Interim Results

Vislink PLC 30 August 2007 Vislink plc Interim results for the six months ended 30 June 2007 Vislink plc ('The Group'), a leading supplier of microwave radio and satellite transmission products for the broadcast and security markets and of CCTV systems for the marine security market has today announced its interim results for the six months to 30 June 2007. Financial summary --------------------------- -------- ----------- For the six months ended 30 June 2007 2006 £'000 £'000 --------------------------- -------- ----------- Revenue 46,152 50,764 Operating profit 7,184 6,234 Adjusted* operating profit 7,860 6,910 Adjusted* operating margin 17.0% 13.6% Profit before taxation 6,967 6,076 Earnings per share - basic 3.20p 2.73p Adjusted* earnings per share - basic 3.54p 3.08p --------------------------- -------- ----------- *Adjusted operating profit is operating profit before the amortisation of acquired intangibles. Adjusted earnings per share are calculated on the same basis. Highlights: • Good progress made with the strategic development of the core operations • Adjusted* operating profit increased by 13.7% to £7.86 million (2006 - £6.91 million) • Adjusted* operating margin increased to 17.0% (2006 - 13.6%) • Revenues increased by 1.1% (at constant exchange rates and excluding the Venezuelan contract sales) • Revenues were £46.15 million (2006 - £50.76 million) • Adjusted* earnings per share increased by 14.9% to 3.54 pence (2006 - 3.08 pence) • Net cash inflow generated from operations in the period was £5.33 million (2006 - £6.57 million) • The Group ended the period with net cash of £4.16 million (31 December 2006 - £3.91 million) • The Group announced on 30 July 2007 the acquisition of Focus Communications, Inc. • Forward order book of £32.6m • Encouraging trading since the period end Tim Trotter, Chairman of Vislink said: 'The Group has achieved a record half year operating profit. The order flow has continued to improve into the second half and we have made our first investment to create a Technical Services business in the US market. The Board is encouraged by current trading and continues to look forward to the rest of the year with confidence.' - ends - For further information on 30 August 2007, please contact: Ian Scott-Gall, Chief Executive 01488 685500 James Trumper, Group Finance Director 01488 685500 Andrew Hayes / James White 0207 796 4133 Hudson Sandler Chairman and Chief Executive's Statement Results for six months to 30 June 2007 Introduction Our strategy remains the delivery of increasing shareholder value by acquisition and by building on our market leading positions in the broadcast and marine safety markets whilst increasing our capacity to capitalise on the growing defence, law enforcement and security markets. We continue to seek earnings enhancing acquisitions that will strengthen and accelerate our growth into the broadcast and defence, law enforcement and security markets. A significant opportunity for Vislink is the 2 GHz programme in the US domestic market. In exchange for being granted radio spectrum for their telecoms needs, Sprint/Nextel is required by the regulatory authorities to compress the existing Broadcast Auxiliary Service (BAS) spectrum into a smaller portion of the 2GHz radio spectrum. This compression requires the use of digital equipment and Sprint/Nextel is obliged to replace all 2GHz analogue microwave systems with Standard Definition digital systems on a like-for-like basis. This programme continues to grow in size and opportunity, with it increasing to an estimated US $400 million for equipment and US $200 million for Services. It is expected to run well into 2009. MRC has now received cumulative purchase orders of US $180 million for equipment under this programme. The Services sector of this programme offers significant additional revenues under the Group's strategy to acquire and build its Technical Services business. Financial results The Group has made good progress with both its strategy and its core operations. The Group's adjusted* operating margin has improved to 17.0% of revenues (2006 - 13.6%) generating a 14.9% increase in adjusted* earnings per share. The order intake for the period grew by 3.7%, excluding the effects of foreign exchange and orders associated with the completed legacy Venezuelan contract. The headline order intake for the period was £46.13 million (2006 - £49.16 million). On the same basis, organic revenues increased 1.1%. Headline revenues were £46.15 million (2006 - £50.76 million) after the adverse impact of foreign exchange on translation of £3.02 million and comparatively lower Venezuelan contract sales of £2.10 million. The Group has continued to increase its operating profits. The adjusted operating profit being operating profit from continuing operations before the amortisation of acquired intangibles, increased by 13.7% to £7.86 million (2006 - £6.91 million). This increase is after an adverse impact from foreign exchange on translation of £0.53 million. Operating profits from continuing operations were up by 15.2% to £7.18 million (2006 - £6.23 million). The Group's profits from continuing activities after interest charges but before tax were up by 14.7% at £6.97 million (2006 - £6.08 million). The Group net cash inflow generated from operations was £5.33 million (2006 - £6.57 million). The Group net cash was £4.16 million as at 30 June 2007 (31 December 2006 - £3.91 million). Earnings Per Share The reported basic undiluted earnings per share for the period were 3.20 pence (2006 - 2.73 pence). After adjusting for the amortisation of acquired intangibles, the Group's adjusted earnings per share increased 14.9% to 3.54 pence (2006 - 3.08 pence). Dividends As in previous years the Board is not recommending an interim dividend. Business Review US RF business MRC, the US business, increased its orders by 10.3% in local currency. Sales revenues were 3.5% lower. The slight reduction in revenue was due to sales being deferred to the second half when several new products that had been developed for the broadcast market and in particular the 2GHz re-channelisation programme, entered production. Reported sales, after the effect of adverse foreign exchange translation, were 12.9% lower at £26.27 million (2006 - £30.16 million). As a result of the lower sales and increased investment for the DLES markets operating profits were 11.1% lower in local currency and the reported operating profit was £4.64 million (2006 - £5.74 million). The US domestic broadcast market remains strong with demand continuing to be driven by the 2Ghz re-channelisation programme for which MRC launched two new key products at the NAB exhibition in April. Progress continues to be made in developing the US defence and law enforcement markets. UK RF business The UK business comprises the Advent satellite communications business, the Link wireless camera business and the legacy Venezuelan (VTV) contract. Revenues for the UK RF business were £18.42 million (2006 - £20.28 million) including £2.02million (2006 - £4.12 million) for the VTV contract, which has been completed. With the elimination of previous losses on the VTV contract and improved margins, the adjusted operating profit increased to £3.27 million (2006 - £1.83 million) before the £0.68 million amortisation of acquired intangibles in respect of the acquisition of Link (2006 - £0.68 million). Advent continues to trade profitably although the market for satellite products has been slow in the first half. Link continues to benefit from the sale of High Definition (HD) products in both Europe and Asia as well as from both standard and high definition sales related to the 2GHz re-channelisation programme in the US via MRC. Link has received the internationally recognised Queen's Award for International Trade during the period, adding to their success in 2004 when they won the Queen's Award for Enterprise: Innovation. Prospects for the UK RF business in the second half are encouraging. Several significant orders have recently been won including a £4.3 million order from a European broadband satellite services provider for a large fixed earth station project and an £1.23 million order from the DLES market in Asia. Further international expansion for the UK business is planned with the opening of an office in Dubai to increase distribution into the Middle East and Africa, in addition to the Singapore regional office shared with Hernis. Hernis Hernis has performed ahead of expectations with another record period. Orders increased by 8.4% and revenues increased by 52.2% over 2006, in local currency. Orders received were £9.10 million (2006 - £8.75 million) and revenues were up by 45.6% to £8.44 million (2006 - £5.80 million). Operating profits increased by 89.0% to £1.38 million (2006 - £0.73 million) and exceeded the full year operating profit achieved in 2006. The local Norwegian offshore market for Hernis has been particularly strong, with sales increasing from £1.88 million in 2006 to £3.78 million. In addition the Singapore operation has also seen growth in both business and personnel. Hernis continues to benefit from demand for exploration and transportation in the oil and gas markets and is set to expand its local facilities in Norway to meet the increased levels of business. Acquisitions On 30 July 2007 we announced the acquisition of Focus Communications, Inc trading as Western Technical Services ('WTS') for a maximum cash consideration, dependent on performance, of US $5.5 million (£2.7million). A key part of the Group's strategy is to create incremental long-term recurring revenue opportunities by building a US Technical Services business through both organic and acquisition led growth. The acquisition of WTS will enhance service revenues from the 2GHz re-channelisation programme and the DLES markets, as well as providing the prospect of recurring revenues as the broadcast customers move towards contracted out services. This provides the Group with a stepping-stone towards being able to provide full 'turnkey' project management and integration services in the US, utilising the strength of our market leading products. DLES markets DLES sales in the period were 10.6% of Group sales at £4.88 million. Investment has continued into the DLES market, both in terms building dedicated teams in both the US and UK, product development and establishing new channels to market. Further personnel will be recruited in the third quarter to support the DLES growth strategy. Recent successes include the delivery of the first part of a military project by Advent for twelve mobile satellite terminals, with a second order being received for delivery later this year, to a leading European defence system integrator. MRC's multi-band video microwave equipment was chosen by the New Jersey State Police (NJSP) for their state-wide video and communications upgrade. MRC's systems gave the NJSP the capability of receiving airborne generated live video feeds from any NJSP or New Jersey National Guard aircraft operating anywhere over the state for homeland security, law enforcement and emergency response. The second half has started well with DLES orders from the Asian and US markets. Link has announced the launch of its strategic video surveillance system designed principally for government security agencies and military deployment for use in urban environments. Prospects The prospects for the remainder of the year are encouraging. The Group had a forward order book at 30 June of £32.6 million (31 December 2006 - £34.7 million). Our RF businesses are all expected to continue to benefit from the introduction of new products for the strong growth opportunity created by the move from Standard Definition (SD) to HD within the professional broadcast market. MRC have introduced new radio platforms that give the ability to support both SD and HD utilising the Link IPR and a new expandable central receive diversity system that supports single or multi-site architectures for SD and HD ENG and outside broadcast applications. Link's new HD wireless camera radio system is now in production. Advent has seen increased demand for its larger vehicle based antennas to be used for HD sports broadcasts. The US broadcast market will continue to benefit from the 2GHz re-channelisation programme over the next two years. The acquisition of WTS will increase the Group's revenues from the programme through the provision of integration services to the programme as well as the DLES market. In the international broadcast market the RF businesses are all seeing an increased level of opportunities going into the second half. Across the Group the level of DLES opportunities and quoting activity has increased. With new product introductions in the second half prospects for the remainder of the year are encouraging. Demand for Hernis systems from the marine and offshore markets is expected to continue to be strong as oil and gas exploration and extraction from harsher environments has been made economically viable by the higher oil prices. In summary, the Group has achieved a record half year operating profit. The order flow has continued to improve into the second half and we have made our first investment to create a Technical Services business in the US market. The Board is encouraged by current trading and continues to look forward to the rest of the year with confidence. THS Trotter, Chairman IH Scott-Gall, Chief Executive August 30, 2007 CONSOLIDATED GROUP INCOME STATEMENT for the six months ended 30 June 2007 Six months Six months Year ended to 30 June to 30 June 31 December 2007 2006 2006 (Unaudited) (Unaudited) (Audited) Notes £'000 £'000 £'000 Continuing operations Revenue 2 46,152 50,764 100,498 Cost of sales (26,932) (32,052) (63,053) --------- --------- --------- Gross profit 19,220 18,712 37,445 Sales and marketing expenses (4,728) (5,591) (10,060) Research and development costs (2,839) (2,456) (5,398) Administrative costs (4,440) (4,233) (8,757) Other expenses (29) (198) (291) --------- --------- --------- Operating profit 2 7,184 6,234 12,939 ------------------------ ------- --------- --------- --------- Operating profit is analysed as: Operating profit before amortisation of acquired intangibles 6 7,860 6,910 14,303 Amortisation of acquired intangibles (676) (676) (1,364) ------------------------ ------- --------- --------- --------- Finance costs 3 (301) (242) (505) Investment income 3 84 84 241 --------- --------- --------- Profit before taxation 6,967 6,076 12,675 Taxation 4 (2,554) (2,363) (4,968) --------- --------- --------- Profit for the period being profit attributable to equity shareholders 4,413 3,713 7,707 --------- --------- --------- --------- --------- --------- Earnings per share expressed in pence per share: 6 3.20p 2.73p 5.65p - basic 6 3.16p 2.68p 5.56p - diluted --------- --------- --------- Dividends No dividends have been declared and approved in respect of the six month periods ending 30 June 2007 and 30 June 2006 (see note 5). CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the six months ended 30 June 2007 Six months to Six months to Year ended 31 30 June 30 June December 2007 2006 2006 (Unaudited) (Unaudited) (Audited) Notes £'000 £'000 £'000 Opening shareholders' equity 42,963 37,815 37,815 ---------- --------- --------- Profit for the financial period 4,413 3,713 7,707 Share options - value of employee services 64 59 122 Dividends 5 (1,380) (681) (681) ---------- --------- --------- Movements in the profit and loss account 3,097 3,091 7,148 Translation difference on foreign currency net investments (260) (1,161) (2,578) Shares issued 34 66 518 Disposal of investment in own shares 19 60 60 ---------- --------- --------- Total movements in shareholders' equity 2,890 2,056 5,148 ---------- --------- --------- Closing shareholders' equity 45,853 39,871 42,963 ---------- --------- --------- CONSOLIDATED GROUP BALANCE SHEET as at 30 June 2007 30 June 30 June 31 December 2007 2006 2006 (Unaudited) (Unaudited) (Audited) Notes £'000 £'000 £'000 Assets Non-current assets Goodwill 22,635 23,013 22,737 Intangible assets 6,111 6,492 6,177 Property, plant and 4,977 4,891 4,689 equipment Investment in associates 188 - 182 Financial assets - 109 - Deferred tax assets 1,093 929 991 --------- --------- --------- 35,004 35,434 34,776 --------- --------- --------- Current assets Inventories 16,112 15,973 14,466 Trade and other receivables 18,467 14,023 18,463 Net cash and cash 8 4,664 7,658 8,159 equivalents --------- --------- --------- 39,243 37,654 41,088 --------- --------- --------- Liabilities Current liabilities Financial liabilities - borrowings 8 - 235 1,750 Trade and other payables 23,661 22,898 24,240 Current tax liabilities 1,149 1,151 1,172 Provisions for other liabilities and charges 622 825 668 --------- --------- --------- 25,432 25,109 27,830 --------- --------- --------- --------- --------- --------- Net current assets 13,811 12,545 13,258 --------- --------- --------- Non-current liabilities Financial liabilities - borrowings 8 500 3,500 2,500 Deferred tax liabilities 2,075 2,372 2,275 Other non-current - 2,236 - liabilities Provisions for other liabilities and charges 387 - 296 --------- --------- --------- 2,962 8,108 5,071 --------- --------- --------- --------- --------- --------- Net assets 45,853 39,871 42,963 --------- --------- --------- Shareholders' equity Ordinary shares 3,462 3,418 3,460 Share premium account 4,864 4,422 4,832 Investment in own shares (30) (49) (49) Merger reserve 30,565 30,565 30,565 Translation reserve (4,126) (2,449) (3,866) Retained earnings 11,118 3,964 8,021 --------- --------- --------- Total shareholders' equity 45,853 39,871 42,963 --------- --------- --------- CONSOLIDATED GROUP CASH FLOW STATEMENT for the six months ended 30 June 2007 Six months Six months Year ended to 30 June to 30 June 31 December 2007 2006 2006 (Unaudited) (Unaudited) (Audited) Notes £'000 £'000 £'000 Cash flow from operating activities Cash generated from operations 7 5,333 6,569 13,558 Interest received 84 84 241 Interest paid (177) (183) (309) Taxation paid (2,822) (2,325) (5,118) --------- --------- --------- Net cash generated from operating activities 2,418 4,145 8,372 --------- --------- --------- Cash flows from investing activities Proceeds from sale of property, plant and equipment - 2 12 Purchase of property, plant and equipment (953) (1,063) (1,747) Expenditure on capitalised development costs (1,120) (869) (1,810) Investment in associates - (66) (139) --------- --------- --------- Net cash (absorbed by) investing activities (2,073) (1,996) (3,684) --------- --------- --------- Cash flows from financing activities Net proceeds from issue of ordinary share capital 34 66 518 Net proceeds from sale of own shares 19 60 60 Repayment of borrowings - secured 8 (2,000) (3,678) (3,362) Repayment of borrowings - unsecured 8 (1,750) (1,285) (1,836) Net proceeds from issue of new bank loan 8 - 3,500 2,500 Dividend paid to shareholders - - (681) --------- --------- --------- Net cash (absorbed by) financing activities (3,697) (1,337) (2,801) --------- --------- --------- Effect of foreign exchange rate changes 8 (143) (276) (850) --------- --------- --------- Net (decrease)/inc rease in cash and cash equivalents (3,495) 536 1,037 Cash and cash equivalents at beginning of period 8,159 7,122 7,122 --------- --------- --------- Cash and cash equivalents at end of period 8 4,664 7,658 8,159 --------- --------- --------- NOTES TO THE INTERIM ACCOUNTS for the six months ended 30 June 2007 1. BASIS OF PREPARATION This interim report comprises the consolidated interim balance sheets as of 30 June 2007 and 30 June 2006 and related consolidated interim statements of income and cash flows for the six months then ended. This interim report has been prepared in accordance with the Listing Rules of the Financial Services Authority. In preparing this financial information management has used the principal accounting policies as set out in the Group's annual financial statements for the year ended 31 December 2006. 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. This interim report is unaudited and does not constitute audited accounts within the meaning of the Companies Act 1985. The accounts for the year ended 31 December 2006, on which the auditors' opinion did not contain any statements made under either s237(2) or s237(3) of the Companies Act 1985, were prepared in accordance with International Financial Reporting Standards and IFRIC interpretations, and have been filed with the Registrar of Companies. The Group has chosen not to adopt IAS 34, 'Interim financial statements', in preparing its 2007 interim statements and, therefore, this interim financial information is not in compliance with IFRS. 2. SEGMENTAL ANALYSIS The Group's internal organisational and management structure and its system of internal financial reporting to the Board of Directors is based on the geographical location of its businesses. These comprise three regions, the UK, the United States of America (US) and Norway. The UK comprises the RF businesses of Advent Communications satellite products, projects and the wireless camera systems of Link. The US comprises the RF microwave radio business of MRC. Norway comprises the marine CCTV business of Hernis. The table below shows the analysis of Group external revenue, by geographic location. Revenue Operating Profit Six months to Six months to Year ended Six months to Six months to Year ended 30 June 30 June 31 December 30 June 30 June 31 December 2007 2006 2006 2007 2006 2006 (Unaudited) (Unaudited) (Audited) (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 £'000 £'000 £'000 By geographic location UK (note a) 18,420 20,276 37,393 2,600 1,150 2,731 US 26,273 30,161 60,762 4,637 5,741 11,241 Norway 8,444 5,798 13,094 1,375 725 1,318 Central - - - (1,008) (1,026) (2,130) costs Inter-segmenta l transactions (6,985) (5,471) (10,751) (420) (356) (221) -------- -------- --------- --------- -------- -------- Group total 46,152 50,764 100,498 7,184 6,234 12,939 -------- -------- --------- --------- -------- -------- Notes: a) For the six months ended 30 June 2007 the UK operating profit is after charging £676,000 in respect of the acquired intangibles (six months to 30 June 2006 - £676,000 and year to 31 December 2006 - £1,364,000). Secondary format - geographical segments The Group manages its business segments on a global basis. The operations are based in three main geographical areas. The UK is the home country of the parent. The operations are located geographically as described in the table above. The sales analysis in the tables below are based on the geographical location of the customer, product category and customer category. Geographic revenue analysis Six months to Six months to Year ended 31 30 June 2007 30 June 2006 December 2006 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 By market: UK & Ireland 2,810 3,847 6,274 Rest of Europe 7,276 4,367 11,756 North America 24,361 26,397 54,574 South America 3,895 5,338 8,865 Middle East 1,121 3,132 6,639 Asia 4,757 7,153 10,592 Africa 1,237 151 642 Other 695 379 1,156 -------- -------- -------- 46,152 50,764 100,498 -------------------------------- -------- -------- -------- Analysis of revenue by product category Microwave radio and wireless camera products 26,130 32,147 63,275 Satellite products 9,560 8,697 19,309 Broadcast projects 2,018 4,122 4,820 Marine CCTV products 8,444 5,798 13,094 -------- -------- -------- 46,152 50,764 100,498 -------------------------------- -------- -------- -------- Analysis of revenue by customer category Broadcasters 33,163 39,276 77,570 Defence, security and law enforcement 4,882 5,771 10,016 Marine, oil and gas 8,107 5,612 12,773 Other - 105 139 -------- -------- -------- 46,152 50,764 100,498 -------------------------------- -------- -------- -------- 3. FINANCE COSTS - NET Six months to Six months to Year ended 31 30 June 2007 30 June 2006 December 2006 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Interest payable on bank borrowing (124) (114) (236) Interest payable on other loans (23) (16) (46) Unwinding of interest associated with the discounting of deferred consideration (154) (112) (223) -------- -------- --------- Interest and similar charges payable (301) (242) (505) Investment income 84 84 241 -------- -------- --------- Finance costs - net (217) (158) (264) -------------------------------- -------- -------- --------- 4. TAX ON PROFIT ON ORDINARY ACTIVITIES Six months to Six months to Year ended 31 30 June 2007 30 June 2006 December 2006 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 The tax charge for the period comprises: 934 179 351 UK corporation tax Foreign tax 1,930 2,513 5,118 -------- -------- --------- Total current tax 2,864 2,692 5,469 -------- -------- --------- Deferred tax: (310) (329) (264) UK corporation tax Foreign tax - - (237) -------- -------- --------- Total deferred tax (310) (329) (501) -------- -------- --------- Total taxation 2,554 2,363 4,968 -------------------------------- -------- -------- --------- The tax charge for the six months ended 30 June 2007 is based on the effective tax rate, which it is estimated will apply to earnings for the full year. 5. DIVIDENDS No interim dividend is proposed for the period. In 2006 there was no interim dividend and the final dividend of 1.0 pence per share was approved at the Annual General Meeting on 23 May 2007 and paid on 20 July 2007. 6. EARNINGS PER ORDINARY SHARE Earnings per share is calculated by reference to a weighted average of 137,891,000 ordinary shares in issue during the period, excluding shares held by the Employees' Share Ownership Plan (30 June 2006 - 135,912,000 and 31 December 2006 - 136,495,000). The diluted earnings per share is after taking account of a further 1,656,000 shares (30 June 2006 - 2,439,000; 31 December 2006 - 2,094,000) being the dilutive effect of share options. Adjusted earnings Vislink believes that adjusted operating profit, adjusted profit before tax, adjusted earnings and adjusted earnings per share provide additional useful information on trends to shareholders. Vislink uses these measures for internal performance analysis and incentive compensation arrangements. The principal adjustment is in respect of the amortisation of acquired intangibles. The reconciliation between reported and adjusted earnings and basic earnings per share is shown below: Six months to Six months to Year ended 30 June 2007 30 June 2006 31 December 2006 Earnings Basic EPS Earnings Basic EPS Earnings Basic EPS £'000 pence £'000 pence £'000 pence Reported earnings 4,413 3.20p 3,713 2.73p 7,707 5.65p Amortisation of acquired intangibles after tax 473 0.34p 473 0.35p 955 0.70p -------- -------- -------- -------- -------- -------- Adjusted earnings 4,886 3.54p 4,186 3.08p 8,662 6.35p -------- -------- -------- -------- -------- -------- 7. NOTES TO THE CASH FLOW STATEMENT Net cash flow from operating activities comprises: Six months to Six months to Year ended 31 30 June 2007 30 June 2006 December 2006 £'000 £'000 £'000 Profit attributable to shareholders 4,413 3,713 7,707 Taxation 2,554 2,363 4,968 Depreciation 662 621 1,321 Loss on disposal of property, plant and equipment - 41 41 Amortisation of development costs 484 488 997 Amortisation of acquired intangibles 676 676 1,364 Share options - value of employee services 64 59 122 Investment income (84) (84) (241) Finance costs 301 242 505 (Increase) in inventories (1,714) (3,156) (2,110) (Increase)/dec rease in trade and other receivables (202) 2,399 (2,706) (Decrease)/inc rease in payables (1,873) (765) 1,457 Increase/(decr ease) in provisions 52 (28) 133 --------- -------- --------- Net cash inflow from operating activities 5,333 6,569 13,558 --------- -------- --------- 8. NET CASH The movements in cash and cash equivalents and borrowings in the period were as follows: Net cash and Short term Other Total net cash cash borrowings borrowings equivalents £'000 £'000 £'000 £'000 At 1 January 2007 8,159 (1,750) (2,500) 3,909 Repayment of borrowings (2,000) - 2,000 - Payment of loan notes (1,750) 1,750 - - Other cash movements in the period 398 - - 398 Exchange rate adjustments (143) - - (143) --------- --------- --------- --------- At 30 June 2007 4,664 - (500) 4,164 --------- --------- --------- --------- 9. SUBSEQUENT EVENT - ACQUISITION On 30 July 2007 the Group acquired Focus Communications, Inc, trading as Western Technical Services ('WTS'), for a maximum consideration, dependent on performance, of US$5.5 million (£2.7 million). WTS, based in Orange County, California, specialises in the design and installation of video and data microwave communications, Electronic News Gathering (ENG), Airborne Law Enforcement (ALE), cellular and PCS, satellite, video surveillance, fibre optics and site control systems. 10. APPROVAL A committee of the Board of Directors approved this report on 30 August 2007. Independent review report to Vislink Plc Introduction We have been instructed by the company to review the financial information for the six months ended 30 June 2007, which comprise the consolidated interim balance sheet as at 30 June 2007, and the related consolidated interim statements of income, cash flows and changes in shareholders' equity for the six months then ended and related notes. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors. The Listing Rules of the Financial Services Authority require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. This interim report has been prepared in accordance with the basis set out in Note 1. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of Group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the disclosed accounting policies have been applied. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit and therefore provides a lower level of assurance. Accordingly we do not express an audit opinion on the financial information. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Listing Rules of the Financial Services 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. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2007. PRICEWATERHOUSECOOPERS LLP Chartered Accountants Bristol 30 August 2007 Notes: (a) The maintenance and integrity of the Vislink web site 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 interim report since it was initially presented on the web site. (b) Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions. This information is provided by RNS The company news service from the London Stock Exchange

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