Videndum lowers full-year forecasts as film and TV productions remain slow

The London-listed firm said adjusted operating profit fell to £11m, compared to £16.2m in the first six months of 2023, reflecting ongoing challenges in the consumer and independent content creator (ICC) segments, as well as a slower-than-expected recovery in the cine and scripted television markets.

Despite the decrease in revenue and profit, Videndum said it achieved significant improvements in free cash flow, which reached £15.1m, up from a negative £3.5m in the first half of last year.

Net debt was also substantially reduced to £117.3m, down from £216.1m a year earlier, and £128.5m at the end of 2023.

That reduction was achieved through disciplined cost control and strategic management of capital expenditure and working capital.

The company reported an operating loss of £9.2m for the period, compared to a loss of £44.3m in the first half of 2023, with losses before tax narrowing to £13.4m from £50m.

Basic losses per share totalled 13.6p, compared to 100p a year earlier.

Videndum renegotiated its committed revolving credit facility (RCF), which was extended with improved lending covenants, reflecting its efforts to strengthen its financial position amid depressed EBITDA levels and ongoing macroeconomic challenges.

The group’s leverage ratio stood at 3.3x at the end of June.

Looking ahead, the company said it saw continued signs of improvement in the cine and scripted television markets, although the recovery was progressing more slowly than anticipated.

The broadcast television segment is expected to benefit from major events such as the summer 2024 Olympic Games and the upcoming US presidential election.

However, Videndum said it had lowered its expectations for the full 2024 financial year, due to slower-than-expected recovery in those key markets.

To address ongoing challenges, the company was implementing a strategic cost-saving programme aimed at delivering at least £10m in additional permanent savings in the 2025 period.

The board said it remained cautiously optimistic that the cine and scripted television markets would return to higher demand levels in 2025, and that the ICC segment would benefit from increasing sales of premium compact system cameras.

“Although market conditions in the first half remained challenging for Videndum, we saw signs of improvement with some post-strike recovery in the cine and scripted television market,” said group chief executive officer Stephen Bird.

“There was continued strong demand for new premium compact system cameras; however, the macroeconomic environment affecting the consumer and ICC segments remained challenging.

“Given this backdrop, the group maintained its relentless focus on managing costs tightly as well as controlling capex and working capital.”

Bird said the company had returned to being cash-generative, with a continued reduction in net debt.

“Despite signs of a pickup in cine and scripted television productions, and growth in the premium camera market, the group, along with other companies in our sectors, has yet to see the anticipated improvement in orders.

“As a result, we now expect 2024 to be below our previous expectations.”

The firm was implementing a strategic cost-saving programme, Stephen Bird said, which was projected to deliver at least £10m in additional permanent savings in the 2025 financial year.

“The board expects the group to benefit from increased revenue as the cine and scripted television market returns to a more normalised level during 2025, and our ICC segment starts to see the pickup from the attachment of our products to recently sold cameras.

“Videndum remains well positioned in attractive markets with good medium-term prospects.”

At 0847 BST, shares in Videndum were down 18.39% at 228.5p.

Reporting by Josh White for Sharecast.com.