Company Announcements

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