Videndum Plc · LSE:VID
Videndum — The Vitec Group — FY2016 Earnings Presentation
43 slides from Videndum's earnings presentation, Feb 21, 2017
Slide 1: Full Year Results 2016
The Vitec Group plc Full Year Results 2016 21 February 2017 Record performance with strong growth in revenue, profit* and cash Enabling the capture and sharing of exceptional images * Before restructuring costs, charges associated with acquisition of businesses and impairment of goodwill, as describ
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 > Highlights > Stephen Bird, Group Chief Executive > Financial Review > Paul Hayes, Group Finance Director > Market and Strategy Update > Stephen Bird, Group Chief Executive > Q&A Page 3
Slide 4: Highlights
Highlights
Slide 5: Record performance with strong growth in revenue, profit and cash
The Vitec Group plc Record performance with strong growth in revenue, profit* & cash Strategic Delivered Strong growth progress in underlying higher growth, of 18.4% in technology excluding non- revenue and products, new core Haigh-Farr 19.0% in PBT* growth markets and despite & APAC lower US rental
Slide 6: Delivering on our strategy to transform Vitec to realise growth
The Vitec Group plc Delivering on our strategy to transform Vitec to realise growth 1. Improving the core by managing cash, reducing inventory and converting rental assets 2. Sustained investment in new products, technologies and markets to drive sales 3. Getting closer to our customers > Selling mo
Slide 7: Financial Review
Financial Review ey
Slide 8: Full year results reflect good growth
The Vitec Group plc Full year results reflect good growth Better / (worse) at 2016 2015 Better / Constant £m £m (worse) FX > Good growth in revenue and Revenue 376.2 317.8 18.4% 4.8% operating profit* including benefit of foreign exchange Gross profit * 148.6 129.8 14.5% 1.8% Gross margin % * 39.5%
Slide 9: Divisions outperforming their markets
The Vitec Group plc Divisions outperforming their markets Revenue Operating Profit* D at D at 2016 2015 D 2016 2015 D Constant FX Constant FX £m £m £m £m £m £m £m £m Broadcast 224.8 189.0 +35.8 +11.7 21.0 20.3 +0.7 (0.6) Photographic 151.4 128.8 +22.6 +5.3 20.5 15.1 +5.4 +0.5 376.2 317.8 +58.4 +17.0
Slide 10: Underlying revenue growth
The Vitec Group plc Underlying revenue growth £m 380 FX > Anticipated lower volumes at non- core Haigh-Farr 360 Translation > Underlying revenue growth £36.3m including Olympics and NFL contract > Acquisitions of Wooden Camera, 340 Provak and Offhollywood Acquisitions Underlying Revenue Transaction
Slide 11: Underlying operating profit growth
The Vitec Group plc Underlying operating profit* growth £m 42 FX > Underlying profit* improvement on 40 higher sales Translation £4.3m > Growth in Photographic & new 38 technologies offsetting lower Transaction sales in more mature markets Haigh- 36 £1.9m Farr Acquisitions > Lower margin NFL contrac
Slide 12: Strong free cash flow
The Vitec Group plc Strong free cash flow 2016 2015 D > Focused working capital management £m £m £m initiatives including: Operating profit * 41.5 35.4 6.1 > £11.2 million inventory reduction Depreciation (1) 18.4 16.2 2.2 > Sustained good ageing on receivables Working capital 12.0 (5.2) 17.2 > £7.4
Slide 13: Strong balance sheet
The Vitec Group plc Strong balance sheet £m 80 Free Cashflow FX Trans- > Net debt of £75.1 million after 70 Acquisitions actions in £11.6 million adverse FX impact & Pr Yr own Disposal shares > Net outflow on acquisitions includes: 60 > £17.5 million on Provak, Offhollywood, Xume & Wooden Camera 50
Slide 14: Other financial developments
The Vitec Group plc Other financial developments > One-off, non-cash, goodwill impairment of £12.1 million on non-core Haigh-Farr and US asset rentals business > Strong cash inflow from US asset rentals business with performance being carefully reviewed > Effective tax rate improved to 27% from 30%
Slide 15: A focus on cash and a clear capital allocation policy
The Vitec Group plc A focus on cash and a clear capital allocation policy > >95% operating cash conversion* (2012-2016) 1 Reinvest to drive organic growth > >100% cash conversion* 2016 > Clear investment criteria > Good dividend yield 2 Progressive dividend policy > >2.0x dividend cover > Clear stra
Slide 16: Market & Strategy Update
Market & Strategy Update
Slide 17: Vitec outperforming the market
The Vitec Group plc Vitec outperforming the market Photographic Division revenue versus CIPA shipments Broadcast Division product revenue** versus IABM At constant currency, indexed to 100 at December 2012 At constant currency, indexed to 100 at December 2012 120 150 CIPA Shipments * IABM - Acquisit
Slide 18: Strategic objectives
The Vitec Group plc Strategic objectives 1 Improve the core 2 Focus on new markets and technologies 3 Get closer to our customers 4 Expand in APAC 5 Corporate development A strategy to continue to realise growth in a changing market Page 18
Slide 19: Strategy: Improve the core
The Vitec Group plc Strategy to continue to realise growth 1 Improve the core > Focus on cash and leveraging synergies across the Group > Sustained investment in innovative new product development, e.g. Vinten Vantage robotic camera head and Litepanels LED lights > Encourage repeat and multiple purc
Slide 20: Strategy: Focus on new markets and technologies
The Vitec Group plc Strategy to continue to realise growth 2 Focus on new markets and technologies > Launch new, higher technology products for filmmakers and ICCs, e.g. Teradek Sphere and SmallHD > Collaborate to develop and commercialise high-end accessories for new image capture devices, e.g. Man
Slide 21: Strategy: Get closer to customers, expand in APAC, corporate development
The Vitec Group plc Strategy to continue to realise growth 3 Get closer to our customers > Collaborations with other industry leaders, e.g. Apple and Leica > Continued development of e-commerce capability, e.g. Amazon and manfrotto.com > Focus on opportunities to own more of our distribution channel
Slide 22: A higher technology focused business
The Vitec Group plc A higher technology focused business Broadcast Division Revenue* Higher Tech** 23% 26% 28% 31% 41% 43% Traditional 77% 74% 72% 69% 59% 57% *Reported revenue excluding IMT (disposed November 2014) and Haigh-Farr **Higher Tech includes robotics, mobile power, LED lighting, wireless
Slide 23: Summary
The Vitec Group plc Summary > Record performance in 2016 with growth in revenue, profit* and cash > Delivering on strategy to transform Vitec to realise growth 1. Improving the core 2. Sustained investment in new technology and markets 3. Getting closer to our customers 4. Growing APAC 5. Corporate
Slide 24: Lino Manfrotto 1937 – 2017
The Vitec Group plc Lino Manfrotto 1937 – 2017 Page 24
Slide 25: Questions
The Vitec Group plc Questions Page 25
Slide 26: Appendices
Appendices
Slide 27: Broadcast products
The Vitec Group plc Broadcast products * Clockwise from top left: Teradek: VidiU Pro; Sphere SmallHD: 3203 HDR Monitor; Litepanels: Brick Bi-Colour; Astra Soft 1x1 Bi-Color; Offhollywood: OMOD; Paralinx: Dart; Wooden Camera: Ultra Arm; Unified Baseplate; Low Mode V-Mount Adapter. Page 27
Slide 28: Broadcast products
The Vitec Group plc Broadcast products * Clockwise from left: Vinten: Vantage; Hexagon Track system powered by Technopoint; Autoscript: E.P.I.C. prompter; Autocue: PSP17 teleprompter; Sachtler: Sachtler Ace L – Freddie Wong Signature Edition; Video 18S2; Camera Corps: Q-Ball 3; Anton/Bauer: V90 & G9
Slide 29: Photographic products
The Vitec Group plc Photographic products Available in the Apple store * Clockwise from top left: Manfrotto: Digital Director for iPad Air 2; Befree; Compact Xtreme; Off road ThrillLED; Avenger: Wind Up stand; Gitzo: Mountaineer tripod; Monopod (folded and extended); Lastolite: triFlip kit contents
Slide 30: Working capital overview
The Vitec Group plc Working capital overview Movement in Working Capital FY 2016 FY 2015 D Working Capital Days 2016 2015 £m £m £m Inventory Days 83 105 Decrease / (increase) in inventories 11.2 (3.0) 14.2 Trade Receivable Days 43 40 (Increase) / decrease in receivables (4.5) 0.8 (5.3) Increase / (d
Slide 31: Foreign Exchange – Key Impacts on Vitec
The Vitec Group plc Foreign Exchange – Key Impacts on Vitec 1.40 EUR/USD 1.30 a) Translation > Translational impact is unhedged 1.20 $1.17 $1.13 $1.12 > The majority of the Group’s profit is in USD and EUR 1.10 > FY 2016 benefited from the weakening of Sterling Contracted at 31 Dec 16 (for next 12 m
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
The Vitec Group plc GAAP reconciliation: Profit before tax and earnings per share (EPS) 2016 2015 D 2016 2015 D £m £m £m £m £m £m Adjusted profit before tax* 37.5 31.5 6.0 Adjusted profit after tax* 27.3 21.9 5.4 (1) Restructuring costs (5.2) (4.9) (0.3) Restructuring costs, charges associated with
Slide 34: Overview
The Vitec Group plc Overview
Slide 35: What we do
The Vitec Group plc What we do Broadcast Division Photographic Division > Equipment and FY 2016 > Equipment and FY 2016 Revenue £224.8m Revenue £151.4m Services Operating Profit* £21.0m Distribution Operating Profit* £20.5m Operating Margin* 9.3% Operating Margin* 13.5% * Before restructuring costs,
Slide 36: Our Divisions: Broadcast
The Vitec Group plc Our Divisions Broadcast Division Pedestals Lighting Monitors Transmitters Systems integration Tripods Prompters Specialty Cameras Software Rentals Mobile Power Robotics Page 36
Slide 37: Our Divisions: Photographic
The Vitec Group plc Our Divisions Photographic Division Bags Filters Tripods and Heads for LED Lighting Digital Editing 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 Vitec market share 25% 7% Competition market share 5% Vitec management estimates by sales
Slide 40: Where we operate
The Vitec Group plc Where we operate > Sites in 10 countries; sell into 100+ countries 2016 Revenue 3% > Sales: UK accounts for only 9.5% of revenue > Complex restructuring and streamlining been delivered to plan Europe 18% 31% North America > Well capitalised manufacturing in Italy, Costa Rica, UK
Slide 41: Financial Overview
The Vitec Group plc Financial Overview > Vitec has been strengthened through Operating Profit* (£m) Operating Margin* (%) a 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 42: Five year performance reflects self-help & acquisitions
The Vitec Group plc Five year performance reflects self-help & acquisitions £m 45 Acquisitions & Disposals FX > Profit* growth since 2011 Volume, 40 despite market and price & mix currency headwinds 35 Self-Help > Self-help initiatives have 30 delivered £21.7m of profit 25 £16.4m Restructuring > Acq
Slide 43: The Vitec Group plc contact details
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