Enabling the capture and sharing of exceptional content. The Vitec Group plc The Vitec Group plc Full Year Results 2018 Full Year Results 2018 Record financial performance and significant strategic progress Record financial performance and significant strategic progress 21 February 2019 21 February 2019
Important notice 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 publicly 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 alternative performance measures (“APMs”) which are not defined or specified under the requirements of International Financial Reporting Standards (IFRS). The Group uses these APMs to improve the comparability of information between reporting periods and Divisions, by adjusting for certain items which impact upon IFRS measures, to aid the user in understanding the activity taking place across the Group’s businesses. APMs are used by the Directors and management for performance analysis, planning, reporting and incentive purposes. A definition of the APMs used in this presentation and a reconciliation from adjusted operating profit to statutory operating profit is included in the Appendix. Page 2
Agenda > 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 Page 3
Highlights: record Group performance 1. Record Group performance in revenue, profit before tax and EPS > Growth in revenue of 9.1% and adjusted profit before tax* of 20.8% > Adjusted basic earnings per share* significantly improved by 32.2%, partially benefitting from lower 2018 tax rate + increased to 21.8% (2017: 19.6%) > ROCE 2. Significant strategic progress: continued organic growth; improved margins; transformational acquisitions > Invested selectively in faster growing market segments to achieve organic growth > Continued to improve margin to 13.9%, up 110 basis points (c. 13.5% excluding SmallHD insurance benefit) > Expanded addressable markets and increased higher technology capabilities through acquisition of Amimon core technology and Rycote audio 3. Good cash generation, strong balance sheet and net debt/adjusted EBITDA * ratio at 1.2 times 4. Total dividend increased by 21.3% to 37.0 pence with dividend cover at 2.5 times Outlook for further progress in 2019 remains unchanged * Before charges associated with acquisition of businesses and material non-operating events, as described in the Appendix. Page 4 + Return on capital employed (ROCE) is calculated as adjusted operating profit* for the last twelve months divided by average total assets less current liabilities excluding the current portion of interest- bearing borrowings.
Financial Review Financial Review Page 5
Full year results: another record performance Better / > Record revenue, PBT and EPS 2018 2017 Better / (worse) at (worse) Constant > Strong revenue growth FX £m £m Revenue 385.4 353.3 9.1% 10.8% > Solid performance from underlying business Gross profit * 174.1 156.5 11.2% 11.7% > FY benefit from 2017 acquisition of JOBY and Lowepro Gross margin % * 45.2% 44.3% +90 bps +40 bps Operating expenses * (120.6) (111.3) (8.4%) (9.5%) > Improvement in adjusted operating margin* Operating profit * 53.5 45.2 18.4% 17.1% > Continued and sustainable operational efficiencies Operating margin % * 13.9% 12.8% +110 bps +70 bps > Small benefit from accounting treatment of SmallHD Net finance expense (2.3) (2.8) insurance PBT * 51.2 42.4 20.8% 17.5% Adjusted EPS * (p) 93.2 70.5 32.2% > Significant improvement in adjusted EPS* to 93.2p Dividend per share (p) 37.0 30.5 21.3% > Total dividend increased by 21.3% to 37.0p with cover ROCE + 21.8% 19.6% +220 bps of 2.5x * Before charges associated with acquisition of businesses and material non-operating events, as described in the Appendix. + Return on capital employed (ROCE) is calculated as adjusted operating profit* for the last twelve months divided by average total assets less current liabilities excluding the current portion of interest-bearing borrowings. Page 6
Divisional performance Revenue Adjusted operating profit* Better / Better / (worse) Better / Better / (worse) 2018 2017 2018 2017 (worse) at Constant FX (worse) at Constant FX £m £m % % £m £m % % Imaging Solutions 201.6 175.9 14.6% 15.8% 31.1 29.9 4.0% 7.0% 114.2 3.9% 5.6% 15.2 32.2% 19.7% Production Solutions 118.7 20.1 Creative Solutions 65.1 63.2 3.0% 6.2% 15.7 13.0 20.8% 24.6% 385.4 353.3 9.1% 10.8% 66.9 58.1 15.1% 14.3% Corporate & unallocated - - - - (13.4) (12.9) (3.9%) (3.9%) 353.3 9.1% 10.8% 45.2 18.4% 17.1% 385.4 53.5 * Before charges associated with acquisition of businesses and material non-operating events, as described in the Appendix. Imaging Solutions > Underlying business delivered a solid performance against challenging market conditions > Revenue growth driven by FY impact of JOBY and Lowepro > Margin dilution due to change in product mix; underlying margin increased by +50 bps Production Solutions > Strong performance driven by new products including Gemini lights and Flowtech tripods > Margin accretion includes the benefit of the Winter Olympics, operational efficiencies and FX Creative Solutions > Good performance despite SmallHD disruption; growth includes Rycote and Amimon > Underlying margin improved adjusting for SmallHD disruption Page 7
Group revenue bridge Continuing operations £m > Underlying revenue growth: 400 > Growth in Production Solutions and Creative Solutions Acquisitions FX 390 with benefit from new product launches > Reduction in Imaging Solutions in challenging market 380 conditions 370 > Despite SmallHD disruption FY 18 Revenue 360 Underlying > Significant acquisition benefit Revenue > Mainly JOBY and Lowepro 350 FY 17 Revenue > FX headwind from year-on-year strengthening of Sterling 340 330 £353.3m £2.4m £35.4m £(5.7)m £385.4m Page 8
Group adjusted operating profit* bridge Continuing operations £m 55 FX > Underlying profit growth driven by: Acquisitions Underlying > Strong cost control including operational efficiencies Profit 50 > Benefit from Winter Olympics > Includes insurance proceeds relating to SmallHD property damage and business interruption 45 FY 17 FY 18 > Benefit from acquisitions, primarily nine months of JOBY / Profit Profit Lowepro contribution 40 35 £53.5m £45.2m £5.5m £2.2m £0.6m * Before charges associated with acquisition of businesses and material non-operating events, as described in the Appendix Page 9
Cash generation Better / Total performance for continuing 2018 2017 (worse) and discontinued operations £m £m £m > Free cash flow £10.0m higher than 2017 Operating profit * 44.8 8.7 53.5 > Lower working capital investment Depreciation (1) 14.1 (2.7) 11.4 > Lower tax reflecting timing of payments Working capital (5.9) (9.4) 3.5 Restructuring cash outflow 0.0 (1.4) 1.4 and Patent Box benefit in Italy Integration cash outflow (2.2) (0.6) (1.6) > £2.2m integration cash outflow related to Other (2) 1.2 (4.0) (2.8) JOBY/Lowepro as expected Cash generated from operations 54.0 48.7 5.3 Capital expenditure (3) (15.1) 0.7 (14.4) > Operating cash conversion of 84% Proceeds from asset sales 0.5 3.5 (3.0) Net interest and tax paid (6.6) (13.6) 7.0 23.5 10.0 Free cash flow 33.5 * Before charges associated with acquisition of businesses and material non-operating events (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, transaction costs relating to acquisition of businesses. (3) Purchase of PPE and capitalisation of software and development costs. Page 10
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