Pebble Beach Regulatory News (PEB)

Vislink plc

(the "Company" or the "Group")

Half year results for the six months ended 30 June 2016

Vislink plc, a leading global software and technology business specialising in solutions for the live collection, delivery and playout automation of high quality video 'from scene to screen' for the broadcast and surveillance and public safety markets, today announces its half year results for the six months ended 30 June 2016.

1 Adjusted operating profit from continuing operations before the amortisation of acquired intangibles and non-recurring costs (note 5).

2 Adjusted earnings per share normalised for tax effective rate of 20 per cent.

Key points

John Hawkins, Executive Chairman of the Group, said:

"We continue to see significant underlying organic growth in our software business with a strong order intake which has carried through into H2.

The long term prospects for Pebble Beach Systems continue to improve as we augment our core enterprise software solutions with cloud enabled software applications. We also have a pipeline of partners and software bolt-on acquisitions which will further enhance the Group strategy of building a high margin, cash generative software business.

In its core broadcast market Vislink Communication Systems has seen a reduction in spend from broadcasters as they divert budgets from building infrastructure to investing in content. A technology shift to IP infrastructures has also delayed key buying decisions.

With this background and with a desire to increase the efficiency of VCS and ensure that we build a cash generative sustainable and profitable business we have taken a number of decisive actions as part of our business improvement plan, including the move of the VCS finance function to Head Office leading to improved cash collection. We will continue to re-evaluate implementation of the business plan as trading progresses into H2.

To ensure that we continue our focus on improving the cash generation and profitability of the Group we will:

Our long term aim of investing in software and services, and reducing our overall indebtedness remains central to our objectives to ensure we have a continuation of the growth of our software business in 2017 and beyond, and a cash generative VCS.

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For further information please contact:

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon publication of this announcement this information is now considered to be in the public domain.

About Vislink plc

Vislink plc is a leading global software and technology business specialising in solutions for the live collection, delivery and playout automation of high quality video 'from scene to screen'.

For the broadcast markets, Vislink provides wireless communication solutions for the collection of live news, sport and entertainment as well as software solutions for channel playout automation, channel-in-a-box and video content management. Vislink also provides secure video communications for surveillance and public safety applications such as law enforcement and homeland security.

Vislink employs over 250 people worldwide with offices in the UK, USA, UAE and Singapore and manufacturing operations in the UK and the USA. Vislink has net assets of over £21 million and continues to invest in innovation.

The Company is listed on the AIM market of the London Stock Exchange. For further information, visit www.vislinkplc.com.

Forward-looking statements

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

Introduction

As indicated in the trading update issued on 6 July 2016, the Group generated lower than expected revenue of £22.6 million in a variable marketplace. Pebble Beach Systems achieved revenue of £5.4 million and contributed £1.2 million of adjusted operating profit. However, in challenging market conditions, Vislink Communication Systems underperformed with revenues of £17.2 million and generated an adjusted operating loss of £0.8 million. As a result, the Group is currently utilising its banking facilities, and forecasts it will breach its September banking covenants.

Our two divisions continue to provide best in class solutions to three core markets; the broadcast software market, the broadcast communications market for the collection of live news, sport and live entertainment events, and the surveillance and public safety market.

Platform for profit growth

The Group operates as two divisions: Pebble Beach Systems, which includes the Group's automation and playout software products, and Vislink Communication Systems, which is a consolidation of the Group's hardware businesses. Both divisions benefit from channel and market synergies. We continue to see a strengthening of our capabilities, expertise and ability to execute against our "Scene to Screen" strategy and this is accelerated by the development of key partnerships and the launch of new products.

Pebble Beach Systems

Pebble Beach Systems is a world leader in the provision of software for automation, Channel in a Box and content management solutions for TV broadcasters, cable and satellite operators. Its leading next generation products and cutting-edge software technology within the broadcasting sector are best reflected by its global customer base, which includes GloboSat, CNN Chile and Fox Sports. Furthermore, this customer base continues to grow rapidly. Pebble Beach Systems has high margins, excellent growth prospects and solid cash generation.

Pebble Beach Systems had a slower than expected start to the year due to a delay in orders being received, however still achieved revenue of £5.4 million (H1 2015: £5.4 million). Pebble Beach Systems contributed £1.2 million of adjusted operating profit in H1 2016 (H1 2015: £1.8 million) which reflects investment in software development and expansion of sales capability to underpin the future growth of the division.

We believe that Pebble Beach Systems' ongoing organic growth has transitioned Vislink into a market leading, video capture and playout provider to the broadcast industry. Pebble Beach Systems demonstrates that the Group's software strategy is on track, with the software business providing good growth prospects, better operating margins and the benefit of improved visibility of earnings.

Vislink Communication Systems

The business was restructured during 2015. However, the continued significant changes in both the broadcast marketplace and the media technology used to meet the industry's needs, combined with the external economic worldwide factors, meant that Vislink Communication Systems found market conditions continued to be challenging in H1 2016, resulting in lower than expected order intake.

The Board is initiating a business improvement plan within Vislink Communication Systems in H2. This improvement plan is focusing the business on key, leading edge technologies and a restructuring plan that is directed at further reducing costs within the business during H2.

Vislink Communication Systems has successfully developed new products incorporating IP technology. These products have been very well received and the timings of these launches will benefit Vislink Communication Systems in future periods, with further product launches planned. Vislink Communication Systems is positioning itself to be the technology leader in those markets which offer better growth through exploiting technology shift opportunities.

Financial results

Group revenue for the period to 30 June 2016 was £22.6 million (H1 2015: £26.6 million). Orders received in the period were £22.3 million (H1 2015: £28.2 million). The order book at 30 June 2016 was £11.4 million (30 June 2015: £7.1 million).

Total overheads reduced to £11.2 million (H1 2015: £11.5 million).

The adjusted operating loss for the period was £1.1 million (H1 2015: profit of £2.2 million) before charging £24.5 million in respect of the amortisation and impairment of goodwill and acquired intangibles (H1 2015: £1.2 million) and £6.4 million of non-recurring items (H1 2015: £1.7 million).

The reported loss before tax was £32.2 million (H1 2015: £0.9 million).

As at 30 June 2016 the Group held inventory of £8.1 million which is down 42.8 per cent on the prior year (H1 2015: £14.1 million), but which included an inventory write-down of £5.5 million. Trade and other receivables of £18.2 million, up 52.4 per cent on the prior year (H1 2015: £12.0 million); and trade and other payables of £13.1 million, up 1.4 per cent on the prior year (H1 2015: £12.9 million).

The Group continues to view investment in the development of new products and services as key to future growth. The cash outflow from investing activities amounted to £2.0 million (H1 2015: £1.6 million) which comprised net capital expenditure and the capitalisation of development costs.

Non-recurring Items

It was announced on 6 July 2016 that the Board had initiated a business improvement plan triggered by market conditions and a detailed review was carried out of inventory and capitalised development costs to identify increasingly inappropriate legacy technology and products. As a consequence a significant inventory write-down of £5.5 million has been recorded, along with a £0.8 million impairment of capitalised development costs, totalling £6.3 million.

These adjustments will ensure that the VCS product portfolio is focussed on key, leading-edge technologies. This, combined with the continuing development of new IP products, will ensure the business is well positioned to capitalise on the ever-evolving technology shift.

In addition, as a result of H1 performance and expected outturn for the year, management considered that there had been an impairment trigger requiring an impairment review of intangible assets. This has led to a write down of goodwill and acquired intangibles of £23.3 million, as a result of a downgrading of the forecasts for the business.

Going Concern

In the trading statement issued on 6 July 2016, the Group announced that the lower than expected trading performance of Vislink Communication Systems was expected to continue into H2, and that the Group's bankers had agreed to defer the covenant tests until 31 July 2016 (from 30 June 2016).

The deferred covenants at the end of July were waived, however trading for Vislink Communication Systems remains challenging, with the seasonal uplift usually experienced following Q1 not materialising. As a consequence the Group has been in conversation with its bankers.

As at 30 June 2016 net debt was £8.8m (cash £3.2m and bank debt £(12.0)m). Net debt has subsequently increased. The Group is fully utilising its RCF facility and forecasts that it will be in breach of its banking covenants at 30 September 2016, meaning that it is reliant on the ongoing support of its bankers.

In order to assess the appropriateness of preparing the consolidated interim financial information on the going concern basis, management have prepared detailed projections of expected future cash flows out to 31 December 2016 and a higher level review to December 2017, and these have been reviewed by the Board.

Whilst challenging, Management are implementing an improvement plan directed at enabling the business to remain within its borrowing facilities through a combination of actively managing cash, cutting unnecessary expenditure and looking at other sources of finance or disposal opportunities within the Group.

In reaching their decision that the interim results should be prepared on the going concern basis, the Board has considered the forecast covenant breach. If the Group is not in compliance with its financing arrangements, the lender can immediately call for repayment of the loan, and the Group has insufficient cash to repay the secured loan in full without securing additional funding. However, the Group is in constructive discussions with its bankers.

The condition identified above, regarding the ongoing support of the Group's bankers, indicates the existence of a material uncertainty that may cast significant doubt about the Group's ability to continue as a going concern. The consolidated interim financial information does not include the adjustments that would result if the Group was unable to continue as a going concern.

Earnings per share

The reported basic undiluted loss per share for the period was 26.9 pence (H1 2015: 0.4 pence).

After adjusting for amortisation and impairment of goodwill and acquired intangibles and other non-recurring items the Group's adjusted loss per share was 2.9 pence (H1 2015: earnings of 1.6 pence).

The adjusted loss per share normalised for an effective tax rate of 20 per cent for the period was 0.8 pence (H1 2015: earnings of 1.3 pence).

Dividends

In order to preserve cash the Board proposed that the full year dividend in respect of the year ended 31 December 2015 remain at 1.5 pence per share (2014: 1.5 pence per share). This was approved at the Group's Annual General Meeting and the final dividend was paid to shareholders on the 18 July 2016. As in previous years, the Board is not declaring an interim dividend.

Our Markets

Orders received from our broadcast market were down 23.8 per cent to £19.5 million (H1 2015: £25.6 million), with orders received from the surveillance market up 5.5 per cent to £2.7 million (H1 2015: £2.6 million).

In the Group's hardware division, broadcast order intake was down 36.1 per cent to £14.1 million (H1 2015: £22.1 million). This was offset by the software division where broadcast order intake was up by 53.3 per cent to £5.4 million (H1 2015: £3.5 million).

Group Broadcast revenue decreased by 7.7 per cent to £20.6 million (H1 2015: £22.3 million). Group Surveillance revenue has decreased by 52.9% to £2.0 million (H1 2015: £4.3 million).

Principal risks and uncertainties

The principal risks and uncertainties affecting the business activities of the Group remain those detailed on page 37 of the 2015 Annual Report, a copy of which is available on the Group website at www.vislinkplc.com, together with the banking uncertainties as referred to above. The Board considers that these are a current reflection of the main risks and uncertainties facing the business for the remaining six months of the financial year. The Group notes that this is not an exhaustive list. The Group's risk management process remains unchanged from 31 December 2015 and is described in detail in the 2015 Annual Report. The principal risks considered by the Board relate to global economic conditions and those associated with the Group's markets, reputation, overseas operations, customer defaults, senior management and foreign exchange, and the banking uncertainties. The principal exchange rates used in the preparation of this condensed consolidated half year financial information are provided in note 13.

Strategy and Outlook

The key focus of the Group is to expand its software offerings, and continue its strong organic software growth whilst maintaining profitability.

Operating efficiency and cash generation will be the focal point. Restructuring in the last quarter of 2016 should benefit the Group, coupled with the improvement in lower costs at Group level leading to an improving position in 2017.

Our partnerships and expansion of our sales channels continues with our relationship with Harmonic continuing to make strong progress.

The software division (PBS) continues to benefit from market leading cloud and IP solutions. We remain committed to growing this business both organically and through bolt on acquisitions.

The Group has invested heavily over the past few years in ensuring that our hardware division (VCS) has the latest IP products and can exploit the live sports applications and improved content acquisition through exploiting the very latest Ultra High Definition technologies. That said this division has to now deliver improved cash generation and profitability, and benefit from its market leadership.

Taking the foreign exchange gain below the line, the Group anticipate making an adjusted operating loss for the year as a whole.

John HawkinsExecutive Chairman

CONSOLIDATED GROUP INCOME STATEMENT

For the six months ended 30 June 2016

Diluted earnings per share

The diluted loss per share was (26.9)p (note 8).

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2016

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

For the six months ended 30 June 2016

CONSOLIDATED GROUP STATEMENT OF FINANCIAL POSITION

As at 30 June 2016

CONSOLIDATED GROUP CASH FLOW STATEMENT

For the six months ended 30 June 2016

NOTES TO THE HALF YEAR FINANCIAL INFORMATION

For the six months ended 30 June 2016

1. GENERAL INFORMATION

Vislink plc ("the Company") and its subsidiaries (together "the Group") is a global software and technology business specialising in solutions for the live collection, delivery and playout automation of high quality video 'from scene to screen'.

For the broadcast markets, Vislink provides wireless communication solutions for the collection of live news, sport and entertainment as well as software solutions for channel playout automation, channel-in-a-box and video content management. Vislink also provides secure video communications for surveillance and public safety applications such as law enforcement and homeland security.

Vislink employs over 250 people worldwide with offices in the UK, USA, UAE and Singapore and manufacturing operations in the UK and the USA. Vislink has net assets of over £21 million and continues to invest in innovation.

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

This condensed consolidated half year financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2015 were approved by the Board of Directors on 6 April 2016 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.

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

This half year results announcement was approved for issue by the Board of Directors on 29 September 2016.

2. BASIS OF PREPARATION

This condensed consolidated half year financial information for the six months ended 30 June 2016 has been prepared in accordance with the AIM Rules for Companies and with IAS 34, 'Half year financial reporting' as adopted by the European Union. The condensed consolidated half year financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2015, which have been prepared in accordance with IFRSs as adopted by the European Union.

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

Going concern

In the trading statement issued on 6 July 2016, the Group announced that the lower than expected trading performance of Vislink Communication Systems was expected to continue into H2, and that the Group's bankers had agreed to defer covenant tests until 31 July 2016 (from 30 June 2016).

The deferred covenants were subsequently waived at the end of July, however trading for Vislink Communication Systems remains challenging with the seasonal uplift usually experienced following Q1 not materialising. As a consequence the Group has been in conversation with its bankers.

As at 30 June 2016 net debt was £8.8m (cash £3.2m and bank debt £(12.0)m). Net debt has subsequently increased. The Group is fully utilising its RCF facility and forecasts that it will be in breach of its banking covenants at 30 September 2016, meaning that it is reliant on the ongoing support of its bankers.

In order to assess the appropriateness of preparing the consolidated interim financial information on the going concern basis, management have prepared detailed projections of expected future cash flows out to 31 December 2016 and a higher level review to December 2017, and these have been reviewed by the Board.

Whilst challenging, Management are implementing an improvement plan directed at enabling the business to remain within its borrowing facilities through a combination of actively managing cash, cutting unnecessary expenditure and looking at other sources of finance or disposal opportunities within the Group.

In reaching their decision that the interim results should be prepared on the going concern basis, the Board has considered the forecast covenant breach. If the Group is not in compliance with its financing arrangements, the lender can immediately call for repayment of the loan, and the Group has insufficient cash to repay the secured loan in full without securing additional funding. However, the Group is in constructive discussions with its bankers.

The condition identified above, regarding the ongoing support of the Group's bankers, indicates the existence of a material uncertainty that may cast significant doubt about the Group's ability to continue as a going concern. The consolidated interim financial information does not include the adjustments that would result if the Group was unable to continue as a going concern.

3. ACCOUNTING POLICIES

The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2015, as described in those annual financial statements.

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

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

4. SEGMENTAL ANALYSIS

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

The segment information provided to the Executive Management Board for the reportable continuing segments for the period ended 30 June 2016 is as follows:

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

5. NON-RECURRING ITEMS

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

Inventory and capitalised cost write downs arose as a result of the review carried out as part of the business improvement plan to identify increasingly inappropriate legacy technology and products.

6. TAX ON PROFIT ON ORDINARY ACTIVITIES

The tax charge for the six months ended 30 June 2016 is based on the full year estimated effective tax rate of 0 per cent for the UK which is significantly lower than the standard rate principally due to the utilisation of tax losses and enhanced Research and Development claims. Deferred tax is calculated in full on temporary differences under the liability method using a tax rate appropriate to the country in which the deferred tax liability or asset has arisen. Deferred tax assets have been recognised in respect of all tax losses and other temporary differences to the extent that they are regarded as recoverable against future profits.

7. DIVIDENDS

No interim dividend is proposed for the period. In respect of 2015 there was no interim dividend and the final dividend of 1.5 pence per share was approved at the Group's Annual General Meeting on 20 May 2016 and paid on 18 July 2016. The total cash cost of the dividend was £1.8 million.

8. EARNINGS PER ORDINARY SHARE

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period, excluding those held in the employee share trust which are treated as cancelled. Earnings per share is calculated by reference to a weighted average of 121,977,000 ordinary shares in issue during the period (30 June 2015: 121,844,000 and 31 December 2015: 121,910,000).

For diluted earnings per share the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The dilutive shares are those share options granted to employees where the exercise price is less than the average market price of the company's ordinary shares during the period. At 30 June 2016 there were 2,704,000 dilutive share options (30 June 2015: 2,756,000 and 31 December 2015: 2,784,000) and the diluted loss per share was 26.9 pence (H1 2015: 0.4 pence) compared to the basic loss per share of 26.9 pence (H1 2015: 0.4 pence).

Adjusted earnings

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

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

9. PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS

Historical goodwill acquired in business combinations was allocated, at acquisition, to the cash-generating units (CGUs) that were expected to benefit from those business combinations, being the markets that the Group serves, namely Broadcast, Surveillance and Public Safety, Amplifier Technology Limited and Pebble Beach Systems Limited.

In accordance with the requirements of IAS 36 "Impairment of assets", goodwill is required to be tested for impairment on an annual basis or when there is a triggering event, with reference to the value of the cash-generating units in question. The downturn in trading performance is considered to be a trigger and an impairment review has been performed. The goodwill relating to the Surveillance and Public Safety market was fully written down in 2010. The Group acquired Amplifier Technology in 2013 which is a separate CGU and Pebble Beach Systems in 2014 which is also a separate CGU, therefore impairment reviews have been undertaken in respect of the Broadcast market and Amplifier Technology. No impairment trigger is considered to exist for Pebble Beach Systems. The carrying value of goodwill at 30 June 2016 is £3.3 million (2015: £25.0 million) consisting of £nil for the Broadcast market (2015: £20.6 million), £nil for Amplifier Technology (2015: £1.1 million) and £3.3 million for Pebble Beach Systems (2015: £3.3 million).

The carrying value of all CGUs (including goodwill) have been assessed with reference to value in use over a projected period of four and a half years, along with a terminal value. This reflects projected cash flows based on management projections.

The key assumptions on which the value in use calculations are based relate to business performance over the next four and a half years, long term growth rates beyond 2016 and the discount rate applied. It has been assumed there will be no long term growth of either Amplifier Technology or Broadcast and growth of 3% for Pebble Beach Systems. In accordance with accounting standards, it has also been assumed that there will be no savings resulting from future restructuring which is yet to occur.

A pre-tax discount rate of 8.9 per cent (2014: 14.6 per cent) has been used. In respect of the Broadcast market and Amplifier Technology the value in use was found to be lower than the carrying value resulting in the impairment of goodwill of £20.6m for Broadcast and £1.1m for Amplifier Technology.

10. CASH, BORROWINGS AND LOANS

The movements in cash and cash equivalents (net of overdrafts), borrowings and loans in the period were as follows:

The Group held cash of £3.2 million at the period-end and taken together with the outstanding debt of £12.0 million, there was a net debt position of £8.8 million.  

11. PROVISIONS FOR OTHER LIABILITIES AND CHARGES

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

The property provision consists of a provision for vacated leasehold properties acquired as part of the Gigawave acquisition and a vacated property provision for the Vislink International Hemel Hempstead site, created as a result of the restructuring that was conducted in 2015.

The current period property provision movement relates to the release of some of the vacant property provision for the Vislink International Hemel Hempstead site.

The property provision represents the estimated future liabilities associated with the properties. 

12. NOTES TO THE CASH FLOW STATEMENT

Net cash flow from operating activities comprises:

13. FOREIGN EXCHANGE RATES

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

Independent review report to Vislink Plc

Report on the consolidated interim financial statements

Our conclusion

We have reviewed Vislink Plc's consolidated interim financial statements (the "interim financial statements") in the half year results of Vislink Plc for the 6 month period ended 30 June 2016. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the AIM Rules for Companies.

Emphasis of matter

Without modifying our conclusion on the interim financial statements, we have considered the adequacy of the disclosure made in the basis of preparation note made in note 2 to the consolidated interim financial information concerning the Group's ability to continue as a going concern, and the uncertainty regarding the ongoing support of the group's bankers. This condition, along with the other matters explained in note 2 to the consolidated interim financial information, indicate the existence of a material uncertainty which may cast significant doubt about the group's ability to continue as a going concern. The consolidated interim financial information does not include the adjustments that would result if the company was unable to continue as a going concern.

What we have reviewed

The interim financial statements comprise:

the consolidated group statement of financial position as at 30 June 2016;

the consolidated group income statement and consolidated statement of comprehensive income for the period then

ended;

the consolidated group cash flow statement for the period then ended;

the consolidated statement of changes in shareholders equity for the period then ended; and

the explanatory notes to the interim financial statements.

The interim financial statements included in the half year results have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the AIM Rules for Companies.

As disclosed in note 2 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

The half year results, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half year results in accordance with the AIM Rules for Companies which require that the financial information must be presented and prepared in a form consistent with that which will be adopted in the company's annual financial statements.

Our responsibility is to express a conclusion on the interim financial statements in the half year results based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the AIM Rules for Companies and for no other purpose. We do not, in giving this conclusion, 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.

What a review of interim financial statements involves

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We have read the other information contained in the half year results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

PricewaterhouseCoopers LLP

Chartered Accountants

Bristol

29 September 2016

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

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