Final Results
The Vitec Group PLC
06 March 2003
6 March 2003
The Vitec Group plc
Full Year Results to 31 December 2002
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 2002.
2002 2001
million million
Turnover £182.2 £190.4
Operating profit(1) £24.7 £30.6
Pre-tax profit(2) £23.1 £28.0
Adjusted basic EPS(2) 34.1p 42.9p
Dividend 22.7p 22.7p
KEY POINTS
• Continued strong cash generation, £20.7m, up from £18.0m
• Resilient performance in Photographic and Retail
• Manufacturing restructuring underway, consolidating in lower cost locations
• Emphasis on new product development
• Recommended unchanged total dividend of 22.7p
Commenting on the results, Gareth Rhys Williams, Chief Executive said:
'Last year saw challenging conditions, particularly in the broadcast market. We
maintained our focus on delivering operational improvements and developing
exciting new products. This focus is already benefiting us and puts us in a
strong position to capitalise on the market upturn when it comes.
'Overall, the Group is not anticipating a recovery in markets during 2003.
While current trading is broadly in line with expectations, we are tackling the
decline in the broadcast market with a significant manufacturing reorganisation,
benefits of which will be seen in 2004.'
(1)pre operating exceptional items of £5.8 million (2001: nil) and goodwill
amortisation of £0.9 million (2001: £0.9 million)
(2)pre total exceptional items of £5.6 million (2001: £2.9 million) and goodwill
amortisation of £0.9 million (2001: £0.9 million)
Enquiries
The Vitec Group plc Gareth Rhys Williams 020 8939 4650
Financial Dynamics Rob Gurner 020 7269 7221
Chairman's statement
Shareholders are now familiar with the difficult market in which we have been
operating throughout 2001 and 2002 and clearly we are not immune from the impact
of this. The challenge facing our management team remains to focus on
delivering operational improvements in our businesses and to position them to
take advantage of the upturn, when it comes, by continuing to improve our range
of new products and by creating a more efficient and cost-effective
manufacturing capability throughout the Group.
As is evident from our results for the year ended 31 December 2002, a relatively
small decline in turnover (4.3% decline from £190.4 million in 2001 to £182.2
million in 2002) has a significant effect on our profit before tax, exceptional
items and goodwill amortisation (17.5% decline from £28.0 million in 2001 to
£23.1 million in 2002). However, the actions taken during the year have reduced
this effect compared with that in 2001.
Our Photographic and Retail business continues to perform well, with operating
margins* at 20%. In the tougher broadcast market, the Broadcast Services
division has reacted to the downturn by cost cutting and tighter management of
its rental assets. Together with successful contracts at the FIFA World Cup,
these actions have shown through in operating profits* reduced by £0.2 million
on sales down £1.8 million. In our communications companies, now part of
Broadcast Systems, the cost cutting and new products launched during the year
helped to improve operating profits* by 50% to £1.2 million. However, our
results have been most affected by the decline in the camera support companies,
particularly Vinten and Sachtler, whose operating profits before exceptional
items and goodwill amortisation fell by £5.1 million on sales that were £8.2
million lower. Projects to reduce the cost base through consolidating
manufacturing, and to introduce exciting new products, are progressing well.
Our profits in the past have benefited substantially from modest increases in
turnover and the company believes that shareholders will benefit from the
operating leverage in our business when the broadcast market recovers. We need
to balance the requirement to reduce costs throughout the Group with the
necessity of investing in new products and in effective sales and marketing such
that our brands maintain their value.
During 2002 we looked at a number of acquisitions which would help the Group
develop into adjacent, but related, areas and which would make not only
strategic but financial sense for shareholders. On close examination through our
due diligence processes a number of these opportunities failed to meet our
financial objectives and these due diligence costs, amounting to £0.5 million,
are included in our operating expenses for 2002. We continue to look for
acquisition targets which can be integrated into our existing portfolio and
provide future growth. Early in 2003 we announced the acquisition of Radamec
Broadcast Systems, whose business is complementary to Vinten, and OConnor,
which manufactures specialist heads and accessories for the film industry. We
expect both acquisitions to be earnings enhancing from 2004.
During the year we have had several changes to the Board. I would like to
welcome Will Wyatt, who joined the Board as a non-executive director in June
2002, who brings with him a wealth of experience from his tenure at the BBC. I
also welcome Alastair Hewgill, who joined in May 2002 as Finance director.
Alastair previously held senior finance roles at GKN. Richard Green stepped
down as Finance director in May 2002 and I would like to thank him for his
dedication to Vitec as Finance director for over 10 years. Michael Stacey
resigned in October 2002 and I would like to thank him for his contribution to
the Company.
Our employees have continued to rise to the challenges which we all face and I
thank them for their hard work and flexibility over the year.
We are recommending an unchanged final dividend for the year of 16.6p per share,
giving a total dividend for the year of 22.7p, representing a net yield of 8.4%
at the share price of 270p on 5 March 2003. Our adjusted basic earnings per
share figure of 34.1p is down 20.5% from last year (42.9p) but we continue to
generate good cash flow and have a modest level of indebtedness.
Outlook
Overall, the Group is not anticipating a recovery in markets during 2003. While
present trading is broadly in line with expectations, we are tackling the
decline in the broadcast market with a significant manufacturing reorganisation,
benefits of which will be seen in 2004. The Broadcast Services division in the
USA has had a slow start to the year, and will not benefit from the major
sporting events of 2002. I will be able to update shareholders again in early
May at the time of our annual general meeting.
*before amortisation of goodwill and exceptional items
Chief executive's statement
During my first year at Vitec, I took the opportunity to review the various
businesses within the Group and to initiate the implementation of a new strategy
based on the watchwords 'Consolidate-Leverage-Grow'. This new strategic path was
adopted to react to the market environments in which we operate: whilst
photographic markets have remained stable, broadcasting markets continued to
deteriorate in 2002. With these difficult markets conditions in mind, it was
pleasing to see initial benefits resulting from the new strategy, particularly
in respect of performances at Clear-Com and Drake and in the new products
launched at the end of the year.
Consolidate - Leverage - Grow
With the changed market conditions it is no longer appropriate to run each of
the businesses as independent companies as we have in the past. There are
operating synergies to be achieved from consolidating some of the manufacturing
operations which have until now been run separately. By being more proactive in
sharing sales leads we will also leverage the market knowledge we have within
the Group. We will continue to keep our outstanding brands independent, the
underlying strength of Vitec, but look for ways to make them operate more
cohesively. Some of the savings from the consolidation of the manufacturing
platforms will be used to fund increases in R&D and marketing spend to generate
future growth. We will continue to look for acquisition targets which will add
value to our existing portfolio and provide future potential sales growth, or
where we can improve the performance of the acquired company.
Market overview
Vitec provides products and services to the broadcasting, entertainment and
media industries, which have themselves been under growing pressure during 2002.
Our core customers, from broadcasting networks through to individual
professional photographers, derive at least part of their revenue from
advertising. This has been in decline for over a year and the initial hopes of
recovery in late 2002 faded, with many industry observers now predicting a
material advertising upturn as late as 2004. Additionally, some of the large
media groups are going through a period of restructuring and consolidation which
is reducing their expenditure on our products and services.
Operational Performance
This reduction in our key customers' spending power has affected the performance
of Broadcast Systems, particularly Sachtler and Vinten (which primarily
manufacture video camera supports). Our intercom companies have, however, been
successful in selling their systems into new markets, notably US homeland
defence, and have therefore been able to maintain their level of sales.
Reduced customer spend also impacted Broadcast Services, where Bexel's strong
performance in the FIFA World Cup was not sufficient to offset the reductions in
its rental contracts from both outside broadcast and corporate communications
activities.
Robust consumer confidence during the year aided our Photographic and Retail
Display division, which saw continued strong demand from the semi-professional
and amateur photographer for our tripod and accessory products.
Structural Changes and Operational Efficiencies
In the light of depressed markets, the immediate focus has been on reducing
costs and maintaining our good cash generation. To this end, we further
strengthened our management team - in June we appointed Brian McCluskie as
Operations director and have made a structural change by consolidating the
Broadcast Camera Systems and Communications & Audio divisions into one -
Broadcast Systems.
We have announced the closure of one plant in the USA and one in Germany, with
the production being moved to existing facilities in the UK and Costa Rica. The
first benefits of this (£2 million) will flow through in 2004. Operating expense
before exceptional items and goodwill amortisation has been decreased from 2001
despite increased M&A, tax advisory and recruitment costs. Other changes at
Drake and Clear-Com have helped their operating profits to rise by 50% from last
year.
At the same time, the strong development pipeline has been maintained, with
exciting product launches from Vinten, Drake and Manfrotto in particular. Vitec
companies will continue to set the standard for product innovation in order to
capitalise on the market upturn when it comes.
Despite some necessary stock build-up to protect the business during the factory
moves the continuing focus on cash generation has resulted in net debt falling
by £10.6 million to £11.9 million at the year end, emphasising the underlying
financial strength of Vitec.
Post balance sheet events
During February we announced the acquisitions of OConnor Engineering
Laboratories, based in Costa Mesa, California, for $2.7 million (£1.6 million)
and Radamec Broadcast Systems, based in Chertsey, England, for £4.65 million.
OConnor is a leading designer and manufacturer of camera control heads for the
film industry, an area Vitec has in the past only supplied in a limited way;
Radamec Broadcast Systems has a strong position in Europe in remote controlled
camera systems for both broadcasters and legislatures. Both will form part of
our Broadcast Systems division and we expect them to be earnings enhancing in
2004.
Photographic and Retail Display
Products for professional photographers and the retail display market
The USA, the Group's most important market for the photographic, lighting
support and retail display businesses, enjoyed an exceptionally good year on the
Photographic side despite difficult market conditions. However, the Retail
Display businesses suffered severely as the USA recession affected retailers and
as mass retailers took market share from the department stores and speciality
chains, ALU's core customers. European photographic markets were strong for
most of the year but showed some weakness in Germany throughout the year. Sales
decreased in Japan, for the second consecutive year, and in China, last year's
strongly emerging market. South Korea's growth, greatly helped by the World Cup,
was not enough to counter this effect. The Retail Display business in Europe was
very weak on the standard products but strong in custom projects, in particular
with a contract to supply Nokia.
Sales of the higher margin photographic camera and lighting support products
increased compared to last year. A large number of new products have been
introduced at shows during last year, most of which have received excellent
response from the market place. These included the launch of several innovative
products such as composite video heads, tripods for digital cameras, geared
heads, a LANC control pan bar, motorised background support systems, new carbon
fibre and Mini DV tripods. Bogen has signed an exclusive USA agreement for the
distribution of Delsey, a leading brand in camera luggage. IFF, despite the drop
off in sales of the Identisystem product, has increased its presence in the
studio suspension market. Litec increased sales of its lighting suspension
structures over the prior year primarily thanks to new products and prestigious
projects such as the NATO convention held near Rome and the international
e-Government symposium in Palermo. ALU also introduced a number of new products
at New York's December market such as the new box, 'Autocube', and the new
tension pole system, 'Stylo'.
2002 was a year of great organisational change for the division: the
Photographic companies have been reorganised around clearer functional lines
operating under a newly formed holding company, Gruppo Manfrotto srl, which has
incorporated all the key functions of the business. To reduce production costs
and improve efficiency, the Italian manufacturing companies have successfully
introduced flow production lines in two of their sites. The remaining sites will
be converted during 2003.
The Movex IT system was successfully implemented in ALU New York and ALU Italy.
The total conversion to a division-wide integrated system will be completed by
the summer of 2003, yielding both a smoother fulfilment experience for our
customers and simpler internal processes.
2002 2001
Turnover £77.0m £75.2m
Operating profit* £15.4m 16.4m
Operating margin 20.0% 21.8%
*before amortisation of goodwill of £0.1 million (2001: £0.1 million) and
exceptional items of £0.8 million (2001: Nil).
Broadcast systems
Products and systems primarily for broadcast applications.
The Broadcast Systems division comprises the units in the former Broadcast
Camera Systems and Communications and Audio divisions, merged last year as they
both primarily sell to the same customers. The broadcast market has been very
tough throughout the year.
Vinten continues to set the standard for the high end studio and sports
applications:
WAVY-TV, in Virginia USA, chose Vinten's AutoCam robotic pedestals as a cost
effective solution to upgrade its existing manually operated studio cameras,
proving that the product is as relevant to local stations as it is to larger
central studios.
At the World Cup, Vinten also had more than 50 Vector and Vision camera support
systems, particularly the Vector 700 Pan and Tilt Heads, spread across all 20
World Cup venues. The Vector 700 is extremely popular at such events as its
tailored drag characteristics allow a high level of control for both slow and
fast image capture which is ideal for slow motion replay.
After its launch at IBC 2002, Vinten's Fibertec created excitement amongst a
variety of users. A breakthrough in innovation, the Fibertec is a tripod with
twice the rigidity of other products on the market, made of composite 'I section
' struts rather than the more typical tubular legs.
Sachtler's product range of camera control and automated suspension and lighting
management systems has been widened by the introduction of the Artemis product
line - four different balance systems for the professional camera operator.
These portable systems are used for applications where a tripod is not
practicable, typically live sports coverage.
Sachtler also won a new customer, SWR who are one of the largest television
companies in Germany, for their studio lighting applications, delivering nearly
500 telescopic systems with a total turnover of 1.4 million Euros (£0.9
million).
Anton/Bauer introduced several new products, led by its unique Dionic battery
system. This incorporates state-of-the-art lithium ion cell chemistry with the
proven features of the Anton/Bauer InterActive Digital battery system and
delivers lightweight performance for the burgeoning market for small size DV
cameras. This new battery accounted for more than 10% of the battery sales in 7
months of production. NBC, an Anton/Bauer client for over 20 years, chose to
upgrade its battery system to the new Dionic battery and Titan chargers.
The manufacturing operations of the newly acquired Aspen were integrated into
Anton/Bauer's facility in Shelton, Connecticut. Aspen's distribution and
pricing programs were reorganised and the product line trimmed to better address
market requirements. A new line of innovative battery and charger products will
be unveiled at NAB 2003.
During the year, Clear-Com and Drake produced orders and sales that exceeded
those achieved in 2001. After experiencing a difficult first 6 months, both
companies were able to recover during the second part of the year.
While the broadcast market remained soft, the investment by Drake to
geographically develop its sales led, in the last quarter, to the business
delivering its first ever orders to Japan and to the USA: a system for the US
Senate. Clear-Com continued a tradition of significant sales in Japan and won a
prestigious order from NTV worth almost US$1 million (£0.7 million).
Considerable work was undertaken by Clear-Com to advance its sales to the
Military, Government and Aerospace markets and substantial success was achieved
to help offset the difficult broadcast market.
At IBC in September, Drake launched FreeSpeak, the world's first digital
cellular wireless intercom. It was enthusiastically received and the first
orders for this revolutionary new wireless product were placed. Clear-Com
wireless sales experienced strong growth, confirming an increasing demand by
customers in favour of wireless solutions over their more traditional 'wire
connected' alternative. The integration of VEGA in 2001 and expansion of
Clear-Com's wireless product range has underpinned this success.
Early in 2002 Drake won a £1.5 million contract for the development and supply
of a communications system for the European Space Agency (ESA) to be used for
the Columbus Space Laboratory Project, which has subsequently led to projects
with other ESA facilities, such as the astronaut training centre in Cologne.
The technology developed for these programmes has attracted considerable
interest from space agencies around the world. The Air Traffic Control (ATC)
market remained depressed following September 11, however there were signs that
the industry had readjusted to lower revenues and invitations to tender are
beginning to reappear and in early 2003 Drake landed a significant ATC order for
a system in South Korea.
2002 2001
Turnover
Broadcast Systems £75.7m £83.9m
Communication and Audio £18.1m £18.1m
Broadcast Camera Systems £57.6m £65.8m
Operating profit*
Broadcast Systems £8.4m £13.1m
Communication and Audio £1.2m £0.8m
Broadcast Camera Systems £7.2m £12.3m
Operating margin
Broadcast Systems 11.1% 15.6%
Communication and Audio 6.6% 4.4%
Broadcast Camera Systems 12.5% 18.7%
*before amortisation of goodwill of £0.4 million (2001: £0.4 million) and
exceptional items of £5.0 million (2001: Nil).
Broadcast services
Rental services and technical support primarily for the broadcast market
Broadcast Services was impacted by ongoing weak trading conditions in the USA
broadcast industry in 2002. Over the past few months, there have been signs of a
slow and patchy rebound in broadcast, but the commercial market remains quite
weak. Price competition is still intense due to the continued sector-wide
surplus of equipment available for rent.
As a result, and despite a significant boost from large Winter Olympic and World
Cup contracts in the first half of the year, annual turnover was lower than last
year. Used equipment sales were constrained for several months because so much
equipment was needed to serve the large contracts for these major events.
Capital expenditures were reduced sharply in the second half of 2002, to
continue bringing the Division's pool of equipment in line with lower demand.
More equipment was subrented throughout the year than in the past which, despite
creating lower margins, supports the large events and helps meet spot shortages
without requiring capital investment.
The Division was significantly more cash generative than it has been
historically, as equipment depreciation costs exceeded the amount of capital
investment needed to meet the lower level of market demand. Equipment levels
will reduce further in 2003, which will allow for continued profitability and
better cash flows, despite the fact that the larger cyclical events, for example
the Olympics and the US presidential elections, will not recur until 2004.
The Division's primary operational focus is on increasing the level and
effectiveness of its direct sales and marketing campaigns. Projects have been
taken away from competitors and several new product packages and service
offerings have been developed as a direct result of the greater customer contact
already being achieved.
The Division's ongoing entry into the film sector via high definition digital
camera technology remains a significant source of new business as producers
switch from shooting on celluloid film to shooting on video.
2002 2001
Turnover £29.5m £31.3m
Operating profit* £0.9m £1.1m
Operating margin 3.1% 3.5%
* before amortisation goodwill of £0.4 million (2001: £0.4 million).
Manufacturing
In September 2002 we announced our reorganisation and restructuring plans. Vitec
Manufacturing was formed in September 2002 to bring focus to the operations part
of the businesses, supporting our strong Sales and Marketing, Engineering and
Design teams. Quality and 'Complete and On Time' delivery are the key goals for
the operations teams in 2003. The restructuring programme will focus on
consolidating facilities to exploit our scale and deliver improved quality and
delivery performance, but at reduced cost. We will achieve this by specialising
our plants - low complexity broadcast support products being made in San Jose,
Costa Rica, where we have had a facility for 8 years, and high complexity
products in Bury St Edmunds, England. As a result, the plants in New Jersey,
USA and Munich are being closed. Full year financial benefits in excess of £3
million will be achieved in 2005.
To ensure that our products maintain their local design character and quality,
Sachtler's design, engineering and product management will remain in Munich, and
those for the automated Vinten products in New Jersey, USA.
Some of the key milestones already achieved are that the first products have
already been transferred from New Jersey to Bury St Edmunds, passing the
rigorous quality assurance checks; the first products have been transferred from
Germany and England to Costa Rica and are now in production; agreement of the
social plans has been reached in Germany; and top calibre additions to the Costa
Rica management team have been made and their training in Europe completed.
World Class Manufacturing (WCM)
The rollout of our WCM programme is underway with 'lean' projects in Manfrotto
and Bury St Edmunds. Again, we have strengthened the team to accelerate changes
to the manufacturing model that will enable us to be more flexible in our
factories, reducing inventory and improving our customer service.
As consolidation of our manufacturing base takes place, it will give us a solid
platform to launch a second wave of supply chain and logistics initiatives. In
the past, the businesses have operated in isolation in both these activities.
In 2002 we started projects that will continue throughout 2003; in supply chain
we are focusing on the top areas of spend across the Group to bring buying power
and improved pricing; in logistics we aim to shorten the time to market as well
as reduce our costs.
Robust processes and new measurement systems
To allow smooth new product introductions across the Group and enable
manufacturing to be both more flexible and, in some cases, physically remote
from design, we have implemented common front-end engineering across the
companies. We are well underway with the implementation of new ERP systems;
Bury St Edmunds went live in May 2002, and we are rolling out the programme
across Broadcast Systems to complete by the end of 2004. Standard manufacturing
measures have been implemented across the businesses that can be reviewed, in
some cases daily. This culture has been initiated in Italy, Germany, UK and
Costa Rica with encouraging results.
Financial review
Turnover reduced by £8.2 million (from £190.4 million to £182.2 million) or 4.3%
in the year. Virtually all of the reduction occurred in the Broadcast Systems
division reflecting the continuing recession in the broadcast and media
industries. The lower volume and mix effects reduced turnover by £3.3 million
and lower effective prices due to unfavourable foreign exchange rate movements
by £2.0 million. These reductions were offset by a net pricing benefit of £0.2
million and a contribution from the acquisition of Aspen Electronics of £0.8
million. In addition to the above movements the weaker US$ (4.3% versus last
year), partially offset by a stronger Euro (1.5% versus last year) resulted in
an adverse exchange translation of £3.9 million.
Gross margins Gross profit margins fell from 50.6% to 47.7% reflecting the lower
volumes and mix changes. Gross profits were £9.4 million lower than the prior
year.
Net operating expenses Net operating expenses before exceptional items of £5.8
million and goodwill amortisation of £0.9 million decreased by £3.5 million to
£62.3 million, of which £2.0 million was due to lower costs and £1.5 million
exchange gains on hedging. Operating expenses were increased by a number of
costs including due diligence on unsuccessful acquisitions, increased advisory
costs and higher bad debts.
Operating profits Operating profits before exceptional items and goodwill
amortisation fell from £30.6 million to £24.7 million and operating profit
margins were 13.6% compared to 16.1% in 2001. The year on year effect of
translating overseas profits was negligible and the net effect of unfavourable
exchange rates was £0.5 million after hedging.
As announced at the interims, the Group has taken an operating exceptional
charge of £5.8 million in the second half relating to the restructuring of its
operations, including the closure of manufacturing in Munich and New York and
transfer to Costa Rica and Bury St Edmunds.
Other profit and loss items The sale of a building in France for £1.9 million
produced a profit of £0.2 million.
Taxation The effective taxation rate on operating profit before goodwill
amortisation and exceptional items has increased to 39.4% from 37.1% in 2001.
The increase is attributable to an adverse change in the source of Group
profits; particularly the Group has incurred net losses in the UK but has not
benefited from tax relief on these. In 2002, £0.7 million of the £9.1 million
total tax charge represents deferred tax and is, therefore, a non-cash charge.
Cash flow and net debt Cash generation remained strong despite the lower
profits, and net debt decreased during the year by £10.6 million to £11.9
million. Net cash inflow from operating activities was £35.4 million (2001:
£42.1 million), equating to 86p per share (2001: 103p per share). Cash flow from
a reduction in working capital reduction was £0.6 million (2001: £0.4 million).
Capital expenditures and financial investments were £10.5 million (2001: £15.4
million), of which £4.8 million relates to rental assets and £1.1 million to IT
projects, partly financed by the proceeds from higher asset disposals of £3.9
million (2001: £2.4 million).
After a seasonal increase of £0.3 million in the first half, stocks were reduced
by £3.4 million in the second half and at the year end were £3.1 million (9.2%)
lower than the prior year. Stock days improved to 117 (2001: 130). Trade debtors
were £2.1 million higher than last year with debtor days at 57 days (2001: 51
days). This was principally due to invoicing in November and December being £3.7
million greater than the same period in 2001, particularly Retail Display in
Europe and Communications and Audio. However, trade creditors at £12.1 million
were £2.5 million higher than last year, largely reflecting the increased level
of activity.
Treasury Policy 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 are hedged
12 months forward. Forward foreign exchange contracts totalled £27 million
(2001: £30 million) at 31 December 2002. 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 Group operates strict controls over all treasury transactions involving dual
signatures and appropriate authorisation limits.
Financing Activities The average cost of borrowing for the year was 5.2% (2001:
6.1%). Net interest cover (before goodwill amortisation and exceptional items)
remained high at 15 times (2001: 12 times) despite the lower profits. The
Group's three year committed facilities were renewed during 2002 and now expire
in October 2005.
Consolidated profit and loss account
For the year ended 31 December 2002
2002 2001
Before Exceptional Goodwill Total Total (1)
exceptional items amortisation Restated
items and
goodwill
amortisation
£m £m £m £m £m
Turnover 182.2 - - 182.2 190.4
Cost of sales (95.2) - - (95.2) (94.0)
Gross profit 87.0 - - 87.0 96.4
Net operating expenses (62.3) (5.8) (0.9) (69.0) (66.7) (2)
Operating profit 24.7 (5.8) (0.9) 18.0 29.7
Profit on sale of fixed - 0.2 - 0.2 0.8
assets
Amounts written off - - - - (3.7)
investments
Profit on ordinary 24.7 (5.6) (0.9) 18.2 26.8
activities before
interest
Net interest payable (1.6) (1.6) (2.6)
Profit on ordinary 23.1 (5.6) (0.9) 16.6 24.2
activities before tax
Tax on profit on (9.1) (9.1) (10.7)
ordinary activities
Profit on ordinary 14.0 (5.6) (0.9) 7.5 13.5
activities after tax and
for the financial year
Dividends (9.3) (9.3)
Retained (loss)/profit (1.8) 4.2
for the year transferred
to reserves
Basic earnings per share 18.3p 32.9p
Diluted earnings per 18.3p 32.9p
share
Adjusted basic earnings 34.1p 42.9p
per share
(1) See prior year adjustment.
(2) Net operating expenses during the year ended 31 December 2001 included £0.9 million of
goodwill amortisation.
All of the above results relate to continuing
operations.
Balance sheets
As at 31 December 2002
Group Company
2002 2001 2002 2001
Restated (1)
£m £m £m £m
Fixed assets
Intangible assets 11.0 10.8 - -
Tangible assets 42.7 48.5 2.2 2.3
Investments 0.5 - 144.8 129.0
54.2 59.3 147.0 131.3
Current assets
Stocks 30.5 33.6 - -
Debtors 37.0 34.3 2.3 3.5
Cash at bank and in hand 16.1 17.8 2.3 8.2
83.6 85.7 4.6 11.7
Creditors - due within one year (36.8) (64.8) (48.3) (50.8)
Net current assets/(liabilities) 46.8 20.9 (43.7) (39.1)
Total assets less current liabilities 101.0 80.2 103.3 92.2
Creditors - due after more than one year (24.3) (4.5) (24.0) (1.5)
Provisions for liabilities and charges (13.8) (8.6) (0.1) (0.1)
Net assets 62.9 67.1 79.2 90.6
Capital and reserves
Called up share capital 8.2 8.2 8.2 8.2
Share premium account 2.6 2.5 2.6 2.5
Capital redemption reserve 1.6 1.6 1.6 1.6
Revaluation reserve 1.5 1.5 0.9 0.9
Other reserves - - 53.7 53.7
Profit and loss account 49.0 53.3 12.2 23.7
Shareholders' funds - equity 62.9 67.1 79.2 90.6
(1) See prior year adjustment
Approved by the Board on 6 March 2003 and signed on its
behalf.
Alastair Hewgill
Director
Consolidated statement of total recognised gains and losses
For the year ended 31 December 2002
2002 2001
Restated (1)
£m £m
Profit for the financial year 7.5 13.5
Exchange rate movements on foreign net investments (2.5) 0.3
Tax on exchange differences - (0.3)
Total recognised gains and losses relating to the year 5.0 13.5
Prior year adjustment (2.3) -
Total recognised gains and losses since the last annual report 2.7 13.5
(1) See prior year adjustment
Reconciliation of movements in consolidated shareholders' funds
For the year ended 31 December 2002
2002 2001
Restated (1)
£m £m
Profit for the financial year 7.5 13.5
Dividends (9.3) (9.3)
Retained (loss)/profit for the year (1.8) 4.2
Exchange rate movements and related tax on foreign net investments (2.5) (0.1)
New share capital subscribed 0.1 0.1
Net (decrease)/increase in shareholders' funds (4.2) 4.2
Opening shareholders' funds - (restated)(2) 67.1 62.9
Closing shareholders' funds 62.9 67.1
(1) See prior year adjustment
(2) Opening shareholders' funds at 1 January 2002 have been reduced by £2.3
million (2001: £0.8 million) following the adoption of FRS 19 - Deferred tax
Consolidated cashflow statement
For the year ended 31 December 2002
2002 2001
£m £m
Net cash inflow from operating activities 35.4 42.1
Returns on investments and servicing of finance
Interest received 0.3 0.8
Interest paid (1.9) (3.5)
Net cash outflow from returns on investments servicing of finance (1.6) (2.7)
Tax Paid (6.6) (8.4)
Capital expenditure and financial investments
Purchase of tangible fixed assets (10.0) (15.4)
Sale of tangible fixed assets 3.9 2.4
Purchase of fixed asset investments (0.5)
Net cash outflow from capital expenditure (6.6) (13.0)
Acquisitions
Purchase of subsidiary undertakings (1.7) (0.3)
Equity dividends paid (9.3) (8.9)
Net cash inflow before financing 9.6 8.8
Financing
Issue of shares 0.1 0.1
Net repayment of loans (12.0) (10.1)
Net cash outflow from financing (11.9) (10.0)
Decrease in cash in the year (2.3) (1.2)
Reconciliation of operating profit to net cash flow from operating
activities
2002 2001
£m £m
Operating profit 18.0 29.7
Goodwill amortisation 0.9 0.9
Depreciation 12.2 12.3
(Profit)/Loss on sale of fixed assets (1.5) 0.1
Decrease/(increase) in stocks 2.7 4.5
(Increase)/decrease in debtors (4.3) 3.4
(Increase)/decrease in creditors 2.2 (7.5)
(Increase)/decrease in provisions 5.2 (1.3)
Net cash inflow from operating activities 35.4 42.1
Activity analysis
Operating profit Turnover Net assets
2002 2001 2002 2001 2002 2001
Restated (1)
£m £m £m £m £m £m
1 Class of business
Broadcast Camera Systems 7.2 12.3 57.6 65.8 24.6 30.2
Communications and Audio 1.2 0.8 18.1 18.1 6.8 7.5
Broadcast Systems(2) 8.4 13.1 75.7 83.9 31.4 37.7
Photographic and Retail Display 15.4 16.4 77.0 75.2 29.3 33.4
Broadcast Services 0.9 1.1 29.5 31.3 20.5 21.4
24.7 30.6 182.2 190.4 81.2 92.5
Goodwill amortisation (0.9) (0.9) - - - -
Exceptional items (5.8) - - - - -
18.0 29.7 182.2 190.4 81.2 92.5
Group net liabilities (18.3) (25.4)
62.9 67.1
(1) See prior year adjustment
(2) Broadcast Camera Systems and Communications and Audio have been combined to
form Broadcast
Systems.
Goodwill amortisation relates to Photographic and Retail Display - £0.1 million
(2001: £0.1 million), Broadcast Systems - £0.4 million (2001: £0.4 million) and
Broadcast Services - £0.4 million (2001: £0.4 million)
Exceptional items relate to Broadcast Systems £5.0 million and Photographic and
Retail Display £0.8 million
Group net liabilities include cash, financing and capitalised goodwill.
The net book value of goodwill relates to Photographic and Retail Display - £1.8
million (2001: £1.9 million), Broadcast Systems - £2.5 million (2001: £1.5
million) and Broadcast Services - £6.0 million (2001: £7.1 million).
Activity analysis (cont)
Operating profit Turnover Net assets
Restated (1)
2002 2001 2002 2001 2002 2001
£m £m £m £m £m £m
2 Geographic area by origin
United Kingdom (4.1) 0.8 21.6 23.1 9.7 10.8
The rest of Europe 18.4 20.2 76.0 72.6 24.6 30.4
The Americas 9.7 8.9 81.9 91.9 45.5 49.6
Asia and Australasia 0.7 0.7 2.7 2.8 1.4 1.7
24.7 30.6 182.2 190.4 81.2 92.5
Goodwill amortisation (0.9) (0.9) - - - -
Exceptional items (5.8) - - - - -
18.0 29.7 182.2 190.4 81.2 92.5
Group net liabilities (18.3) (25.4)
62.9 67.1
(1) See prior year adjustment
Goodwill amortisation relates to The rest of Europe - £0.1 million (2001: £0.1
million) and The Americas - £0.8 million (2001: £0.8 million).
Exceptional items relate to United Kingdom - £0.6 million , The rest of Europe -
£4.3 million and The Americas - £0.9 million.
The net book value of goodwill relates to the United Kingdom - £0.5 million
(2001: £0.5 million), The rest of Europe - £1.9 million (2001: £1.9 million) and
The Americas - £7.9 million (2001: £8.1 million).
Activity analysis (cont)
Turnover
2002 2001
£m £m
3 Turnover by destination
United Kingdom 8.2 9.2
The rest of Europe 50.2 48.3
The Americas 97.7 105.1
Asia and Australasia 21.9 24.6
Africa and Middle East 4.2 3.2
182.2 190.4
Notes
1. Basis of preparation
The financial information for the years ended 31 December 2002 and 31
December 2001 contained in this preliminary announcement was approved by the
Board on 6 March 2003. This announcement does not constitute statutory
accounts of the company within the meaning of section 240 of the Companies
Act 1985.
Statutory accounts for the year ended 31 December 2001 have been delivered
to the Registrar of Companies. Statutory accounts for the year ended 31
December 2002 will be delivered to the Registrar of Companies following the
company's Annual General Meeting. The auditors have reported on both these
sets of accounts. Their reports were not qualified and did not contain a
statement under section 237(2) of the Companies Act 1985.
2. Prior year adjustment
The Group has adopted FRS 19 'Deferred Taxation' for the first time in these
financial statements. Comparative amounts have been restated and consequently
reserves have been decreased and provisions increased by £2.3 million at 31
December 2001.
The impact of adopting FRS 19 on the profit and loss account in 2002 has been to
increase the ordinary and total tax charge by £1.2 million (2001: £1.4 million).
Basic earnings per share for the year ended 31 December 2001 has been restated
from 36.4p to 32.9p.
This information is provided by RNS
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