News Column

Vislink Shares Fall As Hardware Arm Sours Strong Software Performance

September 2, 2014

Sam Unsted

LONDON (Alliance News) - Vislink PLC posted a slight rise in pretax profit on a small fall in revenue for the first half on Tuesday, saying that while it was trading in line with expectations for the year and was optimistic for the future, its was facing an uncertain broadcast market and was hit by delayed surveillance contracts in its hardware division.

Shares in Vislink were down heavily in early trade Tuesday, falling 14% to 44.33 pence to be the second-biggest faller in the AIM All-Share index.

Pretax profit for the video and data company was up to GBP2 million in the six months to June 30 from GBP1.4 million in the same period a year earlier. Revenue for the period was down slightly to GBP27.1 million from GBP28 million a year earlier.

The group said its software business is trading ahead of expectations for the year, a performance it expects to continue in the second half. The unit is expected to prove a major contributor to operating profit in the full year, Vislink said.

The software business was given a further boost on Tuesday after Vislink said Pebble Beach Systems, which it acquired in March this year, sealed a strategic partnership with Harmonic Inc. The deal will allow Harmonic to sell packages integrated with Pebble Beach software to the international broadcast market.

The deal will result in a GBP2 million initial order being placed with Pebble Beach by Harmonic.

But the strong performance from its software arm was offset by the difficulties faced in its hardware division. The unit was hit by the uncertain broadcast market environment and a delay in surveillance contracts due to longer decision-making cycles. Vislink said, however, that it secured a multi-million pound public safety contract earlier this year, which is set to contribute significantly to its operating profit for the year.

The group undertook a restructuring of the division in order to cut costs in the half-year and said it has seen an improving trading trend, with revenue from the division recovering towards the end of the first half.

"Whilst the broadcast market has been challenging for our hardware business, overall, we are encouraged with these results. We have taken timely action to reduce costs in our hardware division and we have seen an improved trading trend, the order book strengthened in second quarter and the orders to sales ratio is better than 1," said Vislink Executive Chairman John Hawkins.

"2014 represents a transitional and transformational year for the group and with the increasing focus on our software division, we believe that this will enhance the group's overall quality of earnings in 2014 and beyond. The group continues to trade in line with market expectations and the board remains confident for the future prospects for the group," Hawkins added.

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Source: Alliance News

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