Interim Results: Correction
The Vitec Group PLC
06 September 2004
The following replaces the Interim Results announcement released today at 7:00
under RNS number 6221C.
In Note 6, it should say that the results for Multiblitz are included in the
Photographic division, and not the Photographic Systems division as previously
stated.
The full amended text appears below.
6 September 2004
The Vitec Group plc
Half Year Results to 30 June 2004
The Vitec Group plc, the international supplier of products, services and
solutions to the Broadcast, Entertainment and Media industries, announces its
results for the half year to 30 June 2004.
H1 2004 H1 2003
Turnover from continuing operations £89.1m £82.2m
Adjusted, before exceptional items and goodwill amortisation
Operating profit from continuing operations £7.6m £8.8m
Pre-tax profit £6.8m £8.1m
Basic EPS 9.6p 11.8p
After exceptional items and goodwill amortisation
Pre-tax profit £5.5m £6.6m
Basic EPS 6.4p 8.1p
Interim dividend 6.1p 6.1p
KEY POINTS
• Group sales from continuing operations increased 8.4% over
last year; 17% growth in constant currency
• Operating profit* increased £1.8m in constant currency
• Improved productivity flowing from manufacturing
restructuring
• First half impact on operating profit* of £3.0m from adverse
currency movements
• Recommended unchanged interim dividend of 6.1p
* before exceptional items and goodwill amortisation
Commenting on the results, Gareth Rhys Williams, Chief Executive said:
'Demand has strengthened again in Photographic and the Broadcast environment is
showing patchy recovery. Against this background, the Group continues to
introduce new products, enter related markets and deliver ongoing operational
improvements.
'Vitec's results are traditionally weighted towards the second half of the year.
We expect a similar pattern for 2004 as a result of the summer season of
photographic sales, the phasing of broadcasters' budgets and contracts won at
the Athens Olympics. Trading up to the end of August is in line with overall
expectations.'
Enquiries
The Vitec Group plc Gareth Rhys Williams 020 8939 4650
Financial Dynamics Rob Gurner 020 7269 7221
Financial Overview
We are delighted to report that revenue, from continuing operations, in the
first half of 2004 increased 8.4% from last year, with growth in all divisions.
This performance was achieved despite the Group continuing to be affected by
adverse currency movements, particularly of the US dollar relative to the euro.
In constant currency our revenue growth was 17%. The additional volume and the
first half year of productivity improvements from the plant closures, have
improved operating profit (before goodwill amortisation and exceptional items),
in constant currency, by £1.8m from £8.8m to £10.6m. However, adverse FX effects
of £3m left reported operating profit before exceptional items and goodwill of
£7.6m. Interest expense was £0.1m higher than last year leaving profit before
tax, exceptional items and goodwill amortisation of £6.8m (2003: £8.1m).
Free cash outflow of £2.4m compared with an inflow in H1 2003 of £0.5m, was
affected by working capital increases roughly in line with the sales growth
except for longer payment terms on some recent large projects and capital spend
on rental items for the Olympics, as well as the cash costs of manufacturing
restructuring.
The Board has declared an unchanged interim dividend of 6.1p per share, in line
with the guidance given earlier in the year.
Photographic Division
The Photographic Division continues to grow very strongly, with sales from
continuing operations up 15% to £34.8m compared with the first half of 2003. In
constant currency, the growth was 22%. Operating profit (before goodwill
amortisation) reduced by £1.1m to £6m despite the volume gain, due to increased
administration and marketing expenses and the lower effective prices for US
dollar sales. This division is benefiting from the general growth in
photography, driven by the rapid uptake of digital cameras. Although our
products are sold principally to professional photographers, the advent of
digital SLR cameras that are affordable for the keen amateur, combined with an
exciting range of new products, has produced impressive volume growth.
The four in-house photographic distribution businesses are now operating
together under the Bogen Imaging name, helping to improve sales of both our own
and third party products. The distribution business of Multiblitz, acquired from
its founder in January, is now operating alongside the other distribution
companies as Bogen Imaging GmbH.
A number of senior managers left with the sale of ALU in December 2003, since
when the team in Italy has been strengthened by the addition of a new Sales and
Marketing Director, previously at Nike, and by a new Operations Director from
Fiat. The Campese office building has been refurbished and extended to
accommodate all of the previously dispersed administrative and finance functions
on the one site. The plant at Nove was closed in the period and its operations
integrated within the remaining facilities, many of which saw further work on
improved manufacturing layouts and organisation.
Broadcast Systems Division
Sales within Broadcast Systems grew 5% in the first half on the back of
increased volume, much of it in the US, to £41m; in constant currency the growth
was some 13%. Operating profit (before goodwill amortisation and exceptional
items) reduced by £0.5m to £1.4m. Most of the growth was organic, the result of
our own product development, and a resurgence of demand from parts of the
broadcast market. This recovery has been more evident however for lower cost
items and robotic systems than for the traditional studio camera pedestals.
Volume through the Costa Rica plant continues to grow in response to increased
market demand and we are shipping the first large orders of the FreeSpeak
digital wireless product.
We continue to be successful in penetrating related markets where Group products
are attractive. Sales of batteries and tripods for non-broadcast applications
have grown substantially, augmented by further intercoms projects within the Air
Traffic Control sector. Shipments have been made to China, Korea and Vietnam and
a contract has been received to supply equipment for eight airports in India
worth approximately £1.5m, which forms part of the budgeted increase in sales in
that market.
With most of the manufacturing restructuring within this division behind us we
are working on the other areas where we can gain leverage by operating in a more
integrated manner. To this end we have initiated a number of projects, including
relocating some engineering resource from the US back to the UK, re-siting the
management of Vinten from the US back to Bury St Edmunds and the implementation
of far-reaching changes within the distribution of our intercoms products. Drake
and Clear-Com, our two major intercoms brands, have for some time been working
within a common management structure and with a common product development
centre, however they had maintained separate distribution channels. These were
sometimes in conflict with each other. 'Project XPoint', announced in July, will
resolve these conflicts - the Clear-Com brand will be used worldwide for the
broadcast and live entertainment markets while the Drake brand will be used
exclusively in Air Traffic Control. Both brands will now benefit from being able
to sell all of the Group's products, and workload within the development area
can be further leveraged. For these and other similar projects within this
division a charge of between £4m and £5m will be taken, of which £0.5m has
already been charged in the first half.
Anton Bauer's new 'Dionic 160' lithium-ion battery won a technology award at the
NAB show in April, as did Vinten's new patented 'Vector 900' camera head.
Broadcast Services Division
This business operates principally in the US where market conditions have
recently improved. US dollar revenue was up 18% on 2003, translating into
sterling as a 3% growth to £13.3m. Operating profit (before goodwill
amortisation) was up £0.4m to £0.2m on the back of this increased volume. We
have gained several High Definition sports projects as well as additional high
profile reality shows. Broadcast Services became the primary video and audio
rental equipment supplier to 'Casino', the first reality show produced in High
Definition, as well as to two of the best known programmes in this genre, '
Survivor' and 'The Apprentice'. As these shows become technically more
sophisticated, producers appreciate the skills that we are able to offer.
In March the division acquired the US assets of Charter Broadcast, one of
Bexel's competitors in the broadcast market. The business has been fully
integrated into Bexel's nationwide network and IT system. Of Charter's four
sites, those in Dallas and Atlanta (where Bexel already had offices) were closed
immediately and those in Chicago and Orlando have been retained, allowing Bexel
to serve local operations such as Fox Sports Midwest and the Golf Channel.
Assets of £0.9m were acquired for a nominal sum.
Additional revenue during the period came from contracts with two German
networks, ARD and ZDF, to supply equipment for their coverage of the Euro 2004
football championships. Successes in capturing work in support of the Athens
Olympics made these smaller European projects profitable. The revenue for the
Athens Olympics projects will help drive further improvement in the second half
of this year, along with a full period of benefit from the Charter acquisition.
Pensions
In April 2001 the triennial valuations of the two UK final salary schemes showed
a funding surplus of £2m on assets of £29m. However, since then the market has
fallen and actuarial assumptions on longevity and future investment returns have
altered significantly, which is expected to lead to an overall funding deficit.
The Group expects to agree the 2004 revaluation, and to have determined any
actions required, by the end of November. Both schemes were closed to new
members in December 2003. The FRS17 deficit at 31 December 2003 was £5m on
assets of £28m.
Board changes
We are delighted that Michael Harper has been appointed as a non-executive
director effective from 14 June. Michael is currently Chief Executive of Kidde
plc, the fire protection group, and he has a number of other non-executive
positions. His wide-ranging experience will be of great benefit to the Group.
Nigel Moore, who joined the Board in March, took over chairmanship of the Audit
Committee from John Potter on 31 August.
Strategy Update
Much of the consolidation work under the Group's strategy of 'Consolidate -
Leverage - Grow' is now complete, and tangible opportunities for growth have
been identified, partly through future acquisitions. The Group's annual
strategic review in June confirmed that the present strategy remains the most
appropriate route to value creation for shareholders.
Outlook
Vitec's results are traditionally weighted towards the second half of the year.
We expect a similar pattern for 2004 as a result of the summer season of
photographic sales, the phasing of broadcasters' budgets and contracts won at
the Athens Olympics. Trading up to the end of August is in line with overall
expectations.
Alison Carnwath Gareth Rhys Williams
Chairman Chief Executive
Half Year Results to 30 June 2004
Broadcast Systems
2004 2003
Turnover £41.0m £39.0m
Operating Profit * £1.4m £1.9m
Operating Margin* 3.4 % 4.9 %
* before exceptional items and goodwill amortisation
Broadcast Services
2004 2003
Turnover £13.3m £12.9m
Operating Profit * £0.2m £(0.2)m
Operating Margin* 1.5 % (1.6) %
* before exceptional items and goodwill amortisation
Photographic
2004 2003**
Turnover £34.8m £30.3m
Operating Profit * £6.0m £7.1m
Operating Margin* 17.2 % 23.4 %
* before exceptional items and goodwill amortisation
** This excludes the Retail Display business that was sold on 30 December 2003. In
2003 its turnover was £9.1m and operating profit was £nil.
Consolidated profit and loss account
Six months ended 30 June 2004 (unaudited)
Six months to Six months to Audited year
June 2004 June 2003 2003
£m £m £m
Turnover
Existing operations 86.9 82.2 170.4
Acquisitions 2.2 - -
Continuing operations 89.1 82.2 170.4
Discontinued operation - 9.1 22.4
89.1 91.3 192.8
Operating profit before exceptional items and goodwill
amortisation
Existing operations 7.4 8.8 17.8
Acquisitions 0.2 - -
Continuing operations 7.6 8.8 17.8
Discontinued operations - - -
Operating profit before exceptional items and 7.6 8.8 17.8
goodwill amortisation
Exceptional items (0.5) (1.0) (1.9)
Goodwill amortisation (0.8) (0.5) (3.4)
Operating profit 6.3 7.3 12.5
Loss on disposal of discontinued operation - - (3.0)
Profit on ordinary activities before interest 6.3 7.3 9.5
Net interest payable (0.8)
(0.7) (1.7)
Profit on ordinary activities before tax 5.5 6.6 7.8
Tax (2.9) (3.2) (2.3)
Profit on ordinary activities after tax 2.6 3.4 5.5
Dividends (2.5) (2.5) (9.3)
Retained profit/(loss) 0.1 0.9 (3.8)
Basic earnings per share 6.4p 8.1p 13.6p
Diluted earnings per share 6.3p 8.0p 13.5p
Adjusted basic earnings per share 9.6p 11.8p 23.9p
Average exchange rates :
Euro 1.48 1.46 1.45
US$ 1.82 1.60 1.63
Consolidated balance sheet
Six months ended 30 June 2004 (unaudited)
As at 30 June As at 30 June Audited
2004 2003 Restated 31 December 2003
(1) Restated (1)
£m £m £m
Fixed assets
Intangible assets 9.2 13.6 10.1
Tangible assets 35.7 42.0 34.5
44.9 55.6 44.6
Current assets
Stock 34.1 41.2 33.2
Debtors 42.3 36.8 42.2
Cash at bank and in hand 6.8 13.9 15.6
83.2 91.9 91.0
Creditors - due within one year (31.8) (39.0) (37.3)
Net current assets 51.4 52.9 53.7
Total assets less current liabilities 96.3 108.5 98.3
Creditors - due after more than one year (28.6) (29.1) (26.1)
Provisions for liabilities and charges (10.7) (14.7) (12.4)
Net assets 57.0 64.7 59.8
Capital and reserves
Share capital including share premium 10.4 10.3 10.3
Reserves 46.6 54.4 49.5
Shareholders funds - equity 57.0 64.7 59.8
Closing exchange rates :
Euro 1.49 1.44 1.42
US$ 1.81 1.65 1.79
(1) Shareholders funds have been restated to show the investment held in respect of grants under share option
schemes as a deduction ( see Note 1 to the Interim Accounts)
Group statement of total recognised gains and losses
Six months ended 30 June 2004 (unaudited)
Six months to Six months to June Audited year
June 2004 2003 2003
£m £m £m
Profit for the period 2.6 3.4 5.5
Exchange differences on foreign net investments (3.0) 1.4 (0.9)
Total recognised gains and losses relating to the (0.4) 4.8 4.6
period
Prior year adjustment for ESOP accounting (see note 1) (0.5)
Total recognised gains and losses since last annual (0.9)
report
Group reconciliation of movements in shareholders funds
Six months ended 30 June 2004 (unaudited)
Six months to Six months to June Audited year
June 2004 2003 Restated 2003 Restated
£m £m £m
Profit for the period 2.6 3.4 5.5
Dividends (2.5) (2.5) (9.3)
Retained profit/(loss) for the period 0.1 0.9 (3.8)
Exchange differences on foreign net investments (3.0) 1.4 (0.9)
Goodwill previously written off included in profit - - 2.1
for the financial year
New share capital subscribed 0.1 0.0 0.0
Increase/(decrease) in shareholders funds (2.8) 2.3 (2.6)
Opening shareholders funds - restated for ESOP 59.8 62.4 62.4
accounting (see note 1)
Closing shareholders funds 57.0 64.7 59.8
Consolidated cash flow statement
Six months ended 30 June 2004 (unaudited)
Six months to Six months to Audited year
June 2004 June 2003
2003
£m £m £m
Operating profit 6.3 7.3 12.5
Research and development - amortisation of 0.2 0.2 0.2
deferred expenditure
Goodwill amortisation 0.8 0.5 3.4
Depreciation 5.1 5.8 11.3
Working capital and other items (7.4) (2.2) 1.3
Net cash inflow from operating activities 5.0 11.6 28.7
Returns on investments and servicing of finance (0.7) (0.8) (1.8)
Tax paid (0.8) (1.9) (10.8)
Net capital expenditure (5.8) (3.7) (7.8)
Acquisitions (1.5) (6.5) (6.4)
Disposals 0.0 0.0 2.6
Equity dividends paid (6.8) (6.8) (9.3)
Net cash (outflow) before financing (10.6) (8.1) (4.8)
Financing
Issue of shares 0.1 0.0 0.0
Net receipt/(repayment) of loans 2.4 4.9 (1.9)
New unsecured loan 0.0 0.0 5.4
Net cash inflow from financing 2.5 4.9 3.5
Decrease in cash in the period (8.1) (3.2) (1.3)
Reconciliation of net cash flow to movement in net debt
Six months ended 30 June 2004 (unaudited)
Six months to Six months to Audited year
June 2004 June 2003 2003
£m £m £m
Reconciliation of net cash flow to movement in net debt
Decrease in cash in the period (8.1) (3.2) (1.3)
Net (receipt) of loans (2.4) (4.9) (3.5)
Increase/(decrease) in net debt resulting from (10.5) (8.1) (4.8)
cash flows
Loans transferred on disposal of business 0.0 0.0 5.4
Exchange rate movements (0.7) 1.1 0.9
Movements in net debt in the period (11.2) (7.0) 1.5
Net debt at 1 January (10.4) (11.9) (11.9)
Closing net debt (21.6) (18.9) (10.4)
Analysis of net debt
Cash 6.8 13.9 15.6
Debt due after one year (28.4) (28.9) (26.0)
Debt due within one year 0.0 (3.9) 0.0
Total (21.6) (18.9) (10.4)
Segmental analysis of Turnover and Operating Profit
Six months ended 30 June 2004 (unaudited)
2004 2003 2004 2003
£m £m £m £m
Class of business Turnover Operating
profit
Broadcast systems 41.0 39.0 1.4 1.9
Photographic 34.8 30.3 6.0 7.1
Broadcast services 13.3 12.9 0.2 (0.2)
89.1 82.2 7.6 8.8
Exceptional items (0.5) (1.0)
Goodwill amortisation (0.8) (0.5)
89.1 82.2 6.3 7.3
Discontinued operation (1) 9.1 0.0
89.1 91.3 6.3 7.3
Geographical turnover By By
destination origin
United Kingdom 4.9 4.6 10.9 11.0
The rest of Europe 25.1 20.6 28.8 24.4
The Americas 45.3 44.3 46.6 46.6
Asia and Australasia 11.7 10.9 2.8 0.2
Africa and Middle East 2.1 1.8 0.0
89.1 82.2 89.1 82.2
Discontinued operation (1) 9.1 9.1
89.1 91.3 89.1 91.3
Note (1) The Retail Display business was sold on 30 December 2003. In 2003 its turnover was £9.1m and
operating profit was £nil.
1. Basis of preparation The financial information set out above does not
constitute statutory accounts for the Group. The interim financial statements
have been prepared in accordance with accounting policies set out in the Group's
audited accounts except as set out below. The figures for the year ended 31
December 2003 have been derived from the statutory accounts and restated for
UITF38. The report of the auditors was unqualified and did not contain a
statement under section 237(2) or (3) of the Companies Act.
The Urgent Issues Task Force (UITF) Abstract 38 changes the presentation of an
entity's own shares held in an Employee Share Ownership Plan (ESOP) Trust by
requiring them to be deducted in arriving at the shareholders funds instead of
showing them as an asset. Accordingly, the prior periods' balance sheets have
been restated to show shares held in respect of grants under share option
schemes of £0.5 million as at 30th June 2003 and as at 31 December 2003 as a
deduction from shareholders funds instead of as a fixed asset investment.
2. Operating exceptional items of £0.5 million (2003:£1.0 million) relates
to the restructuring in the Broadcast Systems division. Goodwill amortisation
relates to Broadcast Systems £0.5 million (2003: £0.2 million); Photographic
£0.1 million (2003: £0.1 million) and Broadcast Services £0.2 million (2003:
£0.2 million).
3. The tax rate on profits before exceptional items and goodwill
amortisation for the half year is estimated at 42% on the basis of the
anticipated tax rates which will apply for the full year and the charge
comprises current tax £2.5 million (2003: £2.4 million) and deferred tax £0.4
million (2003: £0.8 million). The tax credit on goodwill amortisation was £nil
(2003:£nil) and on exceptional items £nil (2003:£nil).
4. Earnings per share The calculation of basic earnings per share is
based on profit on ordinary activities after tax of £2.9 million (2003: £3.4
million) and the weighted average number of shares of 41,045,922 (2003 :
41,031,522). Adjusted basic earnings per share is calculated on profit on
ordinary activities after tax but before exceptional items and amortisation of
goodwill, using the same number of shares. Diluted earnings per share is based
upon profit on ordinary activities after tax and the weighted average number of
shares as adjusted for the weighted number of shares under option of 41,260,547
(2003: 41,127,885).
5. Interim dividend The directors have declared an interim dividend of
6.1p per share, which will absorb £2.5 million (2003: 6.1p absorbing £2.5
million). The dividend will be paid on 3 November 2004 to shareholders on the
register at the close of business on 1 October 2004.
6. Acquisitions On 8 January 2004 the Group acquired the domestic
distribution activity of Multiblitz (Dr. Ing. D.A. Mannesmann GmbH & Co), a
distributor of the Group's Manfrotto products in Germany, for €2.0 million cash
(£1.3 million). Based on a provisional assessment of fair values, goodwill of
£0.9 million arose on acquisition.
On 30 March 2004 the Group acquired the operating assets and certain liabilities
of Charter Broadcast North America Inc., a provider of broadcast rental
equipment in the United States and Canada, for US$0.3 million cash ( £0.2
million). Based on a provisional assessment of fair values, negative goodwill of
£0.6m arose on acquisition.
The results of Multiblitz have been included in the Photographic division and
those of Charter Broadcast North America have been included in the Broadcast
Services division.
7. Copies of this statement will be sent to all shareholders on the share
register as at 6 September 2004. Copies are available on application to the
Company secretary.
This information is provided by RNS
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