Interim Results

VITEC GROUP PLC
3 September 1999
                                     
                                VITEC GROUP
                                     
                              INTERIM RESULTS
 
Vitec Group today announces results for the six months to 30 June 1999.
Vitec Group operates, acquires and develops niche engineering and service
businesses which have a high market share supplying high quality products
to world-wide broadcast, photographic, retail and corporate markets.
 
Six months ended 30           1999       1998
June
 
Turnover                    £80.6m     £80.0m
Pre-tax profit             £17.4m*    £19.2m*
Headline earnings per        24.7p      25.8p
share
Dividend per share            4.9p       4.3p
 
* Before goodwill amortisation
 
 
- Sales flat and profits slightly down when compared to record first half
of 1998
- Interim dividend up 14%
- Group highly cash generative, with operating cashflow of £25.7m
- Tender offer for between 10% to 15% of Group's issued shares
 
Commenting on the results Malcolm Baggott, Chief Executive, said:
 
'Despite having to report a slight fall from last year's record
performance, Vitec has delivered yet another robust performance,
characterised by strong cash generation and strong margins, in the face of
the more difficult market conditions anticipated in many of our key
markets. Whilst we continue to progress a number of investment and
acquisition opportunities, the very nature of the Group's formidable cash
generative capabilities has made our balance sheet increasingly
inefficient. Accordingly, a major strategic initiative to return value to
shareholders and reduce our cost of capital has been announced today by
means of a tender offer for between 10% to 15% of the Group's issued
shares.'
 
 
Vitec Group plc
Richard Green, Group Financial Director
Malcolm Baggott, Chief Executive
Tel:  [phone]
 
Financial Dynamics
Charles Watson / Sarah Marsland
Tel:  [phone]
                                     
                                     
                            INTERIM REPORT 1999
 
 
CHAIRMAN'S STATEMENT
 
Overview
Vitec is announcing a slight fall in first half profits for 1999, compared
with  the record performance of the Group in the corresponding period last
year.   These  profits are in line with our expectations in  view  of  the
softness  in certain markets for broadcast products.  Overall,  Vitec  has
delivered  yet  another robust performance, characterised by  strong  cash
generation and strong margins.
 
Whilst  we  continue  to progress a number of investment  and  acquisition
opportunities,  the very nature of the Group's formidable cash  generative
capabilities   has  made  our  balance  sheet  increasingly   inefficient.
Accordingly,   we   are  announcing  the  intention  to   repurchase   for
cancellation  of  between  10%  to 15%  of  the  Company's  shares.   This
represents  excess capital in the business above that which  is  currently
required  and  leaves  the  Group  with  ample  scope  to  implement   its
acquisition  plans.  It is intended that all shareholders  will  have  the
opportunity to participate in the buy-back which is expected to  take  the
form of a tender offer.  Further details of the proposed tender offer will
be announced and posted to shareholders as soon as possible.
 
 
Results
Group  sales have been flat compared to 1998 whilst consolidated operating
profits  before  goodwill amortisation have decreased by 9  per  cent  and
headline  earnings  per share by 4.3%.  Exchange rates,  acquisitions  and
disposals have not had a material impact on results and comparatives.
 
Turnover was £80.6 million (1998 : £80.0 million) and, with net margins at
22.0  per  cent (1998 : 24.4 per cent), operating profits before  goodwill
amortisation are reported at £17.7 million (1998 : £19.5 million)
 
Net  interest payable was £0.3 million and the tax charge decreased by 3.4
percentage  points to 31.0 per cent.  Basic earnings per share  are  24.2p
compared  to  25.7p  for 1998.  The Directors have declared  an  increased
interim dividend of 4.9p (1998 : 4.3p), up by 14%.
 
Cash  flow  was  strong with net cash inflow from operating activities  of
£25.7  million  (1998  : £21.0 million).  After payment  of  tax,  capital
expenditure,  interest  and dividends, free cash flow  was  £11.7  million
(1998 : £6.1 million).  One small acquisition and the repurchase of shares
cost  £7.6 million leaving net cash balances at the end of June  of  £10.6
million.
 
 
Photographic and Retail Display
It  was  a  good  half  year  for  the  photographic  and  retail  display
businesses.   Sales  of £32.0 million (1998 : £29.7 million)  generated  a
healthy profit of £9.5 million (1998 : £8.8 million).  In April, Litec was
acquired  for £2.8 million; this business, based near Venice, manufactures
specialist  aluminium support structures for live events  and  exhibitions
and  will  complement  our other lighting suspension operations  (IFF)  in
Italy.   It contributed sales of £0.5 million and profits of £0.1  million
in the period.
 
Manfrotto  photographic and video product sales showed steady growth  over
1998;  however,  Gitzo, our French subsidiary, had disappointing  results,
principally  due  to  poor sales to Japan.  Bogen,  our  USA  distribution
business,  continued its track record of solid growth.   Alu,  our  retail
display  business, won several large projects in the USA  and  Europe  and
experienced strong sales of its retail fixturing products.  Sales of  this
highly  profitable  activity  have now  grown  to  represent  27%  of  the
division.
 
 
Broadcast Products
Divisional  sales of £35.4 million were level with 1998 at £35.7  million,
and  operating  profits decreased to £6.6 million (1998 :  £8.6  million).
The  weak  market  conditions for broadcast products  experienced  in  the
second  half  of  last year have continued, particularly  for  Vinten  and
Sachtler   support   products,  and,  to  a  lesser   degree,   Clear-Com.
Broadcasters  are  suffering from cost pressures as they  convert  to  the
digital world and we have experienced a slowdown in projects which require
our high-end camera supports.  Anton/Bauer performed in line with 1998 and
Drake  performed  well receiving good orders from both the  broadcast  and
simulation markets.
 
Broadcast Services
Revenues  for the broadcast services businesses increased by 2.4 per  cent
to  £13.3 million (1998 : £12.9 million) but operating profit was down  by
17.2  per  cent at £1.7 million (1998 : £2.0 million).  The  1998  figures
included  a  substantial contribution from the Winter Olympics in  Nagano.
However,  there  were  no  major events of comparable  magnitude  in  this
period.
 
The video rental market is facing considerable competitive pressures.   As
the  leading company in the US market, Bexel is combating these  pressures
through  cost efficiency improvements and a major investment programme  in
high  definition and digital television equipment in order to  be  at  the
forefront   of   new   technologies.    The   audio   division   performed
satisfactorily, including a contribution from Systems Wireless, which  was
in line with expectations.
 
 
Prospects
Trading in the start of the second half is consistent with the market
conditions which we have been experiencing over the past year.   Our
photographic and retail display businesses continue to enjoy healthy
trading while certain markets for Broadcast products and services remain
difficult.  Recently, there have been encouraging indications that the
economies of the Far East are recovering.  Those businesses which have
been adversely affected by weaker markets have taken appropriate action
and continue to drive for improved profitability and cash flow.
 
In line with our stated Group strategy, Vitec will continue to examine all
means by which shareholder value can be increased, particularly given the
financial strength and management capability throughout the Group.  We
remain confident in the Group's prospects.
 
Alison Carnwath
3 September 1999
 
 
           CONSOLIDATED PROFIT AND LOSS ACCOUNT
         Six months ended 30 June 1999 (unaudited)
 
 
                                                    Audited
                                      Six months to    Year
                                               June
                                     1999      1998    1998
                                    £'000     £'000   £'000
                                                           
Turnover                                            
 
Continuing operations              80,080    78,379 159,881
Acquisitions                          525         -       -
Discontinued operation                  -     1,576   2,403
                                   ______    ______  ______
                                   80,605    79,955 162,284
                                   ______    ______  ______
Operating profit                                           
 
Continuing operations              17,574    19,416  39,811
Acquisitions                          125         -       -
Discontinued operation                  -        91     181
                                   ______    ______  ______
Operating profit before goodwill   17,699    19,507  39,992
amortisation
Goodwill amortisation               (213)      (30)   (216)
                                   ______    ______  ______
Group operating profit             17,486    19,477  39,776
Loss on sale of discontinued            -         -   (562)
operation
                                   ______    ______  ______
Profit on ordinary activities      17,486    19,477  39,214
before interest
Net interest payable                (313)     (343)   (729)
                                   ______    ______  ______
Profit on ordinary activities      17,173    19,134  38,485
before tax
Tax                               (5,390)   (6,601) (10,846)
                                   ______    ______  ______
Profit on ordinary activities      11,783    12,533  27,639
after tax
Minority interest - equity           (13)      (19)    (46)
                                   ______    ______  ______
Profit                             11,770    12,514  27,593
Dividends                         (2,349)   (2,099) (7,861)
                                   ______    ______  ______
Retained profit                     9,421    10,415  19,732
                                   ______    ______  ______
Basic earnings per share            24.2p     25.7p   56.6p
Diluted earnings per share          23.9p     25.4p   56.1p
Headline earnings per share         24.7p     25.8p   58.2p
 

                    CONSOLIDATED BALANCE SHEET                                  
                       
                  As at 30 June 1999 (unaudited)
                                                      Audited
                                           30 June         31
                                                     December
                                      1999     1998      1998
                                     £'000    £'000     £'000
                                                             
Fixed assets                                                 
Intangible assets                    9,377    7,254     6,931
Tangible assets                     38,413   35,206    36,941
                                    ______   ______    ______
                                    47,790   42,460    43,872
                                    ______   ______    ______
Current assets                                               
Stocks                              31,337   32,078    30,565
Debtors                             32,800   34,033    33,225
Cash at bank and in hand            30,318   23,551    26,510
                                    ______   ______    ______
                                    94,455   89,662    90,300
Creditors - due within one year    (33,931) (38,755) (30,014)
                                    ------   ------    ______
Net current assets                  60,524   50,907    60,286
                                    ______   ______    ______
Total assets less current          108,314   93,367   104,158
liabilities
                                                             
Creditors - due after more than    (16,496) (19,529) (16,175)
one year                                           
Provisions for liabilities and     (5,666)  (6,015)   (5,909)
charges                             ______   ______    ______
Net assets                          86,152   67,823    82,074
                                    ______   ______    ______
                                                             
Capital and reserves                                         
Share capital including share       11,383   11,480    11,506
premium
Reserves                            74,026   55,768    69,827
                                    ______   ______    ______
Shareholders' funds - equity        85,409   67,248    81,333
Minority interest - equity             743      575       741
                                    ______   ______    ______
                                    86,152   67,823    82,074
                                    ______   ______    ______
                                          
 
     STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES AND
     RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
                              
                                                      Audited
                                      Six months to      Year
                                               June
                                      1999     1998      1998
                                     £'000    £'000     £'000
                                                             
Profit for the period               11,770   12,514    27,593
                                                             
Exchange rate movements on           (576)    (960)     3,115
foreign net investments             ______   ______    ______
Total recognised gains and losses                            
relating to the period              11,194   11,554    30,708
Dividends                          (2,349)  (2,099)   (7,861)
Goodwill written back                    -        -       686
Ordinary shares                    (4,769)      510       536
(repurchased)/issued
Goodwill written off                     -     (29)      (48)
                                    ______   ______    ______
Net addition to shareholders'        4,076    9,936    24,021
funds
Opening shareholders' funds         81,333   57,312    57,312
                                    ______   ______    ______
Closing shareholders' funds         85,409   67,248    81,333
                                    ______   ______    ______
                                                             
 
 
              CONSOLIDATED CASH FLOW STATEMENT
         Six months ended 30 June 1999 (unaudited)
                                                     Audited
                                      Six months to     Year
                                               June
                                      1999     1998     1998
                                     £'000    £'000    £'000
                                                            
Operating profit                    17,486   19,477   39,595
Goodwill amortisation                  213       30      216
Depreciation                         4,314    3,908    7,776
Working capital and other items      3,668  (2,390)  (4,339)
                                    ______   ______   ______
Net cash inflow from operating      25,681   21,025   43,248
activities
Returns on investments and           (362)    (349)    (775)
servicing of finance
Tax paid                           (5,370)  (7,362)  (14,098)
                                                            
Net capital expenditure            (6,152)  (5,393)  (10,546)
                                                            
Acquisitions and disposal          (2,840)  (9,541)  (8,839)
Equity dividends paid              (2,100)  (1,801)  (6,830)
                                    ______   ______   ______
Net cash inflow/(outflow) before                            
use of liquid resources and          8,857  (3,421)    2,160
financing
                                                            
Management of liquid resources                              
Cash funds under management              -    5,267    5,267
                                                            
Financing                                                   
(Purchase)/issue of ordinary       (4,769)      510      536
shares
Net repayment of loans                 (7)    (836)  (4,616)
                                    ______   ______   ______
Net cash outflow from financing    (4,776)    (326)  (4,080)
                                    ______   ______   ______
Increase in cash in the period       4,081    1,520    3,347
                                    ______   ______   ______
                                                            
 
    SEGMENTAL ANALYSIS OF TURNOVER AND OPERATING PROFIT
         Six months ended 30 June 1999 (unaudited)
                         
                             1999     1998     1999     1998
                            £'000    £'000    £'000    £'000
                                                            
Class of business            Turnover      Operating profit
Photographic and retail    31,953   29,746    9,470    8,831
display
Broadcast products         35,401   35,688    6,579    8,592
Broadcast services         13,251   12,945    1,650    1,993
                           ______   ______   ______   ______
Continuing operations      80,605   78,379   17,699   19,416
Discontinued operation          -    1,576        -       91
Goodwill amortisation           -        -    (213)     (30)
                           ______   ______   ______   ______
                           80,605   79,955   17,486   19,477
                           ______   ______   ______   ______
                                                             
                                                   
Geographical turnover     By destination       By origin
United Kingdom              3,794    3,525   11,361   10,395
The rest of Europe         20,768   17,940   32,638   30,318
The Americas               47,034   46,503   35,773   36,451
Asia and Australasia        7,714    8,518      833    1,215
Africa and Middle East      1,295    1,893                 -
                           ______   ______   ______   ______
                           80,605   78,379   80,605   78,379
Discontinued operation          -    1,576        -    1,576
                           ______   ______   ______   ______
                           80,605   79,955   80,605   79,955
                           ______   ______   ______   ______
 
Notes
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. The figures for the year  ended  31
December  1998  are  extracted from the statutory accounts  on  which  the
auditors  issued an unqualified report and which have been filed with  the
Registrar of Companies.
 
2.   Interim  dividend The directors have declared an interim dividend  of
4.9p  per  share,  which  will  absorb £2,349,000  (1998:  4.3p  absorbing
£2,099,000).   The dividend will be paid on 4 January 2000 to shareholders
on the register at the close of business on 26 November 1999.
 
3.  Copies of this statement will be sent to all shareholders on the share
register  as  at  3  September  1999.  Copies  are  available  on  written
application to the Company Secretary.