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

Pebble Beach SystemsAnnouncement

16/09/2015 07:01

RNS Number : 1704Z
Vislink PLC
16 September 2015
Vislink plc
(the "Company" or the "Group")
Half year results for the six months ended 30 June 2015
Vislink plc, the global technology business specialising in solutions for the capture, management and delivery of high quality video for the broadcast and surveillance and public safety markets, today announces its half year results for the six months ended 30 June 2015.
Results for the six months ended 30 June 2015
2015
2014
m
m
Order intake
28.2
33.3
Revenue 
26.6
27.1
Adjusted operating profit1
2.2
1.7
Adjusted operating margin1 
8.1%
6.3%
Adjusted earnings per share1 
1.6p
1.2p
Adjusted earnings per share normalised for tax effects2
1.3p
0.8p
Reported operating (loss)/profit 
(0.9)
2.0
Basic earnings per share 
(0.4)p
1.7p
Net debt
(1.2)
(0.3)
1 Adjusted to exclude restructuring and rationalisation, amortisation and impairment of goodwill and acquired intangibles, and other non-recurring costs (note 5). 
2 Adjusted earnings per share normalised for tax effective rate of 20 per cent. 
Key points 
 
Adjusted operating profit up 25.9% to 2.2 million (H1 2014: 1.7 million) 
 
Orders received during the period of 28.2 million (H1 2014: 33.3 million which included the benefit of a significant order)
 
Gross margin strengthened to 51.2% (H1 2014 42.8%) reflecting improved operational efficiency and increased proportion of software revenue
 
Continued strong performance of Pebble Beach Systems 
Vislink Communication Systems' Broadcast order intake up 18.1% to 22.1 million
Successful completion of the Home Office surveillance contract by Vislink Communication Systems
Vislink Communication Systems' successful restructuring is largely complete with significant cost savings, reflected in the improved adjusted operating margin
 
Use of the world's first live wireless 4K cameras, provided by Vislink at the UK Moto GP
 
Harmonic and GoPro strategic relationships continue to progress, evidenced by the successful launch with GoPro in April of HEROCastTM
John Hawkins, Executive Chairman of the Group, said:
"We continue to transition to a software and services business represented by the evolving profit mix and strengthened margins within the business. Pebble Beach Systems has had a strong financial performance in this half year with better operating margins, and it continues to expand its sales activities through its key partnerships.
The strategy is working, evidenced by an improvement in gross margin and overall profit margin from 6.3 per cent to 8.1 per cent at the half year comparison. Group revenue decreased by 0.5 million (1.8 per cent) compared to the prior year. The reduction in revenue was driven by Vislink Communication Systems, and amounted to 2.9 million (12.0 per cent) however this was partially offset by Pebble Beach Systems which contributed for a full 6 months (5.5 million of revenue) against 3.5 months (3.1 million of revenue) in the previous half year. 
In its core markets, Vislink Communication Systems found market conditions challenging and continued to witness longer decision making cycles. A significant restructuring of our hardware division, coupled with investment in new products and an increasing order pipeline, provides an encouraging platform for improved results from Vislink Communication Systems. 
Both the Harmonic and GoPro strategic relationships continue to progress. 
The Group is confident of its strategy and transition to software and services, which will benefit the Group as a whole in 2015 and beyond."
 
- ends -
A copy of the half yearly report will be available from the Group's website www.vislink.com
Enquiries:
Vislink plc: John Hawkins, Executive Chairman
+44 (0)1488 685500
Vislink plc: Ian Davies, Finance Director
N+1 Singer: Shaun Dobson / Alex Wright
+44 (0)1488 685500
+44 (0)20 7496 3000
Hudson Sandler: Charlie Jack / Katie Matthews
+44 (0)207 796 4133
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 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 54 million and continues to invest in innovation.
The Company is listed on the AIM market of the London Stock Exchange (AIM: VLK). For further information, visit www.vislink.com. 
The Company is listed on the AIM Market of the London Stock Exchange. 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.
 
Executive Chairman's Statement 
For the six months to 30 June 2015
Introduction
The first half of the year saw a further improvement in profitability for the Group, with adjusted operating profit growing 25.9 per cent to 2.2 million. This has been achieved through our two divisions which have continued to provide best in class solutions to our 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. 
The Group achieved an order intake of 28.2 million for the six months ended 30 June 2015 (H1 2014: 33.3 million which benefited from the significant Home Office contract). During this period order intake strengthened in Broadcast, leading to an order book of 7.1 million at the end of the period. Vislink Communication Systems' Broadcast overall order intake was up 18.1 per cent in H1 2014 to 22.1 million. Revenue in the first half was 26.6 million, which on a constant currency basis was marginally down on the same period last year, which included revenue from the aforementioned Home Office contract. 
Adjusted operating profit was up 25.9 per cent to 2.2 million, with an improvement in adjusted operating margin for the period to 8.1 per cent (H1 2014 6.3 per cent). 
Platform for profit growth 
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. 
The Group is operating as two divisions; Pebble Beach Systems, which includes the Group's software businesses, and Vislink Communication Systems, which is a consolidation of the Group's hardware businesses. Both divisions benefit from channel and market synergies.
Pebble Beach Systems provides state of the art products in automation, channel in a box and integrated channel technology, with scalable products designed for multichannel transmission, news, sports and interactive televisionandhas grown into a market leader in Europe and the Middle East. 
Pebble Beach Systems' strong financial performance has continued in 2015, as the business continued to gain traction in new markets, launch new products and strengthen its industry partnerships. 
In March, Pebble Beach Systems was awarded a landmark project with Al Jazeera Media Network supplying a system to unify the playout infrastructure, replacing the legacy solution and delivering advanced functionality. In May, German national public television broadcaster ZDF (Zweites Deutsches Fernsehen) completed the transfer of all of ZDF's ingest and playout across its five channels to Marina, Pebble Beach Systems' flagship automation solution.
In 2014, the Group announced a partnership with Harmonic Inc (Nasdaq: HLIT) ("Harmonic") to enable Harmonic to work with Pebble Beach Systems to sell packages to the international broadcast market, supported by Harmonic's channels to market. This partnership is making strong progress and, reflecting the anticipated sales cycle lead time, we are now seeing momentum in project wins.
Encouraging progress has been made by Pebble Beach Systems in North America where the focused sales activities, leveraging both the Harmonic partnership and wider Vislink organisations in this market, are delivering key opportunities. 
Pebble Beach Systems demonstrates that the Group's Software strategy is on track, giving good growth prospects, better operating margins and the benefit of improved visibility of earnings. 
Vislink Communication Systems ("VCS") has continued to make strong progress both in terms of margin improvement, restructuring the organisation and evolving stronger industry partnerships. This has been achieved against a background ofchallenging conditions in its core markets, which also continued to witness longer decision making cycles. There is considerable on-going evolution within the broadcast hardware technology industry with the increase in market appetite for increased flexible live "Points of View", greater use of IP solutions and the ever increasing demands for video content.
Early in 2014, VCS won a multimillion pound contract in public safety for the Home Office in the UK, which contributed significantly to order intake in H1 2014 and to revenue and operating profit in 2014. The project was successfully completed in H1 2015 and provides an active demonstration of the capabilities of the core product portfolio for the surveillance and public safety market.
VCS has been able to reduce costs in its manufacturing base by both consolidation of manufacturing operations and outsourcing the manufacture of established products to third parties. This brings the benefit of both a lower fixed cost base and flexibility to expand production as market needs generate demand. VCS has continued to build value around its core products by investing in new products which have been launched into the marketplace.
In April 2015, in conjunction with GoPro, we announced the launch of HEROCastTMat NAB (National Association of Broadcasters) show 2015, the major broadcast trade show. HEROCastTMis a miniature transmitter that allows GoPro HERO3+BlackTMand HERO4TMcameras to broadcast live, HD wireless video for the first time.It is Vislink's smallest, lightest, and most energy-efficient HD wireless transmitter and is expected to transform the broadcasting of live sports and other broadcasts and the HEROCastTMhas already been successfully used to broadcast NHL (National Hockey League) games. 
There has been an acceleration of interest in the launch of new 4K Ultra HD channels and services, which in turn is creating demand for the technology to support this exciting new video media.In August 2015Dorna Sports, in collaboration with BT Sport, produced live coverage of theMotoGP Octo British Grand Prix at Silverstone in 4K Ultra HD. This is the first time a MotoGP World Championship event has been covered live in 4K Ultra HD and included the use of the world's first live wireless 4K Ultra HD cameras, provided by Vislink.
Financial Results
Group revenue for the six months to 30 June 2015 was 26.6 million (H1 2014: 27.1 million). Orders received in the period were 28.2 million (H1 2014: 33.3 million). The order book at 30 June 2015 was 7.1 million (31 December 2014: 5.0 million). 
The Group's gross margin improved by 8.4 percentage points to 51.2 per cent (H1 2014: 42.8 per cent). Vislink Communication Systems saw a significant improvement in gross margin, benefiting from the restructuring of its manufacturing capability, andGroup's gross margin benefitted from the increasing contribution of software revenues from Pebble Beach Systems.
Overheads remained in line with expectations with the total overheads increasing to 11.5 million (H1 2014: 9.9 million) due to H1 2015 containing a full six months of Pebble Beach Systems' overheads, compared with three and a half months in the same period last year. R&D expenditure increased reflecting both the Group's investments in products and the full six months of costs in Pebble Beach Systems. 
The adjusted operating profit was 2.2 million (H1 2014: 1.7 million) before charging 1.2 million in respect of the amortisation of acquired intangibles (H1 2014: 0.9 million) and 1.7 million of non-recurring items (H1 2014: a credit of 1.3 million). 
The reported loss before tax was 0.9 million (H1 2014: profit 2.0 million). The reported loss has arisen due to non-recurring restructuring costs in the Hardware division of 1.7 million in the period. On a comparative basis, H1 2014 benefited from a non-recurring 2.0m release of deferred consideration in respect of the acquisition of Amplifier Technology in 2013. 
Net finance costs have increased this year reflecting a full 6 months of interest on the Group's 7.0 million Revolving Credit Facility ("RCF") and 3.0 million term loan facility which were utilised in part to finance the acquisition of Pebble Beach Systems.
At the half year, the Group held inventory of 14.1 million, up 17.0 per cent on the same period in the prior year (H1 2014: 12.1 million), trade and other receivables of 12.0 million, up 2.5 per cent on the same period in the prior year (H1 2014: 11.7 million) and trade and other payables of 12.9 million, down 20.7 per cent on the same period in the prior year (H1 2014: 16.3 million).
The Group held cash of 6.2 million at 30 June 2015 and taken together with the outstanding debt of 7.4 million, there was a net debt position of 1.2 million (H1 2014: 0.3 million). The cash inflow from operating activities in the period was 0.1 million (H1 2014: 5.5 million) reflecting an investment in working capital to underpin future growth.
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 1.6 million (H1 2014: 9.4 million) which comprised net capital expenditure and the capitalisation of development costs. In H1 2014 investing activities included a 7.0 million net outflow in respect of the acquisition of Pebble Beach Systems.
On 30 June 2015, the Group restructured its existing debt facilities and replaced the original 7.0 million RCF facility and 3.0 million term loan with a 10.0 million RCF facility, to provide greater flexibility.
Earnings per Share
The adjusted earnings per share for the period was 1.6p (H1 2014: 1.2p). After charging non-recurring costs and the amortisation of acquired intangibles, the reported earnings/(loss) per share from continuing operations was (0.4)p (H1 2014: 1.7p). 
Dividends
As part of the Group's progressive dividend policy, the Board proposed that the full year dividend in respect of the year ended 31 December 2014 increase by 20 per cent to 1.50 pence per share (2014: 1.25 pence per share). This was approved at the Group's Annual General Meeting and the final dividend was paid to shareholders on 17 July 2015. As in previous years, the Board is not declaring an interim dividend. 
Business Performance 
The table below sets out the key performance indicators that are used by management to measure the performance in the business. 
Performance for the six months ended 30 June
2015
2014
Change
FY 2014
Continuing business:
Orders received (m)
28.2
33.3
(15.2)%
61.4
Revenue (m)
26.6
27.1
(1.8)%
61.9
Book to bill ratio
106.0%
122.8%
(13.7)%
99.1%
Gross margin
51.2%
42.8%
+19.4%
45.9%
Total operating costs (m)1
13.4
13.2
+1.0%
27.5
Adjusted operating profit (m)2
2.2
1.7
+25.9%
7.2
Adjusted earnings per share 2
1.6p
1.2p
+33.3%
4.1p
1 Operating costs comprise sales and marketing expenses, administrative expenses, the costs associated with logistics (presented within Cost of sales) and R&D and excludes amortisation of acquired intangibles and non-recurring items. 
2 Defined as operating profit/(loss) before the amortisation of acquired intangibles and other non-recurring costs. Adjusted EPS is calculated on the same basis after taking account of related tax effects.
Our Markets 
Orders received from our broadcast market were up 19.1 per cent to 25.6 million (H1 2014: 21.5 million). In the Group's Hardware division, Broadcast order intake was up 18.1 per cent to 22.1 million. Hardware surveillance orders were down 78.0 per cent to 2.6 million (H1 2014: 11.8 million). This reduction reflects the strong comparatives in 2014, which included the Home Office contract order.
Group Broadcast revenues increased 5.9 per cent to 22.3 million (H1 2014: 21.1 million). The software revenue was ahead of expectations in the period, moving 17.0 per cent ahead of budget, supported by our partnership with Harmonic. Group Surveillance revenue decreased by 28.3 per cent to 4.3 million (H1 2014: 6.0 million). 
Revenue by market
H1 2015
H1 2014
Change
FY 2014
m
m
%
m
Broadcast:
UK & Europe
6.3
8.3
(23.7)%
15.5
Americas
10.8
7.4
45.9%
17.9
Middle East and Africa
3.3
2.7
23.2%
5.4
Asia/Pacific
1.9
2.7
(30.1)%
7.2
Broadcast 
22.3
21.1
5.9%
46.0
Surveillance 
4.3
6.0
(28.7)%
15.9
Total
26.6
27.1
(1.8)%
61.9
Divisional operations
H1 2015
H1 2014
Change
FY 2014
m
m
% 
m
Revenues 
Vislink Communication Systems
21.2
24.0
(12.0)%
53.6
Pebble Beach Systems
5.4
3.1
78.2%
8.3
Total revenue
26.6
27.1
(1.8)%
61.9
Adjusted operating profit
Vislink Communication Systems
1.9
1.8
5.4%
5.9
Pebble Beach Systems
1.8
1.1
60.5%
3.3
Central costs
(1.5)
(1.2)
29.0%
(2.0)
Total adjusted operating profit 
2.2
1.7
25.9%
7.2
Principal risks and uncertainties 
The principal risks and uncertainties affecting the business activities of the Group remain those detailed on pages 41 of the 2014 Annual Report, a copy of which is available on the Group website at www.vislink.com. The Board considers that these remain 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 2014 and is described in detail in the 2014 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. The principal exchange rates used in the preparation of this condensed consolidated half year financial information are provided in note 13. 
Strategy and Outlook
Our strategy to continue to develop our core competence in high quality video Scene to Screen solutions while seeking to generate an increased proportion of our revenues from higher margin software business is progressing well.
We remain committed to our customer centric, solution-led and best-in-class products which enable the Group to successfully capture new business and deliver through key partnerships.
The Board believes that the Group is well placed to benefit from macro drivers in the sectors in which it operates. These include the increased demand for the higher image qualities of HD and Ultra HD video, the increasing opportunities for live Points of View and the acceleration of End to End IP technologies. 
A key focus of the Group is to expand its software offerings, which will enhance its solutions and grow its recurring revenues. The partnership with Harmonic is providing additional sales channels in key geographic markets. 
We have an improved product range for the hardware market and have seen an increase in underlying broadcast orders. Vislink Communication Systems now has a significantly reduced cost base and is more efficient in accessing new product opportunities, and this is expected to contribute towards improved trading in the second half of 2015. Our improving order pipeline underpins this outlook. 
We continue to transform the Group. As our software offering grows we will enhance visibility of earnings and margins, and remain completely aligned to our shareholders' objectives of delivering long term profitable growth.
The Group enters the second half of 2015 with renewed confidence with the expansion of our ever increasing software portfolio and a more efficient integrated communication division.
John Hawkins
Executive Chairman 
CONSOLIDATED GROUP INCOME STATEMENT 
For the six months ended 30 June 2015
Six months to 30 June 2015
Six months to 30 June 2014
Year ended 31 December 2014
(Unaudited)
(Unaudited)
(Audited)
Notes
000
000
000
Continuing operations
Revenue
4
26,631
27,111
61,931
Cost of sales
(13,009)
(15,503)
(33,519)
Gross profit
13,622
11,608
28,412
Sales and marketing expenses
(4,511)
(4,300)
(8,817)
Research and development costs
(2,811)
(2,198)
(5,558)
Administrative costs
(4,136)
(3,391)
(6,833)
Other (expenses)/income
(2,942)
355
(1,692)
Operating (loss)/profit
4
(778)
2,074
5,512
Operating (loss)/profit is analysed as:
Adjusted operating profit
2,164
1,719
7,204
Amortisation of acquired intangibles
(1,209)
(906)
(2,630)
Non-recurring items
5
(1,733)
1,261
938
Finance costs - net
(103)
(51)
(145)
(Loss)/profit before taxation
(881)
2,023
5,367
Taxation
6
422
(13)
(1,623)
(Loss)/profit for the period attributable to equity shareholders
(459)
2,010
3,744
Basic earnings per share
8
(0.4)p
1.7p
3.2p
Diluted earnings per share
There is no difference between basic and diluted earnings per share (note 8).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2015
Six months to 30 June 2015
Six months to 30 June 2014
Year ended 31 December 2014
(Unaudited)
(Unaudited)
(Audited) 
000
000
000
(Loss)/profit for the period
(459)
2,010
3,744
Items that may subsequently be reclassified to profit or loss:
Exchange difference on translation of foreign currency net investments
(17)
(333)
483
Total comprehensive (expense)/income for the period 
(476)
1,677
4,227
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the six months ended 30 June 2015
Share Capital
Share premium account
Capital redemption reserve
Merger reserve
Translation reserve
Retained earnings
Total 
000
000
000
000
000
000
000
Balance at 1 January 2015
3,066
6,800
617
32,448
4,437
9,459
56,827
Purchase of own shares
-
-
-
-
-
(5)
(5)
Share based payments: value of employee services
-
-
-
-
-
287
287
Dividends payable
-
-
-
-
-
(1,830)
(1,830)
Transactions with owners
-
-
-
-
-
(1,548)
(1,548)
Retained loss for the period
-
-
-
-
-
(459)
(459)
Exchange difference on translation of foreign currency net investments
-
-
-
-
(17)
-
(17)
Total comprehensive expenditure for the period 
-
-
-
-
(17)
(459)
(476)
Balance at 30 June 2015
3,066
6,800
617
32,448
4,420
7,452
54,803
Balance at 1 January 2014
2,848
4,900
617
30,565
3,954
6,718
49,602
Issue of share capital
117
-
-
1,883
-
-
2,000
Share based payments: value of employee services
-
-
-
-
-
198
198
Dividends payable
-
-
-
-
-
(1,471)
(1,471)
Transactions with owners
117
-
-
1,883
-
(1,273)
727
Retained profit for the period
-
-
-
-
-
2,010
2,010
Exchange differences on translation of foreign currency net investments
-
-
-
-
(333)
-
(333)
Total comprehensive income for the period 
-
-
-
-
(333)
2,010
1,677
Balance at 30 June 2014
2,965
4,900
617
32,448
3,621
7,455
52,006
Balance at 1 January 2014
2,848
4,900
617
30,565
3,954
6,718
49,602
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)
Transactions with owners
218
1,900
-
1,883
-
(1,003)
(2,998)
Retained profit for the year
-
-
-
-
-
3,744
3,744
Exchange differences on translation of overseas operations
-
-
-
-
483
-
483
Total comprehensive income for the period 
-
-
-
-
483
3,744
4,227
Balance 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 30 June 2015
Notes
Six months to 30 June 2015
Six months to 30 June 2014
Year ended 31 December 2014
(Unaudited)
(Unaudited)
(Audited) 
000
000
000
Assets
Non-current assets
Intangible assets
9
42,648
43,885
43,683
Property, plant and equipment
9
2,268
2,579
2,665
Deferred tax assets
3,786
2,746
3,712
48,702
49,210
50,060
Current assets
Inventories
14,107
12,061
12,884
Trade and other receivables
11,958
11,670
15,956
Current tax assets
66
-
-
Cash and cash equivalents
10
6,180
7,749
8,380
32,311
31,480
37,220
Liabilities
Current liabilities
Financial liabilities-borrowings
10
7,400
5,000
5,600
Trade and other payables
12,938
16,322
15,810
Current tax liabilities
-
184
747
Provisions for other liabilities and charges
11
733
846
280
21,071
22,352
22,437
Net current assets
11,240
9,128
14,783
Non-current liabilities
Financial liabilities-borrowings
10
-
3,000
2,400
Deferred tax liabilities
5,139
3,268
5,338
Provisions for other liabilities and charges 
11
-
64
278
5,139
6,332
8,016
Net assets
54,803
52,006
56,827
Shareholders' equity
Ordinary shares
3,066
2,965
3,066
Share premium account
6,800
4,900
6,800
Capital redemption reserve
617
617
617
Merger reserve
32,448
32,448
32,448
Translation reserve
4,420
3,621
4,437
Retained earnings
7,452
7,455
9,459
Total shareholders' equity
54,803
52,006
56,827
Approved by the Board on 16 September 2015 and signed on its behalf by:
John Hawkins
Executive Chairman 
Ian Davies
Group Finance Director 
CONSOLIDATED GROUP CASH FLOW STATEMENT 
For the six months ended 30 June 2015
Notes
Six months to 30 June 2015
Six months to 30 June 2014
Year ended 31 December 2014
(Unaudited)
(Unaudited)
(Audited)
000
000
000
Cash flows from operating activities
Cash generated from operations
12
829
5,610
7,999
Interest paid
(107)
(69)
(169)
Taxation paid
(641)
(81)
(102)
Net cash generated from operating activities
81
5,460
7,728
Cash flows from investing activities
Interest received
4
14
24
Acquisition of subsidiary (net of cash acquired)
-
(7,004)
(7,003)
Proceeds from sale of property, plant and equipment
458
-
1
Purchase of property, plant and equipment
9
(359)
(440)
(919)
Expenditure on capitalised development costs
9
(1,737)
(1,999)
(3,647)
Net cash used in investing activities
(1,634)
(9,429)
(11,544)
Cash flows from financing activities
Net proceeds from new bank loans
10
-
8,000
8,000
Repayment of bank loans
10
(600)
-
-
Dividend paid to shareholders
-
-
(1,473)
Proceeds on (purchase)/issue of shares
(5)
-
2,000
Net cash (used)/generated in financing activities
(605)
8,000
(8,527)
Net (decrease)/increase in cash and cash equivalents
(2,158)
4,031
4,711
Cash and cash equivalents at beginning of period
8,380
3,705
3,705
Effect of foreign exchange rate changes
10
(42)
13
(36)
Cash and cash equivalents at end of period 
10
6,180
7,749
8,380
NOTES TO THE HALF YEAR FINANCIAL INFORMATION
For the six months ended 30 June 2015
1. GENERAL INFORMATION
Vislink plc ("the Company") and its subsidiaries (together "the Group") is a 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 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 54 million and continues to invest in innovation. 
The Company is a public limited company, which 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 2014 were approved by the Board of Directors on 24 March 2015 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 16 September 2015.
2. BASIS OF PREPARATION
This condensed consolidated half year financial information for the six months ended 30 June 2015 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 2014, 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.
3. ACCOUNTING POLICIES

The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2014, 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 2015 is as follows:
Vislink Communication Systems
Pebble Beach Systems
TOTAL CONTINUING OPERATIONS
H1 2015
H1 2014
FY 2014
H1 2015
H1 2014
FY 2014
H1 2015
H1 2014
FY 2014
m
m
m
m
m
m
m
m
m
Revenue
21,171
24,047
53,639
5,460
3,064
8,292
26,631
27,111
61,931
Operating profit:
Adjusted operating profit
1,851
1,757
5,938
1,847
1,151
3,298
3,698
2,908
9,236
Central costs
(1,534)
(1,189)
(2,032)
Group adjusted operating profit
2,164
1,719
7,204
Amortisation of acquired intangibles
(506)
(502)
(2,630)
(703)
(404)
-
(1,209)
(906)
(2,630)
Non-recurring items
(1,717)
(443)
(889)
-
-
-
(1,717)
(443)
(889)
Central non-recurring items
-
-
-
-
-
-
(16)
1,704
1,827
Group total operating (loss)/profit
(372)
812
2,419
1,144
747
3,298
(778)
2,074
5,512
Finance income/(costs) - net
(4)
(42)
(432)
3
10
19
(1)
(32)
(413)
Central finance income/(costs) - net
-
-
-
-
-
-
(102)
(19)
268
(Loss)/profit before tax
(376)
770
1,987
1,147
757
3,317
(881)
2,023
5,367
GEOGRAPHIC REVENUE ANALYSIS BY DESTINATION
Six months to 30 June 2015
Six months to 30 June 2014
Year ended 31 December 2014
(Unaudited)
'000
(Unaudited)
'000
(Audited) 
'000
UK & Europe
8,967
12,773
27,468
Americas
12,340
8,687
21,518
Middle East and Africa
3,288
2,716
5,500
Asia/Pacific
2,036
2,935
7,445
26,631
27,111
61,931
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.
NET ASSETS
Six months to 30 June 2015
Six months to 30 June 2014
Year ended 31 December 2014
(Unaudited)
'000
(Unaudited)
'000
(Audited)
'000
Vislink Communication Systems
50,913
48,253
50,129
Pebble Beach Systems
11,307
13,656
13,726
Segment net assets
62,220
61,909
63,855
Group net assets
(7,417)
(9,903)
(7,028)
54,803
52,006
56,827
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.
Six months to 30 June 2015
Six months to 30 June 2014
Year ended 31 December 2014
(Unaudited)
(Unaudited)
(Audited)
000
000
000
Rationalisation and redundancy costs
1,717
443
722
Provision release against contractual issues
-
-
(2)
Costs associated with the transfer to the AIM market
-
-
72
Acquisition related costs
16
296
270
Deferred consideration release
-
(2,000)
(2,000)
Total non-recurring items
1,733
(1,261)
(938)
The rationalisation and redundancy costs reflect the non-recurring costs of the restructure in Vislink Communication Systems, this is now largely complete. 
6. TAX ON PROFIT ON ORDINARY ACTIVITIES
Six months to 30 June 2015
Six months to 30 June 2014
Year ended 31 December 2014
(Unaudited)
(Unaudited)
(Audited)
000
000
000
Current tax:
UK corporation tax 
(178)
76
585
Foreign tax
-
5
74
Total current tax
(178)
81
659
Deferred tax: 
UK corporation tax
(180)
(148)
112
Foreign tax
(64)
80
837
Adjustments in respect of prior years
-
-
15
Total deferred tax
(244)
(68)
964
Total taxation charge
(422)
13
1,623
The tax charge for the six months ended 30 June 2015 is based on the full year estimated effective tax rate of 7.8 per cent which is significantly lower than the standard rate principally due to the utilisation of tax losses. 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 2014 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 2015 and paid on 17 July 2015. 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 121,844,000 ordinary shares in issue during the period (30 June 2014: 115,803,000 and 31 December 2014: 117,797,000).
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 2015 there were 2,756,000 dilutive share options (30 June 2014: 170,000 and 31 December 2014: 2,453,000). The effect of dilutive shares was not material and therefore there is no difference between basic earnings per share and diluted earnings per share.
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:
Six months to 
Six months to 
Year ended
30-Jun-15
30-Jun-14
31-Dec-14
Pence per share 
Pence per share 
Pence per share
000
000
000
Reported earnings per share
(459)
(0.4)
2,010
1.7
3,744
3.2
Amortisation of acquired intangibles after tax
1,020
0.8
758
0.7
2,209
1.9
Non-recurring costs after tax
1,382
1.2
(1,420)
(1.2)
(1,093)
(1.0)
Adjusted earnings per share
1,943
1.6
1,348
1.2
4,860
4.1
9. PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
Six months to 30 June 2015
Six months to 30 June 2014
Year ended 31 December 2014
(Unaudited)
(Unaudited)
(Audited)
000
000
000
Property, plant and equipment
Opening net book value as at 1 January 
2,665
2,430
2,430
Additions
359
440
919
Acquisitions through business combinations
-
162
162
Disposals
(341)
-
(1)
Depreciation 
(421)
(431)
(886)
Exchange adjustment
6
(22)
41
Closing net book value
2,268
2,579
2,665
Intangible assets
Capitalised development costs
Opening net book value as at 1 January 
9,441
7,569
7,569
Additions
1,737
1,999
3,647
Amortisation 
(1,411)
(800)
(2,092)
Exchange adjustment
(37)
(161)
317
Capitalised development costs closing net book value
9,730
8,607
9,441
Goodwill and acquired intangible assets 
Opening net book value as at 1 January 
34,242
25,464
25,464
Additions
-
7,844
7,986
Additions through business combinations
-
3,076
3,076
Disposals
(66)
-
-
Amortisation 
(1,210)
(906)
(2,130)
Impairment charge
-
-
(500)
Exchange adjustment
(48)
(200)
346
Goodwill and acquired intangible assets closing net book value
32,918
35,278
34,242
Total closing net book value of intangible assets
42,648
43,885
43,683
10. CASH, BORROWINGS AND LOANS
The movements in cash and cash equivalents (net of overdrafts), borrowings and loans in the period were as follows:
 
Net cash and cash equivalents
Other borrowings
Total net cash
000
000
000
Six months ended 30 June 2015
At 1 January 2015
8,380
(8,000)
380
Cash flow for the period before financing 
(1,558)
-
(1,558)
Movement in borrowings in the period
(600)
600
-
Exchange rate adjustments
(42)
-
(42)
At 30 June 2015
6,180
(7,400)
(1,220)
Six months ended 30 June 2014
At 1 January 2014
3,705
-
3,705
Cash flow for the period before financing and acquisition of subsidiary
3,035
-
3,035
Purchase of subsidiary
(13,093)
-
(13,093)
Cash acquired with subsidiary
6,089
-
6,089
Movement in borrowings in the period
8,000
(8,000)
-
Exchange rate adjustments
13
-
13
At 30 June 2014
7,749
(8,000)
(251)
Year ended 31 December 2014
At 1 January 2014
3,705
-
3,705
Cash flow for the period before financing and acquisition of subsidiary
3,188
-
3,188
Purchase of subsidiary
(13,093)
-
(13,093)
Cash acquired with subsidiary
6,089
-
6,089
Repayment of borrowings
8,000
(8,000)
-
Dividend paid to shareholders
(1,473)
-
(1,473)
Proceeds on issues of shares
2,000
-
2,000
Exchange rate adjustments
(36)
-
(36)
At 31 December 2014
8,380
(8,000)
380
The Group held cash of 6.2 million at the period-end and taken together with the outstanding debt of 7.4 million, there was a net debt position of 1.2 million. 
11. PROVISIONS FOR OTHER LIABILITIES AND CHARGES
Six months to 30 June 2015
Six months to 30 June 2014
Year ended 31 December 2014
(Unaudited)
(Unaudited)
(Audited)
000
000
000
Warranty provision
269
340
270
Property provision 
171
323
288
Rationalisation provision
293
247
-
733
910
558
Amounts due within one year
733
846
280
Amounts due after one year
-
64
278
733
910
558
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 is in respect of vacated leasehold properties acquired as part of the Gigawave acquisition and represents the estimated future liabilities associated with the properties.
Rationalisation provisions are in respect of future liabilities for committed reorganisation costs at the statement of financial position dates.
12. NOTES TO THE CASH FLOW STATEMENT 
Net cash flow from operating activities comprises:
Six months to 30 June 2015
Six months to 30 June 2014
Year ended 
31 December 2014
(Unaudited)
(Unaudited)
(Audited)
000
000
000
(Loss)/profit before tax 
(881)
2,023
5,367
Depreciation
421
431
886
(Profit)/loss on disposal of property, plant and equipment
(50)
-
-
Acquisition related costs
-
227
224
Release of deferred consideration no longer payable
-
(2,000)
(2,000)
Amortisation and impairment of development costs
1,411
800
2,092
Amortisation of acquired intangibles
1,209
906
2,630
Share based payment expenses
287
198
500
Finance income from continuing operations
(4)
-
(24)
Finance costs from continuing operations
107
-
169
Increase in inventories
(1,258)
(1,092)
(1,268)
Decrease/(increase) in trade and other receivables 
712
1,563
(2,233)
(Decrease)/increase in payables 
(1,301)
2,344
1,807
(Decrease)/increase in provisions
176
210
(151)
Net cash inflow from operating activities
829
5,610
7,999
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.
Six months to 30 June 2015
Six months to 30 June 2014
Year ended 31 December 2014
(Unaudited)
(Unaudited)
(Audited)
Average rate for the period
US dollar
1.5151
1.6690
1.648
Period end rate
US dollar
1.5729
1.7097
1.561
Independent review report to Vislink plc
Introduction
We have been engaged by the company to review the condensed consolidated half-year financial information in the half-yearly financial report for the six months ended 30 June 2015, which comprises the Consolidated Group Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in Shareholders Equity, Consolidated Group Statement of Financial Position, Consolidated Group Cash Flow Statement and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report 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.
As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the AIM Rules for Companies and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Scope of review
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.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2015 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the AIM Rules for Companies.
PricewaterhouseCoopers LLP
Chartered Accountants
16 September 2015
Bristol
Notes:
(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 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.

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