TIDMVTC
RNS Number : 8455G
Vitec Group PLC (The)
09 November 2018
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.
The Vitec Group plc
9 November 2018
ACQUISITION OF AMIMON INC. AND TRADING UPDATE
Wireless video capabilities transformed by margin enhancing
acquisition of Amimon
The Vitec Group plc ("Vitec" or the "Group"), the international
provider of products and solutions to the Broadcast and
Photographic markets, is pleased to announce that it has acquired
Amimon Inc., consisting primarily of its Israeli subsidiary Amimon
Limited (together "Amimon").
It also announces that the Board's expectations for the year
ending 31 December 2018 remain unchanged, with material EPS
growth.
Acquisition and integration of Amimon
Vitec acquired Amimon on 8 November 2018 for $55.0 million
(GBP42.3 million) in cash, with an expected total investment of
$59.9 million (GBP46.1 million) on a cash / debt free basis,
including employee retention, deal and integration costs. The total
investment will be funded from Vitec's committed bank
facilities.
Amimon designs and develops chipsets and modules for real-time
wireless video transmission, primarily for professional filmmaking
and high-end productions ("cine market").
Established in 2004, Amimon operates primarily from its
headquarters in San Jose, California, and an R&D centre in
Israel, where the majority of its 60 employees are based. Dr Zvi
Reznic, Amimon's Chief Technology Officer and Co-Founder, and
certain other employees, have confirmed that they will remain with
the company post acquisition.
Vitec will integrate Amimon into its Creative Solutions
Division. Amimon brings extensive software, chipset design and
electronics hardware development expertise, and opens up growth
opportunities to develop innovative new products for adjacent
markets. Amimon's Israel facility will primarily become an R&D
centre of excellence for Creative Solutions.
Strategic rationale for the acquisition
The acquisition is part of Vitec's strategy to develop and grow
in the wireless video market and will give Vitec access to patented
core technology as well as new intellectual property.
Vitec and Amimon have had a strong customer / supplier
relationship since 2012, having worked together to build a new
market for professional wireless video. Amimon is the key supplier
to Teradek, having developed a market-leading, exclusive and
patented technology which is recognised as the industry-standard
for zero delay wireless video. Amimon's technology is used in many
of our Creative Solutions products, enabling very high quality,
zero delay video, up to 4K resolution, to be transmitted wirelessly
between cameras and monitors. This connects a director and crew to
the camera in a real-time, cable-free environment, and allows fast
changes on set, saving time and money.
Acquiring the core technology found within many of our Creative
Solutions products will enable Vitec to become vertically
integrated. This will drive growth, including the cost-effective
and focused development of the next generation of highly
differentiated wireless video products, enabling us to bring them
to market faster. The acquisition will allow Vitec to quickly
expand into the adjacent on-location sports and news market,
selling wireless video products to Broadcasters and Independent
Content Creators under Vitec's premium brands, using our
established distribution network.
Creative Solutions will also be able to strengthen its position
in the cine market by capitalising on the next generation of
wireless video products and get closer to camera manufacturers
through Amimon's direct relationships.
Financial aspects of the acquisition
Amimon reported consolidated audited results for the year to 31
December 2017 of $18.6 million (GBP14.4 million) revenue and
reported an operating loss of $0.7 million (GBP0.5 million). Gross
assets were $10.5 million (GBP7.8 million) at 31 December 2017. For
the nine months to September 2018, revenue was $13.4 million
(GBP9.9 million) and EBITDA was $0.8 million (GBP0.6 million).
The financial impact of the acquisition includes:
-- Vitec is uniquely placed to access cost synergies across
the Creative Solutions Division and Amimon, primarily in
administration, sales and marketing and through aligning
the R&D roadmaps to focus on growing markets;
-- Post-acquisition, Amimon's revenue will reduce significantly
to reflect intra-Group sales;
-- Creative Solutions is expected to increase EBITDA by $4.0
million (GBP3.1 million) in 2019, $7.5 million (GBP5.8 million)
in 2020 and $9.0 million (GBP6.9 million) in 2021 with Amimon
under Vitec's ownership;
-- The return on investment is expected to exceed Group WACC
from 2020 onwards;
-- Proforma 2018 year end net debt to EBITDA is expected to
increase to 1.4x.
The acquisition accelerates the Group's stated objective to
achieve mid-teen adjusted operating profit margins and is expected
to enhance adjusted earnings per share from 2019.
The Group has increased its committed bank facilities by GBP25.0
million.
Stephen Bird, Group Chief Executive of Vitec, commented:
"Vitec is the natural home for Amimon and I am really delighted
to welcome this talented team of engineers to the Group. They bring
exclusive software and hardware expertise that will add real value
to our customers and our shareholders.
"Amimon is the technology of choice for wireless equipment used
in the cine market. This acquisition opens up the exciting
opportunity for Vitec to drive growth by taking wireless technology
into adjacent markets, developing innovative new products to give
our customers greater flexibility in image capture and content
creation.
"We know the business well, use their technology in our
market-leading Teradek and SmallHD products, and we are uniquely
placed to access cost synergies through integration with our
existing capabilities. As well as accelerating the Group's stated
objective to achieve mid-teen operating margins, the acquisition is
expected to enhance earnings per share from 2019."
Trading update
The Board's expectations for the year ending 31 December 2018
remain unchanged, with material EPS growth combined with good cash
generation.
-- In Imaging Solutions, the Joby and Lowepro brands maintained
their improved market share with a more favourable product mix
underpinning the investment case. The encouraging launch of new
mirrorless cameras from Canon and Nikon has subdued near term
demand but their full availability in 2019 will be of benefit.
-- Production Solutions continued to perform well in the US, and
as anticipated, benefitted from the sales of new products, including
the launch of the Flowtech 100 tripod and Litepanels Gemini lights.
Overall its performance continued to be strong.
-- Our higher technology Creative Solutions Division continued to
grow and SmallHD will move into their new facility later this
month when they expect to return to full production shortly thereafter.
We expect insurance cover to continue to mitigate losses due
to the previously announced SmallHD manufacturing disruption
caused by a fire in an adjacent building. As previously announced,
the acquisition of Rycote, the manufacturer of advanced noise
reduction equipment, is proceeding to plan and has opened the
opportunity for us to enter the growing audio capture market.
Full Year Results
Vitec is scheduled to release its full year results announcement
on Thursday 21 February 2019.
-Ends-
Enquiries:
The Vitec Group plc
Stephen Bird, Group Chief Executive
Kath Kearney-Croft, Group Finance Director
Telephone: 020 8332 4600
MHP Communications
Tim Rowntree
Ollie Hoare
Telephone: 020 3128 8771
Notes
1. ROI (Return on Investment) is calculated as adjusted profit
after tax divided by total investment; adjusted profit after tax is
defined in the Alternative Performance Measures in the Group's Half
Year Results to 30 June 2018
2. Average foreign exchange rates in the period from 1 January
to 31 December 2017: GBP1 = $1.29
3. Average foreign exchange rates in the period from 1 January
to 30 September 2018: GBP1 = $1.35
4. Nothing in this announcement should be construed as a profit forecast
5. Estimated foreign exchange rate at completion: GBP1 = $1.30
6. This announcement contains inside information. The person
responsible for arranging the release of this announcement on
behalf of The Vitec Group plc is Jon Bolton, Group Company
Secretary.
A snapshot of The Vitec Group plc
Vitec is a leading global provider of premium branded products
and solutions to the fast moving and growing "image capture and
content creation" market.
Vitec's customers include broadcasters, independent content
creators, photographers and enterprises, and our activities
comprise: design, manufacture and distribution of high performance
products and solutions including camera supports, camera mounted
electronic accessories, robotic camera systems, prompters, LED
lights, mobile power, monitors and bags, and noise reduction
equipment.
We employ around 1,700 people across the world in eleven
different countries and are organised in three Divisions: Imaging
Solutions, Production Solutions and Creative Solutions.
The Vitec Group plc is listed on the London Stock Exchange with
2017 revenue from continuing and discontinued operations of
GBP378.1 million.
More information about the Vitec Group can be found at:
www.vitecgroup.com
More information about Amimon can be found at:
www.amimon.com
LEI number: 2138007H5DQ4X8YOCF14
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END
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