Pebble Beach Regulatory News (PEB)

21 Mar 2005 07:01

Vislink PLC21 March 2005 Vislink plc Preliminary results for the year ended 31 December 2004 Vislink plc ("Vislink") today announces its preliminary results for the yearended 31 December 2004. The Group supplies microwave radio and satellitetransmission products for the broadcast and security markets and integrated CCTVsystems for marine security and petroleum markets. Financial summary For the year ended 31 December 2004 2003 £'000 £'000 Turnover - continuing operations 67,831 67,966Operating profit - continuing operations before goodwill amortisation and exceptional restructuring costs* 2,360 2,074EBITA 821 (1,786)(Loss) before taxation (809) (3,371) Earnings per share excluding goodwill amortisation and exceptional restructuring costs* 0.97p 0.96p *Goodwill amortisation was £1,132,000 (2003 - £1,167,000) and exceptionalrestructuring costs were £1,539,000 (2003 - £3,760,000) Key points • The Group is continuing to see growth from the US broadcast business and Hernis • Group sales in the second half improved to £37.72 million (first half - £30.11million) • Second half operating profits before goodwill and exceptional costs increased to £1.90 million (first half - £0.46 million) • After restructuring the UK business has been stabilised and returned to profitability in December • Acquisition of Link Research Limited completed on 11 February 2005 • MRC won an initial $30million order in February 2005 for the 2GHz relocation project • The Board is recommending that the dividend is maintained at 0.2 pence per share Commenting on the results, Bob Morton, Chairman of Vislink plc, said: "The enlarged Group is well placed to benefit from the opportunities for MRC inthe US market and the synergy from the Link acquisition. The restructured UKbusiness is expected to be profitable in 2005 and Hernis continues to perform inline with expectations. The Board considers that the prospects for the currentfinancial year are encouraging and looks forward to 2005 with enthusiasm andconfidence" - Ends - For further information on 21 March 2005, please contact: Ian Scott-Gall 01488 685500Chief Executive, Vislink plcJames Trumper 01488 685500Group Finance Director, Vislink plc Chairman's Statement Introduction The Board are pleased to report that the Group has made significant progressduring the second half of 2004. Second half sales improved to £37.72 million(first half - £30.11million) and operating profits before goodwill andexceptional costs increased to £1.90 million (first half £0.46 million). In the US, Microwave Radio Communications ('MRC') saw another year of growth inoperating profits as it benefited from a strong order intake, particularly fromthe US Government. Whilst international sales continued to grow, the domestic USbroadcast market was subdued during the year as the broadcasters' awaited theoutcome of the regulatory changes to their outside broadcast electronic newsgathering operations. This programme of change, known as the 2GHz relocationproject, requires broadcasters in the US to convert to digital equipment andrelocate their radio transmissions to a higher frequency. This requires thereplacement of their existing radio equipment. In February 2005 MRC won aninitial order of $30million to build inventory for the project, which isexpected to be shipped in the second half of this year. The UK business, in the first half, suffered from weak sales and further tradinglosses despite the rationalisation and integration of the business into onesite, as announced at the end of 2003. A further strategic review was thereforeundertaken to restore the UK business to profitability, which resulted inoperational management changes and additional cost reductions. Restructuringcosts associated with the further rationalisation in 2004 amounting to£1.54million have been provided for in the financial statements. The contract inVenezuela has made a good contribution during the year and is now entering itslast phase, with completion expected before the end of 2005. The business hasnow been stabilised and returned to profitability in December. Hernis, the Group's marine safety business, enjoyed a year of growth in bothorder intake and operating profits over the previous year. Results for the Year Group sales from continuing operations were maintained at £67.83 million (2003 -£67.97 million). In local currency all business units saw sales growth, howeveradverse rates of foreign exchange from a weak US dollar depressed sales insterling terms relative to 2003 by £3.82 million. Operating profits before goodwill amortisation and exceptional rationalisationcosts, improved to £2.36 million (2003 - £2.05 million). Again all businessunits saw an improvement in their operating results in local currency, but theadverse exchange rates depressed the operating profits in sterling terms by£0.49 million relative to 2003. Goodwill amortisation for the year was lower at£1.13 million (2003 - £1.17 million). Net interest payable increased to £0.49million (2003 - £0.42 million) as a result of the Group's increased workingcapital. After the exceptional restructuring costs of £1.54 million (2003 - £3.76million) the Group made a pre-tax loss of £0.81 million (2003 - £3.37 millionloss, including loss on disposal of businesses of £0.08million). At December 31, 2004 the Group had net debt of £2.35 million (December 31, 2003- net cash of £3.70 million). There was a net cash outflow during the periodfrom the absorption of the deposit received on the Venezuelan contract intoworking capital and from the restructuring of the UK broadcast business. Earnings per Share Earnings per share from continuing operations before goodwill and theexceptional restructuring costs were 0.97p (2003 - 0.96p). The basic loss pershare was 1.56p (2003 - 3.88p). Dividends The Board is recommending a maintained dividend of 0.2p per share. The dividend,subject to shareholder approval, will be paid on 22 July 2005 to shareholders onthe register as at 1 July 2005. Acquisition of Link Research Limited On 14 January 2005 the Board announced that it had entered into a conditionalagreement to acquire Link Research Limited ('Link') for an initial considerationof £5.0million, to be satisfied by cash and loan notes of £2.0 million and £3million by the issue of 13,186,813 new ordinary shares at 22.75 pence each. Themaximum potential consideration for the acquisition is £10.75 million. At thesame time the Board announced that the Company proposed to raise £4.64 millionby way of a placing and open offer of 20,414,569 new ordinary shares at 22.75pence. Details of the transactions were in the circular sent to all shareholderson 14 January 2005. On 9 February 2005, the acquisition and the placing and open offer were approvedby shareholders at an Extraordinary General Meeting, and the acquisition of Linkwas duly completed on 11 February 2005. Strategy and Prospects The Group's strategic objectives continue to be the achievement of an operatingprofit return of 10 per cent on sales before goodwill amortisation and centralcosts and for the broadcast business to achieve enhanced sales growth throughthe development of the government, military and security markets. MRC has been achieving this level of return and it is expected that the marginswill be further improved by the incremental revenues in the US from the 3 year2GHz relocation programme. At the same time MRC is maintaining a strongdevelopment program to meet the needs of both the core broadcast market and theemerging public safety market in the US. The acquisition of Link and the funds raised through the open offer havestrengthened the Group's strategic position within the broadcast market. Link'soperating profits already well exceed 10 per cent of sales and the verticalintegration of Link products into MRC products for the 2GHz relocation projectwill have the effect of further improving Group margins. The appointment ofLink's Managing Director, Len Mann, as Chief Technology Officer for thebroadcast businesses will ensure the coordination of the development programmefor the next generation of microwave and satellite products to meet ourstrategic objectives. The restructuring of the UK based broadcast business has now been completed andprogress is being made in improving both the sales and margins of the businessby the new management team. The development programme to produce new satelliteproducts to meet the needs of both broadcast and non-broadcast applications hasmade good progress. The UK business has retained its project based skill set totake advantage of new opportunities that are expected to arise in markets whereit has an established track record. Hernis has experienced an increased demand from the local Norwegian oil and gasmarket. The implementation of the International Ship and Port Safety regulationsin July 2004 have broadened the marine security market and, combined withHernis' new product introductions, are generating additional salesopportunities. Hernis' margins are close to the Group's objective. In summary, the enlarged Group is well placed to benefit from the opportunitiesfor MRC in the US market and the synergy from the Link acquisition. Therestructured UK business is expected to be profitable in 2005 and Herniscontinues to perform in line with expectations. The Board considers that theprospects for the current financial year are encouraging and looks forward to2005 with enthusiasm and confidence. ALR MortonChairman21 March 2005 Group Profit and Loss Accountfor the year ended December 31, 2004 Before Before goodwill & goodwill & exceptional Goodwill & exceptional Goodwill & items exceptional items exceptional items Total items Total 2004 2004 2004 2003 2003 2003 £'000 £'000 £'000 £'000 £'000 £'000 Notes TurnoverContinuing operations 67,831 - 67,831 67,966 - 67,966Discontinued operations - - - 1,425 - 1,425 2 67,831 - 67,831 69,391 - 69,391Operating profitContinuing operations beforeexceptional restructuring costs andgoodwill amortisation 2,360 - 2,360 2,074 - 2,074Exceptional restructuring costs - (1,539) (1,539) - (3,760) (3,760)Continuing operations before goodwill 2 2,360 (1,539) 821 2,074 (3,760) (1,686)amortisationGoodwill amortisation 2 - (1,132) (1,132) - (1,167) (1,167)Continuing operations 2 2,360 (2,671) (311) 2,074 (4,927) (2,853) Discontinued operations 2 - - - (23) - (23)Total operating (loss)/profit 2,360 (2,671) (311) 2,051 (4,927) (2,876) (Loss) on disposal of businesses 3 - - - - (27) (27)Impairment of long leasehold property 3 - - - - (50) (50) (Loss)/profit on ordinary activitiesbefore interest 2,360 (2,671) (311) 2,051 (5,004) (2,953) Interest receivable 93 - 93 38 - 38Interest payable (591) - (591) (456) - (456) (Loss)/profit on ordinary activitiesbefore taxation 1,862 (2,671) (809) 1,633 (5,004) (3,371) Tax on (loss)/profit on ordinary activities 4 (876) 111 (765) (666) 111 (555) (Loss)/profit for the financial year 986 (2,560) (1,574) 967 (4,893) (3,926) Dividends 5 (246) - (246) (202) - (202) Transfer (from)/to reserves 740 (2,560) (1,820) 765 (4,893) (4,128) Basic (loss)/earnings per share 6 0.97p (2.53)p (1.56)p 0.96p (4.84)p (3.88)pDiluted (loss)/earnings per share 6 0.97p (2.52)p (1.55)p 0.95p (4.80)p (3.85)p Dividend per share 5 0.20p 0.20p Statement of retained profitsProfit and loss account at January 1, 2004 (3,672) 2,048Arising in the financial year (1,820) (4,128)Foreign exchange (864) (1,592)Profit and loss account carried forward (6,356) (3,672) Statement of Total Recognised Gains and Lossesfor the year ended December 31, 2004 2004 2003 £000 £000 (Loss)/profit for the financial year (1,574) (3,926)Translation difference on foreign currency net investments (864) (1,592)Total recognised gains and losses since last Annual Report (2,438) (5,518) There is no material difference between the reported results and the historicalcost profits and losses. Reconciliation of Movements in Shareholders' Fundsfor the year ended December 31, 2004 2004 2003 Restated Notes £'000 £'000 Opening equity shareholders' funds as previously reported 26,820 32,700Adjustment for investment in own shares 1 - (160)Opening equity shareholders' funds restated 26,820 32,540 (Loss)/profit for the financial year (1,574) (3,926)Dividends (246) (202)Translation difference on foreign currency net investments (864) (1,592)Movement in the year (2,684) (5,720) Closing equity shareholders' funds 24,136 26,820 Group and Company Balance Sheetas at December 31, 2004 Group Company 2004 2003 2004 2003 Restated Restated £'000 £'000 £'000 £'000Fixed assetsIntangible assets 16,622 18,091 - -Tangible assets 4,343 4,464 2 5Investments - - 25,236 25,236 20,965 22,555 25,238 25,241 Current assetsStocks 8,936 9,099 - -Debtors 16,988 12,857 442 521Cash at bank and in hand 3,219 9,540 1,669 83 29,143 31,496 2,111 604 Creditors - amounts falling due within one year 21,005 19,121 3,867 1,559Net current assets/(liabilities) 8,138 12,375 (1,756) (955)Total assets less current liabilities 29,103 34,930 23,482 24,286Creditors - amounts falling due after more than one year 3,378 5,567 16,567 17,578Provisions for liabilities and charges 1,589 2,543 - - 24,136 26,820 6,915 6,708 Capital and reserves Called up share capital 2,552 2,552 2,552 2,552Share premium account 205 205 205 205Investment in own shares (160) (160) (160) (160)Merger reserve 27,895 27,895 - -Profit and loss account (6,356) (3,672) 4,318 4,111 Equity shareholders' funds 24,136 26,820 6,915 6,708 Group Cash Flow Statementfor the year ended December 31, 2004 Notes 2004 2003 £'000 £'000 Net cash (outflow)/inflow from operating activities 7 (3,605) 11,824 Returns on investments and servicing of financeInterest received 93 38Interest paid (590) (476) (497) (438) Taxation paid (737) (1,223) Capital expenditurePurchase of tangible fixed assets (769) (1,137)Purchase of investments - (76)Proceeds from sale of tangible fixed assets 2 35 (767) (1,178) Acquisitions and disposalsProceeds from sale of businesses - 160 Equity dividends paid (202) (205) Net cash (outflow)/inflow before financing (5,808) 8,940 FinancingRepayment of bank loans (275) (3,331) (275) (3,331) (Decrease)/increase in cash (6,083) 5,609 Reconciliation of Net Cash Flow to Movement in Net Debtfor the year ended December 31, 2004 Notes 2004 2003 £'000 £'000 (Decrease)/increase in cash (6,083) 5,609Repayment of bank loans 275 3,331Change in net debt resulting from cash flows 7 (5,808) 8,940Effect of foreign exchange changes 7 (238) (258)Movement in net (debt)/cash (6,046) 8,682 Opening net cash/(debt) 3,697 (4,985) Closing net (debt)/cash 7 (2,349) 3,697 1. Accounting policies This results for the year ended 31 December 2004 have been prepared usingaccounting policies and practices consistent with those used in the preparationof the Annual Report and Accounts for the year ended 31 December 2003 with theexception of the changes caused by the adoption of Urgent Issues Task ForceAbstract 38 'Accounting for ESOP Trusts' ('UITF38'). UITF38 requires own shares held through an employee share ownership plan trustto be deducted in arriving at shareholders' funds. The adoption of UITF38 hasthe effect of reducing shareholders funds' brought forward by £160,000 with noeffect on the profit and loss account. 2. Segmental Analysis Turnover Operating Profit Net Assets Total Total Total Total Total Total 2004 2003 2004 2003 2004 2003 Restated £'000 £'000 £'000 £'000 £'000 £'000By business:Broadcast 59,871 59,599 2,782 2,451 8,400 11,100Hernis 7,960 8,367 714 606 3,312 4,117Central - - (1,136) (983) 12,424 11,603 67,831 67,966 2,360 2,074 24,136 26,820Exceptional rationalisation costs - - (1,539) (3,760) - -(note 3)Goodwill amortisation - - (1,132) (1,167) - -Continuing operations 67,831 67,966 (311) (2,853) 24,136 26,820 Discontinued operations - 1,425 - (23) - - Total 67,831 69,391 (311) (2,876) 24,136 26,820 Net assets within Central include group debt, capitalised goodwill anddividends. The exceptional rationalisation costs are allocated to the Broadcast businessesin both 2004 and 2003. Goodwill amortisation in the continuing operations is in respect of thebusinesses of Advent Communications, Multipoint Communications and MicrowaveRadio Communications all of which are within the Broadcast business. Turnover Analysis Discontinued Operations Broadcast Hernis Total 2004 2003 2004 2003 2004 2003 2004 2003 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000By market:UK & Ireland 4,503 7,157 1,014 315 - 1,401 5,517 8,873 Rest of Europe 4,628 4,068 3,902 4,264 - 18 8,530 8,350North America 24,096 25,899 897 1,271 - 5 24,993 27,175South America 19,738 2,758 173 48 - - 19,911 2,806Middle East 2,609 5,747 68 407 - - 2,677 6,154Asia 3,060 8,724 1,479 1,662 - - 4,539 10,386Africa 839 5,012 200 19 - - 1,039 5,031Other 398 234 227 381 - 1 625 616 59,871 59,599 7,960 8,367 - 1,425 67,831 69,391By origin:UK & Ireland 32,250 28,903 - - - 1,425 32,250 30,328 Norway - - 7,960 8,367 - - 7,960 8,367North America 27,621 30,696 - - - - 27,621 30,696 59,871 59,599 7,960 8,367 - 1,425 67,831 69,391 Net Assets Analysis Total 2004 2003 Restated £'000 £'000By market:UK & Ireland 9,637 12,484 Norway 3,312 4,117North America 11,187 10,219 24,136 26,820 3. Exceptional items a) Operating exceptional items 2004 2003 £'000 £'000Provision for the restructuring of the UK broadcast business- redundancy and relocation costs 1,082 945- fixed asset impairment and inventory write down 353 1,913- onerous property lease commitments 104 902 1,539 3,760 On November 27, 2003 the Group announced the operational restructuring of the UKbroadcast business. This involved the closure of the Luton manufacturingfacility with the consolidation of manufacturing into Chesham. Following theintegration of the facilities further restructuring has taken place in 2004 asall microwave manufacture in the UK has ceased. No tax assets have beenrecognised in respect of the charges above. b) Non-operating exceptional items 2004 2003 £'000 £'000Loss on disposal of businesses - 27Impairment of long leasehold property associated with business disposed of - 50 - 77 The loss on disposal of businesses relates to the sale of the image analysisbusiness of Data Cell. The long leasehold property was sold after December 31,2003 at its net book value of £475,000. 4. Taxation a) Analysis of tax charge in period 2004 2003The tax charge for the year comprises: £'000 £'000Current taxUK Corporation tax - at 30% (2003 - 30%) - -UK Corporation tax - adjustment in respect of prior years - - - -Overseas taxation - current 825 748Overseas taxation - adjustments in respect of prior years (16) (59)Total current tax 809 689 Deferred taxOrigination and reversal of timing differencesUK tax (107) (472)Foreign tax 63 338Total deferred tax (44) (134) Tax on ordinary activities 765 555 5. Dividends 2004 2003 £'000 £'000 Final dividend proposed of 0.20p per share (2003 - 0.20p per share) 246 202 6. Earnings per Ordinary Share Earnings per share is calculated by reference to a weighted average of101,123,000 (2003 - 101,238,000) ordinary shares in issue throughout the year(excluding the shares held by the Employees' Share Ownership Plan) and on theloss for the financial year of £1,574,000 (2003- loss of £3,926,000). Dilutedearnings per share is after taking account of a further 460,000 (2003 - 620,000)shares being the dilutive effect of share options. Earnings per share before goodwill and exceptional items excludes after taxlosses relating to goodwill and exceptional items of £2,560,000 (2003 -£4,893,000). At the date of issue of the report the total number of shares in issue were135,674,000. Basic Diluted Basic Diluted 2004 2004 2003 2003 Basic and diluted loss per share (1.56)p (1.55)p (3.88)p (3.85)p Adjustment for goodwill and exceptional items 2.53p 2.52p 4.84p 4.80p Basic and diluted earnings per share before goodwill and exceptional items 0.97p 0.97p 0.96p 0.95p 7. Notes to the Statement of Cash Flows (a) Reconciliation of operating profit to net cash inflow fromoperating activities Total Total 2004 2003 £'000 £'000 Operating (loss) (311) (2,876)Depreciation 849 1,519Amortisation of goodwill 1,132 1,167(Profit)/loss on sale of fixed assets (2) 35(Increase)/decrease in stocks (68) 2,399(Increase)/decrease in debtors (3,999) 4,388Increase in creditors 33 3,462(Decrease)/increase in provisions (1,239) 1,730Net cash (outflow)/inflow from operating (3,605) 11,824activities (b) Analysis of net debt At Exchange At January 1, Cash flow movements December 31, 2004 2004 £'000 £'000 £'000 £'000 Cash at bank and in hand 9,540 (6,083) (238) 3,219Loans (5,843) 275 - (5,568) 3,697 (5,808) (238) (2,349) 8. Directors Responsibilities The financial information for the year ended December 31, 2004 has beenextracted from the full accounts of the Group, which contain an unqualifiedaudit report and will be filed, in due course, with Companies House. Theauditors have reported on those accounts; their report was unqualified and didnot contain statements under section 237 (2) or (3) of the Companies Act 1985. 9. Report and Accounts Copies of the Report and Accounts will be sent to shareholders in due course andwill then be available from the registered office at Marlborough House, CharnhamLane, Hungerford, Berkshire, RG17 0EY. This information is provided by RNS The company news service from the London Stock Exchange