Videndum Plc · LSE:VID
Videndum — The Vitec Group — H1 2010 Earnings Presentation
39 slides from Videndum's earnings presentation, Aug 24, 2010
Slide 1: 2010 Interim Results
Page 1 2010 Interim Results Stephen Bird Group Chief Executive Richard Cotton Group Finance Director 24 August 2010
Slide 2: Agenda
Page 2 Agenda Highlights Financial Review Operational Review & Outlook Stephen Bird, Richard Cotton, Stephen Bird, Group Chief Executive Group Finance Director Group Chief Executive
Slide 3: Highlights
Page 3 Highlights Stephen Bird Group Chief Executive
Slide 4: Highlights
Page 4 Highlights Strong financial performance − Sales 5% lower than H1 2009 − 2009 cost reduction initiatives delivered to plan − Operating margin increased from 6.8% to 8.7% − PBT up 23.5% vs H1 2009 − Net debt reduced to £35.3 million from £52.6 million at June 2009 − Increased Interim Dividend 3
Slide 5: Financial Review
Page 5 Financial Review Richard Cotton Group Finance Director
Slide 6: Income statement
Page 6 Income statement H1 2010 H1 2009 ∆ ∆ CER ** £m £m % % Revenue 152.5 160.8 (5.2%) (2.9%) Gross margin % 41.2% 39.4% +1.8 pts Operating profit * 13.2 11.0 20.0% 6.5% Operating margin % 8.7% 6.8% +1.9 pts PBT * 12.6 10.2 23.5% 9.1% Adjusted basic EPS * 19.5 p 16.6 p 17.5% 3.7% Dividend per share
Slide 7: Organic revenue growth offsetting end of BAS contract
Page 7 Organic revenue growth* offsetting end of BAS contract Adjusted ∆ ∆ H1 09 FX H1 09* H1 10 Organic Disposals Division £m £m £m £m % ** £m % ** £m % Imaging & Staging 74.2 (1.8) 72.4 73.5 1.5% 1.4 1.9% (0.3) (0.4%) Videocom 73.9 (1.6) 72.3 60.6 (16.1%) (6.8) (10.0%) (4.9) (6.1%) Services 12.7 (
Slide 8: Revenue bridge
Page 8 Revenue bridge 170 FX Translation 160 Disposals FX Price Transaction BAS Volume (£m) 150 140 H1 09 H1 10 Revenue. Revenue 130 £160.8m (£3.4m) (£5.2m) (£12.3m) £12.0m £1.0m (£0.4m) £152.5m Variances are based on management’s best estimates and are not a statutory presentation Disposals include
Slide 9: Operating profit bridge
Page 9 Operating profit bridge 18 16 Opex Cost Savings NBD 14 Other FX Transact Opex Vol/Mix/ Price/Cost (£m) 12 FX Transl Disposals BAS Efficiency 10 8 H1 09 H1 10 Profit* . Profit* 6 £11.0m (£0.3m) £0.6m (£5.2m) £5.2m £0.8m £3.0m (£2.3m) (£1.4m) £1.8m £13.2m * Operating profit before significant i
Slide 10: Cash generated from operations
Page 10 Cash generated from operations Continuing cash disciplines delivering results H1 2010 H1 2009 ∆ £m £m £m Operating profit * 13.2 11.0 2.2 Depreciation ** 7.5 7.9 (0.4) Working Capital (5.2) (3.3) (1.9) Restructuring costs (2.3) (2.2) (0.1) Other 0.5 0.1 0.4 Cash generated from Operations 13.
Slide 11: Free cash flow
Page 11 Free cash flow Stronger performance H1 2010 H1 2009 ∆ £m £m £m Cash generated from Operations 13.7 13.5 0.2 Capital expenditure (5.5) (5.1) (0.4) Proceeds from asset sales 1.0 0.8 0.2 Net interest paid (0.6) (1.0) 0.4 Tax received 1.1 (1.0) 2.1 Free cash flow 9.7 7.2 2.5 Capital expenditure
Slide 12: Net debt bridge
Page 12 Net debt bridge 50 45 Free Cash Flow 40 Acquisitions/ Exchange Dividends Disposal Net Own movements (£m) 35 Shares Purchased 30 25 Jun 10 Dec 09 Net Debt Net Debt 20 £40.6m (£9.7m) £4.6m (£4.2m) £1.0m £3.0m £35.3m Continued strong free cash flow of £9.7m (H1 2009 £7.2m) Final dividend covere
Slide 13: Other financial points
Page 13 Other financial points Bank Loan Utilisation as at 30 Jun 2010 £39.8m (Dec 2009 £52.7m) − Jun 2010 net debt of £35.3m − Net Debt to EBITDA ratio of 0.8x – improved from December 2009 (1.0x) Tax – Effective tax rate − 34% headline charge (FY 2009: 32%) − FY 2010 guidance: 34% Foreign exchange
Slide 14: Operational Review
Page 14 Operational Review Stephen Bird Group Chief Executive
Slide 15: Three market strategy update
Page 15 Three market strategy update Continue to invest Broadcast & Video Fast growth from B&I, LED lighting and £750m* robotics Photographic Continue to invest in Pro-market £830m* Grow Manfrotto through product extension & appealing to wider audience MAG Grow Integrated Microwave Technologies £640
Slide 16: Three market strategy update: Broadcast & Video
Page 16 Three market strategy update Broadcast & Video Markets strengthened following 2009 weakness − Vinten and Sachtler growth Strong Vitec group presence at NAB show in Las Vegas Significant new product launches − 31 from Videocom alone − Development of video accessories to support Hybrid DSLR s
Slide 17: Three market strategy update: Photographic
Page 17 Three market strategy update Photographic Market strengthened Completed market research and targeting − Targeted at new entry level DSLR users Development of Manfrotto Powerbrand product range Integrated range of products − Supports − Bags − LED Lights − Apparel Launch at Photokina in Septem
Slide 18: Three market strategy update: MAG
Page 18 Three market strategy update Military Aerospace and Government (MAG) Defence market uncertain, however ISR* will grow Auction 66 success − Framework contract with US DoJ for up to 5 years − $6.6 million first order awarded April – sales in 2010 − IMT product outperformed rivals in extensive
Slide 19: Imaging & Staging
Page 19 Imaging & Staging Stronger Photographic market H1 2010 H1 2009 ∆ ∆ CER Digital SLR’s driving new £m £m % % accessories and users Revenue 73.5 74.2 (0.9%) 1.5% Completion of Manfrotto Operating profit * 9.3 8.1 14.8% 2.6% Powerbrand range − September launch at Operating margin % * 12.7% 10.9%
Slide 20: Videocom
Page 20 Videocom Broadcast market recovery and strategic execution in MAG Broadcast & video growth - H1 2010 H1 2009 ∆ ∆ CER especially Asia and Europe £m £m % % Revenue 60.6 73.9 (18.0%) (16.1%) Camera supports grew strongly with many new Operating profit * 3.7 3.5 5.7% (5.9%) products Operating ma
Slide 21: Services
Page 21 Services Broadcast market growth in content creation 2010 2009 ∆ ∆ CER Growth in large live events £m £m % % and reality documentaries Revenue 18.4 12.7 44.9% 49.6% Strong performance at Vancouver Olympic Games Operating profit * 0.2 (0.6) n/m n/m − OBS contract providing new Operating margi
Slide 22: Geographic Reach
Page 22 Geographic Reach % of H1 revenue Wide geographic spread Destination 2009 2010 Sites in 14 countries; sell into 100+ countries N America 47 49 Sales: UK accounts for only 8% of revenue Europe 38 31 Asia-Pacific 11 14 RoW 4 6 Group office Videocom Division Imaging & Staging Division Services D
Slide 23: Global Operations Footprint
Page 23 Global Operations Footprint Operations in low cost countries − Manufacturing plants in Costa Rica, Slovakia and Mexico − Outsourced operations in China Other manufacturing sites in US, UK and Italy Flexibility to move to low cost sites Acts as FX hedge Operations Videocom Division Imaging &
Slide 24: International Profile: China
Page 24 International Profile Growing in emerging markets: China Chinese market − Large and rapidly growing photographic market − 7% of global D-SLR unit volumes (2008)* − D-SLR volumes: 40% CAGR (2005-8)* New wholly-owned Photographic business − Offices in HK and Shanghai − Sales in Greater China**
Slide 25: International Profile: Brazil
Page 25 International Profile Growing in emerging markets: Brazil Brazilian broadcast market − Largest Latin American market (50% of TV ad revenue)* − TV ad revenue:10% CAGR (2010-4)*: helped by World Cup and Olympics − HD transition only just started New Vitec office in Sao Paolo − Centre of TV pro
Slide 26: Increased collaboration
Page 26 Increased collaboration Leveraging our combined strength to win business Imaging & Staging and Videocom − Manfrotto distributing Litepanels products − Litepanels developing lights for photographic market Imaging & Staging Division Services and Videocom − Leads from major broadcasters generat
Slide 27: New product development
Page 27 New product development Benefiting from improved processes Around 4% of revenue* spent on R&D Current and future expenditure more effective − more focus on areas of major growth: Manfrotto, Litepanels and IMT Benefits already apparent with − reduced time to market: from 18 to 12 months at Ma
Slide 28: Outlook
Page 28 Outlook These results demonstrate strong execution against our plans for 2010, which together with strengthened Photographic and Broadcast markets, have enabled us to more than make up for the anticipated revenue shortfall arising from the completion of the BAS contract in late 2009. As a re
Slide 29: Questions
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Slide 30: Foreign Exchange update
Page 30 Foreign Exchange update Year on year effect Translation Transaction Total on profit £/$ €/$ £/€ £m £m £m Average FY03 1.63 1.13 1.45 1.2 (2.3) (1.1) Average FY04 1.82 1.24 1.47 (0.9) (3.9) (4.8) Average FY05 1.82 1.24 1.46 0.1 (1.0) (0.9) Average FY06 1.84 1.25 1.47 (0.2) (0.5) (0.7) Average
Slide 31: Banking
Page 31 Banking Loan facility of £125m − Committed until 2013 − 5 banks − Current interest at 0.95% over LIBOR* Utilisation as at 30 Jun 2010 £39.8m (Dec 2009 £52.7m) − Jun 2010 net debt of £35.3m Net Debt to EBITDA ratio of 0.8x – improved from December 2009 (1.0x) * At current levels of net debt t
Slide 32: Clear-Com disposal 1 April 2010
Page 32 Clear-Com disposal 1 April 2010 Not core to Vitec strategy HM Electronics will provide a good home for ongoing development Consideration of up to £8.7m − £8.0m received in H1 − £0.7m potential deferred consideration (not yet recognised) Gross assets disposed £9.9m; net assets disposed £5.9m
Slide 33: UK Defined Benefit Pension Scheme Closure
Page 33 UK Defined Benefit Pension Scheme Closure Scheme closed to future accrual for remaining 112 active members − Closed to new members since 2003 Affected active employees encouraged to transfer to Group’s defined contribution scheme Benefits to Vitec: − Stems further investment and actuarial vo
Slide 34: Imaging & Staging New Products and Awards in 2010
Page 34 Imaging & Staging New Products and Awards in 2010 Joystick Heads 732CY M-Y Carbon Fibre Tripod Kata's Bumblebee Ultra Light Backpack Bridge technology 504HD head for video
Slide 35: Videocom New Products and Awards in 2010
Page 35 Videocom New Products and Awards in 2010 Litepanel’s Sola Oconnor’s O-Grip Petrol’s Cambio camera support bag with integrated LED Fresnel Light accessory camera support Anton Bauer’s IMT Modular Charger System MicroLite HD COFDM transmitter
Slide 36: Organisation
Page 36 Organisation The TheVitec VitecGroup Groupplc plc Imaging Videocom Imaging&&Staging Videocom Staging Videocom Videocom Services Services 2009 2009 2009 2009 2009 2009 Sales Sales £141.8m £141.8m Sales Sales £147.0m £147.0m Sales Sales £26.3m £26.3m Profit Profit £17.7m £17.7m Profit Profit £
Slide 37: Purpose, values and brand
Page 37 Purpose, values and brand Our purpose − “We provide vital products and services which support the capture of exceptional images” – in short, we facilitate people reliably to “Capture the Moment”. Our values − Product Excellence – Everything we make and do is exceptional − Creative Solutions
Slide 38: Important notice
Page 38 Important notice This presentation is being made only to, and is only directed at, persons to whom such presentations may lawfully be communicated (“relevant persons”). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. Information in
Slide 39: Page 39
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