Videndum Plc · LSE:VID
Videndum — The Vitec Group — H1 2018 Earnings Presentation
37 slides from Videndum's earnings presentation, Aug 10, 2018
Slide 1: The Vitec Group plc Half Year Results 2018
Enabling the capture and sharing of exceptional images. The Vitec Group plc Half Year Results 2018 Record H1 profit and improved margins 10 August 2018
Slide 2: Important notice
Important notice Forward-looking statements This presentation contains forward-looking statements with respect to the financial condition, performance, position, strategy, results and plans of The Vitec Group plc (the “Group”, “Vitec”, or the “Company”) based on Management’s current expectations or
Slide 3: Agenda
Agenda > Highlights > Stephen Bird, Group Chief Executive > Financial Review > Kath Kearney-Croft, Group Finance Director > Market and Strategy Update > Stephen Bird, Group Chief Executive > Q&A Page 3
Slide 4: Highlights: record Group performance
Highlights: record Group performance 1. Record Group performance in profit before tax and EPS > Further underlying profit growth across the portfolio > Improvement in adjusted operating margin* to 13.9% on a reported basis > ROCE+ increased to 21.7% (H1 2017: 19.4%) 2. Continued progress in driving
Slide 5: Financial Review
Financial Review Page 5
Slide 6: Record H1 profit and improved Group margins
Record H1 profit and improved Group margins Better / > Record operating profit, PBT and EPS H1 H1 Better / (worse) at 2018 2017 (worse) Constant > Strong revenue growth Continuing operations £m £m FX > 2017 acquisition of JOBY and Lowepro Revenue 183.3 164.9 11.2% 16.0% > Partly offset by impact of
Slide 7: Divisional performance
Divisional performance Revenue Adjusted operating profit* H1 H1 Better / Better / (worse) H1 H1 Better / Better / (worse) Continuing operations 2018 2017 (worse) at Constant FX 2018 2017 (worse) at Constant FX £m £m % % £m £m % % Imaging Solutions 98.5 78.4 25.6% 29.1% 14.9 13.5 10.4% 13.7% Producti
Slide 8: Group revenue bridge
Group revenue bridge £m 200 Translation Acquisitions > Underlying revenue growth: Discontinued 190 operations > Sales grew despite SmallHD fire curtailing revenue growth 180 Transaction > Benefit from Winter Olympics and strong sales of new products 170 Underlying Revenue > Slower start in Imaging S
Slide 9: Group adjusted operating profit bridge
Group adjusted operating profit* bridge £m 27.5 > Underlying profit growth driven by: Transaction Acquisitions 25.0 > Higher sales and an improvement in operating Underlying Profit margin % 22.5 > Benefit from Winter Olympics in Production Solutions Discontinued operations > Partly offset by higher
Slide 10: Cash generation
Cash generation H1 H1 Better / > Lower depreciation and asset sales following Total performance for continuing 2018 2017 (worse) and discontinued operations disposal of Bexel in 2017 £m £m £m Operating profit * 25.5 21.2 4.3 > H1 cash performance better than previously Depreciation (1) 5.5 8.5 (3.0)
Slide 11: Net debt
Net debt £m 45.0 Free Cash Transactions flow FX in own shares 40.0 Acquisitions > Increase in interim dividend of 10.6% Dividends > Cash outflow on acquisitions due to Adeal 35.0 > Transactions in own shares relates to funding of employee incentive plan 30.0 > Net Debt to EBITDA ratio of 0.7x (Dec 1
Slide 12: H2 guidance
H2 guidance > 2018 H1/H2 phasing > Profit expected to be slightly H2 weighted in line with historical performance, including stronger performance from JOBY/Lowepro > H2 cash expected to be broadly in line with H1 with further working capital investment > Expect further underlying growth in H2 > Effe
Slide 13: Market & Strategy Update
Market & Strategy Update Page 13
Slide 14: Executing on the Group's strategy
Executing on the Group’s strategy 2. Margin 3. Further M&A 1. Organic growth improvement activity The right strategy for continued growth and value creation Page 14
Slide 15: Imaging Solutions Market and Strategy
Imaging Solutions Imaging Solutions** Division revenue versus CIPA shipments Market Moving annual totals at constant currency, indexed to 100 at December 2012 > ILC market stabilised 130 CIPA shipments * 120 Imaging Solutions revenue ** > Smartphone and vlogging accessories market growing Imaging So
Slide 16: Imaging Solutions H1 2018: strong performance
Imaging Solutions H1 2018: strong performance 1. Core business: JOBY and Lowepro growing share; maintained leading share in tripods and bags 2. Smartphone accessories: enhanced relationship with Apple 3. Strategic partnerships: marketing alliance with Sony delivered co-branded accessories for Sony A
Slide 17: Production Solutions Market and Strategy
Production Solutions Market > Broadcast market stable, although cost pressures in studios > Growth in on-location production: news and sports Strategy 1. Invest in growth areas with new products aimed at: > On-location news and sports, e.g. lights, batteries and Flowtech > Reducing broadcaster costs
Slide 18: Production Solutions H1 2018: good performance
Production Solutions H1 2018: good performance, benefitted from the Winter Olympics 1. On-location news and sports: > Sachtler/Vinten Flowtech 75 tripod; launching new Flowtech 100 tripod in September to expand addressable market > Litepanels Gemini lights selling well; launch of Anton/Bauer Dionic
Slide 19: Production Solutions video
Production Solutions video Page 19
Slide 20: Creative Solutions Market and Strategy
Creative Solutions Market Estimated US Company programming spend in 2017, $bn, excl sport NBC Universal 10.2 > Production spend continues to grow, especially in scripted Time Warner 8.0 FOX 8.0 series on newer platforms Disney Netflix 6.3 7.8 Viacom 5.4 Strategy Amazon 4.5 CBS 4.2 New players: $15.3
Slide 21: Creative Solutions H1 2018: continued strong growth prior to fire at SmallHD
Creative Solutions H1 2018: continued strong growth prior to fire at SmallHD 1. Maintain and expand share: > Core products: SmallHD grew 70% Q1 2018, with Focus monitors highly successful; record June in Teradek following launch of refreshed Bolt products; Wooden Camera Power Plate for Anton/Bauer b
Slide 22: Summary
Summary 1. Record Group performance in profit before tax and EPS 2. Continued M&A activity 3. Strong cash generation and a robust balance sheet 4. Full year expectations unchanged 5. Well-positioned with a clear growth strategy Transformed portfolio delivering record performance and improved margins
Slide 23: Q&A
Q&A Page 23
Slide 24: Appendices
Appendices Page 24
Slide 25: Results for total operations
Results for total operations Better / Total performance for H1 H1 Better / (worse) at continuing and 2018 2017 (worse) Constant discontinued operations £m £m FX Revenue 183.3 187.6 (2.3%) 1.6% Gross profit 83.7 79.0 5.9% 7.9% Gross margin % 45.7% 42.1% +360 bps +260bps Operating expenses * (58.2) (5
Slide 26: Consumers in the image capture and sharing market
Consumers in the “image capture and sharing market” • Professional companies • Independent professionals • Producing commercial content • Producing content for their own • Broadcasters, TV Networks, Film platform and/or partner needs Production Companies • Cameraman, Cinematographer, • e.g. Vinten,
Slide 27: Competitive landscape
Competitive landscape Broadcast Camera Supports Cine Camera Supports On Set Wireless Prompters 6x 3x 13x 9x Photographic Tripods Batteries Photographic Bags Key 5x 5x Vitec market share Competition market share Page 27
Slide 28: A higher technology focused Broadcast business
A higher technology focused Broadcast business Revenue from Production Solutions and Creative Solutions Higher Technology 34% All Creative Solutions’ products plus higher 41% technology* revenue in Production Solutions 50% 54% 59% 62% Traditional Broadcast Production Solutions excluding higher 66% t
Slide 29: The Vitec Group: M&A track record
The Vitec Group: M&A track record From start of 2012 2012 2013 2014 2015 2016 2017 2018 to end of 2017 * £75m invested Excluding impact of acquisitions in 2017 20% return 1 2 3 M&A clearly aligned Doing the right deal: Extraction of synergies with strategic disciplined approach objectives * Excludin
Slide 30: Where we operate
Where we operate > Sites in 11 countries; sell into 100+ countries > Sales: UK accounts for only 11% of revenue US Japan > Well capitalised manufacturing in Italy, Costa China Rica, UK & US Costa Rica > Low cost APAC sourcing, including China & Singapore Vietnam 2017 full year revenue from continuin
Slide 31: Vitec Imaging Solutions products
Vitec Imaging Solutions products Bags Lighting & controls Supports Camera accessories * Clockwise from top left: Lowepro: Flipside Trek BP 450 AW; Manfrotto: Noreg; National Geographic: Australia Collection; Gitzo: Adventury; Lastolite: Skylite Rapid Kit; Manfrotto: Lykos; JOBY: GripTight Pro Telepo
Slide 32: Vitec Production Solutions products
Vitec Production Solutions products Bags Camera accessories Prompters Mobile Power Distribution, rental Robotic camera Lighting & Supports & services systems controls * Clockwise from top left: Sachtler: Comporter; OConnor: O-Rig Pro Kit; Autoscript: E.P.I.C. prompter; Autocue: PSP17 teleprompter; A
Slide 33: Vitec Creative Solutions products
Vitec Creative Solutions products Camera accessories Video transmission systems Monitors * Clockwise from top left: Offhollywood: OMOD; Wooden Camera: Unified DSLR Cage; Teradek RT: MK3.1 controller; Teradek: Serv Pro; Paralinx: Dart; SmallHD and Teradek: 703 Bolt; SmallHD: Focus. Page 33
Slide 34: FX sensitivities
FX sensitivities Currency Current spot rates H1 18 average H1 17 average % change (31 Jul 2018) rate rate (H1 18 vs H1 17) USD 1.31 1.38 1.27 (8.7)% EUR 1.13 1.14 1.16 1.7% YEN 146 149 142 (4.9)% > Impact of FX on operating profit is expected to be broadly neutral for H2 at current spot rates > The
Slide 35: Financial overview
Financial overview % Total performance for continuing and discontinued operations £45 14 £40 12 > 2017 improvement in 10 £35 8 adjusted operating profit * £30 6 driven by significant 4 £25 2 transformation of the Group £20 0 2011 2012 2013 2014 2015 2016 2017 > Disposal of non-core Adjusted operatin
Slide 36: Alternative performance measures
Alternative performance measures APM Closest equivalent Definition statutory measure > In addition to statutory reporting, Vitec Adjusted operating profit Operating profit Calculated as operating profit before charges associated with acquisition of reports alternative performance measures businesses
Slide 37: The Vitec Group plc
The Vitec Group plc Bridge House Heron Square Richmond TW9 1EN United Kingdom T +44 (0)20 8332 4600 F +44 (0)20 8948 8277 [email protected] www.vitecgroup.com Page 37