Last checked at 8 Jul 2010 07:00
Vislink plc
Trading Update
Vislink plc ("The Group"), the global technology business specialising in secure communications products and services for the News & Entertainment, Law Enforcement & Public Safety, Marine & Energy markets, today publishes a trading update in respect of the year ending 31 December 2010.
Current trading
Trading for the first six months to 30 June 2010 has remained mixed and continues the trend described in the announcement of our 2009 full year results and in our first quarter interim management statement. Underlying revenue for the first half, which excludes revenue from the US 2GHz relocation programme, is expected to be £34.0 million, 13 per cent down on the first half of 2009, reflecting the tough economic conditions of the period. Underlying order intake for the first half was down 23 per cent over the same period in 2009. The order backlog at 30 June 2010 was £16.5 million (31 March 2010, £17.6 million).
We now see some signs of economic recovery across the Group. Our sales pipeline (being the total value of identified opportunities) continues to grow. Visibility as to when opportunities will be converted into orders is still opaque. In our News and Entertainment (N&E) business, underlying revenues were down 10 per cent in the first half; broadcasters have recently begun to release capital expenditure again and as a result underlying order intake for N&E is up 10 per cent in the period. In contrast, as foreseen, revenue and order intake in our Marine and Energy business are down 14 per cent and 39 per cent respectively due to the impact of the recession; we expect order intake to recover in the second half as our core offshore and marine markets start to invest again. For our two smaller business units, Law Enforcement and Public Safety and Services, the prospects continue to improve, albeit contending with the unpredictability of public procurement.
In the course of the first half, management made further cost reductions in the business without harming the ability of the Group to take advantage of the economic recovery, maintaining its level of investment in engineering and new products. Total overhead costs (including those in manufacturing) are expected to be £3.5 million lower for the full year than in 2009. At the same time material costs are being reduced through sourcing from Asia; the resultant improvement from material cost reductions is expected to improve gross material margins by more than 2 per cent in the full year over 2009.
Financial Position
With the aborted acquisition costs incurred in the first quarter, restructuring costs from staff terminations, investments in Asia and adverse foreign exchange movements from the Group's principal debt being held in US dollars, as a natural hedge against future cash flows, the Group ended the half year with net debt of £3.1million (31 December 2009: net funds of £0.6 million).
Summary
As a result of the slow order in-take in the first half and underlying year on year revenue decline, the company will report an operating loss before amortisation of acquired intangibles and exceptional costs for the six months to 30 June 2010. The Board expects the order flow and revenues to improve in the second half. It does not expect full year revenues to exceed the underlying revenues of £85.0 million reported in 2009.
The reorganisation of the Group last year into four customer-facing business units has provided the Group with a sounder base on which to operate. As part of the next stage in the Group's development, the Board has asked the Chief Executive to review the future composition of the Group, the results of which will be available before the end of the year.
The Board remains confident about the prospects for the Group despite the current weak trading. The Board will give a further trading update with the Interim Results announcement on 25 August 2010.
Duncan Lewis,
Chief Executive
8 July 2010
- ends -
For further information, please contact:
Duncan Lewis, Chief Executive 014 88 68 55 00
James Trumper, Group Finance Director 014 88 68 55 00
Charlie Jack, Hudson Sandler 020 77 96 41 33
About Vislink plc
The Vislink Group is strategically focussed on providing secure communication technologies to customers in its chosen markets. We specialise in wireless, video and IP technologies together with the supporting management systems. We have four international business units organised to serve its customers in News & Entertainment, Law Enforcement & Public Safety, Marine & Energy and the related Services markets. With offices in the UK, USA, Norway, Dubai, South Africa and Singapore we employ over 420 people worldwide and have net assets in excess of £50 million. Our products include the design and manufacture of microwave radio, satellite transmission, wireless camera and marine CCTV systems; our manufacturing operations are in the UK, Norway and the USA.