RNS Number : 0826P
The Vitec Group PLC
14 August 2014
 



 

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.

14 August 2014

The Vitec Group plc

Half Year Results to 30 June 2014

Revenue 3.8% higher and operating profit* up 6.3% at constant exchange rates

The Vitec Group plc ("Vitec" or "The Group"), the international provider of products and services for the Broadcast and Video, Photographic, and MAG (Military, Aerospace and Government) markets, announces its results for the half year ended 30 June 2014.

 

Results

H1 2014

H1 2013

% Change

% Change

 

 

 

 

Organic CER**

Revenue

£152.9m

£157.6m

-3.0%

-1.5%

 

 

 

 

 

Operating profit*

£19.2m

£19.8m

-3.0%

-2.1%

Operating margin* %

12.6%

12.6%

-

 

 

 

 

 

 

Profit before tax*

£17.5m

£17.6m

-0.6%

-

Adjusted earnings per share*

27.4p

27.4p

-

 

 

 

 

 

 

Operating profit

£16.6m

£12.3m

+35.0%

 

Profit before tax

£14.9m

£10.1m

+47.5%

 

Basic earnings per share

23.1p

14.9p

+55.0%

 

 

 

 

 

 

Net debt

£68.0m

£67.5m

 

 

 

 

 

 

 

Interim dividend per share

9.3p

8.9p

+4.5%

 

 

Key Points

 

Half year results in line with the Board's expectations

Good performance considering challenging markets and currency headwinds

Revenue 3.8% higher and operating profit* up 6.3% at constant exchange rates

Operating margin* maintained on lower revenue

Continued market outperformance in Photographic business

Decision to focus Videocom on core broadcast activities and exit IMT

Interim dividend increased 4.5% to 9.3 pence per share

 

* Before restructuring costs and charges associated with acquired businesses. Restructuring costs in H1 2014 were £0.9 million (H1 2013: £6.2 million). Charges associated with acquired businesses were £1.7 million (H1 2013: £1.3 million) consisting of £1.5 million for the amortisation of acquired intangible assets (H1 2013: £1.3 million) and £0.2 million transaction costs (H1 2013: £nil).

** Organic CER: At Constant Exchange Rates on a comparative basis, excluding year on year effect of acquisitions.

 

Commenting on the results, Stephen Bird, Group Chief Executive, said:

"Our results for the first half of 2014 were in line with our expectations. Our markets remained challenging and, as expected, foreign exchange rates negatively impacted our revenue and profits. At constant exchange rates, revenue and operating profit* were 3.8% and 6.3% respectively ahead of the prior period. Despite the headwinds mentioned above, we maintained margins whilst delivering our strategy of focusing on our core markets supplemented with selective value-adding acquisitions.

Within the Videocom Division, the Broadcast & Video activities performed well in a variable market including a strong performance from Teradek, acquired in the second half of 2013. We have decided to exit our IMT business, which serves the MAG market and is a relatively small part of the Division, and focus Videocom on its core broadcast activities. 

The Imaging Division has seen a continuation of challenging market conditions, particularly in the US, but we have consolidated our market share in key markets. The Services Division had a strong first half including contracts to support the Sochi Winter Olympics and FIFA World Cup.

Although our order book visibility remains limited, the Board's expectations for the full year are unchanged."

Enquiries:

The Vitec Group plc

Telephone: 020 8332 4600

Stephen Bird, Group Chief Executive

 

Paul Hayes, Group Finance Director

 

 

 

FTI Consulting

 

Nick Hasell / Susanne Yule

Telephone: 020 3727 1340

Notes

1.         This statement is based on information sourced from management estimates.

2.         Current market exchange rates as at 12 August 2014: £1 = $1.68, £1 = €1.26, €1 = $1.34, £1 = Yen172.

3.         H1 2014 average exchange rates: £1 = $1.67, £1 = €1.22, €1 = $1.37, £1 = Yen171.

4.         H1 2013 average exchange rates: £1 = $1.54, £1 = €1.17, €1 = $1.31, £1 = Yen146.

Vitec is an international Group principally serving customers in the Broadcast & Video, Photographic and Military, Aerospace and Government (MAG) markets. Listed on the London Stock Exchange with 2013 revenue of £315.4 million, Vitec is based on strong, well known, premium brands on which its customers worldwide rely. Vitec is organised in three Divisions: Videocom, Imaging and Services.

Videocom designs, manufactures and distributes systems and products used in broadcasting and live entertainment, film and video production and MAG.

Imaging designs, manufactures and distributes equipment and accessories for photography and video.

Services provides equipment rental, workflow design and technical support to TV production teams and film crews.

More information can be found at: www.vitecgroup.com.

Vitec will be presenting its results to analysts at 9.00 am on Thursday, 14 August.  An audio recording of the presentation, along with the presentation slides, will be available on our website after the meeting.  Users can pre-register to access the recording and slides by clicking "Open" in the "View Online" section for the 2014 Half Year Results via the following link: www.vitecgroup.com/half_year_results_2014.

Cautionary Statement

Statements made in this announcement that look forward in time or that express management's beliefs, expectations or estimates regarding future occurrences are "forward-looking statements" within the meaning of the United States federal securities laws. These forward-looking statements reflect Vitec's current expectations concerning future events and actual results may differ materially from current expectations or historical results.

H1 2014 Management & Financial Review

Vitec delivered a first half performance in line with our expectations. Activity levels were lower than in H1 2013 but the Group benefited from the Teradek business acquired in the second half of 2013 and contributions from the Sochi Winter Olympics and FIFA World Cup. The results reflect the incremental benefit of successfully streamlining the business in 2013, an ongoing focus on cost management and an adverse impact from foreign exchange.

Revenue decreased by 3.0% to £152.9 million (H1 2013: £157.6 million) with organic revenue at constant currency 1.5% lower. Operating profit* decreased by 3.0% to £19.2 million (H1 2013: £19.8 million) with operating margin* maintained at 12.6% on lower revenue.

The adverse year-on-year impact from foreign exchange movements in the first half was £10.3 million on revenue and £1.8 million on operating profit*. Revenue at constant exchange rates was 3.8% higher and operating profit* at constant exchange rates was 6.3% higher.

Our Videocom Division included a strong contribution from Teradek and benefited from the Sochi Winter Olympics. IMT, which represents a relatively small part of the Videocom Division, had a disappointing performance in comparison to a strong first half in 2013 which included a $5.8m contract with the US Department of Justice. The Imaging Division continued to face a challenging market, particularly for camera bags although it delivered tripod and accessory sales ahead of the market. The Services Division's revenue included the benefit from the Sochi Olympics, the FIFA World Cup and an increase in the underlying rentals market.

The gross margin* % was lower than the prior period at 43.0% (H1 2013: 45.1%) mainly reflecting product mix including the non-repeat of the higher margin US Department of Justice contract and revenue growth in the lower margin Services Division. There was a £0.9 million incremental benefit to gross margin from the 2013 restructuring projects which we delivered in line with our plans.

Operating expenses* were £4.6 million lower than in H1 2013 at £46.6 million. This includes focused cost control, £1.6 million of year-on-year benefits from restructuring activities and a £2.7 million benefit from foreign exchange partially offset by the inclusion of the acquisitions' operating expenses.

In the first half of 2014 there was a restructuring charge of £0.9 million (H1 2013: £6.2 million) relating to the completion of the restructuring projects that we commenced in 2013. This included the transfer of manufacturing from the UK to Costa Rica that was delivered on schedule and with costs in line with expectations. The total incremental benefit from restructuring was £2.5 million during the period and strongly positions the Group for the future.

Net finance expenses totalled £1.7 million (H1 2013: £2.2 million). The decrease predominantly reflects lower average borrowing levels and exchange losses in the prior year.

Profit before tax* at £17.5 million was similar to the first half of last year (H1 2013: £17.6 million). Adjusted earnings per share* were in line with H1 2013 at 27.4 pence per share. Group profit before tax of £14.9 million (H1 2013: £10.1 million) was after £0.9 million of restructuring costs (H1 2013: £6.2 million) and £1.7 million of charges associated with acquired businesses (H1 2013: £1.3 million).

Free cash flow+ of £3.8 million (H1 2013: £7.9 million) is reported after £2.1 million of cash outflows on restructuring activities (H1 2013: £3.5 million). There was a total cash outflow of £8.1 million (H1 2013: £0.2 million) after acquisitions, net purchases of shares to meet share plan commitments and dividend payments.

Net debt at 30 June 2014 was £68.0 million (31 December 2013: £61.5 million). The Group's balance sheet remains solid with a net debt to EBITDA ratio of 1.3 times (30 June 2013: 1.2 times; 31 December 2013: 1.1 times).

The Board has declared an interim dividend of 9.3 pence per share, an increase of 4.5%, which equates to dividend cover of 2.9 times on adjusted EPS*. The dividend will be paid on Friday 24 October 2014 to shareholders on the register at the close of business on Friday 26 September 2014.

* Before restructuring costs and charges associated with acquired businesses as defined on page 1 of this announcement.

+ Cash generated from operations in the financial period after net capital expenditure, net interest and tax paid.

Strategy

We believe that Vitec's Broadcast and Photographic businesses continue to present attractive long-term growth prospects for the Group. This is driven by the increase in not only the capture but also the sharing of high quality images and the continued rapid evolution of these technologies. Vitec has leading brands and technologies in these markets and we are developing and launching new premium products and services particularly for the growing number of independent pro-video users.

Our strategy is to grow our core business by leveraging our strong brands, premium positioning, global reach and product development. This includes using our expertise to help end users capture and share images. We believe that the Asia-Pacific region, which accounts for around 18% of our revenue, is an important growth market and there are good opportunities in this region. We will continue to acquire and integrate appropriate adjacent activities into our core Broadcast and Photographic businesses.

Products and services supporting major sporting events also present good growth opportunities for the Group as demonstrated in the recent Winter Olympics and FIFA World Cup. In the first half of the year we acquired assets of £1.8 million from the Speciality Cameras division of SIS Outside Broadcasts Limited, which captures unique images at live events. We are also managing our Services Division more closely with our other broadcast activities to seek to grow this part of our business.

Decision to exit from IMT

Our Videocom Division serves the Broadcast & Video market and also includes IMT, a relatively small part of our business, which provides wireless microwave products for the Military, Aerospace and Government (MAG) markets. We have attempted to grow IMT in an increasingly challenging market that has become overly price driven. This was recently demonstrated by the award of certain large Government contracts to competitors at prices where we would not generate positive returns. There are limited synergies between IMT's MAG business and other activities within the Group. IMT incurred a loss of £1.1 million in the first half of 2014 (H1 2013: profit of £1.4 million) on revenue of £5.8 million (H1 2013: £9.0 million). This compares to a breakeven position in 2013 for the full year on revenue of £14.0 million which included the large profitable Department of Justice contract.

As a result, we have decided to exit the IMT business and we are assessing our options of a sale or closure. Our preliminary assessment of the net exit costs based on closing the business is an exceptional one-off pre-tax charge in the region of c.£5.5 million, after foreign exchange recycling, of which c.£5.0 million is anticipated to be a cash outflow. We will provide an update on the exit from IMT in due course.

 

Videocom Division

The Videocom Division specialises in the supply of high-quality broadcast equipment principally for professionals engaged in producing video content for the media industries globally: broadcast, film and live events. This equipment is also supplied to meet the growing demand from pro-video users including corporate, educational and religious entities.

 

 

H1 2014

H1 2013

r %

r % Organic CER **

Revenue

£69.5m

£70.2m

-1.0%

-5.7%

Operating Profit*

£8.5m

£8.7m

-2.3%

-17.4%

Operating Margin*

12.2%

12.4%

-20 bps

-160 bps

* Before restructuring costs and charges associated with acquired businesses as defined on page 1 of this announcement.

** Organic CER: at Constant Exchange Rates excluding year on year effect of acquisitions

The Videocom Division's results summarised in this table include IMT. We have announced today that we have decided to exit from that business. Excluding IMT's performance, revenue for the Division in H1 2014 would have increased by 4.1% to £63.7 million (H1 2013: £61.2 million) and operating profit* would have increased by 31.5% to £9.6 million (H1 2013: £7.3 million).

Markets

We estimate that the Broadcast & Video addressable market for products and services supplied by Vitec is worth around £600 million annually. This includes the traditional broadcast and film markets as well as the video production market. Videocom is well positioned due to its broad geographical reach and premium products. We have a global sales team that provides strong international coverage and is able to offer a full range of products and services to our customers all over the world. This market has seen some variability in demand in the first half of the year particularly in the US although it has seen good opportunities from major sporting events.

Operations

Videocom's revenue for H1 2014 was £69.5 million, a decrease of 1.0% on H1 2013. On a constant exchange rate basis, revenue was up 6.0% but was 5.7% lower organically. Operating margin* was broadly consistent with the prior year at 12.2% including the benefit of streamlining the business and cost control measures. The Division benefited from the inclusion of a strong performance at Teradek and a contribution from supporting the Sochi Winter Olympics. As a result operating profit* on a constant exchange rate basis was up by 1.2%. Restructuring activities are largely complete, with the relocation of certain UK manufactured products to Costa Rica completed to schedule in the first half of 2014.

Our camera supports brands experienced a lower level of project activity. However we have continued to grow sales of our premium robotics products across all regions. Prompters performed in line with last year, but the Litepanels LED lighting products and Anton/Bauer mobile power products performance has been lower than expected. We are in the process of broadening our LED lighting product range to maintain our leading position in the market, and are launching some new, innovative mobile power products.

The Teradek business that we acquired in H2 2013 is performing well with strong growth post-acquisition. The business continues to develop innovative products, including the new Bolt wireless transmitter that was released in July 2014 and further product launches are planned for later in the year.

We have further strengthened our premium product and service offerings through the acquisition of the speciality camera assets of SIS Outside Broadcasts Limited. These are renowned for the innovative solutions that deliver viewers to the heart of live events, including the Stump Cam used in international cricket matches and the Plunge Cam that tracks high divers from the diving board to underwater.

In April 2014, the Group reached an agreement to acquire Autocue, a leading provider of teleprompters, for a net consideration of £6.0 million. The transaction is subject to UK competition clearance and we await the decision of the Competition and Markets Authority.

Imaging Division

The Imaging Division provides premium photographic and video equipment to both professional and non-professional users. The photographic and video equipment consists primarily of camera supports, tripods, heads, camera bags, lighting supports, LED lights and lighting accessories. We also supply a range of tripods, bags, lighting and other photographic products to the consumer segment.

Imaging

H1 2014

H1 2013

r %

r % Organic CER **

Revenue

£64.1m

£73.6m

-12.9%

-7.2%

Operating Profit*

£8.6m

£10.9m

-21.1%

-8.7%

Operating Margin*

13.4%

14.8%

-140 bps

-20 bps

* Before restructuring costs and charges associated with acquired businesses as defined on page 1 of this announcement.

** Organic CER: at Constant Exchange Rates

Markets

We estimate that the addressable Photographic market for product categories supplied or distributed by Vitec is worth around £800 million. Approximately half of this market is professional photographers and the remainder is consumers who have a keen interest in photography or who simply want to record and share images.  Photography continues to attract new consumers as the number and type of image-taking devices increases and the distribution of images via social media continues to grow in popularity.

The sale of new cameras is a key driver in the Photographic market. According to the Camera & Imaging Products Association (CIPA), global shipments of interchangeable lens cameras continued to decrease in H1 2014 and were 16% lower than prior year including a very challenging US market.

End markets, particularly the US, have seen a continued slowdown in interchangeable lens camera sales. The effect of this market softness has been exacerbated by retailers continuing to destock following high levels of inventory in 2012 plus an overall reduction in the amount of inventory in the retail chain as the mix continues to swing away from specialist camera retailers towards e-tailers. We believe that both of these effects should start to unwind in due course.

Operations

Imaging's revenue for H1 2014 was 12.9% lower than H1 2013 at £64.1 million or 7.2% lower at constant exchange rates. Operating profit* fell by £2.3 million to £8.6 million. Despite the decline in revenue, operating margin* was consistent with H1 2013 after adjusting for adverse currency movements. This reflects a continuing focus on cost control and the year-on-year benefits from the restructuring completed in 2013. Against the challenging market background, our core camera supports sales are performing relatively well and we are pleased with sales of new products including further versions of the BeFree and new 190 tripod ranges. Our share of the US market remained broadly steady whilst elsewhere we continued to grow our market share and increased sales particularly through our owned distribution channels.

The camera bags market which is largely driven by new camera sales continued to decrease significantly in the first half of the year. We are addressing this with the launch of our Manfrotto branded range of bags to grow our relatively small share of this large market.

Services Division

Our Services Division provides broadcast equipment rental and technical support to television production teams and film crews. It provides a complete one-stop solution for producers globally, enabling customers to deliver the most demanding projects. It also enables Vitec to closely monitor changes in technology and to showcase our products. The Division has a strategy to focus on events where higher levels of service are most needed.

 

H1 2014

H1 2013

r %

r % Organic CER **

Revenue

£19.3m

£13.8m

+39.9%

+52.0%

Operating Profit*

£2.1m

£0.2m

+£1.9m

+£2.0m

Operating Margin*

10.9%

1.4%

+9.5% pts

+10.1% pts

* Before restructuring costs and charges associated with acquired businesses as defined on page 1 of this announcement.

** Organic CER: at Constant Exchange Rates

Markets

We estimate that the addressable market for these services is worth around £250 million. We have seen good demand for our services during the first half of the year driven by the demand for high quality live broadcasting of major sporting events that achieve large audiences.

Operations

Revenue for H1 2014 increased by 39.9% to £19.3 million, with operating profit* £1.9 million higher at £2.1 million. This included the benefit from contracts to supply the Sochi Winter Olympics, the FIFA World Cup and an increase in our underlying rentals business. We are pleased with progress in this business where we are concentrating on driving sales, including sales of rental assets, while securing attractive pricing for our premium services. The profitability of the business is also continuing to benefit from improving asset utilisation by acquiring appropriate assets and disposing of under-utilised assets, as well as from managing the cost base effectively.

 

Geographic Spread

Vitec has a broad geographic spread. In H1 2014, 43% of our revenues by destination came from North America, with the remainder split between Europe 33%, Asia-Pacific 18% and Rest of World 6%. Only 9% of our revenue is derived from the UK. We have seen a decrease in revenues from the North American region in the first half of the year, which represented 45% of revenue in 2013, reflecting the more challenging market in this region. We currently have a direct presence in 12 countries around the world: the UK, USA, Brazil, Costa Rica, France, Germany, Italy, Netherlands, Israel, Japan, China and Singapore.

Outlook

Although our order book visibility remains limited, the Board's expectations for the full year are unchanged.

Going Concern

The Directors have made appropriate enquiries and consider that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Directors continue to adopt the going concern basis in preparing the financial statements.

 

 

 

 

John McDonough CBE

Stephen Bird

Chairman

Group Chief Executive

 

 

Principal risks and uncertainties

Vitec is exposed to a number of risk factors which may affect its performance. The Group has a well-established framework for reviewing and assessing these risks on a regular basis, and has put in place appropriate processes and procedures to mitigate against them. However, no system of control or mitigation can completely eliminate all risks. The Board has determined that the following are the principal risks facing the Group:

 

Demand for Vitec's products

Demand for our products may be adversely affected by many factors. These include changes in customer and consumer preferences and our ability to deliver appropriate products or to support changes in technology. We have continued to invest in new product development and launched a number of new products. Demand may be impacted by competitor activity and the level of customer demand in our target markets particularly in the current challenging market environment.

We value our relationships with our customers and closely monitor our target markets and user requirements. We maintain good relationships with all our key customers and make appropriate investments in product development and marketing activities to ensure that we remain competitive in each market. In support of our new product launches, we have completed consumer research before developing new products to ensure that they are appropriately designed for our target markets.

Major contract awards

Our operating performance and cash flow may be dependent on the timing of major contract awards. The timing of the award of these contracts can be difficult to predict. In addition, the loss, suspension or cancellation of contracts may impact trading performance. In particular, our MAG business has been adversely impacted by a lower level of investment in the US defence budget.

We attempt to gain a good understanding of likely demand through developing close relationships with our customers. We also have a broad range of contracts that reduce our dependence on any particular contract or customer. We actively review our orders and trading outlook and manage our resources in line with anticipated activity.

New markets and channels of distribution

As we enter new markets and channels of distribution we may achieve lower than anticipated trading volumes and pricing levels or higher costs and resource requirements. This may impact the levels of profitability and cash flows delivered. During the year we have seen a continuation of the trend of sales increasingly being made online rather than through stores.

We have a thorough process for assessing and planning the entry into new markets and related opportunities. This includes marketing and advertising strategies for our products and services. We continuously assess our performance in these markets and the related opportunities and risks. We adapt our approach taking into account our actual and anticipated performance.

Acquisitions and disposals

In pursuing our business strategy we continuously explore opportunities to enhance our business through development activities such as strategic acquisitions and disposals. This involves a number of calculated risks including: acquiring desired businesses on economically acceptable terms; integrating new businesses, employees, business systems and technology; and realising satisfactory post-acquisition performance. During the year we acquired the speciality camera assets of SIS Outside Broadcasts Limited which is being integrated into the Group. We have also reached agreement to acquire Autocue which is subject to competition clearance.

We mitigate these risks by having a clear acquisition strategy with a robust valuation model. Thorough due diligence processes are completed including the use of external advisers where appropriate. There is a clear focus on integrating acquired businesses and monitoring post-acquisition performance. Over the past four years the Group has made five acquisitions and completed the disposal of a non-core business.

Pricing pressure

We might experience pricing pressure including challenges in raising prices, especially in the current economic climate, or not recovering increases in commodity and other costs. If the price of products does not at least recover movements in commodity costs and other expenses and we are unable to reduce our expenses, our results could be adversely affected.

We ensure that our product and service offering remains competitive by investing in new product development, in appropriate marketing and product support, and improving the management of supply chain costs. This allows us to support price increases when required by working closely with our suppliers and managing our expenses and cost base appropriately.

Dependence on key suppliers

We source materials and components from many suppliers in various locations and in some instances are more dependent on a limited number of suppliers for particular items. If any of these suppliers or subcontractors fails to meet the Group's requirements, we may not have readily available alternatives, thereby impacting our ability to provide an appropriate level of customer service.

We aim to secure multiple sources of supply for all materials and components and develop strong relationships with our major suppliers. We review the performance of strategically important suppliers globally on an on-going basis.

Dependence on key customers

Whilst the Group has a wide customer base, the loss of a key customer, or a significant worsening in their success or financial performance, could result in a material impact on the Group's results.  As in previous years, Vitec has no customer that accounts for more than 10% of sales.

We monitor closely our performance with all customers through developing strong relationships, analysis of sales trends and financial performance of our key customers. We continue to expand our customer base including entering into new channels of distribution to expand our portfolio of customers.

Business Continuity

Disruption to our business can arise from a range of events such as: natural/man-made disasters, conflicts, pandemic flu or infrastructure issues affecting our production and distribution sites. In addition, we are dependent on our IT platforms continuing to work effectively in supporting our business.

We have appropriate business continuity plans within our businesses that we periodically review to mitigate these risks.

Employees

We employ around 1,800 people and are exposed to a risk of being unable to retain or recruit suitable talent to support the business. We manufacture and supply products from a number of locations and it is important that our employees operate in a professional and safe environment.

We recognise that it is important to motivate and retain capable people across our businesses to ensure that we are not exposed to risk of unplanned staff turnover. We fairly reward our employees and have appropriate staff recruitment, appraisal, talent management and succession planning strategies to ensure we recruit and retain good quality people across the business. We take our employees' health and safety very seriously and have appropriate processes in place to allow us to monitor and address any issues appropriately.

Laws and regulations

We are subject to a comprehensive range of legal obligations in all countries in which we operate. As a result, we are exposed to many forms of legal risk. These include, without limitation, regulations relating to government contracting rules, anti-bribery provisions, competition, and health and safety laws in numerous jurisdictions around the world. Failure to comply with such laws could significantly impact the Group's reputation and could expose the Group to fines and penalties.

We have resources dedicated to legal and regulatory compliance supported by external advice where necessary. We enhance our controls, processes and employee knowledge to maintain good governance and to comply with new laws and regulations such as the provisions of the UK Bribery Act 2010. The Group has processes in place to ensure that its worldwide business units understand and apply the Group's culture and processes to their own operations.

Reputation of Vitec Group

Damage to our reputation and our brand names can arise from a range of events such as poor product performance, unsatisfactory customer service, and other events either within or outside our control. We have many premium brands within our niche markets as well as the reputation of the Group.

We recognise the importance of our reputation and attempt to identify any potential issues quickly and address them appropriately. We recognise the importance of providing high quality products, good customer service and managing our business in a safe and professional manner. This requires all employees to commit to and comply with the Vitec Code of Business Conduct which was recommunicated to all employees in 2013.

Exchange rates

The global nature of the Group's business means it is exposed to volatility in currency exchange rates in respect of foreign currency denominated transactions, and the translation of net assets and income statements of foreign subsidiaries and equity accounted investments. The Group is exposed to a number of foreign currencies, the most significant being the US Dollar and Euro. We have seen a weakening of these currencies relative to sterling, which has been detrimental to our reported performance.

We regularly review and assess our exposure to changes in exchange rates. We reduce the impact of sudden movements in exchange rates with the use of appropriate hedging activities on forecast foreign exchange net exposures. We do not hedge the translation effect of exchange rate movements on the Income Statement or Balance Sheet of overseas subsidiaries.

 

Responsibility statement of the Directors in respect of the Half Year Results to 30 June 2014

We confirm that to the best of our knowledge:

•                       the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

The Half Year Results announcement report includes a fair review of the information required by:

(a)        DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Group during that period; and any changes in the related party transactions described in the last annual report that could do so.

For and on behalf of the Board

Paul Hayes

Group Finance Director

 

13 August 2014

 

 

Independent review report to The Vitec Group plc

 

Introduction

We have been engaged by the company to review the condensed set of financial statements in the Half Year results announcement for the six months ended 30 June 2014 which comprises the Condensed Consolidated Income Statement, the Condensed Consolidated Balance Sheet, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Condensed Consolidated Statement of Cash Flows and the related explanatory notes. We have read the other information contained in the Half Year results announcement and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").  Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

 

Directors' responsibilities

The Half Year results announcement is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the Half Year results announcement in accordance with the DTR of the UK FCA.

 

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU.  The condensed set of financial statements included in this Half Year results announcement has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

 

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the Half Year results announcement based on our review.

 

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion.

 

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the Half Year results announcement for the six months ended 30 June 2014 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.

 

 

Robert Brent
for and on behalf of KPMG LLP
Chartered Accountants

15 Canada Square

London

E14 5G

 

13 August 2014

 

 

Condensed Consolidated Income Statement




 

For the half year ended 30 June 2014

 

 

 


 

 

Half year to 30 June 2014

Half year to 30 June 2013

Year to 31 December 2013

 

Notes

 £m

 £m

 £m

Revenue

2

152.9

157.6

315.4

Cost of sales

 

(87.1)

(87.1)

(181.3)

Gross profit

 

65.8

70.5

134.1

Operating expenses

 

(49.2)

(58.2)

(109.8)

Operating profit

 

16.6

12.3

24.3

Comprising 

 




-  Operating profit before restructuring costs and charges associated with acquired businesses

 

19.2

19.8

39.5

-  Restructuring costs

3

(0.9)

(6.2)

(11.4)

-  Charges associated with acquired businesses

3

(1.7)

(1.3)

(3.8)

 

 

16.6

12.3

24.3

Net finance expense

4

(1.7)

(2.2)

(3.9)

Profit before tax

 

14.9

10.1

20.4

Comprising 

 




-  Profit before tax, excluding restructuring costs and charges associated with acquired businesses

 

17.5

17.6

35.6

-  Restructuring costs

3

(0.9)

(6.2)

(11.4)

-  Charges associated with acquired businesses

3

(1.7)

(1.3)

(3.8)

 

 

14.9

10.1

20.4

Taxation

7

(4.7)

(3.6)

(6.4)

Profit for the period attributable to owners of the parent

 

10.2

6.5

14.0






Earnings per share

5




Basic earnings per share

 

23.1p

14.9p

31.9p

Diluted earnings per share

 

23.0p

14.9p

31.8p

 

 

 

 


Average exchange rates

 




      Euro

 

1.22

1.17

1.17

      US$

 

1.67

1.54

1.56

 

 

Consolidated Statement of Comprehensive Income

 

 

 

For the half year ended 30 June 2014

 

 

 

 

 Half year to 30 June

 Half year to 30 June

 Year to 31 December

 

2014

2013

2013

 

 £m

 £m

 £m

Profit for the period

10.2

6.5

14.0

Other comprehensive income:




Items that will not be reclassified to profit or loss:




Remeasurements of defined benefit obligation

1.4

1.3

0.1

Related tax

(0.3)

(0.3)

(0.3)

Items that are or may be reclassified to profit or loss:




Currency translation differences on foreign currency subsidiaries

(5.8)

10.9

(2.8)

Net investment hedges - net gain/(loss)

2.1

(4.3)

0.5

Cash flow hedges - reclassified to profit or loss

(1.2)

(0.8)

(1.5)

Cash flow hedges - effective portion of changes in fair value

0.2

(0.7)

2.6

Related tax

0.3

0.4

(0.3)

Other comprehensive income/(expense), net of tax

(3.3)

6.5

(1.7)

Total comprehensive income for the period attributable to owners of the parent

6.9

13.0

12.3

 

 

Condensed Consolidated Balance Sheet

 



 

As at 30 June 2014

 



 

 

 

30 June

30 June

31 December


 

2014

2013

2013


 

 £m

 £m

 £m

Assets





Non-current assets





Intangible assets


74.9

69.6

76.3

Property, plant and equipment


50.7

51.1

53.5

Trade and other receivables


0.4

0.5

0.4

Derivative financial instruments


0.1

0.4

1.0

Deferred tax assets


13.2

14.9

14.0



139.3

136.5

145.2

Current assets





Inventories


59.5

63.9

55.3

Trade and other receivables


54.6

58.0

48.5

Derivative financial instruments


2.4

1.3

2.5

Current tax assets


0.3

0.3

2.7

Cash and cash equivalents


8.6

10.0

12.9



125.4

133.5

121.9

Total assets


264.7

270.0

267.1

Liabilities





Current liabilities





Bank overdrafts


0.8

0.5

-

Interest-bearing loans and borrowings


0.1

-

-

Trade and other payables


46.4

47.8

48.1

Derivative financial instruments


0.1

0.5

0.1

Current tax liabilities


8.2

7.1

5.2

Provisions


2.5

3.3

6.5



58.1

59.2

59.9

Non-current liabilities





Interest-bearing loans and borrowings


75.7

77.0

74.4

Derivative financial instruments


-

0.3

-

Other payables


1.1

1.4

0.8

Post-employment obligations 


7.5

8.5

9.1

Provisions


1.2

1.1

1.4

Deferred tax liabilities


1.4

1.4

1.3



86.9

89.7

87.0

Total liabilities


145.0

148.9

146.9

Net assets


119.7

121.1

120.2






Equity





Share capital


8.8

8.8

8.8

Share premium


12.8

10.8

12.1

Translation reserve


(8.0)

4.6

(4.3)

Capital redemption reserve


1.6

1.6

1.6

Cash flow hedging reserve


1.6

0.4

2.3

Retained earnings


102.9

94.9

99.7

Total equity


119.7

121.1

120.2






Balance Sheet exchange rates





      Euro


1.25

1.17

1.20

      US$


1.71

1.52

1.66

 

 

Consolidated Statement of Changes in Equity

For the half year ended 30 June 2014


 Share capital

 Share premium 

 Translation reserve

 Capital redemption reserve

Cash flow hedging reserve

 Retained earnings

 Total equity


 £m

 £m

 £m

 £m

 £m

 £m

 £m

Balance at 1 January 2014

8.8

12.1

(4.3)

1.6

2.3

99.7

120.2

Profit for the period

-

-

-

-

-

10.2

10.2

Other comprehensive income/(expense) for the period

-

-

(3.7)

-

(0.7)

1.1

(3.3)

Contributions by and distributions to owners








Dividends paid

-

-

-

-

-

(6.2)

(6.2)

Own shares purchased

-

-

-

-

-

(1.9)

(1.9)

New shares issued

-

0.7

-

-

-

-

0.7

Balance at 30 June 2014

8.8

12.8

(8.0)

1.6

1.6

102.9

119.7









 Share capital

 Share premium 

 Translation reserve

 Capital redemption reserve

Cash flow hedging reserve

 Retained earnings

 Total equity


 £m

 £m

 £m

 £m

 £m

 £m

 £m

Balance at 1 January 2013

8.8

10.4

(2.0)

1.6

1.5

94.3

114.6

Profit for the period

-

-

-

-

-

6.5

6.5

Other comprehensive income/(expense) for the period

-

-

6.6

-

(1.1)

1.0

6.5

Contributions by and distributions to owners








Dividends paid

-

-

-

-

-

(5.9)

(5.9)

Own shares purchased

-

-

-

-

-

(1.3)

(1.3)

New shares issued

-

0.4

-

-

-

-

0.4

Share-based payment charge

-

-

-

-

-

0.3

0.3

Balance at 30 June 2013

8.8

10.8

4.6

1.6

0.4

94.9

121.1

 

 

Condensed Consolidated Statement of Cash Flows





For the half year ended 30 June 2014





 


 Half year to 30 June

 Half year to 30 June

 Year to 31 December

 


2014

2013

2013

 

Notes

 £m

 £m

 £m

Cash flows from operating activities 




 

Profit for the period


10.2

6.5

14.0

Adjustments for:





Taxation


4.7

3.6

6.4

Depreciation


6.8

6.1

12.4

Amortisation of intangible assets


2.5

2.4

4.5

Net gain on disposal of property, plant and equipment and software


(1.3)

(0.5)

(2.1)

Share-based payment charge


-

0.3

1.4

Fair value adjustment to contingent consideration since date of acquisition


-

-

0.8

Net finance expense


1.7

2.2

3.9

Operating profit before changes in working capital and provisions 


24.6

20.6

41.3

(Increase)/decrease in inventories


(5.9)

(1.2)

4.9

(Increase)/decrease in receivables


(7.3)

(5.6)

1.8

(Decrease)/increase in payables


(0.4)

2.3

3.1

(Decrease)/increase in provisions


(1.7)

1.7

1.3

Cash generated from operating activities


9.3

17.8

52.4

Interest paid


(1.7)

(1.8)

(3.6)

Tax received/(paid)


1.4

(2.3)

(8.5)

Net cash from operating activities


9.0

13.7

40.3






Cash flows from investing activities 





Proceeds from sale of property, plant and equipment and software


2.6

1.3

3.8

Purchase of property, plant and equipment


(5.6)

(6.7)

(19.3)

Purchase of software and capitalisation of development costs


(2.2)

(0.4)

(3.4)

Acquisition of businesses, net of cash acquired


(4.0)

(1.3)

(8.5)

Net cash used in investing activities


(9.2)

(7.1)

(27.4)






Cash flows from financing activities 





Proceeds from the issue of shares


0.2

0.4

0.4

Own shares purchased


(1.9)

(1.3)

(1.5)

Proceeds from interest-bearing loans and borrowings


3.5

(0.3)

1.9

Dividends paid


(6.2)

(5.9)

(9.8)

Net cash used in financing activities


(4.4)

(7.1)

(9.0)






(Decrease)/increase in cash and cash equivalents  

8

(4.6)

(0.5)

3.9

Cash and cash equivalents at 1 January


12.9

9.3

9.3

Effect of exchange rate fluctuations on cash held 


(0.5)

0.7

(0.3)

Cash and cash equivalents at the end of period (1)

8

7.8

9.5

12.9

(1) Cash and cash equivalents include bank overdrafts in the balance sheet



 

 

1 Accounting policies

Reporting entity

The Vitec Group plc (the Company) is a company domiciled in the United Kingdom.  These condensed consolidated interim financial statements as at and for the six months ended 30 June 2014 comprise the Company and its subsidiaries (together referred to as the Group).

Basis of preparation and statement of compliance

These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. The accounting policies applied in the preparation of this interim financial information are consistent with the policies applied by the Group in the consolidated financial statements as at and for the year ended 31 December 2013 which were prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. It does not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2013.

The comparative figures for the year ended 31 December 2013 do not constitute statutory accounts for the purpose of section 435 of the Companies Act 2006. The auditors have reported on the 2013 accounts, and these have been filed with the Registrar of Companies; their report was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis, and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense.  Actual results may differ from these estimates.


In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2013.

These condensed consolidated interim financial statements were approved by the Board of Directors on 13 August 2014.

Changes in Accounting Policies

There are a number of new standards, amendments to standards and interpretations that are not yet effective for the half year ended 30 June 2014, and have not been adopted early in preparing these condensed consolidated interim financial statements. None of these are anticipated to have any material impact on these condensed consolidated interim financial statements.

 

 

2 Segment reporting








 









 

Reportable segments








 

For the half year ended 30 June 2014








 









 


Half year to 30 June


2014

2013

2014

2013

2014

2013

2014

2013

2014

2013


£m

£m

£m

£m

£m

£m

£m

£m

£m

£m


Videocom

Imaging

Services

Corporate and unallocated

Consolidated

Revenue from external customers:











     Sales

65.1

68.7

64.1

73.6

5.4

3.6

-

-

134.6

145.9

     Services

4.4

1.5

-

-

13.9

10.2

-

-

18.3

11.7

Total revenue from external customers

69.5

70.2

64.1

73.6

19.3

13.8

-

-

152.9

157.6

Inter-segment revenue (1)

0.7

1.2

0.1

0.3

0.1

-

(0.9)

(1.5)

-

-

Total revenue

70.2

71.4

64.2

73.9

19.4

13.8

(0.9)

(1.5)

152.9

157.6












Segment result

8.5

8.7

8.6

10.9

2.1

0.2

-

-

19.2

19.8

Restructuring costs

(0.9)

(3.0)

-

(2.7)

-

(0.5)

-

-

(0.9)

(6.2)

Transaction costs relating to acquisitions

(0.2)

-

-

-

-

-

-

-

(0.2)

-

Amortisation of acquired intangible assets

(1.3)

(1.0)

(0.2)

(0.3)

-

-

-

-

(1.5)

(1.3)

Operating profit

6.1

4.7

8.4

7.9

2.1

(0.3)

-

-

16.6

12.3

Net finance expense









(1.7)

(2.2)

Taxation









(4.7)

(3.6)

Profit for the period









10.2

6.5

(1) Inter-segment pricing is determined on an arm's length basis.

 

 

 

Geographical segments




For the half year ended 30 June 2014





 Half year to 30 June

 Half year to 30 June

 Year to 31 December


2014

2013

2013


 £m

 £m

 £m

Analysis of revenue from external customers, by location of customer




United Kingdom

13.7

13.3

26.5

The rest of Europe

37.5

36.4

71.6

North America

65.9

71.4

142.0

Asia Pacific

27.3

27.9

56.8

The rest of the World

8.5

8.6

18.5

Total revenue from external customers

152.9

157.6

315.4

The Group's operating segments are located in several geographical locations, and sell products and services on to external customers in all parts of the world.

 

 

 

3 Restructuring costs and charges associated with acquired businesses

Restructuring costs and charges associated with acquired businesses are excluded from key performance measures in order to more accurately show the underlying current business performance of the Group in a consistent manner and reflect how the business is managed and measured on a day-to-day basis. Restructuring costs include employment termination costs, and other site rationalisation and closure costs. Charges associated with acquired businesses include non-cash charges such as amortisation of acquired intangible assets, cash charges such as transaction costs and fair value adjustments to contingent consideration since date of acquisition.

Restructuring costs and charges associated with acquired businesses comprise the following:


Half year to 30 June

Half year to 30 June

Year to 31 December


2014

2013

2013


 £m

 £m

 £m

Restructuring costs (1)

(0.9)

(6.2)

(11.4)

Fair value adjustment to contingent consideration since date of acquisition

-

-

(0.8)

Transaction costs relating to acquisitions

(0.2)

-

(0.4)

Amortisation of acquired intangible assets

(1.5)

(1.3)

(2.6)

Restructuring cost and charges associated with acquired businesses, before tax

(2.6)

(7.5)

(15.2)

Tax on restructuring costs and charges associated with acquired businesses

0.7

2.0

4.6

Restructuring costs and charges associated with acquired businesses, net of tax

(1.9)

(5.5)

(10.6)

(1)  As announced in 2013, the Group undertook a number of restructuring activities that included downsizing selected activities in the UK, Italy, Israel and the US and expanding its capabilities in Costa Rica to further shift to lower cost manufacturing.  The costs incurred included employment termination costs, site rationalisation and closure costs. Costs of £0.9m were incurred in the period to 30 June 2014 within the Videocom division.  These actions have better positioned the Group for the future.

 

 

4 Net finance expense





Half year to 30 June

Half year to 30 June

Year to 31 December


2014

2013

2013


 £m

 £m

 £m

 




Net currency translation gains/(losses)

0.1

(0.2)

-

Interest payable on interest-bearing loans and borrowings

(1.7)

(1.8)

(3.6)

Net interest expense on net defined benefit pension scheme liabilities

(0.1)

(0.2)

(0.3)

Net finance expense

(1.7)

(2.2)

(3.9)

 




 

 

5  Earnings per share

Earnings per share ("EPS") is the amount of post-tax profit attributable to each share.

Basic EPS is calculated on the profit for the period divided by the weighted average number of ordinary shares in issue during the period.

Diluted EPS is calculated on the profit for the period divided by the weighted average number of ordinary shares in issue during the period, but adjusted for the effects of dilutive share options.

The adjusted EPS measure is used by Management to assess the underlying performance of the ongoing businesses, and therefore excludes restructuring costs and charges associated with acquired businesses, both net of tax.


The calculation of basic, diluted and adjusted EPS is set out below:



Half year to 30 June

Half year to 30 June


2014

2013

 

 £m

 £m

Profit for the financial period

10.2

6.5

Add back:



Restructuring costs and charges associated with acquired businesses, net of tax

1.9

5.5

Earnings before restructuring costs and charges associated with acquired businesses

12.1

12.0



 Half year to 30 June

 Half year to 30 June

 Half year to 30 June


2014

2013

2014

2013

2014

2013


 No

 No

 pence

 pence

 pence

 pence


Weighted average number of shares '000

Adjusted earnings per share

Earnings per share

Basic

44,129

43,762

27.4

27.4

23.1

14.9

Dilutive potential ordinary shares

196

249

(0.1)

(0.2)

(0.1)

-

Diluted

44,325

44,011

27.3

27.2

23.0

14.9

 

 

6  Interim dividend

After the balance sheet date, an interim dividend of 9.3 pence per share has been declared by the Directors, totalling £4.1 million (2013: 8.9 pence per share totalling £3.9 million). The dividend has not been provided for at the half year and there are no tax consequences.

The dividend will be paid on Friday 24 October 2014 to shareholders on the register at the close of business on Friday 26 September 2014. The Company has a Dividend Reinvestment Plan that allows shareholders to reinvest dividends to purchase additional shares in the Company. For shareholders to apply the proceeds of this and future dividends to the plan, application forms must be received by the Company's registrar by no later than Monday 29 September 2014. Existing participants in the Plan will automatically have the interim dividend reinvested.  Details on the Plan can be obtained from Capita Asset Services on 0871 664 0300 or at www.capitashareportal.com. Calls cost 10p per minute plus network extras, lines are open 9.00am to 5.30pm Monday to Friday.

 

 

7 Taxation


Half year to 30 June

Half year to 30 June

Year to 31 December


2014

2013

2013


 £m

 £m

 £m

Before restructuring costs and charges associated with acquired businesses

 

 

 

Current tax

4.9

5.4

11.2

Deferred tax

0.5

0.2

(0.2)


5.4

5.6

11.0

Restructuring costs and charges associated with acquired businesses

 

 

 

Current tax (1)

(0.8)

(2.2)

(4.6)

Deferred tax (2)

0.1

0.2

-


(0.7)

(2.0)

(4.6)

Summarised in the Income Statement as follows

 

 

 

Current tax

4.1

3.2

6.6

Deferred tax

0.6

0.4

(0.2)


4.7

3.6

6.4


(1) Current tax credits of £0.8 million were recognised with a corresponding credit to restructuring costs and charges associated with acquired businesses in 2014.  £0.2 million of this represents the tax deduction associated with the restructuring costs, the remaining £0.6 million represents the current tax impact of the amortisation of intangible assets in the period.

(2) Deferred tax charges of £0.1 million have been recognised relating to the deferred tax impacts of the amortisation of intangible assets.

 

 

8  Analysis of net debt

The table below analyses the Group's components of net debt and their movements in the period:


 Half year to 30 June

 Half year to 30 June

 Year to 31 December


2014

2013

2013


 £m

 £m

 £m

 (Decrease)/increase in cash and cash equivalents

(4.6)

(0.5)

3.9

 (Proceeds)/repayment of interest-bearing loans and borrowings

(3.5)

0.3

(1.9)

 (Increase)/decrease in net debt resulting from cash flows

(8.1)

(0.2)

2.0

 Effect of exchange rate fluctuations on cash held

(0.5)

0.7

(0.3)

 Effect of exchange rate fluctuations on debt held

2.1

(4.3)

0.5

 Effect of exchange rate fluctuations on net debt

1.6

(3.6)

0.2

 Movements in net debt in the period

(6.5)

(3.8)

2.2

 Net debt at 1 January

(61.5)

(63.7)

(63.7)

 Net debt at the end of period

(68.0)

(67.5)

(61.5)





 Cash and cash equivalents in the Balance Sheet

8.6

10.0

12.9

 Bank overdrafts

(0.8)

(0.5)

-

 Cash and cash equivalents in the Statement of Cash Flows

7.8

9.5

12.9

 Interest-bearing loans and borrowings

(75.8)

(77.0)

(74.4)

 Net debt at the end of period

(68.0)

(67.5)

(61.5)

 

 

9  Acquisitions

On 24 March 2014, the Videocom division of the Group acquired the assets of the Speciality Cameras division of SIS Outside Broadcasts Limited through a business combination for a cash consideration of £1.8 million. The fair value of the assets acquired was £1.6 million resulting in goodwill of £0.2 million. The acquired speciality camera assets are renowned for the innovative solutions that deliver viewers to the heart of live events. This includes the Stump CamTM used in international cricket matches, unique on-board cameras for high profile sporting events such as on the yachts in the America's Cup, and the Plunge CamTM that tracks high divers from the dive to underwater. The acquisition complements the Group's existing range of broadcast equipment and its products will be marketed through the Group's global distribution network. Under the terms of the acquisition, there is a potential contingent consideration of up to £1.4 million that is dependent on the performance against revenue targets for future events.

The cash outflow during the half year ended 30 June 2014 of £4.0 million in respect of acquisitions relates to the following :

-  In March 2014, the Videocom division of the Group paid a cash consideration of £1.8 million for the assets of the Speciality Cameras division of SIS Outside Broadcasts Limited.

-  In March 2014, US$2.4 million (£1.5 million) was paid in cash as part of a contingent total consideration of US$3.2 million (£2.0 million) in relation to Teradek (acquired in August 2013). The remaining US$0.8 million (£0.5 million) was satisfied by the issue of 72,933 new Vitec ordinary shares.

-  In February 2014, a contingent consideration of £0.7 million in relation to Haigh-Farr (acquired in December 2011) was paid.

On 10 April 2014, the Group reached an agreement to acquire Autocue, subject to competition clearance, for a net consideration of £6.0 million. Autocue is a leading provider of teleprompters.

 

 

10  Events after the reporting period

As highlighted in the Management & Financial Review, the Board has decided to exit from the IMT business. IMT is a small part of the Videocom segment and in the half year ended 30 June 2014 reported an operating loss of £1.1 million (30 June 2013: operating profit of £1.4 million) on revenue of £5.8 million (30 June 2013: £9.0 million).

The Group is assessing exit options including closure or disposal. The preliminary assessment of the net loss before tax based on closing the business is in the region of £5.5 million after previously recorded foreign exchange gains are recycled to the Income Statement. This one-off charge would be presented separately in the Income Statement for the year ending 31 December 2014.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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