REG - Vislink PLC - Final Results <Origin Href="QuoteRef">VLK.L</Origin> - Part 1

Pebble Beach SystemsAnnouncement

24/03/2015 07:01

RNS Number : 2451I
Vislink PLC
24 March 2015
Vislink plc
Results for the year ended 31 December 2014
Vislink plc (the "Group"), the global technology business specialising in solutions for the collection and delivery of high quality video and associated data for the broadcast and surveillance and public safety markets, today announces its final results for the year ended 31 December 2014.
Financial Headlines
2014
2013
% Change 
Order intake
61.4m
60.1m
+2.0%
Revenue
61.9m
59.9m
+3.4%
Adjusted* operating profit
7.2m
4.3m
+66.1%
Adjusted* earnings per share
4.1p
4.2p
-2.4%
Adjusted**earnings per share normalised for tax effects
4.6p
3.2p
+43.8%
Operating profit 
5.5m
3.1m
+79.1%
Profit attributable to shareholders
3.7m
3.5m
+7.7%
Basic earnings per share
3.2p
3.1p
+3.2%
Net cash 
0.4m
3.7m
-89.7%
Total dividend per share proposed
1.50p
1.25p
+20.0%
*Adjusted operating profit is operating profit from continuing operations before the amortisation and impairment of acquired intangibles, and other non-recurring items. Adjusted earnings per share is calculated on the same basis after taking account of related tax effects.
** Adjusted earnings per share normalised for tax effective rate of 20 per cent.
Highlights
 Adjusted operating profit up 66.1% to 7.2 million, ahead of market expectations. 
 Revenue up 3.4% to 61.9 million.
 Cash generated from operations up from 4.4 million to 8.0 million.
 Proposed full year dividend up 20% to 1.50 pence per share.
 Move to AIM completed in January 2014.
Good performance from surveillance and public safety with successful delivery of Home Office contract. Completion anticipated in H1 2015.
 Pebble Beach Systems, a software business, was acquired and successfully integrated into the business. 
 Key strategic agreements with Harmonic and GoPro.
John Hawkins, Executive Chairman of Vislink said:
"We are delighted to have achieved our adjusted operating profit of 7.2 million in the year, from an 8.4 million loss in 2010, testament to the significant commitment from all at Vislink. The adjusted operating profit is ahead of market expectations. 
In addition to record profitability, 2014 was a transformation year. We saw the rewards of investing in software with the acquisition of Pebble Beach Systems, a world leader in the provision of software for automation, Channel in a Box and content management solutions, and announced a strategic partnership with Harmonic, the worldwide leader in video delivery infrastructure for emerging television and video services.
After the year end, we announced a strategic relationship with GoPro which opens up a new option for broadcasters and sports promoters globally. Vislink believes this new 'point of view' market holds huge potential."
- ends -
For further information please contact:
John Hawkins, Executive Chairman
+44 (0) 14 88 68 55 00
Ian Davies, Group Finance Director
+44 (0) 14 88 68 55 00
Andrew Hayes / Charlie Jack / Katie Matthews 
Hudson Sandler
+44 (0) 20 77 96 41 33
Shaun Dobson / Alex Wright 
N+1 Singer 
+44 (0) 20 74 96 30 00
About Vislink plc
Vislink plc is a leading global technology business specialising in the collection, delivery and management of high quality live 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 300 people worldwide with offices in the UK, USA, UAE, Brazil and Singapore and manufacturing operations in the UK and the USA. Vislink has net assets of over 55 million and continuously invests in innovation.
The Company is listed on the AIM market of the London Stock Exchange (AIM:VLK). For further information, visit www.vislink.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
2014 was another year of substantial profitable growth for the Group. We achieved adjusted operating profit growth in excess of 66 per cent to 7.2 million. This has been achieved whilst our two divisions have continued 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. 
In March 2014, we acquired Pebble Beach Systems, a world leader in the highly specialised and mission critical field of broadcast automation. This enables Vislink to offer 'scene to screen' solutions both through unrivalled technology and experienced management. It also enables Pebble Beach Systems to leverage its position as part of Vislink and our global presence and relationships. Since the acquisition, the business has made strong progress.
Objectives achieved and platform for growth
The adjusted operating profit of 7.2 million exceeds market expectations and we have surpassed our target 10 per cent adjusted operating margin. It is worth noting that had we not agreed discretionary bonuses in respect of 2014 performance, adjusted operating profit would have been 8.0 million.
Furthermore, we have also hit our target of 25 per cent of our revenues coming from higher margin security and surveillance business. Our focus on cellular and IP products has resulted in the launch of cellular and IP devices in 2014.
We said we would seek to move into software to improve margins and this has also set us on a critical path to recurring revenues, with 15% of software revenues and 10% of surveillance and public safety revenues being recurring. 
In 2011, we said blue chip partners would support our global growth and channels to market. Key partners now include GoPro, Fujitsu, NEL, Harmonic and TVU. The relationships with these world class organisations will play a key role going forward.
With the acquisition of Pebble Beach Systems and the on-going development in our surveillance and public safety market, we believe that we have built a fantastic platform for future growth. 
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 software technology within the broadcasting sector is best reflected by its global customer base. Furthermore, this customer base is fast growing, with 50 per cent of its top ten customers in 2014 being new. The business has high margins, growth prospects and solid cash generation. 
The acquisition fits perfectly with Vislink's desire for growth and recurring revenues by extending its reach and providing customers with synergies; from capturing video to interactive programming, including the acquisition of video content and revenue generation. Vislink plans to grow its software capability around the Pebble Beach Systems management team. 
Pebble Beach Systems has benefitted from being part of the Group, allowing expansion globally and a strategic partnership with Harmonic. These have helped Pebble Beach Systems grow its profit to 3.3 million in 2014 (in 9 months' of contribution).
We believe that the acquisition and its successful integration transitions Vislink into a market leading, video capture and playout provider to the broadcast industry. 
Partnerships
On 30 June 2014, we signed an OEM agreement with Harmonic Inc. (Nasdaq: HLIT) ("Harmonic"), a worldwide leader in video delivery infrastructure for emerging television and video services. The partnership will enable Harmonic to sell packages, integrated with Pebble Beach Systems' software, to the international broadcast market. 
The partnership resulted in Harmonic placing an initial order for software licenses valued at 2.0 million in 2014 and subscribing for 4.0 million new ordinary shares in the Group priced at 50 pence per share by way of a direct subscription. 
After our year closed, in early January 2015 we announced that we had entered into an agreement with GoPro Inc. (NASDAQ: GPRO) ("GoPro"). The partnership brings immersive GoPro perspectives to live events, enabling GoPro HERO4 cameras with a professional grade, live, HD wireless broadcast solution,through the incorporation of the smallest, lightest and lowest power professional broadcast wireless transmitter.
Vislink and GoPro have been working together to produce a transmitter that is small enough to be body worn or mounted in unique areas to provide all new perspectives for people watching their favourite live sports and events. The prototype was showcased during popular live events last winter, including the Winter X Games 2015 Aspen, select AMA Monster Energy Supercross events and other live sporting events. This new solution is the first time official GoPro products can be used to transmit the action in high definition, allowing for integration into a live television broadcast.
In late January, GoPro announced a partnership with the National Hockey League ("NHL"). In an unprecedented first for GoPro, a new partnership with the NHL and the NHL Players' Association ("NHLPA") will bring hockey fans closer to the action on the ice than ever before; with the NHL using GoPro's Professional Broadcast Solution, developed in collaboration with Vislink, to deliver viewers never-before-seen perspectives of the game.
Following a successful testing period and product showcasing, it is intended that a formal production agreement between the two companies will be entered into in 2015.
Financial results 
The reported adjusted operating profit was 7.2 million (2013: 4.3 million), a 66% increase compared to 2013. Our markets continue to be tough but as long as we continue to better balance our business between software and hardware and maintain our product leadership, the Group will continue to grow profitability.
Group revenues were 61.9 million (2013: 59.9 million) which was flat but reflects our focus on quality of earnings and the improved mix in software/hardware revenues. Our newly acquired software business grew revenues by 51 per cent, surveillance and public safety grew by 35 per cent, whilst broadcast revenues were down by 22 per cent. 
Early in 2014 we won a multimillion pound contract in public safety in the UK which significantly contributed to our declared strategy of having at least 25 per cent of our revenues being derived from the secure communication and surveillance markets by the end of the financial year 2014. The majority of the project was successfully delivered in 2014, with final completion expected in H1 2015. 
Order intake for the year was 61.4 million (2013: 60.1 million) and the opening order book for this year stood at 8.8 million (2013: 5.6 million). 
There were some working capital increases throughout the year associated with our growth and investments in new products. The Group has maintained a strong balance sheet throughout the year and at 31 December 2014 had a net cash balance.
Earnings per share
The reported basic undiluted earnings per share for the year was 3.2 pence (2013: 3.1 pence). 
After adjusting for amortisation and impairment of acquired intangibles and other non-recurring items the Group's adjusted earnings per share was 4.1 pence (2013: adjusted earnings per share of 4.2 pence). 
The Adjusted earnings per share normalised for tax effective rate of 20 per cent for the year was 4.6 pence (2013: 3.2 pence). 
Dividends 
As part of the Group's progressive dividend policy, the Board is proposing that the full year dividend increase by 20 per cent to 1.50 pence per share (2013: 1.25 pence per share). 
Acquisitions
The Group has executed against its acquisition strategy and the efficient integration of acquired business.
Amplifier Technology Limited made a profit contribution of 0.2 million in 2014 with prospects for more operating leverage in 2015. Deferred consideration of 2.0 million payable in the year was written back and the Board also recommended that goodwill be impaired by 0.5 million at the year end. The Group remains confident of further synergy from the Amplifier Technology Limited products, particularly in the security and surveillance sectors. In January 2015 we completed the integration of Amplifier Technology into Vislink Communication Systems.
On 20 January 2014 the Group moved from a listing on the main market, to AIM. The primary reason for this, as announced in our circular, was to simplify and reduce the financial burden of making acquisitions. As part of the transformation of the Group, "bolt on" acquisitions were a key part of our three year plan, 2011-2014. 
Pebble Beach Systems was acquired in March 2014 for a total consideration of 14.9 million comprising 12.9 million in cash and 2.0 million represented by the issue of new Vislink ordinary shares. Upon completion, the Group cash balance was strengthened by 6.1 million of cash retained in Pebble Beach Systems' balance sheet.
The cash consideration was funded out of existing Group resources and a new 10.0 million debt facility. The facility has a three year term and is split 3.0 million amortising term loan and 7.0 million flexible revolving credit facility, of which 5.0 million had been drawn down at the year end.
In 2015 we will continue to grow our sales channels to markets for both our software division and our communication division. We will continue to seek growth opportunities both organically and through acquisitions, whilst keeping a clear underlying objective of continuing to grow shareholder value. 
The Board, management and employees
We continue to see a strengthening of our capabilities and expertise as we acquire new businesses. With the acquisition of Pebble Beach Systems, we are now operating as two divisions; Pebble Beach Systems and Vislink Communication Systems, which is a consolidation of the existing hardware businesses. Both divisions benefit from channel and market synergies. 
During the period, we were pleased to appoint Simon Derry as CEO of Vislink Communication Systems. Simon has a wealth of general management experience having formerly been responsible for the growth and success of Snell, a world leader providing software and hardware for multimedia screens. Simon will be tasked with growing this division and focussing on our IP and cellular transformation.
On behalf of the Board I would like to thank all our people; those newly joining us through acquisition, those who have got behind our vision for growth and all who have contributed to our success in 2014.
Current outlook trading 
Our markets continue to be challenging. However, the Group enters 2015 with renewed confidence buoyed by the expansion of our ever increasing software portfolio and a more efficient integrated communication division under new leadership. 
We are confident of the opportunities that will come from our enlarged footprint in both broadcast and surveillance and public safety markets. 
We are transforming the Group. As our software group grows we will further enhance earnings, margins and cash generation and remain completely aligned to our shareholders' objectives of delivering short term and long term profitable growth. 
John Hawkins
EXECUTIVE CHAIRMAN
Executive Chairman's Statement
For the year ended 31 December 2014
DIVISIONS AND MARKETS
For the year ended 31 December 2014
Divisional Operations
2014
'm
2013
'm
Change 
%
Vislink Communication Systems
53.6
59.9
-10.4%
Pebble Beach Systems 
8.3
-
+100.0%
Total Revenue
61.9
59.9
+3.4%
Vislink Communication Systems
5.9
6.8
-12.9%
Pebble Beach Systems
3.3
-
+100.0%
Central
(2.0)
(2.5)
-18.0%
Total adjusted operating profit
7.2
4.3
+66.1%
During 2014 we reorganised the business to change our focus in line with the Group's on-going strategy to report internally by the two new divisions, Vislink Communication Systems and Pebble Beach Systems, instead of by geographic proximity. Following the introduction of these changes we have revised our segmental reporting as required under IFRS8.
The Vislink Communication Systems division has seen a decline in revenues of 10.4 per cent in 2014 across both markets with the America's and Middle Eastern regions finishing below 2013 levels. However there has been significant growth in the UK region as a result of a large contract win in the surveillance and public safety market. 
The Pebble Beach Systems division has exceeded original expectations contributing 8.3 million of revenues and 3.3 million of adjusted operating profit in the nine months since acquisition in March 2014, with strong performance in the UK, rest of Europe and Middle Eastern regions.
Revenue by Region
Vislink Communication Systems
Pebble Beach Systems
2014
'm
2013
'm
Change
%
2014
'm
2013
'm
Change 
%
Revenues by region
UK 
13.7
5.7
+140.6%
2.6
-
+100.0%
Rest of Europe
9.7
9.6
+1.1%
1.5
-
+100.0%
North America
17.8
20.5
-13.1%
0.8
-
+100.0%
Latin America
2.5
4.2
-41.0%
0.4
-
+100.0%
Middle East and Africa
3.1
13.6
-77.1%
2.4
-
+100.0%
Asia / Pacific 
6.8
6.3
+9.3%
0.6
-
+100.0%
Total Revenue
53.6
59.9
-10.4%
8.3
-
+100.0%
The Group achieved strong revenue growth in the UK and Asia/Pacific regions during the financial period.
The Americas region remains the largest market for both our broadcast and surveillance and public safety businesses, with the US Government both directly and indirectly being a key customer. Sales cycles can be long, but the Group is well positioned on a number of initiatives and programmes and expects this to be an increasingly significant source of revenue going forward.
Latin America remains a key market, with the 2016 Olympic Games in Brazil providing an impetus for further investment in both broadcast and surveillance and public safety in the region.
We believe that the acquisition of Pebble Beach Systems will continue to add further revenue streams for the Group.
Technology and Innovation
The Group's continued profitable growth has enabled it to generate the funds needed to deliver innovative products and solutions that add value for our customers. The investment in the development of market leading solutions and expansion of available market is a key part of the organic growth strategy.
The business has invested in capitalised development costs of 3.6 million in the year (2013: 4.5 million) and amortised 2.1 million (2013: 2.2 million). The amortisation is included in the reported Research and Development expenses in the consolidated Group income statement. For 2014, these Research and Development expenses were 5.6 million (2013: 3.9 million) representing 9.0 per cent of revenues (2013: 6.6 per cent). The cost increase is mainly due to development expenses incurred during the year in the acquired software business of Pebble Beach Systems.
The Group has launched cutting-edge products and solutions to meet the ever-changing requirements of today's market. Vislink's 2.4m HD fully integrated antenna for its NewSwift vehicle-mounted systems range, includes impressive new features that make the unit suitable for use by all broadcasters in any environment. 
Guiding the next generation in video collection solutions, the launch of the HDR-5000 provides Video Over IP Diversity, presenting the end user with an uninterrupted video connection and meeting the unique challenges of broadcasters and public safety officials worldwide. 
Building on Pebble Beach Systems' enterprise-level Marina automation platform, the launch of Marina Lite delivers world class automation at an affordable price to broadcasters with low channel counts. The new suite of Pebble Web Client tools leverages HTML5 and the latest web server technology to offer high visibility and remote access and control of our automation and integrated channel platforms.
In August 2014, a new agreement with Harmonic, the worldwide leader in video delivery infrastructure, represented a significant development in the life of the Marina platform for Pebble Beach Systems, enabling us to deliver tightly integrated solutions to the playout market through an extensive network of global sales channels.
The strategic partnership entered into with GoPro early in 2015 is one example of how our market-leading low latency, wireless camera and transmission systems are being endorsed by industry heavyweights. The development enables GoPro HERO4 cameras to include a professional grade, live, HD wireless broadcast solution, with a transmitter that is small enough to be body worn or mounted in unique areas, providing new perspectives for viewers and fundamentally changing the way which live sport is watched on television. 
FINANCIAL REVIEW
The Group's reported trading performance is summarised as follows:
2014
'm
2013
'm
Change
%
Continuing business
Revenue 
61.9
59.9
+3.4%
Gross profit
28.4
24.3
+16.7%
Gross margin %
45.9%
40.7%
+5.2pts
Research and development expenses
(5.6)
(3.9)
+41.0%
Other expenses
(15.6)
(16.1)
-2.6%
Adjusted operating profit 
7.2
4.3
+66.1%
Amortisation and impairment of acquired intangibles
(2.6)
(1.4)
Non-recurring items
0.9
0.2
Reported operating profit
5.5
3.1
+79.1%
Net finance costs
(0.2)
-
Profit before tax
5.3
3.1
+73.5%
Taxation
(1.6)
0.4
Profit attributable to equity shareholders
3.7
3.5
+7.7%
Basic earnings per share - continuing operations
3.2p
3.1p
+3.2%
Adjusted earnings per share1 - continuing operations 
4.1p
4.2p
-2.4%
Normalised earnings per share2 - continuing operations
4.6p
3.2p
+43.8%
1Adjusted EPS is calculated on operating profit before the amortisation and impairment of acquired intangibles, and other non-recurring costs after taking account of related tax effects.
2Adjusted earnings per share normalised for a tax rate of 20 per cent.
Goodwill impairment
In accordance with the requirements of IAS 36 'Impairment of assets', goodwill is required to be tested for impairment on an annual basis, with reference to the value of the cash-generating units ("CGU") in question. 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 a separate CGU therefore impairment reviews have been undertaken in respect of the broadcast market, Amplifier Technology and Pebble Beach Systems. The carrying value of goodwill at 31 December 2014 is 24.6m (2013: 21.6m) consisting of 20.3 million for the Broadcast market (2013: 20.1 million), 1.1 million for Amplifier technology (2013: 1.5 million) and 3.2 million for Pebble Beach Systems (2013: nil).
Following a review of our forecasts for Amplifier Technology, and in the context of the deferred consideration not earned, the carrying value of our Amplifier Technology goodwill has been written down by 0.5 million to 1.1 million. Our review of the remaining CGU calculations indicated there was no further impairment in the year.
Non-recurring items
The Group credited 0.9 million of non-recurring costs to the consolidated income statement. The credit comprised:
 0.7 million charge in respect of rationalisation and redundancy costs
 0.3 million charge in respect of acquisition costs
 0.1 million charge associated with the cost of the move to AIM
 0.2 million charge associated with contractual disputes
 2.0 million credit relating to the release of deferred consideration not earned; and
 0.2 million credit in respect of a creditor dispute resolution 
Working capital
Our key metrics for managing working capital are day's sales outstanding for trade receivables and net inventory days. The table below shows that trade receivables have increased to 90 days whilst inventory days have increased to 145 days. Inventory levels were unusually high at year end due to a number of projects which were fully or partially complete awaiting shipment in Q1 2015.
Trade receivables included a significant debtor at the year end. The expected payment of which is due in H1 2015. There are no significant adverse trends in debtors. The small increase in day's sales outstanding is impacted by the mix of sales from different regions.
Days (source: Group management accounts)
2014
2013
Trade receivables - day's sales outstanding1
90
82
Inventory days2
145
122
1Trade receivables at the end of the financial year divided by quarter 4 revenue multiplied by the number of days in quarter 4
2Net inventory at the end of the financial year divided by quarter 4 material costs of sales multiplied by the number of days in quarter 4
Cash flows
The Group held cash and cash equivalents of 8.4 million at 31 December 2014 (2013: 3.7 million). The table below summarises the cash flows for the year.
'million
2014
2013
Cash generated from operating activities
7.7
4.2
Net cash used in investing activities
(11.5)
(7.3)
Net cash from financing activities
8.5
(1.4)
Effects of foreign exchange
 -
 0.1
Net increase/(decrease) in cash and cash equivalents
4.7
(4.4)
Cash and cash equivalents at 1 January
3.7
8.1
Cash and cash equivalents at 31 December
8.4
3.7
Returns to shareholders were in the form of a dividend payment of 1.5 million (2013: 1.4 million). 
Returns to shareholders
It is the Group's stated strategy to only recommend a final dividend. The Board is recommending that the dividend be increased by 20 per cent to 1.50 pence per share (2013: 1.25 pence). The payment of the dividend will absorb approximately 1.8 million of cash. Subject to the approval of shareholders, the dividend will be paid on 17 July 2015 to those shareholders on the register at 26 June 2015. 
Foreign exchange
In 2014 the net assets of the Group decreased by 0.1m on the translation of foreign currency net investments (2013: increased by 0.1 million) as a result of the weakening of the US dollar against sterling. 
The principal exchange rates used by the Group in translating overseas profits and net assets into sterling are set out in the table below.
Rate compared to  sterling
Average 
rate
2014
Average 
Rate
2013
Year end 
rate
2014
Year end 
rate
2013
US dollar
1.648
1.565
1.561
1.653
If the results for the year to 31 December 2013 had been translated at the 2014 average rate then the translation impact would be to reduce prior year revenue by 1.2 million and increase the profit before tax by
0.1 million.
Risk management
The Board regularly reviews the full range of business risks facing the Group. The approach adopted is to identify, evaluate and manage the likely impact of risk on the Group's business objectives. Where the risks are unavoidable they are managed through business controls and where appropriate through insurance and treasury activities.
The Group has a programme of regular risk assessment, which incorporates internal control reviews of both a financial and non-financial nature. A process of continuous review has been in place throughout the year at an operating company level to consider the risk environment and the effectiveness of controls. The results of reviews, initiatives and progress on implementing control improvements are regularly reported to the Board.
John Hawkins, Executive Chairman
Ian Davies, Group Finance Director
24 March 2015 
CONSOLIDATED GROUP INCOME STATEMENT 
for the year ended 31 December 2014
2014
2013
Notes
'000
'000
Revenue
3
61,931
59,879
Cost of sales
(33,519)
(35,537)
Gross profit
28,412
24,342
Sales and marketing expenses
(8,817)
(10,273)
Research and development expenses
(5,558)
(3,942)
Administrative expenses
(6,833)
(5,791)
Other expenses
(1,692)
(1,258)
Operating profit
4
5,512
3,078
Operating profit is analysed as:
Adjusted operating profit
7,204
4,336
Amortisation and impairment of acquired intangibles
(2,630)
(1,420)
Non-recurring items
3,4
938
162
Finance costs
5
(169)
(4)
Finance income 
5
24
19
Profit before tax
5,367
3,093
Tax
6
(1,623)
384
Profit for the year being profit attributable to owners of the parent
3,744
3,477
Basic earnings per share
Diluted earnings per share
Adjusted earnings per share
8
8
8
3.2p
3.1p
4.1p
3.1p
3.1p
4.2p
Adjusted earnings per share normalised for tax effective rate of 20 per cent
4.6p
3.2p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2014
2014
2013
'000
'000
Profit for the financial year
3,744
3,477
Other comprehensive expense - items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of overseas operations
483
(200)
Total comprehensive income for the year attributable to owners of the parent
4,227
3,277
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
for the year ended 31 December 2014
Share
Capital
'000
Share premium account
'000 
Capital redemption reserve
'000
Merger reserve
'000
Translation reserve
'000
Retained earnings
'000
Total 
'000
At 1 January 2013
2,848
4,900
617
30,565
4,154
4,293
47,377
Retained profit for the year
-
-
-
-
-
3,477
3,477
Exchange differences on translation of overseas operations 
-
-
-
-
(200)
-
(200)
Share based payments: value of employee services
-
-
-
-
-
361
361
Dividends paid
-
-
-
-
-
(1,413)
(1,413)
Repurchase of own shares
At 31 December 2013
2,848
4,900
617
30,565
3,954
6,718
49,602
At 1 January 2014
2,848
4,900
617
30,565
3,954
6,718
49,602
Retained profit for the year
-
-
-
-
-
3,744
3,744
Exchange differences on translation of overseas operations
-
-
-
-
483
-
483
Issue of share capital
218
1,900
-
1,883
-
-
4,001
Adjustment in respect of employee share ownership plan
-
-
-
-
-
(30)
(30)
Share based payments: value of employee services
-
-
-
-
-
500
500
Dividends payable
-
-
-
-
-
(1,473)
(1,473)
At 31 December 2014
3,066
6,800
617
32,448
4,437
9,459
56,827
CONSOLIDATED GROUP STATEMENT OF FINANCIAL POSITION
as at 31 December 2014
2014
2013
Notes
'000
'000
Assets
Non-current assets
Intangible assets
43,683
33,033
Property, plant and equipment
2,665
2,430
Deferred tax assets
3,712
4,150
50,060
39,613
Current assets
Inventories
12,884
11,094
Trade and other receivables
15,956
11,907
Cash and cash equivalents
11
8,380
3,705
37,220
26,706
Liabilities
Current liabilities
Financial liabilities - borrowings
5,600
-
Trade and other payables
15,810
12,848
Current tax liabilities
747
12
Provisions for other liabilities and charges
280
638
22,437
13,498
Net current assets
14,783
13,208
Non-current liabilities
Financial liabilities - borrowings
2,400
-
Deferred tax liabilities
5,338
3,153
Provisions for other liabilities and charges 
278
66
8,016
3,219
Net assets
3
56,827
49,602
Equity attributable to owners of the parent
Ordinary shares
10
3,066
2,848
Share premium account
10
6,800
4,900
Capital redemption reserve
10
617
617
Merger reserve
32,448
30,565
Translation reserve
4,437
3,954
Retained earnings
9,459
6,718
Total equity
56,827
49,602
CONSOLIDATED GROUP STATEMENT OF CASH FLOWS 
for the year ended 31 December 2014
2014
2013
Notes
'000
'000
Cash flows from operating activities
Cash generated from operations
9
7,999
4,352
Interest paid
(169)
(2)
Taxation paid
(102)
(114)
Net cash from operating activities
7,728
4,236
Cash flows from investing activities
Interest received
24
19
Acquisition of subsidiary
(13,092)
(2,031)
Cash acquired from acquisition of subsidiary 
6,089
-
Deferred consideration in respect of previous acquisitions
-
(405)
Proceeds from sale of property, plant and equipment
1
64
Purchase of property, plant and equipment
(919)
(473)
Expenditure on capitalised development costs
(3,647)
(4,453)
Net cash used in investing activities
(11,544)
(7,279)
Cash flows from financing activities
New bank loans raised
11
8,000
-
Dividend paid
11
(1,473)
(1,413)
Proceeds on issues of shares
2,000
-
Net cash from/(used in) financing activities
8,527
(1,413)
Net increase/(decrease) in cash and cash equivalents
4,711
(4,456)
Effect of foreign exchange rate changes
11
(36)
30
Cash and cash equivalents at 1 January
3,705
8,131
Cash and cash equivalents at 31 December 
8,380
3,705
Net cash comprises:
Cash and cash equivalents
8,380
3,705
Borrowings
(8,000)
-
Net cash at 31 December
11
380
3,705
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2014
1. GENERAL INFORMATION
Vislink plc ("the Company") and its subsidiaries (together "the Group") is a global technology business specialising in the collection and delivery of high quality video and associated data from the field to the point of usage. 
Vislink provides solutions to the broadcast market for the collection of live news, sport and live entertainment events, the video, secure communications and surveillance market including military, law enforcement and public safety. With offices in the UK, USA, UAE and Singapore and manufacturing operations in the UK and the USA we employ over 300 people worldwide and have net assets of 56.8 million. Our hardware and software products offer a complete wireless solution from scene (video contribution) to screen (video playout and automation). Our solutions deploy IP, cellular and more traditional microwave radio and satellite transmission and our studio software solutions deploy the latest software innovations
The Company is a public limited company, and is quoted on the Alternative Investment Market (AIM) of the London stock exchange. The Company is 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 final results announcement was approved for issue on 24 March 2015.
2. BASIS OF PREPARATION
The Group financial statements have been prepared on a going concern basis in accordance with International Financial reporting Standards as adopted by the European Union (IFRSs), IFRIC interpretations and the Company Act 2006 applicable to companies reporting under IFRS.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgment in the process of applying the groups accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the group financial statements are disclosed in note 4 of the Group financial statements. 
During the current reporting period there were no new standards or amendments which had a material impact on the net assets of the Group. In addition, standards or amendments issued but not yet effective are not expected to have a material impact on the net assets of the Group. 
3. SEGMENTAL REPORTING
During 2014 we reorganised the business to change our focus in line with the Group's on-going strategy to report internally by the two new divisions, Vislink Communication Systems and Pebble Beach Systems, instead of by geographic proximity. Following the introduction of these changes we have revised our segmental reporting as required under IFRS8.
The Group's internal organisational and management structure and its system of internal financial reporting to the Board of directors are based on the product offerings of each of its businesses, which comprise the two new divisions, Vislink Communication Systems and Pebble Beach Systems. Each division has its own managing director who sits on the Executive Management Board, together with the Group Finance Director, under the chairmanship of the Executive Chairman to oversee the running of the Group. The chief operating decision-maker has been identified as the Executive Management Board. 
The Executive Management Board reviews the Group's internal financial reporting in order to assess performance and allocate resources. The same information is provided to the Board of directors of Vislink plc. Management have therefore determined that the operating segments for the Group will be based on these reports. 
The Vislink Communication Systems division is responsible for the sales and marketing of all Group hardware products and services. It is also the product centre for the Advent satcom communication products, Link and Gigawave wireless camera systems and the associated Microwave and Amplifier products. The Pebble Beach Systems division is responsible for the sales and marketing of all Group software products and services. It is also the product centre for the Pebble Beach Systems product brands. 
The table below shows the analysis of Group external revenue and operating profit from continuing operations by business segment.
Vislink Communication Systems
Pebble Beach Systems
Central
Total
'000
Year to 31 December 2014
Broadcast
37,754
8,292
-
46,046
Surveillance and public safety
15,885
-
-
15,885
Total revenue
53,639
8,292
-
61,931
Adjusted operating profit/(loss)
5,938
3,298
(2,032)
7,204
Amortisation and impairment of acquired intangibles
(2,630)
-
-
(2,630)
Non-recurring items
(889)
-
1,827
938
Group total operating profit/(loss)
2,419
3,298
(205)
5,512
Year to 31 December 2013
Broadcast
48,119
-
-
48,119
Surveillance and public safety
11,760
-
-
11,760
Total revenue
59,879
-
-
59,879
Adjusted operating profit/(loss)
6,815
-
(2,479)
4,336
Amortisation of acquired intangibles
(1,420)
-
-
(1,420)
Non-recurring items
288
-
(126)
162
Group total operating profit/(loss)
5,683
-
(2,605)
3,078
Geographic external revenue analysis
Group management are focused on developing global revenue growth from the two main markets that the Group serves, broadcast and surveillance and public safety. Segmental reporting is therefore also provided by reference to revenue by market by geographic region.
The revenue analysis in the table below is based on the geographical location of the customer for each market. 
2014
2013
Broadcast
'000
Surveillance and public safety
'000
Total 
'000
Broadcast
'000
Surveillance and public safety
'000
Total 
'000 
By market
UK 
6,214
10,098
16,312
3,154
2,538
5,692
Rest of Europe
9,321
1,835
11,156
8,445
1,111
9,556
North America
15,027
3,555
18,582
14,116
6,355
20,471
Latin America
2,893
43
2,936
4,208
66
4,274
Middle East and Africa
5,432
68
5,500
12,055
1,564
13,619
Asia / Pacific
7,159
286
7,445
6,141
126
6,267
46,046
15,885
61,931
48,119
11,760
59,879
Net assets
The table below summarises the net assets of the Group by division. Balance sheet reporting is disclosed by the divisional assets and liabilities of the Group as this is consistent with the presentation of internal information provided to the Executive Management Board and the Board of Directors.
2014
'000
2013
'000
By division:
Vislink Communication Systems
43,101
49,602
Pebble Beach Systems
13,726
-
56,827
49,602
4. OPERATING PROFIT 
The following items have been included in arriving at the operating profit for the continuing business:
2014
'000
2013 
'000
Depreciation of property, plant and equipment 
886
790
Amortisation of acquired intangibles 
2,130
1,420
Impairment of intangible assets
500
-
Operating lease rentals 
205
319
Loss on sale of property, plant and equipment
-
3
Repairs and maintenance expenditure on property, plant and equipment
112
118
Exchange gains credited to profit and loss
(534)
(65)
Research and development expenditure:
- Expensed in the year
5,558
3,942
- Amortisation and impairment of capitalised development cost 
2,092
2,189
Non-recurring items
The following items of unusual nature, size or incidence have been charged in arriving at the operating profit for the year and are described as non-recurring. 
2014
'000
2013
'000
Rationalisation and redundancy costs
722
-
Reduction in disputed creditor balance 
(169)
-
Contractual disputes 
167
(330)
Write back of deferred consideration un-earned
(2,000)
-
Acquisition related costs
270
168
Costs associated with the transfer to the Alternative Investment Market (AIM)
72
-
(938)
(162)
The Group has incurred rationalisation and redundancy costs of 722,000 in the year (2013: nil).
An on-going creditor dispute was also resolved during the year, resulting in a 169,000 reduction in the payable amount. The agreed revised settlement figure will be paid in 2015. 
In 2014 an on-going contractual dispute was resolved and a final settlement figure of 167,000 was agreed and paid. In 2013 the Group released a 330,000 provision that was in place relating to a contractual dispute.
There was a 2,000,000 release of deferred consideration owing to the vendors of Amplifier Technology Ltd during the year as a result of the failure to meet target revenues (2013: nil).
The Group incurred costs of 224,000 during the year in relation to the acquisition of Pebble Beach Systems Ltd and also incurred 46,000 of costs associated with an aborted acquisition. In 2013 the Group incurred costs of 93,000 in relation to the acquisition of Amplifier Technology Ltd and 75,000 of costs were incurred in respect of operations in Brazil.
The Group incurred costs of 72,000 in relation to the move to AIM.
5. FINANCE INCOME - NET
2014
'000
2013
'000
Interest payable on bank borrowing
(169)
(4)
Finance costs
(169)
(4)
Finance income 
24
19
Finance (costs)/income - net
(145)
15
Finance income is derived from cash held on deposit.

6. INCOME TAX EXPENSE
2014
'000
2013
'000
Current tax
UK corporation tax
585
(8)
Foreign tax - current year
74
95
Adjustments in respect of prior years
-
(66)
Total current tax
659
21
Deferred tax
UK corporation tax
112
(144)
Foreign tax
837
(261)
Adjustments in respect of prior years
15
-
Total deferred tax
964
(405)
Total taxation
1,623
(384)
From 1st April 2014 the corporation tax rate will be 21 per cent and from 1st April 2015 will be 20 per cent. These rates were substantively enacted on 2 July 2013 and hence deferred tax assets and liabilities are calculated at 20 per cent.
Deferred tax has been provided for at the rate of 20 per cent (2013: 20 per cent). There was not a material impact on the deferred tax charge as a result of the change in deferred tax rates.  
There is no tax impact for the Group associated with the dividend proposed (note 7). 
7. DIVIDENDS
The directors are proposing a final dividend in respect of the financial year ending 31 December 2014 of 1.50 pence per share, which will absorb an estimated 1.8 million of shareholders' funds. It will be paid on 17 July 2015 to shareholders who are on the register of members on 26 June 2015.
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 year, 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 117,797,000 ordinary shares in issue during the year (31 December 2013: 113,070,000). 
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 year.
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 items and their related tax effects.
The reconciliation between reported and underlying earnings and basic earnings per share is shown below:
2014
2013
Earnings
'000
Pence
Earnings
'000
Pence
Reported earnings per share
3,744
3.2p
3,477
3.1p
Amortisation of acquired intangibles after tax
2,209
1.9p
1,336
1.2p
Non-recurring items after tax
(1,093)
(1.0)p
(124)
(0.1)p
Adjusted earnings per share
4,860
4.1p
4,689
4.2p
9. CASH FLOW FROM OPERATING ACTIVITIES
Net cash flow from operating activities comprises:
2014
'000
2013
'000
Profit for the year
5,367
3,093
Depreciation of property, plant and equipment
886
790
Loss on disposal of property, plant and equipment
-
3
Acquisition related costs
224
93
Write back of deferred consideration un-earned
(2,000)
-
Amortisation and impairment of development costs
2,092
2,189
Amortisation and impairment of acquired intangibles
2,630
1,420
Share-based payment expense
500
361
Finance income 
(24)
(19)
Finance costs 
169
4
Increase in inventories
(1,268)
(1,478)
Increase in trade and other receivables 
(2,233)
(1,677)
Increase in trade and other payables 
1,807
366
Decrease in provisions
(151)
(793)
Net cash from operating activities
7,999
4,352
10. CALLED UP SHARE CAPITAL, SHARE PREMIUM AND CAPITAL REDEMPTION RESERVE
Number of shares 
'000
Share Capital
'000
Share Premium
'000
Capital redemption reserve
'000
Total
'000
At 1 January 2014
113,902
2,848
4,900
617
8,365
Share issues
8,701
218
1,900
-
2,118
At 31 December 2014
122,603
3,066
6,800
617
10,483
11. NET FUNDS
The movements in cash and cash equivalents and borrowings in the year are as follows:
Cash and cash equivalents
'000
Other borrowings
'000
Total net cash
'000
At 1 January 2014
3,705
-
3,705
Cash flow for the year before financing and acquisition of subsidiary
3,187
-
3,187
Proceeds on issue of shares
2,000
-
2,000
Purchase of subsidiary
(13,092)
-
(13,092)
Cash acquired from subsidiary
6,089
-
6,089
Movement in borrowings in the year
8,000
(8,000)
-
Dividend paid 
(1,473)
-
(1,473)
Exchange rate adjustments
(36)
-
(36)
At 31 December 2014 
8,380
(8,000)
380
Ends.

This information is provided by RNS
The company news service from the London Stock Exchange
  END
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