Videndum Plc · LSE:VID
Videndum — The Vitec Group — H1 2016 Earnings Presentation
47 slides from Videndum's earnings presentation, Aug 4, 2016
Slide 1: Half year results 2016
The Vitec Group plc Half year results 2016 > Stephen Bird, Group Chief Executive > Paul Hayes, Group Finance Director > 4 August 2016 Revenue and operating profit* growth
Slide 2: Important notice
The Vitec Group plc 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” or the “Company”) based on Management’s current expect
Slide 3: Agenda
The Vitec Group plc Agenda > Overview > Stephen Bird, Group Chief Executive > Financial Review > Paul Hayes, Group Finance Director > Strategic and Operational Review > Stephen Bird, Group Chief Executive Page 3
Slide 4: Overview
The Vitec Group plc Overview > Stephen Bird Group Chief Executive Page 4 Photo: Manfrotto Digital Director for iPad Air 2
Slide 5: Overview
The Vitec Group plc Overview > First half results in line with our expectations > Growth in Group revenue and operating profit* > Broadcast Division increased revenue > Photographic Division grew both revenue and profit* > Strong free cash flow+ of £22.6m (H1 2015: £3.3m), improved working capital m
Slide 6: Financial Review
The Vitec Group plc Financial Review > Paul Hayes Group Finance Director Page 6 Photo: Anton/Bauer G90 Cine battery
Slide 7: Half year results in line with expectations
The Vitec Group plc Half year results in line with expectations D% H1 H1 Better / at 2016 2015 (worse) D Constant > Growth in sales of higher £m £m % FX technology products and services Revenue 171.1 155.9 9.7% 3.1% Gross profit * 67.4 64.3 4.8% (1.7%) > Gross margin reflects growth of Gross margin
Slide 8: Divisional performance
The Vitec Group plc Divisional performance Revenue Operating Profit* D at D at H1 2016 H1 2015 D H1 2016 H1 2015 D Constant FX Constant FX £m £m £m £m £m £m £m £m Broadcast 102.3 92.5 +9.8 +3.9 8.5 9.7 (1.2) (1.2) Photographic 68.8 63.4 +5.4 +1.1 8.9 6.7 +2.2 +0.3 171.1 155.9 +15.2 +5.0 17.4 16.4 +1
Slide 9: Operating profit bridge
The Vitec Group plc Operating profit* bridge £m 20 > Underlying gross profit* reflects: > Revenue growth in 18 Photographic and new Underlying FX Gross technologies Profit* Restruc- > Growth in lower margin 16 turing Acquisitions services revenue including Opex NFL contract Investment 14 > Non-repea
Slide 10: Cash flow
The Vitec Group plc Cash flow H1 H1 2016 2015 D > Strong cash generation in H1 2016 £m £m £m > Focussed working capital Operating profit * 17.4 16.4 1.0 management initiatives including: Depreciation (1) 8.6 7.9 0.7 > £4.1 million inventory reduction Working capital 8.6 (8.9) 17.5 Restructuring cash
Slide 11: Strong balance sheet
The Vitec Group plc Strong balance sheet £m 80 Free Cashflow > Net debt of £72.8m 75 > Net outflow on acquisitions FX includes: 70 Transactions Acquisitions in own > £2.5 million on Provak & & Pr Yr Shares Offhollywood Disposal 65 > £2.8 million of earnouts on Teradek Dividends 60 > Net Debt to EBIT
Slide 12: Other financial developments
The Vitec Group plc Other financial developments > Potential forex benefit if exchange rates remain at current rates in H2 > Effective tax rate maintained at 30% > Amortisation of acquired intangibles: £5.8m for FY 16 > Plan to relocate Bury broadcast business to local, more efficient site in 2017 P
Slide 13: Financial Review: Summary
The Vitec Group plc Financial Review: Summary > Half year results in line with our expectations > Growth in revenue and operating profit* > Good cash flow generation and a strong balance sheet > Streamlining substantially complete and delivering savings > Interim dividend increased by 4.2% to 9.9 pe
Slide 14: Strategic & Operational Review
The Vitec Group plc Strategic & Operational Review > Stephen Bird Group Chief Executive Photo: Manfrotto BeFree colour range Page 14
Slide 15: Market Conditions
The Vitec Group plc Market Conditions > Broadcast Division > Rapidly changing technology and customer needs > Positive US offset by more challenging EMEA Opportunities in > Strong demand for high technology products & services new technologies including enterprise video opportunities and services >
Slide 16: Broadcast Division
The Vitec Group plc Broadcast Division Growth in revenue despite anticipated non-repeat of higher margin antennas contracts H1 H1 D % at > Increase in sales of higher 2016 2015 D Constant technology products offset lower £m £m % FX large camera supports Revenue 102.3 92.5 10.6% 4.0% Operating profit
Slide 17: Photographic Division
The Vitec Group plc Photographic Division Growth in revenue and profit* at constant exchange rates H1 H1 D % at 2016 2015 D > Outperforming Photographic Constant £m £m % FX market by launching innovative Revenue 68.8 63.4 8.5% 1.6% new products Operating profit * 8.9 6.7 32.8% 4.1% > Growth in owned
Slide 18: Vitec outperforming camera sales
The Vitec Group plc Vitec outperforming camera sales Photographic revenue versus CIPA shipments 110 CIPA shipments MAT* > Vitec’s Photographic sales are Photographic Division's revenue MAT** starting to return to growth 100 > Market driven by new products 90 and innovation > Sales initiatives includ
Slide 19: Good progress in continuing to deliver our strategy
The Vitec Group plc Good progress in continuing to deliver our strategy > Growth in higher technology sales > Continued investment in new Improving the product development & innovation core > Focus on independent content creators & enterprise video > Continued to strengthen our teams in Asia-Pacific
Slide 20: Good progress in continuing to deliver our strategy (cont.)
The Vitec Group plc Good progress in continuing to deliver our strategy (cont.) PROVAK > Disciplined approach to acquisitions Strategic > Successful completion of two acquisitions acquisitions in H1 2016 > Acquisitions performing well Offhollywood acquired for an initial Provak acquired for a net co
Slide 21: Strategic Summary
The Vitec Group plc Strategic Summary > Good progress in continuing to deliver Vitec’s strategy > Continuing to improve the core > Investing in new technology and growing APAC > Streamlined, stronger, healthier business Page 21
Slide 22: Outlook
The Vitec Group plc 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
Slide 23: Questions
The Vitec Group plc Questions Page 23
Slide 24: Appendices
The Vitec Group plc Appendices Photo: Autocue portable iPad teleprompter Page 24
Slide 25: Broadcast products
The Vitec Group plc Broadcast products * Clockwise from top left: Teradek: VidiU Pro; SmallHD: 3203 HDR Monitor; Anton/Bauer: V90 & G90 Cine Batteries; Litepanels: Caliber; Brick Bi-Colour; Astra Soft 1x1 Bi-Color; Offhollywood: OMOD; Paralinx: Triton. Page 25
Slide 26: Broadcast products
The Vitec Group plc Broadcast products * Clockwise from left: Autocue: PSP17 teleprompter; Autoscript: E.P.I.C. prompter; Sachtler: Video 18S2; Camera Corps: Q Compact Robotic Camera and Mini Tracking System; Vinten: Vector 750 Pan and Tilt Head; OConnor: Ultimate 2560 Fluid Head. Page 26
Slide 27: Photographic products
The Vitec Group plc Photographic products * Clockwise from top left: Manfrotto: Digital Director for iPad Air 2; Befree; Compact Xtreme; Off road ThrillLED; Avenger: Wind Up stand; Gitzo: Mountaineer tripod; Lastolite: TriFlip kit contents and TriGrip silver; Manfrotto: Lykos; Street Medium Backpack
Slide 28: Photographic – New Products
The Vitec Group plc Photographic – New Products Products also available in the Apple store * Clockwise from top left: Gitzo: Traveller Tripod and Centre Ball Head; Manfrotto: Advanced * Clockwise from top left: Manfrotto: Compact Action Tripod; PIXI Mini Rear Backpack; Essential Collection Medium Ho
Slide 29: Operating margin*
The Vitec Group plc Operating margin* Opex H1 15 Underlying Restructuring Acquisitions FX H1 16 Investment £10.2m Revenue £4.1m £0.9m £155.9m £171.1m £1.9m £0.1m Operating Profit* £2.5m (£2.1m) £16.4m (£1.4m) £17.4m Operating Margin* 10.5% (1.5%) (0.8%) 1.5% - 0.5% 10.2% (indicative) Page 29 * Befor
Slide 30: Foreign Exchange – Key Impacts on Vitec
The Vitec Group plc Foreign Exchange – Key Impacts on Vitec 1.40 EUR/USD a) Translation 1.30 > Translational impact is unhedged 1.20 $1.17 > The majority of the Group’s profit is in USD and EUR $1.14 $1.13 1.10 > Weakening of Sterling led to a year-on-year favourable impact in H1 16 Contracted at 30
Slide 31: Working capital overview
The Vitec Group plc Working capital overview Movement in Working Capital Balance Sheet H1 2016 H1 2015 D Inventories (£m) Current Current £m £m £m Receivables (£m) Payables (£m) 62.0 60.0 56.0 Decrease / (increase) in inventories 4.1 (5.8) 9.9 54.0 60.0 58.0 FX (Increase) in receivables (2.8) (1.9)
Slide 32: Borrowings
The Vitec Group plc Borrowings > New revolving credit loan facility of £125m > Committed until July 2021 with 5 relationship banks > Margin at 125 bps over LIBOR (previously 200 bps over LIBOR) > Significant covenant headroom > Private Placement shelf facility established in 2011 > Matures in May 20
Slide 33: GAAP reconciliation: Profit before tax and earnings per share (EPS)
The Vitec Group plc GAAP reconciliation: Profit before tax and earnings per share (EPS) H1 H1 H1 H1 2016 2015 D 2016 2015 D £m £m £m £m £m £m Profit before tax* 15.5 14.6 0.9 10.9 10.2 0.7 Profit after tax* (1) Gain on disposal of property 0.7 - 0.7 Gain on disposal of property, restructuring costs
Slide 34: Overview
The Vitec Group plc Overview l
Slide 35: What we do
The Vitec Group plc What we do Broadcast Division Photographic Division > Equipment and FY 2015 > Equipment FY 2015 Revenue £189.0m Revenue £128.8m Services Operating Profit* £20.3m Operating Profit* £15.1m Operating Margin* 10.7% Operating Margin* 11.7% Our ultimate customer is primarily a camera o
Slide 36: Our Divisions
The Vitec Group plc Our Divisions Broadcast Division Pedestals Lighting Monitors Wireless Services Tripods Prompters Specialty Cameras Transmitters Rentals Mobile Power Robotics Page 36
Slide 37: Our Divisions
The Vitec Group plc Our Divisions Photographic Division Bags Tripods for photo and video LED Lighting Digital Editing Tripod Heads for photo and video Lighting Accessories Software Smartphone Accessories Page 37
Slide 38: Our key brand portfolio
The Vitec Group plc Our key brand portfolio Broadcast Division Photographic Division * * National Geographic bags are manufactured and distributed under licence Vitec has a portfolio of market leading world class brands Page 38
Slide 39: Competitive landscape
The Vitec Group plc Competitive landscape Broadcast Camera Supports Cine Camera Supports On Set Wireless Prompters Photographic Tripods 3x 2x 13x 7x 5x 55% 60% 90% 55% 31% Batteries LED Lights Photographic Bags 25% 7% 5% Vitec holds strong positions in its niche product categories Page 39 Vitec mana
Slide 40: Where we operate
The Vitec Group plc Where we operate > Sites in 10 countries; sell into 100+ countries 2015 Revenue > Sales: UK accounts for only 10% of revenue 5% > Complex restructuring and streamlining been delivered to plan 18% 30% Europe North America > Well capitalised manufacturing in Italy, Costa Rica, UK &
Slide 41: Broadcast Market: Disruption = Change = Opportunity
The Vitec Group plc Broadcast Market: Disruption = Change = Opportunity New Screens Broadcasters outsourcing to stay competitive Broadcast must focus on News & Democratisation Live Sports Shorter of Media Events equipment life-cycles Explosion in demand for content Independent content creators a.k.a
Slide 42: Photographic market: Favourable drivers
The Vitec Group plc Photographic market: Favourable drivers 24.0 0.4 ILC Shipments Other 20.2 0.3 Market showing 20.0 17.1 15.7 0.3 16.0 13.8 signs of 12.0 9.7 9.9 12.9 13.1 0.2 0.2 stabilisation 7.5 8.0 5.3 0.1 4.0 0.1 0.0 0.0 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 De
Slide 43: Five year acquisition track record
The Vitec Group plc Five year acquisition track record Acquisition Disposal April 2012 August 2013 March 2014 October 2014 December 2014 February 2015 January 2016 April 2016 Camera Corps Teradek SIS Autocue SmallHD Paralinx Provak Offhollywood 2012 2013 2014 2015 2016 August 2012 November 2014 Stag
Slide 44: Financial Overview
The Vitec Group plc Financial Overview > Vitec has been strengthened through a Operating Profit* (£m) Operating Margin* (%) number of self-help initiatives 45 14% 12% > Exited from non-core businesses 40 10% > Streamlining & restructuring 35 8% > Integrated some great acquisitions 6% 30 4% > Signifi
Slide 45: Five year performance reflects self-help & acquisitions
The Vitec Group plc Five year performance reflects self-help & acquisitions £m 45 > Profit* and margin* growth Acquisitions FX & Disposals since 2010 despite market 40 and currency headwinds > Self-help initiatives have 35 delivered £12.8m of profit Volume, Self-Help price & 30 mix > Acquisitions ha
Slide 46: Clear Capital Allocation Policy
The Vitec Group plc Clear Capital Allocation Policy > Maintain strong cash generation 1. Reinvest to drive organic growth > Continue to invest in capital & new product development 2. Progressive dividend policy > Supported by 2.0x dividend cover (FY 15) 3. Disciplined approach to > Clear strategic a
Slide 47: The Vitec Group plc
The Vitec Group plc Bridge House Heron Square Richmond TW9 1EN UK Telephone: +44 (0)20 8332 4600 Fax: +44 (0)20 8948 8277 www.vitecgroup.com