Acquisition of RTMotion Enabling the capture and sharing of - PowerPoint PPT Presentation

The Vitec Group plc 22 September 2017 Acquisition of JOBY and Lowepro Acquisition of RTMotion Enabling the capture and sharing of exceptional images

The Vitec Group plc Important notice Forward-looking statements This presentation contains forward-looking statements with respect to the financial condition, performance, position, strategy, results and plans of The Vitec Group plc (the “Group” or the “Company”) based on Management’s current expectations or beliefs as well as assumptions about future events. These for ward-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 publically revise or update any forward-looking statements or adjust them for future events or developments. Nothing in this presentation should be construed as a profit forecast. The information in this presentation 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 presentation 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 presentation contains brands and products that are protected in accordance with applicable trademark and patent laws by virtue of their registration. Adjusted performance measures In addition to statutory reporting, Vitec reports total performance for continuing and discontinued operations on an adjusted basis before restructuring costs and charges associated with acquisition of businesses. Full details can be found in The Vitec Group plc Half Year Results to 30 June 2017. Adjusted performance measures in this presentation are denoted by an *. Specifically: - Adjusted earnings per share* is earnings before charges associated with acquisition of businesses, restructuring costs and gain on disposal of business, divided by the weighted average number of ordinary shares in issue - ROCE (Return on Capital Employed) is calculated as adjusted operating profit* for the last twelve months divided by average total assets less current liabilities excluding the current portion of interest-bearing borrowings - Adjusted operating profit* is before charges associated with acquisition of businesses, restructuring costs, and gain on disposal of business Page 2

The Vitec Group plc Agenda > JOBY and Lowepro > Acquisition highlights > JOBY > Lowepro > Strategic rationale > Integration > Financials > RTMotion > Acquisition highlights > Summary > Q & A Page 3

The Vitec Group plc JOBY and Lowepro acquisition highlights Acquired high profile JOBY and Lowepro brands Excellent strategic fit with Vitec’s existing core activities, enhancing its Photographic Division > Know the business well and an opportune time to acquire > Camera market stabilised, Lowepro expands our presence in US, gives an unrivalled portfolio of bags > JOBY gives us greater access to fast growing iPhoneography and vlogging markets > Good deal and significant synergies post integration Brings innovative product development teams and technology > HQ near San Francisco; products designed and developed in California and Hong Kong > Dedicated supply chain teams in Hong Kong and China where all products are manufactured by third parties and sold globally via independent distributors Key terms of acquisition > $10.3m (£7.6m) cash consideration, on a debt/cash free basis > $32.0m (£23.7m) expected total investment including deal costs, working capital and investment to change the distribution model, and integration costs to access synergies Enhances Vitec’s adjusted EPS in FY 2018, materially in FY 2019 Proforma 30 June 2017 net debt to EBITDA (post Bexel, DayMen): 0.9x Significantly expands Photographic’s market leading brands Page 4

The Vitec Group plc JOBY , formed in 2006 and sold to DayMen in 2011 > In 2006, JOBY introduced the patented GorillaPod which has transformed the camera accessories market > Gives Vitec a leading global position in the fast-growing iPhoneography and vlogging consumer accessories markets > Award-winning industrial design, high quality materials > Strengthens our relationships outside of the photographic channel > Apple continues to grow the JOBY range inside their stores > Good growth prospects for iPhoneography supports market Pro-specification Compact System Camera iPhoneography Page 5

The Vitec Group plc Lowepro , formed in 1967 > Global leader in bags for electronic and photographic devices > Premium bags market stabilising in line with CIPA data trends > Scope to improve margins and increase sales as markets improve > Gives Vitec greater share and penetration globally, particularly in the US, and specifically outdoor photographic bags > Gives Vitec a larger retail and online presence Lowepro focus on design for outdoors complements Manfrotto’s established strength in urban > and professional studio markets Outdoor Device Drone Outdoor Photographic Page 6

The Vitec Group plc The Vitec Group plc MAT JOBY and Lowepro: March 2015 to July 2017 actuals 170 Joby 160 Revenue rebased 100 150 140 130 120 110 100 90 80 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 110 105 Lowepro Revenue rebased 100 100 95 90 85 80 75 70 65 60 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Source: DayMen management JOBY growing rapidly, Lowepro stabilised Page 7

The Vitec Group plc The Vitec Group plc Strategic rationale for the transaction  1 Improve the core > Leverage the combined global sales and distributor network > Consolidate and augment procurement capabilities > Enrich the technical capability of the expanded team  2 Focus on new markets and technologies > Innovative product development teams to expand product development and technical capabilities with access to IP in the higher technology area of iPhoneography and vlogging accessories with JOBY’s GorillaPod  3 Get closer to our customers > Consolidate strategic relationships with Apple and online retailers such as Amazon, the leading consumer electronics retailers, and B&H and other photo speciality retailers  4 Expand in APAC Strengthen the Group’s presence in China and HK, presenting a platform to expand further in APAC > Page 8

The Vitec Group plc Integration: a great fit > Integrate the two brands into Vitec’s Photographic Division existing structure under the leadership of Marco Pezzana Brands and NPD > Retain both brands > Continue to focus JOBY on mobile and vlogging > Focus Lowepro on outdoors/adventurers photographers, Manfrotto on urban/studio > NPD to remain in California (Lowepro) and Hong Kong (JOBY) Operations and logistics > Move administrative/operations/logistics functions to Italy > Hong Kong: integrate key employees with local Manfrotto office > Yiantian, China: progressively integrate with local Manfrotto logistics hub Distribution > To be integrated into the Photographic Division and run out of Italy > Move to Manfrotto Distribution subsidiaries over time > US Distribution business transitioning immediately due to the failure of DayMen’s third party US distributor Page 9

The Vitec Group plc Financial effects of the JOBY and Lowepro acquisition > Acquired certain assets and liabilities of DayMen Group S.a.r.l. including subsidiary companies in HK and China for a cash consideration of $10.3m (£7.6m) > Net assets acquired c. $1.2m (c. £0.9m), which includes $0.7m working capital and $0.5m fixed assets > DayMen unaudited results for the year to 31 March 2017 > Revenue $73.2m (£56.3m), Operating profit $1.4m (£1.1m), EBITDA $2.1m (£1.6m) > As we transition from a third party distribution model to utilising Vitec-owned distribution, there will be an expected $14.7m (£10.9m) investment in working capital > One-off cash costs to implement the integration and deliver cost savings of c. $7.0m (£5.2m), including deal costs, and will be incurred by y/e 2018. The P&L impact of integration costs will be taken above the line > Pre-tax cost savings of at least $5.0m (£3.7m) p.a. are expected to be realised by y/e 2018, and at least $7.0m (£5.2m) p.a. by y/e 2019 > Consideration funded from Vitec’s available committed bank facilities Note Page 10 Estimated foreign exchange rate at completion: £1 = $1.35

The Vitec Group plc Financial effects of the JOBY and Lowepro acquisition (cont.) > Proforma 30 June 2017 net debt to EBITDA would be 0.9x following the disposal of Bexel (completed 1 August 2017) and the acquisition of the JOBY and Lowepro brands > FY 2017 – excluding integration costs, expected to be neutral to adjusted EPS > FY 2018 – expected to enhance Vitec’s adjusted EPS > FY 2019 – expected to be materially enhancing to Vitec’s adjusted EPS > ROCE expected to be in excess of Group’s average by y/e 2018 > Group margins remain broadly in line with expectations following integration into the Photographic Division Page 11