Interim Management Statement

RNS Number : 4880S

The Vitec Group PLC

19 May 2009

 



    19 May 2009

The Vitec Group plc

Interim Management Statement: Four Months to 30 April 2009

Current trading

The trends outlined in our full year results announcement of 2 March 2009 have continued with a resilient performance in Imaging being more than offset by lower sales volumes in some of our Broadcast Systems businesses and weakness in Broadcast Services.

Order intake in the Imaging business is holding up well, and is in line with our expectations. In Staging, demand for standard trusses has been weak in the first four months. The Group disposed of the non-core IFF suspensions business in March to Lighting Italia SrL for a cash consideration of £1.2m. Cost reduction measures have been implemented to mitigate volume shortfalls, particularly in the Staging business.

As reported in the preliminary results, Broadcast Systems is seeing weak demand in its Camera Dynamics, Communications and Portable Power businesses. We have taken further measures in each business aimed at realigning our cost base with these lower levels of demand. RF Extreme (previously RF Systems) continues to make deliveries of its HD-ready digital wireless equipment under the BAS programme and is making headway in winning non-BAS business. Litepanels, the producer of LED lights for the broadcast industry acquired in August 2009, continues to perform strongly. 

Broadcast Services, our US-based broadcast equipment rental business, continues to experience reduced demand. While the sports, reality and large events markets remain firm, there has been some further weakening in the wider US broadcast rentals market. The business is actively identifying new revenue-generating opportunities.

The Group has acted decisively and quickly to implement cost savings to mitigate the effect of reduced volumes. To date the Group has implemented actions, including headcount reductions, which will save over £15m in the current year, at a one time cost of c.£4m. 

Financial position

At 30 April 2009, the Group's net debt was £54.9 million, compared to £53.0 million at 31 December 2008. Since the year end the Group has received £0.7 million from the sale of IFF (after disposal and severance costs), offset by earn out payments related to the Autoscript and Litepanels acquisitions of £2.9 million and adverse exchange rate movements on net debt of £0.2 million. The Group has a committed multi-currency loan facility of £125 million, which expires in August 2013 and was utilising £58.1 million of the facility as at 30 April 2009.

Foreign exchange

Exchange rates for our main operating currencies (the US dollar, Euro and Yen) remain very volatile. If current exchange rates continue throughout 2009 (see note 2, 3), at our current estimates of sales volumes and profit for the rest of the year and at the current level of Group hedging in place, a favourable impact of over £10 million on 2009 operating profit compared to 2008 would arise. 

Outlook

Our markets remain challenging and current visibility is poor. Against this background, the Board now expects the outturn for 2009 to be slightly below its previous expectations. However, we have already reacted swiftly to adapt our cost base and we will take all further measures necessary to bring capacity in line with demand.

At the same time we will continue to invest in new products in order to reinforce our market leadership and ensure we are well positioned when our markets recover, thereby generating the greatest long term value for our shareholders.

Management

The new Chief Executive Stephen Bird joined the Group on 14 April 2009.

Forthcoming announcements

Our half year results will be released on 26 August 2009.

Enquiries: 

The Vitec Group plc                

Stephen Bird, Chief Executive                       Telephone: [phone]

Richard Cotton, Group Finance Director

Financial Dynamics    

Richard Mountain / Sophie Kernon                Telephone: [phone]

Notes

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

2. Current market exchange rates: £1 = $1.53 £1 = €1.13, €1 = $1.35

3. 2008 average market exchange rates: £1 = $1.85, £1 = €1.26, €1 = $1.46

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

5. Vitec is an international Group, principally serving customers in the worldwide media sector with products and services for the broadcast, entertainment and photographic industries. Vitec is based on strong, well known, premium brands that professionals rely on. Vitec is organised in three divisions: Imaging & Staging, Broadcast Systems and Broadcast Services. More information can be found at: www.vitecgroup.com.

 

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