Streamlined and strengthened
Following a sequence of disposals over the past four years, Vitec Group PLC (LONDON:VTC) is now focused on its Broadcast and Photographic divisions where it is investing heavily in innovative products, notably for independent content providers. The shares are trading at a discount to peers. We see potential for share price appreciation as the shares rerate on a likely profit rebound in FY16.
Investment in products a drag on H115 profits
H115 revenues rose by 2% year-on-year to £155.9m. Broadcast revenues (excluding IMT, which was sold in FY14) grew by £9.5m (11%), reflecting the benefit of acquisitions (£7.1m) and forex. Divisional organic growth was offset by the absence of sales relating to the World Cup and Winter Olympics, which boosted FY14 by an estimated £7m. Photographic revenues declined by £0.7m (1%). Group pre-tax profit (before deducting restructuring costs, acquisition transaction costs and goodwill amortisation) fell by £2.9m (17%) to £14.6m as a result of high levels of investment in product development and marketing, the absence of high-margin major event activity and adverse forex effects, which are expected to continue into H215. Stripping out forex and the effect of major events, underlying EBIT grew.
To Read the Entire Report Please Click on the pdf File Below.