1 2012	FY 2012
	£m	£m	£m		£m	£m	£m		£m	£m	£m
Revenue:
Broadcast	15,129	14,675	29,227		8,439	9,512	17,845		23,568	24,187	47,072
Surveillance	1,401	994	3,390		3,059	2,316	6,741		4,460	3,310	10,131
External revenue	16,530	15,669	32,617		11,498	11,828	24,586		28,028	27,497	57,203
Inter-segmental	2,542	2,600	5,227		333	108	686		2,875	2,708	5,913
Total revenue	19,072	18,269	37,844		11,831	11,936	25,272		30,903	30,205	63,116
Inter-segmental									(2,875)	(2,708)	(5,913)
Reported revenue									28,028	27,497	57,203
Operating profit:
Adjusted operating profit/(loss)	3,080	2,542	4,942		(232)	(163)	397		2,848	2,379	5,339
Central costs									(819)	(1,011)	(2,249)
Group adjusted operating profit									2,029	1,368	3,090
Amortisation of acquired intangibles	(175)	(176)			(481)	(472)			(656)	(648)	(1,589)
Non-recurring items	34	-			-	-			34	-	706
Group total operating profit	2,939	2,366			(713)	(635)			1,407	720	2,207

GEOGRAPHIC REVENUE ANALYSIS BY DESTINATION	Six months to 30 June 2013	Six months to 30 June 2012	Year ended 31 December 2012
	(Unaudited)	(Unaudited)	(Audited)
UK & Europe	6,912	9,079	15,611
Americas	12,088	11,710	26,743
Middle East and Africa	6,847	3,649	8,172
Asia/Pacific	2,181	3,059	6,677
	28,028	27,497	57,203

The amounts reported to the Executive Chairman with respect to total net assets are measured in a manner consistent with that of the financial statements. The assets are allocated based on the operations of the segment and the physical location of the asset

NET ASSETS	Six months to 30 June 2013	Six months to 30 June 2012	Year ended 31 December 2012
	(Unaudited)	(Unaudited)	(Audited)
UK	26,438	24,490	24,501
US	20,334	19,915	18,685
Segment net assets	46,772	44,405	43,186
Group net assets	1,609	1,654	4,191
	48,381	46,059	47,377

5.   NON-RECURRING ITEMS

The following items of unusual nature, size or incidence have been charged to operating profit during the period and are described as non-recurring.

NON-RECURRING ITEMS	Six months to 30 June 2013	Six months to 30 June 2012	Year ended 31 December 2012
	(Unaudited)	(Unaudited)	(Audited)
	£000	£000	£000
Rationalisation and redundancy costs	143	-	3
Provision against contractual issues	-	-	330
Adjustments to deferred consideration	-	-	(1,039)
Costs associated with the integration of Gigawave Limited	(177)	-	-
Total non-recurring items	(34)	-	(706)

 

6.   TAX ON PROFIT ON ORDINARY ACTIVITIES

TAX ON PROFIT ON ORDINARY ACTIVITIES	Six months to 30 June 2013	Six months to 30 June 2012	Year ended 31 December 2012
	(Unaudited)	(Unaudited)	(Audited)
	£000	£000	£000
Current tax:
UK corporation tax	46	-	26
Foreign tax	-	-	163
Total current tax	46	-	189
Deferred tax:
UK corporation tax	(28)	267	(474)
Foreign tax	(91)	(60)	397
Total deferred tax	(119)	207	(77)
Total taxation charge	(73)	207	112

The tax charge for the six months ended 30 June 2013 is based on the effective tax rate of 3.25% (31 December 2012 5.0%).  Deferred tax is calculated in full on temporary differences under the liability method using a tax rate appropriate to the country in which the deferred tax liability or assets has arisen.  Deferred tax assets have been recognised in respect of all tax losses and other temporary differences to the extent that they are regarded as recoverable against future profits.

 

7.   DIVIDENDS

No interim dividend is proposed for the period.  In respect of 2012 there was no interim dividend and the final dividend of 1.25 pence per share was approved at the Annual General Meeting on 22 May 2013 and paid on 19 July 2013. The total cash cost of the dividend was £1.4m.

8.   EARNINGS PER ORDINARY SHARE

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period, excluding those held in the employee share trust which are treated as cancelled. Earnings per share is calculated by reference to a weighted average of 113,063,000 ordinary shares in issue during the period (30 June 2012: 113,063,000 and 31 December 2012: 113,063,000).

For diluted earnings per share the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The dilutive shares are those share options granted to employees where the exercise price is less than the average market price of the company's ordinary shares during the period.  At 30 June 2013 there were 156,000 dilutive share options (30 June 2012: 167,000 and 31 December 2012: 733,000). The effect of dilutive shares was not material and therefore there is no difference between basic earnings per share and diluted earnings per share.

Adjusted earnings

The directors believe that the adjusted operating profit, adjusted profit before tax, adjusted earnings and adjusted earnings per share provide additional useful information on underlying trends to shareholders. These measures are used by management for internal performance analysis and incentive compensation arrangements. The term "adjusted" is not a defined term used under IFRS and may not therefore be comparable with similarly titled profit measurements reported by other companies. The principal adjustments are made in respect of the amortisation of acquired intangibles, impairment of goodwill and non-recurring costs and their related tax effects.

The reconciliation between reported and adjusted earnings and basic earnings per share for the continuing business is shown below:

	Six months to			Six months to			Year ended
	30-Jun-13			30-Jun-12			31-Dec-12
	Earnings	Basic EPS		Earnings	Basic EPS		Earnings	Basic EPS
	£000			£000			£000
Reported earnings per share	1,492	1.3p		526	0.5p		2,120	1.9p
Amortisation of acquired intangibles after tax	621	0.5p		476	0.4p		1,508	1.3p
Non-recurring costs after tax	(67)	(0.0p)		-	-		(788)	(0.7p)
Adjusted earnings per share	2,046	1.8p		1,002	0.9p		2,840	2.5p

9.   PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS

PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS	Six months to 30 June 2013	Six months to 30 June 2012	Year ended 31 December 2012
	(Unaudited)	(Unaudited)	(Audited)
	£000	£000	£000
Property, plant and equipment
Opening net book value as at 1 January	2,695	3,560	3,560
Additions	170	196	379
Disposals	(57)	(212)	(285)
Depreciation	(397)	(479)	(915)
Exchange adjustment	56	(15)	(44)
Closing net book value	2,467	3,050	2,695
Intangible assets
Intangible development costs
Opening net book value as at 1 January	5,439	5,719	5,719
Additions	2,010	1,398	2,759
Amortisation	(1,149)	(1,270)	(2,564)
Impairment Charge	-	-	(325)
Exchange adjustment	234	(47)	(150)
Development costs closing net book value	6,534	5,800	5,439
Goodwill and acquired intangible assets
Opening net book value as at 1 January	23,237	25,157	25,157
Amortisation	(656)	(648)	(1,589)
Exchange adjustment	446	(112)	(331)
Goodwill and acquired intangibles closing net book value	23,027	24,397	23,237
Total closing net book value of intangible assets	29,561	30,197	28,676

10.  CASH, BORROWINGS AND LOANS

The movements in cash and cash equivalents, borrowings and loans in the period were as follows:

CASH, BORROWINGS AND LOANS		Net cash and cash equivalents	Other borrowings	Total net cash
		£000	£000	£000
Six months ended 30 June 2013
At 1 January 2013		8,131	-	8,131
Cash flow for the period before financing		(992)	-	(992)
Movement in borrowings in the period		-	-	-
Exchange rate adjustments		104	-	104
At 30 June 2013		7,243	-	7,243
Six months ended 30 June 2012
At 1 January 2012		10,184	(37)	10,147
Cash flow for the period before financing		(1,764)	-	(1,764)
Movement in borrowings in the period		(37)	37	0
Exchange rate adjustments		(21)	-	(21)
At 30 June 2012		8,362	-	8,362
Year ended 31 December 2012
At 1 January 2012		10,184	(37)	10,147
Cash flow for the period before financing and acquisition of subsidiary		(545)	-	(545)
Repayment of borrowings		(37)	37	-
Dividend paid to shareholders		(1,413)	-	(1,413)
Exchange rate adjustments		(58)	-	(58)
At 31 December 2012		8,131	-	8,131

The facilities expiring within one year comprise the Group bonding and ancillary facilities that are subject to review during 2013 in the normal course of business.  At 30 June 2013 the Group had a gross bank overdraft facility of £2.0m, net limit of £1.0m. Interest on the overdraft facility is charged at 2.25 per cent over base rate.

11.  PROVISIONS FOR OTHER LIABILITIES AND CHARGES

PROVISIONS FOR OTHER LIABILITIES AND CHARGES	Six months to 30 June 2013	Six months to 30 June 2012	Year ended 31 December 2012
	(Unaudited)	(Unaudited)	(Audited)
	£000	£000	£000
Warranty provision	345	536	331
Property provision	367	893	754
Rationalisation provision	103	5	5
Other provision	330	-	330
	1,145	1,434	1,420
Amounts due within one year	1,040	536	838
Amounts due after one year	105	898	582
	1,145	1,434	1,420

Warranty provisions are made in respect of the expected future warranty costs in certain businesses based on historic actual costs. Warranty periods on products are generally between one and two years.

The property provision is in respect of vacated leasehold properties acquired as part of the Gigawave acquisition and represents the estimated future liabilities associated with the properties.  The provision has been reduced as a result of a recent lease surrender for a vacated property.

Rationalisation provisions are in respect of future liabilities for committed reorganisation costs at the statement of financial position dates, including severance payments, in respect of reorganisation in the Middle East. The provision for rationalisation payments have been announced prior to 30 June 2013.

The Group has other provisions in place that represent an ongoing dispute with a distributor regarding contractual obligations.  The provision represents the potential liabilities associated with the costs incurred in resolving the dispute.

12.  NOTES TO THE CASH FLOW STATEMENT

 

Net cash flow from operating activities comprises:

NOTES TO THE CASH FLOW STATEMENT	Six months to 30 June 2013	Six months to 30 June 2012	Year ended 31 December 2012
	(Unaudited)	(Unaudited)	(Audited)
	£000	£000	£000
Profit before tax	1,419	733	2,232
Depreciation	397	479	915
(Profit)/loss on disposal of property, plant and equipment	29	(21)	75
Amortisation and impairment of development costs	1,149	1,270	2,600
Amortisation of acquired intangibles	657	648	1,589
Share options - value of employee services	125	82	188
Finance income from continuing operations	-	(13)	(29)
Finance costs from continuing operations	-	-	4
Increase in inventories	(3,298)	(1,509)	(1,185)
Increase in trade and other receivables	(2,730)	(1,892)	(678)
Increase/(decrease) in payables	4,161	1,126	(1,381)
Decrease in provisions	(290)	(405)	(412)
Net cash inflow from operating activities	1,619	498	3,918

13.  FOREIGN EXCHANGE RATES

 

The principal exchange rates used by the Group in translating overseas profits and net assets into GBP are set out in the table below.

FOREIGN EXCHANGE RATES COMPARED TO GBP	Six months to 30 June 2013	Six months to 30 June 2012	Year ended 31 December 2012
	(Unaudited)	(Unaudited)	(Audited)
Average rate for the period
US dollar	1.5438	1.5760	1.5849
Period end rate
US dollar	1.5167	1.5686	1.6170

Statement of directors' responsibilities

The directors confirm that this condensed consolidated half year financial information has been prepared in accordance with IAS 34 as adopted by the European Union and that the half year management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

·      an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

·      material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.

The directors of Vislink plc are listed in the Vislink plc Annual Report for 31 December 2012, with the exception of the following change in the period: Andrew Sleigh resigned from the Board on 13 May 2013. A list of the current directors is maintained on the Vislink plc website at www.vislink.com.

On behalf of the Board

John Hawkins

Executive Chairman

Ian Davies

Group Finance Director

29 August 2013

Independent review report to Vislink Plc

Introduction

We have been engaged by the company to review the condensed consolidated half year financial information in the half-yearly financial report for the six months ended 30 June 2013, which comprises the Consolidated Group Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in Shareholders Equity, Consolidated Group Statement of Financial Position, Consolidated Group Cash Flow Statement and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Half Year Financial Reporting", as adopted by the European Union.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Conduct Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Half Year Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of half year financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated financial information in the half-yearly financial report for the six months ended 30 June 2013 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

PRICEWATERHOUSECOOPERS LLP

Chartered Accountants

Bristol

29 August 2013

Notes:

(a)  The maintenance and integrity of the Vislink plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

(b)  Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

 

END

 

 

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