TIDMVTC
RNS Number : 5875N
The Vitec Group PLC
10 August 2017
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE
OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE
TO DO THE SAME WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OF SUCH JURISDICTION. THIS ANNOUNCEMENT
CONTAINS INSIDE INFORMATION.
10 August 2017
The Vitec Group plc
Half Year Results to 30 June 2017
Significant strategic progress transforming the Group
The Vitec Group plc ("Vitec" or "the Group"), the
international provider of products and solutions
for the broadcast and photographic markets, announces
its results for the half year ended 30 June 2017.
Results % change at
constant exchange
rates
--------------------------- ----------------------
H1 2017 H1 2016 % change Total Continuing**
--------------------------- ----------- ----------- --------- ------- -------------
Total operations
Adjusted revenue* GBP187.6m GBP171.1m +9.6% -1.2% +3.1%
Adjusted operating
profit* GBP21.2m GBP17.4m +21.8% +6.3% +9.6%
Adjusted profit before
tax* GBP19.3m GBP15.5m +24.5% +10.9% +14.7%
Adjusted basic earnings
per share* 31.7p 24.6p +28.9%
Interim dividend per
share 10.4p 9.9p +5.1%
Free cash flow(+) GBP19.4m GBP22.6m
Net debt GBP(52.6)m GBP(72.8)m
Statutory results
Continuing operations
Revenue GBP164.9m GBP144.0m
Operating profit GBP18.3m GBP13.1m
Profit before tax GBP16.4m GBP11.2m
Profit/(loss) after GBP0.8m GBP(0.5)m
tax from discontinued
operations
Basic earnings per
share from continuing
and discontinued
operations 32.0p 17.1p
Highlights
-- Significant progress executing our strategy to
transform the Group
-- Continued underlying growth for the Group led by
higher technology businesses
-- Adjusted operating margin* improved from 10.2%
to 11.3%
-- ROCE(++) at 19.4% (FY 16: 17.5%) benefited from
higher adjusted operating profit*, lower assets
and favourable FX in H1
-- Disposals of US broadcast services ("Bexel") and
Haigh-Farr will further improve ROCE(++) and margins
-- Strong cash generation with 115% operating cash
conversion
* In addition to statutory reporting, Vitec reports
total performance for continuing and discontinued
operations on an adjusted basis before charges associated
with acquisition of businesses, restructuring costs
and gain on disposal of business as described on
page 2.
** Both Bexel and Haigh-Farr have been classified
as discontinued operations in the current period.
The remaining businesses within the Group are classified
as continuing operations. All comparatives have been
classified on the same basis.
(+) Free cash flow: cash generated from operations
in the period after net capital expenditure, net
interest and tax paid.
(++) ROCE (Return on Capital Employed) is calculated
as adjusted operating profit* for the last twelve
months divided by average total assets less current
liabilities excluding the current portion of interest-bearing
borrowings.
Cash generated from operating activities after net
capital expenditure, before restructuring costs paid
divided by adjusted operating profit*
Commenting on the results, Stephen Bird, Group Chief
Executive, said:
"We made significant progress during the first half
by streamlining the Group's portfolio of businesses
and continue to execute our strategy in all areas,
particularly by launching new products.
The Photographic Division continues to perform well
and the market is showing signs of recovery. The
Broadcast Division benefited from further growth
in our higher technology businesses. A challenging
US studio market has been partly offset by good underlying
performance in Europe and the Middle East, while
Wooden Camera is performing ahead of expectations.
Strong cash generation and a robust balance sheet
support our clear growth strategy and the disposals
of Haigh-Farr and Bexel will improve Group margins
and ROCE.
On the back of a good trading performance and continued
underlying growth, the Board's expectations for the
full year are unchanged, assuming no significant
change in exchange rates."
For further information
please contact:
The Vitec Group plc Telephone: 020 8332
4600
Stephen Bird, Group Chief
Executive
Kath Kearney-Croft, Group
Finance Director
MHP Communications Telephone: 020 3128
8100
Tim Rowntree/ Ollie Hoare
Vitec will present its results to analysts at 8.30am
on Thursday, 10 August 2017. An audio recording of
the presentation, along with the presentation slides,
will be available on our website after the meeting.
Users can pre-register to access the recording and
slides using the following link:
www.vitecgroup.com/investors/results-reports-and-presentations/
Notes to Editors:
Vitec is a leading global provider of premium branded
products and solutions to the fast changing and growing
"image capture and sharing" market.
Vitec's customers include broadcasters, independent
content creators, photographers and enterprises,
and our activities comprise: design, manufacture
and distribution of high performance products and
solutions including camera supports, wireless systems,
robotic camera systems, prompters, LED lights, mobile
power, monitors and bags.
We employ around 1,600 people across the world in
ten different countries and are organised in two
Divisions: Broadcast and Photographic.
The Vitec Group plc is listed on the London Stock
Exchange with 2016 revenue of GBP376.2 million.
More information can be found at: www.vitecgroup.com
LEI number: 2138007H5DQ4X8YOCF14
Notes * - Adjusted performance is before GBP4.5m charges
associated with acquisition of businesses (H1
2016: GBP2.7m), GBPnil restructuring costs
(H1 2016: GBP2.1m) and GBP3.2m gain on disposal
of business (H1 2016: GBPnil). Charges associated
with acquisition of businesses consisted of
GBP4.5m amortisation of acquired intangible
assets (H1 2016: GBP2.7m), GBPnil purchase
price adjustment (H1 2016: GBP0.2m credit),
and GBPnil transaction costs relating to acquisition
of businesses (H1 2016: GBP0.2m).
- Adjusted performance for continuing operations
is before GBP3.3m charges associated with acquisition
of businesses (H1 2016: GBP2.2m) and GBPnil
restructuring costs (H1 2016: GBP1.8m). Charges
associated with acquisition of businesses consisted
of GBP3.3m amortisation of acquired intangible
assets (H1 2016: GBP2.2m), GBPnil purchase
price adjustment (H1 2016: GBP0.2m credit),
and GBPnil transaction costs relating to acquisition
of businesses (H1 2016: GBP0.2m).
- Adjusted earnings per share is earnings before
restructuring costs, charges associated with
acquisition of businesses and gain on disposal
of business divided by the weighted average
number of ordinary shares in issue.
- Where adjusted performance measures are provided,
they are compared to the equivalent measures
in the prior period.
1 This statement is based on information sourced
from management estimates and includes comparing
performance at constant exchange rates to assist
in understanding the underlying performance
of the Group.
2 H1 2017 average exchange rates: GBP1 = $1.27,
GBP1 = EUR1.16, EUR1 = $1.09, GBP1 = Yen142.
3 H1 2016 average exchange rates: GBP1 = $1.43,
GBP1 = EUR1.29, EUR1 = $1.11, GBP1 = Yen160.
H1 2017 management & financial review
H1 2017 H1 2016 % Change % Change
at constant
exchange
rates
------------------------ ---------- ---------- --------- -------------
Revenue
Total GBP187.6m GBP171.1m +9.6% -1.2%
Continuing operations GBP164.9m GBP144.0m +14.5% +3.1%
Adjusted operating
profit*
Total GBP21.2m GBP17.4m +21.8% +6.3%
Continuing operations GBP21.6m GBP17.1m +26.3% +9.6%
Adjusted profit before
tax*
Total GBP19.3m GBP15.5m +24.5% +10.9%
Continuing operations GBP19.7m GBP15.2m +29.6% +14.7%
Adjusted EPS*
Total 31.7p 24.6p +28.9%
Continuing operations 34.2p 23.9p +43.1%
------------------------ ---------- ---------- --------- -------------
Revenue from continuing operations increased by 14.5%
to GBP164.9 million (H1 2016: GBP144.0 million) and
adjusted operating profit* from continuing operations
was 26.3% higher at GBP21.6 million (H1 2016: GBP17.1
million). At constant exchange rates, revenue from
continuing operations was 3.1% higher and adjusted
operating profit* from continuing operations increased
by 9.6%. Lower broadcast activity in the more mature
US markets was offset by growth in sales of higher
technology and photographic products.
The Broadcast Division grew revenue from continuing
operations by 15.0% to GBP86.5 million and adjusted
operating profit* from continuing operations increased
by 29.3% to GBP10.6 million. Revenue growth includes
GBP4.1 million from the 2016 acquisitions of Offhollywood
and Wooden Camera. There was continued growth in higher
technology products including wireless transmitters
and receivers, camera monitors, and robotics supported
by new product launches. At constant exchange rates
revenue from continuing operations increased by 3.2%
and adjusted operating profit* from continuing operations
was 10.3% higher than the prior period.
The Photographic Division grew revenue by 14.0% to
GBP78.4 million and adjusted operating profit* increased
by 23.6% to GBP11.0 million, benefiting from higher
sales of video and lighting products, as well as increased
revenue through its e-commerce and owned distribution
channels. At constant exchange rates revenue increased
by 3.0% and adjusted operating profit* was 8.9% higher
than the prior period.
Group gross margin from continuing operations at 44.7%
was higher than the prior period (H1 2016: 42.4%) reflecting
growth in higher technology sales, favourable sales
mix and prior year acquisitions.
Adjusted operating expenses* from continuing operations
were GBP8.1 million higher than H1 2016 at GBP52.1
million. This mainly reflects an adverse currency impact
of GBP3.8 million, and investments in our higher technology
and photographic businesses to drive sales and future
growth. This has been partly offset by restructuring
savings from the prior year actions that were successfully
completed. Investment in new product development at
GBP8.0 million (H1 2016: GBP6.1 million) was higher
than the prior period at 5.0% of Group product sales
from continuing operations (H1 2016: 4.4%) mainly due
to incremental higher technology R&D investment.
As expected, there was a net foreign exchange benefit
versus H1 2016 of GBP2.7 million on our adjusted operating
profit* from continuing operations of GBP21.6 million
mainly due to a stronger US Dollar and Euro.
Adjusted profit before tax* from continuing operations
of GBP19.7 million was GBP4.5 million higher than the
prior period (H1 2016: GBP15.2 million). Statutory
profit before tax from continuing operations of GBP16.4
million (H1 2016: GBP11.2 million) was after GBP3.3
million charges associated with acquisition of businesses
(H1 2016: GBP2.2 million) and GBPnil restructuring
costs (H1 2016: GBP1.8 million).
Adjusted earnings per share* from continuing operations
increased by 43.1% to 34.2 pence per share (H1 2016:
23.9 pence per share). Basic earnings per share from
continuing operations was 30.3 pence per share (H1
2016: 18.2 pence per share).
Free cash flow(+) of GBP19.4 million (H1 2016: GBP22.6
million) includes the benefits from higher operating
profit and lower capital expenditure partly offset
by a working capital outflow of GBP2.0 million in H1
2017 (H1 2016: GBP8.6 million inflow) principally driven
by an increase in inventory where inventory levels
at the end of 2016 were particularly low. H1 2016 free
cash flow(+) also included an exceptionally large inflow
on working capital reductions across the Group, a GBP4.0
million inflow from the Olympics and proceeds of GBP3.9
million from the sale of the Bury St. Edmunds manufacturing
site.
Net debt at 30 June 2017 was GBP52.6 million (30 June
2016: GBP72.8 million). The decrease in net debt resulting
from cash flows was GBP19.8 million (H1 2016: GBP9.9
million). This was after: a GBP1.6 million earnout
payment on Wooden Camera in respect of their strong
FY16 performance; GBP7.7 million of dividend payments
(H1 2016: GBP6.7 million); a net cash inflow of GBP11.1
million on the disposal of Haigh-Farr; and a net favourable
foreign exchange impact of GBP2.7 million principally
driven by US Dollar denominated debt. Vitec repaid
its $50 million private placement facility in full,
funded by the Revolving Credit Facility, in the period.
The Group's balance sheet remains strong with a year-end
net debt to adjusted EBITDA* ratio of 0.9 times (30
June 2016: 1.3 times).
The Board has declared an interim dividend of 10.4
pence per share (H1 2016: 9.9 pence per share). The
dividend will be paid on Friday, 20 October 2017 to
shareholders on the register at the close of business
on Friday, 22 September 2017.
(+) Free cash flow: cash generated from operations
in the period after net capital expenditure, net interest
and tax paid.
Significant progress executing our strategy
Vitec operates in the fast growing "image capture and
sharing" market. Technology is driving fundamental
changes to this market and Vitec's unique heritage
and credibility of our premium brands enables us to
capitalise on those changes.
We have grown our addressable markets and end users
from traditional broadcast and photographic customers
to newer faster growing market segments, like new media
which includes social media. These include independent
content creators and enterprises that are increasingly
using high quality video for their communication.
Vitec continues to lead the market with its range of
products and solutions. We have developed a significantly
higher technology business by expanding our capabilities
and designing products for the growing independent
content creator markets and new image capture devices.
We continue to successfully transform Vitec by executing
our growth strategy focused on five main strategic
priorities: 1. To improve the core by improving and strengthening
our business model while continuing to innovate.
2. To maintain investment into new and faster
growing markets and technologies to underpin
future growth.
3. To continue to get closer to our end customers
by owning more distributors and optimising
our e-commerce activities.
4. To focus on geographical expansion, especially
in APAC, which we believe has good medium-term
growth opportunities.
5. To supplement our many organic growth opportunities
with carefully targeted acquisitions and corporate
development.
Disposals
On 1 August 2017 we sold Bexel to NEP Supershooters
L.P., a subsidiary of NEP Group Inc., for a gross cash
consideration of $35.0 million (GBP26.5 million) and
net cash proceeds of $32.0 million (GBP24.2 million).
Estimated net assets at completion were $25.0 million
(GBP18.9 million). The disposal represents a further
step in the transformation of the Group and is in line
with Vitec's stated aim of seeking to improve operating
margins across the business.
We disposed of the non-core Haigh-Farr business on
9 May 2017. There was a gain on the disposal of the
business before tax of GBP3.2 million (H1 2016: GBPnil).
These disposals enable Vitec to focus on driving growth
in its core, premium branded broadcast and photographic
markets.
Broadcast Division
The Broadcast Division designs, manufactures, distributes
and provides premium branded products and solutions
for broadcasters, film and video production companies,
independent content creators and enterprises.
Adjusted* Statutory
------------------ ---------------------------------------------- --------------------
Broadcast H1 2017 H1 % Change % Change H1 2017 H1
Division 2016 at constant 2016
Continuing exchange
operations rates
------------------ --------- --------- --------- ------------- --------- ---------
Revenue GBP86.5m GBP75.2m +15.0% +3.2% GBP86.5m GBP75.2m
Operating profit GBP10.6m GBP8.2m +29.3% +10.3% GBP7.4m GBP5.7m
+140 +70
Operating margin 12.3% 10.9% bps bps 8.6% 7.6%
------------------ --------- --------- --------- ------------- --------- ---------
* For Broadcast, before charges associated with acquisition
of businesses of GBP3.2m (H1 2016: GBP1.9m) and GBPnil
restructuring costs (H1 2016: GBP0.6m).
Revenue from continuing operations for H1 2017 was
GBP86.5 million, an increase of 15.0% on the prior
period. At constant exchange rates revenue from continuing
operations was 3.2% higher than the prior period.
Revenue from higher technology products increased from
the prior period. Sales of wireless transmitters and
receivers, camera monitors, and robotics continue to
perform well. SmallHD delivered good growth in the
first half of the year compared to the prior period,
benefiting from previous investment in its new monitor
technology and from new product launches. Wooden Camera,
the high quality branded camera accessories business
that we acquired in September 2016, is performing ahead
of our expectations. The market for our traditional
large studio supports has been more challenging in
the US although this was partly offset by better conditions
in Europe and the Middle East.
We continued to invest in new product development with
our focus on new markets and technology. New products
launched in the period include a new line of Teradek
encoders, new ranges of SmallHD monitors, Wooden Camera
Universal Follow Focus, Autoscript Intelligent Prompting,
and Litepanels Astra and Sola LED lights.
Adjusted operating profit* from continuing operations
increased by GBP2.4 million to GBP10.6 million and
was 10.3% higher than the prior period at constant
exchange rates. This reflects growth in higher technology
products, favourable sales mix, and a contribution
of GBP1.7 million from acquisitions.
Adjusted* Statutory
--------------- ----------------------------------------------- ----------------------
Broadcast H1 2017 H1 % Change % Change H1 2017 H1
Division 2016 at constant 2016
Discontinued exchange
operations rates
--------------- ---------- --------- --------- ------------- ---------- ----------
Revenue GBP22.7m GBP27.1m -16.2% -25.3% GBP22.7m GBP27.1m
Operating GBP(0.4)m GBP0.3m GBP(1.6)m GBP(0.5)m
(loss)/
profit
Earnings per
share (2.5)p 0.7p 1.7p (1.1)p
--------------- ---------- --------- --------- ------------- ---------- ----------
* For Broadcast discontinued operations, before amortisation
of acquired intangible assets of GBP1.2m (H1 2016:
GBP0.5m) and GBPnil restructuring costs (H1 2016: GBP0.3m).
Revenue from discontinued operations was GBP22.7 million
(H1 2016: GBP27.1 million) and adjusted operating loss*
from discontinued operations was GBP0.4 million (H1
2016: GBP0.3 million profit) on lower sales at Haigh-Farr
and lower activity in US asset rentals in a non-Olympic
year.
Revenue from the broadcast services business was lower
than the prior period. The lower activity impacting
the business' profitability from the end of last year
continued into H1 2017 as the traditional US asset
rentals market in which this business operates became
increasingly competitive. We carefully reviewed the
business and its fit with our strategic priorities
and subsequently agreed to sell Bexel to NEP Supershooters
L.P., a subsidiary of NEP Group Inc., for a gross cash
consideration of $35.0 million (GBP26.5 million) and
net cash proceeds of $32.0 million (GBP24.2 million).
This deal completed on 1 August 2017.
Photographic Division
The Photographic Division designs, manufactures and
distributes premium branded equipment for photographic
and video cameras and provides dedicated solutions
to professional and non-professional image makers.
This consists primarily of camera supports, tripods,
camera bags, lighting supports, LED lights, lighting
controls and filters. It also supplies an expanding
range of premium accessories for smartphones, action
cameras and drones.
Adjusted* Statutory
------------------ ---------------------------------------------- --------------------
Photographic H1 2017 H1 % Change % Change H1 2017 H1
Division 2016 at constant 2016
exchange
rates
------------------ --------- --------- --------- ------------- --------- ---------
Revenue GBP78.4m GBP68.8m +14.0% +3.0% GBP78.4m GBP68.8m
Operating profit GBP11.0m GBP8.9m +23.6% +8.9% GBP10.9m GBP7.4m
+110 +70
Operating margin 14.0% 12.9% bps bps 13.9% 10.8%
------------------ --------- --------- --------- ------------- --------- ---------
* For Photographic, before charges associated with
acquisition of businesses of GBP0.1m (H1 2016: GBP0.3m)
and GBPnil restructuring costs (H1 2016: GBP1.2m).
The Photographic Division grew revenue by 14.0% to
GBP78.4 million and adjusted operating profit* by 23.6%
to GBP11.0 million. Excluding the favourable effect
of foreign exchange, revenue was 3.0% higher and adjusted
operating profit* increased by 8.9%.
We have grown sales in our owned distribution and e-commerce
channels, both directly and through sales to our major
online partners including Amazon. We are pleased with
this progress as we are now seeing the return on our
previous investment in this infrastructure that enables
us to get closer to our customers on a global scale.
Our partnership with Leica has progressed in the period
with Gitzo distributed through their stores world-wide.
We have successfully grown our sales of video supports,
along with filters and light shapers designed for professional
and non-professional image makers. Manfrotto bags are
also performing well.
The Photographic Division has a good market share in
the APAC region. We have progressively grown sales
in APAC during H1 2017 by GBP3.9 million supported
by our direct distribution in China, Hong Kong and
Japan. APAC sales made up 28% of Photographic revenue
in H1 2017 (H1 2016: 26%).
Recent Camera and Imaging Products Association (CIPA)
data is encouraging with signs of the interchangeable
lens cameras (ILC) market stabilising and showing recovery
over the last eight months.
Adjusted operating profit* grew by GBP2.1 million to
GBP11.0 million and was 8.9% higher than the prior
period at constant exchange rates. This reflects the
increase in revenue and favourable sales and channel
mix.
Board changes
On 24 April 2017, Kath Kearney-Croft was appointed
Group Finance Director of the Company and on 28 April
2017, Paul Hayes ceased to be a director of the Company.
Martin Green was appointed an Executive Director of
the Company on 4 January 2017.
Principal risks and uncertainties
The principal risks and uncertainties that may affect
our performance are unchanged from those set out on
pages 28 and 29 of the Annual Report & Accounts 2016.
The Directors continue to regard these as the principal
risks and uncertainties facing the Group.
Vitec is exposed to a number of risk factors which
may affect its performance. The Group has a well-established
framework for reviewing and assessing these risks on
a regular basis, and has put in place appropriate processes
and procedures to mitigate against them. However, no
system of control or mitigation can completely eliminate
all risks. In summary, the principal risks facing the
Group are around:
-- Demand for Vitec's products
-- New markets and channels of
distribution
-- Acquisitions
-- Pricing pressure
-- Dependence on key suppliers
-- Dependence on key customers
-- People
-- Laws and regulations
-- Reputation of the Vitec Group
-- Foreign exchange rates
-- Business continuity and IT security
-- Effectiveness and impact of
restructuring projects
Forward-looking statements
This announcement contains forward-looking statements
with respect to the financial condition, performance,
position, strategy, results and plans of the Group
based on Management's current expectations or beliefs
as well as assumptions about future events. These forward-looking
statements are not guarantees of future performance.
Undue reliance should not be placed on forward-looking
statements because, by their very nature, they are
subject to known and unknown risks and uncertainties
and can be affected by other factors that could cause
actual results, and the Group's plans and objectives,
to differ materially from those expressed or implied
in the forward-looking statements. The Company undertakes
no obligation to publically revise or update any forward-looking
statements or adjust them for future events or developments.
Nothing in this announcement should be construed as
a profit forecast.
The information in this announcement does not constitute
an offer to sell or an invitation to buy shares in
the Company in any jurisdiction or an invitation or
inducement to engage in any other investment activities.
The release or publication of this announcement in
certain jurisdictions may be restricted by law. Persons
who are not resident in the United Kingdom or who are
subject to other jurisdictions should inform themselves
of, and observe, any applicable requirements.
This announcement contains brands and products that
are protected in accordance with applicable trademark
and patent laws by virtue of their registration.
Responsibility statement of the Directors in respect
of the Half Year Results to 30 June 2017
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been
prepared in accordance with IAS 34 Interim Financial
Reporting as adopted by the EU.
The Half Year Results announcement report includes
a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules,
being an indication of important events that have occurred
during the first six months of the current financial
year and their impact on the condensed set of financial
statements; and a description of the principal risks
and uncertainties for the remaining six months of the
year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules,
being related party transactions that have taken place
in the first six months of the current financial year
and that have materially affected the financial position
or performance of the Group during that period; and
any changes in the related party transactions described
in the last annual report that could do so.
Outlook
On the back of a good trading performance and continued
underlying growth, the Board's expectations for the
full year are unchanged, assuming no significant change
in exchange rates.
For and on behalf of the Board Stephen Bird Kath Kearney-Croft
Group Chief Executive Group Finance Director
INDEPENT REVIEW REPORT TO THE VITEC GROUP PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2017, which comprises Condensed
Consolidated Income Statement, Consolidated Statement of
Comprehensive Income, Condensed Consolidated Balance Sheet,
Consolidated Statement of Changes in Equity, Condensed Consolidated
Statement of Cash Flows and the related explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2017 is not prepared, in all material respects, in accordance
with IAS 34 Interim Financial Reporting as adopted by the EU and
the Disclosure Guidance and Transparency Rules ("the DTR") of the
UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. We read the other information contained in the
half-yearly financial report and consider whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with International Financial
Reporting Standards as adopted by the EU. The directors are
responsible for preparing the condensed set of financial statements
included in the half-yearly financial report in accordance with IAS
34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company for our
review work, for this report, or for the conclusions we have
reached.
Adrian Wilcox
For and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
Canary Wharf
London
E14 5GL
9 August 2017
Condensed Consolidated Income
Statement
For the half year ended 30 June
2017
Half Half Year
year year to 31
to 30 to 30 December
June June 2016
2017 2016
Notes GBPm GBPm GBPm
------ ------- ------- ----------
Revenue 2 164.9 144.0 318.9
Cost of sales (91.2) (82.9) (183.5)
------------------------------------------------------------- ------ ------- ------- ----------
Gross profit 73.7 61.1 135.4
Operating expenses (55.4) (48.0) (105.0)
------------------------------------------------------------- ------ ------- ------- ----------
Operating profit 18.3 13.1 30.4
------------------------------------------------------------- ------ ------- ------- ----------
Comprising
* Operating profit before charges associated with
acquisition of businesses and restructuring costs 21.6 17.1 41.4
- Charges associated with acquisition
of businesses 3 (3.3) (2.2) (7.6)
- Restructuring costs 3 - (1.8) (3.4)
18.3 13.1 30.4
------------------------------------------------------------- ------ ------- ------- ----------
Net finance expense 4 (1.9) (1.9) (4.0)
------------------------------------------------------------- ------ ------- ------- ----------
Profit before tax 16.4 11.2 26.4
------------------------------------------------------------- ------ ------- ------- ----------
Comprising
* Profit before tax, excluding charges associated with
acquisition of businesses and restructuring costs 19.7 15.2 37.4
* Charges associated with acquisition of businesses 3 (3.3) (2.2) (7.6)
* Restructuring costs 3 - (1.8) (3.4)
16.4 11.2 26.4
------------------------------------------------------------- ------ ------- ------- ----------
Taxation 7 (2.9) (3.1) (1.5)
------------------------------------------------------------- ------ ------- ------- ----------
Profit from continuing operations 13.5 8.1 24.9
Profit/(loss) after tax from
discontinued operations 8 0.8 (0.5) (15.9)
------------------------------------------------------------- ------ ------- ------- ----------
Profit attributable to owners
of the parent 14.3 7.6 9.0
------------------------------------------------------------- ------ ------- ------- ----------
Earnings per share from continuing
and discontinued operations 5
Basic earnings per share 32.0p 17.1p 20.2p
Diluted earnings per share 31.7p 17.0p 20.1p
Average exchange rates
Euro 1.16 1.29 1.22
US$ 1.27 1.43 1.35
Consolidated Statement of Comprehensive
Income
For the half year ended 30 June
2017
Half Half Year
year year to 31
to 30 to 30 December
June June 2016
2017 2016
GBPm GBPm GBPm
----------------------------------------- ------- ------- ----------
Profit for the period 14.3 7.6 9.0
Other comprehensive income:
Items that will not be reclassified
to profit or loss:
Remeasurements of defined benefit
obligation 2.1 (3.6) (6.4)
Related tax (0.4) 0.5 1.0
Items that are or may be reclassified
to profit or loss:
Foreign exchange gain recycled to (8.8) - -
the Income Statement on disposal
of business
Currency translation differences
on foreign currency subsidiaries (6.5) 22.8 37.7
Net investment hedges - net gain/(loss) 2.5 (9.9) (16.6)
Cash flow hedges - reclassified
to the Income Statement 2.7 0.5 0.8
Cash flow hedges - effective portion
of changes in fair value 2.2 (5.2) (4.6)
Related tax (1.2) 0.9 0.9
Other comprehensive (expense)/income,
net of tax (7.4) 6.0 12.8
----------------------------------------- ------- ------- ----------
Total comprehensive income for the
period attributable to owners of
the parent 6.9 13.6 21.8
----------------------------------------- ------- ------- ----------
Condensed Consolidated Balance
Sheet
As at 30 June 2017
30 June 30 June 31 December
2017 2016 2016
Notes GBPm GBPm GBPm
---------------------------------- ------ -------- -------- ------------
Assets
Non-current assets
Intangible assets 81.0 96.9 99.0
Property, plant and equipment 29.0 57.1 54.0
Trade and other receivables 0.9 0.7 0.9
Derivative financial instruments 0.4 - 0.2
Deferred tax assets 24.9 17.8 26.6
136.2 172.5 180.7
---------------------------------- ------ -------- -------- ------------
Current assets
Inventories 61.9 61.4 57.9
Trade and other receivables 53.5 59.2 66.2
Derivative financial instruments 0.8 - 0.2
Current tax assets 0.9 1.0 0.7
Cash and cash equivalents 18.7 20.9 17.1
Assets of the disposal group
classified as held for sale 8 22.6 - -
158.4 142.5 142.1
---------------------------------- ------ -------- -------- ------------
Total assets 294.6 315.0 322.8
---------------------------------- ------ -------- -------- ------------
Liabilities
Current liabilities
Bank overdrafts - - 0.3
Interest-bearing loans and
borrowings 0.5 0.1 40.9
Trade and other payables 50.8 55.5 55.3
Derivative financial instruments 1.6 5.1 4.8
Current tax liabilities 10.7 7.7 8.1
Provisions 2.3 4.0 4.9
Liabilities of the disposal
group classified as held
for sale 8 4.3 - -
70.2 72.4 114.3
---------------------------------- ------ -------- -------- ------------
Non-current liabilities
Interest-bearing loans and
borrowings 70.8 93.6 51.0
Derivative financial instruments 0.1 1.6 1.2
Other payables 0.8 - -
Post-employment obligations 11.1 10.1 13.0
Provisions 0.7 0.7 1.1
Deferred tax liabilities 2.3 2.4 2.4
---------------------------------- ------ --------
85.8 108.4 68.7
---------------------------------- ------ -------- -------- ------------
Total liabilities 156.0 180.8 183.0
---------------------------------- ------ -------- -------- ------------
Net assets 138.6 134.2 139.8
---------------------------------- ------ -------- -------- ------------
Equity
Share capital 9.0 8.9 9.0
Share premium 15.5 14.5 15.4
Translation reserve 4.0 8.6 16.8
Capital redemption reserve 1.6 1.6 1.6
Cash flow hedging reserve (0.2) (4.8) (3.9)
Retained earnings 108.7 105.4 100.9
---------------------------------- ------ -------- -------- ------------
Total equity 138.6 134.2 139.8
---------------------------------- ------ -------- -------- ------------
Balance Sheet exchange rates
Euro 1.14 1.20 1.17
US$ 1.30 1.34 1.24
Consolidated Statement of Changes in Equity
For the half year ended 30 June 2017
Cash
Capital flow
Share Share Translation redemption hedging Retained Total
capital premium reserve reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------------
Balance at 1 January
2017 9.0 15.4 16.8 1.6 (3.9) 100.9 139.8
Total comprehensive
income for the
period
Profit for the
period - - - - - 14.3 14.3
Other comprehensive
(expense)/income
for the period - - (12.8) - 3.7 1.7 (7.4)
Contributions by
and distributions
to owners
Dividends paid - - - - - (7.7) (7.7)
Own shares purchased - - - - - (1.3) (1.3)
New shares issued - 0.1 - - - - 0.1
Share-based payment
charge, net of
tax - - - - - 0.8 0.8
---------------------- ---------- ---------- ------------- ------------- ---------- ----------- ---------
Balance at 30 June
2017 9.0 15.5 4.0 1.6 (0.2) 108.7 138.6
---------------------- ---------- ---------- ------------- ------------- ---------- ----------- ---------
Cash
Capital flow
Share Share Translation redemption hedging Retained Total
capital premium reserve reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------------
Balance at 1 January
2016 8.9 14.3 (4.3) 1.6 (1.0) 106.8 126.3
Total comprehensive
income for the
period
Profit for the
period - - - - - 7.6 7.6
Other comprehensive
income/(expense)
for the period - - 12.9 - (3.8) (3.1) 6.0
Contributions by
and distributions
to owners
Dividends paid - - - - - (6.7) (6.7)
New shares issued - 0.2 - - - - 0.2
Share-based payment
charge, net of
tax - - - - - 0.8 0.8
---------------------- ---------- ---------- ------------- ------------- ---------- ----------- ---------
Balance at 30 June
2016 8.9 14.5 8.6 1.6 (4.8) 105.4 134.2
---------------------- ---------- ---------- ------------- ------------- ---------- ----------- ---------
Condensed Consolidated Statement
of Cash Flows
For the half year ended 30 June
2017
Half Half Year
year year to 31
to 30 to 30 December
June June
2017 2016 2016
Notes GBPm GBPm GBPm
---------------------------------------------------- ------ ----------- -------- -----------
Cash flows from operating activities
Profit for the period 14.3 7.6 9.0
Adjustments for:
Taxation 3.7 3.1 1.5
Depreciation 6.9 7.2 15.3
Amortisation of intangible assets 6.1 4.2 11.0
Impairment of intangible assets - - 12.1
Net gain on disposal of property,
plant and equipment and software (0.5) (1.0) (1.5)
Fair value (losses)/gains on derivative
financial instruments (0.3) 0.4 0.4
Share-based payment charge 0.8 0.8 1.6
Earnout payments and purchase
price adjustment - (0.2) 1.2
Profit on disposal of business (3.2) - -
Net finance expense 1.9 1.9 4.0
---------------------------------------------------- ------ ----------- -------- -----------
Operating profit before changes
in working capital and provisions 29.7 24.0 54.6
(Increase)/decrease in inventories (8.2) 4.1 11.2
Decrease/(increase) in receivables 4.8 (2.8) (4.5)
Increase in payables 1.4 7.3 5.3
Decrease in provisions (1.0) (1.4) (1.8)
Cash generated from operating
activities 26.7 31.2 64.8
Interest paid (1.7) (2.1) (5.2)
Tax paid (2.0) (2.2) (7.2)
----------------------------------------------------
Net cash from operating activities 23.0 26.9 52.4
---------------------------------------------------- ------ ----------- -------- -----------
Cash flows from investing activities
Proceeds from sale of property,
plant and equipment and software 2.4 5.7 9.0
Purchase of property, plant and
equipment (3.7) (8.7) (13.4)
Capitalisation of software and
development costs (2.3) (1.3) (3.4)
Acquisition of businesses, net
of cash acquired (1.6) (5.1) (20.3)
Disposal of business 8 11.1 - -
Cash outflow on previous disposal (0.2) (1.1) (1.5)
Net cash from/(used in) investing
activities 5.7 (10.5) (29.6)
---------------------------------------------------- ------ ----------- -------- -----------
Cash flows from financing activities
Proceeds from the issue of shares 0.1 0.2 1.2
Own shares purchased (1.3) - (0.1)
Repayment of interest-bearing
loans and borrowings (18.1) (5.0) (13.6)
Dividends paid (7.7) (6.7) (11.1)
----------------------------------------------------
Net cash used in financing activities (27.0) (11.5) (23.6)
---------------------------------------------------- ------ ----------- -------- -----------
Increase/(decrease) in cash and
cash equivalents 9 1.7 4.9 (0.8)
Cash and cash equivalents at 1
January 16.8 12.5 12.5
Effect of exchange rate fluctuations
on cash held 0.2 3.5 5.1
---------------------------------------------------- ------ ----------- -------- -----------
Cash and cash equivalents at the
end of period (1) 9 18.7 20.9 16.8
---------------------------------------------------- ------ ----------- -------- -----------
(1) Cash and cash equivalents
include bank overdrafts in the
balance sheet
1 Accounting policies
Reporting entity
The Vitec Group plc (the "Company") is a company domiciled
in the United Kingdom. These condensed consolidated
interim financial statements as at and for the half
year ended 30 June 2017 comprise the Company and its
subsidiaries (together referred to as the "Group").
Basis of preparation and statement of compliance
These condensed consolidated interim financial statements
have been prepared in accordance with IAS 34 Interim
Financial Reporting. The accounting policies applied
in the preparation of this interim financial information
are consistent with the policies applied by the Group
in the consolidated financial statements as at and
for the year ended 31 December 2016 which were prepared
in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union.
It does not include all of the information required
for full annual financial statements and should be
read in conjunction with the consolidated financial
statements of the Group as at and for the year ended
31 December 2016.
The comparative figures for the year ended 31 December
2016 do not constitute statutory accounts for the
purpose of section 435 of the Companies Act 2006.
The auditors have reported on the 2016 accounts, and
these have been filed with the Registrar of Companies;
their report was unqualified, did not include a reference
to any matters to which the auditors drew attention
by way of emphasis, and did not contain a statement
under section 498(2) or (3) of the Companies Act 2006.
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions
that affect the application of accounting policies
and the reported amounts of assets and liabilities,
income and expense. Actual results may differ from
these estimates.
In preparing these condensed consolidated interim
financial statements, the significant judgements made
by management in applying the Group's accounting policies
and the key sources of estimation uncertainty were
the same as those that applied to the consolidated
financial statements as at and for the year ended
31 December 2016.
These condensed consolidated interim financial statements
were approved by the Board of Directors on 9 August
2017.
Going concern
The Directors have made appropriate enquiries and
consider that the Group has adequate resources to
continue in operational existence for the foreseeable
future, which comprises the period of at least 12
months from the date of the half year results. There
are no material uncertainties that would prevent the
Directors from being unable to make this statement.
Accordingly, the Directors continue to adopt the going
concern basis in preparing the financial statements.
New standards and interpretations not yet adopted
The following standards, amendments to standards and
interpretations will become effective for the Group
in future years.
IFRS 15 "Revenue from Contracts with Customers"
The adoption of this standard requires the separation
of performance obligations within contracts with customers,
and the contractual value to be allocated to each
of the performance obligations. Revenue is then recognised
as each performance obligation is satisfied. This
standard will replace existing revenue recognition
standards.
The Group is currently performing a detailed assessment
of the impact of the application of IFRS 15 and expects
to disclose additional quantitative information before
it adopts IFRS 15.
IFRS 9 "Financial Instruments"
This standard covers the classification, measurement,
impairment and derecognition of financial assets and
financial liabilities together with a new hedge accounting
model.
IFRS 16 "Leases"
The standard is effective for annual periods beginning
on or after 1 January 2019. The adoption of this standard
removes the distinction between operating and finance
leases and will result in all operating leases, above
a de minimis level, being capitalised with the associated
assets and liabilities being brought on to the Balance
Sheet.
The Group has not yet quantified the impact on its
reported assets and liabilities of the adoption of
IFRS 16. The quantitative effect will depend on, inter
alia, the transition method chosen, the extent to
which the Group uses the practical expedients and
recognition exemptions, and any additional leases
that the Group enters into. The Group expects to disclose
its transition approach and quantitative information
before adoption.
2. Segment reporting
Reportable segments
For the half year ended
30 June 2017
The US broadcast services business and Haigh-Farr defence
antennas business, both part of the Broadcast Division,
have been classified as discontinued operations in
the current period. Their performance in this period
and comparative periods is therefore part of discontinued
operations as presented in Note 8 and is excluded from
segmental performances below.
For the half year to 30 June
------
From continuing Broadcast Photographic Corporate Consolidated
operations: and unallocated
------------------- ----------------- -------------------- --------------------- -------------------
2017 2016 2017 2016 2017 2016 2017 2016
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------- -------- ------- ------------ ------ ----------- -------- ----------- ------
Revenue from
external
customers:
Sales 83.1 71.4 78.4 68.8 - - 161.5 140.2
Services 3.4 3.8 - - - - 3.4 3.8
------------------- -------- ------- ------------ ------ ----------- -------- ----------- ------
Total revenue
from external
customers 86.5 75.2 78.4 68.8 - - 164.9 144.0
Inter-segment
revenue (1) 0.2 0.2 0.4 0.1 (0.6) (0.3) - -
-------- ------- ------------ ------ ----------- --------
Total revenue 86.7 75.4 78.8 68.9 (0.6) (0.3) 164.9 144.0
------------------- -------- ------- ------------ ------ ----------- -------- ----------- ------
Segment result 10.6 8.2 11.0 8.9 - - 21.6 17.1
Amortisation of
acquired
intangible
assets (3.2) (1.9) (0.1) (0.3) - - (3.3) (2.2)
Restructuring
costs - (0.6) - (1.2) - - - (1.8)
Fair value
adjustment
to contingent
consideration
on previous
acquisitions - 0.2 - - - - - 0.2
Transaction costs
relating to
acquisition
of businesses - (0.2) - - - - - (0.2)
------------------- -------- ------- ------------ ------ ----------- -------- ----------- ------
Operating profit 7.4 5.7 10.9 7.4 - - 18.3 13.1
Net finance
expense (1.9) (1.9)
Taxation (2.9) (3.1)
----------- ------
Profit for the
period 13.5 8.1
------------------- -------- ------- ------------ ------ ----------- -------- ----------- ------
Segment assets 128.0 116.1 96.4 94.5 3.1 0.4 227.5 211.0
Unallocated assets
Cash and cash
equivalents 18.7 20.9 18.7 20.9
Current tax
assets 0.9 1.0 0.9 1.0
Deferred tax
assets 24.9 17.8 24.9 17.8
----------- ------
Total assets 272.0 250.7
------------------- -------- ------- ------------ ------ ----------- -------- ----------- ------
Segment
liabilities 31.6 29.6 31.6 27.5 4.2 8.3 67.4 65.4
Unallocated
liabilities
Interest-bearing
loans and
borrowings 71.3 93.7 71.3 93.7
Current tax
liabilities 10.7 7.7 10.7 7.7
Deferred tax
liabilities 2.3 2.4 2.3 2.4
----------- ------
Total liabilities 151.7 169.2
------------------- -------- ------- ------------ ------ ----------- -------- ----------- ------
(1) Inter-segment pricing is determined on an arm's
length basis.
Geographical segments
For the half year ended 30
June 2017
Half year Half year Year to
to 30 to 30 31 December
June June
2017 2016 2016
GBPm GBPm GBPm
---------------------------------------- ------------------------------ ----------- -----------------
Continuing operations - analysis
of revenue from external customers,
by location of customer
United Kingdom 19.0 16.1 34.8
The rest of Europe 39.9 33.8 75.4
North America 64.3 58.3 129.6
Asia Pacific 35.8 30.9 69.0
The rest of the World 5.9 4.9 10.1
---------------------------------------- ------------------------------ ----------- -----------------
Total revenue from external
customers 164.9 144.0 318.9
---------------------------------------- ------------------------------ ----------- -----------------
The Group's operating segments are located in several
geographical locations, and sell products and services
on to external customers in all parts of the world.
3 Charges associated with acquisition of businesses,
impairment of goodwill and restructuring costs
Charges associated with acquisition of businesses,
impairment of goodwill and restructuring costs are
excluded from key performance measures in order to
more accurately show the underlying current business
performance of the Group in a consistent manner. This
also reflects how the business is managed and measured
on a day-to-day basis. Restructuring costs include
employment termination and other site rationalisation
costs. Charges associated with acquisition of businesses
include non-cash charges such as amortisation of acquired
intangible assets and cash charges such as transaction
costs and earnout payments.
Half year Half year Year to
to 30 to 30 31 December
June June
2017 2016 2016
GBPm GBPm GBPm
---------------------------------------- ------------------------------ ----------- -----------------
Analysis of operating expenses
Earnout payments and purchase
price adjustment - 0.2 (1.2)
Transaction costs relating
to acquisition of businesses - (0.2) (0.6)
Amortisation of acquired intangible
assets (3.3) (2.2) (5.8)
---------------------------------------- ------------------------------ ----------- -----------------
Charges associated with acquisition
of businesses (3.3) (2.2) (7.6)
Restructuring costs (1) - (1.8) (2.9)
Other administrative expenses (20.4) (17.2) (38.7)
---------------------------------------- ------------------------------ ----------- -----------------
Administrative expenses (23.7) (21.2) (49.2)
Marketing, selling and distribution
costs (24.4) (20.7) (42.6)
Research, development and
engineering costs (7.3) (6.1) (13.2)
Total from continuing operations (55.4) (48.0) (105.0)
---------------------------------------- ------------------------------ ----------- -----------------
Amortisation of acquired intangible
assets (1.2) (0.5) (2.1)
Impairment of goodwill - - (12.1)
Restructuring costs - (0.3) (1.8)
Other administrative expenses (3.3) (3.6) (8.1)
---------------------------------------- ------------------------------ ----------- -----------------
Administrative expenses (4.5) (4.4) (24.1)
Marketing, selling and distribution
costs (2.3) (2.2) (4.5)
---------------------------------------- ------------------------------ ----------- -----------------
Total from discontinued operations (6.8) (6.6) (28.6)
---------------------------------------- ------------------------------ ----------- -----------------
(1) Of the total GBP3.4 million restructuring costs
from continuing operations in the year to 31 December
2016, GBP2.9 million is in operating expenses and
the remaining GBP0.5 million is included in cost of
sales.
4 Net finance expense
Half year Half year Year to
to 30 to 30 31 December
June June
2017 2016 2016
GBPm GBPm GBPm
Finance income
---------------------------------------------------- ------------------ ----------- -----------------
Net currency translation gains - 0.3 0.4
---------------------------------------------------- ------------------ ----------- -----------------
Finance expense
Net currency translation losses (0.2) - -
Interest payable on interest-bearing
loans and borrowings (1.6) (2.1) (4.2)
Net interest expense on net defined
benefit pension scheme liabilities (0.1) (0.1) (0.2)
---------------------------------------------------- ------------------
(1.9) (2.2) (4.4)
---------------------------------------------------- ------------------ ----------- -----------------
Net finance expense (1.9) (1.9) (4.0)
---------------------------------------------------- ------------------ ----------- -----------------
5 Earnings per share
Earnings per share ("EPS") is the amount of post-tax
profit attributable to each share.
Basic EPS is calculated on the profit for the period
divided by the weighted average number of ordinary
shares in issue during the period.
Diluted EPS is calculated on the profit for the period
divided by the weighted average number of ordinary
shares in issue during the period, but adjusted for
the effects of dilutive share options.
The Adjusted EPS measure is used by management to
assess the underlying performance of the ongoing businesses,
and therefore excludes restructuring costs, charges
associated with acquisition of businesses, impairment
of goodwill, and profit on disposal of business, all
net of tax.
The calculation of basic, diluted and adjusted EPS
is set out below:
Half year Half year
to 30 to 30
June 2017 June
2016
GBPm GBPm
------------------------------------------------------------------------ ----------- -----------------
Profit/(loss) for the financial period
Continuing operations 13.5 8.1
Discontinued operations 0.8 (0.5)
------------------------------------------------------------------------ ----------- -----------------
14.3 7.6
Add back charges associated with acquisition
of businesses, impairment of goodwill,
restructuring costs and profit on disposal
of business, net of tax
Continuing operations 1.8 2.5
Discontinued operations (1.9) 0.8
------------------------------------------------------------------------ ----------- -----------------
(0.1) 3.3
Earnings before charges associated
with acquisition of business, impairment
of goodwill, restructuring costs and
profit on disposal of business
Continuing operations 15.3 10.6
Discontinued operations (1.1) 0.3
------------------------------------------------------------------------ ----------- -----------------
Earnings before charges associated
with acquisition of businesses, impairment
of goodwill, restructuring costs and
profit on disposal of business 14.2 10.9
------------------------------------------------------------------------ ----------- -----------------
Half year Half year Half year
to 30 June to 30 June to 30 June
2017 2016 2017 2016 2017 2016
No. No. pence pence pence pence
--------------------- ----------------- ---------- ------------------ ----------- ------- --------
Weighted average Adjusted earnings Earnings per
number of per share share
shares '000
From continuing
and discontinued
operations
Basic 44,741 44,511 31.7 24.6 32.0 17.1
Dilutive potential
ordinary shares 371 80 (0.3) (0.1) (0.3) (0.1)
--------------------- ----------------- ---------- ------------------ ----------- ------- --------
Diluted 45,112 44,591 31.4 24.5 31.7 17.0
--------------------- ----------------- ---------- ------------------ ----------- ------- --------
From continuing
operations
Basic 44,741 44,511 34.2 23.9 30.3 18.2
Dilutive potential
ordinary shares 371 80 (0.3) (0.1) (0.3) (0.1)
--------------------- ----------------- ---------- ------------------ ----------- ------- --------
Diluted 45,112 44,591 33.9 23.8 30.0 18.1
--------------------- ----------------- ---------- ------------------ ----------- ------- --------
From discontinued
operations
Basic 44,741 44,511 (2.5) 0.7 1.7 (1.1)
Dilutive potential
ordinary shares 371 80 - - - -
--------------------- ----------------- ---------- ------------------ ----------- ------- --------
Diluted 45,112 44,591 (2.5) 0.7 1.7 (1.1)
--------------------- ----------------- ---------- ------------------ ----------- ------- --------
6 Interim dividend
After the balance sheet date, an interim dividend
of 10.4 pence per share has been declared by the Directors,
totalling GBP4.7 million (2016: 9.9 pence per share
totalling GBP4.4 million). The dividend has not been
provided for at half year and there are no tax consequences.
The dividend will be paid on Friday 20 October 2017
to shareholders on the register at the close of business
on Friday 22 September 2017. The Company has a Dividend
Reinvestment Plan that allows shareholders to reinvest
dividends to purchase additional shares in the Company.
For shareholders to apply the proceeds of this and
future dividends to the plan, application forms must
be received by the Company's Registrars by no later
than Monday 25 September 2017. Existing participants
in the Plan will automatically have the interim dividend
reinvested. Details on the Plan can be obtained from
Capita Asset Services on 0371 664 0381 or at www.signalshares.com.
Calls are charged at the standard geographic rate
and will vary by provider. If you are outside the
United Kingdom, please call +44 371 664 0381. Calls
outside the United Kingdom will be charged at the
applicable international rate. The lines are open
from 9.00am to 5.30pm, Monday to Friday excluding
public holidays in England and Wales.
7 Taxation
Income tax expense is recognised at an amount determined
by multiplying the profit before tax for the interim
reporting period by management's best estimate of
the weighted-average annual income tax rate for the
full financial year, adjusted for the tax effect of
certain items recognised in full in the interim period.
As such, the effective tax rate in the interim financial
statements may differ from management's estimate of
the effective tax rate for the annual financial statements.
Half year Half year Year
to 30 to 30 to 31
June June December
2017 2016 2016
GBPm GBPm GBPm
------------------------------------------------- ---------- ----------
The total taxation charge in the Income Statement
is analysed as follows:
Summarised in the Income Statement
as follows
Continuing operations
Current tax (3.8) (3.3) (8.4)
Deferred tax 0.9 0.2 6.9
------------------------------------------ ------ ---------- ----------
(2.9) (3.1) (1.5)
------------------------------------------ ------ ---------- ----------
Discontinued operations
Current tax (0.4) - -
Deferred tax (0.4) - -
------------------------------------------ ------ ---------- ----------
(0.8) - -
------------------------------------------ ------ ---------- ----------
Continuing and discontinued operations
Current tax (4.2) (3.3) (8.4)
Deferred tax 0.5 0.2 6.9
------------------------------------------ ------ ---------- ----------
(3.7) (3.1) (1.5)
------------------------------------------ ------ ---------- ----------
Before charges associated with
acquisition of businesses, impairment
of goodwill, restructuring costs
and profit on disposal of business
Continuing operations
Current tax (3.8) (4.4) (13.3)
Deferred tax (0.6) (0.2) 3.1
------------------------------------------ ------ ---------- ----------
(4.4) (4.6) (10.2)
------------------------------------------ ------ ---------- ----------
Discontinued operations
Current tax - - -
Deferred tax (0.7) - -
---------- ----------
(0.7) - -
------------------------------------------ ------ ---------- ----------
Continuing and discontinued operations
Current tax (3.8) (4.4) (13.3)
Deferred tax (1.3) (0.2) 3.1
------------------------------------------ ------ ---------- ----------
(5.1) (4.6) (10.2)
------------------------------------------ ------ ---------- ----------
Charges associated with acquisition
of businesses, impairment of goodwill,
restructuring costs and profit
on disposal of business
Continuing operations
Current tax - 1.1 4.9
Deferred tax 1.5 0.4 3.8
------------------------------------------ ------ ---------- ----------
1.5 1.5 8.7
------------------------------------------ ------ ---------- ----------
Discontinued operations
Current tax (0.4) - -
Deferred tax 0.3 - -
------------------------------------------ ------ ---------- ----------
(0.1) - -
------------------------------------------ ------ ---------- ----------
Continuing and discontinued operations
Current tax (0.4) 1.1 4.9
Deferred tax 1.8 0.4 3.8
------------------------------------------ ------ ---------- ----------
1.4 1.5 8.7
------------------------------------------ ------ ---------- ----------
8 Disposals, discontinued operations and non-current
assets classified as held for sale
Disposals
On 9 May 2017 the Group sold Haigh-Farr, Inc. ("Haigh-Farr"),
a defence antennas business based in the US and
included in the Broadcast Division, for an initial
cash consideration of $15.8 million (GBP12.2 million),
of which $0.8 million (GBP0.6 million) is deferred
for twelve months from disposal date. A profit of
GBP3.2 million arose on disposal after taking into
account GBP0.5 million costs of disposal, net assets
disposed (GBP17.3 million including GBP2.3 million
of plant and equipment) and the previously recorded
foreign exchange gain of GBP8.8 million that has
been recycled to the Income Statement. The disposal
enables management to place greater focus on opportunities
in its core activities in the Broadcast and Photographic
Divisions.
Discontinued operations
In accordance with IFRS 5 "Non-current assets held
for sale and discontinued operations", the assets
and liabilities of the US broadcast services business
which is part of the Broadcast Division, have been
classified as a disposal group held for sale within
the period. The business was disposed of on 1 August
2017 (see note 11).
Discontinued operations are businesses that have been
sold, or which are held for sale. Both the US broadcast
services business and Haigh-Farr have been classified
as discontinued operations in the current period.
The table below shows the results of the discontinued
operations which are included in the Group Income
Statement, Group Statement of Cash Flows and Group
Balance Sheet respectively.
a) Income Statement - discontinued Half Half Year to
operations year year 31 December
to 30 to 30 2016
June June GBPm
2017 2016
GBPm GBPm
Revenue 22.7 27.1 57.3
Expenses (24.3) (27.6) (73.2)
---------------------------------------------------------------- ------------ --------- --------------
Operating loss (1.6) (0.5) (15.9)
---------------------------------------------------------------- ------------ --------- --------------
Comprising
* Operating (loss)/profit before amortisation of
acquired intangible assets, impairment of goodwill
and restructuring costs (0.4) 0.3 0.1
- Amortisation of acquired intangible
assets (1.2) (0.5) (2.1)
- Impairment of goodwill - - (12.1)
- Restructuring costs - (0.3) (1.8)
---------------------------------------------------------------- ------------ --------- --------------
(1.6) (0.5) (15.9)
---------------------------------------------------------------- ------------ --------- --------------
Taxation (0.7) - -
---------------------------------------------------------------- ------------ --------- --------------
Loss after tax from discontinued
operations (2.3) (0.5) (15.9)
---------------------------------------------------------------- ------------ --------- --------------
Gain on disposal of discontinued 3.2 - -
operation before tax
Taxation (0.1) - -
---------------------------------------------------------------- ------------ --------- --------------
Gain on disposal of discontinued 3.1 - -
operation after tax
---------------------------------------------------------------- ------------ --------- --------------
Profit/(loss) after tax from
discontinued operations attributable
to owners of parent 0.8 (0.5) (15.9)
---------------------------------------------------------------- ------------ --------- --------------
b) Statement of Cash Flows - Half Half Year to
discontinued operations year year 31 December
to 30 to 30 2016
June June
2017 2016
GBPm GBPm GBPm
---------------------------------------------------------------- ------------ --------- --------------
Net cash from operating activities 2.8 11.3 8.6
Net cash from/(used in) investing
activities(1) 12.1 (3.9) (3.5)
---------------------------------------------------------------- ------------ --------- --------------
Net cash from discontinued operations 14.9 7.4 5.1
---------------------------------------------------------------- ------------ --------- --------------
(1) Half year to 30 June 2017 includes net
proceeds of GBP11.1 million from the disposal
of Haigh-Farr
c) Effect of disposal on the 30 June
Group Balance Sheet 2017
GBPm
--------------------------------------------------------------- --- -------- -------------------------
Assets of the disposal group
classified as held for sale
Property, plant and equipment 16.7
Inventories 0.1
Trade and other receivables 5.8
---------------------------------------------------------------- -------- -------------------------
22.6
------------------------------------------------------------------- -------- -------------------------
Liabilities of the disposal group
classified as held for sale
Trade and other payables 4.3
---------------------------------------------------------------- -------- -------------------------
9 Analysis of net debt
The table below analyses the Group's components of
net debt and their movements in the period:
Half year Half year Year
to 30 to 30 to 31
June 2017 June 2016 December
2016
GBPm GBPm GBPm
--------------------------------------- ----------- ----------- ----------
Increase/(decrease) in cash and
cash equivalents 1.7 4.9 (0.8)
Repayment of interest-bearing
loans and borrowings 18.1 5.0 13.6
--------------------------------------- ----------- ----------- ----------
Decrease in net debt resulting
from cash flows 19.8 9.9 12.8
--------------------------------------- ----------- ----------- ----------
Effect of exchange rate fluctuations
on cash held 0.2 3.5 5.1
Effect of exchange rate fluctuations
on debt held 2.5 (9.9) (16.7)
--------------------------------------- ----------- ----------- ----------
Effect of exchange rate fluctuations
on net debt 2.7 (6.4) (11.6)
--------------------------------------- ----------- ----------- ----------
Movements in net debt in the
period 22.5 3.5 1.2
Net debt at 1 January (75.1) (76.3) (76.3)
--------------------------------------- ----------- ----------- ----------
Net debt at the end of the period (52.6) (72.8) (75.1)
--------------------------------------- ----------- ----------- ----------
Cash and cash equivalents in
the Balance Sheet 18.7 20.9 17.1
Bank overdrafts - - (0.3)
--------------------------------------- ----------- ----------- ----------
Cash and cash equivalents in
the Statement of Cash Flows 18.7 20.9 16.8
Interest-bearing loans and borrowings (71.3) (93.7) (91.9)
--------------------------------------- ----------- ----------- ----------
Net debt at the end of the period (52.6) (72.8) (75.1)
--------------------------------------- ----------- ----------- ----------
The Group repaid its Private Placement shelf facility
of US$50 million when it expired in May 2017
10 Forward exchange contracts
The fair value of forward exchange contracts is determined
by estimating the market value of that contract at
the reporting date. Derivatives with a positive fair
value are recorded as assets and negative fair values
as liabilities, and presented as current or non-current
based on their contracted maturity dates.
The following table shows the forward exchange contracts
in place at the Balance Sheet date. These contracts
mature in the next 24 months, therefore the cash flows
and resulting effect on profit and loss are expected
to occur within the next 24 months.
Average Average
As at exchange As at exchange
30 June rate 30 June rate
2017 of contracts 2016 of contracts
currency millions millions
--------------------------------------- ----------- ------------- -------------- --------- --------------
Cash flow hedging contracts
USD / GBP forward exchange
contracts USD 14.4 1.32 14.3 1.52
USD / EUR forward exchange
contracts USD 35.9 1.13 43.3 1.15
EUR / GBP forward exchange
contracts EUR 20.7 1.20 28.2 1.31
JPY / GBP forward exchange
contracts JPY 586.6 150.2 1,061.5 169.2
JPY / EUR forward exchange
contracts JPY 1,071.5 122.3 1,266.7 129.4
--------------------------------------- ----------- ------------- -------------- --------- --------------
A net loss of GBP2.2 million relating to forward exchange
contracts was reclassified to the Income Statement,
to match the crystallisation of the hedged forecast
cash flows which affect the Income Statement.
Fair value hierarchy
The table below shows the carrying values and fair
values of financial assets and liabilities:
Carrying Fair Carrying Fair
value value value value
30 June 30 June 30 June 30 June
2017 2017 2016 2016
GBPm GBPm GBPm GBPm
------------------------------------------------- ------------ ------------ ------------ ------------
Forward exchange contracts - Assets 1.2 1.2 - -
Forward exchange contracts
- Liabilities (1.7) (1.7) (6.7) (6.7)
Cash at bank and in hand 18.7 18.7 20.9 20.9
Net trade receivables 41.8 41.8 44.1 44.1
Trade payables (28.4) (28.4) (29.4) (29.4)
Fixed rate borrowings (2.3) (2.3) (38.7) (39.4)
Floating rate borrowings (69.0) (69.0) (55.0) (55.0)
------------ ------------ ------------ ------------
(39.7) (39.7) (64.8) (65.5)
The fair value of floating rate borrowings approximates to the carrying value because interest
rates are at floating rates where payments are reset to market rates at intervals of less
than one year.
The fair value of fixed rate borrowings is estimated by discounting the future contracted
cash flow, using appropriate yield curves, to the net present values.
All financial instruments are deemed Level 2.
11 Post balance sheet events
On 1 August 2017 the Group sold its US broadcast services business which was included in the
Broadcast Division, for a gross cash consideration of $35.0 million (GBP26.5 million). Net
cash proceeds were $32.0 million (GBP24.2 million) and estimated net assets at completion
were $25.0 million (GBP18.9 million). The previously recorded foreign exchange gain to be
recycled to the Income Statement and the resulting profit on disposal have not yet been calculated.
The disposal enables management to place greater focus on opportunities in its core activities
in the Broadcast and Photographic Divisions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BIGDIBGGBGRC
(END) Dow Jones Newswires
August 10, 2017 02:01 ET (06:01 GMT)
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