For chief executive Stephen Bird, Vitec (VTC) is “quite a decentralised, entrepreneurial” company, which offers considerable autonomy to its acquired businesses. This makes it an attractive parent, argues Mr Bird, to the likes of Wooden Camera, a high-margin camera accessories maker bought for £15m upfront in September 2016 (the total consideration could reach £27m). The business is performing ahead of expectations, while two recent disposals have also helped Vitec's management focus on improving margins and the top line. Vitec sold Bexel, a capital-intensive, loss-making US broadcast services provider, and Haigh-Farr, a defence antennas business with decent – but falling – margins.
Vitec’s strategy seems to be working: the adjusted operating margin grew from 10.2 per cent to 11.3 per cent, against 3 per cent constant-currency growth in continuing revenue. Conversion of adjusted operating profit into operating cash flow was strong at 115 per cent. Management is making good on its effort to grow strongly in Asia Pacific, with sales there constituting 28 per cent of photographic revenue, up from 26 per cent a year earlier.
The photographic division achieved sales growth of 14 per cent to £78.4m. Recent industry data suggest interchangeable lens cameras (ILC) are popular again, after a hiatus caused by greater interest in smartphone cameras and other devices. This is good news for Vitec, as people tend to buy its products to accompany ILC cameras.
Analysts at Investec forecast pre-tax profit of £40.2m and EPS of 65.7p for 2017 (from £37.5m and 61.1p in 2016).
| THE VITEC GROUP (VTC) | ||||
| ORD PRICE: | 1,010p | MARKET VALUE: | £451m | |
| TOUCH: | 1,006-1,017p | 12-MONTH HIGH: | 1041p | LOW: 590p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 29 | |
| NET ASSET VALUE: | 310p* | NET DEBT: | 38% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 144 | 11.2 | 17.1 | 9.9 |
| 2017 | 165 | 16.4 | 32.0 | 10.4 |
| % change | +15 | +46 | +87 | +5 |
| Ex-div: | 21 Sep | |||
| Payment: | 20 Oct | |||
| *Includes intangible assets of £81m, or 181p a share | ||||
