30th Aug 2007 07:00
Vislink PLC30 August 2007 Vislink plc Interim results for the six months ended 30 June 2007 Vislink plc ("The Group"), a leading supplier of microwave radio and satellitetransmission products for the broadcast and security markets and of CCTV systemsfor the marine security market has today announced its interim results for thesix months to 30 June 2007. Financial summary--------------------------- -------- -----------For the six months ended 30 June 2007 2006 £'000 £'000--------------------------- -------- -----------Revenue 46,152 50,764Operating profit 7,184 6,234Adjusted* operating profit 7,860 6,910Adjusted* operating margin 17.0% 13.6%Profit before taxation 6,967 6,076Earnings per share - basic 3.20p 2.73pAdjusted* earnings per share - basic 3.54p 3.08p--------------------------- -------- ----------- *Adjusted operating profit is operating profit before the amortisation ofacquired intangibles. Adjusted earnings per share are calculated on the samebasis. Highlights: • Good progress made with the strategic development of the core operations • Adjusted* operating profit increased by 13.7% to £7.86 million (2006 - £6.91 million) • Adjusted* operating margin increased to 17.0% (2006 - 13.6%) • Revenues increased by 1.1% (at constant exchange rates and excluding the Venezuelan contract sales) • Revenues were £46.15 million (2006 - £50.76 million) • Adjusted* earnings per share increased by 14.9% to 3.54 pence (2006 - 3.08 pence) • Net cash inflow generated from operations in the period was £5.33 million (2006 - £6.57 million) • The Group ended the period with net cash of £4.16 million (31 December 2006 - £3.91 million) • The Group announced on 30 July 2007 the acquisition of Focus Communications, Inc. • Forward order book of £32.6m • Encouraging trading since the period end Tim Trotter, Chairman of Vislink said: "The Group has achieved a record half year operating profit. The order flow hascontinued to improve into the second half and we have made our first investmentto create a Technical Services business in the US market. The Board isencouraged by current trading and continues to look forward to the rest of theyear with confidence." - ends - For further information on 30 August 2007, please contact: Ian Scott-Gall, Chief Executive 01488 685500 James Trumper, Group Finance Director 01488 685500 Andrew Hayes / James White 0207 796 4133 Hudson Sandler Chairman and Chief Executive's StatementResults for six months to 30 June 2007 Introduction Our strategy remains the delivery of increasing shareholder value by acquisitionand by building on our market leading positions in the broadcast and marinesafety markets whilst increasing our capacity to capitalise on the growingdefence, law enforcement and security markets. We continue to seek earningsenhancing acquisitions that will strengthen and accelerate our growth into thebroadcast and defence, law enforcement and security markets. A significant opportunity for Vislink is the 2 GHz programme in the US domesticmarket. In exchange for being granted radio spectrum for their telecoms needs,Sprint/Nextel is required by the regulatory authorities to compress the existingBroadcast Auxiliary Service (BAS) spectrum into a smaller portion of the 2GHzradio spectrum. This compression requires the use of digital equipment andSprint/Nextel is obliged to replace all 2GHz analogue microwave systems withStandard Definition digital systems on a like-for-like basis. This programme continues to grow in size and opportunity, with it increasing toan estimated US $400 million for equipment and US $200 million for Services. Itis expected to run well into 2009. MRC has now received cumulative purchaseorders of US $180 million for equipment under this programme. The Servicessector of this programme offers significant additional revenues under theGroup's strategy to acquire and build its Technical Services business. Financial results The Group has made good progress with both its strategy and its core operations.The Group's adjusted* operating margin has improved to 17.0% of revenues (2006 -13.6%) generating a 14.9% increase in adjusted* earnings per share.The order intake for the period grew by 3.7%, excluding the effects of foreignexchange and orders associated with the completed legacy Venezuelan contract.The headline order intake for the period was £46.13 million (2006 - £49.16million). On the same basis, organic revenues increased 1.1%. Headline revenueswere £46.15 million (2006 - £50.76 million) after the adverse impact of foreignexchange on translation of £3.02 million and comparatively lower Venezuelancontract sales of £2.10 million. The Group has continued to increase its operating profits. The adjustedoperating profit being operating profit from continuing operations before theamortisation of acquired intangibles, increased by 13.7% to £7.86 million (2006- £6.91 million). This increase is after an adverse impact from foreign exchangeon translation of £0.53 million. Operating profits from continuing operationswere up by 15.2% to £7.18 million (2006 - £6.23 million). The Group's profitsfrom continuing activities after interest charges but before tax were up by14.7% at £6.97 million (2006 - £6.08 million). The Group net cash inflow generated from operations was £5.33 million (2006 -£6.57 million). The Group net cash was £4.16 million as at 30 June 2007 (31December 2006 - £3.91 million). Earnings Per Share The reported basic undiluted earnings per share for the period were 3.20 pence(2006 - 2.73 pence). After adjusting for the amortisation of acquiredintangibles, the Group's adjusted earnings per share increased 14.9% to 3.54pence (2006 - 3.08 pence). Dividends As in previous years the Board is not recommending an interim dividend. Business Review US RF business MRC, the US business, increased its orders by 10.3% in local currency. Salesrevenues were 3.5% lower. The slight reduction in revenue was due to sales beingdeferred to the second half when several new products that had been developedfor the broadcast market and in particular the 2GHz re-channelisation programme,entered production. Reported sales, after the effect of adverse foreign exchangetranslation, were 12.9% lower at £26.27 million (2006 - £30.16 million). As aresult of the lower sales and increased investment for the DLES marketsoperating profits were 11.1% lower in local currency and the reported operatingprofit was £4.64 million (2006 - £5.74 million).The US domestic broadcast market remains strong with demand continuing to bedriven by the 2Ghz re-channelisation programme for which MRC launched two newkey products at the NAB exhibition in April. Progress continues to be made indeveloping the US defence and law enforcement markets. UK RF business The UK business comprises the Advent satellite communications business, the Linkwireless camera business and the legacy Venezuelan (VTV) contract. Revenues forthe UK RF business were £18.42 million (2006 - £20.28 million) including£2.02million (2006 - £4.12 million) for the VTV contract, which has beencompleted. With the elimination of previous losses on the VTV contract andimproved margins, the adjusted operating profit increased to £3.27 million (2006- £1.83 million) before the £0.68 million amortisation of acquired intangiblesin respect of the acquisition of Link (2006 - £0.68 million). Advent continues to trade profitably although the market for satellite productshas been slow in the first half. Link continues to benefit from the sale of HighDefinition (HD) products in both Europe and Asia as well as from both standardand high definition sales related to the 2GHz re-channelisation programme in theUS via MRC. Link has received the internationally recognised Queen's Award forInternational Trade during the period, adding to their success in 2004 when theywon the Queen's Award for Enterprise: Innovation. Prospects for the UK RF business in the second half are encouraging. Severalsignificant orders have recently been won including a £4.3 million order from aEuropean broadband satellite services provider for a large fixed earth stationproject and an £1.23 million order from the DLES market in Asia. Furtherinternational expansion for the UK business is planned with the opening of anoffice in Dubai to increase distribution into the Middle East and Africa, inaddition to the Singapore regional office shared with Hernis. Hernis Hernis has performed ahead of expectations with another record period. Ordersincreased by 8.4% and revenues increased by 52.2% over 2006, in local currency.Orders received were £9.10 million (2006 - £8.75 million) and revenues were upby 45.6% to £8.44 million (2006 - £5.80 million). Operating profits increased by89.0% to £1.38 million (2006 - £0.73 million) and exceeded the full yearoperating profit achieved in 2006. The local Norwegian offshore market for Hernis has been particularly strong,with sales increasing from £1.88 million in 2006 to £3.78 million. In additionthe Singapore operation has also seen growth in both business and personnel.Hernis continues to benefit from demand for exploration and transportation inthe oil and gas markets and is set to expand its local facilities in Norway tomeet the increased levels of business. Acquisitions On 30 July 2007 we announced the acquisition of Focus Communications, Inctrading as Western Technical Services ("WTS") for a maximum cash consideration,dependent on performance, of US $5.5 million (£2.7million). A key part of theGroup's strategy is to create incremental long-term recurring revenueopportunities by building a US Technical Services business through both organicand acquisition led growth. The acquisition of WTS will enhance service revenuesfrom the 2GHz re-channelisation programme and the DLES markets, as well asproviding the prospect of recurring revenues as the broadcast customers movetowards contracted out services. This provides the Group with a stepping-stonetowards being able to provide full "turnkey" project management and integrationservices in the US, utilising the strength of our market leading products. DLES markets DLES sales in the period were 10.6% of Group sales at £4.88 million. Investmenthas continued into the DLES market, both in terms building dedicated teams inboth the US and UK, product development and establishing new channels to market.Further personnel will be recruited in the third quarter to support the DLESgrowth strategy. Recent successes include the delivery of the first part of a military project byAdvent for twelve mobile satellite terminals, with a second order being receivedfor delivery later this year, to a leading European defence system integrator.MRC's multi-band video microwave equipment was chosen by the New Jersey StatePolice (NJSP) for their state-wide video and communications upgrade. MRC'ssystems gave the NJSP the capability of receiving airborne generated live videofeeds from any NJSP or New Jersey National Guard aircraft operating anywhereover the state for homeland security, law enforcement and emergency response. The second half has started well with DLES orders from the Asian and US markets.Link has announced the launch of its strategic video surveillance systemdesigned principally for government security agencies and military deploymentfor use in urban environments. Prospects The prospects for the remainder of the year are encouraging. The Group had aforward order book at 30 June of £32.6 million (31 December 2006 - £34.7million). Our RF businesses are all expected to continue to benefit from the introductionof new products for the strong growth opportunity created by the move fromStandard Definition (SD) to HD within the professional broadcast market. MRChave introduced new radio platforms that give the ability to support both SD andHD utilising the Link IPR and a new expandable central receive diversity systemthat supports single or multi-site architectures for SD and HD ENG and outsidebroadcast applications. Link's new HD wireless camera radio system is now inproduction. Advent has seen increased demand for its larger vehicle basedantennas to be used for HD sports broadcasts. The US broadcast market will continue to benefit from the 2GHz re-channelisationprogramme over the next two years. The acquisition of WTS will increase theGroup's revenues from the programme through the provision of integrationservices to the programme as well as the DLES market. In the internationalbroadcast market the RF businesses are all seeing an increased level ofopportunities going into the second half. Across the Group the level of DLES opportunities and quoting activity hasincreased. With new product introductions in the second half prospects for theremainder of the year are encouraging. Demand for Hernis systems from the marine and offshore markets is expected tocontinue to be strong as oil and gas exploration and extraction from harsherenvironments has been made economically viable by the higher oil prices. In summary, the Group has achieved a record half year operating profit. Theorder flow has continued to improve into the second half and we have made ourfirst investment to create a Technical Services business in the US market. TheBoard is encouraged by current trading and continues to look forward to the restof the year with confidence. THS Trotter, Chairman IH Scott-Gall, Chief Executive August 30, 2007 CONSOLIDATED GROUP INCOME STATEMENTfor the six months ended 30 June 2007 Six months Six months Year ended to 30 June to 30 June 31 December 2007 2006 2006 (Unaudited) (Unaudited) (Audited) Notes £'000 £'000 £'000Continuing operationsRevenue 2 46,152 50,764 100,498Cost of sales (26,932) (32,052) (63,053) --------- --------- ---------Gross profit 19,220 18,712 37,445Sales andmarketingexpenses (4,728) (5,591) (10,060)Research anddevelopmentcosts (2,839) (2,456) (5,398)Administrativecosts (4,440) (4,233) (8,757)Other expenses (29) (198) (291) --------- --------- ---------Operatingprofit 2 7,184 6,234 12,939------------------------ ------- --------- --------- --------- Operating profit is analysedas:Operatingprofit beforeamortisationof acquiredintangibles 6 7,860 6,910 14,303Amortisationof acquiredintangibles (676) (676) (1,364)------------------------ ------- --------- --------- ---------Finance costs 3 (301) (242) (505)Investmentincome 3 84 84 241 --------- --------- ---------Profit beforetaxation 6,967 6,076 12,675Taxation 4 (2,554) (2,363) (4,968) --------- --------- ---------Profit for theperiod beingprofitattributableto equityshareholders 4,413 3,713 7,707 --------- --------- --------- --------- --------- ---------Earnings pershareexpressed inpence pershare: 6 3.20p 2.73p 5.65p- basic 6 3.16p 2.68p 5.56p- diluted --------- --------- --------- Dividends No dividends have been declared and approved in respect of the six month periodsending 30 June 2007 and 30 June 2006 (see note 5). CONSOLIDATED STATEMENT OF CHANGES IN EQUITYfor the six months ended 30 June 2007 Six months to Six months to Year ended 31 30 June 30 June December 2007 2006 2006 (Unaudited) (Unaudited) (Audited) Notes £'000 £'000 £'000 Openingshareholders'equity 42,963 37,815 37,815 ---------- --------- --------- Profit for thefinancialperiod 4,413 3,713 7,707Share options- value ofemployeeservices 64 59 122Dividends 5 (1,380) (681) (681) ---------- --------- ---------Movements inthe profit andloss account 3,097 3,091 7,148Translationdifference onforeigncurrency netinvestments (260) (1,161) (2,578)Shares issued 34 66 518Disposal ofinvestment inown shares 19 60 60 ---------- --------- ---------Totalmovements inshareholders'equity 2,890 2,056 5,148 ---------- --------- ---------Closingshareholders'equity 45,853 39,871 42,963 ---------- --------- --------- CONSOLIDATED GROUP BALANCE SHEETas at 30 June 2007 30 June 30 June 31 December 2007 2006 2006 (Unaudited) (Unaudited) (Audited) Notes £'000 £'000 £'000 Assets Non-current assetsGoodwill 22,635 23,013 22,737Intangible assets 6,111 6,492 6,177Property, plant and 4,977 4,891 4,689equipmentInvestment in associates 188 - 182Financial assets - 109 -Deferred tax assets 1,093 929 991 --------- --------- --------- 35,004 35,434 34,776 --------- --------- ---------Current assets Inventories 16,112 15,973 14,466Trade and other receivables 18,467 14,023 18,463Net cash and cash 8 4,664 7,658 8,159equivalents --------- --------- --------- 39,243 37,654 41,088 --------- --------- ---------Liabilities Current liabilitiesFinancial liabilities -borrowings 8 - 235 1,750Trade and other payables 23,661 22,898 24,240Current tax liabilities 1,149 1,151 1,172Provisions for otherliabilities and charges 622 825 668 --------- --------- --------- 25,432 25,109 27,830 --------- --------- --------- --------- --------- ---------Net current assets 13,811 12,545 13,258 --------- --------- --------- Non-current liabilities Financial liabilities -borrowings 8 500 3,500 2,500Deferred tax liabilities 2,075 2,372 2,275Other non-current - 2,236 -liabilitiesProvisions for otherliabilities and charges 387 - 296 --------- --------- --------- 2,962 8,108 5,071 --------- --------- --------- --------- --------- ---------Net assets 45,853 39,871 42,963 --------- --------- ---------Shareholders' equityOrdinary shares 3,462 3,418 3,460Share premium account 4,864 4,422 4,832Investment in own shares (30) (49) (49)Merger reserve 30,565 30,565 30,565Translation reserve (4,126) (2,449) (3,866)Retained earnings 11,118 3,964 8,021 --------- --------- ---------Total shareholders' equity 45,853 39,871 42,963 --------- --------- --------- CONSOLIDATED GROUP CASH FLOW STATEMENTfor the six months ended 30 June 2007 Six months Six months Year ended to 30 June to 30 June 31 December 2007 2006 2006 (Unaudited) (Unaudited) (Audited) Notes £'000 £'000 £'000Cash flow from operatingactivitiesCash generatedfromoperations 7 5,333 6,569 13,558Interestreceived 84 84 241 Interest paid (177) (183) (309) Taxation paid (2,822) (2,325) (5,118) --------- --------- ---------Net cashgenerated fromoperatingactivities 2,418 4,145 8,372 --------- --------- --------- Cash flows from investingactivities Proceeds fromsale ofproperty,plant andequipment - 2 12Purchase ofproperty,plant andequipment (953) (1,063) (1,747)Expenditure oncapitaliseddevelopmentcosts (1,120) (869) (1,810)Investment inassociates - (66) (139) --------- --------- ---------Net cash(absorbed by)investingactivities (2,073) (1,996) (3,684) --------- --------- --------- Cash flows from financingactivities Net proceedsfrom issue ofordinary sharecapital 34 66 518Net proceedsfrom sale ofown shares 19 60 60Repayment ofborrowings -secured 8 (2,000) (3,678) (3,362)Repayment ofborrowings -unsecured 8 (1,750) (1,285) (1,836)Net proceedsfrom issue ofnew bank loan 8 - 3,500 2,500Dividend paidto shareholders - - (681) --------- --------- ---------Net cash(absorbed by)financingactivities (3,697) (1,337) (2,801) --------- --------- --------- Effect offoreignexchange ratechanges 8 (143) (276) (850) --------- --------- --------- Net(decrease)/increase in cashand cashequivalents (3,495) 536 1,037Cash and cashequivalents atbeginning ofperiod 8,159 7,122 7,122 --------- --------- ---------Cash and cashequivalents atend of period 8 4,664 7,658 8,159 --------- --------- --------- NOTES TO THE INTERIM ACCOUNTSfor the six months ended 30 June 2007 1. BASIS OF PREPARATION This interim report comprises the consolidated interim balance sheets as of 30June 2007 and 30 June 2006 and related consolidated interim statements of incomeand cash flows for the six months then ended. This interim report has been prepared in accordance with the Listing Rules ofthe Financial Services Authority. In preparing this financial informationmanagement has used the principal accounting policies as set out in the Group'sannual financial statements for the year ended 31 December 2006. The preparation of the financial information requires the use of estimates andassumptions that affect the reported amounts of assets and liabilities at thedate of the financial statements and the reported amount of revenues andexpenses during the reporting period. Although these estimates are based onmanagement's best knowledge of the amount, event or actions, actual resultsultimately may differ from these estimates. This interim report is unaudited and does not constitute audited accounts withinthe meaning of the Companies Act 1985. The accounts for the year ended 31December 2006, on which the auditors' opinion did not contain any statementsmade under either s237(2) or s237(3) of the Companies Act 1985, were prepared inaccordance with International Financial Reporting Standards and IFRICinterpretations, and have been filed with the Registrar of Companies. The Group has chosen not to adopt IAS 34, 'Interim financial statements', inpreparing its 2007 interim statements and, therefore, this interim financialinformation is not in compliance with IFRS. 2. SEGMENTAL ANALYSIS The Group's internal organisational and management structure and its system ofinternal financial reporting to the Board of Directors is based on thegeographical location of its businesses. These comprise three regions, the UK,the United States of America (US) and Norway. The UK comprises the RF businessesof Advent Communications satellite products, projects and the wireless camerasystems of Link. The US comprises the RF microwave radio business of MRC. Norwaycomprises the marine CCTV business of Hernis. The table below shows the analysis of Group external revenue, by geographiclocation. Revenue Operating Profit Six months to Six months to Year ended Six months to Six months to Year ended 30 June 30 June 31 December 30 June 30 June 31 December 2007 2006 2006 2007 2006 2006 (Unaudited) (Unaudited) (Audited) (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 £'000 £'000 £'000 By geographiclocationUK (note a) 18,420 20,276 37,393 2,600 1,150 2,731US 26,273 30,161 60,762 4,637 5,741 11,241Norway 8,444 5,798 13,094 1,375 725 1,318Central - - - (1,008) (1,026) (2,130)costsInter-segmental transactions (6,985) (5,471) (10,751) (420) (356) (221) -------- -------- --------- --------- -------- --------Group total 46,152 50,764 100,498 7,184 6,234 12,939 -------- -------- --------- --------- -------- -------- Notes: a) For the six months ended 30 June 2007 the UK operating profit is after charging £676,000 in respect of the acquired intangibles (six months to 30 June 2006 - £676,000 and year to 31 December 2006 - £1,364,000). Secondary format - geographical segments The Group manages its business segments on a global basis. The operations arebased in three main geographical areas. The UK is the home country of theparent. The operations are located geographically as described in the tableabove. The sales analysis in the tables below are based on the geographical location ofthe customer, product category and customer category. Geographic revenue analysis Six months to Six months to Year ended 31 30 June 2007 30 June 2006 December 2006 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000By market:UK & Ireland 2,810 3,847 6,274 Rest of Europe 7,276 4,367 11,756North America 24,361 26,397 54,574South America 3,895 5,338 8,865Middle East 1,121 3,132 6,639Asia 4,757 7,153 10,592Africa 1,237 151 642Other 695 379 1,156 -------- -------- -------- 46,152 50,764 100,498 -------------------------------- -------- -------- --------Analysis of revenue by productcategoryMicrowaveradio andwirelesscameraproducts 26,130 32,147 63,275Satelliteproducts 9,560 8,697 19,309Broadcastprojects 2,018 4,122 4,820Marine CCTVproducts 8,444 5,798 13,094 -------- -------- -------- 46,152 50,764 100,498 -------------------------------- -------- -------- --------Analysis of revenue by customercategoryBroadcasters 33,163 39,276 77,570Defence,security andlawenforcement 4,882 5,771 10,016Marine, oiland gas 8,107 5,612 12,773Other - 105 139 -------- -------- -------- 46,152 50,764 100,498 -------------------------------- -------- -------- -------- 3. FINANCE COSTS - NET Six months to Six months to Year ended 31 30 June 2007 30 June 2006 December 2006 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000Interestpayable onbank borrowing (124) (114) (236)Interestpayable onother loans (23) (16) (46) Unwinding ofinterestassociatedwith thediscounting ofdeferredconsideration (154) (112) (223) -------- -------- ---------Interest andsimilarchargespayable (301) (242) (505)Investmentincome 84 84 241 -------- -------- ---------Finance costs- net (217) (158) (264)-------------------------------- -------- -------- --------- 4. TAX ON PROFIT ON ORDINARY ACTIVITIES Six months to Six months to Year ended 31 30 June 2007 30 June 2006 December 2006 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000The tax chargefor the periodcomprises: 934 179 351UK corporation taxForeign tax 1,930 2,513 5,118 -------- -------- ---------Total currenttax 2,864 2,692 5,469 -------- -------- ---------Deferred tax: (310) (329) (264)UK corporation taxForeign tax - - (237) -------- -------- ---------Total deferredtax (310) (329) (501) -------- -------- ---------Total taxation 2,554 2,363 4,968-------------------------------- -------- -------- --------- The tax charge for the six months ended 30 June 2007 is based on the effectivetax rate, which it is estimated will apply to earnings for the full year. 5. DIVIDENDS No interim dividend is proposed for the period. In 2006 there was no interimdividend and the final dividend of 1.0 pence per share was approved at theAnnual General Meeting on 23 May 2007 and paid on 20 July 2007. 6. EARNINGS PER ORDINARY SHARE Earnings per share is calculated by reference to a weighted average of137,891,000 ordinary shares in issue during the period, excluding shares held bythe Employees' Share Ownership Plan (30 June 2006 - 135,912,000 and 31 December2006 - 136,495,000). The diluted earnings per share is after taking account of a further 1,656,000shares (30 June 2006 - 2,439,000; 31 December 2006 - 2,094,000) being thedilutive effect of share options. Adjusted earningsVislink believes that adjusted operating profit, adjusted profit before tax,adjusted earnings and adjusted earnings per share provide additional usefulinformation on trends to shareholders. Vislink uses these measures for internalperformance analysis and incentive compensation arrangements. The principaladjustment is in respect of the amortisation of acquired intangibles.The reconciliation between reported and adjusted earnings and basic earnings pershare is shown below: Six months to Six months to Year ended 30 June 2007 30 June 2006 31 December 2006 Earnings Basic EPS Earnings Basic EPS Earnings Basic EPS £'000 pence £'000 pence £'000 penceReportedearnings 4,413 3.20p 3,713 2.73p 7,707 5.65pAmortisationof acquiredintangiblesafter tax 473 0.34p 473 0.35p 955 0.70p -------- -------- -------- -------- -------- --------Adjustedearnings 4,886 3.54p 4,186 3.08p 8,662 6.35p -------- -------- -------- -------- -------- -------- 7. NOTES TO THE CASH FLOW STATEMENT Net cash flow from operating activities comprises: Six months to Six months to Year ended 31 30 June 2007 30 June 2006 December 2006 £'000 £'000 £'000Profitattributabletoshareholders 4,413 3,713 7,707Taxation 2,554 2,363 4,968Depreciation 662 621 1,321Loss ondisposal ofproperty,plant andequipment - 41 41Amortisationof developmentcosts 484 488 997Amortisationof acquiredintangibles 676 676 1,364Share options- value ofemployeeservices 64 59 122Investmentincome (84) (84) (241)Finance costs 301 242 505(Increase) ininventories (1,714) (3,156) (2,110)(Increase)/decrease in tradeand otherreceivables (202) 2,399 (2,706)(Decrease)/increase inpayables (1,873) (765) 1,457Increase/(decrease) inprovisions 52 (28) 133 --------- -------- ---------Net cashinflow fromoperatingactivities 5,333 6,569 13,558 --------- -------- --------- 8. NET CASH The movements in cash and cash equivalents and borrowings in the period were asfollows: Net cash and Short term Other Total net cash cash borrowings borrowings equivalents £'000 £'000 £'000 £'000 At 1 January2007 8,159 (1,750) (2,500) 3,909Repayment ofborrowings (2,000) - 2,000 -Payment ofloan notes (1,750) 1,750 - -Other cashmovements inthe period 398 - - 398Exchange rateadjustments (143) - - (143) --------- --------- --------- ---------At 30 June2007 4,664 - (500) 4,164 --------- --------- --------- --------- 9. SUBSEQUENT EVENT - ACQUISITION On 30 July 2007 the Group acquired Focus Communications, Inc, trading as WesternTechnical Services ("WTS"), for a maximum consideration, dependent onperformance, of US$5.5 million (£2.7 million). WTS, based in Orange County,California, specialises in the design and installation of video and datamicrowave communications, Electronic News Gathering (ENG), Airborne LawEnforcement (ALE), cellular and PCS, satellite, video surveillance, fibre opticsand site control systems. 10. APPROVAL A committee of the Board of Directors approved this report on 30 August 2007. Independent review report to Vislink Plc Introduction We have been instructed by the company to review the financial information forthe six months ended 30 June 2007, which comprise the consolidated interimbalance sheet as at 30 June 2007, and the related consolidated interimstatements of income, cash flows and changes in shareholders' equity for the sixmonths then ended and related notes. We have read the other informationcontained in the interim report and considered whether it contains any apparentmisstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The Listing Rulesof the Financial Services Authority require that the accounting policies andpresentation applied to the interim figures should be consistent with thoseapplied in preparing the preceding annual accounts except where any changes, andthe reasons for them, are disclosed. This interim report has been prepared in accordance with the basis set out inNote 1. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of Group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the disclosed accounting policies havebeen applied. A review excludes audit procedures such as tests of controls andverification of assets, liabilities and transactions. It is substantially lessin scope than an audit and therefore provides a lower level of assurance.Accordingly we do not express an audit opinion on the financial information.This report, including the conclusion, has been prepared for and only for thecompany for the purpose of the Listing Rules of the Financial Services Authorityand for no other purpose. We do not, in producing this report, accept or assumeresponsibility for any other purpose or to any other person to whom this reportis shown or into whose hands it may come save where expressly agreed by ourprior consent in writing. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2007. PRICEWATERHOUSECOOPERS LLPChartered AccountantsBristol 30 August 2007 Notes: (a) The maintenance and integrity of the Vislink web site is the responsibilityof the directors; the work carried out by the auditors does not involveconsideration of these matters and, accordingly, the auditors accept noresponsibility for any changes that may have occurred to the interim reportsince it was initially presented on the web site. (b) Legislation in the United Kingdom governing the preparation anddissemination of financial information may differ from legislation in otherjurisdictions. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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