Vislink (LON:VLK) 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.
Industry evolution affected VCS performance
VCS revenues declined by 19% year-on-year because of several factors specific to this division, taking VCS into a loss. H116 PBS revenues were very slightly lower than H115 because of delays to orders being received, although a 53% year-on-year improvement in order intake and the receipt of several significant new orders in September indicate a stronger H2. PBS operating profit reduced by 35%, reflecting investment in development and sales activities to support future growth. Group revenues dropped by 15% to £22.6m. The group shifted from £2.2m adjusted operating profit in H115 to £1.1m adjusted operating loss in H116. Exceptional costs totalling £29.7m relate to inventory, goodwill and IP write-downs associated with a complete restructuring of VCS to align its product offer with the changing industry environment.
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