Chairman's Statement

Chairman John McDonough reports on performance

Performance and dividend
The Group delivered a good underlying performance in 2015 with the overall results reflecting the non-repeat of the 2014 Sochi Winter Olympics and FIFA World Cup and a negative impact from foreign exchange. The higher technology broadcast businesses have continued to grow well, while the traditional broadcast and photographic businesses have faced challenging market conditions. The Group is investing in its higher technology products and driving new product launches while taking proactive actions to streamline certain activities with lower growth prospects. These self-help actions are progressing to plan and some further actions are being taken to drive profitable medium-term growth despite uncertain market conditions. The Board remains confident about the Company’s future and we recommend a final dividend of 15.1 pence per ordinary share (2014: 14.7 pence). The final dividend, subject to shareholder approval at the 2016 Annual General Meeting will be paid on Friday, 20 May 2016. This brings the total dividend for 2015 to 24.6 pence per share (2014: 24.0 pence).

Strategy and Board focus
The Board has continued to develop the Group’s strategy with its focus on our core Broadcast and Photographic markets particularly given the context of the fast pace of change in technology and market needs. In April 2015 we held an investor day for our major shareholders showcasing our key brands and growth strategy through: allocating resources to the fast growing independent content creator segment and a focus on content sharing opportunities; increasing resources, brand presence and sales in APAC; and continuing to make strategic acquisitions which make financial sense. Stephen Bird will give further explanation on progress against each of these in his report.

Governance and Board changes
The Board is responsible for setting the right tone from the top and ensuring that a robust governance structure is in place to enable the business to succeed and deliver long-term sustainable growth. As part of this responsibility the Board has continued in 2015 with its programme of visiting key operations and meeting as many people as possible, with a visit to Manfrotto in Italy that included a detailed update from the senior Photographic Division management team on market trends, product development, innovation and operations. This has built on the Board’s visit in 2014 to the Company’s West Coast Broadcast businesses in the US including Teradek and Bexel. We will continue with this practice in 2016 by visiting our operations and people on the East Coast in the US. Each individual Board member is also encouraged to visit our operations at their own convenience to further build on their understanding of the business.

To enforce the importance of good governance and setting the right standards throughout the Group, we have re-launched our Code of Conduct to all employees setting out the values and standards we expect in the conduct of business. This covers issues such as health and safety, conduct of employees, diversity, financial controls and business integrity, and is available on our website. We also undertook a recommunication of our whistleblowing service in 2015 to further strengthen the importance of our governance processes.

In 2015 I have continued with my practice of meeting with several of our major shareholders to discuss the Company’s performance, strategic direction and governance arrangements.

During 2015, Carolyn Fairbairn stood down as an independent Non-Executive Director and Chairman of the Remuneration Committee to take on a new role as Director-General of the CBI. Carolyn had served on the Board since February 2012 and provided outstanding independent advice. This change necessitated our search for a replacement and we have been fortunate to secure the services of Caroline Thomson who was appointed as an independent Non-Executive Director and Chairman of the Remuneration Committee on 1 November 2015. Caroline brings excellent skills and experience to the Board with her background working at the highest level in the BBC. Caroline has undertaken a thorough induction to the Group having already met with senior management and key advisors and will be visiting our key operations during 2016.

As explained in my report in the 2014 Annual Report, Christopher Humphrey succeeded Nigel Moore as Chairman of the Audit Committee at the conclusion of the Company’s AGM in May 2015. Christopher has successfully taken on this Chairmanship and ensured that there has been no break in continuity in this important role. Similarly, Mark Rollins at the conclusion of the 2015 AGM succeeded Nigel Moore in the role of Senior Independent Director and likewise has ensured a seamless transition, including leading the evaluation of my own performance as part of the 2015 Board evaluation.

The Board now comprises seven directors and following our 2015 Board evaluation we believe has the right balance of skills and diversity to meet the challenges the Company faces. The Board over the last couple of years has refreshed itself in terms of the independence of its Non-Executive Directors and continues to monitor its composition to ensure a structured process of succession delivering the right skills, experience and independence to support the successful execution of the Company’s strategy.

Building on the externally facilitated Board evaluation in 2014 the Board set itself objectives for 2015, against which we have tracked progress. We have also carried out an internal Board evaluation in 2015 reviewing progress of the Board against these objectives and the Board’s overall performance against the agreed strategy, financial performance, governance, succession and Board dynamic. The detail of the 2015 objectives and the Board evaluation is set out in the Corporate Governance section of this Annual Report.

Bill Vinten
The Board was sad to hear about the death of Bill Vinten in late 2015. Bill Vinten was a key founding figure in the Company’s business being instrumental in establishing the Vinten product name and our Broadcast supports business based in Bury St Edmunds. The Vinten name is synonymous in the broadcast market with quality products and Bill Vinten’s legacy is reflected in the quality of products produced and sold bearing the Vinten name.

Annual General Meeting
Our AGM will be on 18 May 2016 and the Notice of Meeting and explanatory notes accompany this Annual Report and can be found on our website. All resolutions will be conducted on a poll as in previous years. The Board believe that this is more democratic enabling the views of a wider number of shareholders to be taken into account by way of proxies being voted. All members of the Board plan to attend the AGM and look forward to the opportunity to meet with shareholders. The detail of the AGM resolutions is set out in the AGM Notice accompanying this Annual Report.

Our people
2015 has been a challenging year for Vitec with uncertain end markets and the need to restructure operations to achieve a good performance. This has been achieved through the dedication, passion and hard work of all our people. On behalf of the Board I would like to thank all of our people for their contribution in 2015.

John McDonough CBE

The higher technology broadcast businesses have continued to grow well, while the traditional broadcast and photographic businesses have faced challenging market conditions.