VTC.L Regulatory News (VTC)

19 Nov 2008 07:00



19 November 2008

The Vitec Group plc

Interim Management Statement

The Vitec Group plc, the leading supplier of products and services to the worldwide media sector, issues the following interim management statement in respect of the ten months ended 31 October 2008.

Current trading

The Group continues to trade in line with our expectations.

Broadcast Systems has continued to perform well, particularly Camera Dynamics and Intercoms, with customers completing their 2008 capital expenditure plans. Autoscript is trading strongly, while Anton/Bauer, our portable power business, has continued to see demand soften. RF Systems has accelerated deliveries of its HD-ready digital wireless equipment under the BAS programme. This has helped Sprint Nextel meet its October deadline for transitioning a number of key markets, resulting in relatively more BAS programme sales falling in 2008 than in 2009. Litepanels, the producer of LED lights for the broadcast industry that we acquired in August, is trading well.

Broadcast Services, our US-based broadcast equipment rental business, had a very successful Beijing Olympics in July and August and, as planned, is now disposing of the extra equipment that was required. The business serves mainly the sports, reality and large events markets where demand remains firm, though we have seen some further weakening in the wider US broadcast rentals market. 

Imaging had a very successful Photokina exhibition in Cologne in September, showing many new products including the Manfrotto 055 carbon tripod, the Gitzo hollow ball head, and new models in the Kata DPS range. While sales volumes have been running ahead of last year, order intake is running a little below our expectations in the current quarter. Staging has seen strong demand for its standard trusses and IFF suspensions. Tomcat UK, the loss-making operation in the Wirral, was closed in September. Tomcat Mexico is on course to move into its enlarged premises this month, which will create increased low-cost manufacturing capacity to support our Tomcat US business.

Financial position

At 31 October 2008, the Group's net debt was £59.5 million, compared to £50.3 million at 30 June 2008. Since the half year the Group has generated free cash flow of £11.7 million, offset by the cash cost of acquisitions of £9.2 million (including Litepanels), the interim dividend of £3.1 million and adverse exchange rate movements on net debt of £9.0 million. The Group has a committed multi-currency loan facility of £125 million, which expires in August 2013 and utilised £65.3 million of the facility as at 31 October 2008.

Foreign exchange

Exchange rates for our main operating currencies (the US dollar, Euro and Yen) remain very volatile. We have provided a summary of the illustrative effects on operating profit (after hedging) of certain exchange rate outcomes in the notes to this statement, though it is only an approximation. 

If current FX rates remain the same for the rest of 2008 (see notes 3, 4), the effect on operating profit (after hedging) in 2008 vs 2007 will be c.£2 million more favourable than the guidance we provided on 27 August 2008. Were this trend to continue into 2009, then further benefits would accrue. 

Outlook

We have made good progress in the ten months to 31 October 2008, which reflects the success of our business strategy and our growing range of innovative products delivered through Vitec's global distribution network. We will remain alert to further adverse changes in the economic environment and the impact on the markets we serve and are ready to take action should there be a change in customer demand. 

As previously stated in the 2008 interim results, the Board looks forward to continued progress in 2008.

Forthcoming announcements

We expect to release a post-close statement on Thursday 15 January 2009 and our preliminary results on Monday 2 March 2009.

Enquiries: 

The Vitec Group plc

Alastair Hewgill, Interim Chief Executive Telephone: 020 8939 4650

Richard Cotton, Group Finance Director

Financial Dynamics

Richard Mountain / Sophie Kernon Telephone: 020 7269 7121

Notes

1. This statement is based on information sourced from management estimates.

2. Whilst Vitec has significant production and sourcing in US dollars and has hedging arrangements in place, movements in the $/£ and, particularly, $/€ rates can have a significant impact on reported results. After hedging, the Group estimates there would be a £2.0m favourable effect on operating profit in 2008 compared to 2007 (the guidance of a £1.5 million full year adverse effect given at the interim results presentation on 27 August 2008 was incorrect and should have been £0.2m adverse), if current exchange rates continue throughout 2008. With regard to 2009, the following table shows how 2009 FX effects on operating profit (after hedging) is expected to compare with 2008, at a range of exchange rates (again, assuming they remain the same until the end of 2009, with similar levels of sales volumes and profit activity to 2008 at the current level of Group hedging in place and with other currencies remaining at their current exchange rate against Sterling). 

3. Current market exchange rates: £1 = $1.50 £1 = €1.19, €1 = $1.26

4. 2007 average market exchange rates: £1 = $2.00, £1 = €1.47, €1 = $1.37

5. Statements made in this announcement that look forward in time or that express management's beliefs, expectations or estimates regarding future occurrences are "forward-looking statements" within the meaning of the United States federal securities laws. These forward-looking statements reflect Vitec's current expectations concerning future events and actual results may differ materially from current expectations or historical results. 

6. Vitec is an international Group, principally serving customers in the worldwide media sector with products and services for the broadcast, entertainment and photographic industries. Vitec is based on strong, well known, premium brands that professionals rely on. Vitec is organised in three divisions: Imaging & Staging, Broadcast Systems and Broadcast Services. More information can be found at: www.vitecgroup.com.