Final Results

The Vitec Group PLC 25 February 2002 25 February 2002 The Vitec Group plc Full Year Results to 31 December 2001 The Vitec Group plc, the international supplier of products, services and solutions to the broadcast, entertainment and media industries, announces its results for the year to 31 December 2001. 2001 2000 Turnover £190.4m £200.0m Operating profit* £30.6m £40.1m Pre-tax profit* £28.0m £37.2m Headline EPS* 46.4p 62.8p Dividend 22.7p 21.2p Free cash flow £18.0m £17.6m *pre exceptional items and goodwill amortisation KEY POINTS • Healthy margins, despite difficult market conditions • Tight focus on costs in second half • Cash conversion of operating profit improved to 138% • Recommended increase in total dividend of 7% to 22.7p • Appointment of Gareth Rhys Williams as Chief Executive in late November 2001 Commenting on the results, Gareth Rhys Williams, Chief Executive said: 'Vitec Group produced a resilient performance in 2001 in adverse market conditions through aggressive action on costs. Our margins remain healthy, we have continued to be very cash generative and we ended the year with a strong balance sheet. 'We do not anticipate that revenues will increase in 2002 but the on-going focus on cost reduction should deliver benefits during the year. 'With continuing economic uncertainty in the USA and Europe, we are cautious about short-term prospects for our markets but Vitec's underlying strength will allow us to capitalise on the upturn when it arrives, and our confidence in Vitec's position is emphasised by the recommendation of an increased final dividend of 16.6p.' Enquiries The Vitec Group plc Gareth Rhys Williams 020 8939 4650 Financial Dynamics Rob Gurner 020 7269 7221 FINANCIAL OVERVIEW Turnover decreased by 5% from the record levels of 2000 to £190.4million - the first time in over 5 years that we have suffered a decline in the top line. Profit before tax, exceptional items and goodwill amortisation was £28.0million, a decrease of 25% over 2000. Headline earnings per share decreased by 26% to 46.4p. Operating cash flow remained strong. We converted 138% (2000: 114%) of our operating profits into cash, and free cash flow was £18.0million (2000 £17.6million). We made no major acquisitions during the year and net debt at the year-end was £22.5million. Goodwill amortisation was £0.9million (2000: £0.6million) and exceptional items, net of tax, were a charge of £3.2million (2000: £1.9million). The lower volume and mix effects reduced turnover by £17.0million, this was offset by exchange translation gains of £6.0million, higher prices of £1.0million and contribution from an acquisition of £0.5million. Approximately 70% of the volume decline occurred in the Communications and Audio and Broadcast Services divisions. The exchange translation gains arose from the US$, 5% stronger than sterling versus last year, and the Euro currencies which were 2% stronger. Gross profit margins fell from 53.3% to 50.6% reflecting the lower volumes and mix changes. Gross profits were £10.2million lower than the prior year. Cost reduction actions reduced operating expenses significantly from £36.2million in the first half to £29.6million in the second half, making operating expenses for the year £0.7million lower than 2000. Operating expenses were increased £2.1million by exchange rates and by a number of costs which would not all normally recur annually: redundancy and termination costs of £0.6million; relocation and reorganisation costs of £0.5million and trade debtors written off due to customer bankruptcies £0.4million. The effect of favourable exchange translation rates, which increased operating profit by £0.8million, and the benefits of the cost reduction actions were not sufficient to contain the fall in gross profits. Operating profits before exceptional items and goodwill amortisation fell from £40.1million to £30.6million and profit margins were 16% compared to 20% last year. The sale of a building in Italy produced a profit of £0.8million. As announced at the Interims, a full impairment provision of £3.7million has been made against the minority investment in Intersense, the high-tech motion control company, whose profit and cash forecasts were reduced substantially during the year. Cash generation remained high despite the lower profits, and net debt decreased during the year by £8.5million to £22.5million. Cash flow from operations was £42.1million (2000: £45.8million), equating to 103p per share (2000: 112p per share). Working capital reduced by £0.5million during the year. After increasing by £3.7million in the first half, stocks were reduced by £7.9million in the second half and at the year end were £4.2million lower than the prior year. Stock days improved to 130 (2000: 148). Trade debtors were £2.9million lower than last year with debtor days improving to 51 days (2000: 53 days). However, creditors were also lower largely reflecting reduced stocks and the absence of incentive compensation accruals at 31 December 2001. Capital expenditures were £15.4million (£14.4million), of which £7.4million relates to rental assets and £3.2million to IT projects, partly financed by the proceeds from higher asset disposals of £2.4million (2000: £1.6million). Financing, financial risk hedging and tax planning are managed centrally. Hedging activities are designed to protect profits, not to speculate. Substantial changes to the financial structure of the Group or treasury practice are referred to the Board. There were no substantial changes during the year. A portion of the transactions of subsidiaries in foreign currencies is hedged 12 months forward. Forward foreign exchange contracts totalled £30.0million (2000: £35.0 million) at 31 December 2001. Translation of foreign currency profits and interest rates are not normally hedged. Foreign currency net assets are not hedged other than by normal Group borrowings. The average cost of borrowing for the year was 6.1% (2000: 6.9%). Net interest cover remained high at 12 times (2000: 14 times) despite the lower profits. All of the Group's committed facilities expire in October 2002. We have already commenced renegotiations with our banks and do not currently anticipate any major issues. Our operating companies in continental Europe successfully converted to full Euro-based accounting with effect from 1 January 2002. CHAIRMAN'S STATEMENT Overview In contrast to my statement this time last year, when I was able to report that most of our companies had enjoyed record years, this year the Group's results declined significantly. Many of our businesses are dependent upon the broadcast industry, which has witnessed savage reductions in advertising revenues. Whilst the lower volumes, combined with an increase in our operating expenses in the first half, inevitably led to a decline in profits, the Group continued to enjoy healthy margins and remains strongly capitalised. As I reported at the time of our interims in early September, we took firm action on costs, particularly in the latter part of 2001, which restored our margins to 16% for the full year. In the second half of the year we reduced the Group's operating expenses by over £6.0million, compared to the first half. Financials Turnover decreased by 5% from the record levels of 2000 to £190.4million - the first time in over five years that we have suffered a decline in the top line. Profit before tax, exceptional items and goodwill amortisation was £28.0million, a decrease of 25% over 2000. Headline earnings per share decreased by 26% to 46.4p. Operating cash flow remained strong. We converted 138% (2000: 114%) of our operating profits into cash, and free cash flow was £18.0million (2000 £17.6million). We made no major acquisitions during the year and net debt at the year-end was £22.5million. Goodwill amortisation was £0.9million (2000: £0.6million) and exceptional items, net of tax, were a charge of £3.2m (2000: £1.9million). Dividend Reflecting the Directors' continuing belief in the strength of the Group, the Board is recommending an increased final dividend of 16.6p per share (2000 15.6p) making a total dividend of 22.7p for the year (2000 21.2p), covered 2 times on this year's earnings. Charitable donations Thankfully none of our staff were injured in the events of September 11th. Nevertheless, over half of the Group's business is in the USA and we considered it entirely appropriate to donate US$100,000 to the Twin Towers Fund in New York. Also many of our US and European staff made personal contributions to other funds which are helping families affected by that tragic event. People Following the resignation of our previous Chief Executive in July last year, we appointed Gareth Rhys Williams as Chief Executive on 23rd November. I and other Board members are delighted that he agreed to join us and he is already demonstrating a good understanding of the issues which we need to address to achieve future growth. Our staff throughout the Group have worked tirelessly to minimise the impact of poor market conditions on our businesses. I would like to thank them personally for their efforts and their continuing loyalty to the Group. None of our senior staff received an annual bonus and salaries have been frozen for many of them. Future prospects A recovery in our own fortunes is heavily dependent upon a recovery of the markets in which we operate. With continuing economic uncertainty in the USA and Europe, we are cautious about short-term prospects in the broadcast industry. However we continue to take action on costs and we remain confident that Vitec is well positioned to take advantage of an upturn in our markets. We continue to look at possible acquisitions of companies in our markets, where we are able to add value and where these businesses can be secured at an acceptable price. The next year may well provide suitable targets. CHIEF EXECUTIVE'S REVIEW Vitec's core markets are broadcasting, entertainment and media. All of these have been significantly affected by the economic slowdown that started in the USA in the first half year, and which was exacerbated by the shock wave following September 11. This slowdown has translated into a particularly marked reduction in advertising spend, on which many of our customers depend. Advertising has seen a trend of strong growth in past years, but this year's fall has been significant. As a result, the networks' operating and capital budgets are under severe pressure which, combined with their need to upgrade to digital transmission standards, has caused many of them to defer their spend on our products. Vitec's products retain a high profile and visibility with our customers, but the Group's sales volume has been hit hard, particularly in the USA. Broadcast Services has had a very tough year as coverage of outside events has been scaled back, and the camera support and intercom businesses that supply the broadcast networks with their infrastructure needs have also been impacted. However, in the photographic camera and lighting support businesses there was a more muted effect: sales have continued to grow but much more slowly than in the past. There is also a technology driven trend towards lighter and cheaper digital camera which has been putting downward pressure on margins, although this is offset by the increased number of professional level cameras being used. Our customers' needs for improved operating efficiencies have also resulted in order intake levels for Vinten's robotic pedestals being at very high levels. Vitec's management have responded to this new set of circumstances in several ways. Overhead costs have been reduced; lean manufacturing programmes stepped up a gear and much work has recently been done to improve flexibility and responsiveness at the individual manufacturing plants. As we enter 2002, working capital controls have been tightened to husband resources for key projects. Going forward continuous downward pressure needs to be maintained on our cost base, both direct and indirect. It is clear that to maximise the performance of Vitec, not just the individual operations, will require a more integrated approach than in the past. We must also continue to introduce the new products that will enable our customers to exploit their creative skills, and which allow them to do so with greater efficiency. In today's environment we need to ensure that Vitec is leveraging its customer relationships and manufacturing platforms to best effect, maintaining the strength of our brands whilst looking to minimise structural costs. Despite the economic situation, Vitec's companies continue to be highly respected names in their markets, with exceptional reputations for service and reliability. This is underpinned by the expertise and enthusiasm of our staff. Where our challenge is to find areas in which to grow, Vitec's customer relationships and skills can be exploited to launch successful new products and to add value to acquisitions. I believe Vitec's underlying strength, evidenced by its reputation for excellence in both products and service, will enable our company to capitalise on the upturn when it comes, and deliver value for its shareholders. I am looking forward to this challenge. OPERATIONAL OVERVIEW Broadcast Camera Systems The decline in our largest market, the USA, was only partially compensated by strength in Europe and Asia. Lower volumes, product mix changes and higher operating costs reduced margins. A combination of weak markets and shifts in product and geographic mix produced turnover 3% lower than the record year in 2000. However, strong growth in sales of robotic studio lighting and camera systems was attained reflecting the increasing trend toward automation in TV studios as the networks pursue ways to reduce their production costs whilst maintaining programme quality. Vinten's Autocam robotic and remote-controlled camera systems provide cost effective solutions for studio news programme production, whilst Sachtler's automated suspension and lighting management systems provide high quality, state-of-the-art solutions to customers who are building new studios or modernising existing studios. The growing market for Autocam products is highly competitive and prices had to be reduced during the year. Additionally both Autocam and studio suspension margins are lower than the traditional camera pedestal business. Demand was also higher for the lower margin, lightweight camera support systems. These mix changes, coupled with slightly higher operating costs, caused a fall in profit margins. Generally, sales of camera support and lighting equipment used in studio production, outside broadcasting and film-for-TV output were lower than last year. However, sales unit volumes of lightweight equipment used in electronic news gathering (ENG) increased. In the USA, lower sales of high-end manual studio pedestals and heads resulted as programme schedules were cut back whereas demand for Autocam systems was high. Markets in Europe and the Far East, particularly China, Korea and Japan, performed well, partially making up for the USA shortfall. Germany, France and the Middle East softened in the second half of the year. Anton/Bauer's world-wide sales of batteries were lower than last year, adversely impacted by the decline in sales of high-end broadcast cameras and delays in the conversion to digital cameras in the marketplace. In Germany, Vinten won a $1 million order from the Home Shopping Channel Europe for their new Quattro-Z robotic pedestals. Vinten also announced a joint marketing venture with JL Fisher, the leading manufacturer of film camera support equipment, based in Burbank, California. This gives Vinten access to the growing market for high definition digital film making. In October Vinten were awarded the Guild of Television Cameramen UK seal of approval for the Vector 700 panning head. Sachtler won a contract worth 5million Euros over four years with ORF TV in Austria to supply fully motorised studio lighting suspension systems. The Sachtler solution helps to improve studio utilisation by minimising set up times for new productions. ORF TV Austria also adopted Anton/Bauer batteries as the standard to power their new Sony MPEG IMX format camera systems Anton/Bauer launched TITAN 70, a unique battery / charger combination aimed at the growing 'event' market segment. The high power demands of high definition and digital film cameras were successfully met with Anton/Bauer's 100-watt hour HYTRON 100 system, which was adopted as standard by Panavision. Implementation of manufacturing efficiency programmes continued during the year. Operating costs increased in the first half but were reduced in the second half to levels similar to those in the first half of 2000. Headcount at the year end was 6% lower than last year. New product development costs were increased by 8%. It is of paramount importance to maintain and enhance our valuable brands by continuing to launch innovative, cost efficient, high quality products into the broadcast market. These investments are included in operating costs. Photographic & Retail Display The USA, the most important market for the photographic, lighting support and retail display businesses, suffered the worst trading conditions for over 10 years. Strength in the European and Asian markets for most of the year greatly mitigated the effects of this decline. Photographic USA turnover was 11% lower than last year as the photographic market in the USA fell by over an estimated 20% compared to 2000. In contrast European markets were strong for most of the year, but started to weaken in the final quarter. Sales increased in Asia where some slowing in the Taiwanese and South Korean markets in the second half was offset by strength in Japan and China. Sales of the higher margin photographic camera and lighting supports products were lower than last year, although sales of video camera supports were slightly ahead. Bogen set up a new studio division to address the broadcast, theatre and architectural markets in the USA and Canada for the IFF lighting suspension systems, helping IFF win its first prestigious project in the Sony Music Studios in Manhattan. IFF also won a notable contract to supply Indentisystems to the Italian police. Litec once again increased sales of its lighting suspension structures by 30% over the prior year. New product activity included the restyling and improvement of the 190 tripod range, the launch of the 540ART video tripod, featuring the unique ART rapid deployment technology and, importantly, the 516 video head replacing the 116 MK3 head. To reduce costs, the Italian companies are being consolidated into a leaner corporate structure and Gitzo production was relocated from France to Italy into a facility vacated by the consolidation of the Avenger manufacturing in Bassano. Also Bogen completed its warehouse and distribution reorganisation. The new Movex IT system was successfully implemented in the USA and France, the first steps towards a division-wide integrated system by the end of 2002. Retail Display The USA recession affected retailers particularly in the second half, during which the effects of the September 11th attacks were also keenly felt. Retailers cut their prices in order to stimulate sales. Also they reduced staffing levels and other costs. Furthermore, mass retailers took market share from the department stores and specialty retailers, Alu's core customers. In the second half, Alu's USA sales fell over 20% compared with last year. Europe fared much better, where sales for the year increased 70% on 2000. This was primarily due to increased custom project business, although the markets in Italy, Benelux, Spain and Sweden performed well. However the German market slowed significantly. In the USA, Alu supplied Levi Strauss for its national back to school programme and Ralph Lauren Polo for their department store 'shop in shop' concept. In Europe, Alu won significant business with Benetton for its world wide roll out of standard components, and with Nokia to equip its European outlets with custom-designed display equipment. New products successfully introduced were Autoforms, laminated shelving and a new range of signholders. These new accessories complement our customers' existing Alu systems and also satisfy the needs of new customers in creating a differentiated look. The new Alu factory and warehouse in Bassano was completed in April. The Alu USA warehousing operation and the administrative functions have been consolidated on a new single site in New Jersey. In August Alu acquired its Swedish distributor for £0.3million. Communications & Audio Following an outstanding year in 2000 for Clear-Com and Drake, their core broadcast markets softened significantly as broadcasters cut back on expenditure in the face of toughening market conditions. The live entertainment and voice communications marketplaces were also weaker than last year. Despite significant cost reduction measures, profit levels were low. Sales volumes declined by over 20%. In response, headcount was reduced by 34%. Together with other actions, operating costs reduced by £1million in the second half. Operating costs were 6% lower than last year and are now lower than their 2000 levels. 2001 saw many changes. In May Vega's operation in Los Angeles was relocated and integrated with Clear-Com in San Francisco, where the workforce also had to be reduced in order to lower costs. Clear-Com completed the restructuring of its international sales organisation. Drake's broadcast international sales team was strengthened in South East Asia, with the opening of an office in Singapore, and the Middle East. In addition, the worldwide sales and product development activities of its voice communications business were greatly improved. Demand flow manufacturing is being introduced at Clear-Com, with the first manufacturing cell now fully operational. Successfully meeting customer demand from this cell within one working day, this rapid response methodology is being implemented for all other products. Despite the downturn, many successes in winning major international projects were recorded. In the broadcast sector, Clear-Com product was chosen by the Big Brother TV show in the UK, GG Studios in Israel, TV Globo in Brazil, Fukui Broadcasting in Japan and the Home Shopping Network in four EU countries. Clear-Com's live entertainment customers included L'Opera Bastille in France, Disney Europe, Auditorio de Tenerife in Spain as well as several cruise ships and the Goodwill Games. Building on its CD-quality communications heritage, Drake was selected by Swansea Airport in the UK to supply their new Small Tower Voice Switch system for air traffic control tower communications following the airport's recent CAA approval. Drake's solution supports commercial flights seven days a week and comprises a central voice switching matrix and operator positions interfacing seamlessly with existing radio frequencies and telephone lines. Drake also completed further important work for DFS, the German Air Traffic Control Authority. As part of the 'System East' modernisation programme, six airports in eastern Germany have been digitally networked. One of the most technically advanced in the world, the network features Drake's colour touchscreens and Venix digital communications equipment delivering high quality audio with automatic ISDN backup. Several new products were launched during 2001. Clear-Com introduced the RCS-2000 programmable source-assignment panel and the PS232a world-class power supply for its Party-Line range. Its Matrix Plus 3 product line was also improved with the addition of the i-series line of modular, expandable intercom panels. Vega's frequency-agile wireless intercom, the Q700, was launched in June and shipments made to several high profile venues. Drake launched the Refresh range of user panels. Featuring high-contrast vacuum fluorescent displays, they give unrivalled legibility in the broadcast industry, with a new ergonomic key design. Broadcast Services In the absence of large international events, the Broadcast services companies are almost entirely dependent on the USA economy. Turnover was 15% lower than last year but despite cost reduction measures and efforts to reduce the rental asset base, profits were 78% lower. The major USA TV networks responded to the severe contraction in their advertising by cutting their programming budgets, resulting in substantially lower rental revenues. The New York attacks caused further curtailment or cancellation of many entertainment and commercial events served by our companies. Staffing levels were reduced by 22% which, together with other cost reduction programmes, resulted in second half operating expenses over 16% lower than in the first half. Sales training initiatives and focused marketing campaigns were implemented in order to optimise turnover. An improved sales and marketing infrastructure, including a sophisticated customer database and contact management system, was instituted. The results have been encouraging, although the full potential of this shift in approach will not be realized until 2002 and beyond. Significant investment was made in a new operational and financial IT system which will result in faster and better analysis of rental assets and contract performance, improved asset utilisation, more effective capital expenditures and further savings in variable rental costs in the future. In order to contain the fall in asset utilisation, sales of used rental equipment were increased and planned recurring capital expenditures were reduced in line with the lower rental turnover. However, several major additional capital investments were made in order to improve our rental offerings. Bexel Broadcast Services, focused on large events, designed and constructed its first Mobile Editing and Support truck ('BBS ONE'). This 53-foot unit is designed to meet the evolving needs of broadcast sports producers, helping them reduce costs by providing efficient delivery of our equipment to major events throughout the USA. It features two interchangeable edit suites which can be customized to meet the technical requirements of each event, and can be used for two different customers concurrently. Following its commissioning in November, BBS ONE has served several high profile events, including the Tiger Woods Golf Challenge (during which Tiger Woods was interviewed inside the truck), the Britney Spears concert in Las Vegas and the National Collegiate and Professional Football playoff games. To prepare for the World Cup and Winter Olympics, Bexel also replaced its inventory of character generation equipment. These devices produce the graphics displayed on screen for sporting and other live televised events. The inventory of super slo-mo cameras and digital disk recorders was also upgraded and expanded with state of the art equipment. These are specialised 90-frame camera systems used primarily for sporting events. Bexel is now firmly positioned as the leader in this part of the rental market. Bexel's investments in high definition digital cameras in recent years began to generate better returns in 2001 as this technology becomes an accepted alternative for traditional filmmakers. Bexel provided equipment and services to three recurring television series, a major feature film and over twenty smaller scale projects. Previously, all of these would have been shot on film and serviced only by specialist rental firms. THE VITEC GROUP plc CONSOLIDATED PROFIT AND LOSS ACCOUNT for the year ended 31 December 2001 2001 2001 2001 2001 2000 £m £m £m £m £m Before Exceptional Goodwill Total Total exceptional items amortisation items and goodwill amortisation Turnover 190.4 - - 190.4 200.0 Cost of sales (94.0) - - (94.0) (93.4) ______ ______ ______ ______ ______ Gross profit 96.4 - - 96.4 106.6 Net operating expenses (65.8) - (0.9) (66.7) (69.0)* ______ ______ ______ ______ ______ Operating profit 30.6 - (0.9) 29.7 37.6 Profit on sale of fixed assets - 0.8 - 0.8 - Amounts written off investments - (3.7) - (3.7) - ______ ______ ______ ______ ______ Profit on ordinary activities before 30.6 (2.9) (0.9) 26.8 37.6 interest Net interest payable (2.6) - - (2.6) (2.9) ______ ______ ______ ______ ______ Profit on ordinary activities before tax 28.0 (2.9) (0.9) 24.2 34.7 Tax (9.0) (0.3) - (9.3) (11.5) ______ ______ ______ ______ ______ Profit on ordinary activities after tax 19.0 (3.2) (0.9) 14.9 23.2 and for the financial year Dividends (9.3) (8.7) ______ ______ Retained profit for the year transferred 5.6 14.5 to reserves ______ ______ Basic earnings per share 36.4p 56.7p Diluted earnings per share 36.3p 56.4p Headline earnings per share 46.4p 62.8p *Net operating expenses during the year ended 31 December 2000 included £1.9 million of exceptional items and £0.6 million of goodwill amortisation. The Board has recommended a final dividend of 16.6 per share (2000: 15.6p) which, together with the interim dividend of 6.1p (2000: 5.6p), totals 22.7p per share for the year (2000: 21.2p). Dividends are covered 2 times by earnings before exceptional items and goodwill amortisation. If approved, it will be paid on 23 May 2002 to shareholders on the register at the close of business on 26 April 2002. The financial information in this announcement does not constitute the company's statutory accounts for the years ended 31 December 2001 or 2000 but is derived from those accounts. Statutory accounts for 2000 have been delivered to the registrar of companies, and those for 2001 will be delivered following the company's annual general meeting. The auditors have reported on the accounts; their report was unqualified and did not contain statements under section 237 (2) or (3) of the Companies Act 1985. THE VITEC GROUP plc SEGMENTAL ANALYSIS for the year ended 31 December 2001 Activity analysis Turnover Operating profit 2001 2000 2001 2000 £m £m £m £m Class of business Broadcast camera systems 65.8 67.6 12.3 15.2 Photographic and retail display 75.2 73.8 16.4 18.0 Communications and audio 18.1 21.8 0.8 1.9 Broadcast services 31.3 36.8 1.1 5.0 ______ ______ ______ ______ 190.4 200.0 30.6 40.1 Exceptional items - - - (1.9) Goodwill amortisation - - (0.9) (0.6) ______ ______ ______ ______ 190.4 200.0 29.7 37.6 ______ ______ ______ ______ By destination By origin 2001 2000 2001 2000 £m £m £m £m Geographical turnover United Kingdom 9.2 8.6 23.1 28.3 The rest of Europe 48.3 47.3 72.6 71.1 The Americas 105.1 115.9 91.9 97.6 Asia and Australasia 24.6 25.2 2.8 3.0 Africa and Middle East 3.2 3.0 - - ______ ______ ______ ______ 190.4 200.0 190.4 200.0 ______ ______ ______ ______ THE VITEC GROUP plc CONSOLIDATED BALANCE SHEET as at 31 December 2001 2001 2000 £m £m Fixed assets Intangible assets 10.8 10.9 Tangible assets 48.5 47.0 Investments - 3.5 ______ ______ 59.3 61.4 ______ ______ Current assets Stocks 33.6 37.8 Debtors 34.3 38.0 Cash at bank and in hand 17.8 19.2 ______ ______ 85.7 95.0 Creditors - due within one year (64.8) (38.6) ______ ______ Net current assets 20.9 56.4 ______ ______ Total assets less current liabilities 80.2 117.8 Creditors - due after more than one year (4.5) (46.6) Provisions for liabilities and charges (6.3) (7.5) ______ ______ Net assets 69.4 63.7 ______ ______ Capital and reserves Called up share capital 8.2 8.2 Share premium account 2.5 2.4 Capital redemption reserve 1.6 1.6 Revaluation reserve 1.5 1.5 Profit and loss account 55.6 50.0 ______ ______ Shareholders' funds - equity 69.4 63.7 ______ ______ THE VITEC GROUP plc CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 December 2001 2001 2000 £m £m Net cash inflow from operating activities 42.1 45.8 Returns on investments and servicing of finance Interest received 0.8 0.8 Interest paid (3.5) (3.8) ______ ______ Net cash outflow from returns on investments and servicing of finance (2.7) (3.0) ______ ______ Tax paid (8.4) (12.4) ______ ______ Capital expenditure Purchase of tangible fixed assets (15.4) (14.4) Sale of tangible fixed assets 2.4 1.6 Purchase of fixed asset investments - (3.5) ______ ______ Net cash outflow from capital expenditure (13.0) (16.3) Acquisitions Purchase of subsidiary undertakings (0.3) (7.1) ______ ______ Equity dividends paid (8.9) (9.9) ______ ______ Net cash inflow/(outflow) before financing 8.8 (2.9) Financing Issue of shares 0.1 0.1 Net repayment of loans (10.1) (11.0) ______ ______ Net cash outflow from financing (10.0) (10.9) ______ ______ Decrease in cash in the year (1.2) (13.8) ______ ______ THE VITEC GROUP plc OTHER INFORMATION for the year ended 31 December 2001 Reconciliation of operating profit to net cash flow from operating activities 2001 2000 Continuing operations £m £m Operating profit 29.7 37.6 Goodwill amortisation 0.9 0.6 Depreciation 12.3 11.4 Loss on sale of fixed assets 0.1 - Decrease/(increase) in stock 4.5 (7.3) Decrease/(increase) in debtors 3.4 (3.8) (Decrease)/increase in creditors (7.5) 5.2 (Decrease)/increase in provisions (1.3) 2.1 ______ ______ Net cash inflow from operating activities 42.1 45.8 ______ ______ Total recognised gains and losses and reconciliation of shareholders' funds 2001 2000 £m £m Profit for the financial year 14.9 23.2 Exchange rate movements on foreign net investments 0.3 4.3 Tax on exchange differences (0.3) 0.6 ______ ______ Total recognised gains relating to the year 14.9 28.1 Dividends (9.3) (8.7) New share capital subscribed 0.1 0.1 ______ ______ Net increase in shareholders' funds 5.7 19.5 Opening shareholders' funds 63.7 44.2 ______ ______ Closing shareholders' funds 69.4 63.7 ______ ______ This information is provided by RNS The company news service from the London Stock Exchange

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