Videndum revenue, earnings fall in challenging year for entertainment
Content creation hardware and software company reported a challenging 2023 on Tuesday, impacted by writer and actor strikes in the US and a difficult macroeconomic environment, and destocking.
The London-listed firm, formerly known as the Vitec Group, said those factors contributed to a 31% decrease in revenue from continuing operations compared to the prior year.
Its adjusted operating expenses were £21.2m lower than 2022, primarily due to self-help actions and synergies from site restructuring.
Adjusted operating profit still saw an 81% decline year-on-year, reflecting a 39% drop in revenue, although the company maintained an 84% cash conversion rate from continuing operations.
To address the challenges, Videndum raised £125m in equity to deleverage and support its strategic initiatives, as it maintained leverage within lending covenant limits.
While industry confidence in the post-strike recovery remained strong, the anticipated pickup in the cinema and scripted television market did not materialise as expected.
Videndum's management said it believed the rate of decline was improving, with destocking largely completed.
The broadcast TV segment performed well, supported by market-leading robotics, AI autonomous presenter-tracking software, and speech recognition prompting technology.
However, trading in the first quarter of 2024 fell below expectations due to the slower-than-anticipated recovery in the cinema and scripted TV market.
As of 31 March, net debt had decreased to £122.4m, £6.1 million lower than the prior year.
Leverage stood at 3.0x, within lending covenant limits, as the company aimed to reduce leverage to its targeted range of below 1.5x.
Looking ahead, the board said it remained confident in a strong recovery in the second half of 2024 as the cinema and scripted TV market gradually recovered, although the pace and shape of the post-strike recovery remained uncertain.
"2023 was an exceptionally challenging year for Videndum and, in particular, the unprecedented length of the strikes by US writers and actors significantly impacted our financial performance," said group chief executive officer Stephen Bird.
"We acted quickly to reduce costs and manage cash, and, with the support of our shareholders, deleveraged through a capital raise, which has enabled us to preserve the long-term capabilities of the business.
"Although industry confidence in the post-strike recovery is strong, the cine and scripted television market is taking more time than anticipated to recover."
Bird added that the macroeconomic environment remained "challenging", leading the company to maintain a focus on managing costs and controlling capex and working capital.
"I am proud of the way our people have responded to an incredibly difficult market environment and am confident in the ability of the team to deliver a strong recovery over the next few years.
"We remain confident that the Group will benefit from a strong recovery in 2024, however, with an increased second half weighting as the cine and scripted TV market gradually recovers.
"Videndum is well positioned in a content creation market which has attractive structural growth drivers and good medium-term prospects."
At 0828 BST, shares in Videndum were down 3.52% at 274p.
Reporting by Josh White for Sharecast.com.
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