Why Shares in Vislink plc Plunged Today


Although we don’t believe in timing the market or panicking over every stock fluctuation, understanding how a business is performing, competing and changing is vital to sensible investment.

Shares in Vislink  (LSE: VLK) — a company that provides high-quality video technology to the media, law enforcement and defence markets — are currently down over 15% in trading so far today, following publication of the company’s results for the first half of 2014.

Adjust operating profit fell 15%, down to £1.7m, affected by adverse exchange rates (it was up 3.4% on a constant currency basis), on revenue that dipped 3.2%, to £27.1m. 

Cash generation from operations rose almost 250%, up to £5.5m, and £33.3m of orders were received during the period, marginally down in real terms on H1 2013’s £33.6m.  Within that, orders received from the broadcast market fell 10.2%, to £21.1m, but surveillance-related orders soared 107%, to £11.8m.

The company reported a that its software division is “trading ahead of expectations” and that it expects a “continued strong performance” from it in the second half. But Vislink said that delays to surveillance-related contracts and a broadcast market it described as “uncertain” had affected its hardware business.

Adjusted earnings per share (EPS) were down 33%, at 1.2p, and, as in previous years, the board did not recommend an interim dividend.

Commenting on the results, executive chairman John Hawkins said:

Whilst the broadcast market has been challenging for our hardware business, overall, we are encouraged with these results. 

“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.

In a separate announcement, Vislink revealed that its wholly-owned Pebble Beach subsidiary had signed a partnership agreement, worth an initial £2m of software orders, with Harmonic Inc, a global leader in video delivery infrastructures. Alongside the partnership deal Harmonic will also be subscribing for 4m new shares in Vislink, at 50p per share, giving Harmonic a 3.26% interest. Vislink says it will use the proceeds of the issue to strengthen its balance sheet.

Vislink’s share price is now down 3.2% on this time last year, during which time the AIM All-Share index has gone up 3%. However, over the past five years Vislink has left its index trailing, rising 70% compared with the AIM All-Share’s 32% increase.

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Jon Wallis owns shares of Vislink. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.