TIDMVTC
RNS Number : 1962G
The Vitec Group PLC
04 August 2016
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE
OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE
TO DO THE SAME WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OF SUCH JURISDICTION. THIS ANNOUNCEMENT
CONTAINS INSIDE INFORMATION.
4 August 2016
The Vitec Group plc
Half Year Results to 30 June 2016
Revenue and operating profit* growth
The Vitec Group plc ("Vitec" or "the Group"), the international
provider of products and services for the Broadcast
and Photographic markets, announces its results for
the half year ended 30 June 2016.
Results H1 2016 H1 2015 % Change % Change
at constant
exchange
rates
------------------- ---------- ---------- --------- ------------
Revenue GBP171.1m GBP155.9m +9.7% +3.1%
Operating profit* GBP17.4m GBP16.4m +6.1% -5.2%
Profit before
tax* GBP15.5m GBP14.6m +6.2% -6.4%
Adjusted earnings
per share* 24.5p 23.0p +6.5%
Interim dividend
per share 9.9p 9.5p +4.2%
Operating profit GBP12.6m GBP13.8m
Profit before GBP10.7m GBP12.0m
tax
Basic earnings
per share 17.1p 18.9p
Free cash flow(+) GBP22.6m GBP3.3m
Net debt GBP72.8m GBP81.5m
------------------- ---------- ---------- --------- ------------
Key Points
* First half results in line with our expectations
* Delivering on strategy to drive sales in new
technologies and APAC
* As anticipated, foreign exchange beneficial in period
* Broadcast Division increased revenue despite
anticipated non-repeat of Haigh-Farr higher margin
antennas contracts which impacted profit
* Photographic Division grew both revenue and profit*
with new products through owned distribution channels
* Strong free cash flow(+) of GBP22.6m (H1 2015:
GBP3.3m), improved working capital management
* Full year outlook unchanged. H2 to benefit from Rio
2016 Olympics, full year savings from previously
announced restructuring and, potentially, weaker
Sterling
* Before gain on disposal of property, restructuring
costs and charges associated with acquisition of businesses.
For the Group, the gain on disposal of property in
H1 2016 was GBP0.7 million (H1 2015: GBPnil), restructuring
costs were GBP2.8 million (H1 2015: GBPnil) and charges
associated with acquisition of businesses were GBP2.7
million (H1 2015: GBP2.6 million). The charges associated
with acquisition of businesses are described in Note
1 below.
(+) Free cash flow: cash generated from operations
in the period after net capital expenditure, net interest
and tax paid.
Commenting on the results, Stephen Bird, Group Chief
Executive, said:
"Revenue and profit* grew in the first half of the
year in line with our expectations.
The Broadcast Division continued to develop and grow
its new technology businesses by investing in product
development and launching a number of innovative products
and services. As expected, the Division's performance
reflected the non-repeat of a strong prior period performance
by the Haigh-Farr antennas business.
The Photographic Division performed well in the first
half of the year. We grew revenue and operating profit*,
benefitting from recently launched products and investment
in our owned distribution channels.
The Board's expectations for the full year are unchanged.
We anticipate that the Group's performance in the second
half of the year will benefit from the Rio 2016 Olympics,
full year savings from the previously announced restructuring
plans, and, potentially, from weaker Sterling."
For further information please contact: The Vitec Group plc Telephone: 020 8332
4600
Stephen Bird, Group Chief
Executive
Paul Hayes, Group Finance
Director
Vitec will present its results to analysts at 10.00
am on Thursday, 4 August 2016. An audio recording of
the presentation, along with the presentation slides,
will be available on our website after the meeting.
Users can pre-register to access the recording and
slides using the following link: www.vitecgroup.com/half_year_results_2016
Notes to Editors:
Vitec is a global provider of premium branded products
and services to the Broadcast and Photographic markets.
Vitec is listed on the London Stock Exchange with 2015
revenue of GBP317.8 million.
The Group is organised in two Divisions:
The Broadcast Division designs, manufactures and distributes
premium branded products for broadcasting, film and
video production for broadcasters and independent content
creators. It also provides premium services including
equipment rental and technical solutions to TV production
teams, film crews and corporate enterprises.
The Photographic Division designs, manufactures and
distributes premium branded equipment for photographic
and video cameras and provides dedicated solutions
to professional and non-professional image takers.
More information can be found at: www.vitecgroup.com.
Notes 1. Charges associated with acquisition of businesses
were GBP2.7 million (H1 2015: GBP2.6 million).
These consisted of GBP2.7 million for the amortisation
of acquired intangible assets (H1 2015: GBP2.5
million) and GBP0.2 million of transaction costs
relating to acquisition of businesses (H1 2015:
GBP0.1 million), net of a GBP0.2 million receipt
in relation to the purchase price adjustment for
Autocue (acquired 2014), that was agreed with
the vendors during the period (H1 2015: GBPnil).
2. This statement is based on information sourced
from management estimates.
3. Current market exchange rates as at 2 August 2016:
GBP1 = $1.33, GBP1 = EUR1.19, EUR1 = $1.12, GBP1
= Yen134.
4. H1 2016 average exchange rates: GBP1 = $1.43,
GBP1 = EUR1.29, EUR1 = $1.11, GBP1 = Yen160.
5. H1 2015 average exchange rates: GBP1 = $1.53,
GBP1 = EUR1.37, EUR1 = $1.12, GBP1 = Yen183.
H1 2016 Management & Financial Review
Revenue increased by 9.7% to GBP171.1 million (H1 2015:
GBP155.9 million) and operating profit* was 6.1% higher
at GBP17.4 million (H1 2015: GBP16.4 million). This
included a benefit from foreign exchange and at constant
exchange rates revenue grew 3.1% while operating profit*
declined 5.2%. This performance includes growth in
sales of higher technology products and services, supplemented
by benefits from restructuring. This was partly offset
by investments in product development within our higher
technology businesses and the anticipated non-repeat
of a strong performance by our Haigh-Farr antennas
business in the prior period.
The Broadcast Division grew revenue by 10.6%. There
was growth in the broadcast services business, and
we have continued to increase revenue from higher technology
products including wireless transmitters and receivers,
camera monitors and mobile power. This revenue growth
includes a benefit from foreign exchange and was partly
offset by lower revenue in the higher margin Haigh-Farr
business. The Division's operating profit* decreased
by 12.4%.
The Photographic Division grew sales by 8.5%. This
included a number of recently launched new product
ranges, growth through our owned distribution channels
and favourable foreign exchange. Operating profit*
grew by 32.8% as a result of these factors and the
benefit from restructuring actions taken this year.
The Group's gross margin* % was lower than the prior
period at 39.4% (H1 2015: 41.2%) mainly reflecting
revenue growth at lower margin in the broadcast services
business, as well as prior period higher margin contracts
in Haigh-Farr. After adjusting for these factors, gross
margin* % was in line with the prior period.
Operating expenses* were GBP2.1 million higher than
in H1 2015, including an adverse currency effect of
GBP2.4 million. After adjusting for this and GBP0.3
million of incremental costs from acquisitions, operating
expenses* were GBP0.6 million lower than the prior
period. This mainly reflects restructuring savings,
partly offset by investments in new and higher technology
products. The investment in new product development
and innovation as a percentage of Group product sales
was broadly in line with the prior period at 4.1% (H1
2015: 4.6%).
There was a restructuring charge of GBP2.8 million
in the first half of 2016 relating to the actions summarised
in our 2015 full year results announcement. These activities
are progressing to plan and are substantially complete,
with savings of GBP2.5 million in the first half of
the year. There was also a GBP0.7 million gain, which
was excluded from adjusted operating profit, on the
sale of the manufacturing site in Bury St Edmunds ("Bury").
Proceeds of GBP3.9 million were received in January
this year. We are planning to vacate the site during
2017 and move to a new lean manufacturing facility
in a nearby leased site.
As expected, there was a net foreign exchange benefit
on the Group's operating profit* versus the same period
last year due to a stronger US Dollar and Euro. The
result of the EU referendum has caused some uncertainty
and there has been volatility in currency exchange
rates. If exchange rates remain at current levels Vitec
would continue to realise a net currency benefit in
the second half of the year mainly from the translation
of its results into Sterling. There would also be transactional
benefits in the medium term as more beneficial exchange
rates flow through the Group's hedging positions.
Profit before tax* of GBP15.5 million was higher than
the prior period (H1 2015: GBP14.6 million). Adjusted
earnings per share* increased by 6.5% to 24.5 pence
per share (H1 2015: 23.0 pence per share). Group profit
before tax of GBP10.7 million (H1 2015: GBP12.0 million)
was after GBP2.8 million of restructuring costs (H1
2015: GBPnil), the GBP0.7 million gain on the sale
of the Bury site (H1 2015: GBPnil) and GBP2.7 million
charges associated with acquisition of businesses (H1
2015: GBP2.6 million).
Free cash flow(+) of GBP22.6 million (H1 2015: GBP3.3
million) is reported after a net GBP3.9 million of
cash outflows on restructuring actions (H1 2015: GBP1.4
million). The strong free cash flow(+) in the first
half of the year includes the benefits from working
capital management actions, including timing of payment
on major contracts, and the proceeds of GBP3.9 million
from the sale of the Bury site, partially offset by
restructuring cash outflows, and higher net interest
and tax payments. There was a total cash inflow of
GBP9.9 million (H1 2015: GBP12.1 million outflow) after
investing GBP5.1 million in acquisitions (H1 2015:
GBP8.6 million), including a GBP2.8 million final payment
of deferred consideration on Teradek and GBP6.7 million
of dividend payments (H1 2015: GBP6.5 million).
Net debt at 30 June 2016 was GBP72.8 million (30 June
2015: GBP81.5 million), including a net GBP6.4 million
increase from foreign exchange due to the significant
weakening of Sterling late in June 2016. The Group's
balance sheet remains strong with an improved net debt
to EBITDA ratio of 1.3 times (30 June 2015: 1.5 times).
A new five year GBP125 million multi-currency Revolving
Credit Facility with an improved margin was agreed
with five banks on 5 July 2016.
The Board has declared an interim dividend of 9.9 pence
per share (H1 2015: 9.5 pence per share). The dividend
will be paid on Friday 21 October 2016 to shareholders
on the register at the close of business on Friday
23 September 2016.
* Before gain on disposal of property, restructuring
costs and charges associated with acquisition of businesses
as defined on page 1 of this announcement.
+ Cash generated from operations in the period after
net capital expenditure, net interest and tax paid.
Strategy
Vitec's strategy is to grow the Group's core Broadcast
and Photographic business by leveraging its premium
brands and strong market positions. This includes driving
opportunities from rapidly changing technology and
customer needs by developing and launching new premium
products and services. There was good progress in the
first half of 2016, with a number of new technology
products recently launched across both Divisions.
We continue to focus on the growing number of independent
content creators and content sharing opportunities
that benefit from the increase in the capture and sharing
of high quality images. There is growing demand for
our products within enterprise video applications for
corporates, houses of worship, educational establishments
and governmental bodies. The Group also continues to
increase resources and brand presence in the APAC region
in both our Broadcast and Photographic Divisions. We
believe that APAC is a particularly attractive medium-term
growth market with good opportunities and we grew revenue
by GBP3.9 million to GBP31.0 million in this important
region in the first half of the year.
Vitec has a broad geographic spread and a direct presence
in 10 countries: the UK, the US, Costa Rica, France,
Germany, Italy, the Netherlands, Japan, China and Singapore.
In H1 2016, 48% of our revenues by destination came
from North America, with the remainder split between
Europe 31%, APAC 18%, and Rest of World 3%.
The Group continues to identify and make appropriate,
value-adding acquisitions. In January 2016 we acquired
Provak, our former distribution partner in the Netherlands,
for a net consideration of GBP0.9 million. In April
2016 we acquired the business and some of the assets
of Offhollywood Digital, LLC for an initial consideration
of GBP1.6 million. Offhollywood provides camera-back
modules for RED cameras and other services which complement
our higher technology businesses.
Broadcast Division
The Broadcast Division designs, manufactures and distributes
premium branded products for broadcasting, film and
video production for broadcasters and independent content
creators. It also provides premium services including
equipment rental and technical solutions to TV production
teams, film crews and corporate enterprises.
Broadcast Division H1 2016 H1 2015 % Change % Change
at constant
exchange
rates
-------------------- ---------- --------- --------- -------------
Revenue GBP102.3m GBP92.5m +10.6% +4.0%
Operating Profit* GBP8.5m GBP9.7m -12.4% -11.7%
-220 -160
Operating Margin* 8.3% 10.5% bps bps
-------------------- ---------- --------- --------- -------------
* Before gain on disposal of property, restructuring
costs and charges associated with acquisition of businesses
as defined on page 1 of this announcement.
Revenue for H1 2016 was GBP102.3 million, an increase
of 10.6% on the prior period. At constant exchange
rates revenue grew by 4.0% on the prior period.
The Broadcast Division has seen a positive US market
offsetting more challenging conditions in EMEA. The
Division continued to increase its sales of higher
technology products including wireless transmitters
and receivers, camera monitors and mobile power. Our
mobile power business has grown, with the US broadcast
battery market performing well and gaining a number
of large medical mobile power orders. This was offset
by lower sales of large camera supports.
The Division launched a number of innovative products
in the first half of the year, including large High
Dynamic Range (HDR) monitors and virtual reality capabilities.
This was further enhanced with the acquisition of the
business and some of the assets of Offhollywood Digital,
LLC in April 2016. Offhollywood provides camera-back
modules for RED cameras and other services to a similar
customer base to that serviced by our existing higher
technology businesses.
Revenue from the equipment rental and broadcast services
business was higher than the same period last year
with the award of a significant contract with the NFL
for project management and technical support to upgrade
the communication infrastructure at all of their stadiums.
This contract demonstrates the technological capabilities
of our business. It includes high material costs with
a low pass-through margin, resulting in a lower gross
margin* versus the prior period. We are also well positioned
to benefit from supporting the Olympics in Rio de Janeiro
in the second half of the year.
The Division's results were also impacted by the anticipated
lower volumes and planned cost investments within the
higher margin Haigh-Farr antennas business after strong
sales in the same period in 2015.
Operating profit* decreased by GBP1.2 million to GBP8.5
million. This includes continued investment in the
engineering resources at our wireless products and
camera monitor businesses. As anticipated this investment
in future growth is impacting margins in the short
term and this is partly offset by savings from previously
announced restructuring activities.
Photographic Division
The Photographic Division designs, manufactures and
distributes premium branded equipment for photographic
and video cameras and provides dedicated solutions
to professional and non-professional image takers.
This consists primarily of camera supports, tripods,
camera bags, lighting supports, LED lights, lighting
controls and filters. It also supplies an expanding
range of premium accessories for smartphones, action
cameras and drones.
Photographic Division H1 2016 H1 2015 % Change % Change
at constant
exchange
rates
----------------------- --------- --------- --------- -------------
Revenue GBP68.8m GBP63.4m +8.5% +1.6%
Operating Profit* GBP8.9m GBP6.7m +32.8% +4.1%
+230
Operating Margin* 12.9% 10.6% bps +30 bps
----------------------- --------- --------- --------- -------------
* Before restructuring costs and charges associated
with acquisition of businesses as defined on page 1
of this announcement.
The Photographic Division grew revenue and operating
profit* during the first half of 2016. We believe that
we have continued to outperform the photographic market
by launching innovative new products.
Revenue increased by 8.5% to GBP68.8 million, and was
1.6% higher than the prior period at constant exchange
rates. This included continued growth through our owned
distribution channels offsetting lower sales through
independent distributors. This demonstrates the strength
of the Group's distribution network and reflects the
benefit from investments in our growing e-commerce
activities and new products to drive sales.
Our Photographic Division recently launched a number
of new products including the TwistGrip that connects
all smartphones to any support, and accessories for
the Manfrotto Digital Director that enables an iPad
to control camera equipment. We are also working with
Apple on expanding our product offering in its stores
which will enable smartphone users to take better photographs
and videos.
Operating profit* increased by GBP2.2 million to GBP8.9
million and operating margin* improved by 230 bps.
The Division has continued to invest in its owned distribution
channels, including the acquisition of Provak, our
former distribution partner in the Netherlands, in
January 2016. It is also increasing its presence in
the APAC region while delivering efficiencies. Our
initiatives to improve margins include the restructuring
actions taken this year and the continued implementation
of lean processes and focussed cost control.
Principal risks and uncertainties
The principal risks and uncertainties which may affect
our performance are unchanged from those set out on
pages 18 and 19 of the Annual Report & Accounts 2015.
The Directors continue to regard these as the principal
risks and uncertainties facing the Group. We are continuing
to monitor the recent decision by the UK to exit the
EU and its impact on the Group's principal risks and
uncertainties. We have a well-established framework
for reviewing and assessing these risks on a regular
basis, and have put in place appropriate processes
and procedures to mitigate against them. However,
no system of control or mitigation can eliminate all
risks. In summary, the principal risks facing the
Group are around:
-- Demand for Vitec's products
-- New markets and channels of distribution
-- Acquisitions
-- Pricing pressure
-- Dependence on key suppliers
-- Dependence on key customers
-- People
-- Laws and regulations
-- Reputation of Vitec Group
-- Exchange rates
-- Business Continuity
-- Effectiveness and impact of restructuring projects
Forward-looking statements
This announcement contains forward-looking statements
with respect to the financial condition, performance,
position, strategy, results and plans of The Vitec
Group plc (the "Group" or the "Company") based on
Management's current expectations or beliefs as well
as assumptions about future events. These forward-looking
statements are not guarantees of future performance.
Undue reliance should not be placed on forward-looking
statements because, by their very nature, they are
subject to known and unknown risks and uncertainties
and can be affected by other factors that could cause
actual results, and the Group's plans and objectives,
to differ materially from those expressed or implied
in the forward-looking statements. The Company undertakes
no obligation to publically revise or update any forward-looking
statements or adjust them for future events or developments.
Nothing in this announcement should be construed as
a profit forecast.
The information in this announcement does not constitute
an offer to sell or an invitation to buy shares in
the Company in any jurisdiction or an invitation or
inducement to engage in any other investment activities.
The release or publication of this announcement in
certain jurisdictions may be restricted by law. Persons
who are not resident in the United Kingdom or who
are subject to other jurisdictions should inform themselves
of, and observe, any applicable requirements.
This announcement contains brands and products that
are protected in accordance with applicable trademark
and patent laws by virtue of their registration.
Responsibility statement of the Directors in respect
of the Half Year Results to 30 June 2016
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been
prepared in accordance with IAS 34 Interim Financial
Reporting as adopted by the EU.
The Half Year Results announcement report includes
a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency
Rules, being an indication of important events that
have occurred during the first six months of the current
financial year and their impact on the condensed set
of financial statements; and a description of the
principal risks and uncertainties for the remaining
six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency
Rules, being related party transactions that have
taken place in the first six months of the current
financial year and that have materially affected the
financial position or performance of the Group during
that period; and any changes in the related party
transactions described in the last annual report that
could do so.
Outlook
The Board's expectations for the full year are unchanged.
We anticipate that the Group's performance in the
second half of the year will benefit from the Rio
2016 Olympics, full year savings from the previously
announced restructuring plans, and, potentially, from
weaker Sterling.
For and on behalf of the Board Stephen Bird Paul Hayes
Group Chief Executive Group Finance Director
3 August 2016
INDEPENT REVIEW REPORT TO THE VITEC GROUP PLC
Introduction
We have been engaged by the company to review the
condensed set of financial statements in the Half
Year results announcement for the six months ended
30 June 2016 which comprises Condensed Consolidated
Income Statement, the Condensed Consolidated Balance
Sheet, the Consolidated Statement of Comprehensive
Income, the Consolidated Statement of Changes in Equity,
the Condensed Consolidated Statement of Cash Flows
and the related explanatory notes. We have read the
other information contained in the Half Year results
announcement and considered whether it contains any
apparent misstatements or material inconsistencies
with the information in the condensed set of financial
statements.
This report is made solely to the company in accordance
with the terms of our engagement to assist the company
in meeting the requirements of the Disclosure and
Transparency Rules ("the DTR") of the UK's Financial
Conduct Authority ("the UK FCA"). Our review has been
undertaken so that we might state to the company those
matters we are required to state to it in this report
and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility
to anyone other than the company for our review work,
for this report, or for the conclusions we have reached.Directors' responsibilities
The Half Year results announcement is the responsibility
of, and has been approved by, the directors. The directors
are responsible for preparing the Half Year results
announcement in accordance with the DTR of the UK
FCA.
As disclosed in note 1, the annual financial statements
of the group are prepared in accordance with IFRSs
as adopted by the EU. The condensed set of financial
statements included in this Half Year results announcement
has been prepared in accordance with IAS 34 Interim
Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a
conclusion on the condensed set of financial statements
in the Half Year results announcement based on our
review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410
Review of Interim Financial Information Performed
by the Independent Auditor of the Entity issued by
the Auditing Practices Board for use in the UK. A
review of interim financial information consists of
making enquiries, primarily of persons responsible
for financial and accounting matters, and applying
analytical and other review procedures. A review is
substantially less in scope than an audit conducted
in accordance with International Standards on Auditing
(UK and Ireland) and consequently does not enable
us to obtain assurance that we would become aware
of all significant matters that might be identified
in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention
that causes us to believe that the condensed set of
financial statements in the Half Year results announcement
for the six months ended 30 June 2016 is not prepared,
in all material respects, in accordance with IAS 34
as adopted by the EU and the DTR of the UK FCA.
Adrian Wilcox
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
3 August 2016
Condensed Consolidated Income
Statement
For the half year ended 30 June
2016
Half Half Year
year year to 31
to 30 to 30 December
June June 2015
2016 2015
Notes GBPm GBPm GBPm
------ -------- ------- ----------
Revenue 2 171.1 155.9 317.8
Cost of sales (103.9) (91.6) (188.9)
-------------------------------------------------------------- ------ -------- ------- ----------
Gross profit 67.2 64.3 128.9
Gain on sale of property, plant 0.7 - -
and equipment
Operating expenses (55.3) (50.5) (106.5)
-------------------------------------------------------------- ------ -------- ------- ----------
Operating profit 12.6 13.8 22.4
-------------------------------------------------------------- ------ -------- ------- ----------
Comprising
* Operating profit before gain on disposal of property,
restructuring costs and charges associated with
acquisition of businesses 17.4 16.4 35.4
- Gain on disposal of property 3 0.7 - -
- Restructuring costs 3 (2.8) - (4.9)
- Charges associated with acquisition
of businesses 3 (2.7) (2.6) (8.1)
-------------------------------------------------------------- ------ -------- ------- ----------
12.6 13.8 22.4
-------------------------------------------------------------- ------ -------- ------- ----------
Net finance expense 4 (1.9) (1.8) (3.9)
Profit before tax 10.7 12.0 18.5
-------------------------------------------------------------- ------ -------- ------- ----------
Comprising
* Profit before tax, excluding gain on disposal of
property, restructuring costs and charges associated
with acquisition of businesses 15.5 14.6 31.5
* Gain on disposal of property 3 0.7 - -
* Restructuring costs 3 (2.8) - (4.9)
* Charges associated with acquisition of businesses 3 (2.7) (2.6) (8.1)
10.7 12.0 18.5
-------------------------------------------------------------- ------ -------- ------- ----------
Taxation 7 (3.1) (3.6) (5.5)
-------------------------------------------------------------- ------ -------- ------- ----------
Profit for the period attributable
to owners of the parent 7.6 8.4 13.0
-------------------------------------------------------------- ------ -------- ------- ----------
Earnings per share 5
Basic earnings per share 17.1p 18.9p 29.3p
Diluted earnings per share 17.0p 18.8p 29.2p
Average exchange rates
Euro 1.29 1.37 1.38
US$ 1.43 1.53 1.53
Consolidated Statement of Comprehensive
Income
For the half year ended 30 June
2016
Half Half Year
year year to 31
to 30 to 30 December
June June 2015
2016 2015
GBPm GBPm GBPm
----------------------------------------- ------- ------- ----------
Profit for the period 7.6 8.4 13.0
Other comprehensive income:
Items that will not be reclassified
to profit or loss:
Remeasurements of defined benefit
obligation (3.6) 0.9 1.5
Related tax 0.5 (0.2) (0.5)
Items that are or may be reclassified
to profit or loss:
Currency translation differences
on foreign currency subsidiaries 22.8 (5.8) 4.2
Net investment hedges - net (loss)/gain (9.9) 2.9 (1.5)
Cash flow hedges - reclassified
to the Income Statement 0.5 0.6 0.6
Cash flow hedges - effective portion
of changes in fair value (5.2) 0.9 (1.5)
Related tax 0.9 (0.3) 0.5
Other comprehensive income/(expense),
net of tax 6.0 (1.0) 3.3
----------------------------------------- ------- ------- ----------
Total comprehensive income for the
period attributable to owners of
the parent 13.6 7.4 16.3
----------------------------------------- ------- ------- ----------
Condensed Consolidated Balance
Sheet
As at 30 June 2016
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
---------------------------------- -------- -------- ------------
Assets
Non-current assets
Intangible assets 96.9 89.5 90.7
Property, plant and equipment 57.1 52.5 53.8
Trade and other receivables 0.7 0.6 0.6
Derivative financial instruments - 1.0 0.1
Deferred tax assets 17.8 12.8 15.2
172.5 156.4 160.4
---------------------------------- -------- -------- ------------
Current assets
Assets held for sale - - 1.0
Inventories 61.4 59.0 58.9
Trade and other receivables 59.2 51.7 50.7
Derivative financial instruments - 2.2 0.5
Current tax assets 1.0 0.5 0.9
Cash and cash equivalents 20.9 11.0 13.6
142.5 124.4 125.6
---------------------------------- -------- -------- ------------
Total assets 315.0 280.8 286.0
---------------------------------- -------- -------- ------------
Liabilities
Current liabilities
Bank overdrafts - 0.4 1.1
Interest-bearing loans and
borrowings 0.1 0.2 0.2
Trade and other payables 55.5 43.7 43.5
Derivative financial instruments 5.1 2.4 1.7
Current tax liabilities 7.7 8.1 6.6
Provisions 4.0 2.6 8.1
72.4 57.4 61.2
---------------------------------- -------- -------- ------------
Non-current liabilities
Interest-bearing loans and
borrowings 93.6 91.9 88.6
Derivative financial instruments 1.6 0.5 0.5
Other payables - 0.2 -
Post-employment obligations 10.1 6.6 6.1
Provisions 0.7 2.2 1.2
Deferred tax liabilities 2.4 1.9 2.1
---------------------------------- --------
108.4 103.3 98.5
---------------------------------- -------- -------- ------------
Total liabilities 180.8 160.7 159.7
---------------------------------- -------- -------- ------------
Net assets 134.2 120.1 126.3
---------------------------------- -------- -------- ------------
Equity
Share capital 8.9 8.9 8.9
Share premium 14.5 13.5 14.3
Translation reserve 8.6 (9.9) (4.3)
Capital redemption reserve 1.6 1.6 1.6
Cash flow hedging reserve (4.8) 0.6 (1.0)
Retained earnings 105.4 105.4 106.8
---------------------------------- -------- -------- ------------
Total equity 134.2 120.1 126.3
---------------------------------- -------- -------- ------------
Balance Sheet exchange rates
Euro 1.20 1.41 1.36
US$ 1.34 1.57 1.48
Consolidated Statement of Changes in Equity
For the half year ended 30 June 2016
Cash
Capital flow
Share Share Translation redemption hedging Retained Total
capital premium reserve reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------------
Balance at 1 January
2016 8.9 14.3 (4.3) 1.6 (1.0) 106.8 126.3
Total comprehensive
income for the
period
Profit for the
period - - - - - 7.6 7.6
Other comprehensive
income/(expense)
for the period - - 12.9 - (3.8) (3.1) 6.0
Contributions by
and distributions
to owners
Dividends paid - - - - - (6.7) (6.7)
New shares issued - 0.2 - - - - 0.2
Share-based payment
charge, net tax - - - - - 0.8 0.8
---------------------- ---------- ---------- ------------- ------------- ---------- ----------- ---------
Balance at 30 June
2016 8.9 14.5 8.6 1.6 (4.8) 105.4 134.2
---------------------- ---------- ---------- ------------- ------------- ---------- ----------- ---------
Cash
Capital flow
Share Share Translation redemption hedging Retained Total
capital premium reserve reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------------
Balance at 1 January
2015 8.9 13.4 (7.0) 1.6 (0.6) 102.3 118.6
Total comprehensive
income for the
period
Profit for the
period - - - - - 8.4 8.4
Other comprehensive
income/(expense)
for the period - - (2.9) - 1.2 0.7 (1.0)
Contributions by
and distributions
to owners
Dividends paid - - - - - (6.5) (6.5)
New shares issued - 0.1 - - - - 0.1
Share-based payment
charge, net tax - - - - - 0.5 0.5
---------------------- ---------- ---------- ------------- ------------- ---------- ----------- ---------
Balance at 30 June
2015 8.9 13.5 (9.9) 1.6 0.6 105.4 120.1
---------------------- ---------- ---------- ------------- ------------- ---------- ----------- ---------
Condensed Consolidated Statement
of Cash Flows
For the half year ended 30 June
2016
Half Half Year
year year to 31
to 30 to 30 December
June June
2016 2015 2015
Notes GBPm GBPm GBPm
----------------------------------------------- ------- -------- -------- -----------
Cash flows from operating activities
Profit for the period 7.6 8.4 13.0
Adjustments for:
Taxation 3.1 3.6 5.5
Depreciation 7.2 6.8 13.8
Amortisation of intangible assets 4.2 3.6 7.8
Impairment losses on intangible
assets - - 0.2
Net gain on disposal of property,
plant and equipment and
software (1.0) (0.7) (1.2)
Fair value gains on derivative
financial instruments 0.4 0.3 0.1
Share-based payment charge 0.8 0.5 1.1
Fair value adjustment to contingent
consideration on previous acquisitions (0.2) - 2.6
Net finance expense 1.9 1.8 3.9
----------------------------------------------- ------- -------- -------- -----------
Operating profit before changes
in working capital and provisions 24.0 24.3 46.8
(Increase)/decrease in inventories 4.1 (5.8) (3.0)
(Increase)/decrease in receivables (2.8) (1.9) 0.8
(Decrease)/increase in payables 7.3 (1.2) (3.0)
(Decrease)/increase in provisions (1.4) (2.0) 0.1
Cash generated from operating
activities 31.2 13.4 41.7
Interest paid (2.1) (1.9) (4.0)
Tax paid (2.2) (0.2) (5.6)
-----------------------------------------------
Net cash from operating activities 26.9 11.3 32.1
----------------------------------------------- ------- -------- -------- -----------
Cash flows from investing activities
Proceeds from sale of property,
plant and equipment and software 5.7 1.9 4.7
Purchase of property, plant and
equipment (8.7) (7.5) (16.4)
Capitalisation of software and
development costs (1.3) (2.4) (4.2)
Acquisition of businesses, net
of cash acquired 8 (5.1) (8.6) (9.0)
Cash outflow on previous disposal (1.1) (0.4) (0.7)
Net cash used in investing activities (10.5) (17.0) (25.6)
----------------------------------------------- ------- -------- -------- -----------
Cash flows from financing activities
Proceeds from the issue of shares 0.2 0.1 0.9
(Repayment of)/proceeds from interest-bearing
loans and borrowings (5.0) 16.2 8.5
Dividends paid (6.7) (6.5) (10.7)
-----------------------------------------------
Net cash used in financing activities (11.5) 9.8 (1.3)
----------------------------------------------- ------- -------- -------- -----------
Increase in cash and cash equivalents 9 4.9 4.1 5.2
Cash and cash equivalents at 1
January 12.5 7.9 7.9
Effect of exchange rate fluctuations
on cash held 3.5 (1.4) (0.6)
----------------------------------------------- ------- -------- -------- -----------
Cash and cash equivalents at the
end of period (1) 9 20.9 10.6 12.5
----------------------------------------------- ------- -------- -------- -----------
(1) Cash and cash equivalents include
bank overdrafts in the balance sheet
1 Accounting policies
Reporting entity
The Vitec Group plc (the "Company") is a company domiciled
in the United Kingdom. These condensed consolidated
interim financial statements as at and for the half
year ended 30 June 2016 comprise the Company and its
subsidiaries (together referred to as the "Group").
Basis of preparation and statement of compliance
These condensed consolidated interim financial statements
have been prepared in accordance with IAS 34 Interim
Financial Reporting. The accounting policies applied
in the preparation of this interim financial information
are consistent with the policies applied by the Group
in the consolidated financial statements as at and
for the year ended 31 December 2015 which were prepared
in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union.
It does not include all of the information required
for full annual financial statements and should be
read in conjunction with the consolidated financial
statements of the Group as at and for the year ended
31 December 2015.
The comparative figures for the year ended 31 December
2015 do not constitute statutory accounts for the
purpose of section 435 of the Companies Act 2006.
The auditors have reported on the 2015 accounts, and
these have been filed with the Registrar of Companies;
their report was unqualified, did not include a reference
to any matters to which the auditors drew attention
by way of emphasis, and did not contain a statement
under section 498(2) or (3) of the Companies Act 2006.
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions
that affect the application of accounting policies
and the reported amounts of assets and liabilities,
income and expense. Actual results may differ from
these estimates.
In preparing these condensed consolidated interim
financial statements, the significant judgements made
by management in applying the Group's accounting policies
and the key sources of estimation uncertainty were
the same as those that applied to the consolidated
financial statements as at and for the year ended
31 December 2015.
These condensed consolidated interim financial statements
were approved by the Board of Directors on 3 August
2016.
Going concern
The Directors have made appropriate enquiries and
consider that the Group has adequate resources to
continue in operational existence for the foreseeable
future, which comprises the period of at least 12
months from the date of the half year results. There
are no material uncertainties that would prevent the
Directors from being unable to make this statement.
Accordingly, the Directors continue to adopt the going
concern basis in preparing the financial statements.
Changes in Accounting Policies
There are a number of new standards, amendments to
standards and interpretations that are not yet effective
for the half year ended 30 June 2016, and have not
been adopted early in preparing these condensed consolidated
interim financial statements. None of these are anticipated
to have any material impact on these condensed consolidated
interim financial statements.
2. Segment reporting
Reportable segments
For the half year
ended 30 June 2016
For the half year to 30 June
Broadcast Photographic Corporate Consolidated
and unallocated
-------------------------------- --------------- --------------- -------------------- ----------------------
2016 2015 2016 2015 2016 2015 2016 2015
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------- ------- ------ ------- ------ --------- --------- -------------- ------
Revenue from external
customers:
Sales 78.7 78.3 68.8 63.4 - - 147.5 141.7
Services 23.6 14.2 - - - - 23.6 14.2
-------------------------------- ------- ------ ------- ------ --------- --------- -------------- ------
Total revenue from
external customers 102.3 92.5 68.8 63.4 - - 171.1 155.9
Inter-segment revenue
(1) 0.2 0.3 0.1 0.1 (0.3) (0.4) - -
------- ------ ------- ------ --------- ---------
Total revenue 102.5 92.8 68.9 63.5 (0.3) (0.4) 171.1 155.9
-------------------------------- ------- ------ ------- ------ --------- --------- -------------- ------
Segment result 8.5 9.7 8.9 6.7 - - 17.4 16.4
Gain on disposal
of property 0.7 - - - - - 0.7 -
Restructuring costs (1.6) - (1.2) - - - (2.8) -
Fair value adjustment
to contingent consideration
on previous acquisitions 0.2 - - - - - 0.2
Transaction costs
relating to acquisition
of businesses (0.2) (0.1) - - - - (0.2) (0.1)
Amortisation of
acquired intangible
assets (2.4) (2.3) (0.3) (0.2) - - (2.7) (2.5)
-------------------------------- ------- ------ ------- ------ --------- --------- -------------- ------
Operating profit 5.2 7.3 7.4 6.5 - - 12.6 13.8
Net finance expense (1.9) (1.8)
Taxation (3.1) (3.6)
-------------- ------
Profit for the
year 7.6 8.4
-------------------------------- ------- ------ ------- ------ --------- --------- -------------- ------
(1) Inter-segment pricing is determined on an arm's
length basis.
Geographical segments
For the half year ended 30
June 2016
Half year Half year Year to
to 30 to 30 31 December
June June
2016 2015 2015
GBPm GBPm GBPm
------------------------------------------------- --------------- -------------------- --------------
Analysis of revenue from external
customers, by location of
customer
United Kingdom 16.2 16.0 31.5
The rest of Europe 36.3 32.9 64.0
North America 82.4 70.5 150.2
Asia Pacific 31.0 27.1 55.9
The rest of the World 5.2 9.4 16.2
------------------------------------------------- --------------- -------------------- --------------
Total revenue from external
customers 171.1 155.9 317.8
------------------------------------------------- --------------- -------------------- --------------
The Group's operating segments are located in several
geographical locations, and sell products and services
on to external customers in all parts of the world.
3 Gain on disposal of property, restructuring costs
and charges associated with acquisition of businesses
Gain on disposal of property, restructuring costs
and charges associated with acquisition of businesses
are excluded from key performance measures in order
to more accurately show the underlying current business
performance of the Group in a consistent manner. This
also reflects how the business is managed and measured
on a day-to-day basis. Restructuring costs include
employment termination and other rationalisation costs.
Charges associated with acquisition of businesses
include non-cash charges such as amortisation of acquired
intangible assets, and cash charges such as transaction
costs and fair value adjustments to contingent consideration
since date of acquisition.
Gain on disposal of property, restructuring costs
and charges associated with acquisition of businesses
comprise the following:
Half year Half year Year to
to 30 to 30 31 December
June June
2016 2015 2015
GBPm GBPm GBPm
------------------------------------------------- --------------- -------------------- --------------
Gain on disposal of property 0.7 - -
(1)
------------------------------------------------- --------------- -------------------- --------------
Restructuring costs (2) (2.8) - (4.9)
------------------------------------------------- --------------- -------------------- --------------
Fair value adjustment to contingent
consideration since date of
acquisition (3) 0.2 - (2.6)
Transaction costs relating
to acquisition of businesses (0.2) (0.1) (0.1)
Amortisation of acquired intangible
assets (2.7) (2.5) (5.4)
------------------------------------------------- --------------- -------------------- --------------
Charges associated with acquisition
of businesses (2.7) (2.6) (8.1)
------------------------------------------------- --------------- -------------------- --------------
(1) In 2016, the Group made a gain of GBP0.7 million
on disposal of property.
(2) In 2016, restructuring costs of GBP2.8 million
relate to the Group streamlining certain operations
by downsizing selected activities in the UK, US and
Europe and are primarily employment termination costs.
(3) GBP0.2 million was received in relation to the
purchase price adjustment to the contingent consideration
payable to Autocue (acquired in 2014), which was agreed
with the vendors during the period.
4 Net finance expense
Half year Half year Year to
to 30 to 30 31 December
June June
2016 2015 2015
GBPm GBPm GBPm
------------------------------------------------- --------------- -------------------- --------------
Finance income
------------------------------------------------- --------------- -------------------- --------------
Net currency translation gains 0.3 0.3 0.3
------------------------------------------------- --------------- -------------------- --------------
Finance expense
Interest payable on interest-bearing
loans and borrowings (2.1) (1.9) (4.0)
Net interest expense on net
defined benefit pension scheme
liabilities (0.1) (0.2) (0.2)
------------------------------------------------- ---------------
(2.2) (2.1) (4.2)
------------------------------------------------- --------------- -------------------- --------------
Net finance expense (1.9) (1.8) (3.9)
------------------------------------------------- --------------- -------------------- --------------
5 Earnings per share
Earnings per share ("EPS") is the amount of post-tax
profit attributable to each share.
Basic EPS is calculated on the profit for the year
divided by the weighted average number of ordinary
shares in issue during the year.
Diluted EPS is calculated on the profit for the year
divided by the weighted average number of ordinary
shares in issue during the year, but adjusted for
the effects of dilutive share options.
The Adjusted EPS measure is used by management to
assess the underlying performance of the ongoing business
and therefore excludes restructuring costs, charges
associated with acquired businesses and disposal of
business, all net of tax.
The calculation of basic, diluted and adjusted EPS
is set out below:
Half year Half year
to to
30 June 30 June
2016 2015
Profit GBPm GBPm
----------------------------------------------------------------- ---------------- ----------
Profit for the financial period 7.6 8.4
Add back:
Gain on disposal of property, restructuring
costs and charges associated with acquisition
of businesses, net of tax 3.3 1.8
Earnings before gain on disposal of
property, restructuring costs and charges
associated with acquisition of businesses 10.9 10.2
----------------------------------------------------------------- ---------------- ----------
Half year Half year Half year
to 30 June to 30 June to 30 June
2016 2015 2016 2015 2016 2015
No. No. pence pence pence pence
------------------------ --------- -------- ------------------ ------- ------- ----------
Weighted average Adjusted earnings Earnings per
number of per share share
shares '000
Basic 44,511 44,331 24.5 23.0 17.1 18.9
Dilutive potential
ordinary shares 80 141 (0.1) (0.1) (0.1) (0.1)
------------------------ --------- -------- ------------------ ------- ------- ----------
Diluted 44,591 44,472 24.4 22.9 17.0 18.8
------------------------ --------- -------- ------------------ ------- ------- ----------
6 Interim dividend
After the balance sheet date, an interim dividend
of 9.9 pence per share has been declared by the Directors,
totalling GBP4.4 million (2015: 9.5 pence per share
totalling GBP4.2 million). The dividend has not been
provided for at half year and there are no tax consequences.
The dividend will be paid on Friday 21 October 2016
to shareholders on the register at the close of business
on Friday 23 September 2016. The Company has a Dividend
Reinvestment Plan that allows shareholders to reinvest
dividends to purchase additional shares in the Company.
For shareholders to apply the proceeds of this and
future dividends to the plan, application forms must
be received by the Company's Registrars by no later
than Monday 26 September 2016. Existing participants
in the Plan will automatically have the interim dividend
reinvested. Details on the Plan can be obtained from
Capita Registrars on 0871 664 0381 or at www.capitaregistrars.com.
Calls cost 12p per minute plus network extras, lines
are open 8.30am to 5.30pm Monday-Friday.
7 Taxation
Half year Half year Year
to 30 to 30 to 31
June June December
2016 2015 2015
GBPm GBPm GBPm
------------------------------------- ---------- ---------- ----------
Before disposal of property,
restructuring costs and charges
associated with acquisition
of businesses
Current tax 4.4 3.2 7.5
Deferred tax 0.2 1.2 2.1
------------------------------------- ---------- ---------- ----------
4.6 4.4 9.6
------------------------------------- ---------- ---------- ----------
Disposal of property, restructuring
costs and charges associated
with acquisition of businesses
Current tax (1) (1.1) (0.3) (1.2)
Deferred tax (2) (0.4) (0.5) (2.9)
------------------------------------- ---------- ----------
(1.5) (0.8) (4.1)
------------------------------------- ---------- ---------- ----------
Summarised in the Income Statement
as follows
Current tax 3.3 2.9 6.3
Deferred tax (0.2) 0.7 (0.8)
------------------------------------- ---------- ---------- ----------
3.1 3.6 5.5
------------------------------------- ---------- ---------- ----------
(1) Current tax credits of GBP0.3 million (2015: GBP0.3
million) were recognised in the period which represents
the tax impact of the amortisation of intangible assets.
(2) Deferred tax credits of GBP0.4 million (2015:
GBP0.5 million) have been recognised relating to the
deferred tax impacts of the amortisation of intangible
assets.
8 Acquisitions
On 13 January 2016, the Group acquired 100% of the
issued share capital of Manfrotto Distribution Benelux
B.V. (formerly Provak Foto Film Video B.V.), based
in the Netherlands, through a business combination
for a net cash consideration of EUR1.2 million (GBP0.9
million). The acquisition complements the Group's
owned distribution channels. As at the date of this
report the fair value of the assets and liabilities
acquired are being measured. Based on provisional
adjustments, the fair value of the assets acquired
in the business at acquisition date was GBP0.4 million
resulting in goodwill of GBP0.5 million.
On 12 April 2016, the Broadcast Division of the Group
acquired the business and some of the assets of Offhollywood
Digital, LLC ("Offhollywood"), based in the US, through
a business combination for an initial net cash consideration
of US$2.2 million (GBP1.6 million). As at the date
of this report the fair value of the assets and liabilities
acquired are being measured. Based on provisional
adjustments, the fair value of the assets acquired
in the business at acquisition date was GBP0.8 million
resulting in goodwill of GBP0.8 million. Under the
terms of the acquisition, there is a potential contingent
consideration of up to $8.0 million that is dependent
on the performance against demanding gross profit
targets over the period to December 2018. Offhollywood
provides camera-back modules for RED cameras and other
services to a similar customer base to that serviced
by the Group's existing higher technology businesses,
and its products will be marketed through the Group's
global distribution network.
An analysis of the cash flows relating to acquisitions
is provided below:
Half year
to 30
June 2016
GBPm
----------------------------------------------------------------- -------------
Cash paid in relation to Manfrotto Distribution
Benelux. B.V. 0.9
Cash paid in relation to Offhollywood Digital,
LLC 1.6
Cash paid in respect of contingent consideration
for Teradek (acquired in 2013) 2.8
Cash received in respect of the purchase price
adjustment for Autocue (acquired in 2014),
agreed with the vendors during period (0.2)
----------------------------------------------------------------- -------------
Net cash outflow in respect of acquisitions 5.1
----------------------------------------------------------------- -------------
9 Analysis of net debt
The table below analyses the Group's components of
net debt and their movements in the period:
Half year Half year Year to
to 30 to 30 31 December
June 2016 June 2015 2015
GBPm GBPm GBPm
--------------------------------------- ----------- ----------- -------------
Increase in cash and cash equivalents 4.9 4.1 5.2
Repayment of /(proceeds from)
interest-bearing loans and
borrowings 5.0 (16.2) (8.5)
--------------------------------------- -----------
Decrease/(increase) in net
debt resulting from cash flows 9.9 (12.1) (3.3)
--------------------------------------- ----------- ----------- -------------
Effect of exchange rate fluctuations
on cash held 3.5 (1.4) (0.6)
Effect of exchange rate fluctuations
on debt held (9.9) 2.9 (1.5)
--------------------------------------- ----------- ----------- -------------
Effect of exchange rate fluctuations
on net debt (6.4) 1.5 (2.1)
--------------------------------------- ----------- ----------- -------------
Movements in net debt in the
period 3.5 (10.6) (5.4)
Net debt at 1 January (76.3) (70.9) (70.9)
--------------------------------------- ----------- ----------- -------------
Net debt at the end of period (72.8) (81.5) (76.3)
--------------------------------------- ----------- ----------- -------------
Cash and cash equivalents in
the Balance Sheet 20.9 11.0 13.6
Bank overdrafts - (0.4) (1.1)
--------------------------------------- ----------- ----------- -------------
Cash and cash equivalents in
the Statement of Cash Flows 20.9 10.6 12.5
Interest-bearing loans and
borrowings (93.7) (92.1) (88.8)
--------------------------------------- ----------- ----------- -------------
Net debt at the end of period (72.8) (81.5) (76.3)
--------------------------------------- ----------- ----------- -------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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