Final Results - Year Ended 31 December 1999
Vitec Group PLC
10 March 2000
VITEC GROUP plc
1999 YEAR END RESULTS
Vitec Group, the supplier of equipment to the world's television
entertainment, photographic and retail markets today, announces results for
the twelve months to 31 December 1999.
12 months ended 31 December 1999 1998
Turnover £171.4m £162.3m
Profit before tax* £37.1m £39.3m
Headline earnings per 54.3p 58.2p
share
Dividend per share 18.5p 16.1p
*before goodwill amortisation/exceptional
- Second half rebound produces good result
- Consolidated sales up by 6%
- Total dividend up 15%
- Record operating cash flow of £51.1m
- Share repurchases reduce equity by 16.5%
- Philip Cushing appointed new Chief Executive
Commenting on the results Malcolm Baggott, retiring Chief Executive, said:
'After a slower start to the year the group rebounded in the second half
to report another set of good results and this trend has continued in the
first two months of 2000. Record cash generation has also enabled us to
improve balance sheet efficiency by share repurchases of 16.5% of the group's
equity'
Vitec Group plc Tel: 01494 679 800
Alison Carnwath, Chairman
Malcolm Baggott, Chief Executive
Richard Green, Group Financial Director
Financial Dynamics Tel: 0171 831 3113
Charles Watson
Richard Mountain Mob: 07909 684466
OVERVIEW
Vitec is announcing another set of strong results and for the sixth year in
succession, the Directors are recommending a dividend increase of 15% for the
year, with a final dividend of 13.6p (1998 : 11.8p) making a total dividend
of 18.5p for 1999 (1998 : 16.1p).
The Photographic and Retail Display Division produced its best ever profits.
The Broadcast Camera Systems results were affected by continuing
reorganisation costs of Vinten in both the UK and the USA; the Communications
and Audio Division continued to grow strongly; and the Broadcast Services
Division produced double digit profit growth.
Group sales increased by just under 6% to £171.4 million (1998 : £162.3
million) and earnings before interest, tax and goodwill amortisation was £38.2
million(1998 : £40.0 million). The effects of acquisitions in 1999 were
immaterial to these results.
Operating cash flow was £51.1 million, a record for the group and an increase
of 18% over 1998 (£43.3 million): free cash flow was £21.4million, almost
double the figure for 1998 (£11.0 million). Headline earnings per share was
approximately 7% lower at 54.3p (1998 : 58.2p) as the tax charge for the
group rose to 30.7% (1998 : 27.6%)
OPERATIONAL REVIEW
Photographic & Retail Display
Sales of £69.5 million were 10.7% higher than 1998 (£62.8 million). This
included first year sales by Litec of £1.4 million. Operating profits of
Manfrotto, Bogen and Alu Italy all increased over 1998 but were adversely
affected by a poor performance from Gitzo in France and some price pressure
for Alu in the USA. Despite these effects, operating profits of £19.7 million
were at record levels.
Broadcast Camera Systems
For the full year, sales were flat at £59.9 million. Although there were
record profits from Anton/Bauer and Sachtler's profits were level with 1998,
profits at Vinten were depressed due to reorganisation costs and lower sales
volumes in the Americas. Profits for the year of £13.1 million were 16.0%
down on 1998 (£15.6 million).
Communications & Audio
Sales for the Communications and Audio Division, which included a full year
forDrake, were up by 33.6% at £15.9 million (1998 : £11.9 million); 1999
included a contribution of £0.5 million from Vega. Profits of Clear-Com were
slightly down as it invested more in research and development. Drake is now
revitalised and had a very good first full year. Overall, profits improved by
21.4% to £1.7 million (1998 : £1.4 million).
Broadcast Services
Broadcast Services revenues showed a modest increase over 1998 with sales of
£26.1 million (1998 : £25.4 million). Prior year revenues included a
substantial contribution from the Winter Olympics held in Nagano, Japan. As a
result of better product mix, cost reductions and other profitability
improvement programmes, operating profits were up by 12.1% at £3.7 million
(1998 : £3.3 million).
CORPORATE ACTIVITY
There were no significant acquisitions made during the year and our surplus
cash was used to effect share repurchases through both open market
transactions and a tender offer. In total 16.5% of our equity was bought back
at an average price of 620p per share which left the group with net debt of
£27.8 million at the year-end. Interest cover remains high after these
repurchases and the Group has considerable financial capacity. The Board
continues to review suitable acquisitions in related businesses and in January
2000 we announced the purchase for US$12 million of most of the assets of the
main competitor to Bexel, Duke City Video. These are currently being merged
into Bexel.
CHIEF EXECUTIVE
In January this year the Board announced that Malcolm Baggott, our Chief
Executive for the past ten years, wished to retire during the course of this
financial year. Malcolm has been the architect of the Vitec Group and his
tireless energy, combined with his effective leadership, have driven profits
from £8.6 million in 1990 to £37.1 million today.
Today, we announce the appointment of Philip Cushing to the position of the
Group Chief Executive with effect from 28 April 2000. He brings to the Group
a wealth of commercial, industrial and international experience gained most
recently as Chief Executive of Inchcape plc and we are confident in his
ability to take Vitec on to its next stage of development.
FUTURE PROSPECTS
Sixty per cent of the group profits are denominated in Euros and thirty six
per cent are denominated in US dollars and therefore exchange rate movements
can affect consolidated group profits. Nevertheless, sales in the second
part of last year picked up strongly and this has continued in the first two
months of this year. We have a talented group of executives heading our
businesses and can look forward to the future with confidence.
VITEC GROUP plc
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 December 1999
1999 1999 1999 1998 1998 1998
£'m £'m £'m £'m £'m £'m
Before Goodwill Total Before Goodwill Total
goodwill amortisation goodwill amortisation
amortisation amortisation
Turnover
Continuing
operations 169.5 - 169.5 159.9 - 159.9
Acquisitions 1.9 - 1.9 - - -
Discontinued
operation - - - 2.4 - 2.4
______ ______ ______ ______ ______ ______
171.4 - 171.4 162.3 - 162.3
Cost of sales (78.9) - (78.9) (75.5) - (75.5)
______ ______ ______ ______ ______ ______
Gross profit 92.5 - 92.5 86.8 - 86.8
Operating
expenses (54.3) (0.5) (54.8) (46.8) (0.2) (47.0)
Operating profit
Continuing
operations 38.0 (0.4) 37.6 39.8 (0.2) 39.6
Acquisitions 0.2 (0.1) 0.1 - - -
Discontinued
operation - - - 0.2 - 0.2
______ ______ ______ ______ ______ ______
Group operating
profit 38.2 (0.5) 37.7 40.0 (0.2) 39.8
Loss on sale of
discontinued
operation - - (0.6) - (0.6)
______ ______ ______ ______ ______ ______
Profit on
ordinary
activities
before interest 38.2 (0.5) 37.7 39.4 (0.2) 39.2
______ ______ ______ ______
Net interest
payable (1.1) (0.7)
______ ______
Profit on
ordinary
activities
before tax 36.6 38.5
Tax (11.4) (10.8)
______ ______
Profit on
ordinary
activities
after tax 25.2 27.7
Minority interest - (0.1)
______ ______
Profit for the
financial
year 25.2 27.6
Dividends (7.6) (7.9)
______ ______
Retained profit 17.6 19.7
______ ______
Basic earnings
per share 53.3p 56.6p
Diluted earnings
per share 52.6p 56.1p
Headline earnings
per share 54.3p 58.2p
The Board has recommended a final dividend of 13.6p per share (1998: 11.8p)
which, together with the interim dividend of 4.9p (1998: 4.3p) totals 18.5p
per share for the year (1998: 16.1p). The dividend is covered 3.4 times by
earnings. If approved, it will be paid on 3 July 2000 to shareholders on the
register at the close of business on 5 June 2000.
The financial information in this announcement does not constitute the
company's statutory accounts for the years ended 31 December 1999 or 1998 but
is derived from those accounts. Statutory accounts for 1998 have been
delivered to the registrar of companies, and those for 1999 will be delivered
following the company's annual general meeting. The auditors have reported on
the accounts; their report was unqualified and did not contain statements
under section 237 (2) or (3) of the Companies Act 1985.
VITEC GROUP plc
SEGMENTAL ANALYSIS
for the year ended 31 December 1999
Activity analysis
Turnover Operating Profit
1999 1998 1999 1998
£'m £'m £'m £'m
Class of business
Photographic and retail display 69.5 62.8 19.7 19.5
Broadcast camera systems 59.9 59.8 13.1 15.6
Communications and audio 15.9 11.9 1.7 1.4
Broadcast services 26.1 25.4 3.7 3.3
Goodwill amortisation - - (0.5) (0.2)
______ ______ ______ ______
171.4 159.9 37.7 39.6
Discontinued operation - 2.4 - 0.2
______ ______ ______ ______
171.4 162.3 37.7 39.8
______ ______ ______ ______
By destination By origin
1999 1998 1999 1998
£'m £'m £'m £'m
Geographical turnover
United Kingdom 7.7 8.0 23.4 21.8
The rest of Europe 44.0 37.2 66.5 59.7
The Americas 99.5 95.4 78.6 76.5
Asia and Australasia 17.5 16.4 2.9 1.9
Africa and Middle East 2.7 2.9 - -
______ ______ ______ ______
171.4 159.9 171.4 159.9
Discontinued operation - 2.4 - 2.4
______ ______ ______ ______
171.4 162.3 171.4 162.3
______ ______ ______ ______
VITEC GROUP plc
CONSOLIDATED BALANCE SHEET
as at 31 December 1999
1999 1998
£'m £'m
Fixed assets
Intangible assets 10.0 6.9
Tangible assets 37.5 37.0
______ ______
47.5 43.9
______ ______
Current assets
Stocks 29.1 30.6
Debtors 32.6 33.2
Cash at bank and in hand 32.8 26.5
______ ______
94.5 90.3
Creditors - due within one year (33.7) (30.0)
______ ______
Net current assets 60.8 60.3
______ ______
Total assets less current liabilities 108.3 104.2
Creditors - due after more than one year (57.3) (16.2)
Provisions for liabilities and charges (5.9) (5.9)
______ ______
Net assets 45.1 82.1
______ ______
Capital and reserves
Called up share capital 8.2 9.8
Share premium account 2.3 1.7
Capital redemption reserve 1.6 -
Revaluation reserve 1.5 1.5
Profit and loss account 30.6 68.3
______ ______
Shareholders' funds - equity 44.2 81.3
Minority interest - equity 0.9 0.8
______ ______
45.1 82.1
______ ______
VITEC GROUP plc
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 1999
1999 1998
£'m £'m
Net cash inflow from operating activities 51.1 43.3
Returns on investments and servicing of finance
Interest received 0.7 1.0
Interest paid (1.6) (1.8)
______ ______
Net cash outflow for returns on investments and
servicing of finance (0.9) (0.8)
______ ______
Tax paid (10.6) (14.1)
______ ______
Capital expenditure
Purchase of tangible fixed assets (10.7) (11.0)
Sale of tangible fixed assets 0.3 0.4
______ ______
Net cash outflow for capital expenditure (10.4) (10.6)
Acquisitions and disposal
Purchase of subsidiary undertakings (4.8) (9.4)
Sale of subsidiary undertaking - 0.6
______ ______
Net cash outflow for acquisitions and disposal (4.8) (8.8)
Equity dividends paid (7.8) (6.8)
______ ______
Net cash inflow before use of liquid 16.6 2.2
resources and financing
Management of liquid resources
Cash funds under management - 5.2
Financing
Issue of shares 0.6 0.5
Purchase of shares (50.7) -
Net receipt/(repayment) of loans 41.1 (4.6)
______ ______
Net cash outflow from financing (9.0) (4.1)
______ ______
Increase in cash in the period 7.6 3.3
______ ______
VITEC GROUP plc
OTHER INFORMATION
for the year ended 31 December 1999
Reconciliation of operating profit to net cash flow
from operating activities
1999 1998
Continuing operations £'m £'m
Operating profit 37.7 39.6
Goodwill amortisation 0.5 0.2
Depreciation 8.6 7.8
(Profit)/loss on sale of fixed assets (0.1) 0.2
Increase in provisions 0.3 0.2
Decrease/(increase) in stock 1.3 (1.5)
Increase in debtors (0.6) (1.5)
Increase/(decrease) in creditors 3.4 (2.4)
______ ______
51.1 42.6
Discontinued operation - 0.7
______ ______
Net cash inflow from operating activities 51.1 43.3
______ ______
Total recognised gains and losses and reconciliation
of shareholders' funds
1999 1998
£'m £'m
Profit for the financial year 25.2 27.6
Exchange rate movements and related tax on foreign (4.6) 3.1
net investments
______ ______
Total recognised gains relating to the year 20.6 30.7
Dividends (7.6) (7.9)
New share capital subscribed 0.6 0.5
Purchase of shares (50.7) -
Writeback of goodwill from reserves - 0.7
______ ______
(37.1) 24.0
Opening shareholders' funds 81.3 57.3
______ ______
Closing shareholders' funds 44.2 81.3
______ ______
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