Final Results - Year to 31 Dec 1999 & Acquisition
Vislink PLC
29 March 2000
28/03/00
Vislink plc
Preliminary results for the year ended 31 December 1999 and announcement
of the proposed acquisition of Advent Communications Limited
Key announcements
- Disposal programme of non-core businesses completed, raising £26.7 million
net of costs, resulting in net free cash at year end of £12.1 million
- Acquisition of Advent Communications Limited for £14.08 million creates a
broader-based satellite communications business
- Re-branding of the Company as Vislink plc
- New management team focused on the strategy to develop the Group's
opportunities in digital wireless technology and video on the internet
Results for the year ended 31 December 1999 - continuing operations
- Continuing businesses report an operating profit of £2.0 million
(1998 - £2.1 million)
- Earnings per share on continuing businesses up 36% to 1.31p (1998 - 0.96p)
- The Board are recommending a final dividend of 0.3p (1998 final dividend -
1.0p)
Group results for the year ended 31 December 1999
- Operating loss on discontinued businesses of £2.2million (1998 - profit of
£1.9 million) and exceptional loss on sale of businesses
of £20.3 million (1998 - £3.7 million)
- Group loss for the year after taxation of £21.8million (1998 - £1.5
million)
- Loss per share 23.81p (1998 - 1.63p)
Bob Morton, Chairman of Vislink, commented on the announcement:
'1999 was a year of significant change. Following the appointment of our
new Chief Executive on 24 March 1999, we have achieved the first part of
our declared strategy by disposing of our non-core businesses and
generating funds for investment in growth opportunities.
'The Group is carefully looking at opportunities for expansion, both
organically and through acquisition, as part of its strategy to focus on,
and invest in, the higher-growth technology businesses.
'The acquisition of Advent provides the opportunity to create and grow a much
broader-based satellite, broadcast and telecommunications business.
'The enlarged Group will be able to benefit from the growth in
telecommunications and broadcasting markets arising from the development
of internet data and broadcast quality digital video.'
For further information on Wednesday 29 March 2000, please contact:
Ian Scott-Gall 020 7353 1500
Chief Executive, Vislink plc
James Trumper 020 7353 1500
Finance Director, Vislink plc
Andrew Sharkey/Emmanuel Kenning 020 7353 1500
Luther Pendragon
Chairman's Statement
1999 was a year of significant change. Following the appointment of our
new Chief Executive on 24 March 1999, we have achieved the first part
of our declared strategy by disposing of our non-core businesses and
generating funds for investment into future growth opportunities.
The Group is carefully looking at opportunities for expansion, both
organically and through acquisition, as part of its strategy to focus
on and invest in the higher-growth technology businesses, which form the
core of the Group.
Strategy
The new name and the new management team represent a new beginning for the
Group. The focus on the Broadcast and Telecommunications and Video
Technology Divisions, together with the opportunities afforded to them by
the growth in digital wireless technology and video on the internet,
provides the platform for significant future growth.
Acquisition of Advent Communications Limited
I am pleased to announce that we have reached agreement to purchase the
entire issued share capital of Advent Communications Limited ('Advent').
The Company has conditionally agreed to acquire Advent for a consideration of
£14.08 million, to be satisfied by the payment of £12.46 million in cash and
the issue of 1.2 million new Ordinary Shares (valued at £1.62 million on the
basis of the closing mid-market price of an ordinary share of 135.0p on 28
March 2000, being the last business day prior to the publication of this
announcement). In addition, Advent will pay £1.14 million in pre-sale
dividends to its current shareholders and post-completion pension
contributions of £0.88 million to its current directors. A further
announcement will be made shortly and further details of the transaction and
the business of Advent are set out in a circular to be sent to shareholders.
The acquisition of Advent provides the opportunity to create a much
broader-based satellite communications business and to grow our overall
broadcast and telecommunications business.
The enlarged Broadcast and Telecommunications Division will be able to
benefit from the growth in telecommunications and broadcasting markets
arising from the development of internet data and broadcast quality digital
video.
New Management Team
On 1 December 1999, the Board announced the appointment of James Trumper
as Finance Director with effect from 24 January 2000 following the
resignation of Piero Fileccia. James was formerly Finance Director of
Mitsubishi Electric Corporation PC Division and Bluebird Toys plc.
On 1 September 1999, Ian Macfarlane was appointed as Managing Director of
the Video Technology Division. Ian Aizlewood continues as Managing Director
of the Broadcast and Telecommunications Division.
The new team are working closely with the Chief Executive, Ian Scott-Gall,
to implement the strategy for the growth of the Group.
Disposal Programme
In my interim statement of 23 September 1999, I reported the sale of
the US Aerospace business and also, subject to shareholder approval
which was subsequently given at the Extraordinary General Meeting held on
11 October 1999, the sale of the UK Aerospace Division and the Electrical
Division.
On 4 October 1999, we announced the sale of the business and assets of
the UK Security Division together with the shares in the related Belgium
and Dutch distribution companies and our Security Division interests in
Singapore and Thailand.
The printed circuit board manufacturing company, Tru-Lon Printed Circuits
(Royston) Limited, was sold on 21 October 1999 and the 49 per cent interest
in our joint venture company, Automotive Motion Technology Limited, was sold
on 21 December 1999.
This completed the disposal and reorganisation programme, which realised
£28.1 million of gross proceeds before disposal costs.
Reduction in Share Premium Account
On 18 November 1999, I wrote to you setting out the proposal to reduce the
Company's share premium account by £23.83 million. The underlying reasons
behind the proposal were given in that letter. The High Court in Dublin
approved the proposed reduction in the share premium on 20 December 1999 and
this reduction is reflected in the Company's balance sheet.
Results for the Year
The overall Group results were dominated by the loss arising from writing
back £20.0 million of goodwill, previously written off to reserves, in
respect of the businesses and assets disposed of during the year. The
losses on disposal were £20.3 million. Together with the trading losses
of the discontinued businesses to their point of sale, which amounted to
£2.2 million, the total loss arising from the businesses and assets that were
sold was £22.5 million.
The continuing businesses, our core companies for the future, generated an
operating profit of £3.4 million on sales of £43.4 million. Central costs
of £1.4 million and net interest charges in the year of £0.7 million,
however, reduced the ongoing businesses' pre tax profit to £1.3 million
for the year.
Earnings Per Share
The earnings per share of the continuing businesses were 1.31p (1998 -
0.96p) being an increase of 36% on the previous year.
The loss per share attributed to the discontinued businesses and
exceptional items was 25.12p (1998 - 2.59p). This has resulted in an
overall loss per share of 23.81p (1998 - 1.63p).
Dividend
The Board is recommending a dividend of 0.3p (1998 full year dividend - 1.5p)
for the year in line with the Group's strategy to grow by investment in our
core businesses and by acquisition. It is the Board's intention to recommend
only an annual dividend in future.
The dividend, subject to shareholder approval at the next Annual General
Meeting, will be paid on 4 July 2000 to shareholders on the register at 14
April 2000.
Employees
On behalf of the Board I would like to express our appreciation and thanks
to all our employees for their support and commitment during a year of
significant change.
Retirement
Ted Russell, our President since 1988 and a former Chairman from 1950 to
1988, has decided to retire with effect from 31 December 1999. On behalf
of the Board, I would like to thank Ted for his total support and
commitment to the Group over the years.
Current Trading and Prospects
The Group, after two months trading, is currently performing in line with
its budgets.
Across the Group a number of interesting orders have recently been won.
These include orders for our internet web image products supplied by our
Active Imaging business, orders to equip two cruise liners being built
for Royal Caribbean Cruises Limited with an integrated CCTV system for
both external and internal use and an order to supply satellite systems
to provide high speed internet access combined with voice, data and fax
traffic in one corporate communications system for a customer's European
regional offices.
The Board considers that prospects for continuing growth in the Group's two
divisions remain good.
A L R Morton
Chairman
Group Profit and Loss Account for the year ended 31 December 1999
Note 1999 1998
£'000 £'000
Turnover
Continuing operations 43,383 43,639
Discontinuing operations 38,770 70,539
________________
1 82,153 114,178
________________
Operating profit (loss)
Continuing operations 1,969 2,145
Discontinuing operations (2,154) 1,943
________________
1 (185) 4,088
________________
Exceptional loss on sale
of businesses (including
goodwill of £20.0 million
previously written off
(1998 - £75,000)) 2 (20,332) (3,703)
________________
(Loss) profit on ordinary (20,517) 385
activities before interest
Interest payable (829) (1,111)
Interest receivable 176 -
________________
Loss on ordinary
activities before
taxation (21,170) (726)
________________
Tax on loss on ordinary
activities 3 (679) (770)
Loss for the financial year (21,849) (1,496)
Dividends
Paid - 459
Proposed 275 918
________________
4 275 1,377
________________
Transfer from reserves (22,124) (2,873)
________________
________________
Basic and diluted loss
per share 5 (23.81)p (1.63)p
________________
________________
Earnings per share from
continuing operations 5 1.31p 0.96p
________________
________________
Statement of Total Recognised Gains and Losses for the year
ended 31 December 1999
1999 1998
£'000 £'000
Loss for the financial year (21,849)(1,496)
Translation difference on
foreign currency net investments 8 (78)
________________
(21,841) (1,574)
________________
________________
Reconciliation of Movements in Shareholders' Funds for the year
ended 31 December 1999
1999 1998
£'000 £'000
Loss for the financial year (21,849)(1,496)
Dividends (275)(1,377)
________________
(22,124)(2,873)
Value of share issues in year - 11
Goodwill written off on
prior year acquisitions - (241)
Goodwill on the disposal of
businesses 19,955 75
Translation difference on
foreign currency net
investments 8 (78)
________________
(2,161) (3,106)
Opening equity shareholders' funds 29,233 32,339
________________
Closing equity shareholders' funds 27,072 29,233
________________
________________
Balance Sheet as at 31 December 1999
Group Company
1999 1998 1999 1998
£'000 £'000 £'000 £'000
Fixed assets
Intangible assets 2,652 2,796 - -
Tangible assets 3,876 11,851 - -
Financial assets 19 46 9,908 52,792
_______________________________
6,547 14,693 9,908 52,792
_______________________________
Current assets
Stocks 8,403 21,720 - -
Debtors 9,350 27,755 1,427 835
Cash at bank and in hand 16,466 1,052 14,514 5
________________________________
34,219 50,527 15,941 840
________________________________
Creditors - amounts due
within one year 8,781 30,242 498 1,246
________________________________
Net current assets (liabilities) 25,438 20,285 15,443 (406)
________________________________
Total assets less current 31,985 34,978 25,351 52,386
liabilities
Creditors - amounts due 3,591 4,646 30 60
after one year
Provisions for liabilities 1,322 1,099 100 -
and charges ________________________________
Net Assets 27,072 29,233 25,221 52,326
________________________________
________________________________
Capital and reserves
Called up share capital 2,182 2,182 2,182 2,182
Share premium account 21,422 45,255 21,422 45,255
Other reserves 1,450 1,450 1,450 1,450
Profit and loss account 2,018 (19,654) 167 3,439
________________________________
Equity shareholders' funds 27,072 29,233 25,221 52,326
________________________________
________________________________
Group Cash Flow Statement for the year ended 31 December 1999
1999 1998
£'000 £'000
Net cash inflow from 4,455 2,043
operating activities ________________
Returns on investments and servicing
of finance
Interest received 32 -
Interest paid (796) (1,117)
________________
(764) (1,117)
________________
Taxation paid (1,407) (844)
________________
Capital expenditure
Purchase of tangible fixed assets (1,817) (1,989)
Proceeds from sale of fixed assets 270 214
________________
(1,547) (1,775)
________________
Acquisitions and disposals
Purchase of subsidiary undertakings (30) (1,888)
Purchase of investments - (6)
Proceeds from sale of businesses 24,718 -
________________
24,688 (1,894)
________________
Equity dividends paid (918) (1,300)
________________
Net cash inflow (outflow)
before financing 24,507 (4,887)
________________
________________
Financing
Issue of ordinary share capital - 11
New long term loans 360 2,000
Repayment of bank loans (547) (543)
Finance lease repayments (836) (751)
________________
(1,023) 717
________________
Increase (decrease) in cash 23,484 (4,170)
________________
________________
Reconciliation of Net Cash Flow to Movement in Net Debt
1999 1998
£'000 £'000
Increase (decrease) in cash 23,484 (4,170)
Cash inflow from increase in loans (360) (2,000)
Repayment of bank loans 547 543
Finance lease payments 836 751
________________
Change in net cash (debt)
resulting from cash flows 24,507 (4,876)
Purchase of tangible fixed (414) (1,046)
assets with finance leases
Finance leases of 850 8
undertakings sold
Bank loans of undertakings sold 28 -
Effect of foreign exchange 11 14
changes ________________
Movement in net cash (debt) 24,982 (5,900)
Opening net debt (12,900) (7,000)
________________
Closing net cash (debt) 12,082(12,900)
________________
________________
1. Segmental Analysis
Turnover Operating Net Assets
Profit
Total Total Total Total Total Total
1999 1998 1999 1998 1999 1998
£'000 £'000 £'000 £'000 £'000 £'000
By division:
Broadcast and 28,540 26,391 2,537 2,535 9,148 6,923
Telecommunications
Video Technology 14,843 17,248 901 1,037 5,172 4,647
Central - - (1,325) (1,355) 12,752 (9,520)
Goodwill - - (144) (72) - -
amortisation _______________________________________________
Continuing 43,383 43,639 1,969 2,145 27,072 2,050
operations
Discontinuing 38,770 70,539 (2,154) 1,943 - 27,183
operations _______________________________________________
Total 82,153 114,178 (185) 4,088 27,072 29,233
_______________________________________________
_______________________________________________
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
Total Broadcast & Video Discontinued
Telecom- Technology Operations
communications
1999 1998 1999 1998 1999 1998 1999 1998
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
By
market:
UK & 46,901 73,900 12,914 13,025 4,366 5,806 29,621 55,069
Ireland
Rest of 13,497 15,664 6,492 5,117 3,117 3,320 3,888 7,227
Europe
North 9,562 11,206 1,466 1,703 4,771 5,555 3,325 3,948
America
Asia 5,492 5,512 2,490 1,540 2,021 2,017 981 1,955
Other 6,701 7,896 5,178 5,006 568 550 955 2,340
______________________________________________________________
82,153 114,178 28,540 26,391 14,843 17,248 38,770 70,539
______________________________________________________________
______________________________________________________________
By
origin:
UK & 66,424 95,483 25,785 22,529 4,492 6,709 36,147 66,245
Ireland
Rest of 6,192 6,952 - - 5,817 5,746 375 1,206
Europe
North 9,537 11,743 2,755 3,862 4,534 4,793 2,248 3,088
America ______________________________________________________________
82,153 114,178 28,540 26,391 14,843 17,248 38,770 70,539
______________________________________________________________
______________________________________________________________
Net Asset Analysis
Total
1999 1998
£'000 £'000
By market:
United Kingdom & Ireland 21,318 21,052
Rest of Europe 2,228 2,463
North America 3,526 5,718
________________
27,072 29,233
________________
________________
2. Exceptional items
1999 1998
£'000 £'000
Loss on disposal of Aerospace Division 1,454 -
Loss on disposal of Electrical Division 3,391 -
Loss on disposal of Security Division 15,013 -
Provision against investment in - 3,250
Automotive Motion Technology Limited
(Profit) on sale of investment in (572) -
Automotive Motion Technology Limited
Loss on the disposal of other businesses 1,046 75
Adjustment to the sale of businesses - 378
in prior years ________________
20,332 3,703
________________
________________
3. Taxation
1999 1998
£'000 £'000
UK Corporation tax at - 600
30.25% (1998 - 31%)
Advance corporation tax written off 733 -
Adjustment in respect of prior years 631 450
Overseas taxation 115 170
Deferred taxation (800) (450)
_______________
679 770
_______________
_______________
4. Dividends
1999 1998
£'000 £'000
Interim - nil (1998 - - 459
0.50p per share)
Final - 0.30p per share 275 918
(1998 - 1.00p per share) _______________
275 1,377
_______________
_______________
In 1999 there is no UK tax credit (1998 - 0.25p) attached to
the final dividend.
5. Earnings (loss) per Ordinary Share
Earnings (loss) per ordinary share is calculated by reference to a weighted
average of 91,767,000 (1998 - 91,754,000) ordinary shares in issue during
the period. Earnings per share from continuing operations excludes after
tax losses relating to discontinued operations of £2,718,000 (1998 - profit
of £1,943,000) and exceptional items of £20,332,000 (1998 - £4,323,000).
At the date of the preliminary announcement the number of shares in issue
was 92,959,000.
1999 1998
£'000 £'000
Basic and diluted earnings per share (23.81)p (1.63)p
Adjustments:
Loss (profit) after taxation 2.96p (2.12)p
from discontinued operations
Exceptional items 22.16p 4.71p
__________________
Earnings per share from 1.31p 0.96p
continuing operations __________________
__________________
6. Notes to the Group Cash Flow Statement
(a) Reconciliation of operating (loss) profit to net cash inflow
from operating activities
1999 1998
£'000 £'000
Operating (loss) profit (185) 4,088
Depreciation 1,710 2,067
Amortisation of goodwill 144 72
Provision against investments 6 20
(Profit) on sale of fixed assets (10) (54)
(Increase) in stocks (1,477) (1,924)
Decrease (increase) in debtors 6,581 20
(Decrease) in creditors (1,854) (1,902)
(Decrease) in provisions (460) (344)
_________________
Net cash inflow from 4,455 2,043
operating activities _________________
_________________
(b) Analysis of net debt
Other
At 1 Cash non- Exchange At 31
January flow cash movements December
movements
£'000 £'000 £'000 £'000 £'000
Cash at bank and in hand 1,052 15,415 - (1) 16,466
Bank overdrafts (8,069) 8,069 - - -
Loans (4,284) 187 28 12 (4,057)
Finance leases (1,599) 836 436 - (327)
________________________________________________
(12,900) 24,507 464 11 12,082
________________________________________________
________________________________________________
(c) Cash flow from disposals
The non-core businesses which were disposed of during the year contributed
£1,817,000 to the net operating cash flows and paid £211,000 in respect
of interest, £699,000 in respect of capital expenditure and £154,000 in
respect of taxation, giving rise to a net cash inflow before financing of
£753,000.
7. Subsequent Events
On 29 March 2000 the Company announced its intention to acquire the entire
issued share capital of Advent Communications Limited for a consideration of
£14,078,000 to be satisfied by the payment of £12,458,000 in cash on
completion of the acquisition, the issue of 504,000 new ordinary shares to the
Advent Directors on completion and the issue of 696,000 ordinary shares to the
Advent Directors on the second anniversary of completion if they remain
employed by Advent at that date. On the basis of the closing mid-market price
of an ordinary share of 135.0p on 28 March 2000, being the last business day
prior to the publication of this statement, the 1.2 million new ordinary
shares to be issued in connection with the Acquisition Agreement are valued at
£1,620,000.
In addition, a pre-sale dividend of £1,142,000 will be paid by Advent to
its current shareholders and a post-completion pension contribution of
£880,000 in aggregate will be paid by Advent to the Advent Directors'
occupational pension schemes.
The acquisition is subject to the approval of shareholders at an
Extraordinary General Meeting to be held on 17 April 2000.
8. Directors Responsibilities
The financial information summarised above does not constitute statutory
accounts within the meaning of Section 19 of the Companies (Amendment) Act
1986 of Ireland. The financial information for the year ended 31 December
1999 has been extracted from the full accounts of the Group which contain an
unqualified audit report and will be filed, in due course, with the
Companies Registration Office in Ireland.
9. Report and Accounts
Copies of the Report and Accounts will be sent to shareholders in due
course and will be available from the registered office at Brookfield House,
Brookfield Terrace, Blackrock, Co. Dublin, Ireland.
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