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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Videndum Plc | LSE:VTC | London | Ordinary Share | Ordinary Shares |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1,290.00 | 1,280.00 | 1,288.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
TIDMVTC
RNS Number : 4046X
Vitec Group PLC (The)
10 August 2018
Hot Features
Premium
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. THIS ANNOUNCEMENT
CONTAINS INSIDE INFORMATION.
10 August 2018
The Vitec Group plc
Half Year Results to 30 June 2018
Record H1 profit and improved margins
The Vitec Group plc ("Vitec" or "the Group"), the international provider
of products and solutions for the broadcast and photographic markets,
announces its results for the half year ended 30 June 2018.
Results % change
H1 2018 H1 2017 As reported Constant
FX rates
----------- ---------- ------------
Continuing operations
Revenue GBP183.3m GBP164.9m +11.2% +16.0%
Adjusted operating profit* GBP25.5m GBP21.6m +18.1% +16.7%
Adjusted operating margin* 13.9% 13.1%
Adjusted profit before tax* GBP24.5m GBP19.7m +24.4% +19.2%
Adjusted basic earnings per
share* 39.5p 34.2p +15.5%
Statutory results
Revenue GBP183.3m GBP164.9m +11.2%
Operating profit GBP20.7m GBP18.3m +13.1%
Operating margin 11.3% 11.1%
Profit before tax GBP19.7m GBP16.4m +20.1%
Basic earnings per share
from continuing and discontinued
operations 38.2p 32.0p +19.4%
Interim dividend per share 11.5p 10.4p
Free cash flow* GBP16.4m GBP19.4m
Net debt GBP43.0m GBP52.6m
Highlights
-- 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%)
-- Continued progress in driving further growth and efficiency
* JOBY and Lowepro acquisition performing in line with
expectations and gaining market share; acquisition of
Adeal expanded APAC distribution into Australia
* Significant number of market-leading new products
launched at end of 2017 are selling well
* Further improvements to manufacturing operations
across the Group including move to new Bury St
Edmunds, UK site; transfer from Shelton, US to our
facility in Costa Rica on track
-- Strong Balance Sheet to support organic investment and M&A
-- Full year expectations remain unchanged, with material EPS
growth
* In addition to statutory reporting, Vitec reports alternative performance
measures ("APMs") which are not defined or specified under the requirements
of International Financial Reporting Standards (IFRS). The Group
uses these APMs to improve the comparability of information between
reporting periods and Divisions, by adjusting for certain items which
impact upon IFRS measures, to aid the user in understanding the activity
taking place across the Group's businesses. APMs are used by the
Directors and management for performance analysis, planning, reporting
and incentive purposes. A summary of APMs used and their closest
equivalent statutory measures is given in the Glossary.
Commenting on the results, Stephen Bird, Group Chief Executive, said:
"Vitec continued to make good progress, delivering record first half
profit and earnings per share for shareholders.
We are seeing the benefits of the actions taken last year to streamline
the Group's portfolio, acquire new product lines and restructure
into three Divisions.
The broad range of products in Imaging Solutions enables us to continue
to outperform the market, and JOBY and Lowepro are performing to
plan. The new products launched by Production Solutions continue
to be well received and the Division successfully moved its head
office operations to a new manufacturing site in Bury St Edmunds.
As anticipated, we benefitted from the 2018 Winter Olympics. Our
Creative Solutions Division continued to grow strongly and gain market
share prior to the fire in April 2018, which temporarily disrupted
SmallHD's site operations.
Vitec has a diversified product portfolio with strong positions in
the fast moving and growing "image capture and content creation"
market. We remain on track in the second half of the year; we expect
to deliver organic revenue growth and year-on-year margin improvements,
and to identify businesses to acquire in core and adjacent markets.
The Board's expectations for the full year are unchanged, with material
EPS growth."
For further information please
contact:
The Vitec Group plc Telephone: 020 8332 4600
Stephen Bird, Group Chief Executive
Kath Kearney-Croft, Group Finance
Director
MHP Communications Telephone: 020 3128 8100
Tim Rowntree/ Ollie Hoare
Vitec will present its results to analysts at 9.30am on Friday, 10
August 2018. A live webcast of the presentation will be available
on our website, and an audio recording, along with the presentation
slides and a highlights video, will be available after the meeting.
Users can pre-register to access the presentation material using
the following link:
www.vitecgroup.com/investors/results-reports-and-presentations/
Notes to Editors:
Vitec is a leading global provider of premium branded products and
solutions to the fast moving and growing "image capture and content
creation" market.
Vitec's customers include broadcasters, independent content creators,
photographers and enterprises, and our activities comprise: design,
manufacture and distribution of high performance products and solutions
including camera supports, camera mounted electronic accessories,
robotic camera systems, prompters, LED lights, mobile power, monitors
and bags.
We employ around 1,700 people across the world in eleven different
countries and are organised in three Divisions: Imaging Solutions,
Production Solutions and Creative Solutions.
The Vitec Group plc is listed on the London Stock Exchange with 2017
revenue from continuing and discontinued operations of GBP378.1 million.
More information can be found at: www.vitecgroup.com
LEI number: 2138007H5DQ4X8YOCF14
Notes 1 This statement is based on information sourced from management
estimates and includes comparing performance at constant exchange
rates to assist in understanding the underlying performance
of the Group.
2 H1 2018 average exchange rates: GBP1 = $1.38, GBP1 = EUR1.14,
EUR1 = $1.21, GBP1 = Yen149
3 H1 2017 average exchange rates: GBP1 = $1.27, GBP1 = EUR1.16,
EUR1 = $1.09, GBP1 = Yen142
H1 2018 management and financial overview
Adjusted* Statutory
H1 2018 H1 2017 % Change % Change H1 2018 H1 2017
at constant
exchange
rates
-------------- ---------- ---------- --------- ---------- ----------
Revenue
Continuing
operations GBP183.3m GBP164.9m +11.2% +16.0% GBP183.3m GBP164.9m
Total
operations GBP183.3m GBP187.6m -2.3% +1.6% - -
Operating
profit
Continuing
operations GBP25.5m GBP21.6m +18.1% +16.7% GBP20.7m GBP18.3m
Total
operations GBP25.5m GBP21.2m +20.3% +18.9% - -
Profit before
tax
Continuing
operations GBP24.5m GBP19.7m +24.4% +19.2% GBP19.7m GBP16.4m
Total
operations GBP24.5m GBP19.3m +26.9% +21.6% - -
Basic
earnings per
share
Continuing
operations 39.5p 34.2p +15.5% 38.2p 30.3p
Total
operations 39.5p 31.7p +24.6% 38.2p 32.0p
---------- ---------- --------- ------------- ---------- ----------
Revenue from continuing operations increased by 11.2% to GBP183.3 million
(H1 2017: GBP164.9 million) despite the impact of the fire at premises
adjacent to SmallHD in April 2018. Adjusted operating profit* from continuing
operations was 18.1% higher at GBP25.5 million (H1 2017: GBP21.6 million).
At constant exchange rates, revenue from continuing operations was 16.0%
higher and adjusted operating profit* from continuing activities was
16.7% higher. This was driven by higher revenue from the 2017 acquisition
of JOBY and Lowepro, continued strong growth in Creative Solutions prior
to the fire at SmallHD and the benefit of the Winter Olympics.
Our insurance cover is expected to mitigate any potential losses from
the fire. Results for the first half include GBP4.7 million related
to the insurance claim; a staged payment of $4.3 million (GBP3.2 million)
was received from the insurer in June 2018 to cover in part property
damage and business interruption for the SmallHD business. The business
is making good progress in returning to full operational performance.
Imaging Solutions' revenue grew by 25.6% to GBP98.5 million and adjusted
operating profit* increased by 10.4% to GBP14.9 million. Revenue growth
included a GBP21.5 million benefit from JOBY and Lowepro, partly offset
by GBP2.5 million from unfavourable foreign exchange. At constant exchange
rates and excluding the impact of acquisitions, revenue was in line
with the prior period and adjusted operating profit* grew by 4.3% driven
by productivity savings.
Production Solutions' revenue from continuing operations increased by
2.5% to GBP57.1 million driven by the Winter Olympics and strong sales
of Litepanels Gemini lights and Flowtech tripods, launched at the end
of 2017, partly offset by unfavourable foreign exchange. Adjusted operating
profit* increased by 50.0% to GBP9.9 million due to higher volumes,
higher margin impact from the Winter Olympics and favourable foreign
exchange. At constant exchange rates revenue from continuing operations
increased by 6.9% and adjusted operating profit* from continuing operations
was 31.8% higher than the prior period.
Revenue in Creative Solutions declined by 10.1% to GBP27.7 million,
a reduction of 2.5% on a constant currency basis. Prior to the fire
which disrupted SmallHD's operations, Creative Solutions' revenue was
growing at c. 9% after excluding the impact of foreign exchange and
the 2017 acquisition of RTMotion, as we continued to gain share in the
fast growing Independent Content Creator market. We expect to return
to growth in H2. Adjusted operating profit* increased by 7.7% to GBP7.0
million which included GBP4.7 million of other income related to the
insurance claim following the fire. At constant exchange rates adjusted
operating profit* increased by 16.7%.
Reported group gross margin from continuing operations of 45.7% was
higher than the prior period (H1 2017: 44.7%). This reflects booking
the insurance income to gross profit with no adjustment for lost revenue
in Creative Solutions, the impact of the higher margin Winter Olympics
in Production Solutions, and the expected decline in margin in Imaging
Solutions due to the acquisition of JOBY and Lowepro, partly offset
by productivity savings.
Adjusted operating expenses* from continuing operations were GBP6.1
million higher than the prior period at GBP58.2 million (H1 2017: GBP52.1
million). This mainly reflects the impact of the acquisition of JOBY
and Lowepro and higher corporate costs, partly offset by favourable
foreign exchange.
Adjusted operating margin* was 13.9% on a reported basis which includes
a small benefit from accounting for the SmallHD fire insurance claim.
The reported adjusted operating margin* improved from H1 2017 total
operations (11.3%), including the benefit from disposing of Haigh-Farr
and Bexel, as we progress towards achieving our mid-teen target over
the medium-term.
Adjusted profit before tax* from continuing operations of GBP24.5 million
was GBP4.8 million higher than the prior period (H1 2017: GBP19.7 million).
This included a net foreign exchange benefit versus the prior period
of GBP0.9 million.
Adjusted basic earnings per share* from continuing operations increased
by 15.5% to 39.5 pence per share (H1 2017: 34.2 pence per share).
Statutory profit before tax of GBP19.7 million (H1 2017: GBP16.4 million)
was after GBP4.8 million charges associated with acquisition of businesses
(H1 2017: GBP3.3 million).
Free cash flow* of GBP16.4 million (H1 2017: GBP19.4 million) includes
a working capital outflow of GBP2.1 million (H1 2017: GBP2.0 million).
The prior period included GBP2.3 million of asset sales from Bexel prior
to its disposal and higher depreciation.
Net debt at 30 June 2018 was GBP43.0 million (31 December 2017: GBP42.9
million). The decrease in net debt resulting from cash flows was GBP1.2
million (H1 2017: GBP19.8 million). This was after: GBP9.0 million of
dividend payments (H1 2017: GBP7.7 million); GBP3.7 million transactions
in own shares relating to funding of our employee incentive programme;
and GBP2.5 million net cash outflow relating to the acquisition of Adeal.
There was also a net unfavourable foreign exchange impact of GBP1.3
million driven by US dollar denominated debt. The Group's balance sheet
remains strong with a net debt to adjusted EBITDA* ratio of 0.7 times
(30 June 2017: 0.9 times).
The Board has declared an interim dividend of 11.5 pence per share (H1
2017: 10.4 pence per share). The dividend will be paid on Friday, 19
October 2018 to shareholders on the register at the close of business
on Friday, 21 September 2018. The Group has sufficient distributable
reserves to cover the dividends for a number of years.
Continued progress
Vitec operates in the fast moving and growing "image capture and content
creation" market. Technology and social media are driving fundamental
changes to this market and Vitec's unique heritage, the credibility
of our premium products, and our manufacturing and distribution strengths,
provide us with exciting opportunities to capitalise on those changes.
2017 was a transformational year for Vitec, as we significantly streamlined
our portfolio through disposals and acquisitions, repositioning the
Group for further progress. From 1 January 2018 we changed our reporting
from two to three Divisions to reflect a changing customer base, to
enable us to adapt more quickly to market and technological changes,
and to give greater focus to the fast-growing Independent Content Creator
market. Our new three Divisions - Imaging Solutions, Production Solutions
and Creative Solutions - are highly customer-focused and operate in
a decentralised, entrepreneurial structure, yet share capabilities across
the Group.
Vitec continues to lead the market with its range of products and solutions
and is making good progress delivering against our clear growth strategy:
1. Organic growth through continued product innovation, and geographical,
distribution and digital expansion to get closer to our customers and
expand our market share;
2. Margin improvements by optimising our manufacturing and assembly
portfolio, improving productivity, optimising our channel and Divisional
sales mix, identifying cross-Divisional synergies and making higher
margin acquisitions; and
3. Further M&A activity with carefully targeted acquisitions in core
and adjacent niche markets, investing in new and faster growing markets
and technologies.
Imaging Solutions
Imaging Solutions designs, manufactures and distributes premium branded
equipment for photographic and video cameras and provides dedicated
solutions to professional and non-professional image makers. This consists
primarily of camera supports and heads, camera bags, lighting supports,
LED lights, lighting controls and filters. It also designs and distributes
a range of premium accessories for smartphones, action cameras and drones.
Imaging Solutions represents 54% of Group revenue, and our three year
strategy is to increase revenue and maintain margins.
Adjusted* Statutory
Imaging Solutions H1 2018 H1 2017 % Change % Change H1 2018 H1 2017
at constant
exchange
rates
--------- --------- --------- ------------- --------- ---------
Revenue GBP98.5m GBP78.4m +25.6% +29.1% GBP98.5m GBP78.4m
Operating profit GBP14.9m GBP13.5m +10.4% +13.7% GBP13.1m GBP13.4m
Operating margin 15.1% 17.2% -210 bps -210 bps 13.3% 17.1%
--------- --------- --------- ------------- --------- ---------
* For Imaging Solutions, before charges associated with acquisition
of businesses of GBP1.8m (H1 2017: GBP0.1m).
Imaging Solutions grew revenue by 25.6% to GBP98.5 million. This strong
result was driven by the transformational acquisition of JOBY and Lowepro,
which completed in September 2017 and is performing in line with expectations,
delivering revenue of GBP21.5 million during the period. Overall, performance
of these brands is expected to be weighted towards the second half.
Excluding the unfavourable impact of foreign exchange, as well as the
impact from acquisitions, revenue was in line with the prior period
with a slower start in Q1 and growth in Q2. Adjusted operating profit*
increased by 4.3% on the same basis.
Camera and Imaging Products Association's (CIPA) data of year-to-date
shipments of interchangeable lens cameras (ILCs) stabilised in Q2, following
the slightly lower performance in Q1. Our sales continued to outperform
CIPA trends and we maintained our leading market share in bags and supports.
During the period JOBY and Lowepro returned to month-on-month market
share growth.
We have made progress in developing our distribution partnerships to
support both innovation and user engagement. We signed a strategic alliance
with Sony and have agreed a full product roadmap; the first Manfrotto
and Gitzo dedicated accessories for Sony Alpha were launched in April
2018 and are performing ahead of expectations. We developed the JOBY
GripTight PRO TelePod tripod in conjunction with Apple, which is also
performing well and has further enhanced our presence in Apple stores
globally.
We continue to invest in developing our own distribution channels and
acquired Adeal, our former distribution partner in Australia, in March
2018. The acquisition of Adeal is in line with Vitec's strategy to expand
in APAC and get closer to our customers.
Adjusted operating margin* decreased by 2.1% pts to 15.1%. This reflects
the expected impact of the JOBY and Lowepro acquisition, where products
have a slightly lower margin in line with comparable products in the
rest of the Division, and H1 margins were depressed due to selling through
the buyback inventory. After excluding the impact of acquisitions and
foreign exchange, adjusted operating margin* increased by 0.8% pts.
This improvement was driven by productivity savings, including greater
use of automation at our facility in Italy.
Statutory operating profit decreased by 2.2% to GBP13.1 million which
included GBP1.8 million of costs associated with acquisitions (H1 2017:
GBP0.1 million).
Production Solutions
Production Solutions designs, manufactures and distributes premium branded
products and solutions for broadcasters, film and video production companies,
independent content creators and enterprises. Products include video
heads, tripods, lights, batteries and speciality camera systems. Production
Solutions represents 31% of Group revenue, and our three year strategy
is to maintain revenue and improve margins.
Adjusted* Statutory
Production H1 2018 H1 2017 % Change % Change H1 2018 H1 2017
Solutions at constant
exchange
rates
--------- --------- --------- ------------- --------- ---------
Revenue GBP57.1m GBP55.7m +2.5% +6.9% GBP57.1m GBP55.7m
Operating profit GBP9.9m GBP6.6m +50.0% +31.8% GBP9.4m GBP6.0m
Operating margin 17.3% 11.8% +550 bps +290 bps 16.5% 10.8%
--------- --------- --------- ------------- --------- ---------
* For Production Solutions' continuing operations, before charges associated
with acquisition of businesses of GBP0.5m (H1 2017: GBP0.6m).
Production Solutions' revenue grew by GBP1.4 million to GBP57.1 million.
This includes the benefit from the Winter Olympics and strong sales
of Litepanels Gemini lights and the Flowtech carbon fibre tripod, which
were launched at the end of 2017, partly offset by GBP2.3 million of
unfavourable foreign exchange.
The business remains market leader in the core broadcast studio market.
Performance in the US was slightly better following a weak first half
last year due to the impact of the spectrum "repack" which we continue
to monitor. This was partly offset by lower demand in EMEA.
New products launched during the period mainly focused on non-studio
applications for broadcasters and independent content creators. These
included the Anton/Bauer Dionic XT battery, the next generation of the
highly popular battery series with improved performance and reliability;
and the Dual Mini Remote Head, a device recently featured in the World
Cup to support high motion cameras for through-the-net football replays.
We continue to improve the core business by driving operational efficiencies.
In May 2018 we opened our new manufacturing site in Bury St Edmunds,
UK. We also made further progress in moving our manufacturing operations
from Shelton, US to our facility in Costa Rica, which will lead to cost
savings from 2019. These improvements have established a solid foundation
to support further strong performance.
Adjusted operating margin* increased by 5.5% pts to 17.3% driven by
favourable foreign exchange, higher volumes and the incremental impact
from the Winter Olympics.
Statutory operating profit increased by GBP3.4 million to GBP9.4 million.
Creative Solutions
Creative Solutions designs, manufactures and distributes premium branded
products and solutions for independent content creators, enterprises,
broadcasters, and film and video production companies. It is made up
of a number of brands that Vitec has acquired and includes Teradek,
SmallHD, Wooden Camera and RTMotion. Creative Solutions represents 15%
of Group revenue, and our three year strategy is to increase revenue
and maintain higher margins.
Adjusted* Statutory
Creative H1 2018 H1 2017 % Change % Change H1 2018 H1 2017
Solutions at constant
exchange
rates
--------- --------- --------- ------------- --------- ---------
Revenue GBP27.7m GBP30.8m -10.1% -2.5% GBP27.7m GBP30.8m
Operating profit GBP7.0m GBP6.5m +7.7% +16.7% GBP4.5m GBP3.9m
Operating margin 25.3% 21.1% +420 bps +420 bps 16.2% 12.7%
--------- --------- --------- ------------- --------- ---------
* For Creative Solutions, before charges associated with acquisition
of businesses of GBP2.5m (H1 2017: GBP2.6m).
Creative Solutions' revenue decreased by GBP3.1 million to GBP27.7 million.
This includes the impact of a fire at an adjacent office which disrupted
SmallHD's site operations and GBP2.4 million from unfavourable foreign
exchange.
We have continued to invest in the Division to build the Divisional
structure. As previously planned, SmallHD will be moving to a larger
facility later in 2018. Prior to the fire, Creative Solutions' revenue
had been growing at c. 9%, driven by growth of c. 70% at SmallHD, and
the new facility will enable us to meet the higher demand as we return
to full production.
Our markets continue to grow, driven by the sharp rise in original content
creation including the proliferation of various online platforms such
as Amazon and Netflix. We further expanded our offering of higher technology
products to the Independent Content Creator segment. New products launched
include Teradek Bolt XT and LT, the latest updates to our zero delay
wireless video product line, which have been differentiated to target
different segments of the market and drive growth; Teradek Link Pro,
a powerful WiFi router with built-in network bonding; Teradek VidiU
Go, a livestreaming device with built-in cellular bonding; and an innovative
power plate developed by Wooden Camera in conjunction with Production
Solutions that is compatible with Anton/Bauer batteries.
RTMotion, the wireless motor lens control systems company which was
acquired in September 2017, continued to perform in line with expectations.
Adjusted operating margin* increased by 4.2% pts to 25.3%. This benefits
from recognising the insurance income within gross profit with no adjustment
for lost revenue.
Statutory operating profit increased by 15.4% to GBP4.5 million.
Corporate costs
Corporate costs include payroll and bonus costs for the Directors and
head office team, Long Term Incentive Plan costs for key individuals
across the Group, professional fees, property costs, travel costs and
IT costs.
Adjusted* Statutory
Corporate costs H1 2018 H1 2017 % Change % Change H1 2018 H1 2017
at constant
exchange
rates
--------- --------- --------- ------------- -------- --------
Operating loss GBP6.3m GBP5.0m 26.0% 26.0% GBP6.3m GBP5.0m
--------- --------- --------- ------------- -------- --------
The increase in corporate costs includes higher Long Term Incentive
Plan accruals linked to good financial performance and share price increase.
Site visit to Production Solutions
On Thursday 20 September 2018, Vitec will host a site visit to Production
Solutions' UK head office in Bury St Edmunds for institutional investors
and analysts. The day will focus on growth opportunities in both our
Production Solutions and Creative Solutions Divisions. Copies of the
presentations will be made available on the Group's website after the
event.
Principal risks and uncertainties
The principal risks and uncertainties that may affect our performance
are unchanged from those set out on pages 34 and 35 of the Annual Report
& Accounts 2017. The Directors continue to regard these as the principal
risks and uncertainties facing the Group.
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. In summary, the principal
risks facing the Group are around:
-- Demand for Vitec's products
-- New markets and channels of distribution
-- Acquisitions
-- Pricing pressure
-- Dependence on key suppliers
-- Dependence on key customers
-- People
-- Laws and regulations
-- Reputation of the Vitec Group
-- Exchange rates
-- Business continuity
Board changes
The Board announces that with effect from 1 September 2018, Lorraine
Rienecker will cease to be an independent non-executive director of
the Company. Lorraine will stand down from the Board to concentrate
on her executive career. With effect from the same date, Duncan Penny
will join the Board as an independent non-executive director. Duncan
is currently Chief Executive at XP Power holding that position since
February 2003 and was previously its Finance Director from April 2000
to 2003. Prior to XP Power, Duncan held senior roles with Dell Computer
Corporation and LSI Logic Corporation and was an audit manager at Coopers
& Lybrand. Upon appointment, Duncan has a holding of 3,000 ordinary
shares in the Company held through a discretionary portfolio.
John McDonough, Chairman commented "On behalf of the Board I welcome
Duncan as an independent non-executive director at this exciting time
of growth for the Company. Duncan brings extensive international experience
especially in APAC in technology businesses. I would also like to thank
Lorraine for her service to the Company since her appointment in December
2013 and wish her success in her exciting new role."
In connection with Duncan Penny's appointment there are no further matters
to be disclosed in accordance with paragraph 9.6.13 of the Listing Rules
of the UK Listing Authority.
Change of auditor
Following approval at our AGM on 15 May 2018, we are pleased to confirm
that we have appointed Deloitte LLP as our new auditor. The Board is
grateful to KPMG LLP for their lengthy service to Vitec.
Forward-looking statements
This announcement contains forward-looking statements with respect to
the financial condition, performance, position, strategy, results and
plans of the Group based on Management's current expectations or beliefs
as well as assumptions about future events. These forward-looking statements
are not guarantees of future performance. Undue reliance should not
be placed on forward-looking statements because, by their very nature,
they are subject to known and unknown risks and uncertainties and can
be affected by other factors that could cause actual results, and the
Group's plans and objectives, to differ materially from those expressed
or implied in the forward-looking statements. The Company undertakes
no obligation to publicly revise or update any forward-looking statements
or adjust them for future events or developments. Nothing in this announcement
should be construed as a profit forecast.
The information in this announcement does not constitute an offer to
sell or an invitation to buy shares in the Company in any jurisdiction
or an invitation or inducement to engage in any other investment activities.
The release or publication of this announcement in certain jurisdictions
may be restricted by law. Persons who are not resident in the United
Kingdom or who are subject to other jurisdictions should inform themselves
of, and observe, any applicable requirements.
This announcement contains brands and products that are protected in
accordance with applicable trademark and patent laws by virtue of their
registration.
Responsibility statement of the Directors in respect of the Half Year
Results to 30 June 2018
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
-- The interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first
six months and description of principal risks and uncertainties for
the remaining six months of the year); and
-- The interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related parties' transactions
and changes therein).
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included in the company's website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial information differs from legislation in other jurisdictions.
Outlook
Vitec has a diversified product portfolio with strong positions in the
fast moving and growing "image capture and content creation" market.
We remain on track in the second half of the year; we expect to deliver
organic revenue growth and year-on-year margin improvements, and to
identify businesses to acquire in core and adjacent niche markets. The
Board's expectations for the full year are unchanged, with material
EPS growth.
Going concern and viability
The Directors have made appropriate enquiries and consider that the
Group has adequate resources to continue in operational existence for
the foreseeable future. The Board has considered the potential risks
to the uncertainty of the Brexit negotiations and, whilst continuing
to monitor developments, currently consider the risks to be minimal.
Accordingly, the Directors continue to adopt the going concern basis
in preparing the financial statements.
The Directors have also assessed the long-term viability of the Group
over a three year period, taking account of the Group's current position
and prospects, its strategic plan, risk appetite and the principal risks
and how these are managed. Based on this assessment, the Directors have
a reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over this period.
For and on behalf of the Board Stephen Bird Group Chief Executive
Kath Kearney-Croft Group Finance Director
INDEPENT REVIEW REPORT TO THE VITEC GROUP PLC
We have been engaged by the Company to review the condensed set of
financial statements in the half-yearly financial report for the six
months ended 30 June 2018 which comprises the condensed consolidated
income statement, the consolidated statement of comprehensive income,
the condensed consolidated balance sheet, the consolidated statement
of changes in equity, the condensed consolidated statement of cash
flows and related notes 1 to 12. We have read the other information
contained in the half-yearly financial report 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 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 Financial Reporting Council. Our work has been
undertaken so that we might state to the company those matters we
are required to state to it in an independent review 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
formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has
been approved by, the directors. The directors are responsible for
preparing the half-yearly financial report in accordance with the
Disclosure and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
As disclosed in note 1, the annual financial statements of the Group
are prepared in accordance with IFRSs as adopted by the European Union.
The condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with International
Accounting Standard 34 "Interim Financial Reporting" as adopted by
the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the
condensed set of financial statements in the half-yearly financial
report 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 Financial Reporting Council for use in the United Kingdom.
A review of interim financial information consists of making inquiries,
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 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-yearly financial report for the six months ended 30 June 2018
is not prepared, in all material respects, in accordance with International
Accounting Standard 34 as adopted by the European Union and the Disclosure
and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Deloitte LLP
Statutory Auditor
London, United Kingdom
9 August 2018
Condensed Consolidated Income Statement
For the half year ended 30 June 2018
Half year Half year Year to
to 30 June to 30 June 31 December
2018 2017 2017
Notes GBPm GBPm GBPm
------ ------------ ------------ -------------
Revenue 2 183.3 164.9 353.3
Cost of sales (104.3) (91.2) (196.8)
Other income 3 4.7 - -
-------------------------------------------------------------- ------ ------------ ------------ -------------
Gross profit 83.7 73.7 156.5
Operating expenses 4 (63.0) (55.4) (126.3)
-------------------------------------------------------------- ------ ------------ ------------ -------------
Operating profit 20.7 18.3 30.2
-------------------------------------------------------------- ------ ------------ ------------ -------------
Comprising
* Adjusted operating profit 25.5 21.6 45.2
* Charges associated with acquisition of businesses 4 (4.8) (3.3) (15.0)
20.7 18.3 30.2
-------------------------------------------------------------- ------ ------------ ------------ -------------
Net finance expense 5 (1.0) (1.9) (2.8)
-------------------------------------------------------------- ------ ------------ ------------ -------------
Profit before tax 19.7 16.4 27.4
-------------------------------------------------------------- ------ ------------ ------------ -------------
Comprising
* Adjusted profit before tax 24.5 19.7 42.4
* Charges associated with acquisition of businesses 4 (4.8) (3.3) (15.0)
19.7 16.4 27.4
-------------------------------------------------------------- ------ ------------ ------------ -------------
Taxation (2.5) (2.9) (16.9)
-------------------------------------------------------------- ------ ------------ ------------ -------------
Comprising taxation on
* Adjusted profit 6 (6.7) (4.4) (10.8)
* Charges associated with acquisition of businesses and
material non-operating events 6 4.2 1.5 (6.1)
-------------------------------------------------------------- ------ ------------ ------------ -------------
(2.5) (2.9) (16.9)
-------------------------------------------------------------- ------ ------------ ------------ -------------
Profit from continuing operations 17.2 13.5 10.5
Profit after tax from discontinued
operations 12 - 0.8 17.0
-------------------------------------------------------------- ------ ------------ ------------ -------------
Profit for the period attributable to owners
of the parent 17.2 14.3 27.5
---------------------------------------------------------------------- ------------ ------------ -------------
Earnings per share from continuing
operations 7
Basic earnings per share 38.2p 30.3p 23.4p
Diluted earnings per share 37.8p 30.0p 23.3p
Earnings per share from continuing
and
discontinued operations 7
Basic earnings per share 38.2p 32.0p 61.4p
Diluted earnings per share 37.8p 31.7p 61.0p
Average exchange rates
Euro 1.14 1.16 1.14
US$ 1.38 1.27 1.29
Consolidated Statement of Comprehensive
Income
For the half year ended 30 June 2018
Half year Half year Year to
to 30 June to 30 June 31 December
2018 2017 2017
GBPm GBPm GBPm
------------------------------------------------- ------------ ------------ -------------
Profit for the period 17.2 14.3 27.5
Other comprehensive income:
Items that will not be reclassified subsequently
to profit or loss:
Remeasurements of defined benefit obligation 6.0 2.1 0.6
Related tax (1.0) (0.4) (0.1)
Items that are or may be reclassified subsequently
to profit or loss:
Foreign exchange gain recycled to the Income
Statement on disposal of businesses - (8.8) (17.3)
Currency translation differences on foreign
currency subsidiaries 2.4 (6.5) (10.8)
Net investment hedges - net (loss)/gain (1.6) 2.5 2.7
Cash flow hedges - reclassified to the Income
Statement, net of tax (0.6) 2.7 3.3
Cash flow hedges - effective portion of changes
in fair value (0.7) 2.2 2.5
Related tax 0.2 (1.2) (0.6)
Other comprehensive income/(expense), net
of tax 4.7 (7.4) (19.7)
------------------------------------------------- ------------ ------------ -------------
Total comprehensive income for the period
attributable to owners of the parent 21.9 6.9 7.8
------------------------------------------------- ------------ ------------ -------------
Condensed Consolidated Balance Sheet
As at 30 June 2018
30 June 30 June 31 December
2018 2017 2017
Notes GBPm GBPm GBPm
---------------------------------------------- ------ ------ -------- ------------
Assets
Non-current assets
Intangible assets 88.3 81.0 88.4
Property, plant and equipment 32.0 29.0 31.0
Trade and other receivables 1.1 0.9 0.9
Derivative financial instruments - 0.4 0.4
Deferred tax assets 18.0 24.9 17.7
139.4 136.2 138.4
---------------------------------------------- ------ ------ -------- ------------
Current assets
Inventories 80.2 61.9 69.8
Trade and other receivables 64.8 53.5 65.8
Derivative financial instruments 0.7 0.8 1.9
Current tax assets 2.5 0.9 1.2
Cash and cash equivalents 27.0 18.7 12.6
Assets of the disposal group classified
as held for sale 12 - 22.6 -
175.2 158.4 151.3
---------------------------------------------- ------ ------ -------- ------------
Total assets 314.6 294.6 289.7
---------------------------------------------- ------ ------ -------- ------------
Liabilities
Current liabilities
Interest-bearing loans and borrowings 0.5 0.5 0.5
Trade and other payables 70.4 50.8 67.4
Derivative financial instruments 0.5 1.6 0.4
Current tax liabilities 7.8 10.7 4.4
Provisions 8.8 2.3 9.3
Liabilities of the disposal group classified
as held for sale 12 - 4.3 -
88.0 70.2 82.0
---------------------------------------------- ------ ------ -------- ------------
Non-current liabilities
Interest-bearing loans and borrowings 69.5 70.8 55.0
Derivative financial instruments 0.1 0.1 0.1
Other payables 1.1 0.8 -
Post-employment obligations 6.5 11.1 12.6
Provisions 1.0 0.7 1.7
Deferred tax liabilities 2.3 2.3 2.7
---------------------------------------------- ------
80.5 85.8 72.1
---------------------------------------------- ------ ------ -------- ------------
Total liabilities 168.5 156.0 154.1
---------------------------------------------- ------ ------ -------- ------------
Net assets 146.1 138.6 135.6
---------------------------------------------- ------ ------ -------- ------------
Equity
Share capital 9.0 9.0 9.0
Share premium 16.8 15.5 16.8
Translation reserve (7.8) 4.0 (8.6)
Capital redemption reserve 1.6 1.6 1.6
Cash flow hedging reserve 0.2 (0.2) 1.3
Retained earnings 126.3 108.7 115.5
---------------------------------------------- ------ ------ -------- ------------
Total equity 146.1 138.6 135.6
---------------------------------------------- ------ ------ -------- ------------
Balance Sheet exchange rates
Euro 1.13 1.14 1.13
US$ 1.32 1.30 1.35
Consolidated Statement of Changes in Equity
For the half year ended 30 June 2018
Cash
Capital flow
Share Share Translation redemption hedging Retained Total
Notes capital premium reserve reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------
Balance at 1
January
2018 9.0 16.8 (8.6) 1.6 1.3 115.5 135.6
IFRS 9 adjustment
to
opening equity 1 - - - - - (0.1) (0.1)
------------------ ------ ---------- ---------- ------------- ------------- ---------- ----------- ---------
Adjusted opening
equity 9.0 16.8 (8.6) 1.6 1.3 115.4 135.5
Total comprehensive
income
for the period
Profit for the
year - - - - - 17.2 17.2
Other comprehensive
income/(expense)
for the period - - 0.8 - (1.1) 5.0 4.7
Contributions by and
distributions
to owners
Dividends paid - - - - - (9.0) (9.0)
Own shares
purchased - - - - - (3.7) (3.7)
Share-based
payment
charge - - - - - 1.4 1.4
Balance at 30
June 2018 9.0 16.8 (7.8) 1.6 0.2 126.3 146.1
------------------ ------ ---------- ---------- ------------- ------------- ---------- ----------- ---------
Cash
Capital flow
Share Share Translation redemption hedging Retained Total
capital premium reserve reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------
Balance at 1
January 2017 9.0 15.4 16.8 1.6 (3.9) 100.9 139.8
Total
comprehensive
income
for the period
Profit for the
period - - - - - 14.3 14.3
Other comprehensive
(expense)/income
for the period - - (12.8) - 3.7 1.7 (7.4)
Contributions by
and distributions
to owners
Dividends paid - - - - - (7.7) (7.7)
Own shares
purchased - - - - - (1.3) (1.3)
New shares issued - 0.1 - - - - 0.1
Share-based
payment charge,
net of tax - - - - - 0.8 0.8
------------------ ------ ---------- ---------- ------------- ------------- ---------- ----------- ---------
Balance at 30
June 2017 9.0 15.5 4.0 1.6 (0.2) 108.7 138.6
------------------ ------ ---------- ---------- ------------- ------------- ---------- ----------- ---------
Condensed Consolidated Statement of Cash Flows
For the half year ended 30 June 2018
Half year Half year Year to
to 30 June to 30 June 31 December
2018 2017 2017
Notes GBPm GBPm GBPm
---------------------------------------------------- ------- ------------ ------------ -------------
Cash flows from operating activities
Profit for the period 17.2 14.3 27.5
Adjustments for:
Taxation 2.5 3.7 13.3
Depreciation and impairment 3.4 6.9 10.5
Amortisation of intangible assets 5.2 6.1 12.2
Net gain on disposal of property, plant and
equipment and
software - (0.5) (0.7)
Fair value losses/(gains) on derivative
financial instruments 0.1 (0.3) (0.6)
Share-based payment charge 1.4 0.8 2.2
Earnout, deferred payments and purchase
price adjustment 0.5 - 4.1
Profit on disposal of businesses, before
tax - (3.2) (15.0)
Net finance expense 1.0 1.9 2.8
----------------------------------------------------- ------ ------------ ------------ -------------
Operating profit before changes in working
capital and provisions 31.3 29.7 56.3
Increase in inventories (6.9) (8.2) (9.9)
Decrease/(increase) in receivables 2.3 4.8 (5.6)
Increase in payables 2.5 1.4 6.1
(Decrease)/increase in provisions (3.8) (1.0) 1.8
Cash generated from operating activities 25.4 26.7 48.7
Interest paid (0.9) (1.7) (2.6)
Tax paid (1.5) (2.0) (11.0)
-----------------------------------------------------
Net cash from operating activities 23.0 23.0 35.1
----------------------------------------------------- ------ ------------ ------------ -------------
Cash flows from investing activities
Proceeds from sale of property, plant and
equipment and software 0.1 2.4 3.5
Purchase of property, plant and equipment (4.3) (3.7) (10.8)
Capitalisation of software and development
costs (2.4) (2.3) (4.3)
Acquisition of businesses, net of cash
acquired 8 (2.5) (1.6) (12.4)
Disposal of businesses - 10.9 32.4
Net cash (used in)/from investing activities (9.1) 5.7 8.4
----------------------------------------------------- ------ ------------ ------------ -------------
Cash flows from financing activities
Proceeds from the issue of shares - 0.1 1.4
Own shares purchased (3.7) (1.3) (3.5)
Repayment of interest-bearing loans and
borrowings (44.0) (61.6) (144.5)
Borrowings from interest-bearing loans
and borrowings 56.9 43.5 110.7
Dividends paid (9.0) (7.7) (12.4)
-----------------------------------------------------
Net cash from/(used in) financing activities 0.2 (27.0) (48.3)
----------------------------------------------------- ------ ------------ ------------ -------------
Increase/(decrease) in cash and cash equivalents 9 14.1 1.7 (4.8)
Cash and cash equivalents at 1 January 12.6 16.8 16.8
Effect of exchange rate fluctuations on
cash held 0.3 0.2 0.6
----------------------------------------------------- ------ ------------ ------------ -------------
Cash and cash equivalents at the end of
the period 9 27.0 18.7 12.6
----------------------------------------------------- ------ ------------ ------------ -------------
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 half year ended 30 June 2018 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. This
report 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 2017, which were prepared in accordance with International
Financial Reporting Standards as adopted by the European Union ("IFRS").
The comparative figures for the year ended 31 December 2017 do not
constitute statutory accounts for the purpose of section 434 of the
Companies Act 2006. The auditors have reported on the 2017 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 half year amounts as at and for the half years ending 30 June
presented in these condensed consolidated interim financial statements
have been reviewed in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 but have not been audited.
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 2017, except for
the estimation of insurance receivable in relation to the SmallHD
insurance claim (see note 3).
In reporting financial information, the Group presents alternative
performance measures ("APMs") which are not defined or specified under
the requirements of IFRS. The Group believes that these APMs, which
are not considered to be a substitute for or superior to IFRS measures,
provide stakeholders with additional helpful information to better
reflect the underlying business and enable more meaningful comparison
over time. A glossary on the last page provides a comprehensive list
of APMs that the Group uses, including an explanation of how they
are calculated, why they are used and how they can be reconciled to
a statutory measure where relevant.
These condensed consolidated interim financial statements were approved
by the Board of Directors on
9 August 2018.
The accounting policies adopted in these interim financial statements
are consistent with those of the previous financial year and the corresponding
interim period, except for the adoption of new accounting standards
as set out below.
Impact of adoption of new accounting standards
The Group has applied IFRS 9 "Financial Instruments" and IFRS 15 "Revenue
from Contracts with Customers" from 1 January 2018, which has resulted
in new accounting policies as set out below.
IFRS 9 "Financial Instruments"
IFRS 9 replaces the provisions of IAS 39 that relate to the recognition,
classification and measurement of financial assets and financial liabilities,
derecognition of financial instruments, impairment of financial assets
and hedge accounting. In accordance with the transitional provisions
of IFRS 9, comparative figures have not been restated.
The Group was required to revise its provision methodology under IFRS
9 for its trade receivables and contract assets. The GBP0.1 million
impact of the change on the Group's retained earnings is set out in
the Consolidated Statement of Changes in Equity.
IFRS 15 "Revenue from Contracts with Customers"
The Group has applied IFRS 15 retrospectively using the cumulative
effect method and has chosen not to adjust contract consideration
for the effects of a significant financing component when the period
between delivery of a specified good or service and payment by a customer
is less than one year. The Group generally does not have contracts
where the period between the transfer of the promised goods or services
to the customer and payment by the customer exceeds one year.
There has been no material impact on the financial statements of adopting
IFRS 15. The Group previously recognised a net provision for returns
in trade receivables. Under IFRS 15, a refund liability of GBP0.5
million for the expected refunds to customers is recognised in other
payables, and a separate asset for the right to the returned goods
of GBP0.2 million is recognised in other receivables.
Accounting policies applying from 1 January 2018
Derivatives and hedge accounting
Cash flow hedges are used to hedge the variability in cash flows of
highly probable forecast transactions caused by changes in exchange
rates.
At 31 December 2017 the Group's foreign currency forward contracts
which were designated in hedging relationships continue to qualify
for hedge accounting under IFRS 9 and these relationships are therefore
treated as continuing hedges.
As a result of adopting IFRS 9, there have been no changes to the
accounting for qualifying cash flow hedges and the accounting policies
as disclosed in the 2017 annual report continue to apply.
Net Investment hedges
The Group uses US Dollar, Euro and Japanese Yen denominated borrowings
as a hedge against the translation exposure on the Group's net investment
in overseas companies. At 31 December 2017 the Group's borrowings
which were designated in hedging relationships continue to qualify
for hedge accounting under IFRS 9 and these relationships are therefore
treated as continuing hedges.
As a result of adopting IFRS 9, there have been no changes to the
accounting for qualifying net investment hedges and the accounting
policies as disclosed in the 2017 annual report continue to apply.
Financial assets classification and measurement
The Group classifies its financial instruments depending on the business
model for managing the financial assets and the contractual terms
of the cash flows. Trade receivables and contract assets are measured
at amortised cost while derivatives are measured at fair value through
profit or loss unless designated in a qualifying hedging relationship.
Trade receivables impairment
The Group applies the IFRS 9 simplified approach to measuring expected
credit losses which uses a lifetime expected loss allowance for all
trade receivables and contract assets. To measure the expected credit
losses, trade receivables and contract assets have been grouped based
on shared credit risk characteristics and the days past due.
Trade receivables are written off when there is no reasonable expectation
of recovery. Indicators that there is no reasonable expectation of
recovery include, amongst others, the failure of a debtor to engage
in a repayment plan with the Group, and a failure to make contractual
payments for an extended period.
Sale of goods
Revenue from the sale of goods is recognised when the Group sells
a product to a customer and control has passed. This is either once
the product has been shipped or delivered to the customer depending
on the terms and conditions of the sale. Revenue is recognised at
the transaction price exclusive of sales tax, adjusted for the expected
level of returns, trade discounts and volume rebates. A refund liability
and a right to the returned goods are recognised for the products
expected to be returned.
Some contracts include multiple deliverables, such as the sale of
the product and its installation. If material, distinct goods and
services are accounted for as separate performance obligations. The
transaction price is allocated to each performance obligation based
on their stand-alone selling prices.
Service contracts
Revenue from rental service contracts which are fulfilled using the
Group's equipment and operators is recognised in the accounting period
in which the services are rendered.
Licenses
Software licenses are sold by the Group on a standalone basis and
together with a tangible product. If the license is considered distinct,
the revenue recognition pattern is based on whether the license is
a right to access intellectual property (revenue recognised over time)
or a right to use intellectual property (revenue recognised at a point
in time). The majority of the licenses granted by the Group represent
a right to use intellectual property.
Financing components
The Group generally does not have contracts where the period between
the transfer of the promised goods or services to the customer and
payment by the customer exceeds one year.
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, which comprises the period of at least
12 months from the date of the half year results. There are no material
uncertainties that would prevent the Directors from being unable to
make this statement. Accordingly, the Directors continue to adopt
the going concern basis in preparing the financial statements.
New standards and interpretations not yet adopted
The following standards, amendments to standards and interpretations
will become effective for the Group in future years.
IFRS 16 "Leases"
IFRS 16 "Leases" was issued on 13 January 2016 and is effective for
annual periods beginning on or after
1 January 2019. It requires lessees to recognise most leases on the
balance sheet. Currently, IAS 17 "Leases" only requires leases categorised
as finance leases to be recognised on the balance sheet, with leases
categorised as operating leases not recognised and expensed through
the income statement. The impact of IFRS 16 will be to recognise a
lease liability and a corresponding right of use asset in the balance
sheet for leases currently classified as operating leases. The Directors
are continuing to evaluate the full impact of the adoption of this
standard. The actual impact in the period of initial application will
depend on the composition of the Group's lease portfolio at that date,
the Group's latest assessment of whether it will exercise any lease
renewal options and the extent to which the Group chooses to use practical
expedients and exemptions. The Group expects to disclose further information
about its transition approach and the impact of the new standard before
adoption.
Other standards
Other amended standards and interpretations are not expected to have
a significant impact on the Group's consolidated financial statements.
2 Segment reporting
In the year ended 31 December 2017, the Group reorganised its business
into three Divisions (Imaging Solutions, Production Solutions and Creative
Solutions) to reflect a changing customer base, to enable the Group
to adapt quickly to market and technological challenges, and to give
greater focus to the fast-growing Independent Content Creator market.
These reportable segments reflect the internal reporting provided to
the Chief Operating Decision Maker on a regular basis to assist in
making decisions on capital allocated to each segment and to assess
performance.
---------------------------------------------------------------------------------------------------------------------
For the half year to 30 June
------------------------------- ------------------------------------------------------------------------------------
Imaging Production Creative Corporate Consolidated
Solutions Solutions Solutions and unallocated
2018 2017 2018 2017 2018 2017 2018 2017 2018 2017
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------ ------ ------ ------ ------ ------ --------- -------- ------- ------
From continuing operations:
------------------------------- ------ ------ ------ ------ ------ ------ --------- -------- ------- ------
Total revenue from
external customers 98.5 78.4 57.1 55.7 27.7 30.8 - - 183.3 164.9
Inter-segment revenue
(1) 0.2 0.4 0.2 0.2 0.1 - (0.5) (0.6) - -
------ ------ ------ ------ ------ ------ --------- -------- ------- ------
Total revenue 98.7 78.8 57.3 55.9 27.8 30.8 (0.5) (0.6) 183.3 164.9
------ ------ ------ ------ ------ ------ --------- -------- ------- ------
Adjusted operating
profit 14.9 13.5 9.9 6.6 7.0 6.5 (6.3) (5.0) 25.5 21.6
Transaction costs relating
to acquisition of businesses (0.1) - - - - - - - (0.1) -
Integration costs (1.1) - - - - - - - (1.1) _
Amortisation of acquired
intangible assets (0.6) (0.1) (0.5) (0.6) (2.0) (2.6) - - (3.1) (3.3)
Earnout payments - - - - (0.5) - - - (0.5) -
------ ------ ------ ------ ------ ------ --------- -------- ------- ------
Operating profit 13.1 13.4 9.4 6.0 4.5 3.9 (6.3) (5.0) 20.7 18.3
Net finance expense (1.0) (1.9)
Taxation (2.5) (2.9)
------- ------
Profit for the period 17.2 13.5
------------------------------- ------ ------ ------ ------ ------ ------ --------- -------- ------- ------
Segment assets 128.9 96.4 90.0 85.1 45.3 42.9 2.9 3.1 267.1 227.5
Unallocated assets
Cash and cash equivalents 27.0 18.7 27.0 18.7
Current tax assets 2.5 0.9 2.5 0.9
Deferred tax assets 18.0 24.9 18.0 24.9
------- ------
Total assets 314.6 272.0
------------------------------- ------ ------ ------ ------ ------ ------ --------- -------- ------- ------
Segment liabilities 44.3 31.6 25.2 24.6 14.1 7.0 4.8 4.2 88.4 67.4
Unallocated liabilities
Interest-bearing loans
and borrowings 70.0 71.3 70.0 71.3
Current tax liabilities 7.8 10.7 7.8 10.7
Deferred tax liabilities 2.3 2.3 2.3 2.3
------- ------
Total liabilities 168.5 151.7
------------------------------- ------ ------ ------ ------ ------ ------ --------- -------- ------- ------
(1) Inter-segment pricing is determined on an arm's length basis.
Geographical information
For the half year ended 30 June 2018
Half year
Half year to Year to
to 30 June 30 June 31 December
2018 2017 2017
GBPm GBPm GBPm
--------------------------------------------------------------- ------------ ------------ ------------------
Continuing operations - analysis of revenue
from external customers, by location of
customer
United Kingdom 21.0 19.0 40.3
The rest of Europe 47.6 39.9 83.1
North America 72.7 64.3 144.3
Asia Pacific 36.9 35.8 73.5
The rest of the World 5.1 5.9 12.1
--------------------------------------------------------------- ------------ ------------ ------------------
Total revenue from external customers 183.3 164.9 353.3
--------------------------------------------------------------- ------------ ------------
The Group's operations are located in several geographic locations,
and sell products and services on to external customers in all parts
of the world.
3 Other income
On 26 April 2018, the offices and warehouse of SmallHD LLC ("SmallHD")
in North Carolina, US (part of the Creative Solutions Division) were
damaged by a fire which started in an adjacent office. An evacuation
was conducted successfully with no injuries to our team. The insurance
policy held by the Group covers both damage to assets and business
interruption.
As at the date of the interim financial statements, the outcome of
the insurance claim has not been finalised. At the balance sheet date,
an amount of GBP4.7 million related to the insurance reimbursement
has been recognised in other income. Staged cash payments of GBP3.2
million have been received, but the final insurance receivable is subject
to ongoing discussions with the insurer and will also be affected by
any continued impact to SmallHD which is covered by the business interruption
insurance.
4 Operating expenses
Charges associated with acquisition of 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. This
also reflects how the business is managed and measured on a day-to-day
basis. Charges associated with acquisition of businesses include non-cash
charges such as amortisation of acquired intangible assets and cash
charges such as transaction costs, earnout and deferred payments and
significant costs relating to the integration of acquired businesses.
Half year Half year Year to 31
to 30 June to 30 June December
2018 2017 2017
GBPm GBPm GBPm
--------------------------------------------------------------- ------------ ------------ ------------------
Analysis of operating expenses
From continuing operations:
Transaction costs relating to acquisition
of businesses (0.1) - (1.3)
Integration costs (1.1) - (2.2)
Amortisation of acquired intangible assets (3.1) (3.3) (7.4)
Earnout payments (0.5) - (4.1)
--------------------------------------------------------------- ------------ ------------ ------------------
Charges associated with acquisition of
businesses (4.8) (3.3) (15.0)
Other administrative expenses (24.2) (20.4) (46.4)
--------------------------------------------------------------- ------------ ------------ ------------------
Administrative expenses (29.0) (23.7) (61.4)
Marketing, selling and distribution costs (26.6) (24.4) (49.7)
Research, development and engineering
costs (7.4) (7.3) (15.2)
--------------------------------------------------------------- ------------ ------------ ------------------
Total from continuing operations (63.0) (55.4) (126.3)
--------------------------------------------------------------- ------------ ------------ ------------------
From discontinued operations:
Amortisation of acquired intangible assets - (1.2) (1.2)
Other administrative expenses - (3.3) (3.6)
--------------------------------------------------------------- ------------ ------------ ------------------
Administrative expenses - (4.5) (4.8)
Marketing, selling and distribution costs - (2.3) (2.7)
--------------------------------------------------------------- ------------ ------------ ------------------
Total from discontinued operations - (6.8) (7.5)
--------------------------------------------------------------- ------------ ------------ ------------------
5 Net finance expense
Half year Half year
to 30 June to Year to 31
30 June December
2018 2017 2017
GBPm GBPm GBPm
Finance income
--------------------------------------------------------------- ------------ ------------ ------------------
Net currency translation gains 0.4 - 0.1
--------------------------------------------------------------- ------------ ------------ ------------------
Finance expense
Net currency translation losses - (0.2) -
Unwind of discount on liabilities (0.1) - -
Interest payable on interest-bearing
loans and borrowings (1.2) (1.6) (2.6)
Interest expense on net defined benefit
pension scheme (0.1) (0.1) (0.3)
--------------------------------------------------------------- ------------ ------------ ------------------
(1.4) (1.9) (2.9)
--------------------------------------------------------------- ------------ ------------ ------------------
Net finance expense (1.0) (1.9) (2.8)
--------------------------------------------------------------- ------------ ------------ ------------------
6 Taxation
Income tax expense is recognised at an amount determined by multiplying
the profit before tax for the interim reporting period by management's
best estimate of the weighted-average annual income tax rate for the
full financial year, adjusted for the tax effect of certain items recognised
in full in the interim period. As such, the effective tax rate in the
interim financial statements may differ from management's estimate
of the effective tax rate for the annual financial statements.
Half year Half year Year to
to 30 June to 30 June 31 December
2018 2017 2017
GBPm GBPm GBPm
----------------------------------------------------------------- -------------- ------------ -------------
The total taxation (charge)/credit in the Income Statement is analysed
as follows:
Summarised in the Income Statement as follows
Continuing operations
Current tax (3.5) (3.8) (6.2)
Deferred tax 1.0 0.9 (10.7)
----------------------------------------------------------------- -------------- ------------ -------------
(2.5) (2.9) (16.9)
----------------------------------------------------------------- -------------- ------------ -------------
Discontinued operations
Current tax - (0.4) (0.4)
Deferred tax - (0.4) 4.0
----------------------------------------------------------------- -------------- ------------ -------------
- (0.8) 3.6
----------------------------------------------------------------- -------------- ------------ -------------
Continuing and discontinued operations
Current tax (3.5) (4.2) (6.6)
Deferred tax 1.0 0.5 (6.7)
----------------------------------------------------------------- -------------- ------------ -------------
(2.5) (3.7) (13.3)
----------------------------------------------------------------- -------------- ------------ -------------
Charges associated with acquisition of businesses,
profit on disposal of businesses and material
non-operating events (1)
Continuing operations
Current tax 3.2 - 0.2
Deferred tax 1.0 1.5 (6.3)
----------------------------------------------------------------- -------------- ------------ -------------
4.2 1.5 (6.1)
----------------------------------------------------------------- -------------- ------------ -------------
Discontinued operations
Current tax - (0.4) (0.4)
Deferred tax - 0.3 4.7
----------------------------------------------------------------- -------------- ------------ -------------
- (0.1) 4.3
----------------------------------------------------------------- -------------- ------------ -------------
Continuing and discontinued operations
Current tax 3.2 (0.4) (0.2)
Deferred tax 1.0 1.8 (1.6)
----------------------------------------------------------------- -------------- ------------ -------------
4.2 1.4 (1.8)
----------------------------------------------------------------- -------------- ------------ -------------
Before charges associated with acquisition
of businesses, profit on disposal of businesses
and material non-operating events (1)
Continuing operations
Current tax (6.7) (3.8) (6.4)
Deferred tax - (0.6) (4.4)
----------------------------------------------------------------- -------------- ------------ -------------
(6.7) (4.4) (10.8)
----------------------------------------------------------------- -------------- ------------ -------------
Discontinued operations
Current tax - - -
Deferred tax - (0.7) (0.7)
----------------------------------------------------------------- -------------- ------------ -------------
- (0.7) (0.7)
----------------------------------------------------------------- -------------- ------------ -------------
Continuing and discontinued operations
Current tax (6.7) (3.8) (6.4)
Deferred tax - (1.3) (5.1)
----------------------------------------------------------------- -------------- ------------ -------------
(6.7) (5.1) (11.5)
----------------------------------------------------------------- -------------- ------------ -------------
(1) The amount of GBP4.2 million in the half year to 30 June 2018 includes
taxation on charges associated with acquisition of businesses and an
overseas tax credit of GBP3.0 million related to prior periods.
7 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 charges
associated with acquisition of businesses, profit on disposal of businesses
and material non-operating events, all net of tax.
The calculation of basic, diluted and adjusted EPS is set out below:
Half year Half year
to 30 June to 30 June
2018 2017
Profit for the financial period GBPm GBPm
----------------------------------------------------------------------------------- ------------ -------------
Continuing operations 17.2 13.5
Discontinued operations - 0.8
----------------------------------------------------------------------------------- ------------ -------------
17.2 14.3
Add back charges associated with acquisition of businesses,
profit on disposal of businesses and material non-operating
events, all net of tax
Continuing operations 0.6 1.8
Discontinued operations - (1.9)
----------------------------------------------------------------------------------- ------------ -------------
0.6 (0.1)
Adjusted profit after tax
Continuing operations 17.8 15.3
Discontinued operations - (1.1)
----------------------------------------------------------------------------------- ------------ -------------
17.8 14.2
----------------------------------------------------------------------------------- ------------ -------------
Weighted average Adjusted earnings Earnings per share
number of shares per share
'000
Half year to 30 Half year to 30 Half year to 30
June June June
2018 2017 2018 2017 2018 2017
Number Number pence pence pence pence
--------------------------------------- ---------- -------- --------- --------- ------------ -------------
From continuing and
discontinued operations
Basic 45,011 44,741 39.5 31.7 38.2 32.0
Dilutive potential ordinary
shares 511 371 (0.4) (0.3) (0.4) (0.3)
--------------------------------------- ---------- -------- --------- --------- ------------ -------------
Diluted 45,522 45,112 39.1 31.4 37.8 31.7
--------------------------------------- ---------- -------- --------- --------- ------------ -------------
From continuing operations
Basic 45,011 44,741 39.5 34.2 38.2 30.3
Dilutive potential ordinary
shares 511 371 (0.4) (0.3) (0.4) (0.3)
--------------------------------------- ---------- -------- --------- --------- ------------ -------------
Diluted 45,522 45,112 39.1 33.9 37.8 30.0
--------------------------------------- ---------- -------- --------- --------- ------------ -------------
From discontinued operations
Basic 45,011 44,741 - (2.5) - 1.7
Dilutive potential ordinary
shares 511 371 - - - -
--------------------------------------- ---------- -------- --------- --------- ------------ -------------
Diluted 45,522 45,112 - (2.5) - 1.7
--------------------------------------- ---------- -------- --------- --------- ------------ -------------
8 Acquisitions
Acquisition of Adeal
On 7 March 2018, the Group acquired 100% of the issued share capital
of Adeal Proprietary Limited ("Adeal"), a company based in Australia,
for net cash consideration of A$4.5 million (GBP2.5 million), after
cash acquired of A$0.2 million (GBP0.1 million). The acquisition complements
the Group's owned distribution channels. As at the date of this report
the fair value of the assets and liabilities acquired are being measured.
Based on provisional adjustments, the fair value of the net assets
acquired in the business at acquisition date was GBP2.5 million (mainly
inventory GBP2.3 million; trade receivables GBP1.1 million, trade and
other payables GBP1.0 million) resulting in goodwill of GBP0.1 million.
The trade receivables acquired had a fair value and a gross contractual
value of GBP1.1 million. Adeal operates within the Imaging Solutions
Division.
The results of Adeal in the six month period to 30 June 2018 comprise
revenue of GBP2.3 million and operating profit of GBPnil million. Had
the acquisition been made at the beginning of the year (i.e. 1 January
2018), consolidated pro-forma revenue and profit for the half year
ended 30 June 2018 would have been GBP183.9 million and GBP17.2 million
respectively.
JOBY and Lowepro, acquired in 2017
In the period, the process to measure the fair values of the assets
and liabilities acquired was completed in respect of the JOBY and Lowepro
acquisitions. An increase in goodwill of GBP1.4 million was recognised
in the period as a result of fair value adjustments mainly to contingent
liabilities.
9 Analysis of net debt
The table below analyses the Group's components of net debt and their
movements in the period:
Half year Half year Year to
to 30 June to 30 June 31 December
2018 2017 2017
GBPm GBPm GBPm
------------------------------------------------------------- -------------------- ------------ -------------
Increase/(decrease) in cash and cash equivalents 14.1 1.7 (4.8)
Repayment of interest-bearing loans and
borrowings 44.0 61.6 144.5
Borrowings from interest-bearing loans and
borrowings (56.9) (43.5) (110.7)
------------------------------------------------------------- -------------------- ------------ -------------
Decrease in net debt resulting from cash
flows 1.2 19.8 29.0
Effect of exchange rate fluctuations on
cash held 0.3 0.2 0.6
Effect of exchange rate fluctuations on
debt held (1.6) 2.5 2.6
------------------------------------------------------------- -------------------- ------------ -------------
Effect of exchange rate fluctuations on
net debt (1.3) 2.7 3.2
------------------------------------------------------------- -------------------- ------------ -------------
Movements in net debt in the period (0.1) 22.5 32.2
Net debt at 1 January (42.9) (75.1) (75.1)
------------------------------------------------------------- -------------------- ------------ -------------
Net debt at the end of the period (43.0) (52.6) (42.9)
------------------------------------------------------------- -------------------- ------------ -------------
Cash and cash equivalents in the Statement
of Cash Flows 27.0 18.7 12.6
Interest-bearing loans and borrowings (70.0) (71.3) (55.5)
------------------------------------------------------------- -------------------- ------------ -------------
Net debt at the end of the period (43.0) (52.6) (42.9)
------------------------------------------------------------- -------------------- ------------ -------------
10 Forward exchange contracts
The fair value of forward exchange contracts is determined by estimating
the market value of that contract at the reporting date. Derivatives
with a positive fair value are recorded as assets and negative fair
values as liabilities, and presented as current or non-current based
on their contracted maturity dates.
The following table shows the forward exchange contracts in place at
the Balance Sheet date. These contracts mature in the next 18 months,
therefore the cash flows and resulting effect on profit and loss are
expected to occur within the next 18 months.
As at 30 As at 30
June June
----------- -----------
2018 2017
Currency millions Average millions Average
exchange exchange
rate of rate of
contracts contracts
------------------------------ ----------- --------- ----------- --------- -----------
Cash flow hedging contracts
USD / GBP forward exchange
contracts USD 7.3 1.32 14.4 1.32
USD / EUR forward exchange
contracts USD 20.6 1.19 35.9 1.13
EUR / GBP forward exchange
contracts EUR 12.8 1.13 20.7 1.20
JPY / GBP forward exchange
contracts JPY 487.8 143.0 586.6 150.2
JPY / EUR forward exchange
contracts JPY 968.8 127.1 1,071.5 122.3
------------------------------ ----------- --------- ----------- --------- -----------
During the period to 30 June 2018 a net profit of GBP0.7 million (2017:
GBP2.2 million loss) relating to forward exchange contracts was reclassified
to the Income Statement, to match the crystallisation of the hedged
forecast cash flows which affect the Income Statement.
Fair value hierarchy
The carrying values of financial assets and liabilities approximate
their fair values.
All financial instruments are deemed Level 2.
11 Subsequent events
Other than as described below, there were no events after the Balance
Sheet date that require disclosure.
Interim dividend
After the balance sheet date, an interim dividend of 11.5 pence per
share has been declared by the Directors, totalling GBP5.2 million
(2017: 10.4 pence per share totalling GBP4.7 million). The dividend
has not been included as a liability in these financial statements.
The dividend will be paid on Friday 19 October 2018 to shareholders
on the register at the close of business on Friday 21 September 2018.
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 Registrars
by no later than Friday 28 September 2018. Existing participants in
the Plan will automatically have the interim dividend reinvested. Details
on the Plan can be obtained from Link Asset Services on 0871 664 0300
or at www.signalshares.com. Calls cost 12p per minute plus your phone
company's access charge. If you are outside the United Kingdom, please
call
+44 371 664 0381. Calls outside the United Kingdom will be charged
at the applicable international rate. The lines are open from 9.00am
to 5.30pm, Monday to Friday (excluding public holidays in England and
Wales).
12 Disposals and discontinued operations in 2017
Both Haigh-Farr and the US broadcast services business were disposed
in 2017 and were classified as discontinued operations in accordance
with IFRS 5 "Non-current assets held for sale and discontinued operations".
As at 30 June 2017, the assets and liabilities of the US broadcast
services business, which was disposed on 1 August 2017, were classified
as a disposal group held for sale.
The table below shows the results of the discontinued operations which
are included in the Group Income Statement and Group Statement of Cash
Flows respectively.
Half year Year to
to 30 June 31 December
a) Income Statement - discontinued operations 2017 2017
GBPm GBPm
----------------------------------------------------------------- ------------ -------------
Revenue 22.7 24.8
Expenses (24.3) (26.4)
----------------------------------------------------------------- ------------ -------------
Operating loss (1.6) (1.6)
----------------------------------------------------------------- ------------ -------------
Comprising
- Operating loss before amortisation of acquired
intangible assets (0.4) (0.4)
* Amortisation of acquired intangible assets (1.2) (1.2)
----------------------------------------------------------------- ------------ -------------
(1.6) (1.6)
----------------------------------------------------------------- ------------ -------------
Taxation (0.7) (0.7)
----------------------------------------------------------------- ------------ -------------
Loss after tax from discontinued operations (2.3) (2.3)
----------------------------------------------------------------- ------------ -------------
Gain on disposal of discontinued operations before
tax 3.2 15.0
Taxation (0.1) 4.3
----------------------------------------------------------------- ------------ -------------
Gain on disposal of discontinued operations after
tax 3.1 19.3
----------------------------------------------------------------- ------------ -------------
Profit after tax from discontinued operations attributable
to owners of parent 0.8 17.0
----------------------------------------------------------------- ------------ -------------
Half year Year to
to 30 June 31 December
b) Statement of Cash Flows - discontinued operations 2017 2017
GBPm GBPm
----------------------------------------------------------------- ------------ -------------
Net cash from operating activities 2.8 3.3
Net cash from investing activities (1) 12.1 33.7
----------------------------------------------------------------- ------------ -------------
Net cash from discontinued operations 14.9 37.0
----------------------------------------------------------------- ------------
(1) Includes net proceeds of GBP11.1 million in half year to 30 June
2017 and GBP32.6 million in year to 31 December 2017 from disposal
of businesses
30 June 31 December
c) Effect of disposal on the Group Balance Sheet 2017 2017
GBPm GBPm
----------------------------------------------------------------- ------------ -------------
Assets of the disposal group classified as held for
sale
Property, plant and equipment 16.7 -
Inventories 0.1 -
Trade and other receivables 5.8 -
----------------------------------------------------------------- ------------ -------------
22.6 -
----------------------------------------------------------------- ------------ -------------
Liabilities of the disposal group classified as held
for sale
----------------------------------------------------------------- ------------ -------------
Trade and other payables 4.3 -
----------------------------------------------------------------- ------------ -------------
Glossary - Alternative Performance Measures ("APMs")
In addition to statutory reporting, Vitec reports alternative performance
measures ("APMs") which are not defined or specified under the requirements
of International Financial Reporting Standards ("IFRS"). The Group uses
these APMs to improve the comparability of information between reporting
periods and Divisions, by adjusting for certain items which impact upon
IFRS measures, to aid the user in understanding the activity taking
place across the Group's businesses. APMs are used by the Directors
and management for performance analysis, planning, reporting and incentive
purposes.
---------------------------------------------------------------------------------------------------------------
APM Closest equivalent Definition & Purpose
statutory measure
----------------------- ---------------------------------------------------------------
Income Statement Measures
Adjusted operating Operating profit Calculated as operating profit before
profit charges associated with acquisition of
businesses and material non-operating
events. These are excluded by virtue of
their size and nature in order to more
accurately show the underlying business
performance of the Group in a consistent
manner. This is a key management incentive
metric.
Charges associated with acquisition of
businesses include non-cash charges such
as amortisation of acquired intangible
assets and cash charges such as transaction
costs, earnout and deferred payments and
significant costs relating to the integration
of acquired businesses.
See the Condensed Consolidated Income
Statement for a reconciliation.
----------------------- ---------------------------------------------------------------
Adjusted operating None Calculated as adjusted operating profit
profit margin divided by revenue. Progression in adjusted
operating margin is an indicator of the
Group's operating efficiency.
----------------------- ---------------------------------------------------------------
Adjusted operating Operating expenses Calculated as operating expenses before
expenses charges associated with acquisition of
businesses and material non-operating
events. These are excluded by virtue of
their size and nature in order to more
accurately show the underlying operating
cost base of the Group in a consistent
manner.
The table below shows the reconciliation
for continuing operations:
Half Half
year to year to Year to
30 June 30 June 31 December
2018 2017 2017
GBPm GBPm GBPm
-------------------------- --------- --------- -------------
Operating expenses 63.0 55.4 126.3
Charges associated
with acquisition
of businesses (4.8) (3.3) (15.0)
------------------------------------------------------------------------ --------- --------- -------------
Adjusted operating
expenses 58.2 52.1 111.3
------------------------------------------------------------------------ --------- --------- -------------
Adjusted profit Profit before Calculated as profit before tax, before
before tax tax charges associated with acquisition of
businesses and material non-operating
events. These are excluded by virtue of
their size and nature in order to more
accurately show the underlying business
performance of the Group in a consistent
manner. This is a key management incentive
metric.
See the Condensed Consolidated Income
Statement for reconciliation.
Adjusted profit Profit after Calculated as profit after tax before
after tax tax charges associated with acquisition of
businesses, profit on disposal of businesses
and material non-operating events.
Adjusted basic Basic earnings Calculated as adjusted profit after tax
earnings per share per share divided by the weighted average number
of ordinary shares in issue during the
period. This is a key management incentive
metric.
See note 7 "Earnings per share".
Cash Flow Measures
Free cash flow Net cash from Net cash from operating activities after
operating activities proceeds from property, plant and equipment
and software, purchase of property, plant
and equipment, and capitalisation of software
and development costs. This measure reflects
the cash generated in the period that
is available to invest in accordance with
the Group's capital allocation policy.
---------------------------------------------------------------
Operating cash Net cash from Free cash flow before payment of interest,
flow operating activities tax, restructuring costs, transaction
costs relating to acquisition of businesses
and integration costs. This is a measure
of the cash generation and working capital
efficiency of the Group's operations.
Operating cash flow as a percentage of
adjusted operating profit is a key management
incentive metric.
Half Half
year to year to Year to
30 June 30 June 31 December
2018 2017 2017
GBPm GBPm GBPm
-------------------------- --------- --------- -------------
Net cash from
operating activities 23.0 23.0 35.1
Proceeds from
sale of property,
plant and equipment
and software 0.1 2.4 3.5
Purchase of property,
plant and equipment (4.3) (3.7) (10.8)
Capitalisation
of software and
development costs (2.4) (2.3) (4.3)
------------------------------------------------------------------------ --------- --------- -------------
Free cash flow 16.4 19.4 23.5
Add back:
Interest paid 0.9 1.7 2.6
Tax paid 1.5 2.0 11.0
Payment of restructuring
costs, transaction
costs relating
to acquisition
of businesses
and integration
costs 1.6 1.2 3.3
------------------------------------------------------------------------ --------- --------- -------------
Operating cash
flow 20.4 24.3 40.4
------------------------------------------------------------------------ --------- --------- -------------
Other Measures
Return on capital None Calculated as adjusted operating profit
employed (ROCE) for the last twelve months divided by
average total assets less current liabilities
excluding the current portion of interest-bearing
borrowings. This is a measure of the efficiency
of the Group's asset base.
----------------------- ---------------------------------------------------------------
Adjusted EBITDA Operating profit Calculated as adjusted operating profit
for the last twelve months before depreciation
of tangible fixed assets and amortisation
of intangibles (other than those already
excluded from adjusted operating profit).
The ratio of net debt to adjusted EBITDA
is a metric used in assessing covenant
compliance for the Group's Revolving Credit
Facility Agreement, and is a measure of
the level of the Group's borrowings relative
to its cash generation.
----------------------- ---------------------------------------------------------------
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
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