Videndum PLC · LSE:VID
Videndum — The Vitec Group — H1 2020 Earnings Presentation
33 slides from Videndum's earnings presentation, Aug 6, 2020
Slide 1: The Vitec Group plc Half Year Results 2020
Enabling the capture and sharing of exceptional content. The Vitec Group plc Half Year Results 2020 6 August 2020
Slide 2: Important notice
Important notice Forward-looking statements This presentation contains forward-looking statements with respect to the financial condition, performance, position, strategy, results and plans of The Vitec Group plc (the “Group”, “Vitec”, or the “Company”) based on Management’s current expectations or
Slide 3: Agenda
Agenda Half Year 2020 Summary and COVID-19 Update > Stephen Bird, Group Chief Executive Market and Strategy Update > Stephen Bird, Group Chief Executive Financial Review > Martin Green, Group Finance Director Summary > Stephen Bird, Group Chief Executive Q&A Page 3
Slide 4: Half year 2020 summary – what happened
Half year 2020 summary – what happened > Vitec affected early in the pandemic > 50% of the Group's revenue either from products sourced from China or made in Italy > Customer demand significantly impacted from March; film and scripted TV productions suspended, sporting events postponed, professional
Slide 5: Half year 2020 summary – our response
Half year 2020 summary – our response > Prioritised safe working environment > £20.0 – £25.0m FY 2020 cost reductions on track > c.£13.0m achieved in H1 > Protected R&D investment > Strong cash performance, with positive operating cashflow > Net debt lower than at June 2019 > Further reinforced our
Slide 6: Market & Strategy Update
Market & Strategy Update Page 6
Slide 7: Imaging Solutions
Imaging Solutions > Professional, high end segment (c.60% Imaging revenue) resilient; expected to recover as events and travel resume and new, higher value Compact System Cameras launched (e.g. Canon R5/R6 & Sony A7S III) > Entry-level, hobbyist segment (c.20%) declining as smartphones continue to r
Slide 8: Page 8
Page 8
Slide 9: Production Solutions
Production Solutions > Investing in faster growing on-location markets, including LED lighting and mobile power products due to growing demand for 24-hour news > Physical distancing and continuing cost pressures in studios benefit robotics, remote controlled and voice activated products > Benefit fr
Slide 10: Creative Solutions
Creative Solutions > Greatest area of growth and opportunity > Expect strong bounce back in content production once film and scripted TV sets reopen, although exact timing uncertain > Significant multi-year growth opportunity from technology upgrade to 4K with our proprietary integrated eco-system >
Slide 11: Page 11
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Slide 12: Financial Review
Financial Review Page 12
Slide 13: Half year 2020 results
Half year 2020 results H1 2020 H1 2019 Better / Better / > Demand significantly impacted by pandemic (worse) at (worse) £m £m Constant FX > Reduced gross margin due to lower revenue Revenue 118.9 184.2 (35%) (37%) > 2019 included 3%pts benefit from SmallHD Gross profit * 44.4 87.7 (49%) (50%) insura
Slide 14: Cash generation
Cash generation Better / £m H1 2020 H1 2019 (worse) > Working capital movement (+£14.1m) mainly: Operating profit* (4.4) 25.8 (30.2) > Benefit from lower inventory (+£0.5m) vs increase in (1) Depreciation 9.4 9.1 0.3 H1 2019 (-£5.3m) Dec / (inc) in working capital 5.4 (8.7) 14.1 > Net trade receivab
Slide 15: Net debt
Net debt £m 110 Employee Lease FX > Net debt £11.4m higher than Dec-19 but £1.0m lower Free cash incentive flow* shares additions than Jun-19 (£108.4 million) 100 Upfront fees on RCF 90 > FX increase primarily driven by a strengthening dollar 80 ($1.24 vs $1.32 at Dec-19) 70 > Revised covenants for
Slide 16: Divisional performance
Divisional performance Revenue Operating profit* Better / Better / Better / Better / H1 2020 H1 2019 (worse) at H1 2020 H1 2019 (worse) at (worse) constant FX (worse) constant FX £m £m % % £m £m % % Imaging Solutions 63.8 95.5 (33%) (34%) (1.2) 13.4 (109%) (111%) Production Solutions 33.7 54.8 (39%)
Slide 17: Summary
Summary Page 17
Slide 18: Summary
Summary 1. Half year 2020 financial performance significantly impacted by COVID-19 2. Significant actions to cut costs, manage cash and reinforce liquidity 3. Net debt at FY 2020 expected to be broadly similar to FY 2019 4. Market growth drivers remain positive with beneficial structural changes 5.
Slide 19: Q&A
BBC News, 2020 Q&A Phone number: +44 (0)330 336 9411 Confirmation code: 8802867 Page 19
Slide 20: Appendices
Appendices Page 20
Slide 21: Medium-term prospects
Medium-term prospects Imaging Solutions > Professional, high end segment resilient and transitioning to higher value compact system cameras > Hobbyist segment (c. 20% Imaging revenue) declining but offset by growth in JOBY smartphonography accessories > Continued disruption to the traditional photog
Slide 22: Investment proposition
Investment proposition 1. “Image capture and content creation” market will return to growth 2. Robust financial position, long-term financing and short-term flexibility 3. Well positioned for medium-term organic growth post COVID-19 4. Market-leading brands with premium pricing, increasing technolog
Slide 23: Group R&D overview
Group R&D overview R&D spend focused on faster growing segments R&D spend: investing in the future > Audio, smartphonography, LED lights, wireless transmission, 100% 15% remote/on-set monitoring, robotics, motion control, batteries 90% 80% > Expected 2019-23 market growth rate for these categories >
Slide 24: New camera releases 2020 from main manufacturers
New camera releases 2020 from main manufacturers 2020 2021 Q1 Q2 Q3 Q4 > 700€ > 1,500€ > Great for vlogging, equipped with features for beginners > 4K video > Ideal for all skill levels Market shifting towards premium cameras, > 4K video with ‘digital gimbal’ > Great for vlogging feature, lightweigh
Slide 25: Where we operate
Where we operate > Sites in 11 countries; sell into 100+ countries > Sales: UK accounts for only 11% of revenue US > Well capitalised, world-class manufacturing facilities in Israel Japan Italy, Costa Rica, UK & US China > Low cost APAC sourcing, including China & Vietnam Costa Rica > R&D centres in
Slide 26: Competitive landscape
Competitive landscape Manual cine/broadcast Supports On Set Wireless Prompters Photographic Bags 6x 13x 4x 5x 55% 37% 27% 85% Photographic Tripods Batteries LED Lights Key 5x Vitec market share 1.4x 4.4x 36% Competition market share 21% 9% For 85% of its revenue, Vitec is #1 or #2 in its niche marke
Slide 27: Vitec Imaging Solutions products
Vitec Imaging Solutions products Photo & video supports Lighting Smartphonography Audio capture Motion control & stabilisers Bags Clockwise from top left: PHOTO & VIDEO SUPPORTS - Manfrotto: Fast Twin Carbon Tripod with Nitrotech 612 head, Befree 3 Way Advanced for Sony, Gitzo: Center Ball Head; LIG
Slide 28: Vitec Production Solutions products
Vitec Production Solutions products Studio pedestals On-location supports Prompters Mobile power Distribution, rental & services Robotic camera systems Lighting & controls Bags & camera accessories Clockwise from top left: STUDIO PEDESTALS - Vinten: Quartz Two pedestal; ON-LOCATION SUPPORTS - OConno
Slide 29: Vitec Creative Solutions products
Vitec Creative Solutions products Video transmission systems Camera accessories Monitors IP Video Clockwise from top left: VIDEO TRANSMISSION SYSTEMS - Teradek: Bolt 4K, Orbit PTZ, Ranger; IP VIDEO - Teradek: Prism, VidiU Go; MONITORS - SmallHD: OLED-22, Cine 7 with Teradek integration; CAMERA ACCES
Slide 30: FX sensitivities
FX sensitivities Currency Current spot HY 20 HY 19 rates average average (5 Aug 20) rates rates USD 1.31 1.27 1.29 EUR 1.11 1.15 1.15 YEN 138 138 143 > The expected year-on-year impact on 2020 adjusted operating profit* at current spot rates would be a tailwind of c. £0.6m** > The expected further i
Slide 31: Five year summary
Five year summary % Total performance for continuing and discontinued operations 55 16 50 14 45 40 12 35 10 30 25 8 FY15 FY16 FY17 FY18 FY19 Adjusted operating profit* (£m) Adjusted operating margin* (%) Total continuing and discontinued FY15 FY16 FY17 FY18 FY19 operations Revenue (£m) 317.8 376.2 3
Slide 32: Our leadership team
Our leadership team Stephen Bird Group Chief Executive Appointed: April 2009 Shares: 307,957 Martin Green Jennifer Shaw Jon Bolton Group Finance Director Group Communications Group Company Secretary Director & HR Director Appointed: April 2003 Appointed: June 2016 Appointed: Sept 2008 Shares: 112,11
Slide 33: The Vitec Group plc
The Vitec Group plc Bridge House Heron Square Richmond TW9 1EN United Kingdom T +44 (0)20 8332 4600 F +44 (0)20 8948 8277 info@vitecgroup.com www.vitecgroup.com Page 33