REG - Videndum PLC - 2024 Interim Results
26/09/2024 07:00
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RNS Number : 7137F Videndum PLC 26 September 2024
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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 2023(2) H1 2023(1)
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/
(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/
(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 market(1)). The macroeconomic environment affecting the consumer
and ICC segments (together c.40-50% of Group revenue(1)) 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
(leverage(2) of 4.25x and interest cover(3) of 1.5x); September 2024 (interest
cover(3) of 2.25x); December 2024 (interest cover(3) of 3.0x); interest
cover(3) 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, leverage(2) was 3.3x (31 December 2023: 3.3x) and interest
cover(3) 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 (91.0) (96.9) (193.0)
Other Income
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
Condensed Consolidated Statement of Comprehensive Income
For the half year ended 30 June 2024
Half year to 30 June 2024 Half year to 30 June 2023 Year to 31 December 2023
Unaudited Unaudited Audited
£m £m £m
Loss for the period (12.8) (46.5) (78.1)
Other comprehensive income/(loss):
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit schemes - 0.8 0.1
Tax - (0.2) -
Items that are or may be reclassified subsequently to profit or loss:
Currency translation differences on foreign currency subsidiaries (1.1) (14.0) (12.2)
Net investment hedges - net (loss)/gain (0.8) 2.4 -
Fair value of cash flow hedges reclassified to the profit or loss (2.2) (2.0) (4.2)
Effective portion of changes in fair value of cash flow hedges 1.1 2.9 2.9
Tax associated with changes in cash flow hedges 0.3 (0.2) 0.3
Other comprehensive loss, net of tax (2.7) (10.3) (13.1)
Total comprehensive loss for the period attributable to owners of the parent (15.5) (56.8) (91.2)
Condensed Consolidated Balance Sheet
As at 30 June 2024
30 June 2024 30 June 2023 31 December 2023
Unaudited Unaudited Audited
Notes £m £m £m
Assets
Non-current assets
Intangible assets 8 137.1 155.8 152.6
Property, plant and equipment 53.2 60.2 56.4
Employee benefit asset 9 4.2 4.7 4.2
Trade and other receivables 4.2 5.0 5.2
Derivative financial instruments 11 0.2 3.6 2.3
Non-current tax assets 6 3.2 3.1 3.1
Deferred tax assets 6 55.6 43.7 55.4
257.7 276.1 279.2
Current assets
Inventories 94.7 102.0 94.5
Contract assets 1.9 2.4 1.8
Trade receivables 40.0 42.4 35.2
Other receivables 13.8 9.5 12.1
Derivative financial instruments 11 2.8 2.8 1.8
Current tax assets 3.3 5.3 5.7
Cash and cash equivalents 10 55.4 17.9 8.7
211.9 182.3 159.8
Assets of the disposal group classified as held for sale 14 9.0 22.6 12.3
Total assets 478.6 481.0 451.3
Liabilities
Current liabilities
Bank overdrafts 10 38.7 4.3 4.0
Interest-bearing loans and borrowings 10 0.1 30.7 0.2
Lease liabilities 10 7.9 5.7 5.6
Contract liabilities 5.9 1.7 2.1
Trade payables 30.2 34.2 20.0
Other payables 19.5 20.1 22.8
Derivative financial instruments 11 - 0.1 0.1
Current tax liabilities 6.5 13.8 7.8
Provisions 2.9 3.5 3.1
111.7 114.1 65.7
Non-current liabilities
Interest-bearing loans and borrowings 10 101.9 162.8 99.0
Lease liabilities 10 24.1 30.5 28.4
Other payables 0.9 0.8 1.2
Employee benefit liabilities 2.6 2.7 2.9
Provisions 0.7 0.8 0.8
Deferred tax liabilities 9.8 7.2 11.2
140.0 204.8 143.5
Liabilities of the disposal group classified as held for sale 14 3.9 6.5 4.6
Total liabilities 255.6 325.4 213.8
Net assets 223.0 155.6 237.5
Equity
Share capital 12 18.9 9.4 18.9
Share premium 133.7 24.4 133.7
Translation reserve (14.9) (12.4) (13.0)
Capital redemption reserve 1.6 1.6 1.6
Cash flow hedging reserve 2.1 4.6 2.9
Retained earnings 81.6 128.0 93.4
Total equity 223.0 155.6 237.5
Balance Sheet exchange rates
Euro 1.18 1.17 1.15
US$ 1.26 1.27 1.27
Consolidated Statement of Changes in Equity
For the half year ended 30 June 2024 (Unaudited)
Share capital Share premium Translation reserve Capital redemption reserve Cash flow hedging reserve Retained earnings Total equity
£m £m £m £m £m £m £m
Balance at 1 January 2024 18.9 133.7 (13.0) 1.6 2.9 93.4 237.5
Loss for the period - - - - - - (12.8) (12.8)
Other comprehensive loss for the period - - (1.9) - (0.8) - (2.7)
Total comprehensive loss for the period - - (1.9) - (0.8) (12.8) (15.5)
Contributions by and distributions to owners
Own shares purchased - - - - - (0.1) (0.1)
Share-based payment charge, net of tax - - - - - 1.1 1.1
Balance at 30 June 2024 18.9 133.7 (14.9) 1.6 2.1 81.6 223.0
Share capital Share premium Translation reserve Capital redemption reserve Cash flow hedging reserve Retained earnings Total equity
£m £m £m £m £m £m £m
Balance at 1 January 2023 9.4 24.3 (0.8) 1.6 3.9 185.3 223.7
Loss for the period - - - - - (46.5) (46.5)
Other comprehensive (loss)/income for the period - - (11.6) - 0.7 0.6 (10.3)
Total comprehensive (loss)/income for the period - - (11.6) - 0.7 (45.9) (56.8)
Contributions by and distributions to owners
Dividends paid - - - - - (11.6) (11.6)
Own shares purchased - - - - - (1.6) (1.6)
Own shares sold - - - - - 1.1 1.1
New shares issued - 0.1 - - - - 0.1
Share-based payment - - - - - 0.7 0.7
charge, net of tax
Balance at 30 June 2023 9.4 24.4 (12.4) 1.6 4.6 128.0 155.6
Condensed Consolidated Statement of Cash Flows
For the half year ended 30 June 2024
Half year to 30 June 2024 Half year to 30 June 2023 Year to 31 December 2023
Unaudited Unaudited Audited
Notes £m £m £m
Cash flows from operating activities
Loss for the period (12.8) (46.5) (78.1)
Adjustments for:
Net finance expense 4.2 5.7 14.5
Taxation (0.6) (3.5) (2.6)
Depreciation 6.3 7.5 14.4
Impairment of intangible and fixed assets 4 16.4 48.6 53.8
Amortisation of intangible assets 5.3 8.7 14.0
Net loss on disposal of property, plant and equipment and software - 0.2 0.3
Fair value (gains)/losses on derivative financial instruments (0.1) (0.3) (0.2)
Foreign exchange losses 0.4 - -
Share-based payment charge 1.1 1.2 1.5
Earnout charges and retention bonuses 0.1 0.7 1.7
Loss on disposal of business before tax - - 1.0
Cash generated from operating activities before change in working capital, 20.3 22.3 20.3
including provisions
(Increase)/decrease in inventories (0.8) (0.8) 7.6
(Increase)/decrease in trade receivables (4.2) 7.9 16.3
(Increase)/decrease in other receivables and contract assets (2.2) 2.4 0.7
Increase/(decrease) in trade payables 10.1 (5.5) (20.5)
Decrease in other payables and contract liabilities - (13.1) (12.3)
Decrease in provisions (0.5) (1.7) (2.3)
Cash generated from operating activities 22.7 11.5 9.8
Interest paid (4.9) (6.2) (15.4)
Tax received/(paid) 1.3 (4.8) (10.5)
Net cash from/(used in) operating activities 19.1 0.5 (16.1)
Cash flows from investing activities
Proceeds from sale of property, plant and equipment and software 2.5 0.1 0.2
Purchase of property, plant and equipment (3.0) (2.0) (4.8)
Purchase of software and payment of development costs (5.6) (7.5) (13.7)
Acquisition of businesses, net of cash acquired - (1.6) (1.6)
Disposal of business - - (0.9)
Net cash used in investing activities (6.1) (11.0) (20.8)
Cash flows from financing activities
Proceeds from the issue of shares, net of costs - 0.1 118.1
Proceeds from the sale of own shares - 1.1 1.2
Own shares purchased (0.1) (1.6) (3.7)
Principal lease repayments 10 (2.9) (3.5) (6.7)
Repayment of interest-bearing loans and borrowings 10 (96.4) (62.8) (313.9)
Proceeds from interest-bearing loans and borrowings 10 98.9 85.7 240.0
Dividends paid - (11.6) (11.6)
Net cash (outflow)/inflow from financing activities (0.5) 7.4 23.4
Increase/(decrease) in cash and cash equivalents 12.5 (3.1) (13.5)
Cash and cash equivalents at 1 January 4.7 15.8 15.8
Effect of exchange rate fluctuations on cash held (0.5) 0.9 2.4
Cash and cash equivalents at the end of the period 10 16.7 13.6 4.7
1 Accounting policies
Reporting entity
Videndum plc (the "Company") is a public company limited by shares
incorporated in the United Kingdom under the Companies Act. The Company is
registered in England and Wales and its registered address is Bridge House,
Heron Square, Richmond TW9 1EN, United Kingdom. These condensed consolidated
interim financial statements ("Financial Statements") as at and for the half
year ended 30 June 2024 comprise the Company and its subsidiaries (together
referred to as the "Group").
These Financial Statements do not comprise statutory accounts within the
meaning of section 434 of the Companies Act 2006. Statutory accounts for the
year ended 31 December 2023 were approved by the board of Directors on 22
April 2024 and delivered to the Registrar of Companies. The report of the
auditors on those accounts was unqualified, did not contain an emphasis of
matter paragraph and did not contain any statement under section 498 of the
Companies Act 2006.
These Financial Statements have been reviewed, not audited and were approved
by the Board of Directors on 25 September 2024.
Basis of preparation and statement of compliance
The half year Financial Statements covers the six month period ended 30 June
2024 and has been prepared in accordance with in accordance with the
UK-adopted International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority. This Financial Statements comprises the
unaudited financial information for the half years ended 30 June 2024 and
2023. The half year financial information has been prepared applying
consistent accounting policies to those applied by the Group for the year
ended 31 December 2023. The application of the accounting policies is expected
to be applicable for the year ending 31 December 2024, which will be prepared
in accordance with United Kingdom adopted International Financial Reporting
Standards.
The preparation of Financial Statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these estimates.
In preparing these Financial Statements, the significant judgements made by
management in applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the audited
consolidated financial statements as at and for the year ended 31 December
2023.
Other income has been disclosed below gross profit for the half year ended 30
June 2024 to ensure a more appropriate presentation. The comparatives have not
been restated.
Goodwill
The goodwill recognised by the Group has all arisen as a result of
acquisitions and is stated at cost less any accumulated impairment losses.
Goodwill is allocated on acquisition to cash-generating unit ("CGU"), or
groups of CGUs, which are anticipated to benefit from the combination. The
CGUs are assessed to be the three segments of the Group. Goodwill is not
subject to amortisation but is tested for impairment annually or if there is
an indicator triggering the impairment assessment. Impairment is determined by
assessing the recoverable amount of the CGU to which the goodwill is
allocated. This estimate of recoverable amount is determined at each
assessment date. The estimate of recoverable amount requires significant
assumptions to be made and is based on a number of factors such as the
near-term business outlook for the segment, including both its operating
profit and operating cash flow performance. Where the recoverable amount of
the CGU is less than the carrying amount, an impairment loss is recognised in
the statement of profit or loss. All acquisitions that have occurred since 1
January 2010 are accounted for by applying the acquisition method.
Goodwill on these acquisitions represents the excess of the fair value of the
acquisition consideration over the fair value of the identifiable net assets
acquired, all measured at the acquisition date. Subsequent adjustments to the
fair values of net assets acquired can be made within 12 months of the
acquisition date where original fair values were determined provisionally.
These adjustments are accounted for from the date of acquisition.
Critical estimates:
- Impairment of discontinued operations
Non-current assets held of sale are measured at the lower of carrying amount
and fair value less costs to sell. There was estimation and assumptions
applied by management in determining the recoverable amount of these assets.
- Inventory
Provisions are required to write down slow-moving, excess and obsolete
inventory to its net realisable value. Management assessed the level of
inventory provisioning by category and judgements and estimates were made in
determining if a provision was required and at what level. The key estimates
relate to supply chains and their lead times, future selling price,
anticipated future sales of products over particular time periods, the
susceptibility of the underlying product to obsolescence and current year
trading performance. The anticipated level of future sales is determined
primarily based on actual sales over a specified historic reference period,
which has been enhanced to a period of between six and 24 months, which is
determined by management and is deemed appropriate to the type of inventory.
- Pension benefits
The actuarial valuations associated with the pension schemes involve making
assumptions about discount rates and life expectancy. All assumptions are
reviewed at each reporting date.
- Tax
The Group is subject to income taxes in a number of jurisdictions. Management
is required to make estimates in determining the provisions for income taxes
and deferred tax assets and liabilities recognised in the Financial
Statements. Tax benefits are recognised to the extent that it is probable that
sufficient taxable income will be available in the future against which
temporary differences and unused tax losses can be utilised. The most
significant estimates made are in relation to the recognition of deferred tax
assets arising from carried forward tax losses. The recovery of those losses
is dependent on the future profitability of Group entities based in the
jurisdictions with those carried forward tax losses, most significantly in the
United States. The assumptions used in the measurement of the deferred tax
assets are consistent with those as disclosed in Note 8 "Intangible assets" in
relation to the impairment tests of CGUs containing goodwill.
- Impairment of goodwill
The impairment of goodwill involves making assumptions. The most critical
assumptions include determination of the discount rates and terminal growth
rates. All assumptions are reviewed at each reporting date. Further details
about the assumptions used and sensitivities are set out in note 8 "Intangible
assets".
Judgements:
- Development costs
The Group capitalises development costs which meet the criteria under IAS 38
"Intangible Assets" within Intangible assets. The Group makes significant
judgements in the application of IAS 38, particularly in relation to its
requirements regarding the technical feasibility of completing the asset and
the Group's ability to sell and generate future economic benefits from the
intangible asset.
- Going concern assessment
There were material judgements made by the Board to determine if the Group is
a going concern and the material uncertainty surrounding it. These judgements
are disclosed under "going concern" in note 1 "Accounting policies". The key
judgements surrounding the material uncertainty relate to the length of time
it takes to recover from the strikes and the recovery from the broader
macroeconomic challenges faced by the Group.
- Asset held for sale and discontinued operations
The critical judgement is in relation to determining if the assets held for
sale meet the criteria to be classified as a discontinued operation under IFRS
5 "Non-current assets held for sale and discontinued operations", particularly
if they represent either a separate major line of business or a geographical
area of operations. Management has deemed that these requirements have been
met. See note 14 "Discontinued operations and non-current assets classified as
held for sale".
- Alternative performance measures ("APMs")
In reporting financial information, the Group presents APMs which are not
defined or specified under the requirements of IFRS. The Group believes that
these APMs, which are not considered to be a substitute for, or superior to,
IFRS measures, provide stakeholders with additional helpful information and
enable an alternative comparison of performance over time. Note 15 "Glossary
of Alternative Performance Measures ("APMs")" provides a comprehensive list of
APMs that the Group uses, including an explanation of how they are calculated,
why they are used and how they can be reconciled to an IFRS measure where
relevant.
- Tax
In relation to tax, these include the interpretation and application of
existing legislation. The Group's key judgement relates to the application of
tax law in relation to the EU State Aid Investigation. Details in relation to
this judgement are set out in Note 6 "Taxation".
Impact of adoption of new accounting standards
In the current period, the Group has applied a number of amendments to IFRS
Accounting Standards issued by the International Accounting Standards Board
("IASB") that are mandatorily effective for an accounting period that begins
on or after 1 January 2024. Their adoption has not had any material impact on
the disclosures or on the amounts in these Group's Financial Statements.
· Amendments to IAS 1: Classification of Liabilities as Current or Non-current
and Non-current liabilities with covenants;
· Amendments to IAS 7 and IFRS 7: Supplier Finance Arrangements; and
· Amendments to IFRS 16: Lease liability in sale and leaseback
New standards and interpretations not yet adopted
Amended standards and interpretations not yet effective are not expected to
have a significant impact on the Group's Financial Statements. At the date of
authorisation of these Financial Statements, the Group has not applied any new
or revised IFRS Accounting Standards that have been issued but are not yet
effective. The standard applicable to the Group is shown below:
· Amendments to IAS 21: Lack of Exchangeability (effective 1 January 2025)
· IFRS 18: Presentation and disclosure in financial statements' (effective 1
January 2027)
· IFRS 19: Subsidiaries without Public Accountability: Disclosures (effective 1
January 2027)
Going concern
These Financial Statements have been prepared on a going concern basis. The
Board has considered the future cash flow forecasts over a period of 12 months
from the approval date of these Financial Statements and believes that
available liquidity will be sufficient to enable the Group to meet its
liabilities as they fall due.
In the first half of 2024, the Group continued to be impacted by:
· The post-strike recovery in the cine and scripted TV market taking longer than
anticipated.
· The challenging macroeconomic environment affecting consumers and independent
content creators.
The Board has conducted a thorough evaluation of the going concern assumption
and has modelled both a base case and a severe but plausible downside scenario
that reflects the above factors.
Background and context
2023 was an exceptionally challenging year for the Group, suffering from the
prolonged adverse impacts of three major headwinds. These headwinds were (1)
the weakened macroeconomic environment, (2) destocking of inventory by
retailer customers and distribution partners, and (3) the US Writers' and
Actors' strikes (together "the strikes").
Whilst the strikes ended by December 2023, during the first half of 2024 the
Group continued to be impacted by (1) the post-strike recovery in the cine and
scripted TV market taking longer than anticipated and (2) the continued
challenging macroeconomic environment affecting consumers and independent
content creators.
The challenges in the cine and scripted TV market during the period were
compounded by the threats of additional strikes, albeit unlikely to
materialise, from the two remaining set of US unions which had to agree new
contracts with the Alliance of Motion Picture and Television Producers
("AMPTP") by the end of July. These were, namely the International Alliance of
Theatrical Stage Employees ("IATSE") union and the Teamster and Hollywood
Basic Crafts unions. Both sets of unions had ratified contracts by the
beginning of August, bringing a close to remaining concern in this market of
new potential strike actions. However, the threat of the strikes had resulted
in many US productions being put on hold until the contracts were ratified.
Against this challenging backdrop, the Group took significant mitigating
actions, including agreeing covenant amendments with its lending banks, and
continued cost reduction and cash conservation plans.
Borrowing facilities and financial position at 30 June 2024
The Group has a committed Multicurrency Revolving Credit Facility ("RCF") with
a syndicate of five banks (see note 10 "Analysis of net debt") who have
provided strong support. This was evidenced during 2023 and in the first half
of 2024, as the Group continued to navigate through the current set of adverse
headwinds.
On 28 June 2024, the Group renegotiated its RCF with its lending banks. It
extended the termination date to 14 August 2026 and reduced its committed
facility by £50 million to £150 million, reflecting the lower level of
borrowings that the Group is operating with after the equity raise in December
2023.
As part of this renegotiation, the Group also agreed with its lending banks
amendments to its covenants as follows:
- June 2024 (leverage (net debt: EBITDA) < 4.25x and interest cover
(EBITA:net interest) > 1.5x),
- September 2024 (interest cover > 2.25x),
- December 2024 (interest cover > 3.0x),
- interest cover > 3.5x thereafter, and quarterly test dates to
continue.
All other covenants remain unchanged. These amendments to the RCF preclude the
Board from declaring a dividend and restrict factoring to £15 million until
delivery of the 31 March 2025 covenant test.
At 30 June 2024, liquidity (cash headroom) was £63.9 million (31 December
2023: £105.3 million; 30 June 2023: £62.9 million), comprising £47.2
million unutilised RCF and £55.4 million of cash with £38.7 million utilised
overdraft.
At 30 June 2024, covenant ratios were 3.3x for net debt: EBITDA and 1.9x for
EBITA:net interest (31 December 2023: 3.3x and 2.0x; 30 June 2023: 2.9x and
5.9x respectively), See Note 15 "Glossary of Alternative Performance Measures
("APMs")" for definitions and computations.
Base case
The Board is continuing to monitor the Group's ability to meet its lending
covenants. As part of the Board's consideration of the appropriateness of
adopting the going concern basis of accounting in preparing the Financial
Statements, a range of scenarios have been modelled over the 12 month period
following their signing of the Financial Statements. For this, the Board has
considered base case projections and a plausible downside scenario.
The base case follows the Board-approved forecast for 2024 and forecast
assumptions for 2025. These acknowledge the challenges and opportunities being
faced by the Group and assume a recovery in the cine and scripted TV segment
during the second half of 2024. They also assume that the ICC/consumer segment
will continue to deteriorate, albeit at a lower rate than in 2023.
The most material judgements for the forecast relate to how long it will take
for the Group's financial performance to recover from the strikes and how much
worse the macroeconomic environment might be in 2024 and 2025 vs 2023. The
judgements and sensitivities are expanded on in further detail below. The base
case does not forecast a breach of covenants.
The lowest point of liquidity in the period to September 2025 is expected to
be £55 million at October 2024, with liquidity steadily improving thereafter.
Severe but plausible downside assessment
In acknowledging the challenges faced in H1 2024, the Board has also modelled
a severe but plausible downside scenario.
In this scenario, the Board has considered:
· A lower-than-expected recovery in the cine and scripted TV market (to around
70% of pre-strike levels against 75% in the base case);
· The financial impact of worse than expected trading conditions for the Group's
consumer and ICC products with the market remaining at -15% compared to the
same period last year for the rest of 2024 and improving at a slower pace
against the base case; and
· Significantly reduced market share gains.
In the severe but plausible downside model these assumptions translate to an
overall revenue increase of 4% for the going concern period against an
expected increase of 17% modelled in the base case scenario.
No additional mitigation beyond the self-help actions (i.e., cost reduction
activities, particularly for discretionary costs; and cash-saving measures)
are considered in this scenario.
The material judgements considered are:
· Estimating the recovery from the strikes, both in terms of the length of the
recovery and the quantum thereof, which is at a slower pace than the base
case;
· Trading conditions, in particular the impact of the macroeconomic environment,
being worse than expected in the base case (and ability to enter new markets
or gain market share); and
· Continuing self-help actions that would partly offset the effects of the
above.
Considering the above assumptions and judgements, the severe but plausible
scenario foresees a covenant breach towards the end of the going concern
period. As would be the case in any covenant breach, the banking syndicate
could withdraw their funding to the Group.
The Board, in light of its experience, past practice and performance, and
historical evidence and current trading, considers that (a) it remains
challenging to determine the length of time it will take to recover from the
strikes, and (b) there is limited forecasting visibility supportable by
externally sourced market evidence.
The Board also note that current trading levels are close to the severe but
plausible downside and as a result, whilst no breach is forecasted for the
third and fourth quarters of 2024, there is limited covenant headroom should
these trading levels continue. Nevertheless, the Board is proactively managing
the options available to the Group to mitigate the risk related to a covenant
breach and deliver measures as set out in the "Mitigation plans" below.
Material uncertainty
As a result of the financial projections under the severe but plausible
scenario, a breach of the Group's loan covenant is forecasted within 12 months
from the approval of these Financial Statements, as well as limited covenant
headroom for the remainder of 2024.
Consequently, the Board has concluded that while the Group has a reasonable
expectation of its ability to renegotiate the terms of the RCF if required,
take other actions to avoid a breach of covenants or to obtain a waiver, these
financial projections do indicate the existence of a material uncertainty
which may cast significant doubt about the Group's ability to continue as a
going concern. The Financial Statements do not include the adjustments that
would result if the Group were unable to continue as a going concern.
Mitigation plans
The Board implemented mitigating actions during the first half of 2024 to
offset the challenging trading conditions and successfully renegotiated the
covenants in the past. The Board continues to employ similar robust measures
which include cost reduction activities, particularly but not limited to
discretionary costs; cash saving measures; and renegotiating its RCF
covenants.
As a result of the continuing challenging trading conditions, the Group has
developed an additional set of actions to be delivered during the second half
of 2024 and in early 2025. These will significantly reduce fixed costs in
comparison to those included in the forecasts set out above. Notwithstanding
the material uncertainty, the Board has, on balance of the available evidence
and modelled scenarios, concluded that there is a reasonable prospect that
improvements in the Group's performance, along with mitigating actions, will
be achieved and it is appropriate to adopt the going concern basis of
accounting in preparing the Financial Statements.
2 Segment reporting
The Group has three reportable segments which are reported in a manner that is
consistent with the internal reporting provided to the Chief Operating
Decision Maker on a regular basis to assist in making decisions on capital
allocated to each segment and to assess performance. The Lightstream and
Amimon businesses, part of the Creative Solutions Division and the Syrp
business, part of the Media Solutions Division, have been classified as
discontinued operations. Their performance in this period and comparative
periods are therefore part of discontinued operations as presented in note 14
"Discontinued operations and non-current assets classified as held for sale"
and are excluded from segmental performances below.
For the half year to 30 June
Media Solutions Production Solutions Creative Solutions Corporate and unallocated Total Continuing operations Discontinued operations and non-current assets held for sale Total continuing and discontinued operations
2024 2023((2)) 2024 2023 2024 2023 2024 2023 2024 2023((2)) 2024 2023((2)) 2024 2023
£m £m £m £m £m £m £m £m £m £m £m £m £m £m
Analysis of revenue from external customers, by location of customer
United Kingdom 5.5 6.9 6.0 5.7 2.8 1.8 - - 14.3 14.4 - - 14.3 14.4
The rest of Europe 24.1 26.8 9.1 11.8 4.1 4.0 - - 37.3 42.6 0.3 0.2 37.6 42.8
North America 27.6 29.9 23.2 24.8 22.3 20.9 - - 73.1 75.6 1.2 4.1 74.3 79.7
Asia Pacific 12.8 15.5 5.8 7.2 3.8 3.8 - - 22.4 26.5 0.1 0.5 22.5 27.0
The rest of the World 3.1 3.2 2.6 2.2 0.5 0.5 - - 6.2 5.9 - 0.1 6.2 6.0
Total revenue from external customers 73.1 82.3 46.7 51.7 33.5 31.0 - - 153.3 165.0 1.6 4.9 154.9 169.9
Inter-segment revenue ((1)) 0.2 0.1 1.0 0.3 0.1 - (1.3) (0.4) - - - - - -
Total revenue 73.3 82.4 47.7 52.0 33.6 31.0 (1.3) (0.4) 153.3 165.0 1.6 4.9 154.9 154.9 169.9
Adjusted operating profit/(loss) 6.4 10.5 5.9 7.3 4.8 3.7 (6.1) (5.3) 11.0 16.2 (1.3) (4.0) 9.7 12.2
Amortisation of intangible assets that are acquired in a business combination (1.8) (1.9) - (0.1) - - - - (1.8) (2.0) - (2.2) (1.8) (4.2)
Impairment of assets (15.3) (0.1) - (1.7) - - - - (15.3) (1.8) (1.2) (46.9) (16.5) (48.7)
Acquisition related charges - (0.3) (0.1) (0.1) - - - - (0.1) (0.4) - (0.9) (0.1) (1.3)
Integration and restructuring costs (0.2) (1.4) (0.3) (0.8) - (0.1) - - (0.5) (2.3) - - (0.5) (2.3)
Operating (loss)/profit (10.9) (10.9) 6.8 5.5 4.6 4.8 3.6 (6.1) (5.3) (6.7) 9.7 (2.5) (54.0) (9.2) (44.3)
Net finance expense (4.1) (5.5) (0.1) (0.2) (4.2) (5.7)
(Loss)/profit before tax (10.8) 4.2 (2.6) (54.2) (13.4) (50.0)
Taxation 0.6 (0.7) - 4.2 0.6 3.5
(Loss)/profit for the period (10.2) 3.5 (2.6) (50.0) (12.8) (46.5)
Segment assets 180.5 217.7 118.9 112.5 45.2 46.2 7.5 12.0 352.1 388.4 9.0 13.7 361.1 402.1
Unallocated assets
Cash and cash equivalents 55.4 17.9 55.4 17.9 - - 55.4 17.9
Non-current tax assets 3.2 3.1 3.2 3.1 - - 3.2 3.1
Current tax assets 3.3 5.3 3.3 5.3 - - 3.3 5.3
Deferred tax assets 55.6 43.7 55.6 43.7 - 8.9 55.6 52.6
Total assets 469.6 430.9 458.4 9.0 22.6 478.6 439.9 481.0
Segment liabilities 48.7 50.9 29.9 31.2 11.1 13.8 5.0 4.2 94.7 100.1 3.9 6.5 98.6 106.6
Interest-bearing loans and borrowings 0.5 0.6 - - - - 101.5 192.9 102.0 193.5 - - 102.0 193.5
Unallocated liabilities
Bank overdrafts 38.7 4.3 38.7 4.3 - - 38.7 4.3
Current tax liabilities 6.5 13.8 6.5 13.8 - - 6.5 13.8
Deferred tax liabilities 9.8 7.2 9.8 7.2 - - 9.8 7.2
Total liabilities 251.7 213.0 318.9 3.9 6.5 255.6 216.9 325.4
((1))Inter-segment pricing is determined on an arm's length basis. These are
eliminated in the corporate and unallocated column.
( )
((2)) 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 the 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".
The £2.5 million (2023: £54.0 million) operating loss of discontinued
operations comprises £0.5 million (2023: £1.1 million) in Media Solutions
Division and £2.0 million (2023: £52.9 million) in Creative Solutions
Division. The Group's operations are located in several geographic locations
and sell products and services to external customers around the world.
3 Operating expenses
Half year to 30 June 2024 Half year to 30 June 2023 Year to 31 December 2023((1))
£m £m £m
Analysis of operating expenses
- Adjusting items in operating (loss)/profit 17.7 6.5 18.0
- Adjusting items in cost of sales (0.1) (0.5) (4.2)
- Adjusting items in operating expenses 17.6 6.0 13.8
- Other administrative expenses 24.0 24.1 49.3
Adjusting items and administrative expenses 41.6 30.1 63.1
Marketing, selling and distribution costs 19.7 21.1 41.3
Research, development and engineering costs 8.6 7.6 14.9
Total operating expenses from continuing operations 69.9 58.8 119.3
- Adjusting items in operating expenses 1.2 50.0 54.2
- Other administrative expenses 0.6 1.8 2.6
Adjusting items and administrative expenses 1.8 51.8 56.8
Marketing, selling and distribution costs 0.4 1.0 1.7
Research, development and engineering costs 1.4 3.6 5.6
Total operating expense from discontinued operations 3.6 56.4 64.1
( )
((1)) For the half year period ended 30 June 2024, resulting from an
application of accounting policy choice, the Group
has presented £0.3 million legal expenses relating to the Quasar
acquisition as an adjusting item. The comparative figures for the year
ended 31 December 2023 have been restated accordingly in the condensed
consolidated statement of profit or loss and related notes for an amount of
£0.5 million (30 June 2023: £nil). There is no impact on the Group's net
assets.
4 Adjusting items
The Group presents alternative performance measures ("APMs") in addition to
its statutory results.
APMs used by the Group and, where relevant, a reconciliation to statutory
measures is set out in note 15 "Glossary of Alternative Performance Measures
("APMs")" to these Financial Statements. The Group's key performance measures,
such as adjusted operating profit, exclude adjusting items.
Half year to 30 June 2024 Half year to 30 June 2023 Year to 31 December 2023((1))
£m £m £m
Continuing operations
Amortisation of intangible assets that are acquired in a business combination (1.8) (2.0) (4.0)
Impairment of assets ((2)) (15.3) (1.8) (7.3)
Acquisition related charges (0.1) (0.4) (1.3)
Integration and restructuring costs (0.5) (2.3) (5.4)
Adjusting items in operating (loss)/profit from continuing operations (17.7) (6.5) (18.0)
Finance expense - amortisation of loan fees on borrowings for acquisitions and - (0.4) (2.6)
other financing activities
Adjusting items in (loss)/profit before tax from continuing operations (17.7) (6.9) (20.6)
Half year to 30 June 2024 Half year to 30 June 2023 Year to 31 December 2023
Discontinued operations £m £m £m
Amortisation of intangible assets that are acquired in a business combination - (2.2) (2.2)
Impairment of assets((3)) (1.2) (46.9) (50.2)
Acquisition related charges - (0.9) (1.4)
Integration and restructuring costs - - (0.4)
Adjusting items in operating loss from discontinued operations (1.2) (50.0) (54.2)
Finance expense - unwind of discount on liabilities and other interest (0.1) (0.2) (0.3)
Adjusting items in loss before tax from discontinued operations (1.3) (50.2) (54.5)
((1)) See note 3 "Operating expenses" for details of changes to the
comparative amounts.
((2)) Impairment of assets of £15.3 million (30 June 2023: £1.8 million; 31
December 2023: £7.3 million) comprises impairment of goodwill of £14.9
million (30 June 2023 and 31 December 2023: £nil), other fixed assets of
£0.3 million (30 June 2023: £1.7 million; 31 December 2023: £3.6 million)
and inventory write-off of £0.1 million (30 June 2023: £0.1 million; 31
December 2023: £3.7 million).
((3)) Impairment of assets of £1.2 million (30 June 2023: £46.9 million; 31
December 2023: £50.2 million) comprises impairment of goodwill of £nil (30
June 2023: £25.9 million; 31 December 2023: £26.8 million) and other
intangible assets of £1.2 million (30 June 2023: £21.0 million; 31
December 2023: £23.4 million).
See note 7 "Earnings per share" for the above, net of tax.
5 Net finance expense
Half year to 30 June 2024 Half year to 30 June 2023 Year to 31 December 2023
£m £m £m
Finance income
Net currency translation gains 0.6 0.8 2.0
Fair value gain on interest rate swaps designated as cash flow hedges ((1)) - 1.7 -
Other interest income 0.4 0.1 0.2
Interest income on net defined benefit pension scheme 0.1 0.1 0.2
1.1 2.7 2.4
Finance expense
Interest expense on interest-bearing loans and borrowings((2)) (1) (5.1) (7.3) (16.3)
Fair value gain on interest rate swaps designated as cash flow hedges ((1)) 0.8 - 3.0
Interest expense on net defined benefit pension scheme - - (0.1)
Interest expense on lease liabilities (0.7) (0.8) (1.5)
Other interest expense ((3)) (0.2) (0.1) (1.6)
(5.2) (8.2) (16.5)
Net finance expense from continuing operations (4.1) (5.5) (14.1)
Finance expense
Net currency translation losses - - (0.1)
Unwind of discount on liabilities and other interest (0.1) (0.2) (0.3)
Finance expense from discontinued operations (0.1) (0.2) (0.4)
((1)) For the half year ended 30 June 2024 and for the year ended 31 December
2023 the fair value gain on interest rate swaps designated as cash flow hedges
was presented within Finance expense together with the related hedged item,
while for the half year ended 30 June 2023 this was presented gross within
Finance income.
((2)) Interest expense on interest-bearing loans and borrowings of £5.1
million (2023: £7.3 million) from continuing operations relates to interest
expense of £4.8 million (2023: £6.7 million); amortisation of loan fees
£0.3 million (2023: £0.3 million); and an adjusting amount of £nil (2023:
£0.3 million) relating to loan fees on borrowings for acquisitions. See note
4 "Adjusting items".
((3)) Other interest expense of £0.2 million (2023: £0.1 million) from
continuing operations includes an adjusting amount of £nil (2023: £0.1
million) relating to other financing activities, not relating to underlying
trading. See note 4 "Adjusting items".
6 Taxation
Income tax expense is recognised at an amount determined by multiplying the
profit before tax for the interim reporting period by management's best
estimate of the weighted-average annual income tax rate for the full financial
year, adjusted for the tax effect of certain items recognised in full in the
interim period. As such, the effective tax rate in the Financial Statements
may differ from management's estimate of the effective tax rate for the annual
financial statements.
Half year to 30 June 2024 Half year to 30 June 2023 Year to 31 December 2023
£m £m £m
The total taxation charge/(credit) in the Profit or loss is analysed as
follows:
Continuing operations
Current tax 1.0 1.4 1.0
Deferred tax (1.6) (0.7) (7.7)
(0.6) 0.7 (6.7)
Discontinued operations
Current tax - - (0.6)
Deferred tax - (4.2) 4.7
- (4.2) 4.1
Continuing and discontinued operations
Current tax 1.0 1.4 0.4
Deferred tax (1.6) (4.9) (3.0)
(0.6) (3.5) (2.6)
Adjusting items
Continuing operations
Current tax (0.1) (0.5) (1.8)
Deferred tax (2.0) (1.2) (2.0)
(2.1) (1.7) (3.8)
Discontinued operations
Current tax - - (0.4)
Deferred tax - (3.6) (5.2)
- (3.6) (5.6)
Continuing and discontinued operations
Current tax (0.1) (0.5) (2.2)
Deferred tax (2.0) (4.8) (7.2)
(2.1) (5.3) (9.4)
Before adjusting items
Continuing operations
Current tax 1.1 1.9 2.8
Deferred tax 0.4 0.5 (5.7)
1.5 2.4 (2.9)
Discontinued operations
Current tax - - (0.2)
Deferred tax - (0.6) 9.9
- (0.6) 9.7
Continuing and discontinued operations
Current tax 1.1 1.9 2.6
Deferred tax 0.4 (0.1) 4.2
1.5 1.8 6.8
EU State Aid investigation
In October 2017, the European Commission (EC) opened a State Aid investigation
into the Group Financing Exemption in the UK controlled foreign company
("CFC") rules (an exemption introduced into the UK tax legislation in 2013).
In common with other UK-based international companies whose intra-group
finance arrangements are in line with current controlled foreign company
rules, the Group is affected by this decision.
In June 2019, the UK government submitted an appeal to the EU Commission
against its decision. In common with a number of other affected taxpayers, the
Group filed its own annulment application.
In 2021 the Group received a Charging Notice and Interest Charging Notice from
HMRC, and accordingly paid £3.0 million. The Group considered it probable
that its appeal against the Charging Notice and/or its annulment application
against the European Commission's ("EC") State Aid decision would be
successful and as such recorded a non-current asset in relation to the payment
on the basis that it would ultimately be refunded.
It was considered possible, however, that the appeal and/or annulment might be
unsuccessful which would result in a liability contingent on the outcome.
In 2022, the General Court of the European Union upheld the EC's original
decision to the Court of Justice of the European Union ("CJEU"). The
applicants in both of the lead cases making applications for annulment of
which the Group's own annulment application stood behind appealed against this
judgement.
On 11 April 2024, the Advocate General delivered an independent, but
non-binding, Opinion on the case, stating that the CJEU should set aside the
judgement of the General Court and annul the EC's decision which found that
the UK provided State Aid to certain multinational groups between 2013 and
2018. On 19 September 2024, the European Court of Justice annulled the EC's
original decision. This judgement is now final. Management remains of the view
that it is probable that its appeal and/or its annulment application will be
successful based on the technical facts of the case.
The non-current tax asset at 30 June 2024 is £3.2 million which represents
the £3.0 million described above plus £0.2 million interest receivable.
Deferred Tax Assets
Deferred tax assets are recognised to the extent it is probable that future
taxable profit will be available against which the unused tax losses, unused
tax credits and deductible temporary differences can be utilised in the
relevant jurisdictions. As of 30 June 2024, the Group has recognised deferred
tax assets of £55.6 million (30 June 2023: £43.7 million; 31 December 2023:
£55.4 million)
7 Earnings per ordinary share
Earnings per share ("EPS") is the amount of post-tax profit/(loss)
attributable to each share.
Basic EPS is calculated on the profit for the period divided by the weighted
average number of ordinary shares in issue during the
period.
Diluted EPS is calculated on the profit/(loss) for the period divided by the
weighted average number of ordinary shares in issue during the period but
adjusted for the effects of dilutive share options.
The adjusted EPS measure is calculated based on adjusted profit/(loss) and is
used by management to set performance targets for employee incentives and to
assess performance of the businesses.
The calculation of basic, diluted and adjusted EPS is set out
below:
Half year Half year to
30 June 2024 30 June 2023
£m £m
(Loss)/profit for the financial period from continuing operations (10.2) 3.5
Add back adjusting items:
Amortisation of intangible assets that are acquired in a business combination, 1.4 1.5
net of tax
Impairment of fixed assets, net of tax 13.8 1.4
Acquisition related charges, net of tax 0.1 0.2
Integration and restructuring costs, net of tax 0.3 1.8
Finance expense - amortisation of loan fees on borrowings for acquisitions and - 0.3
other interest, net of tax
Add back adjusting items from continuing operations, net of tax: 15.6 5.2
Adjusted profit after tax from continuing operations 5.4 8.7
Loss for the financial period from discontinued operations
Add back adjusting items, all net of tax: (2.6) (50.0)
Amortisation of intangible assets that are acquired in a business combination, - 1.8
net of tax
Impairment of intangible assets, net of tax 1.2 43.9
Acquisition related charges, net of tax - 0.7
Finance expense - unwind of discount on liabilities and other interest and 0.1 0.2
other interest, net of tax
Add back adjusting items from discontinued operations, all net of tax 1.3 46.6
Adjusted loss after tax from discontinued operations (1.3) (3.4)
Loss for the financial period (12.8) (46.5)
Adjusted profit after tax 4.1 5.3
Weighted average number of shares '000 Adjusted earnings per share Earnings
per share
Half year to 30 June Half year to 30 June Half year to 30 June
2024 2023 2024 2023 2024 2023
Number Number pence pence pence pence
From continuing operations((1))
Basic 94,191 46,485 5.7 18.7 (10.8) 7.5
Dilutive potential ordinary shares 261 1,006 (0.1) (0.4) - (0.1)
Diluted 94,452 47,491 5.6 18.3 (10.8) 7.4
From discontinued operations
Basic 94,191 46,485 (1.4) (7.3) (2.8) (107.5)
Dilutive potential ordinary shares - - - - - -
Diluted 94,191 46,485 (1.4) (7.3) (2.8) (107.5)
From total operations ((2))
Basic 94,191 46,485 4.3 11.4 (13.6) (100.0)
Dilutive potential ordinary shares 261 1,006 (0.1) (0.2) - -
Diluted 94,452 47,491 4.2 11.2 (13.6) (100.0)
((1)) 261,000 potential ordinary shares are antidilutive for half year to 30
June 2024 statutory earnings per share.
((2)) 261,000 (2023: 1,006,000) potential ordinary shares are antidilutive for
statutory earnings per share.
8 Intangible assets
Intangible assets comprise of goodwill, acquired intangibles, software and
capitalised development costs.
Impairment tests for CGUs or groups of CGUs containing goodwill
In accordance with the requirements of IAS 36 "Impairment of Assets", goodwill
is allocated to the CGUs, assessed to be the three segments of the Group,
which are expected to benefit from the acquisition and are identified by the
way goodwill is monitored for impairment. The Group's total consolidated
goodwill of £80.1 million at 30 June 2024 (31 December 2023: £94.8 million)
is allocated to: Media Solutions: £37.9 million (31 December 2023: £52.7
million); Production Solutions: £31.2 million (31 December 2023: £31.1
million); and Creative Solutions: £11.0 million (31 December 2023: £11.0
million).
Goodwill allocated to each CGU is assessed for impairment annually and if
there is a specific indicator of impairment. At the half year, trading levels
indicated an impairment trigger event. As a result, an impairment test was
performed to assess the recoverable amount compared to each CGUs carrying
value. The recoverable value of the CGU has been assessed with reference to
the higher of fair value less costs of disposal and the value in use (VIU)
methodology which is then compared to the carrying value of the net assets
within the CGU. The VIU was performed over a projected period of five years
together with a terminal value. This reflects the projected cash flows of each
CGU based on the actual operating results, the most recent Board approved
budget, the strategy, and management projections.
The key assumptions on which the value in use calculations are based relate to
(i) business performance over the next five years, (ii) terminal growth rates
beyond 2029; and (iii) discount rates applied.
(i) Business performance over the next five years - Forecast sales growth
rates are based on past experience and take into account current and future
market conditions and opportunities, and strategic decisions made in respect
of each CGU. Operating profits are forecast based on historical experience of
operating margins adjusted for the impact of changes in product costs,
cost-saving initiatives already implemented, approved or committed to at the
balance sheet date and any new product launches. Cash conversion is the ratio
of operating cash flow to operating profit. Management forecasts the cash
conversion rate based on historical experience.
(ii) Terminal growth rates beyond 2029 - These are based on management's
assessment of the outlook for overall market growth for all CGUs.
(iii) Discount rates applied - The pre-tax discount rates were measured based
on the interest rate of 30-year government bonds issued in the relevant
market, adjusted for a risk premium to reflect both the increased risk of
investing in equities generally and the systematic risk of the CGU. Growth
rates for 2028 and 2029 were assumed to be 4.0% and 2.0% for Media Solutions,
8.0% and (1.0%) for Production Solutions and 4.0% and 2.0% for Creative
Solutions respectively. The growth rates used for the impairment test as at 31
December 2023 for the 2027 and 2028 years were 4.0% and 2.0% for Media
Solutions, 1.0% and 5.0% for Production Solutions and 8.0% and 4.0% for
Creative Solutions respectively. Growth rates for the period beyond 2029 were
assumed to be 2.0% for all CGUs. The pre-tax discount rates applied to
discount the pre-tax cash flows were 15.0% (2023: 15.0%) for Media Solutions;
14.0% (2023: 14.0%) for Production Solutions; and 16.0% (2023: 16.0%) for
Creative Solutions.
Outcome of the impairment review
Our 30 June 2024 impairment assessment concluded that there is headroom in the
Production Solutions and Creative Solutions CGUs, consistent with 31 December
2023. The carrying value of the Media Solutions CGU exceeded its value in use
by £14.9 million (2023: £nil). An impairment charge equivalent to this
amount has been recognised in the condensed consolidated statement of profit
or loss.
Other sensitivities
No reasonable change to estimates results in an impairment for Production
Solutions or Creative Solutions.
The table below shows the sensitivity of the £14.9m impairment recognised to
reasonable possible changes in key assumptions in relation to Media Solutions.
Scenario 1 (+/-20bps) Scenario 2 (+/-50bps)
Discount rate £2.8m/(£2.9m) £6.7m/(£7.4m)
Terminal growth rate (£2.3m)/£2.2m (£5.8m)/£5.3m
9 Employee benefit asset
The Group has employee benefit schemes in the UK, Italy, Germany, Japan and
France. In the UK it is a defined benefit scheme which was closed to future
accruals with effect from 31 July 2010.
The UK defined benefit scheme is in an actuarial surplus position of £4.2
million at 30 June 2024 (30 June 2023: £4.7 million; 31 December 2023: £4.2
million) measured on an IAS 19 "Employee Benefits" basis). The surplus has
been recognised on the basis that the Group has an unconditional right to a
refund, assuming the gradual settlement of Scheme liabilities over time until
all members have left the Scheme.
10 Analysis of net debt
The table below analyses the Group's components of net debt and their
movements in the period:
Interest bearing loans and borrowings ((1)) Leases Liabilities from financing Cash and cash equivalents((2)) Half year to 30 June 2024 from continuing operations Leases from discontinued operations Half year to 30 June 2024 from total operations
sub-total
£m £m £m £m £m £m £m
Opening at 1 January 2024 (99.2) (34.0) (133.2) 4.7 (128.5) (0.3) (128.8)
Other cash flows - - - 12.9 12.9 - 12.9
Repayments 96.4 2.7 99.1 (99.3) (0.2) 0.2 -
Borrowings (98.9) - (98.9) 98.9 - - -
Leases entered into during the period - (0.9) (0.9) - (0.9) - (0.9)
Leases - early termination - 0.1 0.1 - 0.1 - 0.1
Fees incurred 0.8 - 0.8 - 0.8 - 0.8
Amortisation of fees (0.3) - (0.3) - (0.3) - (0.3)
Foreign exchange differences (0.8) 0.1 (0.7) (0.5) (1.2) - (1.2)
Closing at 30 June 2024 (102.0) (32.0) (134.0) 16.7 (117.3) (0.1) (117.4)
Interest bearing loans and borrowings Leases Liabilities from financing Cash and cash equivalents((2)) Year to 31 December 2023 from continuing operations Leases from discontinued operations Year to 31 December 2023 from total operations
sub-total
((1))
£m £m £m £m £m £m £m
Opening at 1 January 2023 (174.5) (34.1) (208.6) 15.8 (192.8) (0.7) (193.5)
Reclassify from continued to discontinued ((3)) - 0.3 0.3 - 0.3 (0.3) -
Other cash flows - - - 67.1 67.1 - 67.1
Repayments 313.9 6.3 320.2 (320.6) (0.4) 0.4 -
Borrowings (240.0) - (240.0) 240.0 - - -
Leases entered into during the year - (7.6) (7.6) - (7.6) (0.1) (7.7)
Leases - early termination - 0.1 0.1 - 0.1 0.3 0.4
Fees incurred 0.3 - 0.3 - 0.3 - 0.3
Amortisation of fees (1.3) - (1.3) - (1.3) - (1.3)
Foreign currency 2.4 1.0 3.4 2.4 5.8 0.1 5.9
Closing at 31 December 2023 (99.2) (34.0) (133.2) 4.7 (128.5) (0.3) (128.8)
Interest bearing loans and borrowings((1)) Leases Liabilities from financing Cash and cash equivalents ((2)) Half year to 30 June 2023 from continuing operations Leases from discontinued operations Half year to 30 June 2023 from total operations
sub-total
£m £m £m £m £m £m £m
Opening at 1 January 2023 (174.5) (34.1) (208.6) 15.8 (192.8) (0.7) (193.5)
Other cash flows - - - (22.5) (22.5) - (22.5)
Repayments 62.8 3.3 66.1 (66.3) (0.2) 0.2 -
Borrowings (85.7) - (85.7) 85.7 - - -
Leases entered into during the period - (6.8) (6.8) - (6.8) - (6.8)
Leases - early termination - 0.1 0.1 - 0.1 - 0.1
Fees incurred - - - - - - -
Amortisation of fees (0.6) - (0.6) - (0.6) - (0.6)
Foreign exchange differences 4.5 1.3 5.8 0.9 6.7 - 6.7
Closing at 30 June 2023 (193.5) (36.2) (229.7) 13.6 (216.1) (0.5) (216.6)
((1)) Interest bearing loans and borrowings are stated after deduction of
unamortised loan fees and loan transaction costs of £1.3 million (31 December
2023: £0.8 million, 30 June 2023: £1.1 million).
((2)) Cash and cash equivalents include bank overdrafts of £38.7 million (30
June 2023: £4.3 million, 31 December 2023: £4.0 million).
((3)) On 31 December 2023, the Syrp business which is part of the Media
Solutions Division based in New Zealand was closed. Therefore, the finance
lease of £0.3 million was reclassified from continuing to discontinued
operations at the beginning 2023, on 1 January 2023. See note 14 "Discontinued
operations and non-current assets classified as held for sale".
On 14 February 2020, the Group signed a new £165.0 million five-year with one
optional one-year extension multi-currency RCF with a syndicate of five banks.
The one-year extension was agreed with the syndicate banks in January 2022
(four banks) and in July 2023 (fifth bank), increasing the RCF maturity to 14
February 2026. In December 2022, a £35.0 million accordion was agreed with
four syndicate banks, resulting in the total commitments increasing to £200.0
million. In June 2024, the facility was extended by six months taking the
maturity to 14 August 2026 and reduced by £50.0 million, taking the overall
committed facilities to £150.0 million.
During the second half of 2023 and in June 2024, the Group renegotiated and
agreed with its lending banks revised covenants for the RCF. The applicable
covenant limit at each test date is set out below:
Test date Net debt: EBITA:
EBITDA ((1))
net interest ((1))
not higher than not lower than
June 2023 3.25x 4.00x
December 2023 4.25x 1.25x
March 2024 4.25x 1.50x
June 2024 4.25x 1.50x
September 2024 3.75x 2.25x
December 2024 3.25x 3.00x
March 2025, onwards (2) 3.25x 3.50x
((1)) See note 15 "Glossary of Alternative Performance Measures ("APMs")" for
the definition and determination of these items.
((2)) Quarterly test dates to continue beyond March 2025.
Restrictions apply up to March 2025 whereby dividends and acquisitions are not
permitted without lender consent and the non-recourse factoring facility is
capped to £15.0 million utilisation.
The Group was utilising 69% of the RCF as at 30 June 2024 (51% as at 31
December 2023; 78% as at 30 June 2023).
Under the terms of the RCF the Group expects to and has the discretion to roll
over the obligation for at least 12 months from the Balance Sheet date, and as
a result, these amounts are reported as non-current liabilities in the
condensed consolidated balance sheet. On 22 January 2021, the Group received a
€0.7 million (£0.6 million) fixed rate loan from the Italian Government in
response to COVID-19. The loan amortises bi-annually from June 2024 and will
be fully repaid by December 2027. As at June 2024, the outstanding balance was
€0.6 million (£0.5 million).
On 14 November 2021, the Group signed a US$53.0 million (£43.8 million)
three-year (expiry 14 November 2024) amortising Term Loan with a syndicate of
four banks to facilitate the acquisition of Savage. Following the payment of
25% of the original amount during 2022 and 20% in June 2023, the outstanding
balance of US$29.1 million (£23.3 million) was pre-paid on 11 December 2023
and the facility cancelled. On 7 January 2022, the Group signed a US$47.0
million (£38.8 million) three-year (maturity 7 January 2025) amortising Term
Loan with a syndicate of four banks to facilitate the acquisition of AUDIX.
Following the payment of 25% of the original amount during 2022 and 20% in
June 2023, the outstanding balance of US$25.9 million (£20.7 million) was
pre-paid on 11 December 2023 and the facility cancelled.
On 25 January 2024, the group entered into a new operating cash pooling
arrangement with HSBC which caused a change in presentation under IAS 32,
accordingly the balances are presented gross at 30 June 2024, while under
the previous arrangement with the same bank they were presented net as they
met the criteria to be disclosed net under IAS32. As at 30 June 2024, the
£38.7 million gross overdraft is offset against £41.7 million of the gross
cash of £55.4 million, creating a net cash pool of £3.0 million. Under the
arrangement, the offset is allowed for net overdraft utilisation and interest
calculation purposes. The Group's net cash position as at 30 June 2024 is
£16.7 million (30 June 2023: £13.6 million; 31 December 2023: £4.7
million).
The Group has a £3.4 million un-committed bank overdraft facility, and a
£5.0 million committed bank overdraft facility which is carved out of the
£150.0 million RCF when in use. As at 30 June 2024, £nil overdrafts (30
June 2023: £4.3 million; 31 December 2023: £4.0 million) of the total £9.3
million facilities were in use on a net basis, and £38.7 million (30 June
2023: £24.3 million; 31 December 2023: £39.9 million) bank overdrafts were
in use on a gross basis.
11 Derivative financial instruments
The fair value of forward exchange contracts and interest rate swap contracts
is determined by estimating the market value of that contract at the reporting
date. Derivatives are presented as current or non-current based on their
contracted maturity dates.
Forward exchange contracts
The following table shows the forward exchange contracts in place at the
Balance Sheet date. These contracts mature in the next eighteen months,
therefore the cash flows and resulting effect on the statement of profit or
loss are expected to occur within the next eighteen months.
Nominal amounts as at 30 June 2024 Weighted average exchange rate of contracts Nominal amounts as at 30 June 2023 millions Weighted average exchange rate of contracts
millions
Currency
Forward exchange contracts (buy/sell)
GBP/USD forward exchange contracts USD 11.0 1.20 18.3 1.20
EUR/USD forward exchange contracts USD 19.7 1.06 41.1 1.04
GBP/EUR forward exchange contracts EUR 19.6 1.13 7.6 1.14
GBP/JPY forward exchange contracts JPY 402.6 170.4 144.0 154.0
EUR/JPY forward exchange contracts JPY 820.0 151.3 263.0 137.0
CHF/GBP forward exchange contracts CHF - - 0.5 1.11
During the period ended 30 June 2024 a net gain of £1.5 million (2023: £0.4
million net gain) relating to forward exchange contracts was reclassified to
the statement of profit or loss, to match the crystallisation of the hedged
forecast cash flows which affects the statement of profit or loss.
Interest rate swaps
The following table shows the interest rate swap contracts in place at the
Balance Sheet date. The interest is payable quarterly on 31 March, 30 June, 30
September and 31 December.
Nominal amounts as at 30 June 2024 Nominal amounts as at 30 June 2023 millions
millions
Weighted average fixed rate((1))
Maturity
Currency
Interest rate swap contracts
USD Interest rate swaps float (SOFR) to fix USD 40.0 5.18% Sep-24 35.0
GBP Interest rate swaps float (SOFR) to fix GBP 37.0 1.01% Jan-25 47.0
USD Interest rate swaps float (SONIA) to fix USD - 1.01% Sep-23 55.0
(()(1)) In addition to these fixed rates, the margin relating to the interest
swapped of the underlying RCF or the term loans continues to apply.
In September 2023 the Group entered into new $40.0 million and $35.0 million
floating-to-fixed interest rate swaps to replace the maturing $35.0 million
and $55.0 million swaps. As at 30 June 2024, a total of £68.6 million (June
2023: £117.8 million) remain in place following the early closures of the
$35.0 million (£27.5 million) and £10.0 million swaps in December 2023, due
to the underlying debt repayment following the equity raise. Swaps cover 67%
of the variable loan principal outstanding (30 June 2023: 61%).
During the period ended 30 June 2024 a net gain of £0.8 million (30 June
2023: net gain of £1.7 million) relating to interest rate swaps was
reclassified to the Profit or Loss, to match the crystallisation of the hedged
forecast cash flows which affects the statement of profit or loss.
Fair value hierarchy
The carrying values of the Group's financial instruments approximate their
fair values.
The Group's financial instruments measured at fair value are Level 2.
12 Share capital
Share capital as at 30 June 2024 amounted to £18.9 million (30 June 2023:
£9.4 million; 31 December 2023: £18.9 million).
13 Subsequent events
Apart from an update on the EU state aid investigation disclosed in note 6
"Taxation", there were no events after the Balance Sheet date that require
disclosure.
14 Discontinued operations and non-current assets classified as held for sale
Discontinued
operations
In accordance with IFRS 5 "Non-current Assets Held for Sale and Discontinued
Operations", the assets and liabilities of the Amimon business, which is part
of the Creative Solutions Division, and the Syrp business, which is part of
the Media Solutions Division are classified as a disposal group held for sale.
Discontinued operations are businesses that have been sold, abandoned, or
which are held for sale and contribute to a separate major line of business or
geographical area of operations. The Lightstream and Amimon businesses, part
of the Creative Solutions Division, and the Syrp business, part of the Media
Solutions business, are all classified as discontinued operations.
As at 30 June 2023 Lightstream and Amimon were classified as assets held for
sale and discontinued operations. On 2 October 2023 the Group sold its
Lightstream business based in the US. As at 30 June 2024 Amimon is classified
as an asset held for sale and a discontinued operation.
On 31 December 2023 the Syrp business based in New Zealand was abandoned. 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 the continuing operations.
The table below shows the results of the discontinued operations which are
included in the condensed consolidated statement of profit or loss, condensed
consolidated statement of cash flows and condensed consolidated balance sheet
respectively.
a) Statement of Profit or loss - discontinued
operations
Half year to 30 June 2024 Half year to 30 June 2023 ((1)) Year to 31 December 2023
Notes £m £m £m
Revenue 1.6 4.9 8.1
Expenses (4.1) (58.9) (68.6)
Operating loss (2.5) (54.0) (60.5)
Comprising
- Adjusted operating loss (1.3) (4.0) (6.3)
- Adjusting items in operating loss 4 (1.2) (50.0) (54.2)
Finance expense (0.1) (0.2) (0.4)
Loss before tax (2.6) (54.2) (60.9)
Comprising
- Adjusted loss before tax (1.3) (4.0) (6.4)
- Adjusting items in loss before tax 4 (1.3) (50.2) (54.5)
Taxation - 4.2 (4.1)
Loss after tax from discontinued operations (2.6) (50.0) (65.0)
Loss on disposal of discontinued operation after tax - - (1.0)
Loss after tax from discontinued operations attributable to owners of parent (2.6) (50.0) (66.0)
((1)) Half year to 30 June 2023 has been re-presented to present Syrp Limited
("Syrp") as a discontinued operation separately from continuing operations.
b) Statement of Cash Flows - discontinued operations
Half year to 30 June 2024 Half year to 30 June 2023 Year to 31 December 2023
restated((2))
£m £m £m
Net cash used in operating activities (0.9) (3.6) (7.3)
Net cash used in investing activities (1.2) (1.7) (4.1)
Net cash outflow from financing activities ((2)) (0.2) (0.4) (0.4)
Net cash used in discontinued operations (2.3) (5.7) (11.8)
Loss on disposal of discontinued operation after tax - - (1.0)
Add back share-based payment charge - - 0.1
Disposal of business in cash flow - - (0.9)
( )
((2)) The 30 June 2023 "Net cash used in operating activities", "Net cash used
in investing activities" and "Net cash outflow from financing activities" have
been restated to align with the requirements for Statement of Cash Flows per
IAS 1. This is consistent with 30 June 2024 and 31 December 2023.
c) Effect of the disposal group on the Group condensed consolidated
balance sheet
Half year to Half year to Year to
30 June 30 June 31 December 2023
2024 2023
£m £m £m
Assets of the disposal group classified as held for sale
Intangible assets 5.5 5.4 5.5
Property, plant and equipment 1.1 3.6 3.6
Deferred tax assets - 8.9 -
Inventories 1.2 1.6 1.0
Contact assets 0.2 - 0.2
Trade and other receivables 0.5 2.6 1.5
Other non-current receivables 0.5 0.5 0.5
9.0 22.6 12.3
Liabilities of the disposal group classified as held for sale
Lease liabilities (0.1) (0.5) (0.3)
Contract liabilities (0.3) (0.4) (0.3)
Trade payables (0.4) (1.4) (0.8)
Other payables (1.7) (2.6) (1.6)
Current provisions (0.5) (0.5) (0.6)
Non-current provisions (0.9) (1.1) (1.0)
(3.9) (6.5) (4.6)
15 Glossary on Alternative Performance Measures ("APMs")
The Group believes that these APMs, which are not considered to be a
substitute for or superior to IFRS measures, provide stakeholders with
additional helpful information and enable an alternative comparison of
performance over time.
The Group uses APMs to aid 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. Where
relevant, further information on specific APMs is provided in each section
below.
APM Closest equivalent IFRS measure Definition & Purpose
Profit or loss measures from continuing operations
Adjusted gross profit Gross profit Calculated as gross profit before adjusting items. The table below shows a
reconciliation:
See note 4 "Adjusting items".
Half year to 30 June Half year to 30 June Year
to
31
Dece
mber
2024 2023 2023
£m £m £m
Gross profit 62.3 68.5 114.
6
Other income - (0.4) (0.7
)
Adjusting items in cost of sales 0.1 0.5 4.2
Adjusted gross profit 62.4 68.6 118.
1
Adjusted gross profit margin None Calculated as adjusted gross profit divided by revenue.
Adjusted operating profit (Loss)/profit before tax Calculated as (loss)/profit before tax, before net finance expense, and before
adjusting items. This is a key management incentive metric.
Adjusting items include non-cash charges such as amortisation of intangible
assets that are acquired in a business combination, and effect of fair
valuation of acquired inventory and property, plant and equipment. Cash
charges include items such as transaction costs, earnout, retention and
deferred payments, and significant costs relating to the integration of
acquired businesses.
The table below
shows a
reconciliation:
See note 4
"Adjusting
items".
Half year to 30 June Half year to 30 June Year to 31 December
2024 2023 2023
£m £m £m
(Loss)/Profit before tax (10.8) 4.2 (18.8)
Net finance expense 4.1 5.5 14.1
Adjusting items in operating profit 17.7 6.5 18.0
Adjusted operating profit 11.0 16.2 13.3
Adjusted operating profit margin None Calculated as adjusted operating profit divided by revenue. Progression in
adjusted operating margin is an indicator of the Group's operating efficiency.
Adjusted operating expenses Operating Calculated as operating expenses before adjusting items.
expenses
The table below
shows a
reconciliation:
See note 3
"Operating
expenses".
Half year to 30 June Half year to 30 June Ye
ar
to
31
De
ce
mb
er
2024 2023 20
23
£m £m £m
Operating expenses 69.9 58.8 11
9.
3
Adjusting items in operating expenses (17.6) (6.0) (1
3.
8)
Adjusted operating expenses 52.3 52.8 10
5.
5
Adjusted net finance income/(expense) None Calculated as finance expense, less finance income, and less amortisation of
loan fees and loan transaction costs on borrowings for acquisitions and other
interest.
The table below shows a reconciliation:
Half year to 30 June Half year to 30 June Year to 31 December
2024 2023 2023
£m £m £m
Finance expense (5.2) (8.2) (16.5)
Adjusting finance expense - amortisation of loan fees and loan transaction - 0.4 2.6
costs on borrowings for acquisitions and other interest
Finance income 1.1 2.7 2.4
Adjusted net finance expense (4.1) (5.1) (11.5)
Adjusted profit before tax (Loss)/Profit before Calculated as profit before tax, before adjusting item. This is a key
tax management incentive metric.
See condensed
consolidated
statement of
profit or loss
for a
reconciliation.
Adjusted profit after tax (Loss)/Profit after Calculated as profit after tax before adjusting items.
tax
See condensed
consolidated
statement of
profit or loss
for a
reconciliation.
Adjusted basic earnings per share Basic earnings per share Calculated as adjusted profit after tax divided by the weighted average number
of ordinary shares outstanding during the period. This is a key management
incentive metric.
See note 7
"Earnings per
share" for a
reconciliation.
Cash Flow measures from continuing operations
Free cash flow Net cash from operating activities Net cash from operating activities after proceeds from the sale of property,
plant and equipment and software, purchase of property, plant and equipment,
and capitalisation of software and development costs. This measure reflects
the cash generated in the period that is available to invest in accordance
with the Group's capital allocation policy.
See "adjusted operating cash flow" below for a reconciliation.
Adjusted operating cash flow Net cash from operating activities Free cash flow before payment of interest, tax, restructuring and integration
costs, and transaction costs relating to the acquisition of businesses. This
is a measure of the cash generation and working capital efficiency of the
Group's operations. Adjusted operating cash flow as a percentage of adjusted
operating profit is a key management incentive metric.
Half year to 30 June Half year to 30 June Year
to
31
Dece
mber
2024 2023 2023
£m £m £m
(Loss)/profit for the period from continuing operations (10.2) 3.5 (12.
1)
Add back:
Taxation and net finance expense 3.5 6.2 7.4
Adjusting items 17.7 6.5 18.0
Adjusted operating profit 11.0 16.2 13.3
Depreciation excluding effect of fair valuation of property, plant and 6.3 7.1 14.0
equipment ((1))
Amortisation of purchased software and payment of development costs 3.5 3.2 6.5
Decrease/(increase) in adjusted trade working capital ((2)) 4.4 2.6 (1.1
)
Increase in adjusted non-trade working capital ((2)) (0.7) (6.9) (6.8
)
Decrease in adjusted provisions ((2)) (0.4) (0.1) -
Other:
- Net loss on disposal of property, plant and equipment and software - 0.2 0.2
- Fair value gains on derivative financial instruments (0.1) (0.3) (0.2
)
- Foreign exchange losses 0.5 (0.1) (0.3
)
- Share-based payment charges 1.1 0.8 1.0
- Proceeds from sale of property, plant and equipment and software 2.5 0.1 0.3
- Add back proceeds from property held for sale previously (2.5) - -
- Purchase of property, plant and equipment (3.0) (1.9) (4.6
)
- Purchase of software and payment of development costs (4.4) (5.8) (10.
7)
Adjusted operating cash flow 18.2 15.1 11.6
Interest paid (4.9) (6.2) (15.
3)
Tax received/(paid) 1.3 (4.8) (10.
4)
Proceeds from property held for sale previously 2.5 - -
Payments relating to:
Restructuring and integration costs (0.7) (3.3) (6.4
)
Proceeds from sale of impaired inventory - - 1.1
Retention bonuses (1.2) (3.7) (3.6
)
Transaction and other costs relating to acquisitions (0.1) (0.6) (0.
8)
Free cash flow 15.1 (3.5) (23.
8)
Proceeds from sale of property, plant and equipment and software (2.5) (0.1) (0.
3)
Purchase of property, plant and equipment 3.0 1.9 4.6
Purchase of software and payment of development costs 4.4 5.8 10.7
Net cash from operating activities 20.0 4.1 (8.8
)
((1) ) Depreciation on property, plant and equipment is £6.3
million (2023: £7.1 million), of which £2.7 million (2023: £3.1 million)
relates to right-of-use property, plant and equipment.
((2) ) See "Adjusted trade working capital movement", "Adjusted
non-trade working capital movement" and "Adjusted provision movement" below
for a reconciliation.
Decrease/(increase) in adjusted trade working capital None The decrease/(increase) in adjusted trade working capital includes movements
in inventories, trade receivables and trade payables, excluding movements
relating to adjusting items.
Half year to 30 June Half year to 30 June Ye
ar
to
31
De
ce
mb
er
2024 2023 20
23
£m £m £m
(Increase)/decrease in inventories (0.7) (1.0) 6.
9
(Increase)/decrease in trade receivables (5.2) 9.7 17
.1
Increase/(decrease) in trade payables 10.4 (5.9) (2
0.
2)
Decrease in trade working capital 4.5 2.8 3.
8
Deduct inflows from adjusting charges:
- Effect of fair valuation of acquired inventory - (0.1) (0
.1
)
- Impairment of inventory (0.1) (0.1) (
3.
7)
- Proceeds from the sale of impaired inventory - - (
1.
1)
Decrease/(increase) in adjusted trade working capital 4.4 2.6 (1
.1
)
Decrease/(increase) in adjusted non-trade working capital None The decrease/(increase) in adjusted non-trade working capital includes
movements in other receivables, other payables and contract
assets/liabilities, excluding movements relating to adjusting items.
Half year to 30 June Half year to 30 June Year to 31 December
2024 2023 2023
£m £m £m
(Increase)/decrease in other receivables and contract assets (2.2) 2.5 0.5
Decrease in other payables and contract liabilities (0.1) (13.3) (10.9)
Increase in non-trade working capital (2.3) (10.8) (10.4)
Deduct inflows from adjusting charges:
Adjustments for integration, restructuring and other costs, transaction costs 1.6 3.9 3.6
relating to acquisition of businesses, and retention bonuses
Increase in adjusted non-trade working capital (0.7) (6.9) (6.8)
Decrease in adjusted provisions Decrease in provisions The adjusted provisions movement excludes movements relating to adjusting
items.
Half year to 30 June Half Yea
year to r
30 June to
31
Dec
emb
er
2024 2023 202
3
£m £m £m
Decrease in provisions (0.3) (1.5) (1.
9)
Adjustments for integration , restructuring and other costs (0.1) 1.4 1.9
Decrease in adjusted provision (0.4) (0.1)
-
Other measures from continuing operations
Return on capital employed (ROCE) None ROCE is calculated as annual adjusted operating profit for the last 12 months
divided by the average total assets (excluding defined benefit pension asset
and deferred tax assets)), current liabilities (excluding current
interest-bearing loans and borrowings), and non-current lease liabilities.
The average is based on the opening and closing position of the 12 month
applicable period.
12 months ended
30 June
2024
£m
Adjusted operating profit for the last 12 months 8.1
Capital employed at the beginning of the 12 month period 299.7
Capital employed at the end of the 12 month period 277.1
Average capital employed 288.4
Adjusted ROCE % 2.8%
Dropthrough None Dropthrough is the change in adjusted operating profit as a percentage of the
change in revenue.
Organic revenue None Organic revenue is revenue from existing business, and not from new mergers
and acquisitions.
Organic adjusted operating profit None Organic adjusted operating profit is adjusted operating profit from existing
business, and not from new mergers and acquisitions.
Organic growth None Organic growth is the growth achieved year-on-year from existing business, and
not from new mergers and acquisitions.
Constant currency None Constant currency variances are derived by calculating the current year
amounts at the applicable prior year foreign currency exchange rates,
excluding the effects of hedging in both years.
Revenue growth is presented on a constant currency basis as this best
represents the impact of volume and pricing on revenue growth.
Organic revenue at constant currency None Calculated as organic revenue at constant currency.
The table below shows a reconciliation:
See condensed consolidated statement of profit or loss for a reconciliation.
See "Organic revenue", "Organic growth" and "Constant currency" above for
definitions.
Half year to
30 June
2024
£m
Half year to 30 June 2023 organic revenue 165.0
Half year to 30 June 2024 organic revenue 153.3
Exclude effects of foreign currency exchange rates:
Translational effects 4.7
Transactional effects (1.0)
2024 organic revenue at constant currency 157.0
Organic growth at constant currency % (5%)
Cash conversion None Calculated as adjusted operating cash flow divided by adjusted operating
profit. This is a key management incentive metric and is a measure used within
the Group's incentive plans.
Organic adjusted operating profit at constant currency None Calculated as organic adjusted profit at constant currency.
The table below shows a reconciliation:
See condensed consolidated statement of profit or loss for a reconciliation.
See "Adjusted operating profit" above for definitions.
See "Organic adjusted operating profit", "Organic growth" and "Constant
currency" above
for definitions.
Half year to
30 June
2024
£m
Half year to 30 June 2023 organic adjusted operating profit 16.2
2024 organic adjusted operating profit ((1)) 11.0
Exclude effects of foreign currency exchange rates:
Translational effects 0.1
Transactional effects 0.2
2024 organic adjusted operating profit at constant currency 11.3
Organic growth at constant currency % (30%)
((1)) See "Adjusted operating profit" above for a reconciliation.
Adjusted EBITDA None Calculated as adjusted operating profit for the last 12 months before
depreciation of tangible fixed assets and amortisation of intangibles (other
than those already excluded from adjusted operating profit).
The table below shows a reconciliation:
12 months ended
30 June
2024
£m
Adjusted operating profit for the last 12 months 8.1
Add back depreciation excluding effect of fair valuation of property, plant 13.2
and equipment
Add back amortisation of purchased software and payment of development costs 6.8
Adjusted EBITDA 28.1
Covenant EBITDA None Calculated as adjusted EBITDA for the last 12 months before share based
payment charge, and after interest income/(expense) unrelated to gross
borrowings
The table below shows a reconciliation:
12 months ended
30 June
2024
£m
Adjusted EBITDA for the last 12 months 28.1
Add back share based payment charge 1.3
Add back material items of an unusual nature 5.3
Add interest income unrelated to gross borrowings ((1)) 1.3
Covenant EBITDA 36.0
((1)) See "Interest income/(expense) unrelated to gross borrowings" below for
a reconciliation.
Covenant EBITA None Calculated as Covenant EBITDA for the last 12 months less depreciation of
tangible fixed assets and amortisation of intangibles (other than those
already excluded from adjusted operating profit).
The table below shows a reconciliation:
12 months ended
30 June
2024
£m
Covenant EBITDA for the last 12 months 36.0
Less depreciation excluding effect of fair valuation of property, plant and (13.2)
equipment
Covenant EBITA 22.8
Interest income/(expense) unrelated to gross borrowings None This is currency translation gains/(losses), other interest income/(expense),
interest income/(expense) on net defined benefit pension scheme, and loan fees
on borrowings, excluding those on borrowings for acquisitions, and other
financing initiatives.
12 months ended 12 months ended 12 months ended
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Net currency translation gains 1.8 2.4 2.0
Other interest income 0.5 0.1 0.2
Interest income on net defined benefit pension scheme 0.2 0.1 0.2
Interest expense on net defined benefit pension scheme (0.1) - (0.1)
Other interest expense (1.7) - (1.6)
Loan fees on borrowings (1.6) (1.2) (1.9)
Less loan fees on borrowings for acquisitions and other financing initiatives 2.2 0.7 2.6
Interest income unrelated to gross borrowings 1.3 2.1 1.4
Covenant net interest None Calculated as adjusted net finance income/(expense)((1)) for the last 12
months less interest income/(expense) unrelated to gross borrowings ((1))
12 months ended 12 months ended 12 months ended
30 June 30 June 31 December
2023 2023 2023
£m £m £m
Adjusted net finance expense for the last 12 months (10.5) (8.1) (11.5)
Less interest income unrelated to gross borrowings (1.3) (2.1) (1.4)
Covenant net interest (11.8) (10.2) (12.9)
((1)) See "Adjusted net finance income/(expense)" and "Interest
income/(expense) unrelated to gross borrowings" above for a reconciliation.
Net debt None See note 10 "Analysis of Net debt" for an explanation of the balances included
in net debt, along with a breakdown of the amounts.
Covenant net debt None Calculated as Net debt including lease liabilities from discontinued
operations, before unamortised loan fees on borrowings.
Half year to 30 June Half year to 30 June Year to 31 December
2023 2023 2023
£m £m £m
Net debt from continuing operations 117.3 216.1 128.5
Add back lease liabilities from discontinued operations 0.1 0.5 0.3
Add back unamortised loan fees on borrowings 1.3 1.1 0.8
Covenant net debt 118.7 217.7 129.6
Decrease in adjusted provisions
Decrease in provisions
The adjusted provisions movement excludes movements relating to adjusting
items.
Half year to 30 June
Half year to 30 June
Year to 31 December
2024
2023
2023
£m
£m
£m
Decrease in provisions
(0.3)
(1.5)
(1.9)
Adjustments for integration , restructuring and other costs
(0.1)
1.4
1.9
Decrease in adjusted provision
(0.4)
(0.1)
-
Other measures from continuing operations
Return on capital employed (ROCE)
None
ROCE is calculated as annual adjusted operating profit for the last 12 months
divided by the average total assets (excluding defined benefit pension asset
and deferred tax assets)), current liabilities (excluding current
interest-bearing loans and borrowings), and non-current lease liabilities.
The average is based on the opening and closing position of the 12 month
applicable period.
12 months ended
30 June
2024
£m
Adjusted operating profit for the last 12 months
8.1
Capital employed at the beginning of the 12 month period
299.7
Capital employed at the end of the 12 month period
277.1
Average capital employed
288.4
Adjusted ROCE %
2.8%
Dropthrough
None
Dropthrough is the change in adjusted operating profit as a percentage of the
change in revenue.
Organic revenue
None
Organic revenue is revenue from existing business, and not from new mergers
and acquisitions.
Organic adjusted operating profit
None
Organic adjusted operating profit is adjusted operating profit from existing
business, and not from new mergers and acquisitions.
Organic growth
None
Organic growth is the growth achieved year-on-year from existing business, and
not from new mergers and acquisitions.
Constant currency
None
Constant currency variances are derived by calculating the current year
amounts at the applicable prior year foreign currency exchange rates,
excluding the effects of hedging in both years.
Revenue growth is presented on a constant currency basis as this best
represents the impact of volume and pricing on revenue growth.
Organic revenue at constant currency
None
Calculated as organic revenue at constant currency.
The table below shows a reconciliation:
See condensed consolidated statement of profit or loss for a reconciliation.
See "Organic revenue", "Organic growth" and "Constant currency" above for
definitions.
Half year to
30 June
2024
£m
Half year to 30 June 2023 organic revenue 165.0
Half year to 30 June 2024 organic revenue 153.3
Exclude effects of foreign currency exchange rates:
Translational effects 4.7
Transactional effects (1.0)
2024 organic revenue at constant currency 157.0
Organic growth at constant currency % (5%)
Cash conversion
None
Calculated as adjusted operating cash flow divided by adjusted operating
profit. This is a key management incentive metric and is a measure used within
the Group's incentive plans.
Organic adjusted operating profit at constant currency
None
Calculated as organic adjusted profit at constant currency.
The table below shows a reconciliation:
See condensed consolidated statement of profit or loss for a reconciliation.
See "Adjusted operating profit" above for definitions.
See "Organic adjusted operating profit", "Organic growth" and "Constant
currency" above
for definitions.
Half year to
30 June
2024
£m
Half year to 30 June 2023 organic adjusted operating profit 16.2
2024 organic adjusted operating profit ((1)) 11.0
Exclude effects of foreign currency exchange rates:
Translational effects 0.1
Transactional effects 0.2
2024 organic adjusted operating profit at constant currency 11.3
Organic growth at constant currency % (30%)
((1)) See "Adjusted operating profit" above for a reconciliation.
Adjusted EBITDA
None
Calculated as adjusted operating profit for the last 12 months before
depreciation of tangible fixed assets and amortisation of intangibles (other
than those already excluded from adjusted operating profit).
The table below shows a reconciliation:
12 months ended
30 June
2024
£m
Adjusted operating profit for the last 12 months
8.1
Add back depreciation excluding effect of fair valuation of property, plant
and equipment
13.2
Add back amortisation of purchased software and payment of development costs
6.8
Adjusted EBITDA
28.1
Covenant EBITDA
None
Calculated as adjusted EBITDA for the last 12 months before share based
payment charge, and after interest income/(expense) unrelated to gross
borrowings
The table below shows a reconciliation:
12 months ended
30 June
2024
£m
Adjusted EBITDA for the last 12 months
28.1
Add back share based payment charge
1.3
Add back material items of an unusual nature
5.3
Add interest income unrelated to gross borrowings ((1))
1.3
Covenant EBITDA
36.0
((1)) See "Interest income/(expense) unrelated to gross borrowings" below for
a reconciliation.
Covenant EBITA
None
Calculated as Covenant EBITDA for the last 12 months less depreciation of
tangible fixed assets and amortisation of intangibles (other than those
already excluded from adjusted operating profit).
The table below shows a reconciliation:
12 months ended
30 June
2024
£m
Covenant EBITDA for the last 12 months
36.0
Less depreciation excluding effect of fair valuation of property, plant and
equipment
(13.2)
Covenant EBITA
22.8
Interest income/(expense) unrelated to gross borrowings
None
This is currency translation gains/(losses), other interest income/(expense),
interest income/(expense) on net defined benefit pension scheme, and loan fees
on borrowings, excluding those on borrowings for acquisitions, and other
financing initiatives.
12 months ended
30 June
2024
£m
12 months ended
30 June
2023
£m
12 months ended
31 December
2023
£m
Net currency translation gains
1.8
2.4
2.0
Other interest income
0.5
0.1
0.2
Interest income on net defined benefit pension scheme
0.2
0.1
0.2
Interest expense on net defined benefit pension scheme
(0.1)
-
(0.1)
Other interest expense
(1.7)
-
(1.6)
Loan fees on borrowings
(1.6)
(1.2)
(1.9)
Less loan fees on borrowings for acquisitions and other financing initiatives
2.2
0.7
2.6
Interest income unrelated to gross borrowings
1.3
2.1
1.4
Covenant net interest
None
Calculated as adjusted net finance income/(expense)((1)) for the last 12
months less interest income/(expense) unrelated to gross borrowings ((1))
12 months ended
30 June
2023
£m
12 months ended
30 June
2023
£m
12 months ended
31 December
2023
£m
Adjusted net finance expense for the last 12 months
(10.5)
(8.1)
(11.5)
Less interest income unrelated to gross borrowings
(1.3)
(2.1)
(1.4)
Covenant net interest
(11.8)
(10.2)
(12.9)
((1)) See "Adjusted net finance income/(expense)" and "Interest
income/(expense) unrelated to gross borrowings" above for a reconciliation.
Net debt
None
See note 10 "Analysis of Net debt" for an explanation of the balances included
in net debt, along with a breakdown of the amounts.
Covenant net debt
None
Calculated as Net debt including lease liabilities from discontinued
operations, before unamortised loan fees on borrowings.
Half year to 30 June
2023
£m
Half year to 30 June
2023
£m
Year to 31 December
2023
£m
Net debt from continuing operations
117.3
216.1
128.5
Add back lease liabilities from discontinued operations
0.1
0.5
0.3
Add back unamortised loan fees on borrowings
1.3
1.1
0.8
Covenant net debt
118.7
217.7
129.6
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