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27 May 2020
The Vitec Group plc
The Vitec Group plc ("Vitec" or "the Group"), the international provider of premium branded products and solutions to the fast changing and growing "image capture and content creation" market, issues the following announcement ahead of its Annual General Meeting taking place later today.
Update on global operations
COVID-19 impacted Vitec early in the pandemic, with half of the Group's revenue coming from products sourced from China and made in Italy. We responded quickly, implementing significant and far-reaching mitigating actions to cut costs and manage cash. The year-on-year benefit of these cost actions is expected to be between £20.0 - £25.0 million. We are using Government support where possible to preserve the long-term capabilities of the business.
All of our manufacturing sites are now operational, albeit we are seeking to flex production with demand and carefully manage inventory levels. The Group has worked with its manufacturing teams and followed government guidelines to put stringent health & safety and social distancing measures in place. The majority of our offices remain closed due to government directives, with employees working from home where possible, with minimal operational disruption.
Current end market demand
Customer demand remains significantly impacted. The high-end film and scripted TV production industry is shut down, sporting events postponed, professional photographers impacted and many retail outlets remain closed, and this has curtailed short-term demand.
However, the Chinese market is slowly recovering and some market segments (e.g. news, reality and documentary TV production) continue to remain active. We are focusing our short-term efforts in these areas, especially where Broadcasters and Enterprise customers are using our products to help them work remotely and keep their social distance, for example with robotic cameras and remote streaming, monitoring and lighting equipment. We are also seeing increased demand for our JOBY vlogging and smartphonography products through online channels.
Vitec felt the first effects of COVID-19 on its supply chain at the end of February, with customer demand significantly impacted in March and April. Revenue for the first quarter of 2020 was down c. 20% vs the prior year. Revenue for April 2020 was down c. 60% vs the previous year, in line with our revised expectations, but trading conditions in May are starting to improve. Interest costs for the full year will rise by c. £1.0 million.
There remains considerable uncertainty in our markets but we currently expect trading conditions to continue to improve in H2 2020, albeit at a slower rate than we had previously hoped. It remains difficult to provide financial guidance for the full year.
Financing and liquidity
Vitec has a robust financial position with liquidity, long-term financing and short-term flexibility. As at 30 April 2020, the Group's net debt was £113.4 million (31 December 2019 £96.0 million). We continue to take significant actions to optimise cash and, based on current expectations, and subject to FX fluctuations, we expect net debt at the end of FY 2020 to be broadly similar to the end of FY 2019.
On 4 May 2020, the Group announced revised covenants for 2020 under its £165.0 million five-year Revolving Credit Facility ("RCF") and that we had further reinforced our liquidity position by accessing the Bank of England's COVID Corporate Financing Facility ("CCFF") scheme. As anticipated, the Group has drawn down £30.0 million of the CCFF to repay part of the RCF.
We firmly believe that Vitec's end markets will recover well once the crisis is over as the demand for original content continues to grow.
Our strategy for long-term growth remains just as relevant as it was before the crisis:
· In Creative Solutions, we remain focused on the significant growth potential from the launch of our 4K eco-system of wireless video products in the cine market;
· In Imaging Solutions, we expect to benefit from the continued growth in JOBY vlogging and smartphonography accessories. Although there will be further disruption to the traditional photographic retail channel, the transition to the higher margin ecommerce channel will accelerate and we had already restructured our business to benefit from this continued change; and
· In Production Solutions, we will benefit from the growth in on-location lights and mobile power, robotic cameras and voice-activated prompting, the rescheduling of major sporting events to 2021, as well as targeting further operational efficiencies.
As a result of the COVID-19 pandemic, we expect to see a fundamental structural change in production with film and TV companies demanding more distributed production with remote viewing and remote-controlled products. We believe that this could significantly benefit Vitec and we are actively looking at how we can take advantage of these new opportunities.
Today's AGM is a closed meeting due to COVID-19 and will be held at the Company's registered office. Shareholders should not attend in person. The outcome of the AGM resolutions will be announced to the market following the AGM.
For further information please contact:
The Vitec Group plc
Telephone: 020 8332 4602
Stephen Bird, Group Chief Executive
Martin Green, Group Finance Director
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Telephone: 020 3128 8147
Tim Rowntree/Robert Collett-Creedy
Notes to Editors
Vitec is a leading global provider of premium branded products and solutions to the fast changing and growing "image capture and content creation" 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 and accessories, wired and wireless video transmission systems, robotic camera systems, prompters, LED lights, mobile power, monitors, bags, motion control, smartphone accessories, audio capture and noise reduction equipment.
We employ around 1,600 people across the world in 11 different countries and are organised in three Divisions: Imaging Solutions, Production Solutions and Creative Solutions.
The Vitec Group plc is listed on the London Stock Exchange with 2019 revenue of £376.1 million.
More information can be found at: www.vitecgroup.com
LEI number: 2138007H5DQ4X8YOCF14
This announcement contains inside information. The person responsible for arranging the release of this announcement on behalf of The Vitec Group plc is Jon Bolton, Group Company Secretary.
This report contains certain forward-looking statements with respect to the financial condition, results of operations, and businesses of the The Vitec Group plc. These statements and forecasts involve risk, uncertainty and assumptions because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. These forward-looking statements are made only as at the date of this announcement. Nothing in this announcement should be construed as a profit forecast. Except as required by law, The Vitec Group plc has no obligation to update the forward-looking statements or to correct any inaccuracies therein.
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