[PPT] - The Vitec Group plc Full Year Results 2017 Transformational year PowerPoint Presentation

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Enabling the capture and sharing

f exceptional images.

The Vitec Group plc Full Year Results 2017 Transformational year for the Group

22 February 2018

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Forward-looking statements This presentation contains forward-looking statements with respect to the financial condition, performance, position, strategy, results and plans of The Vitec Group plc (the “Group”, “Vitec”, or the “Company”) based on Management’s current expectations or beliefs as well as assumptions about future events. These forward-looking statements are not guarantees of future performance. Undue reliance should not be placed on forward-looking statements because, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and the Group’s plans and objectives, to differ materially from those expressed or implied in the forward-looking statements. The Company undertakes no obligation to publically revise or update any forward-looking statements or adjust them for future events or

developments. Nothing in this presentation should be construed as a profit forecast.

The information in this presentation 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 presentation 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 presentation contains brands and products that are protected in accordance with applicable trademark and patent laws by virtue of their registration. Adjusted performance measures In addition to statutory reporting, Vitec reports total performance for continuing and discontinued operations on an adjusted basis before charges associated with acquisition of businesses, impairment of goodwill, restructuring costs and material non-operating events. Adjusted performance measures (“APMs”) in this presentation are denoted by an *. Each item excluded in the APMs is considered to be significant in nature and/or value. The purpose of excluding these items is to better reflect the underlying business and enable more meaningful comparison over time. This is consistent with how the business performance is reported to the Board and Operations

Executive. A definition of the APMs used in this presentation and a reconciliation from adjusted operating profit to statutory operating profit is included in the Appendix.

Important notice

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>Highlights

> Stephen Bird, Group Chief Executive

>Financial Review

> Kath Kearney-Croft, Group Finance Director

>Market and Strategy Update

> Stephen Bird, Group Chief Executive

>Q&A Agenda

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1. Transformation of the Group’s portfolio

> Disposals funded acquisitions > New operating structure > Significant number of market-leading new products launched

2. Record Group performance

> Revenue for continuing operations up 10.8%, adjusted PBT* up 13.4% > Adjusted operating margin* for total operations improved to 11.8% from 11.0% > ROCE for total operations increased to 19.6% from 17.5%

3. Total dividend increased by 12.1%
4. Strong cash conversion of 119%ɸ, reduction in net debt to £42.9m
5. Well-positioned to be able to deliver future growth

Highlights: record Group performance

2017 was a transformational year for the Group

* Before charges associated with acquisition of businesses, impairment of goodwill, restructuring costs, and significant costs relating to the integration of acquired businesses and material non-

perating events, as described in the Appendix

ɸ Total operations excluding the acquisition of JOBY and Lowepro

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Financial Review

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Full year results: a record performance

> Record adjusted* revenue, PBT and EPS > Improvement in gross margin %* > Higher opex > Investment to drive sales and future growth > Higher corporate costs > Full year dividend increased by 12.1% to 30.5p > Increase in ROCE to 19.6%

* Before charges associated with acquisition of businesses, impairment of goodwill, restructuring costs and material non-operating events, as described in the Appendix

2017 2016 £m £m Revenue * 378.1 376.2 0.5% (2.9%) Gross profit * 162.4 148.6 9.3% 4.2%

Gross margin % * 43.0% 39.5% +350 bps +290 bps

Operating expenses * (117.6) (107.1) (9.8%) (6.3%) Operating profit * 44.8 41.5 8.0% (1.2%)

Operating margin % * 11.8% 11.0% +80 bps +20 bps

Net finance expense (2.8) (4.0) PBT * 42.0 37.5 12.0% 2.8% Adjusted EPS * 68.1 61.3 11.1% Dividend per share 30.5 27.2 12.1% ROCE 19.6% 17.5%

+210 bps

Better / (worse) Better / (worse) at Constant FX Total performance for continuing and discontinued operations

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Continuing operations

> Benefit from the disposal of Haigh-Farr and Bexel comparing continuing to total

perations

> Higher growth rates in revenue and adjusted PBT* > Improvement in the Group’s gross margin* % and operating margin* %

* Before charges associated with acquisition of businesses, impairment of goodwill, restructuring costs and material non-operating events, as described in the Appendix

2017 2016 Continuing operations £m £m Revenue 353.3 318.9 10.8% 6.4% Gross profit * 156.5 135.9 15.2% 9.4%

Gross margin % * 44.3% 42.6% +170 bps +120 bps

Operating expenses * (111.3) (94.5) (17.8%) (13.6%) Operating profit * 45.2 41.4 9.2%

Operating margin % *

12.8% 13.0%

20 bps
80 bps

Net finance expense (2.8) (4.0) PBT * 42.4 37.4 13.4% 4.1% Adjusted EPS * 70.5 61.0 15.6% Better / (worse) Better / (worse) at Constant FX

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Divisional performance

Imaging Solutions Production Solutions Creative Solutions >Transformational acquisition of JOBY and Lowepro >Sales outperformed CIPA trends; high growth in APAC >Spectrum “repack” in the US has led to lower studio sales >New product launches well received by the market >Benefitted from continued strong growth in ICC market >Higher technology product offering enhanced by RTMotion acquisition Corporate & unallocated >Includes impact of higher LTIP and bonus accruals

2017 2016

Better / (worse)

Better / (worse) at Constant FX

2017 2016

Better / (worse)

Better / (worse) at Constant FX

£m £m % % £m £m % % 175.9 151.4 16.2% 11.3% 29.9 25.2 18.7% 13.4% 114.2 121.6 (6.1%) (9.6%) 15.2 16.3 (6.7%) (21.1%) 63.2 45.9 37.7% 31.9% 13.0 9.5 36.8% 31.3% 353.3 318.9 10.8% 6.4% 58.1 51.0 13.9% 6.2%

(12.9)

(9.6) (34.4%) (34.4%) 353.3 318.9 10.8% 6.4% 45.2 41.4 9.2%

Corporate & unallocated

Creative Solutions Revenue Adjusted operating profit* Imaging Solutions Continuing operations Production Solutions

* Before charges associated with acquisition of businesses, impairment of goodwill, restructuring costs and material non-operating events, as described in the Appendix

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Group total revenue bridge

£m

£376.2m (£32.5m) (£5.2m) £8.1m £18.4m £378.1m £13.1m

FY 16

Revenue

FY 17

Revenue

Translation Discontinued

perations

EU Services Underlying Revenue Acquisitions Transaction

330 340 350 360 370 380

> Excluding discontinued operations > Anticipated reduction in revenue in EU Services driven by non-repeat of Olympics > Underlying revenue growth driven by Creative Solutions and Imaging Solutions

ffsetting decline in US studio business

> Translational FX benefit from weakening

f Sterling

* Before charges associated with acquisition of businesses, impairment of goodwill, restructuring costs and material non-operating events, as described in the Appendix

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Group total adjusted operating profit* bridge

£m

£41.5m (£0.5m) (£6.4m) £3.1m £3.3m £44.8m £3.8m

FY 16 Profit* FY 17 Profit* Discontinued

perations

EU Services & Corporate costs Underlying Profit Acquisitions

30 32 34 36 38 40 42

> Anticipated reduction in profit in EU Services and higher corporate costs > Underlying profit growth driven by > Higher sales and an improvement in gross margin % > Partly offset by investment to drive future growth > Benefit from acquisitions with JOBY/Lowepro ahead of plan > Selling new JOBY products into channel > Earlier capture of synergies

44 46 * Before charges associated with acquisition of businesses, impairment of goodwill, restructuring costs and material non-operating events, as described in the Appendix

Translation Transaction

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Cash generation

> Lower depreciation following disposal of Bexel > Working capital investment reflects c. £11m impact from acquisition of JOBY and Lowepro > £1.4 million cash outflow on 2016 restructuring > Operating cash conversion of 119% excluding impact of JOBY and Lowepro

* Before charges associated with acquisition of businesses, impairment of goodwill, restructuring costs, and material non-operating events, as described in the Appendix

(1) Includes depreciation, amortisation of software and capitalised development costs and impairment losses on property, plant and equipment. (2) Includes change in provisions, share based payments charge, gain on disposal of PPE, fair value derivatives, integration costs and transaction costs relating to

acquisition of businesses.

(3) Purchase of PPE and capitalisation of software and development costs.

2017 2016

Better / (worse)

£m £m £m Operating profit * 44.8 41.5 3.3 Depreciation (1) 14.1 18.4 (4.3) Working capital (9.4) 12.0 (21.4) Restructuring cash outflow (1.4) (7.4) 6.0 Other (2) 0.6 0.3 0.3 Cash generated from operations 48.7 64.8 (16.1) Capital expenditure (3) (15.1) (16.8) 1.7 Proceeds from asset sales 3.5 9.0 (5.5) Net interest and tax paid (13.6) (12.4) (1.2) Free cash flow 23.5 44.6 (21.1)

Total performance for continuing and discontinued operations

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Strong balance sheet

> Cash outflow on acquisitions more than funded by disposals of Bexel and Haigh-Farr > Repayment of $50m private placement in H1 > Net Debt to EBITDA ratio of 0.7x (Dec 16: 1.2x)

Dec 16 Net Debt Dec 17 Net Debt

£75.1m £42.9m Free

Cashflow (£23.5m) £12.4m Dividends Acquisitions Disposals £12.4m Transactions in own shares (£32.4m) £2.1m FX (£3.2m)

£m

20 30 40 50 60 80 70

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Integration of JOBY and Lowepro

> The latest view of the total acquisition cost is in line with previous guidance, with £0.8m of integration costs being accounted for in goodwill:

Previously guided by end of FY18 $m £m Latest view by end of FY18 $m £m

Cash consideration

10.3 7.6 11.4 8.4

Integration and deal costs

7.0 5.2 5.7 4.4

SUB TOTAL

17.3 12.8 17.1 12.8

Investment in working capital

14.7 10.9 14.9 10.9

TOTAL COST

32.0 23.7 32.0 23.7

> JOBY and Lowepro performed ahead of plan in 2017 mainly due to timing: > Selling new JOBY products into channel > Earlier capture of synergies > Profit phasing expected to be second half weighted

* FX rate of £1 = $1.35 used for both previously guided and latest view numbers for consistency

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A disciplined capital allocation policy

1. Reinvest to

drive organic growth

3. M&A in line

with strategy

2. Progressive

dividend policy

4. Return cash

to shareholders

Vitec’s disciplined capital allocation policy helps to maintain a strong balance sheet

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Growth in dividend outstripped growth in EPS over last 5 years

> 2017 DPS up 12.1% > 2017 dividend cover at 2.2 times > Progressive dividend policy with 4 year CAGR of +7.3% and dividend cover at least 2.0 times

10 15 20 25 30 35 2015 2017 2014 2013 2016

CAGR +7.3%

Total dividend (pence) 10 20 30 40 50 60 70 2015 2016 2017 2014 2013 Basic adjusted EPS (pence) for total operations

CAGR +5.0%

> Adjusted EPS* progression reflected

perating profit after tax* growth

* Before charges associated with acquisition of businesses, impairment of goodwill, restructuring costs and material non-operating events, as described in the Appendix

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> Improvement in ROCE to 19.6% for total operations (2016: 17.5%) > Amortisation of acquired intangibles

> £5.8m in FY18 including impact from FY17 acquisitions

> Net financial expense: c. £2.5m in FY18 > US tax reform

> £7.9m non-cash deferred tax charge in 2017 excluded from adjusted earnings > Adjusted ETR: 2% pts reduction to 25% from 2018 resulting from US Tax Reform

> 2018 H1/H2 phasing

> Profit expected to be slightly H2 weighted in line with historical performance > Cash expected to be strongly H2 weighted

> Change in FX guidance as reflected in the Appendix

Other financial developments

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Market & Strategy Update

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Imaging Solutions Division revenue versus CIPA shipments Production Solutions and Creative Solutions revenue (from continuing operations) versus IABM

Moving annual totals at constant currency, indexed to 100 at December 2012 At constant currency, indexed to 100 at December 2012

Market trends and growth drivers

Original scripted series p.a. in the US

Source: FX Networks Research (21 December 2017) * Quantity of global shipments of interchangeable lens cameras as published by the Camera and Imaging Products Association (CIPA)

50 60 70 80 90 100 110 120 Dec16 Dec12 Dec14 Dec15 Dec17 Dec13 Imaging Solutions revenue at constant FX Imaging Solutions revenue CIPA shipments * 90 100 110 120 130 140 150 160 Dec16 Dec13 Dec12 Dec15 Dec14 Dec17 PS and CS revenue at constant FX IABM - Acquisition & Production market revenue PS and CS revenue Online services include Amazon Prime, Crackle, Hulu, Netflix, Vimeo, YouTube and Playstation

487 455 421 389 349 2017 +9% 2013 2014 2015 2016

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Significant progress with corporate development

> Sold non-core Haigh-Farr and Bexel for net consideration of £33.2m > Disposals funded acquisitions of JOBY, Lowepro and RTMotion for expected total net investment of £26.8m

2017 was a year of transformation

Professional and Enthusiast Photographers and Videographers

Avenger Colorama Gitzo JOBY Lastolite Lowepro Manfrotto

Broadcasters, Film and Video Production Companies

Anton/Bauer Autocue & Autoscript Camera Corps Litepanels OConnor Sachtler Vinten

Independent Content Creators and Filmmakers

Paralinx RTMotion SmallHD Teradek VitecEV Wooden Camera

Three Divisions reflect changing customer base and focus on fast-growing ICC market

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> Organic sales growth > Operational efficiencies > Further M&A activity > Growth strategy focused on five priorities

Executing on strategy to continue to realise growth

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> Continued investment in innovative new product development across the Group > Wide range of significant new products launched in 2017, including:

> Imaging Solutions: Manfrotto Nitrotech video head and Befree Advanced tripod, Gitzo 100, JOBY GorillaPod Mobile Rig > Production Solutions: Sachtler/Vinten Flowtech tripod, Autoscript Intelligent Prompting, Litepanels Gemini LED lights > Creative Solutions: SmallHD monitors, Wooden Camera accessories, Teradek H.265 encoders > Cross-Group products: SmallHD & Anton/Bauer Focus monitor, SmallHD & Teradek 703 Bolt wireless monitoring device for Directors, Wooden Camera & Manfrotto Director’s Cage

> Supporting the 2018 Winter Olympics in South Korea

Executing on strategy to continue to realise growth

Autoscript Intelligent Prompting Sachtler/Vinten Flowtech tripod JOBY GorillaPod Mobile Rig SmallHD 5” Focus Monitor Manfrotto Nitrotech video head

Improve the core and focus on new markets and technology

SmallHD/Teradek 703 Bolt Wooden Camera/ Manfrotto Director’s Cage

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> Lean manufacturing initiatives across all sites > Imaging Solutions Manfrotto Befree production moved from China to Italy > Production Solutions Anton/Bauer manufacturing moving to Costa Rica > Production Solutions move to new UK manufacturing site in H1 2018 > Further growth in online platforms, own distribution, e-commerce channels > Apple and Amazon growth in Imaging Solutions Division

Executing on strategy to continue to realise growth

Operational efficiencies to improve core business Get closer to our customers

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> Region with the greatest growth potential for Vitec > Acquisition of JOBY and Lowepro brands strengthened engineering and supply chain capabilities in China and Hong Kong > Identification of further opportunities to utilise current distribution network and resources to promote Creative Solutions brands, initially in China > Continual assessment of M&A opportunities for innovative businesses with the right product development, growth characteristics and financial prospects > Focused on core and adjacent markets to supplement organic growth opportunities

Executing on strategy to continue to realise growth

Expand in APAC Further strategic corporate development

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1. 2017 was a transformational year for the Group

> Refined our portfolio to position the Group to deliver further progress in 2018

2. Record Group performance

> Growth in revenue and adjusted profit before tax*, increased total dividend

3. Well-positioned with a clear growth strategy

> Focused on organic sales growth, operational efficiencies and further corporate development > 2017 acquisitions to materially enhance EPS > Strong cash generation and a robust balance sheet

Summary

Vitec’s reshaped portfolio and new structure have repositioned the Group to be able to deliver further progress in 2018

* Before charges associated with acquisition of businesses, impairment of goodwill, restructuring costs and material non-operating events, as described in the Appendix

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Q&A

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Appendices

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Consumers in the “image capture and sharing market”

Active hobbyist
Shooting stills and videos
Sharing with friends on social

media

e.g. JOBY, Manfrotto,

Lowepro

Advanced enthusiasts
Pursuing specific genre

development

Portrait, Outdoor, Urban
e.g. Manfrotto, Gitzo,

Lowepro

Independent professionals
Producing content for their own

platform and/or partner needs

Cameraman, Cinematographer,

Videographer, Photographer,

Lighting Specialist
e.g. Teradek, SmallHD, Wooden

Camera, Manfrotto, Sachtler

Professional companies
Producing commercial content
Broadcasters, TV Networks, Film

Production Companies

e.g. Vinten, Sachtler, Litepanels,

Autoscript, Autocue, Anton/Bauer, Camera Corps

Professional Studio Independent Content Creators Social Sharer Traditional Enthusiast

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60%

55%

Competitive landscape

Broadcast Camera Supports Cine Camera Supports On Set Wireless Prompters Photographic Tripods 21%

Vitec management estimates by sales value in the market segments in which these products are sold.

Batteries Photographic Bags

Vitec market share Competition market share 6x 3x

85%

13x

39%

4x

37%

5x

27%

5x

Vitec holds strong positions in its niche product categories

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A higher technology focused business

66% 59% 50% 46% 42% 34% 41% 50% 54% 58%

Higher Tech Traditional Broadcast *

All Creative Solutions’ products plus robotics, mobile power, LED lighting and specialty cameras from Production Solutions

2013 2014 2015 2016 2017

> Higher technology products generally have a higher margin than other broadcast products > Growth in revenue from higher technology products is mainly driven by acquisitions

Production Solutions’ continuing

perations excluding robotics, mobile

power, LED lighting and specialty cameras

Vitec continues to grow its revenue in high technology products

* H1 2017 presentation included the impact of Bexel; this has been excluded here following its disposal in August 2017.

Revenue from Production Solutions and Creative Solutions

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The Vitec Group: M&A track record

2012

£75m invested

From start of 2012 to end of 2017 *

20% return

Excluding impact of acquisitions in 2017

1. M&A clearly aligned with strategic objectives
2. Doing the right deal: disciplined approach
3. Extraction of synergies

2013 2014 2015 2016

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2017

* Excluding impact from integration costs and investment in working capital relating to JOBY/Lowepro acquisition

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US Costa Rica Singapore Japan France Italy Germany Netherlands

Vitec manufacturing & procurement sites

UK

Distribution sites

China

Where we operate

3%

2017 Revenue from continuing operations

2% 41% 21% 36%

Rest of the World Europe APAC North America

Sites in 10 countries; sell into 100+ countries
Sales: UK accounts for only 11% of revenue
Well capitalised manufacturing in Italy, Costa Rica, UK & US
Low cost APAC sourcing, including China & Vietnam

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Imaging Solutions products

Bags Supports Camera accessories Lighting & controls

* Clockwise from top left: Lowepro: Flipside Trek BP 450 AW; Gitzo: Century Traveler Backpack; Lastolite: Skylite Rapid Kit; Manfrotto: Lykos; JOBY: GorillaPod Mobile Rig; Manfrotto: Befree advanced and PIXI Evo; Gitzo: 100 Year Anniversary Edition Traveler Tripod; Avenger: Wind Up stand; Manfrotto: Xume filters; Manfrotto: Pro Light 3N1-36; National Geographic: Australia Collection.

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Production Solutions products

Bags Camera accessories Mobile power

* Clockwise from top left: Sachtler: Comporter; OConnor: O-Rig Pro Kit; Autoscript: E.P.I.C. prompter; Autocue: PSP17 teleprompter; ; Vinten: Hexagon Track system powered by Technopoint; Vantage; Camera Corps: Q-Ball 3; Anton/Bauer: V90 & G90 Cine Batteries.

Prompters Robotic camera systems

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Production Solutions products continued

Lighting & controls

* Clockwise from top left: Litepanels: Gemini; OConnor: Ultimate 2560 Fluid Head; Vinten: Quartz Two pedestal ; Sachtler: Sachtler Ace L – Freddie Wong Signature Edition ; Sachtler and Vinten: Flowtech; Camera Corps: Q-Ball 3.

Distribution, rental & services Supports

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Creative Solutions products

Camera accessories Monitors Video transmission systems

* Clockwise from top left: Offhollywood: OMOD; Wooden Camera: Unified DSLR Cage; Teradek: Serv Pro; Paralinx: Dart; Teradek RT: MK3.1 controller; SmallHD and Teradek: 703 Bolt; SmallHD: Focus.

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FX sensitivities

Currency Current spot rates (at 20 Feb 2018) 2017 average rate 2016 average rate % change (2017 vs 2016)

USD 1.40 1.29 1.35 4.0% EUR 1.13 1.14 1.22 6.4% YEN 149 145 147 1.9%

> The expected year-on-year impact on 2018 adjusted operating profit* at current spot rates would be a headwind of c. £0.8m**

* Before charges associated with acquisition of businesses, impairment of goodwill, restructuring costs and material non-operating events, as described

n the following slide

** This includes the year-on-year impact resulting from the loss on cash flow hedges and balance sheet revaluations in 2017

Currency Movement Impact on operating profit* (£m) USD +/- $0.10

/+ 2.6

EUR +/- €0.10

/+ 1.3

YEN +/- 10 YEN

/+ 0.6

> The expected further incremental impact from subsequent movements in 2018 from current spot rates is:

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Alternative performance measures

> Adjusted operating profit is calculated as operating profit before charges associated with acquisition of businesses, impairment of goodwill, restructuring costs and material non-operating events > Reconciliation between adjusted operating profit and statutory operating profit: > Adjusted earnings per share is calculated as adjusted profit after tax divided by the weighted average number

f ordinary shares in issue during the financial year

> Adjusted profit after tax is calculated as profit after tax before charges associated with acquisition of businesses, impairment of goodwill, restructuring costs and material non-operating events

2017 2016 2017 2016 £m £m £m £m Adjusted Operating Profit 45.2 41.4 44.8 41.5 Charges associated with acquisition of businesses (15.0) (7.6) (16.2) (9.7) Restructuring costs

(3.4)
(5.2)

Impairment of goodwill

(12.1)

Statutory Operating Profit 30.2 30.4 28.6 14.5 The breakdown of charges associated with acquisition of businesses is: Amortisation of acquired intangible assets (7.4) (5.8) (8.6) (7.9) Earnout, deferred payments and purchase price adjustment (4.1) (1.2) (4.1) (1.2) Transaction costs relating to acquisition of businesses (1.3) (0.6) (1.3) (0.6) Integration costs (2.2)

(2.2)
Charges associated with acquisition of businesses

(15.0) (7.6) (16.2) (9.7)

Total

perations

Continuing

perations

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Financial overview

0% 50 16% 45 40 35 14% 25 30 20 12% 10% 8% 6% 4% 2%

2016 2014 2013 2015 2017

Adjusted operating margin* (%) Adjusted operating profit * (£m) Total performance for continuing and discontinued operations

> 2017 improvement in adjusted operating profit * driven by significant transformation of the Group > Disposal of non-core businesses > Acquisition of businesses with a good strategic fit

FY 2013 FY 2014 FY 2015 FY 2016 FY2017 £m £m £m £m £m Revenue 315.4 309.6 317.8 376.2 378.1 Operating profit* 39.5 38.8 35.4 41.5 44.8 Operating margin* 12.5% 12.5% 11.1% 11.0% 11.8% Cash generated from operating activities 52.4 42.0 41.7 64.8 48.7

* Before charges associated with acquisition of businesses, impairment of goodwill, restructuring costs and material non-operating events, as described

n the previous slide

£m

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The Vitec Group plc Bridge House Heron Square Richmond TW9 1EN United Kingdom T +44 (0)20 8332 4600 F +44 (0)20 8948 8277 info@vitecgroup.com www.vitecgroup.com

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