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.
26
September 2024
Videndum plc
2024 Interim Results
Videndum plc ("the Company" or "the Group"),
the international provider of premium branded hardware products and
software solutions to the content creation market, announces its
results for the half year ended 30 June 2024.
|
Results
|
|
|
|
|
H1 2024
|
H2
20232
|
H1
20231
|
|
|
|
|
|
|
Continuing operations¹
|
|
|
|
|
Revenue
|
£153.3m
|
£141.9m
|
£165.0m
|
|
Adjusted operating
profit/(loss)*
|
£11.0m
|
£(2.9)m
|
£16.2m
|
|
Adjusted operating margin*
|
7.2%
|
(2.0)%
|
9.8%
|
|
Adjusted profit/(loss) before
tax*
|
£6.9m
|
£(9.3)m
|
£11.1m
|
|
Adjusted basic earnings/(loss) per
share*
|
5.7p
|
(9.3)p
|
18.7p
|
|
Free cash flow*
|
£15.1m
|
£(20.3)m
|
£(3.5)m
|
|
Net debt*
|
£117.3m
|
£128.5m
|
£216.1m
|
|
Statutory results from continuing and discontinued
operations¹
|
|
|
|
|
|
|
Revenue
|
£154.9m
|
£145.1m
|
£169.9m
|
|
Operating loss
|
£(9.2)m
|
£(20.9)m
|
£(44.3)m
|
|
Operating margin
|
(5.9)%
|
(14.4)%
|
(26.1)%
|
|
Loss before tax
|
£(13.4)m
|
£(29.7)m
|
£(50.0)m
|
|
Loss per share
|
(13.6)p
|
(57.5)p
|
(100.0)p
|
|
|
|
|
|
H1 2024 Financial summary
|
·
|
Videndum's first half revenue was
broadly in line with its expectations and the Group maintained its
focus on tightly controlling costs, capex and working
capital
|
|
·
|
Revenue from continuing operations
7% lower than H1 2023, 8% higher than H2 2023,
reflecting:
|
|
|
·
|
Some post-strike recovery in the cine and scripted TV market², however
the recovery is taking longer than anticipated
|
|
|
·
|
Continued challenging
macroeconomic environment affecting the consumer and independent
content creator ("ICC") segments
|
|
·
|
Adjusted operating profit* of
£11.0 million
|
|
|
·
|
Adjusted operating profit⃰ up
£13.9 million vs H2 2023
|
|
|
·
|
Adjusted operating expenses*
tightly controlled for the last 18 months
despite inflationary pressures (-17% lower in H1 2024 than in H1
2022)
|
|
·
|
£117.3 million net debt at 30 June
2024, reduced from £128.5 million at 31 December 2023
|
|
|
·
|
165% cash conversion*
|
|
|
·
|
H1 2024 leverage of 3.3x due to
depressed EBITDA. The Group renegotiated its committed Revolving
Credit Facility ("RCF") with its lending banks. The facility has
been extended, reduced in quantum, and its lending covenants
improved
|
Current trading and outlook
|
·
|
Cine and scripted TV market shows
continued signs of post-strike improvement with commissioning of
new productions starting to ramp up. However, the recovery is taking longer than
anticipated
|
|
·
|
Macroeconomic environment
affecting the consumer and ICC segments remains challenging,
although there is continued strong demand for new premium Compact
System Cameras
|
|
·
|
Broadcast TV segment second half
performance will benefit, as expected, from the successful delivery
of the Summer 2024 Olympic Games contract and the forthcoming US
Presidential election
|
|
·
|
Despite signs of a pickup in cine
and scripted TV productions, and growth in the premium camera
market, the Group, along with other companies in our sectors, has
yet to see the anticipated improvement in orders. As a result, we
now expect FY 2024 to be below our previous expectations
|
|
·
|
The Company is implementing a
strategic cost-saving programme, projected to deliver at least £10
million in additional permanent savings in FY 2025
|
|
·
|
The Board expects
the cine and scripted TV market to return to
higher levels of demand during 2025, and for our ICC segment to
start to benefit from the increase in premium camera
sales
|
|
·
|
Videndum remains well positioned
in attractive markets with good medium-term prospects
|
Commenting, Stephen Bird, Group Chief Executive,
said:
"Although market conditions in the first half remained
challenging for Videndum, we saw signs of improvement
with some
post-strike recovery in the cine and scripted TV
market. There was continued strong
demand for new premium Compact System Cameras however, the
macroeconomic environment affecting the consumer and ICC segments
remained challenging. Given this backdrop, the Group maintained its
relentless focus on managing costs tightly as well as controlling
capex and working capital. The Company has returned to being cash
generative with a continued reduction in net
debt.
"Despite signs of a pickup in cine and scripted TV
productions, and growth in the premium camera market, the Group,
along with other companies in our sectors, has yet to see the
anticipated improvement in orders. As a result, we now
expect FY 2024 to be below our previous expectations. The Company
is implementing a strategic cost-saving programme which is
projected to deliver at least £10 million in additional
permanent savings in FY 2025.
"The Board expects the Group to benefit from increased
revenue as the cine and scripted TV market returns to a more
normalised level during 2025, and our ICC segment starts to see the
pickup from the attachment of our products to recently sold
cameras. Videndum remains well
positioned in attractive markets with good medium-term
prospects."
Notes
|
1
|
Amimon was held for sale at 30
June 2024 and reported as discontinued operations. H1 2023 has been
re-presented to ensure comparability including reporting the
operation at Syrp (the Media Solutions' motion controls R&D
centre in New Zealand), which was wound down in H2 2023, in
discontinued operations. Results of discontinued operations can be
found in notes 2 and 13 to the condensed financial statements. 2023
also includes Lightstream in discontinued operations, which was
sold on 2 October 2023.
|
|
|
For H2 2023, the Group has
re-classified legal expenses of £0.5 million from other
administrative expenses to adjusting operating expenses*. There is
no impact on the Group's net assets.
|
|
2
|
The Writers' Guild of America
("WGA") was on strike from 2 May to 27 September 2023 and the
Screen Actors Guild and the American Federation of Television and
Radio Artists ("SAG-AFTRA") were on strike from 14 July to 9
November 2023. WGA's contract was ratified on 9 October 2023 and
SAG-AFTRA's contract was ratified on 5 December 2023, ending the
strikes.
|
|
3
|
H1 2024 average exchange rates: £1
= $1.26, £1 = €1.17, €1 = $1.08, £1 = ¥192
|
|
4
|
H1 2023 average exchange rates: £1
= $1.23, £1 = €1.14, €1 = $1.08, £1 = ¥166
|
This announcement contains inside
information. The person 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
from continuing operations ("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 and excluding discontinued operations, 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.
|
For more information please
contact:
|
|
|
Videndum plc
|
Telephone: 020 8332
4602
|
|
Stephen Bird, Group Chief
Executive
Andrea Rigamonti, Group Chief
Financial Officer
|
|
|
|
|
A video webcast and Q&A for
Analysts and Investors will be held today, starting at 08:30am UK
time. The presentation slides are available on our
website.
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 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 ("ICC"), 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, carrying solutions,
backgrounds, audio capture, and noise reduction
equipment.
We employ around 1,600 people
across the world in ten 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
H1 2024 management and
financial overview
As expected, market conditions
remained challenging in the first half of 2024, however we saw some
signs of improvement, with some post-strike recovery in the cine
and scripted TV market (c.30% of Group revenue exposed to cine and
scripted TV market1). The macroeconomic environment
affecting the consumer and ICC segments (together c.40-50% of Group
revenue1) remained challenging, although there was
significantly less destocking than in H1 2023.
Against this backdrop, we
continued to take robust actions. The Group maintained its focus on
managing costs tightly, and controlling capital expenditure and
working capital. Adjusted operating expenses* have remained flat
for the last 18 months, running 17% lower than in H1 2022.
Property, Plant and Equipment ("PP&E") capex has remained at a
low level (aside from expenditure for the Olympics).
The Group renegotiated its
committed RCF with its lending banks during the second quarter of
2024. The facility has been extended by six months to 14 August
2026, the total committed facility has been reduced by £50 million
to £150 million, and its lending covenants improved as follows:
June 2024 (leverage2 of 4.25x and interest
cover3 of 1.5x); September 2024 (interest
cover3 of 2.25x); December 2024 (interest
cover3 of 3.0x); interest cover3 to 3.5x
thereafter and quarterly test dates to continue.
Through this period, we have been
careful to largely protect R&D investment to enable the Group
to continue to develop market-leading products to maximise its
future growth potential.
Income and expense
The numbers below are presented on
a continuing basis (unless otherwise stated).
|
|
Adjusted*
|
Statutory from continuing
and discontinued operations
|
|
|
H1 2024
|
H2 2023
|
H1 2023
|
H1 2024
|
H1 2023
|
|
Revenue
|
£153.3m
|
£141.9m
|
£165.0m
|
£154.9m
|
£169.9m
|
|
Operating profit/(loss)
|
£11.0m
|
£(2.9)m
|
£16.2m
|
£(9.2)m
|
£(44.3)m
|
|
Profit/(loss) before
tax
|
£6.9m
|
£(9.3)m
|
£11.1m
|
£(13.4)m
|
£(50.0)m
|
|
Earnings/(loss) per
share
|
5.7p
|
(9.3)p
|
18.7p
|
(13.6)p
|
(100.0)p
|
The headwinds mentioned above had
slightly more impact than those experienced in H1 2023. This
resulted in Group revenue from continuing operations decreasing by
7% compared to H1 2023.
We estimate that the revenue
impact of the declining consumer and ICC market was c.£7 million,
and c.£11 million from the supressed cine and scripted TV market.
These effects were largely offset by c.£12 million less destocking
than that seen in H1 2023. The remaining c.£6 million decline was
mainly due to adverse FX compared to H1 2023.
While revenue from the cine and
scripted TV market was lower than in H1 2023, it was significantly
up on H2 2023. This followed the conclusion of the writers' and
actors' strikes at the end of 2023 and productions restarting.
Although the consumer and ICC market continued to decline, it was
at a lower rate than that experienced in 2023. As a result, total
revenue in H1 2024 was 8% higher than H2 2023.
Adjusted gross margin* fell
slightly from 41.6% in H1 2023 to 40.7% in H1 2024 due to the lower
revenue. Adjusted operating expenses* decreased by £0.5 million to
£52.3 million (H1 2023: £52.8 million) and have run at this level
for the past 18 months (H2 2023: £52.7 million). This reflects
self-help actions taken to reduce discretionary costs in the
short-term, including the state support scheme La Cassa
Integrazione Guadagni Ordinaria ("CIGO") in Italy, and benefits
from the restructuring projects actioned at the end of 2022 and in
H1 2023. Adjusted operating expenses* were -17% lower than those in
H1 2022 (£63.1 million) but are expected to return in a phased and
controlled manner as trading conditions improve.
Adjusted operating profit*
included a £0.3 million adverse foreign exchange effect after
hedging, compared to H1 2023. The impact on H2 2024 adjusted
operating profit* from a one cent stronger/weaker US Dollar/Euro is
expected to be an increase/decrease of approximately £0.1 million
and £nil million respectively. At current spot rates (24 September:
£1 = $1.34, £1 = €1.20) there is expected to be a £0.9 million
adverse impact on H2 2024 versus H2 2023.
Adjusted net finance expense* of
£4.1 million was £1.0 million lower than in H1 2023. This was
driven by lower borrowings, following the equity raise at the end
of 2023 and despite higher interest rates on borrowings. In H2
2024, an average of c.50% of our borrowings will
be fixed through swaps at an average rate of c.4% (including
margin). These swaps are due to mature in September 2025 ($40.0
million) and January 2025 (£37.0 million). Our floating debt
currently has an average interest rate of c.7% (including margin).
Net finance expense also includes interest on the lease
liabilities, income from the accounting surplus of the defined
benefit pension scheme, amortisation of loan fees, and net currency
translation gains or losses.
Adjusted profit before tax* was
£6.9 million, £4.2 million lower than H1 2023. Adjusted operating
profit* and adjusted profit before tax* were down 32% and 38%
respectively on H1 2023.
Statutory loss before tax from
continuing and discontinued operations of £13.4 million (H1 2023:
£50.0 million loss) includes adjusting items from continuing
operations of £17.7 million (H1 2023: £6.9 million) and a £2.6
million loss from discontinued operations after adjusting items (H1
2023: £54.2 million loss). The adjusting items from continuing
operations primarily relate to the impairment of assets (£15.3
million of the £17.7 million).
The Group's effective tax rate
("ETR") on adjusted profit before tax* was 22% (H1 2023: 21%).
Statutory ETR from continuing and discontinued operations was a 4%
credit on the £13.4 million loss (H1 2023: 7% credit on the £50.0 million loss before tax).
Adjusted basic earnings per share*
was 5.7 pence (H1 2023: 18.7 pence). Statutory basic loss per share
from continuing and discontinued operations was 13.6 pence (H1
2023: 100.0 pence loss per share).
Cash flow
and net
debt
Cash generated from operating
activities was £22.7 million (H1 2023: £11.5 million) and net cash
from operating activities was £19.1 million (H1 2023: £0.5
million).
Free cash flow* was £18.6 million
higher than in H1 2023, reflecting higher cash conversion*, and
lower interest, tax and restructuring costs. Cash conversion* was
165%, and cumulatively across the three years to 30 June 2024 has
been 94%.
|
£m
|
H1 2024
|
H1 2023
|
Variance
|
|
Statutory operating loss from
continuing and discontinued operations
|
(9.2)
|
(44.3)
|
52.1
|
|
Add back discontinued operations statutory operating
loss
|
2.5
|
54.0
|
(51.5)
|
|
Add back adjusting items from continuing
operations
|
17.7
|
6.5
|
(3.7)
|
|
Adjusted operating profit*
|
11.0
|
16.2
|
(5.2)
|
|
Depreciation(1)
|
9.8
|
10.3
|
(0.5)
|
|
Adjusted trade working capital
(inc)/dec*
|
4.4
|
2.6
|
1.8
|
|
Adjusted non-trade working capital
(inc)/dec*
|
(0.7)
|
(6.9)
|
6.2
|
|
Adjusted provisions
inc/(dec)*
|
(0.4)
|
(0.1)
|
(0.3)
|
|
Capital
expenditure(2)
|
(7.4)
|
(7.7)
|
0.3
|
|
Other(3)
|
1.5
|
0.7
|
0.8
|
|
Adjusted operating cash flow*
|
18.2
|
15.1
|
3.1
|
|
Cash conversion*
|
165%
|
93%
|
+72%pts
|
|
Interest and tax paid
|
(3.6)
|
(11.0)
|
7.4
|
|
Earnout and retention
bonuses
|
(1.2)
|
(3.7)
|
2.5
|
|
Restructuring, integration costs
and sale of property
|
1.8
|
(3.3)
|
5.1
|
|
Transaction costs
|
(0.1)
|
(0.6)
|
0.5
|
|
Free cash flow*
|
15.1
|
(3.5)
|
18.6
|
(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 £19.1 million (H1 2023: £0.5 million) comprises £15.1 million
free cash flow from continuing operations* (H1 2023: -£3.5 million)
plus £7.4 million capital expenditure from continuing operations
(H1 2023: £7.7 million) less £2.5 million from sale of PP&E and
software from continuing operations (H1 2023: £0.1 million) plus
net cash from operating activities from discontinued operations of
-£0.9 million (H1 2023: -£3.6 million)
Adjusted trade working capital*
decreased by £4.4 million in H1 2024 (H1 2023: £2.6 million
decrease). Inventory increased by £0.8 million in H1 2024 (H1 2023:
increased by £1.2 million). Trade receivables increased by £5.2
million and trade payables increased by £10.4 million. These
reflected the higher level of trading in H1 2024 compared to H2
2023.
Capital expenditure
included:
|
·
|
£3.0 million of PP&E (£1.7
million excluding the Olympics) compared with £1.9 million in H1
2023. This reflected continued actions to limit non-essential
spend, with PP&E £1.5 million lower, excluding the Olympics,
than in H1 2022 (£3.2 million);
|
|
·
|
£4.2 million capitalisation of
development costs (H1 2023: £5.5 million) and £0.2 million
capitalisation of software (H1 2023: £0.3 million). Gross R&D
was lower than in H1 2023. The percentage of revenue (6.3%) was
flat year-on-year (H1 2023: 6.3%).
|
|
£m
|
H1 2024
|
H1 2023
|
Variance
|
|
Gross R&D
|
9.7
|
10.4
|
(0.7)
|
|
Capitalised
|
(4.2)
|
(5.5)
|
1.3
|
|
Amortisation
|
3.1
|
2.7
|
0.4
|
|
P&L Impact
|
8.6
|
7.6
|
1.0
|
Interest and tax paid decreased by
£7.4 million compared to H1 2023, mainly due to timing of tax
payments and refunds, as well as lower interest costs.
Earnout and retention bonuses
relate to AUDIX, Savage and Quasar. £2.5 million
was received for the sale of a property in the Production Solutions
Division.
|
December 2023 closing net debt* (£m)
|
(128.5)
|
|
Free cash flow from continuing
operations*
|
15.1
|
|
Free cash flow from discontinued
operations
|
(2.3)
|
|
Upfront loan fees, net of
amortisation
|
0.5
|
|
Dividends paid
|
-
|
|
Employee incentive
shares
|
(0.1)
|
|
Acquisitions/disposals
|
-
|
|
Net lease additions
|
(0.8)
|
|
FX
|
(1.2)
|
|
June 2024 closing net debt* (£m)
|
(117.3)
|
Net debt* at 30 June 2024 of
£117.3 million was £11.2 million lower than at 31 December 2023
(£128.5 million). There was a £1.2 million unfavourable impact from
FX, primarily from the translation of our US dollar debt, following
the strengthening of the US dollar against Sterling across H1
2024.
On 28 June 2024, the Group
renegotiated its RCF with its lending banks by extending its
termination to 14 August 2026 and reducing its committed facility
by £50 million to £150 million. This reflects the lower level of
borrowings that the Group is operating with after the equity raise
in December 2023. As part of this renegotiation, the Group also
agreed the improvements to its covenants.
At 30 June 2024,
leverage2 was 3.3x (31 December 2023: 3.3x) and interest
cover3 was 1.9x (31 December 2023: 2.0x).
Liquidity at 30 June 2024 totalled
£63.9 million, comprising £47.2 million
unutilised RCF (total facility of £150 million which matures in
August 2026) and £55.4 million of cash less £38.7 million utilised
overdraft.
ROCE* of 2.8%4 was
lower than the prior year (31 December 2023: 4.5%), which mainly
reflects the lower adjusted operating profit* in H1 2024 compared
to H1 2023.
Material uncertainty
The Board has conducted a thorough
evaluation of the going concern basis of
accounting and has modelled both a base
case and a severe but plausible downside scenario. A breach of the
Group's loan covenants within 12 months from the approval of these
financial statements is not forecast under the base case but is
forecast under the severe but plausible scenario, as well as limited covenant headroom for the remainder of
2024. Consequently, the Board has concluded that while the Group
has a reasonable expectation of its ability to renegotiate the
terms of the RCF if required, take other actions to avoid a breach
of covenants or to obtain a waiver, these financial projections do
indicate the existence of a material uncertainty which may cast
significant doubt about the Group's ability to continue as a going
concern.
The Board implemented mitigating
actions during the first half of 2024 to offset the challenging
trading conditions and has successfully renegotiated the covenants
in the past. The Board continues to employ similar robust measures
which include cost reduction activities, particularly but not
limited to discretionary costs; cash saving measures; and
renegotiating its RCF covenants. As a result of the continuing
challenging trading conditions, the Group has developed a set of
actions to be delivered during the second half of 2024 and in early
2025 that will reduce costs permanently in comparison to those
included in the forecasts. Further detail on the assessment of
going concern can be found within note 1 to the condensed financial
statements.
Adjusting items from continuing operations
Adjusting items from continuing
operations in H1 2024 primarily relate to the impairment of assets,
which reflects the impairment of goodwill allocated to the Media
Solutions Division. Trading conditions have been challenging for
the last two years and, given the diminished visibility regarding
the speed of recovery, there is a resulting impairment of some of
the goodwill accumulated from historic acquisitions.
|
£m
|
H1 2024
|
H1 2023
|
|
Amortisation of intangible
assets that are acquired in a business
combination
|
(1.8)
|
(2.0)
|
|
Acquisition related
charges
|
(0.1)
|
(0.4)
|
|
Integration, restructuring, and
other costs
|
(0.5)
|
(2.3)
|
|
Impairment of assets
|
(15.3)
|
(1.8)
|
|
Finance expense - amortisation of
loan fees on borrowings for acquisitions
|
-
|
(0.4)
|
|
Adjusting items
|
(17.7)
|
(6.9)
|
Discontinued operations
The Group is focusing more tightly
on high-end professional content creation, where it has high market
share, sales channel expertise and more compelling growth
opportunities. Consequently, in 2023 the Board decided to exit
loss-making operations in non-core markets, specifically medical
and gaming, to concentrate R&D investment on the content
creation market. As a result, whilst the Creative Solutions
Division as a whole remains core going forward, Amimon was held for
sale at 30 June 2024 and Lightstream was sold on 2 October 2023.
Both are reported as discontinued operations. In addition, we wound
down Syrp (the Media Solutions' motion controls R&D centre in
New Zealand) in H2 2023, which is also reported within discontinued
operations. H1 2024 financials predominantly relate to Amimon but
do include some final operating expenses for Syrp.
|
£m
|
H1 2024
|
H1 2023
|
|
Revenue
|
1.6
|
4.9
|
|
Adjusted loss before
tax*
|
(1.3)
|
(4.0)
|
|
Adjusting items
|
(1.3)
|
(50.2)
|
|
Statutory loss before
tax
|
(2.6)
|
(54.2)
|
Revenue decreased significantly
due to the sale of Lightstream (revenue in H1 2023 but not in H1
2024) and tough trading conditions for Amimon.
Adjusting items of £1.3 million
(H1 2023: £50.2 million) mainly reflects a £1.2 million impairment
of assets (H1 2023: £46.9 million across Amimon, Lightstream and
Syrp).
Notes
|
1
|
Management estimates of
pre-strikes revenue by market
|
|
2
|
Leverage is calculated as net debt
before arrangement fees and after leases of discontinued
operations, divided by covenant EBITDA for the applicable 12-month
period (being adjusted EBITDA*, before share-based payment charges,
and after interest on employee benefits, interest related net
currency translation gains, and the amortisation of loan
arrangement fees); see Glossary for further detail.
|
|
3
|
Interest cover is calculated as
covenant EBITA for the applicable 12-month period (being adjusted
EBITDA* less depreciation of PP&E) divided by adjusted net
finance expense* (before interest on employee benefits and FX
movements, and the amortisation of arrangement fees); see Glossary
for further detail.
|
|
4
|
Return on capital employed
("ROCE") is calculated as adjusted 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.
|
Divisions
Videndum's purpose is to "enable
our customers to capture and share exceptional content", and this
is what guides us. We focus on the professional end of the content
creation market, operating in defensible niches where our premium
brands have strong share.
There is growing appetite for high
quality content, and we expect demand for, and investment in,
original content to remain strong (e.g. live news, broadcast sport,
reality and scripted TV shows, films, digital visual content for
e-commerce and vlogging, etc).
The Group is well positioned at
the heart of this market and our strategic priorities remain
unchanged. However, we are focusing more tightly on our core
markets, particularly for high-end, professional and B2B content
creation, where we see the greatest growth potential, and exiting
non-core markets. Our long-term strategy is to invest in areas
where we can grow organically, while improving our margins and,
over the longer-term, to grow through M&A.
Media Solutions
The Media Solutions Division
designs, manufactures and distributes premium branded equipment for
photographic and video cameras, and smartphones. It provides
dedicated solutions to professional and amateur photographers and
videographers, independent content creators, vloggers/influencers,
enterprises, governments and professional musicians. These include
camera supports (tripods and heads), smartphone and vlogging
accessories, lighting supports and controls, LED lights, audio
capture and noise reduction equipment, carrying solutions and
backgrounds. Media Solutions represents c.50% of Group
revenue.
|
|
Adjusted*
|
Statutory from continuing
and discontinued operations
|
|
Media Solutions
|
H1 2024
|
H2 2023
|
H1 2023
|
H1 2024
|
H1 2023
|
|
External revenue
|
£73.1m
|
£71.4m
|
£82.3m
|
£73.1m
|
£82.3m
|
|
Operating profit/(loss)
|
£6.4m
|
£0.9m
|
£10.5m
|
£(11.4)m
|
£5.7m
|
|
Operating margin
|
8.8%
|
1.3%
|
12.8%
|
(15.6)%
|
6.9%
|
* For Media Solutions, before adjusting items of £17.3
million (H1 2023: £3.7 million) and operating loss from
discontinued operations of £0.5 million (H1 2023: £1.1 million
loss)
Market conditions continued to be
tough for Media Solutions, with demand in the consumer and ICC
segments (together c.75%) declining, albeit at a lower rate than
that seen in 2023. This was offset by significantly less destocking
in H1 2024 than there was in H1 2023 such that sell-in to retailers
was broadly flat year-on-year. Media Solutions' revenue was 11%
lower than in H1 2023, driven by lower revenue for cine and
scripted TV products following a strong H1 2023 before the strikes
began. Media Solutions' revenue was slightly higher than H2 2023,
with the cine and scripted TV market returning to some extent
post-strikes.
Actions continued to be taken to
minimise discretionary spend and CIGO continued to be applied at
the Feltre factory, which allowed us to flex manufacturing output
to reduce inventory. As a result, adjusted operating expenses* were
6% lower than in H1 2023 and 17% lower than in H1 2022. The
Division also benefitted from the 2023 restructuring
actions.
Adjusted operating margin* was
8.8% (H1 2023: 12.8%) reflecting operating leverage on the revenue
decline and a £0.7 million charge relating to an inventory
provision for JOBY. This was partly mitigated by the lower adjusted
operating expenses*.
Statutory operating loss was £11.4
million (H1 2023: £5.7 million profit) which reflects £17.3 million
of adjusting items from continuing operations (H1 2023: £3.7
million) and a £0.5 million loss from discontinued operations (H1
2023: £1.1 million loss).
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 fluid 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.
|
|
Adjusted*
|
Statutory
|
|
Production Solutions
|
H1 2024
|
H2 2023
|
H1 2023
|
H1 2024
|
H1 2023
|
|
External revenue
|
£46.7m
|
£49.5m
|
£51.7m
|
£46.7m
|
£51.7m
|
|
Operating profit
|
£5.9m
|
£5.3m
|
£7.3m
|
£5.5m
|
£4.6m
|
|
Operating margin
|
12.6%
|
10.7%
|
14.1%
|
11.8%
|
8.9%
|
* For Production Solutions, before adjusting items of £0.4
million (H1 2023: £2.7 million).
Production Solutions' revenue was
10% lower than in H1 2023. Conditions remained challenging both in
the cine and scripted TV market, and for ICCs. In the broadcast
market, robotic sales were up c.50% compared to H1 2023, driven by
the Vinten VEGA Robotics Control System, launched in 2023, which
can also be automated with AI-driven talent tracking. However, this
was offset by slightly lower performance in our broadcast manual
supports and lighting products. Revenue was lower than in H2 2023,
mainly due to the challenges in the ICC market. Anton/Bauer's
Salt-E Dog, the sustainable portable power solution based on sodium
technology, won awards at both the 2024 National Association of
Broadcasters Show in Las Vegas and the Royal Television Society
Awards, however revenue was constricted by the challenging market
conditions.
Costs continued to be controlled
tightly, with adjusted operating expenses* having remained broadly
flat across the last 18 months, and 9% lower than in H1 2022. The
adjusted operating margin* was down to 12.6% (H1 2023:
14.1%).
Statutory operating profit was
£5.5 million (H1 2023: £4.6 million) reflecting £0.4 million of
adjusting items (H1 2023: £2.7 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, enterprises and broadcasters. Products include
wired and wireless video transmission systems, lens control
systems, monitors and camera accessories for the cine, scripted TV
and live production segments. Creative Solutions represents c.20%
of Group revenue.
|
|
Adjusted*
|
Statutory from continuing
and discontinued operations
|
|
Creative Solutions
|
H1 2024
|
H2 2023
|
H1 2023
|
H1 2024
|
H1 2023
|
|
External revenue
|
£33.5m
|
£21.0m
|
£31.0m
|
£35.1m
|
£35.9m
|
|
Operating profit/(loss)
|
£4.8m
|
£(2.9)m
|
£3.7m
|
£2.8m
|
£(49.3)m
|
|
Operating margin
|
14.3%
|
(13.8)%
|
11.9%
|
8.0%
|
(137.3)%
|
* For Creative Solutions, before adjusting items from
continuing operations of £nil million (H1 2023: £0.1 million) and
operating loss from discontinued operations of £2.0 million (H1
2023: £52.9 million loss)
The writers' and actors' strikes
had the largest effect on Creative Solutions in 2023, where the
majority of products are used in cine and scripted TV. This
Division has therefore seen the largest rebound effect, although
the market is still operating at a suppressed level. Live
production revenue has been broadly flat over the last 18 months
despite challenging market conditions. Creative Solutions' revenue
was 8% ahead of H1 2023 and 60% up on H2 2023.
Adjusting operating expenses* were
2% lower than in H1 2023 and 18% lower than in H1 2022. This
reflected the restructuring actions announced at the end of 2022
and limiting discretionary spend.
Adjusted operating margin* was up
to 14.3% (H1 2023: 11.9%) reflecting operating leverage on the
higher revenue.
Statutory operating profit was
£2.8 million (H1 2023: £49.3 million loss), which reflects £nil of
adjusting items from continuing operations (H1 2023: £0.1 million)
and a £2.0 million loss from discontinued operations (H1 2023:
£52.9 million loss).
Corporate costs
Corporate costs include charges
relating to Long Term Incentive Plan ("LTIP") and Restricted Share
Plan ("RSP") used to incentivise and retain employees across the
Group. They also include payroll and bonus costs for the Executive
Directors and head office team, professional fees, property costs,
and travel costs.
|
|
Adjusted*
|
Statutory
|
|
Corporate costs
|
H1 2024
|
H2 2023
|
H1 2023
|
H1 2024
|
H1 2023
|
|
Operating (loss)
|
£(6.1)m
|
£(6.2)m
|
£(5.3)m
|
£(6.1)m
|
£(5.3)m
|
* For corporate costs, before adjusting items of £nil million
(H1 2023: £nil million).
Corporate costs were higher than
those in H1 2023 mainly due to the non-repeat of reversal of
certain LTIP charges in H1 2023. Costs were broadly flat compared
to H2 2023.
Dividend
The Board recognises the
importance of dividends to the Group's shareholders and intends to
resume payment of a progressive and sustainable dividend when
appropriate to do so. Note, the amendments to the RCF preclude the
Board from declaring a dividend until delivery of the 31 March 2025
covenant test.
Responsibility
ESG Strategy
Despite the market challenges
faced in H1 2024, the Group has continued to progress with our ESG
programme which is focused on seven key pillars across 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
Responsible practices: Formalise the integrity of our entire supply chain
Giving back: Positively
impact the communities in which we operate
Environment and climate initiatives, and 2024
priorities
The Group continues to work
towards net zero by 2035 for Scopes 1 and 2, and 2045 for
Scope 3. In 2024, we aim to further develop energy and emissions'
reduction initiatives, integrate sustainability into our product
lifecycles and refine data collection methods. Data collection will
focus on Categories 1 (Purchased Goods and Services), 4 (Upstream
transportation and distribution) and 9 (Downstream Transportation
and Distribution). We plan to consolidate
the Group's standalone 2024 ESG and TCFD reports to enhance
accessibility for stakeholders. The combined sustainability report
will be available in H1 2025.
Climate change
We recognise our duty to work
towards mitigating climate change. We conduct annual climate
scenario analyses for our main sites, key suppliers and supply
routes, modelling the effects of climate change across three
different warming scenarios. To discuss the mitigation measures for
each risk, various stakeholders within the business participated in
the Group's Climate Transition Risk Management Workshop in July
2024. Our Head of Group Risk Assurance will annually review
climate-risk exposure against business risk level
tolerances.
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
2023 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
|
|
·
|
Treasury
|
|
·
|
Business continuity including
cyber security
|
|
·
|
Climate change
|
|
·
|
Restructuring and
disposals
|
|
·
|
Acquisitions
|
At half-year, the Group continued
to report that a material uncertainty over going concern still
existed, therefore this contributes to certain risks remaining
elevated.
The "Treasury" risk remains
high as it encompasses risks relating to
going concern, funding, cash management and foreign exchange. While
borrowings have reduced significantly since June 2023 because of
the equity raise, we expect interest charges to remain high
throughout 2024, and in 2025 due to fixed rate borrowing coming to
an end. In addition, the Group needs to
comply with RCF lending covenants at quarterly testing periods;
failure to meet those could result in the lending syndicate
requesting immediate repayment of the Group's RCF drawings, which
would impact the Group's ability to continue as a going concern.
The Group is closely monitoring headroom against these covenants
and has identified further cost reduction opportunities.
The "Treasury" risk is also
heightened as a result of increased pressure on cash management, in
particular the additional challenges in managing inventory levels
due to demand being less than planned. In addition, the Trustee of
the UK Defined Benefit scheme may seek from the Group an increased
payment into the defined benefit scheme due to concerns about long
term funding in the context of going concern material
uncertainty.
The risk relating to "Demand for
Videndum's products" is stable overall. The Group's overall
performance has improved since the second half of 2023, due to some
post-strike recovery in the cine and scripted TV market. In
addition, the Group's H2 2024 performance will benefit from the
Olympics and the US Presidential election. Although the
macroeconomic environment remains challenging, we believe the
long-term fundamentals for the content creation industry remain
strong.
The risk related to "Dependence on
Key Suppliers" is high due to Videndum's reliance on a small number
of suppliers available to produce certain critical components such
as wireless modules, semi-conductors and bespoke glass panels for
use in monitors. It is currently exacerbated by geopolitical
issues, including trade disputes with China. We continue to seek
alternative providers and where necessary, purchase buffer stock to
mitigate the risk of supply chain disruption.
Overall "Cost pressure" has eased
since the end of 2022, in particular the cost of energy and
commodities, and the affordability of critical
components.
"People" risk is higher due to the
increased pressure linked to restructuring initiatives and measures
to contain costs given pressures on the business, including short
time working. This may affect morale and lead to greater employee
turnover. Headcount freezes are placing higher demands on people,
leading to increased dissatisfaction, as well as no bonuses,
significantly reduced variable incentive payments, and salary
increase freezes. During the first half of 2024, some Divisions
experienced greater attrition rates for certain key roles, with
some employees in key engineering positions leaving
Videndum.
"Cyber" 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.
The risk relating to
"restructuring and disposals" continues to be high given the
planned disposal of the Amimon medical business and the need to
continue to control costs.
The likelihood of any acquisition
is very low in the short term, so the risk is correspondingly low.
This risk is offset by the possibility that central bank rates will
start to fall.
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
These financial statements have
been prepared on a going concern basis. The Board has considered
the future cash flows over a period of 12 months from the approval
date of these financial statements and believes that available
liquidity will be sufficient to enable the Group to meet its
liabilities as they fall due.
The Board has conducted a thorough
evaluation of the going concern basis of
accounting and has modelled both a base
case and a severe but plausible downside scenario. A breach of the
Group's loan covenants within 12 months from the approval of these
financial statements is not forecast under the base case but is
forecast under the severe but plausible scenario.
Consequently, the Board has
concluded that while the Group has a reasonable expectation of its
ability to renegotiate the terms of the RCF, take other actions to
avoid a breach of covenants or to obtain a waiver, these
projections do indicate the existence of a material uncertainty
which may cast significant doubt about the Group's ability to
continue as a going concern.
Full detail can be found within note 1 to the condensed
financial statements.
For and on behalf of the
Board
|
Stephen Bird
|
Andrea Rigamonti
|
|
Group Chief Executive
|
Group Chief Financial
Officer
|
Statement of Directors' responsibilities
The Directors confirm that these
condensed consolidated financial statements ("Financial
Statements") have been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and that the
interim management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
|
·
|
an indication of important events
that have occurred during the first six months and their impact on
the Financial Statements, and a description of the principal risks
and uncertainties for the remaining six months of the financial
year; and
|
|
·
|
material related-party
transactions in the first six months and any material changes in
the related-party transactions described in the last annual
report.
|
The maintenance and integrity of
the Videndum plc website is the responsibility of the Directors;
the work carried out by the authors does not involve consideration
of these matters and, accordingly, the auditors accept no
responsibility for any changes that might have occurred to the
Financial Statements since they were initially presented on the
website.
The Directors of Videndum plc are
listed in the Videndum plc annual report for 31 December 2023, with
the exception of the following changes in the period: Ian McHoul,
Tete Soto and Erika Schraner ceased to be Directors at the
conclusion of the Company's Annual General Meeting on 19th May
2024. Polly Williams was appointed to the board as Non-executive,
Chair of the Audit Committee and a member of the Remuneration and
Nominations Committees on 1 July 2024. Stephen Harris was
appointed to the Board in November 2023 but took the helm of
Chairman of the Board on 1 May 2024. A list of current Directors is
maintained on the Videndum plc website:
www.videndum.com.
By order of the board
Independent review report to
Videndum plc
Report on the condensed
consolidated interim financial statements
Our conclusion
We have reviewed Videndum plc's
condensed consolidated interim financial statements (the "interim
financial statements") in the 2024 Interim Results of Videndum plc
for the 6 month period ended 30 June 2024 (the
"period").
Based on our review, nothing has
come to our attention that causes us to believe that the interim
financial statements are not prepared, in all material respects, in
accordance with UK adopted International Accounting Standard 34,
'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
The interim financial statements
comprise:
|
·
|
the Condensed Consolidated Balance
Sheet as at 30 June 2024;
|
|
·
|
the Condensed Consolidated
Statement of Profit or Loss and Condensed Consolidated Statement of
Comprehensive Income for the period then ended;
|
|
·
|
the Condensed Consolidated
Statement of Cash Flows for the period then ended;
|
|
·
|
the Consolidated Statement of
Changes in Equity for the period then ended; and
|
|
·
|
the explanatory notes to the
interim financial statements.
|
The interim financial statements
included in the 2024 Interim Results of Videndum plc have been
prepared in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
Basis for conclusion
We conducted our review in
accordance with International Standard on Review Engagements (UK)
2410, 'Review of Interim Financial Information Performed by the
Independent Auditor of the Entity' issued by the Financial
Reporting Council for use in the United Kingdom. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review
procedures.
A review is substantially less in
scope than an audit conducted in accordance with International
Standards on Auditing (UK) and, consequently, does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
We have read the other information
contained in the 2024 Interim Results and considered whether it
contains any apparent misstatements or material inconsistencies
with the information in the interim financial
statements.
Material uncertainty related to
going concern
In forming our conclusion on the
interim financial statements, which is not modified, we have
considered the adequacy of the disclosure made in note 1 to the
interim financial statements concerning the group's ability to
continue as a going concern.
Note 1 to the interim financial
statements highlights the challenging trading conditions, in
particular the post-strike recovery in the cine and scripted TV
market that is taking longer than anticipated, and the challenging
macroeconomic environment affecting consumers and independent
content creators.
In assessing going concern, the
board has considered the forecast of cash flows over a period of 12
months from the approval date of the interim financial statements,
in order to assess both the ongoing liquidity of the group and its
ability to meet its lending covenants. The severe but
plausible downside scenario reflects the sensitivities in terms of
timeline and pace of recovery of the group's performance from the
strikes and worse than expected trading conditions. The financial
projections under the severe but plausible scenario indicate that a
breach of the Group's loan covenants is forecast towards the end of
the going concern period, i.e. within 12 months from the approval
of these interim financial statements, and there is limited
covenant headroom for the remainder of 2024 should the current
trading levels, which are close to the severe but plausible
downside scenario, continue.
These conditions, along with the
other matters explained in note 1 to the interim financial
statements, indicate the existence of a material uncertainty which
may cast significant doubt about the group's ability to continue as
a going concern. The interim financial statements do not include
the adjustments that would result if the group were unable to
continue as a going concern.
Based on our review procedures,
which are less extensive than those performed in an audit as
described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors
have inappropriately applied the going concern basis of accounting
in the preparation of the interim financial statements.
Responsibilities for the interim
financial statements and the review
Our responsibilities and those of
the directors
The 2024 Interim Results,
including the interim financial statements, is the responsibility
of, and has been approved by the directors. The directors are
responsible for preparing the 2024 Interim Results in accordance
with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority. In preparing the
2024 Interim Results, including the interim financial statements,
the directors are responsible for assessing the group's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
group or to cease operations, or have no realistic alternative but
to do so.
Our responsibility is to express a
conclusion on the interim financial statements in the 2024 Interim
Results based on our review. Our conclusion is based on procedures
that are less extensive than audit procedures, as described in the
Basis for conclusion paragraph of this report. This report,
including the conclusion, has been prepared for and only for the
company for the purpose of complying with the Disclosure Guidance
and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority and for no other purpose. We do not, in giving
this conclusion, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior
consent in writing.
PricewaterhouseCoopers
LLP
Chartered Accountants
London
25 September 2024
Condensed Consolidated Statement of Profit or
Loss
For
the half year ended 30 June 2024
|
|
|
Half year to 30 June
2024
|
Half
year to 30 June 2023(1)
|
Year to
31 December 2023(2)
|
|
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
Notes
|
£m
|
£m
|
£m
|
|
Continuing operations
|
|
|
|
|
|
Revenue
|
2
|
153.3
|
165.0
|
306.9
|
|
Cost of sales
Other Income
|
|
(91.0)
|
(96.9)
|
(193.0)
|
|
Other income
|
|
-
|
0.4
|
0.7
|
|
Gross profit
|
|
62.3
|
68.5
|
114.6
|
|
Other income
|
|
0.9
|
-
|
-
|
|
Operating expenses
|
3
|
(69.9)
|
(58.8)
|
(119.3)
|
|
Operating (loss)/profit
|
|
(6.7)
|
9.7
|
(4.7)
|
|
Comprising
|
|
|
|
|
|
- Adjusted operating profit
|
|
11.0
|
16.2
|
13.3
|
|
- Adjusting items in operating (loss)/profit
|
4
|
(17.7)
|
(6.5)
|
(18.0)
|
|
|
|
|
|
|
|
Finance income
|
|
1.1
|
2.7
|
2.4
|
|
Finance expense
|
|
(5.2)
|
(8.2)
|
(16.5)
|
|
Net finance expense
|
5
|
(4.1)
|
(5.5)
|
(14.1)
|
|
(Loss)/profit before tax
|
|
(10.8)
|
4.2
|
(18.8)
|
|
Comprising
|
|
|
|
|
|
- Adjusted profit before tax
|
|
6.9
|
11.1
|
1.8
|
|
- Adjusting items in (loss)/profit before tax
|
4
|
(17.7)
|
(6.9)
|
(20.6)
|
|
Taxation
|
6
|
0.6
|
(0.7)
|
6.7
|
|
(Loss)/profit for the period from continuing
operations
|
(10.2)
|
3.5
|
(12.1)
|
|
Loss for the period from discontinued
operations
|
14
|
(2.6)
|
(50.0)
|
(66.0)
|
|
|
|
|
|
|
Loss for the period attributable to owners of the
parent
|
(12.8)
|
(46.5)
|
(78.1)
|
|
(1) Half year to 30 June 2023 has been re-presented to present
Syrp Limited ("Syrp"), which is part of the Media Solutions
Division, as a discontinued operation separately from continuing
operations. On 31 December 2023 the Syrp business based in New
Zealand was closed. See note 14 "Discontinued operations and
non-current assets classified as held for sale".
(2) See note 3 "Operating expenses" for details of change to
adjusting items in the comparative amounts.
|
|
|
Earnings per share from continuing
operations
|
|
|
Basic earnings per
share
|
7
|
(10.8)p
|
7.5p
|
(24.4)p
|
|
Diluted earnings per
share
|
7
|
(10.8)p
|
7.4p
|
(24.4)p
|
|
|
|
|
|
|
|
Earnings per share from total operations
|
|
|
Basic earnings per
share
|
7
|
(13.6)p
|
(100.0)p
|
(157.5)p
|
|
Diluted earnings per
share
|
7
|
(13.6)p
|
(100.0)p
|
(157.5)p
|
|
|
|
|
|
|
|
Average exchange rates
|
|
|
|
|
|
Euro
|
|
1.17
|
1.14
|
1.15
|
|
US$
|
|
1.26
|
1.23
|
1.24
|
|
|
|
|
|
|
1
Accounting policies
Reporting entity
Videndum plc (the "Company") 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
interim financial statements ("Financial Statements") as at and for
the half year ended 30 June 2024 comprise the Company and its
subsidiaries (together referred to as the "Group").
These Financial Statements do not
comprise statutory accounts within the meaning of section 434 of
the Companies Act 2006. Statutory accounts for the year ended 31
December 2023 were approved by the board of Directors on 22 April
2024 and delivered to the Registrar of Companies. The report of the
auditors on those accounts was unqualified, did not contain an
emphasis of matter paragraph and did not contain any statement
under section 498 of the Companies Act 2006.
These Financial Statements have
been reviewed, not audited and were approved by the Board of
Directors on 25 September 2024.
Basis of preparation and statement of
compliance
The half year Financial Statements
covers the six month period ended 30 June 2024 and has been
prepared in accordance with in accordance with the UK-adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority. This Financial
Statements comprises the unaudited financial information for the
half years ended 30 June 2024 and 2023. The half year financial
information has been prepared applying consistent accounting
policies to those applied by the Group for the year ended 31
December 2023. The application of the accounting policies is
expected to be applicable for the year ending 31 December 2024,
which will be prepared in accordance with United Kingdom adopted
International Financial Reporting Standards.
The preparation of Financial
Statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and
expense. Actual results may differ from these
estimates.
In preparing these Financial
Statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
audited consolidated financial statements as at and for the year
ended 31 December 2023.
Other income has been disclosed
below gross profit for the half year ended 30 June 2024 to ensure a
more appropriate presentation. The comparatives have not been
restated.
Goodwill
The goodwill recognised by the
Group has all arisen as a result of acquisitions and is stated at
cost less any accumulated impairment losses. Goodwill is allocated
on acquisition to cash-generating unit ("CGU"), or groups of CGUs,
which are anticipated to benefit from the combination. The CGUs are
assessed to be the three segments of the Group. Goodwill is not
subject to amortisation but is tested for impairment annually or if
there is an indicator triggering the impairment assessment.
Impairment is determined by assessing the recoverable amount of the
CGU to which the goodwill is allocated. This estimate of
recoverable amount is determined at each assessment date. The
estimate of recoverable amount requires significant assumptions to
be made and is based on a number of factors such as the near-term
business outlook for the segment, including both its operating
profit and operating cash flow performance. Where the recoverable
amount of the CGU is less than the carrying amount, an impairment
loss is recognised in the statement of profit or loss. All
acquisitions that have occurred since 1 January 2010 are accounted
for by applying the acquisition method.
Goodwill on these acquisitions
represents the excess of the fair value of the acquisition
consideration over the fair value of the identifiable net assets
acquired, all measured at the acquisition date. Subsequent
adjustments to the fair values of net assets acquired can be made
within 12 months of the acquisition date where original fair values
were determined provisionally. These adjustments are accounted for
from the date of acquisition.
Critical estimates:
- Impairment of discontinued
operations
Non-current assets held of sale
are measured at the lower of carrying amount and fair value less
costs to sell. There was estimation and assumptions applied by
management in determining the recoverable amount of these
assets.
- Inventory
Provisions are required to write
down slow-moving, excess and obsolete inventory to its net
realisable value. Management assessed the level of inventory
provisioning by category and judgements and estimates were made in
determining if a provision was required and at what level. The key
estimates relate to supply chains and their lead times, future
selling price, anticipated future sales of products over particular
time periods, the susceptibility of the underlying product to
obsolescence and current year trading performance. The anticipated
level of future sales is determined primarily based on actual sales
over a specified historic reference period, which has been enhanced
to a period of between six and 24 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 and life expectancy. All assumptions are
reviewed at each reporting date.
- 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 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. The assumptions used in the
measurement of the deferred tax assets are consistent with those as
disclosed in Note 8 "Intangible assets" in relation to the
impairment tests of CGUs containing goodwill.
- Impairment of goodwill
The impairment of goodwill
involves making assumptions. The most critical assumptions include
determination of the discount rates and terminal growth rates. All
assumptions are reviewed at each reporting date. Further details
about the assumptions used and sensitivities are set out in note 8
"Intangible assets".
Judgements:
- Development
costs
The Group capitalises development
costs which meet the criteria under IAS 38 "Intangible Assets"
within 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.
- Going concern assessment
There were material judgements
made by the Board to determine if the Group is a going concern and
the material uncertainty surrounding it. These judgements are
disclosed under "going concern" in note 1 "Accounting policies".
The key judgements surrounding the material uncertainty relate to
the length of time it takes to recover from the strikes and the
recovery from the broader macroeconomic challenges faced by the
Group.
- Asset held for sale and discontinued
operations
The critical judgement is in
relation to determining if the assets held for sale meet the
criteria to be classified as a discontinued operation under IFRS 5
"Non-current assets held for sale and discontinued operations",
particularly if they represent either a separate major line of
business or a geographical area of operations. Management has
deemed that these requirements have been met. See note 14
"Discontinued operations and non-current assets classified as held
for sale".
- Alternative performance measures
("APMs")
In reporting financial
information, the Group presents APMs which are not defined or
specified under the requirements of 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 15 "Glossary of Alternative Performance
Measures ("APMs")" 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 an IFRS measure
where relevant.
- 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. Details in relation to
this judgement are set out in Note 6 "Taxation".
Impact of adoption of new accounting
standards
In the current period, the Group
has applied a number of amendments to IFRS Accounting Standards
issued by the International Accounting Standards Board ("IASB")
that are mandatorily effective for an accounting period that begins
on or after 1 January 2024. Their adoption has not had any material
impact on the disclosures or on the amounts in these Group's
Financial Statements.
|
·
|
Amendments to IAS 1:
Classification of Liabilities as Current or Non-current and
Non-current liabilities with covenants;
|
|
·
|
Amendments to IAS 7 and IFRS 7:
Supplier Finance Arrangements; and
|
|
·
|
Amendments to IFRS 16: Lease
liability in sale and leaseback
|
New standards and interpretations not yet
adopted
Amended standards and
interpretations not yet effective are not expected to have a
significant impact on the Group's Financial Statements. At the date
of authorisation of these Financial Statements, the Group has not
applied any new or revised IFRS Accounting Standards that have been
issued but are not yet effective. The standard applicable to the
Group is shown below:
|
·
|
Amendments to IAS 21: Lack of
Exchangeability (effective 1 January 2025)
|
|
·
|
IFRS 18: Presentation and
disclosure in financial statements' (effective 1 January
2027)
|
|
·
|
IFRS 19: Subsidiaries without
Public Accountability: Disclosures (effective 1 January
2027)
|
Going concern
These Financial Statements have
been prepared on a going concern basis. The Board has considered
the future cash flow forecasts over a period of 12 months from the
approval date of these Financial Statements and believes that
available liquidity will be sufficient to enable the Group to meet
its liabilities as they fall due.
In the first half of 2024, the
Group continued to be impacted by:
|
·
|
The post-strike recovery in the
cine and scripted TV market taking longer than
anticipated.
|
|
·
|
The challenging macroeconomic
environment affecting consumers and independent content
creators.
|
The Board has conducted a thorough
evaluation of the going concern assumption and has modelled both a
base case and a severe but plausible downside scenario that
reflects the above factors.
Background and context
2023 was an exceptionally
challenging year for the Group, suffering from the prolonged
adverse impacts of three major headwinds. These headwinds were (1)
the weakened macroeconomic environment, (2) destocking of inventory
by retailer customers and distribution partners, and (3) the US
Writers' and Actors' strikes (together "the strikes").
Whilst the strikes ended by
December 2023, during the first half of 2024 the Group continued to
be impacted by (1) the post-strike recovery in the cine and
scripted TV market taking longer than anticipated and (2) the
continued challenging macroeconomic environment affecting consumers
and independent content creators.
The challenges in the cine and
scripted TV market during the period were compounded by the threats
of additional strikes, albeit unlikely to materialise, from the two
remaining set of US unions which had to agree new contracts with
the Alliance of Motion Picture and Television Producers ("AMPTP")
by the end of July. These were, namely the International Alliance
of Theatrical Stage Employees ("IATSE") union and the Teamster and
Hollywood Basic Crafts unions. Both sets of unions had ratified
contracts by the beginning of August, bringing a close to remaining
concern in this market of new potential strike actions. However,
the threat of the strikes had resulted in many US productions being
put on hold until the contracts were ratified.
Against this challenging backdrop,
the Group took significant mitigating actions, including agreeing
covenant amendments with its lending banks, and continued cost
reduction and cash conservation plans.
Borrowing facilities and financial position at 30 June
2024
The Group has a committed
Multicurrency Revolving Credit Facility ("RCF") with a syndicate of
five banks (see note 10 "Analysis of net debt") who have provided
strong support. This was evidenced during 2023 and in the first
half of 2024, as the Group continued to navigate through the
current set of adverse headwinds.
On 28 June 2024, the Group
renegotiated its RCF with its lending banks. It extended the
termination date to 14 August 2026 and reduced its committed
facility by £50 million to £150 million, reflecting the lower level
of borrowings that the Group is operating with after the equity
raise in December 2023.
As part of this renegotiation, the
Group also agreed with its lending banks amendments to its
covenants as follows:
- June
2024 (leverage (net debt: EBITDA) < 4.25x and interest cover
(EBITA:net interest) > 1.5x),
-
September 2024 (interest cover > 2.25x),
- December
2024 (interest cover > 3.0x),
- interest
cover > 3.5x thereafter, and quarterly test dates to
continue.
All other covenants remain
unchanged. These amendments to the RCF preclude the Board from
declaring a dividend and restrict factoring to £15 million until
delivery of the 31 March 2025 covenant test.
At 30 June 2024, liquidity (cash
headroom) was £63.9 million (31 December 2023: £105.3 million; 30
June 2023: £62.9 million), comprising £47.2 million unutilised RCF
and £55.4 million of cash with £38.7 million utilised
overdraft.
At 30 June 2024, covenant ratios
were 3.3x for net debt: EBITDA and 1.9x for EBITA:net interest (31
December 2023: 3.3x and 2.0x; 30 June 2023: 2.9x and 5.9x
respectively), See Note 15 "Glossary of Alternative Performance
Measures ("APMs")" for definitions and
computations.
Base case
The Board is continuing to monitor
the Group's ability to meet its lending covenants. As part of the
Board's consideration of the appropriateness of adopting the going
concern basis of accounting in preparing the Financial Statements,
a range of scenarios have been modelled over the 12 month period
following their signing of the Financial Statements. For this, the
Board has considered base case projections and a plausible downside
scenario.
The base case follows the
Board-approved forecast for 2024 and forecast assumptions for 2025.
These acknowledge the challenges and opportunities being faced by
the Group and assume a recovery in the cine and scripted TV segment
during the second half of 2024. They also assume that the
ICC/consumer segment will continue to deteriorate, albeit at a
lower rate than in 2023.
The most material judgements for
the forecast relate to how long it will take for the Group's
financial performance to recover from the strikes and how much
worse the macroeconomic environment might be in 2024 and 2025 vs
2023. The judgements and sensitivities are expanded on in further
detail below. The base case does not forecast a breach of
covenants.
The lowest point of liquidity in
the period to September 2025 is expected to be £55 million at
October 2024, with liquidity steadily improving
thereafter.
Severe but plausible downside assessment
In acknowledging the challenges
faced in H1 2024, the Board has also modelled a severe but
plausible downside scenario.
In this scenario, the Board has
considered:
|
·
|
A lower-than-expected recovery in
the cine and scripted TV market (to around 70% of pre-strike levels
against 75% in the base case);
|
|
·
|
The financial impact of worse than
expected trading conditions for the Group's consumer and ICC
products with the market remaining at -15% compared to the same
period last year for the rest of 2024 and improving at a slower
pace against the base case; and
|
|
·
|
Significantly reduced market share
gains.
|
In the severe but plausible
downside model these assumptions translate to an overall revenue
increase of 4% for the going concern period against an expected
increase of 17% modelled in the base case scenario.
No additional mitigation beyond
the self-help actions (i.e., cost reduction activities,
particularly for discretionary costs; and cash-saving measures) are
considered in this scenario.
The material judgements considered
are:
|
·
|
Estimating the recovery from the
strikes, both in terms of the length of the recovery and the
quantum thereof, which is at a slower pace than the base
case;
|
|
·
|
Trading conditions, in particular
the impact of the macroeconomic environment, being worse than
expected in the base case (and ability to enter new markets or gain
market share); and
|
|
·
|
Continuing self-help actions that
would partly offset the effects of the above.
|
Considering the above assumptions
and judgements, the severe but plausible scenario foresees a
covenant breach towards the end of the going concern period. As
would be the case in any covenant breach, the banking syndicate
could withdraw their funding to the Group.
The Board, in light of its
experience, past practice and performance, and historical evidence
and current trading, considers that (a) it remains challenging to
determine the length of time it will take to recover from the
strikes, and (b) there is limited forecasting visibility
supportable by externally sourced market evidence.
The Board also note that current
trading levels are close to the severe but plausible downside and
as a result, whilst no breach is forecasted for the third and
fourth quarters of 2024, there is limited covenant headroom should
these trading levels continue. Nevertheless, the Board is
proactively managing the options available to the Group to mitigate
the risk related to a covenant breach and deliver measures as set
out in the "Mitigation plans" below.
Material uncertainty
As a result of the financial
projections under the severe but plausible scenario, a breach of
the Group's loan covenant is forecasted within 12 months from the
approval of these Financial Statements, as well as limited covenant
headroom for the remainder of 2024.
Consequently, the Board has
concluded that while the Group has a reasonable expectation of its
ability to renegotiate the terms of the RCF if required, take other
actions to avoid a breach of covenants or to obtain a waiver, these
financial projections do indicate the existence of a material
uncertainty which may cast significant doubt about the Group's
ability to continue as a going concern. The Financial
Statements do not include the adjustments that would result if the
Group were unable to continue as a going concern.
Mitigation plans
The Board implemented mitigating
actions during the first half of 2024 to offset the challenging
trading conditions and successfully renegotiated the covenants in
the past. The Board continues to employ similar robust measures
which include cost reduction activities, particularly but not
limited to discretionary costs; cash saving measures; and
renegotiating its RCF covenants.
As a result of the continuing
challenging trading conditions, the Group has developed an
additional set of actions to be delivered during the second half of
2024 and in early 2025. These will significantly reduce fixed costs
in comparison to those included in the forecasts set out above.
Notwithstanding the material uncertainty, the Board has, on balance
of the available evidence and modelled scenarios, concluded that
there is a reasonable prospect that improvements in the Group's
performance, along with mitigating actions, will be achieved and it
is appropriate to adopt the going concern basis of accounting in
preparing the 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. The
Lightstream and Amimon businesses, part of the Creative Solutions
Division and the Syrp business, part of the Media Solutions
Division, have been classified as discontinued operations. Their
performance in this period and comparative periods are therefore
part of discontinued operations as presented in note 14
"Discontinued operations and non-current assets classified as held
for sale" and are excluded from segmental performances
below.
8
Intangible assets
Intangible assets comprise of
goodwill, acquired intangibles, software and capitalised
development costs.
Impairment tests for CGUs or groups of CGUs containing
goodwill
In accordance with the
requirements of IAS 36 "Impairment of Assets", goodwill is
allocated to the CGUs, assessed to be the three segments of the
Group, which are expected to benefit from the acquisition and are
identified by the way goodwill is monitored for impairment. The
Group's total consolidated goodwill of £80.1 million at 30 June
2024 (31 December 2023: £94.8 million) is allocated to: Media
Solutions: £37.9 million (31 December 2023: £52.7 million);
Production Solutions: £31.2 million (31 December 2023: £31.1
million); and Creative Solutions: £11.0 million (31 December 2023:
£11.0 million).
Goodwill allocated to each CGU is
assessed for impairment annually and if there is a specific
indicator of impairment. At the half year, trading levels indicated
an impairment trigger event. As a result, an impairment test was
performed to assess the recoverable amount compared to each CGUs
carrying value. The recoverable value of the CGU has been assessed
with reference to the higher of fair value less costs of disposal
and the value in use (VIU) methodology which is then compared to
the carrying value of the net assets within the CGU. The VIU was
performed over a projected period of five years together with a
terminal value. This reflects the projected cash flows of each CGU
based on the actual operating results, the most recent Board
approved budget, the strategy, and management
projections.
The key assumptions on which the
value in use calculations are based relate to (i) business
performance over the next five years, (ii) terminal growth rates
beyond 2029; and (iii) discount rates applied.
(i) Business performance over the
next five years - Forecast sales growth rates are based on past
experience and take into account current and future market
conditions and opportunities, and strategic decisions made in
respect of each CGU. Operating profits are forecast based on
historical experience of operating margins adjusted for the impact
of changes in product costs, cost-saving initiatives already
implemented, approved or committed to at the balance sheet date and
any new product launches. Cash conversion is the ratio of operating
cash flow to operating profit. Management forecasts the cash
conversion rate based on historical experience.
(ii) Terminal growth rates beyond
2029 - These are based on management's assessment of the outlook
for overall market growth for all CGUs.
(iii) Discount rates applied - The
pre-tax discount rates were measured based on the interest rate of
30-year government bonds issued in the relevant market, adjusted
for a risk premium to reflect both the increased risk of investing
in equities generally and the systematic risk of the CGU. Growth
rates for 2028 and 2029 were assumed to be 4.0% and 2.0% for Media
Solutions, 8.0% and (1.0%) for Production Solutions and 4.0% and
2.0% for Creative Solutions respectively. The growth rates used for
the impairment test as at 31 December 2023 for the 2027 and 2028
years were 4.0% and 2.0% for Media Solutions, 1.0% and 5.0% for
Production Solutions and 8.0% and 4.0% for Creative Solutions
respectively. Growth rates for the period beyond 2029 were assumed
to be 2.0% for all CGUs. The pre-tax discount rates applied to
discount the pre-tax cash flows were 15.0% (2023: 15.0%) for Media
Solutions; 14.0% (2023: 14.0%) for Production Solutions; and 16.0%
(2023: 16.0%) for Creative Solutions.
Outcome of the impairment review
Our 30 June 2024 impairment
assessment concluded that there is headroom in the Production
Solutions and Creative Solutions CGUs, consistent with 31 December
2023. The carrying value of the Media Solutions CGU exceeded its
value in use by £14.9 million (2023: £nil). An impairment charge
equivalent to this amount has been recognised in the condensed
consolidated statement of profit or loss.
Other sensitivities
No reasonable change to estimates
results in an impairment for Production Solutions or Creative
Solutions.
The table below shows the
sensitivity of the £14.9m impairment recognised to reasonable
possible changes in key assumptions in relation to Media
Solutions.
|
|
Scenario 1
(+/-20bps)
|
Scenario 2
(+/-50bps)
|
|
Discount rate
|
£2.8m/(£2.9m)
|
£6.7m/(£7.4m)
|
|
Terminal growth rate
|
(£2.3m)/£2.2m
|
(£5.8m)/£5.3m
|
9
Employee benefit asset
The Group has employee benefit
schemes in the UK, Italy, Germany, Japan and France. In the UK it
is a defined benefit scheme which was closed to future accruals
with effect from 31 July 2010.
The UK defined benefit scheme is
in an actuarial surplus position of £4.2 million at 30 June 2024
(30 June 2023: £4.7 million; 31 December 2023: £4.2 million)
measured on an IAS 19 "Employee Benefits" basis). 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.
10 Analysis of net debt
The table below analyses the
Group's components of net debt and their movements in the
period:
|
|
Interest
bearing loans and borrowings (1)
|
Leases
|
Liabilities from financing
sub-total
|
Cash and cash equivalents(2)
|
Half
year to 30 June 2024 from continuing operations
|
Leases
from discontinued operations
|
Half
year to 30 June 2024 from total operations
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Opening at 1 January
2024
|
(99.2)
|
(34.0)
|
(133.2)
|
4.7
|
(128.5)
|
(0.3)
|
(128.8)
|
|
Other cash flows
|
-
|
-
|
-
|
12.9
|
12.9
|
-
|
12.9
|
|
Repayments
|
96.4
|
2.7
|
99.1
|
(99.3)
|
(0.2)
|
0.2
|
-
|
|
Borrowings
|
(98.9)
|
-
|
(98.9)
|
98.9
|
-
|
-
|
-
|
|
Leases entered into during the
period
|
-
|
(0.9)
|
(0.9)
|
-
|
(0.9)
|
-
|
(0.9)
|
|
Leases - early
termination
|
-
|
0.1
|
0.1
|
-
|
0.1
|
-
|
0.1
|
|
Fees incurred
|
0.8
|
-
|
0.8
|
-
|
0.8
|
-
|
0.8
|
|
Amortisation of fees
|
(0.3)
|
-
|
(0.3)
|
-
|
(0.3)
|
-
|
(0.3)
|
|
Foreign exchange
differences
|
(0.8)
|
0.1
|
(0.7)
|
(0.5)
|
(1.2)
|
-
|
(1.2)
|
|
Closing at 30 June 2024
|
(102.0)
|
(32.0)
|
(134.0)
|
16.7
|
(117.3)
|
(0.1)
|
(117.4)
|
|
|
Interest
bearing loans and borrowings
(1)
|
Leases
|
Liabilities from financing
sub-total
|
Cash and
cash equivalents(2)
|
Year to
31 December 2023 from continuing operations
|
Leases
from discontinued operations
|
Year to
31 December 2023 from total operations
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Opening at 1 January
2023
|
(174.5)
|
(34.1)
|
(208.6)
|
15.8
|
(192.8)
|
(0.7)
|
(193.5)
|
|
Reclassify from continued to
discontinued (3)
|
-
|
0.3
|
0.3
|
-
|
0.3
|
(0.3)
|
-
|
|
Other cash flows
|
-
|
-
|
-
|
67.1
|
67.1
|
-
|
67.1
|
|
Repayments
|
313.9
|
6.3
|
320.2
|
(320.6)
|
(0.4)
|
0.4
|
-
|
|
Borrowings
|
(240.0)
|
-
|
(240.0)
|
240.0
|
-
|
-
|
-
|
|
Leases entered into during the
year
|
-
|
(7.6)
|
(7.6)
|
-
|
(7.6)
|
(0.1)
|
(7.7)
|
|
Leases - early
termination
|
-
|
0.1
|
0.1
|
-
|
0.1
|
0.3
|
0.4
|
|
Fees incurred
|
0.3
|
-
|
0.3
|
-
|
0.3
|
-
|
0.3
|
|
Amortisation of fees
|
(1.3)
|
-
|
(1.3)
|
-
|
(1.3)
|
-
|
(1.3)
|
|
Foreign currency
|
2.4
|
1.0
|
3.4
|
2.4
|
5.8
|
0.1
|
5.9
|
|
Closing at 31 December
2023
|
(99.2)
|
(34.0)
|
(133.2)
|
4.7
|
(128.5)
|
(0.3)
|
(128.8)
|
|
|
Interest bearing loans and
borrowings(1)
|
Leases
|
Liabilities from financing
sub-total
|
Cash and cash equivalents (2)
|
Half year to 30 June 2023 from continuing
operations
|
Leases
from discontinued operations
|
Half
year to 30 June 2023 from total operations
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
|
Opening at 1 January
2023
|
(174.5)
|
(34.1)
|
(208.6)
|
15.8
|
(192.8)
|
(0.7)
|
(193.5)
|
|
|
Other cash flows
|
-
|
-
|
-
|
(22.5)
|
(22.5)
|
-
|
(22.5)
|
|
|
Repayments
|
62.8
|
3.3
|
66.1
|
(66.3)
|
(0.2)
|
0.2
|
-
|
|
|
Borrowings
|
(85.7)
|
-
|
(85.7)
|
85.7
|
-
|
-
|
-
|
|
|
Leases entered into during the
period
|
-
|
(6.8)
|
(6.8)
|
-
|
(6.8)
|
-
|
(6.8)
|
|
|
Leases - early
termination
|
-
|
0.1
|
0.1
|
-
|
0.1
|
-
|
0.1
|
|
|
Fees incurred
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
Amortisation of fees
|
(0.6)
|
-
|
(0.6)
|
-
|
(0.6)
|
-
|
(0.6)
|
|
|
Foreign exchange
differences
|
4.5
|
1.3
|
5.8
|
0.9
|
6.7
|
-
|
6.7
|
|
|
Closing at 30 June 2023
|
(193.5)
|
(36.2)
|
(229.7)
|
13.6
|
(216.1)
|
(0.5)
|
(216.6)
|
|
(1) Interest bearing loans and borrowings are stated after
deduction of unamortised loan fees and loan transaction costs of
£1.3 million (31 December 2023: £0.8 million, 30 June 2023: £1.1
million).
(2) Cash and cash equivalents include bank overdrafts of £38.7
million (30 June 2023: £4.3 million, 31 December 2023: £4.0
million).
(3) On 31 December 2023, the Syrp business which is part of the
Media Solutions Division based in New Zealand was closed.
Therefore, the finance lease of £0.3 million was reclassified from
continuing to discontinued operations at the beginning 2023, on 1
January 2023. See note 14 "Discontinued operations and non-current
assets classified as held for sale".
On 14 February 2020, the Group
signed a new £165.0 million five-year with one optional one-year
extension multi-currency RCF with a syndicate of five banks. The
one-year extension was agreed with the syndicate banks in January
2022 (four banks) and in July 2023 (fifth bank), increasing the RCF
maturity to 14 February 2026. In December 2022, a £35.0 million
accordion was agreed with four syndicate banks, resulting in the
total commitments increasing to £200.0 million. In June 2024, the
facility was extended by six months taking the maturity to 14
August 2026 and reduced by £50.0 million, taking the overall
committed facilities to £150.0 million.
During the second half of 2023 and
in June 2024, the Group renegotiated and agreed with its lending
banks revised covenants for the RCF. The applicable covenant limit
at each test date is set out below:
|
Test date
|
Net
debt:
EBITDA (1)
|
EBITA:
net interest (1)
|
|
|
not higher than
|
not lower than
|
|
June 2023
|
3.25x
|
4.00x
|
|
December 2023
|
4.25x
|
1.25x
|
|
March 2024
|
4.25x
|
1.50x
|
|
June 2024
|
4.25x
|
1.50x
|
|
September 2024
|
3.75x
|
2.25x
|
|
December 2024
|
3.25x
|
3.00x
|
|
March 2025, onwards (2)
|
3.25x
|
3.50x
|
(1) See note 15 "Glossary of Alternative Performance Measures
("APMs")" for the definition and determination of these
items.
(2) Quarterly test dates to continue beyond March
2025.
Restrictions apply up to March
2025 whereby dividends and acquisitions are not permitted without
lender consent and the non-recourse factoring facility is capped to
£15.0 million utilisation.
The Group was utilising 69% of the
RCF as at 30 June 2024 (51% as at 31 December 2023; 78% as at 30
June 2023).
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 condensed consolidated balance sheet. On 22 January 2021, the
Group received a €0.7 million (£0.6 million) fixed rate loan from
the Italian Government in response to COVID-19. The loan amortises
bi-annually from June 2024 and will be fully repaid by December
2027. As at June 2024, the outstanding balance was €0.6 million
(£0.5 million).
On 14 November 2021, the Group
signed a US$53.0 million (£43.8 million) three-year (expiry 14
November 2024) amortising Term Loan with a syndicate of four banks
to facilitate the acquisition of Savage. Following the payment of
25% of the original amount during 2022 and 20% in June 2023, the
outstanding balance of US$29.1 million (£23.3 million) was pre-paid
on 11 December 2023 and the facility cancelled. On 7 January 2022, the Group signed a US$47.0 million (£38.8
million) three-year (maturity 7 January 2025) amortising Term Loan
with a syndicate of four banks to facilitate the acquisition of
AUDIX. Following the payment of 25% of the original amount during
2022 and 20% in June 2023, the outstanding balance of US$25.9
million (£20.7 million) was pre-paid on 11 December 2023 and the
facility cancelled.
On 25 January 2024, the group
entered into a new operating cash pooling arrangement with HSBC
which caused a change in presentation under IAS 32,
accordingly the balances are presented gross at 30 June
2024, while under the previous arrangement with the same bank they
were presented net as they met the criteria to be disclosed
net under IAS32. As at 30 June 2024, the £38.7 million gross
overdraft is offset against £41.7 million of the gross cash of
£55.4 million, creating a net cash pool of £3.0 million. Under the
arrangement, the offset is allowed for net overdraft utilisation
and interest calculation purposes. The Group's net cash position as
at 30 June 2024 is £16.7 million (30 June 2023: £13.6 million; 31
December 2023: £4.7 million).
The Group has a £3.4 million
un-committed bank overdraft facility, and a £5.0 million committed
bank overdraft facility which is carved out of the £150.0 million
RCF when in use. As at 30 June 2024, £nil overdrafts (30 June
2023: £4.3 million; 31 December 2023: £4.0 million) of the total
£9.3 million facilities were in use on a net basis, and £38.7
million (30 June 2023: £24.3 million; 31 December 2023: £39.9
million) bank overdrafts were in use on a gross basis.
11 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 eighteen months, therefore the
cash flows and resulting effect on the statement of profit or loss
are expected to occur within the next eighteen months.
|
|
Currency
|
Nominal amounts as at 30
June 2024
millions
|
Weighted average exchange
rate of contracts
|
Nominal
amounts as at 30 June 2023 millions
|
Weighted
average exchange rate of contracts
|
|
Forward exchange contracts (buy/sell)
|
|
|
|
|
|
|
GBP/USD forward exchange
contracts
|
USD
|
11.0
|
1.20
|
18.3
|
1.20
|
|
EUR/USD forward exchange
contracts
|
USD
|
19.7
|
1.06
|
41.1
|
1.04
|
|
GBP/EUR forward exchange
contracts
|
EUR
|
19.6
|
1.13
|
7.6
|
1.14
|
|
GBP/JPY forward exchange
contracts
|
JPY
|
402.6
|
170.4
|
144.0
|
154.0
|
|
EUR/JPY forward exchange
contracts
|
JPY
|
820.0
|
151.3
|
263.0
|
137.0
|
|
CHF/GBP forward exchange
contracts
|
CHF
|
-
|
-
|
0.5
|
1.11
|
During the period ended 30 June
2024 a net gain of £1.5 million (2023: £0.4 million net gain)
relating to forward exchange contracts was reclassified to the
statement of profit or loss, to match the crystallisation of the
hedged forecast cash flows which affects the statement of profit or
loss.
