Update Announcement

Videndum PLC

02 May 2023

 

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2 May 2023

Videndum plc

Update Announcement

The Board of Videndum plc ("the Company" or "the Group"), the international provider of premium branded hardware products and software solutions to the content creation market, believes it is appropriate to provide an update regarding the potential impact of a US writers' strike, combined with the current macroeconomic conditions, on the Group's FY 2023 performance.

The Writers' Guild of America ("WGA"), which combines two different US labour unions representing TV and film writers in New York and Los Angeles has called a strike today, Tuesday 2 May 2023 (at 8:00am UK time). Over recent weeks, speculation about a potential strike by the WGA has caused some US cine/scripted TV productions to be paused, affecting short-term demand for our high-end cine and scripted TV products in the US (c.20% of Group revenue). We had expected this revenue to bounce back in a no-strike scenario.

It is difficult to forecast the possible length and impact of the strike¹, but it will potentially cause further deferral of revenues in our high-end cine and scripted TV products in the US, which we currently expect to partly return later this year. However, as a result, there is likely to be a further increase in the H2 weighting to the Group's FY 2023 performance. This is also leading to a wider range of possible outcomes for FY 2023 than previously expected. If there is a prolonged writers' strike, the Board believes that the Group's FY 2023 performance will be below our previous expectations.

As expected, looking forward, the macroeconomic environment remains challenging, particularly with low business confidence in the US; we are not yet seeing a recovery in the consumer environment, improvement in the Independent Content Creator segment, nor any significant retail restocking.

The Group is, however, performing well in some regions and segments. For example:

·	Media Solutions, as expected, has seen a post-lockdown bounce back in China, Japan is performing well, Europe is starting to return to growth, and Amazon in the US is up c.4% on 2022 year-to-date. In addition, lighting supports continue to perform well, and Audix is ahead of expectations; our new podcasting microphone, as an example, was extremely well received at the National Association of Music Merchants ("NAMM") annual event in California in April.
·	In Production Solutions, the Broadcast TV Studio segment is performing well, with customers having allocated budgets for automation. Our new robotics control platform, with AI autonomous, dynamic, full body tracking technology, is the most advanced solution on the market and was exceptionally well received at the National Association of Broadcasters ("NAB") annual convention in Las Vegas in April. Our virtual and extended reality ("XR") image-based lighting solutions for both the cine and broadcast segments, and our new range of sustainable power solutions based on sodium technology, which will revolutionise the use of power in cine and broadcast productions, also generated great interest.
·	In Creative Solutions, as expected, the medical segment continues to perform strongly and our new Teradek Prism and zero delay Ranger solutions for broadcast and live productions were also very well received at NAB. We remain positive about the prospects for ART ("Adaptive Reliable Transport"), particularly in broadcast and live sports.

As previously announced, we have successfully implemented self-help actions across the Group, including a number of sizeable changes in Media Solutions. We continue to look at initiatives to further streamline our cost base to ensure that the business is even better positioned for long-term growth.

The Board continues to review options to unlock more shareholder value for our Creative Solutions Division and all options remain on the table. Within this context, the Lightstream business is performing below expectations and is lossmaking. Although we have extracted some synergistic technology benefits, we expect to take an impairment to the $24.0 million carrying value of its intangible assets.

An increased H2 weighting will slightly increase our covenant net debt to EBITDA ratio at 30 June 2023 from our previous expectations. We are implementing a wide range of actions to conserve cash and reduce our debt. We continue to manage inventory closely, along with the rest of working capital, and to carefully control costs.

Commenting, Stephen Bird, Group Chief Executive, said:

"As a result of the current macroeconomic headwinds, compounded by a US writers' strike, there is likely to be an increase in the H2 weighting to the Group's FY 2023 performance. This is also leading to a wider range of possible outcomes for FY 2023 than previously expected. If there is a prolonged writers' strike, the Board believes that the Group's FY 2023 performance will be below our previous expectations.

"The long-term drivers of the business, however, remain attractive and we continue to execute self-help actions to streamline our cost base, to ensure the business is even better positioned. NAB was the largest global broadcast convention held in the last four years and we are extremely pleased with the response to our new product launches, which will drive growth. Products we have launched within the last three years are likely to account for about half of current year revenue.

"The content creation market continues to have strong prospects and Videndum is well positioned to drive long-term growth."

The Group is scheduled to release its H1 2023 results on Thursday 10 August 2023.

For more information please contact:
Videndum plc	Telephone: [phone]
Stephen Bird, Group Chief Executive
Andrea Rigamonti, Group Chief Financial Officer
Jennifer Shaw, Group Communications Director

Notes to Editors:

Videndum is a leading global provider of premium branded hardware products and software solutions to the growing content creation market. We are organised in three Divisions: Videndum Media Solutions, Videndum Production Solutions and Videndum Creative Solutions.

Videndum's customers include broadcasters, film studios, production and rental companies, photographers, independent content creators, gamers, professional musicians and enterprises. Our product portfolio includes camera supports, video transmission systems and monitors, live streaming solutions, smartphone accessories, robotic camera systems, prompters, LED lighting, mobile power, bags, backgrounds, motion control, audio capture, and noise reduction equipment.

We employ around 1,800 people across the world in 11 different countries. Videndum plc is listed on the London Stock Exchange, ticker: VID.

More information can be found at: https://videndum.com/

LEI number: 2138007H5DQ4X8YOCF14

Notes

1	A US writers' strike last happened in 2007 and lasted for 100 days from 5 November 2007.
2	Exchange rate: £1 = $1.25.
3	Current company compiled consensus for FY2023: adjusted profit before tax ranges £53.1 million to £55.3 million.
4	This announcement contains inside information. The person responsible for arranging the release of this announcement on behalf of Videndum plc is Jon Bolton, Group Company Secretary.
5	This report contains certain forward-looking statements with respect to the financial condition, results of operations, and businesses of Videndum plc. These statements and forecasts involve risk, uncertainty and assumptions because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. These forward-looking statements are made only as at the date of this announcement. Nothing in this announcement should be construed as a profit forecast. Except as required by law, Videndum plc has no obligation to update the forward-looking statements or to correct any inaccuracies therein.

 

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