Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on VISLINK PLC. We currently have 30 research reports from 4 professional analysts.
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Shareholder approval sought for revised terms
19 Jan 17
Vislink has modified the terms of the agreement to sell the assets of Vislink Communication Systems (VCS). The total consideration payable remains $16m. This will now be split into an initial cash consideration of $6.5m and $9.5m deferred consideration payable in secured loan notes, which must be redeemed within 45 days of the disposal completing. Shareholder approval of the modified terms is required before the disposal can complete. We leave our estimates, which assume that VCS remains within the group, unchanged and will review them on completion.
Strong growth in software, hardware declining
21 Dec 16
Vislink has announced that trading for FY16 is in line with management expectations, with Q4 exhibiting the usual seasonal uplift. In addition, on Friday, it announced it had entered into a business purchase agreement to sell the assets of Vislink Communications Systems (VCS) for $16m, progressing from the informal agreement in principle announced in October, to a detailed formal agreement. The disposal remains conditional on shareholder approval. We leave our estimates, which assume that VCS remains within the group, unchanged and will review them when shareholder approval has been received.
Conditional sale of hardware division
28 Oct 16
Vislink has announced that it has entered into a conditional agreement to sell the assets of Vislink Communication Systems (VCS) for $16m. The transaction is expected to be subject to shareholder approval and to close by end FY16. The deal frees management to focus on the software division, which reported a strong increase in order intake during H116, in contrast to the hardware division where H116 revenues fell by 19%, taking the division and the group into the red. The deal also solves the debt problem, leaving the group substantially debt-free. Net debt had reached £8.8m at end June and in September the group was fully utilising its £15.0m revolving credit facility, potentially breaching bank covenants.
Opening a new chapter
21 Oct 16
A lot can happen in 1 ½ weeks. Firstly on the 12th October, Vislink announced that its broadcast software arm, Pebble Beach Systems (PBS), had traded strongly – reporting H1 order intake up 53% LFL. Then the following day, Finance Director (Ian Davies) resigned with immediate effect due to personal health-related reasons, with the shares hitting an all-time low of 8p. Finally the stock has almost doubled to 15.5p over the past 2 days, on the back of positive news that the Board has conditionally agreed to dispose of its hardware division, Vislink Communication Systems (VCS), to xG Technology Inc (Nasdaq: XGTI) for $16m (or c. £13m gross, representing 0.4x 2016 sales). We think xG Tech is a logical home for VCS, since it is already a leader in providing secure, always-on, wireless communications for many mission critical sectors, such as the armed forces, emergency services, public safety, telemedicine, etc. The transaction is subject to shareholder approval (date to be confirmed), and if authorised as anticipated, should close by the end of 2016. Proceeds (say £12m net) have been ear-marked to pay back the vast majority of the company’s £15m revolving credit facility with Santander - thus leaving the business “substantially debtfree”.
Decisive action being taken
30 Sep 16
Given July’s profit warning, Vislink’s interims this morning were never going to be pretty. H1’16 orders and turnover fell 21% and 15% respectively to £22.3m and £22.6m, reflecting ongoing difficulties at VSC (where sales dropped -18.5% to £17.2m) as broadcasters continued to divert budgets from infrastructure to content and transition to IP technologies (re delayed orders). Accordingly this pushed group adjusted EBIT to a loss of -£1.1m (vs £2.2m LY) - excluding £2.2m of forex gains which were credited to reserves - with net debt rising to £8.8m from £5.75m as at December. £1.9m of R&D was capitalised vs £1.6m of amortisation charged to the P&L.
Fast-forward on transition to software
28 Jul 16
Vislink has announced that FY16 performance will be materially below previous estimates because of weakness in the hardware division (VCS). Management has instigated a restructuring of this division, accelerating the transformation of the group into one where two-thirds of operating profits are derived from software activities. Progress executing this transformation should prompt a partial recovery in the share price.
The Slide Rule
12 Jan 17
What is The Slide Rule? The Slide Rule has been designed to dramatically simplify the identification of the best companies in the UK small/mid-cap sector by making a quantitative assessment of the relative potential of each company. At its core, The Slide Rule aims to identify those companies that create genuine shareholder value through strong returns on capital and solid growth, but also present a value opportunity with the potential tailwind of earnings momentum. Companies are assessed within a Quality, Value, Growth and Momentum (QVGM) framework.
Visible benefits from restructuring
23 Feb 17
In our view, Monitise’s H1 17 results demonstrate the benefits of management’s ongoing transformation programme. EBITDA profitability was sustained, and accompanied by cash outflow more than halving vs H1 16A. With gross cash at £27.3m, the group’s financial position remains strong. Initial FINkit sales are under “active discussion” and ongoing regulatory initiatives (CMA, PSD2) give further grounds for optimism in the outlook.
Small Cap Breakfast
16 Feb 17
Saffron Energy—Schedule One update. Raising £2.5m, expected Mkt Cap £7.7m. Admission due 24 Feb. Italian Oil & Gas Play Guinness Oil & Gas Exploration—Publication of prospectus. Seeking to raise £50m and invest in 15 exploration companies at launch, with plans to grow the portfolio to 30 positions during its lifetime. Issue closing 23 Feb. Arix Bioscience — Intention to float on the main market from the global healthcare and life science Company supporting medical innovation. Raised £52m in Feb 16 with investors including Woodford Investment Management
Ready to dominate TV distribution and prepared for new competition from Iliad
20 Feb 17
TI has released a good set of Q4 results: Revenues were up organically by 0.8% yoy (vs -5.2% in Q1, -4.2% in Q2 and -1.2% in Q3) while the EBITDA (excluding the negative impact of non-recurring items) has increased sharply by 5.9% yoy as in Q3 but vs a decline of 1.7% in H1! EBITDA has clearly benefited from the actions implemented in the “cost recovery plan” that started in Q2 in the Domestic Business and in Q3 in the Brazil Business. In Italy, revenues were up by 2.7% yoy (vs +1% in Q3 and -1.7% in the H1). The solid, structural recovery of Mobile revenues was confirmed, thanks both to the maintenance of market share and the stabilisation of ARPU levels. But the key point is the EBITDA which has grown by 8.4% (vs 7.9% in Q3, +6.9% in Q2 and -5.2% in Q1). Excluding non-recurring restructuring charges, EBITDA would have grown by +4.5% in 2016, with an EBITDA margin of 45.9%, up 1.9ppts on 2015. In Brazil, Q4 revenues were down organically and at constant change by only 1.7% yoy (vs -5.2% in Q3 and -14% in H1)! The main issue is that the total number of subscribers (c.63m with a market share of 26%) was still down by 4.3% vs end 2015. Note, however, that like its competitors the group has seen its prepaid customer base contract sharply in 2016, due to the adoption of a restrictive policy for the disconnection of inactive customers according to Anatel’s new criteria (the Brazilian National Telecommunications Agency). Q4 EBITDA was up by 2.8% yoy (vs +0.5% in Q3 and -10.9% in H1) with the start in Q3 of cost-cutting operations.
Ronez performing, debt facilities agreed
21 Feb 17
Confirming our view that Ronez is a high-quality maiden acquisition, SigmaRoc today announces that trading and operational performance at the verticallyintegrated aggregates business on the Channel Islands has been strong in the first few weeks of trading since the deal completed in early 2017. January sales volumes are reportedly above budget, a healthy order book is in place for the remainder of the quarter, and requisite back-office systems are being developed faster and at lower cost than initially anticipated. Furthermore, SigmaRoc has agreed terms with Santander Bank for a £2m revolving credit facility and is close to agreeing an £18m term facility – once finalized these debt facilities should see SigmaRoc sufficiently capitalized to progress initial projects in management’s pipeline of growth opportunities. We thus continue to believe that Ronez has potential to generate EBITDA to the group of at least £6m pa as efficiencies continue to be unlocked under the new independent ownership structure, providing SigmaRoc with a firm platform from which to leverage more acquisitions and/or organic investments and thus deliver further earnings growth as it progresses its niche buy-and-build strategy.
New Screen – Consistent Growth + “11 with legs”
17 Dec 15
To represent the theme of “Consistent Growth”, we introduce our second basket of small-cap stocks selected by a screening process. This will sit alongside our first (deep value) basket introduced and described in our note dated 26th May 2015 (Our first screen – 10 deep value stocks to consider). The screening criteria address both the extent AND the quality of growth in EPS and sales, which we consider add a worthwhile additional element to stock selection. The process results in a basket of 25 stocks, the performance of which we will track over time, allowing comparison of investment styles, but also highlighting interesting companies. We have taken a closer look at 11 stocks “11 with legs” (see list on the right) in this screen.