TIDMVID
RNS Number : 2113R
Videndum PLC
28 February 2023
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.
28 February 2023
Videndum plc
2022 Full Year Results
Record revenue and adjusted profit before tax*
Videndum plc ("the Company" or "the Group"), the international
provider of premium branded hardware products and software
solutions to the growing content creation market, announces its
audited results for the year ended 31 December 2022.
Results 2022 2021 % change
---------- ---------- ---------
Revenue GBP451.2m GBP394.3m +14%
Adjusted operating profit* GBP60.0m GBP46.2m +30%
Adjusted operating margin* 13.3% 11.7% +160bps
Adjusted profit before tax* GBP54.0m GBP42.4m +27%
Adjusted basic earnings per
share* 90.1p 69.9p +29%
Dividend per share 40.0p 35.0p +14%
Free cash flow* GBP28.5m GBP33.1m -14%
Net debt* GBP193.5m GBP145.2m +33%
Statutory results
Operating profit GBP31.5m GBP33.5m -6%
Operating margin 7.0% 8.5% -150bps
Profit before tax GBP24.7m GBP29.6m -17%
Basic earnings per share 71.4p 56.4p +27%
2022 financial highlights
-- Record revenue (+14%) and adjusted profit before tax* (+27%)
-- Organic, constant currency revenue slightly ahead of
last year, despite softness in the consumer segment (c.10%
of Group revenue) and some retail destocking
-- Executing on our M&A strategy with acquisitions integrated
well
-- Adjusted operating margin* progression (+160bps); pricing
again more than offset inflation and a continued well-managed
cost base
-- Delivered operating cash conversion* of 83%
-- As expected, net debt* increased due to M&A activity and
exchange rates
-- Net debt to EBITDA of 2.1x (loan covenants basis)
-- Progressive total dividend of 40.0p per share (+14%)
Strategic positioning and outlook
-- Uniquely positioned at the heart of the growing global content
creation market
-- Continued adjusted operating margin* improvement
-- Additional opportunities identified for a number of self-help
actions to further streamline our cost base and deliver
cross-Divisional synergies
-- Expect stable FY 2023 adjusted profit before tax * , with
higher operating profit offset by increased interest charges
; higher than usual H2 weighting due to current macroeconomic
environment
Commenting on the results, Stephen Bird, Group Chief Executive,
said:
"Videndum delivered another record performance, despite a
challenging H2 2022 macroeconomic environment. This is testament to
the quality of our people, operational excellence and our leading,
premium brands which allow us to manage pricing to more than offset
inflationary headwinds. We executed well on our strategy,
delivering organic growth, margin improvement, good cash generation
and growth through M&A.
"We expect that some short-term macroeconomic headwinds will
continue to affect our consumer segment (c.10% of Group revenue)
and business confidence more generally, with additional retail
destocking and some purchase deferral by independent content
creators in H1 2023 however, we are seeing signs of improvement,
particularly in the US . We continue to develop innovative new
technology to improve our customers' productivity by developing
products which reduce set up time and lower operating costs. This
is becoming increasingly important to our customers and drives
shorter product replacement cycles. We are also executing on a
number of self-help actions to further streamline our cost base and
deliver cross-Divisional synergies to ensure that the business is
even better positioned for long-term growth. We therefore expect to
deliver a stable FY 2023 adjusted profit before tax* compared to FY
2022, with higher operating profit offset by increased interest
charges, albeit with a higher than usual H2 weighting.
"The Group is uniquely positioned right at the heart of the
growing content creation market with attractive market drivers. We
remain committed to our previously stated organic strategic
ambition of c.GBP600 million revenue and greater than GBP100
million adjusted operating profit* however, the timing is likely to
be delayed due to the current macroeconomic environment. The
content creation market is a great place to be and Videndum is well
positioned to deliver growth and value for shareholders. "
For more information please contact:
Videndum plc Telephone: 020 8332 4602
Stephen Bird, Group Chief Executive
Andrea Rigamonti, Group Chief
Financial Officer
Jennifer Shaw, Group Communications
Director
A video webcast and Q&A for Analysts and Investors will be
held today, starting at 10.30am UK time. The presentation slides
will be available on our website at 7.00am.
Users can pre-register to access the webcast and slides using
the following link :
https://videndum.com/investors/results-reports-and-presentations/
Notes to Editors :
Videndum is a leading global provider of premium branded
hardware products and software solutions to the growing content
creation market. We are organised in three Divisions: Videndum
Media Solutions, Videndum Production Solutions and Videndum
Creative Solutions.
Videndum's customers include broadcasters, film studios,
production and rental companies, photographers, independent content
creators, gamers, professional musicians and enterprises. Our
product portfolio includes camera supports, video transmission
systems and monitors, live streaming solutions, smartphone
accessories, robotic camera systems, prompters, LED lighting,
mobile power, bags, backgrounds, motion control, audio capture, and
noise reduction equipment.
We employ around 1,900 people across the world in 11 different
countries. Videndum plc is listed on the London Stock Exchange,
ticker: VID.
More information can be found at: https://videndum.com/
LEI number: 2138007H5DQ4X8YOCF14
Notes
2022 average exchange rates: GBP1 = $1.24, GBP1 = EUR1.17,
(1) EUR1 = $1.06, GBP1 = Yen161.
2021 average exchange rates: GBP1 = $1.38, GBP1 = EUR1.16,
(2) EUR1 = $1.18, GBP1 = Yen151.
This announcement contains inside information. The person
(3) responsible for arranging the release of this announcement
on behalf of Videndum plc is Jon Bolton, Group Company
Secretary.
* In addition to statutory reporting, Videndum plc reports
alternative performance measures ("APMs") which are not defined or
specified under the requirements of International Financial
Reporting Standards ("IFRS"). The Group uses these APMs to aid the
comparability of information between reporting periods and
Divisions, by adjusting for certain items which impact upon IFRS
measures, to aid the user in understanding the activity taking
place across the Group's businesses. APMs are used by the Directors
and management for performance analysis, planning, reporting and
incentive purposes. A summary of APMs used and their closest
equivalent statutory measures is given in the Glossary.
2022 financial overview
Income and expense
Adjusted* Statutory
2022 2021 % change 2022 2021
------------------ ---------- ---------- --------- ---------- ----------
Revenue GBP451.2m GBP394.3m +14% GBP451.2m GBP394.3m
Operating profit GBP60.0m GBP46.2m +30% GBP31.5m GBP33.5m
Profit before GBP54.0m GBP42.4m +27% GBP24.7m GBP29.6m
tax
Earnings per
share 90.1p 69.9p +29% 71.4p 56.4p
---------- ---------- --------- ---------- ----------
The Group achieved record revenue and adjusted profit before
tax* despite some significant headwinds, including weakening
consumer confidence as the year progressed. This most significantly
impacted revenue from our non-professional customers, which
represents c.10% of total Group revenue. Business confidence was
also low in H2 and as a result, we saw retailer destocking across
all Divisions but predominantly in Media Solutions.
These external factors meant that full year organic, constant
currency growth was 1%. The acquisitions of Savage and Audix have
been successfully integrated and contributed to full year revenue
growth of 8% on a constant currency basis, and 14% on a reported
basis.
Adjusted gross margin* of 43.9% was in line with 2021 (43.9%).
As expected, Litepanels' royalties were lower than in 2021;
excluding royalties from both periods, the gross margin* has
increased from 43.3% to 43.7%. The effect of price increases more
than offset the high inflation on raw materials, freight, duty,
utilities and labour.
Adjusted operating expenses* of GBP138.1 million were GBP11.1
million higher than 2021. On an organic, constant currency basis,
they declined by GBP1.6 million due to careful management of the
cost base across H2 to mitigate against the macroeconomic
headwinds.
The drop through from higher revenue combined with tight control
of the cost base delivered a 160bps increase in the adjusted
operating margin* to 13.3%. There was a 24% drop through of revenue
to profit on a reported basis, which was 40% at constant
currency.
Adjusted profit before tax* included a GBP3.6 million favourable
foreign exchange effect after hedging compared to 2021, due to a
stronger US Dollar partly offset by a slightly weaker Euro than in
2021. The impact on 2023 adjusted profit before tax* from a one
cent stronger/weaker US Dollar/Euro is expected to be an
increase/decrease of approximately GBP0.3 million and GBP0.3
million respectively. At current spot rates (24 February: GBP1 =
$1.19, GBP1 = EUR1.13) there is expected to be a c.GBP2 million
favourable impact versus 2022.
Adjusted net finance expense* of GBP6.0 million was GBP2.2
million higher than in 2021. This was driven by higher debt,
following the recent acquisitions, and rising interest rates;
partly offset by net gains on the translation of intercompany loans
and cash balances. In 2023, an average of c.65% of our borrowings
will be fixed through swaps at an average rate of c.4% (including
margin), partly mitigating the risk of further interest rate
increases. Our floating debt currently has an average interest rate
of c.6% (including margin). Net finance expense also includes
interest on the lease liabilities and the defined benefit pension
scheme, amortisation of loan fees, and net currency translation
gains or losses.
Adjusted profit before tax* was GBP54.0 million; GBP11.6 million
higher than 2021. On an organic, constant currency basis, adjusted
operating profit* and adjusted profit before tax* were 11% and 3%
up respectively on 2021.
Statutory profit before tax of GBP24.7 million (2021: GBP29.6
million) further reflects adjusting items of GBP29.3 million (2021:
GBP12.8 million), which primarily relate to the amortisation of
acquired intangibles, acquisition related charges, and
restructuring. These charges were higher compared to 2021 primarily
due to the recent acquisitions, particularly those of Savage and
Audix, and the Creative Solutions' restructuring announced at the
November trading update. As a result, statutory operating margin
decreased from 8.5% to 7.0%.
The Group's effective tax rate ("ETR") on adjusted profit before
tax* was 23.1% (2021: 24.3%). Statutory ETR was a 33.2% credit
(2021: 12.5% cost) due to the recognition of historical US tax
losses of GBP14.3 million.
Adjusted basic earnings per share* was 90.1 pence. Statutory
basic earnings per share was 71.4 pence.
Cash flow and net debt
Cash generated from operating activities was GBP65.3 million
(2021: GBP65.7 million) and net cash from operating activities was
GBP48.7 million (2021: GBP54.7 million).
Free cash flow* was GBP4.6 million lower than 2021. Cash
conversion* was 83%, and across the last three years has
cumulatively been 108%.
GBPm 2022 2021 Variance
-------
Statutory operating profit 31.5 33.5 (2.0)
Add back adjusting items 28.5 12.7 15.8
------- ------- ---------
Adjusted operating profit* 60.0 46.2 13.8
Depreciation(1) 22.6 18.7 3.9
Adjusted working capital
(inc)/dec* (19.4) 1.1 (20.5)
Adjusted provisions inc/(dec)* (0.8) (0.8) -
Capital expenditure(2) (20.2) (21.7) 1.5
Other(3) 7.6 6.2 1.4
Adjusted operating cash
flow* 49.8 49.7 0.1
Cash conversion* 83% 108% (25)%pts
Interest and tax paid (16.6) (11.0) (5.6)
Earnout and retention
bonuses (1.3) (2.2) 0.9
Restructuring and integration
costs (2.0) (1.9) (0.1)
Transaction costs (1.4) (1.5) 0.1
------- ------- ---------
Free cash flow* 28.5 33.1 (4.6)
-------------------------------- ------- ------- ---------
(1) Includes depreciation, amortisation of software and
capitalised development costs
(2) Purchase of Property, Plant & Equipment ("PP&E") and
capitalisation of software and development costs
(3) Includes share-based payments charge (excluding retention)
and other reconciling items to get to the adjusted operating cash
flow*
Net cash from operating activities of GBP48.7 million (2021:
GBP54.7 million) comprises GBP28.5 million free cash flow (2021:
GBP33.1 million) plus GBP20.2 million capital expenditure (2021:
GBP21.7 million) less nil proceeds from sale of PP&E and
software (2021: GBP0.1 million)
Adjusted working capital* increased by GBP19.4 million in 2022.
Inventory increased by GBP12.2 million in H1, which was expected
following cost inflation, capacity constraints and component
shortages but fell by GBP2.0 million across H2 as we managed our
cash position carefully. Receivables increased by GBP5.0 million in
part due to price rises, and payables decreased by GBP4.2 million
mainly due to year-on-year movements in accruals.
Capital expenditure included:
-- GBP7.1 million of property, plant and equipment compared
with GBP10.8 million in 2021, which included the insourcing
of JOBY to Feltre;
-- GBP12.1 million capitalisation of R&D (2021: GBP10.1 million)
primarily at Creative Solutions to develop our next generation
products; and GBP1.0 million capitalisation of software
(2021: GBP0.8 million). Gross R&D was higher than 2021,
as expected, and grew in line with revenue (6.3% of revenue
in 2022 compared to 6.4% in 2021).
GBPm 2022 2021 Variance
------- -------
Gross R&D 28.2 25.2 3.0
Capitalised (12.1) (10.1) (2.0)
Amortisation 6.4 4.8 1.6
P&L Impact 22.5 19.9 2.6
-------------- ------- ------- ---------
'Other' primarily relates to share-based payments.
Interest and tax paid increased by GBP5.6 million compared to
2021 mainly due to higher interest costs from fees for the Audix
term loan and accordion agreement, as well as the increased P&L
charge.
Earnout and retention bonuses relate to Lightstream and Quasar.
Restructuring cash outflow reflects costs associated with
rebranding from The Vitec Group plc to Videndum plc and the exit
costs that were paid in 2022, the remainder to be paid in 2023.
December 2021 closing
net debt* (GBPm) (145.2)
Free cash flow* 28.5
Upfront loan fees,
net of amortisation (0.3)
Dividends paid (18.0)
Employee incentive
shares (1.4)
Acquisitions (33.2)
Net lease additions (8.6)
FX (15.3)
December 2022 closing
net debt* (GBPm) (193.5)
----------------------- --------
Net debt* at 31 December 2022 was GBP48.3 million higher than at
31 December 2021 (GBP145.2 million) and GBP0.6 million lower than
at 30 June 2022 (GBP194.1 million).
The ratio of net debt to EBITDA was 2.1x at 31 December 2022
(2021: 2.0x), on the basis used for our loan covenants(1) . Given
the expected H2 weighting in 2023, the ratio will increase at 30
June 2023 but is then expected to materially decline
thereafter.
Cash outflow on acquisitions mostly relates to the purchase of
Audix on 11 January 2022, net of the cash acquired.
Net lease additions mainly consist of a new lease at Savage and
also a lease as part of the acquisition of Audix.
There was a GBP15.3 million adverse impact from FX; primarily
from the translation of our US dollar debt, following the
strengthening of the US dollar against Sterling.
Liquidity at 31 December 2022 totalled GBP102.1 million;
comprising GBP86.3 million unutilised RCF and GBP15.8 million of
cash. The GBP35 million RCF accordion was executed on 30 December
2022 taking the total RCF facility from GBP165 million to GBP200
million.
ROCE* of 18.8%(2) was higher than the prior year (2021: 18.0%),
which reflects the higher adjusted operating profit*, partly offset
by increased capital employed because of the recent
acquisitions.
Adjusting items
Adjusting items in profit before tax were GBP29.3 million versus
GBP12.8 million in 2021.
GBPm 2022 2021
Amortisation of acquired intangible assets 10.9 7.2
Acquisition related charges(3) 9.3 4.6
Integration and restructuring costs 8.3 0.9
Finance expense - amortisation of loan fees
on borrowings for acquisitions 0.8 0.1
Adjusting items 29.3 12.8
--------------------------------------------- -----
Notes
Net debt is stated before arrangement fees; EBITDA is based
(1) on adjusted EBITDA* for the applicable 12-month period
(see Glossary), before non-cash share-based payment charges;
and after interest on employee benefits and FX movements,
and the amortisation of arrangement fees; it also includes
the 12-month pro forma effect of acquisitions. Our loan
covenant is 3.25x
Return on capital employed ("ROCE") is calculated as adjusted
(2) operating profit* for the last twelve months divided by
the average total assets (excluding non-trading assets
of defined benefit pension and deferred tax), current liabilities
(excluding current interest-bearing loans and borrowings),
and non-current lease liabilities. 2021 has been restated
to exclude the deferred tax asset, which was included in
the 2021 calculation.
Includes earnout charges, retention bonuses, transaction
(3) costs relating to the acquisition of businesses, and the
effect of fair valuation of acquired inventory.
Market and strategy update
Videndum is uniquely positioned right at the heart of the
content creation market, with market-leading, premium brands in
defensible niches; approximately 90% of our revenue comes from
professional content creators.
The content creation market is now larger and growing faster
than pre-pandemic with the Group being exposed to strong market
growth drivers. The Group's Total Addressable Market ("TAM") has
increased from c.GBP2 billion pre-pandemic (2019) to c.GBP3 billion
and, as previously stated, it is expected to grow high single digit
in the medium term, compared to low single digit pre-pandemic,
although with a slower growth rate in 2022-23 due to macroeconomic
headwinds .
We continue to execute well on our long-term strategy to deliver
organic growth, improve margins and to grow through M&A. Our
strategic initiatives and growth drivers lead to a medium-term
ambition for the Group to deliver c.GBP600 million revenue and
greater than GBP100 million adjusted operating profit on an organic
basis. However, the current macroeconomic environment is likely to
delay this ambition.
1. Organic growth
Organic growth is being driven by technology advancement and by
the significant changes in the way people now capture, consume and
share content. We estimate that 75% of the Group's business is
exposed to the four main structural market growth drivers below,
which have all been experiencing double-digit growth. We continue
to develop innovative new technology to improve our customers'
productivity by developing products which reduce set up time and
lower operating costs. This is becoming increasingly important to
our customers and drives demand for new and replacement
products.
The internet
Retail e-commerce drives demand for digital visual content as
new products need to be photographed and filmed frequently to be
published online, for example across the fashion, food, real estate
and hospitality industries.
We estimate that c.30% of the Group's revenue is exposed to
retail e-commerce which we serve with intuitive products used in
studios and a growing number of enterprise facilities. This drives
demand for our professional photography and videography equipment,
including supports, backgrounds, lighting and carrying solutions,
mainly benefiting our Media Solutions Division.
Subscription TV
Spending on original content creation for subscription TV
channels like Netflix, Amazon Prime Video and Disney+ drives demand
for our equipment.
We estimate that c.30% of the Group's revenue is exposed to
subscription TV, including: our video transmission and monitoring
systems, and camera accessories in Creative Solutions; lighting
equipment, mobile power and supports in Production Solutions; and
supports and audio capture in Media Solutions.
TikTok and YouTube
There has been significant growth in vloggers and influencers
creating and sharing video and audio content on social media
platforms like TikTok and YouTube. We estimate that there are more
than 40 million vloggers (with a following of over 1,000 people),
who share and monetise their videos or podcasts. Improving the
quality of their content is enormously important to their success -
and that is what Videndum products help them do.
We estimate that c.10% of the Group's revenue is exposed to
vloggers and influencers who use our JOBY supports, lights and
microphones, and our backgrounds to create high-quality content.
The JOBY customers of today potentially transition to Videndum's
other premium brands, as they become the filmmakers, broadcasters
and professional photographers of the future.
Live streaming
Live streaming of video has grown strongly across multiple
verticals, such as broadcasting, medical, industrial and gaming to
maintain communications and facilitate remote collaboration. For
example, governments, schools, houses of worship and businesses
rely on high quality, secure, zero or low delay video transmission
to communicate with their communities, customers and employees.
This market growth driver accounts for c.5% of the Group's
revenue and is increasing. There is a high demand for remote
wireless video within hospital operating rooms, where Amimon's
proprietary zero delay technology is being used by the leading
medical equipment providers.
Creative Solutions has developed a new high-end streaming
technology called ART (Adaptive Reliable Transport) which delivers
secure, ultra-low latency, broadcast-quality video and audio for
mission-critical video transport over public networks. The team is
working on miniaturising ART into smaller devices and to embed ART
across the Teradek product range.
Technology advancement
Sustained R&D investment in innovative new technology to
improve our customers' productivity is key to enabling our premium
brands to maintain their already strong market positions and, in
places, gain share. Last year, about half of our revenue came from
new products launched in the last three years.
The four market growth drivers above, plus technology
advancement, mean that our business has been growing in three key
ways. First, our core businesses e.g., professional photography,
broadcast TV and on-set monitoring. Second, growth in new areas,
e.g., vloggers and professional influencers, or on-camera
microphones, which are crucial to enhancing the quality of video
content being shared. Third, growth in new verticals enabled by
video transmission and live streaming. Here, we are expanding into
new market segments with our Amimon live streaming technology, from
just cine on-set monitoring, to broadcasting, medical, industrial
and other enterprises.
2. Margin improvement
We expect continued margin improvement as volumes grow and we
deliver operating leverage. We also intend to take a number of
self-help actions to further streamline our cost base and deliver
cross-Divisional synergies to ensure that the business is well set
up for continued long-term growth. Our actions will include:
-- Operational excellence, e.g., targeting 3% year-on-year
productivity gains by driving lean manufacturing and continuous
improvement initiatives across the Group
-- Targeted pricing improvements to reflect product quality
and brand strength; price increases were implemented in
2022 which will ensure that we will continue to stay ahead
of inflationary pressures. We will continue to monitor
inflation
-- Increasing mix of higher margin, higher technology products,
e.g., 4K/HDR technology replacement cycle in Creative Solutions
and new advanced automated solutions with our prompting
and robotics products
-- Driving margin improvement in Creative Solutions; 2022
saw the Division's operating profit margin improve 240bps
year-on-year, and this is expected to improve further following
the recently announced reorganisation of the Division
-- Growing online sales, e.g., in FY 2022 c.50% of Media Solutions'
revenue (excluding from B2B customers) was from online
sales, of which 5% was direct e-commerce compared to 4%
in FY 2021
-- Higher margin acquisitions and capturing synergies, e.g.,
in Media Solutions we have further strengthened our go-to-market
effectiveness in the US and leveraged greater organisational
efficiencies in line with the integration plans for Audix
and Savage, and also Rycote
-- Optimising the use of our sites and rationalisation of
our site portfolio, e.g., we will look to relocate employees
into alternative or smaller properties. In 2022, we closed
our Chatsworth, US site and employees were relocated to
a nearby existing facility
3. M&A activity
We have a strong M&A track record and a clear capital
allocation strategy.
We have increased our addressable markets by expanding our
product portfolio, customer base and technology capabilities,
through carefully selected acquisitions . The Group has been
focused on the fastest growing market segments of the content
creation market, mainly in the two key strategic growth areas of
video transmission/streaming in Creative Solutions and content
creation in Media Solutions, including allocating more attention to
audio capture, where we see a sizeable opportunity.
The Board believes that Creative Solutions has significant
potential, in terms of market opportunity, rate of future growth
and margins under Videndum ownership. The Board continues to review
options to unlock more shareholder value, which could include
licensing or selling our technology, a joint venture, or selling
the Division . A further update will be provided as and when
appropriate.
Executive Team
Videndum announces that Marco Pezzana, Chief Executive Officer
of its Media Solutions Division, is appointed Group Chief Operating
Officer, continuing to report to Stephen Bird, Group Chief
Executive. Marco will retain responsibility for the Media Solutions
Division as its Chief Executive Officer and will take on a wider
responsibility for the Group's operations. This will include
working on strategic self-help projects to further streamline our
cost base, maximise operational efficiencies and deliver
cross-Divisional synergies to accelerate Videndum's growth. Marco
has been with Videndum since March 2009 and has led the Media
Solutions Division since November 2011. He has a deep understanding
of the Group's operations and international markets. Marco will
attend Board meetings.
Divisional performances
Media Solutions
The Media Solutions Division designs, manufactures and
distributes premium branded equipment for photographic and video
cameras and smartphones, and provides dedicated solutions to
professional and amateur photographers/videographers, independent
content creators, vloggers/influencers, gamers, enterprises and
professional musicians. This includes camera supports and heads,
smartphone and vlogging accessories, lighting supports and
controls, LED lights, motion control, audio capture and noise
reduction equipment, camera bags and backgrounds, marketed under
the most recognised accessories brands in the industry. Media
Solutions represents c.50% of Group revenue.
Media Solutions' TAM has increased to c.GBP1.5 billion,
particularly due to the addition of Audix and Savage's addressable
markets as well as market growth coming from an increase in
vlogging and retail e-commerce driving demand for our professional
equipment, and audio capture. We estimate that the market CAGR
(2022-25) will be c.4%.
Our strategy is focused on developing innovative new products to
improve our customers' productivity in order to grow our core
professional business, mainly driven by e-commerce and the demand
for original content creation, as well as growth in new areas of
vlogging accessories and audio capture.
Adjusted* Statutory
------------------ ---------------------------------
Media Solutions 2022 2021 % change 2022 2021
---------- ---------- --------- ---------- ----------
Revenue GBP217.8m GBP194.7m +12% GBP217.8m GBP194.7m
Operating profit GBP33.1m GBP26.6m +24% GBP23.4m GBP23.8m
Operating margin 15.2% 13.7% +150bps 10.7% 12.2%
---------- ---------- --------- ---------- ----------
* For Media Solutions, before adjusting items of GBP9.7 million
(2021: GBP2.8 million).
Macroeconomic market conditions had a significant impact on
Media Solutions and drove an organic, constant currency revenue
decline of 7%. The acquisitions of Savage and Audix have been
successfully integrated and along with a tailwind from a stronger
Euro and US Dollar resulted in reported revenue for Media Solutions
increasing by 12%.
High inflation drove weakening consumer confidence, which
started towards the end of H1 and continued throughout H2. The
consumer segment (c.20% of the Division) was most significantly
impacted with lower demand from hobbyists and
vlogger/influencers.
Business confidence was subsequently low in H2 and retailer
destocking impacted across the Division, including in the
independent content creator segment (c.55% of the Division).
Our premium lighting supports are best-in-class and have been in
high demand and we saw significant growth in the high-end
professional segment (c.25% of the Division). We launched our
Avenger Buccaneer for the cine/scripted TV market in September,
which is a unique, ground-breaking lighting stand.
Higher reported revenue drove a 24% increase in adjusted
operating profit* with the operating margin* increasing by 150bps.
Operating profit* declined by 3% on an organic, constant currency
basis.
Statutory operating profit was GBP23.4 million (2021: GBP23.8
million), reflecting GBP9.7 million of adjusting items (2021:
GBP2.8 million).
Production Solutions
The Production Solutions Division designs, manufactures and
distributes premium branded and technically advanced products and
solutions for broadcasters, film and video production companies,
independent content creators and enterprises. Products include
video heads, tripods, LED lighting, batteries, prompters and
robotic camera systems. It also supplies premium services including
equipment rental and technical solutions. Production Solutions
represents c.30% of Group revenue.
The TAM for Production Solutions is c.GBP0.4 billion and we
estimate that the market CAGR (2022-25) will be c.3%.
Our strategy is focused on growth in our core business of
professional equipment for original content creation in
cine/scripted TV, products for on-location news and sporting
events, as well as innovative new technology like robotic camera
systems and voice-activated prompting to enable automation and cost
efficiencies in TV studios.
Adjusted* Statutory
----------------------
Production Solutions 2022 2021 % change 2022 2021
---------- ---------- --------- ---------- ----------
Revenue GBP137.8m GBP121.8m +13% GBP137.8m GBP121.8m
Operating profit GBP31.4m GBP28.0m +12% GBP30.1m GBP27.1m
Operating margin 22.8% 23.0% -20bps 21.8% 22.2%
---------- ---------- --------- ---------- ----------
* For Production Solutions, before adjusting items of GBP1.3
million (2021: GBP0.9 million).
Production Solutions had a stand-out year as it was less
affected by the macroeconomic conditions with all their products
catering for professionals. Organic, constant currency revenue
increasing by 6%, and the stronger US Dollar resulted in reported
revenue for Production Solutions increasing by 13%.
The broadcast segment returned to pre-pandemic levels,
significantly increasing studio spend year-on-year; driving high
growth in studio supports and prompting. Our voice-activated
prompting, launched in 2021, continued to drive growth in this area
as well.
Outside of the studio, our market-leading flowtech tripods and
aktiv fluid heads helped to drive material growth in non-studio
supports. The Litepanels Gemini 2x1 Hard launched in May and was
very well received by the market, with some significant first year
revenue.
Camera Corps provided bespoke cameras to the Winter Olympics in
H1; although H2 year-on-year comparisons are unfavourable given the
Summer Olympics in H2 2021.
The higher revenue drove a 12% increase in adjusted operating
profit* and 10% on an organic, constant currency basis. The
operating margin* decreased by 20bps as royalties received for the
Litepanels brand were lower than seen in 2021, with 100% of the
revenue decline dropping through to profit. Excluding the
royalties, the operating margin* was 22.1% (2021: 20.3%).
Statutory operating profit was GBP30.1 million (2021: GBP27.1
million), which included GBP1.3 million of adjusting items (2021:
GBP0.9 million).
Creative Solutions
The Creative Solutions Division develops, manufactures and
distributes premium branded products and solutions for film and
video production companies, independent content creators, gamers,
enterprises (e.g., medical and industrial) and broadcasters.
Products include wired and wireless video transmission and lens
control systems, live streaming solutions, monitors, camera
accessories and software applications. Creative Solutions
represents c.20% of Group revenue.
The TAM for Creative Solutions is larger than GBP1.0 billion,
and we estimate that the market CAGR (2022-2025) will be
10-15%.
Our strategy is focused on continuing to deliver the 4K/HDR
replacement cycle as well as developing innovative new technology
to improve our customers' productivity in the growing areas of
remote monitoring, collaboration and streaming in the cine/scripted
TV and enterprise markets.
Adjusted* Statutory
-------------------------
Creative Solutions 2022 2021 % change 2022 2021
--------- --------- --------- ---------- ----------
Revenue GBP95.6m GBP77.8m +23% GBP95.6m GBP77.8m
Operating profit/(loss) GBP12.5m GBP8.3m +51% GBP(3.3)m GBP(0.6)m
Operating margin 13.1% 10.7% +240bps (3.5)% (0.8)%
--------- --------- --------- ---------- ----------
* For Creative Solutions, before adjusting items of GBP15.8
million (2021: GBP8.9 million).
The continuation of the 4K/HDR rollout drove Creative Solutions
revenue to increase by 10% on an organic, constant currency basis,
and the stronger US Dollar resulted in reported revenue for
Creative Solutions increasing by 23%.
Our Teradek Bolt transmitters and receivers are exclusively now
4K/HDR, as are a third of the sales of SmallHD monitors. Total
4K/HDR sales were c.$47 million (c.$13m of which were monitors).
Wooden Camera saw continued significant growth, and overall the
cine/scripted TV segment grew materially.
Less remote working compared to 2021 and a repositioning of our
brand towards the higher margin, higher end of the enterprise
market saw revenue decline year-on-year in this market, as
expected. However, high demand for our Amimon medical products did
result in continued significant growth in this market segment.
The higher revenue drove a 51% increase in adjusted operating
profit* with the operating margin* increasing by 240bps. Operating
profit* increased by 41% on an organic, constant currency
basis.
In November, we announced a reorganisation in Creative
Solutions. Following a period of significant investment in R&D
in Creative Solutions, the future focus is on leveraging our unique
technologies and platforms to drive further growth in strategic
markets. Consequently, the sales and marketing teams were
reorganised into specialist vertical segments to maximise the
Division's growth potential, and to focus on high end, high margin,
mission-critical products incorporating patented Amimon technology,
exiting the low margin, low end of the wireless video streaming
market where our products do not incorporate the Amimon
technology.
These actions are expected to reduce the annual divisional cost
base by c.$3.5 million. The total cash cost of the reorganisation
is expected to be c.$2.5 million ($0.7 million in 2022), with
non-cash write-offs in 2022 of $4.5 million.
Statutory operating loss was GBP3.3 million (2021: GBP0.6
million loss), which reflects GBP15.8 million of adjusting items,
including those above (2021: GBP8.9 million).
Corporate costs
Corporate costs include Long Term Incentive Plan and Restricted
Share Plan ("RSP") charges used to incentivise and retain employees
across the Group, as well as payroll and bonus costs for the
Executive Directors and head office team, professional fees,
property costs and travel costs.
Adjusted* Statutory
------------------
Corporate costs 2022 2021 % change 2022 2021
Operating (loss) GBP(17.0)m GBP(16.7)m +2% GBP(18.7)m GBP(16.8)m
----------- ----------- --------- ----------- -----------
* For corporate costs, before adjusting items of GBP1.7 million
(2021: GBP0.1 million).
Corporate costs were slightly above those in 2021 on an
adjusted* basis. At a statutory level the GBP1.9 million increase
was due to restructuring costs.
Dividend
The Board has recommended a final dividend of 25.0 pence per
share amounting to GBP11.6 million (2021: 24.0 pence per share
amounting to GBP11.1 million). The final dividend, subject to
shareholder approval at the 2023 Annual General Meeting, will be
paid on Friday, 19 May 2023 to shareholders on the register at the
close of business on Friday, 21 April 2023. This will bring the
total dividend for the year to 40.0 pence per share (2021: 35.0
pence per share). A dividend reinvestment alternative is available
with details available from our registrars, Equiniti Limited. The
Board's objective is for a progressive and sustainable dividend and
believes it is appropriate for the Group to target a total dividend
cover of 2.0-2.5 times adjusted EPS*.
Responsibility
ESG Strategy
Videndum aims to be a sustainable business, minimising our
impact on the environment, and working to improve the societies in
which we operate. Throughout 2022, the Company further developed
its Group-wide ESG programme, increasingly focusing on the
end-to-end supply chain as well as direct operations, and
addressing and reporting on material issues affecting our
operations and stakeholders.
Our strategy includes clear objectives and targets, prioritising
actions that will deliver the greatest impact. We have prioritised
seven key pillars, grouped under four areas:
Environment: Reduce carbon emissions; Reduce packaging and
waste; Embed sustainability into our product life cycle
Our people: Continue to prioritise health and safety; Improve
diversity and inclusion ("D&I")
Responsible practices: Formalise the integrity of our entire
supply chain
Giving back: Positively impact the communities in which we
operate
ESG Governance
The Videndum Board provides oversight and has overall
responsibility for the Group's ESG programme, while the ESG
committee, chaired by the Group CEO and comprising senior
executives from across the Group, is responsible for driving ESG
performance. ESG Governance has been integrated into our existing
processes and a percentage of the Group CEO's remuneration is tied
to the Group's ESG performance. In 2022, we established a dedicated
ESG Working Group made up of specific ESG coordinators across each
of our Divisions and the Group Risk Assurance Manager. This Working
Group meets bi-weekly and is responsible for achieving the Group's
wider ESG targets.
ESG Reporting
We are in the process of producing our second standalone ESG
Report for our 2022 reporting period in accordance with the GRI
(Global Reporting Initiative). During the year, we developed our
TCFD (Task Force on Climate-related Financial Disclosures)
reporting by widening our climate scenario analysis and data
collection processes to include new acquisitions and top suppliers
based on spend and crucial supply chain routes. Both reports will
be available on our website at the end of March.
2022 Progress
Reducing the Group's carbon footprint is a clear priority for
Videndum. We have developed and set near-term targets as we journey
to be carbon neutral for scope 1 and 2 by 2025, net zero for Scope
1 and 2 by 2035, and for Scope 3 by 2045. We have identified
quantifiable measures to achieve these objectives. By implementing
smarter ways of working and investing in infrastructure, as
outlined below, we have already achieved a greater than 20%
reduction across the Group's scope 1 and 2 emissions since 2019,
excluding the impact of recently acquired businesses.
After calculating our 2020 carbon footprint for the first time
in 2021, we launched a robust data collection process to align our
carbon reporting with annual reporting. In 2022 we calculated our
total Scope 1, 2 and 3 carbon emission for both 2021 and 2022. In
2022, we introduced measures to improve the accuracy of our data
collection, moving to activity-based data collection for areas such
as employee commuting, waste and business travel.
Widening our data collection in line with the Greenhouse Gas
Protocol and Streamlined Energy and Carbon Reporting ("SECR")
requirements creates a clearer picture of higher-emitting areas of
our operations. This has enabled us to develop a roadmap to target
the best areas to reduce across Scope 1, 2, and 3.
This year, we have progressed many of our initiatives to reduce
our carbon emissions, including the installation of Solar PV to our
Cartago site, Costa Rica and Bury St. Edmunds, UK in Q1 2022. Solar
photovoltaics ("PV") installation to the roof at the Feltre, Italy
site and Ashby, UK site is under evaluation with suppliers, and
planned for installation by early 2024. We have continued to
install energy saving technology across our sites, including LED
lighting, energy metering, circuit level monitoring, compressed air
leak detection and building heating and cooling controls.
As part of our focus on formalising the integrity of our entire
supply chain, we launched an ESG Supplier Questionnaire, engaging
with several of our top suppliers based on spend, who account for
13% of our Scope 3 carbon emissions. The questionnaire requested
details of our suppliers Scope 1 & 2 carbon emissions, energy
usage, reduction targets and wider ESG programmes. We deem this
approach to be effective and will widen the scope over time. We
continue to proactively screen our suppliers for compliance and
reputational issues. As previously announced, due to the conflict
in Ukraine, we have taken the decision to suspend all exports of
our products and services to Russia until further notice.
Upholding the right values and behaviours is central to the
Group's governance and culture, and is reflected in our Code of
Conduct which was updated and relaunched in 2022 and is available
on our website.
At Videndum, we are committed to developing more sustainable
products. Product Life Cycle Assessment ("LCA") methodology and
Sustainable Design Principles have been embedded into internal
design processes in Media Solutions and are used to support R&D
investment decisions around sustainability. Production Solutions is
currently developing an LCA programme which will commence in
2023.
We have continued working towards the elimination of single-use
plastic, as well as recyclability of packaging and other product
components. We aim to eliminate or replace 50% of current cardboard
packaging consumption with sustainable, FSC grade cardboard. The
bulk of our paper and cardboard packaging usage sits within our
Media Solutions Division, of which 47% was FSC graded and 72% made
from recycled material in 2022.
Upon feedback from stakeholders, we have improved our collection
methods for social data across the Group. We have developed and
launched templates to ensure Group-wide performance of social
targets is monitored and reporting is cohesive. With this, Videndum
is improving reporting around diversity across the Group and
associated issues (e.g., employee turnover, disabled
employees).
In 2022, we continued to build on our commitment to positively
impact one disadvantaged person for every Videndum employee in the
communities in which we operate. Following some delays with
COVID-19, we have increased our engagement with charitable and
community partners in 2022, engaging with new organisations as well
as reengaging with existing partners across the Group. In 2022, the
Group positively impacted 443 disadvantaged people.
FY 2023 and Medium-Term Outlook
The Group is uniquely positioned right at the heart of the
growing content creation market with attractive market drivers. In
H1 2023, against a strong comparator period in H1 2022, we expect
that some macroeconomic headwinds will continue to affect our
consumer segment (c.10% of Group revenue) and business confidence
more generally, with additional retail destocking and some purchase
deferral by independent content creators. However, we are seeing
signs of improvement, particularly in the US. We continue to
develop innovative new technology to improve our customers'
productivity by developing products which reduce set up time and
lower operating costs. This is becoming increasingly important to
our customers and drives shorter product replacement cycles. We are
also executing on a number of self-help actions to further
streamline our cost base and deliver cross-Divisional synergies to
ensure that the business is even better positioned for long-term
growth. We therefore expect to deliver a stable FY 2023 adjusted
profit before tax * compared to FY 2022 , with higher operating
profit offset by increased interest charges , albeit with a higher
than usual H2 weighting due to the macroeconomic environment
mentioned above.
We remain committed to our previously stated organic strategic
ambition of c.GBP600 million revenue and greater than GBP100
million adjusted operating profit * however, the timing is likely
to be delayed due to the macroeconomic environment. The content
creation market is a great place to be and Videndum is well
positioned to deliver growth and value for shareholders.
Risks and Uncertainties
Videndum 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.
The principal risks and uncertainties that may affect our
performance are set out in the Annual Report and in summary are
around:
-- Demand for Videndum's products
-- Cost pressure
-- Dependence on key suppliers (including component shortages)
-- Dependence on key customers
-- People (including health and safety)
-- Laws and regulations
-- Reputation of the Group
-- Foreign exchange and interest rates
-- Business continuity including cyber security
-- Climate change
-- Restructuring
-- Acquisitions
Demand for Videndum's products remains stable overall, in spite
of the challenging economic outlook affecting our consumer-oriented
brands, and a number of headwinds which include the war in Ukraine,
higher inflation and interest rates, currency fluctuations, supply
chain disruptions, and some markets still affected by COVID-19. The
order book going into 2023 is healthy, and the Group's
diversification strategy continues to bear fruit with certain
segments (e.g., Audio, Lighting) continuing to perform strongly. We
believe the long-term fundamentals for the content creation
industry remain strong.
The risk related to "new markets/channels of distribution" is
incorporated into the risk "Demand for Videndum's products". We no
longer consider this to be a standalone risk given that the
diversification into new segments and rollout of a digital strategy
are substantially complete.
Cost pressure remains high but has reduced since 2021. Videndum
has been able to implement price increases to more than offset the
increase in costs, and we continue to control the cost base
carefully. In addition, the availability of critical components has
improved since 2021.
The risk relating to People has reduced. There have been several
HR initiatives which have improved the retention of engineers,
wider market pressures relating to competition for talent have
eased and in addition there has been an easing of health and safety
restrictions related to COVID-19.
The risk relating to foreign exchange and interest rates has
increased, due to significantly higher cost of servicing debt. We
have implemented derivative swaps to fix 79% of the interest on
Group borrowing as at 31 December 2022.
The cyber security risk remains elevated in view of the high
number of cyber security breaches and ransomware activity affecting
the corporate sector. We continue to focus on strengthening our
cyber security defences and have increased budgets allocated to
security. We keep our framework under review; however, this risk
remains inherently high and cannot be eliminated.
Several Restructuring activities have been announced to take
place in 2023, therefore this is now a principal risk. We continue
to drive operational improvements to improve efficiency.
Audit Tender 2023
During the second half of 2022 our external auditor, Deloitte
LLP, informed the Audit Committee that from 2024 it will no longer
be able to act as auditor for the Company. The Audit Committee, on
behalf of the Board, will therefore conduct a formal audit tender
process during the second quarter of 2023. Deloitte has confirmed
that there are no circumstances tied to their standing down as
external auditor that need to be brought to shareholders' attention
and that they will conduct the audit for the year ending 31
December 2023, subject to shareholder approval. We will keep
shareholders informed on the progress and outcome of the audit
tender.
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 publicly 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.
Going concern and viability
The Directors have made appropriate enquiries and consider that
the Group has adequate resources to continue in operational
existence for the foreseeable future, being a period of at least 12
months from the date of approval of the condensed financial
statements. The Directors have considered the potential risk of
lower revenue and, while monitoring developments, they currently
consider there to be minimal risk of breaching covenants. Under the
most severe scenario modelled, the lowest point of cash headroom in
the next 12 months would be at February 2024, when cash headroom
under the RCF would be GBP28 million. Accordingly, the Directors
continue to adopt the going concern basis in preparing the
financial statements. Further detail on the assessment of going
concern can be found within note 1 to the condensed financial
statements.
The Directors have also assessed the long-term viability of the
Group over a three-year period, taking account of the Group's
current position and prospects, its strategic plan, risk appetite
and the principal risks and how these are managed. Based on this
assessment, the Directors have a reasonable expectation that the
Group will be able to continue in operation and meet its
liabilities as they fall due over this period, subject to the Group
retaining the ability to acquire funding in order to refinance its
committed facilities when they fall due, which is expected to be
the case.
For and on behalf of the Board
Stephen Bird Andrea Rigamonti
Group Chief Executive Group Chief Financial Officer
Condensed Consolidated Income Statement
For the year ended 31 December 2022
2022 2021
Notes GBPm GBPm
--- ------ -------- --------
Revenue 2 451.2 394.3
Cost of sales (255.7) (221.2)
------------------------------------------------ --- ------ -------- --------
Gross profit 195.5 173.1
Operating expenses 3 (164.0) (139.6)
------------------------------------------------ --- ------ -------- --------
Operating profit 31.5 33.5
------------------------------------------------ --- ------ -------- --------
Comprising
* Adjusted operating profit 4 60.0 46.2
* Adjusting items in operating profit 4 (28.5) (12.7)
------------------------------------------------ --- ------ -------- --------
Net finance expense 5 (6.8) (3.9)
------------------------------------------------ --- ------ -------- --------
Profit before tax 24.7 29.6
------------------------------------------------ --- ------ -------- --------
Comprising
* Adjusted profit before tax 54.0 42.4
* Adjusting items in profit before tax (29.3) (12.8)
------------------------------------------------ --- ------ -------- --------
Taxation 8.2 (3.7)
------------------------------------------------ --- ------ -------- --------
Comprising
* Taxation on adjusted profit 6 (12.5) (10.3)
* Adjusting items in taxation 6 20.7 6.6
------------------------------------------------ --- ------ -------- --------
Profit for the year attributable to owners
of the parent 32.9 25.9
----------------------------------------------------- ------ -------- --------
Earnings per share
Basic earnings per share 7 71.4p 56.4p
Diluted earnings per share 7 68.7p 54.5p
Average exchange rates
Euro 1.17 1.16
US$ 1.24 1.38
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
2022 2021
GBPm GBPm
------------------------------------------------------ ------ ------
Profit for the year 32.9 25.9
------------------------------------------------------- ------ ------
Other comprehensive income/(expense):
Items that will not be reclassified subsequently
to profit or loss:
Remeasurements of defined benefit obligation 9.1 6.9
Related tax (2.1) (0.7)
Items that are or may be reclassified subsequently
to profit or loss:
Currency translation differences on foreign
currency subsidiaries 22.6 (3.9)
Net investment hedges - net (loss)/gain (5.8) 0.2
Cash flow hedges - reclassified to the Income
Statement, net of tax 1.6 (0.1)
Cash flow hedges - effective portion of changes
in fair value, net of tax 2.4 (0.1)
------------------------------------------------------- ------ ------
Other comprehensive income, net of tax 27.8 2.3
------------------------------------------------------- ------ ------
Total comprehensive income for the year attributable
to owners of the parent 60.7 28.2
------------------------------------------------------- ------ ------
Condensed Consolidated Balance Sheet
As at 31 December 2022
2022 2021
GBPm GBPm
--------------------------------------- --------- -------- ------------
Assets
Non-current assets
Intangible assets 217.9 173.7
Property, plant and equipment 66.6 60.7
Employee benefit asset 3.9 -
Trade and other receivables 7.4 5.8
Derivative financial instruments 3.8 0.1
Non-current tax assets 3.0 3.0
Deferred tax assets 51.2 33.6
353.8 276.9
---------------------------------------------------- -------- ------------
Current assets
Inventories 107.3 88.5
Trade and other receivables 68.9 60.0
Derivative financial instruments 2.3 -
Current tax assets 4.1 4.7
Cash and cash equivalents 15.8 11.0
198.4 164.2
---------------------------------------------------- -------- ------------
Total assets 552.2 441.1
------------------------------------------------------ -------- ------------
Liabilities
Current liabilities
Bank overdrafts - 3.1
Interest-bearing loans and borrowings 36.0 13.2
Lease liabilities 6.0 5.7
Trade and other payables 81.3 76.7
Derivative financial instruments 0.9 0.3
Current tax liabilities 16.7 16.0
Provisions 5.5 1.5
146.4 116.5
---------------------------------------------------- -------- ------------
Non-current liabilities
Interest-bearing loans and borrowings 138.5 109.6
Lease liabilities 28.8 24.6
Other payables 1.8 0.4
Employee benefit liabilities 3.1 8.4
Provisions 2.4 2.9
Deferred tax liabilities 7.5 4.8
------------------------------------------------------
182.1 150.7
---------------------------------------------------- -------- ------------
Total liabilities 328.5 267.2
------------------------------------------------------ -------- ------------
Net assets 223.7 173.9
------------------------------------------------------ -------- ------------
Equity
Share capital 9.4 9.3
Share premium 24.3 23.1
Translation reserve (0.8) (17.6)
Capital redemption reserve 1.6 1.6
Cash flow hedging reserve 3.9 (0.1)
Retained earnings 185.3 157.6
------------------------------------------------------ -------- ------------
Total equity 223.7 173.9
------------------------------------------------------ -------- ------------
Balance Sheet exchange rates
Euro 1.13 1.19
US$ 1.21 1.35
Consolidated Statement of Changes in Equity
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
2021 9.2 21.7 (13.9) 1.6 0.1 126.7 145.4
Profit for the
year - - - - - 25.9 25.9
Other comprehensive
(expense)/income
for the year - - (3.7) - (0.2) 6.2 2.3
------------------------- ---------- ---------- ------------ ------------- ---------- ----------- ---------
Total comprehensive
(expense)/income
for the year - - (3.7) - (0.2) 32.1 28.2
Contributions by
and distributions
to owners
Dividends paid - - - - - (7.1) (7.1)
Own shares purchased - - - - - (5.8) (5.8)
Share-based payment
charge, net of tax - - - - - 8.2 8.2
New shares issued 0.1 1.4 - - - 3.5 5.0
------------------------- ---------- ---------- ------------ ------------- ---------- ----------- ---------
Balance at 31 December
2021 and 1 January
2022 9.3 23.1 (17.6) 1.6 (0.1) 157.6 173.9
Profit for the
year - - - - - 32.9 32.9
Other comprehensive
income for the year - - 16.8 - 4.0 7.0 27.8
------------------------- ---------- ---------- ------------ ------------- ---------- ----------- ---------
Total comprehensive
income for the year - - 16.8 - 4.0 39.9 60.7
Contributions by
and distributions
to owners
Dividends paid - - - - - (18.0) (18.0)
Own shares purchased - - - - - (5.8) (5.8)
Own shares sold - - - - - 3.1 3.1
New shares issued 0.1 1.2 - - - - 1.3
Shared-based payment
charge, net of tax - - - - - 8.5 8.5
Balance at 31 December
2022 9.4 24.3 (0.8) 1.6 3.9 185.3 223.7
------------------------- ---------- ---------- ------------ ------------- ---------- ----------- ---------
Condensed Consolidated Statement of Cash Flows
For the year ended 31 December 2022
2022 2021
Notes GBPm GBPm
-------------------------------------------- ------ ------- --------
Cash flows from operating activities
Profit for the year 32.9 25.9
Adjustments for:
Taxation (8.2) 3.7
Depreciation 15.3 12.9
Impairment losses on property, plant
and equipment - 0.2
Impairment losses on capitalised 1.9 -
development costs
Amortisation of intangible assets 18.3 13.0
Fair value losses on derivative financial 0.1 -
instruments
Foreign exchange losses 0.6 -
Share-based payment charge 8.9 7.9
Earnout charges and retention bonuses 4.5 0.8
Net finance expense 6.8 3.9
--------------------------------------------- ------ ------- --------
Cash generated from operating activities
before changes in working capital,
including provisions 81.1 68.3
Increase in inventories (8.0) (21.9)
Increase in receivables (5.0) (5.8)
(Decrease)/increase in payables (5.6) 27.8
Increase/(decrease) in provisions 2.8 (2.7)
--------------------------------------------- ------ ------- --------
Cash generated from operating activities 65.3 65.7
Interest paid (9.4) (4.5)
Tax paid (7.2) (6.5)
--------------------------------------------- ------ ------- --------
Net cash from operating activities 48.7 54.7
--------------------------------------------- ------ ------- --------
Cash flows from investing activities
Proceeds from sale of property, plant
and equipment and software - 0.1
Purchase of property, plant and equipment (7.1) (10.8)
Capitalisation of software and development
costs (13.1) (10.9)
Acquisition of businesses, net of
cash acquired (33.2) (56.1)
Net cash used in investing activities (53.4) (77.7)
--------------------------------------------- ------ ------- --------
Cash flows from financing activities
Proceeds from the issue of shares 1.3 1.5
Proceeds from the sale of own shares 3.1 -
Own shares purchased (5.8) (5.8)
Principal lease repayments (6.4) (5.7)
Repayment of interest-bearing loans
and borrowings (93.8) (128.2)
Borrowings from interest-bearing
loans and borrowings 130.3 160.8
Dividends paid (18.0) (7.1)
--------------------------------------------- ------ ------- --------
Net cash from financing activities 10.7 15.5
--------------------------------------------- ------ ------- --------
Increase/(decrease) in cash and
cash equivalents and overdrafts 11 6.0 (7.5)
Cash and cash equivalents at 1 January 7.9 16.8
Effect of exchange rate fluctuations
on cash held 1.9 (1.4)
--------------------------------------------- ------ ------- --------
Cash and cash equivalents and overdrafts
at 31 December 11 15.8 7.9
--------------------------------------------- ------ ------- --------
1 Accounting policies
Reporting entity
Videndum plc (the "Company", previously The Vitec Group plc) is
a public company limited by shares incorporated in the United
Kingdom under the Companies Act. The Company is registered in
England and Wales and its registered address is Bridge House, Heron
Square, Richmond TW9 1EN, United Kingdom. These condensed
consolidated financial statements ("financial statements") as at
and for the year ended 31 December 2022 comprise the Company and
its subsidiaries (together referred to as the "Group").
Basis of preparation
In reporting financial information, the Group presents
Alternative Performance Measures ("APMs") which are not defined or
specified under the requirements of International Financial
Reporting Standards ("IFRS"). The Group believes that these APMs,
which are not considered to be a substitute for or superior to IFRS
measures, provide stakeholders with additional helpful information
and enable an alternative comparison of performance over time. Note
13 "Glossary of Alternative Performance Measures" provides a
comprehensive list of APMs that the Group uses, including an
explanation of how they are calculated, why they are used and how
they can be reconciled to a statutory measure where relevant.
The Company has elected to prepare its Parent Company financial
statements in accordance with Financial Reporting Standard 101
Reduced Disclosure Framework ("FRS 101").
Basis of consolidation
Subsidiaries are entities that are controlled by the Group.
Control exists when the Group has the rights to variable returns
from its involvement with an entity and has the ability to affect
those returns through its power over the entity. The results of
subsidiaries sold or acquired during the year are included in the
accounts up to, or from, the date that control exists.
Going concern
As part of the Directors' consideration of the appropriateness
of adopting the going concern basis and long-term viability in
preparing the financial statements, a range of scenarios have been
modelled through to the end of 2025. The Directors have applied a
robust process to assess the forecast scenarios which included
applying severe but plausible downside risks and mitigating
activities. Neither the Group's latest forecast nor the downside
scenarios modelled result in a breach of the covenants under the
terms of its multicurrency Revolving Credit Facility ("RCF") and
all scenarios show sufficient cash headroom to continue in
operational existence for the foreseeable future, being a period of
at least 12 months from the date of approval of these financial
statements.
The Directors have also considered the Group's capacity to
remain a going concern after consideration of future cash flows,
expected debt service requirements, undrawn facilities and access
to capital markets.
As such, the Directors are satisfied that it is appropriate for
the Group to continue to adopt the going concern basis for
preparing these financial statements.
Significant judgements, key assumptions and estimates
The following provides information on those policies that the
Directors consider critical because of the level of judgement and
estimation required which often involves assumptions regarding
future events which can vary from what is anticipated. The
Directors review the judgements and estimates on an ongoing basis
with revisions to accounting estimates recognised in the period in
which the estimates are revised and in any future periods affected.
The Directors believe that the consolidated financial statements
reflect appropriate judgements and estimates and provide a true and
fair view of the Group's performance and financial position.
Critical accounting estimates and assumptions
The following are the critical estimates and assumptions that
the Directors have made in the process of applying the Group's
accounting policies and that have a significant risk of resulting
in material adjustments to the carrying amounts of assets and
liabilities within the next financial year.
Inventory
Provisions are required to write down slow-moving, excess and
obsolete inventory to its net realisable value. The estimation of
inventory impairment is based on anticipated future sales of
products over particular time periods. The anticipated level of
future sales is determined primarily based on actual sales over a
specified historic reference period of between six and twelve
months, which is determined by Management and is deemed appropriate
to the type of inventory.
Pension benefits
The actuarial valuations associated with the pension schemes
involve making assumptions about discount rates, future salary
increases, future pension increases and mortality rates. All
assumptions are reviewed at each reporting date.
Acquisitions
Acquisitions are accounted for under the acquisition method,
based on the fair values of the consideration paid. Assets and
liabilities, with limited exceptions, are measured at their fair
value at the acquisition date. The Group estimates the provisional
fair values and useful lives of acquired assets and liabilities at
the date of acquisition. The valuation of acquired intangibles is
subject to estimation of future cash flows and the discount rate
applied to them. Determination of the useful economic lives of
technology-related intangible assets requires assumptions about
future market trends and future risk of replacement or obsolescence
of those assets.
Tax
The Group is subject to income taxes in a number of
jurisdictions. Management is required to make estimates in
determining the provisions for income taxes and deferred tax assets
and liabilities recognised in the consolidated financial
statements. Tax benefits are recognised to the extent that it is
probable that sufficient taxable income will be available in the
future against which temporary differences and unused tax losses
can be utilised. The most significant estimates made are in
relation to the recognition of deferred tax assets arising from
carried forward tax losses. The recovery of those losses is
dependent on the future profitability of Group entities based in
the jurisdictions with those carried forward tax losses, most
significantly in the United States.
Critical judgements in applying the Group's accounting
policies
The following are critical judgements that the Group makes,
apart from those involving estimations (which are dealt with
above), that the Directors have made in the process of applying the
Group's accounting policies and that have the most significant
effect on the amounts recognised in the financial statements.
Development costs
The Group capitalises development costs which meet the criteria
under IAS 38 "Intangible Assets". The Group makes significant
judgements in the application of IAS 38, particularly in relation
to its requirements regarding the technical feasibility of
completing the asset and the Group's ability to sell and generate
future economic benefits from the intangible asset.
Tax
In relation to tax, these include the interpretation and
application of existing legislation. The Group's key judgement
relates to the application of tax law in relation to the EU State
Aid Investigation.
Impact of adoption of new accounting standards or amendments
The Group has considered the following amendments to standards
that are effective from 1 January 2022. These do not have a
significant impact on the consolidated financial statements of the
Group.
Amendments to IFRS 3 "Business Combinations" with reference to
the Conceptual Framework
Amendments to IAS 37 "Provisions, Contingent Liabilities and
Contingent Assets" on cost of fulfilling a contract
Amendments to IAS 16 "Property, Plant and Equipment" on proceeds
before intended use
New standards and interpretations effective for future periods
and not yet adopted
Amended standards and interpretations not yet effective are not
expected to have a significant impact on the Group's consolidated
financial statements.
2 Segment reporting
The Group has three reportable segments which are reported in a
manner that is consistent with the internal reporting provided to
the Chief Operating Decision Maker on a regular basis to assist in
making decisions on capital allocated to each segment and to assess
performance.
Media Solutions Production Creative Corporate Consolidated
(1) Solutions Solutions and unallocated
2022 2021 2022 2021 2022 2021 2022 2021 2022 2021
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------- -------- ------ ------ ------ ------- --------- -------- ------- -------
Analysis of
revenue from
external customers,
by location
of customer
United Kingdom 17.7 17.4 15.3 13.4 5.5 6.3 - - 38.5 37.1
The rest of
Europe 75.2 72.6 32.7 36.2 10.0 8.7 - - 117.9 117.5
North America 74.4 62.1 63.3 53.8 67.0 52.0 - - 204.7 167.9
Asia Pacific 42.8 37.8 16.3 14.4 11.3 9.4 - - 70.4 61.6
The rest of
the World 7.7 4.8 10.2 4.0 1.8 1.4 - - 19.7 10.2
Total revenue
from external
customers 217.8 194.7 137.8 121.8 95.6 77.8 - - 451.2 394.3
Inter-segment
revenue (2) 0.1 0.2 0.4 0.5 0.1 0.2 (0.6) (0.9) - -
-------- -------- ------ ------ ------ ------- --------- -------- ------- -------
Total revenue 217.9 194.9 138.2 122.3 95.7 78.0 (0.6) (0.9) 451.2 394.3
-------- -------- ------ ------ ------ ------- --------- -------- ------- -------
Adjusted operating
profit/(loss) 33.1 26.6 31.4 28.0 12.5 8.3 (17.0) (16.7) 60.0 46.2
Amortisation
of intangible
assets that
are acquired
in a business
combination (4.4) (1.2) (0.2) (0.3) (6.3) (5.7) - - (10.9) (7.2)
Acquisition
related
charges (4.4) (1.2) (0.1) (0.2) (4.8) (3.2) - - (9.3) (4.6)
Integration
and restructuring
costs (0.9) (0.4) (1.0) (0.4) (4.7) - (1.7) (0.1) (8.3) (0.9)
Operating profit/(loss) 23.4 23.8 30.1 27.1 (3.3) (0.6) (18.7) (16.8) 31.5 33.5
Net finance
expense (6.8) (3.9)
Taxation 8.2 (3.7)
------- -------
Profit for
the year 32.9 25.9
-------- -------- ------ ------ ------ ------- --------- -------- ------- -------
Segment assets 242.5 186.2 119.7 101.7 107.4 98.2 8.5 2.7 478.1 388.8
Unallocated
assets
Cash and cash
equivalents 15.8 11.0 15.8 11.0
Non-current
tax assets 3.0 3.0 3.0 3.0
Current tax
assets 4.1 4.7 4.1 4.7
Deferred tax
assets 51.2 33.6 51.2 33.6
------- -------
Total assets 552.2 441.1
-------- -------- ------ ------ ------ ------- --------- -------- ------- -------
Segment liabilities 62.8 57.2 38.9 37.9 20.6 18.8 7.5 6.6 129.8 120.5
Interest-bearing
loans
and borrowings 0.6 0.6 - - - 0.4 173.9 121.8 174.5 122.8
Unallocated
liabilities
Bank overdrafts - 3.1 - 3.1
Current tax
liabilities 16.7 16.0 16.7 16.0
Deferred tax
liabilities 7.5 4.8 7.5 4.8
------- -------
Total liabilities 328.5 267.2
-------- -------- ------ ------ ------ ------- --------- -------- ------- -------
Cash flows from
operating activities 25.2 32.2 30.6 30.4 9.9 8.8 (17.0) (16.7) 48.7 54.7
Cash flows from
investing activities (40.0) (49.7) (5.3) (5.4) (8.1) (22.6) - - (53.4) (77.7)
Cash flows from
financing activities (3.0) (2.5) (2.1) (2.0) (1.7) (1.1) 17.5 21.1 10.7 15.5
-------- -------- ------ ------ ------ ------- --------- -------- ------- -------
Capital expenditure
Property, plant
and equipment 3.6 6.8 3.0 3.4 0.5 0.6 - - 7.1 10.8
Software and
development
costs 3.2 2.9 2.4 1.1 7.5 6.9 - - 13.1 10.9
-------- -------- ------ ------ ------ ------- --------- -------- ------- -------
(1) The Imaging Solutions segment has been renamed the Media
Solutions segment following the change of the Company name from The
Vitec Group plc to Videndum plc with effect from 23 May 2022.
(2) Inter-segment pricing is determined on an arm's length
basis. These are eliminated in the Corporate column.
The Group's operations are located in several geographical
locations and sell products and services on to external customers
in all parts of the world.
One customer (2021: one) accounted for more than 10% of external
revenue. In 2022, the total revenue from this customer, which was
recognised in all three segments, was GBP60.8 million (2021:
GBP50.4 million).
3 Operating expenses
2022 2021
GBPm GBPm
--------------------------------------- ------ ------
Analysis of operating expenses
- Adjusting items in operating profit
(1) 25.9 12.6
- Other administrative expenses 61.9 57.6
---------------------------------------- ------ ------
Administrative expenses 87.8 70.2
Marketing, selling and distribution
costs 53.7 49.5
Research, development and engineering
costs 22.5 19.9
Operating expenses 164.0 139.6
---------------------------------------- ------ ------
(1) Adjusting items in operating profit are GBP28.5 million
(2021: GBP12.7 million) of which GBP25.9 million (2021: GBP12.6
million) are recognised in operating expenses and GBP2.6 million
(2021: GBP0.1 million) in cost of sales. See note 4 "Adjusting
items".
4 Adjusting items
The Group presents APMs in addition to its statutory results.
These are presented in accordance with the Guidelines on APMs
issued by the European Securities and Markets Authority
("ESMA").
APMs used by the Group and, where relevant, a reconciliation to
statutory measures are set out in note 13 "Glossary of Alternative
Performance Measures". Adjusting items are described below along
with more detail of the specific adjustment and the Group's
rationale for the adjustment.
The Group's key performance measures, such as adjusted operating
profit, exclude adjusting items.
The following are the Group's principal adjusting items when
determining adjusted operating profit:
Amortisation of intangible assets that are acquired in a
business combination
Acquired intangibles are measured at fair value, which takes
into account the future cash flows expected to be generated by the
asset rather than past costs of development. Additionally, acquired
intangibles include assets such as brands, know-how and
relationships which the Group would not normally recognise as
assets outside of a business combination. The amortisation of the
fair value of acquired intangibles is not considered to be
representative of the normal costs incurred by the business within
the Group on an ongoing basis. On an ongoing basis, the Group
capitalises development costs of intangible assets and the costs of
purchasing software. These intangible assets are recognised at cost
and the amortisation of these costs are included in adjusted
operating profit.
Acquisition related charges
Earnout charges and retention bonuses agreed as part of the
acquisition
Under IFRS 3, most of the Group's earnout charges and retention
bonuses are treated as post combination remuneration, although the
levels of remuneration generally do not reflect market rates and do
not get renewed as a salary (or other remuneration) might. The
Group considers this to be inconsistent with the economics
reflected in the deals because other consideration for the
acquisition is effectively included in goodwill rather than in the
Income Statement. Retention agreements are generally entered into
with key management at the point of acquisition to help ensure an
efficient integration.
Transaction costs
Transaction costs related to the acquisition of a business do
not reflect its trading performance and so are adjusted to ensure
consistency between periods.
Effect of fair valuation of acquired inventory
As part of the accounting for business combinations, the Group
measures acquired inventory at fair value as required under IFRS 3.
This results in the carrying value of acquired inventory being
higher than its original cost-based measure. The impact of the
uplift in value has the effect of increasing cost of sales thereby
reducing the Group's gross profit margin which is not
representative of ongoing performance.
Effect of fair valuation of property, plant and equipment
Under IFRS 3, acquired fixed assets are measured at fair value.
This measure does not reflect the undepreciated cost of the
acquired asset from the perspective of the acquiree and as such
alters the depreciation cost from the Group's perspective after the
acquisition. This does not reflect the ongoing profitability of the
acquired business.
Grant payments in excess of the liability recognised on
acquisition
These are costs relating to pre-acquisition funding activity. As
they are not relevant to understanding the in-year performance of
the business, they are adjusted to ensure consistency between
periods.
Integration and restructuring costs
For an acquired business, the costs of integration, such as
termination of third-party distributor agreements, severance and
other costs included in the business's defined integration plan, do
not reflect the business's trading performance and so are adjusted
to ensure consistency between periods.
Restructuring and other associated costs arising from
significant strategy changes that are not considered by the Group
to be part of the normal operating costs of the business.
Finance expense - amortisation of loan fees on borrowings for
acquisitions
Upfront borrowing fees related to funding for acquisitions do
not reflect the ongoing funding cost of the investment and so are
adjusted to ensure consistency between periods.
Other adjusting items
-- profit/(loss) on disposal of businesses;
-- impairment charges that are considered to be significant
in nature and/or value to the performance of the business;
-- past service charges associated with defined benefit pensions,
such as gender equalisation of guaranteed minimum pension
("GMP") for occupational schemes; and
-- other significant initiatives not related to trading.
No such items arose in the current or prior year.
In addition to the above, the current and deferred tax effect of
adjusting items are taken into account in calculating post tax
APMs. In addition, the following are treated as adjusting items
when considering post tax APMs:
-- significant adjustments to current or deferred tax which
have arisen in previous periods but are accounted for in
the current period; and
-- the net effect of significant new tax legislation changes.
The APMs reflect how the business is measured and managed on a
day-to-day basis including when setting and determining the
variable element of remuneration of senior management throughout
the Group (notably cash bonus and the Long Term Incentive Plan
("LTIP")).
Adjusted operating profit, adjusted profit before tax and
adjusted profit after tax are not defined terms under IFRS and may
not be comparable with similarly titled profit measures reported by
other companies. They are not intended to be a substitute for IFRS
measures. All APMs relate to the current year results and
comparative periods where provided.
2022 2021
GBPm GBPm
----------------------------------------------------- ------- -------
Amortisation of intangible assets that are acquired
in a business combination (1) (10.9) (7.2)
Acquisition related charges (1) (2) (9.3) (4.6)
Integration and restructuring costs (1) (3) (8.3) (0.9)
Adjusting items in operating profit (28.5) (12.7)
Finance expense - amortisation of loan fees on
borrowing for acquisitions (1) (4) (0.8) (0.1)
Adjusting items in profit before tax (29.3) (12.8)
------------------------------------------------------ ------- -------
(1) See note 7 "Earnings per share" for tax relating to
this.
(2) Acquisition related charges comprise retention payment
charge of GBP5.9 million (2021: GBP2.8 million) relating to
continued employment, grant payments in excess of liability
recognised at acquisition of GBP1.8 million (2021: GBPnil),
transaction costs relating to the acquisition of businesses of
GBP1.0 million (2021: GBP1.7 million), the effect of fair valuation
of acquired inventory and property of GBP0.5 million (2021: GBP0.1
million), and the effect of fair valuation of acquired property,
plant and equipment of GBP0.1 million (2021: GBPnil).
The retention payment charge of GBP5.9 million relates to
Quasar: GBP0.1 million, Lightstream: GBP2.5 million, Savage: GBP0.7
million and Audix: GBP2.6 million. The charge incurred in 2021 was
GBP2.8 million relating to Quasar: GBP0.1 million, Lightstream:
GBP2.6 million and Savage: GBP0.1 million.
Transaction costs of GBP1.0 million relate to Audix: GBP0.4
million and other: GBP0.6 million. The charge incurred in 2021 was
GBP1.7 million relating to Quasar: GBP0.1 million, Lightstream:
GBP0.5 million, Savage: GBP0.7 million and Audix: GBP0.4
million.
(3) Restructuring costs were incurred across all divisions, with
the majority in the Creative Solutions Division.
Creative Solutions began a project to reorganise the sales and
marketing teams into specialist vertical segments to maximise the
Division's growth potential, and to focus on high end, high margin,
mission-critical products incorporating patented Amimon technology,
exiting the low margin, low end of the wireless video streaming
market where our products do not incorporate the Amimon technology.
The costs incurred were GBP0.6 million of employee costs, and
impairment of GBP1.7 million of inventory and GBP1.9 million of
capitalised development costs in relation to the low end of the
wireless video streaming market (2021: GBPnil).
Media Solutions incurred GBP0.7 million of employee costs in
relation to organisational changes (2021: GBP0.5 million of
recruitment and professional fees).
Production Solutions began a project to consolidate operations
on the West coast of the US, the cost of which was GBP0.6 million
of employee costs (2021: GBP0.4 million of integration costs in
relation to the acquisition of Quasar). GBP1.9 million was incurred
in relation to the exits of senior management positions (2021:
GBPnil).
GBP0.9 million was incurred for rebranding from Vitec to
Videndum, and in respect of a one-off legal case (2021: GBPnil).
All restructuring and integration costs in 2022 have been
recognised in operating expenses aside from GBP2.1 million which is
in cost of sales (2021: GBPnil).
An amount of GBP2.6 million (2021: GBP0.1 million) was adjusted
from cost of sales. This related to the fair value uplift of GBP0.5
million (2021: GBP0.1 million) relating to acquired inventory sold
by the Group since the business combination, and restructuring
costs of GBP2.1 million (2021: GBPnil) of which inventory
impairment was GBP1.7 million (2021: GBPnil), and redundancy costs
GBP0.4 million (2021: GBPnil).
(4) Amortisation of loan fees of GBP0.8 million (2021: GBP0.1
million) relating to borrowings for acquisitions was adjusted from
net finance expense.
5 Net finance expense
2022 2021
GBPm GBPm
Finance income
Fair value gain on interest rate swaps 0.7 -
designated as cash flow hedges
Net currency translation gains 2.4 0.5
3.1 0.5
Finance expense
Interest expense on lease liabilities (1.5) (1.0)
Interest expense on interest-bearing loans
and borrowings (1) (8.3) (3.3)
Interest expense on net defined benefit
pension scheme (0.1) (0.1)
--------------------------------------------- ------ ------
(9.9) (4.4)
-------------------------------------------- ------ ------
Net finance expense (6.8) (3.9)
--------------------------------------------- ------ ------
(1) Interest expense on interest-bearing loans and borrowings of
GBP8.3 million (2021: GBP3.3 million) includes an adjusting amount
of GBP0.8 million (2021: GBP0.1 million) relating to amortisation
of loan fees on borrowings for acquisitions. See note 4 "Adjusting
items".
6 Taxation
2022 2021
GBPm GBPm
The total taxation charge/(credit) in the Income
Statement is analysed as follows:
Summarised in the Income Statement as follows
Current tax 8.5 11.4
Deferred tax (16.7) (7.7)
--------------------------------------------------- ------- ------
(8.2) 3.7
-------------------------------------------------- ------- ------
Adjusting items
Current tax (1) (1.7) (0.2)
Deferred tax (2) (19.0) (6.4)
--------------------------------------------------- ------- ------
(20.7) (6.6)
-------------------------------------------------- ------- ------
Before adjusting items
Current tax 10.2 11.6
Deferred tax 2.3 (1.3)
--------------------------------------------------- ------- ------
12.5 10.3
-------------------------------------------------- ------- ------
(1) Current tax credit of GBP1.7 million (2021: GBP0.2 million
credit) was recognised in the year of which GBP0.7 million credit
(2021: GBP0.2 million credit) related to integration and
restructuring costs, GBP0.2 million credit (2021: GBPnil) related
to financial expense, and GBP0.8 million credit relates to
non-taxable foreign exchange.
(2) Deferred tax credit of GBP19.0 million (2021: GBP6.4 million
credit) was recognised in the year of which GBP0.7 million credit
(2021: GBPnil) relates to integration and restructuring costs,
GBP1.7 million credit (2021: GBP1.5 million credit) to
acquisitions, GBP2.3 million credit (2021: GBP1.8 million credit)
to amortisation of intangible assets, GBPnil (2021: GBP2.6 million
credit) relates to the impact of the 2021 intercompany debt
restructure, GBPnil (2021: GBP0.9 million credit) relates to the
impact of the step-up in the tax base of certain plant and
equipment in Italy, GBPnil (2021: GBP0.4 million charge) relates to
the UK rate change from 19% to 25%, and GBP14.3 million credit
relates to a deferred tax asset recognition.
7 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 year divided by
the weighted average number of ordinary shares in issue during the
year.
Diluted EPS is calculated on the profit for the year divided by
the weighted average number of ordinary shares in issue during the
year, but adjusted for the effects of dilutive share options.
The adjusted EPS measure is calculated based on adjusted profit
and is used by Management to set performance targets for employee
incentives and to assess performance of the businesses.
The calculation of basic, diluted and adjusted EPS is set out
below:
2022 2021
GBPm GBPm
--------------------------------------------- ------- ------
Profit for the financial year 32.9 25.9
--------------------------------------------- ------- ------
Add back adjusting items, all net of tax :
Amortisation of intangible assets that are
acquired in a business combination, net of
tax 8.6 5.4
Acquisition related charges, net of tax 7.7 3.1
Integration and restructuring costs, net of
tax 6.8 0.7
Finance expense - amortisation of loan fees
on borrowings for acquisitions, net of tax 0.6 0.1
Current tax credit (1) (0.8) -
Deferred tax credit (2) (14.3) (3.1)
--------------------------------------------- ------- ------
8.6 6.2
--------------------------------------------- ------- ------
Adjusted profit after tax 41.5 32.1
--------------------------------------------- ------- ------
(1) A current tax credit of GBP0.8 million (2021: GBPnil)
relates to non taxable foreign exchange gains.
(2) A deferred tax credit of GBP14.3 million (2021: GBP3.1
million) relates to the recognition of deferred tax assets.
Weighted average Adjusted earnings Earnings per
number of shares per share share
'000
2022 2021 2022 2021 2022 2021
Number Number pence pence pence pence
-------------------- --------- --------- --------- --------- ------- ------
Basic 46,064 45,904 90.1 69.9 71.4 56.4
Dilutive potential
ordinary shares 1,850 1,619 (3.5) (2.4) (2.7) (1.9)
-------------------- --------- --------- --------- --------- ------- ------
Diluted 47,914 47,523 86.6 67.5 68.7 54.5
-------------------- --------- --------- --------- --------- ------- ------
8 Employee benefit asset
The Group has defined benefit pension schemes in the UK, Italy,
Germany, Japan and France. The UK defined benefit scheme was closed
to future benefit accrual with effect from 31 July 2010.
As a result of actuarial movements during the period, including
an increase in the discount rate from 1.9% at 31 December 2021 to
4.8% at 31 December 2022 and the removal of future discretionary
pension increases (31 December 2021: 3.2%), the UK defined benefit
scheme is in an actuarial surplus position at 31 December 2022
(measured on an IAS 19 "Employee Benefits" basis) of GBP3.9 million
(31 December 2021: liability of GBP4.6 million). The surplus has
been recognised on the basis that the Group has an unconditional
right to a refund, assuming the gradual settlement of Scheme
liabilities over time until all members have left the Scheme.
9 Dividend
The proposed final dividend for the year ended 31 December 2022
was recommended by the Directors. This is subject to approval by
shareholders at the AGM.
2022 2021
GBPm GBPm
Amounts arising in respect of the year
Interim dividend for the year ended 31 December
2022 of 15.0p (2021: 11.0p) per ordinary share 6.9 5.0
Proposed final dividend for the year ended
31 December 2022 of 25.0p (2021: 24.0p) per
ordinary share 11.6 11.1
------------------------------------------------- ----- -----
18.4 16.1
------------------------------------------------- ----- -----
The aggregate amount of dividends paid in
the year
Final dividend for the year ended 31 December
2021 of 24.0p (2020: 4.5p) per ordinary share 11.1 2.1
Interim dividend for the year ended 31 December
2022 of 15.0p (2021: 11.0p) per ordinary share 6.9 5.0
------------------------------------------------- ----- -----
18.0 7.1
------------------------------------------------- ----- -----
10 Acquisitions
Acquisitions are accounted for under the acquisition method of
accounting. With limited exceptions, identifiable assets acquired
and liabilities and contingent liabilities assumed are measured at
their fair values at the acquisition date. A detailed exercise is
undertaken to assess the fair value of assets acquired and
liabilities assumed, with the use of third-party experts where
appropriate.
The valuation of intangible assets requires the use of
assumptions and estimates, including future growth rates, expected
inflation rates, discount rates used and useful economic lives.
This process continues as information is finalised, and accordingly
the fair values presented in the tables below are provisional
amounts. In accordance with IFRS 3 until the assessment is complete
the measurement period will remain open up to a maximum of 12
months from the acquisition date so long as information remains
outstanding.
The excess of the consideration transferred, any non-controlling
interest recognised and the fair value of any previous equity
interest in the acquired entity over the fair value of net
identifiable assets acquired is recorded as goodwill.
Acquisition-related costs are recognised in the Income Statement as
incurred in accordance with IFRS 3.
Acquisitions provide opportunities for further development of
the Group's activities and create enhanced returns. Such
opportunities and the workforces inherent in each of the acquired
businesses represent much of the assessed value of goodwill.
Acquisition of Savage
During the period ended 31 December 2022, the process to measure
the fair values of the assets acquired and liabilities assumed was
completed in respect of the Savage acquisition. The Balance Sheet
as at 31 December 2021 has been adjusted to reflect a decrease in
goodwill of GBP0.7 million as a result of adjustments increasing
deferred tax assets by GBP0.5 million, increasing acquired
intangible assets by GBP0.3 million, and increasing other creditors
by GBP0.1 million. An amount of GBP0.3 million was received in the
period in relation to the final working capital adjustment for
Savage.
Acquisition of Audix
On 11 January 2022, the Group acquired 100% of the issued share
capital of Audix LLC ("Audix"), a US company, for consideration of
US$45.8 million (GBP33.7 million). Under the terms of the
acquisition, there is deferred consideration payable in 2023 of
US$2.0 million, the fair value of which is US$1.9 million (GBP1.4
million). The consideration for the acquisition is set out in the
table below.
Audix has been integrated into the Media Solutions Division and
it designs, engineers and manufactures high performing, innovative
microphones for the professional audio industry. Audix products are
highly complementary to the JOBY and Rycote brands and this
acquisition will help to enhance the Group's leading position in
the growing audio market. This acquisition is in line with the
Group's strategy to drive growth by increasing its addressable
markets and expanding its higher technology capabilities.
Based on the provisional view, the fair value of the net assets
acquired in the business at acquisition date was GBP18.7 million,
resulting in goodwill of GBP16.4 million. The whole amount of
goodwill is tax deductible over 15 years and represents the
expected synergies from the acquisition and the assembled
workforce.
In connection with the acquisition, a retention agreement is
entered into with key employees. The retention agreement is for a
total of US$3.1 million (GBP2.3 million) conditional on continued
employment and payable in 2023. This is accounted for as an
employee expense in accordance with IAS 19.
A summary of the acquisitions is detailed below:
Total
GBPm
----------------------------------------- ------
Fair value of net assets acquired
Intangible assets 15.1
Property, plant and equipment 5.5
Inventories 3.1
Trade and other receivables 1.1
Cash 0.2
Lease liabilities (4.4)
Trade and other payables (1.1)
Deferred tax (0.8)
--------------------------------------------- ------
18.7
Goodwill 16.4
--------------------------------------------- ------
Total purchase consideration 35.1
Present value of deferred consideration (1.4)
--------------------------------------------- ------
Cash consideration 33.7
Cash acquired (0.2)
--------------------------------------------- ------
Total outflow of cash for Audix 33.5
Working capital adjustment received
for Savage (0.3)
--------------------------------------------- ------
Total outflow of cash 33.2
--------------------------------------------- ------
Acquisition related charges include: transaction costs of GBP0.4
million relating to the acquisition of Audix and retention payment
charges of GBP5.9 million (Quasar: GBP0.1 million, Lightstream:
GBP2.5 million and Savage: GBP0.7 million and Audix: GBP2.6
million).
The trade receivables acquired had a fair value and a gross
contractual value of GBP0.7 million. All contractual cash flows at
acquisition date are expected to be collected.
The results of the acquisition included in the Group's
consolidated results are revenue of GBP12.9 million and operating
profit of GBP1.3 million. The level of profitability is stated
after adjusting items.
Had the acquisition been made at the beginning of the year
(i.e.,1 January 2022), it would have contributed GBP13.1 million to
revenue and GBP1.3 million profit to the operating profit of the
Group. The level of profitability is stated after adjusting
items.
11 Analysis of net debt
The table below analyses the Group's components of net debt and
their movements in the period:
Interest-
bearing Other cash
loans and Liabilities and cash
borrowings from financing equivalents
(1) Leases Sub-total (2) Total
GBPm GBPm GBPm GBPm GBPm
------------ ------- ---------------- ------------- --------
Opening at 1
January 2021 (91.4) (16.2) (107.6) 16.8 (90.8)
Other cash flows - - - (37.0) (37.0)
Business combinations - (4.5) (4.5) 2.6 (1.9)
Repayments 128.2 5.7 133.9 (133.9) -
Borrowings (160.8) - (160.8) 160.8 -
Leases entered
into during the
year - (15.7) (15.7) - (15.7)
Leases - early
termination - 0.1 0.1 - 0.1
Fees incurred 1.3 - 1.3 - 1.3
Amortisation
of fees (0.7) - (0.7) - (0.7)
Foreign currency 0.6 0.3 0.9 (1.4) (0.5)
------------ ------- ---------------- ------------- --------
Closing at 31
December 2021
and opening at
1 January 2022 (122.8) (30.3) (153.1) 7.9 (145.2)
------------ ------- ---------------- ------------- --------
Other cash flows - - - (24.3) (24.3)
Business combinations - (4.4) (4.4) 0.2 (4.2)
Repayments 93.8 6.4 100.2 (100.2) -
Borrowings (130.3) - (130.3) 130.3 -
Leases entered
into during the
year - (4.8) (4.8) - (4.8)
Leases - early
termination - 0.6 0.6 - 0.6
Fees incurred 1.0 - 1.0 - 1.0
Amortisation
of fees (1.3) - (1.3) - (1.3)
Foreign currency (14.9) (2.3) (17.2) 1.9 (15.3)
------------ ------- ---------------- ------------- --------
Closing at 31
December 2022 (174.5) (34.8) (209.3) 15.8 (193.5)
------------ ------- ---------------- ------------- --------
(1) Interest bearing loans and borrowings include unamortised
fees and transaction costs of GBP1.7 million (2021: GBP2.1
million)
(2) Other cash and cash equivalents include bank overdrafts of
GBPnil (2021: GBP3.1 million).
On 14 February 2020, the Group signed a new GBP165.0 million
five-year (with one optional one-year extension) multicurrency RCF
with a syndicate of five banks. On 12 November 2021, the Group
signed an amendment and restatement agreement to change the
underlying benchmark from LIBOR to the relevant risk-free rates
(SONIA, SOFR, TONA), due to the cessation of LIBOR on 31 December
2021. In January 2022, a one-year extension was agreed with four
syndicate banks, and in December 2022 a GBP35.0 million accordion
was agreed with the same four syndicate banks resulting in the
total commitments increasing to GBP200 million, with GBP35.0
million expiring on 14 February 2025 and GBP165.0 million expiring
on 14 February 2026. The Group was utilising 57% of the RCF as at
31 December 2022.
Under the terms of the RCF the Group expects to and has the
discretion to roll over the obligation for at least 12 months from
the Balance Sheet date, and as a result, these amounts are reported
as non-current liabilities in the Balance Sheet.
On 14 November 2021, the Group signed a new US$53.0 million
(GBP43.8 million) three-year amortising Term Loan with a syndicate
of four banks to facilitate the acquisition of Savage. This
facility will expire on 14 November 2024. Following the payment of
25% of the original amount during 2022, the outstanding balance of
this Term Loan was US$39.8 million (GBP32.8 million) as at 31
December 2022.
On 7 January 2022, the Group signed a new US$47.0 million
(GBP38.8 million) three-year amortising Term Loan with a syndicate
of four banks to facilitate the acquisition of Audix. This facility
will expire on 7 January 2025. Following the payment of 25% of the
original amount during 2022, the outstanding balance of this Term
Loan was US$35.2 million (GBP29.1 million) as at 31 December
2022.
12 Derivative financial instruments
The fair value of forward exchange contracts and interest rate
swap contracts is determined by estimating the market value of that
contract at the reporting date. Derivatives are presented as
current or non-current based on their contracted maturity
dates.
Forward exchange contracts
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.
Currency As at Average As at Average
31 December exchange 31 December exchange
2022 rate of 2021 rate of
millions contracts millions contracts
---------------------------- ---------- ------------- ----------- ------------- -----------
Forward exchange contracts
(buy/sell)
GBP/USD forward exchange
contracts USD 27.8 1.21 12.1 1.35
EUR/USD forward exchange
contracts USD 58.6 1.05 16.2 1.17
GBP/EUR forward exchange
contracts EUR 15.3 1.15 3.8 1.18
GBP/JPY forward exchange
contracts JPY 288.0 155.6 93.0 156.7
EUR/JPY forward exchange
contracts JPY 656.0 138.4 204.0 133.4
---------------------------- ---------- ------------- ----------- ------------- -----------
A net loss of GBP2.9 million (2021: GBP0.1 million gain)
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.
Interest rate swaps
The following table shows the interest rate swap contracts in
place at the Balance Sheet date. The interest is payable quarterly
on 31 March, 30 June, 30 September and 31 December.
Currency Nominal Nominal
amounts Weighted amounts
as at average as at
31 December fixed 31 December
2022 rate (1) Maturity 2021
------------------------------- ---------- ------------- ---------- --------- -------------
Interest rate swap contracts
USD Interest rate swaps float
(SOFR) to fix (2) USD 75.0 1.01% Sep 23 26.5
USD Interest rate swaps float
(SOFR) to fix USD 35.0 4.89% Sep 23 0.0
GBP Interest rate swaps float
(SONIA) to fix GBP 47.0 1.74% Jan 25 37.0
------------------------------- ---------- ------------- ---------- --------- -------------
(1) In addition to these fixed rates, the margin relating to the
interest swapped of the underlying RCF or term loans continues to
apply.
(2) The notional amounts of the USD interest rate swaps linked
to the term loans, amortise bi-annually in line with the
amortisation of the term loans.
During the period ended 31 December 2022 a net gain of GBP0.7m
(2021: GBPnil) relating to interest rate swaps was reclassified to
the Income Statement, to match the crystallisation of the hedged
forecast cash flows which affects the Income Statement.
13 Glossary on Alternative Performance Measures ("APMs")
APM Closest equivalent Definition and Purpose
statutory measure
The Group uses APMs to aid the comparability of information
between reporting periods and Divisions, by adjusting for certain
items which impact upon IFRS measures, to aid the user in understanding
the activity taking place across the Group's businesses. APMs
are used by the Directors and Management for performance analysis,
planning, reporting and incentive purposes. Where relevant,
further information on specific APMs is provided in each section
below.
Income Statement measures
Adjusted gross Gross profit Calculated as gross profit before
profit adjusting items.
The table below shows a reconciliation:
See note 4 "Adjusting items". 2022 2021 2020
GBPm GBPm GBPm
Gross profit 195.5 173.1 112.0
Adjusting items in
cost of sales 2.6 0.1 1.4
------ ------ ------
Adjusted gross profit 198.1 173.2 113.4
------ ------
-------------------- ---------------------------------------------------------------------------------------------
Adjusted gross None Calculated as adjusted gross profit
profit margin divided by revenue.
-------------------- ---------------------------------------------------------------------------------------------
Adjusted Profit before Calculated as profit before tax, before
operating tax net finance expense, and before adjusting
profit items. This is a key management incentive
metric.
Adjusting items include non-cash charges
such as amortisation of intangible
assets that are acquired in a business
combination, and effect of fair valuation
of acquired inventory and property,
plant and equipment. Cash charges
include items such as transaction
costs, earnout, retention and deferred
payments, and significant costs relating
to the integration of acquired businesses.
The table below shows a reconciliation:
See note 4 "Adjusting items". 2022 2021 2020
GBPm GBPm GBPm
-----
Profit before tax 24.7 29.6 (3.3)
Net finance expense 6.8 3.9
Adjusting items in
operating profit 28.5 12.7
----- -----
Adjusted operating
profit 60.0 46.2 9.9
-------------------- ---------------------------------------------------------------------------------------------
Adjusted None Calculated as adjusted operating profit
operating divided by revenue. Progression in
profit margin adjusted operating margin is an indicator
of the Group's operating efficiency.
----------------- -------------------- ---------------------------------------------------------------------------------------------
Adjusted Operating expenses Calculated as operating expenses before
operating adjusting items.
expenses The table below shows a reconciliation: 2022 2021 2020
GBPm GBPm GBPm
Operating expenses 164.0 139.6 115.3
Adjusting items in
operating expenses (25.9) (12.6) (11.8)
------- ------- -------
Adjusted operating
expenses 138.1 127.0 103.5
------- ------- -------
-------------------- ---------------------------------------------------------------------------------------------
Adjusted net None Calculated as finance expense, less
finance finance income and amortisation of
income/(expense) loan fees on borrowings for acquisitions.
The table below shows a reconciliation: 2022 2021
GBPm GBPm
Finance expense (9.9) (4.4)
Finance income 3.1 0.5
Adjusting finance
expense - amortisation
of loan fees on borrowings
for acquisitions 0.8 0.1
------ ------
Adjusted net finance
expense (6.0) (3.8)
------ ------
-------------------- ---------------------------------------------------------------------------------------------
Adjusted profit Profit before Calculated as profit before tax, before
before tax tax adjusting items. This is a key management
incentive metric and is a measure
used within the Group's incentive
plans.
See Condensed Consolidated Income
Statement for reconciliation.
----------------- -------------------- ---------------------------------------------------------------------------------------------
Adjusted profit Profit after Calculated as profit after tax before
after tax tax adjusting items.
See Condensed Consolidated Income
Statement for reconciliation.
Adjusted basic Basic earnings Calculated as adjusted profit after
earnings per per share tax divided by the weighted average
share number of ordinary shares outstanding
during the period. This is a key management
incentive metric and is a measure
used within the Group's incentive
plans.
See note 7 "Earnings per share" for
a reconciliation.
Cash flow measures
Free cash Net cash from Net cash from operating activities
flow operating after proceeds from property, plant
activities and equipment and software, purchase
of property, plant and equipment,
and capitalisation of software and
development costs. This measure reflects
the cash generated in the period that
is available to invest in accordance
with the Group's capital allocation
policy.
See "adjusted operating cash flow"
below for a reconciliation.
-------------------- ---------------------------------------------------------------------------------------------
Adjusted Net cash from Free cash flow before payment of interest,
operating operating tax, restructuring and integration
cash flow activities costs, and transaction costs relating
to acquisition of businesses. This
is a measure of the cash generation
and working capital efficiency of
the Group's operations. Adjusted operating
cash flow as a percentage of adjusted
operating profit is a key management
incentive metric. 2022 2021
GBPm GBPm
-------
Profit for the period 32.9 25.9
Add back:
Taxation and net finance
expense (1.4) 7.6
Adjusting items 28.5 12.7
-------
Adjusted operating
profit 60.0 46.2
Depreciation excluding
effect of fair valuation
of property, plant
and equipment 15.2 12.9
Amortisation of capitalised
software and development
costs 7.4 5.8
Adjusted working capital
movement (1) (19.4) 1.1
Adjusted provision
movement (1) (0.8) (0.8)
Other:
- Fair value losses 0.1 -
on derivative financial
instruments
- Foreign exchange 0.6 -
losses
- Share-based payments
excluding retention
charges and restructuring
costs 6.9 5.9
- Impairment losses
on property, plant
and equipment - 0.2
- Proceeds from sale
of property, plant
and equipment and
software - 0.1
Purchase of property,
plant and equipment (7.1) (10.8)
Capitalisation of
software and development
costs (13.1) (10.9)
------- -------
Adjusted operating
cash flow 49.8 49.7
Interest paid (9.4) (4.5)
Tax paid (7.2) (6.5)
Payments relating
to:
Restructuring and
integration costs (2.0) (1.9)
Earnout and retention
bonuses (1.3) (2.2)
Transaction costs (1.4) (1.5)
------- -------
Free cash flow 28.5 33.1
Proceeds from sale
of property, plant
and equipment and
software - (0.1)
Purchase of property,
plant and equipment 7.1 10.8
Capitalisation of
software and development
costs 13.1 10.9
Net cash from operating
activities 48.7 54.7
------- -------
(1) See "adjusted working capital
movement" and "adjusted provision
movement" below for a reconciliation.
---------------------------------------------------------------------------------------------
Adjusted working None The adjusted working capital movement
capital movement excludes movements in provisions,
and movements relating to adjusting
items. 2022 2021 2020
GBPm GBPm GBPm
Increase in inventories (8.0) (21.9) 11.5
Increase in receivables (5.0) (5.8) 8.3
(Decrease)/increase
in payables (5.6) 27.8 (12.6)
------- ------- -------
(Increase)/decrease
in working capital,
excluding provisions (18.6) 0.1 7.2
Deduct inflows from
adjusting charges:
Effect of fair valuation
of acquired inventory (0.5) (0.1) (0.9)
Add back following
outflows:
Adjustments for integration
and restructuring
costs, transaction
costs relating to
acquisition of businesses
and earnout and retention
bonuses (0.3) 1.1 1.7
Adjusted working
capital movement (19.4) 1.1 8.0
============================= ======= ======= =======
---------------------------------------------------------------------------------------------
Adjusted Increase/(decrease) The adjusted provisions movement excludes
provisions in provisions movements relating to adjusting items. 2022 2021 2020
movement GBPm GBPm GBPm
Increase/(decrease)
in provisions 2.8 (2.7) (2.8)
Adjustments for integration
and restructuring
costs (1.9) 0.7 0.6
Adjustments for grant (1.8) -
payments
Earnout and deferred
payments 0.1 1.2 1.8
------
Adjusted provision
movement (0.8) (0.8) (0.4)
============================= ====== ====== ======
-------------------- ---------------------------------------------------------------------------------------------
Other Measures
Return on None ROCE is calculated as annual adjusted
capital employed operating profit for the last 12 months
("ROCE") divided by the average total assets
(excluding defined benefit pension
asset and deferred tax assets), current
liabilities (excluding current interest-bearing
loans and borrowings), and non-current
lease liabilities.
The average is based on the opening
and closing of the 12-month period. 2022 2021 2020
GBPm GBPm GBPm
Adjusted operating
profit for the last
12 months 60.0 46.2 9.9
Capital employed at
the beginning of the
year 279.6 235.1 270.6
Capital employed at
the end of the year 357.9 279.6
Average capital employed 318.8 257.4 265.2
------ ------ ------
ROCE % 18.8% 18.0% 3.7%
========================== ====== ====== ======
-------------------- ---------------------------------------------------------------------------------------------
Constant None Constant currency variances are derived
currency by calculating the current year amounts
at the applicable prior year foreign
currency exchange rates, excluding
the effects of hedging in both years.
Revenue growth is represented on a
constant currency basis as this best
represents the impact of volume and
pricing on revenue growth.
-------------------- ---------------------------------------------------------------------------------------------
Cash conversion None This is calculated as adjusted operating
cash flow divided by adjusted operating
profit. This is a key management incentive
metric and is a measure used within
the Group's incentive plans.
-------------------- ---------------------------------------------------------------------------------------------
Net debt None See note 11 "Analysis of net debt"
for an explanation of the balances
included in net debt, along with a
breakdown of the amounts.
-------------------- ---------------------------------------------------------------------------------------------
Adjusted EBITDA None Calculated as adjusted operating profit
for the last 12 months before depreciation
of tangible fixed assets and amortisation
of intangibles (other than those already
excluded from adjusted operating profit).
The table below shows a reconciliation: 2022 2021 2020
GBPm GBPm GBPm
Adjusted operating
profit for the last
12 months 60.0 46.2 9.9
Add back depreciation
excluding effect of
fair valuation of
property, plant and
equipment 15.2 12.9 270.6
Add back amortisation
of intangible assets 18.3 13.0
Less amortisation
of acquired intangible
assets (10.9) (7.2) 265.2
------- ------ ------
Adjusted EBITDA 82.6 64.9 3.7%
========================= ======= ====== ======
----------------- -------------------- ---------------------------------------------------------------------------------------------
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