Interim Results
Vislink PLC
4 September 2001
4 September 2001
Vislink plc
Interim results for the six months ended 30 June 2001
'The Group has benefited from its acquisitions and continues to make progress'
Highlights
* The Group's sales were up by 93 per cent. to £38.52 million (2000 -
£19.94 million). The sales growth has been achieved through a good
contribution from the acquisitions made last year and a 6 per cent.
increase from the continuing businesses
* The Group has increased its EBITA by 209 per cent., helped by
acquisitions. The Group's operating profit before goodwill amortisation
(EBITA) is £1.7 million (2000 - £0.55 million)
* The Group has increased profit before interest and tax by 223 per cent.
to £1.1million (2000 - £0.34 million)
* Earnings per share from continuing operations excluding goodwill
amortisation rose by 69 per cent. to 1.00 pence (2000 - 0.59 pence)
* In July the business and certain assets of Codepoint, the Video
Division's access control business, were sold for net cash of £0.28
million
Commenting on the interim announcement, Bob Morton, Chairman of Vislink plc
said:
'The current global economic climate has undoubtedly lengthened the
sales cycle and made trading tougher. The Group has achieved an
acceptable level of orders and sales during the first half and under
these conditions the prospects for the second half remain
satisfactory.'
- Ends -
For further information on 4 September 2001, please contact:
Ian Scott-Gall 01488 685500
Chief Executive, Vislink plc
James Trumper 01488 685500
Group Finance Director
Richard Dyett 020 7597 5033
Investec Henderson Crosthwaite
Chairman's Statement
Introduction
I am pleased to report that the Group has continued to make progress in a
challenging trading environment.
Results for the six months to 30 June 2001
The Group's sales for the period were up by 93 per cent. to £38.52 million
(2000 - £19.94 million). The sales growth has been achieved through a good
contribution from the acquisitions made last year and a 6 per cent. increase
from the continuing businesses. The Group's order intake in the first half was
£39.80 million (2000 - £26.94 million).
The Group significantly increased its operating profit before goodwill
amortisation, to £1.69 million (2000 - £0.55 million). Goodwill amortisation
for the period was £0.62 million (2000 - £0.21 million).
The profit before interest and tax at £1.08 million was well ahead of last
year's £0.34 million. In the half year there was a net interest charge of
£0.53 million compared with a net interest receipt of £0.09 million for the
previous half year. This charge reflects the cost of the increased Group debt
following the acquisition of Microwave Radio Communications, in July 2000.
The Group's profit on ordinary activities before tax for the period rose by 31
per cent. to £0.55 million (2000 - £0.42 million).
The Group had a positive cash flow from operations of £0.71 million, although
net debt increased slightly in the period to £12.43 million (31 December 2000
- £11.84 million).
Earnings per share
Earnings per share from continuing operations excluding goodwill amortisation
rose 69 per cent. to 1.00 pence (2000 - 0.59 pence). Basic earnings per share
increased 11 per cent. to 0.40 pence (2000 - 0.36 pence).
Dividends
As in previous years the Board is not recommending an interim dividend for the
half year in line with the Group's stated strategy only to recommend an annual
dividend.
Business Review
Broadcast and Telecommunications Division
Financial review
The Division's sales for the six months were £30.90 million (2000 - £12.7
million). Satisfactory contributions were made by the recent acquisitions,
Microwave Radio Communications ('MRC') of £11.2 million (2000 - nil) and
Advent Communications Limited ('Advent') of £8.18 million (2000 - £1.92
million). Continental Microwave ('CML'), the larger of the original divisional
companies has also made a positive contribution to the half year with sales of
£7.6 million (2000 - £5.9 million).
The Division's operating profit before goodwill increased to £2.24 million
(2000 - £0.81 million). The goodwill amortisation was £0.62 million (2000 - £
0.21 million) giving a net operating profit of £1.62 million (2000 - £0.60
million).
General review
The Division started the year with a good order book. Trading during the first
half has been tougher, particularly in the second quarter when there was a
noticeable lengthening of the sales cycle. However the Division has won some
significant orders and has maintained its order book at £13.8 million.
During the first half year, the general economic slow down was felt mainly by
our customers in the UK and the US and therefore the larger contract wins have
been from outside these markets. The most notable included a £1.0m contract
won by CML from a Taiwanese broadcaster for the supply of a digital microwave
system that will carry digital television signals through the majority of the
island. CML has also won a second £2.30 million order for a state sponsored TV
station and transmitter system for a West African country following on from a
successful installation last year. A Middle East customer has awarded
Multipoint a US$0.9 million (£0.65 million) contract for the design,
manufacture, installation and commissioning of a large fixed satellite up-link
which will have the capability of simulcasting multiple analogue and digital
signals from a single antenna. MRC has won contracts to supply two Korean
broadcast companies with digital TV systems which have a contract value of
US$1.0 million (£0.72 million). Advent has won four projects for £1.0 million
of satellite equipment for a Middle East customer and also a £1.4 million
contract to supply portable satellite communications equipment to a Far East
customer.
In addition, we remain the nominated supplier on two large contracts which are
still expected to make a contribution to the fourth quarters sales with the
balance being shipped next year.
In the US Broadcast TV market, the FCC mandated timetable for the stations to
have Digital TV broadcast capability continues to benefit MRC which is
receiving an encouraging level of orders for its studio to transmitter
microwave links.
Video Technology Division
Financial review
The Division's sales for the half year increased to £7.21 million (2000 -
£6.89 million) as a result of good sales growth from Hernis, Datacell and
American Auto-Matrix ('AAM'). Active Imaging had lower comparative sales due
to the reduced demand for Internet based products.
The Division's operating profit for the half year at £0.30 million was
slightly behind the previous year's £0.43 million due to the latter including
the £0.11 million one-off sale of intellectual property rights by AAM, our US
buildings control business.
General review
Hernis, our Norwegian based high quality CCTV systems integrator, has had a
record order intake in the first half year with orders of £4.22 million (2000
- £3.23 million). Significant orders included systems for two onshore gas
plants, worth £0.5 million and ten systems for liquid natural gas vessels
worth £0.6 million. In addition, in May, Hernis won the contract to supply the
on-board security and safety CCTV system to the 'World' - the world's first
residential ocean going resort liner. These orders have come from a number of
shipping and oil and gas companies and underline the global strength of
Hernis.
AAM has won a US$1.0 million (£0.72 million) maintenance, service and
installation contract for a key local customer in Pittsburg. This represents
the first of such installation and service contracts and is expected to
generate a satisfactory result for AAM over the next 12 months.
The Division's order book has increased, as a result of the strong order input
in the half year, to £4.9 million (December 31, 2000 - £3.6 million).
We have continued the investment program to enhance the Internet video based
systems developed by Active Imaging. The Active Imaging Multimedia Server
(AIMMS) project is currently at beta testing stage and the product will be
launched in the second half.
Disposal of Codepoint
On July 28 we announced the sale of the business and certain assets of
Codepoint, the Division's access control business. Codepoint had sales of £
0.79 million and an operating profit of £0.03 million for the year ended 31
December 2000. The sale is expected to generate net cash of £0.28 million and
a modest gain, which will be included in the full year results.
Strategy and Prospects
The Broadcast and Telecommunications Division continues to work on the
integration of its businesses through the joint development of new products
and the co-ordinated management of its international sales and marketing. The
global reach of the Division has been demonstrated by its success in winning
orders outside of the UK and US markets.
The US market for digital TV continues to be underpinned by the firm position
being taken by the Federal Communications Commission (FCC) for the dates by
which the TV stations have to have a digital capability. The UK market would
benefit from a similar clear statement, without which the roll out of the next
phase of the UK's Digital Terrestrial TV network will continue to drift.
The Video Technology Division has had an encouraging first half and is
expected to continue to grow organically.
The current global economic climate has undoubtedly lengthened the sales cycle
and made trading tougher. The Group has achieved an acceptable level of orders
and sales during the first half and under these conditions the prospects for
the second half remain satisfactory.
A L R Morton
Chairman
4 September 2001
GROUP PROFIT AND LOSS ACCOUNT
for the six months ended 30 June 2001
Six months Six months Year
to to ended
30 June 30 June 31 Dec
2001 2000 2000
£'000 £'000 £'000
Turnover
Continuing operations 38,111 19,590 60,255
Discontinued operations 409 354 790
---------- ---------- ----------
38,520 19,944 61,045
---------- ---------- ----------
Operating Profit
Continuing operations before goodwill 1,691 553 2,784
Goodwill on continuing operations (616) (210) (796)
---------- ---------- ----------
1,075 343 1,988
Discontinued operations 6 (8) 30
---------- ---------- ----------
1,081 335 2,018
---------- ---------- ----------
Exceptional costs from change of domicile - - (549)
---------- ---------- ----------
Profit on ordinary activities before interest 1,081 335 1,469
Interest payable (615) (178) (1,067)
Interest receivable 87 265 605
---------- ---------- ----------
Profit on ordinary activities before taxation 553 422 1,007
Tax on profit on ordinary activities (148) (88) (245)
---------- ---------- ----------
Profit for the financial period 405 334 762
Dividends - - (405)
---------- ---------- ----------
Transfer to reserves 405 334 357
===== ===== =====
Basic earnings per share 0.40p 0.36p 0.79p
===== ===== =====
Fully diluted earnings per share 0.39p 0.35p 0.78p
===== ===== =====
Earnings per share from continuing operations 1.00p 0.59p 2.15p
excluding goodwill
===== ===== =====
Dividend per share - - 0.40p
===== ===== =====
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the six months ended 30 June 2001
Six months to Six months to Year ended
30 June 2001 30 June 2000 31 Dec 2000
£'000 £'000 £'000
Profit for the financial period 405 334 762
Translation difference on foreign 1,080 276 354
currency net investments
---------- ---------- ----------
Total recognised gains and losses 1,485 610 1,116
===== ===== =====
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the six months ended 30 June 2001
Six months to Six months to Year ended
30 June 2001 30 June 2000 31 Dec 2000
£'000 £'000 £'000
Profit for the financial period 405 334 762
Dividends - - (405)
---------- ---------- ----------
405 334 357
Value of share issues in year - 1,010 5,375
Value of shares to be issued (170) - 438
Translation difference on foreign 1,080 276 354
currency net investments
---------- ---------- ----------
1,315 1,620 6,524
Opening equity shareholders' funds 33,596 27,072 27,072
---------- ---------- ----------
Closing equity shareholders' funds 34,911 28,692 33,596
===== ===== =====
GROUP BALANCE SHEET
as at 30 June 2001
30 June 2001 30 June 2000 31 Dec 2000
£'000 £'000 £'000
Fixed assets
Intangible assets 23,143 16,074 23,466
Tangible assets 6,344 5,257 6,372
Financial assets 19 19 19
---------- ---------- ----------
29,506 21,350 29,857
---------- ---------- ----------
Current assets
Stocks 16,697 10,558 17,120
Debtors 16,929 11,153 18,101
Cash at bank and in hand 1,677 2,090 3,450
---------- ---------- ----------
35,303 23,801 38,671
---------- ---------- ----------
Creditors - amounts falling due
within one year
Borrowings 2,283 716 2,341
Creditors 15,273 10,752 18,779
---------- ---------- ----------
17,556 11,468 21,120
---------- ---------- ----------
Net current assets 17,747 12,333 17,551
Total assets less current liabilities 47,253 33,683 47,408
Creditors - amounts falling due
after more than one year
Borrowings 11,820 3,659 12,956
Creditors 0 37 0
---------- ---------- ----------
11,820 3,696 12,956
---------- ---------- ----------
Provisions for liabilities and charges 522 1,295 856
---------- ---------- ----------
34,911 28,692 33,596
===== ===== =====
Capital and reserves
Called up share capital 2,534 2,340 2,534
Shares to be issued 268 0 438
Merger reserve 27,895 23,724 27,895
Profit and loss account 4,214 2,628 2,729
---------- ---------- ----------
Equity shareholders' funds 34,911 28,692 33,596
===== ===== =====
SUMMARISED STATEMENT OF CASH FLOWS
for the six months ended 30 June 2001
Six months to Six months to Year ended
30 June 2001 30 June 2000 31 Dec 2000
£'000 £'000 £'000
Net cash inflow (outflow) from 714 (1,212) 676
operating activities
Returns on investments and servicing (905) 93 93
of finance
Taxation (130) (66) (105)
Capital expenditure (397) (807) (1,615)
Acquisitions and disposals - (12,994) (27,650)
Equity dividends paid - - (275)
---------- ---------- ----------
Net cash outflow before financing (718) (14,986) (28,876)
Financing (1,194) 547 15,831
---------- ---------- ----------
Decrease in cash (1,912) (14,439) (13,045)
===== ===== =====
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Six months Six months Year ended
to to 31 Dec
30 June 2001 30 June 2000 2000
£'000 £'000 £'000
Decrease in cash (1,912) (14,439) (13,045)
Cash inflow from increase in loans - (335) (11,637)
Repayment of bank loans 1,117 289 507
Finance lease repayments 77 124 287
---------- ---------- ----------
Change in net debt resulting from cash (718) (14,361) (23,888)
flows
Effect of foreign exchange changes 139 (6) (41)
---------- ---------- ----------
Movement in net debt (579) (14,367) (23,929)
Opening net (debt) cash (11,847) 12,082 12,082
---------- ---------- ----------
Closing net debt (12,426) (2,285) (11,847)
===== ===== =====
NOTES TO THE INTERIM ACCOUNTS
for the six months ended 30 June 2001
1. SEGMENTAL REPORT
Turnover Operating Profit
Six Six Year Six Six Year
months to months to ended months to months to ended
30 June 30 June 31 Dec 30 June 30 June 31 Dec
2001 2000 2000 2001 2000 2000
By Division: £'000 £'000 £'000 £'000 £'000 £'000
Broadcast and 30,899 12,701 46,222 2,239 806 3,458
Telecommunications
Video Technology 7,212 6,889 14,033 296 431 947
Central costs - - - (564) (577) (1,079)
---------- ---------- -------- ----- ------- --------
38,111 19,590 60,225 1,971 660 3,326
Exceptional - - - (280) (107) (542)
development costs
Goodwill - - - (616) (210) (796)
amortisation
---------- ---------- ---------- ------- ------- -------
Ongoing operations 38,111 19,590 60,225 1,075 343 1,988
---------- ---------- ---------- ------- ------- -------
Discontinued 409 354 790 6 (8) 30
operations
---------- ---------- ---------- ------- ------- -------
Group total 38,520 19,944 61,045 1,081 335 2,018
===== ===== ===== ===== ===== =====
Goodwill amortisation is in respect of Advent Communications Limited,
Multipoint Communications Limited and Microwave Radio Communications LLC. All
the companies are within the Broadcast and Telecommunications Division.
Turnover Analysis
Turnover
Six months to Six months to Year ended
30 June 2001 30 June 2000 31 Dec 2000
By market: £'000 £'000 £'000
Continuing operations
UK & Ireland 5,693 5,225 11,661
Rest of Europe 6,180 4,072 11,971
North America 15,694 3,503 16,727
Asia 6,094 2,740 7,867
Africa 708 2,301 6,748
Other 3,742 1,749 5,281
---------- ---------- ----------
38,111 19,590 60,255
Discontinued operations
UK & Ireland 404 337 775
Rest of Europe - 12 -
North America - 5 -
Asia 5 - 11
Africa - - -
Other - - 4
---------- ---------- ----------
Group Total 38,520 19,944 61,045
===== ===== =====
2. TAX ON PROFIT ON ORDINARY ACTIVITIES
The tax charge for the six months ended 30 June 2001 is based on the effective
tax rate which it is estimated will apply on earnings for the full year.
3. DIVIDENDS
No interim dividend is proposed for the period. In 2000 there was no interim
dividend and the final dividend was 0.4 pence.
4. EARNINGS PER ORDINARY SHARE
Earnings per share is calculated by reference to a weighted average of
101,377,000 ordinary shares in issue during the period (30 June 2000 -
92,988,000; 31 December 2000 - 96,643,000).
The fully diluted earnings per share is based on 102,829,000 ordinary shares
in issue during the period (30 June 2000 - 94,771,000; 31 December 2000 -
98,134,000).
Earnings per share from continuing operations excludes after tax profits
relating to discontinued operations of £6,000 (30 June 2000 - £8,000 loss and
31 December 2000 - £30,000 profit).
Six months to Six months to Year ended
30 June 2001 30 June 2000 31 Dec 2000
Basic earnings per share 0.40p 0.36p 0.79p
Adjustments:
Goodwill 0.61p 0.22p 0.82p
Result after taxation from operations (0.01)p 0.01p (0.03)p
to be discontinued
Non-operating exceptional items - - 0.57p
---------- ---------- ----------
Earnings per share from ongoing 1.00p 0.59p 2.15p
operations before goodwill
---------- ---------- ----------
Fully diluted earnings per share 0.39p 0.35p 0.78p
===== ===== =====
5. RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOW
FROM OPERATING ACTIVITIES
Six months Six months Year ended
to to 31 Dec
30 June 30 June 2000
2001 2000
£'000 £'000 £'000
Operating profit 1,081 335 2,018
Depreciation 567 400 920
Amortisation of goodwill 616 210 796
(Profit) loss on sale of fixed assets (16) - 1
Decrease (increase) in stocks 764 49 (2,013)
Decrease (increase) in debtors 1,459 (777) (4,495)
(Decrease) increase in creditors (3,423) (1,402) 3,915
(Decrease) in provisions (334) (27) (466)
---------- ---------- ----------
Net cash inflow (outflow) from operating 714 (1,212) 676
activities
===== ===== =====
6. PROFIT AND LOSS ACCOUNT
The profit and loss account comprises:
30 June 2001 30 June 2000 31 Dec 2000
£'000 £'000 £'000
Accumulated profits 8,479 5,691 6,378
Goodwill written off (4,265) (3,063) (3,649)
---------- ---------- ----------
4,214 2,628 2,729
===== ===== =====
7. POST BALANCE SHEET EVENTS
On July 28, 2001 the Company sold the business and assets of the trade of
Codepoint, the buildings access control business to Total Security Protection
Limited for a consideration of £0.22 million (before costs). The book value of
the assets disposed of was £0.07 million.
8. BASIS OF PREPARATION
The interim accounts, which are unaudited, have been prepared in accordance
with the accounting policies set out in the Annual Report and Accounts for the
year ended 31 December 2000. The financial information for the preceding year
is based upon the statutory accounts for the ended 31 December 2000, upon
which the auditors gave an unqualified opinion and which have been delivered
to Companies House.
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