Our Strategy

Vitec’s strategy is to focus on two markets that offer good long-term growth potential:

Broadcast

We provide high quality, branded equipment for broadcasters, cinematographers and independent content creators.

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Photographic

We provide a complete range of innovative branded accessories for professional photographers, photographic enthusiasts, social recorders and independent content creators.

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Our strategic priorities and progress during 2015

Vitec has industry-leading product development teams. The Group continues to invest in developing premium innovative products for its customers, including:

  • Teradek VidiU Pro – an easy to use portable device that enables users to broadcast their events live to the internet
  • Teradek COLR a compact device to manage real-time colour correction on set
  • Paralinx Ace – a lightweight, portable device offering uncompressed real-time wireless monitoring aimed at drones
  • SmallHD 500 and 700 series – high definition on-camera monitors with enhanced functionality and displays
  • Anton/Bauer healthcare batteries and chargers – lightweight batteries featuring a visual display to communicate battery life
  • Manfrotto’s Digital Director – an Apple certified electronic device that connects a DSLR camera to an iPad to enable dynamic management of the photo and video workflow
  • Manfrotto bags and accessories – for drones and action cameras
  • Litepanels Brick Bi-Color and Manfrotto Lykos ranges – innovative LED lighting products for broadcasters and photographers

Vitec has strong relationships with its customers and end users. The Group continues to develop products and provide services that meet its customers’ needs, supplementing this with appropriate acquisitions. Key developments in the year include:

  • Driven sales of our higher technology products leading to higher Broadcast revenue in the absence of major sporting events in 2015
  • Expanded our product offering to independent content creators in the Broadcast market with the acquisition of Paralinx
  • Significantly increased sales of products aimed at independent content creators
  • Gained market share in our Manfrotto branded range of bags after the consolidation of the portfolio completed in 2015
  • Enhanced our e-commerce platforms

Vitec has a broad geographical spread with customers in over 100 countries. We are investing in growing our sales globally. Key results and initiatives include:

  • Grown sales in our key Asia-Pacific market to £55.9 million (2014: £53.3 million)
  • Strong revenue growth in Japan in both our Broadcast and Photographic Divisions
  • Continue to strengthen our teams in the Asia-Pacific region across both Divisions
  • Worked with multi-national retail and broadcast customers to support them internationally
  • Moved to a direct distribution model in China for our Photographic business
  • Successfully implemented e-commerce initiatives in China

Vitec provides premium products and services, and we believe our margins should reflect this. During 2015 we have invested in future sales growth, managed the cost base and are realising benefits from streamlining actions:

  • Grown the Group’s gross margin* at constant exchange rates
  • Invested in higher growth segments of the market including e-commerce, product development and launching new products
  • Commenced a £10 million restructuring programme during 2015 across the UK, US and Europe which is progressing well and will deliver an approximate two year payback
  • Invested in product development at 4.5% of Group product sales (2014: 4.1%)

Our people are our most important asset and we aim to retain and recruit suitable talent to support the business. During 2015 Vitec:

  • Appointed new talent to senior roles in key markets in the US and Asia-Pacific
  • Awarded internal promotions for high-potential employees both within and across Divisions
  • Continued to encourage diversity within our business across all the countries we operate in
  • Held a management conference bringing together over 130 of our senior employees across the Group

Vitec generates strong levels of operating cash flow# to support the development of the business, maintain a good progressive dividend policy and fund appropriate acquisitions. Cash generation is a priority for the Group with senior management incentivised to manage Vitec’s working capital effectively. During the year Vitec:

  • Maintained a strong balance sheet while using cash generated to grow the business through targeted acquisitions
  • Maintained a strong control over working capital and continued to invest in driving sales growth
  • Improved operating profit* into operating cash flow# conversion and achieved a conversion of 83% in 2015, maintaining an average of 87% over three years
  • Retained good processes for tracking and managing working capital based on clearly defined metrics

Key Performance Indicators

The Board and Operations Executive monitor a number of key performance indicators (KPIs), to measure our performance over time. Targets for most KPIs are set annually during our budgetary process and include our strategic priorities.

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Principal Risks and Uncertainties

Vitec 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 Board has determined that the following are the principal risks facing the Group are...

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Our Business Model

At the Group level

We create value by:

Strategy
We set Group and Divisional strategy in the medium term, especially with regards to markets served, customer segments and products supplied.

Budgeting and monitoring
Vitec sets Group and Divisional budgets annually and regularly reviews Group and Divisional performance during the year. This includes regular forecasts to ensure that the financial performance is clearly understandable and appropriate targets are set.

Investor relations
We communicate our strategy, performance, outlook and governance with our investors on a regular basis.

Treasury and tax
Vitec manages its financing, hedging and tax planning activities centrally to ensure that the Group has an appropriate structure and funding to support its geographically diverse business.

Acquisitions and disposals
We buy businesses that provide a good return with clear synergies such as extending our technological, product or geographic footprint. We dispose of those businesses that do not fit strategically or do not offer scope to deliver attractive returns.

Compliance and governance
Vitec ensures that an effective Groupwide governance framework and policies are in place to ensure a strong culture of governance and ethical behaviour.

Risk management
We set an overall framework for reviewing and assessing risk and taking mitigating actions as part of the execution of our strategy.

Health and safety
Vitec sets policies to ensure a healthy, safe and productive work environment for all our employees, and ensures they are complied with.

Talent management
We work across the Group to have consistent policies, processes and initiatives for acquiring, retaining and engaging our best talent.

At the Divisional level

We create value by:

Receiving feedback from customers
Our businesses continually obtain feedback on the markets, competitors and products from customers as well as from research. As our businesses are often the market leaders, this enables us to anticipate and respond to developments to ensure our brands remain renowned for their premium offerings.

Designing and developing innovative product and service offerings for our brands
We are at the forefront of embracing new technologies, products and materials that result in innovative high-quality yet cost-effective solutions. We develop innovative products and services that are protected by patents and trademarks and which are marketed under our world-renowned brands.

Sourcing and lean manufacturing
We procure materials from reputable suppliers and produce our products in efficient and environmentally friendly operations and, where appropriate, in lower cost countries such as Costa Rica and China. The majority of our operations are relatively low-volume, small-batch processes.

Working with global logistics providers
We have distributors and customers across the globe and we engage with a number of leading logistics partners to ensure responsive and timely delivery of our products to the relevant geography.

Having a global distribution and sales network to serve our customers
We market our products and services through our own sales and marketing teams. The majority of our sales are conducted via a global network of distributors, dealers and retailers who sell on to customers. We are expanding our e-commerce capabilities through working closely with our customers to develop our online presence. The breadth of products and our strong brand heritage means that our network of channel partners is unrivalled in the markets we serve.

We engage our employees through clear values

We create value by:

Product excellence
Everything we make and do is exceptional

Vitec products and services are exceptional because they are delivered by outstanding people. We set the highest standards of technical performance and aftercare, designing solutions that do precisely what image takers need them to do. All our activities reflect our obsession with quality.

Customer focus
We are nothing without our customers

At Vitec, the focus is always on the customer, allowing us to support them no matter what changes and challenges they face. If we respect our customers’ creative expertise, they will respect ours.

Creative solutions
We are constantly looking to break new ground

At Vitec we learn fast and are always looking for new ways to support our customers and meet their needs. To stay ahead of the game, our creativity has to be applied to every aspect of our business, not just our products. Our passion, flair and ability to ask “why not?” are at the heart of everything we do.

Collaboration
We work better when we work together

The closer we are to our colleagues and customer contacts, the more successful we will be. If we celebrate achievements, share knowledge, pool resources, test ideas and support each other, life will be more rewarding and more satisfying.

Integrity
What you see is what you get

Commitment, fairness and honesty towards our customers, our suppliers and our own people. By being authentic we develop loyalty and trust between ourselves and all those we engage with.

 

* Before restructuring costs and charges associated with acquired businesses.

# Cash generated from operating activities after net capital expenditure, before restructuring costs paid.