Results for the year ended 31 December 2010

Transcription

1 Results for the year ended 31 December March 2011 John Hawkins, Chairman Elect James Trumper, Finance Director

2 Headlines Disposal of HERNIS Scan Systems completed 30 December 2010; Group held net cash of 22.2m at 31 December 2010 Group now focused on supplying secure communication solutions to the broadcast, law enforcement and public safety markets 2010 was a challenging year for both the News & Entertainment and Law Enforcement & Public Safety business units Underlying revenue down 7% and 34% respectively Increase in operating loss over 2009 Reduction in operating costs of 20% (~ 5.0m) announced in January 2011 Tender offer to return up to 5.0m to shareholders Proposed dividend maintained at 1.25p Vislink plc: 2010 Final Results 2

3 FINANCIAL REVIEW Vislink plc: 2010 Final Results 3

4 Results Overview Change '000 '000 % Revenue 38,176 53, % Underlying* revenue 38,176 43, % Reported operating (loss) (18,931) (5,589) Adjusted** operating (loss) (7,847) (2,316) Adjusted** margin -20.6% -4.3% (Loss) after tax - continuing activities (17,204) (5,280) Profit after tax - discontinued operations 21,193 4,453 Profit (loss) attributable to shareholders 3,989 (827) Basic EPS 2.9p (0.6p) Adjusted** EPS (5.1p) (1.7p) *Underlying revenue excludes revenue from the product shipments under the US 2GHz spectrum relocation programme **Adjusted operating (loss) is operating (loss) before amortisation and impairment of goodwill and acquired intangibles and non-recurring costs. Adjusted (loss) per share is calculated on the same basis taking into account related tax effects Vislink plc: 2010 Final Results 4

5 Underlying business performance improved in H2 H H FY 2010 FY 2009 FY Change Restated Restated '000 '000 '000 '000 % N&E revenue (underlying)* 14,187 17,442 31,629 33, % N&E 2GHz revenue , % LEPS revenue 2,558 3,989 6,547 9, % Revenue 16,745 21,431 38,176 53, % Cost of sales 11,278 13,476 24,754 32,337 Gross margin 5,467 7,955 13,422 21,343 Gross margin % 32.6% 37.1% 35.2% 39.8% -4.6% Overheads 11,112 10,157 21,269 23, % Adjusted operating (loss)** (5,645) (2,202) (7,847) (2,316) Adjusted operating (loss) % -33.7% -10.3% -20.6% -4.3% -16.2% Memo: Total operating costs Logistics overheads in CoS 5,535 6, % Overheads 21,269 23, % Total operating costs 26,804 30, % *Underlying revenue excludes revenue from the product shipments under the US 2GHz spectrum relocation programme **Adjusted operating (loss)/profit is operating (loss)/profit before amortisation and impairment of goodwill and acquired intangibles, share based payments and non-recurring costs. Vislink plc: 2010 Final Results

6 Operating (loss) bridge: continuing operations Profit Bridge: 2009 to m 1.00 m 0.00 m 2.39 m m m ( 2.32)m 1.44 m ( 5.16) m m m m m ( 3.03)m ( 7.85)m m m 2009 Logistics Overheads BAS revenue Underlying volume ( 1.17)m Mix 2010 Loss of revenues, both BAS and core business has resulted in increased operating loss despite 13% reduction in operating costs Vislink plc: 2010 Final Results 6

7 Profit for the financial year 4.0m N&E LE&PS Total N&E LE&PS Restated '000 '000 '000 '000 '000 '000 Results: by business units Revenue 31,629 6,547 38,176 43,762 9,918 53,680 Gross Profit 11,160 2,262 13,422 17,021 4,322 21,343 Gross Profit % 35.3% 34.6% 35.2% 38.9% 43.6% 39.8% Sales & Marketing (7,034) (2,882) (9,916) (8,251) (2,563) (10,814) Contribution 4,126 (620) 3,506 8,770 1,759 10,529 R&D (5,712) (6,281) G&A (5,641) (6,564) Adjusted operating (loss) (7,847) (2,316) Less: Amortisation of acquired intangibles (1,119) (2,331) Goodwill impairment (4,557) - Non-recurring costs (5,408) (942) Reported operating (loss) (18,931) (5,589) Less: Interest (486) (458) Tax 2, Discontinued activities after tax 21,193 4,453 Profit (loss) for the financial year 3,989 (827) Non-recurring costs include product rationalisation and inventory reserves 3.3m; with drawl from the military satcom market 1.2m; aborted acquisition 0.6m; rationalisation and redundancy 0.3m net Vislink plc: 2010 Final Results 7

8 Year end cash 22.2m; Positive cash flow from operations '000 '000 Operating (loss) - continuing business (18,931) (5,589) Operating profit - discontinued business 1,161 6,113 Depreciation & amortisation 13,674 7,514 Other non cash movements Gain on disposal of property, plant & equipment 2 (745) Working capital (decrease)/increase 7,898 (47) Interest paid (net) (186) (239) Tax paid (625) (2,041) Net cash generated from operating activities 3,187 5,053 Net capital expenditure (2,215) (834) Capitalised development costs (2,980) (3,197) Free cash (outflow) inflow (2,008) 1,022 Dividends paid (1,720) (1,720) Deferred consideration (1,629) (484) Net proceeds from sale of Hernis 26,943 - Debt repayments (7,162) (199) Net cash movement 14,424 (1,381) FX movement 383 (228) Opening cash & cash equivalents 7,423 9,032 Closing cash & cash equivalents 22,230 7, m of cash held in escrow until 30 June 2012 Net cash generated from operations 3.2m and net free cash out flow 2.0m despite the trading losses Working capital movement includes 2.5m increase in inventory reserve Net capital expenditure in prior year includes 1.8m from sale of freehold property Borrowings - (6,812) Net cash 22, Vislink plc: 2010 Final Results 8

9 Strong balance sheet: net assets 56.3m Balance sheet at 31 December 31 December Cha nge '000 '000 '000 Non-current assets Goodwill and intangibles 25,434 37,024 (11,590) Property plant & equipment 2,793 5,756 (2,963) Investments and deferred tax 408 1,182 (774) 28,635 43,962 (15,327) Net current assets Inventory 7,398 15,655 (8,257) Debtors 11,681 24,378 (12,697) Cash 22,230 7,423 14,807 Current liabilities (13,355) (24,943) 11,588 27,954 22,513 5,441 Net assets held for sale 1,256-1,256 Non-current liabilities (1,572) (13,715) 12,143 Shareholders funds 56,273 52,760 3,513 Reduction in goodwill and intangibles as a result of impairment reviews Inventory reduction includes the one off 2.5m write down Prior year numbers include the net assets of Hernis: Non current 2.2m Current assets 17.9m (inc cash of 4.9m) Current liabilities 8.1m Assets held for sale are those of WTS Vislink plc: 2010 Final Results 9

10 Other financial points Discontinued business comprises the trade of: HERNIS sold 30 December 2010 Western Technical Services, small California based services business treated as asset held for sale in balance sheet FX impact on results not material - /$ rate 1.55 (2009: 1.56) Effective tax rate: 14.3% at adjusted pre tax level (2009: 13.0%) reflects level of losses not recognised as deferred tax assets Pensions: no unfunded pension liabilities Vislink plc: 2010 Final Results 10

11 OPERATING REVIEW & OUTLOOK Vislink plc: 2010 Final Results 11

12 Our markets News & Entertainment Market drivers Increasing advertising spend (in developed economies) Underlying economic growth in developing economies Events Technology Regulation Relationships with every major broadcaster Most comprehensive product range in the industry New products Small camera back transmitter Rugged portable Satcoms terminal 3G/4G/WiMax camera gateway Implementation of IP strategy JV in China Law Enforcement & Public Safety Market drivers Demand for overt/covert surveillance Security of Citizens Public Finances Public Procurement procedures One of the largest players in the digital video surveillance segment Customers: Police Government Security Agencies Organisations with special security needs (e.g. utilities, prisons) Kamelyon: key product range developed for world wide security markets - gaining acceptance IP - network based products in development Vislink plc: 2010 Final Results 12

13 News & Entertainment Financial results ' Change Orders (non BAS) 31,814 29,958 6% Orders (BAS) - 4,046 Sales (non BAS) 31,629 33,997-7% Sales (BAS) - 9,765 Contribution 4,126 8,770-53% Operating margin 13% 20% -7% 14.0m 12.0m 10.0m 8.0m 6.0m 4.0m 2.0m 0.0m 10.7m 8.8m UK & Europe 12.9m 9.5m North America 1.8m 3.5m South America 4.6m 4.1m Middle East/Africa 3.9m 5.7m Asia/ Pacific 2GHz programme completed in 2009 Underlying growth in order intake but revenue was 7% lower Contribution declined due to: volume loss from ending of BAS lower revenues in the Americas and Europe from the economic down turn However: Growth in developing markets Asia up 46% South America up 94% 13% reduction in sales and marketing overheads in Vislink plc: 2010 Final Results 13

14 Law Enforcement & Public Safety Financial results 34 % decline in revenues and 29% ' Change Orders 6,705 9,392-29% Sales 6,547 9,918-34% Contribution (620) 1,759 Operating margin -9% 18% decline in orders was disappointing Expansion of the business has been impeded by : Deferment of major projects 8.0m 7.0m 6.0m 5.0m 4.0m 3.0m 2.0m 1.0m 0.0m 6.9m 5.9m 1.6m 0.5m 0.3m 0.8m 0.1m 0.2m UK & Europe Americas Middle East/Africa Asia/ Pacific Unpredictable procurement processes of public authorities Fiscal constraints Weak performance outside of the US However: Pipeline is growing Expect to increase in revenues in Vislink plc: 2010 Final Results 14

15 Strategy To sell secure communications solutions (satellite, microwave, IP) into markets which have long-term structural growth opportunities. To focus on serving the news and entertainment and law enforcement and public safety markets: In our markets we are either the market-leader or a significant competitor of the market leader; Our markets require common technologies and related products; and Our customers benefit from the economies of scale in our investment in engineering and manufacturing. The Group is debt free, and has the capacity to invest selectively in product development and make judicious acquisitions where it can build profitable market-share from its existing position Vislink plc: 2010 Final Results 15

16 Current trading & outlook In News & Entertainment we anticipate that we will see continued revenue growth in Asia and Latin America. The US and Canadian broadcast markets will be more robust as the economic recovery continues, and we expect modest recovery in Western Europe. The 2011 market outlook for LEPS is also more positive. We have a growing pipeline and we expect increased revenues from the Americas, Middle East and Asia. In addition, Federal Government agencies throughout the Americas are expanding the capabilities of their aerial surveillance units increasing demand for sophisticated airborne downlink solutions. As a result of the sale of HERNIS and the ongoing cost reduction programme we have implemented, we now have a strong balance sheet to invest in the profitable development of our markets and products and to consider selective acquisitions to generate future growth. Vislink plc: 2010 Final Results

17 Summary We have a solid platform from which to grow the business both organically and through acquisition. We have A clear market focus; Strong positions in our markets; A reduced cost base; and Strong financial base with no debt Vislink plc: 2010 Final Results 17

18 Appendices Vislink plc: 2010 Final Results

19 Vislink Brands Total Market Definition Size of Total Market Definition of Addressable Markets Size of Addressable Market Advent Satellite Ground Terminals 1.2 billion Satellite News Gathering; Earth Station/Teleport Integration; Emergency/Disaster Recovery 250m Link ENG Broadcast and Law Enforcement Broadcast 650 m Law Enforcement 0.5 billion Newsgathering; Sports and Events; Hire/Rental; Airborne; Cellular Receive; Sport; LES Downlinks Broadcast 70m Law Enforcement 200m MRC Broadcast (Americas and associated systems) 4.5 billion Electronic News Gathering; Studio receivers; MPEG encoders and decoders; Long haul microwave links (7 or 13 GHz); Short haul (18 or 23 GHz) Broadcast (non-sat) 300m PMR Law Enforcement Law Enforcement & Security 0.5 billion + Simple transmitter/receiver systems and TX/RX repeaters; Airborne links, handheld and portable receive systems; RF Cellular and IP Diversity/cellular RX Systems and command vans Law Enforcement 200m Vislink plc: 2010 Final Results 19

20 Key Competitors News & Entertainment Vitec Law Enforcement & Public Safety Vitec Gigawave ( 12m) Domo ( 15m) BMS ( 7.5m) GMS ( 7m) Gigasat ( 6m) BMS ( 4m) Swe-dish ( 15m) DTC ( 5m) Domo ( 10m) ECS ( 2.5m) Revenue figures are management estimates Vislink plc: 2010 Final Results 20

21 N&E New Products LYNX Range of High End H.264 Encoders, Exciters, Satcom and Terrestrial Receivers and Decoders NewSwift LT Vehicle Mounted Satcom Antenna for Remote Networking / Comms Applications AMG/ASG2100 Advanced Mobile and Studio Gateway. Enables Video Streaming via the Cloud or over Fat-Pipe ENG Microwave Link NewsLite 6000 IATA Compliant Satcom Gateway Terminal for rapid deployment remote video streaming applications AMG2100 ASG2100 MobiLink 2000 HD Outside Broadcast Portable Microwave Link Link XP1310 H.264 Mini Camera Mounted Transmitter Vislink plc: 2010 Final Results 21

22 LEPS New Products Kamelyon -HDT-1000 SD/HD/IP H.264 Covert Transmitter Kamelyon Rapid Deployment Tripod System for SD/HD Video Transmission and Reception Kamelyon- HDR Double Vision -SD/HD/IP H.264 Transportable Receiver Kamelyon- HDR-2100 SD/HD/IP H.264 Transportable Receiver Kamelyon- HDX-1100 SD/HD H.264 High-Power Long-Range Airborne Transmitter Kamelyon -HDR-1000 SD/HD/IP H.264 Covert Receiver TTK Tactical Transmitter Case Hawk- Miniature Transmitter over IP Vislink plc: 2010 Final Results 22

23 Orders, revenue and order backlog H H FY 2010 FY 2009 Change Orders received: by business unit '000 '000 '000 '000 % News & Entertainment - core 15,603 16,211 31,814 29, % News & Entertainment - 2Ghz , % Law Enforcement & Public Safety 2,917 3,788 6,705 9, % Orders reported 18,520 19,999 38,519 43, % Underlying orders 18,520 19,999 38,519 39, % As at 31 December FY 2010 FY 2009 Change '000 '000 % External order book for future shipment News & Entertainment - BAS 4,899 4, % Law Enforcement & Public Safety % Order backlog reported 5,524 5, % H H FY 2010 FY 2009 Change Revenue by business unit '000 '000 '000 '000 % News & Entertainment - core 14,187 17,442 31,629 33, % News & Entertainment - 2Ghz , % Law Enforcement & Public Safety 2,558 3,989 6,547 9, % Revenue reported 16,745 21,431 38,176 53, % Underlying revenue 16,745 21,431 38,176 43, % Vislink plc: 2010 Final Results 23

24 News & Entertainment News & Entertainment H H '000 '000 '000 '000 Orders: Core 15,603 16,211 31,814 29,958 Orders: BAS ,046 Total orders received 15,603 16,211 31,814 34,004 Revenue: Core 14,187 17,442 31,629 33,997 Revenue: BAS ,765 Revenue 14,187 17,442 31,629 43,762 Gross Profit 4,536 6,624 11,160 17,021 Gross Profit % 32.0% 38.0% 35.3% 38.9% Sales & Marketing 3,642 3,392 7,034 8,251 Contribution 894 3,232 4,126 8,770 Contribution margin % 6.3% 18.5% 13.0% 20.0% Vislink plc: 2010 Final Results 24

25 Law Enforcement & Public Safety Law Enforcement & Public Safety H H '000 '000 '000 '000 Total orders received 2,917 3,788 6,705 9,392 Revenue 2,558 3,989 6,547 9,918 Gross Profit 931 1,331 2,262 4,322 Gross Profit % 36.4% 33.4% 34.6% 43.6% Sales & Marketing 1,233 1,649 2,882 2,563 Contribution (302) (318) (620) 1,759 Contribution margin % -11.8% -8.0% -9.5% 17.7% Vislink plc: 2010 Final Results 25

26 EPS and tax '000 '000 '000 '000 '000 Adjusted Adjusted Basic Basic Adjusted operating (loss) (7,847) (2,316) (7,847) (2,316) Net interest charged (486) (458) (486) (458) Amortisation of acquired intangibles & impairment of goodwill - - (5,676) (2,331) Other adjusting items - - (5,408) (942) (Loss) before taxation (8,333) (2,774) (19,417) (6,047) Taxation 1, , Discontinued activities ,193 4,453 Profit (Loss) after tax (7,139) (2,413) 3,989 (827) Effective tax rate 14.3% 13.0% 11.4% 12.7% Earnings per share -5.2p -1.7p 2.9p -0.6p Average number of shares in issue (m) Vislink plc: 2010 Final Results 26

27 Important notice This presentation is being made only to, and is only directed at, persons to whom such presentations may lawfully be communicated ( relevant persons ). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. Information in the following presentation relating to the price at which relevant investments have been bought or sold in the past or the yield on such investments cannot be relied upon as a guide to the future performance of such investments. The release, publication or distribution of these presentations in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which these presentations are released, published or distributed should inform themselves about, and observe, such restrictions. No reliance may be placed for any purpose whatsoever on the information contained in this document or on assumptions made as to its completeness. No representation or warranty, express or implied, is given by the Company, its subsidiaries or any of their respective advisers, officers, employees or agents, as to the accuracy of the information or opinions contained in this document and no liability is accepted for any such information or opinions or for any loss howsoever arising, directly or indirectly, from any use of this presentation or its contents. In the United Kingdom, this presentation is only being distributed to persons who are reasonably believed to be persons who fall within Article 19 of The Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 or to other persons to whom this presentation may otherwise be lawfully distributed. To the extent not already in the public domain, the contents of this presentation are to be kept confidential and must not be copied or distributed by recipients. The distribution of this document in other jurisdictions may be restricted by law and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. The information and opinions contained in this presentation are provided as at the date of this presentation and are subject to change without notice. By attending the presentation you agree to be bound by the foregoing limitations. This presentation and the associated slides and discussion contain forward-looking statements. Forward-looking statements by their nature involve risks and uncertainties because they relate to events and depend on circumstances that will or may occur in the future. Actual results may differ from those expressed in these statements depending on a variety of factors including the following: demand and pricing, operational problems, general economic conditions, changes in laws and regulations, exchange rate fluctuations, development and use of new technology, changes in public expectations, successful commercial relationships, the actions of competitors, natural disasters, other changes in business conditions and other factors discussed elsewhere in this presentation Vislink plc: 2010 Final Results 27

28 Vislink plc: 2010 Final Results