FROM SCENE TO SCREEN - pebbleplc.com SCENE TO SCREEN ... management team, with a proven track record. Transition to software and ... GLOBALLY. VISLINK BELIEVES THIS NEW ‘POINT

ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2014 WWW.VISLINK.COMSTOCK CODE: VLK

F R O M S C E N E T O S C R E E N

23765.02 17 April 2015 3:44 PM Proof 7

REVENUE(£m)

50.3

11 12 13 14

57.2 59.9 61.9

ADJUSTED OPERATINGPROFIT*(£m)

-0.2

11 12

3.1

13

4.3

14

7.2

NORMALISED ADJUSTED EARNINGS PER SHARE**(pence)

-0.2

11 12

2.2

13

3.2

14

4.6

VISLINK’S CORE COMPETENCE IS THE DELIVERY OF HIGH QUALITY, LIVE VIDEO AND DATA, FROM SCENE TO SCREEN

OUR STRATEGY OF GROWING HIGHER MARGIN, RECURRING REVENUE BUSINESS WILL DELIVER LONG TERM SHAREHOLDER VALUE

HIGHLIGHTS 2014

REASONS TO INVEST

FINANCIAL HIGHLIGHTS

OPERATIONAL HIGHLIGHTS•OurstrategyfortheGroupremainsontrack;withtheacquisitionofPebbleBeachSystemscompletedinMarch2014andthefundingcapacityavailableforfutureinvestmentandgrowthopportunities

•Thecreationofseparatesoftware(PebbleBeachSystems)andhardware(VislinkCommunicationSystems)divisionsallowsustoaddressourcoreverticalmarketsofbroadcast,surveillance,publicsafetyanddefence

•Strategicrelationships,includingthosewithHarmonicIncandGoProInc,haveresultedinexcitingdevelopmentsinbothhardwareandsoftware

Forfurtherinformationwithinthisdocument

Additionalinformationonlineat:Vislink.comandPebble.tv

1

5

2

6 7

3 4

Experienced management team,withaproventrack

record.

Transition to software and services,throughacquisitionsand

evolutionofcompleteproductsolutions.

Solid financial performance;

yearonyearprofitgrowthfrom2011to

2014.

Disciplined strategy,leveragingmarketgrowth,

technology,channelpartnershipsand

focusedacquisitions.

Dividends paid whilstdeliveringincreasingcapitalgrowthforourshareholders.

Improved quality of earnings,fromfocussingonimprovingmarginmixandexpanding

ourrecurringrevenues.

Market leading solutions;

technologyshowcaseddailythroughglobalmajorsportsandlivebroadcastevents.

CAUTIONARY STATEMENT

ThisStrategicreporthasbeenpreparedsolelytoprovideadditionalinformationtoshareholderstoassesstheCompany’sstrategiesandthepotentialforthosestrategiestosucceed.TheStrategicreportcontainscertainforward-lookingstatements.Thesestatementsaremadebythedirectorsingoodfaithbasedontheinformationavailabletothemuptothetimeoftheirapprovalofthisreportandsuchstatementsshouldbetreatedwithcautionduetotheinherentuncertainties,includingbotheconomicandbusinessriskfactors,underlyinganysuchforward-lookinginformation.Thedirectors,inpreparingtheStrategicreport,havecompliedwiths414coftheCompaniesAct2006.ThisStrategicreporthasbeenpreparedfortheGroupasawholeandthereforegivesgreateremphasistothosematterswhicharesignificanttoVislinkplcanditssubsidiaryundertakingswhenviewedasawhole.

ThisStrategicreportdiscussesthefollowingareas:

•Thebusinessmodel

•FairreviewoftheGroup’sbusiness

•Futuredevelopments

•Strategyandobjectives

•Keyperformanceindicators

•Principalrisksreviewanduncertainties

LOOK OUT FOR THESE ICONS

*Adjustedoperatingprofitisoperatingprofitfromcontinuingoperationsbeforetheamortisationandimpairmentofacquiredintangibles,andothernon-recurringitems.Adjustedearningspershareiscalculatedonthesamebasisaftertakingaccountofrelatedtaxeffects.

**Adjustedearningspersharenormalisedfortaxeffectiverateof20percent.

23765.02 17 April 2015 3:44 PM Proof 7

Vislink plcAnnual Report & Accounts for the year ended 31 December 2014

01

CONTENTSSTRATEGIC REPORT02 CHAIRMAN’S STATEMENT08 VISLINK AT A GLANCE 10 OUR STRATEGY 12 OUR MARKETPLACE 14 OUR BUSINESS MODEL BROADCAST

16 WHAT WE DO 18 WHY WE DO IT 20 WHAT WE OFFER OUR CUSTOMERS

SURVEILLANCE, PUBLIC SAFETY & DEFENCE22 WHAT WE DO 24 WHY WE DO IT 26 WHAT WE OFFER OUR CUSTOMERS

BROADCAST SOFTWARE28 WHAT WE DO 30 WHY WE DO IT 32 WHAT WE OFFER OUR CUSTOMERS

34 OUR PEOPLE/TALENT 35 TECHNOLOGY AND INNOVATION 36 BUSINESS REVIEW—DIVISIONS AND MARKETS 37 BUSINESS REVIEW —FINANCIAL REVIEW 40 RISK AND RISK MANAGEMENT

OUR GOVERNANCE42 BOARD COMPOSITION 44 DIRECTORS’ REPORT 46 CORPORATE GOVERNANCE STATEMENT 50 REMUNERATION REPORT 57 STATEMENT OF DIRECTORS’ RESPONSIBILITIES

OUR FINANCIALS58 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF VISLINK PLC 59 CONSOLIDATED INCOME STATEMENT 59 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 60 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 61 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY 62 CONSOLIDATED STATEMENT OF CASH FLOWS 63 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 96 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF VISLINK PLC 98 COMPANY FINANCIAL STATEMENTS — BALANCE SHEET 99 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS 100 NOTES TO THE COMPANY FINANCIAL STATEMENTS

COMPANY INFORMATION106 ANALYSIS OF SHAREHOLDERS 107 GLOSSARY OF TERMS 108 SHAREHOLDER NOTES 109 SHAREHOLDER INFORMATION

CHAIRMAN’S STATEMENT OUR STRATEGY

BROADCAST

SURVEILLANCE AND PUBLIC SAFETYMARKETPLACE

02 10

16

2212

CHAIRMAN’S STATEMENT

WE ARE DELIGHTED TO HAVE ACHIEVED OUR ADJUSTED OPERATING PROFIT OF £7.2M IN THE YEAR, FROM AN £8.4M LOSS IN 2010, TESTAMENT TO THE SIGNIFICANT COMMITMENT FROM ALL AT VISLINK. THE ADJUSTED OPERATING PROFIT IS AHEAD OF MARKET EXPECTATIONS.

IN ADDITION TO RECORD PROFITABILITY, 2014 WAS A TRANSFORMATION YEAR. WE SAW THE REWARDS OF INVESTING IN SOFTWARE WITH THE ACQUISITION OF PEBBLE BEACH SYSTEMS, A WORLD LEADER IN THE PROVISION OF SOFTWARE FOR AUTOMATION, CHANNEL IN A BOX AND CONTENT MANAGEMENT SOLUTIONS, AND ANNOUNCED A STRATEGIC PARTNERSHIP WITH HARMONIC, THE WORLDWIDE LEADER IN VIDEO DELIVERY INFRASTRUCTURE FOR EMERGING TELEVISION AND VIDEO SERVICES.

AFTER THE YEAR END, WE ANNOUNCED A STRATEGIC RELATIONSHIP WITH GOPRO WHICH OPENS UP A NEW OPTION FOR BROADCASTERS AND SPORTS PROMOTERS GLOBALLY. VISLINK BELIEVES THIS NEW ‘POINT OF VIEW’ MARKET HOLDS HUGE POTENTIAL.”

INTRODUCTION2014wasanotheryearofsubstantialprofitablegrowthfortheGroup.Weachievedadjustedoperatingprofitgrowthinexcessof66percentto£7.2m.Thishasbeenachievedwhilstourtwodivisionshavecontinuedtoprovidebestin-classsolutionstothreecoremarkets;thebroadcastsoftwaremarket,thebroadcastcommunicationsmarketforthecollectionoflivenews,sportandliveentertainmentevents,andthesurveillanceandpublicsafetymarket.

InMarch2014,weacquiredPebbleBeachSystems,aworldleaderinthehighlyspecialisedandmissioncriticalfieldofbroadcastautomation.ThisenablesVislinktooffer‘scenetoscreen’solutionsboththroughunrivalledtechnologyandexperiencedmanagement.ItalsoenablesPebbleBeachSystemstoleverageitspositionaspartofVislinkandourglobalpresenceandrelationships.Sincetheacquisition,thebusinesshasmadestrongprogress.

GROUP REVENUE

£61.9m2013:£59.9m

John HawkinsExecutiveChairman

ADJUSTED OPERATING PROFIT

£7.2m2013:£4.3m

Vislinkmaritimesolutionsco-ordinateseaandairpatrols

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02

Enablingmulti-agencyco-operation

Low-latencywirelesscamerabacktransmittersdeliverlivesportscoverageworldwide

Vislink+GoPro=Awholenewwaytowatchlivesports Thegrowthofvideocaptureincreasesoptionsformulti-screenviewing

23765.02 17 April 2015 3:44 PM Proof 7

STRATEGIC REPORT

03

CHAIRMAN’S STATEMENTCONTINUED

PARTNERSHIPSOn30June2014,wesignedanOEMagreementwithHarmonicInc.(Nasdaq:HLIT)(“Harmonic”),aworldwideleaderinvideodeliveryinfrastructureforemergingtelevisionandvideoservices.ThepartnershipwillenableHarmonictosellpackages,integratedwithPebbleBeachSystems’software,totheinternationalbroadcastmarket.

ThepartnershipresultedinHarmonicplacinganinitialorderforsoftwarelicensesvaluedat£2.0millionin2014andsubscribingfor4.0millionnewordinarysharesintheGrouppricedat50pencepersharebywayofadirectsubscription.

Afterouryearclosed,inearlyJanuary2015weannouncedthatwehadenteredintoanagreementwithGoProInc.(NASDAQ:GPRO)(“GoPro”).ThepartnershipbringsimmersiveGoProperspectivestoliveevents,enablingGoProHERO4cameraswithaprofessionalgrade,live,HDwirelessbroadcastsolution,throughtheincorporationofthesmallest,lightestandlowestpoweredprofessionalbroadcastwirelesstransmitter.

VislinkandGoProhavebeenworkingtogethertoproduceatransmitterthatissmallenoughtobebodywornormountedinuniqueareastoprovideallnewperspectivesforpeoplewatchingtheirfavouritelivesportsandevents.Theprototypewasshowcasedduringpopularliveeventslastwinter,includingtheWinterXGames2015Aspen,selectAMAMonsterEnergySupercrosseventsandotherlivesportingevents.

PEBBLE BEACH SYSTEMSPebbleBeachSystemsisaworldleaderintheprovisionofsoftwareforautomation,ChannelinaBoxandcontentmanagementsolutions,forTVbroadcasters,cableandsatelliteoperators.Itsleadingnextgenerationproductsandsoftwaretechnologywithinthebroadcastingsectorisbestreflectedbyitsglobalcustomerbase.Furthermore,thiscustomerbaseisfastgrowing,with50percentofitstoptencustomersin2014beingnew.Thebusinesshashighmargins,growthprospectsandsolidcashgeneration.

TheacquisitionfitsperfectlywithVislink’sdesireforgrowthandrecurringrevenuesbyextendingitsreachandprovidingcustomerswithsynergies;fromcapturingvideotointeractiveprogramming,includingtheacquisitionofvideocontentandrevenuegeneration.VislinkplanstogrowitssoftwarecapabilityaroundthePebbleBeachSystemsmanagementteam.

PebbleBeachSystemshasbenefitedfrombeingpartoftheGroup,allowingexpansiongloballyandastrategicpartnershipwithHarmonic.ThesehavehelpedPebbleBeachSystemsgrowitsprofitto£3.3millionin2014(in9months’ofcontribution).

WebelievethattheacquisitionanditssuccessfulintegrationtransitionsVislinkintoamarketleading,videocaptureandplayoutprovidertothebroadcastindustry.

OBJECTIVES ACHIEVED AND PLATFORM FOR GROWTHTheadjustedoperatingprofitof£7.2millionexceedsmarketexpectationsandwehavesurpassedourtarget10percentadjustedoperatingmargin.Itisworthnotingthathadwenotagreeddiscretionarybonusesinrespectof2014performance,adjustedoperatingprofitwouldhavebeen£8.0million.

Furthermore,wehavealsohitourtargetof25percentofourrevenuescomingfromhighermarginsecurityandsurveillancebusiness.OurfocusoncellularandIPproductshasresultedinthelaunchofcellularandIPdevicesin2014.

Wesaidwewouldseektomoveintosoftwaretoimprovemarginsandthishasalsosetusonacriticalpathtorecurringrevenues,with15percentofsoftwarerevenuesand10percentofsurveillanceandpublicsafetyrevenuesbeingrecurring.

In2011,wesaidbluechippartnerswouldsupportourglobalgrowthandchannelstomarket.KeypartnersnowincludeGoPro,Fujitsu,NEL,HarmonicandTVU.Therelationshipswiththeseworldclassorganisationswillplayakeyrolegoingforward.

WiththeacquisitionofPebbleBeachSystemsandtheon-goingdevelopmentinoursurveillanceandpublicsafetymarket,webelievethatwehavebuiltafantasticplatformforfuturegrowth.

Findoutaboutourstrategyandbusinessonpages2to33

Findoutmoreonourwebsites:Vislink.comandPebble.tv

We will continue to seek growth opportunities both organically and through acquisitions, whilst keeping a clear underlying objective of continuing to grow shareholder value.”

Vislinkliveeventsolutionsusedfornewsandsports

Capturingactionatover200mph

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04

Providingreal-time,actionableintelligence

Deliveringthemostimmersiveviewingexperiencepossible

23765.02 17 April 2015 3:44 PM Proof 7

www.vislink.comStock code: VLK STRATEGIC REPORT

05

CHAIRMAN’S STATEMENTCONTINUED

Findoutaboutourstrategyandbusinessonpages2to33


We are transforming the Group. As our software group grows we will further enhance earnings, margins and cash generation and remain completely aligned to our shareholders’ objectives of delivering short term and long term profitable growth.”

ThisnewsolutionisthefirsttimeofficialGoProproductscanbeusedtotransmittheactioninhighdefinition,allowingforintegrationintoalivetelevisionbroadcast.

InlateJanuary,GoProannouncedapartnershipwiththeNationalHockeyLeague(“NHL”).InanunprecedentedfirstforGoPro,anewpartnershipwiththeNHLandtheNHLPlayers’Association(“NHLPA”)willbringhockeyfansclosertotheactionontheicethaneverbefore;withtheNHLusingGoPro’sProfessionalBroadcastSolution,developedincollaborationwithVislink,todeliverviewersnever-before-seenperspectivesofthegame.

Followingasuccessfultestingperiodandproductshowcasing,itisintendedthataformalproductionagreementbetweenthetwocompanieswillbeenteredintoin2015.

FINANCIAL RESULTS Thereportedadjustedoperatingprofitwas£7.2million(2013:£4.3million),a66percentincreasecomparedto2013.Ourmarketscontinuetobetoughbutaslongaswecontinuetobetterbalanceourbusinessbetweensoftwareandhardwareandmaintainourproductleadership,theGroupwillcontinuetogrowprofitability.

Grouprevenueswere£61.9million(2013:£59.9million)whichwasflatbutreflectsourfocusonqualityofearningsandtheimprovedmixinsoftware/hardwarerevenues.Ournewlyacquiredsoftwarebusinessgrewrevenuesby51percent,surveillanceandpublicsafetygrewby35percent,whilstbroadcastrevenuesweredownby22percent.

Earlyin2014wewonamultimillionpoundcontractinpublicsafetyintheUKwhichsignificantlycontributedtoourdeclaredstrategyofhavingatleast25percentofourrevenuesbeingderivedfromthesecurecommunicationandsurveillancemarketsbytheendofthefinancialyear2014.Themajorityoftheprojectwassuccessfullydeliveredin2014,withfinalcompletionexpectedinH12015.

Orderintakefortheyearwas£61.4million(2013:£60.1million)andtheopeningorderbookforthisyearstoodat£8.8million(2013:£5.6million).

Thereweresomeworkingcapitalincreasesthroughouttheyearassociatedwithourgrowthandinvestmentsinnewproducts.TheGrouphasmaintainedastrongbalancesheetthroughouttheyearandat31December2014hadanetcashbalance.

EARNINGS PER SHAREThereportedbasicundilutedearningspersharefortheyearwas3.2pence(2013:3.1pence).

Afteradjustingforamortisationandimpairmentofacquiredintangiblesandothernon-recurringitems,theGroup’sadjustedearningspersharewas4.1pence(2013:adjustedearningspershareof4.2pence).

Theadjustedearningspersharenormalisedfortaxeffectiverateof20percentfortheyearwas4.6pence(2013:3.2pence).

DIVIDENDS AspartoftheGroup’sprogressivedividendpolicy,theBoardisproposingthatthefullyeardividendincreaseby20percentto1.50pencepershare(2013:1.25pencepershare).

ACQUISITIONSTheGrouphasexecutedagainstitsacquisitionstrategyandtheefficientintegrationofacquiredbusiness.

AmplifierTechnologyLimitedmadeaprofitcontributionof£0.2millionin2014withprospectsformoreoperatingleveragein2015.Deferredconsiderationof£2.0millionpayableintheyearwaswrittenbackandtheBoardalsorecommendedthatgoodwillbeimpairedby£0.5millionattheyearend.TheGroupremainsconfidentoffurthersynergyfromtheAmplifierTechnologyLimitedproducts,particularlyinthesecurityandsurveillancesectors.InJanuary2015wecompletedtheintegrationofAmplifierTechnologyintoVislinkCommunicationSystems.

On20January2014theGroupmovedfromalistingonthemainmarket,toAIM.Theprimaryreasonforthis,asannouncedinourcircular,wastosimplifyandreducethefinancialburdenofmakingacquisitions.AspartofthetransformationoftheGroup,“bolton”acquisitionswereakeypartofourthreeyearplan,2011–2014.

PebbleBeachSystemswasacquiredinMarch2014foratotalconsiderationof£14.9millioncomprising£12.9millionincashand£2.0millionrepresentedbytheissueofnew

Vislinkordinaryshares.Uponcompletion,theGroupcashbalancewasstrengthenedby£6.1millionofcashretainedinPebbleBeachSystems’balancesheet.

ThecashconsiderationwasfundedoutofexistingGroupresourcesandanew£10.0milliondebtfacility.Thefacilityhasathreeyeartermandissplit£3.0millionamortisingtermloanand£7.0millionflexiblerevolvingcreditfacility,ofwhich£5.0millionhadbeendrawndownattheyearend.

In2015wewillcontinuetogrowoursaleschannelstomarketsforbothoursoftwaredivisionandourcommunicationdivision.Wewillcontinuetoseekgrowthopportunitiesbothorganicallyandthroughacquisitions,whilstkeepingaclearunderlyingobjectiveofcontinuingtogrowshareholdervalue.

THE BOARD, MANAGEMENT AND EMPLOYEESWecontinuetoseeastrengtheningofourcapabilitiesandexpertiseasweacquirenewbusinesses.WiththeacquisitionofPebbleBeachSystems,wearenowoperatingastwodivisions;PebbleBeachSystemsandVislinkCommunicationSystems,whichisaconsolidationoftheexistinghardwarebusinesses.Bothdivisionsbenefitfromchannelandmarketsynergies.

Duringtheperiod,wewerepleasedtoappointSimonDerryasCEOofVislinkCommunicationSystems.Simonhasawealthofgeneralmanagementexperiencehaving

formerlybeenresponsibleforthegrowthandsuccessofSnell,aworldleaderprovidingsoftwareandhardwareformultimediascreens.SimonwillbetaskedwithgrowingthisdivisionandfocussingonourIPandcellulartransformation.

OnbehalfoftheBoardIwouldliketothankallourpeople;thosenewlyjoiningusthroughacquisition,thosewhohavegotbehindourvisionforgrowthandallwhohavecontributedtooursuccessin2014.

CURRENT OUTLOOK TRADING Ourmarketscontinuetobechallenging.However,theGroupenters2015withrenewedconfidencebuoyedbytheexpansionofoureverincreasingsoftwareportfolioandamoreefficientintegratedcommunicationdivisionundernewleadership.

Weareconfidentoftheopportunitiesthatwillcomefromourenlargedfootprintinbothbroadcastandsurveillanceandpublicsafetymarkets.

WearetransformingtheGroup.Asoursoftwaregroupgrowswewillfurtherenhanceearnings,marginsandcashgenerationandremaincompletelyalignedtoourshareholders’objectivesofdeliveringshorttermandlongtermprofitablegrowth.

JohnHawkinsExecutiveChairman

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06

Viewersdon’tmissasecondwithstunningHDvideofromVislinksystems

Capturingthecompetitor’spointofview

PortableIPtransmissionsolutionsforbreakingnewsevents

23765.02 17 April 2015 3:44 PM Proof 7


07

OUR BUSINESSThecorecompetenceofVislinkisthecollection,deliveryandmanagementofhighquality,livevideoandassociateddata,fromscenetoscreen.

Wearenowoperatingastwodivisions:

-PebbleBeachSystems,whichisfocussedonbroadcastsoftware;and

-VislinkCommunicationSystems,whichisaconsolidationoftheexistinghardwaretechnologybusinesses.

Weprovidesolutionstothreecoremarkets:

•thebroadcastcommunicationsmarket,forlivenews,sportandentertainmentevents,toprovidehighqualityvideocontributionfromscenetoscreen;

•thesurveillance,publicsafetyanddefencemarkets,suchaslawenforcementandhomelandsecurity,toenablereal-timevideointelligence;and

•thebroadcastsoftwaremarket,fortheacquisition,managementandplayoutofmediaandcontent

LIVE TV COVERAGE CONTINUES TO BE A MAJOR SUCCESS STORYTheimportanceof“Live”TVanddeliverycontentovermultiplechannels(TV,personalcomputers,tabletsandsmartphones)isgrowing.Thisnewmulti-screenenvironmenthasdrivenbroadcasterstofocusonlivecontentproduction,drivingdemandforVislinkbroadcastproducts.Theabilitytoreporteventsinatimelyandaccuratefashioniscritical.Mediachannelsmustdeliverhigh-qualityvideo,audioanddatasecurely,efficientlyandimmediately.

Shapingastrongfutureforvideoandbeyondrequiresfindingnewwaysofcollectinganddisseminatinglivecontentinthemostcost-effectivemannerpossible.Withoverfiftyyearsofexperience,wearecontinuouslyexploringtheworkflowsofbroadcastersworldwide.Thisinnateunderstandingoflivevideohasshapedourdevelopmentroadmap,creatinganewmulti-modeapproachtolivevideocontributionanddistribution.

KEY MARKET DRIVERS Image Quality Migration:•HighDefinition(HD)broadcast—onlyaminorityofglobalbroadcastershavecurrentlytransitionedtofullHD

•BeyondHD—takingadvantageofnewtechnologiessuchas4Kultrahigh-definitionTVandHighEfficiencyVideoCoding(HEVC)

Spectrum Change:•Digitalswitchoverandspectrumdynamicswillcontinuetogenerateopportunities

•2015istheyeargenerallyviewedasaninternationallymandatedanalogueswitch-offdate.Thereareanumberofbroadcastersworldwidestillintransition

Cellular and IP Products:•WorkflowsutilisingIP(InternetProtocol)technologies,simplifyingdeliveryofcontentfromscenetoscreen,isaccelerating

•Transitiontofile-based/IPproductiontoolsEmerging Markets:•Increasedglobaldemandfor“high-quality”transmission(majorsporting,entertainmentandpoliticalevents)

Increased Demand:•Secondandthirdscreen(PCsandmobiledevices)contentdelivery.Livebroadcastsareextendingthemarketreachforbroadcasters,monetisingcontentandmakingiteasierandmoreengagingforconsumerstoaccess

ABILITY TO TAKE DECISIVE ACTION BASED ON REAL-TIME VIDEO INTELLIGENCEAtthecoreofeverymissioncriticalsituationistheneedforrapiddeploymentofhighlyreliablecommunications.Vislinkunderstandsthisneedandplaysacriticalroleinsupplyingsystemsformilitary,defence,publicsafetyandsatellitetelecommunicationsworldwide.Weprovidecompletesolutionstosupportreal-timevideosurveillanceontheground,inthewaterandintheair.

Increasingly,thetacticalinformationofchoiceisvideo.Apicturemaybeworthathousandwordsbuthighqualityreal-timevideoisseveralordersofmagnitudemore.Theabilityofnewsorganisationsandsocialnetworkstocapturehighqualityvideoanddistributeitwidelyhasnotgoneunnoticedbyauthoritiestryingtokeeptabsonsituationsattheirbordersorwithin.ItisthisdynamicthataffordsVislinkgreatopportunitiesatthecentreofthehomelandsecuritymarket.

KEY MARKET DRIVERS•Linkingbothdeployedheadquartersandteamsoffieldpersonnelinactivetheatrewithnationalcommandauthoritiesforsafer,real-time,tacticaldecisionmaking

•Integratingcommercialoff-the-shelf(COTS)componentsandsystems,withthosepurposebuiltformilitaryusetoaddressdefencerequirements

•ReplacingmannedreconnaissanceandresponseaircraftwithUnmannedAerialVehicles(UAV)

•Developingtrueintegrationoftechnologies(Command,Control,Communications,Computers,Intelligence,SurveillanceandReconnaissance)

SURVEILLANCE, PUBLIC SAFETY & DEFENCEBROADCAST

VISLINK AT A GLANCEBROADCAST SOFTWARE

ACCURATE AND TIMELY PLAYOUT OF PROGRAMMINGInrecentyearstherehasbeenahugeincreaseinthenumberoftelevisionchannels,thanksinparttonewthematiclaunchesandtheriseofspecialistprogramming,butalsoasaresultoftheintroductionofHighDefinition,Mobile,IPTV,4G,andOverTheTop(OTT)services.Inadditiontoincreasingchannelcounts,broadcastersareunderpressuretoimproveefficienciesandreduceexpenditure.Lowercostsoftwaresolutionsarereplacingspecialisthardwareproducts,significantlyreducingoperatingcostsforbroadcasters.

Whilstembracingthisnew,lowercost,agiletechnology,broadcastersandmediacompaniesstilldemandtheaccurateandtimelyplayoutofscheduledprogramminginordertofulfiltheircontractualobligationsandtoprotecttheirrevenues.PebbleBeachSystemsdevelopsintelligent,robustsoftwarethatautomatesthemission-criticaltaskofcontrollingthemultiplecomplextechnologieswhichdeliverthesechannelstoair.

KEY MARKET DRIVERS•Shiftfromtraditionalhardwaretechnologytosoftwaresolutions•Continuedgrowthofdigitalterrestrial,satelliteandcableservices,andweb-basedstreamingplatforms,alongwiththeongoingadoptionofHDtechnologyinemergingmarkets

•Changingbusinessdynamicswhichdrivethedemandforflexibletechnologyconfigurations— Morechannelsarebeingtestedandlaunched,withshorterdeploymenttimes,requiringagilechanneldeliverytechnology

•Centralisationofbroadcastoperationsintohubandspokemodels,enablingthedeliveryofregionalchannelsatlowercostwithtargetedcontentandadvertising

•Emergingtrendtoreplacefixedhardwaresolutionswithvirtualisedsolutionsor‘Cloud’technology

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08

OUR LOCATIONSWemanageourbusinessthroughourmainoperationalsitesintheUKandtheUS.Wecreatenewproductsthroughourengineeringanddevelopmentcentresofexcellence,whichalsocollaboratewithourmarketleadingtechnologypartners.

Ourbusinessaddressesglobalmarkets,andwesellthroughdirectsalesandpartnershipsorganisedintofivesalesregions.Asaresult,inadditiontoourmainsites,thesalesofficeswehaveinCalifornia,Dubai,Singapore,andBrazilareincreasinglyimportant.Webackupoursalespresencebyensuringourcustomersupportisclosetoourcustomers.

SALES BY MARKET

BROADCAST 61.0%SURVEILLANCE 25.6%SOFTWARE 13.4%

£61.9m

SALES BY REGION

REST OF EUROPE 18.0%NORTH AMERICA 30.0%LATIN AMERICA 4.8%MIDDLE EAST & AFRICA 8.9%ASIA PACIFIC 12.0%

£61.9m

UK 26.3%

HEAD OFFICE LOCATION

DEVELOPMENT LOCATIONS

SALES OFFICE LOCATIONS

KEY

COUNTRIES WHERE PRODUCTS ARE SOLD

SALES OFFICE LOCATIONS

• UK— Colchester— HemelHempstead— Weybridge

• USA— California— Colorado— Massachusetts

• Dubai• SãoPaulo• SingaporeDEVELOPMENT LOCATIONS

• UK

— Colchester— HemelHempstead— Weybridge

• USA— Colorado— Massachusetts

GROUP HEAD OFFICE LOCATION

• Hungerford,UK

COUNTRIES WHERE PRODUCTS ARE SOLD

• Themajorityofcountriesworldwide

23765.02 17 April 2015 3:44 PM Proof 7

09

STRATEGIC REPORTwww.vislink.comStock code: VLK

OUR STRATEGY

OUR GOALS AND STRATEGYMARKET NEEDS DELIVERED GOALS FIND OUT MORE

01 MARKET LEADING SOLUTIONS

•Tomeetmarketandtechnologytrends:• forbroadcasters,todelivertheabovewhilstimprovingefficiencies,addressing“Live”coverageandlaunchingnewchannels;

• forconsumers,demandinggreaterflexibilityastowhenandhowtheywatchvideo;and

• forvideo,whichhastravelledinthedirectionofbigger,better,fasterandhigherquality

•VislinkCommunicationSystems(VCS)launchedthe2.4mNewSwiftHDAntenna,Mantis-LTFlyawayAntenna,HDR-5000receiver,AdventDVE5150andNewStream,asingle,compactunittotransmitmultiplevideostreamsatoncewithIP,cellular,microwaveandsatellitetransmission

•PebbleBeachSystemslaunchedtheMarinaLiteautomationsolutionandPebbleWebClient

•Movequicklytoprovidebestinclassproducts,whichinclude:

• fasterprogramminganddynamicplacingofadvertising,allowingcustomerstomaximisereturnoncontentandprogramming;

•bestqualitylivecoveragetoconsumers,forincreasedaudience;and

•newPointofViewandIPsolutions

FindoutaboutTechnologyandInnovationonpage35

02 EXPANSION OF AVAILABLE MARKET

•ThegrowthofvideocaptureandcontentmanagementinadjacentmarketswillenableVislinktoexploititsknowledgeandtechnology,providingfurtheropportunitiesinsurveillance,publicsafetyanddefence

•Broadcastersareincreasingspendonsoftwaresolutionsastheyseekefficienciesandexpansionofcontentforlinearchannelsandondemandconsumerviewingplatforms

•Surveillance,publicsafetyanddefence-multimillionpoundHomeOfficecontractcontributedtoatleast25percentofVCSrevenuesbeingderivedfromthismarketplace

•PlayoutAutomationandChannelinaBox-openedupthismarketplacebytheacquisitionofPebbleBeachSystems

•StrategicrelationshipwithHarmonic,strengthenedchannelreachforsoftwareinAsiaandNorthAmerica

•Provideabroader,integratedrangeoftechnologyandsoftwaresolutions

•Focusonindustrysectorsinwhichwehavebusinessexpertiseandproductleadership

•Leverageourdirectandpartnerglobalchannels•Expandouravailablemarkets,toaccelerateprofitgrowth

FindoutaboutSurveillanceonpages22to27

FindoutaboutPebbleBeachSystemsonpages28to33

03 POINT OF VIEW – LIVE!

•Forbroadcasters,increaseoptionsforbettermultiscreenviewing,bringingnewrevenuestreamsandincreaseddigitalrevenuesforourcustomers

•Forsurveillanceandpublicsafety,rapidlyexpandingneedtoprovidehigh-qualityimages,givingcriticalreal-timeintelligence

•FacilitatedapartnershipbetweenGoProandtheNationalHockeyLeague(NHL),bringinghockeyfansclosertotheactionontheiceanddeliveringnever-before-seenperspectivesofthegame

•HDon-boardcameraandvideotransmissionfortheelectricFormulaEChampionship,capturingreal-timeactionfromthetrackandpitlanes

•Continuetoprovideinnovativecontentcaptureandnewandexcitinganglesthroughthedevelopmentofbodyworncameras

•Addresstheprovisionoflivesportsandtheoverallqualityofprogrammingandcoveragewhichdefinesliveaudienceviewingandinturndrivesadvertisingrevenues

FindoutaboutBroadcastonpages16to21

FindoutaboutSurveillanceonpages22to27

04 END-TO-END IP

•Forbroadcasters,IPoffersimprovedvideocapture,socialnetworkingcontentandareductionincomplex‘‘traditional’’workflows

•Forsurveillanceandpublicsafety,IPoffersimprovedvideocapture,contentmanagementandavailability

•PartneredwithTVUNetworkstodeliverIPvideoandwirelesssolutionsforlivesportsandeventscoverageglobally

•Launchednewproducts,toprovideVideoOverIPDiversity•Movedtooffercompleteend-to-endIPvideosolutions,includingfilemanagementandcontrolsoftware

•DeliverIPbasedworkflowstoallowmoreaffordableprocessingonserversandrouters,aswellasflexibilityintransport,encodingandproduction

•ProvideourcustomerswithatotalpackagethatbringsIPvideoalongtheentireprocess,frompointofcollectiontotheviewer’sTVorsecondscreendevice

FindoutaboutBroadcastIPonpages16to21

FindoutaboutSurveillanceIPonpages22to27

05 TRANSITION TO SOFTWARE AND SERVICES

•OurcustomersarelookingtosoftwaretoimproveflexibilitybyreplacingcomplexbespokehardwarewithsoftwaretechniquesandstandardIT

•Ourcustomersareseekingto‘‘consume’’technologyasaserviceandhavemoreflexibleoperatingcosts,capacityandcapability

•AcquiredPebbleBeachSystemsanditsmarketleadingsoftware,whichcansupportawiderangeofbroadcastapplications

•CombinedthebenefitsofPebbleBeachSystems’softwarewithHarmonic’smediaservers;deliveringpremiumintegratedchannelplayoutsolutions

•Focusonsoftwareandservices,expandourcurrentsoftwaredivision,bothorganicallyandthroughacquisition,anddriveservicesthroughtheprovisionofourwirelessvideocontributiondevices

• Increaseourpaceofinvestmentinsoftwareandservices,furtherimprovingourprofitabilityandvisibilityofearnings

FindoutaboutPebbleBeachSystemsonpages28to33

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TRANSITION TO SOFTWARE AND SERVICES

END-TO-ENDIP

POINT OF VIEW — LIVE!

EXPANSION OF AVAILABLE

MARKET

MARKETLEADING

SOLUTIONS

A CONTINUATION OF THE PROGRESS DELIVERED IN 2014 THEY COVER 5 KEY AREAS:

DELIVERY OF SHAREHOLDER VALUE BY PROFITABLE GROWTH AND IMPROVED QUALITY OF EARNINGS

Breakinglivenewsstoriesprovideimmediacyandaudienceinteraction Capturinghigh-qualitylivevideofromchallengingenvironments

OUR GOALS AND STRATEGY FOR 2015 TO 2017

01 02 03 04 05

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OUR MARKETPLACE

Vislinkisaleadingglobaltechnologybusinessspecialisinginthecollection,transmission,managementanddeliveryofhighqualityvideoandassociateddatafromscenetoscreen.Vislinkprovidessolutionstothebroadcastmarketforthecollectionoflivenews,sportandentertainmentevents,aswellassoftwaresolutionsforchannelplayoutautomation,ChannelinaBoxandvideocontentmanagement,andtothesurveillancemarketincludingdefence,lawenforcementandpublicsafetycustomers.Vislinkbringstogetherindustry-leadingproductsandateamofexperiencedandknowledgeablepersonneltocreatecomprehensive,unifiedsolutionsthatenableourcustomerstodotheirjobsevenmoreeffectively.

Ourbusinessmodelisbuiltaroundourcorestrategicthemesofsupportingourglobalcustomersandchannels,acommitmenttocontinuedinnovationandmanagingcost-efficientoperationstodeliverprofitablegrowth.

Aroundthecorestrategicthemesofthemodelweviewourbusinessasfollows:

PRODUCT LEADERSHIP AND COMPLETE CUSTOMER SOLUTIONSWeofferourcustomersproductleadership,withindustry-leadingproductsdifferentiatedbytheintegrationofdisparatetechnologies,toprovidecompletecustomersolutionsandatieredproductandtechnologyportfolio.

Ourstrategicportfolioofproducts,combinedwithourcoretechnologiesandsystemsengineeringexpertise,allowustoprovideworld-classcomprehensivesolutionstoourcustomers.Ourmarketingandbusinessdevelopmentteamsutilisecustomerfeedback,marketresearchandindustryknowledgetocreatetheproductroadmap.Inturn,ourin-houseengineeringanddevelopmentteamscreateplatformsthataddresstheuniquechallengesoftherapidlychangingvideolandscape.Thiscontinuedinnovationresultsinend-to-endsolutionsthatfeature:

•World-classtechnology,specificallydesignedtomeettheuniquechallengesofthebroadcastandsurveillance,publicsafetyanddefencemarkets

•SpecialisedRFequipmentfornewsgathering,outsidebroadcasts,on-boardandotherevents,andcovertandovertsurveillanceapplications

•Flexible,portableandmobileproductsthatsupportseamless,real-timedeliveryofvideo,voice,anddataworldwideviamultipletransmissionchannels,includingmicrowave,satellite,cellular,IPandMESH

Unlikeourcompetitorswhoselldisparateproducts,weworkwithourcustomerstodesign,develop,andintegratecustomisedsolutionsthatdeliverlivevideocontentwhereitisneeded.

Vislink’syearsofexperienceinourproductsandmarketsallowustodeliver:

•Customengineeringforspecialprojects/solutions

•Highlyreliable,missioncriticaldeliveryofvideoandassociateddata

•Miniaturisationandruggedisationforchallengingenvironments

•Abilitytoleveragetechnologyplatformsformarketsynergies

CUSTOMERS AND CHANNELSWeofferworldwidesalesandorganisationalsupport.

In2014,theGroupoperatedthroughfivekeysalesregions:

•UK&RestofEurope•NorthAmerica•LatinAmerica•Asia/Pacific•MiddleEast&Africa

TobroadenourfocusinLatinAmerica,weexpandedoursurveillancedivisionwithintheBrazilianmarketplace.Inresponsetoincreasedclientdemandforalocalpresenceinthiskeymarket,afull-timesalesmanagerisnowstationedinSãoPaulo,Brazil.Thisexpansionaddstoourglobalpresenceandprovidesourcustomerswithlocalsalesandcustomersupport.

Findoutaboutoursolutionsonpages16to33

CONTRIBUTION DISTRIBUTION

POST PRODUCTION

SECURITY, PUBLIC SAFETY AND

DEFENCE

NEWS

LAPTOP

TABLET

SMART PHONE

T.V.

LIVE VIDEO

SPORTS & EVENTS

FROM SCENE TO SCREEN THE BROADCAST VALUE CHAIN

Livesportscoverageusingwirelesscamerasystemssolutions

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AVAILABLE MARKETTheexpansionoftheGroup’savailablemarketisoneofthefivekeystrategicgoals.

InBroadcast,thedevelopmentofbluechippartnerswillsupportourglobalgrowth,technologyofferingsandchannelstomarket.KeypartnersnowincludeGoPro,Fujitsu,NEL,TVUandHarmonic.

InSurveillance,therisingimportanceofhomelandsecurityandtheabilityformultipleagenciestoco-operateandtakedecisiveactionisincreasingdemandforcommunicationsystemsandrealtimehighqualityvideo,growingouraddressablemarket.

InBroadcastSoftware,theacquisitionofPebbleBeachSystems,whichdeliversworldleadingsolutions,hasopenedupthemarketfortheprovisionofsoftwareforautomation,ChannelinaBoxandcontentmanagementforbroadcasters.

TheGroupisbuoyedbyourincreasingportfolioofsolutionsandweareconfidentoftheopportunitiesthatwillcomefromourenlargedfootprintinthebroadcast,surveillanceandpublicsafetymarkets.

EXPANSION OF AVAILABLE MARKETSURVEILLANCE, PUBLIC SAFETY & DEFENCE

BROADCASTBROADCASTSOFTWARE

Solutionsfortheacquisition,managementandplayoutofmediaandcontentacrossawiderangeofbroadcastmarketsandchanneltypes,including:

•Nationalbroadcastersandnetworkoriginators

•ServiceprovidersandMSOs•Specialistandregionalbroadcasters•Sportsbroadcasters

OUR SOLUTIONS•Marina–nextgenerationenterpriselevelautomationplatformformulti-channelapplications

•Dolphin–multi-formatintegratedchanneldeliverysolutionsbasedonstandardIThardware

•Stingray–cost-effectiveself-containedChannelinaBoxforallchanneltypes

MARKET SIZE•Itisestimatedthattheintegratedplayout,automationsolutionsandChannelinaBoxmarketisinexcessof£200million

MARKET TRENDS •SignificantgrowthinAsiaandAfrica

•IncreasingadoptionofPebbleBeachSystemstechnologyinthekeyUSmarket

•GrowthinsaleschannelsbyvirtueofHarmonicOEMagreement

Completesolutionsforthecollection,transmission,andplayoutmanagementofliveeventvideoanddatafromanywherefor:

•Nationalandlocalaffiliatebroadcasters

•Majorleaguesportsstadiumsandmotorsporttracks

•Extremesportscoverage•Alternativemarkets,suchascolleges,highschools,andsmalleventorganisers

OUR SOLUTIONS•Livenews,includingfixedandportableENG,SNGandcellularsolutionsmultimodetransmission.

•Sportscoverage,includingwirelesscamerassystemsolutions,indoorvenuecoverageforstadiumsandarenas,outdooreventcoverageincludingmarathonsandgolftournaments,andcustomisedon-boardmotorsportsolutions.

•Televisedevents,includingcellularsolutionsforliveanywherecoverageandpointofviewcameraangles

MARKET SIZE•Basedonmarketresearch,theGroupestimatesouraddressablemarketisinexcessof£200million

MARKET TRENDS •IPworkflowsandCloudstorageformoreefficientdigitalcontentmanagement

•Buildoutof4GLTEnetworks,improvingreliabilityofcellularnewsgathering

•Multi-platformcontentdeliveryforon-the-goviewers

Comprehensivevideo,audioanddatacommunicationssolutionsthatprovidereal-timevideointelligencetoenableafullyintegratedpublicsafetyresponse.

•Firstresponders–Police,Fire,EMS•Helicopterandaircraftpilots•Federalandlocallawenforcement•Securityorganisations

OUR SOLUTIONS•Airborneoperations,includingwideareanetworkdownlinksolutions

•Mobilecommand,linkingmultiplevehicleson-scenetoairbornedownlinkimageryandEmergencyOperationsCentrepersonnel

•Unmannedsystems,includingUAVandUGVtransmittersolutions

•Maritimesolutions,includingair-to-ship,ship-to-ship,andship-to-shorerelays

MARKET SIZE•Basedonmarketresearch,theGroupestimatesouraddressablemarketisinexcessof£300million

MARKET TRENDS •Interoperabilityamongpublicsafetyorganisations,includingfirstresponders,incidentcommandersandfederalandstateagencies

•IPvideodistributiontoedgedevices,suchaslaptops,smartphonesandtablets

•ConversiontoHDqualityvideosystemsforclearerandbetterintelligence

MA

RG

INS

CASH GENERATION

HIGH GROWTH M

ARKETS

BROADCAST COMMUNICATIONS £200m+ *

SURVEILLANCE COMMUNICATIONS £300m+ *

AUTOMATION, CiaB & ADJACENT AREAS£200m+ *

*Group estimates based on market research

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OUR BUSINESS MODEL“VISLINK IS A GLOBAL TECHNOLOGY BUSINESS SPECIALISING IN HIGH QUALITY VIDEO SOLUTIONS FOR OUR WORLDWIDE MARKETS”

MARKETPLACE

CUSTOMERS

MARKET LEADING SOLUTIONS

KEY TECHNOLOGY

KEY RESOURCE

KEY PARTNERS

VALUE PROPOSITIONS

CHANNELS

BROADCAST SOFTWARE

DIRECT SALES & DISTRIBUTORS

BROADCASTERS AND STATION GROUPS

WIRELESS COMMUNICATION OF VIDEO & DATA - MICROWAVE,SATELLITE,CELLULAR & IP

POINT OF VIEW-LIVE!

UK & US OPERATIONS

END-TO-END IP

5 SALES REGIONS

“LIVE”-REAL-TIME ENVIRONMENTS“HIGHLY RELIABLE” MISSION-CRITICAL ENVIRONMENTS

BROADCAST COMMUNICATION SYSTEMS

SURVEILLANCE, PUBLIC SAFETY & DEFENCE COMMUNICATION

POLICE, HOMELAND SECURITY & SPECIAL FORCES

MULTI-CHANNEL CONTROL - AUTOMATION & CiaB

VIRTUALISATION

UK & US OPERATIONS

Knowledge Sharing

KEY

HARMONIC GoPro

TVU NETWORKS

DIRECT SALES & DISTRIBUTORS

“SOLUTIONS THAT MEET CUSTOMERS’ EXPECTATIONS”“FLEXIBLE SUPPORT”“INNOVATIVE AND TRUSTED GUIDE”


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MARKET LEADING SOLUTIONSOuraimistodevelopcompletesolutionstomeettechnologytrends:

•forvideo,whichhastravelledinthedirectionofbigger,better,fasterandhigherquality;

•forconsumers,demandinggreaterflexibilityastowhenandhowtheywatchvideo;and

•forbroadcasters,todelivertheabovewhileimprovingefficienciesandlaunchingnewchannels

KEY TECHNOLOGY•Virtualisation–wedesignsoftwareandsystemstomaximisethebenefitsofthisnewtechnologytooffermaximumflexibilityandcontrolofcontent,networksandassets

•PointofViewLive!–welooktocaptureandshareinterestingandinformativenewperspectivesthatwerepreviouslynotpossibleorwereseenastoocostly,providingreal-timehigh-qualityimagesandincreasedoptionsformultiscreenviewing

•End-to-endIP–weprovideourcustomerswithatotalpackagethatbringsIPVideoalongtheentireprocess,frompointofcollectiontotheviewer’sTVorsecondscreendevice

MARKETPLACEWeprovidesolutionstothreecoremarkets:

•thebroadcastcommunicationsmarket,forlivenews,sportandentertainmentevents,toprovidehighqualityvideocontributionfromscenetoscreen;

•thesurveillance,publicsafetyanddefencemarkets,suchaslawenforcementandhomelandsecurity,toenablereal-timevideointelligence;and

•thebroadcastsoftwaremarket,fortheacquisition,managementandplayoutofmediaandcontent

CUSTOMERS •Weworkcloselywiththemajorityoftheworld’sbroadcasters,includingspecialistsinnews,liveentertainmentandsports.Customersincludenetworkoriginators,TVstationgroupsandserviceproviders.Oursoftwaresolutionsandcommunicationlinkshavemanycommoncustomers

•Weprovidecompleteend-to-endsolutionstosurveillance,publicsafetyanddefenceorganisations.Customersincludepoliceforces,homelandsecurityagenciesandSpecialForces,intheUK,USandworldwide

CHANNELS•Ourbusinessaddressesglobalmarketsandwesellboththroughdirectsalesandpartnershipswithvalueaddedresellersandsystemintegrators.Webackupourdirectandindirectsalespresencebyensuringourcustomersupportisclosetoourcustomers,flexibleandresponsive

•Oursalesteamsandpartnersarefocusedonmarketsectorsbutshareknowledgeofcustomerrequirementsandkeymarkettrends

VALUE PROPOSITIONS•“Live”–real-timeenvironmentsdemandframeaccurate,timelysolutions

•“Highlyreliable”-missioncriticalenvironmentsdemandavailabilityanddependability

•“Solutionsthatwork”–comprehensivesolutionsneedtodeliveroncustomerexpectations.

•“Flexiblesupport”–ourcustomersrequiretherightsupport,wheneverandwhereverneeded

•“InnovativeandTrustedGuide”–wemusthelpourcustomerskeepabreastoftherapidpaceofchange

KEY PARTNERSWecontinuetocreateimportantstrategicpartnerships,including:

•withHarmonic,tocombinethebenefitsofPebbleBeachSystemsmarket-leadingMarinawithHarmonic’smediaservers,deliveringpremiumintegratedchannelplayout;

•withTVUNetworks,tocombineTVU’stransmissiontechnologywithVislink’shybridmicrowaveIPtechnologytodelivercompleteIPsolutions;and

•withGoPro(inearly2015),toenableGoProHERO4camerastoincludeaprofessionalgrade,live,HDwirelessbroadcastsolution,withatransmitterthatissmallenoughtobeworn

KEY RESOURCE•WemanageourbusinessthroughourmainoperationalsitesintheUKandtheUS.Wecreatenewproductsthroughourengineeringanddevelopmentcentresofexcellence,whichalsocollaboratewithourmarketleadingtechnologypartners

•Inadditiontoourmainsites,thesalesofficeswehaveinCalifornia,Dubai,SingaporeandBrazilareincreasinglyimportant.Webackupoursalespresencebyensuringourcustomersupportisclosetoourcustomers


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23765.02 17 April 2015 3:44 PM Proof 7

W H AT W E D OB R O A D C A S T

WEOPERATEINTHE‘‘HIGH-END’’BROADCASTMARKETFORLIVENEWS,SPORTSANDENTERTAINMENTEVENTS

Shapingastrongfutureforvideoandbeyondrequiresfindingnewwaysofgeneratinganddisseminatinglivecontentinthemostcost-effectivemannerpossible.VislinkcombinesportableandfixedassetswiththepowerofhybridtransmissionoptionsandIP-basedworkflowsolutionstoprovideaseamlessflowofcontenttotheend-user.

COLLECTIONWithaglobaltelevisionaudience,thereisnoroomforerror.ThatiswhyVislink’scompleteliveeventsolutionsarechosenforthebroadcastoflivenews,sportsandeventsworldwide.Ourbest-in-classwirelesscamerabacksandon-boardcamerasprovidethevideoquality,portability,ultra-lowlatencyandseamlessvideorequiredforbreakingnews,livevideoandsportingevents.

TRANSMISSIONVislinkblendsportabletransmittersanddiversityreceivesystemstocaptureandrelayvideotransmissionsfromthegroundtofixedmicrowavesites.Ourhighcapacityfull-duplexHDbackhaulsandfixedlinksystemstransmitvideoviamicrowave,fibreorIP.Specialisedhigh-gainreceivesystemsprovideseamlesslow-delaycollectionofSD/HDvideo.Hybridsolutions,combiningmicrowave,satellite,cellular,Wi-Fi,andIPtechnologiesdeliverHDdigitalnewsgatheringandvideotransmissionacrossdiverseterrainandincongestedenvironments.

DISTRIBUTIONVislinksolutionsprovideconnectivitythatenablesfullhigh-definitionviewingoftheeventtoviewersaroundtheworld.OurunmatchedproductportfolioofferscompleteHD,MPEG-4andH.264solutionswithcapabilitiesformultiplatformcontentdelivery,ensuringlive,broadcast-qualityvideoisdeliveredtoitsfinaldestination.

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WHY WE DO IT

Broadcasters are relying more than ever on the immediacy and audience interaction that comes from live broadcast.”

Inthefast-pacedindustryofnewsandentertainment,havingadynamictoolkit,builtonaplatformthatsupportsfuturegrowthanddevelopment,isextremelyvaluabletotoday’sbroadcaster.Fromthemulti-screenenvironmenttoremoteconnectivity,ouruniqueportfolioenablesend-to-endsolutionsthatenhancethequalityofserviceandexpandmobileconnectivity.

Broadcastersarerelyingmorethaneverontheimmediacyandaudienceinteractionthatcomesfromlivebroadcast.Achievingsuccessintoday’sdynamic,on-demandnews

environmentrequiresnotonlybeingfirstonscenebreakingthenewsstory,butalsodeployinglimitedresourcesforcoverageofmultiplenewsandsportseventsoccurringsimultaneously.

HYBRID TECHNOLOGIES TRANSFORM NEWSGATHERINGHybridnewsgatheringsolutionsofferstationstheabilitytodomore,withbothincreasedefficiencyandflexibility.Thecombinedpowerof

cellular,satellite,microwave,Wi-FiandIPnewsgatheringtransmissiontechnologiesmakesthedeliveryofbreakingnewstotheworldeasierthanever.

OurNewStreammultimodetransmissionsystemwasanindustry-firsthybridproductthatincorporatedmicrowave,satelliteandcellulartechnologiesintoasingleunit.Buildingonthissuccess,wehavereleasedanotherindustry-firstproduct:ournewcellularoutdoorunit(ODU).Thisrooformast-mountedcellulartransmitteriscompletelyweatherproof,allowingforoperation

inthemostextremeconditions.Theaddedheightadvantageofthemast-mounteddesignsignificantlyimprovesuserreliabilityandnetworkaccess.

RAPID RESPONSE Beingfirstonsceneofabreakingnewseventrequirespreparationandtherightequipment.TheVislinkcellulartransmissionsolutionincludesaportablehandheldtransmitterandsmall,compactrooformast-mountedoutdoorunitthatincreasesrangeandperformance.Theequipmentcaneasilybecarriedonarapidresponsevehicle,suchasamotorcycleorSportUtilityVehicle(“SUV”)andbetransmittingwithinfiveminutesofarrivalonscene.Vislinknowsupportsabroaderspectrumofcellularcarriers,allowingtheunittobeusedinmorecountriesinternationally.

REMOTE NEWSGATHERINGFornewsteamsthroughoutSouthAmerica,flyingcommercialairlinesiscommonwhencoveringstoriesinsurroundingcountries.Airlinerestrictions,particularlysizeandweight,wereanimpedimenttotransportingportablesatelliteterminals,whichofferuplinkcoveragefromeventhemostremotelocations.Vislink’sMSAThasbeendesignedforrapiddeploymentandremotenewsgathering.Thecompact,1.2mreflectorfitsintoalightweight,airline-checkablepackage.Setuptosatelliteacquisitioncanbecompletedinunderfiveminutes.Inaddition,theMSATprovidessignificantlyhigherdatarates(upto10Mbps)thanpreviousconventionalsolutions,enablinghigh-qualityvideoandhigh-speeddataconnectivityinthefield.

BROADCAST REVENUE

£37.8m2013£48.1m

NEWSTREAM

NEWS STUDIO

NEWS TRUCK

COURTHOUSE

STADIUM

BREAKINGNEWS

MESH/MIMO

MICROWAVE

HARD LINE

SATELLITE MICROWAVE CELLULAR

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Annual Report & Accounts for the year ended 31 December 2014

18

Vislink plc

MULTI-SCREEN DELIVERYThepopularityofedgedevicesandsecond-screenviewingrequiresbroadcasterstodistributevideoinmultipleformswithconsiderationforthetypeofviewingdevice(TVorhandheldmobile),methodofreception(cable,overtheair,cellularorWi-Finetworks),andend-userdisplayrequirements.

Vislink’sVideoMediaServer(“VMS”)streamsIPvideotowebsitesandcontentdeliverynetworkssimultaneouslyforsecondscreenusers.TheVMSisabletotranscodetheIPstreamstoaccommodateawiderangeofnetworkedgedevicesatvaryingnetworkbandwidths,whicheverismostappropriateforthedevicebeingused.TheseincludeiOS,Androidandthelatestplatformsforotherhandhelddevices.

Newcameraanglesgeneratesaudienceinteraction Combinedpowerofcellular,satellite,microwave,Wi-FiandIPmakesnewsgatheringeasierthanever

The combined power of multimode newsgathering transmission technologies makes the delivery of breaking news to the world easier than ever.”

MarcMarquezonhisvictorylap

Findoutmoreonourwebsite:Vislink.com

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STRATEGIC REPORT

19

Stock code: VLKwww.vislink.com

WHAT WE OFFER OUR CUSTOMERS

Vislink Delivers Innovative Video Solutions to the FIA Formula E Championship

THE CHALLENGEFormulaEisanewFIAChampionshipfeaturingFormulacarspoweredexclusivelybyelectricenergy.Theywantedtodeliverconsistent,real-time,close-upactionfromthetrackandpitlanes.Topspeedsofover200mph,nearconstantaccelerationanddeceleration,andfiercevibrationsarejustafewoftheextremeconditionsthatcreateuniquechallengesfordeliveringlowlatencyandcrystalclearimages.

THE SOLUTIONVislinkengineersdesignedandtestedavehicleon-boardcamerasystem,aswellasatrack-widereceivesystemthatensuresfullcoverageregardlessofcarpositioning.

FormulaEcarsnowracewithfourmicro-sizedon-boardHDcameras,whichcanbemountedinuptoten

differentpositions.H.264on-boardtransmittersprovideliveHDvideo,aswellasaudioanddatarelatedtothecar’sspeed,positionandothermetrics.

Fortycarshavebeenpre-wiredtoacceptwirelesscamerasandtransmitters.FormulaEhastheflexibilitytomaketwentycars“live”atanygiventime.

Toensurecontinuouscoveragefromaroundthetrack,multipleground-basedreceiversareplacedstrategicallyaroundthecircuit,soeverycameraprovidesuninterruptedvideo.

THE RESULTFormulaEviewersbenefitfromtheuniqueandimmersivefootageprovidedbyon-boardcameras,H.264transmittersandmultiplereceivers.Vislinktechnologyallowsbroadcasterstodeliverpersistent,HDqualityvideofromthetracktoviewersworldwide.

THE CHALLENGEDubai’sstatebroadcasterDubaiMediaInc(DMI)wantedtorevampitsAlMarmoumStudio,whichexclusivelycoverstheAlMarmoumcamelracetrack,fromitsexistingSDinfrastructuretoa3G/HD/SDfile-basedworkflow.Thestudiowantedtodeliverseamlesscoverageoftheactionfromeverycornerofthetrack,sotheviewerdidnotmissasecond.

THE SOLUTIONVislinkdesignedandinstalleda10-channelwirelesscameranetworkconsistingof8vehicle-

mountedMTV-HD2CompactDigitalTransmitters,andthreefullyintegratedINCAMSonycameratransmitsystems,whichwerepairedwithOCP5ControlUnitsforreverseRFcameracontrolcapabilities.

Additionally,athird-partyUAVwasoutfittedwithanMNTXtransmittertoprovideaerialfootage,andahandheldreceiverletsthegroundteamcontroltheon-boardcamera.

Thevideofromallcamerasignalsistransmittedtothestudioforprogrammemixing.Themicrowavediversityreceivesystemallows

multipleRFandvideochannelstobereceivedsimultaneously.

Totransmitfootagefromthetrack,DMIusesaNewSwifthighcapacitysatelliteterminalandMVLpoint-to-pointmicrowavelinkasabackup.

THE RESULTTheupgradedstudiomarkedamilestoneinDMI’squesttomoderniseitsoutputtoHDonly.Despitesignificanttimeconstraints,Vislinkwasabletodeliverandinstallthecompletesystem,whichperformedfaultlesslythroughouttheevent.

START YOUR (ELECTRIC) ENGINES CASE STUDY GALLOPING TO THE FINISH LINE CASE STUDY

Our goal is to provide the most immersive track experience possible for our viewers. Vislink delivered a customised solution that allows our audience unique camera angles from the cars and seamless video transmission from the strategically placed receivers around the track. Vislink’s engineers worked with us every step of the way to ensure the designs met our specifications through installation and final testing.”AliRussellDirectorofMediaFormulaE

Camel racing has a long and prominent tradition in the UAE, and our viewers expect seamless coverage from the entire event. The project of upgrading Al Marmoum Studio was not a simple one, because the racetrack extends more than 8km in distance. At DMI, we always look for new solutions with the latest technical trends that fulfil the objectives of the requirement. The solution provided by Vislink allowed us to meet the project objectives and achieve the high standards required by the Al Marmoum Studio.”SalehLoota-HeadofTVandRadioEngineeringofDMI

On-boardcamerasprovideindustry-firstviewinganglesfromthevehicles CompleteVislinksolutionsmayincludefixed,portable,microwave,satellite,IPandMESHtechnologies

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Vislink plc

Q

WITH THE GROWTH OF CELLULAR NEWSGATHERING EQUIPMENT, WHERE DO YOU SEE TRADITIONAL MICROWAVE AND SATELLITE PRODUCTS POSITIONED IN THE MARKET?

A

Thepopularityofcellularnewsgatheringisgrowingalongwiththeexpansionofinfrastructureand4G/LTEnetworks.Cellulartransmittersprovidetheopportunitytocollectmorelivevideocontentwithcable-freemobilityonsceneandatalowercost,asmultiplecrewswithcellulartransmitterscanbedeployedtoanumberofnewsstories.However,theavailabilityofcellularcoverageandnetworkbandwidthfluctuationscanaffecttransmissioncapabilityandquality,especiallyincountrieswhere3Gnetworksarestillthestandard.

Therefore,traditionalnewsgatheringtechniques,intheformofdedicatedlicensedmicrowavespectrumandsatelliteterminalsarestillaveryimportantcomponentoftheworldwidebroadcaster’sworkflow.Microwavetransmissionprovidestheultimateinreliability,lowlatency

andpicturequalityrequiredforsportsandliveevents.Bothfixedandportablesatellitesystemsarecapableofrobustvideoanddatathroughputandprovideareliableplatformtobroadcastfromalmostanywhereintheworld.

Werecognisethebenefitsthatmultipletransmissionmodesprovide,andwearecontinuingthedevelopmentonhybridproductsthatcombinethesetechnologiesintoasinglepackage.Thechoiceofcellular,microwave,satellite,Wi-FiorIPtransmissionprovidesourcustomerscompleteflexibilityandreliabletransmission,fromanywhereintheworld.

Q

AT NAB 2014, VISLINK ANNOUNCED A PARTNERSHIP WITH TVU NETWORKS. HOW HAS THIS PARTNERSHIP BENEFITTED VISLINK?

A

AspartofourpartnershipwithTVU,wedevelopedtheTVUPackPoweredbyVislinkHybridTechnology.ThisuniquejointofferingintegratestheTVUPackTM8200andTVU’sInverseStatMuxIPtransmissionprotocolstocombinemultipledataconnectionswithVislink’shybridmicrowaveIPtechnology.Thissolutioncombinesbest-of-breedcellularandIPmicrowave

transmissiontechnologiesintoasinglemobile,lightweightbackpack,enablingbroadcasterstotransmitHDvideosimultaneouslyovercellularandmicrowaveconnectionswithsub-secondlatency.

ThisnewPackwasanimmediatehitatIBC2014,takinghometwoindustryawardsanddemonstratingthetwocompanies’commitmenttomeetthegrowingdemandforhighlyresilientandportablenewsgatheringequipment.

Vislink’spartnershipwithTVUalsoallowsustoprovideadditionalmethodsofvideocontentdistributionthroughtheTVUGrid.TheGridnetworkprovidesaconnectiontovideosourcesanddistributionpointsthatallowsuserstosharelivevideocontentinstantlytoanywhereintheworldthathasaccesstoaGrid-accessibledevice.

Anumberofourcustomersarenowrealisingthebenefitsofthispartnership,andwearelookingtoidentifyadditionalopportunitiesforjointgrowthin2015.

Q

WHAT IS VISLINK’S VIEW ON 4K AND H.265?

A

ThereisnoquestionthatthefutureofTVviewingis4K–picturequalitywillcontinuetoimprovebecausethatiswhatconsumerswill

demandandTVmanufacturerswillhavetorespond.Withthegrowthofmulti-platformcontentdelivery,videoon-demand,andotherformsofstreamingmedia,amoreimportantissuequicklybecomesapparent:4KusesfarmorebandwidthtotransmitthanHD.

Theincreasedbandwidthrequiredtotransmitvideoat4Ktranslatestohighercostsforbroadcasters.Internetstreamingserviceswillalsoencounterproblemsas4Kshowsincreasedemandoncableproviders,whomaybeginimposingbandwidthlimitsonconsumers,whichwilldramaticallyincreasebufferingtimesforonlinecontentviewing.

Asaresult,Vislinkisdevelopingadvancedcompressiontechniquesthatwillreducethebandwidthrequiredfortransmission,andwithit,thetotalcost.H.265(alsoknownasHEVC),thesuccessorofH.264/MPEG-4,isexpectedtodeliverthesame,orevensuperior,picturequalityforbothHD/SDand4Kresolutions,ata50percentreductioninbitrateversusMPEG-4/H.264.

Tomakewayforbroadcasting4Kefficientlyandcosteffectively,encodersanddecoderswillneedtoincorporateH.265hardware.Thereissomedebateoverthetimelineofimplementationandadoption,butVislinkisalreadyplanningtheintegrationofH.265and4Kcapablehardwareintoourcurrentrangeofproducts.WhenconsumersandTVmanufacturersarereadytomake4Kthedefactostandard,Vislinkbroadcastcustomerswillhavethetoolstomakeithappen.

Q

HOW IS VISLINK RESPONDING TO THE SHIFT TOWARD IP WORKFLOWS?

A

ThebenefitsofIP-basedworkflowsincludethehomogeneousnatureoftheingestedvideo,affordableprocessingonservers,standardstotransporthighbandwidthvideoviaIP,thelowercostofIPversusSDIrouting,andflexibilityinproductionandencoding.Asaresult,thebroadcastindustryisatacrossroadsofmajortransition-theslowphase-outofstationtechnologicalmainstaysSDIandvideorouters,andtheirsubsequentreplacementwithIPworkflows.

Vislinkisrespondingbyshiftingitsofferingstocompleteend-to-endsolutionsthatgobeyondcollectionandtransmissionofvideotothestudiotonowincludefilemanagementandcontrolsoftware.ThisaddedfunctionalityprovidesourcustomerswithatotalpackagethatbringsIPvideoalongtheentireprocess,frompointofcollectiontoviewer’sTVorsecondscreendevice.

Mike Payne

GALLOPING TO THE FINISH LINE CASE STUDY

Q&A WITH MIKE PAYNEVISLINK COMMUNICATION SYSTEMS CHIEF TECHNOLOGY OFFICER AND PRESIDENT OF VCS AMERICAS


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STRATEGIC REPORTStock code: VLKwww.vislink.com

W H AT W E D OS U R V E I L L A N C E , P U B L I C S A F E T Y

& D E F E N C EWEPROVIDECOMPLETEEND-TO-ENDSOLUTIONSTOADDRESSTHENEEDSOFTODAY’SSURVEILLANCE,PUBLICSAFETYANDDEFENCEORGANISATIONS

Vislinksystemsprovidereal-time,actionableintelligencetocommandstaffanddecision-makers,resultingindecreasedresponsetimesandmoreefficientdeploymentofresources.Oursolutionsspecialiseinthecollection,managementanddistributionofhigh-quality,mission-criticalvideowhichenablesofficersandpublicsafetypersonneltomakebetterinformeddecisions,resultinginafasterandsaferresolutiontothesituation.

COLLECTION Wearespecialistsinairbornedownlinkstomobilecommandandemergencyoperationscentres,

fixedpoint-to-pointandportabletransmission,centralreceivesiteinfrastructure,maritimeapplicationsandUAVsolutionstomeetthedemandsoffieldpersonnelandcommandstaff.

MANAGEMENTVislinksolutionsallowpublicsafetyofficialstovisualiseandprioritisethetacticalpicturetoroutemission-criticalvideodirectlytofirstresponders.Interoperabilityensuresallstakeholdersparticipatefullyinthetacticalresponse.

DISTRIBUTIONFullyinformeddecisionscannowbemadefromvirtuallyanywhereusingsmartphoneandtablettechnology.UtilisingaVislinkCloudorhardware-basedvideomediaserver,live,encrypted,broadcast-qualityvideocanbetransmittedviaIP,3G/4GLTEandWi-Finetworks,andviewedbyusersvirtuallyanywhere.

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WHY WE DO IT

Vislink solutions provide broadband communications from the most remote locations worldwide.”

DELIVERING SUPERIOR SOLUTIONS THAT PROVIDE COMPLETE SITUATIONAL AWARENESS FOR MORE EFFECTIVE DECISION MAKINGDigitaltechnologyisimprovingcommunicationsatalllevelsoflawenforcement.Vislinkunderstandstheimportanceofprovidinghighlyreliable,securecommunicationssystems.Vislinkworkscloselywithourcustomerstoidentifytheirlocalandregionaloperationalchallenges,anddesignsanddeploysa

customisedsolutionthatcapturesanddisseminateslivevideocontentinthemostcost-effectivemannerpossible.

VISLINK SOLUTIONS:•Deliverreal-timevideoandtacticalinformationdirectlytocommandpersonneltoassessandassistindisasterresponses

•Allowforinteragencysharingandcooperationofmission-criticalvideo,voiceanddata

•Providebroadbandcommunicationsfromthemostremotelocationsworldwide

•Increasecriminalidentificationandapprehensionrateswithcrystalclearimagery

•Reducecostsbybeingscalableandexpandableforfutureupgrades

COMPLETE END-TO-END SOLUTIONSVislinksolutionssupportairborne,mobile,fixed,andcovertvideosurveillancemissionsincluding;airbornedownlinks,criminalinvestigation,crisismanagement,mobilecommandpostsandfieldoperations.Acompletesolutionincludessitesurveyandengineering,frequencycoordination,installationandintegration,turnup,testingandacceptance,andpreventativemaintenance.

AIRBORNE OPERATIONS Theabilitytoviewatacticalsituationfromtheairminimisesresponsetimeandoptimisesofficersafety.Ourcompact,lightweightproductsprovidepowerful,high-qualityvideoandexcellentdatatransmissionspeeds.Utilisingreal-timevideo,incidentcommanderscanquicklyestablishoperationalprioritiesanddeployresourcesefficiently,astheLondonAmbulanceServicecasestudyonpage26highlights.

UAVUAVsprovidemission-criticalvisualimageryfromaerialunits,allowingcommandstafftoviewandaccessincidents.Vislink’ssmall,lightweightvideodownlinktransmitterprovideshigh-qualityreal-timevideotothesurveillanceandpublicsafetysector.

TACTICAL MOBILE COMMANDEffectiveincidentmanagementoftenrequiresanonsitemobilecommandvehicle,andoursolutionsincludevehicletransmittersandportabletacticalreceivers.Vislink’smobileconfigurationscandelivermaximumrangeandsupportmultiplevideo,audioanddatafeeds.Vislink’stechnologyprovidessecuredistributionofmissioncriticalvideoviaanInternetProtocol(IP)networktofirstresponders,commandstaff,andEmergencyOperationspersonnel,atmultiplelocations.

MARITIME RECONNAISSANCE Coastguard,borderprotectionandcustomsauthoritiesareincreasinglyconcernedwithsecurity,drugenforcementandfisheryprotection.Vislink’smaritimesolutionincorporatesmicrowavedownlinktransmittersonUAVsoraircraftforcoordinatedseaandairpatrols.Remotesurveillancesystemsusesmartmonitorswithmovingmapsoftware,digitalvideorecorders,andGPSreceiversystemsforreliableauto-tracking.SURVEILLANCE

REVENUE

£15.9m2013£11.8m

AIRBORNE VIDEO

UAV VIDEO

MAN PORTABLERECEIVER

COMMAND VESSEL

BOARDING PARTYREAL-TIME VIDEO

AIRBORNE RELAY

COMMAND &CONTROL CENTRE

RECEIVE SITE

RECEIVE SITELINE OF SIGHT

MAN PORTABLERECEIVERVEHICLE MOUNTED

RECEIVER

VEHICLE MOUNTEDRECEIVER

RECEIVE SITE

MOBILECOMMAND

SWAT VEHICLE

UGV

CCTV

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INTEROPERABILITYOursolutionscombinevideointelligencefromavarietyofdeployedassetsintooneseamlessflowofinformationthatisinteroperablewithotherrespondingagencies.Theabilitytoshareintelligencesimultaneouslyamongmultipleagencies,includingpolice,ambulance,fire,maritimeandotherdepartments,enablesafullyintegratedpublicresponseteamthatoptimisesresources,reducesexpenditureandimprovesoveralloutcomes.Oursolutionsalsoallowforinteragencysharingofmission-criticalintelligence,astheSanAntoniocasestudyonpage26demonstrates.

Vislink’sadvanceddownlinksolutionsenhancemaritimesurveillanceandsafetyoperations

Vislink’smaritimesolutionsco-ordinateseaandairpatrols Livevideosolutionsenablefasterresponsetimesandseamlessoperations

IP DISTRIBUTIONTheVislinkVideoMediaServer(VMS)ingestsallthevideofromdeployedassetsandmakesthelive,real-timevideoavailableforviewingonfieldedgedevices,suchassmartphonesandtablets.TheVMS,combinedwithremotewirelessnetworks,allowsfieldpersonneltoturntheirsmartphoneintoanadvancedcommunicationtooltoviewreal-timeairbornevideo,regardlessoftheirlocation.Ratherthanrelyingontraditionalreceiveanddistributioninfrastructure,whichcansometimesbelimitedinavailablecoveragearea,IPdistributionviatheCloudorhardware-basedVMSprovideseveryofficeratanincidentsceneaccesstotacticalimagery.

IP video provides interoperability that allows multiple agencies to share intelligence simultaneously, enabling a fully integrated public response that optimises resources and improves situational outcomes.”

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London Ambulance Service realises the benefits of multi-agency integration

THE CHALLENGELondon’sAmbulanceServiceprovidesafastandeffectiveresponsetopublicincidents,althoughhistoricallyithasworkedindependentlyfromLondon’sotheremergencyservices.Itneededthecapabilitytoreceiveintelligencefrombothairandgroundunitsfasterandmoreaccurately,insteadofrelyingonvoicecommunicationbetweenindividuals.

THE SOLUTIONVislink’stechnologyhastransformedtheLondonAmbulanceService’sperformanceandresponsivenessontheground,whilepromotinggreaterunitywiththecapital’sotherkeyfirstresponders.Usinghandhelddevices,theteamsnowstayinconstantcontactwithhelicopters,airplanesandboatstoreceivedownlinkinformationinreal-time.Whenacriticalincidentoccurs,itcandeployinjust15minutesand

experiencethesameeyesandearsasthosepresentatthescene.

Forexample,ifsomeonefallsintotheRiverThames,dataisdownloadedtotheambulanceservice’smobiledevicedirectlyfromthehelicopterpresentattheincident.AstheambulancemakesitswaytotheexactGPSlocation,itsteamcanseethepatientincrystal-cleardetail,toestablishwhotheyare,wheretheyare,whatishappeningtothemandwhatconditiontheyarein,allbeforearriving.

THE RESULT VislinkcamerasanddownlinksolutionshaverevolutionisedtheLondonAmbulanceService’scapabilities,savingasignificantamountofmoneyoperationallywhilepromotinggreatermulti-agencyintegration.

Vislink’s downlink unit is an invaluable tool for enabling better decision-making. This unique way of working with the Met Police has been so effective that it will be introduced in other areas of the UK.”ChrisDoyleOperationsCommander,LondonAmbulanceService

San Antonio Police take airborne downlinks to the next level with Diversity Receive Systems

THE CHALLENGETheSanAntonioPoliceDepartment,whichprotectsmorethan1.5millionpeoplespreadoveranareaof400squaremiles,neededtoupgradetheirageinganaloguemicrowaveequipmenttoareal-time,high-definitiondigitalvideosurveillancesystem.

Theyrequiredasystemthat:

•WouldprovidelivevideofrommultiplehelicopterstotheirEmergencyOperationsCentre(EOC)andofficersontheground

•Wasinteroperableandcompatiblewithotherlawenforcementcommunitiesinthearea

•Encompassedacoverageareathatincludedboththecityandsurroundingsuburbs

THE SOLUTIONVislinkworkedwithourValueAddedReseller,RSIGlobalCommunications,todevelopandimplementacompleteend-to-endvideosurveillancesolution.

Downlinktransmittersandomni-directionalantennaswereinstalledonallfourhelicopters.Real-timeimagerycannowbetransmittedsimultaneouslytothecommandvans,groundpersonnelviadigitalhandheldreceivers,andtothefixedreceivesite.

AvideomediaserverconvertsthevideostreamtoIP,allowingcompleteflexibilityindistributionoptions.VideoisstreameddirectlytoavideowallattheEOCforviewingbycommandstaff,andtofieldedgedevices,suchassmartphonesandtablets,forviewingfromvirtuallyanylocation.

THE RESULTByupgradingfromanalogueequipmenttoadigitalreceivesystem,SanAntoniowasabletotakeadvantageofincreasedoperatingrangeandsuperiorimagequality.Theywerealsoabletorealisethebenefitsofinteroperabilityandcompatibilitywithotherlocalareaagencies.

The San Antonio Police Department were pleased with their ability to purchase a comprehensive integrated solution from a single provider, complete with system evaluation, design, manufacturing, installation, service and extended warranties.” RSIGlobalCommunications

AN EYE IN THE SKY MISSION-CRITICAL DIGITAL VIDEO

Airbornevideodownlinksprovidelive,aerialvideointelligenceofanunfoldingsituationIPvideoprovidesacommonplatformforinteragencysharingofintelligenceandassets

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HOW HAVE VISLINK’S SATELLITE SYSTEMS ADVANCED OVER THE PAST YEAR?

A

VislinkenteredintoacooperationagreementwithsatellitecommunicationssolutionssupplierNDSATCOM,whichgivesourcustomersaccesstotheirportfolioofproducts.AsaresultNDSATCOM’sSKYWAN5GmodemisbeingmadeavailableaspartoftheVislinkrangeofSATCOMequipment.

TheADM5100isahalf-rack,multi-functionalunitthatencompassestheSKYWAN5Gmodem,whichmakesitoptimallysuitedforusewithanynetworktopology,includingstar,multi-star,hybridorfullMESHnetworks.ThisproductoffersgreaterflexibilitytotheVSATworldandwillprovidebroadcasterswithenhancedefficiencywhentransmittingcompressedvideoacrossall-IPnetworks.TheSKYWAN5GwillalsobeavailableasanintegratedoptionfortheMSATrangeofportableandlightweightsatellitedataterminals.

HOW IS VISLINK INCORPORATING NEW TECHNOLOGIES AND EASIER-TO-USE WEB INTERFACES INTO ITS PRODUCTS?

A WedemonstratedtheConnectivityPackfunctionalityatIBC2014.ThisallowedtheMSATterminaltoactasaVPNtothestudiousinganyavailablemeanssuchasUSBModem,PublicWiFiHotspotsoritsownsatellitelink.

AsimpleWiFi/Networkaccessiblewebclient,allowsnon-technicaluserstosimplyswitchontheVPN.TheusersarethenconnectedtotheStudioNetworkandtheMSATcanberemotelycontrolledbyanengineerinthestudio.

TwofurtherpackswillbeavailableforenablingBi-DirectionalCommunicationsoverstandardbroadcastlinkssuchasDVB-S(2)orDVB-T:

•IPOptimisationPackprovidesIPaccelerationtechniquesenablingservicessuchasefficientnetworkconnectionsandIFB/Talkback/VoIP,overlossy,highlatencylinks

•FileTransferPackforStoreandForwardfiletransferoverUnidirectionallinks,withacceleratedtransferoverAsymmetricandSymmetriclinks

Streaming encrypted IP video over public cellular networks provides key decision-makers the ability to view mission-critical video imagery regardless of their location.”

Q Q Q

WHAT ARE KEY MARKET DRIVERS IN THE SURVEILLANCE AND PUBLIC SAFETY SECTOR?

A

Improved technology: Astechnologychangesandadvances,moreandmorepublicsafetyorganisationsareupgradingtoreal-time,high-definitiondigitalvideosystemsthatincreaseoperatingrangeandprovidesuperiorimagequality.

IP:Theseorganisationswanttoutilisetheirexistinginfrastructuretostreammission-criticalvideoimageryoverIPandpubliccellularnetworks,forviewingbykeydecision-makers,regardlessoftheirlocation.

Interoperability:Effectiveincidentmanagementrequiresahighlevelofmobilityandcooperationamongmultipleagenciesandoperationspersonnel.Forthisreason,organisationswantasystemthatprovidesinteroperabilityandcompatibilitywithotherorganisations,suchasneighbouringcities,counties,orstatewideinfrastructure.

Simon Derry

Q&A WITH SIMON DERRYCHIEF EXECUTIVE OFFICER VISLINK COMMUNICATION SYSTEMS

Rapidlydeployable,reliablevideoanddatacommunicationsystems


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W H AT W E D OB R O A D C A S T S O F T W A R E

WEDELIVERSOFTWARESOLUTIONSTOAUTOMATEANDMANAGEBROADCASTMEDIA,CONTENTANDOPERATIONSFORTV

BROADCASTERSANDCABLEANDSATELLITEOPERATORSWORLDWIDE

PebbleBeachSystemsdevelopsandsuppliessoftwaresolutionsforTVbroadcasters.Ourmajorstrengthsareintheareaofplaytoairsystemsandthemanagementofmediaassets.

Broadcastersandmediacompaniesrelyontheaccurateandtimelyplayoutofscheduledprogramminginordertofulfiltheircontractualobligationsandtoprotecttheirrevenues.

PebbleBeachSystemshasdevelopedintelligent,robustsoftwarethatautomatesthemission-criticaltaskofplayingoutthecorrectmedia,alongwithanysecondaryactionssuchasgraphicsandsubtitling,attherighttimeontherightchannels.Aswellasenablingoperatorstocontrolalargernumberofchannelsthanpreviouslypossible,italsoreducesthe

potentialforoperatorerror,partlybycontinuouslyvalidatingmediatoensureitispresent,correctandreadyforplayoutontime,andbycontrollingthemultiplecomplextechnologieswhichdeliverchannelstoair.

28

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F R O M S C E N E T O S C R E E N

WHY WE DO IT

We are seeing a proliferation of lower cost software solutions which are replacing traditional hardware products.”

Recentyearshaveseenahugeincreaseinthenumberofchannels,partlybecauseofnewthematiclaunchesandtheriseofspecialistchannels,butalsobecauseoftheintroductionofHighDefinition,Mobile,IPTV,4G,andOverTheTop(OTT)services.Atthesametimethereispressureonbroadcasterstoimproveefficienciesandreducecosts.Manyarelookingtomakesavingsbyoperationaloptimisationssuchasreducingcapitalinvestment,runningcosts,spaceandpowerusage.Muchofthisismadepossiblebyadvancesincomputertechnology,

andwearenowseeingaproliferationoflowercostsoftwaresolutionswhicharereplacingtraditionalhardwareproducts.

PebbleBeachSystemshastheexpertise,experienceandproductportfoliotohelpbroadcastersmeetthesegoals.Asaleadingdeveloperandsupplierofautomation,‘‘ChannelinaBox’’andcontentmanagementsolutionsforTVbroadcasters,cableandsatelliteoperators,thecompanydeliverssolutionswhichhavetheflexibilitytosupportawiderangeofbroadcastapplications.Our

automationproductsaresuitableformultichannelplayoutandhighpressureliveprogrammingenvironmentssuchasnewsorsports,whilstsupportingnewtechnologiessuchasHD,IPTVandinteractivetelevision.ThegrowingclientlistincludesTVGloboBrazil,FoxNewsandBusinessChannelsUSA,ZDFGermany,OrbitShowtimeNetworkUAE,EricssonSweden,TV2Denmark,MTGUKandAMCNetworksBroadcastingandTechnologyUSA.

Oneofthemainchallengesfortechnologycompaniesinthissectoristokeepabreastoftherapidrateofchangewithintheindustry,andtobeabletoadapttothenewtechnologiesastheypresentthemselves.Videoandaudioprocessingismovingfromdedicatedhardwareintostandardsoftware,andstandardIThardwareisbeingreplacedwithvirtualisedsolutionsor‘‘Cloud’’technology.SoftwarecompaniessuchasPebbleBeachSystemsareideallypositionedtogrowwithinthisrapidlychangingmarketastheyareagileaswellashavingtheexperience,technologyandestablishedpresencewithinthemarkettobeabletodelivertheverylatestsolutions.

SolutionsneedtodistributevideotoTVs,laptops,tabletsandSmartPhones

BROADCAST SOFTWARE REVENUE

£8.3m2013£Nil

Playout automation has an increasingly pivotal role to play in driving business efficiency.”

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Videoandaudioprocessingismovingfromdedicatedhardwaretostandardsoftware Ourautomationproductsaresuitableformulti-channelplayout

Solutionsaresuitableforhighpressureliveprogrammingsuchasnewsorsports

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SwedishmediacompanyModernTimesGroup(MTG)isaninternationalmediacompanywithoneofthelargestentertainmentcontentportfoliosintheindustry.ItbroadcastspremiumlivesportssuchastheChampionsLeagueandFormula1,alongwithpremiumUSdrama,locallyproducedTVseries,realityTVandcomedy,toover130countries.

ContentisdeliveredviafreetoairandpayTVplatformsacrossScandinavia,theBaltics,CentralandEasternEuropeandintoemergingmarketsinAfrica.ViasatisalsooneofthelargestcommercialradiooperatorsintheNordicandBalticregions.

HavinglaunchedTV3,thefirstcommercialchannelinScandinavia,onNewYear’sEvein1987,thegroupnowemploysinexcessof3000employeesandpostedrevenuesinexcessofSEK15bnin2014.

WhentheUKoperationelectedtorelocatetoitsnewChiswickfacility

inWestLondon,fromanexistinginstallationinWestDrayton,MTGtooktheopportunitytorefreshitsplayouttechnologyandtoaddressoperationalissueswithitslegacyequipment.Attheheartofthenewinstallationsitsa48channelMarinaautomationsystemwhichhasbeensuppliedaspartofaturnkeysystemviasystemsintegratorBCE,asubsidiaryofRTLinLuxembourg.

PebbleBeachSystemsSalesDirectorTomGittinscomments:

“WedeliveredamultichannelplayoutsystemtoMTGinSwedensoonafterPebbleBeachSystemswasfounded,andhavebeenworkingcloselywiththegroupformanyyears.ThesubsequentsupplyofaplayoutsystemtoViasatGhanawasfollowedwithamajorprojectatViasatRiga,whereweprovideanendtoendworkflowsolution,includingmediamanagement.WehavealsosuppliedautomationtoMTG’soperationinTanzania.Thisnewinstallationwent

onairduringMarch2015andisthelargestMarinadeploymentintheUK.ItcontrolsarangeofthirdpartytechnologyincludingHarmonicvideoservers,andisresponsiblefortheplayoutofthemainTV3channelplusanumberofoptoutchannelswhichcarryregion-specificcommercialstoatotalof19sub-regions,acrossScandinavia,RussiaandHungary.”

ThesystemalsohandlestheplayoutofanumberofthematicandfilmchannelsfromtheChiswickfacility.Thenewinstallationintroducedanumberofnewsystemsthatrequiredintegrationtoimprovetheoverallworkflowprocess,andPebbleBeachSystemsworkedcloselywithanumberofvendorsonPlaylist,GraphicsandMediaManagementintegration

MagnusLindholmisCEOatMTGBroadcastCentreAB,inStockholm,Sweden,andoversawtheselectionprocess.

Marinaautomationfeaturesahighlyconfigurableuserinterface

MTGtooktheirMarinasystemliveinMarch2015

MODERN TIMES GROUP CASE STUDY

We are excited to be implementing this next generation automation platform. It was important for us to select a solution which can evolve and develop as our business needs change over the coming years. In addition to providing expert assistance to us during the design phase of this project, Pebble Beach Systems continues to deliver excellent support on an ongoing basis for the systems we already have in operation.”MagnusLindholmCEOMGTBroadcastCentreAB

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Findoutmoreonourwebsite:Pebble.tv

WHAT HAS HAPPENED SINCE THE MERGER WITH VISLINK IN MARCH?

A

ThegrowthofPebbleBeachSystemshasacceleratedsincetheacquisitionbyVislink.OurflagshipMarinaandDolphinautomationproductshavebeenverypopular,andarebeingselectedbymanyTier1broadcastersallovertheworld.WehaverecentlybeenawardedseveralmajorcontractsintheUSA,MiddleEast,BrazilandEurope.Ourrecurringrevenuesarealsoincreasing.

InSeptemberwesecuredasignificantOEMagreementwithHarmonic,amajorsupplierofequipmenttothebroadcastmarket,whowillreselloursoftwaretogetherwiththeirserverproductsworldwide.

HOW IMPORTANT IS AUTOMATION TO THE BROADCASTER?

A

Asthenumberofchannelscontinuestorise,playoutautomationhasanincreasinglypivotalroletoplayindrivingbusinessefficiency,replacingmanualoperationsandguaranteeingthatchannelswillremainonairinavarietyoffaultconditions.Automationsystemsalsodeliveressentialreportingandauditingmetricsforthebroadcastbusinessowner.

Broadcastersthereforerelyonsuchsystemsinordertofulfiltheircontractualobligationsandtoprotecttheirrevenues.PebbleBeachSystemspridesitselfondeliveringrobustsolutionsandexceptionalsupportforthetechnologyitdeliverstofulfilthismission-criticalfunction.

WHAT ABOUT THE FUTURE?

A

PebbleBeachSystemshasahighlycompetentanddedicatedteamofdevelopersandprojectengineerswiththeexperienceandskillstofocusonthespecificneedsofthebroadcaster,whilstleveragingnewtechnologiestodrivetheproductrangeforward.Ledbyaforward-thinkingandambitiousmanagementteamwithapassionfortheindustry,thecompanycontinuestogroworganically,andbenefitsfromthescaleandinfrastructurethatbeingpartoftheVislinkGroupbrings.

Wealsointendtoaccelerateourgrowthfurtherbyexpandingintonewgeographicterritoriesandbyaddingnewproductsandtechnologiestowidenourproductoffering.

Q Q Q

Peter Hajittofi

Q&A WITH PETER HAJITTOFI PEBBLE BEACH SYSTEMS MANAGING DIRECTOR

Q

WHAT TECHNOLOGY CHANGES ARE YOU SEEING IN YOUR SECTOR?

A

PCtechnologyhasadvancedtoalevelwheremanytasksthatusedtobeperformedbyspecialisthardwareproductsarenowpossibleinsoftware.PebbleBeachSystemshasthereforedevelopedsoftwarethatreplacesmanyofthehardwareproductsthathavetraditionallybeenusedinplay-to-airsystems.Thisenablesustoofferbroadcastersevengreatercostsavings.WearenowtakingthetechnologyevenfurtherandarelookingtoprovidesolutionsthatoperateentirelyintheIPdomain.WearecurrentlycarryingouttrialswithaEuropeanplayoutserviceprovidertoevaluateitsplaytoairtechnologyoperatinginavirtualITenvironment.

Onceplayoutinavirtualenvironmentisproven,Cloud-basedplayoutwillbecomefeasible,enablingthedeploymentoflowercostsolutionsthatoperateentirelyonastandardITplatform.

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OUR PEOPLE/TALENT

Vislinkhasover300employeeswiththemajorityemployedinourtwooperatingdivisions,VislinkCommunicationSystems(VCS)andPebbleBeachSystems(PBS).Weprideourselvesinemployingdedicatedpeopleandinturn,assistingandallowingthedevelopmentofthosededicatedpeople;includingthroughperformancedevelopmentandtailoredtraining.

ENGAGING EMPLOYEE OPINIONFollowingthesuccessfulimplementationinoursoftwaredivision,theenvisagedroll-outofemployeeengagementsurveysacrosstheGroupwillenableemployeestohaveavoice;providinginvaluablefeedbacktotheGrouptoensurethattheCompanyiscommunicatingeffectivelyandallowingforanenjoyableandchallengingplacetowork.

PROMOTING DIVERSITY AND INCLUSION Vislinkbelievesthatdiversitymakesgoodbusinesssense.Thesuccessofanyorganisationandthatofitsemployeesdependsverylargelyontheemployeesthemselves.

Aswedevelopnewproductsandexpandourmarkets,wearealwayspleasedtowelcometalentedindividualstoourdedicatedteam.Weunderstandthevalueofworkingtogether,knowingthateachindividualplaysavitalroleintheCompany’ssuccess.Ourbusinessisbuiltonpeoplefromdifferentbackgrounds,comingtogetherforacommongoal.Weprovideequalopportunitiesregardlessofrace,religiousbelief,politicalopinion,sex,maritalstatus,sexualorientation,ageordisability.Wedonotcondoneanydiscriminatoryactorattitudeintheconductofourbusinesswiththepublicorouremployeesandwelooktoouremployeesforsupportinimplementingourpoliciesandpractices.

DEVELOPING LEAN AND EFFICIENT OPERATIONSAstheCompanygrows,weareworkingonsimplifyingprocessesandsharingideasacrossourofficesanddivisions.Weunderstandthebenefitsofsharingbestpracticeandalthoughourhardwareandsoftwaredivisionsappearverydifferentontheoutside,underneathwehaveseenwheredevelopingcommonprocessescanassistgreatly.Wearecurrentlyfocusingonmovingourengineering

Identifying and investing in the next generation is key to achieving and maintaining growth within the Group.”

expertisetoourdevelopmentcentresofexcellence,creatingsingleproductmanagementforgreaterefficiency.Whilstdoingthis,wecontinuetoensurethatweconsultwithallemployeesaffectedbythechange.

STRENGTHENING THE TEAM 2015willseeanincreasedinvestmentinrecruitmentandtalentmanagementwhichwillprovideadynamicbusinessfitforgrowth.VislinkiskeentoenhanceitscurrentGroupprocessesandprocedurestoensureemployeesatalllevelshaveaccesstorelevanttrainingandmanagementsupport.

Aspartoftheongoingdevelopmentofthetalentmanagementprogrammewearelookingtobuildonthesuccessofourgraduaterecruitment,particularlyinthebroadcastsoftwaredivision.IdentifyingandinvestinginthenextgenerationiskeytoachievingandmaintaininggrowthwithintheGroup.

OUR AIM IS TO RETAIN COMPANY VALUES AND REMAIN A PEOPLE-FOCUSED BUSINESS, WORKING TOGETHER TO ACHIEVE THE COMPANY’S STRATEGY AND GOALS EFFICIENTLY.

FindoutaboutDirectorsandemployeesonpages75and76


AVERAGE NUMBER OF EMPLOYEES

301

242 52

2014

GROUP

VCS PBS

2014 2014

Talentedpeopleacrossourglobalbusiness

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TECHNOLOGY AND INNOVATION

Thebusinesshasinvestedincapitaliseddevelopmentcostsof£3.6millionintheyear(2013:£4.5million)andamortised£2.1million(2013:£2.2million).TheamortisationisincludedinthereportedResearchandDevelopmentexpensesintheconsolidatedGroupincomestatement.For2014,theseResearchandDevelopmentexpenseswere£5.6million(2013:£3.9million)representing9.0percentofrevenues(2013:6.6percent).ThecostincreaseismainlyduetodevelopmentexpensesincurredduringtheyearintheacquiredsoftwarebusinessofPebbleBeachSystems.

DEVELOPMENT OF MARKET-LEADING SOLUTIONSTheGrouphaslaunchedcutting-edgeproductsandsolutionstomeettheever-changingrequirementsoftoday’smarket.

Vislink’s2.4mHDfullyintegratedantennaforitsNewSwiftvehicle-mountedsystemsrange,includesimpressivenewfeaturesthatmake

theunitsuitableforusebyallbroadcastersinanyenvironment.

Guidingthenextgenerationinvideocollectionsolutions,thelaunchoftheHDR-5000providesVideoOverIPDiversity,presentingtheend-userwithanuninterruptedvideoconnectionandmeetingtheuniquechallengesofbroadcastersandpublicsafetyofficialsworldwide.

BuildingonPebbleBeachSystems’enterprise-levelMarinaautomationplatform,thelaunchofMarinaLitedeliversworldclassautomationatanaffordablepricetobroadcasterswithlowchannelcounts.

ThenewsuiteofPebbleWebClienttoolsleveragesHTML5andthelatestwebservertechnologytoofferhighvisibilityandremoteaccessandcontrolofourautomationandintegratedchannelplatforms.

MAJOR CUSTOMER PROJECTS ACCELERATE TECHNOLOGYVislinkequipmentcontinuestobeusedinexcitingnewprojects.Wehave

PebbleBeachSystems,enablingustodelivertightlyintegratedsolutionstotheplayoutmarketthroughanextensivenetworkofglobalsaleschannels.

ThestrategicpartnershipenteredintowithGoProearlyin2015isoneexampleofhowourmarket-leadinglowlatency,wirelesscameraandtransmissionsystemsarebeingendorsedbyindustryheavyweights.ThedevelopmentenablesGoProHERO4camerastoincludeaprofessionalgrade,live,HDwirelessbroadcastsolution,withatransmitterthatissmallenoughtobebodywornormountedinuniqueareas,providingnewperspectivesforviewersandfundamentallychangingthewayinwhichlivesportiswatchedontelevision.

Wecontinuetoadvanceoursoftware,LivePointofViewandend-to-endIPtechnologiesboththroughinternaldevelopment,specificprojectsandstrategictechnologypartnerships.ThewholeGroupremainsfocusedonprovidingmarket-leadingsolutionsandexpandingourmarkets.

Findoutaboutoursolutionsonpages16to33

Future-proofscalableandexpandablesystemsmakeenhancementseasierthanever

utilisedVislink’sleadingtechnologybehindexistingfullHDmicrocamerastocreatebespokedesigns,redesigningmotorsportcoveragewith

THE GROUP’S CONTINUED PROFITABLE GROWTH HAS ENABLED IT TO GENERATE THE FUNDS WE NEED TO DELIVER INNOVATIVE PRODUCTS AND SOLUTIONS THAT ADD VALUE FOR OUR CUSTOMERS. THE INVESTMENT IN THE DEVELOPMENT OF MARKET LEADING SOLUTIONS AND EXPANSION OF AVAILABLE MARKET IS A KEY PART OF THE ORGANIC GROWTH STRATEGY

5.04.54.03.53.02.52.01.51.00.50.0

Capitalised Development Costs

Amortisation of Development CostsC

apita

lised

/Am

ortis

atio

n (m

illio

n)

NBV

10.09.08.07.06.04.03.02.01.00.0

FY 13 FY 14

CAPITALISED DEVELOPMENT COSTS

FormulaE.Vislink’sHDon-boardcameraandH.264videotransmissionsystems,capturereal-timecloseupactionfromthetrackandpitlanes.

Earlyin2014,oursurveillanceandpublicsafetydivisionwasawardedasignificantcontractwiththeHomeOffice.Thisinvolvesourreal-timeairbornedownlinkADLequipmentbeingfittedontoaircraft,resultinginthetransmissionofliveimagesfromairborneassetstomultiplereceivesystems.

STRATEGIC PARTNERSHIPS ALLOW FOR FASTER DEVELOPMENTInAugust2014,anewagreementwithHarmonic,theworldwideleaderinvideodeliveryinfrastructure,representedasignificantdevelopmentinthelifeoftheMarinaplatformfor

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BUSINESS REVIEW – DIVISIONS AND MARKETS

REVENUE BY REGION

Vislink Communication Systems Pebble Beach Systems

Revenue by Region2014

£m2013£m

Change%

2014£m

2013£m

Change%

UK 13.7 5.7 +140.6 2.6 — +100.0

RestofEurope 9.7 9.6 +1.1 1.5 — +100.0NorthAmerica 17.8 20.5 -13.1 0.8 — +100.0LatinAmerica 2.5 4.2 -41.0 0.4 — +100.0MiddleEastandAfrica 3.1 13.6 -77.1 2.4 — +100.0Asia/Pacific 6.8 6.3 +9.3 0.6 — +100.0Total Revenue 53.6 59.9 -10.4 8.3 — +100.0

TheGroupachievedstrongrevenuegrowthintheUKandAsia/Pacificregionsduringthefinancialperiod.

TheAmericasregionremainsthelargestmarketforbothourbroadcastandsurveillanceandpublicsafetybusinesses,withtheUSGovernmentbothdirectlyandindirectlybeingakeycustomer.Salescyclescanbelong,buttheGroupiswellpositionedonanumberofinitiativesandprogrammesandexpectsthistobeanincreasinglysignificantsourceofrevenuegoingforward.

LatinAmericaremainsakeymarket,withthe2016OlympicGamesinBrazilprovidinganimpetusforfurtherinvestmentinbothbroadcastandsurveillanceandpublicsafetyintheregion.

WebelievethattheacquisitionofPebbleBeachSystemswillcontinuetoaddfurtherrevenuestreamsfortheGroup.

DIVISIONAL OPERATIONS

Divisional Operations2014

£m2013£m

Change%

VislinkCommunicationSystems 53.6 59.9 -10.4

PebbleBeachSystems 8.3 – +100.0

Total Revenue 61.9 59.9 +3.4

VislinkCommunicationSystems 5.9 6.8 -12.9

PebbleBeachSystems 3.3 – +100.0

Central (2.0) (2.5) -18.0

Total adjusted operating profit 7.2 4.3 +66.1

During2014wereorganisedthebusinesstochangeourfocusinlinewiththeGroup’son-goingstrategytoreportinternallybythetwonewdivisions,VislinkCommunicationSystemsandPebbleBeachSystems,insteadofbygeographicproximity.FollowingtheintroductionofthesechangeswehaverevisedoursegmentalreportingasrequiredunderIFRS8.

TheVislinkCommunicationSystemsdivisionhasseenadeclineinrevenuesof10.4percentin2014acrossbothmarketswiththeAmerica’sandMiddleEasternregionsfinishingbelow2013levels.HowevertherehasbeensignificantgrowthintheUKregionasaresultofalargecontractwininthesurveillanceandpublicsafetymarket.

ThePebbleBeachSystemsdivisionhasexceededoriginalexpectationscontributing£8.3millionofrevenuesand£3.3millionofadjustedoperatingprofitintheninemonthssinceacquisitioninMarch2014,withstrongperformanceintheUK,restofEuropeandMiddleEasternregions.

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BUSINESS REVIEW – FINANCIAL REVIEW FOR THE YEAR ENDED 31 DECEMBER 2014

OPERATING PROFITAdjustedoperatingprofitbeforetheamortisationandimpairmentofintangiblesandnon-recurringitemshasincreasedfrom£4.3millionto£7.2million.TheGroupreportsthreecontinuousyearsofadjustedoperatingprofitgrowthsince2011showninthegraphtotheright.Theoperatingprofitbridgeperformancechartreconcilesthemovementbetween2013and2014adjustedoperatingprofit.

NON-RECURRING ITEMSTheGroupcredited£0.9millionofnon-recurringcoststotheconsolidatedincomestatement.Thecreditcomprised:

•£0.7millionchargeinrespectofrationalisationandredundancycost;

•£0.3millionchargeinrespectofacquisitioncosts;

•£0.1millionchargeassociatedwiththecostofthemovetoAIM;

•£0.2millionchargeassociatedwithcontractualdisputes;

•£2.0millioncreditrelatingtothereleaseofdeferredconsiderationnotearned;and

•£0.2millioncreditinrespectofacreditordisputeresolution.

GOODWILL IMPAIRMENTInaccordancewiththerequirementsofIAS36‘Impairmentofassets’,goodwillisrequiredtobetestedforimpairmentonanannualbasis,withreferencetothevalueofthe

ADJUSTED OPERATING PROFIT

OPERATING PROFIT BRIDGE

(£0.2m)

(£8.4m)

2010 2011 2012 2013 2014

£7.2m£4.3m£3.1m

(£2.0m) (£0.2m)

£4.3m £2.2m

£3.3mm

£0.5m £7.2m

Adjustedoperating pro�t 2013

Salesvolume

Margin % Underlyingoperating

costs

Acquisitions FX Adjustedoperating pro�t 2014

2014 2013Revenue+3.4% £61.9m £59.9mAdjustedOperatingprofit+66.1% £7.2m £4.3mNetAssets+14.6% £56.8m £49.6mCashandcashequivalents+126.2% £8.4m £3.7mReportedEarningspershare+3.2% 3.2p 3.1p

2014£m

2013£m

Change%

Continuing business

Revenue 61.9 59.9 +3.4Grossprofit 28.4 24.3 +16.7Grossmargin% 45.9% 40.7% +5.2ptsResearchanddevelopmentexpenses (5.6) (3.9) +41.0Otherexpenses (15.6) (16.1) -2.6Adjustedoperatingprofit 7.2 4.3 +66.1Amortisationandimpairmentofacquiredintangibles (2.6) (1.4)Non-recurringitems 0.9 0.2Reportedoperatingprofit 5.5 3.1 +79.1Netfinancecosts (0.2) —Profitbeforetax 5.3 3.1 +73.5Taxation (1.6) 0.4Profitattributabletoequityshareholders 3.7 3.5 +7.7Basicearningspershare–continuingoperations 3.2p 3.1p +3.2

Adjustedearningspershare1–continuingoperations 4.1p 4.2p -2.4Normalisedearningspershare2–continuingoperations 4.6p 3.2p +43.8

1 AdjustedEPSiscalculatedonoperatingprofitbeforetheamortisationandimpairmentofacquiredintangibles,andothernon-recurringitemsaftertakingaccountofrelatedtaxeffects.

2 Adjustedearningspersharenormalisedforataxrateof20percent.

cash-generatingunits(“CGU”)inquestion.Thegoodwillrelatingtothesurveillanceandpublicsafetymarketwasfullywrittendownin2010.TheGroupacquiredAmplifierTechnologyin2013whichisaseparateCGUandPebbleBeachSystemsin2014whichisaseparateCGUthereforeimpairmentreviewshavebeenundertakeninrespectofthebroadcastmarket,AmplifierTechnologyandPebbleBeachSystems.Thecarryingvalueofgoodwillat31December2014is£24.6m(2013:£21.6m)consistingof£20.3millionfortheBroadcast

market(2013:£20.1million),£1.1millionforAmplifiertechnology(2013:£1.5million)and£3.2millionforPebbleBeachSystems(2013:£nil).

FollowingareviewofourforecastsforAmplifierTechnology,andinthecontextofthedeferredconsiderationnotearned,thecarryingvalueofourAmplifierTechnologygoodwillhasbeenwrittendownby£0.5millionto£1.1million.OurreviewoftheremainingCGUcalculationsindicatedtherewasnofurtherimpairmentintheyear.

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BUSINESS REVIEW – FINANCIAL REVIEWCONTINUED

KEY PERFORMANCE INDICATORSFinancialindicatorsareshownbelow:

KPI Measure 2014 2013 Definition/CalculationCUSTOMERSOrderIntake+2.0%

£61.4m £60.1m •Orderintakeisameasureofnewbusinesssecuredduringtheyearandrepresentsfirmorders

Revenue+3.4%

£61.9m £59.9m •MonitoringofrevenuesprovidesameasureofbusinessgrowthfortheGroup

•TheGroupmeasuresforeigncurrencyrevenueattheactualexchangerateprevailingatthedateofthetransaction

PROFITABLE GROWTHAdjustedoperatingprofit+66.1%

£7.2m £4.3m •Adjustedoperatingprofitisdefinedasoperatingprofitbeforetheamortisationandimpairmentofacquiredintangibles,andothernon-recurringitems

Adjustedearningspershare(pence)-2.4%

4.1p 4.2p •Adjustedearningspershareiscalculatedinthesamemannerasbasicearningspershareexceptfortheaddingbackoftheafter-taxeffectoftheamortisationandimpairmentofacquiredintangibles,andothernon-recurringitems

OPERATIONSTradeReceivables+8 Days

90 Days 82Days •Tradereceivablesattheendofthefinancialyeardividedbyquarter4revenuemultipliedbythenumberofdaysinquarter4

InventoryDays+23 Days

145 Days 122Days •Netinventoryattheendofthefinancialyeardividedbyquarter4materialcostsofsalesmultipliedbythenumberofdaysinquarter4

TotalOperatingCosts+3.0%

£27.5m £26.7m •Operatingcostscomprisesalesandmarketingexpenses,administrativeexpenses,andtheoverheadcostsassociatedwithLogisticsandResearchandDevelopment

ReturnonSales+4.4pts

11.6% 7.2% •Adjustedoperatingprofitinthefinancialyear,dividedbyrevenueforthefinancialyear

INNOVATIONR&DExpenditureasaproportionofrevenue+1.1pts

11.5% 10.4% •CalculatedascapitaliseddevelopmentcostslessamortisationintheperiodplusR&Dexpenseschargedintheperioddividedbyrevenue

TAXATIONTherewasanettaxchargefortheyearof£1.6million(2013:creditof£0.4million).Thecurrenttaxchargeintheyearwas£0.6million(2013:£0.02million).Therewasadeferredtaxchargeof£1.0million(2013:credit£0.4million).

At31December2014taxpayablewas£0.7million(2013:taxpayableof£nil).

NET ASSETSTheStatementofFinancialPositionat31December2014issummarisedasfollows:

2014£m

2013£m

Intangibleassets 43.7 33.0Property,plantandequipment 2.7 2.4Othernon-currentassetsand(liabilities) (4.2) 1.0Currentassetsand(liabilities) 6.3 9.5

48.4 45.9Cashandcashequivalents 8.4 3.7Net assets 56.8 49.6

Theincreaseinnetassetsintheyearof£7.2millioncomprisesprofitforthefinancialyearof£3.7million,thevalueofemployeeservicesof£0.5million,newshareissuesof£4.0millionandaforeignexchangegainontranslationofoverseasoperationsof£0.5millionoffsetby£1.5millionofdividendspaid.

WORKING CAPITALOurkeymetricsformanagingworkingcapitalaredays’salesoutstandingfortradereceivablesandnetinventorydays.Thetablebelowshowsthattradereceivableshaveincreasedto90dayswhilstinventorydayshaveincreasedto145days.InventorylevelswereunusuallyhighatyearendduetoanumberofprojectswhichwerefullyorpartiallycompleteawaitingshipmentinQ12015.

Tradereceivablesincludedasignificantdebtoratyearend.TheexpectedpaymentofwhichisdueinH12015.Therearenosignificantadversetrendsindebtors.Thesmallincreaseindayssalesoutstandingisimpactedbythemixofsalesfromdifferentregions.

Days (source: Group management accounts) 2014 2013Tradereceivables–days’salesoutstanding1 90 82Inventorydays2 145 122

1 Tradereceivablesattheendofthefinancialyeardividedbyquarter4revenuemultipliedbythenumberofdaysinquarter4.2 Netinventoryattheendofthefinancialyeardividedbyquarter4materialcostsofsalesmultipliedbythenumberofdaysinquarter4.

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CASH FLOWSTheGroupheldcashandcashequivalentsof£8.4millionat31December2014(2013:£3.7million).Thetablebelowsummarisesthecashflowsfortheyear.

2014£m

2013£m

Cashgeneratedfromoperatingactivities 7.7 4.2Netcashusedininvestingactivities (11.5) (7.3)Netcashfromfinancingactivities 8.5 (1.4)Effectsofforeignexchange — 0.1Netincrease/(decrease)incashandcashequivalents 4.7 (4.4)Cashandcashequivalentsat1January 3.7 8.1Cashandcashequivalentsat31December 8.4 3.7

CASH FLOWS FROM OPERATING ACTIVITIES

(£11.5m)

£3.7m

£7.7m

£8.5m £8.4m

1 Jan 2014

Net cash from

operating activites

Net cash used in investingactivities

Net cash from

�nancing activities

31 Dec 2014

Therewasanetcashinflowfromoperatingactivitiesintheyearof£7.7million(2013:£4.2million).

Thecashoutflowfrominvestingactivitiesamountedto£11.5million(2013:£7.3million)whichcomprised£nilproceedsfromthesaleofpropertyplantandequipment(2013:£0.1million);£nilofdeferredconsiderationpaidinrespectofpreviousacquisitions(2013:£0.4million);£7.0mpaidoutinrespectoftheacquisitionofsubsidiaries(2013:£2.0million);and£4.5millioninrespectofcapitalexpenditureandthecapitalisationofdevelopmentcosts(2013:£4.8million).

Thecashinflowfromfinancingactivitiesamountedto£8.5million(2013:cashoutflow£1.4million)whichcomprisedofanewbankloanandrevolvingcreditfacility(RCF)of£8.0million(2013:£nil);proceedsonissueofnewsharesof£2.0million(2013:nil)andreturnstoshareholdersintheformofadividendpaymentof£1.5million(2013:£1.4million).

RETURNS TO SHAREHOLDERSItistheGroup’sstatedstrategytoonlyrecommendafinaldividend.TheBoardisrecommendingthatthedividendbeincreasedby20percentto1.50pencepershare(2013:1.25pence).Thepaymentofthedividendwillabsorbapproximately£1.8millionofcash(2013:£1.5million).Subjecttotheapprovalofshareholders,thedividendwillbepaidon17July2015tothoseshareholdersontheregisterat26June2015.

FOREIGN EXCHANGEIn2014thenetassetsoftheGroupdecreasedby£0.1milliononthetranslationofforeigncurrencynetinvestments(2013:increasedby£0.1million)asaresultoftheweakeningoftheUSdollaragainststerling.

TheprincipalexchangeratesusedbytheGroupintranslatingoverseasprofitsandnetassetsintosterlingaresetoutinthetablebelow;

Rate compared to £ sterling

Average rate

2014

Averagerate

2013

Year end rate

2014

Yearendrate

2013USdollar 1.648 1.565 1.561 1.653

Iftheresultsfortheyearto31December2013hadbeentranslatedatthe2014averageratethenthetranslationimpactwouldbetoreduceprioryearrevenueby£1.2millionandincreasetheprofitbeforetaxby£0.1million.

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RISK AND RISK MANAGEMENT

GROUP RISK MANAGEMENT

OPERATIONAL

DIVISIONAL FINANCE DIRECTORS

WHISTLEBLOWING

BOARD

GROUP FINANCE DIRECTOR

EXECUTIVE CHAIRMAN

COMPLIANCE

INTERNAL AUDIT

COMPANY SECRETARY

AUDIT COMMITTEE

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PRINCIPAL RISKS AND UNCERTAINTIESTheGroupplacesgreatimportanceontheidentificationandeffectivemanagementofrisks.OurapproachtoenterpriseriskmanagementhelpsustodeliverourobjectivesandmaximisethereturnstotheGroup.

ThefollowingtabledescribestherisksthattheBoardconsiderstohavethemostmaterialpotentialimpactontheGroup.TheyarespecifictothenatureofourbusinessnotwithstandingthatthereareotherrisksthatmayoccurandmayimpacttheachievementoftheGroup’sobjectives.

RISK DESCRIPTION TREND POTENTIAL IMPACT MITIGATION

GLOBAL ECONOMIC CONDITIONS

POSITIVE

StrainedglobaleconomicconditionsandvolatilityofinternationalmarketscouldresultinageneralreductioninbusinessactivityandconsequentlossofincomefortheGroup.

•TheGroupismitigatingitsrelianceonitscoremarketsintheUK,USandcontinentalEuropebyexpandingitsactivitiesintheMiddleEastandAfricaandAsia/Pacific

•TheGroupisdevelopingnewrelationshipsandpartnershipsthroughexpandingitsinternationalpresenceandfocusonitsexistingcustomers.ImprovingoperationalefficiencyoftheGroup,combinedwithcostreductionsalreadyundertaken,willunderpintheperformanceoftheGroupgoingforward

MARKETS AND COMPETITION

POSITIVE

ThemarketsinwhichtheGroupoperatesarematureandhighlycompetitivewithrespecttoprice,geographicdistinction,functionality,brandrecognitionandtheeffectivenessofsalesandmarketing.

DuetopricepressuretheGroupmayexperiencefluctuationsinoperatingresults.Competitioncouldbeintensifiedduetocompaniesenteringcertainmarketswithnewproductsorfavourablecoststructures.Insuchevents,Groupsales,marginsand/ormarketsharemaydecrease.

•TheGroupfocusesonaccessinganddevelopingkeytechnologiesandserviceofferingswhichdifferentiateuscompetitively•TheGroupisresponsivetoourcustomersandiscontinuouslyimprovingthequality,deliveryandreliabilityofourproducts•TheGroupensuresitreviewsanddevelopsitskeypartnershipswithsuppliers,distributorsandcustomers.Inaddition,itisdevelopinglongtermstrategicpartnershipswithotherseffectively

REPUTATIONAL RISKS

NEUTRAL

ManyoftheGroup’sproductsareformission-criticalservices,suchasensuringlivenewsisavailableinreal-timeorthatmission-criticalvideosurveillanceisuninterrupted.ThereisariskthatproductfailurewillcauselossofservicestoVislink’scustomers,bringingdamagetotheGroup’sreputation.

• CustomerserviceandsupportisakeypartoftheGroup’sofferingtocustomerstomitigatesuchdamage

RESEARCH AND DEVELOPMENT

NEUTRAL

Lossofmarketshareresultingfromproductobsolescenceandfailuretoinnovatetomeetcustomerneeds.

•TheGroupmakessignificantinvestmentinnewproductdevelopmentandbestpracticeissharedbetweenGroupcompanies•TheGroupbelievesthisinvestmentenablesittodeliverclear“product-leadership”and“completecustomersolutions”• LargeR&DprojectsthatarecapitalisedrequireapprovalfromseniormanagementtoensurethatprojectsareinlinewiththeGroup’soveralltechnologystrategy

SENIOR MANAGEMENT AND SENIOR PERSONNEL NEUTRAL

TheGroupisdependentonmembersofitsseniormanagementteamandskilledpersonnel.Itsfuturesuccesswilldependinpartonitsabilitytoattractandretainhighlyskilledmanagementandpersonnel.IftheGroupdoesnotsucceedinattractingandretainingskilledpersonnel,itmaynotbeabletogrowitsbusinessasanticipated.

•TheGrouphasover300staffincluding88engineersand56salesemployees•TheGroupregularlysurveysstafftoassessthealignmentofindividualswithGroupvalues•TheGrouprecognisesthatourpeoplearekeytoitsongoingsuccessandinvestsinattracting,developingandretainingkeystaff

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BOARD COMPOSITION

APPOINTED TO BOARD:December2010

INDEPENDENT:No

KEY STRENGTHS:•Optimisingvalueforshareholders•AsChairmanofWirelessLogic,returneda6.1×returnonexittoECI,amidmarketprivateequityfirm

•AsChairmanofGenusplc,oversawgrowthfromOFEXtoAIMtoaFTSE250company

•MaximisedexitvalueofGrasebyplcthroughsaletoSmithsIndustrieswithasignificantcashpremium

•ManagedexitvalueofPsionplcthroughcashsaletoMotorolaSolutions

•Extensiveinternationalexperienceanddiversebusinessexperienceinsoftwareandhardware,withprivateandpubliccompanies

•Specialistinturnaroundandgrowthbusinesses(tooktheAniteGroupfroma£68millionlosstoa£30millionprofit)

•InstrumentalinformulatingtheDVDstandardforPhilipsElectronicsasGlobalHeadofMultimedia

•Internationalexperienceofgrowingsoftwareandhardwarebusinesses,includingthe‘‘InternetofThings’’

CURRENT EXTERNAL COMMITMENTS:HoldsanumberofNon-executivedirectorshipsinprivatecompanies

PREVIOUS ROLES:ChiefExecutiveofAtexMediaCommandLimitedChairmanofGenusplcChairmanofPsionplcChiefExecutiveofAniteplc25yearswithPhilipsElectronics

BOARD COMMITTEE MEMBERSHIPS:ExecutiveBoard-MemberNominationCommittee-Chairman

APPOINTED TO THE BOARD:August2012

INDEPENDENT:No

KEY STRENGTHS:•Charteredaccountantandanengineeringgraduate

•Extensiveinternationalexperienceingrowingbusinessthroughbothorganicopportunitiesandacquisitions

•Customerfacingbusinessdevelopmentrolestosecuremajorlongtermcontracts

•Extensivelistedplcexperience•PartofseniorteamatPattonair,growingbusinessfrom£15millionto£200million

CURRENT EXTERNAL COMMITMENTS:None

PREVIOUS ROLES:GroupFinanceDirectorofVictoriaPLCChairmanofColinCampbellFinancialandCommercialDirectorofUMECOplc’sPattonairDivisionFinancialmanagementrolesinContinentalAG’sNTSdivisionStartedinpracticewithrolesinAudit,CorporateRecoveryandCorporateFinance

BOARD COMMITTEE MEMBERSHIPS:ExecutiveBoard–Member

APPOINTED TO THE BOARD:June2006

INDEPENDENT:Yes

KEY STRENGTHS:•24years’experienceasChiefExecutiveorManagingDirectorofmultinationaltechnologybusinesses

•Wideexperienceinestablishingandbuildinginternationalbusinesses

•Passionateaboutleanmanufacturing/supplychainsandcontinuousimprovement

•BroadrangeofNon-executivedirectorshipsincludingChairmanshipoftwoearlystagecompanies

•RelevantdomainknowledgeasformerDivisionalChiefExecutiveofVitecGroup

CURRENT EXTERNAL COMMITMENTS:DirectorofMetaSphereLimitedDirectorofBlackfyneLtdDirectorofLocking&SecuritySolutionsLimitedDirectorofPumaDistributionLimitedAdvisesandinvestsinanumberofearlystagecompanies

PREVIOUS ROLES:CEOofUDEXHoldingsLtdHeadedtheBroadcastSystemsDivisionofVITECGroupplc

BOARD COMMITTEE MEMBERSHIPS:RemunerationCommittee–ChairmanAuditCommittee–MemberNominationCommittee–Member

JOHN HAWKINS EXECUTIVE CHAIRMAN

IAN DAVIES GROUP FINANCE DIRECTOR AND COMPANY SECRETARY

ROBIN HOWE BSc,FCIMSENIOR INDEPENDENT NON-EXECUTIVE DIRECTOR

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Vislink plc

APPOINTED TO THE BOARD:October2007

INDEPENDENT:Yes

KEY STRENGTHS:•Duringa23-yearcareerininvestmentbankingOliveradvisedUKandinternationalbusinessesontransactionsandfinancingaswellasrunningtheteamsinWesternEurope

•Ownsaself-storagebusiness•ChairstheRiskCommitteeofNAMA,the‘‘bad’’Irishbankwithsome£15billionofassets

CURRENT EXTERNAL COMMITMENTS:DirectorofNAMA(Ireland)DirectorofEurobankCyprusLtdDirectorofNaafiPensionFundTrusteesDirectorofEllinghamLimited

PREVIOUS ROLES:HeadofCorporateFinance(Europe)atBNPParibasSeniormanagementroleswithinCharterhouseBankandRobertFlemingNon-executiveDirectorwiththeIrishBankResolutionCorporationLimitedNon-executiveDirectorofMcCarthy&Stoneplc,NottingHillHousingTrustandCenkosSecuritiesplc

BOARD COMMITTEE MEMBERSHIPS:AuditCommittee–ChairmanRemunerationCommittee–MemberNominationCommittee–Member

APPOINTED TO THE BOARD:October2011

INDEPENDENT:Yes

KEY STRENGTHS:•35years’experienceinthebroadcastindustry

•ChairmanofOFCOM’sAdvisoryCommitteeforEngland

•DigitalContentTechnology•Businesstransformationandchangemanagement

CURRENT EXTERNAL COMMITMENTS:DirectorofMaximumClarityLimited

PREVIOUS ROLES:DirectorofTechnologyandChiefTechnologyOfficerforGranadaGlobalChiefTechnologyOfficerattheBBCForthelasteightyearshasbeenaninvestor,adviserandNon-executiveDirectorforemergingtechnologycompanies,combinedwithworkacrossabroadrangeoforganisationsinsideandoutsidethebroadcastsector

BOARD COMMITTEE MEMBERSHIPS:AuditCommittee–MemberRemunerationCommittee–MemberNominationCommittee–Member

OLIVER ELLINGHAM BA,ACAINDEPENDENT NON-EXECUTIVE DIRECTOR

JOHN VARNEY BAINDEPENDENT NON-EXECUTIVE DIRECTOR

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OUR GOVERNANCE

DIRECTORS’ REPORT

ThedirectorspresenttheannualreportofVislinkplctogetherwiththeauditedGroupandCompanyfinancialstatementsfortheyearended31December2014,whichwereapprovedbythedirectorson24March2015.TheGroupfinancialstatementshavebeenpreparedinaccordancewithInternationalFinancialReportingStandardsasadoptedbytheEuropeanUnion(IFRS).TheCompanyfinancialstatementshavebeenpreparedinaccordancewithUKGenerallyAcceptedAccountingPractice(UKGAAP).

AreviewoftheGroup’stradingandanindicationoffuturedevelopmentsarecontainedintheExecutiveChairman’sStatementandtheStrategicReportonpages2to7and10to11.

VislinkplcisincorporatedinEngland(companyregistrationnumber04082188)andhasitsregisteredofficeatMarlboroughHouse,CharnhamLane,Hungerford,Berkshire,RG170EY.

RESULTS AND DIVIDENDS Theresultsfortheyearended31December2014aresetoutintheconsolidatedincomestatementonpage59.TheGrouphasreportedanoperatingprofitfromitscontinuingactivitiesof£5.5million(2013:£3.1million).Afteraccountingfornetfinancecoststheconsolidatedincomestatementshowsaprofitbeforetaxationof£5.4million(2013:£3.1million).

Thedirectorsarerecommendingthatthefullyeardividendincreaseby20percentto1.50penceperordinaryshare(2013:1.25penceperordinaryshare,)amountingto£1.8millionpayableon17July2015toshareholdersontheCompany’sregisteratthecloseofbusinesson26June2015.Theshareswillbequotedexdividendfrom25June2015.

DIRECTORS ThedirectorsoftheCompanywhoservedduringtheyearanduptothedateofapprovalofthefinancialstatementsareasfollows:

•JohnHawkins(ExecutiveChairman)•IanDavies(GroupFinanceDirectorandCompanySecretary)•RobinHowe(SeniorIndependentNon-executiveDirector)•OliverEllingham(Non-executiveDirector)•JohnVarney(Non-executiveDirector)

Shortbiographiesofeachcurrentdirectorareprovidedonpages42and43.

InaccordancewiththeCompany’sArticlesofAssociation,JohnVarneyandRobinHowewillretirebyrotationand,beingeligible,offerthemselvesforre-electionattheforthcomingAnnualGeneralMeeting.TheCompany’sArticlesofAssociationrequireanynewdirectorsappointedbytheBoardtoretirefromofficeandofferthemselvesforelectionbyshareholdersatthenextAnnualGeneralMeetingfollowingtheirappointment.Nonewdirectorswereappointedduring2014.

Detailsofthedirectors’servicecontractsandlettersofappointmentaregivenintheRemunerationReportonpages50to56.Disclosureofthedirectors’interestsinshares,includingshareoptions,isalsogivenintheRemunerationReport.DuringtheyeartheGroupmaintainedinsuranceprovidingliabilitycovertoitsdirectorsandofficers.

InaccordancewiththechangeinApril2014totheapproachofHMRCtowardstheofficersofcompanies,includingNon-executiveDirectors,beingtreatedasself-employed,thefeesfortheExecutiveChairmanwereoperatedthroughtheGroup’spayroll,inlinewithotherdirectorsandemployees.ThisdoesnotaffectotherBoardmembers,executiveornon-executive,whoarealreadypaidthroughthepayroll.

MATERIAL INTEREST IN CONTRACTS Nodirector,eitherduringorattheendofthefinancialyear,wasmateriallyinterestedinanysignificantcontractwiththeCompanyoranysubsidiaryundertaking.

SHARE CAPITAL DetailsoftheCompany’ssharecapitalareshowninnote23totheconsolidatedfinancialstatements.

TheCompany’ssharecapitalcomprisesoneclassofordinarysharesandasat24March2015therewereinissue122,603,134fullypaidordinarysharesof2.5penceeach.Allsharesexceptforthoseheldbytheemployees’sharetrustarefreelytransferableandrankparipassuforvotinganddividendrights.

TheCompanyhasbeennotifiedofthefollowinginterestsinmorethan3percentoftheCompany’sissuedsharecapitalat24March2015.

Numberofshares percent

FerlimNomineesLimited 19,518,517 15.92BarclayshareNomineesLimited 8,681,894 7.08HSBCGlobalCustodyNominee(UK)Limited 8,100,000 6.61TheBankofNewYork(Nominees)Limited 5,750,000 4.69TDDirectInvestingNominees(Europe)Limited 4,133,581 3.37SCMNomineesLimited 4,000,000 3.26

FINANCIAL RISK MANAGEMENT TheGroup’spoliciesonfinancialriskmanagementaresetoutinnote3totheconsolidatedfinancialstatements.

SOCIAL RESPONSIBILITY TheBoardtakesregularaccountofthesignificanceofsocial,environmentalandethicalmatters.ThefollowingspecificmattersfallunderthebroaddefinitionofSocialResponsibility:

EMPLOYEES TheGrouprecognisestherolethatitsemployeesplayinitssuccess.EachbusinessunitwithintheGrouphaslinesofcommunicationinplacetoensurethatemployeesareconsultedwithandkeptinformedofissuesrelevanttothem.Staffnotices,emailsandstaffmeetingsareusedtocommunicateimmediateissuestothem.Thebusinessesproducetheirownnewslettersforbothinternalandexternalpurposes.

TheGroupprovidesemployeeswithaccesstotrainingcarriedoutbothwithintheorganisationandonexternalaccreditedcoursesthatarerelevanttoanemployee’sroleanddevelopment.

ItisthepolicyoftheGroupnottodiscriminatebetweenemployeesorpotentialemployeeswithdisabilitiesoronthegroundsofage,race,religion,sexorpoliticalbeliefandtoofferthesameemploymentopportunities,training,careerdevelopmentandpromotionprospectstoall.

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Applicationsforemploymentbydisabledpersonsarealwaysfullyconsideredbearinginmindtheaptitudesoftheapplicantconcerned.Intheeventofmembersofstaffbecomingdisabled,everyeffortismadetoensurethattheiremploymentwiththeGroupcontinuesandtheappropriatetrainingisarranged.ItisthepolicyoftheGroupthatthetraining,careerdevelopmentandpromotionofadisabledperson,sofaraspossible,beidenticalwiththatofotheremployees.

EMPLOYEE SHARE SCHEME INCENTIVES VislinkplcoperatesanumberofsharebasedincentiveschemesonanallUKemployeeanddiscretionarybasisforthebenefitoftheGroup’semployeesanditsseniormanagement.TheaimofthesharebasedincentiveschemesistoaligntheinterestsoftheemployeeswiththoseoftheCompany’sshareholders.ToencourageemployeeinterestandparticipationinthefinancialperformanceoftheGroup,aVislinkplcShareIncentivePlanisavailableforemployees.

At31December2014theEmployeeShareOwnershipPlan(ESOP)held786,420(2013:832,000)sharesintheCompanyrepresenting0.6percentoftheissuedsharecapital(2013:0.7percent).TheESOPhaswaiveditsrightstoreceivedividends.

HEALTH AND SAFETY ItisthepolicyoftheGrouptoensurethehealthandwelfareofemployeesbymaintainingasafeplaceandsystemofwork.ThispolicyisbasedontherequirementsofnationalemploymentlegislationinthecountrieswheretheGroupoperates,includingtheSafety,HealthandWelfareatWorkAct1989.

ENVIRONMENTAL MANAGEMENT TheGroupiscommittedtoenvironmentalmanagementthroughaprocessofcontinuousimprovement.AsmanufacturersofelectronicequipmenttheGroup’sbusinessesarecompliantwiththelatestlegislationfortheEuropeanUnion(EU)directivesregardingWasteElectricalandElectronicEquipment(WEEE)andtheRestrictionofHazardousSubstances(RoHS).

Vislinkiscommittedtominimisingourimpactontheenvironmentbyreducingourwasteandcarbonfootprintthroughenergymanagementandrecyclingschemes.OurUSfactoryisregisteredwiththeEnvironmentProtectionAgencyandhasaproducercomplianceschemefortherecyclingofallelectricalandelectronicwasteproducedonsite.Allourbusinessesareconsciousoftheneedtoreducetheirwasteandcarbonfootprintthroughenergymanagementandrecyclingschemes.

TheGroupactivelyencouragesallshareholderstocontributetowardsagreenercountrysidebyregisteringforourregistrar’seTreeserviceunderwhichadonationwillbemadetoTheWoodlandTrust.Allfundsdonatedgotheirmanytree-plantingprogrammes.Thiscanbeaccessedthroughtheinvestors’pageontheGroupwebsiteatwww.vislink.com.

ANNUAL GENERAL MEETINGTheAnnualGeneralMeetingwillbeheldat29ClothFair,London,EC1A7NNonWednesday20May2015at12.00noon.SharecapitalresolutionswillbeproposedattheAnnualGeneralMeetingtorenewforafurtheryearthedirectors’authoritytoallotequitysecuritiesforcashotherthantoexistingshareholdersonaproratabasisandtoauthorisepurchasesbytheCompanyofitsownshares.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORSInthecaseoftheindividualswhoaredirectorsoftheCompanyatthedatewhenthisreportwasapproved:

•sofaraseachofthedirectorsisaware,thereisnorelevantauditinformationofwhichtheCompany’sauditorsareunaware,and

•eachofthedirectorshastakenallthestepstheyoughttohavetakenindividuallyasadirectorinordertomakethemselvesawareofanyrelevantauditinformationandtoestablishthattheCompany’sauditorsareawareofthatinformation.

CORPORATE GOVERNANCETheCompany’sstatementoncorporategovernancecanbefoundintheCorporateGovernanceStatementonpages46to49ofthesefinancialstatements.TheCorporateGovernanceStatementformspartofthisdirectors’reportandisincorporatedintoitbyitscross-reference.

GOING CONCERN BASIS ThedirectorsarerequiredtomakeanassessmentoftheGroup’sabilitytocontinuetotradeasagoingconcern.ThedirectorshavegiventhismatterdueconsiderationinthelightofcurrenttradingandofitscurrentnetcashpositionandhaveconcludedthatitisappropriatetopreparetheGroupfinancialstatementsonagoingconcernbasis.

INDEPENDENT AUDITORSTheindependentauditors,PricewaterhouseCoopersLLP,haveindicatedtheirwillingnesstocontinueinofficeandaresolutionthattheybereappointedwillbeproposedattheAnnualGeneralMeeting.

TheStrategicReportandDirectors’ReportwereapprovedandsignedbyorderoftheBoard.

IanDaviesGroupFinanceDirector&CompanySecretary24March2015

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CORPORATE GOVERNANCE STATEMENT

TheGroupiscommittedtohighstandardsofcorporategovernance,whichitconsidersarecriticaltobusinessintegrityandtomaintaininginvestors’andotherstakeholders’trustintheGroup.TheGroupexpectsalldirectorsandemployeestoactwithhonesty,integrityandfairness.Withaninternationalpresence,theGroupactsinaccordancewiththelawsandcustomsofthecountriesinwhichitoperates;adoptsproperstandardsofbusinesspracticeandprocedure;operateswithintegrity;andobservesandrespectsthecultureofeverycountryinwhichitdoesbusiness.

CompliancewiththeUKCorporateGovernanceCodeisnotmandatoryforcompanieswhosesharesareadmittedtotradingonAIM.Thedirectorsrecognise,however,theimportanceofhighstandardsofcorporategovernanceandaccordinglyhavedeterminedthattheGroupshallhavetheregardtotheQuotedCompaniesAlliance(QCA)Codeoncorporategovernance.TheQCACodeapplieskeyelementsoftheUKCorporateGovernanceCodeandotherrelevantguidancetotheneedsandparticularcircumstancesofsmallandmid-sizequotedcompanies,includingAIMcompanies,forwhichtheUKCorporateGovernanceCodemaynotbeentirelyrelevantduetotheirsize.ThedirectorswillreviewtheGroup’scorporategovernanceproceduresfromtimetotimehavingregardtothesize,natureandresourcesoftheCompanytoensuresuchproceduresareappropriate.

TheBoarddoesnotenvisagethattherewillbeanysignificantalterationtothestandardsofreportingandgovernancewhichtheCompanycurrentlymaintains.TheCompanywillmaintainitsAudit,NominationandRemunerationCommitteeswhichwillbesubjecttothesametermsandconditions.

TheBoardstructurecomprisesthreeindependentNon-executiveDirectorsandanExecutiveChairmanandExecutiveFinanceDirector.

TheroleofChairmanandChiefExecutivecontinuestobecombined(sinceMay2011)byJohnHawkinsundertheroleofExecutiveChairman,whoisnotconsideredtobeindependent.

Nonewdirectorswereappointedduring2014.

THE ROLE OF THE BOARDBOARD COMPOSITION AND OPERATIONThesizeoftheBoardandthebalancebetweenexecutivesandnon-executivesisconsideredtobeappropriatetotheCompany’ssizeandscopeofactivitiesandprovidesforeffectiveoperation.TheBoardcurrentlycomprisesanExecutiveChairman,threeNon-executiveDirectorsandanExecutiveFinanceDirector.AlltheNon-executiveDirectorsareconsideredbytheBoardtobeindependent.RobinHoweisthenominatedSeniorIndependentDirectorandisavailabletoshareholdersiftheyhaveconcernsthatcannotbeaddressedthroughthenormalchannels.

TheBoardhasapprovedaformalscheduleofmattersreservedforitsdecisionwhichitreviewsannually.TheBoardmakesdecisionsandreviewsandapproveskeypoliciesanddecisionsoftheGroupinparticularrelatingto:

•Strategyandvalues;•Corporategovernance;•Annualoperatingandexpenditurebudgets;•Treasurypolicies;•Significantcapitalandrevenueprojects;•Riskmanagementstrategiesincludingapproachto/appetiteforrisk;•Systemsforinternalcontrol;•Boardandkeymanagementappointments;•Remunerationpolicies;

•Acquisitionsanddisposals;and•AnyothermatterwhichhasamaterialconsequencefortheGroup

TheBoardhasdelegatedallauthoritiesotherthanthosecontainedinthescheduleofmattersreservedtotheExecutiveDirectorsontheunderstandingthattheywillatalltimesactinaccordancewiththebestinterestsoftheGroup,itsshareholdersandstaffandthattheiractionswillbeconsistentwiththeGroup’sfinancialandstrategicplansandobjectivesandinconformitywithrelevantlegislationandbestpracticeandthattheywillreportregularlytotheBoardontheexecutionoftheseresponsibilities.

TheBoardhasalsoestablishedthreepermanentcommittees:theAuditCommittee,theNominationCommitteeandtheRemunerationCommittee.Theseoperatewithindefinedtermsofreference,whicharereviewedbytheBoardannually.FulldetailsofthetermsofreferenceareprovidedontheGroupwebsiteatwww.vislink.com.

TheBoardmettentimesduringtheyear,excludingadhocmeetingsconvenedsolelytodealwithproceduralmatters.AttendanceatBoardandCommitteemeetingsduring2014,expressedasthenumberofmeetingsattendedcomparedtothenumberentitledtoattend,wasasfollows:

JOHN HAWKINS

Board No. Attended10/10

Audit No. Attended3*/3

Remuneration No. Attended4*/4

IAN DAVIES


Audit No. Attended3*/3

Remuneration No. Attended4*/4

ROBIN HOWE


Audit No. Attended3/3

Remuneration No. Attended4/4

OLIVER ELLINGHAM




JOHN VARNEY




*Inattendanceforpartofthemeeting.

Attheinvitationoftherelevantcommittees,theExecutiveChairmanandFinancialDirectorusuallyattendAuditCommitteemeetingsandtheExecutiveChairmanattendstheRemunerationCommitteemeetingsotherthanwhenhisownremunerationisdiscussed.WheredirectorsareunabletoattendBoardmeetingstheyareadvisedofthematterstobediscussedinadvanceofthemeetingandgiventheopportunitytoprovidetheirviewstotheExecutiveChairmanorSeniorIndependentDirector.

InadditiontotheformalscheduledmeetingstheBoardheldinformaldiscussionswithExecutiveDirectorsandsenioroperationalmanagersonstrategy,businessdevelopmentandothertopicsimportanttotheGroup’sprogressthroughouttheyear.Non-executiveBoardmemberswereinvitedtoattendtheexecutivemanagementmeetingsinfurtheranceofthesediscussions.

TheExecutiveChairmanisresponsiblefortherunningoftheBoard.Heensuresthatalldirectorsreceivesufficientrelevantinformationonfinancial,businessandcorporateissuespriortomeetings.Inhisexecutivecapacityhisresponsibilitiesfocusonco-ordinatingtheCompany’sbusinessandimplementingGroupstrategyassetbytheBoard.TheCompanySecretaryisresponsibleforensuringthatBoardproceduresarecompliedwith.AlldirectorsareabletotakeindependentprofessionaladviceinfurtheranceoftheirdutiesifnecessaryandhaveaccesstoboththeCompanySecretaryandtheSeniorIndependentDirector.

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ThetermsofappointmentfortheNon-executiveDirectorsareavailableforinspectionattheCompany’sregisteredofficeduringnormalbusinesshoursandfor15minutespriorto,andduring,theAnnualGeneralMeeting(AGM).Alldirectorsofferthemselvesforre-electionatthefirstAGMsubsequenttotheirappointmentandatleastonceeverythreeyearsthereafter.RobinHoweandJohnVarneyretirefromofficebyrotationandofferthemselvesforreappointmentbyshareholders.Biographicalinformationandtermsofappointmentforeachofthedirectorsaresetoutonpages42to43,andpage56.Allotherdirectorshavebeenre-electedwithinthelastthreeyears.TheBoardconfirmsthat,havingtakenintoconsiderationtheresultsoftheperformanceevaluationundertakenintheyear,thedirectorsbeingproposedforre-electionhavedemonstratedcommitmenttotheirresponsibilitiesandcontinuetoperformeffectively.

NewdirectorsreceiveaformalinductiononjoiningtheBoardappropriatetotheirlevelofknowledgeandexperienceandareencouragedtovisitdifferentareasoftheGroupaspartofafamiliarisationprogramme.ABoardmeetingisheldatoneoftheGroup’soverseaslocationsatleastonceeveryotheryeartoallowalldirectorstomeetwithlocalseniormanagementintheirenvironment.

Appropriatedirectors’andofficers’liabilityinsurancecoverhasbeeninplacethroughouttheyearandisapprovedbytheBoardaspartoftheglobalinsuranceprogramme.

EXECUTIVE CHAIRMANTheroleofChairmanandChiefExecutivewascombinedunderJohnHawkinson18May2011.UndertheroleofChiefExecutiveJohnHawkinscommits166workingdaysperannumtotheroleandsuchadditionaltimeasrequiredtoensurethathisdutiesarefullyperformed.

On12November2013JohnHawkinssignedanExecutiveChairmanRetentionLong-TermIncentiveSchemeandShareAwardContract.

ThethreeyearretentionawardmadetotheExecutiveChairmanduringthefinancialyearended31December2012whichwasaimedatgrowingtheCompany’sbusinesstorevenuesof£80milliongeneratinga10percentoperatingprofitmarginwithinthreeyears,willvestfollowingtheendofthefinancialyearoftheCompanyending31December2014,subjecttotheachievementoftheperformancecriteriaattachingtothataward.

ContinuedimplementationofGroupstrategyisnecessarytoachievetheproposedgrowthoftheCompany’sbusinessinthefinancialyearsoftheCompanyfollowingthefinancialyearending31December2014andtheretentionoftheExecutiveChairmanisconsideredessentialforitsimplementationandexecution.

TheCommitteeaccordinglydeterminedthattheCompanyandshareholders’interestswerebestservedbythecreationofanewspecialincentiveforMrHawkins,linkedtohiscontinuedretention,andintheformofthisshareawardcontract,dated12November2013,andannouncedontheLondonStockExchangeon13November2013.

On12November2013aconditionalnil-costshareawardwasmadetoMrHawkinsover2,000,000shares,pursuanttoListingRule9.4.2(2)(the“RetentionAward”).

TheRetentionAwardwasmadetofacilitateMrHawkins’retentionasExecutiveChairmanoftheCompanyanditisintendeditwillbereleased,liketheLTIPAward,followingtheendofathreeyearholdingperiodsubject,generally,tocontinuedemploymentandtheCompany’sachievementofthesameEPSperformanceconditionsmeasuringtheCompany’sadjustedEPSinthefinancialyearoftheCompanyendingon31December2016,asapplytotheLTIPAward.

TheRetentionAwardisbasedontheprinciplesofthe2012AwardandhasbeenmadetosecurethecontinuityofleadershipattheCompanynecessarytoachievetheproposedgrowthoftheCompany’sbusiness.

On6April2014JohnHawkinssignedanemployeeserviceagreementasExecutiveChairmanoftheCompanyandnopreviousemploymentoftheExecutiveshallcountaspartoftheExecutive’scontinuousperiodofemployment.Theemploymentshallbesubjecttoterminationbyeitherpartygivingtotheother12months’priornoticeinwriting.IftheExecutive’sroleisreviewedinaccordancewithClause2oftheagreementanditissplitintotheroleofNon-executiveChairmanandChiefExecutivethenprovidedtheExecutiveisofferedoneofthoserolesitisrecognisedthatthisnoticeperiodwillbereducedtosixmonths.Thebasicsalaryis£360,000peryearwhichcomprises£260,000fortheExecutive’sdutiesasChiefExecutiveand£100,000forhisroleasChairman.

On6April2014aDeedofAmendmentwasagreedtotheExecutiveChairmanRetentionLong-TermIncentiveSchemeawardcontractdated29March2012toreflectthechangedstatusofJohnHawkinstoemployee.

On6April2014aDeedofAmendmentwasagreedtotheExecutiveChairmanretentionlong-termincentiveschemeshareawardcontractdated12November2013toreflectthechangedstatusofJohnHawkins’toemployee.

BOARD PERFORMANCE EVALUATIONThedirectorsconfirmthattheyhaveconductedanevaluationoftheperformanceandeffectivenessoftheBoardfor2014.ThedirectorsmetwiththeExecutiveChairmanonaone-to-onebasisanddiscussedmattersofperformance,structure,objectivesandprocessoftheBoardanditsindividualmembers.TheresultswerethenreportedbacktotheBoard.TheBoardidentifiedandagreedactionswhereappropriate.ThedirectorsaddressedanycommentsontheExecutiveChairman’sperformancetotheSeniorIndependentDirector.TheevaluationoftheExecutiveChairman’sperformanceduringtheyearwasledbytheSeniorIndependentDirector.

THE AUDIT COMMITTEEMEMBERSHIP AND DUTIESTheAuditCommitteeischairedbyOliverEllingham.AsaqualifiedCharteredAccountant,OliverhastherelevantfinancialexperienceasrequiredbytheNVQCode.RobinHoweandJohnVarneyservedontheCommitteethroughouttheyear.

TheExecutiveChairmanandFinancialDirectorarenormallyinvitedtoattendeachCommitteemeetingasaretheexternalauditors,whohavedirectaccesstotheChairmanoftheCommitteeatalltimes.TheCommitteealsomeetswiththeexternalauditorswithoutthepresenceofExecutiveDirectors,forindependentdiscussions.

TheAuditCommittee’sresponsibilitiesinclude:makingrecommendationstotheBoardregardingtheappointmentoftheexternalauditorsbasedonitsreviewofthescopeofwork,cost-effectivenessandindependenceoftheexternalauditors;keepingunderreviewtheeffectivenessoftheGroup’ssystemofinternalcontrolsandriskmanagementandreportingtotheBoarditsfindings;reviewingtheinternalcontrolreviewprogramme;monitoringthefinancialreportingprocess;reviewingandchallengingtheactionsandjudgementsofmanagementinrelationtotheinterimandannualfinancialstatementsbeforesubmissiontotheBoard;reviewingtheCompany’sarrangementsforitsemployeestoraiseconcernsinconfidenceaboutpossiblewrongdoing;andreviewingtheCompany’sproceduresfordetectingfraud.

Inordertoensuretheindependenceandobjectivityofourauditors,PricewaterhouseCoopersLLP,theCommitteeregularlyreviewstheremunerationreceivedbythemforauditservices,audit-relatedservicesandnon-auditwork.Thesereviewsensureabalanceofobjectivity,valueformoneyandcompliancewithourrequirementforindependence.Theoutcomeofthesereviewswasthattheperformanceofnon-auditworkbyourauditorswasthemostcost-effectivewayofconductingourbusinessandthatnoconflictsofinterestexistedbetweensuchauditandnon-auditwork.

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CORPORATE GOVERNANCE STATEMENTCONTINUED

TherearecertainareasinwhichtheCommitteeconsidersthattheexternalauditorscanaddvaluetotheGroup,withoutcompromisingtheirindependence.InaccordancewiththeGroup’spolicyonnon-auditservices,theGroupreceivednon-auditservicesduringtheyearrelatedtotaxcomplianceandtaxadvice.Anysignificantnon-auditworkundertakenbytheexternalauditorswasapprovedbytheAuditCommitteetoensurethattheauditors’independencewasnotcompromised.ThesereviewsenabledtheAuditCommitteetoconfirmthatitcontinuestoreceiveanefficient,effectiveandindependentauditservice.

TheAuditCommitteeconfirmsthatithasconductedanassessmentoftheexternalauditorsanddeterminedthatadequatepoliciesandsafeguardsareinplacetoensurethattheirindependenceandobjectivityhasnotbeenimpaired.Auditpartnersarerotatedatleasteveryfiveyears.

ACTIVITIES OF THE AUDIT COMMITTEETheAuditCommitteemetthreetimesduringtheyearandonceuptothedateofthisreportin2014andreporteditsconclusionstotheBoard.InthesemeetingstheAuditCommitteehas:

•reviewedtheaccountingpolicies;•reviewedtheannouncementofthefinancialresultsoftheGroupfortheyearended31December2013,31December2014andthe2014interimresultspriortoapprovalbytheBoard;

•consideredandreviewedthe2013and2014annualreportandfinancialstatementsandthe2014interimreport,payingparticularattentiontocriticalareasofmanagementjudgement,togetherwiththeexternalauditors’reports;

•consideredanddiscussedtheauditplanwiththeexternalauditorsforthe2014audit;•consideredandrecommendedtotheBoardthereappointmentoftheauditorswhichwillbeputtoshareholdersforapprovalattheAGM;

•reviewedandconsideredreportsfrominternalcontrolvisitsandtheexternalauditorsontheeffectivenessofthesystemofinternalcontrol,andreportedtotheBoardontheresultsofthereview;

•reviewedthereportsfrommanagementontheGroup’smainrisksandtheassessmentandmitigationofthoserisks;•approvedthestatutoryauditfeefor2014,andreviewednon-auditfeespaidtotheexternalauditorstoensuretheywereinaccordancewiththeGroup’spolicy;

•monitoredtheindependenceandundertookanevaluationoftheeffectivenessoftheexternalauditors;•reviewedthepoliciesintroducedtocomplywiththeUKBriberyAct2010;and•reviewedtheCodeofConductwhichsetsouthowtheGroup’semployeesareabletoraiseconcernsoverfinancialorotherirregularitiesinconfidence.Thispolicywasinplacethroughouttheyear

Inaddition,theAuditCommitteereviewedtheneedforaninternalauditdepartmentandconcludedthattherewasnotarequirementgiventhepresentsizeoftheGroupandinternalcontrolreviewsundertakenbytheheadofficefunction.

THE NOMINATION COMMITTEEJohnHawkinschairstheNominationCommittee.OliverEllingham,RobinHoweandJohnVarneyservedontheCommitteethroughouttheyear.TheGroupCompanySecretaryalsoattendsthemeetings.

TheNominationCommitteereviewsthestructure,sizeandcompositionoftheBoard.ItalsoensuresthatthereisadequatesuccessionplanninginregardtoBoardandseniormanagementappointments.

TherewerenoformalmeetingsoftheCommitteeduringtheyear.

THE REMUNERATION COMMITTEEDetailsoftheRemunerationCommitteeandtheGroup’scompliancewiththerequirementsoftheNVQCodeareprovidedintheRemunerationReportassetoutonpages50to56.

RELATIONS WITH SHAREHOLDERSTheBoardwelcomesenquiriesfrombothinstitutionalandprivateinvestorsthroughouttheyearandrespondsquicklyeitherverballyorinwritingtoenquiriesreceivedfromboth.TheExecutiveChairmanandtheFinanceDirectormeetatregularintervalswithinstitutionalinvestorstodiscusstheGroup’sperformanceandobjectives.TheNon-executiveDirectorsareavailabletoattendmeetingswithshareholdersiftheyarerequestedtodoso.

TheGroup,viaitswebsiteatwww.vislink.com,providesup-to-dateinformationontheCompanyanditsoperatingsubsidiaries,includingallstockexchangeannouncementsanddownloadablecopiesofthemostrecentreportandaccountsandinterimstatements.ThewebsitealsoprovidesacommunicationchanneltotheGroupviaemail.ShareholdersmayelecttoreceiveallshareholderdocumentselectronicallybyregisteringwiththeGroup’sregistrars.

TheCompanyusesitsAGMasanopportunitytocommunicatewithitsshareholdersandencouragestheirparticipation.Asinpreviousyears,itistheintentionoftheBoardtoincorporateapresentationreviewingtheGroup’sobjectivesandstrategy,followedbyaquestionandanswersessionwithmembersoftheBoardatthenextAGMon20May2015.ThenoticeoftheAGMissenttoshareholdersatleast21workingdaysinadvanceofthedateofthemeetingandcontainsdetailsoftheseparateresolutionsthatareproposedforshareholderapproval.ThenoticeoftheAGMseparatelyaccompaniestheannualreport.SeparateresolutionsareproposedoneachsubstantiallydifferentissueandthenumberofproxyvotescastforeachresolutionisdisclosedbytheChairmanatthemeeting.Shareholdershavetheoptionofsubmittingtheirvotinginstructionselectronicallyorbyreturningthepersonalisedproxyformwhichseparatelyaccompaniestheannualreport.

ThenoticeofmeetingfortheforthcomingAGMseparatelyaccompaniestheAnnualReportandmaybeviewedontheCompany’swebsiteinvestors.vislink.com.

DocumentsrelatingtotheCompany’sgovernanceandthefulltermsofreferenceofitsstandingCommitteesarealsoavailableontheCompany’swebsiteinvestors.vislink.com/investors.

FINANCIAL REPORTINGReviewsoftheperformanceandfinancialpositionoftheGroupareincludedintheExecutiveChairman’sStatementandtheStrategicReportonpages2to41.TheBoardusesthese,togetherwiththeDirectors’Reportonpages44to45,topresentabalancedandunderstandableassessmentoftheGroup’spositionandprospects.

Thedirectors’responsibilitiesinrespectoftheGroupfinancialstatementsaredescribedintheStatementofDirectors’Responsibilitiesonpage57.

RESPONSIBILITY FOR RISK AND INTERNAL CONTROL TheBoardhasoverallresponsibilityfortheGroup’ssystemofinternalcontrolalthoughitshouldberecognisedthatitcanprovideonlyreasonableandnotabsoluteassuranceagainstmaterialmisstatementorloss.TheeffectivenessoftheGroup’ssystemofinternalcontrolhasbeenreviewedbytheBoardduringtheyearhavingspecialregardtothestructuralandculturalchangesimplementedduringtheyear.

ThedirectorsconfirmthattheinternalcontrolframeworkisconsistentwiththerevisedTurnbullGuidance,thatthereisanongoingprocessforidentifying,evaluatingandmanagingsignificantrisksfacedbytheGroup,whichisregularlyreviewedbytheBoard,andthatthisprocesswasinplacethroughouttheyearended31December2014anduptothedateofthisreport.

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TheGrouphasaninternalcontrolsysteminplacewhichisdesignedtoprotectshareholders’investmentsbysafeguardingtheassetsoftheGroupandfacilitatingitsefficientoperation.TheBoardconsidersthatstronginternalcontrolsareintegraltothesoundmanagementoftheGroup,anditiscommittedtomaintainingstrictfinancial,operationalandriskmanagementcontroloverallitsactivities.

ItisrecognisedthattherearerisksassociatedwithachievingtheCompany’sgrowthstrategy.TheBoardaimstotakebusinessrisksinaninformedandproactivemanner,suchthatthelevelofriskisalignedwiththepotentialbusinessrewards.Managementregularlyreviewriskexposuresagainstcurrentbusinessriskleveltolerances.Theaimofriskmanagementistoprovidereasonableassurancethattherisksassociatedwithachievingbusinessobjectivesareunderstoodandthattheserisksarebeingrespondedtoappropriatelyatalllevelswithintheorganisation.

ThekeyelementsofinternalcontrolwithintheGrouptomonitorthekeyrisksaredescribedbelow.

CONTROL ENVIRONMENTThereisaclearorganisationstructureinplace,levelsofauthorityarewelldefinedandresponsibilityforoperationalcontrolofthebusinessunitsisdelegatedtomanagingdirectors.Whilstmanagementguidelinesandacomprehensivemanagementreportingpackageareinplaceforallsubsidiaries,theGroupalsomonitorsthesecontrolsbyanumberofmeansincludingregularinternalreview.

IDENTIFICATION AND EVALUATION OF RISKS AND CONTROL OBJECTIVESTheBoardhastheprimaryresponsibilityforidentifyingandevaluatingthemajorrisksfacingtheGroupanddevelopingappropriatepoliciesandprocedurestomanagethem.ItidentifiesthekeyrisksfacedbytheGroup,anddelegatesresponsibilityformanagingthoseriskstoexecutiveandseniormanagement.TheeffectivenessoftheriskcontrolproceduresinplaceisreportedtotheBoardonatleastanannualbasis.

FINANCIAL REPORTING TheGroupoperatesacomprehensivebudgeting,financialreportingandforecastingsystem.Eachoperatingentityisrequiredtocompletemanagementaccountsonamonthlybasiswhichcompareactualresultswithbudget,forecastandprioryear;thesearereviewedatbothexecutiveandBoardlevelmeetingstoensurethatvariancesanddiscrepanciesareidentifiedandactedupononatimelybasis.

Towardstheendofeachfinancialyeartheoperatingentitiespreparebudgetsforthefollowingyear.TheBoardreviewsbudgetsbeforetheyareformallyadopted.TheGroupreportstoitsshareholdersatthehalfyearandfullyearendsaswellasthroughInterimManagementStatements.

MAIN CONTROL PROCEDURES AND MONITORING SYSTEMS USED BY THE BOARD ThereareanumberofkeycontrolproceduresinplacethatarereviewedonanannualbasisbytheBoard.ThesecoverthekeyrisksfacedbytheGroupandarepredominantlyofanoperationalandfinancialnature.

TheGroupfinancefunctionconsolidatestheGroupresultsmonthly,andafullfinancialreviewispresentedateachBoardmeeting,accompaniedbyappropriateKeyPerformanceIndicatorsfortheGroup.EachGroupentitycompilesforecastsofprofitsandcashflowsreflectingtheircurrentexpectations,whicharealsomonitoredbytheBoard.Inaddition,theBoardconsidersthefollowingmatters:

COMMERCIAL RISK AllsignificantcommercialcontractsarereportedtotheBoardandarecontrolledbytheuseofappropriatevettingprocessesandauthorisationlevels.

INVESTMENT APPRAISAL TheGrouphasaclearlydefinedframeworkforcontrollingandreportingacquisitions,disposalsandcapitalexpenditureincludingtheuseofappropriateauthorisationlevels.

LEGAL MATTERS SignificantlitigationandlegalmattersarereportedtotheBoard.

OPERATING BUSINESS FINANCIAL CONTROLS Theexecutivemanagementhavedefinedthefinancialcontrolsandproceduresthateachoperatingentityisrequiredtocomplywith.Keycontrolsovermajorbusinessrisksincludereviewsagainstkeyperformanceindicatorsandexceptionreporting.Theoperatingentitiesmakeperiodicassessmentsoftheirexposuretomajorbusinessrisksandtheextenttowhichtheserisksarecontrolled.ThesearereviewedbytheexecutivemanagementandreportedtotheBoard.

STRATEGIC PLANNING TheexecutivemanagementareresponsibleforkeepingtheBoardappraisedoftheGroupstrategy.TheBoardreviewsstrategicplansaspartoftheongoingbusinessplanningprocessandhasbeencloselyinvolvedinthereviewofthestrategyundertakenduring2011.

COMPUTER SYSTEMS MuchoftheGroup’sfinancialmanagementinformationisprocessedbyandstoredoncomputersystems.Accordingly,theGrouphasestablishedcontrolsandproceduresoverthesecurityofdataheldoncomputersystems.TheGroupoperatesaGroup-wideERPsystem.Acquisitionsaremovedacrosstothissystemaspartofthepostacquisitionintegrationprocesswhilstbeingcarefultoensurethattheabilityofthebusinesstocontinuetooperateeffectivelyisnotimpaired.

INSURANCE TheGroup’sprogrammeofinsurancecoversthemajorriskstotheGroup’sassetsandbusinessandisreviewedannuallybytheBoard.

INTERNAL AUDIT TheGroupdoesnothaveaninternalauditfunctionalthoughtheheadofficeteamfulfilssomefunctionsofaninternalauditdepartmentandhasundertakeninternalcontrolreviewsthroughoutthefinancialyear.ThedirectorsbelievetheGroupfallsintothecategoryofsmallforthispurpose.TheAuditCommitteereviewstheneedforaninternalauditdepartmentatleastannually.

ByorderoftheBoard


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REMUNERATION REPORT

INTRODUCTION ThisreportisontheactivitiesoftheRemunerationCommitteefortheperiodto31December2014.ItsetsouttheremunerationpolicyandremunerationdetailsfortheExecutiveandNon-executiveDirectorsoftheCompany.

Thereportissplitintothreemainareas:

•ThestatementbytheChairoftheRemunerationCommittee;•Theannualreportonremuneration;and•Thepolicyreport

TheAnnualReportonRemunerationprovidesdetailsonremunerationintheperiod.

REMUNERATION COMMITTEETheresponsibilitiesoftheCommitteearetoadviseuponandmakerecommendationstotheBoardontheGroup’sremunerationpoliciesand,withintheframeworkestablishedbytheBoard,torecommendtheremunerationoftheExecutiveDirectors.TheExecutiveChairmanisinvitedtoattendmeetingstodiscussremunerationpackagesandbonusschemesforseniorexecutiveswithintheGroup.

RobinHowechairstheCommittee.OliverEllinghamandJohnVarneyservedontheCommitteethroughouttheyear.

NomemberoftheCommitteehasanypersonalfinancialinterest(otherthanasashareholder),conflictsofinterestarisingfromcross-directorshipsorday-to-dayinvolvementinrunningthebusiness.TheCommitteemakesrecommendationstotheBoard.

TheRemunerationCommitteewillmeasuretheperformanceoftheExecutiveDirectorsandkeymembersofseniormanagementasapreludetorecommendingtheirannualremuneration,bonusawardsandshareplanawardstotheBoardforfinaldetermination.TheremunerationoftheNon-executiveDirectorsisrecommendedbytheExecutiveDirectorsandtakesaccountofthetimespentonBoardandCommitteematters.TheBoardasawholewillmakethefinaldeterminationbutnodirectorplaysapartinanydiscussionabouthisownremuneration.TheRemunerationCommitteehasaccesstobothinternalandexternaladviceincluding,whereappropriate,informationontheremunerationofsimilarexecutivesincomparableorganisations.

Thefocusisonensuringthatacompetitiveandappropriatebasesalaryispaidtodirectorsandseniormanagers,togetherwithincentivearrangementsthatare:

•alignedwithshareholders’interestsandwithlongtermbusinessstrategies;•measuredagainstchallengingbenchmarks,includingbothabsolutefinancialtargets(whicharesetinadvance)andrelativesharepriceperformance;

•amixofannualandthreeyearperformanceperiods;•paidinacombinationofcashandshares;and•transparentandwithout“soft”non-financialtargetswhichcouldotherwiseallowunduediscretiontoawardbonusesthatdonotreflectactualfinancialperformance

CHAIRMAN’S LETTERDear ShareholderTheRemunerationCommittee’smainresponsibilityistoensurethatpaymentstoexecutivesareappropriateandalignedwithshareholderinterests,producingsustainablevaluecreationthroughthedeliveryofourbusinessstrategyandasChairman,IampleasedtopresenttheRemunerationReportfortheyearended31December2014.

Thishasbeenayearofexceptionalresults,withGrouprevenueup3.4percentandreportedadjustedoperatingprofitup66.1percent,contributingto43.8percentincreaseintheadjustedearningspershare,normalisedfortaxeffectsof20percent.

TheBoardhasrecommendedthatthefullyeardividendbeincreasedby20percentto1.50pencepershare(2013:1.25pencepershare).Marketcapitalisationincreasedto£57.0millionat31December2014from£51.7millionon31December2013andtotalexecutiveperformancerelatedremunerationearnedwas£0.4millionfortheyearended31December2014.

Detailsofannualbonuspaymentsandexecutiveremunerationareincludedlaterinthisreport.Analysingexecutivepayversusreturntoshareholders,wehaveproducedthefollowingtable.

KPIsforremunerationofexecutives:

2011 2012 2013 2014Profitbeforetax(£000) (3,617) 2,232 3,093 5,367Adjustedearningspershare(pence) (0.2) 2.5 4.2 4.1Totaldividendpaidtoshareholders(£000) 1,417 1,413 1,413 1,473Totalbonusespaid/payable(£000) - 91 138 148Aftertaxbonusespaid/payable(£000) - 40 60 N/A*Numberofsharespurchasedbyexecutives - 242,579 179,402 N/A*%ofaftertaxbonuspaidusedtobuyshares - 246% 109% N/A*Totalbonuspaidas%ofprofitbeforetax - 4% 4% 3%

*Thebonuspaymentinrelationto2014willbepaidtoExecutivesin2015salaries.

Infullcooperationwiththeexecutives,theRemunerationCommitteehaveagreedthefollowingwithboththeExecutiveChairmanandFinanceDirector,namely:

•Theminimumadjustedoperatingprofittargetasthestartingpointofanybonusistheconsensusanalysispublished•Adjustedoperatingprofitforthebonusyearsetasaminimumthreshold-ifbelowconsensus,thennobonusisearned•Foreachyearaftertax,thefullamountofbonuspaidisusedtobuyVislinksharesontheStockMarket•Thelongtermincentivesarebasedonaggressivegrowthtargets:

— Theexecutivemanagementachievedanadjustedoperatingprofitin2014of£7.2millionandinthepastthreeyearsthemarketcaphasincreasedfrom£29.1millionat31December2011to£57.0millionat31December2014.

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Followingthesuccessofthe2012incentive,majordecisionsondirectors’remunerationhaveincluded:

•Theagreementtorepeatthe2012executivebonusschemeusingnewstretchedtargets;butreducingtheperformancecriteriafromfivemetricstotwo(adjustedoperatingprofitandoperatingcashflow)

•AnagreementtoawardnofeeorsalaryincreasestoExecutiveDirectorsin2014•AnagreementtoawardasalaryincreasetotheNon-executiveDirectorsin2014•TheannouncementtolaunchanewthreeyearLongTermIncentivePlan(LTIP)scheme(2013–2016)forExecutiveDirectorswhichhelpsretainexecutivesandrewardssignificantgrowthinshareholdervalue

TheBoardhaslookedbeyond2015andbelievethereisastrongprospectofcontinuinggrowthinshareholdervalueintheyearsfollowing.

Yoursfaithfully,

RobinHoweSeniorNon-executiveDirector,andChairmanoftheRemunerationCommittee24March2015

ANNUAL REPORT ON REMUNERATION

DIRECTORS’ EMOLUMENTS TheremunerationoftheExecutivedirectorsfortheyears2013and2014ismadeupasfollows:

AGGREGATE DIRECTORS’ REMUNERATION (AUDITED)Directors’emolumentsandpensioncontributionsfortheyearended31December2014wereasfollows:

Basicsalary

andfees£

Performancerelatedbonus

£Benefits

£

Emolumentsbeforepensioncontributions

£

Pensioncontributions

£

Terminationpayments

£

2014 Total

£

2013Total

£Executive Directors

JohnHawkins 360,000 — 24,358 384,358 54,000 — 438,358 459,010IanDavies 175,000 147,700 18,751 341,451 35,243 — 376,694 257,490Non-executive Directors

RobinHowe 40,000 — — 40,000 — — 40,000 30,000OliverEllingham 40,000 — — 40,000 — — 40,000 30,000JohnVarney 40,000 — — 40,000 — — 40,000 30,000AndrewSleigh(to13May2013) — — — — — — — 13,192

655,000 147,700 43,109 845,809 89,243 — 935,052 819,692

BENEFITSBenefitsfortheExecutiveDirectorsincludetheprovisionofacarallowanceandpersonalfuelexpenditure,lifeassurance,privatemedicalinsuranceandpermanenthealthinsurance.Theindividualbenefitsarenotdeemedtobesignificantandarethereforenotanalysedinanyfurtherdetail.

PERFORMANCE RELATED BONUS TheRemunerationCommitteeestablishestheobjectivesthatmustbemeteachfinancialyearforacashbonustobepaidtoExecutiveDirectors.BonusparametersaddressthefinancialperformanceoftheGroup.

Therewasanoverridingconditionthat,fortheyearended31December2014,noperformancerelatedcashbonuscouldbeearnedunlesstheGroupachievedanadjustedoperatingprofittargetof£6.75million(definedasprofitbeforenetfinancecosts,amortisationofacquiredintangibles,non-recurringitemsandtaxation).

HavingachievedtheperformancerelatedcriteriaabonuswasearnedbybothExecutiveDirectorsfortheyearended31December2014.TheremunerationtableaboveindicatesthevaluepayabletoIanDaviesbutJohnHawkinshaselected

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REMUNERATION REPORTCONTINUED

tohavethebonusheearnedof£303,840usedtooffsetagainstanoutstandingHMRCliability,whichisreferredtolaterinthisreport.

Fortheyearended31December2015,theRemunerationCommitteehasestablishedthattheperformancetargetswillbeprofitandcashbasedonlyasopposedtothe2014schemewhichwasbasedaroundprofit,cash,orders,revenueandmargintargets.Thetargetsforthebonusschemein2015havebeensettoacceleratethefinancialperformanceoftheGroup,withbonusesbeingearnedinlinewiththeimprovementoftheGroup’sperformance.

BoththeExecutiveDirectorshaveagreedtoconvertanycashbonusreceivedinrespectoftheGroup’sperformanceinboth2014and2015intosharesintheCompany.

TOTAL PENSION ENTITLEMENTSTheGroupoperatesadefinedcontributionpensionschemeanditistheGroup’spolicythatonlybasicsalariesarepensionableforExecutiveDirectors.

TherearenopensionarrangementsfortheNon-executiveDirectors.Therearenounfundedpensionpromisesorsimilararrangementsforcurrentorpreviousdirectors.

PAYMENT TO PAST DIRECTORS Therewerenopaymentsormoneysorotherassetsmadeduringtheyearended31December2014toanypersonwhowasaformerdirectoroftheCompany.

PAYMENT FOR LOSS OF OFFICETherewerenopaymentsormoneysorotherassetsforlossofofficemadeduringtheyearended31December2014toanypersonwhowasacurrentorformerdirectoroftheCompany.

DIRECTORS’ INTEREST IN SHARE AWARD SCHEMESA) LONG TERM INCENTIVE PLAN (LTIP)TheVislinkplcLTIPwasintroducedin2008,andanextensionapprovedon30May2012.Itisdesignedtorewardandretainexecutivesoverthelongtermwhilstaligningtheirinterestswiththoseofshareholders.

Optionshavebeengrantedasnilcostoptionsunderthisscheme.Theoptionsgrantedunderthisschemearegenerallyexercisableattheendoftheperformanceperiodandforsixmonthsthereafter.Awardsunderthisschemearesubjecttoperformancecriteria,thescalesrelatingtowhicharedeterminedbytheRemunerationCommittee.

TheExecutiveDirectors’beneficialinterestintheLTIPisshownbelow:

AwarddateVesting

date

Marketpriceofashareonaward

Interestat31

December2013

Awardsmadeintheyear Lapsed

Interest at 31

December 2014

JohnHawkins 28Mar2012 28Mar2015 29.50p 2,000,000 — — 2,000,00012Nov2013 12Nov2016 48.45p 2,000,000 — — 2,000,000

IanDavies 15Dec2012 15Dec2015 25.99p 404,000 — — 404,00012Nov2013 12Nov2016 25.99p 750,000 — — 750,000

Asperthetableabove,theLTIPawardsgrantedtobothJohnHawkinsandIanDaviesduringtheyearended31December2012areduetovestin2015,subjecttoachievementoftheperformanceconditions.

Theperformanceconditionsinrespectofthe2012LTIPawardareasfollows:

AverageAdjustedEPS1perannumovertheperformanceperiod2 ProportionofthenumberofAwardSharesvesting

Lessthan3.0pence Nil3.0pence 25%3.0penceto3.75pence Between25%and100%prorataonastraight-linebasis3.75penceorgreater 100%

1. AdjustedEPSisdefinedasthereportedbasicEPSintheannualreportandaccountsfortheFinancialYear2016,adjustedfortheamortisationandimpairmentofgoodwillandacquiredintangibles,andothernon-recurringitemsandtakingintoaccounttaxadjustmentsrelatingtotheseitems.

2. Theperformanceperiodisforthethreefinancialyearscommencing1January2012andending31December2014

NoLTIPawardsweremadetoExecutiveDirectorsintheyearended31December2014.

B) SHARE OPTIONS NooptionsweregrantedtoExecutiveDirectorsduringtheyear.Detailsofoptiongrantscanbefoundinnote23totheconsolidatedfinancialstatements.

C) SHARE INCENTIVE PLAN (SIP) TheExecutiveDirectorswerenotofferedparticipationinthisscheme.

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DIRECTORS’ INTERESTS IN SHARESThetablebelowshowstheinterestsofthedirectorsinofficeattheendoftheyearinthesharecapitaloftheCompany.

At31December

2013

At 31 December

2014Executive Directors

JohnHawkins 214,122 309,279

IanDavies 100,000 150,000

Non-executive Directors

RobinHowe 1,132,578 1,132,578

OliverEllingham 167,000 167,000

JohnVarney 62,229 62,229

Thefollowingchangestookplaceintheinterestsofthedirectorsbetween31December2013and31December2014.

JohnHawkinspurchased95,157sharesatanaveragepriceof47.29pencepershareon2September2014.

IanDaviespurchased50,000sharesatanaveragepriceof45.35pencepershareon2September2014.

PERFORMANCE GRAPHAt31December2014,VislinkshareswerequotedwithintheTechMARKindex,andthedirectorsbelievethatthisprovidedthemostappropriatecomparativeperformancemeasure.

ThefollowinggraphshowstheCompany’sperformance,measuredbyTotalShareholderReturn,comparedwiththeperformanceoftheTechMARK.ThechartshowsthetheoreticalchangeinvalueofashareholdingintheCompanyoverthelastfiveyears,assumingthatdividendsarereinvestedtopurchaseadditionalunitsofequityattheclosingpriceontheexdividenddate.

EXECUTIVE CHAIRMAN REMUNERATIONThetablebelowshowsJohnHawkins’totalremunerationforthelastfouryears,beingthetotaltimethathehasheldthepositionofExecutiveChairman,togetherwithannualbonusoutcomes.Thetotalremunerationfigureiscalculatedonthesamebasisastheaggregatefiguresgivenearlierinthisreport.

NoLTIPawardshavevestedduringthisperiod.

Year

ExecutiveChairmanaggregate

remuneration(£000s)

Annualbonusearnedagainstmaximum

bonus%2014 438,114 84.4% *2013 459,010 25.8%2012 445,012 21.3%2011(for7.5months) 210,000 0.0%

*TheExecutiveChairmanelectednottoreceivepaymentforthebonusearned.

CONSIDERATION OF MATTERS RELATING TO DIRECTORS’ REMUNERATION TherewerefourCommitteemeetingsduringtheyearended31December2014whichconsideredmattersrelatingtothedirectors’remuneration.

SERVICE CONTRACTSJohnHawkinshasacontractdated13May2011,andanupdatedserviceagreementdated6April2014.Fordetailsoftheservicecontractsseepage56.

STATEMENT OF VOTING AT GENERAL MEETING AtthelastAGMheldon21May2014,resolutionsofthefollowingkindweremovedbytheCompanyinrespectof:

-AresolutiontoapprovetheDirectors’RemunerationReportfortheyearended31December2013.

TheGroupiscommittedtoongoingshareholderdialogueandtakesanactiveinterestinvotingoutcomes.Wheretherearesubstantialvotesagainstresolutionsinrelationtodirectors’remuneration,thereasonsforanysuchvotewillbesought,andanyactionsinresponsewillbedetailedhere.

2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 46 0

8 0

1 0 0

1 2 0

1 4 0

1 6 0

1 8 0

2 0 0

2 2 0

2 4 0

2 6 0

VISLINK — TOT RETURN IND

FTSE TECHMARK ALL-SHARE (£) — TOT RETURN INDSource: Thomson Reuters Datastream

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POLICY REPORTTheinformationprovidedinthispartoftheAnnualReportonRemunerationisnotsubjecttoaudit.

INTRODUCTION ThedatefromwhichitisintendedbytheCompanythattheremunerationpolicyistotakeeffectis1January2015.

TheRemunerationCommitteedeterminestheremunerationpolicyforExecutiveDirectorsandotherseniormanagementwiththeaimofensuringthatremunerationpackagesofferedaredesignedtobecompetitivetoattract,motivateandretainexecutivesofthehighcalibreneededforthelongtermdevelopmentoftheGroupandtorewardthemforenhancingvaluetoshareholders.Thepolicyisthatasubstantialproportionofthepackageshouldbeperformancerelated.

Thefollowingtablesetsoutthemainelementsoftheremunerationpolicyfortheyearended31December2015.Eachyear,theRemunerationCommitteereviewstheremunerationpolicy,takingintoaccountboththeexternalmarket(includingenvironmental,socialandcorporategovernanceissues)andtheCompany’sstrategicobjectivesovertheshortandthemediumterm.TheframeworkhasbeendesignedasanintegralpartoftheCompany’soverallbusinessstrategy.

COMPONENTPURPOSE AND LINK TO STRATEGY HOW OPERATED

MAXIMUM POTENTIAL VALUE

PERFORMANCE MEASURES

SALARY AND FEES Toattractandretainhigh-calibreindividualsbyprovidinganappropriatelevelofbasicfixedincomewhilstavoidingexcessiveriskarisingfromover-relianceonvariableincome.

Thebasicsalaryreflectsthemarketratefortheindividual,theirrole,skillsandexperience.

Generallyreviewedannually(withanychangeeffective1January)butexceptionallyatothertimesoftheyear.

Setwithreferencetoindividualperformance,experienceandresponsibilities.

BenchmarkedagainstappropriatecompaniesbytheRemunerationCommittee.

TheRemunerationCommitteeperiodicallybenchmarkssalariesbasedonmarketassessments,theintentionbeingthatbasicsalariesshouldnotnormallybeincreasedbymorethantherateofinflationeachyearwhilstprogressivelyincreasingtheperformancerelatedelementofpay.However,forseniormanagerstheamountofperformancerelatedpay,beingacombinationofcashbonusandlongtermincentives,isexpectedtoincreaseovertime.

N/A N/A

ALL TAXABLE BENEFITS

Toaidretentionandbecompetitiveinthemarketplace.

Healthcarebenefitsinordertominimisebusinessdisruption.

Carallowance

Fuel

Medicalinsurance

Permanenthealthinsurance

Lifeassurance

N/A N/A

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COMPONENTPURPOSE AND LINK TO STRATEGY HOW OPERATED

MAXIMUM POTENTIAL VALUE

PERFORMANCE MEASURES

ANNUAL BONUSES

Toincentivisetheachievementofkeyfinancialandstrategictargetsfortheforthcomingyearwithoutencouragingexcessiverisktaking.

TheRemunerationCommitteeconsidersandapprovesthemeasuresandtargetsatthestartofeachyearandensurestheyarealignedwithbusinessstrategyandaresufficientlystretching.

Insettingfinancialparameters,theRemunerationCommitteetakesintoaccounttheCompany’sinternalbudgetsand,whereapplicable,investors’expectations.Thetargetsapplyingtofinancialmeasuresarebasedonaslidingscale.

Paidincash.

Notpensionable.

Upto250%ofbasesalary. Adjustedoperatingprofit(definedasprofitbeforenetfinancecosts,amortisationofacquiredintangibles,non-recurringitemsandtaxation)(75%).

Operatingcashflow(25%).

LONG TERM SHARE INCENTIVES PLANS

Torewardandretainexecutivemanagementoverthelongtermagainstagreedobjectives,whilstensuringthealignmentofinterestswiththoseoftheshareholders.

Agrantofshares,madeatthediscretionoftheRemunerationCommittee,whichnormallyvestsafterthreeyearssubjecttocontinuedserviceandsatisfactionofperformancetargets.

LTIPawardswithafacevalueofupto300%ofbasesalary.

LTIPperformancemeasuredoverthreeyears.

BasedonEPSgrowth.

PENSIONS Toaidretentionandremaincompetitiveinthemarketplace.

ForExecutiveDirectors,anannualpensionallowanceofupto20percentofbasesalary.

ThereisnopensionentitlementforNon-executiveDirectors.

N/A N/A

TheRemunerationCommitteewillmeasuretheperformanceoftheExecutiveDirectorsandkeymembersofseniormanagementasapreludetorecommendingtheirannualremuneration,bonusawardsandshareplanawardstotheBoardforfinaldetermination.TheremunerationoftheNon-executiveDirectorsisrecommendedbytheExecutiveDirectorsandtakesaccountofthetimespentonBoardandCommitteematters.

ThebasicNon-executiveDirectorfees,whichincludestheChairmanoftheAuditCommitteeandtheChairmanoftheRemunerationCommittee,wasincreasedfrom£30,000to£40,000perannumwitheffectfrom1January2014.Thisincrease,thefirstsince2007,seekstobetterreflectthetimeandresponsibilitycommitmentandensureacompetitivefeetoattracttherightlevelofexperiencefortheroles.

TheBoardasawholewillmakethefinaldeterminationbutnodirectorplaysapartinanydiscussionabouthisownremuneration.TheRemunerationCommitteehasaccesstobothinternalandexternaladviceincluding,whereappropriate,informationontheremunerationofsimilarexecutivesincomparableorganisations.

ExecutiveDirectors’salarieswerereviewedatthebeginningof2011andadecisionwastakentofreezethemattheir2010level.Thispolicywasrepeatedatthebeginningof2012,2013and2014.

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APPROACH TO RECRUITMENT REMUNERATIONWithregardtonewappointments,theRemunerationCommitteereviewsthevariouscomponentsoftheremunerationpackageonacasebycasebasis.

Annualsalariesareregularlybenchmarkedagainstcomparableorganisationstoensurecompetitivesalariesareofferedandtheserviceoftheexecutivecanberetained.

Annualperformancebonusesaredesignedtorewardmanagementforattainmentofagreedfinancialobjectivesfortwoperformancemetrics:adjustedoperatingprofitandoperatingcashflow.

Thepercentageweightingforeachelementisreviewedannuallywithoperatingprofitusuallyrepresentinghalfofthebonusentitlement,butfailuretoreachanagreedminimumoperatingprofitlevelcancelsthebonusesthatcanpotentiallybeearnedforotherperformancemetrics.

SERVICE CONTRACTS ThefollowingobligationsontheCompanywhichwouldgiveriseto,orimpacton,remunerationpaymentsorpaymentforlossofofficeare:

JohnHawkinswasappointedasaNon-executiveDirectoroftheCompanybywayofaletterofappointmentdated17November2010.TheletterprovidedforJohnjoiningtheBoardasNon-executiveChairmanelectwithafeeof£30,000perannum.HewasappointedasNon-executiveChairmanpursuanttoanagreementforservicesdated13May2011.Thefeefortheserviceswas£100,000perannum.Theappointmentwasforaninitialtermofthreeyears,subjecttore-electionbyshareholdersatthefirstAGMfollowingappointmentandthensubsequentlyatleastonceeverythreeyears.Theappointmentmayhavebeenterminatedatthediscretionofeitherpartyuponsixmonths’notice.Theagreementdidnotcontainprovisionsrelatingtocompensationforanyearlyterminationofappointment.AttheAGMheldon21May2014JohnHawkinswasre-electedasadirector.

JohnHawkinswasappointedasChiefExecutivepursuanttoaseparateagreementforservicesdated13May2011.UnderthatagreementJohncommitted166workingdaysperannumtotheroleandsuchadditionaltimeaswasrequiredtoensurethathisdutieswerefullyperformed.Thefeeforserviceswas£260,000perannumandanentitlementtoparticipateintheexecutiveperformancerelatedbonusscheme.Therewasnoprovisionforpensioncontributions,lifeassurance,carallowanceorcost-of-livingincreases.Theappointmentmayhavebeenterminatedatthediscretionofeitherpartyupon12months’notice.TheCompanyreviewsinJanuary,onanannualbasis,theneedtorecruitanewChiefExecutive;intheeventthattheCompanydecidestoundertakesuchrecruitmentthenoticeperiodwouldreducetothreemonths.

In2014afterindependenttaxadvice,theRemunerationCommitteedecidedtovoluntarilydeclaretoHMRCthatthestatusoftheExecutiveChairmanshouldhavebeenunderthePAYEregimefromhisappointmentinNovember2010,despiteaPAYEauditin2011declaringthattheservicecontractsfortheChairmanwereacceptabletotheauthorities.

ThesubsequentPAYEandNationalInsurancebillwassettledbytheCompany.TheExecutiveChairmanelectedtosacrifice,infull,hisentitlementtohisbonusearnedinrelationtoperformancein2014tooffsetagainstthisliability.

ThisclosedthematterwithHMRCandtheCompanyhasnowsettledandpaidalltaxesdueinrelationtotheChairman’semploymentfromNovember2011until5April2014.

On6April2014JohnHawkinssignedanemployeeserviceagreementasExecutiveChairmanoftheCompanyandnopreviousemploymentoftheexecutiveshallcountaspartoftheexecutive’scontinuousperiodofemployment.Theemploymentshallbesubjecttoterminationbyeitherpartygivingtotheother12months’priornoticeinwriting.Iftheexecutive’sroleisreviewedinaccordancewithClause2oftheagreementanditissplitintotheroleofNon-executive

ChairmanandChiefExecutivethenprovidedtheexecutiveisofferedoneofthoserolesitisrecognisedthatthisnoticeperiodwillbereducedtosixmonths.Thebasicsalaryis£360,000peryearwhichcomprises£260,000fortheexecutive’sdutiesasChiefExecutiveand£100,000forhisroleasChairman.

IanDavieshasaservicecontractdated25April2012whichprovidesforanoticeperiodofsixmonths’writtennotice.

RobinHowehasaservicecontractdated1June2006,whichprovidesforanoticeperiodofonemonth’swrittennotice.On1June2011hisappointmentwasextendedforasecondtermoffiveyears.

OliverEllinghamhasaservicecontractdated1October2007,whichprovidesforanoticeperiodofonemonth’swrittennotice.On6April2011hisappointmentwasextendedforasecondtermoffiveyears.

JohnVarneyhasaservicecontractdated1October2011,whichprovidesforanoticeperiodofonemonth’swrittennotice.

Thedirectors’servicecontractsareavailableforinspectionduringbusinesshoursonanyweekdaybetweenthedateofthenoticeandtheAnnualGeneralMeetingattheCompany’sregisteredofficeandatthevenueoftheAnnualGeneralMeetingfrom15minutespriortothecommencementoftheAnnualGeneralMeetinguntilitsconclusion.

POLICY ON PAYMENT FOR LOSS OF OFFICEAllpaymentsduewillbemadeinaccordancewiththeContractofEmploymentandServiceAgreementoftheexecutiveconcernedandwillbesufficientlydetailedtoensuretransparency,namely:

•Thetotalamountforlossofofficepaidtoorreceivablebytheperson(brokendownintoeachcomponentcomprisedinthatpaymentandthevalueofeachcomponent)

•Explanationwillbegivenofhoweachcomponentwascalculated•Disclosureofanyotherpaymentspaidorreceivedbythepersoninconnectionwithterminationofqualifyingservices,whetherbywayofcompensationforlossofofficeorotherwise,includingthetreatmentsofoutstandingincentiveawardsthatvestonorfollowingtermination

•Detailsofanydiscretion

STATEMENT OF SHAREHOLDER VIEWSShareholdershavestatedthatthebonuspolicyisaggressivewithnobonusdueiftheminimumprofittargetisnotachievedwhicheachyearrepresentsanalystmarketconsensus.

Theothermarket-leadinginitiativeisthefactthattheExecutiveChairmanandtheGroupFinanceDirectorwilluse100percentofbonusproceedstopurchasesharesinthemarketandthatlongtermincentivesarealsolinkedtoaggressivegrowth.

APPROVAL ThisreportwasapprovedbytheBoardofdirectorson24March2015andsignedonitsbehalfby:

RobinHoweSeniorNon-executiveDirector,andChairmanoftheRemunerationCommittee24March2015

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STATEMENT OF DIRECTORS’ RESPONSIBILITIES

ThedirectorsareresponsibleforpreparingtheAnnualReport,theDirectors’RemunerationReportandthefinancialstatementsinaccordancewithapplicablelawandregulations.

Companylawrequiresthedirectorstopreparefinancialstatementsforeachfinancialyear.UnderthatlawthedirectorshavepreparedtheGroupfinancialstatementsinaccordancewithInternationalFinancialReportingStandards(IFRSs)asadoptedbytheEuropeanUnion,andtheparentcompanyfinancialstatementsinaccordancewithUnitedKingdomGenerallyAcceptedAccountingPractice(UnitedKingdomAccountingStandardsandapplicablelaw).UndercompanylawthedirectorsmustnotapprovethefinancialstatementsunlesstheyaresatisfiedthattheygiveatrueandfairviewofthestateofaffairsoftheGroupandtheCompanyandoftheprofitorlossoftheGroupforthatperiod.Inpreparingthesefinancialstatements,thedirectorsarerequiredto:

•selectsuitableaccountingpoliciesandthenapplythemconsistently;•makejudgementsandaccountingestimatesthatarereasonableandprudent;•statewhetherIFRSsasadoptedbytheEuropeanUnionandapplicableUKAccountingStandardshavebeenfollowed,subjecttoanymaterialdeparturesdisclosedandexplainedintheGroupandparentcompanyfinancialstatementsrespectively;

•preparethefinancialstatementsonthegoingconcernbasisunlessitisinappropriatetopresumethattheCompanywillcontinueinbusiness

ThedirectorsareresponsibleforkeepingadequateaccountingrecordsthataresufficienttoshowandexplaintheCompany’stransactionsanddisclosewithreasonableaccuracyatanytimethefinancialpositionoftheCompanyandtheGroupandenablethemtoensurethatthefinancialstatementsandtheDirectors’RemunerationReportcomplywiththeCompaniesAct2006and,asregardstheGroupfinancialstatements,Article4oftheIASRegulation.TheyarealsoresponsibleforsafeguardingtheassetsoftheCompanyandtheGroupandhencefortakingreasonablestepsforthepreventionanddetectionoffraudandotherirregularities.

ThedirectorsareresponsibleforthemaintenanceandintegrityoftheCompany’swebsite.LegislationintheUnitedKingdomgoverningthepreparationanddisseminationoffinancialstatementsmaydifferfromlegislationinotherjurisdictions.

Eachofthedirectors,whosenamesandfunctionsarelistedonpages42and43confirmthat,tothebestoftheirknowledge:

•theGroupfinancialstatements,whichhavebeenpreparedinaccordancewithIFRSsasadoptedbytheEU,giveatrueandfairviewoftheassets,liabilities,financialpositionandprofitoftheGroup;and

•theStrategicReportincludesafairreviewofthedevelopmentandperformanceofthebusinessandthepositionoftheGroup,togetherwithadescriptionoftheprincipalrisksanduncertaintiesthatitfaces.

ByorderoftheBoard


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INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF VISLINK PLC

REPORT ON THE GROUP FINANCIAL STATEMENTSOUR OPINIONInouropinion,Vislinkplc’sgroupfinancialstatements(the“financialstatements”):

•giveatrueandfairviewofthestateoftheGroup’saffairsasat31December2014andofitsprofitandcashflowsfortheyearthenended;

•havebeenproperlypreparedinaccordancewithInternationalFinancialReportingStandards(“IFRSs”)asadoptedbytheEuropeanUnion;and

•havebeenpreparedinaccordancewiththerequirementsoftheCompaniesAct2006.

WHAT WE HAVE AUDITEDVislinkplc’sfinancialstatementscomprise:

•theConsolidatedStatementofFinancialPositionasat31December2014;•theConsolidatedIncomeStatementandtheConsolidatedStatementofComprehensiveIncomefortheyearthenended;

•theConsolidatedStatementofCashFlowsfortheyearthenended;•theConsolidatedStatementofChangesinShareholders’Equityfortheyearthenended;and

•thenotestothefinancialstatements,whichincludeasummaryofsignificantaccountingpoliciesandotherexplanatoryinformation

ThefinancialreportingframeworkthathasbeenappliedinthepreparationofthefinancialstatementsisapplicablelawandIFRSsasadoptedbytheEuropeanUnion.

Inapplyingthefinancialreportingframework,thedirectorshavemadeanumberofsubjectivejudgements,forexampleinrespectofsignificantaccountingestimates.Inmakingsuchestimates,theyhavemadeassumptionsandconsideredfutureevents.

OPINION ON OTHER MATTER PRESCRIBED BY THE COMPANIES ACT 2006Inouropinion,theinformationgivenintheStrategicReportandtheDirectors’Reportforthefinancialyearforwhichthefinancialstatementsarepreparedisconsistentwiththefinancialstatements.

OTHER MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTIONADEQUACY OF INFORMATION AND EXPLANATIONS RECEIVEDUndertheCompaniesAct2006wearerequiredtoreporttoyouif,inouropinion,wehavenotreceivedalltheinformationandexplanationswerequireforouraudit.Wehavenoexceptionstoreportarisingfromthisresponsibility.

DIRECTORS’ REMUNERATIONUndertheCompaniesAct2006wearerequiredtoreporttoyouif,inouropinion,certaindisclosuresofdirectors’remunerationspecifiedbylawarenotmade.Wehavenoexceptionstoreportarisingfromthisresponsibility.

RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS AND THE AUDITOUR RESPONSIBILITIES AND THOSE OF THE DIRECTORSAsexplainedmorefullyintheStatementofDirectors’Responsibilities,thedirectorsareresponsibleforthepreparationofthefinancialstatementsandforbeingsatisfiedthattheygiveatrueandfairview.

OurresponsibilityistoauditandexpressanopiniononthefinancialstatementsinaccordancewithapplicablelawandInternationalStandardsonAuditing(UKandIreland)(“ISAs(UK&Ireland)”).ThosestandardsrequireustocomplywiththeAuditingPracticesBoard’sEthicalStandardsforAuditors.

Thisreport,includingtheopinions,hasbeenpreparedforandonlyforthecompany’smembersasabodyinaccordancewithChapter3ofPart16oftheCompaniesAct2006andfornootherpurpose.Wedonot,ingivingtheseopinions,acceptorassumeresponsibilityforanyotherpurposeortoanyotherpersontowhomthisreportisshownorintowhosehandsitmaycomesavewhereexpresslyagreedbyourpriorconsentinwriting.

WHAT AN AUDIT OF FINANCIAL STATEMENTS INVOLVESWeconductedourauditinaccordancewithISAs(UK&Ireland).Anauditinvolvesobtainingevidenceabouttheamountsanddisclosuresinthefinancialstatementssufficienttogivereasonableassurancethatthefinancialstatementsarefreefrommaterialmisstatement,whethercausedbyfraudorerror.Thisincludesanassessmentof:•whethertheaccountingpoliciesareappropriatetotheGroup’scircumstancesandhavebeenconsistentlyappliedandadequatelydisclosed;

•thereasonablenessofsignificantaccountingestimatesmadebythedirectors;and•theoverallpresentationofthefinancialstatements

Weprimarilyfocusourworkintheseareasbyassessingthedirectors’judgementsagainstavailableevidence,formingourownjudgements,andevaluatingthedisclosuresinthefinancialstatements.

Wetestandexamineinformation,usingsamplingandotherauditingtechniques,totheextentweconsidernecessarytoprovideareasonablebasisforustodrawconclusions.Weobtainauditevidencethroughtestingtheeffectivenessofcontrols,substantiveproceduresoracombinationofboth.

Inaddition,wereadallthefinancialandnon-financialinformationintheAnnualReport&Accountstoidentifymaterialinconsistencieswiththeauditedfinancialstatementsandtoidentifyanyinformationthatisapparentlymateriallyincorrectbasedon,ormateriallyinconsistentwith,theknowledgeacquiredbyusinthecourseofperformingtheaudit.Ifwebecomeawareofanyapparentmaterialmisstatementsorinconsistenciesweconsidertheimplicationsforourreport.

OTHER MATTERWehavereportedseparatelyontheCompanyfinancialstatementsofVislinkplcfortheyearended31December2014.

MarkEllis(SeniorStatutoryAuditor)forandonbehalfofPricewaterhouseCoopersLLPCharteredAccountantsandStatutoryAuditors,Bristol24March2015

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Vislink plc

CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2014

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2014

Notes2014£000

2013£000

Revenue 5 61,931 59,879Costofsales (33,519) (35,537)Grossprofit 28,412 24,342)Salesandmarketingexpenses (8,817) (10,273)Researchanddevelopmentexpenses (5,558) (3,942)Administrativeexpenses (6,833) (5,791)Otherexpenses 6 (1,692) (1,258)Operating profit 6 5,512 3,078Operatingprofitisanalysedas:Adjustedoperatingprofit 7,204 4,336Amortisationandimpairmentofacquiredintangibles 12 (2,630) (1,420)Non-recurringitems 6 938 162Financecosts 8 (169) (4)Financeincome 8 24 19Profit before tax 5,367 3,093Tax 9 (1,623) 384Profit for the year being profit attributable to owners of the parent 3,744 3,477Basic earnings per share 11 3.2p 3.1pDiluted earnings per share 11 3.1p 3.1p

2014£000

2013£000

Profitforthefinancialyear 3,744 3,477Othercomprehensiveexpense-itemsthatmaybereclassifiedsubsequentlytoprofitorloss:Exchangedifferenceontranslationofoverseasoperations 483 (200)Total comprehensive income for the year attributable to owners of the parent 4,227 3,277

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Stock code: VLK OUR FINANCIALSwww.vislink.com

Notes2014£000

2013£000

Assets

Non-current assets

Intangibleassets 12 43,683 33,033Property,plantandequipment 13 2,665 2,430Deferredtaxassets 22 3,712 4,150Totalnon-currentassets 50,060 39,613Current assets

Inventories 14 12,884 11,094Tradeandotherreceivables 15 15,956 11,907Cashandcashequivalents 16 8,380 3,705Totalcurrentassets 37,220 26,706Liabilities

Current liabilities

Financialliabilities-borrowings 19 5,600 —Tradeandotherpayables 17 15,810 12,848Currenttaxliabilities 18 747 12Provisionsforotherliabilitiesandcharges 21 280 638Totalcurrentliabilities 22,437 13,498Net current assets 14,783 13,208Non-current liabilities

Financialliabilities-borrowings 19 2,400 —Deferredtaxliabilities 22 5,338 3,153Provisionsforotherliabilitiesandcharges 21 278 66Totalnon-currentliabilities 8,016 3,219Net assets 56,827 49,602Equity attributable to owners of the parent

Ordinaryshares 23 3,066 2,848Sharepremiumaccount 6,800 4,900Capitalredemptionreserve 617 617Mergerreserve 32,448 30,565Translationreserve 4,437 3,954Retainedearnings 9,459 6,718Total equity 56,827 49,602

Thefinancialstatementsonpages59to95wereapprovedbytheBoardofDirectorson24March2015andweresignedonitsbehalfby:

JohnHawkinsIanDaviesDIRECTORS

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2014

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Ordinaryshares£000

Sharepremiumaccount

£000

Capitalredemption

reserve£000

Mergerreserve£000

Translationreserve£000

Retainedearnings

£000

TotalEquity£000

At1January2013 2,848 4,900 617 30,565 4,154 4,293 47,377Comprehensive income

Profitforthefinancialyear — — — — — 3,477 3,477Exchangedifferencesontranslationofoverseasoperations — — — — (200) — (200)Totalcomprehensive(expense)/incomefortheyear — — — — (200) 3,477 3,277Transactions with ownersSharebasedpayments:Valueofemployeeservices(note23) — — — — — 361 361Dividendspaid(note10) — — — — — (1,413) (1,413)Totaltransactionswithowners — — — — — (1,052) (1,052)Balanceat1January2014 2,848 4,900 617 30,565 3,954 6,718 49,602

Comprehensive income

Profitforthefinancialyear — — — — — 3,744 3,744Exchangedifferencesontranslationofoverseasoperations — — — — 483 — 483Totalcomprehensiveincomefortheyear — — — — 483 3,744 4,227Transactions with ownersSharebasedpayments:Valueofemployeeservices(note23) — — — — — 500 500Issueofsharecapital(note23) 218 1,900 — 1,883 — — 4,001AdjustmentinrespectofEmployeeShareOwnershipPlan — — — — — (30) (30)Dividendspayable(note10) — — — — — (1,473) (1,473)Totaltransactionswithowners 218 1,900 — 1,883 — (1,003) 2,998Balance at 31 December 2014 3,066 6,800 617 32,448 4,437 9,459 56,827

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

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OUR FINANCIALS

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2014

Notes2014£000

2013£000

Cash flow from operating activities

Cashgeneratedfromoperations 24 7,999 4,352Interestpaid (169) (2)Taxationpaid (102) (114)Net cash from operating activities 7,728 4,236Cash flow from investing activities

Interestreceived 24 19Acquisitionofsubsidiary (13,092) (2,031)Cashacquiredfromacquisitionofsubsidiary 6,089 —Deferredconsiderationinrespectofacquisition — (405)Proceedsfromsaleofproperty,plantandequipment 1 64Purchaseofproperty,plantandequipment 13 (919) (473)Expenditureoncapitaliseddevelopmentcosts 12 (3,647) (4,453)Net cash used in investing activities (11,544) (7,279)Cash flow from financing activities

Newbankloansraised 8,000 —Dividendpaid 10 (1,473) (1,413)Proceedsonissuesofshares 2,000 —Net cash from/(used) in financing activities 8,527 (1,413)Net increase/(decrease) in cash and cash equivalents 4,711 (4,456)Effectofforeignexchangeratechanges (36) 30Cashandcashequivalentsat1January 3,705 8,131Cash and cash equivalents at 31 December 16 8,380 3,705

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL INFORMATIONVislinkplc(“theCompany”)anditssubsidiaries(together“theGroup”)isaleadingglobaltechnologybusinessspecialisinginthecollection,deliveryandmanagementofhighqualitylivevideo‘fromscenetoscreen’.Forthebroadcastmarkets,Vislinkprovideswirelesscommunicationsolutionsforthecollectionoflivenews,sportandentertainmentaswellassoftwaresolutionsforchannelplayoutautomation,ChannelinaBoxandvideocontentmanagement.Vislinkalsoprovidessecurevideocommunicationsforsurveillanceandpublicsafetyapplicationssuchaslawenforcementandhomelandsecurity.Vislinkemploysover300peopleworldwidewithofficesintheUK,USA,UAE,BrazilandSingaporeandmanufacturingoperationsintheUKandtheUSA.Vislinkhasnetassetsofover£56millionandcontinuouslyinvestsininnovation.

TheCompanyislistedontheAIMmarketoftheLondonStockExchange(AIM:VLK).Forfurtherinformation,visitwww.vislink.com.

TheCompanyisincorporatedanddomiciledintheUK.TheaddressofitsregisteredofficeisMarlboroughHouse,CharnhamLane,Hungerford,Berkshire,RG170EY.

TheregisterednumberoftheCompanyis4082188.

2. SIGNIFICANT ACCOUNTING POLICIESTheprincipalaccountingpoliciesappliedinthepreparationoftheseconsolidatedfinancialstatementsaresetoutbelow.Thesepolicieshavebeenconsistentlyappliedtoalltheyearspresented,unlessotherwisestated.

BASIS OF ACCOUNTINGTheGroupfinancialstatementshavebeenpreparedonagoingconcernbasisinaccordancewithInternationalFinancialReportingStandardsasadoptedbytheEuropeanUnion(IFRSs),IFRICinterpretationsandtheCompaniesAct2006applicabletocompaniesreportingunderIFRS.

ThepreparationoffinancialstatementsinconformitywithIFRSrequirestheuseofcertaincriticalaccountingestimates.ItalsorequiresmanagementtoexercisejudgementintheprocessofapplyingtheGroup’saccountingpolicies.Theareasinvolvingahigherdegreeofjudgementorcomplexity,orareaswhereassumptionandestimatesaresignificanttotheGroupfinancialstatements,aredisclosedinnote4.

DuringthecurrentreportingperiodtherewerenonewstandardsoramendmentswhichhadamaterialimpactonthenetassetsoftheGroup.Inaddition,standardsoramendmentsissuedbutnotyeteffectivearenotexpectedtohaveamaterialimpactonthenetassetsoftheGroup.

TheGroupfinancialstatementshavebeenpreparedonagoingconcernbasisunderthehistoricalcostbasisofaccounting,exceptwherefairvaluemeasurementisrequiredunderIFRSasdescribedbelow.

BASIS OF CONSOLIDATIONTheconsolidatedfinancialstatementsincorporatethefinancialstatementsoftheCompanyandentitiescontrolledbytheCompany(itssubsidiaries)madeupto31December2014.ControlisachievedwhentheCompany:

• hasthepowerovertheinvestee;• isexposed,orhasrights,tovaryfromitsinvolvementwith

theinvestee;and• hastheabilitytouseitspowertoaffectitsreturns

TheCompanyreassesseswhetherornotitcontrolsaninvesteeiffactsandcircumstancesindicatethattherearechangestooneormoreofthethreeelementsofcontrollistedabove.

SubsidiariesarefullyconsolidatedfromthedateonwhichcontrolistransferredtotheGroup.Theyarede-consolidatedfromthedatethatcontrolceases.

Inter-companytransactions,balances,incomeandexpensesontransactionsbetweenGroupcompaniesareeliminated.Profitsandlossesresultingfromtheinter-companytransactionsthatarerecognisedinassetsarealsoeliminated.AccountingpoliciesofsubsidiarieshavebeenchangedwherenecessarytoensureconsistencywiththepoliciesadoptedbytheGroup.

BUSINESS COMBINATIONSTheGroupappliestheacquisitionmethodofaccountingtoaccountforbusinesscombinations.Theconsiderationtransferredfortheacquisitionofasubsidiaryisthefairvaluesofassetstransferred,theliabilitiesassumedandtheequityinterestsissuedbytheGroup.Theconsiderationtransferredincludesthefairvalueofanyassetorliabilityresultingfromacontingentconsiderationarrangement.Identifiableassetsacquiredandliabilitiesandcontingentliabilitiesassumedinabusinesscombinationaremeasuredinitiallyattheirfairvaluesattheacquisitiondate.

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OUR FINANCIALS

AnycontingentconsiderationtobetransferredbytheGroupisrecognisedatthefairvalueattheacquisitiondate.SubsequentchangestothefairvalueofthecontingentconsiderationthatisdeemedtobeanassetorliabilityisrecognisedinaccordancewithIAS39eitherinprofitorlossorasachangetoothercomprehensiveincome.Contingentconsiderationthatisclassifiedasequityisnotremeasured,anditssubsequentsettlementisaccountedforwithinequity.

Costsdirectlyattributabletoanacquisitionarechargeddirectlytotheincomestatementasincurred.

Goodwillisinitiallymeasuredastheexcessoftheaggregateoftheconsiderationtransferredandthefairvalueofthenon-controllinginterestoverthenetidentifiableassetsacquiredandliabilitiesassumed.Ifthisconsiderationislowerthanthefairvalueofthenetassetsofthesubsidiaryacquired,thedifferenceisrecognisedintheprofitandloss.

SEGMENTAL REPORTINGDuring2014wereorganisedthebusinesstochangeourfocusinlinewiththeGroup’songoingstrategytoreportinternallybydivisioninsteadofbygeographicproximity.FollowingtheintroductionofthesechangeswehaverevisedoursegmentalreportingasrequiredunderIFRS8.

TheGroup’sinternalorganisationalandmanagementstructureanditssystemofinternalfinancialreportingtotheBoardofdirectorsarebasedontheproductofferingsofeachofitsbusinesses.Thesecompriseoftwodivisions,VislinkCommunicationSystemsandPebbleBeachSystems.EachdivisionhasitsownmanagingdirectorwhositsontheExecutiveManagementBoard,togetherwiththeGroupFinanceDirector,underthechairmanshipoftheExecutiveChairmantooverseetherunningoftheGroup.Thechiefoperatingdecision-makerhasbeenidentifiedastheExecutiveManagementBoard.

TheExecutiveManagementBoardreviewstheGroup’sinternalfinancialreportinginordertoassessperformanceandallocateresources.ThesameinformationisprovidedtotheBoardofdirectorsofVislinkplc.ManagementhavethereforedeterminedthattheoperatingsegmentsfortheGroupwillbebasedonthesereports.

TheVislinkCommunicationSystemsbusinessisresponsibleforthesalesandmarketingofallGrouphardwareproductsandservices.ItisalsotheproductcentrefortheAdventsatcomcommunicationproducts,LinkandGigawavewirelesscamerasystemsandtheassociatedMicrowaveandAmplifierproducts.ThePebbleBeachSystemsbusinessisresponsibleforthesalesandmarketingofallGroupsoftwareproductsandservices.

GroupmanagementarefocusedondevelopingglobalrevenuegrowthfromthetwomainmarketsthattheGroupserves,BroadcastandSurveillanceandPublicSafety.Segmentalreportingisthereforealsoprovidedbyreferencetorevenuebymarketbygeographicregion.

FOREIGN CURRENCY TRANSLATION(a) Functional and presentation currency

ItemsincludedinthefinancialstatementsofeachoftheGroup’sentitiesaremeasuredusingthecurrencyoftheprimaryeconomicenvironmentinwhichtheentityoperates(“thefunctionalcurrency”).TheGroupfinancialstatementsarepresentedinpoundssterling(GBP),whichistheCompany’sfunctionalandpresentationcurrency.

(b) Transactions and balances

Foreigncurrencytransactionsaretranslatedintothefunctionalcurrencyusingtheexchangeratesprevailingatthedatesofthetransactions.Foreignexchangegainsandlossesresultingfromthesettlementofsuchtransactionsandfromthetranslationatyearendexchangeratesofmonetaryassetsandliabilitiesdenominatedinforeigncurrenciesarerecognisedintheincomestatement.

(c) Group companies

TradingresultsandfinancialpositionofallGroupentities(noneofwhichhasthecurrencyofahyper-inflationaryeconomy)thathaveafunctionalcurrencydifferentfromthepresentationcurrencyaretranslatedintothepresentationcurrencyasfollows:

• assetsandliabilitiesforeachstatementoffinancialpositionpresentedaretranslatedattheclosingrateofexchangeprevailingatthereportingdate;

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

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• incomeandexpenditureforeachincomestatementaretranslatedattheaverageratesofexchangeprevailingduringtheyear;and

• allresultingexchangedifferencesarisingfromrestatementoftheopeningstatementsoffinancialpositionandtradingresultsofoverseassubsidiariesarerecognisedasaseparatecomponentofshareholders’equity

Goodwillandfairvalueadjustmentsarisingontheacquisitionofaforeignentityaretreatedasassetsandliabilitiesoftheforeignentityandtranslatedattheclosingrate.

INTANGIBLE ASSETS(a) Goodwill

GoodwillrepresentstheexcessofthefairvalueofthepurchaseconsiderationfortheinterestinsubsidiaryundertakingsoverthefairvaluetotheGroupofthenetassetsacquired,includingacquiredintangibleassetsandanycontingentliabilities.

Goodwillistestedannuallyormorefrequentlyifeventsorcircumstancesindicatepotentialimpairment.Impairmentlossesarerecognisedfortheamountbywhichanasset’scarryingamountexceedsitsrecoverableamount;thatrecoverableamountisthehigheroftheasset’sfairvaluelesscoststosellanditsvalueinuse.Impairmentsofgoodwillarenotreversed.Gainsandlossesonthedisposalofanentitywillbenetofthecarryingamountofgoodwillrelatingtotheentitysold.

Goodwillisallocatedtocash-generatingunitsforthepurposesofimpairmenttesting.Theallocationismadetocash-generatingunitsthatareexpectedtobenefitfromthebusinesscombinationinwhichthegoodwillarose.

(b) Acquired intangibles

Intangibleassetsacquiredaspartofbusinesscombinationsarecapitalisedatfairvalueatthedateofacquisition.Followingtheinitialrecognition,thecarryingamountofanintangibleassetisitscostlessaccumulatedamortisationandanyaccumulatedimpairmentlosses.Amortisationischargedonthebasisoftheestimatedusefullifeonastraight-linebasisandtheexpenseistakentotheincomestatement(note12).

TheGrouphasrecognisedcustomerrelationships,intellectualpropertyandbrandsasseparatelyidentifiableacquiredintangibleassets.Theusefuleconomiclifeattributedtoeachintangibleassetisdeterminedatthetimeofacquisitionandrangesfromsixtotenyears.

Impairmentreviewsareundertakenwhenthedirectorsconsiderthattherehasbeenapotentialindicationofimpairment.

(c) Research and development costs

Researchexpenditureiswrittenoffasincurred.

WheredevelopmentexpendituremeetsthecriteriaforcapitalisationassetoutinIAS38“IntangibleAssets”thecostsarecapitalised.Thekeyeligibilitycriteriaforcapitalisationrelateto:

• theidentificationofdevelopmentcosts.IngeneraltheGroup’sresearchanddevelopmentactivitiesarecloselyinterrelatedanditisnotuntilthetechnicalfeasibilityofaproductcanbedeterminedwithreasonablecertaintythatdevelopmentcostsareseparatelyidentifiable;and

• thegenerationoffutureeconomicbenefit.Intangibleassetsarenotrecognisedunlesstheresultantproductisexpectedtogeneratefutureeconomicbenefitinexcessoftheamountcapitalised

Developmentcostsareamortisedovertheestimatedusefullifeoftheproductswithwhichtheyareassociated.Amortisationcommenceswhenanewproductisincommercialproduction.Theamortisationperiodrangesfromonetofiveyears.Ifaproductbecomesunviablethedeferreddevelopmentcostsarewrittenoff.

PROPERTY, PLANT AND EQUIPMENTProperty,plantandequipmentarestatedatcostlessaccumulateddepreciationandanyprovisionforimpairment.Costincludestheoriginalpurchasepriceoftheassetandthecostsattributabletobringingtheassettoitsworkingconditionforitsintendeduse.

Depreciationiscalculatedinordertowriteoffthecostofproperty,plantandequipment,otherthanland,overtheirestimatedusefullivesbyequalannualinstalmentsusingthefollowingrates:

Freeholdlandandbuildings 2percentforbuildingsNodepreciationonland

Leaseholdimprovements TheremainingtermoftheleaseFixturesandfittings 10percentPlant,tools,testandcomputerequipment 10percent–33percent

LEASESOperatingleasesareleaseswheretherisksandrewardsofownershipareretainedbythelessor.Rentalspayableunderoperatingleasesarechargedtotheincomestatementonastraight-linebasisovertheperiodofthelease.

INVENTORIESInventoriesarestatedatthelowerofcostandnetrealisablevalue.Costrepresentsdirectcostsincurredand,whereapplicable,productionorconversioncostsandothercoststobringtheinventorytoitsexistingconditionandlocation.Inventoryisaccountedforonastandardcostbasis.Netrealisablevaluecomprisestheactualorestimatedsellingpricelessallfurthercoststocompletion,andlessallcoststobeincurredinmarketing,sellinganddistribution.Provisionsforinventoriesarerecognisedwhenthebookvalueexceedsitsnetrealisablevalue.TheGroupmakesprovisionforslow-moving,obsoleteanddefectiveinventoryasappropriate.

TRADE RECEIVABLESTradereceivablesareinitiallyrecognisedatfairvalue,beingtheoriginalinvoiceamount,andsubsequentlymeasuredatamortisedcostlessprovisionforimpairment.AprovisionforimpairmentisestablishedwhenthereisobjectiveevidencethattheGroupwillnotbeabletocollectallamountsdueaccordingtotheoriginaltermsofthereceivable.Tradereceivablesthatarelessthanthreemonthspastduearenotconsideredimpairedunlesstherearespecificfinancialorcommercialreasonsthatleadmanagementtoconcludethatthecustomerwilldefault.Olderdebtsareconsideredtobeimpairedunlessthereissufficientevidencetothecontrarythattheywillbesettled.Theamountoftheprovisionisthedifferencebetweentheassets’carryingvalueandthepresentvalueoftheestimatedfuturecashflows.Thecarryingamountoftheassetisreducedthroughtheuseofanallowanceaccount,andtheamountofthelossisrecognisedintheincomestatementwithinsalesandmarketingexpenses.

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OUR FINANCIALS

Whenatradereceivableisuncollectableitiswrittenoffagainsttheallowanceaccount.Subsequentrecoveriesofamountspreviouslywrittenoffarecreditedagainstsalesandmarketingexpensesintheincomestatement.

CASH AND CASH EQUIVALENTSCashandshorttermdepositsinthestatementoffinancialpositioncomprisecashatbankandinhandandshorttermdepositswithanoriginalmaturityoflessthanthreemonths.

Forthepurposesoftheconsolidatedcashflowstatement,cashandcashequivalentsconsistofcashandshorttermdepositsasdefinedabove,togetherwithbankoverdraftswhereapplicable.

SHARE CAPITALOrdinarysharesareclassifiedasequity.Proceedsinexcessofthenominalvalueofsharesissuedareallocatedtothesharepremiumaccountandarealsoclassifiedasequity.Incrementalcostsdirectlyattributabletotheissueofnewordinarysharesoroptionsaredeductedfromthesharepremiumaccount.

Wheresharesareissuedinpartorfullconsiderationfortheacquisitionofmorethan90percentoftheissuedsharecapitalofanothercompany,theexcessofvalueattributedtothesharesoverthenominalvalueofsharesissuedisallocatedtothemergerreserve.Themergerreserveisalsoclassifiedasequity.

TRADE PAYABLESTradepayablesareobligationstopayforgoodsorservicesthathavebeenacquiredintheordinarycourseofbusinessfromsuppliers.Accountspayableareclassifiedascurrentliabilitiesifpaymentisduewithinoneyearorless(orinthenormaloperatingcycleofthebusinessiflonger).Ifnot,theyarepresentedasnon-currentliabilities.

Tradepayablesarerecognisedinitiallyatfairvalueandsubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethod.

CURRENT AND DEFERRED TAXATIONThecurrenttaxchargeiscalculatedonthebasisofthetaxlawsenactedorsubstantivelyenactedatthereportingdateinthecountrieswheretheCompany’ssubsidiariesoperateandgeneratetaxableincome.Managementevaluatespositionstakenintaxreturnswithrespecttosituationsinwhichapplicabletaxregulationissubjecttointerpretationandestablishprovisions

whereappropriateonthebasisofamountsexpectedtobepaidtothetaxauthorities.

Deferredtaxisprovided,usingtheliabilitymethod,onalltemporarydifferencesatthereportingdatebetweenthetaxbasesofassetsandliabilitiesandtheircarryingamountsforfinancialreportingpurposes.Deferredtaxliabilitiesarerecognisedinrespectofalltemporarydifferencesexceptwherethedeferredtaxliabilityarisesfromtheinitialrecognitionofgoodwillinbusinesscombinations.

Deferredtaxassetsarerecognisedforalldeductibletemporarydifferences,carry-forwardofunusedtaxassetsandtaxlosses,totheextentthattheyareregardedasrecoverable.Theyareregardedasrecoverablewhere,onthebasisofavailableevidence,therewillbesuitabletaxableprofitsagainstwhichthefuturereversaloftheunderlyingtemporarydifferencescanbededucted.Thecarryingvalueoftheamountofdeferredtaxassetsisreviewedateachreportingdateandreducedtotheextentthatitisnolongerprobablethatsufficienttaxableprofitwillbeavailabletoallowall,orpart,ofthetaxassettobeutilised.

Deferredtaxassetsandliabilitiesaremeasuredatthetaxratesthatareexpectedtoapplytotheyearwhentheassetisrealisedortheliabilityissettled,basedonthetaxrates(andtaxlaws)thathavebeenenactedatthereportingdate.

Deferredtaxassetsandliabilitiesareoffsetwhenthereisalegallyenforceablerighttooffsetcurrenttaxassetsagainstcurrenttaxliabilitiesandwhenthedeferredincometaxassetsandliabilitiesrelatetoincometaxesleviedbythesametaxationauthorityoneitherthetaxableentityordifferenttaxableentitieswherethereisanintentiontosettlethebalancesonanetbasis.

EMPLOYEE BENEFITS(a) Pension obligations

TheGroupemployeesaremembersofdefinedcontributionmoneypurchaseschemeswheretheobligationsofGroupcompaniesarechargedtotheincomestatementastheyareincurred.TheGrouphasnofurtherobligationsoncethecontributionshavebeenpaid.


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(b) Share based compensation

TheGroupoperatesanumberofequity-settled,sharebasedcompensationplans,underwhichtheGroupreceivesservicesfromemployeesasconsiderationforequityinstruments(options)intheCompany.Thefairvalueoftheemployeeservicesreceivedinexchangeforthegrantoftheoptionsisrecognisedasanexpense.Thetotalamounttobeexpensedisdeterminedbyreferencetothefairvalueoftheoptionsgranted:

• includinganymarketperformanceconditions(forexample,theGroup’sshareprice);

• excludingtheimpactofanyserviceandnon-marketperformancevestingconditions(forexample,profitability,salesgrowthtargetsandremaininganemployeeoftheentityoveraspecifiedtimeperiod);and

• includingtheimpactofanynon-vestingconditions(forexample,therequirementforemployeestosave)

Non-marketvestingconditionsareincludedinassumptionsaboutthenumberofoptionsthatareexpectedtovest.Thetotalexpenseisrecognisedoverthevestingperiod,whichistheperiodoverwhichallofthespecifiedvestingconditionsaretobesatisfied.Attheendofeachreportingperiod,theentityrevisesitsestimatesofthenumberofoptionsthatareexpectedtovestbasedonthenon-marketvestingconditions.Itrecognisestheimpactoftherevisiontooriginalestimates,ifany,intheincomestatement,withacorrespondingadjustmenttoequity.

Whentheoptionsareexercised,theCompanyissuesnewshares.Theproceedsreceivednetofanydirectlyattributabletransactioncostsarecreditedtosharecapital(nominalvalue)andsharepremiumwhentheoptionsareexercised.

(c) Employee Share Ownership Plan

TheGroup’sEmployeeShareOwnershipPlan(ESOP)isaseparatelyadministeredtrust.TheCompanyguaranteesliabilitiesoftheESOP,andtheassetsoftheESOPmainlycomprisesharesintheCompany.Theassets,liabilities,incomeandcostsoftheESOPhavebeenincludedintheGroupfinancialstatements.

PROVISIONSProvisionsaremadeinrespectofresidualonerouslongleaseholdpropertieswhereexpectedfuturerentalcostsareinexcessofexpectedincomefromsubletting.

ProvisionismadeforproductwarrantyclaimstotheextentthattheGrouphasacurrentobligationunderwarrantiesgiven.Warrantyaccrualsarebasedonhistoricwarrantyclaimsexperience.Provisionsarediscountedtotheirpresentvaluewheretheimpactissignificant.

REVENUE RECOGNITION(a) Sale of goods

RevenuerepresentsamountsreceivablefromexternalcustomersforgoodssoldbyGroupcompaniesintheordinarycourseofbusinessandexcludingvalueaddedtax.SalesarerecognisedinaccordancewithIAS18“Revenue”,whenthesignificantrisksandrewardsofownershipofthegoodsaretransferredtothecustomer,thesalespriceagreedandthereceiptofpaymentcanbeassured.

(b) Construction contracts

FromtimetotimetheGroupentersintoconstructioncontractsthatwilltakeanumberofmonthstocomplete.CustomercontractsthatareexpectedtospanmorethanoneperiodendarerecognisedinrevenueinaccordancewithIAS11.

Wheretheoutcomeofacontractcanbeestimatedreliably,revenueandcostsarerecognisedbyreferencetothestageofcompletionofthecontractactivityatthereportingdate.Thisismeasuredbytheproportionofcontractcostsincurredforworkperformedtodaterelativetotheestimatedtotalcontractcosts,exceptwherethiswouldnotberepresentativeofthestageofcompletion.Variationsincontractwork,claimsandincentivepaymentsareincludedtotheextentthattheyhavebeenagreedwiththecustomer.

Wheretheoutcomeofacontractcannotbeestimatedreliably,contractrevenueisrecognisedtotheextentofcontractcostsincurredthatitisprobablesuchcostswillberecoverable.Contractcostsarerecognisedasexpensesintheperiodinwhichtheyareincurred.

Whenitisprobablethattotalcontractcostswillexceedtotalcontractrevenue,theexpectedlossisrecognisedasanexpenseimmediately.

(c) Sales of services

RevenuefromservicecontractsthatarenotaccountedforasconstructioncontractsunderIAS11isrecognisedinlinewiththedeliveryofservicetothecustomer.Relatedcostsaredeferredonthestatementoffinancialpositionandthenrecordedasacostofsalewhentherevenueisrecognised.

(d) Interest income

Interestincomeisrecognisedonatimeapportionmentbasis.

DIVIDEND DISTRIBUTIONDividenddistributiontotheCompany’sshareholdersisrecognisedasaliabilityintheGroup’sfinancialstatementsintheperiodinwhichthedividendsareapprovedbytheCompany’sshareholders.

NON-RECURRING ITEMSThesearematerialitemsexcludedfrommanagement’sassessmentofprofitbecausebytheirnaturetheycoulddistorttheGroup’sunderlyingqualityofearnings.Theseareexcludedtoreflectperformanceinaconsistentmannerandareinlinewithhowthebusinessismanagedandmeasuredonaday-to-daybasis.

IMPAIRMENT OF NON-FINANCIAL ASSETSAssetsthathaveanindefiniteusefullife,forexamplegoodwillorintangibleassetsnotreadyforuse,arenotsubjecttoamortisationandaretestedannuallyforimpairment.Assetsthataresubjecttoamortisationordepreciationarereviewedforimpairmentwhenevereventsorchangesincircumstancesindicatethatthecarryingamountmaynotberecoverable.Animpairmentlossisrecognisedfortheamountbywhichtheasset’scarryingamountexceedsitsrecoverableamount.Therecoverableamountisthehigherofanasset’sfairvaluelesscoststosellandvalueinuse.Forthepurposesofassessingimpairment,assetsaregroupedatthelowestlevelsforwhichthereareseparatelyidentifiablecashflows(cash-generatingunits).Non-financialassetsotherthangoodwillthatsufferedanimpairmentarereviewedforpossiblereversaloftheimpairmentateachreportingdate.

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OUR FINANCIALS

3. FINANCIAL RISK MANAGEMENTFINANCIAL RISK FACTORSTheGroup’sactivitiesexposeittoavarietyoffinancialrisks:marketrisk(foreignexchangeriskandcashflowinterestraterisk),creditriskandliquidityrisk.TheGroup’soverallriskmanagementprogrammefocusesontheunpredictabilityofthefinancialmarketsandseekstominimisethepotentialadverseeffectsontheGroup’sfinancialperformance.

RiskmanagementpolicyiscarriedoutthroughacentraltreasuryfunctionwithintheexecutivemanagementteamattheGroup’sheadoffice.Thetreasuryfunctionidentifies,evaluatesandhedgesfinancialrisksincloseco-operationwiththeGroup’soperatingunits.TheBoardprovideswrittenprinciplesforoverallriskmanagementwhilstthecentraltreasuryfunctionprovidesspecificpolicyguidancefortheoperatingunitsintermsofmanagingforeignexchangerisk,creditrisk,cashandliquiditymanagementandtheuseofhedginginstruments.

(A) MARKET RISK (i) Foreign exchange risk

TheGroupoperatesinternationallyandisexposedtoforeignexchangeriskarisingfromvariouscurrencyexposures,primarilybetweentheUSdollarandGBP.Foreignexchangeriskarisesfromfuturecommercialtransactions,recognisedassetsandliabilitiesandnetinvestmentsinforeignoperations.

AtatransactionalleveltheUKbusinesshasabroadlyneutralexposuretoforeigncurrencytransactions,inthattheirrevenuesineurosandUSdollarsmatchtheirpurchases.Foreigncurrencybankaccountsaremaintainedtominimiseexchangeriskbytradingcurrenciesintosterlingonlywhenforecastsurplusesordeficitsareexpectedtoarise.Approximately30percentoftheUSbusiness’costofgoodssoldcomesfromitsfellowsubsidiariesintheUKandispricedinUSdollars.TheflowofcashfromtheUSAtotheUKbusinessesismanagedbycentraltreasuryinordertominimisetherisktotheGroup.

TheexchangerisktotheGroupintermsofitsreportedresultsliesinthetranslationoftheresultsoftheUSbusinessfromUSdollarstoGBP.TheGroup’saccountingpolicyistotranslatetheprofitsandlossesofoverseasoperationsusingtheaverageexchangerateforthefinancialyearandthenetassetsandliabilitiesofoverseassubsidiariesattheyearendexchangerate.Itcontinuestobethe

Group’spolicynottohedgetheforeigncurrencyexposuresonthetranslationofoverseasprofitsorlossesandnetassetsorliabilitiestosterlingastheyareconsideredtobeaccountingratherthancashexposures.

TheprincipalexchangeratesusedbytheGroupintranslatingoverseasprofitsandnetassetsintoGBParesetoutinthetablebelow:

RatecomparedtoGBP

Average rate

2014

Averagerate

2013

Year end rate

2014

Yearendrate

2013USdollar 1.648 1.565 1.561 1.653

Whereoverseasacquisitionsaremade,itistheGroup’spolicytoarrangeanyborrowingsrequiredinlocalcurrency.

ItistheGroup’spolicynottotradeinfinancialinstruments.TheGroupdoesnotuseinterestrateswaps.TheGroupdoesnotspeculateinforeigncurrenciesandnooperatingcompanyispermittedtotakeunmatchedpositionsinanyforeigncurrency.TheGroupwilluseborrowingsincurrenciesotherthanGBPwhereappropriatetospecifictransactions,suchasoverseasacquisitions.Thispolicyhasbeeninforcethroughoutthefinancialyearandremainsso.

(B) CREDIT RISKCreditriskismanagedonaGroupbasis,exceptforcreditriskrelatingtoaccountsreceivablebalances.

Creditriskariseswithcashbalancesandaccountsreceivables.TheGroup’scashdepositsareheldatbanksthathavebeencarefullyselected,takingintoconsiderationtheirindividualexternalcreditratings(note16).

Eachlocalsubsidiaryisresponsibleformanagingandanalysingthecreditriskforeachoftheirnewclientsbeforestandardpaymentanddeliverytermsandconditionsareoffered.ItistheGrouppolicytoobtaindepositsfromcustomerswherepossible,particularlyoverseascustomers.Inaddition,theGroupwillseekconfirmedlettersofcreditforthebalancesdue.Thenatureofthecustomerbase(forexample,nationalTVstations,governmentprocurementagencies)makestheuseofcreditinsuranceinappropriate.CreditriskismanagedattheoperatingbusinessunitlevelandmonitoredattheGroupleveltoensureadherencetoGrouppolicies.Ifthereisnoindependentrating,thefinance


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functionassessesthecreditqualityofthecustomer,takingintoaccountitsfinancialposition,pastexperienceandotherfactors.IndividualrisklimitsaresetbasedoninternalorexternalratingsinaccordancewithlimitssetbytheBoard.Theutilisationofcreditlimitsisregularlymonitored.

(C) LIQUIDITY RISKAmaterialportionoftheGroup’snetassetsarerepresentedbyitscashbalances.Anymateriallossofcashthroughineffectiveinvestmentofthisresourcewouldundermineourabilitytogenerategrowthinshareholdervalue.Similarly,aninabilitytoaccessthesefundswouldunderminetheGroup’sabilitytomeetitsfinancialobligations.Wehaveassessedthelikelihoodoflosstobelowbutwithahighpotentialimpact.

Therefore,inmitigationtheGroup’sliquidityriskmanagementpolicyistomaintainsufficientcashandavailablefundingthroughanadequateamountofcommittedcreditfacilitiesfromitsbankers,Santander.Duetothedynamicnatureoftheunderlyingbusinesses,centraltreasuryaimstomaintainflexibilityinfundingbykeepingcommittedcreditlinesavailable,asdisclosedinnote19.

ThetablebelowanalysestheGroup’snon-derivativefinancialliabilitiesintorelevantmaturitygroupingsbasedontheremainingperiodatthereportingdatetothecontractualmaturitydate.Theamountsdisclosedinthetablearethecontractualundiscountedcashflows.

Lessthanoneyear

£000

Betweenoneandtwoyears

£000

Betweentwoandfiveyears

£000Total£000

At 31 December 2014:Deferredconsideration — — — —Bankloans(secured) 5,600 600 1,800 8,000Tradeandotherpayables 14,983 — — 14,983At31December2013:Deferredconsideration 2,000 — — 2,000Tradeandotherpayables 10,656 — — 10,656

CAPITAL RISK MANAGEMENTTheGroup’sobjectiveswhenmanagingcapitalaretosafeguardtheabilitytocontinueasagoingconcerninordertoprovidereturnsforshareholdersandbenefitsforotherstakeholdersandtomaintainanoptimalcapitalstructuretoreducethecostofcapital.

Consistentwithotherbusinesses,theGroupmonitorscapitalonthebasisofthegearingratio.Thisratioiscalculatedasnetdebtdividedbytotalcapital.Netdebtiscalculatedastotalborrowings(including“currentandnon-currentborrowings”asshowninthestatementoffinancialposition)lesscashandcashequivalents.Totalcapitalisthesumofequityplusnetdebt(orlessnetcash)being£56.4millionat31December2014(2013:£45.9million).

TheGroupiscurrentlyungeared,havingnetcashat31December2014.ItisthestatedstrategyoftheGrouptogrowbothorganicallyandthroughacquisition.Acquisitionswouldbefundedthroughanappropriatecombinationofequityandborrowings.Futuregearingwouldnotbeexpectedtoexceed50percent.

FAIR VALUE ESTIMATIONThecarryingvalueoftradereceivables(lessimpairmentprovision)andpayablesareassumedtoapproximatetotheirfairvalue.

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTSIntheprocessofapplyingtheGroup’saccountingpolicies,managementhasmadeaccountingjudgementsinthedeterminationofthecarryingvalueofcertainassetsandliabilities.Duetotheinherentuncertaintyinvolvedinmakingassumptionsandestimates,actualoutcomeswilldifferfromthoseassumptionsandestimates.Thefollowingjudgementshavethemostsignificanteffectontheamountsrecognisedinthefinancialstatements.

ACCOUNTING FOR LONG TERM CONTRACTSAmountsrecognisedintheincomestatementonlongtermcontractsareafunctionofboththestateofprogressoncontractsandthemarginsthatareexpectedtoberecognisedforthecompletedcontract.Accordingly,recognitionofworkinprogressandmarginsoncontractsthathavenotyetbeencompletedrequiresmanagementtomakeacarefulestimateofthefinalcosts,anyexpectedincreasesaswellasdelays,extracostsandpenaltiesthatcouldreducetheexpectedmargin.

Theamountsrecognisedinthefinancialstatementsrepresentmanagement’sbestestimateofthesekeyconsiderationsatthereportingdate,particularlyinrespectoftheUKpublicsafetycontractexpectedtoreachfinalcompletioninH1of2015.

ACQUIRED INTANGIBLESIntangibleassets(intellectualproperty,brandsandcustomerrelationships)havebeenacquiredaspartofthenetassetsofcertainsubsidiaries.Theseintangibleassetswerecapitalisedattheirfairvalueatthedateofacquisition.Determiningthevalueofacquiredintangiblesrequiredthecalculationofestimatedfuturecashflowsexpectedtoarisefromtheintangibleassetsatasuitablediscountrateinordertocalculatetheirpresentvalue.Inaddition,anestimateoftheusefullifeoftheintangibleassethastobemade,overwhichperiodthecashflowswereexpectedtobegenerated.Thecarryingamountofacquiredintangiblesatthereportingdatewas£9.6million(note12)(2013:£3.9million).

IMPAIRMENT OF GOODWILLDeterminingwhethergoodwillisimpairedrequirestheestimationofthevalueinuseofthecash-generatingunitstowhichgoodwillhasbeenallocated.Thevalueinusecalculationrequirestheentitytoestimatefuturecashflowsexpectedtoarisefromthecash-generatingunitatasuitablediscountrateinordertocalculatethepresentvalue.Detailsoftheimpairmentreviewareprovidedinnote12.

DEFERRED TAX ASSETSThecarryingvalueofdeferredtaxassetsisdependentonsufficienttaxableprofitsbeinggeneratedincertainterritoriesinfutureperiods.Thecarryingamountofnetdeferredtaxliabilitiesatthereportingdatewas£1.6million(note22)(2013:deferredtaxasset£1.0million).Inaddition,therewere£4.8millionofdeferredtaxassetsnotrecognised(2013:£6.8million).

PROVISIONS FOR OTHER LIABILITIES AND CHARGESIncludedwithinthestatementoffinancialpositionarewarrantyprovisionsamountingto£0.3million(2013:£0.3million)andonerouspropertyleasesof£0.3million(2013:£0.4million)(note21).

Managementbelievethatthewarrantyprovisionsareadequatetocoverthefutureriskofproductwarrantyclaimsbasedonhistoricclaimshistoryappliedtothecurrentrevenuelevels.

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OUR FINANCIALS

TheonerouspropertyleaseprovisionrelatestoavacatedleaseholdpropertyacquiredwithGigawaveLimited.Thepropertywassubletduring2013.Propertyprovisionshavebeenmadeinrespectofthevacatedleasepremisesandrepresentthefutureliabilitiesassociatedwiththepropertytotheendofthelease,netofanticipatedincomefromsubletting.Inthecurrenteconomicenvironmentwecannotbecertainthatthisprovisionwillbesufficienttocoverthetotalfutureliabilitiesassociatedwiththepropertyandtherequirementforprovisionwillbereassessedannually.Thetotalliabilityforfuturerentandratesonthevacatedleaseproperty,excludinganypotentialbenefitfromsubletting,is£1.2millionoveranaggregateperiodof5.5years.

IMPAIRMENT OF TRADE RECEIVABLESThecarryingamountofreceivablesattheyearendwas£11.8million(2013:£11.0million),againstwhichtherewasanimpairmentprovisionof£1.0million(2013:£0.8million)(note15).Tradereceivablesthatarelessthanthreemonthspastduearenotconsideredimpairedunlesstherearespecificfinancialorcommercialreasonsthatleadmanagementtoconcludethatthecustomerwilldefault.Olderdebtsareconsideredtobeimpairedunlessthereissufficientevidencetothecontrarythattheywillbesettled.Managementbelievethattheprovisionisadequatetocovertheriskofbaddebts.

INVENTORY PROVISIONSThecarryingamountofinventoryattheyearendwas£12.9million(2013:£11.1million)afteraprovisionforexcessandobsoleteinventoryof£4.8million(2013:£5.0million)(note14).Duringtheyear£0.4millionoftheprovisionwasutilisedfollowingthescrappingandsaleofobsoleteinventory.Inventorywrite-downsof£0.6millionwerewrittenbacktotheincomestatementonthesaleofproductsagainstwhichprovisionshadpreviouslybeenmade.Suchproductshadanestimatednetrealisablevaluethatwasbelowtheircosthencetherequirementfortheprovision.

SHARE BASED PAYMENTSAnumberofaccountingestimatesandjudgementsareincorporatedwithinthecalculationofthechargetotheincomestatementinrespectofsharebasedpayments.Thesearedescribedinmoredetailinnote23.

5. SEGMENTAL REPORTINGThetwomarketsineachofthedivisionsareBroadcastandSurveillanceandPublicSafety.Asthedivisionsmanageandcontrolthemarketsdirectly,costsaresharedacrossmarketsincertaindivisionswhichmeansthatanyallocationofcoststomarketswouldbearbitrary.Thefocusofmanagementistoensurethattheappropriatematerialmarginsarebeingachievedineachmarketasasubanalysisofthedivisionalperformance(note2).


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ThesegmentinformationprovidedtotheExecutiveManagementBoardforthereportablecontinuingsegmentsfortheyearended31December2014isasfollows:

Segmentalreportingbydivision

VislinkCommunication

Systems£000

PebbleBeachSystems

£000Central£000

Total £000

Year ended 31 December 2014Income statement — continuing business:Broadcast 37,754 8,292 — 46,046 SurveillanceandPublicSafety 15,885 — — 15,885 Totalrevenue 53,639 8,292 — 61,931 Adjustedoperatingprofit/(loss) 5,938 3,298 (2,032) 7,204 Amortisationandimpairmentofacquiredintangibles (2,630) — — (2,630)Non-recurringitems (889) — 1,827 938 Financecosts (798) — 629 (169)Financeincome 3 19 2 24 Profitbeforetaxation 1,624 3,317 426 5,367 Taxation (1,438) (693) 508 (1,623)Profit for the year being profit attributable to owners of the parent 186 2,624 934 3,744 Segment assetsNon-currentassets 36,058 10,331 (1,666) 44,723 Currentassets 27,699 7,445 2,076 37,220 Totalassets 63,757 17,776 410 81,943 Totalliabilities 13,628 4,050 7,438 25,116 Total net assets 50,129 13,726 (7,028) 56,827 Other segment items — continuing businessCapitalexpenditure 713 206 — 919 Capitaliseddevelopmentexpenditure 3,499 148 — 3,647 Depreciation 731 70 85 886 Amortisationofintangibles 4,203 19 — 4,222

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OUR FINANCIALS

5. SEGMENTAL REPORTING (CONTINUED)Centralcostsrepresentcorporateexpenses.

Segmentassetsincludeproperty,plantandequipment,goodwill,otherintangibles,inventories,tradereceivablesandoperatingcash.Segmentassetsexcludeinter-segmentinvestments.Segmentliabilitiescompriseoperatingliabilities,taxationandsegmentalprovisionsforliabilitiesandcharges.SegmentalliabilitiesalsoincludeamountsowedtoothersegmentsandCentral.

Segmentalcapitalexpenditurecomprisesadditionstoproperty,plantandequipment.Itexcludessegmentaladditionsresultingfromacquisitionsthroughbusinesscombinations.

Segmentalreportingbydivision

VislinkCommunication

Systems£000

PebbleBeachSystems

£000Central£000

Total £000

Year ended 31 December 2013Income statement - continuing business:Broadcast 48,119 — — 48,119 SurveillanceandPublicSafety 11,760 — — 11,760 Totalrevenue 59,879 — — 59,879 Adjustedoperatingprofit/(loss) 6,815 — (2,479) 4,336 Amortisationofacquiredintangibles (1,420) — — (1,420)Non-recurringitems 288 — (126) 162 Financecosts (2) — (2) (4)Financeincome 7 — 12 19 Profit/(loss)beforetaxation 5,688 — (2,595) 3,093 Taxation 675 — (291) 384 Profit/(loss) for the year being profit/(loss) attributable to owners of the parent 6,363 — (2,886) 3,477 Segment assetsNon-currentassets 34,306 — 1,157 35,463 Currentassets 24,502 — 2,204 26,706 Netdeferredtaxassets 1,467 — (470) 997 Totalassets 60,275 — 2,891 63,166 Totalliabilities 10,955 — 2,609 13,564 Total net assets 49,320 — 282 49,602 Other segment items - continuing business:Capitalexpenditure 471 — 2 473 Capitaliseddevelopmentexpenditure 4,453 — — 4,453 Depreciation 704 — 86 790 Impairmentofintangibles — — — — Amortisationofintangibles 3,609 — — 3,609


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GEOGRAPHIC EXTERNAL REVENUE ANALYSISTherevenueanalysisinthetablebelowisbasedonthegeographicallocationofthecustomerforeachbusinessunit.

2014 2013

Broadcast£000

Surveillance & Public

Safety £000

Total£000

Broadcast£000

Surveillance&Public

Safety£000

Total£000

By market:UK 6,214 10,098 16,312 3,154 2,538 5,692RestofEurope 9,321 1,835 11,156 8,445 1,111 9,556NorthAmerica 15,027 3,555 18,582 14,116 6,355 20,471LatinAmerica 2,893 43 2,936 4,208 66 4,274MiddleEastandAfrica 5,432 68 5,500 12,055 1,564 13,619Asia/Pacific 7,159 286 7,445 6,141 126 6,267

46,046 15,885 61,931 48,119 11,760 59,879

Non-currentassets,otherthanfinancialinstrumentsanddeferredtax,locatedintheUKare£33.6million(2013:£24.6million)andrestofworld£12.7million(2013:£10.9million).

6 OPERATING PROFIT

Thefollowingitemshavebeenincludedinarrivingattheoperatingprofitforthecontinuingbusiness:

2014 £000

2013£000

Depreciationofproperty,plantandequipment(note13) 886 790Amortisationofacquiredintangibles(note12) 2,130 1,420Impairmentofintangibleassets 500 —Operatingleaserentals 205 319Lossonsaleofproperty,plantandequipment — 3Repairsandmaintenanceexpenditureonproperty,plantandequipment 112 118Exchangegainscreditedtoprofitandloss (534) (65)Researchanddevelopmentexpenditure:-Expensedintheyear 5,558 3,942-Amortisationandimpairmentofcapitaliseddevelopmentcosts(note12) 2,092 2,189

OTHER EXPENSESOtherexpensescomprise:

2014 £000

2013£000

Amortisationandimpairmentofacquiredintangibles 2,630 1,420Non-recurringitems (938) (162)

1,692 1,258

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6 OPERATING PROFIT (CONTINUED)NON-RECURRING ITEMSThefollowingitemsofunusualnature,sizeorincidencehavebeenchargedinarrivingattheoperatingprofitfortheyearandaredescribedasnon-recurring:

2014 £000

2013£000

Rationalisationandredundancycosts 722 —Reductionindisputedcreditorbalance (169) —Contractualdisputes 167 (330)Writebackofdeferredconsiderationun-earned (2,000) —Acquisitionrelatedcosts 270 168CostsassociatedwiththetransfertotheAlternativeInvestmentMarket(AIM) 72 —

(938) (162)

TheGrouphasincurredrationalisationandredundancycostsof£722,000intheyear(2013:£nil).

Anon-goingcreditordisputewasalsoresolvedduringtheyear,resultingina£169,000reductioninthepayableamount.Theagreedrevisedsettlementfigurewillbepaidin2015.

In2014anongoingcontractualdisputewasresolvedandafinalsettlementfigureof£167,000wasagreedandpaid.In2013theGroupreleaseda£330,000provisionthatwasinplacerelatingtoacontractualdispute.

Therewasa£2,000,000releaseofdeferredconsiderationowingtothevendorsofAmplifierTechnologyLtdduringtheyearasaresultofthefailuretomeettargetrevenues(2013:£nil).

TheGroupincurredcostsof£224,000duringtheyearinrelationtotheacquisitionofPebbleBeachSystemsLtdandalsoincurred£46,000ofcostsassociatedwithanabortedacquisition.In2013theGroupincurredcostsof£93,000inrelationtotheacquisitionofAmplifierTechnologyLtdand£75,000ofcostswereincurredinrespectofoperationsinBrazil.

TheGroupincurredcostsof£72,000inrelationtothemovetoAIM.


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SERVICES PROVIDED BY THE GROUP’S AUDITORS AND NETWORK FIRMSDuringtheyeartheGroup(includingitsoverseassubsidiaries)obtainedthefollowingservicesfromtheGroup’sauditorsatcostsdetailedbelow:

2014 £000

2013£000

AnalysisoffeespayabletoPricewaterhouseCoopersLLPAuditoftheparentcompanyandconsolidatedfinancialstatements 61 59AuditoftheCompany’ssubsidiaries 77 41Auditrelatedassuranceservices 15 10

153 110Taxationcomplianceservices 30 22Taxationadvisoryservices 23 21Servicesrelatingtocorporatefinancetransactions 9 20Othernonauditservices 6 10

221 183

AdescriptionoftheworkoftheAuditCommitteeissetoutinthecorporategovernancestatementonpage47andincludesanexplanationofhowtheauditors’objectivityandindependenceissafeguardedwhennon-auditservicesareprovidedbytheauditors.

7 DIRECTORS AND EMPLOYEES

Staffcostsduringtheyearforthecontinuingbusinesswereasfollows:

2014 £000

2013£000

Wagesandsalaries 15,362 13,026Socialsecuritycosts 1,992 1,256Otherpensioncosts-definedcontributionplans(note26) 545 365Sharebasedpayments(note23) 500 361

18,399 15,008

ThemonthlyaveragenumberofemployeesemployedbytheGroupduringtheyearwasasfollows:

2014 Number

2013Number

AveragemonthlynumberofemployeesBroadcastsalesandmarketing 53 47SurveillanceandPublicSafetysalesandmarketing 5 7Services 4 12Technology 85 52Logistics 111 97GeneralandAdmin 43 36

301 251

Theaveragenumberofemployeeshasbeencalculatedonaproratabasisfromthedateofdisposaloracquisitionofsubsidiariesandbusinesses.Theaveragenumberofemployeesincludesdirectorswithservicecontracts.Thetotalnumberofemployeesat31December2014was296(2013:271).

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7 DIRECTORS AND EMPLOYEES (CONTINUED)Keymanagementcompensationforthecontinuingbusiness:

2014 £000

2013£000

Shorttermemployeebenefits-includingsalaries,socialsecuritycostsandnon-monetarybenefits 2,568 1,897Postemploymentbenefits-definedcontributionpensionplans 159 71Share-basedpayments(note23) 500 361

3,227 2,329

TheanalysisofkeymanagementcompensationaboveincludesExecutiveDirectors.KeymanagementisdefinedastheseniormanagementteamsineachofthebusinessunitsoftheGroup.Detailsofdirectors’emolumentsareincludedintheremunerationreportonpages50to56.

8 FINANCE INCOME - NET2014 £000

2013£000

Interestpayableonbankborrowing 169 4Financecosts 169 4Financeincome (24) (19)Financecosts/(income)-net 145 (15)

Financeincomeisderivedfromcashheldondeposit.

9 INCOME TAX EXPENSE A) ANALYSIS OF THE TAX CHARGE IN YEAR

2014 £000

2013£000

CurrenttaxUKcorporationtax 585 (8)Foreigntax-currentyear 74 95Adjustmentsinrespectofprioryears — (66)Totalcurrenttax 659 21DeferredtaxUKcorporationtax 112 (144)Foreigntax 837 (261)Adjustmentsinrespectofprioryears 15 —Totaldeferredtax 964 (405)Totaltaxation 1,623 (384)


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B) FACTORS AFFECTING TAX CHARGE FOR YEARThechargefortheyearcanbereconciledtotheprofitintheincomestatementasfollows:

2014 £000

2013£000

Profitbeforetaxoncontinuingoperations 5,367 3,093TaxattheUKcorporationtaxrateof21.5%(2013:23.25%) 1,154 720Adjustmentsinrespectofprioryears 15 (43)Permanentdifferences 347 45EnhancedR&Dtaxrelief (390) (407)Deferredconsiderationnottaxable (430) —Currentyearlossesnotrecognised 1,117 200Additionallossesnowrecognised (36) (960)EffectofchangesinUKtaxrate (40) 208Effectsofdifferenttaxratesofsubsidiariesoperatinginotherjurisdictions (114) (147)Totaltaxation 1,623 (384)

ThestandardrateofcorporationtaxintheUKchangedfrom23percentto21percentwitheffectfrom1April2014.Accordingly,theCompany’sprofitsforthisaccountingyeararetaxedataneffectiverateof21.5percent.

10 DIVIDENDS AND RETURNS TO SHAREHOLDERS2014 £000

2013£000

Finaldividendpaidof1.25pencepershare(2013:1.25pencepershare) 1,473 1,413

Thedirectorsareproposingafinaldividendinrespectofthefinancialyearending31December2014of1.50pencepersharewhichwillabsorbanestimated£1.8millionofshareholders’funds.Itwillbepaidon17July2015toshareholderswhoareontheregisterofmemberson26June2015.

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OUR FINANCIALS

11 EARNINGS PER SHARE

Basicearningspershareiscalculatedbydividingtheearningsattributabletoordinaryshareholdersbytheweightedaveragenumberofordinarysharesoutstandingduringtheyear.

Fordilutedearningspersharetheweightedaveragenumberofordinarysharesinissueisadjustedtoassumeconversionofalldilutivepotentialordinaryshares.ThedilutivesharesarethoseshareoptionsgrantedtoemployeeswheretheexercisepriceislessthantheaveragemarketpriceoftheCompany’sordinarysharesduringtheyear.

Reconciliationoftheearningsandweightedaveragenumberofsharesusedinthecalculationsaresetoutbelow.

2014 2013

Earnings £000

Weighted average number

of shares 000s

Earnings per share

pence Earnings

£000

Weightedaveragenumberofshares

000s

Earningspershare

penceBasic earnings per shareProfitattributabletoordinaryshareholdersfromcontinuingactivities 3,744 117,797 3.2 3,477 113,070 3.1Basicearningspershare 3,744 117,797 3.2 3,477 113,070 3.1Diluted earnings per shareProfitattributabletoordinaryshareholdersfromcontinuingactivities 3,744 120,250 3.1 3,477 113,348 3.1Dilutedearningspershare 3,744 120,250 3.1 3,477 113,348 3.1

ADJUSTED EARNINGS Thedirectorsbelievethatadjustedoperatingprofit,adjustedprofitbeforetax,adjustedearningsandadjustedearningspershareprovideadditionalusefulinformationonunderlyingtrendstoshareholders.Thesemeasuresareusedbymanagementforinternalperformanceanalysisandincentivecompensationarrangements.Theterm“adjusted”isnotadefinedtermunderIFRSandmaynotthereforebecomparablewithsimilarlytitledprofitmeasurementsreportedbyothercompanies.Theprincipaladjustmentsaremadeinrespectoftheamortisationofacquiredintangiblesandnon-recurringitemsandtheirrelatedtaxeffects.

Thereconciliationbetweenreportedandunderlyingearningsandbasicearningspershareisshownbelow:

2014 2013£000 Pence £000 Pence

Reported earnings per share 3,744 3.2 3,477 3.1Amortisationofacquiredintangiblesaftertax 2,209 1.9 1,336 1.2Non-recurringitemsaftertax (1,093) (1.0) (124) (0.1)Adjusted earnings per share 4,860 4.1 4,689 4.2


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12 INTANGIBLE ASSETS

Goodwill£000

Acquiredcustomer

relationships£000

Acquiredintellectualproperty

£000

Acquiredbrands£000

Capitaliseddevelopment

costs£000

Total£000

CostAt1January2013 35,675 11,845 3,720 1,702 21,154 74,096Additions — — — — 4,453 4,453Additionsfromacquisitionofbusiness 1,573 810 1,369 — — 3,752Reductions — — — — — —Disposals — — — — (7,585) (7,585)Exchangeadjustment (221) (151) — (15) (52) (439)At1January2014 37,027 12,504 5,089 1,687 17,970 74,277Additions — — — — 3,647 3,647Additionsfromacquisitionofbusiness 3,218 4,494 3,350 — — 11,062Reductions — — — — — —Disposals — — — — — —Exchangeadjustment 588 402 — 39 653 1,682At 31 December 2014 40,833 17,400 8,439 1,726 22,270 90,668 Accumulated amortisationAt1January2013 15,540 9,989 3,720 456 15,715 45,420Chargefortheyear-continuingbusiness — 1,094 152 174 2,189 3,609Impairmentcharge — — — — — —Acceleratedamortisation — — — — — —Additionsfromacquisitionofbusiness — — — — — —Disposals — — — — (7,585) (7,585)Exchangeadjustment (97) (175) — (10) 82 (200)At1January2014 15,443 10,908 3,872 620 10,401 41,244Chargefortheyear-continuingbusiness — 976 985 169 2,092 4,222Impairmentcharge 500 — — — — 500Acceleratedamortisation — — — — — —Additionsfromacquisitionofbusiness — — — — — —Disposals — — — — — —Exchangeadjustment 258 402 — 23 336 1,019At 31 December 2014 16,201 12,286 4,857 812 12,829 46,985 Net book valueAt 31 December 2014 24,632 5,114 3,582 914 9,441 43,683 At31December2013 21,584 1,596 1,217 1,067 7,569 33,033At1January2013 20,135 1,856 — 1,246 5,439 28,676

Additionsintheyearrelatetocapitaliseddevelopmentcosts,goodwill,acquiredintellectualpropertyandacquiredcustomerrelationshipsfromtheacquisitionofPebbleBeachSystems.

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OUR FINANCIALS

12 INTANGIBLE ASSETS (CONTINUED)

TheestimatedusefullifefortheintellectualpropertyandcustomerrelationshipsacquiredwiththebusinessofPebbleBeachSystemshasbeendeterminedtobefiveyearsandsixyearsrespectivelybasedontheexpectedfuturecashflowsthattheywouldgenerateinarrivingattheirfairvalue.

TheremainingnetbookvalueofIP,brandsandcustomerrelationshipswereacquiredwiththebusinessesofGigawave,AmplifierTechnologyandPMRandareassociatedwiththeBroadcastandSurveillanceandPublicSafetymarkets.Theestimatedusefulliveshadbeendeterminedtobebetweenfiveandtenyearsbasedontheexpectedfuturecashflowsthattheywouldgenerateinarrivingattheirfairvalue.

TheamortisationofdevelopmentcostsisincludedinresearchanddevelopmentexpensesintheConsolidatedIncomeStatement.Withindevelopmentcoststhereare£9.8million(2013:£8.7million)offullywrittendownassetsthatarestillinuse.

Theamortisationofcustomerrelationships,brandsandintellectualpropertyareallchargedtootherexpensesintheConsolidatedIncomeStatementandarereferredtoastheamortisationofacquiredintangibles.

IMPAIRMENT TEST FOR CASH GENERATING UNITS CONTAINING GOODWILLHistoricgoodwillacquiredinbusinesscombinationswereallocated,atacquisition,tothecash-generatingunits(CGUs)thatwereexpectedtobenefitfromthosebusinesscombinations,beingthemarketsthattheGroupserves,namelyBroadcast,SurveillanceandPublicSafety,andAmplifierTechnologyLimited.

InaccordancewiththerequirementsofIAS36“Impairmentofassets”,goodwillisrequiredtobetestedforimpairmentonanannualbasis,withreferencetothevalueofthecash-generatingunitsinquestion.ThegoodwillrelatingtotheSurveillanceandPublicSafetymarketwasfullywrittendownin2010.TheGroupacquiredAmplifierTechnologyin2013whichisaseparateCGUandPebbleBeachSystemsin2014whichisalsoaseparateCGU,thereforeimpairmentreviewshavebeenundertakeninrespectoftheBroadcastmarket,AmplifierTechnologyandPebbleBeachSystems.Thecarryingvalueofgoodwillat31December2014is£24.6million(2013:£21.6million)consistingof£20.3millionfortheBroadcastmarket(2013:£20.1million),£1.1millionforAmplifierTechnology(2013:£1.5million)and£3.2millionforPebbleBeachSystems(2013:£nil).

ThecarryingvalueofallCGUs(includinggoodwill)havebeenassessedwithreferencetovalueinuseoveraprojectedperiodoffouryearswithaterminalvalue.Thisreflectsprojectedcashflowsbasedonactualoperatingresultsandapprovedbudget,strategicplansandmanagementprojections.

Thekeyassumptionsonwhichthevalueinusecalculationsarebasedrelatetobusinessperformanceoverthenextfouryears,longtermgrowthratesbeyond2015andthediscountrateapplied.Growthratesfor2016andbeyondareassumedtobe3percentfortheBroadcastmarketandPebbleBeachSystems,and1percentforAmplifierTechnologywhichisconsideredtobeatorbelowlongtermmarkettrendsfortheunderlyingbusiness.

ThecashflowprojectionshavebeendiscountedtopresentvalueusingtheGroup’spre-taxweightedaveragecostofcapital,whichhasbeencalculatedonaconsistentbasisusingthecapitalassetpricingmodeltodeterminecostofequityanddebt.Thishasresultedinapre-taxdiscountrateof13percent(2013:12percent),whichhasbeenusedforthepurposeoftheimpairmenttest.InrespectoftheBroadcastmarketandPebbleBeachSystemsthevalueinusewasfoundtobehigherthanthecarryingvalue,hencenoimpairmentisnecessary.

FollowingareviewofourforecastsforAmplifierTechnology,andinthecontextofthedeferredconsiderationnotearned(note17),thecarryingvalueofourAmplifierTechnologygoodwillhasbeenwrittendownby£0.5millionto£1.1million.

FurtherimpairmentofourAmplifierTechnologyCGUcouldresultintheeventofanincreaseinthediscountrate,orareductioninthelong-termgrowthrate,orareductioninthevalueofoverallcashflows.Anincreaseof1percentinthediscountratewouldresultinafurther


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impairmentof£0.3millionandareductioninthelongtermgrowthrateof1percentinafurtherimpairmentof£0.2million.Areductionof5percentinoverallcashflowsascomparedtothoseusedinourimpairmenttestwouldresultinafurtherimpairmentof£0.1million.

OurimpairmenttestfortheBroadcastmarketsCGUindicatedheadroomof£4.7million.Areductionof13.6percentinoverallforecastcashflows,oranincreaseinthediscountrateby1.1percent,orareductioninthelongtermgrowthrateto1.4percentwouldcausethecarryingvaluetoequaltherecoverableamount.

FortherestoftheGroup,anyreasonablemovementintheassumptionsusedintheimpairmenttestswouldnotresultinanimpairment.

13 PROPERTY, PLANT AND EQUIPMENT

Freeholdlandandbuildings

£000

Leaseholdimprovements,fixturesand

fittings£000

Plant,tools,testand

computerequipment

£000Total£000

Cost At1January2013 917 1,446 8,520 10,883Additions — 8 465 473Additionsfromacquisitionofbusiness — — 124 124Disposals — — (537) (537)Exchangeadjustment (10) (13) (71) (94)At1January2014 907 1,441 8,501 10,849Additions 73 287 559 919Additionsfromacquisitionofbusiness 32 144 281 457Disposals — — (102) (102)Exchangeadjustment 27 48 1,693 1,768At 31 December 2014 1,039 1,920 10,932 13,891 Accumulated depreciationAt1January2013 216 1,034 6,938 8,188Chargefortheyear-continuingbusiness 33 115 642 790Disposals — — (470) (470)Exchangeadjustment (4) (14) (71) (89)At1January2014 245 1,135 7,039 8,419Chargefortheyear-continuingbusiness 37 115 734 886Additionsfromacquisitionofbusiness 14 102 179 295Disposals — — (101) (101)Exchangeadjustment 9 33 1,685 1,727At 31 December 2014 305 1,385 9,536 11,226 Net book valueAt 31 December 2014 734 535 1,396 2,665 At31December2013 662 306 1,462 2,430At1January2013 701 412 1,582 2,695

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OUR FINANCIALS

14 INVENTORIES2014 £000

2013£000

Rawmaterialsandconsumables 4,410 3,862Workinprogress 880 3,254Finishedgoodsandgoodsforresale 7,594 3,978

12,884 11,094

DuringtheyeartheGroupconsumed£31.9million(2013:£31.6million)ofinventoriesandcredited£nil(2013:credited£0.7million)totheincomestatementinrespectofinventorywritedowns.Inventorywritedownswerewrittenbackonthesaleofproductsagainstwhichprovisionshadpreviouslybeenmade.Suchproductshadanetrealisablevaluethatwasbelowtheircosthencetherequirementfortheprovision.

15 TRADE AND OTHER RECEIVABLES2014 £000

2013£000

Current:Tradereceivables 11,802 11,002Less:provisionforimpairment (962) (752)Tradereceivables-net 10,840 10,250Amountsrecoverableoncontracts 3,867 50Otherreceivables 169 858Prepaymentsandaccruedincome 1,080 749

15,956 11,907

IndeterminingtherecoverabilityofatradereceivabletheGroupconsidersanychangeinthecreditqualityofthetradereceivablefromthedatecreditwasinitiallygranteduptothereportingdate.Theconcentrationofcreditriskislimitedduetothecustomerbasebeinglargeandunrelated.

Tradereceivablesthatarelessthanthreemonthspastduearenotconsideredimpairedunlesstherearespecificfinancialorcommercialreasonsthatleadmanagementtoconcludethatthecustomerwilldefault.At31December2014tradereceivablesof£6.1million(2013:£6.6million)werepastduebutnotimpaired.ThecreditqualityoftheGroup’scustomersisgood,beingacombinationoflargebroadcaststations(publicandprivate),governmentagenciesanddepartments.ControlswithinGroupcompaniesareinplacetoensurethatappropriatecreditlimitsareinplace.Theoverdueamountsrelatetocustomerswithnohistoryofdefault.Theageingofthesereceivablesisasfollows:

2014 £000

2013£000

Uptothreemonths 4,559 4,228Threetosixmonths 866 1,937Oversixmonths 635 425

6,060 6,590


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At31December2014tradereceivablesof£1.0million(2013:£0.5million)wereimpairedandprovidedforinwholeorinpart.Theprovisionof£1.0million(2013:£0.8million)issetagainstspecificcustomerdebts.Ingeneral,customerdebtsthatareconsideredimpairedareasaresultofcontractualdisputesratherthanasaresultofcustomercashflowdifficulties,althoughsomespecificcustomersintheUS,forwhichthedebtshavebeenprovidedinfull,havefiledforrelieffromtheircreditorsunderChapter11intheUnitedStates.Theageingofthesereceivablesisasfollows:

2014 £000

2013£000

Oversixmonths 1,026 484 1,026 484

ThegrossamountsoftheGroup’stradereceivablesaredenominatedinthefollowingcurrencies:

2014 £000

2013£000

Poundssterling 5,760 5,968USdollars 6,004 5,032Euros 38 2

11,802 11,002

MovementsontheGroupprovisionforimpairmentoftradereceivablesareasfollows:

2014 £000

2013£000

At1January 752 512Provisionforreceivableimpairment 411 283Receivableswrittenoffduringtheyearasuncollectable (134) (41)Receivablespreviouslyprovidedthatwererecoveredinfullorpart (184) —Transferonacquisitionofbusiness 115 —Exchangeadjustment 2 (2)At31December 962 752

Thecreationandreleaseofprovisionforimpairedreceivableshavebeenincludedin“salesandmarketingexpenses”intheConsolidatedIncomeStatement.Amountschargedtotheallowanceaccountaregenerallywrittenoff,whenthereisnoexpectationofrecoveringadditionalcash.

Theotherclasseswithintradeandotherreceivablesdonotcontainimpairedassets.

Themaximumexposuretocreditriskatthereportingdateisthefairvalueofeachclassofreceivablementionedabove.TheGroupdoesnotholdanycollateralassecurity.

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OUR FINANCIALS

16 CASH AND CASH EQUIVALENTS2014 £000

2013£000

Cashandbankbalances 8,380 3,705Cash and cash equivalents at 31 December 8,380 3,705

Thecreditqualityofthecashandcashequivalentsthatarenotimpairedcanbeassessedbyreferencetotheexternalcreditratingsofthebankswherethedepositsareheld.

Creditrating(S&P)2014 £000

2013£000

AA- — 16A — 2,735A- — 939A-1+ 1,107 —A-1 6,113 —A-2 1,129 —A-3 31 —BBB — 15Total 8,380 3,705

Reconciliationofincreaseincashandcashequivalentstomovementinnetcash:

2014 2013 Net cash and cash

equivalents £000

Other borrowings

£000

Total net cash

£000

Netcashandcash

equivalents£000

Otherborrowings

£000

Totalnetcash

£000At1January 3,705 — 3,705 8,131 — 8,131Cashflowfortheyearbeforefinancingandacquisitionofsubsidiary 3,187 — 3,187 (1,010) — (1,010)Proceedsonissueofshares 2,000 — 2,000 — — —Purchaseofsubsidiary (13,092) — (13,092) (2,093) — (2,093)Cashacquiredfromsubsidiary 6,089 — 6,089 62 — 62Movementinborrowingsintheyear 8,000 (8,000) — — — —Dividendpaid (1,473) — (1,473) (1,413) — (1,413)Exchangerateadjustments (36) — (36) 28 — 28Cash and cash equivalents at 31 December 8,380 (8,000) 380 3,705 — 3,705


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17 TRADE AND OTHER PAYABLES 2014 £000

2013£000

Paymentsreceivedonaccount 1,033 785Tradepayables 8,589 6,643Accrualsanddeferredincome 5,361 2,942Othertaxesandsocialsecuritycosts 827 192Deferredconsiderationforacquisitions — 2,000Otherpayables — 286

15,810 12,848

During2014thedeferredconsiderationpayabletothevendorsofAmplifierTechnologyLtdwaswrittenbackasthesamewasnotearnedbythevendors.

18 CURRENT TAX ASSETS AND LIABILITIES2014 £000

2013£000

Currenttaxliabilities 691 —Foreigncorporationtax 56 12Currenttaxassets — —Foreigncorporationtax — —

19 FINANCIAL LIABILITIES – BORROWINGS2014 £000

2013£000

Non-current:Bankloans(secured) 2,400 —Current:Bankloans(secured) 5,600 —

BANK BORROWING FACILITIESDuringtheyeartheGroupagreedonanew£10.0milliondebtfacility.Thefacilityconsistedofathreeyeartermloanof£3.0millionandarevolvingcreditfacilitywithalimitof£7.0millionofwhich£5.0millionhadbeenutilisedasat31December2014.£0.6millionofthetermloanisrepayableduring2015.

AdditionalfacilitiesexpiringwithinoneyearcomprisetheGroupbondingandancillaryfacilitythataresubjecttoreviewduring2015inthenormalcourseofbusiness.At31December2014theGrouphadagrossbankoverdraftfacilityof£2.0million,andanetlimitof£1.0million.Interestontheoverdraftfacilityischargedat2.25percentoverbaserate.

AllbankfacilitiesaresecuredbyfixedandfloatingchargesovertheGroup’sassetsandbycross-guaranteesbetweentheCompanyandcertainUKandUSsubsidiaries.

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OUR FINANCIALS

19 FINANCIAL LIABILITIES – BORROWINGS (CONTINUED)Prudentliquidityriskmanagementimpliesmaintainingsufficientcashandavailablefundingthroughanadequateamountofcommittedcreditfacilities.Duetothedynamicnatureoftheunderlyingbusinesses,Grouptreasuryaimstomaintainflexibilityinfundingbykeepingcommittedcreditlinesavailable.

TheGroupdoesnotuseinterestrateswapstomanageitsexposuretointerestratemovementsonitsbankborrowings.Theeffectiveinterestratesatthebalancesheetdateswereasfollows:

2014 2013Bankoverdraft 2.75% 2.75%Bankborrowings 2.45% N/A

TheGroupheldnetcashat31December2014of£0.4million(2013:£3.7million)andtheGroupwasnotutilisinganyavailableoverdraftfacility.

20 FINANCIAL INSTRUMENTSNumericalfinancialinstrumentdisclosuresaresetoutbelow.Additionaldisclosuresaresetoutintheaccountingpolicies(note2).

FINANCIAL INSTRUMENTS BY CATEGORY

2014Loans and receivables

£000

2013Loansandreceivables

£000Assets as per statement of financial position at 31 DecemberTradeandotherreceivablesexcludingprepayments 14,876 11,158Cashandcashequivalents 8,380 3,705Total 23,256 14,863

Therearenofinancialassetsthatarepledgedascollateralforliabilitiesorcontingentliabilities.

2014Other

financial liabilities at

amortised cost

£000

2013Other

financialliabilitiesatamortised

cost£000

Liabilities as per statement of financial position at 31 DecemberTradeandotherpayablesexcludingpaymentsreceivedonaccountandsocialsecurityliabilities 13,950 11,871Borrowings 8,000 —Total 21,950 11,871


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21 PROVISIONS FOR OTHER LIABILITIES AND CHARGESWarranty

provisions£000

Propertyprovisions

£000Total£000

At1January2014 345 359 704Additionalprovisionintheyear 143 — 143Utilisationofprovision (224) (71) (295)Foreignexchange 6 6At 31 December 2014 270 288 558

Provisionshavebeenanalysedbetweencurrentandnoncurrentasfollows:

2014 £000

2013£000

Current 280 638Non-current 278 66At31December 558 704

Warrantyprovisionsaremadeinrespectoftheexpectedfuturewarrantycostsincertainbusinessesbasedonhistoricactualcosts.Warrantyperiodsonproductsaregenerallybetweenoneandtwoyears.Otherthanawarrantyprovisionof£0.1million(2013:£0.1million)allprovisionsaredenominatedinsterling.Thewarrantyprovisionisreassessedannuallybasedonthewarrantyclaimexperienceoftheprevious12monthsrelativetotheaggregateoutstandingwarrantyperiodattheyearend.

ThepropertyprovisionisinrespectofavacatedleaseholdpropertyacquiredaspartoftheGigawaveacquisitionandrepresentstheestimatedfutureliabilitiesassociatedwiththepropertytotheendofthelease,netofanticipatedincomefromsubletting.Thepropertywassub-letduring2013.Inthecurrenteconomicenvironmentwecannotbecertainthatthisprovisionwillbesufficienttocoverthetotalfutureliabilitiesassociatedwiththepropertyandtherequirementforprovisionwillbereassessedannually.Thetotalliabilityforfuturerentandratesonthevacatedleasepremises,excludinganypotentialbenefitfromsubletting,is£1.2millionoveranaggregateperiodof5.5years.

22 DEFERRED TAXATIONDeferredtaxiscalculatedinfullontemporarydifferencesundertheliabilitymethodusingataxrateappropriatetothecountryinwhichthedeferredtaxliabilityorassethasarisen.Deferredtaxassetshavebeenrecognisedinrespectofalltaxlossesandothertemporarydifferencestotheextentthattheyareregardedasmorelikelythannottoberecoverableagainstfutureprofits.

Nodeferredtaxisrecognisedonunremittedearningsofoverseassubsidiaries.AstheearningsarecontinuallyreinvestedbytheGroup,notaxisexpectedtobepayableonthemintheforeseeablefuture.

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OUR FINANCIALS

22 DEFERRED TAXATION (CONTINUED)From1April2014thecorporationtaxratewas21percentandfrom1April2015itwillbe20percent.Theseratesweresubstantivelyenactedon2July2013andhencedeferredtaxassetsandliabilitiesarecalculatedat20percent.

Acceleratedtax

depreciation£000

Intangibleassets£000

Losses£000

Other£000

Total£000

Deferred tax liabilitiesAt1January2014 1,632 1,521 — — 3,153Acquiredduringtheyear 16 1,591 — — 1,607Charge/(credit)toprofitorloss 538 (136) — — 402Reclassificationtodeferredtaxassets (27) — — — (27)Exchangeadjustment 124 79 — — 203At 31 December 2014 2,283 3,055 — — 5,338

Acceleratedtax

depreciation£000


Losses£000

Other£000

Total£000

Deferred tax assetsAt1January2014 27 — 2,740 1,383 4,150Acquiredduringtheyear — — — — —(Charge)/credittoprofitorloss — — (451) (111) (562)Reclassificationfromdeferredtaxliabilities (27) — — — (27)Exchangeadjustment — — 82 69 151At 31 December 2014 — — 2,371 1,341 3,712

Acceleratedtax

£000


Losses£000

Other£000

Total£000

Deferred tax liabilitiesAt1January2013 1,264 1,505 (667) (1,402) 700Acquiredduringtheyear — 162 — — 162Charge/(credit)toprofitorloss 418 (122) (788) 90 (402)Reclassificationtodeferredtaxassets — — 1,399 1,286 2,685Exchangeadjustment (50) (24) 56 26 8At 31 December 2013 1,632 1,521 — — 3,153


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Acceleratedtax

£000


Losses£000

Other£000

Total£000

Deferred tax assetsAt1January2013 355 — 794 62 1,211Acquiredduringtheyear — — 251 — 251(Charge)/credittoprofitorloss (328) — 296 35 3Reclassificationfromdeferredtaxliabilities — — 1,399 1,286 2,685Exchangeadjustment — — — — —At 31 December 2013 27 — 2,740 1,383 4,150

Themovementonnetdeferredtax(liability)/assetintheyearwas:

2014 £000

2013£000

Netdeferredtaxassetat1January 997 511Chargedintheyear-continuingbusiness (964) 405Acquisitionofabusiness (1,607) 89Exchangeadjustment (52) (8)Netdeferredtax(liability)/assetat31December (1,626) 997

Certaindeferredtaxassetshavenotbeenrecognisedwheretheyarenotprobableofrecovery:

2014 £000

2013£000

Losses 4,172 6,253UnutilisedACT 584 584

4,756 6,837

23 ORDINARY SHARES

Number ’000s

2014 £000

Number’000s

2013£000

Ordinary shares of 2.5 pence each at 31 DecemberAuthorised 200,000 5,000 200,000 5,000Allotted and fully paid At1January 113,902 2,848 113,902 2,848Repurchaseofownshares — — — —Shareissues 8,701 218 — —At 31 December 122,603 3,066 113,902 2,848

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OUR FINANCIALS

23 ORDINARY SHARES (CONTINUED)ISSUE OF SHARE CAPITALTheGroupenteredintoapartnershipwithHarmonicduring2014andsawHarmonicsubscribefor4,000,000newordinarysharesintheGrouppricedat50pencepernewordinarysharebywayofadirectsubscription.

AspartoftheconsiderationpayableontheacquisitionofPebbleBeachSystemsLtdtheGroupissued4,700,904newordinarysharesvaluedat£2.0million(note27).Thedifferencebetweenthenominalvalueofthesharesandthemarketpriceatissuehasbeenrecognisedinmergerreserves.

POTENTIAL ISSUE OF SHARESTheGrouphasthefollowingsharebasedpaymentschemes:

A) EXECUTIVE SHARE OPTION SCHEMESExecutiveshareoptionsaregrantedatafixedexercisepriceequaltothemarketpriceofthesharesunderoptionatthedateofgrant.Thecontractuallifeofanoptionistenyears.AwardsareatthediscretionoftheRemunerationCommittee.Optionswillbecomeexercisableonthethirdanniversaryofthedateofgrant.Exerciseofanoptionissubjecttocontinuedemployment.Therearenoperformancecriteriaattachedtotheoptions.

CertainseniorexecutivesholdoptionstosubscribeforsharesintheCompanyatpricesrangingfrom19.0penceto86.3penceundertheshareoptionschemesapprovedbyshareholders.

Thenumberofsharessubjecttooptionsandtheexercisepricesare:

Dateofgrant Exerciseprice Exerciseperiod

2014 Number

’000s

2013Number

’000s07April2004 34.5p 07/04/07—06/04/14 — 5014April2005 27.3p 14/04/08—13/04/15 — —13April2006 53.5p 13/04/09—12/04/16 120 12427April2007 86.3p 27/04/10—26/04/17 50 5008June2011 19.0p 08/06/14—07/06/21 — 30029March2012 29.0p 29/03/15—28/03/22 450 600

620 1,124

Areconciliationofexecutiveoptionmovementsovertheyearisshownbelow:

Number ’000s

2014 Weighted

averageexercise

price Number

’000s

2013Weightedaverageexercise

priceOutstandingatbeginningofyear 1,124 31.8p 1,717 30.9pForfeitedduringtheyear (124) 30.1p (585) 29.0pLapsedduringtheyear (34) 34.5p — —Exercisedduringtheyear (346) 20.4p (8) 34.5pIssuedduringtheyear — — — —Outstandingattheendoftheyear 620 38.4p 1,124 31.8pExercisableattheendoftheyear 170 63.1p 224 56.6p


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345,580optionswereexercisedin2014(2013:8,000).Theoptionsoutstandingat31December2014hadaweightedaverageexercisepriceof38.4pence(2013:31.8pence)andaweightedaverageremainingcontractuallifeof5.7years(2013:6.8years).

Noexecutiveoptionsweregrantedduring2014.Thefairvalueoftheexecutiveoptionsgrantedduring2012thatvestin2015was£65,538,basedontheBlack-Scholespricingmodel.

ExpectedvolatilitywasdeterminedbycalculatingthehistoricalvolatilityoftheGroup’ssharepriceoverthepreviousthreeyears.Therisk-freerateofreturnistheyieldonzerocouponUKgovernmentbondsofatermconsistentwiththeassumedoptionlife.

B) LONG TERM INCENTIVE PLAN (LTIP)Optionshavebeengrantedasnilcostoptionsunderthisscheme.Theoptionsgrantedunderthisschemearegenerallyexercisableattheendoftheperformanceperiodandforsixmonthsthereafter.Awardsunderthisschemearereservedforemployeesatseniormanagementlevelandabove.IfanemployeeleavestheemploymentoftheGroup,aproportionofhisawardmaybedeemedtohavevested,subjecttosatisfyinganyperformanceconditionsandatthediscretionoftheRemunerationCommittee.

AwardsundertheLTIPschemearesubjecttoperformancecriteria,thescalesrelatingtowhichwillbedeterminedannuallybytheRemunerationCommittee.DetailsoftheperformancecriteriaaredisclosedintheRemunerationReport.

ThefairvalueoftheLTIPoptionsgrantedduringtheyearis£248,160,basedonthemarketvalueofthesharesatthedateofgrant,lesstheexpecteddividendyield.Thefairvalueischargedoverthevestingperiod,afterallowingforoptionslapsingatanestimatedrateof20percentperannum.

ThenumberofsharessubjecttoLTIPoptionsandtheexercisepricesare:

Dateofgrant

Sharepriceataward

date Vestingdate

2014 Number

’000s

2013Number

’000s28March2012 29.5p 28March2015 2,200 2,50015December2012 26.0p 15December2015 404 40412November2013 48.5p 12November2016 3,550 3,90003June2014 45.1p 03June2017 600 —

6,754 6,804

2014Dateofgrant 03 June Optiontype ExecutiveSharepriceatgrantdate 45.1pSharesunderoption 600,000 Vestingperiod(years) 3.00

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OUR FINANCIALS

23 ORDINARY SHARES (CONTINUED)AreconciliationofLTIPoptionmovementsovertheyearisshownbelow:

Number ’000s

2014 Weighted

averageexercise

price Number

’000s

2013Weightedaverageexercise

priceOutstandingatbeginningofyear 6,804 39.8p 3,500 28.2pLapsedduringtheyear (650) 39.7p (596) 24.3pGranted 600 45.1p 3,900 48.5pOutstandingattheendoftheyear 6,754 40.6p 6,804 39.8p

TherewerenoLTIPoptionsthatwereexercisableattheendoftheyear(2013:nil).

TheweightedaveragecontractualliferemainingontheLTIPoptionsoutstandingat31December2014is8.47years(2013:9.37years).

C) SHARE OPTIONS - VALUE OF EMPLOYEE SERVICESTheGrouprecognisedtotalexpensesof£500,448(2013:£361,000)relatedtoequity-settledsharebasedpaymenttransactionsintheyear.

24 CASH FLOW FROM OPERATIONSReconciliationofprofitbeforetaxationtonetcashflowsfromoperations.

2014 £000

2013£000

Profitfortheyear 5,367 3,093Depreciationofproperty,plantandequipment 886 790Lossondisposalofproperty,plantandequipment — 3Acquisitionrelatedcosts 224 93Writebackofdeferredconsiderationunearned (2,000) —Amortisationandimpairmentofdevelopmentcosts 2,092 2,189Amortisationandimpairmentofacquiredintangibles 2,630 1,420Sharebasedpaymentexpense 500 361Financeincome (24) (19)Financecosts 169 4Increaseininventories (1,268) (1,478)Increaseintradeandotherreceivables (2,233) (1,676)Increaseintradeandotherpayables 1,807 366Decreaseinprovisions (151) (793)Net cash from operating activities 7,999 4,352


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25 CONTINGENT LIABILITIES AND COMMITMENTSTheaggregatefutureminimumleasepaymentsdueundernon-cancellableoperatingleasesareasfollows:

2014Land andbuildings

£000

2014Other £000

2013Landandbuildings

£000

2013Other£000

Notlaterthanoneyear 939 15 1,034 18Laterthanoneyearandnotlaterthanfiveyears 4,204 41 3,811 33Laterthanfiveyears 619 — 2,049 —

5,762 56 6,894 51

TheGroupleasesanumberofofficeandfactorypremisesunderoperatingleasesofperiodsbetweenfiveandtenyears.Noneoftheseleasescontaincontingentrentals.Otherleasescompriseleasesforofficeequipment.Duringtheyear£0.03million(2013:£0.04million)ofoperatingleasepayments,wererecognisedintheconsolidatedincomestatement.

Shareoptionsgrantedbetween5April1999and5April2002underunapprovedschemesaresubjecttoemployers’andemployees’nationalinsuranceonthegainmadeontheexerciseofsuchoptionsbyUKemployees.At31December2014noaccrualwasrequiredinrespectofthisliability(2013:£nil).

26 PENSIONSDEFINED CONTRIBUTION PLANSTheGroupcurrentlyoperatesaGroupPersonalPensionPlanandfundsareinvestedwithStandardLifeplc.CertainUKemployeesareentitledtojointheplantowhichtheCompanycontributesvaryingamountssubjecttostatus.InadditiontheGroupoperatesastakeholderpensionschemeintheUK.IntheUS,theGroupcontributestoa401KplanonbehalfofemployeesuptoUS$2,500(£1,545)peremployee.ThetotalGrouppensionchargefortheyearwas£0.5million(2013:£0.4million).

TheGrouphasnounfundedpensionliabilities.

27 BUSINESS COMBINATIONSOn18March2014theGroupacquiredtheentireissuedsharecapitalofPebbleBeachSystemsLtdforatotalmaximumconsiderationof£14.9millioncomprising£12.9millionincashand£2.0millionrepresentedbytheissueofnewordinaryshares.PebbleBeachSystemsisasoftwarecompanybasedintheUnitedKingdomthatoperateswithintheBroadcastsegmentprovidingsoftwaresolutionsforplayoutwithadvancedsoftwaretechnology.TheacquisitionofPebbleBeachSystemsmovesVislinkintotheprovisionofsoftwaresolutionsforplayoutwithadvancedsoftwaretechnology.TheCompany’sexistingcapabilitiesofofferingbroadcasterswirelesscommunicationsystemsforthecaptureofliveTVcoverageofnews,entertainmentandsportseventsisnowcomplementedwithworldclasstelevisionautomationandmediamanagementservicesforbroadcaststudios.

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OUR FINANCIALS

27 BUSINESS COMBINATIONS (CONTINUED)ThefollowingtablesummarisestheconsiderationpaidforPebbleBeachSystemsandapreliminaryvaluationoftheamountsoftheassetsacquiredandliabilitiesassumedrecognisedattheacquisitiondate.

Fairvalue£000

Recognised amounts of identifiable assets acquired and liabilities assumed:Cashandcashequivalents 6,089Property,plantandequipment 163Intellectualproperty 3,350Acquiredintangibles–customerrelationshipsandbrands 4,494Inventories 83Tradeandotherreceivables 1,509Tradeandotherpayables (2,446)Deferredtaxliability (1,591)Totalidentifiablenetassets 11,651Goodwill 3,218Totalconsideration 14,869

Deferredtaxof£1.6millionhasbeenprovidedinrespectofthefairvalueofacquiredidentifiableintangibleassetsof£7.8million.

£000Consideration:Cash–Consideration 12,869Ordinaryshares 2,000Totalconsideration 14,869

Acquisitionrelatedcostsof£0.2millionareincludedinotherexpensesintheGroupincomestatementandareconsideredtobenon-recurring(note6).Thus,thetotalcashoutflowassociatedwiththeacquisitionwas£13.1million.

PebbleBeachSystemscontributed£8.3milliontoGrouprevenueandaprofitof£3.4milliontotheGroupoperatingprofitintheperiod.HadPebbleBeachSystemsbeenconsolidatedfrom1January2014theconsolidatedincomestatementwouldinclude£9.9millionofrevenueand£3.7millionofprofitbeforetax.

28 RELATED PARTY TRANSACTIONSTransactionsbetweentheCompanyanditssubsidiaries,whicharerelatedparties,havebeeneliminatedonconsolidationandarenotdisclosedinthisnote.

Keymanagementincludesdirectors(executiveandnon-executive),membersoftheseniormanagement,theCompanySecretaryandtheheadofInternalAudit.Thecompensationpaidorpayabletokeymanagementforemployeeservicesisdisclosedinnote7.

PebbleBeachSystemsLtd,awhollyownedsubsidiaryofVislinkplc,lease(for£95,000perannum)aproperty(Unit12HorizonBusinessVillage)ownedbyDentonTrustofwhichIanCockett,PeterHajittofiandJulianHepworth,directorsofPebbleBeachSystemsLtd,aretrusteesalongwithPaulHatcher,anemployeeofPebbleBeachSystemsLtd.PebbleBeachSystemsLtdalsolease(for£65,000perannum)asecondproperty(Unit15HorizonBusinessVillage)alsoownedbyDentonTrustofwhichIanCockett,PeterHajittofiandJulianHepworth,directorsofPebbleBeachSystemsLtd,aretrustees.


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29 PRINCIPAL SUBSIDIARY COMPANIES

TheprincipalsubsidiariesoftheGroupwhichprincipallyaffectthefiguresshown,whichareunlistedunlessotherwiseindicated,areshownbelow.AfulllistofundertakingswillbeattachedtothenextannualreturnoftheCompany.

ThefollowingsubsidiariesareincludedintheGroup’sconsolidatedresults.AfulllistofsubsidiariescanbeobtainedfromtheCompanySecretaryattheregisteredofficeofVislinkplc.

Proportionofordinary

sharesheldbytheGroup Principalactivity

Countryofincorporationandoperation

Registeredoffice

Continental Microwave Limited* 100% Broadcasttransmissionsystemsintegrationandprojectmanagement

UK HungerfordEngland

Amplifier Technology Limited* 100% Designandmanufactureofamplifiers UK HungerfordEngland

Pebble Beach Systems Limited* 100% Softwareservicevideocaptureandplayoutproviderforthebroadcastindustry

UK WeybridgeEngland

Vislink International Limited*(incorporatingthebusinessofAdventCommunications,LinkResearchandGigawave)

100% Designandmanufactureofwirelesscamerasystems

satelliteuplinkanddownlinkequipment

UK HungerfordEngland

Vislink, Inc. (IncorporatingthebusinessesofMicrowaveRadioCommunications,PacificMicrowaveResearchandWesternTechnicalServices)

100% Designandmanufactureofmicrowaveradiotransmissionequipment

USA DelawareUSA

Vislink Holdings Limited* 100% Managementholdingcompany UK HungerfordEngland

Vislink Holdings, Inc. 100% Managementholdingcompany USA DelawareUSA

*Owneddirectlybytheparentcompany,Vislinkplc.

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OUR FINANCIALS

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF VISLINK PLC

REPORT ON THE COMPANY FINANCIAL STATEMENTSOUR OPINIONInouropinion,Vislinkplc’sCompanyfinancialstatements(the“financialstatements”):

•giveatrueandfairviewofthestateofthecompany’saffairsasat31December2014;

•havebeenproperlypreparedinaccordancewithUnitedKingdomGenerallyAcceptedAccountingPractice;and

•havebeenpreparedinaccordancewiththerequirementsoftheCompaniesAct2006

WHAT WE HAVE AUDITEDVislinkplc’sfinancialstatementscomprise:•theBalanceSheetasat31December2014;•theReconciliationofMovementsinShareholders’Fundsfortheyearthenended;and

•thenotestothefinancialstatements,whichincludeasummaryofsignificantaccountingpoliciesandotherexplanatoryinformation

CertainrequireddisclosureshavebeenpresentedelsewhereintheAnnualReport&Accounts,ratherthaninthenotestothefinancialstatements.Thesearecross-referencedfromthefinancialstatementsandareidentifiedasaudited.ThefinancialreportingframeworkthathasbeenappliedinthepreparationofthefinancialstatementsisapplicablelawandUnitedKingdomAccountingStandards(UnitedKingdomGenerallyAcceptedAccountingPractice).Inapplyingthefinancialreportingframework,thedirectorshavemadeanumberofsubjectivejudgements,forexampleinrespectofsignificantaccountingestimates.Inmakingsuchestimates,theyhavemadeassumptionsandconsideredfutureevents.

OPINION ON OTHER MATTER PRESCRIBED BY THE COMPANIES ACT 2006Inouropinion,theinformationgivenintheStrategicReportandtheDirectors’Reportforthefinancialyearforwhichthefinancialstatementsarepreparedisconsistentwiththefinancialstatements.

OTHER MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTIONADEQUACY OF ACCOUNTING RECORDS AND INFORMATION AND EXPLANATIONS RECEIVEDUndertheCompaniesAct2006wearerequiredtoreporttoyouif,inouropinion:•wehavenotreceivedalltheinformationandexplanationswerequireforouraudit;or

•adequateaccountingrecordshavenotbeenkeptbytheCompany,orreturnsadequateforouraudithavenotbeenreceivedfrombranchesnotvisitedbyus;or

•thefinancialstatementsarenotinagreementwiththeaccountingrecordsandreturns

Wehavenoexceptionstoreportarisingfromthisresponsibility.DIRECTORS’ REMUNERATIONUndertheCompaniesAct2006wearerequiredtoreporttoyouif,inouropinion,certaindisclosuresofdirectors’remunerationspecifiedbylawarenotmade.Wehavenoexceptionstoreportarisingfromthisresponsibility.

RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS AND THE AUDITOUR RESPONSIBILITIES AND THOSE OF THE DIRECTORSAsexplainedmorefullyintheStatementofDirectors’Responsibilities,thedirectorsareresponsibleforthepreparationofthefinancialstatementsandforbeingsatisfiedthattheygiveatrueandfairview.OurresponsibilityistoauditandexpressanopiniononthefinancialstatementsinaccordancewithapplicablelawandInternationalStandardsonAuditing(UKandIreland)(“ISAs(UK&Ireland)”).ThosestandardsrequireustocomplywiththeAuditingPracticesBoard’sEthicalStandardsforAuditors.Thisreport,includingtheopinions,hasbeenpreparedforandonlyforthecompany’smembersasabodyinaccordancewithChapter3ofPart16oftheCompaniesAct2006andfornootherpurpose.Wedonot,ingivingtheseopinions,acceptorassumeresponsibilityforanyotherpurposeortoanyotherpersontowhomthisreportisshownorintowhosehandsitmaycomesavewhereexpresslyagreedbyourpriorconsentinwriting.

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WHAT AN AUDIT OF FINANCIAL STATEMENTS INVOLVESWeconductedourauditinaccordancewithISAs(UK&Ireland).Anauditinvolvesobtainingevidenceabouttheamountsanddisclosuresinthefinancialstatementssufficienttogivereasonableassurancethatthefinancialstatementsarefreefrommaterialmisstatement,whethercausedbyfraudorerror.Thisincludesanassessmentof:•whethertheaccountingpoliciesareappropriatetotheCompany’scircumstancesandhavebeenconsistentlyappliedandadequatelydisclosed;

•thereasonablenessofsignificantaccountingestimatesmadebythedirectors;and

•theoverallpresentationofthefinancialstatements.Weprimarilyfocusourworkintheseareasbyassessingthedirectors’judgementsagainstavailableevidence,formingourownjudgements,andevaluatingthedisclosuresinthefinancialstatements.Wetestandexamineinformation,usingsamplingandotherauditingtechniques,totheextentweconsidernecessarytoprovideareasonablebasisforustodrawconclusions.Weobtainauditevidencethroughtestingtheeffectivenessofcontrols,substantiveproceduresoracombinationofboth.Inaddition,wereadallthefinancialandnon-financialinformationintheAnnualReport&Accountstoidentifymaterialinconsistencieswiththeauditedfinancialstatementsandtoidentifyanyinformationthatisapparentlymateriallyincorrectbasedon,ormateriallyinconsistentwith,theknowledgeacquiredbyusinthecourseofperformingtheaudit.Ifwebecomeawareofanyapparentmaterialmisstatementsorinconsistenciesweconsidertheimplicationsforourreport.

OTHER MATTERWehavereportedseparatelyontheGroupfinancialstatementsofVislinkplcfortheyearended31December2014.

MarkEllis(SeniorStatutoryAuditor)forandonbehalfofPricewaterhouseCoopersLLPCharteredAccountantsandStatutoryAuditors,Bristol24March2015

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OUR FINANCIALS

Notes2014 £000

2013£000

Fixed assetsTangibleassets F 54 131Investments G 26,507 13,639

26,561 13,770Current assetsDebtors H 16,367 17,290Cashatbankandinhand 1,850 2,051

18,217 19,341Creditors - amounts falling due within one year I 12,338 8,384Net current assets 5,879 10,957Total assets less current liabilities 32,440 24,727Bankloans K 2,400 —Net assets 30,040 24,727

Capital and reservesCalledupsharecapital L 3,065 2,848Sharepremiumaccount M 6,800 4,900Capitalredemptionreserve M 617 617Mergerreserve M 4,553 2,670Profitandlossaccount M 15,005 13,692Total shareholders’ funds 30,040 24,727

Companyregistrationnumber:04082188

Thefinancialstatementsonpages98to105wereapprovedbytheBoardofDirectorson24March2015andweresignedonitsbehalfby:

JohnHawkinsIanDaviesDIRECTORS

COMPANY FINANCIAL STATEMENTS — BALANCE SHEET AS AT 31 DECEMBER 2014

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Notes2014 £000

2013£000

Openingshareholders’funds 24,727 26,968

Lossforthefinancialyear B (1,853) (1,189)Sharebasedpayments:Valueofemployeeservices E 500 361IncomefromsharesinGroupundertakings D 4,169 —Dividendspaid D (1,473) (1,413)Issueofsharecapital M 4,000 —AdjustmentinrespectofEmployeeShareOwnershipPlan M (30) —Movementintheyear 5,313 (2,241)Closingshareholders’funds 30,040 24,727

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS FOR THE YEAR ENDED 31 DECEMBER 2014

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OUR FINANCIALS

NOTES TO THE COMPANY FINANCIAL STATEMENTS

A ACCOUNTING POLICIESTheseparatefinancialstatementsoftheCompanyarepresentedasrequiredbytheCompaniesAct2006.TheyhavebeenpreparedonagoingconcernbasisunderthehistoricalcostconventionandinaccordancewithUKGenerallyAcceptedAccountingPrinciples.

Asummaryofthemoreimportantaccountingpoliciesissetoutbelow.Thesepolicieshavebeenconsistentlyappliedtoalltheyearspresented,unlessotherwisestated.

INVESTMENTSAllinvestmentsareinitiallyrecordedatcost,beingthefairvalueofconsiderationgivenincludingtheacquisitioncostsassociatedwiththeinvestment.Subsequently,theyarereviewedforimpairmentonanindividualbasisifeventsorchangesincircumstancesindicatethecarryingvaluemaynotbefullyrecoverable.

TANGIBLE FIXED ASSETSTangiblefixedassetsarestatedatcostlessaccumulateddepreciationandanyprovisionforimpairment.

Costincludestheoriginalpurchasepriceoftheassetandthecostsattributabletobringingtheassettoitsworkingconditionforitsintendeduse.

Depreciationiscalculatedinordertowriteoffthecostoftangiblefixedassetsovertheirestimatedusefullivesbyequalannualinstalmentsusingthefollowingrates:

Plantandcomputerequipment 10%-33%

DEFERRED TAXATIONDeferredtaxisrecognisedinrespectofalltimingdifferencesatthebalancesheetdatebetweenthetaxbasesofassetsandliabilitiesandtheircarryingamountsforfinancialreportingpurposes.

Deferredtaxassetsarerecognisedforalldeductibletimingdifferences,carry-forwardofunusedtaxassetsandtaxlosses,totheextentthattheyareregardedasrecoverable.Theyareregardedasrecoverablewhere,onthebasisofavailableevidence,therewillbesuitabletaxableprofitsagainstwhichthefuturereversaloftheunderlyingtimingdifferencescanbededucted.Thecarryingvalueoftheamountofdeferredtaxassetsisreviewedateachbalancesheetdateandreducedtotheextentthatitisnolongerprobablethatsufficienttaxableprofitwillbeavailabletoallowall,orpart,ofthetaxassettobeutilised.

Deferredtaxassetsandliabilitiesaremeasuredatthetaxratesthatareexpectedtoapplytotheyearwhentheassetisrealisedortheliabilityissettled,basedonthetaxrates(andtaxlaws)thathavebeenenactedatthebalancesheetdate.Deferredtaxismeasuredonanundiscountedbasis.

FOREIGN CURRENCIESMonetaryassetsandliabilitiesdenominatedinforeigncurrenciesaretranslatedattheexchangeratesrulingatthebalancesheetdateandnon-monetarytransactionsattheexchangeratesrulingatthedatesofthetransactions.Alldifferencesonexchangearetakentotheprofitandlossaccount.

SHARE-BASED PAYMENTSThefairvalueofemployeeshareplansiscalculatedusinganoption-pricingmodel.InaccordancewithFRS20“Share-basedpayments”,theresultingcostischargedtotheprofitandlossaccountoverthevestingperiodoftheplans.Thevalueofthechargeisadjustedtoreflecttheexpectedandactuallevelsofoptionsvesting.

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DIVIDENDSUnderFRS21dividendsarenottoberecognisedasacreditoruntilthedividendisapprovedbytheCompany’sshareholders.

PENSIONSCompanyemployeesaremembersofmoneypurchaseschemeswheretheobligationsoftheCompanyarechargedtotheprofitandlossaccountastheyareincurred.

B LOSS FOR THE YEARAspermittedbysection408oftheCompaniesAct2006theCompanyhaselectednottopresentitsownprofitandlossaccount.Vislinkplcreportedalossforthefinancialyearof£1.9million(2013:lossof£1.2million).

C SERVICES PROVIDED BY THE COMPANY’S AUDITORDuringtheyear,theCompanyobtainedthefollowingservicesfromtheCompany’sauditorsatcostsdetailedbelow:

2014 £000

2013£000

AnalysisoffeespayabletoPricewaterhouseCoopersLLPFeespayabletotheCompany’sauditorfortheauditoftheCompany’sfinancialstatements 61 59FeespayabletotheCompany’sauditorforotherservices:–Audit-relatedassuranceservices 15 10

76 69–Taxationcomplianceservices 12 12–Taxationadvisoryservices 23 21–Servicesrelatingtocorporatefinancetransactions 9 20–Othernon-auditservices 6 10

126 132

AdescriptionoftheworkoftheAuditCommitteeissetoutintheCorporateGovernanceStatementonpage47andincludesanexplanationofhowauditorobjectivityandindependenceissafeguardedwhennon-auditservicesareprovidedbytheauditors.

D INCOME FROM SHARES IN GROUP UNDERTAKINGS2014 £000

2013£000

IncomefromsharesinGroupundertakings (4,169) —Finaldividendpaidof1.25ppershare(2013:1.25ppershare) 1,473 1,413

Thedirectorsareproposingafinaldividendinrespectofthefinancialyearending31December2014of1.50pencepersharewhichwillabsorbanestimated£1.8millionofshareholders’funds.Itwillbepaidon17July2015toshareholderswhoareontheregisterofmemberson26June2015.

E SHARE-BASED PAYMENTSDetailsofshare-basedpaymentsareshowninnote23totheconsolidatedGroupfinancialstatements.

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OUR FINANCIALS

F TANGIBLE FIXED ASSETSPlantandcomputerequipment

£000Cost At1January2014 445Additions —At 31 December 2014 445 Accumulated depreciationAt1January2014 314Chargefortheyear 77At 31 December 2014 391 Net book valueAt 31 December 2014 54 At31December2013 131

G INVESTMENTSInvestments

insubsidiaries’unlistedshares

£000Cost At1January2014 21,545Additions 14,868At 31 December 2014 36,413Provision for impairmentAt1January2014 7,906Additions 2,000At 31 December 2014 9,906 Net book valueAt 31 December 2014 26,507 At31December2013 13,639

ThecostadditionintheyearrepresentstheinvestmentinPebbleBeachSystemsLtd,showninnote27totheconsolidatedGroupfinancialstatements.

TheprovisionforimpairmentadditionintheyearrepresentstheAmplifierTechnologyLimiteddeferredconsiderationun-earned,showninnote6totheconsolidatedGroupfinancialstatements.

Thedirectorsbelievethatthecarryingamountoftheinvestmentsissupportedbythevalueoftheirunderlyingnetassets.

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

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H DEBTORS2014

£000 2013£000

AmountsowedbyGroupundertakings 15,767 17,034Deferredtaxation(noteJ) 102 33Corporationtax 305 103Otherdebtors 39 40Prepaymentsandaccruedincome 154 80

16,367 17,290

Deferredtaxassetshavebeenrecognisedinrespectofalltaxlossesandothertemporarydifferencestotheextentthattheyareregardedasrecoverableagainstfutureprofits.Themovementondeferredtaxassetsintheyearrelatestotheutilisationoftimingdifferencesassociatedwithcapitalallowances.

AmountsowedbyGroupundertakingsincludesloansof£15.8million(2013:£17.0million)thatbearinterestat2.75percent,andwhicharerepayableondemand.

I CREDITORS – AMOUNTS FALLING DUE WITHIN ONE YEAR2014 £000

2013£000

Bankloansandoverdrafts(noteK) 5,600 —Tradecreditors 112 61AmountsowedtoGroupundertakings 5,544 5,730Taxationandsocialsecuritycosts 256 192Deferredconsideration — 2,000Accrualsanddeferredincome 826 401

12,338 8,384

J DEFERRED TAXATIONDeferredtaxassetscomprise:

2014 £000

2013£000

Depreciationinexcessofcapitalallowances 102 33Total deferred tax 102 33Atstartofyear 33 28Deferredtaxcreditinprofitandlossaccountforyear 69 5At end of year 102 33

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OUR FINANCIALS

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

K BANK LOANS AND OVERDRAFTS2014 £000

2013£000

Non-current:Bankloansandoverdrafts(secured) 2,400 —Current:Bankloansandoverdrafts(secured) 5,600 —

Furtherinformationaboutthesefacilitiesisgiveninnote19oftheGroupfinancialstatements.

L CALLED UP SHARE CAPITAL

Number ’000s

2014£000

Number’000s

2013£000

Authorisedordinarysharesof2.5penceeachat31December 200,000 5,000 200,000 5,000Allottedandfullypaid:31December 122,603 3,065 113,902 2,848

POTENTIAL ISSUE OF SHARES

Detailsofthepotentialissueofsharesareshowninnote23totheconsolidatedGroupfinancialstatements.

M RESERVESCalledup

sharecapital£000

Sharepremiumaccount

£000

Capitalredemption

reserve£000

Mergerreserve£000

Profitandlossaccount

£000At1January2014 2,848 4,900 617 2,670 13,692Newshareissue 100 1,900 — — —AdjustmentinrespectofEmployeeShareOwnershipPlan — — — — (30)Acquisition 117 — — 1,883 —Lossforthefinancialyear — — — — (1,853)Valueofemployeeservices — — — — 500IncomefromsharesinGroupundertakings — — — — 4,169Dividendspaid — — — — (1,473)At 31 December 2014 3,065 6,800 617 4,553 15,005

At31December2014thetrusteeoftheEmployeesShareOwnershipPlan(ESOP)held786,420shares(2013:832,000)withamarketvalueof£0.2million(2013:£0.2million).Thenetbookvalueoftheseshareswas£0.2million(2013:£0.2million)andwasdeductedfromtheprofitandlossaccount.

TheGroupenteredintoapartnershipwithHarmonicduring2014andsawHarmonicsubscribefor4,000,000newordinarysharesintheGrouppricedat50pencepernewordinarysharebywayofadirectsubscription.

AspartoftheconsiderationpayableontheacquisitionofPebbleBeachSystemsLtdtheGroupissued4,700,904newordinarysharesvaluedat£2.0million(note27).Thedifferencebetweenthenominalvalueofthesharesandthemarketpriceatissuehasbeenrecognisedinmergerreserves.

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N CONTINGENT LIABILITIES AND COMMITMENTS

TheCompanyispartytoacrossguaranteetosecurebankborrowingsandfacilitiesforcreditcards,bondsandguaranteestocertainmembersoftheGroup.At31December2014therewas£8.0millionofbankborrowingsoutstanding(2013:£nil).

TheCompanyhasnocapitalexpenditurecontractedforbutnotprovidedat31December2014(2013:£nil).

Shareoptionsgrantedbetween5April1999and5April2002underunapprovedschemesaresubjecttoemployers’andemployees’nationalinsuranceonthegainmadeontheexerciseofsuchoptionsbyUKemployees.At31December2014noaccrualhasbeenmadeinrespectofthisliability(2013:£nil).

O RELATED PARTY TRANSACTIONSTheCompanyisexemptfromdisclosingrelatedpartytransactionswithentitiesthatarepartoftheVislinkplcGrouporinvesteesofVislinkplcunderFinancialReportingStandard8.Therearenootherrelatedpartytransactionsotherthanthoserelatingtodirectorsthathavebeendisclosedinnote28totheconsolidatedGroupfinancialstatements.

P COMPANY PRINCIPAL SUBSIDIARIESTheprincipalsubsidiariesoftheCompanyarelistedinnote29totheconsolidatedGroupfinancialstatements.

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OUR FINANCIALS

ANALYSIS OF SHAREHOLDERS AS AT 31 DECEMBER 2014

Holding size rangeNumber of

shareholders

Percentage of total

shareholders

Number of shares (000)

Percentage of issued

share capital1–1,000 3,672 56.6 1,647 1.31,001–5,000 2,050 31.6 4,701 3.85,001–10,000 354 5.4 2,655 2.210,001–100,000 319 4.9 10,378 8.5Over100,000 98 1.5 103,222 84.2

6,493 100.0 122,603 100.0

WARNING TO SHAREHOLDERS: BOILER ROOM SCAMSOverthelastfewyears,manycompanieshavebecomeawarethattheirshareholdershavereceivedunsolicitedphonecallsorcorrespondenceconcerninginvestmentmatters.Thesearetypicallyfromoverseasbased“brokers”whotargetUKshareholders,offeringtosellthemwhatoftenturnouttobeworthlessorhighrisksharesinUSorUKinvestments.Theseoperationsarecommonlyknownas“boilerrooms”.These“brokers”canbeverypersistentandextremelypersuasive.

ThedirectorshavebeenmadeawarethatapproacheshavebeenmadetoVislinkshareholders.Shareholdersareadvisedtobeverywaryofanyunsolicitedadvice,offerstobuysharesatadiscountoroffersoffreecompanyreports.

MoredetailedinformationonthisorsimilaractivitycanbefoundontheFCAwebsitehttp://www.fca.org.uk/orbycallingtheFCAConsumerHelplineon08001116768.

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Annual Report & Accounts for the year ended 31 December 2014Vislink plc

GLOSSARY OF TERMS

‘4G LTE’ 4GLong-TermEvolution,astandardforwirelesscommunicationofhigh-speeddata.

‘4K’ adisplaydeviceorcontenthavingresolutionontheorderof4,000pixels.

‘CHANNEL IN A BOX’ or‘CIAB’afullHDingestandplayoutsolutionforasinglechannel,usedbybroadcastersforbroadcastingtelevisionchannelstoviewers.

‘ENG’ ElectronicNewsGathering.

‘FIA’ FédérationInternationaledel’Automobile.

‘FORMULA E’ anewFIAsingle-seaterchampionship;theworld’sfirstfully-electricracingseries.

‘HD’HighDefinition.

‘HTML5’ HypertextMarkupLanguage5,thefifthversionofstandardprogramminglanguagefordescribingthecontentsandpresentationofwebpages.

‘H.264’and‘H.265’highefficiencyvideocompressionformatsusedfortherecording,compressionanddistributionofvideocontent.

‘IP’InternetProtocol,acommunicationprotocolthatenablesdatapacketstobetransmittedandreceivedovertheInternet.

‘MESH’ anetworkinwhicheachnoderelaysdataforthenetwork.

‘MSAT’ MobileSatellite.

‘MSO’Multi-systemOperator.

‘OEM’OriginalEquipmentManufacturer.

‘OTT’or‘OVER THE TOP’aservicethatisutilisedoveranetworkthatisnotofferedbythatnetworkoperator.

‘PBS’PebbleBeachSystems,adivisionofVislinkplc,incorporatingPebbleBeachSystemsLimitedandPebbleBroadcastSystemsInc.

‘POINT OF VIEW’ includesairborne,UAV,onboardandbodywornvideocollection.

‘RF’RadioFrequency.

‘SD’ StandardDefinition.

‘SNG’ SatelliteNewsGathering.

‘TVU’TVUNetworksCorp.

‘UAV’ UnmannedAerialVehicle.

‘UGV’UnmannedGroundVehicle.

‘UHD’UltraHighDefinition.

‘VCS’ VislinkCommunicationsSystems,adivisionofVislinkplc,incorporatingBroadcastCommunicationLinks,andSurveillance,PublicSafetyandDefenceCommunicationLinks.

‘VMS’ VideoMediaServer.

‘VOD’or‘VIDEO ON DEMAND’ systemswhichallowuserstoselectandwatchvideocontentwhentheychoose.

‘VSAT’ VerySmallApertureTerminal,asatellitecommunicationsstation.

‘VIDEO OVER IP DIVERSITY’Vislink’snextgenerationofvideocollectionsolutions.

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COMPANY INFORMATION

SHAREHOLDER NOTES

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Annual Report & Accounts for the year ended 31 December 2014Vislink plc

SHAREHOLDER INFORMATION

BOARD OF DIRECTORSJohn Hawkins ExecutiveChairman

Ian Davies GroupFinanceDirector

Robin Howe SeniorIndependentNon-executiveDirectorRemunerationCommitteeChairman

Oliver Ellingham IndependentNon-executiveDirectorAuditCommitteeChairman

John Varney IndependentNon-executiveDirector

SECRETARYIan Davies

REGISTERED OFFICEMarlboroughHouseCharnhamLaneHungerfordBerkshireRG170EY

COMPANY REGISTRATION NUMBER04082188

AUDITORSPricewaterhouseCoopers LLP 31GreatGeorgeStreetBristolBS15QD

BANKERSSantander Corporate Banking SolentCorporateBankingCentre1DorsetStreetSouthamptonHampshireSO152DP

LEGAL ADVISERSPinsent Masons LLP 3ColmoreCircusBirminghamB46BH

REGISTRARSComputershare Investor Services PLC ThePavilionsBridgwaterRoadBristolBS996ZZ

NOMINATED ADVISER AND BROKERN+1 Singer Advisory LLP OneBartholomewLaneLondonEC2N2AX

SHAREHOLDER QUERIESAllqueriesregardingshareholdings,dividends,lostsharecertificatesorchangesofaddressshouldbecommunicatedinwritingtoVislinkplc,c/oComputershareInvestorServicesPLC,ThePavilions,BridgwaterRoad,BristolBS996ZZstatingtheregisteredshareholder’snameandaddress.

Telephone:08707036270.

Shareholdersmayalsochecktheirshareholding,dividendpaymentsorupdatetheirpersonaldetailsviatheInvestorCentresectionoftheRegistrars’websiteatwww.computershare.com.ThisisasecuresectionoftheComputersharewebsite.ToaccessyourdetailsyouwillrequiretheuniqueShareholderReferenceNumber,foundonthecorrespondingsharecertificate.

SHAREHOLDER E-COMSWEBSITEForfurtherup-to-dateshareholderinformation,pleasevisitinvestors.vislink.com

NEWS ALERTSToreceivethelatestnewsannouncementsandpressreleasesbyemail,pleasevisitwww.vislink.comandfollowthelinktotheinvestor/shareholderservicespagetoregisteryourdetails.

UNSOLICITED MAIL TheCompanyisrequiredbylawtomakeitsshareregisteravailableonrequesttothepublicandorganisationswhichmayuseitasamailinglistresultinginshareholdersreceivingunsolicitedmail.ShareholderswishingtolimitthereceiptofsuchmailshouldwritetotheMailingPreferenceService,DMAHouse,70MargaretStreet,London,W1W8SSorregisteronlineatwww.mpsonline.org.uk.

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www.vislink.comCOMPANY INFORMATIONStock code: VLK

www.vislink.com

VISLINK PLCMARLBOROUGH HOUSECHARNHAM LANEHUNGERFORDBERKSHIRERG17 0EY

TEL: 01488 685500FAX: 01488 685501

WWW.VISLINK.COM

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