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Enabling the
capture and
sharing of
exceptional
content
Annual Report and
Accounts 2023
Capture.
Share.
We are a leading global provider of
premium branded hardware products
and software solutions to the
content creation market.
Discover our Divisions:
See page 16 See page 20 See page 24
Our purpose is to enable
the capture and sharing of
exceptional content.
Media Solutions Production
Solutions
Creative Solutions
Strategic Report
2023 financial summary 02
Understanding Videndum and our brands 04
Our global footprint 06
Strategic framework 08
Market opportunity 10
Chairman’s welcome 12
CEO’s review 13
Media Solutions 16
Production Solutions 20
Creative Solutions 24
Operational and financial review 28
Key Performance Indicators 34
Principal risks and uncertainties 36
Our stakeholders 42
Responsible business 44
Videndum’s roadmap to net zero 46
Task Force on Climate-related Financial Disclosures report
(“TCFD”) 47
Environment 60
Our people 62
Giving back 66
Responsible practices 68
Non-Financial and Sustainability
Information Statement 71
Corporate Governance
Chairman’s statement 72
A snapshot of governance 74
Board of Directors 76
Leadership, purpose, values and culture 78
The role of the Board 80
Section 172 statement 86
Board roles and the division of responsibilities 92
Composition, succession and evaluation 95
Nominations Committee report 98
Audit, risk and internal control 102
Audit Committee report 105
Remuneration report 112
Directors’ Remuneration Policy 116
Annual Report on Remuneration 125
Directors’ report 143
Financial Statements
Independent auditor’s report 147
Introduction and table of contents 155
Primary statements 156
Section 1 – Basis of Preparation 161
Section 2 – Results for the Year 167
Section 3 – Operating Assets & Liabilities 182
Section 4 – Capital Structure 196
Section 5 – Other Supporting Notes 207
Company Financial Statements 218
Glossary of Alternative Performance Measures 226
Five Year Financial Summary 233
Shareholder Information and Financial Calendar 234
videndum.com
Contents
01
Financial StatementsCorporate GovernanceStrategic Report
2023 financial summary
2023 financial summary
– Financial performance significantly impacted
by three headwinds: strikes by US writers and
actors
1
; challenging macroeconomic
environment; and destocking.
– FY 2023 revenue from continuing
operations 31% lower year-on-year.
– H2 2023 revenue 36% lower vs H2 2022
as significantly more impact from the
strikes in H2 than in H1.
– Adjusted operating expenses* from
continuing operations £21.2 million (17%)
lower vs 2022 partly due to self-help
actions and synergies from site
restructuring.
– Adjusted operating profit* from continuing
operations of £12.8 million (81% lower vs
2022) reflecting a 39% dropthrough* on
the lower revenue, compared to a marginal
contribution of c.50%
– 84% cash conversion* from continuing
operations.
– In response to the headwinds, £125 million
(£117.9 million net) equity raised to
deleverage and enable delivery of the
Group’s strategy.
– FY 2023 leverage of 3.3x, due to
significantly depressed EBITDA; within
lending covenant limit of 4.25x.
Revenue
from continuing operations†
£306.9m
Down 31%
2023
2022
2021
£306.9m
£442.5m
£394.3m
Adjusted operating profit*
from continuing operations†
£12.8m
Down 81%
2023
2022
2021
£12.8m
£66.2m
£46.2m
Statutory operating margin
-20.7%
Down 2770 bps
Statutory operating loss
-£65.2m
Down £96.7m
Basic Loss Per Share
-157.5p
Down 228.9p
Adjusted operating margin*
from continuing operations†
4.2%
Down 1080 bps
Adjusted basic Earnings Per Share*
from continuing operations†
8.5p
Down 88.3p
Net debt*
£128.5m
Down 34%
2023
2022
2021
£128.5m
£193.5m
£145.2m
Current trading and outlook
– Industry confidence in the post-strike
recovery remains strong, however the
significant pick up in the cine and scripted TV
market anticipated in March did not
materialise and is now expected from June.
– Macroeconomic environment affecting the
consumer and independent content creator
segments remains challenging; nonetheless
management believes that the rate of decline
is starting to show signs of improvement, and
that destocking is largely completed.
– Broadcast TV segment performing well, with
our market-leading robotics, AI autonomous
presenter-tracking software and speech
recognition prompting technology driving cost
efficiencies for studios; the Group’s second
half performance will benefit from the
Summer 2024 Olympic Games and the US
Presidential election.
– As a result of the slower than anticipated
recovery in the cine and scripted TV market,
trading in our traditionally smallest first
quarter ended up being below our
expectations.
– Net debt at 31 March 2024 was £122.4
million, £6.1 million lower than at
31 December 2023.
– Leverage at 31 March 2024 of 3.0x; within
lending covenant limit of 4.25x. The
Group continues to prioritise reducing
leverage to its targeted range of below
1.5x.
– The Board remains confident that the Group
will benefit from a strong recovery in the
second half of 2024 as the cine and scripted TV
market gradually recovers, although the pace
and shape of the post-strike recovery is
uncertain.
– The Group continues to control costs, capex
and working capital tightly.
– Videndum remains well positioned in a content
creation market which has attractive
structural growth drivers and good medium-
term prospects.
1 The Writers Guild of America (“WGA”) was on strike from 2 May to 27 September 2023 and the Screen Actors Guild and the American Federation of Television and Radio Artists (“SAG-AFTRA”)
were on strike from 14 July to 9 November 2023. WGA’s contract was ratified on 9 October 2023 and SAG-AFTRA’s contract was ratified on 5 December 2023.
† Amimon was held for sale at 31 December 2023 and Lightstream was sold on 2 October 2023; both are reported as discontinued operations. The operation at Syrp (the Media Solutions’ motion
controls R&D centre in New Zealand) was wound down so is reported in discontinued operations. FY 2022 has been re-presented to ensure fair comparability. Statutory Results from continuing
and discontinued operations are per those reported in the 2022 Annual Report. Results of discontinued operations can be found in note 2.2 to the condensed financial statements. Continuing
operations are indicated with a † throughout this report.
* In addition to statutory reporting, Videndum plc reports Alternative Performance Measures (“APMs”) which are not defined or specified under the requirements of International Financial Reporting
Standards (“IFRS”). The Group uses these APMs to aid the comparability of information between reporting periods and Divisions, by adjusting for certain items which impact upon IFRS measures, to
aid the user in understanding the activity taking place across the Group’s businesses. APMs are used by the Directors and Management for performance analysis, planning, reporting and incentive
purposes. A summary of APMs used and their closest equivalent statutory measures is given in the Glossary on pages 226 to 232. APMs are indicated by a * throughout this report.
Annual Report and Accounts 2023
02
Videndum plc
Image: Still Moving
03
Financial StatementsCorporate GovernanceStrategic Report
Understanding
Videndum
For more information visit our website:
videndum.com/about-us/our-brands
About us Our brands
Audio capture
AUDIX
JOBY
Rycote
Distribution, rental & services
Camera Corps
The Camera Store
IP video
Teradek
Monitors
SmallHD
Mobile power
Anton/Bauer
Smartphonography
JOBY
We design and manufacture a
portfolio of market-leading, premium
brands – from traditional
mechanically engineered products
through to electronics and software.
Videndum’s purpose is to enable our
customers, in a full range of creative
industries, to capture and share content
through a wide variety of media.
Videndum’s success is dependent on our
ability to understand and respond to our
customers’ needs.
Our core customers can be
categorised as:
TV broadcaster, production company,
independent content creator (“ICC”) and
professional sound crew
Producing video and audio content for TV
programmes, live news or live sports
events
Film or production company, including
independent film-makers
Making content for feature films and
scripted TV shows to share in cinemas or
on subscription channels like Netflix,
Amazon Prime Video, Apple TV+ and
Disney+
Professional photographer/videographer,
including prosumer
Creating and sharing digital content for
social media platforms or retail
e-commerce, where images and videos of
new products are frequently published
online
Influencer/vlogger
Creating and sharing video and audio
content on social media platforms like
TikTok, YouTube and Instagram
Live streaming enterprise, including
government, education establishment or
house of worship
Creating video and audio content to
stream live or pre-recorded to their
employees, customers and communities
Our brands are leaders in the niche
markets we serve, in terms of premium
products, technology innovation and/or
market share. Our products typically
attach to, or support, a camera –
primarily for broadcast, cinematic,
video, photographic, audio and
smartphone applications – and are
offered as a cohesive package.
Videndum plc
04
Annual Report and Accounts 2023
Video transmission systems
Teradek
Robotic camera systems
Camera Corps
Vinten
Lens control systems
Teradek
Camera accessories
Teradek
Wooden Camera
Carrying solutions
Gitzo
Lowepro
Manfrotto
National Geographic
1
Sachtler
Supports and stabilisers
Avenger
Gitzo
JOBY
Manfrotto
National Geographic
1
OConnor
Sachtler
Vinten
Lighting and lighting control
JOBY
Litepanels
Manfrotto
Quasar Science
1
Manufactured under licence.
Strategic Report Corporate Governance Financial Statements
05
Costa Rica
Israel
Germany
Singapore
Australia
China
Japan
UK
US
Italy
Our global footprint
We employ around 1,600 people in ten
different countries and are organised in
three Divisions: Media Solutions, Production
Solutions and Creative Solutions.
Where we operate
Sites in ten countries; sell into 100+ countries
Well-invested manufacturing facilities in Italy, Costa
Rica, UK and US
R&D centres in Italy, UK, US and Israel
Far East Procurement Centre in Shenzen, China
Distribution centres in UK, Germany, China,
Australia, Singapore and Japan
Annual Report and Accounts 2023
06
Videndum plc
Manufacturing sites R&D sites
Procurement centre Distribution sites
Costa Rica
Israel
Germany
Singapore
Australia
China
Japan
UK
US
Italy
2023 revenue
North America: 44%
Europe: 35%
APAC: 16%
Rest of world: 5%
Our core values
We have a clear purpose that is founded
on a set of core values that form the
Videndum Mindset: “Enabling the capture
and sharing of exceptional content”.
Exceptional product performance
We set the highest standards of technical
performance
Customer focus
We are nothing without our customers
Leading a fast-changing market
We apply our creativity and harness our
diversity to engineer innovative new products
and solutions
Global capability
We share knowledge, pool resources, test
ideas and learn from each other
Transparency, integrity, respect
We hold to the highest professional and
corporate standards
Environmental consciousness
We seek to limit our impact on the environment
and create long-term business sustainability
People and culture
Our employees are key to our success. Their
experience, market knowledge and
commitment create a culture of innovation,
operational excellence, creativity and integrity.
The Group’s decentralised structure with
three Divisions allows us to react quickly to
customer, market and technological changes,
constantly innovating to make our products
the best in our industry. This, together with
our entrepreneurial culture, enables focused
decision making and minimised bureaucracy.
We work to ensure that we have consistent
policies and processes in place across the
Group. We have comprehensive operating
guidelines and internal communications plans
which keep our employees informed, and our
manufacturing teams ensure stringent health
and safety protocols. We are a responsible
business, focusing on supporting the
communities we operate in and further
reducing our impact on the environment.
Read more on page 62
07
Financial StatementsCorporate GovernanceStrategic Report
Strategic framework
Videndum’s purpose is to
enable our customers to
capture and share
exceptional content, and
this is what guides us. Our
strategy is to focus on the
professional end of the
content creation market,
operating in defensible
niche market segments
where our premium brands
have strong share.
Our long-term strategy is
to invest in areas where we
can grow organically, while
improving our margins and,
over the longer-term, to
grow through M&A.
Core competencies
We believe that our core competencies differentiate us from the
competition. Our experienced people have good tenure and really
understand the content creation market.
1. Technology leadership
Designing innovative solutions to make our customers’ lives easier is
what drives us. Because our people understand our end users’ needs,
we are good at developing differentiated new products that they want.
This gives us strong pricing power and also drives demand for new and
replacement products.
2. Worldwide channel strength
The breadth of our product portfolio and strong brand heritage means
that our ability to access the channel to our customers is unrivalled in
the niche markets we serve.
3. Sourcing and manufacturing excellence
We believe that control of the manufacturing process gives us a
competitive advantage.
1.
Technology leadership
Track record of innovative new product development
through customer-led R&D
Intelligent and sustained investment in new products, technologies,
markets and people enables us to ensure that our award-winning
brands remain at the forefront of the industry, recognised for their
premium offerings and innovative technology.
We continually obtain feedback on market trends, from customers,
as well as from research. Our experienced, specialist engineers
apply new technologies and materials to develop high-quality,
high-performance solutions to improve customers’ productivity by
developing products which can reduce set up time, lower operating
costs and unlock creativity.
Our innovative products are protected by patents and trademarks
and are marketed under well-known brands. We take product
quality and customer safety very seriously and our products are
manufactured to the highest standards and rigorously tested. We
are progressively integrating sustainable product development into
our brand strategies using a “cradle-to-grave” Product Life Cycle
Assessment (“PLCA”). This includes evaluating raw materials,
manufacturing processes, waste, packaging, distribution and
end-of-life.
We manufacture the majority of our products in-house and work
with selected, market-leading partners for specialist solutions.
In-house new product development has been supplemented with
carefully selected acquisitions or partnerships in new markets and
technologies.
Image: Joesfin Kuschela
Videndum plc
08
Annual Report and Accounts 2023
3.
Sourcing and manufacturing excellence
Well-invested, highly automated, lean and environmentally
friendly factories, with a continuous improvement culture
We make the majority (c.75%) of the products we sell in-house,
which gives us greater control of the technology, stronger profit
margins and a stronger competitive position.
Our three major manufacturing sites in the UK, Italy and Costa
Rica are certified ISO 9001 Quality Management, ISO 14001
Environmental Management and ISO 45001 health and safety.
Our supply chain is efficient, our people highly trained and
multi-skilled. We procure materials from reputable suppliers, and
make our products in efficient and environmentally friendly
operations and, where appropriate, manufacture or source from
lower-cost countries such as Costa Rica. Where economically and
technically feasible, we insource production, especially when our
sites have stronger environmental credentials than those of external
finished goods suppliers. This helps to improve the Group’s overall
carbon footprint.
The majority of our operations are relatively low-volume, small-
batch processes and our continuous improvement culture enables
us to optimise our global operations. The Group manufactures
c.10x more tripods† than its closest competitor and has
implemented lean manufacturing and automation to maximise
quality, service and efficiency, while reducing costs. Most of our
factories are vertically integrated which means we produce many
of our components in-house. We operate a Group Global Sourcing
Office in Shenzhen, China where the team supports vendor
management, quality control and product development with
strategic vendors across APAC. This further enhances productivity
and time to market.
2.
Worldwide channel strength
Global leader in specialist niche markets, reflected by the
scale and depth of Videndum’s network of channel partners
We market and sell our products globally via multiple distribution
channels, our own sales teams, and through e-commerce via our
own and third-party websites.
The majority of sales are conducted via a global network of
distributors, rental houses, systems integrators, resellers, retailers
and e-tailers who sell on to customers. Our Media Solutions
Division operates its own distribution company covering the US,
UK, EU, China, Japan and Australia through an integrated logistics
network – this infrastructure is progressively being made available
to the rest of the Group.
We continue to expand our digital and e-commerce capabilities,
working closely with our customers and suppliers to further
develop our online presence. Our Media Solutions Division is
considered to have the best digital capabilities in its niche markets,
which provide a long-term, scalable competitive advantage,
including in terms of customer ownership (via a Customer
Relationship Management System across multiple brands).
We engage with a number of leading logistics partners to ensure
responsive and timely delivery of our products to the relevant
geography, and remain conscious of the impact of our distribution
channels on the environment.
† Management estimate.
Strategic Report Corporate Governance Financial Statements
09
Videndum is positioned
at the heart of the global
content creation market,
with market-leading, premium
brands in defensible niches.
We believe that approximately
90% of our revenue comes
from professional content
creators who use our products
to earn their living and about
80% of our products are often
considered to be mission
critical to our customers†.
Market opportunity
Current industry trends
The content creation market continues to have good
medium-term prospects, with structural growth drivers,
and Videndum is uniquely positioned to benefit. Although
the cine and scripted TV market is taking more time than
anticipated to recover from the strikes, and the consumer
and ICC segments of the market are being impacted by the
challenging macroeconomic environment, we expect that
the demand for, and investment in, original content (e.g.
for live news, broadcast sport, reality and scripted TV
shows, films, digital visual content for e-commerce and
vlogging, etc.) will grow in the medium term.
We focus on the growth areas of the content creation
market, and we have recently increased our product
offering in the adjacent vertical market of audio capture.
We estimate that c.75% of the Group’s business is exposed
to five main structural market growth drivers which we
believe remain valid in the medium-to-long term. These are:
(1) internet/e-commerce; (2) subscription TV/original
content creation; (3) video sharing platforms such as
TikTok/YouTube; (4) live streaming; and (5) increasing
environmental consciousness in our markets.
Organic growth is driven by these five drivers underpinned
by technology advancement which can reduce set up time,
lower operating costs and unlock creativity. This drives
demand for new and replacement products. Sustained
R&D investment is key to enabling Videndum’s premium
brands to maintain their already strong market positions
and, in places, gain share.
† Management estimates.
Annual Report and Accounts 2023
10
Videndum plc
1. The internet/e-commerce
Retail e-commerce drives demand for digital visual content as new
products need to be photographed and filmed frequently to be
published online, for example across the fashion, food, real estate
and hospitality industries.
We estimate that c.30% of the Group’s revenue is exposed to retail
e-commerce, which we serve with intuitive products used in studios
and a growing number of enterprise facilities. This drives demand
for our professional photography and videography equipment,
including supports, backgrounds, lighting and carrying solutions,
mainly benefiting our Media Solutions Division.
2. Subscription TV/original content creation
Spending on original content creation for subscription TV channels
like Netflix, Amazon Prime Video and Disney+ drives demand for our
equipment.
In North America, over 50 new sound stages are scheduled for
construction in 2024, providing hundreds of thousands of square
feet of new production space which will need to be equipped. And
in the UK, numerous projects are either underway or planned to
invest in sound stages which will add millions of square feet of new
production space.
We estimate that c.30% of the Group’s revenue is exposed to
subscription TV, including: our video transmission and monitoring
systems, and camera accessories in Creative Solutions; lighting
equipment, mobile power and supports in Production Solutions;
and supports and audio capture in Media Solutions.
3. TikTok and YouTube
There has been significant growth in vloggers and influencers
creating and sharing video and audio content on social media
platforms like TikTok, YouTube and Instagram. We estimate that
there are more than 40 million vloggers (with a following of over
1,000 people) who share and monetise their videos or podcasts.
Improving the quality of their content is critical to their success –
and that is what Videndum products help them do.
We estimate that c.10% of the Group’s revenue is exposed to
vloggers and influencers who use our JOBY supports, lights and
microphones, and our backgrounds to create high-quality content.
The JOBY customers of today will potentially transition to
Videndum’s other premium brands, as they become the film-
makers, broadcasters and professional photographers of the
future.
4. Live streaming
Live streaming of video has grown strongly across multiple verticals
to maintain communications and facilitate remote collaboration.
For example, governments, schools, houses of worship and
businesses rely on high-quality, secure, zero or low delay video
transmission to communicate with their communities, customers
and employees.
This market growth driver accounts for c.5% of the Group’s revenue.
5. Increasing environmental consciousness
in our markets
The growing pressure to become a responsible business and adhere
to regulatory environmental policies has led to industry-wide
replacement cycles, providing Videndum with a number of
opportunities to develop environmentally friendly products. One
example of this is Anton/Bauer’s Salt-E Dog, the first sodium
battery designed and built for the motion picture and television
industry. Its emission-free operation not only reduces the industry’s
carbon footprint but also eliminates noise pollution, and uses 100%
recyclable sodium cells, making it an efficient alternative to
traditional petrol and diesel generators.
Image: Dave Krugman
Artificial intelligence (“AI”)
Like any transformational technology, AI brings the opportunity
to accelerate product development cycles through innovation.
In cine and scripted TV and broadcast TV, AI is seen as a key
enabler to greater production efficiency, particularly through
increased automation in studio equipment (cameras,
prompting, lighting and cranes) and automated talent
tracking, some of which we are already addressing with our
Production Solutions Division through our AI tracking and
speech recognition technology. In professional photography
and live streaming, AI is already empowering faster post-
production. These applications provide growth opportunities
for Videndum. There is a risk that over time, some professional
photography and low-end videography may be replaced by
artificially generated content. Internal studies have identified
a potential risk on stock image libraries for commercial
application; these are estimated to account for less than 10%
of total professional photography being shot. However, AI
development is evolving rapidly, and given how new this
technology is, these estimates are prone to change
significantly both in terms of the size and timing of impact.
11
Financial StatementsCorporate GovernanceStrategic Report
Chairman’s welcome
Ian McHoul
Chairman
2023 proved to be an extremely challenging
year for Videndum – for our employees,
shareholders, customers and suppliers.
Our end markets were impacted by
macroeconomic headwinds, including high
interest rates and high inflation, customer
destocking and wars in Ukraine and Israel-Gaza.
From Q2 2023, these headwinds were further
compounded by the US writers’ and actors’
strikes which lasted through to the end of the
year. These events significantly dampened our
markets and dramatically impacted the
Group’s 2023 financial performance. Despite
management’s best efforts to navigate the
business through these challenges, it became
necessary to undertake a £125 million equity
raise to ensure the long-term security of the
Group. This decision was not taken lightly, but
in the face of the challenges, the Board and
management team acted promptly, and
successfully delivered the equity raise. There
was a very strong response from our
shareholders, who clearly believe in the
long-term prospects for the Group. I would like
to thank both our shareholders and new
investors for their support. We now have a
strengthened capital base, which will enable
Videndum to focus its resources on strategic
execution and long-term value creation.
At the time of writing, the business is still
suffering with dampened end-markets.
Although industry confidence in the post-
strike recovery remains strong, the cine and
scripted TV market is taking more time than
anticipated to recover and the macroeconomic
environment remains challenging. We had to
delay the announcement of our results for the
year ended 31 December 2023 because more
time was required to finalise the full year
financial reporting, including the treatment of
certain adjusting items relating to 2023.
However, the Board believes that 2024 will
progressively improve. The content creation
market, despite recent challenges, has
attractive structural growth drivers and good
medium-term prospects. Videndum is a
high-quality business, with innovative
technology and market-leading, premium
products and services, well placed for a
recovery.
2023 was a period of change for the Board
too. On 26 September it was announced that I
would stand down from the Board for
personal reasons and not seek re-election at
the 2024 AGM. It has been a privilege to be
Chairman of Videndum since May 2019.
Richard Tyson, as Senior Independent Director
led the search for my successor, and we are
very pleased to have secured the services of
Stephen Harris who joined the Board on
9 November 2023 and will succeed me as
Chairman, ahead of the 2024 AGM. Also,
during 2023, Anna Vikström Persson and
Graham Oldroyd both joined the Board as
independent non-executive directors on 1 May
and 12 October 2023, respectively.
Erika Schraner has informed the Board of her
intention not to seek re-election at the
forthcoming 2024 AGM. Erika intends to pursue
new opportunities as Videndum, supported by
a successful equity raise, enters a new phase.
The Board has started a search for a new Chair
of the Audit Committee. Erika has been a
valuable member of the Board, leveraging her
commercial and technical expertise, thoughtful
perspective, and overall business experience in
helping Videndum navigate recent
unprecedented times. On behalf of the Board, I
would like to extend my gratitude to Erika for
her significant contribution and dedication, and
wish her well in her future endeavours.
Due to the challenges that the business faces,
we have suspended paying dividends. Whilst
this was a difficult decision and shareholders
will be disappointed, it is right for the
long-term success of the business. We will look
to reintroduce dividends for shareholders
when appropriate to do so.
Despite the significant financial challenges in
2023, there has been some success. For
example, our ESG programme has continued
to make progress towards our carbon neutral
and net zero targets, and our three main
manufacturing sites now all have solar panels
installed, providing a large proportion of their
energy needs. The business is also making
progress on sustainable products with the
recent launch of Anton/Bauer’s ground-
breaking Salt-E Dog sustainable portable
power supply, based on sodium technology.
Designed for the motion picture and television
industry, this new product has been very well
received. Our separate ESG Report sets out
the progress Videndum has made and our
ongoing plans in this important area.
The Company’s AGM will be held on
Wednesday 19 June 2024 at 116 Pall Mall,
London, SW1Y 5ED. The Notice of Meeting
and explanatory notes for the AGM’s business
accompany this Annual Report and the Board
looks forward to the opportunity to meet with
shareholders at the AGM.
Finally, after such a turbulent 2023 for the
Group, on behalf of the Board I would like to
thank all of our employees for their
commitment and resilience during the year.
Due to the challenges faced by the business,
many of them have been on short-time
working, which has not been easy. However,
our employees have remained supportive
throughout and I am sure that they will
continue to perform to the highest levels to
help the recovery of the business.
Ian McHoul
Chairman
22 April 2024
Videndum plc
12
Annual Report and Accounts 2023
CEO’s review
Stephen Bird
Group Chief Executive
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. We acted quickly
to reduce costs and manage cash, and, with the support
of our shareholders, deleveraged our balance sheet
through a £125 million equity raise, which has enabled us
to preserve the long-term capabilities of the business.
2023 financial overview
2023 was an exceptionally challenging year for
the Group, with three main headwinds. First,
the macroeconomic backdrop led to weaker
consumer confidence and customers delaying
purchases. Second, concerns amongst our
retailer customers and distribution partners
regarding the global economy, high interest
rates, and their working capital levels, led to
destocking. These two headwinds affected our
consumer segment as well as our ICC segment
(together c.40-50% of Group revenue).
Third, the unprecedented and unforeseen
impact from the lengthy US writers’ and
actors’ strikes significantly affected demand
for our high-end cine and scripted TV products
(c.20% of Group revenue exposed to the US
cine market, and a further c.10% to global cine
markets). The writers’ strike began in May and
predominantly affected the US cine market;
however, the speculation of a strike had
caused some cine and scripted TV productions
to be paused in the months prior. The actors
commenced strike action in July and
subsequently all productions ceased in the US
and spread globally where US actors were
involved. Both strikes impacted productions
until the end of the year, having significantly
more impact on the Group in the second half
of 2023 than in the first half. In addition, the
strikes meant that sales of some of our new
product launches were delayed.
The headwinds resulted in Group revenue
from continuing operations decreasing by 31%
compared to 2022; a 32% decline on an organic,
constant currency basis. We estimate the
impact of the writers’ and actors’ strikes was
c.£60 million, the reduction from destocking
was c.£25 million, and the residual reduction
of c.£50 million was from challenging trading
conditions across our markets impacting
demand in the consumer and ICC segments.
Price rises successfully implemented in 2022
and again at the beginning of 2023 more than
offset inflation in the year.
Against this challenging backdrop, the Group
took significant mitigating actions, including
agreeing covenant amendments with its
lending banks, cost reductions including
restructuring projects, and developed plans to
conserve cash. The benefit of these actions
was to reduce costs by c.£13 million versus
2022. The majority of the reduction will
remain in 2024, with discretionary costs
returning in a phased and controlled manner,
as trading conditions improve.
The actions taken constrained the revenue drop
through to adjusted operating profit* to 39%.
The Group largely protected R&D investment
to enable it to develop market-leading
products to maximise our future growth
potential. Gross R&D spend in 2023 was £19.3
million compared to £19.9 million in 2022.
Whilst the response of our teams was
outstanding, the self-help actions only partly
mitigated the weaker trading, and the low
trailing 12-month EBITDA resulted in an
increase in leverage1 from 2.9x at 30 June
2023 to 4.2x at 30 September 2023. As a
result, having reviewed all options, the Board
decided that an equity raise was required and,
through the support of our shareholders and
new investors, £125 million was raised in
December 2023, enabling the Group to
deleverage despite reduction in EBITDA (to
3.3x at 31 December 2023), and help provide
the platform to capture the post-strike
recovery and deliver the Group’s strategy.
Adjusted profit before tax* was £1.3 million;
£58.9 million lower than 2022. On an organic,
constant currency basis, adjusted operating
profit* and adjusted profit before tax* were
85% and 98% down, respectively, on 2022.
Statutory loss before tax from continuing and
discontinued operations of £79.7 million (2022:
£24.7 million profit) further reflects adjusting
items from continuing operations of £20.1
million (2022: £18.0 million) and a £60.9 million
loss from discontinued operations after
adjusting items (2022: £17.5 million loss).
Strategic Report Corporate Governance Financial Statements
13
CEO’s review continued
Market and strategy update
Videndum’s purpose is to “enable our
customers to capture and share exceptional
content”, and this is what guides us. Our
strategy is to focus on the professional end
of the content creation market, operating in
defensible niches where our premium brands
have strong share.
The content creation market continues to
have good medium-term prospects, with
structural growth drivers, and Videndum
is uniquely positioned to benefit. Although the
cine and scripted TV market is taking more
time than anticipated to recover from the
strikes, and the consumer and ICC segments
of the market are being impacted by the
challenging macroeconomic environment, we
expect that the demand for, and investment
in, original content (e.g. for live news,
broadcast sport, reality and scripted TV
shows, films, digital visual content for
e-commerce and vlogging) will grow in the
medium-term.
Our strategic priorities remain unchanged;
however, we are focusing more tightly on our
core markets, particularly for high-end,
professional and B2B content creation – where
we see the greatest growth potential – and
exiting non-core markets. Our long-term
strategy is to invest in areas where we can grow
organically, while improving our margins and,
over the longer-term, to grow through M&A.
1. Organic growth
We focus on the growth areas of the content
creation market, and we have recently
increased our product offering in the adjacent
vertical market of audio capture. We estimate
that c.75% of the Group’s business is exposed
to five main structural market growth drivers
which we believe remain valid in the medium-
to-long term. These are: (1)
internet/e-commerce; (2) subscription TV/
original content creation; (3) video sharing
platforms such as TikTok/YouTube; (4) live
streaming; and (5) increasing environmental
consciousness in our markets.
We expect organic growth to be driven by
these five drivers underpinned by technology
advancement which reduces product
replacement cycles. We use our customer-led
R&D expertise to develop innovative,
differentiated technology to improve
customers’ productivity by developing products
which can lower operating costs and unlock
creativity. Key focus areas include robotics
and AI-driven technology for broadcast studio
automation, high-end audio capture, wireless
video transmission systems, heavy-duty
lighting stands, and a new range of sustainable
portable power solutions based on sodium
technology (Anton/Bauer’s Salt-E Dog) for the
cine and scripted TV, broadcast and other
markets. Salt-E Dog received the “Excellence
in Sustainability” Award at the National
Association of Broadcasters (“NAB”) annual
show in Las Vegas in April 2024. We also
leverage our sales organisation to expand
geographically where markets are growing,
and our presence is low; whilst recognising
barriers to entry of this strategy.
2. Margin improvement
The Group continues to manage costs tightly,
and control capital expenditure and working
capital. Long-term margin improvement
drivers include targeted pricing increases to
reflect product quality and brand strength,
growing online sales, continued operating
efficiencies, and capturing cross-Divisional
synergies. Exiting non-core unprofitable
segments (gaming and medical) will also
deliver improved margins.
3. M&A activity
While we remain focused on post-strike
recovery no acquisitions will occur in the
near-term. However, we will continue
to review opportunities which could
increase our addressable markets and
expand our product portfolio, customer
base and technology capabilities.
Disposal and business held for sale
Following an extensive review of the options
for the Creative Solutions Division, the Board
concluded that the Group will deliver the most
long-term shareholder value by retaining the
Division but focusing more tightly on the
high-end professional content creation
market, where it has high market share, sales
channel expertise and compelling growth
opportunities. Consequently, the Board has
decided to exit the non-core medical market,
and has exited the non-core gaming market,
to concentrate R&D investment on the
content creation market. As a result, whilst
the Creative Solutions Division as a whole
remains core going forward, Amimon was held
for sale at 31 December 2023 and reported as
a discontinued operation. On 2 October 2023,
certain trade and assets of Lightstream were
sold to Xsolla (US), Inc., a leading player in the
gaming industry.
Current trading and outlook
Although industry confidence in the post-
strike recovery remains strong, the significant
pick up in the cine and scripted TV market
anticipated in March did not materialise and is
now expected from June. In addition, the
macroeconomic environment affecting the
consumer and ICC segments remains
challenging; nonetheless management
believes that the rate of decline is starting to
show signs of improvement, and that
destocking is largely completed. Our
Broadcast TV segment is performing well,
with our market-leading robotics, AI
autonomous presenter-tracking software and
speech recognition prompting technology
driving cost efficiencies for studios; the
Group’s second half performance will benefit
from the Summer 2024 Olympic Games and
the US Presidential election. However, as a
result of the slower than anticipated recovery
in the cine and scripted TV market, trading in
our traditionally smallest first quarter ended
up being below our expectations. We have
therefore maintained our relentless focus on
managing costs tightly and controlling capex
and working capital.
I am proud of the way our people have
responded to an incredibly difficult market
environment and remain confident that the
Group will benefit from a strong recovery in
the second half of 2024 as the cine and
scripted TV market gradually recovers,
although the pace and shape of the post-
strike recovery is uncertain. Videndum remains
well positioned in a content creation market
which has attractive structural growth drivers
and good medium-term prospects.
Stephen Bird
Group Chief Executive
22 April 2024
Videndum plc
14
Annual Report and Accounts 2023
Investment case
Strong business in an attractive market with structural growth
drivers, well positioned for recovery and improving returns
Operating at the heart of the content creation market,
which is underpinned by long-term structural growth drivers
Market-leading, premium brands with high-quality products in
defensible niches, which are often mission critical for customers
Strong R&D and product development capabilities generate
innovative proprietary technology supporting pricing power
and leading to shorter product replacement cycles
Well-invested manufacturing footprint, efficient operations
and sourcing drive operational leverage
Worldwide channel strength ensures efficient route to market
A responsible business with a clear purpose and strategy
15
Financial StatementsCorporate GovernanceStrategic Report
External revenue†
2023
2022
2021
£153.7m
£217.8m
£194.7m
Adjusted operating profit*†
2023
2022
2021
£11.4m
£33.1m
£26.6m
Statutory operating profit/loss
2023
2022
2021
-£4.8m
£23.4m
£23.8m
Media Solutions
The global macroeconomic situation
in 2023 presented challenges which
affected consumer demand. Despite
this, our team has exhibited resilience
and we have continued to invest
ininnovation. We have an exciting
range of new products launching
in 2024 which positions us well to
capture future growth opportunities
as the market starts to recover.
Marco Pezzana
Group Chief Operating Officer
and Divisional Chief Executive,
Videndum Media Solutions
Adjusted operating profit*†
£11.4m
Down 68%
External revenue†
£153.7m
Down 29%
Annual Report and Accounts 2023
16
Videndum plc
17
Financial StatementsCorporate GovernanceStrategic Report
Media Solutions continued
This includes camera supports (tripods and heads),
smartphoneand vlogging accessories, lighting supports
and controls, LED lights, audio capture and noise reduction
equipment, carrying solutions and backgrounds. Media
Solutions represents c.50% ofGroup revenue.
Strategy
Our strategy is focused on developing innovative new products to
improve customers’ productivity in order to grow the core professional
business, as well as a focus on high-end audio capture and return to
growth in vlogging accessories when the macroenvironment improves.
Market position
Videndum is a market leader in most of its Media Solutions’ product
categories. Products are sold globally via multiple distribution channels
and increasingly online via our own direct e-commerce capability and
third-party platforms.
Operational review
Market conditions were tough for Media Solutions, with demand in the
consumer and ICC segments (together c.75%) remaining low. This was
compounded by destocking as retail and distribution partners looked to
reduce cash tied up in stock. The majority of the destocking effect occurred
in H1 and management believes destocking is now largely completed.
The strikes impacted the high-end professional segment (c.25%)
including the Avenger lighting supports; although revenue was significantly
above 2021 level despite the strikes, demonstrating the market share
gained by the Buccaneer and Long John Silver stands over recent years.
La Cassa Integrazione Guadagni Ordinaria (“CIGO”), the non-refundable
Italian government supported furlough programme, was applied both
at the Feltre factory and the Cassola divisional head office, which
allowed us to flex manufacturing output to reduce inventory and also
reduce operating expenses. Actions were taken to minimise discretionary
spend, whilst wider restructuring actions focused primarily on
consolidating subsidiaries, helped reduce the cost base.
We restructured our operations to take advantage of location synergies
following recent acquisitions. In the UK, our Rycote windshield production
is now operating out of our Ashby-de-la-Zouch factory. This has expanded
our manufacturing capacity by c.50% and enables us to upgrade our
operations. Audio R&D and microphones production moved from the UK to
our US audio centre of excellence in Portland, and Media Solutions’ US
distribution moved out of New Jersey to our Savage facilities in Arizona.
Adjusted operating margin* was down to 7.4% (2022: 16.1%) reflecting
operating leverage on the revenue decline, partly mitigated by the
costsavings. Statutory operating loss was £4.8 million (2022: £23.4
million profit) which reflects £12.8 million of adjusting items from
continuing operations (2022: £9.5 million) and a £3.4 million loss from
discontinued operations (2022: £2.1 million loss) which includes £1.2 million
impairment of intangible assets at Syrp.
Our brands
Market position†
shown in brackets
Supports and Stabilisers (#1)
Avenger
JOBY
Gitzo
Manfrotto
National Geographic‡
Carrying solutions (#1)
Gitzo
Lowepro
Manfrotto
National Geographic‡
Lighting and controls (#2)
JOBY
Manfrotto
Smartphonography (#1)
JOBY
Audio capture
AUDIX (US leader
)
JOBY (new entrant)
Rycote (#1
)
Backgrounds (#1)
Colorama
Savage
Superior
Target audience
† Management estimates by sales value
in the market segments in which these
products are sold.
‡ Manufactured under licence.
In our niche.
Photographic market: 60%
Cine and scripted TV/ICC
market: 40%
Media Solutions designs, manufactures and distributes
premium branded equipment for photographic and
video cameras, and smartphones. It provides dedicated
solutions to professional and amateur photographers
and videographers, ICCs, vloggers/influencers,
enterprises, governments and professional musicians.
Annual Report and Accounts 2023
18
Videndum plc
Manfrotto: versatile
protectivecarrying solutions
Media Solutions sells protective carrying solutions for
photographic and video equipment under a number
of brands. Lowepro specialises in bags for outdoor/
adventure photography (primarily backpacks) and is in
the process of converting the entire product portfolio
to recycled fabric (80% of total material), fully
eliminating PFC coatings. Manfrotto is focused on
studio carrying equipment including hard cases, and
2023 saw the launch of the Manfrotto Pro Light
Cineloader series of shoulder-style bags, aimed at
professional videographers and film crews. Designed
to safely transport and protect a fully rigged camera
and multiple accessories, this versatile range saves
set-up time when the videographer or camera
operator arrives on site.
Rycote: British manufacturing excellence
Rycote’s industry-standard windshields and microphone suspension systems
are used all over the world for on-location news and sports broadcasting, and
film-making – they are trusted by audio professionals to help them deliver great
sound in the most demanding of conditions.
In 2023, we relocated Rycote production from Stroud, UK to our existing facility
in Ashby-de-la-Zouch, UK. We invested c.£0.5 million in new equipment to
upgrade operations, enabling us to increase manufacturing capacity by 50%
and develop cutting-edge new products. We have installed high precision
cutting machines, which improve product consistency, and we have established
a state-of-the-art Hemi Anechoic Chamber, complete with a wind tunnel, for
dedicated product development and testing. Our highly trained, skilled staff
invest several hours of meticulous hand craftsmanship into each item.
Avenger: growth in lighting stands
asproductions restart
Our Avenger brand is well placed to take advantage
oftherecovery in post-strike demand during 2024
and 2025.
Launched in September 2022, the Avenger Buccaneer
wasincredibly well received across the globe and had
juststarted to gain traction in the US before the strikes.
This unique, groundbreaking lighting stand is the most
compact on the market with the lowest loading height
toenable smaller teams to mount heavy duty lighting
fixtures safely and securely.
In North America alone, over 50 new sound stages are
scheduled for construction in 2024, providing hundreds
ofthousands of square feet of new production space
thatwill need to be equipped. Our latest heavy-duty
stand, the Avenger Banshee, developed in collaboration
with our global rental house partners was launched in
Q12024 in the US.
Case studies
19
Financial StatementsCorporate GovernanceStrategic Report
External revenue
2023
2022
2021
£101.2m
£137.8m
£121.8m
Adjusted operating profit*
2023
2022
2021
£12.1m
£31.4m
£28.0m
Statutory operating profit
2023
2022
2021
£9.5m
£30.1m
£27.1m
Production Solutions
We continue to focus on delivering
industry-leading solutions designed
to enhance the creativity and
efficiency of our customers.
Unique technology innovations,
including artificial intelligence,
sustainability and camera control,
place our brands at the forefront
of growth opportunities in the cine
and broadcast markets.
Nicola Dal Toso
Divisional Chief Executive,
Videndum Production Solutions
Adjusted operating profit
*
£12.1m
Down 61%
External revenue
£101.2m
Down 27%
Annual Report and Accounts 2023
20
Videndum plc
Image: Alex Boulton
Strategic Report Corporate Governance Financial Statements
21
Production Solutions continued
Products include video fluid heads, tripods, LED lighting, batteries,
prompters and robotic camera systems. It also supplies premium
services including equipment rental and technical solutions.
Production Solutions represents c.30% of Group revenue.
Strategy
Our strategy is focused on growth in professional equipment for
on-location news and sporting events, innovative new technology
likerobotic camera systems and voice prompting to enable automation
and cost efficiencies in TV studios, and high-end products for original
content creation in cine and scripted TV, including a new range of
sustainable power solutions based on sodium technology.
Market position
Videndum is a market leader in most of its Production Solutions product
categories and is well positioned due to its broad geographical reach
and premium products. Products and services are sold globally either
directly via Videndum’s own sales teams or via distributors, both online
and in stores.
Operational review
Lower demand in ICC and subsequent destocking also impacted
Production Solutions, as did the writers’ and actors’ strikes. The 2022
comparative includes the Winter Olympics, whereas 2023 did not have
an event on the same scale. Despite the macroenvironment, demand
remains high for our flowtech tripods and systems, and we upgraded
our carbon cell facility in Bury St Edmunds, UK during 2023 to increase
our capacity by up to 40%.
We launched two exciting new products at the 2023 National Association
of Broadcasters Show in Las Vegas (“NAB”) and the CineGear Expo 2023
in LA (“CineGear”): the Anton/Bauer Salt-E Dog, a sustainable portable
power solution based on sodium technology went into production at the
end of the year at our Costa Rican facility; and the Vinten VEGA Control
System, a robotics control system that can also be automated with
AI-driven talent tracking. Salt-E Dog initially is targeted at the cine and
broadcast markets and as such the launch was impacted by the strikes
but we now have a strong pipeline of opportunities. We were able to
demonstrate its capabilities and benefits at the Las Vegas F1 Grand Prix
with Fox Sports, and this generated a lot of interest in the product.
Costs continued to be controlled closely albeit starting from a very
leancost base in 2022. The revenue decline subsequently resulted
intheadjusted operating margin* falling to 12.0% (2022: 22.8%).
Statutory operating profit was £9.5 million (2022: £30.1 million)
reflecting £2.6 million of adjusting items (2022: £1.3 million).
Our brands
Market position†
shown in brackets
Supports (#1)
OConnor
Sachtler
Vinten
Prompters (#1)
Autocue
Autoscript
Lighting (#2)
Litepanels
Quasar Science
Mobile power (#1)
Anton/Bauer
Robotic camera systems (#2)
Camera Corps
Vinten
Distribution, rental
and services (#1)
Camera Corps
The Camera Store
Target audience
† Management estimates by sales value
inthe market segments in which these
products are sold.
Broadcast market: 50%
Cine and scripted TV/ICC
market: 50%
Production Solutions designs, manufactures
and distributes premium branded and
technically advanced products and solutions
for broadcasters, film and video production
companies, ICCs and enterprises.
Annual Report and Accounts 2023
22
Videndum plc
Pioneering AI and machine learning
revolutionise TV studios
Investment in advanced automated solutions is key to increasing
TV studio efficiency without compromising production standards.
The innovative technology in our market-leading Vinten and
Autoscript robotics and prompting solutions is many years ahead
of our competitors. It maintains production quality with fewer
technical operators, delivering clear and long-lasting operational
overhead savings.
VEGA, Vinten’s cutting-edge control system for its robotic TV
studio solutions, includes AI-driven Presenter Tracking and Voice
Control for unlimited flexibility and customisation. VEGA identifies
each person on screen automatically and uses in-built artificial
intelligence to predict future movements based on skeletal
kinematics. Using this technology, VEGA Presenter Tracking
predicts the likely next movements of on-air talent and makes
smooth adjustments in the same way a camera operator would.
VEGA Voice Director will use speech recognition, allowing control
room staff to execute core operating functions, such as selecting
cameras, recalling shots and reframing, using spoken commands.
VEGA is the most advanced robotic camera and prompting
automation solution available today.
Expanding and upgrading our production
facilities
Flowtech Carbon Fibre Cell upgrade
Videndum’s unique carbon fibre manufacturing facility in Bury
StEdmunds, UK includes a fully automated, highly efficient and
proprietary process for the development of carbon fibre forthe
flowtech tripod. To meet the growing demand for this market-
leading product, and as part of our sustainability commitment,
in 2023 the carbon fibre cell underwent a significant upgrade.
£1.7 million was invested in new equipment to increase our
production capacity by 40%, lower our energy consumption,
and support the reduction of waste by 90%.
Costa Rica expansion
Cartago, our Costa Rica manufacturing site, established in 1985,
has c.185 employees producing over 180,000 products annually.
Investment in lean principles makes this one of the region’s most
efficient manufacturing facilities. In 2023, the facility was expanded
by 1,600 sq m to 7,800 sq m to accommodate production of the
new Anton/Bauer Salt-E Dog sustainable portable power product
range and the manufacturing of Wooden Camera products
relocated from Dallas, US.
Case studies
Environmental concerns drive
sustainable power growth
Increasing environmental awareness in the TV and film industry,
coupled with new clean air legislation in the US, led Anton/Bauer
to develop a ground-breaking sodium-based mobile power source.
Known as Salt-E Dog, this sustainable portable power supply
addresses the harmful CO
2
and NOx emissions associated with
traditional fossil fuel generators on production sets, providing
cleaner and quieter power.
Salt-E Dog uniquely uses 100% recyclable sodium cells, which have
a lower Global Warming Potential than lithium-based counterparts.
Sodium ensures safety and efficiency, permitting power placement
near sensitive equipment without fire risks, and minimises the need
for additional safety measures.
Major broadcasters like the BBC, Fox, Sky and CBS, as well as
content producers such as Netflix and Amazon – who have committed
to improving sustainable production methods – have shown
significant interest in Salt-E Dog, underscoring the importance
of reducing carbon emissions on productions.
Leading sustainable power provision positions the Group to
capture the growing eco-conscious content production market.
Salt-E Dog received the “Excellence in Sustainability” Award at
the National Association of Broadcasters (“NAB”) annual show
in LasVegas in April 2024.
At Fox Sports, we are committed to embracing
cutting-edge technology and minimising our
environmental impact while consistently
delivering high-quality broadcast productions.
Thanks to Anton/Bauer’s revolutionary sodium-
based power solution, Salt-E Dog, we are ushering
in a new era of cleaner and more sustainable
energy sources. With zero emissions, whisper-
quiet operation, streamlined cabling, and
uninterrupted power, we are proud to be pioneers
in sustainable broadcast productions powered
bythe latest technology.
Brad Cheney
Vice President, Field Operations and Engineering, Fox Sports
23
Financial StatementsCorporate GovernanceStrategic Report
External revenue†
2023
2022
2021
£52.0m
£86.9m
£77.8m
Adjusted operating profit*†
2023
2022
2021
£0.8m
£16.7m
£8.3m
Statutory operating loss
2023
2022
2021
-£58.0m
-£3.3m
-£0.6m
Creative Solutions
Marco Vidali
Divisional Chief Executive,
Videndum Creative Solutions
Adjusted operating profit*†
£0.8m
Down 95%
External revenue†
£52.0m
Down 40%
2023 was an incredibly challenging
year for our cinema business due
tothelongest strikes in Hollywood
history which paused the market
formost ofthe year. We have
beenfocused on controlling costs,
retaining our talent and preparing
forthe recovery.
Our innovative SmallHD monitor platform was awarded an
Engineering, Science & Technology Emmy® from the Television
Academy at the 75th Annual Engineering Emmy Awards.
And our Live Production business continues to pivot
successfully towards the premium end of the market,
with the launch of two new recurring revenue services which
doubled the revenue for our Prism and Ranger product lines.
Annual Report and Accounts 2023
24
Videndum plc
Strategic Report Corporate Governance Financial Statements
25
Creative Solutions continued
Products include wired and wireless video transmission and
lens control systems, live streaming solutions, monitors and
camera accessories. Creative Solutions represents c.20%
of Group revenue.
Strategy
Our strategy is focused on continuing to deliver the 4K/HDR
replacement cycle as well as developing innovative new technology
toimprove customers’ productivity in the growing areas of remote
monitoring, collaboration and streaming in the cine and scripted TV,
high-end live production and broadcast markets.
Market position
Videndum is the market leader in Creative Solutions’ two largest
product categories due to its premium brands, market-leading
technology and dedicated team of innovative product specialists with
extensive experience in shooting both professional and amateur video
content. Products are sold globally via multiple distribution channels
and increasingly online via its own direct e-commerce capability and
third-party platforms.
Operational review
The writers’ and actors’ strikes had the largest effect on Creative
Solutions, asexpected, where the majority of products are used in
cine and scripted TV. Live production revenue was materially down as
we repositioned ourbrand towards the higher margin, higher end
of the live productionmarket.
However, orders with RTX, a subcontractor for NASA, and Smart
VideoGroup, our new European partner, saw sales of our Prism
encoders and decoders nearly double compared to 2022. At NAB
weannounced the latest version of the Teradek Ranger product,
ournext generation licensed and unlicensed band zero delay (<1ms)
wireless video transmission system forlive production and broadcast
applications, which drove Ranger revenue to nearly double compared
to 2022.
Restructuring actions announced at the end of 2022 and limiting
discretionary spend helped to mitigate the decline in revenue. In the
second half of the year, production of our Wooden Camera products
was transferred from theUS to our Production Solutions’ Costa Rican
facility and the Group benefitted from cross-divisional synergies.
Adjusted operating margin* was down to 1.5% (2022: 19.2%) reflecting
operating leverage on the revenue decline, partly mitigated by the
costsavings, including shortened working hours.
Statutory operating loss was £58.0 million (2022: £3.3 million loss),
which reflects £1.7 million of adjusting items from continuing operations
(2022: £4.7 million) and a £57.1 million loss from discontinued operations
(2022: £15.3 million loss) which includes £49.0 million impairment of
intangible assets relating to Lightstream and Amimon.
Our brands
Market position†
shown in brackets
Video transmission
systems (#1)
Teradek
Monitors (#1‡)
SmallHD
Lens control systems (#3)
Teradek
IP video (#3)
Teradek
Camera accessories (#3)
Wooden Camera
Target audience
† Management estimates by sales value
inthe market segments in which these
products are sold.
‡ In our niche.
Cine and scripted TV/ICC
market: 90%
Enterprise market: 10%
Creative Solutions develops, manufactures
and distributes premium branded products
and solutions for film and video production
companies, ICCs, enterprises and
broadcasters.
Annual Report and Accounts 2023
26
Videndum plc
Case studies
SmallHD award-winning
4K Production Monitors
In 2023, SmallHD received the Engineering, Science &
Technology Emmy® award for its rugged and versatile
4K Monitoring Platform. SmallHD’s Vision Series is the
industry’s only 4K/HDR monitor designed specifically
for rugged on-set monitoring enabling film-makers to
view critically accurate images from the moment they
are captured on set, securing their creative intent
while saving time and cost.
Live Production with Teradek
wireless video transmission
Teradek Ranger is a mission-critical zero-delay
(less than 1 millisecond) wireless video system
that transmits visually lossless 4K/HDR video over
licensed and unlicensed bands. With best-in-class
performance in challenging RF conditions and a
wide operating range from 4.910 to 6.425 GHz,
Ranger allows broadcasters and live production
companies to operate without interference from
nearly any location.
Ranger has been our secret
ingredient for live events at
WiZink Center. Even with the
venue at full capacity, thanks
to Teradek, we ensure an
interference-free, zero-delay video
transmission, providing audiences
with a seamless multi-cam IMAG
experience every time.
Xavi Morón
Owner of Streaming On Set
On previous projects, the missing
component was a killer on-set solution
for monitoring in HDR that not only
comes as close as possible to the
reference HDR monitors in the colour
bay, but also has the exposure tools
Iwas accustomed to using in SDR
monitoring. After looking at many
different displays, I fell in love with
theSmallHD Vision 17.
Armando Salas
ASC
27
Financial StatementsCorporate GovernanceStrategic Report
Financial performance
Adjusted*
Statutory from
continuing and
discontinued operations
2023 2022 % change 2023 2022
Revenue £306.9m £442.5 -31% £315.0m £451.2m
Operating profit/(loss) £12.8m £66.2m -81% £(65.2)m £31.5m
Profit/(loss) before tax £1.3m £60.2m -98% £(79.7)m £24.7m
Earnings/(loss) per share 8.5p 96.8p -91% (157.5)p 71.4p
Cash flow
£m 2023 2022 Variance
Statutory operating (loss)/profit from continuing
and discontinued operations
(.) . (.)
Add back discontinued operations statutory
operating loss
. . .
Add back adjusting items from continuing operations . . .
Adjusted operating profit
*
. . (.)
Depreciation
1
. . .
Adjusted trade working capital (inc)/dec*
(.) (.) .
Adjusted non-trade working capital (inc)/dec*
(.) (.) (.)
Adjusted provisions inc/(dec)*
– (.) .
Capital expenditure
2
(.) (.) .
Other
3
. . (.)
Adjusted operating cash flow
*
. . (.)
Cash conversion
*
% % -%pts
Interest and tax paid (.) (.) (.)
Earnout and retention bonuses (.) (.) (.)
Restructuring, integration costs and
sale of impaired inventory
(.) (.) (.)
Transaction costs – (.) .
Free cash flow
*
(.) . (.)
1 Includes depreciation, amortisation of software and capitalised development costs.
2 Purchase of Property, Plant & Equipment (“PP&E”) and capitalisation of software and development costs.
3 Includes share-based payments charge (excluding retention) and other reconciling items to get to the
adjusted operating cash flow*.
Net cash from operating activities of £16.1 million outflow (2022: £48.7 million inflow) comprises -£23.8
million free cash flow from continuing operations* (2022: £40.3 million) plus £15.3 million capital
expenditure from continuing operations (2022: £15.4 million) less £0.3 million from sale of PP&E and
software from continuing operations (2022: nil) plus net cash from operating activities from discontinued
operations of -£7.3 million (2022: -£6.9 million).
Operational and financial review
Annual Report and Accounts 2023
28
Videndum plc
The actions taken in cost of sales and operating
expenses constrained that revenue
dropthrough* to adjusted operating profit* to
39% (compared to a c.50% marginal
contribution on the lower sales).
Adjusted profit before tax* included a £3.2
million favourable foreign exchange effect after
hedging compared to 2022. The impact on 2024
adjusted profit before tax* from a one cent
stronger/weaker US Dollar/Euro is expected
to be an increase/decrease of approximately
£0.2 million and £0.3 million respectively.
Adjusted net finance expense* of £11.5 million
was £5.5 million higher than in 2022. This was
driven by higher borrowings, following the
acquisitions in 2021 and 2022, and higher
interest rates. In 2024, an average of c.60% of
our borrowings will be fixed through swaps at
an average rate of c.5% (including margin).
Our floating debt currently has an average
interest rate of c.7% (including margin). Net
finance expense also includes interest on the
lease liabilities, income from the accounting
surplus of the defined benefit pension scheme,
amortisation of loan fees, and net currency
translation gains or losses.
Adjusted profit before tax* was £1.3 million;
£58.9 million lower than 2022. On an organic,
constant currency basis, adjusted operating
profit* and adjusted profit before tax* were
85% and 98% down respectively on 2022.
Statutory loss before tax from continuing and
discontinued operations of £79.7 million (2022:
£24.7 million profit) further reflects adjusting
items from continuing operations of £20.1
million (2022: £18.0 million) and a £60.9
million loss from discontinued operations after
adjusting items (2022: £17.5 million loss).
The adjusting items from continuing
operations primarily relate to the
amortisation of acquired intangibles,
acquisition related charges, impairment of
assets, and restructuring. These charges were
higher compared to 2022 primarily due to the
exit from the motion controls market, exit
costs of moving Wooden Camera operations
to Costa Rica, the sale of property in the
Production Solutions Division, and indirect
costs associated with the equity raise and
Income and expense
The numbers below are presented on a
continuing basis (unless stated) including 2022
re-presented to ensure fair comparability.
Group revenue from continuing operations
decreased by 31% compared to 2022; a 32%
decline on an organic, constant currency basis.
We estimate the revenue impact of the
writers’ and actors’ strikes was c.£60 million,
the reduction from destocking was c.£25
million, and the residual reduction of c.£50
million was from challenging trading
conditions across our markets impacting
demand in the consumer and ICC segments.
Price rises successfully implemented in 2022
and again at the beginning of 2023 more than
offset inflationary costs in the year.
The decline in revenue impacted adversely on
adjusted gross margin*, which fell from 43.7%
in 2022 to 38.7% in 2023, mainly reflecting
operating leverage and inefficiencies with
overheads that are unable to flex with lower
volumes. Within adjusted gross profit* the
Group incurred £2.2 million charge relating to
an inventory provision for JOBY. La Cassa
Integrazione Guadagni Ordinaria (“CIGO”), the
non-refundable Italian government supported
furlough programme, was applied in our Italian
facilities to partly mitigate the lower demand
whilst ensuring our employees were looked
after and retained by the business.
Adjusted operating expenses* decreased by
£21.2 million to £106.0 million (2022: £127.2
million) partly due to self-help actions taken
to reduce discretionary costs in the short-
term, including CIGO in Italy and shortened
working hours at Creative Solutions, and
implementation of restructuring projects
across all Divisions to ensure we have a lean
organisation ready to capitalise as trading
conditions improve (together c.£12 million of
the c.£13 million cost actions); as well as lower
corporate costs, mainly due to a decrease in
charge for LTIPs as a result of a decreased
EPS vesting expectations and not awarding
an LTIP in 2023, and lower discretionary bonus
accruals across the Group for 2023 (together
c.£11 million). This was partly offset by c.£2
million of charges relating to one-off
professional fees.
financing; partly offset by lower transaction
costs in relation to acquisitions compared to
those in 2022, and lower amortisation of
acquired intangibles than in 2022. The loss at
discontinued operations predominantly
reflects a £50.2 million impairment of assets
(Lightstream £19.2 million, Amimon £29.8
million and Syrp £1.2 million).
The Group’s effective tax rate (“ETR”) on
adjusted profit before tax* was a credit of
223% (2022: 26% debit). Statutory ETR from
continuing and discontinued operations was a
3% credit on the £79.7 million loss (2022: 33%
debit of the £24.7 million profit before tax).
Adjusted basic earnings per share* was 8.5
pence (2022: 96.8 pence). Statutory basic loss
per share from continuing and discontinued
operations was 157.5 pence (2022: 71.4 pence
earnings per share).
Cash flow and net debt
Cash generated from operating activities was
£9.8 million (2022: £65.3 million) and net cash
from operating activities was a £16.1 million
outflow (2022: £48.7 million inflow).
Free cash flow* was £64.1 million lower than
2022 reflecting the lower adjusted operating
profit* and higher interest, tax and
restructuring costs. Cash conversion* was
84%, and across the last three years has
cumulatively been 96%.
Adjusted trade working capital* increased by
£1.1 million in 2023 (2022: £15.6 million
increase). Inventory decreased by £2.0 million
as we applied effective control measures to
offset the decrease in demand, whilst we
maintained stocks of critical electronic
components to support the cine and scripted
TV recovery. Trade receivables decreased by
£17.1 million which included the benefit of £7.9
million from non-recourse factoring of
receivables and trade payables decreased by
£20.2 million, both reflecting the lower level of
trading. Adjusted non-trade working capital*
increased by £7.1 million (2022: £2.2 million
increase) mainly due to the non-accrual of
discretionary bonuses relating to 2023.
Andrea Rigamonti
Group Chief Financial Officer
CFO’s review
Strategic Report Corporate Governance Financial Statements
29
CFO’s review continued
£m 2023 2022
Amortisation of acquired
intangible assets that are
acquired in a business
combination (.) (.)
Acquisition related
charges
4
(.) (.)
Integration, restructuring,
and other costs (.) (.)
Impairment of assets (. ) (.)
Finance expense –
amortisation of loan fees
on borrowings for
acquisitions, and other
financing activities (.) (.)
Adjusting items (.) (.)
Discontinued operations
The Group is focusing more tightly on high-end
professional content creation, where it has
high market share, sales channel expertise and
compelling growth opportunities. Consequently,
the Board has decided to exit loss-making
operations in non-core markets, specifically
medical and gaming, to concentrate R&D
investment on the content creation market.
As a result, whilst the Creative Solutions
Division as a whole remains core going
forward, Amimon was held for sale at
31 December 2023 and Lightstream was sold
on 2 October 2023 for a net cash consideration
of £0.4 million; both are reported as
discontinued operations. In addition, we
wound down Syrp (the R&D centre in New
Zealand).
£m 2023 2022
Revenue . .
Adjusted PBT* (.) (.)
Adjusting items (.) (.)
Statutory PBT (.) (.)
Revenue decreased by 7% in discontinued
operations, due to the sale of Lightstream
part-way through the year.
Adjusting items of £54.5 million (2022: £11.3
million) mainly reflects a £50.2 million
impairment of assets (2022: £1.3 million)
across Amimon (£29.8 million), Lightstream
(£19.2 million) and Syrp (£1.2 million), and £2.2
million amortisation of acquired intangibles
prior to the impairments
(2022: £5.0 million).
Capital expenditure included:
– £4.6 million of property, plant and
equipment compared with £7.0 million in
2022, reflecting actions to limit
non-essential spend;
– £10.0 million capitalisation of development
costs (2022: £7.4 million); including an
increase at Production Solutions to develop
our AI-driven talent tracking (Vinten Vega)
and sustainable portable power solutions
based on sodium technology (Salt-E Dog);
and £0.7 million capitalisation of software
(2022: £1.0 million). Gross R&D was slightly
lower than 2022; the percentage of revenue
(6.3%) grew (2022: 4.5%) but is a reflection
of the lower revenue and is expected to
return to c.5% in 2024.
£m 2023 2022 Variance
Gross R&D . . (.)
Capitalised (.) ( .) (.)
Amortisation . . .
P&L impact . . (.)
‘Other’ primarily relates to share-based
payments whose reduction compared to 2022
is due to the lower vesting expectations of the
adjusted EPS* conditions and not awarding an
LTIP in 2023.
Interest and tax paid increased by £9.2 million
compared to 2022 mainly due to higher interest
costs and the phasing of tax payments.
Earnout and retention bonuses relate to
Audix, Savage and Quasar. Restructuring cash
outflow mainly reflects the exit costs of the
self-help actions taken to restructure in each
of the Divisions.
December 2022 closing net debt*
(£m) (.)
Free cash flow from continuing
operations* (.)
Free cash flow from discontinued
operations (.)
Upfront loan fees, net of
amortisation (.)
Dividends paid (FY 22 final
dividend) (.)
Net proceeds from the equity raise .
Employee incentive shares (.)
Acquisitions/disposals (.)
Net lease additions ( . )
FX .
December 2023 closing net debt*
(£m) (.)
Net debt* at 31 December 2023 of £128.5
million was £65.0 million lower than at
31 December 2022 (£193.5 million).
Leverage
1
was 3.3x at 31 December 2023
(31 December 2022: 2.2x), on the basis used
for our loan covenants, and well within the
revised covenant of 4.25x. Interest cover
2
of
2.0x at 31 December 2023 was also above the
revised covenant of 1.25x.
Free cash flow from discontinued operations
includes Lightstream exit costs as well as
operating losses.
The net proceeds from the equity raise
reflects gross proceeds of £126.4 million from
the capital raising including £1.3 million from
the Directors and senior management
subscriptions; net of £8.5 million expenses.
Cash outflow on acquisitions relates to deferred
consideration for the purchase of Audix.
Net lease additions were mainly the lease
renewal for our Media Solutions headquarters
in Cassola.
There was a £5.9 million favourable impact
from FX, primarily from the translation of our
US Dollar debt, following the weakening of the
US Dollar against Sterling.
Liquidity at 31 December 2023 totalled £105.3
million, comprising £100.6 million unutilised
RCF (total facility of £200 million which
matures in February 2026) and £8.7 million of
cash less £4.0 million utilised overdraft. We
continue to have strong relationships with our
banks and have agreed lending covenant
amendments for March 2024 (leverage
1
of
4.25x and interest cover
2
of 1.5x), June 2024
(leverage
1
of 3.75x and interest cover
2
of 1.75x),
and September 2024 (leverage
1
of 3.75x and
interest cover
2
of 3.25x); before returning to
original covenants at December 2024
(leverage
1
of 3.25x and interest cover
2
of 4.0x).
The term loans taken out at the time of the
acquisitions of Savage and Audix were fully
repaid upon completion of the equity raise.
ROCE* of 4.4%
3
was lower than the prior year
(2022: 25.5%), which mainly reflects the lower
adjusted operating profit*.
Adjusting items from continuing
operations
Adjusting items in profit before tax from
continuing operations were £20.1 million
versus £18.0 million in 2022. The £7.3 million
impairment of assets (2022: £0.6 million)
relates to the exit from the motion controls
market, exit costs of moving Wooden Camera
operations to Costa Rica, impairment of
intangible assets at Savage, Quasar and
Lowepro, and the sale of property.
Videndum plc
30
Annual Report and Accounts 2023
Going concern
Background and context
2023 was an exceptionally challenging year for
Videndum, with the Group suffering from the
prolonged adverse impacts of three major
headwinds. These headwinds were (1) the
weakened macroeconomic climate, (2)
destocking of inventory by retail customers
and distribution partners, and (3) the US
writers’ and actors’ strikes (together “the
strikes”).
First, from late 2022, the Group’s
performance from its consumer and
Independent Content Creator (“ICC”) markets
was impacted by macroeconomic conditions,
mainly the increase in interest rates and
inflation, which led to weakening demand and
customers delaying purchases.
Second, concerns amongst the Group’s retail
customers and distribution partners regarding
the global economy, higher interest rates, and
their working capital levels, led to destocking.
These two headwinds affected the consumer
segment as well as the ICC segment (together
c.40-50% of Group revenue).
Third, the unprecedented and unforeseen
impact from the lengthy strikes significantly
affected demand for the Group’s high-end cine
and scripted TV products (c.20% of Group
revenue exposed to the US cine market, and a
further c.10% to global cine markets). During
the early part of the first half of 2023, demand
from the cine and scripted TV markets weakened
as contract renewal negotiations between the
Writers Guild of America (“WGA”) and Alliance
of Motion Picture and Television Producers
(“AMPTP”) created uncertainty for the Group’s
customers. Negotiations subsequently broke
down and the WGA called a strike for the first
time since 2007. Whilst the WGA strike
officially commenced on 2 May 2023, the
impact from the decline in orders received by
Videndum began to be noticed in the months
leading up to May 2023. On 14 July 2023, the
Screen Actors Guild – American Federation of
Television and Radio Artists (“SAG-AFTRA”),
the actors’ union who had also been
conducting its own contract renewal
negotiations with the AMPTP, also started
strike action. This resulted in all cine and
scripted TV productions ceasing in the US and
spreading globally where US actors were
involved. In addition, the strikes meant that
some of the Group’s new product launches
were delayed.
The adverse impact on revenue from
continuing operations in 2023 from the strikes
was c.£60 million, the reduction from
destocking was c.£25 million, and the residual
reduction of c.£50 million was from
challenging trading conditions across our
markets impacting demand in the consumer
and ICC segments.
Against this challenging backdrop, the Group
took significant mitigating actions, including
agreeing covenant amendments with its
lending banks, cost reductions including
restructuring projects, and developed plans to
conserve cash.
The Group has had, and continues to have,
support from its lending banks which was
evidenced in 2023 by the Group agreeing an
extension of £35 million of its Revolving Credit
Facility (“RCF”), as well as negotiating and
agreeing Amended Covenants.
Self-help actions taken to reduce
discretionary costs in the short-term included
applying La Cassa Integrazione Guadagni
Ordinaria (“CIGO”), the non-refundable Italian
government supported furlough programme,
in the Group’s Italian-based facilities to partly
mitigate the lower demand whilst ensuring
employees were looked after and retained by
the business. In addition, reduced marketing
and travel spend was implemented across the
Group, shortened working hours were
implemented at the Creative Solutions
Division, hiring freezes, and bonuses across
the Group were not awarded.
The Group implemented several restructuring
projects to reduce its cost base and focus on
the more profitable areas. The most
noticeable activities included the disposal of
the Lightstream business, commencing the
sale process of Amimon, the closure of the
Syrp research and development centre in New
Zealand and the exit from the motion controls
market, moving Media Solutions’ US
distribution out of New Jersey into its Savage
facilities in Arizona, transferring Wooden
Camera operations from Texas to Costa Rica,
and moving Rycote operations to the
Ashby-de-la-Zouch factory in the UK.
The combined benefit of the self-help and
restructuring actions was to reduce costs by
c.£13 million in 2023 versus 2022. However, the
actions only partly mitigated the weaker
trading, and as a result, having reviewed all
options, the Board decided that an equity
raise was required. Videndum successfully
completed an equity raise in December 2023,
generating net proceeds of £117.9 million.
Refer to note 4.3 “Share capital and reserves”
for further information on the equity raise.
The principal purpose of the equity raise was
to repay indebtedness and improve the
Group’s capital position. These proceeds were
used to reduce external debt, which meant
that the two term loans were repaid (£44.0
million) and the remaining balance was used
to reduce the drawn down amount on the RCF
facility by £73.9 million.
Borrowing facilities and financial
position at 31 December 2023 and at
31 March 2024
The Group has a committed £200 million
Multicurrency Revolving Credit Facility
(“RCF”) with a syndicate of five banks with a
term until 14 February 2026 (see note 4.1 “Net
debt”).
At 31 December 2023, liquidity (cash
headroom) was £105.3 million, comprising
£100.6 million unutilised RCF and £8.7 million
of cash less £4.0 million utilised overdraft.
Liquidity at 31 March 2024 totalled £112.1
million, comprising £94.7 million unutilised
RCF and £17.4 million of cash with £nil utilised
overdraft.
The RCF lending covenants relate to net
debt:EBITDA and EBITA:net interest (see
“Glossary of alternative performance
measures (“APMs”)” for the definition of these
measures as set out in the RCF),≈which
historically are tested at 30 June and
31 December, to be no higher than 3.25x and
at least 4.0x respectively (“Existing
Covenants”).
During 2023, given the challenges facing the
Group, particularly the unpredictability of the
end of the strikes and uncertainty relating to
the timing and pace of the market recovery,
the macroeconomic climate and destocking,
the Group proactively negotiated amended
covenants (“Amended Covenants”) to the RCF
with its lending banks.
As a result of the good relationship between
the Group and its lending banks, the Group
agreed with its lending banks:
– an extension of £35 million of its RCF from
14 February 2025 to 14 February 2026,
which was confirmed on 19 July 2023 and
brought this commitment to be in line with
the remainder of the RCF which matures at
the same time in February 2026 (the total
RCF facility is £200 million);
– to amend the “Existing Covenants” to the
new “Amended Covenants” as follows:
– net debt:EBITDA to be no higher than 4.25x
(December 2023) and 3.75x (June 2024);
– EBITA:net interest of at least 1.25x
(December 2023) and 1.75x (June 2024).
No restrictions apply to these Amended
Covenants, for example there are no
restrictions on declaring a dividend but new
testing dates for 31 March 2024 (net
debt:EBITDA to be no higher than 4.25x and
EBITA:net interest of at least 1.5x) and
30 September 2024 (net debt:EBITDA to be no
higher than 3.75x and EBITA:net interest of at
least 3.25x) were agreed. From 31 December
2024, the covenants are net debt:EBITDA to
be no higher than 3.25x and EBITA:net interest
of at least 4.00x. The test dates in 2025 are
30 June and 31 December.
At 31 December 2023 these ratios were 3.3x
for net debt: EBITDA and 2.0x for EBITA:net
interest (31 December 2022: 2.1x and 9.8x
respectively). At 31 March 2024 these ratios
were 3.0x for net debt: EBITDA and 2.2x for
EBITA:net interest.
Strategic Report Corporate Governance Financial Statements
31
CFO’s review continued
Base case
The Board is continuing to monitor the Group’s
ability to meet its lending covenants. As part
of the Board’s consideration of the
appropriateness of adopting the going
concern basis of accounting in preparing the
2023 year-end financial statements, a range
of scenarios have been modelled over the 12
months following the signing of the Group’s
Annual Report. For this, the Board has
considered base case projections and several
severe, but plausible, downside scenarios.
The base case follows the Board-approved
budget for 2024 which acknowledges the
challenges and opportunities being faced by
the Group and assumes a recovery in the cine
and scripted TV segment during 2024,
following the ending of the strikes. It also
assumes that the ICC/consumer segment will
continue to deteriorate, albeit at a lower rate
than 2023. The Board approved budget for
2024 is within the range of forecasts approved
by the Directors as part of the equity raise.
The base case assumed a slower recovery in
January and February 2024, with
improvement thereafter. This forecast is
partly supported by the contracted revenue
relating to the 2024 Summer Olympic games
and the typical seasonal uplift in Q2 and Q4.
The Q1 2024 budget assumed an improvement
in revenue of 5% when compared to Q1 2023.
The FY 2024 budget assumes an improved
second half, including the assumptions of a
recovery from the challenges previously
discussed and the generation of revenue from
new product launches. The recovery in H2
2024 forecasts revenue to be broadly in line
with H2 2022. The overall budgeted revenue
acknowledges the current challenges faced in
2024 and contains a judgement around the
speed of recovery from the challenges faced in
2023. The 2024 budget therefore does not
assume to reach 2022 levels.
The most material judgements for the 2024
budget relate to how long it will take for the
Group’s financial performance to recover from
the strikes and how much worse or better the
macroeconomic environment might be in 2024
vs 2023. The Group does not plan to make any
structural changes under the scenarios that
have been modelled. The judgements and
sensitivities are expanded on in further detail
below. The base case does not forecast a
breach of covenants in 2024. In terms of
liquidity, the lowest point between the time of
signing these financial statements and April
2025 is £113 million at 30 April 2024.
Current sell-side analysts’ forecasts are below
this budget for 2024, as is typical for this
stage in the financial year.
Severe but plausible downside
assessment
In acknowledging the challenges faced in
2023, the Board has also modelled several
severe but plausible downside scenarios. The
material judgements considered in these
scenarios are:
– estimating the recovery from the strikes,
both in terms of the length of the recovery
and the quantum thereof, which is at a
slower pace than the base case;
– trading conditions and, in particular, the
impact of the macroeconomic environment
being worse than expected; and
– continuing self-help actions that would
partly offset the effects of the above.
Whilst most of the Group’s modelled
forecasts do not result in breaching
covenants, there are severe but plausible
downside scenarios which would result in a
breach of the Amended Covenants at the test
dates from 30 June 2024. The severe but
plausible scenarios that exist assume (1) a
slower recovery in the cine and scripted TV
market in 2024; (2) a worsening
macroeconomic environment for the Group’s
consumer/ICC products; and (3) no additional
mitigation.
The most severe modelled slower recovery
assumes that the ICC/consumer segment
declines by 30% on 2023 and that the cine and
scripted TV market only recovers to 50% of
2022. Under these scenarios, there would be a
breach of the Amended Covenant at each of
the 2024 test dates from 30 June 2024. In the
event that the results for Q2 2024 were to be
the same as Q1 2024, this would result in a
breach of the Amended Covenant at 30 June
2024. Albeit the average revenue uplift
between the first and second quarters of the
year over the last ten years, excluding 2020
(COVID-19), has been 22% and every Q2 has
been higher than Q1.
The Board, in light of its experience, past
practice and performance, and historical
evidence and current trading, considers that
(a) it is not possible to determine the length of
time it will take to recover from the strikes, (b)
there is limited forecasting visibility
supportable by externally sourced market
evidence, (c) the typical levels of the Group’s
order book are between one and two months
sales, and (d) the impact of the
macroeconomic environment on ICC and retail
customers and distribution partners remains
uncertain.
The Board is proactively managing the options
available to the Group to mitigate risks and
deliver cost and cash saving measures as set
out in the “Mitigation plans” below.
Trading update for the first quarter of
2024
Although industry confidence in the post-
strike recovery remains strong, the Group did
not see the significant pick up in the cine and
scripted TV market that it was expecting to
happen in the month of March. As a result,
although orders for the first quarter of 2024
were 6% ahead at constant currency than the
same period of 2023 (strikes began in May
2023), revenue was 3% below at constant
currency. Adjusted operating profit* was £0.7
million behind the prior year, reflecting a
consistent treatment for bonus accruals, with
continuing tight control on costs, capex, and
working capital. The macroeconomic
environment for the sell-out from the Group’s
customers for its consumer/ICC products
continued to decline, albeit at a slower rate
than experienced throughout 2023.
Compared to base case, orders for the first
quarter of 2024 were 9% below, at constant
currency, with revenue 8% below, at constant
currency. Revenue was £8.1 million below base
case and, reflecting a consistent treatment
for bonus accruals in both the base case and
Q1 results, adjusted operating profit* was
£3.0 million below base case.
The Group has reforecast Q2 2024
(“Outlook”), in light of the unexpected
weakness in Q1 2024 and current expectations
from its Divisions, including a lower rate of
recovery in the cine and scripted TV market
which, in the Outlook, is anticipated to pick-up
only from June 2024. The Outlook represents
current expectations and lies within the range
of plausible downside scenarios, and would
not result in a breach of covenants at 30 June
2024.
Material uncertainty
The Board has, at the date of signing these
financial statements, determined that given
the sensitivities over the timeline and pace of
recovery from the strikes and the financial
impact on the Group (including potential
covenant breaches) of a slower than expected
recovery and worsening macroeconomic
conditions, a material uncertainty exists which
may cast significant doubt on the Group’s
ability to continue as a going concern such
that it may be unable to realise its assets and
discharge its liabilities in the normal course of
business.
Mitigation plans
The Board implemented mitigating actions
during 2023 to offset the lost revenue. These
included the restructuring projects and cost
reductions previously mentioned. The benefits
of these actions was to reduce 2023 costs by
c.£13 million versus 2022. The majority of the
reduction will remain in 2024, with
discretionary costs returning in a phased and
controlled manner, as trading conditions
improve.
Videndum plc
32
Annual Report and Accounts 2023
The Board is proactively managing the
mitigating options available to the Group.
These include:
– cost and cash saving measures in addition
to those factored into the forecast;
– incremental revenue generating activities;
and
– renegotiating the committed facility,
extension and quantum, and the lending
covenants.
As a result of the challenging trading
conditions experienced in Q1 2024, the Group
has developed a set of actions being delivered
during Q2 2024 that will reduce costs and
secure incremental revenue opportunities in
addition to those included in the Outlook set
out above. Cost and revenue actions have
currently highlighted Q2 operating profit
benefits of £3.8 million, with £2.1 million being
within the Group’s control.
During the second quarter of 2024, the Group
will negotiate with its banks an amendment
and extension of its RCF. As part of this
process, the Group will also endeavour to
agree with its banks a new relaxation of its
covenants, along with a reduction of the
overall committed facility, currently £200
million.
Notwithstanding the above material
uncertainty, the Board has, on balance of the
available evidence and modelled scenarios,
concluded that there is a reasonable prospect
that improvements in the Group’s
performance, along with mitigating actions,
will be achieved and it is appropriate to adopt
the going concern basis of accounting in
preparing the 2023 year-end financial
statements.
Viability Statement
In line with the UK Corporate Governance
Code, the Directors have assessed the
prospects of the Group over a longer period
than that required by the ‘going concern’
provision. The Directors have assessed the
viability of the Group over the three-year
period. The three-year viability period
coincides with the Group’s strategic review
period. The Plan assumes the successful
recovery from the challenges faced in FY23,
implementing cost savings, and returning the
Group to historic profit margins whilst
delivering long term growth. However, the
Directors recognise that the prevailing
conditions make it challenging to forecast
future outcomes.
The Directors believe that a three-year period
is an appropriate period over which a
reasonable expectation of the Group’s
longer-term viability can be evaluated and is
aligned with the Group’s business and
strategic planning time horizon. It reflects the
nature of the Group’s key markets, its
businesses and products and its limited order
visibility. While the Directors have no reason
to believe that the Group will not be viable
over a longer period, they believe that the
three-year period presents readers of the
Annual Report with a reasonable degree of
confidence.
The viability assessment has considered the
potential impact of the principal risks on the
business, in particular future performance
(including the success of the strategy and the
broader economic recovery) and liquidity over
the duration of the Plan. Refer to the Principal
risks and uncertainties section for further
detail. In making this statement, the Directors
have considered the resilience of the Group
under various market conditions, the principal
risks facing the Group, together with the
effectiveness of any mitigating actions and
the availability of financing facilities.
Further detail has been provided on the key
principal risks impacting the three-year
period.
Principal risk 1, “Demand for Videndum’s
products” and Principal risk 2, “Cost Pressure”,
have been incorporated into each modelled
scenario. The declining demand and cost
pressures are key factors within each scenario.
A further decline of revenue, and the
associated demand of products, has been
factored into the severe but plausible
scenarios.
Principal risk 6, “Laws and regulations” and
principal risk 10, “Climate change” have been
specifically considered in the forecasts. The
forecast acknowledges that additional
resources and costs will be required to meet
the short and medium term targets, as set out
in the TCFD section of the annual report.
Additional reporting requirements, property
and business continuity insurance, carbon tax
and offsetting and meeting product
regulation will be required.
The assessment has been made, at the date
of signing these accounts, with reference to:
– The Group’s financial position at the year
ended 31 December 2023 including the
current and forecast funding position and
the Directors’ expectation that funding will
be available before the maturity in
February 2026 of the Group’s £200 million
Revolving Credit Facility;
– The Group’s strategy and business plan;
– The Board’s risk appetite;
– The Group’s principal risks and uncertainties
and how these are identified, managed and
mitigated;
– The Group’s going concern assessment; and
– The external environment that the Group
operates within.
The Directors have reviewed the forecasted
scenarios, including the severe but plausible
scenarios modelled and took Q1 2024 trading
into account in forming their view of the
Group’s viability expectation. Refer to section
1 of the going concern disclosure for further
detail on the scenarios considered.
In the short term, the viability of the Group is
impacted by the recovery from the challenges
faced in FY23 and the material uncertainty
highlighted in the going concern section. The
Group is expected to return to historic profit
margins over the course of the Plan.
Based on this assessment, the Directors have
a reasonable expectation that the Group will
have sufficient resources to continue in
operation and meet its liabilities as they fall
due through to 31 December 2026, taking into
account the need to resolve the material
uncertainty. However, a significant sustained
downturn would threaten the viability of the
business over this three-year assessment
period.
Dividend
Given the current circumstances, no dividend
has been recommended. The Board recognises
the importance of dividends to shareholders
and intends resuming dividend payments
when appropriate to do so.
Andrea Rigamonti
Group Chief Financial Officer
22 April 2024
1 Leverage is calculated as net debt before arrangement fees and after leases of discontinued operations, divided by covenant EBITDA for the applicable 12-month period (being adjusted EBITDA*,
before share-based payment charges, and after interest on employee benefits, interest related net currency translation gains, and the amortisation of loan arrangement fees); see Glossary for
further detail.
2 Interest cover is calculated as covenant EBITA for the applicable 12-month period (being adjusted EBITDA* less depreciation of PP&E) divided by adjusted net finance expense* (before interest
on employee benefits and FX movements, and the amortisation of arrangement fees); see Glossary for further detail.
3 Return on capital employed (“ROCE”) is calculated as adjusted operating profit* for the last 12 months divided by the average total assets (excluding non-trading assets of defined benefit
pension and deferred tax), current liabilities (excluding current interest-bearing loans and borrowings), and non-current lease liabilities.
4 Includes earnout charges, retention bonuses, transaction costs relating to the acquisition of businesses, and the effect of fair valuation of acquired inventory.
Strategic Report Corporate Governance Financial Statements
33
Operational and financial review continued
Key Performance Indicators †
Health and safety: accident record
Number of accidents resulting in greater than three days’ absence.
2
Performance
2023
2022
2021
2
2
0
2023 update
Our target is zero accidents.
Link to strategy
n/a
Constant currency revenue (decline)/growth
Change in revenue on operations at constant exchange rates.
(31.5)%
Performance
2023
2022
2021
(31.5)%
7.7 %
43.5%
2023 update
Decline driven by strikes by US writers and actors, challenging
macroeconomic environment and destocking.
Link to strategy:
1 3
Adjusted profit before tax*
Adjusted profit before tax*.
£1.3m
Performance
2023
2022
2021
£1.3m
£60.2m
£42.4m
2023 update
Decline driven by lower volumes and higher net finance expense.
Link to strategy:
1 2 3
Adjusted operating profit margin*
Adjusted operating profit* divided by revenue.
4.2%
Performance
2023
2022
2021
4.2%
15.0%
13.9%
2023 update
Decline driven by lower volumes.
Link to strategy:
2 3
Videndum plc
34
Annual Report and Accounts 2023
Adjusted ordinary basic EPS*
Adjusted profit after tax* divided by weighted average number of
shares outstanding during the period.
8.5p
Performance
2023
2022
2021
8.5p
96.8p
69.9p
2023 update
Decline driven by lower adjusted profit after tax.
Link to strategy:
1 2 3
Return on capital employed*
Adjusted operating profit* divided by the average total assets
(excluding non-trading assets of defined benefit pension and deferred
tax), current liabilities (excluding current interest-bearing loans and
borrowings), and non-current lease liabilities.
4.4%
Performance
2023
2022
2021
4.4%
25.5%
2.9%
2023 update
Decline driven by lower adjusted operating profit*.
Link to strategy:
1 2 3
Revenue in APAC
Revenue from selling to countries in the Asia Pacific region as a
percentage of total revenue.
16.7%
Performance
2023
2022
2021
16.7%
15.7%
15.6%
2023 update
Increase due to strikes impacting US sales more than APAC.
Link to strategy:
1 3
Cash conversion*
Adjusted operating cash flow* divided by adjusted operating profit*.
84%
Performance
2023
2022
2021
84%
90%
108%
2023 update
Tight control of cash due to effective control measures to offset the
decrease in demand.
Link to strategy:
1 2
Strategic Report Corporate Governance Financial Statements
35
Overview
To achieve its strategic objectives, Videndum
recognises that it will take on certain business
risks.
The Group aims to take business risks
in an informed and proactive manner, such
that the level of risk after mitigating action
is aligned with the potential business rewards.
Management regularly reviews risk exposures
against current business risk level tolerances.
Videndum aims to be a sustainable business,
minimising its impact upon the environment,
supporting and working to improve the
societies in which it operates and with a
rigorous governance framework ensuring the
longevity of the business and minimising risks
around its operations.
The risk management framework includes
formal risk reviews and risk registers
maintained at Group, Divisional and individual
site level.
Our approach is underpinned by a commitment
to fairness and honesty in our relationship
with customers, suppliers, our people and all
our stakeholders. The Group is risk averse with
respect to risks that could negatively affect
the safety of our employees and products, our
brands or reputation, or risks that could lead
to breaches of laws and regulations or
endanger the future existence of the Group.
We have a disciplined financial management
approach and in particular we seek to minimise
the impact of short-term currency fluctuations
on our business. The Group is committed to
full compliance with all statutory obligations
and full disclosure to tax authorities.
To support our strategic priorities, we have
several business objectives which influence the
way in which we proactively manage risks.
These include: being a strong innovator and
investing in research and development;
optimising supply chain efficiency and
operational excellence; robust HR processes
for resourcing and talent development; and
longer-term identification of acquisition
opportunities.
At the time of signing these financial
statements, a material uncertainty on going
concern exists in the event of a slower
recovery in the cine and scripted TV market in
2024 and significantly worsening demand for
our ICC/consumer products, that would cast a
significant doubt upon the Group’s ability to
specifically meet its loan covenant obligations.
Therefore, a number of the Group’s principal
risks have increased since the 2022 Annual
Report and additional actions implemented to
mitigate the impact/likelihood.
Update since 2022
– The risk relating to “Demand for
Videndum’s products” increased in 2023.
This was due partly to a challenging
economic outlook affecting our consumer-
oriented brands, a downturn in the
Consumer Electronics channel, and an
increasingly challenging geopolitical outlook.
Our activity in 2023 was heavily impacted
by the US actors’ and writers’ strikes; we
expect the cine market to recover but the
timing and pace of the recovery is still
uncertain.
– Certain segments (e.g. Audio, Lighting)
continued to perform strongly and we believe
the long-term fundamentals for the content
creation industry remain good.
– People risk was higher due to the increased
pressure linked to restructuring initiatives
and also measures to contain costs given
pressures on the business, including
short-time working which affected morale,
and led to greater employee turnover.
Variable incentive payments were
significantly reduced.
– Reputation risk was greater as a result of
increased external pressure and scrutiny,
linked to the poor financial performance in
2023 and the equity raise.
– Cyber risk remains elevated in view of the
high number of cyber security breaches and
ransomware activity affecting the
corporate sector. We continue to focus on
strengthening our cyber security defences
and have increased budgets allocated to
security. We keep our framework under
review; however, this risk remains inherently
high and cannot be eliminated.
– Acquisition risk is reduced due to such
transactions being unlikely in the short-term.
The Group has a well-established
and effective framework for
reviewing and assessing risks and
has appropriate processes and
procedures to mitigate against
them.
Principal risks and uncertainties
Videndum plc
36
Annual Report and Accounts 2023
Principal risks
Relative positioning at the end of 2023
1. Demand for Videndum’s products
2. Cost pressure
3. Dependence on key suppliers
4. Dependence on key customers
5. People
6. Laws and regulations
7. Reputation of the Group
8. Foreign exchange and interest rates
9. Business continuity including cyber security
10. Climate change
11. Restructuring and disposals
12. Acquisitions
Key Increased Stable Reduced
Image: Basti Balser and Flo Eckhardt
All risks are measured in terms of their financial impact. The categorisation above is based on risk type.
Low Impact High
Low HighLikelihood
1
6
7
8
3
5
12
4
2
9
10
11
Strategic
Financial
Operational and compliance
Strategic Report Corporate Governance Financial Statements
37
Principal risk Mitigation Strategic priority
1. Demand for Videndum’s products
The fundamentals of the content creation industry remain
good. We have premium, market-leading brands and
continue to launch innovative products; certain segments
such as Lighting, flowtech supports and Audio continue
to experience growth. In 2024, the Group’s revenue will
be buoyed by major global sporting events and
broadcasting activity relating to elections.
Global recessionary and inflationary pressures have
reduced consumers’ disposable income, and impacted
demand for consumer-oriented products, which account
for c.10% of the Group’s revenue. The writers’ and
actors’ strikes have ended, however there is still
uncertainty regarding the timing of the full recovery in
sales to the cine and scripted TV market.
Geopolitical issues, including increased tensions in the
Middle East, and a continuation of the Russia/Ukraine
conflict, may affect the short-term outlook.
We recognise that Artificial Intelligence may create
additional risks and opportunities for the content
creator sector.
– Close monitoring of target markets and user
requirements.
– Continuous investment in new product development
and marketing, and phasing out of old products.
– Continued emphasis on diversification away from
traditional markets and channels towards e-commerce
and products with a higher technological content, as
well as accessories.
– Close relationship maintained with key customers.
– The operational footprint and build plans for our
manufacturing plants are adjusted to respond to
changes in demand condition.
– Continued emphasis on cost control measures to
mitigate the impact of slower demand.
– Measures in place to reduce working capital.
– Monitoring of geopolitical developments and adapting
plans accordingly. Supply chain diversification to
reduce reliance on a single territory.
1. Organic growth
2. Margin improvement
3. M&A activity
2. Cost pressure
We continue to experience inflationary increases across
all areas of spend, however the overall pressure is
reducing, and there are much fewer shortages of critical
components than was experienced in the aftermath of
the COVID-19 pandemic.
Cost pressure may increase in the future due to the
regional issues in the Middle East, which may impact
energy costs and safety issues in the Red Sea, which
could affect transport logistics.
– Programmes of carefully evaluated sales price
increases have offset additional costs.
– Careful monitoring of costs versus budgets,
production and sourcing activities are continually
reviewed for cost-saving opportunities.
– Labour efficiency improvements through initiatives
such as Lean principles.
– Key supplier agreements regularly re-tendered to
achieve optimal value.
– Salaries and benefits are regularly benchmarked.
– Reduced reliance on direct energy consumption
through installation of solar panels and other energy
saving measures; careful monitoring of logistics
costs.
2. Margin improvement
3. Dependence on key suppliers
We source materials and components from many
suppliers in various locations, and in some instances are
more dependent on a limited number of suppliers for
particular items.
If any of these suppliers or subcontractors fail to meet
the Group’s requirements, we may not have readily
available alternatives, thereby impacting our ability to
provide an appropriate level of customer service.
In 2021, Videndum faced shortages of certain raw
materials and components, in particular semi-conductors.
This issue eased somewhat during 2022 and 2023.
– Where possible, dual sourcing is in place for all
materials and components, using suppliers in
different territories.
– Monitoring of service levels against pre-defined KPIs.
Strong relationships are maintained.
– In-sourcing opportunities have been identified to
improve margins and reduce key supplier dependencies.
– Formalised Sales and Operations Planning in place,
which enables us to anticipate requirements for raw
materials and other components.
– Business interruption insurance (within deductible
limits) provides coverage for named key suppliers.
1. Organic growth
2. Margin improvement
Principal risks and uncertainties continued
Videndum plc
38
Annual Report and Accounts 2023
Key Increased Stable Reduced
Principal risk Mitigation Strategic priority
4. Dependence on key customers
While the Group has a wide customer base, the loss
of a key customer, or a significant worsening in their
success or financial performance, could result in a
material impact on the Group’s results.
Videndum’s largest customer accounted for
approximately 10% of the Group’s total turnover in
2023. The business also works with a variety of
customers on large sporting events and the extent of
these activities varies year-on-year, although as the
Group has grown the relative importance of the revenue
from these events has decreased.
– Development of strong relationships and dedicated
account management teams for key accounts.
– Strict monitoring of receivable balances. Credit
insurance schemes in place covering approximately
50% of total trade debtor balance.
– Our extensive distribution footprint and e-commerce
capability allows us to leverage different channels of
distribution.
1. Organic growth
2. Margin improvement
5. People
We employ approximately 1,600 people and are exposed
to a risk of being unable to retain or recruit suitable
diverse talent to support the business.
We manufacture and supply products from a number of
locations and it is important that our people operate in
a professional and safe environment.
Corporate restructuring activities may adversely impact
employee morale, which may in turn affect individual
performance and increase attrition. Headcount freezes
place higher demands on people, leading to increased
dissatisfaction, as well as no bonus paid and salary
increase freezes.
Competition for engineering talent is less intense but
there is still a risk that some key engineers may leave
Videndum, thereby adversely affecting the development
of new products.
– Employees’ health and safety is taken very seriously
and risks and issues are carefully monitored.
– Wellness and counselling support facility provided to
employees.
– Employees are rewarded fairly with competitive
remuneration packages.
– Appropriate recruitment, appraisal, talent
management and succession planning strategies are
in place to ensure we recruit and retain diverse, good
quality people and leadership across the business.
– Retention plans are continually reviewed and adapted.
– Increased change management activities and
employee engagement to be implemented to support
restructuring programmes.
– We monitor staff turnover, as reported on page 64 in
the Responsible business section.
1. Organic growth
3. M&A activity
6. Laws and regulations
We are subject to a comprehensive range of legal
obligations in all countries in which we operate.
As a result, we are exposed to many forms of legal risk.
These include, without limitation, regulations relating to
government contracting rules, sanctions regimes,
environment and climate change, taxation, data
protection regimes, anti-bribery provisions, competition,
and health and safety laws in numerous jurisdictions
around the world.
Failure to comply with such laws could significantly
damage the Group’s reputation and could expose
Videndum to fines and penalties.
– Dedicated legal and regulatory compliance resources
supported by external advice where necessary.
– Monitoring of developments in the regulatory
environment in which our companies operate,
including the effect of tax changes.
– We enhance our controls, processes and employee
knowledge to maintain good governance and to
comply with laws and regulations. Our Code of
Conduct sets out standards expected of Videndum
and our employees.
– Intellectual Property is actively protected; Videndum
seeks to enforce its Intellectual Property rights.
– A compliance search engine is used to monitor and vet
third parties, including for possible issues relating to
sanctions regimes.
1. Organic growth
2. Margin improvement
Strategic Report Corporate Governance Financial Statements
39
Principal risks and uncertainties continued
Principal risk Mitigation Strategic priority
7. Reputation of the Group
Damage to our reputation and our brand names can
arise from a range of events such as poor product
performance, unsatisfactory customer service and
other events either within or outside our control.
We are mindful of the increasing levels of regulatory and
stakeholder scrutiny of companies’ affairs, coupled with
the widespread impact of social media.
The societal impact of our brands and the sustainability
of our operations are increasingly important to consumers
of Videndum products and our investor community.
There is increased scrutiny of Videndum’s ESG credentials,
and a need to comply with increasing ESG regulations
(“ESOS”, “TCFD”).
This risk is currently exacerbated due to the increased
scrutiny which is linked to the poor financial
performance of the Group in 2023.
– Strong standards of product quality and customer
service are enforced.
– Business is managed in a safe and professional way,
in accordance with corporate values.
– All employees and stakeholders are expected to abide
by Videndum’s Code of Conduct which was
relaunched in early 2024.
– An independent whistleblowing service is in place for
employees to escalate any concern.
– Third party due diligence framework includes
compliance searches and inspections, and consideration
of reputational issues.
– A structured, Group-wide, ESG programme is in place.
This includes initiatives to improve product sustainability
and reduce waste and emissions.
1. Organic growth
8. Foreign exchange and interest rates
The global nature of the Group’s business means it is
exposed to volatility in currency exchange rates in
respect of foreign currency denominated transactions,
and the translation of net assets and income statements
of foreign subsidiaries and equity accounted investments.
The Group is exposed to a number of foreign currencies,
the most significant being the US Dollar, Euro and
Japanese Yen.
– Use of appropriate hedging activities on forecast
foreign exchange net exposures.
– Overseas investments partly financed through the
use of foreign currency borrowings in order to provide
a net investment hedge over the foreign currency risk
that arises on translation.
– On average, 60% of the interest charge for 2024 is
fixed through the use of swap instruments, thereby
minimising the impact of any major increases.
– The Group continues to carefully control costs; as
trading conditions improve discretionary costs will
return in a phased and controlled manner.
– Equity raise completed at the end of 2023 will reduce
future interest charges
2. Margin improvement
3. M&A activity
9. Business continuity including cyber security
There are risks relating to business continuity resulting
from specific events such as natural disasters including
earthquakes, floods, fires, or pandemic flu and climate
change-induced disasters.
These may impact our manufacturing plants or supply
chain, particularly where these account for a significant
amount of our trading activity.
We are also dependent on our IT platforms continuing to
work effectively to support our business and therefore
there is a cyber security risk for the Group.
– A business continuity and disaster recovery planning
policy is in place.
– Significant investment made in implementing new
security tools and processes.
– IT security controls and training programmes
continually improved with appropriate investment.
– We have global insurances in place which provide
cover for certain business interruption events. We
review coverage annually to determine whether
adjustments are needed.
1. Organic growth
Videndum plc
40
Annual Report and Accounts 2023
Key Increased Stable Reduced
Principal risk Mitigation Strategic priority
10. Climate change
We understand the serious nature of the challenges
relating to climate change and the implications this may
have on our operations and business model.
We consider the physical risks to people, assets and
supply operations based on a projected increase in the
frequency of natural disasters caused by climate
change, and the impact of gradual changes such as
increasing temperature.
Additional resource is needed to manage this issue and
meet additional reporting requirements. Additional cost
may arise, in particular with regards to: property and
business continuity insurance; carbon tax and offsetting;
and meeting product regulation.
See the 2023 TCFD report for a more detailed overview
of this risk.
– A climate change risk management framework has
been established and details are set out in the 2023
TCFD report from page 47.
– We have established clear targets and trajectory for
achieving carbon neutrality and subsequently net zero
emissions. Regular updates are provided to the Board.
– Group-wide ESG programmes (see standalone ESG
report).
1. Organic growth
11. Restructuring and disposals
Several restructuring initiatives are in the process of
being implemented, and the Group has maintained its
focus on managing costs tightly. Restructuring is
supplemented by other continuous improvement
initiatives to optimise our global operations.
There is a risk that these projects do not achieve the
planned outcomes, or that the day-to-day operations
are impacted.
Significant restructuring activity was conducted in 2023
with the closure of several operations. The impact will
need to be carefully managed to ensure that the
business remains resilient.
– Projects are monitored closely by senior operational
management with regular updates provided to the
Divisions/Group.
– Detailed plans put in place and tracked against
milestones.
– Regular review of controls/risks at a Divisional level to
confirm that standard procedures are in place.
– Post restructuring review of business impacted by
restructuring.
1. Organic growth
2. Margin improvement
3. M&A activity
12. Acquisitions
In pursuing our long-term business strategy, we will
continue to explore opportunities to expand our business
through development activities such as strategic
acquisitions.
This involves a number of calculated risks including:
acquiring desired businesses on economically acceptable
terms; integrating new businesses, employees, business
systems and technology; and realising satisfactory
post-acquisition performance.
The short-term risk is reduced due to fact that
acquisitions are unlikely in the next few months, this will
be considered in the future.
– Clear long-term acquisition strategy with a robust
valuation model.
– Stringent due diligence processes are completed
including the use of external advisers where
appropriate.
– A plan is developed to integrate the acquired
businesses in an effective way.
– The post-acquisition performance of each business is
monitored closely.
3. M&A activity
Strategic Report Corporate Governance Financial Statements
41
Our stakeholders
Understanding our stakeholders, their needs and
listening to their views is integral to Videndum’s
strategic planning and operational delivery.
Our key stakeholders are set out below:
Customers Suppliers Employees
Our success is dependent on
our ability to understand and
respond to our customers’
needs. They include
broadcasters, film studios,
photographers, ICCs, vloggers,
influencers, professional sound
crews and enterprises.
We have a large number of
suppliers globally, as the
majority of our operations are
relatively low-volume, small
batch processes. We source
materials from suppliers close
to our manufacturing facilities
where possible.
Our employees are the best in
the sector, our single greatest
asset and critical to our
success. We aim to offer a
safe, inclusive and engaging
work environment.
2023 outcomes
– 2023 was an exceptionally challenging year
for Videndum, with our financial
performance significantly impacted by
three headwinds: strikes by US writers and
actors; a challenging macroeconomic
environment; and destocking.
– Our main customers and end users were
impacted by the same headwinds.
– We kept in close contact with key customers
and continued to collaborate with end users
to develop new products to meet their needs.
2023 outcomes
– 2023 saw pressure on our supply chains due
to macroeconomic headwinds, however our
businesses successfully managed this via
strong working relationships and close
contact with key suppliers.
– Videndum has developed a Group-wide
methodology for evaluating suppliers as
part of our ESG programme.
2023 outcomes
– Due to the strikes and the challenging
market conditions, many of our employees
were on short-time working during 2023 to
protect the business from long-term
damage.
– We kept our employees informed via Town
Hall and team meetings and internal emails.
– Despite the very challenging year, with the
significant headwinds faced, the response
rate to our 2023 all-employee survey was
very good at 74%; responses demonstrated
a high level of engagement and overall
employee satisfaction.
Our Section 172 statement, which sets out
how the Board takes stakeholder interests
into account when making decisions, can be
found on page 86
Group Chief Executive review and
Divisional operating reviews on
pages 13 to 14 and 16 to 28
Employee engagement on page 63
Employee survey overview on page 88
Diversity information on page 64
Health and safety in Videndum on page 65
Whistleblowing service on page 70
Responsible business on page 68
Annual Report and Accounts 2023
42
Videndum plc
Communities Shareholders
We have a number of
manufacturing and office
facilities around the world. We
aim to support the
communities we work in,
limiting any negative impact on
the environment and
protecting natural resources to
create long-term sustainability
for the business.
Videndum maintains close,
open and regular contact with
our shareholders. Shareholders
play an important role in
helping to shape our strategy
and monitor governance.
2023 outcomes
– Videndum is committed to becoming carbon
neutral by 2025 and carbon net zero by
2035 for Scope 1 and 2 emissions.
– Approved science-based targets,
aligned to limit global warming to 1.5ºC.
– ESG Committee oversees our Environmental,
Social and Governance programme.
– By implementing smarter ways of working
and investing in infrastructure, we have
already achieved a c.30% reduction across
the Group’s Scope 1 and 2 emissions since
2019 (excluding the impact of newly acquired
businesses). Our formal baseline for
measuring Scope 1, 2 and 3 emissions is 2021
when the methodology was fully rolled out.
We have reviewed progress against 2019 in
order to analyse year-on-year trends, although
2019 is not technically the baseline year.
– In 2023, our key focus areas included energy
reduction pathways, enhanced tracking of
waste, a significantly increased emphasis
on product sustainability, and the
development of new/sustainable products.
2023 outcomes
– Proactive engagement with investors and
analysts.
– Regular updates given to the market on
business performance.
– Annual Report, results presentations,
investor roadshows and meetings held
virtually or in person.
– Through the support of our shareholders,
we successfully raised £125 million to
deleverage our balance sheet, deliver a
robust capital structure and enable delivery
of the Group’s strategy.
– Annual General Meeting held in May 2023
and General Meeting tied to the equity raise
in December 2023.
More information on our community
and environmental initiatives can be
found in the Responsible business report
on pages 60 to 61 and 66 to 67
Further information on page 87
43
Financial StatementsCorporate GovernanceStrategic Report
Responsible business
A snapshot of ESG
Videndum has a clear purpose and
strategy, and strongly believes in
doing business the right way.
These behaviours are well
embedded within the organisation
and are closely monitored by the
Board. Despite the headwinds,
throughout 2023, the Company
further developed its Group-wide
ESG programme, increasingly
focusing on the end-to-end supply
chain as well as direct operations.
Contents
ESG Governance
44
Videndum’s roadmap to net zero
46
Task Force on Climate-related
Financial Disclosures Report
(“TCFD”)
47
Environment
60
Our people
62
Giving back
66
Responsible practices
68
ESG frameworks that inform our strategy
Both mandatory and voluntary ESG disclosures inform Videndum’s ESG
strategy, details of which can be found in our 2023 ESG Report which is
available on our website.
Stephen Bird
Group Chief Executive
Our ESG strategy and commitment
We are a small company with a global footprint and are
committed to working responsibly. We engage with our
stakeholders – including our employees, shareholders,
customers, supply chain and rating agencies – to develop,
deliver and evolve the Group’s ESG strategy according to
their needs.
Our strategy includes clear objectives and targets,
prioritising actions that can deliver the greatest impact. It
is also designed to contribute positively to the success of
the Group, to reduce the impact of the business on the
environment, to continue to prioritise the health and safety
of our employees, and to improve the diversity and
inclusivity of Videndum’s workplaces.
Despite the market challenges faced in
2023, the Group has continued to make good
progress with our ESG programme.
To reflect Videndum’s commitment to ESG, our third
standalone ESG Report details our 2023 ESG performance,
and is available on our website. This Annual Report
contains an overview of our ESG activities.
ESG Governance
We have a robust governance framework designed to
ensure the continued success of our business, while
minimising risks to our operations and supply chains. We
have a coordinated Group-wide approach to ESG which
focuses on the material issues that affect the business and
its stakeholders.
The Board provides oversight and has overall responsibility
for the Group’s ESG programme and climate-related risks
and opportunities. The ESG Committee, established in 2021
and chaired by the Group Chief Executive, along with senior
executives from across the Group, is responsible for managing
climate-related topics and driving ESG performance. The
Head of Group Risk Assurance leads the climate change
risk management and regularly reviews mitigation plans
on behalf of the ESG Committee, providing updates at all
meetings. The Board was informed of climate-related issues
and ESG matters through updates from ESG Committee
meetings, which occurred five times in 2023. After each ESG
Committee meeting, key points, such as emission
reductions, were distributed to the Board. ESG and climate
governance has been fully integrated into the Group’s
existing processes. Members of the ESG Committee
attended climate risk workshops, which occurred in June,
July and September 2023.
The Audit Committee continues to review financial and
non-financial risks outlined in the Group Risk Register
including climate change, which was determined as a
Principal Risk in 2021. The Board and Audit Committee are
regularly updated on Scope 1 and 2 emissions by sites, to
enable them to track progress towards carbon neutrality.
The Head of Group Risk Assurance provides updates on
TCFD to the Audit Committee at least once a year.
The Board considers climate change in long-term financial
planning for the Group. For example, €, capital was
allocated for solar panel installation in Feltre in . The
Board received training on climate-related matters
throughout , for example through TCFD updates
provided by Inspired ESG. A part of the Group Chief
Executive’s remuneration is tied to the Group’s climate
action and ESG performance, including progress to net zero.
Read more online at
videndum.com/responsibility
Annual Report and Accounts 2023
44
Videndum plc
Videndum Board
Stephen Bird
Group Chief Executive (Sponsor)
Jon Bolton
Group Company Secretary (Executive Lead)
Chris Jorio
Head of Group Risk Assurance (Coordinator)
Georgina Kreysa
Group Communications and ESG Manager (Coordinator)
Enrico Grando
Media Solutions
Meron Kiflu
ESG Coordinator
ESG Working Group
Julio Lizano
Production Solutions
Alejandro Jiron
ESG Coordinator
Marco Vidali
Creative Solutions
Chris Reem
ESG Coordinator
Jennifer Shaw
Investor Relations
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Reduce
packaging
and waste
Formalise
the integrity
of our
supply chain
Positively
impact the
communities
in which we
operate
Reduce carbon
emissions
Videndum’s
positive
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Image: The Tillmann Brothers
How Videndum manages its ESG performance
ESG Committee led by
Our key focus areas
Videndum has seven responsible business priorities
grouped under four specific areas which reflect
how the business operates. These priorities are
embedded in our day-to-day operations.
In 2023, our focus areas included energy
reduction pathways, enhanced tracking of waste,
a significantly increased emphasis on product
sustainability including the development of new,
sustainable products, and the expansion of our
supply chain programme.
Read more from page 60
An ESG Working Group established in 2022, met bi-weekly with our ESG consultants, reporting on progress of the
Group’s seven KPIs (see diagram below). The implementation of low-emission technology, PLCAs and sustainable
product development were also among the key topics of discussion during 2023.
45
Financial StatementsCorporate GovernanceStrategic Report
Targets
Scope Area Short term
(to 2025)
Medium term
(2025–2035)
Long term
(2035–2050)
2023 2024 2025 2027 2030 2035 2045
Scope
1 and 2
Near-term
target
Ensure that 100%
of Group operations
capture and report
on CO
2
e emissions.
38% reduction since
2021 using the
market-based
approach to
measuring
emissions from
electricity.
42% reduction since 2021
using the market-based
approach to measuring
emissions from electricity.
We expect that emissions
will be further reduced
through gas substitution
measures that are at an
evaluation stage.
The maximum cost of
offsets will be £65,000
(less if gas substitution
measures are
implemented).
50% reduction. 60% reduction. 70% reduction, remaining
offsets through carbon
sequestration schemes.
Key actions Improve energy efficiency of electricity and gas – measurable actions have been identified to further reduce emissions for Scope 1 and 2. This includes: further solar panel
projects (Feltre, Italy and Ashby, UK); increased LED lighting coverage; investment in more energy-efficient machinery; and continued conversion of Company cars to
electric or hybrid as and when leases expire. We are working to ensure that all electricity contracts are based on renewable energy so as to reduce Scope 2 emissions under
the market based method.
Electricity Energy metering and
circuit level monitoring.
LED lighting upgrade in
Feltre, Italy, and Ashby,
UK, Bad Kreuznach,
Germany and Tokyo,
Japan.
Carbon fibre upgrade
and other investment
in more modern and
energy efficient
machinery.
Installation of solar
panels at Feltre, Italy.
30% expansion of solar
panels in Cartago,
Costa Rica.
Second installation
of solar panels at
Feltre, Italy.
LED system
implemented in
Phoenix, US.
Reduction in size of
property portfolio
(under-utilised sites) will
reduce annual emissions
by at least 500tCOe
per annum against 2021
baseline.
Introduce further
energy efficiency
measures across our
US sites.
Continue to implement
the more complex/
expensive site survey
recommendations
to ensure further
reductions.
All site survey
recommendations
implemented and residual
Scope 2 emissions that
cannot be eliminated
are offset using
“carbon removal offsets”.
Gas Evaluate investment required to convert
heating systems to air source pumps.
Evaluate cost of substituting gas used
by paint shops.
Continued conversion of
Company cars to electric or
hybrid as and when leases
expire.
Begin to implement
site survey
recommendations to
improve efficiency of
gas consumption.
Continue to implement
the more complex/
expensive site survey
recommendations
to ensure year-on-year
reductions.
All site survey
recommendations
implemented and residual
Scope 1 emissions that
cannot be eliminated
are offset using
“carbon removal offsets”.
Carbon
neutral
target
Reduce Scope 1 and 2 emissions as much
as possible.
From 2025, we will purchase offsets annually to be carbon neutral until we reach our Scope 1 and 2 net
zero target in 2035. At the end of 2025, we expect that c.1,400 tCO
2
e (with electricity measured using
the market based approach) i.e. the remaining emissions, will be offset using quality offset programmes
available, however this may be reduced further if we implement measures to substitute gas.
Net zero
target
Net zero by 2035.
Scope 3 Near-term
target
Ensure that 100% of Group operations
capture and report on CO
2
emissions.
– – – – 90% reduction.
Key actions Implement measures to reduce Scope 3 emissions from business travel, supply chain, transportation of goods and employee commute. This includes:
– Conduct PLCAs (cradle to grave) for key product lines.
– Work with our top five biggest suppliers by revenue to request supplier-specific data on products by 2025.
– Insource production to our energy efficient manufacturing processes to reduce the emissions associated with bought-in finished goods.
– Expand the use of car pooling.
– Monitor flights for business, encourage alternative forms of travel (e.g. rail) where possible.
Net zero
target
Net zero by 2045.
In 2022, we worked to develop our transition plan and a strategy to support our journey to net zero (absolute reduction) for Scope 1 and 2 by 2035 and Scope 3 by 2045.
The 2035 targets for Scope 1 and 2 differ from the 2045 objectives for Scope 3, because 2023 is the first year that we were able to calculate Category 9 (Downstream
Transportation and Distribution). In addition, it is partly due to the complexities associated with mitigating emissions beyond direct operational control. We analysed and
improved the data for Scopes 1, 2, and 3 in accordance with the Greenhouse Gas (“GHG”) Protocol; more details can be found on page 59. Our interim targets were set to
enable us to track our progress towards our long-term targets. Due to 2023 being a challenging year for the content creation market, we plan to submit our targets for
SBTi validation in 2024.
Our carbon neutrality for Scopes 1 and 2 by end of 2025, will include an element of carbon offsetting, however this will be a small proportion of current emissions. The
primary reduction will be through energy saving schemes and use of renewable energy contracts. For net zero objectives, at least 90% of the reduction will be through
energy reduction schemes, with the remainder neutralised through carbon removal schemes.
We have set several ambitious targets to manage the climate-related risks described on pages 49 to 53, and to reduce our impact on the environment. Videndum’s other
environmental indicators (pages 58 and 60 to 61) on energy efficiency measures, waste reduction, product sustainability and supply chain integrity, contribute towards
mitigating some transition and physical risks and capitalise on the potential opportunities in substituting products to lower emission alternatives. In 2023, we measured
and monitored severe weather events across our sites, assessing the impact of typhoons and hurricanes where applicable. We aim to repeat this process annually.
We use a wide variety of metrics to measure climate-related impacts. These metrics consist of Videndum’s greenhouse gas inventory, including the Group’s Scope 1, 2
and 3 carbon emissions and our emissions reduction pathway, which is aligned with the Paris Agreement 1.5°C warming scenario.
Videndum’s transition plan – a roadmap to net zero
Responsible business continued
Videndum plc
46
Annual Report and Accounts 2023
Task Force on Climate-related Financial Disclosures Report (“TCFD”)
Responsible business continued
In 2023, we continued to develop our TCFD reporting for the third year, further embedding
the recommendations and latest guidance into our existing processes.
We aim to continuously improve our TCFD reporting over time as guidance evolves and our responsible business programme progresses.
We are committed to providing information about climate-related risks and opportunities that are relevant to our business. We are evolving our
strategy and governance framework, to take account of these risks and opportunities. In 2023, Videndum complied with the requirements of the
Listing Rule (“LR”) 9.8.6R by including climate-related financial disclosures consistent with the TCFD recommendations and recommended
disclosures (Table 1). We complied with the mandatory climate-related financial disclosure requirements under the Companies (Strategic Report)
(Climate-related Financial Disclosure) Regulations 2022.
Table 1: TCFD recommendations and location in the standalone 2023 TCFD Report.
TCFD Area TCFD recommendation Climate-related Financial Disclosure Compliance
Location in standalone
2023 TCFD Report
Governance a) Describe the Board’s oversight of
climate-related risks and opportunities.
A description of the governance arrangements of
the company in relation to assessing and
managing climate-related risks and opportunities.
Compliant Starting from page
8
b) Describe management’s role in
assessing and managing climate-related
risks and opportunities.
Strategy a) Describe the climate-related risks and
opportunities identified over the short,
medium and long term.
A description of (i) the principal climate-related
risks and opportunities arising in connection with
the operations of the Company and (ii) the time
periods by reference to which those risks and
opportunities are assessed.
Compliant Starting from page
15
b) Describe the impact of climate-related
risks and opportunities on business,
strategy and financial planning.
A description of the actual and potential impacts
of the principal climate-related risks and
opportunities on the business model and strategy
of the Company.
c) Describe the resilience of the strategy,
taking into consideration different
climate-related scenarios, including
a 2°C or lower scenario.
An analysis of the resilience of the business model
and strategy of the Company, taking into
consideration different climate-related scenarios.
Risk
Management
a) Describe the processes for identifying
and assessing climate-related risks.
A description of how the Company identifies,
assesses, and manages climate-related risks and
opportunities
Compliant Starting from page
33
b) Describe the processes for managing
climate-related risks.
c) Describe how processes for identifying,
assessing, and managing climate-related
risks are integrated into overall risk
management.
A description of how processes for identifying,
assessing, and managing climate-related risks are
integrated into the overall risk management
process in the Company.
Metrics
and Targets
a) Describe the targets used to manage
climate-related risks and opportunities
and performance against targets.
A description of the targets used by the Company
to manage climate-related risks and to realise
climate-related opportunities and performance
against those targets.
Compliant Starting from page
37
b) Disclose Scope 1, Scope 2, and, if
appropriate, Scope 3 greenhouse gas
(GHG) emissions, and related risks.
The Key Performance Indicators (“KPIs”) used to
assess progress against targets used to manage
climate-related risks and realise climate-related
opportunities and a description of the calculations
on which those key performance indicators are
based.
c) Disclose the metrics used to assess
climate-related risks and opportunities in
line with the strategy and risk
management process.
Strategic Report Corporate Governance Financial Statements
47
Responsible business continued
TCFD continued
Table 2: Scenario warming pathways used in 2023.
Scenarios warming pathways
Below 2°C Scenario – In this scenario we
assumed that organisations begin to align
more closely with the Paris Agreement and
SBTi (1.5°C) for an orderly and coordinated
transition to a low-carbon economy.
Between 2–3°C Scenario – The assumption is
that we will reach this global warming
scenario if businesses respond to patchwork
policies with intermittent action, aligning
with current forecasts.
Above 3°C Scenario – In this scenario we
assumed that businesses carry on with a
“business as usual” approach without
meaningful action to mitigate climate change
and global emissions rise unchecked. In this
scenario, the Bank of England models a
recession given the substantial impact
climate events will have on people, business
and the environment.
We conducted the analysis using three
timeframes that align with the UK’s net zero
target by 2050:
– Short term (up to 2025) aligns with the
achievement of carbon neutrality by the
end of 2025.
– Medium term (2025–2035) is consistent
with the Group’s net zero target by 2035.
– Long term (2035–2050) is consistent with
the UK Government’s net zero pledge by
2050.
We work closely with our independent,
specialist ESG Consultant, Inspired ESG, to
assess the potential climate-related risks
across all sites and selected supply chain
operations, analysing the impact of both
physical risks (the physical impact of climate
change) and transition risks (the risk
associated with the transition to a
decarbonised economy). Several Divisional
climate risk management workshops were
held in 2023 (June, July and September). In
2023, we further developed our climate
analysis across our operations and supply
chain. The Head of Group Risk Assurance
finalised the financial impact based on
information collected in the workshops,
scoring risks as shown below:
– Low (Moderate): Risks with a potential
financial impact lower than £1.0 million.
– Medium: Risks with a potential financial
impact between £1.0 million and £5.0
million.
– High: Risks with a potential financial impact
greater than £5.0 million.
Risks that may have a potential financial
impact of >£1.0 million were deemed as
material to the business. Therefore, these risks
will be prioritised, and mitigation measures will
be implemented. These risks are shown in
Tables 4 and 5. In accordance with the 2018
UK Corporate Governance Code, the Directors
have assessed the viability of the Group over a
three-year period, taking account of the
principal risks and uncertainties set out on
pages 36 to 41 which include the climate-
related risk. The Directors believe that a
three-year period is an appropriate period
over which a reasonable expectation of the
Group’s longer-term viability can be evaluated
and is aligned with the Group’s business and
strategic planning time horizon. The climate
change risks do not materially impact our
assessment of the Group’s viability over the
three-year time horizon.
We modelled our climate scenarios using
several established models, such as the
International Energy Agency’s World Energy
Models (“WEM”) and the Shared
Socioeconomic Pathways (“SSPs”). Climate
scenarios make projections on hypothetical
futures and as such come with a degree of
uncertainty. For more details, please see our
2023 standalone TCFD report.
The climate models used for this analysis
includes data from the Intergovernmental
Panel on Climate Change’s (“IPCC”)
Representative Concentration Pathways
(RCP), the International Energy Agency’s
(“IEA”) World Energy Model (“WEM”), the
Network for Greening the Financial System
(“NGFS”) and other existing models. These
models have been used as they are
internationally recognised and help to provide
a consistent risk measurement across our
global portfolio and supply chain.
Climate scenario analysis: results
We identified four transitional risks and six
physical climate-related risks that are
material to the business, and four opportunities
that will impact the Group. The transition
risks were analysed at Group level, with the
physical risks by location relevant to each of
our three Divisions. The tables on pages 49 to
54 summarise the risks and opportunities to
the Group, which together form the
classification of our climate change principal
risk and uncertainty. Please see our 2023
standalone TCFD Report for more details on
each climate-related risk and opportunity.
Given the recent increase in reporting
obligations, in 2023, transition risks were
identified to be the most significant to the
Group. We anticipate transition risks to
increase over time as the global economy
decarbonises, impacting all businesses.
Transition risks are more prominent in the
below 2°C scenario or 2-3°C scenario, as
governments introduce more aggressive
climate change reporting requirements and
expand carbon pricing and similar mechanisms.
In the proactive scenario, carbon pricing is
introduced earlier, therefore there is an initial
cost associated with carbon emissions.
However, while the carbon price increases in
the medium term, the actual cost decreases
for the Group due to carbon reduction
initiatives and our net zero strategy. In the
reactive scenario, the later introduction of
carbon pricing creates a sharper cost rise in
the medium and long term. In the inactive
scenario, a smaller carbon cost is introduced,
with limited variation across the short,
medium and long term.
Table 3: Carbon pricing projections
for the Group based on emissions.
Carbon cost assumptions
(£ per tonne of CO
2
tonne)
Short
(up to
2025)
Medium
(2025–
2035)
Long
(2035–
2050)
Proactive Scenario 1 £49 £98 £238
Reactive Scenario 2 £13 £188 £441
Inactive Scenario 3 £13 £18 £23
As per the recommendations of the TCFD, we used a range of scenarios to assess the impact
of climate change on our business, including warming pathways as adopted by the
Intergovernmental Panel of Climate Change (“IPCC”).
Videndum plc
48
Annual Report and Accounts 2023
The maximum annuity impact of climate
change, based on the impact ranges below,
was factored into the long-term financial
modelling for the Group’s cash-generating
units (“CGUs”). There is no material impact on
the available headroom. Any impact assessed
in respect of 2024 is already incorporated in
the budget, for example, in relation to
additional compliance and consultancy costs.
Cross-industry metrics form the basis for
estimating the financial impact of climate-
related risks and opportunities on our
Table 4: Transition Risks identified in 2023
Target Timeline Impact
Magnitude
of impact Risk response
Transition risks
Carbon costs associated with carbon
taxes and offsetting to hit our
emissions goals in the 2–3ºC scenario.
Explanation and mitigation: This risk
would be of highest impact in the 2-3°C
scenario, where carbon costs are projected
to peak as governments bring in carbon
taxation abruptly. A maximum additional
cost of £0.5 million per annum is derived
by reference to available carbon cost
benchmarks, applied to Videndum’s
projections for Scope 1 and 2 emissions
over the next 15 years. This includes
projections for any offset cost from
2025 onwards.
In addition, the EU’s new EU Carbon
Border Adjustment Mechanism (“CBAM”)
tax on imports of raw materials, could
impact Videndum’s imports in the
medium term.
Medium
(2025–2035)
Our projections have
increased due to the EU
Carbon Border tax
which was recently
announced and will
apply to certain
commodity imports into
Italy from 2026
onwards.
Based on projections of
site-related CO
emissions and applying
benchmarks, we have
estimated the future
annual cost of carbon
which is estimated to
peak at £0.5 million per
annum in 2026, but
decrease thereafter.
Medium On our decarbonisation journey, we will
be reducing our carbon emissions
year-by-year and therefore mitigating
the risk of carbon pricing. We aim to
monitor the impact of carbon pricing on
our business as we develop on this journey
and update our pricing model with
accurate Scope 1 and 2 carbon emissions.
We conducted carbon pricing in 2023,
however Videndum is not currently
subject to carbon tax.
Carbon emissions will likely decrease
year-on-year as we work towards
understanding and reducing our carbon
footprint. By the end of 2025, the
Company aims to become carbon neutral,
which means reducing emissions as much
as possible before resorting to carbon
offsets.
See targets on page 46.
Shifts in customer preferences in the
<2ºC and 2–3ºC scenario.
Explanation: Videndum’s business is
sensitive to customer spending
conditions. A reduction in customer
spending could have an adverse effect on
Videndum’s revenue and profitability.
With ESG growing in importance,
customers may change their shopping
preferences in a way that is detrimental
to revenue. Failing to communicate how
we will reduce our environmental impact
proactively could result in losing customers
and impact our position in the market.
Customers may reduce their purchasing
from retail companies which are seen to
be harmful to the environment due to the
use of raw materials, and instead opt for
second-hand purchases.
Medium
term
(2025–2035)
Capital and Financing
– Decreased access to
capital.
Medium Videndum monitors emerging trends and
responds to changing consumer tastes.
Competitors’ propositions are closely
monitored. Videndum has a significant
competitive advantage as many of our
competitors lack the digital talent, supply
chain and global infrastructure, to seize
the opportunities for sustainable products.
We integrate the recommendations of the
TCFD, to ensure our ESG strategy develops
with guidance from best practice.
business. These metrics include but are not
limited to GHG emissions, transition, and
physical risks, climate-related opportunities
and carbon pricing. We have considered all the
relevant cross-industry metrics as per TCFD
guidance. Details of the metrics are located
within the narratives from pages 60 to 61. We
will look to continuously develop these metrics
as our climate reporting progresses.
While we have identified climate change as a
principal risk, this process determined that
climate change and its impact is moderate for
the Group in the short/medium term, and the
risk is therefore categorised as manageable in
the short term. There is no material impact in
relation to 2023. The results of our climate-
related risks and opportunities assessment,
and quantification thereof, shows that the
Group’s long-term prospects are not adversely
impacted in a material way by climate change.
Strategic Report Corporate Governance Financial Statements
49
Target Timeline Impact
Magnitude
of impact Risk response
Transition risks continued
Substitute existing products for
lower-emissions alternatives in the
<2ºC and 2–3ºC scenario.
Explanation: More sustainable
technology is likely to come onto the
market over the coming years. Adopting
or deploying new practices or processes
will come at a cost to the business.
However, we expect such changes to
gradually occur over time. As we aim to
reduce our carbon emissions, we may
need to invest more in lower emissions
technology, resulting in increased costs
for the Company.
Short/
Medium
term
(up to
2025–2035)
Reallocation of R&D
expenditure effort to
more sustainable
products. The impact is
not quantifiable but
likely to be a straight
reallocation so no net
impact.
Medium We aim to procure more sustainable/
recycled materials, which are likely to be
more expensive, resulting in increased
operating costs for the business.
The increased capital expenditure
associated with this risk will be mitigated
by our opportunity to increase revenue
from an increased demand for
sustainable products.
Costs to transition to lower-emissions
technology in the <2ºC and 2–3ºC
scenario.
Explanation: To meet our net zero
targets, we will have to invest in lower
emissions technology across our
operations as more innovative technology
is developed. During 2023, approximately
£1 million worth of capital expenditure
was allocated to the implementation of
energy efficiency initiatives.
Short/
Medium
term (up to
2025–2035)
Capital expenditure
expected to increase by
£1 million to £2 million
over the next couple of
years due to further
investment in solar
panels, in addition to
systems to phase out
natural gas in heating
and paint ovens.
Depreciation will be
offset by energy
savings.
Low to
medium
From the results we have seen to date,
we believe this is a low risk to the
business as the payback associated with
the use of lower emissions energy use
(energy efficiency technology and
renewable power generation) outweighs
the upfront cost of investment.
We have already invested a significant
amount of capex for energy efficiency
technology across the Group, including
LED lighting and other energy
management systems. In 2023, solar
panels were installed at our Feltre, Italy
site. Significant capital expenditure has
been allocated to the implementation of
further energy efficiency initiatives. The
payback associated with the use of lower
emissions energy use (energy efficiency
technology and renewable power
generation) outweighs the upfront cost
of investment.
We expect the investment to decrease
natural gas consumption will have a less
attractive return than projects to reduce
energy. Investment will require
installation of air source pumps that have
a much shorter payback.
See pages 46, 54 and 58 of this report for
more details.
Responsible business continued
TCFD continued
Videndum plc
50
Annual Report and Accounts 2023
Table 5: Climate-related physical risks that may impact the business.
Area Target Timeline Impact
Magnitude
of impact Explanation and mitigation
Climate-related physical risks
Acute Heatwaves 2-3°C and >3°C
scenario.
Explanation: All our sites will be
impacted by heatwaves. Increased
temperatures will lead to a higher
demand for cooling.
As a result, energy costs will rise as
sites require additional cooling to
maintain optimum temperatures for
staff and operations.
However, due to the increased energy
demand, power outages may increase
due to the increased pressure on the
grid, leading to operational disruption.
Short/
Long
term
(up to
2025–
2050)
Cost of property and
business interruption
insurance may
increase. Other risks
of supply chain
disruption are
difficult to quantify
at this point. We
may need to
increase safety
stock, which can
affect our working
capital.
Medium We have and continue to implement
energy efficiency initiatives, such as
renewable energy generation (solar
panels). This means we will need less
power from the grid during periods of
sunshine.
During heatwaves, employees can
take more frequent breaks to avoid
health risks associated with higher
temperatures.
Acute Flooding >3°C scenario.
Explanation: Videndum sites may be
impacted by flooding, such as Tokyo,
Japan and Cartago, Costa Rica.
The latest IPCC figures show that
with 1°C of warming, rainstorms will
intensify by 7%, resulting in an
increase in flooding. Flooding could
have an associated financial loss, for
example, through direct damage to
property, plant and equipment.
Insurance costs could increase. Global
property insurance premiums are
forecast to rise as weather-related
catastrophes become both more
intense and frequent.
In the case of significant flooding,
modelling shows that employee
absence rates could increase by c.5.%.
Medium/
Long
term
(2025–
2050)
Cost of property and
business interruption
insurance may
increase. Other risks
of supply chain
disruption are
difficult to quantify
at this point. We
may need to
increase safety
stock, which can
affect our working
capital.
Medium Across the Group, high standard
drainage systems are well maintained
and serviced to reduce the risk of
flooding. Climate scenario analysis is
conducted annually to assess the
impact of flooding on our sites. We will
analyse the feasibility of conducting
site specific flood risk assessments in
2024.
Our Production Solutions Division has
incorporated specific soakaways to
reduce the risk of flooding and improve
ground stability at our Bury St. Edmunds,
UK, site. We can use alternative storage
sites in the event of a flood.
Our Media Solutions Division relocated
our Stroud, UK, site to Ashby-de-la-
Zouche, UK to derisk operations and
improve efficiencies.
Strategic Report Corporate Governance Financial Statements
51
Responsible business continued
TCFD continued
Area Target Timeline Impact
Magnitude
of impact Explanation and mitigation
Climate-related physical risks continued
Acute Storms and Typhoons 2-3°C
and >3°C scenario.
Explanation: Southeast Asian
countries are projected to be heavily
impacted by climate change.
The number and intensity of extreme
weather events in the region have
been increasing, often leading to
severe economic damage.
A typhoon lasts a few days and it can
close ports and divert ships, leading to
shipping delays of up to ten days.
During an El Niño year, stronger and
more frequent typhoons are expected
across the Eastern Pacific and Asian
region.
Short/
Long
term (up
to
2025–
2050)
Cost of property and
business interruption
insurance may
increase. Other risks
of supply chain
disruption are
difficult to quantify
at this point. We
may need to
increase safety
stock, which can
affect our working
capital.
Medium For critical suppliers located in
Asia-Pacific countries, we are
requesting information regarding their
preparedness for typhoons. For
example, a climate change
questionnaire with AboCom Taiwan
discusses typhoon risk and supplier
mitigations.
We seek to reduce overall reliance on
China and APAC generally, for example,
battery production has been partially
moved to Costa Rica and in-sourcing to
Italy for the JOBY Range.
Where possible, we aim to ensure we
have multiple supplier sources, for
example, FES supplies Videndum from
one factory in Thailand and from one in
China.
Acute Wildfires >3°C scenario.
Explanation: Wildfires may increase
over time due to more frequent
heatwaves and extreme weather
conditions.
Additional financial investment may
be required to install appropriate
ventilation, due to increased
requirements for air filtration
systems.
We will continue to monitor our
insurance coverage, as we are aware
that some insurance companies have
begun to alter insurance coverage to
exclude wildfire damage in California.
Long
term
(2035–
2050)
Cost of property and
business interruption
insurance may
increase. Other risks
of supply chain
disruption are
difficult to quantify
at this point. We
may need to
increase safety
stock, which can
affect our working
capital.
Medium We will continue to conduct climate
scenario analysis annually to identify
key risk areas. Using this information
we will devise preparation plans, for
example, vent covers to prevent smoke
damage to products, as well as
installing appropriate ventilation.
We will ensure our properties are
covered by appropriate insurance
policies.
Videndum plc
52
Annual Report and Accounts 2023
Area Target Timeline Impact
Magnitude
of impact Explanation and mitigation
Climate-related physical risks continued
Chronic Rising Mean Temperatures 2-3°C
and >3°C scenario.
Explanation: All our sites will be
impacted by rising mean temperatures.
Increased mean temperatures may
cause a higher demand for cooling to
maintain optimum temperatures for
our staff and products, resulting in
higher energy costs.
Increased energy usage in summer
months could obstruct our progress in
reaching our targets to be net zero for
Scope 1 and 2 by 2035.
There may be an impact on
productivity, for example, having to
arrange more frequent break times, or
health and safety concerns.
Medium/
Long
term
(2025–
2050)
Expenditures
– Increased direct
and indirect costs.
Impact not
significant in the
short term, and
longer-term impact
difficult to measure.
Low in the
short
term but
longer-
term
impact is
difficult
to
measure.
We have and continue to implement
energy efficiency initiatives, such as
renewable energy generation (solar
panels). This means we will need less
power from the grid during periods of
sunshine.
During heatwaves, employees can take
more frequent breaks to avoid health
risks associated with higher
temperatures.
Chronic Sea level rise >3°C scenario.
Explanation: Rising sea levels may
result in damage to ports along key
supply chain routes, resulting in delays
and increased costs for the business.
In the longer term, some sites may no
longer be viable or so inhospitable
that work force cannot be attracted.
Sites such as Tokyo, Japan and
Shelton, US are at risk.
Rising seas increase the risk of
erosion, storm surges and saltwater
intrusions into aquifers that supply
sites with fresh water.
Damage to sites could lead to closures
and increased insurance premiums.
Damage and disruption to major
routes such as shipping ports could
also impact Videndum’s supply routes.
Our scenario analysis conducted in
2023 identified that one of Creative
Solutions key suppliers has a shipping
site based in Hong Kong, which is
predicted to be at risk from sea level
rise in the long term.
Long
term
(2035–
2050)
Expenditures
– Increased direct
and indirect costs.
Impact not
significant in the
short term, and
longer-term impact
difficult to measure.
Medium Where needed, we may have to engage
with suppliers to see if they conduct
site-specific flood risk assessments
and monitor flood risk at sites for
long-term impacts. We will continue to
conduct annual climate scenario
analysis to monitor this risk.
We work with brokers to maintain
alternative shipment methods.
Our Media Solutions Division’s building
leases are initially for five years, then
renewed for a further three years,
allowing for sites to be relocated if
needed.
Strategic Report Corporate Governance Financial Statements
53
Table 6: Opportunities identified as at the end of 2023
Target Timeline Impact
Opportunity
Dispose of underutilised sites through improved management of property portfolio.
Explanation: One of our strategies for reducing emissions is to optimise the use of our sites and
rationalise our site portfolio. For example, we plan to lease and relocate employees into smaller
properties, where there is unutilised space. In 2023, the Stroud, UK site was relocated which
resulted in savings of £0.75 milllion per annum. We have closed the New Jersey, US site,
consolidating operations into Phoenix, US and have sold the Shelton, US site (and leased back a
smaller footprint). We have also closed the Syrp, New Zealand office. This site rationalisation
strategy results in significant year-on-year cost savings. Cumulating all site closures for the last
few years would result in annual savings well in excess of £1 million per annum. Other site
closures and consolidations are possible over the next few years owing to the size of our
property portfolio and many smaller operations.
Short/
Medium/
Long
term (up
to
2025–
2050)
Reduced indirect (operating)
costs. Major benefit >£1 million
per annum.
Use of lower emissions sources of energy.
Explanation: Use of lower emissions technology such as LED lighting, Building Energy
Management Systems and solar panels improves energy efficiency and reduces energy usage.
Therefore, this will reduce energy costs over time. The payback associated with the use of lower
emissions energy (energy efficiency technology and renewable power generation) outweighs the
upfront cost of investment. Projects are already generating a financial return. Please see table 10
for our 2023 and 2024 energy-saving initiatives.
Short/
Medium/
term (up
to
2025–
2035)
Reduction in operating
expenses because of increased
efficiency (for example, energy
costs). Moderate benefit
>£0.25 million per annum.
Use of more efficient production and distribution processes.
Explanation: Where possible, we diversify our supplier base and source away from countries with
higher risk from a climate change perspective. For example, we have insourced some of the
production relating to JOBY from China. This is beneficial from an ESG standpoint as it increases
the utilisation of Videndum’s sites that have sound environmental credentials (Feltre, Italy and
Cartago, Costa Rica) and reduces emissions relating to transport. This is financially beneficial due
to a greater proportion of margin remaining within the Group. The impact of this risk is not
currently fully quantified. However, there are likely to be several insourcing opportunities that
could offer a financial benefit (such as prompters, batteries, LED Lights, etc.).
Short/
Medium/
term (up
to
2025–
2035)
Reduced indirect
(operating) costs.
Development of new products or services through R&D and innovation.
Explanation: As sustainability grows in importance, there will be an increased demand for
sustainable products. We believe that Videndum is well-positioned to capitalise on this
opportunity, given the development of our ESG Programme and the focus already underway to
improve the sustainability of our products. As pressure grows for products to be more durable,
there is an opportunity to increase this revenue stream. We are continually exploring new/
sustainable product solutions such as the Salt-E Dog sodium battery.
The development of sustainable packaging in our Media Solutions Division is predicted to result
in significant cost savings of around £0.2 million per annum (monocolours, reducing and
simplifying packaging).
Similarly, JOBY has been evaluating sustainable packaging options. In 2023, JOBY Beamo Reel
adopted single-colour carton paper packaging for online sales. In addition, we are working on
packaging and paper reduction. For example, in 2023, JOBY HandyPod clips reduced the use of
instruction manuals.
Short/
Medium/
term (up
to
2025–
2035)
Increased revenues resulting
from increased demand for
products and services. Benefit
not quantified at this point but
likely to be major.
Responsible business continued
TCFD continued
Videndum plc
54
Annual Report and Accounts 2023
Climate risk management
We have a well-established framework for
identifying and assessing our risks and
assigning mitigation actions from years of
development in a competitive business
landscape, for which the Board has ultimate
responsibility. Climate change is an aspect of
this. We followed four interconnected steps:
Step 1 – Potential climate-related risks and
opportunities facing Videndum were identified
in 2021 during our first round of TCFD
reporting, through research, stakeholder
engagement and risk workshops. During 2023,
we repeated this process on existing climate
risks for the third time to determine whether
they were still relevant to Videndum, or if
there are any new risks or opportunities. To
enhance our process, we worked to identify
the risks and opportunities at new sites
acquired during the current financial year and
across our top 90 suppliers and routes. In
total, 19 climate-related risks and four
opportunities were identified in 2023. Starting
in 2024 we will implement a new software
solution to enable the capture and tracking of
climate change risks.
Step 2 – We assessed each risk and
opportunity using our climate scenario analysis,
accounting for the full range of each potential
impact. The financial impact of risks was
assessed and considered where possible. In
2023, our risk assessment process considered
the vulnerability of our 17 top suppliers to
climate change. We also analysed how our key
supply routes may be impacted. Analysing the
potential impact of a number of physical risks,
such as flooding, on our supplier locations and
supply routes, allows us to forecast potential
disruptions to our supply chain.
Step 3 – We continue to appraise our risk
management options, ensuring that the
response remains relevant and most effective.
In 2023, we assessed the quality of existing
risk mitigation options, including those that
were implemented in 2023, such as new
low-emission technologies and, where
necessary, investigated potential options to
manage the impact of risks and opportunities
at new sites and within our supply chain. A risk
management response was agreed,
depending on how it helped build our resilience
to the climate-related issue. The Climate Risk
register has been integrated into the Group’s
overall Risk Register.
Step 4 – Finally, we addressed each risk and
opportunity. Controls were implemented to
prevent, reduce or mitigate downside risks, or
increase the likelihood of opportunities. In
2023, mitigation actions remained in place
from the previous financial year. The outcome
of the climate scenario analysis was one of the
factors behind the relocation of our Stroud, UK
site, after it was identified to be in an area
prone to flood risk. We recognise that residual
risks will remain, and we will communicate this
across the business as appropriate. Risks that
were identified to have a medium or high
impact on the business in 2023 will have
mitigation measures prioritised.
At a minimum, our management teams review
risk exposures against business risk level
tolerances annually. Our management teams
and the Head of Group Risk Assurance will
annually review climate-risk exposure against
business risk level tolerances.
Videndum’s transition plan – a roadmap
to net zero
See page 46
Our goal is to be Net-Zero by 2045. This is
supported by several initiatives, for example,
installing solar panels, entering renewable
contracts for electricity, substituting petrol
and diesel company cars to EVs, and rolling
out LED lighting upgrades at our sites. We
report on our carbon emissions to track our
progress. In the next financial year we are
planning a 38% reduction in our Scope 1 and 2
GHG emissions using the market-based
approach. Please see the Metrics and Targets
section of our standalone 2023 TCFD Report
for how we will achieve this and details on
progress made in 2023. We acknowledge that
our Scope 3 emissions are harder to reduce, so
we plan to monitor and reduce our employees’
travel. For example, our Production Solutions
Division implemented a car-pooling scheme in
2023 at the Cartago, Costa Rica site, with the
aim to implement the scheme at the Division’s
Bury St. Edmunds, UK site in 2024.
Reducing our greenhouse gas emissions
In 2023, our Scope 1 and 2 emissions reduced
by c.30% from 2019 (excluding the impact of
newly acquired businesses). Our formal
baseline for measuring Scope 1, 2 and 3
emissions is 2021, when the methodology was
fully rolled out. We have reviewed progress
against 2019 in order to analyse year-on-year
trends, although 2019 is not technically the
baseline year.
Reducing the Group’s carbon footprint is a
priority for Videndum (see table 10 for
energy-saving initiatives). We calculated our
entire Scope 3 emissions for the first time in
2021, following the GHG Protocol Corporate
Value Chain (Scope 3) Accounting and
Reporting Standard, using 2020 data. In 2022,
we worked to align our Scope 3 reporting to
our financial reporting period, calculating both
our 2021 and 2022 carbon footprints.
Under the GHG Protocol, there are 15
reporting categories, of which 11 apply to the
Group. The following are not applicable to the
nature of the business’s operations, given we
have no upstream leased assets (Category 8),
do not sell goods which require further
processing (Category 10), have no franchises
(Category 14) or any significant applicable
investments (Category 15). In 2022, we
introduced measures to improve the accuracy
of our data collection. This financial year, we
launched an ESG Supplier Questionnaire,
engaging with our top 90 suppliers based on
spend. The questionnaire requested details of
our suppliers’ Scope 1 and 2 carbon emissions,
energy usage, reduction targets and wider
ESG programmes. The surveys were tailored
for each of the three Divisions to ensure
supplier specific information was obtained.
We will use the information from these
surveys to improve the accuracy of our
Category 1: Purchased Goods and Services
and Category 2: Capital Goods data. We
deem this approach to be effective and will
widen the scope over time.
In 2023 we worked with Inspired ESG to
improve the data quality of three Scope 3
Categories 1: Purchased Goods and Services
and Categories 4: Upstream Transport and
Distribution and 9: Downstream Transport
and Distribution. 2023 is the first year that
downstream transportation and distribution
emissions were calculated. The aim is to
further improve our data quality for both
upstream and downstream transportation
and distribution in 2024.
By improving our emissions data collection,
we can improve our understanding of the
high-emitting areas of our operations and
value chain, which will support us with the
implementation of our roadmap to achieve
net zero by 2035 for Scopes 1 and 2, and net
zero by 2045 for Scope 3.
Strategic Report Corporate Governance Financial Statements
55
Our 2023 Scope 1 and 2 emissions represent 3.6% of our total Group emissions, with our 2023 Scope 3 emissions representing 96.4%.
Scope 1, 2 and 3 emissions
Table 7: Group emissions from 2019 to 2023 and reduction target
Emissions Scope
2023 Gross emissions
(tCO
2
e)
2022 Gross
emissions
(tCO
2
e)
re-stated
2021 Gross
emissions
(tCO
2
e)
re-stated
2020 Gross
emissions
(tCO
2
e)
2019 Gross emissions
(tCO
2
e)
Interim
target
Net zero
target year
Scope 1 1,155 1,336 1,193
3,535 4,580
50%
reduction
by 2030
2035
Scope 2 2,556 2,903 2,533 2035
Scope 3 100,531 176,299 155,636 130,820 not fully captured – 2045
Total 104,242 180,538 159,362 134,355 – – –
1 We have re-stated our 2021 Scope 1 and Scope 2 figures which were previously 1,456 and 2,524 tCOe, respectively. These restatements are due to recalibration of our natural gas and electricity
emissions. This has resulted in a slight increase in our overall emissions for 2021. Our Scope 3 emissions were also restated as improved business travel data was collected. Previously, the total was
154,550 tCO2e.
2 We have re-stated our 2022 Scope 1 and Scope 2 figures which were previously 1,467 and 2,773 tCOe, respectively. These restatements were due to recalibration of our natural gas and
electricity emissions. Scope 3 emissions were also restated as improved business travel data was collected. The previous total was 173,148 tCOe.
The marginal increase in Scope 1 and 2 emissions between 2021 and 2022 was due to new businesses being acquired late in 2021 (Savage and
AUDIX). Removing these would show a decrease. A further decrease took place in 2023, due to the impact of several energy saving schemes, and
consolidation of several sites. The above Scope 2 information is provided under the location basis; using the market-based approach, the reduction is
much steeper which is due to the majority of large sites having entered into renewable energy contracts. Similar contracts will be entered into in
2024, which will be a key instrument to achieve carbon neutrality.
In terms of the Scope 3 emissions, the significant decline in 2023 is principally due to reduced activity caused by the macroeconomic headwinds
facing the business.
Streamlined Energy and Carbon Reporting
This report summarises the energy usage, associated emissions, energy efficiency action and energy performance for the Group, under the
government policy Streamlined Energy and Carbon Reporting (“SECR”), as implemented by the Companies (Directors’ Report) and Limited Liability
Partnerships (Energy and Carbon Report) Regulations 2018.
Table 8: Total consumption (kWh) figures for energy supplies reportable by the Group:
Utility and Scope
UK (kWh)
2023
UK (kWh)
2022
UK (kWh)
2021
Global
(excluding
UK) (kWh)
2023
Global
(excluding
UK) (kWh)
2022
re-stated
Global
excluding
UK) (kWh)
2021
re-stated
Total kWh
2023
Total kWh
2022
Total kWh
2021
Scope 1 – gaseous and other
fuels (voluntary) 783,283 872,109 945,124 4,624,549 5,112,471 4,053,757 5,407,832 5,984,580 4,998,881
Scope 1 – transport
(Company fleet) 195,019 275,041 236,608 506,567 669,388 1,093,729 701,585 944,428 1,330,337
Scope 2 – electricity 1,208,408 1,322,599 1,716,613 7,506,194 8,940,700 8,709,990 8,714,602 10,263,299 10,426,603
Scope 2 – transport
(Company fleet) 19,857 5,448 6,473 – 1,727 – 19,857 7,175 6,473
Scope 2 – purchased heat,
steam and cooling 2,475 2,675 9,148 – – – 2,475 2,675 9,148
Scope 3 – grey fleet
2
124,765 35,880 51,642 63,154 69,097 49,342 187,919 104,977 100,984
Total energy use – all Scopes 2,333,807 2,513,752 2,965,608 12,700,464 14,793,383 13,906,818 15,034,270 17,307,134 16,872,426
1 We have restated our UK and Global kWh figures across 2021 and 2022 as improved data quality has become available. These changes align with the restated emissions in Table 7.
2 Grey fleet are the use of employees’ personal vehicles for business purposes, as opposed to belonging to the Company.
Responsible business continued
TCFD continued
Videndum plc
56
Annual Report and Accounts 2023
Streamlined Energy and Carbon Reporting continued
Table 9: The Total Carbon Emissions (tCO
2
e) figures for Group
Location-based
Utility and Scope
UK
(tCO
2
e)
2023
UK
(tCO
2
e)
2022
UK
(tCO
2
e)
2021
Global
(excluding UK)
(tCO
2
e)
2023
Global
(excluding UK)
(tCO
2
e)
2022
re-stated
Global
(excluding
UK)
(tCO
2
e)
2021
re-stated
Total
(tCO
2
e)
2023
Total
(tCO
2
e)
2022
Total
(tCO
2
e)
2021
Scope 1 total 189 224 228 966 1,112 1,002 1,155 1,336 1,231
Scope 1 – gaseous
and other fuels 143 159 173 847 938 745 990 1,097 919
Scope 1 – transport
(Company fleet) 46 65 55 119 159 257 165 224 312
Scope 1 – refrigerants – – – – 15 – – 15 –
Scope 2 total 255 258 367 2,301 2,645 2,167 2,556 2,903 2,535
Scope 2 – electricity 250 256 364 2,301 2,645 2,167 2,551 2,901 2,532
Scope 2 – transport
(Company fleet) 4 1 1 – 0.33 – 4 1 1
Scope 2 – purchased heat,
steam and cooling 1 1 2 – – – 1 1 2
Scope 3 total (grey fleet) 29 8 12 15 16 12 43 25 24
Total emissions – all Scopes 473 490 607 3,282 3,773 3,181 3,754 4,264
1
3,790
1
1 We have restated our 2021 and 2022 emissions totals to incorporate improved data quality. Previous totals equalled 4,265 and 4,005 tCOe for 2022 and 2021, respectively.
The following table shows the intensity metric of tCOe per £million turnover applied for the annual total consumption.
Intensity Metric
UK Intensity
Metric
2023
UK Intensity
Metric
2022
UK Intensity
Metric
2021
1
Global
(excluding UK)
Intensity
Metric
2023
Global
(excluding UK)
Intensity
Metric
2022
Global
(excluding
UK) Intensity
Metric
2021
1
Total Global
Intensity
Metric
2023
Total Global
Intensity
Metric
2022
Total Global
Intensity
Metric
2021
tCO
2
e/£m T/O 4.55 3.71 4.79 16.17 11.82 11.89 12.23 9.45 9.61
1 We have re-stated our 2021 intensity metrics as a result of now applying a UK only specific £m revenue value to UK only emissions. This methodology has also been applied to global (excluding
UK) intensity metric calculations. i.e., applying a global (excluding UK) only £m revenue value to global (excluding UK) emissions.
Strategic Report Corporate Governance Financial Statements
57
Energy efficiency improvements
The Group is committed to year-on-year improvements in our operational energy efficiency. A register of energy efficiency measures has been
compiled and will be implemented within five years.
Table 10: Energy efficiency improvements that will reduce Group emissions in 2023 and planned for 2024 onwards.
Measures undertaken in 2023 Measures planned for 2024 and onwards
Solar – Solar panels installation to the roof of Media
Solutions’ facility in Feltre, Italy.
– 30% expansion of solar panels at Production
Solutions’ site in Cartago, Costa Rica.
– Solar panels installation to the roof at Media Solutions’
Ashby-de-la-Zouche, UK site is under evaluation with
suppliers, and planned for installation in the next two years.
Fleet – 33.3% of Production Solutions’ vehicles were hybrid
or electric at the end of 2023, compared to 27.3% at
the end of 2022.
– Media Solutions has converted 80% of Company
vehicles to electric (2022: 54%).
– Creative Solutions does not have a car fleet.
– Continue conversion of motor vehicles to electric once they
have reached end of life.
– Media Solutions has a target to convert 100% of the
Company fleet to hybrid or electric vehicles by 2025.
– Production Solutions aim to have 63.6% of vehicles converted
to electric/hybrid by the end of 2024. This is due to a number
of leases expiring by the end of 2024 and all new leases are
hybrid or electric as per Group policy.
LED Lighting – The Bad Kreuznach, Germany, Tokyo, Japan and
China offices now use 100% LED lighting.
– Media Solutions’ Ashby-de-la-Zouche, UK site
converted an additional 20% of lighting to LED
saving an estimated 0.7t C0
2
.
– Up to 90% of all lights are now LED in both our
Production Solutions Bury St Edmunds, UK and
Cartago, Costa Rica sites.
– LED lights were installed at Creative Solutions’
Los Angeles, US site towards the end of 2023.
– The complete transition to LED lighting in Feltre, Italy and
Ashby-de-la-Zouche, UK aims to have 100% of lighting
converted to LED in 2024.
– LED lighting conversion at Media Solutions’ Arizona, US office
is budgeted for in 2024.
– Other smaller sites being gradually converted, e.g. Richmond,
UK.
Metering – 25% completion of energy metering and circuit level
monitoring was implemented in Feltre, Italy which
is an estimated saving of 10 tCO
2
e.
– Continue to analyse areas where we can conduct similar
initiatives at other sites.
Green energy
contract
– A total of seven sites have renewable energy
contracts, as at the end of 2023. The sites are:
Richmond, Twickenham, Byfleet and Bury St. Edmunds,
UK; Irvine, US; Cassola and Feltre, Italy. Cartago,
Costa Rica is not technically on a renewable contract,
however, the energy is from a clean, hydroelectric
source.
– We aim to transfer the following sites to a Renewable Energy
Contract in 2024, which aims to further reduce emissions.
– Phoenix, US
– Raleigh, US
– Shelton, US
– Creative Solutions will move three facilities to a renewable
energy contract in 2024.
New product – Anton/Bauer, a brand within Production Solutions,
has launched a sodium-based 9kWh mobile power
source called Salt-E Dog, which delivers consistent
and reliable energy and addresses the pressing issue
of carbon emissions associated with traditional fossil
fuel or lithium generators.
– Continue to conduct R&D to implement similar innovative
products.
Site
rationalisation
– We have confirmed plans to lease one-third of the area
at our Shelton, US site, reducing the size of the site
leased by the Group. We have also switched all the
lighting to LED and checked all HVACs to ensure
compliance with the latest energy efficiency standards.
– Site rationalisation continues to be a key priority.
Air conditioning
energy saving
– 70% completion of compressed air leak detection and
repairs in Feltre, Italy.
– 30% implementation of heating and air conditioning
controls in Feltre, Italy.
– Continue to analyse areas where we can conduct similar
initiatives at other sites. In 2024, we are looking to upgrade
the air-conditioning system in Raleigh, US.
Responsible business continued
TCFD continued
Videndum plc
58
Annual Report and Accounts 2023
Methodology
Scope 1 and 2 consumption and COe emission data for UK sites have been calculated according to the 2019 UK Government environmental
reporting guidance and the GHG Protocol. The current kWh gross calorific value (CV) and kg COe emissions factors relevant to reporting year
1 January – 31 December 2023 were applied. Scope 3 emissions have been calculated based on the guidance in the GHG Protocol Corporate Value
Chain (Scope 3) Standard.
Scope 1 emissions
Direct emissions from our own operations e.g. fuel combustion. Scope 1 fuel consumption – natural gas, transport fuel and other fuels – are converted
to COe figures using conversion factors outlined below.
– To convert Scope 1 (Company fleet and natural gas) and Scope 3 (grey fleet) usage in the UK, the UK DESNZ 2023 emissions factors database
was used. For the US, the United States Environmental Protection Agency GHG Emissions Factors Hub 2023 was used. For Australia, the Australia
National GHG Account Factors 2022 database was used. For remaining countries, we default to the UK DESNZ 2023 emissions factors database.
Scope 2 emissions
Indirect emissions generated from purchased electricity. Scope 2 emissions are calculated based on both the “location” and “market” methods
outlined in the GHG Protocol. Scope 2 country-specific electricity emissions factors were used on the sources in the table on page 56 to 57.
Location-based methodology
Methodology to calculate Scope 2 emissions using the average electricity grid emission conversion factor of a region. For all UK facilities we use the
DESNZ 2023 conversion factors. For all non-USA facilities, we use national carbon conversion factors for grid purchased electricity from a variety
of published sources; including national grid suppliers and government agencies (see table on next page). For USA sources we use the latest regional
intensity factors available from the Environmental Protection Agency’s Emissions and Generation Resource Integrated Database (eGrid). Emissions
associated with the use of purchased electricity (Scope 2 emissions) were calculated using country-specific electricity emissions factors as per the
sources in the table on the next page.
Market-based methodology
Methodology to calculate Scope 2 emissions using electricity conversion factors specific to the contractual instruments in place for procured electricity.
Where contract specific data was not available, location specific residual factors were used. Where neither is present, the location-based factor was used.
Scope 3 emissions
All the indirect emissions (excluded in Scopes 1 and 2) that occur in our value chain. For all Videndum sites, applicable Scope 3 categories were
identified based on an operational control boundary. Scope 3 emissions for applicable categories were calculated following methodologies outlined
in the GHG Protocol “Technical Guidance for Calculating Scope 3 Emissions”, with further guidance taken from the GHG Protocol’s detailed
methodology chapters for each applicable Scope 3 category.
For UK sites, most conversion factors were sourced from UK Government GHG Conversion Factors for Company Reporting, v1.1 2023. Where a
spend-based approach was used, as per the GHG Protocol guidance, conversion factors were taken from the University of Leeds and Department
for Environment, Food and Rural Affairs’ “UK Footprint Results (1990 – 2018)” study or the Department for Environment, Food and Rural Affairs’
“Indirect emissions for the supply chain” database. Scope 3 emissions include Well to Tank and T&D losses.
For international sites, country-specific emissions factor databases were used where available. For example, for US sites, 2023 specific emissions
factors were taken from the EPA GHG Emission Factors Hub and spend-based emission factors were sourced from a Quantis database.
Country-specific 2023 electricity emissions factors were used to estimate emissions associated with Categories 11: Use of Sold Products and
13: Downstream Leased Assets. These factors were taken from the sources outlined in the table below.
A third party uses the Company’s data to calculate emissions but no formal assurance is provided.
Country Source used
Australia Australia National GHG Accounts 2022
China Climate Transparency Report 2022
Costa Rica Costa Rica IMN 2022 Factor
Germany AIB Factors 2023
Hong Kong Hong Kong Electric Company 2023
India Climate Transparency Report 2023
Israel Carbon Footprint Ltd’s 2023 Factors
Italy AIB Factors 2023
Japan Climate Transparency Report 2022
New Zealand Ministry of Environment 2022
Singapore Singapore Energy Market Authority 2022
UK DESNZ 2023
USA EPA 2023
Strategic Report Corporate Governance Financial Statements
59
Responsible business continued
Our vision
Ensuring we limit any negative impact on the environment and protect the natural
resources we rely on creates long-term sustainability for the business.
Overview
We aim to adopt technologies, materials and processes which minimise our impact
on the environment and maximise our use of sustainable resources. Our initiatives
include reducing energy use and carbon emissions, water stewardship, biodiversity,
developing sustainable products, and reducing packaging and waste.
Our efforts and environmental awareness continue to evolve to comply with
regulations and make our business better and more sustainable. The Metrics and
Targets section of the TCFD disclosure (page 37 of standalone report), shows how
we use energy efficiency and are reducing carbon emissions, as well as wider
environmental metrics to manage our climate risks and opportunities. We also
encourage a culture of environmentally sustainable behaviour at work and ensure
that our employees understand how they can contribute. Our standalone ESG
Report details our environmental progress in 2023.
Our targets
Target Progress in 2023
Reduce
carbon
emissions
Scope 1 and 2 emissions have reduced by c.30% since 2019
(excluding the impact of newly acquired businesses).
Measures were initiated to optimise consumption, including further
LED lighting installations and solar energy systems implemented
in Bury St Edmunds, UK, Cartago, Costa Rica and Feltre, Italy.
We are continuing with the conversion of the Company motor fleet
to electric or hybrid as and when leases expire.
Reduce
packaging
and waste
In 2023, we improved our data capture systems to begin collating
mass-based data relating to the purchase of packaging materials.
This allows us to utilise more accurate emissions factors due to an
improvement in the quality of activity-based data. Also, it ensures
that all packaging is accounted for in Scope 3 Category 12
(end-of-treatment of sold products).
70% of Media Solutions’ main paper and cardboard packaging
has been converted to an FSC-graded solution.
40% of Media Solutions’ main plastic packaging comes from
recycled materials.
In Creative Solutions, Teradek, SmallHD and Wooden Camera are all
utilising eco-friendly bubble wrap, derived of 40% recycled content.
Embed
sustainability
into our
product
life cycle
We continue to work to embed sustainability into new product
development and to have PLCA’s for our top five selling products
by 2025. Production Solutions started their first PLCA in December
2023, working on the Sachtler manual support flagship product,
which incorporates the aktiv and flowtech system.
Formalise
the integrity
of our
supply chain
A detailed ESG survey was distributed to our largest 90 suppliers
to understand their approach to key ESG topics and help to
improve the integrity of our supply chain.
Supplier due diligence and supplier audit programme was
strengthened to focus on all relevant ESG dimensions.
Environment
Read more online at videndum.com/responsibility
Annual Report and Accounts 2023
60
Videndum plc
Carbon emissions
We are committed to reducing the
environmental impact of our operations, with
the aim of becoming net zero for Scope 1 and
2 by 2035. Near-term targets have been
developed to support us on this journey,
including reducing our Scope 1 and 2 carbon
emissions by 38% by 2024, 50% by 2027 and
60% by 2030 using the market based
approach. We are working to be carbon
neutral on our operational emissions by the end
of 2025. We will work to reduce our Scope 1 and
2 emissions as far as possible before this date.
From 2025, we will annually purchase carbon
offsets to be carbon neutral until we reach our
Scope 1 and 2 net zero target in 2035. To meet
our long-term and near-term targets, the
Group is committed to year-on-year
improvements in our operational energy
efficiency to begin decarbonising our Scope 1
and 2 emissions.
Packaging, product sustainability and
waste
Two key areas are being progressed to further
lower the environmental impact of packaging
– product packaging and reducing the impact
of logistic packaging.
Our products and services have a
comparatively low impact on the environment
as we use low hazard materials and minimise
the use of resources during the manufacturing
process. However, product sustainability has
become a key focus area and best practice
initiatives and processes have been shared
throughout the Group. PLCA methodology
is embedded into Media Solutions’ internal
design processes and used to support R&D
decisions around sustainability.
Across the Group we continue to work with
waste management companies to see how
the collection and sorting can be improved.
Water stewardship
While our water usage is relatively low, used
mostly for human consumption, we are
reducing our usage where possible. All Divisions
have, or are in the process of, implementing
water-saving initiatives, such as waterless
urinals, limiting flushing options on toilets and
installing motion-controlled taps in lavatories.
For example, in our Production Solutions
Cartago, Costa Rica building, all urinals are
water-free, hand washing faucets are timed
or motion activated, and toilets have been
made water-efficient. Production Solutions
plans to explore the possibility of rainwater
collection by implementing an anodising
process in the plant and subsequently
installing a system that collects rainwater,
channelling it to a container. It can be stored
for industrial use, irrigation of green areas,
sanitary services, and more.
Biodiversity
Although the Group has little direct contact
with biodiversity, we recognise its importance
for the planet. Across our Divisions we ensure
our sites emit limited pollution and are not
disruptive to any nearby wildlife. Production
Solutions continued their partnership with the
Rainforest Trust again this year as part of
their Action4Good Wellness Month. The
Division saved 9,000 acres of rainforest
through this project, by raising £9,000. £1,
equivalent to one acre, was donated for every
30 minutes of exercise logged in the
Action4Good app between September and
October 2023.
Case study
Solar panel installation in
Feltre, Italy
At the end of December 2023, we
installed solar panels at our Media
Solutions factory in Feltre, Italy. The
system, with its installed power of 1 MWp
and a production of 1.15 million kWh per
year, will cover more than 25% of the
electricity needs of the factory and will
result in a 10% reduction in the Group’s
annual Scope 1 and 2 emissions. With this
development, all three of our main
manufacturing sites now have solar
panels installed, providing a substantial
part of their energy needs.
Case study
Production Solutions
PLCA programme
In 2023, Production Solutions
commenced a PLCA for two of the
Division’s top-selling products: aktiv and
flowtech. With over 550 components
under analysis, the PLCA has extended
into 2024. At the end of the process,
we aim to suggest revisions to our New
Product Introduction (“NPI”) process,
integrating sustainability criteria into
performance metrics for future products.
Strategic Report Corporate Governance Financial Statements
61
Responsible business continued
Our vision
To be the preferred employer for the best people in our sector, by providing an
entrepreneurial environment that offers opportunities for our people to develop and
thrive.
Overview
At Videndum, we aim to attract, retain and grow a talented and diverse workforce,
providing equal opportunities for all.
Our employees are the best in the sector, our greatest single asset and critical to our
success. Their attitude and abilities, experience and market knowledge, and talent
and commitment create a culture that supports product excellence, creativity and
integrity. Our annual employee survey monitors key areas that are important to our
staff and we implement action plans to address the feedback we receive. We ensure
that we have consistent policies and processes to acquire, engage and retain our
best talent. Initiatives focus on wellbeing, working environment, sustainability,
diversity, employee benefits and training. We have comprehensive benefits packages
to support employees and remain competitive globally. We also aim to provide our
employees with an engaging and stimulating entrepreneurial environment, where
they are encouraged to learn and develop.
Our targets
Target Progress in 2023
Prioritise
health
and safety
There were two accidents in 2023 that resulted in over three days
absence, which is the same as in 2022.
In both years, the accidents resulting in over three days of absence
were not linked to severe injury but were categorised as over three
days as a result of the time needed for medical appointments and
short recovery periods advocated by health professionals.
In 2023, the overall number of health and safety related accidents
slightly increased compared to 2022.
Improve
diversity,
equality and
inclusion
At the end of 2023, 40% of the Group’s Board of Directors were
female compared to 14% at the end of 2021. 17% of the Group’s
Operations Executive were female, compared to 8% in 2021. 27%
of the Group’s senior management team were female, compared
to 15% in 2021. 30% of the rest of the Organisation were female,
compared to 29% in 2021.
Our people
Read more online at videndum.com/responsibility
Annual Report and Accounts 2023
62
Videndum plc
Employee engagement
Understanding how our employees feel about
working for Videndum is immensely important
to us. In October 2023, we conducted our third
all-employee survey. Despite the very
challenging year with the significant headwinds
faced by the business, the level of participation
was very good at 74%. The survey focused on
six questions covering health and safety and
wellbeing, culture and values, communications,
satisfaction working for Videndum, and the
Group’s ESG initiatives. All responses were over
78% positive and, given the mitigation plans
implemented to reduce costs and conserve
cash during 2023, it was pleasing to see that
responses were only slightly lower compared
to 2022. Feedback on the survey was shared
with Divisional senior management to take
corrective steps to continue to improve the
employee experience.
Our Sharesave Scheme is extremely popular
among our employees and over the years, has
been recognised as a valuable employee
benefit, demonstrating the close alignment
between our employees and shareholders.
Sharesave allows employees to save a fixed
monthly amount up to £300, with the option
to purchase a fixed number of shares in the
Company at a discount of up to 20% on the
share price at the time, or 15% in the US.
Employee wellbeing
Employee wellbeing remains a top priority for
the Board. We have continuously reviewed and
improved processes across the Group, to look
after staff and improve colleagues’ wellbeing.
Our all-employee assistance programme
provides free and confidential support to all
employees and their families on a range of
matters. For example, counselling for
emotional and psychological support,
practical guidance and support on legal,
financial, family and work matters.
Across the Divisions we aim to provide a range
of wellness initiatives to improve employees’
physical and mental health, including childcare
support, family parties, volunteering, day trips
and more, although many activities were
paused in 2023 due to the strikes by US
writers and actors. More information can be
found in our 2023 ESG Report.
Learning and development
Although the majority of training was paused
in 2023 due to the strikes by US writers and
actors, and the challenging macroeconomic
environment, we aim to invest in our employees
to ensure we offer them the best career
development plans for their success and the
success of the Company. These plans
are linked to performance reviews and
organisational needs. We want our employees
to develop and grow. The Board reviews
leadership and succession plans across each of
the Divisions to ensure a structured approach
to growing and developing the Company’s
future leaders. We encourage inter-Company
recruitment between Divisions, including the
Group Head Office, and offer apprenticeship
programmes in many different business areas,
ranging from Engineering to Business Analysis
to HR. Production Solutions has launched the
Hire2Develop programme. Our Media Solutions
and Productions Solutions Divisions operate an
appraisal system to improve personal career
reviews. Creative Solutions has initiated
targeted personal development programmes.
Case study
Employee engagement
Caroline Thomson is the independent Non-
Executive Director responsible for
employee engagement. In October 2023,
Caroline held several virtual employee
engagement sessions with US employees
in the Creative Solutions Division based
in Irvine, California and Cary, North
Carolina. The sessions covered a range of
issues including new starters to the
business and the induction process,
health and safety, culture in the
workplace, remuneration and benefits,
Group and Divisional communications,
diversity and sustainability. Feedback
from each session was shared with
Divisional senior management and the
Board to understand and to “check the
pulse” of employees’ views. These sessions
are extremely valuable and give the Board
greater insight into the views and morale
of employees and help to shape and
develop the Board’s decision making and
to address any concerns. We plan on
holding similar sessions in 2024 and in
future years.
63
Financial StatementsCorporate GovernanceStrategic Report
Responsible business continued
Our people continued
Employee turnover by Division
The table shows employee turnover in 2023, reflecting employees who had resigned from their employment within the Group.
Country 2023 2022 2021
Creative Solutions 15.6% 15.0% 15.0%
Production Solutions 5.7% 7.7% 3.9%
Media Solutions 11.0% 9.0% 6.2%
European Services 10.0% 14.5% 6.5%
Head office 12.5% 17.0% 18.0%
Average across the whole Group 10.4% 12.6% 9.9%
Gender diversity
The Board continues to monitor progress on equality and the Group’s gender breakdown at the end of 2023 can be seen in the table below.
2023 2022 2021
M
% F % M % F % M % F %
Group Board of Directors 6 60% 4 40% 4 57% 3 43% 6 86% 1 14%
Operations Executive 10 83% 2 17% 11 85% 2 15% 11 92% 1 8%
Senior Management 68 73% 25 27% 64 86% 10 14% 28 85% 5 15%
Rest of Organisation 1,113 70% 481 30% 1,175 69% 534 31% 1,259 71% 513 29%
The table above also excludes contractors.
We employ around 1,600 employees in ten countries, who work according to local employment legislation, policies and our organisational values.
Gender Pay Gap
While not legally obliged to report on, we report on the Gender Pay Gap within our 2023 ESG report. The report uses data from our main
employment hubs in the UK, US, Costa Rica and Italy, which represents around 75% of our business. We will continue to monitor progress in this area
and report on in future years.
Stephen Bird, Group Chief Executive, hosting a Town Hall for Media Solutions colleagues in Cassola, Italy
Diversity and inclusion
We strive to employ a diverse workforce and
foster an equal opportunities culture. Our
approach to diversity follows a strict policy of
sourcing the best person for the role
irrespective of race, gender, age, religion,
sexual preference, or disability. Our Code of
Conduct sets out an express prohibition on
discrimination of any kind.
Our Diversity and Inclusion (“D&I”) Strategy
sets out clear targets and action plans, tailored
to address our industry and any areas of
weakness. For example, a lower number of
female employees in senior management roles.
In the five years to 2026, we aim to increase
female employee numbers to improve the
Group’s overall gender diversity from 70% men
and 30% women because we believe that
gender diversity plays a role in companies’
success. At a senior leadership level, we aim for
the ratio of women to be at least 30%.
Flexible working policies are in place across our
three Divisions and are open to all employees.
Applications for employment by disabled
persons are always fully considered, bearing in
mind the respective aptitudes and abilities of
the applicant concerned. If employees become
disabled, all reasonable effort is made to
ensure that their employment within the
Group continues. The training, career
development and promotion of disabled
persons should be, as far as possible, identical
to that of all other employees.
Videndum plc
64
Annual Report and Accounts 2023
Videndum plc Board
Group Chief Executive
Group Company Secretary
and Head of Group Risk
Assurance
Divisional CEOs and
Divisional H&S Managers
Reporting of
incidents and
performance
on a monthly
basis
Local Site H&S
Representative
Health and safety
The health and safety of our people is of
utmost importance, and we operate to
stringent health and safety standards
across all our sites. We have a health and
safety policy available on our website and
more detail can be found in our 2023 ESG
Report. All major sites have health and safety
committees which hold regular meetings
to review health and safety performance.
Our structure for the responsibility
on health and safety management
across the Group is outlined below:
Five-year accident history
Year FTE
Accidents resulting
in over three
days’ absence
Accidents resulting
in three or less
days’ absence
Near misses
(include events or
circumstances that could
have resulted
in an accident)
2023 1,717 2 78 177
2022 1,918 2 68 150
2021 1,784 0 43 128
2020 1,569 0 42 110
2019 1,714 2 54 112
In 2023, our overall number of health and safety related accidents slightly increased compared to
2022. We believe this slight increase was due to improved reporting and awareness particularly to
report near misses or minor incidents. We continue to aim to improve our health and safety
measures, to keep all employees safe and achieve our target of no major lost incident time.
The Production Solutions’ sites in Cartago,
Costa Rica and Bury St Edmunds, UK, and
the Media Solutions’ sites in Cassola and
Feltre, Italy and Ashby, UK are certified
with the standard ISO 45001. Therefore,
over 900 Group employees are covered
by health and safety accreditation.
We continue to train all staff members
on safety relevant to their roles.
Visitors to the carbon fibre cell in Bury St Edmunds, UK
Nicola Dal Toso, Production Solutions Divisional Chief Executive, explaining the Small Big
Improvements initiative to visitors in Bury St Edmunds, UK
Our five-year accident record details the
number of accidents resulting in over three
days’ absence, accidents resulting in less than
three days’ absence and near misses across
the Group. Each event is thoroughly
investigated, and remedial action is taken
where necessary. There have been no
work-related fatalities since the Group began
collating health and safety statistics in 2002.
Strategic Report Corporate Governance Financial Statements
65
Responsible business continued
Our vision
To support and integrate with the local communities and economies where we
operate.
Overview
We invest in projects that align with our core values and look for opportunities to
positively impact one disadvantaged person for every Videndum employee in the
communities in which we operate. We believe in the power of images and videos to
convey ideas and create wealth, and positive social and environmental value. As a
leader in our markets, our employees are experts in photography, videography,
engineering and technology. We aim to share this knowledge, to enable positive
social and environmental outcomes. In 2023, we positively impacted around 560
people through a range of projects and initiatives. More information about our giving
back programme can be found in our standalone 2023 ESG Report.
Our target
Target
Progress in 2023
Over a
four-year
period
1
,
positively
impact the
communities
in which we
operate
In 2023, the Group positively impacted 560 disadvantaged people.
In total, over a four-year period we have positively impacted 1,807
individuals and have therefore achieved our target of positively
impacting one disadvantaged person for every Videndum employee
in the communities in which we operate.
1 Excluding 2020 due to COVID-19 lockdowns.
Giving back
Read more online at videndum.com/responsibility
Annual Report and Accounts 2023
66
Videndum plc
Investing in future industry talent
Videndum donates and lends professional
photographic, TV and cinematic equipment to
educational institutions worldwide, to upskill
future image capture and sharing talent. In
2023, despite the headwinds the business
faced, our Divisions continued to collaborate
with organisations and universities to share
employee knowledge with future industry
professionals.
In 2023, Creative Solutions supported Outlast
Arts and Education’s summer programme.
This is a non-profit organisation that aims to
increase diversity, equity and inclusion in the
film and media arts, supporting Indigenous
and Black youth from rural communities in
South Dakota. During July 2023, Outlast
invited ten Native youth, aged 14-19, to
participate in our Summer Film Intensive,
receiving film and media training. Creative
Solutions donated products such as Small HD
monitors and a Teradek Bolt to Outlast.
In 2023, Media Solutions continued to work
with Associazione Jonathan, mentoring
teenagers on photography. In addition, Media
Solutions continued its impactful
collaboration with Wild Shots Outreach
(“WSO”), committed to empowering
disadvantaged South African youth through
photography and education. This year, our
support extended to young photographers
who engaged in a project featuring the new
Lowepro Pro Trekker 650 backpack. Media
Solutions also participated in Radici Future, a
festival of sustainability of the circular
economy and business ethics for the local
community, educating the younger generation
on sustainability.
Action4Good
Production Solutions’ employee engagement
initiative, boasted an impressive employee
participation rate of over 85%. Guided by four
pillars, including environmental stewardship,
community impact, inclusivity and wellbeing,
Action4Good drives engagement across the
organisation. Operating across our global
sites, our staff drive positive change by joining:
Green Team (environmental projects); Social
Responsibility Team (charitable partnerships);
Education Team (workshops and mentoring);
Welfare Team (wellbeing programmes); and
Social Team (fun and team-building activities).
Our achievements range from conservation
efforts and community collaborations to
empowering youth and fostering wellness.
Whether it involves tree planting, community
involvement, cultivating a welcoming
workspace, or advancing holistic wellbeing,
Action4Good is more than a phrase.
It embodies our active approach, making a
lasting impact while creating a brighter present
and future for our employees and communities.
Charity/employee
volunteering/giving back
As part of our community activities, we
donate time and money to a variety of
local and international charities although
charitable donations were restricted in
2023 due to the macro environment and
strikes by US writers and actors. More
information about our giving back projects
can be found in our 2023 ESG Report.
Case study
Videndum’s partnership
with Richmond Theatre
Trust and Ham Youth Group
This year, as part of the Group’s ongoing
commitment to supporting the local
communities in which we operate,
Videndum partnered with the Richmond
Theatre Trust and Ham Youth Group to
deliver a young film-makers course. Over
a four-day period, 26 disadvantaged
children aged 10 to 16 from Ham Youth
Group worked intensively to create a
short media project including a series of
adverts, two-hander scenes and a few
short stories. Many participants fed back
that they thoroughly enjoyed learning
about the different roles within the film
industry. Many loved being on camera,
but even more enjoyed being behind the
lens. As part of Videndum’s contribution,
each young person was provided with
their own mini film-making kit full of our
products, so they could continue making
films after the project ended. The two
films were shown in a special premiere at
Richmond Theatre, where friends and
family joined the group to see what they
had been working on. The group also
received a backstage tour of the theatre.
The standout experience of the
summer holidays was the young
film-makers with Richmond
Theatre. They are professional
and provided a good experience
to my child.
Parent
Image:
Wild Shot Outreach
67
Financial StatementsCorporate GovernanceStrategic Report
Responsible business continued
Our vision
We aim to ensure that our employees clearly understand what is expected of them
in conducting business ethically, with a common set of values and through our
workforce policies. We expect our business partners to act in a manner that aligns
with our approach, values and behaviours, as set out in our Code of Conduct. Our
Code of Conduct is available on our website at www.videndum.com/responsibility/
policies-reports/.
Overview
We are committed to acting responsibly and conducting our business operations
with integrity. Our values and purpose drive our business decisions and Code of
Conduct, and all our decisions are made with a focus on the impact they may have
on our main stakeholder groups. The Board considers that our people and operations
meet the highest standards of business conduct.
Our target
Target Progress in 2023
Formalise
the integrity
of our supply
chain
A detailed ESG survey was completed with Videndum’s seven most
significant vendors. Supplier due diligence and supplier audit
programme was strengthened to focus on all relevant ESG
dimensions. Our Code of Conduct and independent whistleblowing
service were updated and re-communicated in early 2024.
Responsible practices
Read more online at videndum.com/responsibility/policies-reports/
Annual Report and Accounts 2023
68
Videndum plc
Policies, procedures and training
The Board and Operations Executive review
and approve all key policies and practices
which could impact Videndum’s workforce
and influence their behaviours. All policies
are carefully drafted to ensure they reflect
and support the Group’s purpose, values and
strategy. This includes the Group’s Code of
Conduct and its additional policies relating
to health and safety, anti-bribery and
corruption, modern slavery, data protection
and whistleblowing. Training sessions are
arranged on these topics on a regular basis
for employees to attend. Videndum’s key
compliance policies are published on Divisional
intranets, and the Group’s website, with
some included in the employee handbook.
As part of Videndum’s ESG programme, we
review the integrity surrounding our supply
chain, including all suppliers, agents and
distributors, including a review of agreements
and contractual terms prohibiting bribery
and expressly requiring parties to comply
with the Company’s Code of Conduct.
Code of Conduct
The long-term success of Videndum depends
upon our ability to maintain our reputation
and the trust of our stakeholders wherever we
operate. In our Code of Conduct we provide
clear directives for employees on behaviour
towards colleagues, suppliers, customers,
shareholders and broader community
responsibilities. It encompasses business
integrity, addressing areas such as bribery and
charitable donations.
Our Code is available on the Company website
and is translated into local languages. We
require all senior management to undertake
an online training module covering the Code
of Conduct, including share dealing, conflicts
of interest, legal duties and other reputational
issues. In 2023, one employee was dismissed
from the business due to a breach of the
Code of Conduct. We relaunched our
Code of Conduct and supporting online
training to all employees in early 2024.
Anti-bribery and corruption
Our policy on anti-bribery and corruption
measures is available on our website. It sets
out a zero-tolerance approach and a clear
commitment to doing business the right way.
We regularly train our employees on anti-
bribery and corruption measures using
web-based training modules. To mitigate
the risk around bribery and corruption, we
actively screen all major third parties we do
business with. We use third-party software
to screen business partners for reputational
risk issues, including bribery and corruption,
sanctions, politically exposed persons and
adverse media reports. The software covers
over 1,100 entities and continues to be
expanded. We train our people to ensure
that third parties are screened through
this service as part of doing business with
a new partner. The Board and the Audit
Committee are regularly updated on the
Group’s anti-bribery and corruption measures.
Sustainable procurement
As a market leader, Videndum takes
responsibility for evaluating its suppliers
through NAVEX Risk Rate, an enterprise
third-party risk management solution.
This involves screening new partners and
conducting regular audits on current
suppliers, assessing factors like raw
materials and environmental management
systems. Ethical and environmental
considerations are integral to selecting key
suppliers and contractors. Procurement
has developed standard questionnaires,
tailoring procedures based on risks, and for
critical partners, a detailed site inspection
is mandatory. The audit comprehensively
covers operational and responsible supply
dimensions throughout the entire supply
chain. Any failure in vetting processes
results in discontinuation of collaboration.
69
Financial StatementsCorporate GovernanceStrategic Report
Responsible practices continued
Responsible business continued
Whistleblowing service
We operate an independent whistleblowing
service in conjunction with NAVEX. This
enables any employee or third-party to
confidentially report any issues around
alleged wrongdoing or other Code of Conduct
contraventions. The Board is expressly clear
that all reports made in good faith will not
result in an employee or third-party being
subject to recriminations or disciplinary
action. All reports are notified to the Group
Chief Executive, the Group Company
Secretary and HR Director, and the Audit
Committee Chair and Chairman. They
are investigated independently by senior
management who are not connected to the
report. The outcome of any investigation
is reported to the Chair of the Audit
Committee, and remedial action is taken
where necessary. The Board is notified of
all whistleblowing reports and the outcome
of all investigations. This service was re-
communicated to all employees in early
2024, with posters prominently visible at all
sites and a letter explaining the service, to
ensure it remains visible and is understood.
The documents are translated into local
languages. For more information see page 104.
the conflicted Director to participate in
discussions and the decisions relating to that
matter. In 2023, each Director participated
in the equity raise that completed on
8 December 2023. The details of their
participation is set out on page 132 and 133.
The details of the equity raise are set out
in note 4.3 in the financial statements on
page 205. The equity raise was at a small
discount to the prevailing share price on
the date of announcement and therefore
each Director had an interest in the matter.
Having disclosed their interests in line with
the procedure outlined in the Company’s
Articles of Association, each Director was
not precluded from voting on the proposal.
Other than this matter, it is confirmed that
no other such conflicts arose in 2023.
Workforce remuneration policies
The Remuneration Policy is approved by
shareholders for Directors’ remuneration and
implemented via the Remuneration Committee
on behalf of the Board. The Remuneration
Committee, while carrying out its duties, has
overall oversight of the wider workforce
remuneration practices. Videndum’s competitive
remuneration policies and practices are designed
to attract, retain and motivate employees at all
levels. They are intended to be clear and simple,
and to align with our strategy and our corporate
culture. Full details on Directors’ remuneration
are set out in the Remuneration report on pages
112 to 142.
Political donations
Further to shareholder approval at the 2021
AGM empowering the Directors to make
political donations, it is confirmed that no
such donations were made in the year ended
31 December 2023. The Company’s policy is
not to make political donations. The 2025
AGM will be asked to renew this existing
authority which expires in May 2025.
Supply chain
We expect our business partners to have
similar values to our own, to ensure that
we are not associated with slavery or
human trafficking. Through screening our
supply chain using third-party software
and physically inspecting our supply chain,
we are confident that this is not an issue
within our operations. In addition, as part
of internal audit reviews, the risk assurance
team periodically verifies the supply chain
management processes to ensure that
these include supplier vetting procedures in
respect of risk purchases in accordance with
the Group’s sourcing policy. For example, we
verify that suppliers located in the Far East
have been subject to inspection of working
conditions. We train our employees on this
issue through web-based training modules
and our Code of Conduct. We have developed
a Group-wide methodology for evaluating
our suppliers on all dimensions of ESG. This
approach is being gradually rolled out across
the entire supply chain. We have recently
formalised our Responsible Sourcing Policy
and recommunicated this to suppliers.
Labour and human rights
We fully support the principles set out in the
UN Universal Declaration of Human Rights.
Our policies and procedures reflect the
principles contained within the Declaration.
We support the Modern Slavery Act 2015
and have adopted a slavery and human
trafficking statement, setting out our
processes to ensure that this issue is not in
our operations or supply chain. Our Code of
Conduct sets out an express prohibition on
discrimination of any kind. Employees are
hired in accordance with local employment
legislation, and we are committed to their
fair treatment and respect. We encourage
employees to report suspected incidences of
wrong-doing in our business, including slavery
and human trafficking matters. Any such
reports are thoroughly and independently
investigated. There were no incidents of
discrimination, modern slavery, or human
trafficking reported across the Group in 2023.
Information systems and technology
Responsibility for IT rests with the Group
Chief Financial Officer. Our policy sets out
standards to be followed across the Group
for its employees, contractors and third
parties when using the Group’s IT systems.
The policy has been implemented to ensure
that the Company’s IT fits proper business
purpose and is a safe environment for all our
users. Breach of the IT policy may lead to
disciplinary action being taken. Notably, the IT
policy covers the confidentiality of data, GDPR
requirements, inappropriate content, security
of data, including cyber security and reporting
processes. The Group Chief Financial Officer
and Head of Group Risk Assurance oversee the
IT functions from a governance standpoint.
With the support of specialist providers, we
conduct regular vulnerability assessment and
pen tests, and review the application of IT
controls across the Group. This includes key
control activities such as patching, multi-
factor authentication and user access controls.
Cyber security is a major risk on which regular
updates are provided to the Board and
Audit Committee. The Group has moved to
standard certification and accreditation, using
the government-backed Cyber Essentials
framework and will be working towards the
IASME certification. We work with a leading
cyber security provider to deliver a programme
of awareness training and communication
to all employees, which is a vital component
of our IT security framework. This included
ongoing GDPR training throughout 2023.
Conflicts of interest
Our Conflicts of Interest Policy sets out how
any conflicts of interest are to be reported
and to be managed, including a conflicts of
interest register documenting all declared
conflicts of interest. Each Director is required
to declare any conflict of interest arising on
any matter. The Articles of Association of
the Company dictate how any such conflicts
are to be managed, including that in the
event of a conflict of interest and it having
been declared, the Board may authorise
Videndum plc
70
Annual Report and Accounts 2023
Non-Financial and Sustainability Information Statement
Videndum complies with the requirements of sections 414CA and 414CB of the Companies Act 2006, the 2018 Non-Financial Reporting Directive and
other key compliance areas by including certain non-financial information within the Strategic report. The table below, and the information it refers
to, is intended to help stakeholders understand our position on key non-financial matters:
Reporting requirement Further information
Related
Principal Risk Page(s)
Climate Related
Financial Disclosures
and Environmental
matters
– The Responsible business section outlines our detailed commitment to operating
responsibly in all our dealings with our stakeholders.
– Our ESG targets sets out a roadmap towards becoming a sustainable business.
– Videndum discloses its climate-related risks in line with TCFD requirements.
10 44 to 70
Employees
– Videndum has a Code of Conduct which outlines the Group’s expectation and
commitment to maintaining the highest standards of ethical conduct and behaviour in
business practice. The Code is reviewed annually and in early 2024 the Code of Conduct
was recommunicated to employees.
– We are committed to diversity and inclusion at all levels of our business and
we do not discriminate on any basis.
– Videndum has a well-established employee engagement and feedback programme
with Caroline Thomson, the Non-Executive Director responsible for employee
engagement.
542, 63, 69 and 70
Social matters
– The Responsible business section and our stakeholders sets Videndum’s approach to
supporting our employees, customers and suppliers.
– Divisional CSR programmes have largely been reinvigorated following the pandemic.
7, 9 and 10 42, 66 and 67
Anti-bribery
and corruption
– Videndum’s Code of Conduct sets out the expectations towards the highest standards
of ethical conduct and behaviour in business practice.
– Videndum has an anti-bribery and corruption policy which is reviewed by the Board
annually and further sets out the responsibilities and expectations of our employees for
the prevention, detection and reporting of bribery and other forms of corruption.
– Employees receive training on the anti-bribery and corruption policy, including gifts and
hospitality as part of their induction and contract.
– Suppliers are made aware of our zero-tolerance approach to bribery and we undertake
due diligence on all suppliers using the NAVEX Risk Rate system.
3, 6 and 7 69
Human rights
and modern slavery
– Videndum’s Code of Conduct outlines our stance on human rights and modern slavery.
– A separate Slavery and Human Trafficking statement is published on our website
annually and underlines our commitment to ensuring that slavery and human
trafficking does not exist in our business operations or our supply chain.
5, 6 and 7 70
Business model – Our Business Model sets out how we do what we do, why, where and for whom. 1, 4 , 7 and 12 4 to 11
Principal risks
– Videndum’s principal risks set out the carefully considered business risks and the
mitigating actions that are taken to help reduce the impact of any of these risks across
the Group.
36 to 41
The Strategic Report, including pages 2 to 71, was approved by a duly authorised Committee of the Board of Directors on 22 April 2024 and signed on
its behalf by:
Stephen Bird
Group Chief Executive
22 April 2024
Strategic Report Corporate Governance Financial Statements
71
Videndum plc
72
Annual Report and Accounts 2023
Videndum has a strong
corporate governance
framework that remains
appropriate and measured.
Ian McHoul
Chairman
This corporate governance report sets out how the Board, its Committees,
individual Directors and senior management have continued to operate with a
strong corporate governance framework that remains appropriate and measured.
An internal Board evaluation was carried out in 2023 and details are set out in this
report. Given the challenges in 2023, the Board and organisation needs to be open to
further learnings to support the recovery of the business over the coming year.
Our relationships with all our key stakeholders including shareholders, banks,
employees, customers and suppliers remained strong despite challenges faced,
ensuring that Videndum remained focused on the key issues impacting the business.
Our ESG programme continues to evolve and improve, and we will publish a detailed
ESG report in May 2024.
Videndum has a strong corporate governance framework in place, and that, together
with the guidance of the Board and professionalism of senior management and
employees, ensures that the Company continues to operate the highest standards of
corporate governance.
Ian McHoul
Chairman
22 April 2024
Chairman’s statement
Strategic Report Corporate Governance Financial Statements
73
Videndum plc
74
Annual Report and Accounts 2023
Compliance statement
During the year ended 31 December
2023, we have reported against the
UK Corporate Governance Code 2018
(“the Code”) issued by the Financial
Reporting Council. The Code can be
found at frc.org.uk.
We applied each principle and complied with provisions
throughout 2023 as required by the Listing Rules.
The Board agrees that the Annual Report taken as a
whole is fair, balanced and understandable and gives
all stakeholders the information necessary to assess
the Group’s business model, strategy and performance.
The full report provides the information required for
shareholders to assess the Group’s overall performance
against its strategy.
In January 2024, the FRC published a new UK Corporate
Governance Code that will mainly apply for financial years
commencing on or after 1 January 2025. We will report
on compliance with that in due course and are well placed
to do so.
A snapshot of governance
The following table outlines where
shareholders can find and evaluate how
the Company has applied the principles
of the Code and where key content can
be found in this report:
Major Board decisions
The major decisions taken by the Board and its Committees
during 2023 included:
1.
Divestment of non-core businesses and
restructuring.
2.
Developed succession plans for the Board.
3.
Approval of 2023 half year and 2022 full year
results.
4.
£125.0 million equity raise.
5.
Developed Group-wide ESG initiatives.
6.
External audit tender process.
Board leadership and Company purpose
Page(s)
Code principle A – Effective and
entrepreneurial board
Section 172 statement 86
Board of Directors 76 to 77
Code principle B – Company’s purpose,
values and strategy
About Videndum – what we do and for whom 4 to 11
Section 172 statement 86
Purpose, values and culture 78 to 79
Code principle C – Necessary resources
to meet objectives and prudent and
effective controls
Strategic Report 4 to 71
Audit, risk and internal control 102 to 111
Code principle D – Effective engagement
with stakeholders
Section 172 statement 86
Our stakeholders 42 to 43
Code principle E – Workforce policies
and practices
Employee engagement 63 and 88
Workforce policies 69 and 70
Whistleblowing 70 and 104
Strategic Report Corporate Governance Financial Statements
75
Division of responsibilities
Page(s)
Code principle F – Chairman’s leadership
Board governance 81
Division of Board responsibilities 92 to 94
Code principle G – Division of responsibilities
Board governance 81
Board of Directors 76 to 77
Division of responsibilities 92 to 94
Code principle H – Non-Executive Directors
Section 172 statement 86
Time commitments 99
Code principle I – Role of the
Group Company Secretary
Effective resources and controls 80
Board governance 81
Composition, succession and evaluation
Page(s)
Code principle J – Director
appointment process
Nominations Committee report
– Board appointments and succession
95 to 101
Code principle K – Board skills,
experience and knowledge
Nominations Committee report – Board of
Directors’ skills, experience and knowledge
98
Code principle L – Board evaluation
Nominations Committee report
– Board evaluation
99
Audit, risk and internal control
Page(s)
Code principle M – Policies around
internal and external audit functions
Audit Committee report – effectiveness
of internal and external audit functions
102 to 111
Code principle N – Fair, balanced
and understandable reporting
Fair, balanced and understandable assessment
of the Company’s position and prospects
109
Code principle O – Management of risk
Principal risks of the Company 36 to 41
Audit Committee report 102 to 111
Remuneration
Page(s)
Code principle P – Remuneration policies
and practices aligned to strategy
Remuneration report – remuneration policies
and practices
112 to 142
Code principle Q – Determination of
remuneration
Remuneration report – policy on
executive remuneration
116 to 124
Code principle R – Independent judgement
on remuneration
Remuneration report – independence around
remuneration outcomes
112
Videndum plc
76
Annual Report and Accounts 2023
A N
R
A N
R
N
N
A N R
Board of Directors
Role: Chairman and Chairman of
the Nominations Committee
Appointed: 25 February 2019
– tenure of 5 years and two months
(appointed Chairman from 21 May 2019)
Nationality: British
Skills and experience: Ian is currently a
non-executive director and the chairman of
the Audit Committee of Bellway plc. He was a
non-executive director and chairman of the
Audit Committee of Young & Co’s Brewery PLC
until January 2024. He was formerly a non-
executive director and Senior Independent
Director of Britvic PLC (2014 to 2022) and a
non-executive director of Wood Group PLC
(2017 to 2018) and Premier Foods plc (from
2004 to 2013). He held several roles in his
executive career including Chief Financial
Officer at Amec Foster Wheeler plc between
2008 and 2017 and Group Finance Director at
Scottish & Newcastle plc from 2001 to 2008.
Ian will not seek reappointment at the 2024
AGM and will cease to be a Director at the
conclusion of the 2024 AGM.
Role: Group Chief Executive
Appointed: 14 April 2009
– tenure of 15 years
Nationality: British
Skills and experience: Stephen is currently
Senior Independent Director of Headlam plc
and a member of the English National Ballet’s
Finance and General Purposes Committees.
Previously he was Divisional Managing Director
of Weir Oil & Gas. Prior to this he worked in
senior roles at Danaher Corporation, Black &
Decker and Technicolor Group and was also a
non-executive director and Senior Independent
Director of Dialight plc. Stephen has an
MA from St John’s College, Cambridge.
Role: Group Chief Financial Officer
Appointed: 13 December 2022
– tenure 1 year and 4 months
Nationality: British, Italian
Skills and experience: Andrea re-joined
Videndum from Senior plc in October 2021 in
the role of Deputy Group Finance Director,
having previously worked with Videndum
between 2004 and 2015 in the Head Office
Finance team, notably as the Group Financial
Controller between 2010 and 2015. Prior to
Videndum, Andrea was with Sony UK, and
a Financial Analyst with Morgan Stanley.
A Chartered Management Accountant,
Andrea graduated in Engineering, Economics
and Management from the University of Oxford.
Role: Independent Non-Executive Director
Appointed: 24 November 2022
– tenure of 1 year and 5 months
Nationality: Spanish, British
Skills and experience: Teté is Chief Marketing
Officer at The Access Group and was formerly
Chief Executive Officer of Amigo Technology
Limited, a cloud-based technology platform.
Between 2013 and 2021 Teté held several roles
at O2 including Transformation Director,
Customer Marketing Director and General
Manager, Online and Multichannel. Prior to O2,
Teté worked at AllSaints as Global
eCommerce Director and Dixons as Head of
eCommerce Strategy & Planning. Teté holds a
degree in Law and Business Administration
from ICADE and an MBA from INSEAD
Role: Independent Non-Executive Director
Appointed: 1 May 2023 – tenure of 11 months
Nationality: Swedish
Skills and experience: Between 2018 and 2021,
Anna was Chief Human Resources Officer for
Pearson plc, and between 2011 and 2016
Executive Vice President, Head of Human
Resources at Sandvik AB. Between 2009 and
2014 Anna was an independent non-executive
director for Knowit AB, a public listed IT
consultancy group in the Nordics and Baltics.
Between 2006 and 2011 she was Executive
Vice President, Head of Human Resources at
SSAB AB and prior to that worked at Ericsson
Group AB in various HR roles culminating
as Vice President, Human Resources &
Organisation, Sweden. Anna was born in
South Korea, raised in Sweden and studied in
the US and Germany. Anna holds a Masters in
Law from Lund University as well as
professional HR qualifications from both
London Business School and Michigan
Business School.
Role: Independent Non-Executive Director,
Chair of Remuneration Committee,
Responsible for Employee Engagement
Appointed: 1 November 2015
– tenure of 8 years and 5 months
Nationality: British
Skills and experience: Caroline is currently
a Fellow of the Royal Television Society and
a trustee of the National Gallery Trust and
of Tullie House Gallery in Cumbria. She was
formerly Executive Director of English National
Ballet where she is now a trustee. Until 1 March
2023 Caroline was Chair of Digital UK (Now
Everyone TV), and a non-executive director of
UKGI and Chair of its Remuneration
Committee. Until September 2012 Caroline
was Chief Operating Officer at the BBC,
serving 12 years as a member of the
Executive Board. Caroline received an
honorary doctorate from York University
in 2013 and was made an honorary Fellow of
the University of Cumbria in 2015. From 2016
to 2019 she was Chair of Oxfam. Caroline is
a Deputy Lieutenant for Cumbria.
Ian McHoul
BSc, ACA
Teté Soto
BA, MBA
Anna Vikström
Persson
LLM
Stephen Bird
MA
Andrea
Rigamonti
MEng, ACMA
Caroline
Thomson
BA, D.Univ
Strategic Report Corporate Governance Financial Statements
77
A N R
N
A N R
A N R
Role: Independent Non-Executive Director
and Chairman Designate
Appointed: 9 November 2023
– tenure of 5 months
Nationality: British
Skills and experience: Stephen is currently
Chief Executive Officer at Bodycote plc and
will step down from Bodycote’s board at their
AGM on 31 May 2024. Between 1984 and 1995,
Stephen held several senior management
positions at APV Inc., following which he was
appointed to the board of Powell Duffryn plc
as an executive director. He then joined
Spectris plc as an executive director between
2003 and 2008, and has also been a non-
executive director of Brixton plc from 2006 to
2009 and of Mondi plc from 2011 to 2021.
Stephen is a Chartered Engineer and holds an
MA in Engineering from Cambridge University
and an MBA from the University of Chicago
Booth School of Business.
Stephen will take over as Chairman from Ian
McHoul, who previously announced that he
will stand down at Videndum’s 2024 AGM.
Role: Independent Non-Executive Director
Appointed: 12 October 2023
– tenure of 6 months
Nationality: British
Skills and experience: Graham is an
independent non-executive director of The
Global Smaller Companies Trust PLC listed
on the London Stock Exchange. He holds
director positions in unlisted companies,
including as Chair of Ideal Standard
International NV, as a non-executive director
at Tunstall Integrated Healthcare Holdings
Ltd, and Chair at MCF Limited. Formerly,
Graham was a non-executive director of
PHS Group Investments Ltd, Nobina AB and
Henderson Alternative Strategies Trust plc
(where he was Chair of the Audit Committee
from 2014 – 2020). He was a partner with 23
years’ service at European private equity fund
manager Bridgepoint until June 2013.
A graduate in Engineering from Cambridge
University, Graham also holds an MBA from
INSEAD Business School. He is a Chartered
Engineer, a Fellow of the Institution of
Mechanical Engineers, and a Member of the
Chartered Institute for Securities & Investment.
Role: Independent Non-Executive Director,
Chair of Audit Committee
Appointed: 1 May 2022
– tenure of 1 year and 11 months
Nationality: British, Swiss, American
Skills and experience: Erika is currently a
non-executive director of JTC plc and Chair of
its Nomination Committee. She is also Senior
Independent Director and interim Audit
Committee Chair of Bytes Technology plc and
a non-executive director of Pod Point plc and
HgCapital Trust plc, where she chairs the
Management Engagement Committee. She
was formerly a non-executive director of
Aferian plc where she chaired the Audit
Committee. Erika has over 25 years’
experience in senior leadership positions,
spending nearly two decades in Silicon Valley,
focused on technology, M&A, growth strategy
and transformation. Erika has a PhD in
Management Science and Engineering from
Stanford University and began her executive
career with IBM, followed by roles at REL
Consultancy Group, Computer Sciences
Corporation and Symantec Corporation.
Erika will not seek re-election at the 2024 AGM
and will cease to be a Director at the conclusion
of the AGM.
Stephen Harris
MA, MBA
Dr Erika
Schraner
PhD
Graham Oldroyd
FIMechE, MCSI, MBA
Key to Committee membership
A
Audit Committee
N
Nominations Committee
R
Remuneration Committee
Chairman of the Board
Role: Independent Non-Executive Director,
Senior Independent Director
Appointed: 2 April 2018 – tenure of 6 years
Nationality: British
Skills and experience: Richard is Chief
Executive Officer of Oxford Instruments plc,
having been appointed to that role on
1 October 2023. He was previously Chief
Executive Officer of TT Electronics plc, holding
that position from 2014 to 2023. He was
formerly President of the Aerospace &
Security Division of Cobham plc from 2008
to 2014 and a member of their Executive
Committee. He was previously responsible
for TRW Aeronautical Systems’ (formerly
part of Lucas Industries) European
aftermarket business before joining Cobham
plc in 2003 to run its Flight Refuelling Division.
Richard is a fellow of the Royal Aeronautical
Society and a Governor of St Swithun’s
Independent School for Girls in Hampshire.
Richard Tyson
BSc (Hons),
DipM, FRAes
Videndum plc
78
Annual Report and Accounts 2023
Leadership, purpose, values and culture
Videndum’s purpose is to support our customers by
providing premium branded hardware products and
software solutions to the content creation market.
We have a clearly defined strategy to execute this
purpose and our values and culture underpin the
sustainable delivery of this purpose.
Alignment of culture with purpose,
values and strategy
Videndum’s culture is reflected in our employees’
engagement, motivation, retention and
productivity. The Board reinforces our culture
and values through the way it collectively makes
decisions – including decisions made on strategy,
operations, governance and conduct. The culture
of the Group is monitored and assessed by the
Board via:
– Regular meetings with senior management,
including attendance at Board and
Committee meetings as appropriate.
– Discussing the outcomes of regular
employee surveys and acting on any
findings.
– Employee engagement sessions with a
member of the Board with insights from
these sessions.
– Consideration of feedback from key
investors and wider stakeholders when
shaping Group-wide policies, procedures
and practices.
– Reviewing the Company’s whistleblowing
service and any cases or investigations
from the service.
– Prompt payment to suppliers.
– Training records for Board members.
– Internal and external auditor reviews
and findings.
– Regular risk and compliance reports
from the Head of Group Risk Assurance.
– Assessing cultural indicators such as:
– Management’s attitude to risk and
the Group’s overall risk appetite;
– Compliance with the Group’s policies
including communication and training
on our Code of Conduct; and
– Key Performance Indicators including
health and safety performance,
employee retention, engagement
and feedback.
Further information on how the Board factors
stakeholders into its decisions can be found
on pages 84 to 86.
1. Purpose
3. Values
2. Strategy
4. Culture
Why we do what we do
Our purpose is to enable our customers
to capture and share exceptional content
by being the leading provider of premium
hardware and software solutions
to the content creation market.
The qualities that define us
and what we try to achieve
Videndum provides world-class product
performance with a keen eye for being
customer focused. We lead in fast-changing
markets and have global reach and capability.
We always do business the right way, with
transparency, integrity and respect and in
line with our Code of Conduct.
How we do what we do
Manufacturing and selling our products
and solutions globally via multiple
distribution channels, our own sales
teams and via e-commerce, through both
our own and third-party websites.
Our core customers include broadcasters,
film studios, production and rental
companies, photographers/videographers,
independent content creators, vloggers/
influencers, professional sound crews and
enterprises. Our product portfolio includes
camera supports, video transmission systems
and monitors, live streaming solutions,
smartphone accessories, robotic camera
systems, prompters, LED lighting, mobile
power, carrying solutions and backgrounds,
audio capture and noise reduction equipment.
Who we are as an
organisation
Our employees are entrepreneurial and
have a passion for our products. Videndum
fosters an environment for employees to
be forward-thinking, collaborative and
supportive with an inclusive approach.
Strategic Report Corporate Governance Financial Statements
79
Having a clear purpose which aligns with our
values and with a strategy to back it up, helps
to instil confidence in our stakeholders. It
helps to explain why we exist, why we do what
we do and how we intend to meet our
objectives. All employees are encouraged to
embrace the Company’s culture to ensure our
long-term success.
During 2023, the Board received feedback on
our culture from methods including but not
limited to results of employee surveys and
employee engagement sessions held virtually
Videndum Production Solutions win Corporate Star Award for Best Employee Engagement Programme – Action4Good
at key operating sites with Caroline Thomson
as the Non-Executive Director charged with
responsibility for employee engagement. Due
to the macroeconomic environment affecting
the business, the Board as a collective did not
have the chance during 2023 to visit any of our
key sites. However, it is anticipated that these
visits will recommence during 2024.
Videndum refreshed and recommunicated its
Code of Conduct to all employees in early
2024. This was supported with online training
and testing to embed the Code of Conduct
and the right behaviours with our employees.
The Code of Conduct sets out expectations
on behaviours in all aspects of how employees
conduct themselves. As well as employees,
this is also available to all stakeholders
including customers and suppliers. The Code
of Conduct is published in all languages
commonly spoken in the Group and is available
on our website.
More information on Videndum’s culture can be found at:
Videndum’s governance framework and governance practices on pages 80 to 82
Board activity in 2023 on pages 84 and 90
Videndum’s approach to people, leadership and succession in the Nominations Committee report on pages 96 to 101
Videndum’s risk and internal controls in the Audit Committee report on pages 102 to 111
The focus on health and safety, the environment and sustainability across the Group in the Responsible business report on pages 44 to 71
Videndum’s approach to executive remuneration in the Remuneration report on pages 112 to 142
Videndum plc
80
Annual Report and Accounts 2023
The role of the Board
Our Board, outlined on pages 76 to 77, is
made up of experienced professionals who
bring a diverse range of skills, perspectives
and industry knowledge to our boardroom.
In accordance with the Code, the role of
the Board is to promote the long-term
sustainable success of the Company,
generate value for shareholders and make
a meaningful contribution to wider society.
Collectively, the Board has the right balance
of experience that Videndum needs in the
areas of finance, technology, strategy
and operations, people management
and global commerce, which assists us in
the implementation of our strategy.
Changes to the Board during 2023 included
the following:
Anna Vikström Persson joined the Board
as an independent Non-Executive Director
with effect from 1 May 2023 and became
a member of the Audit, Remuneration
and Nominations Committees.
Graham Oldroyd was appointed an
independent Non-Executive Director
with effect from 12 October 2023 as
well as becoming a member of the Audit,
Remuneration and Nominations Committees.
On 26 September 2023, the Company
announced Ian McHoul’s intention not to seek
re-election at the Company’s 2024 Annual
General Meeting due to personal reasons.
Following a detailed search, the Company
announced the appointment of Stephen Harris
to the Board as an independent Non-Executive
Director and Chairman Designate with effect
from 9 November 2023. Stephen will take over
as Chairman of the Board from Ian McHoul
as soon as is practicable and appropriate.
Erika Schraner has informed the Board
of her intention not to seek re-election
at the forthcoming 2024 AGM.
All Directors of the Company aside from Ian
McHoul and Erika Schraner as outlined above,
in accordance with the Company’s Articles of
Association, will stand for reappointment as
Directors at the Company’s AGM to be held on
19 June 2024 and further details can be found
in the AGM Notice.
The Board has separate roles and a clear
division of responsibilities in order to
properly fulfil its duties, including the
division of responsibilities between the
Chairman and Group Chief Executive. This
is outlined in more detail on pages 92 to 94.
It is the role of the Chairman to manage
the Board and to ensure its effectiveness.
Together with the Group Chief Executive
and the Group Company Secretary, the
Chairman ensures that all Directors:
– Receive accurate, timely and clear
information.
– Actively participate in the decision-making
process.
– Are kept well informed of all key business
and operational developments.
Board meeting agendas are agreed in advance
of meetings by the Chairman and Group Chief
Executive facilitated by the Group Company
Secretary to ensure each Board meeting is as
efficient as possible. Agendas and supporting
papers are circulated to all Board members in
good time in advance of meetings. All Board
members are expected to offer constructive
challenge to any proposals and strategic
decisions made by executive management.
Apart from the remuneration of Directors
there were no instances when a Director had
to abstain from voting on a matter due to a
conflict of interest during 2023. The Board
has a defined policy for dealing with conflicts
or potential conflicts of interest. At the start
of every Board meeting all Directors are
reminded about their duties under Section 172
of the Companies Act 2006 including
the need to disclose any conflicts of interest.
The equity raise of £125.0 million that
completed on 8 December 2023 was a conflict
of interest, since each Director participated
in the equity raise. The equity raise offer
price of £2.67 per New Ordinary Share
represented a discount of approximately 3.3%
to the Closing Price of an Existing Ordinary
Share of £2.76 on 20 November 2023 (being
the last Business Day before publication
of the Prospectus). In accordance with the
Company’s Articles of Association, having
declared their interest, each Director was
authorised to participate in the decision-
making associated with the equity raise.
The Group Company Secretary maintains a
record of any declared conflicts of interest.
Effective resources and controls
The Board has satisfied itself that the
Company’s purpose is aligned with business
practices through a variety of resources,
including regular updates from senior
management as appropriate. These strategic
and operational updates are discussed by the
Board in scheduled Board meetings and ad hoc
Board meetings as necessary, such as those
held around the equity raise in late 2023.
The Board governance arrangements support
the development and delivery of strategy by
ensuring accountability and responsibility for
decisions from within the organisation and
also by leveraging the skills, knowledge and
experience from all Board members. Further
information on the skills and experience of all
Board members can be found on pages 76 to
77 and 95. Board members are encouraged
to openly express their views and opinions on
the business, the strategy, the operation of
the Group or a proposed course of action.
The Board sets itself clear annual objectives
and measures its performance against those
objectives on a regular basis at scheduled
Board meetings. More information on
Board performance and effectiveness
can be found on pages 99 to 101.
Strategic Report Corporate Governance Financial Statements
81
Board governance
Our governance framework encourages robust
governance practices across the business. The
Board has overall responsibility for governance
in the Group, led by the Chairman and
supported by the Group Company Secretary.
The Board has delegated certain responsibilities
to its Nominations, Audit and Remuneration
Committees. Further details of the work,
composition, role and responsibilities of these
Committees are provided in separate reports
on pages 95, 102 and 112, respectively. Each of
the Committees has Terms of Reference which
are reviewed annually by the Committees and
the Board during the year. These are available
on the Group’s website: videndum.com/
investors/corporate-governance/governance-
framework/. The performance of each
Committee is also assessed annually as part
of the evaluation process, and the results of
the internal Board and Committee evaluation
carried out in late 2023 are outlined on pages
99, 104 and 110.
The Board has a schedule of matters reserved
to it which is reviewed annually and can be
viewed on the Group’s website: videndum.
com/investors/corporate-governance/
governance-framework/. The schedule of
matters reserved to the Board includes
matters such as acquisitions and divestment
of businesses, appointments of new Directors
and approval of financial results including
budgets and capital expenditure as well
as any declaration of dividends. Further
information on the matters reserved for the
Board can be found on page 94. The Board
has delegated certain of its powers to the
Group Chief Executive to run the business
and operations. To support his efforts, the
Group Chief Executive has established the
Operations Executive comprising the Group
Chief Executive, Group Chief Financial
Officer, Group Chief Operating Officer,
Group Company Secretary and HR Director,
Group Communications Director, Group
General Counsel and Divisional management.
The Operations Executive meets monthly
and covers current performance and
operational matters including health and
safety. Minutes of all Board and Committee
meetings, including the Operations Executive,
are prepared by the Group Company
Secretary following each meeting.
The Group Chief Executive reports on the
work of the Operations Executive to each
Board meeting to keep the Board fully
informed on operational matters. On
27 February 2023, Marco Pezzana, Chief
Executive Officer of the Media Solutions
Division, was appointed as Group Chief
Operating Officer and continued to report to
Stephen Bird, Group Chief Executive. Marco
retained responsibility for the Media Solutions
Division as its Chief Executive Officer and
took on wider responsibility for the Group’s
operations. This included working on strategic
self-help projects to further streamline the
cost-base, maximise operational efficiencies
and deliver cross-Divisional synergies to
accelerate Videndum’s growth.
Scheduled Board and Committee meetings
were held face-to-face during 2023. All short
notice Board and Committee meetings and
meetings of the Operations Executive are held
via video conference. The Board also held
pre-Board meeting dinners which enabled the
Directors to informally discuss current
business matters. The Board appreciates
this informal environment, which creates an
opportunity for members of the Operations
Executive, other senior management or
external advisors to attend to give updates
on the business. The Non-Executive Directors
continued to hold meetings between
themselves following each scheduled Board
meeting to raise any issues without senior
management present. The Chairman provides
feedback to the Group Chief Executive on
these discussions and take any actions
necessary to address matters raised.
The Directors make extensive use of electronic
Board packs, providing fast and secure access
to all Board and Committee papers, alongside
any other key and confidential updates to
enable the running of the business. The
Chairman of the Board and the Chairs of each
of the Committees set the agendas for all
Board and Committee meetings with support
from the Group Company Secretary. The
information on the business shared with the
Board is sufficient to allow effective debate
and challenge to management.
The information contained within the Board
and Committee packs includes detailed
budgets, forecasts, strategy papers, reviews
of the Group’s financial position, corporate
development opportunities and operational
performance, and annual and half yearly
reports. A detailed monthly report is prepared
and circulated to all Directors from the Group
Chief Executive, Group Chief Financial Officer,
Group Company Secretary and Group General
Counsel, plus a Health and Safety report. The
Board receives further information
from time to time as and when necessary.
Videndum plc
82
Annual Report and Accounts 2023
The role of the Board continued
Operations Executive
The Operations Executive is led by the Group Chief Executive and
comprises the Group Chief Financial Officer, Group Chief Operating
Officer, Divisional CEOs, Group Communications Director, Group
General Counsel, Group Company Secretary and HR Director and
several other senior managers from each Division. It has overall
responsibility for the daily management of the business and the
implementation of the Group’s strategy.
ESG Committee
Chaired by the Group Chief Executive, the committee comprises of the
Group Chief Financial Officer, Group Company Secretary and HR
Director, Group Communications Director, Group Communications and
ESG Manager, Group Risk Assurance Manager and Divisional
Management, including Divisional ESG coordinators. The ESG
Committee oversees the Group’s ESG programme including external
ESG reporting. See page 44 for more information.
Group Company Secretary
All Directors have access to the advice and services of the Group
Company Secretary and any Director may initiate an agreed
procedure to seek independent professional advice sought at the
Company’s expense. Clearance to such advice being sought must be
given in advance by the Chairman. The Group Company Secretary’s
role is to support the Chairman, the Board, its Committees and
individual Directors in discharging their duties effectively including
governance matters. In accordance with the UK Corporate
Governance Code, the Group Company Secretary’s appointment
and removal is a matter to be considered by the whole Board.
Read more on page 102 Read more on page 112Read more on page 95
Videndum plc
The Board of Directors
Chaired by Ian McHoul
Membership:
Chairman, Group Chief Executive, Group Chief Financial Officer, independent Non-Executive Directors
Approve all financial results, dividends and financial matters for the Group
and tracks progress of the business against the strategy
Engagement with the Group’s key stakeholders
Approval of the financing for the Group
Nominations
Committee
Chaired by
Ian McHoul
Membership:
Chairman, Group Chief Executive and the
independent Non-Executive Directors
Oversees and reviews the composition
of the Board
Oversees succession planning of the Board
Oversees the leadership skills requirements
and succession planning of key senior
management for the Group
Terms of reference for each of the
Nominations, Audit and Remuneration
Committee are available on our website
– videndum.com/investors/corporate-
governance
Audit
Committee
Chaired by
Erika Schraner
Membership:
The independent Non-Executive Directors
Responsible for integrity of narrative
reporting and financial statement and
financial controls
Oversees risk management and control
systems including internal audit progress
and effectiveness
Reviews external auditor effectiveness and
oversees external auditor transition
Remuneration
Committee
Chaired by
Caroline Thomson
Membership:
The independent Non-Executive Directors
Reviews framework and policy on Executive
Director and senior management
remuneration and benefits to ensure
alignment with strategy and performance
Reviews and benchmarks incentive
arrangements and ensures they fit
with the Group’s strategy and culture
Ensures Executive Director remuneration
takes into account remuneration across the
wider employee base
Videndum’s governance structure is as follows:
Strategic Report Corporate Governance Financial Statements
83
Image: Felix Belloin
Videndum plc
84
Annual Report and Accounts 2023
Board activity in 2023
During 2023 the Board covered a range of issues at its
scheduled and short notice meetings including:
Stephen Bird, Group Chief Executive,
hosting a Town Hall for Media Solutions
colleagues in Cassola, Italy.
Group Chief Executive, Stephen Bird, receives a product update from Divisional Chief
Executive, Nicola Dal Toso at the Production Solutions site in Bury St Edmunds, UK.
Marco Pezzana, Chief Operating Officer and Media Solutions Divisional Chief Executive
awards an employee whose pictures appear in a local exhibition – Cassola Fotografia.
Strategy
Throughout the year multiple updates were
provided to the Board on all Divisions’
financial and operational performance. Due to
the macroeconomic environment and US
writers’ and actors’ strikes, and the
subsequent effects on the business, a number
of strategic short notice Board meetings were
held to discuss and adapt the Group’s
near-term strategy as necessary. The Board
held a deep dive strategic review in June 2023
covering each of its Divisions as well as a Blue
Sky strategy review meeting in May 2023.
Operational
The Board did not have the collective
opportunity to visit any of its main sites in
2023, however it anticipates that with the
recovery of the business, the visits will resume
in the second half of 2024. During 2023, the
Board received regular updates on operational
performance from the Group Chief Executive
and Group Chief Operating Officer.
ESG and financial reporting
The Board approved the 2022 financial results,
the 2022 Annual Report and Accounts as well
as the 2023 AGM Notice, going concern and
the Viability statement in February 2023.
The Board received regular updates on the
Group’s ESG initiatives, building on the 2021
and 2022 disclosures and issuing standalone
ESG and TCFD reports in April 2023. The Board
also considered and approved the delayed
release of the Company’s 2023 half year and
year-end results.
People
The Board received an update on the
all-employee survey carried out, and also
received feedback from Caroline Thomson on
the employee engagement session carried out
in Creative Solutions in October 2023.
Financial
The Board approved the detailed process
including publication of a prospectus for the
equity raise for £125.0 million during
December 2023.
Strategic Report Corporate Governance Financial Statements
85
Attendance at 2023 Board and Committee meetings
Board Audit Remuneration Nominations
Scheduled Short notice Scheduled Short notice Scheduled Short notice Scheduled Short notice
Number of meetings
6 10 4 3 4 1 2 2
Directors:
Ian McHoul
1
6 (6) 10 (10) – – – – 2 (3) 0 (2)
Erika Schraner
2
6 (6) 10 (10) 4 (4) 3 (3) 4 (4) 0 (1) 2 (2) 2 (2)
Teté Soto 6 (6) 10 (10) 4 (4) 3 (3) 4 (4) 1 (1) 2 (2) 2 (2)
Caroline Thomson 6 (6) 10 (10) 4 (4) 3 (3) 4 (4) 1 (1) 2 (2) 2 (2)
Richard Tyson 6 (6) 10 (10) 4 (4) 3 (3) 5 (5) 1 (1) 2 (2) 2 (2)
Stephen Bird 6 (6) 10 (10) – – – – 2 (2) 2 (2)
Andrea Rigamonti 6 (6) 10 (10) – – – – – –
Anna Vikström Persson
(joined 1 May 2023)
5 (5) 9 (9) 3 (3) 3 (3) 3 (3) 0 (0) 2 (2) 2 (2)
Graham Oldroyd
3
(joined 12 October 2023)
1 (1) 5 (5) 0 (1) 0 (0) 1 (1) 0 (0) 0 (0) 2 (2)
Stephen Harris
(joined 9 November 2023)
1 (1) 1 (1) 1 (1) 0 (0) 1 (1) 0 (0) 0 (0) 0 (0)
The number shown in brackets denotes the number of meetings the Director could have attended during 2023. Where a Director was unable to attend a meeting, their input to the business
of the meeting was given in advance of the meeting to the Chairman or Chair of the Committee as appropriate.
1 Ian McHoul did not attend one of the scheduled Nominations Committee and the two short notice Nominations Committee meetings as they related to his succession plans. These meetings
were chaired by the Senior Independent Director, Richard Tyson.
2 Erika Schraner could not attend one short notice Remuneration Committee meeting held in April 2023 due to a prior engagement, however Erika provided her feedback and input to the
Committee Chair in advance of the meeting.
3 Graham Oldroyd could not attend one scheduled Audit Committee meeting in December 2023 due to a pre-existing commitment which existed before his appointment to the Board. Graham
provided his input to the Audit Committee Chair in advance of the meeting.
Image: The Tillmann Brothers
Videndum plc
86
Annual Report and Accounts 2023
Section 172 statement
The Board confirms that during the year ended 31 December 2023, it has acted in good faith to promote the long-term success of the Company for
the benefit of its key stakeholders that have been identified on pages 42 to 43 as its shareholders, employees, customers, suppliers and the
communities and environments in which we operate all while having due regard to the matters set out under Section 172 (a) to (f) of the Companies
Act 2006:
Relevant Disclosure(s) Page(s)
A The likely consequence of any decision in the long term Purpose and values
Strategic framework/Market opportunity
Dividends
Our stakeholders
Page 78 and 79
Page 8 to 11
Page 33
Page 42 to 43
B The interests of the Company’s employees Our people
Employee engagement
Employee health and wellbeing
Diversity and inclusion
Page 42 and 62
Page 63 and 88
Page 63
Page 64
C The need to foster the Company’s business relationships with
suppliers, customers and others
Customer engagement
Supplier engagement and relationships
Anti-bribery and corruption and modern slavery
Page 42
Page 42
Page 69
D The impact of the Company’s operations on the community
and the environment
Responsible business
Supporting our communities/giving back
Page 60
Page 66
E The desirability of the Company maintaining a reputation for
high standards of business conduct
Values and culture at Videndum
Code of Conduct and whistleblowing service
Workforce policies
Page 78
Page 69 and 70
Page 69 and 70
F The need to act fairly as between members
of the Company
Shareholder engagement
AGM
Rights attached to shares
Page 87
Page 146
Page 143
How the Board considers Section 172
matters
Methods used by the Board to perform their
duties under the Companies Act 2006 include:
– The Board actively considers the Group’s
purpose, values and corporate culture when
reviewing the Company’s policies, particularly
relating to business conduct, which underpins
the way Videndum does business.
– The Audit Committee has oversight of the
Company’s risk assurance and management
framework and the actions that are in place,
or that will be put in place, to mitigate risk
(including any emerging risks where
appropriate) in the short, medium and
long term.
– Blue Sky strategy sessions and detailed
Divisional and Group strategy reviews held
where senior management present updates
to the Board, and the Board discuss mid to
long-term strategy for all Divisions, including
cross-Divisional synergy possibilities.
– The Board considers all ESG matters
carefully as it continues to develop its ESG
programme across the Group, as outlined in
Responsible business from page 44.
– Members of the Board engage directly with
employees and shareholders and receive
feedback from the Group Chief Executive
and Group Chief Financial Officer on
meetings with investors and analysts, as
well as regular updates and reports from the
Operations Executive and external advisers
on engagement with other stakeholders
such as customers, suppliers and the wider
communities in which Videndum operates.
During the second half of the year, it was
apparent that the wider macroeconomic
environment was having an adverse effect on
the Company’s financial position. The Board
took the decision not to pay a 2023 interim
dividend to shareholders to conserve cash.
The Board also considered and approved the
decision to undertake an equity raise, which
culminated in raising £125.0 million and helped
to strengthen the Company’s Balance Sheet.
This demonstrated the Board’s proactivity
in considering all stakeholders in its decision
making and ultimately, the consequences
of its decisions in the longer-term viability
of the Group.
After a rigorous and successful external audit
tender process carried out in May 2023, the
Audit Committee unanimously recommended
the appointment of PricewaterhouseCoopers
LLP as the Company’s auditor to the Board
for consideration and ultimate approval.
The Board approved the appointment of
PricewaterhouseCoopers LLP and the audit
transition has been progressing to plan.
The full year 2023 results will be Deloitte’s
last audit for Videndum and
PricewaterhouseCoopers LLP’s appointment
as external auditor will be put forward as a
resolution to shareholders at the Company’s
2024 AGM.
Further details on stakeholder engagement and
how the Board considers its duties under Section
172 when making major decisions can be found
on pages 42 and 43 and throughout our
Annual Report as outlined above.
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87
Shareholder engagement
Meeting with shareholders
Videndum has an active and open dialogue
with shareholders and their views are
regularly sought on key issues such as
strategy, governance and financial
performance. As illustrated throughout the
£125.0 million equity raise process, they have
been supportive and are an important source
of capital, without whom the Company could
not grow and invest in future success. The
Board receives a monthly shareholder analysis
report from our corporate broker which
records movements in the shareholder register
and also notes when investor engagement has
occurred and any notable views expressed.
There is a detailed investor relations
programme in place to provide all shareholders
with regular updates on operational and
financial performance, including regular
market announcements, presentations,
face-to-face meetings with investors,
roadshows, the AGM and the upkeep of a
detailed investor relations section on the
Group website.
Throughout 2023, the Board communicated
extensively with all key investors to ensure
they remained informed and supportive
of all key business decisions.
Investor meetings and roadshows
During 2023, the Board continued to engage
with numerous institutional investors both
virtually and face-to-face. These were centred
around major events such as the 2022 full year
results, 2023 half year results and the £125.0
million equity raise process, and were
attended by the Group Chief Executive, Group
Chief Financial Officer, and Group
Communications Director.
The Chairman additionally met with several
shareholders during 2023 to hear their views
and discuss business progress.
Annual General Meeting (“AGM”)
The Company’s AGM was held on 11 May 2023
at 41 Portland Place, London W1B 1QH. All
resolutions at the 2023 AGM were passed
with a majority of votes in favour. The detailed
outcome of resolutions at the 2023 AGM is
available on our website under “Corporate
Governance”. The 2024 AGM will be held at 116
Pall Mall, London, SW1Y 5ED on Wednesday,
19 June 2024 at 9.00am. Voting at the AGM is
carried out by way of a poll. Shareholders are
encouraged to submit their votes by proxy
ahead of the AGM to ensure their views are
received in advance.
We also held a General Meeting on
7 December 2023 associated with the approval
of the £125.0 million equity raise. The outcome
of voting at this meeting is also available on
our website.
The Board, in the event of a 20% or more vote
against a resolution at a General Meeting of
shareholders, would consider that a material
level and would seek to engage with
shareholders to understand the nature of
concerns raised by the against votes and what
actions, if any, should be taken to address
such concerns. No such vote against or
concerns were raised during 2023.
Annual Report
The Annual Report is available to all
shareholders. It is normally published in
March/April each year. Through electronic
communication initiatives, we aim to make our
Annual Report as accessible as possible.
Shareholders can opt to receive a hard copy in
the post or can download PDF copies via email
or from our website. Additionally, if a
shareholder holds their shares via a nominee
account and encounters difficulty receiving
the Annual Report via their nominee provider,
they are welcome to contact the Group
Company Secretary to request a copy.
Corporate website
The Videndum website, videndum.com, has a
dedicated investor section which includes all
of our Annual Reports, results presentations,
and our financial and dividend calendar for the
upcoming year. The website also outlines our
business strategy and model, product
portfolio and Company announcements, and
has a detailed section covering our ESG
activities.
Senior Independent Director
If shareholders have any concerns, which
the normal channels of communication to
the Group Chief Executive or Chairman
have failed to resolve, or for which contact
is inappropriate, then our Senior Independent
Director, Richard Tyson, is available to address
them. He can be contacted via email at
info@videndum.com or via the Group
Company Secretary.
The Board and our stakeholders
Videndum plc
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Annual Report and Accounts 2023
The Board and our stakeholders continued
Employee engagement
We have an experienced, diverse and highly trained employee base. They are Videndum’s greatest asset and are critical to our success.
Our employees are incentivised and motivated to help contribute to successfully delivering our strategy, performance and strong reputation.
In order to reach all employees, the Board utilises a combination of formal and informal engagement methods as set out below, the principal
method as defined by the Code being engagement with a Non-Executive Director – Caroline Thomson. The Board continually reviews its employee
engagement mechanisms to ensure they remain effective and open for employees to provide feedback. The Board considers that these engagement
methods with employees as presently structured are effective in engaging with Videndum’s workforce, providing ample opportunity for the view of
employees to be shared with the Board.
Dedicated Non-Executive Director
Caroline Thomson is the independent
Non-Executive Director charged with
gathering the views of our employees.
Caroline annually meets with a number of
employees at several sites to receive
first-hand employee feedback.
In October 2023, Caroline held several
employee engagement sessions with
employees in the Creative Solutions Division
based in Irvine, California and Cary, North
Carolina. The sessions covered a range of
issues including new starters to the
business and induction process, health and
safety, culture in the workplace,
remuneration and benefits, Group and
divisional communications, diversity and
sustainability. Feedback from each session
was shared with Divisional senior
management and the Board to understand
employees’ views and to ‘check the pulse’ of
employees’ views. These sessions are
extremely valuable and give the Board
greater insight into the views and morale of
employees, and help to shape and develop
the Board’s decision making and to address
any concerns on matters such
as remuneration, benefits, working
environment and overall Group strategy.
We plan on holding similar sessions in 2024
and in future years.
How we engage with employees
Employee surveys
We gather feedback from all employees
to assess their levels of engagement. We
conduct an annual all-employee survey,
covering a range of issues including health
and safety and wellbeing, the right culture
for the organisation, communications and
satisfaction with working at Videndum.
Responses from these surveys are
analysed by HR and plans developed to
act on feedback.
Whistleblowing
Our independent whistleblowing service
offers an anonymous reporting line for
employees to raise any concerns or
allegations of wrongdoing directly with
the Board. The service allows concerns to
be raised via telephone or online
reporting.
All-employee
communication and
Divisional townhall
meetings
The Group Chief Executive regularly
communicates with all employees to
provide an update on business
performance and operations. These are
usually centred around year-end and half
year reporting but are held at other times
of the year. In addition, the Group Chief
Executive visits several sites every year
and meets with employees to update them
on performance and to hear first-hand
their views of the business. Divisional
CEOs also hold all-employee Divisional
townhall meetings during the year for the
same purpose in an informal environment.
Intranet
The Divisional intranet is used as a
platform for employees to access our
policies and be kept informed of the latest
Group news.
A combination of feedback from our
annual employee surveys, interaction
with Caroline Thomson and other
communication methods outlined,
illustrates that our employee engagement
programme is valued by employees and
the Board. We are confident that our
employees are able to engage with the
Board and senior management, enabling
the Company’s business and performance
to be understood and the views of
employees to be expressed and considered.
Read more on page 63Read more on page 63
Read more on page 70 and 104
Strategic Report Corporate Governance Financial Statements
89
Image: Pie Aerts
Videndum plc
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Annual Report and Accounts 2023
1. 2.
3. 4.
5. 6.
The Board’s major decisions in 2023
Developed succession plans for the
Board
The Nominations Committee developed succession plans for
the Board and during the year there were several changes
in Directors, including the appointment of a new Chairman
Designate. The Nominations Committee also considered an
update on talent and succession plans for executive talent
below Board level.
Approval of 2023 half year and 2022 full
year financial results
The Board approved the full year results for year ended
31 December 2022 in February 2023 and the interim results for
2023 in September 2023. The Board also considered and
approved trading updates to the market during the year,
particularly around the impact of the US writers’ and actors’
strikes.
The following major decisions were taken by the Board and its
Committees during 2023, taking into consideration the duties to
all key stakeholders under Section 172 of the Companies Act 2006:
Divestment of non-core businesses
and restructuring
In October 2023, Lightstream was sold for consideration of
US$500,000. Amimon was also held for sale. The Board
determined that neither Lightstream or Amimon were core
businesses for the Group. In the UK, the Rycote windshield
production was moved to the Ashby-de-la-Zouche factory
and in the US, audio R&D and microphones production
moved to the audio centre of excellence in Portland, the
manufacturing of Wooden Camera products moved from
Dallas, US to the Cartago site in Costa Rica and Videndum
Media Solutions’ US distribution moved out of New Jersey
to the Savage facilities in Arizona.
£125.0 million equity raise
In response to the macroeconomic headwinds facing the
business in 2023, the Board approved an equity raise of £125.0
million to help strengthen the Group’s Balance Sheet. The
equity raise was supported by investors and completed in
December 2023.
Developed Group-wide ESG initiatives
Despite other challenges, in 2023 we continued to enhance our
ESG programme across the Group and we will publish our third
detailed ESG report in May 2024. Notable success included the
launch of Salt-E Dog and the installation of solar panels at the
Feltre facility in Italy.
External audit tender process
The Audit Committee carried out an external audit tender in
May 2023 and recommended to the Board that
PricewaterhouseCoopers LLP be appointed as the external
auditor with effect from the 2024 AGM.
Read more on page 13 and 29
Read more on page 84
Read more on page 96
Read more on page 44 Read more on page 111
Read more on page 84
Strategic Report Corporate Governance Financial Statements
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Image: Chris Grubisa
Videndum plc
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Annual Report and Accounts 2023
Board roles and the division of responsibilities
There is clear division of responsibilities for the Board between Executive and
Non-Executive Director roles, providing a framework for accountability and oversight.
The roles of Group Chief Executive and Chairman are separate and their responsibilities
are well-defined, set out in writing and regularly reviewed by the Board. The Chairman
is responsible for the leadership of the Board and the Group Chief Executive manages
and leads the business and its operations.
Non-Executive
Ian McHoul
Chairman of the Board and Chairman of the Nominations Committee
– Responsible for the effective operation of the Board
and ensuring it is well-balanced to deliver the Group’s
strategic objectives.
– Encourages an ethical culture that promotes
transparency, open debate and challenge.
– Ensures that the Board plays a part in the
development of strategy and offers constructive
challenge.
– Ensures effective engagement between the Board
and all stakeholders.
– As previously announced, Ian McHoul will step down
from the Board at the conclusion of the 2024 AGM
and will be succeeded by Stephen Harris.
– As Chairman of the Nominations Committee, leads
the work of the Committee in connection with Board
composition and succession planning.
Caroline Thomson
Non-Executive Director tasked with Employee Engagement
and Chair of the Remuneration Committee
– Attends key employee and business events.
– Monitors the effectiveness of employee engagement
programmes and surveys.
– Provides updates to the Board on employee
engagement matters and any employee issues.
– As Chair of the Remuneration Committee, guides the
work of the Committee in connection with Directors’
remuneration.
Richard Tyson
Senior Independent Director
– Acts as a “sounding board” for the Chairman in all
matters of governance and serves as an intermediary
for the other directors and shareholders, as well as
leads the evaluation of the Chairman’s performance.
– Acts as the Chairman if the Chairman’s position is in
any way conflicted.
– Available to shareholders if they have concerns that
have not been resolved through normal channels of
communication with the Company.
– In 2023, Richard Tyson, as Senior Independent Director,
led the search process for a new Chair of the Board.
Erika Schraner
Chair of the Audit Committee
– Acts as an independent point of contact in the Group’s
whistleblowing procedures.
– As Chair of the Audit Committee, leads the work of the
Committee in connection with the integrity of narrative
reporting, internal controls, oversight of the internal
audit function and work of the external auditor.
– Responsible for leading the integrity of narrative
reporting, internal controls, oversight of the internal
audit function and external auditor.
– Erika Schraner will not seek re-election at the 2024
AGM. The Board has started the search for a new
Chair of the Audit Committee.
Independent Non-Executive Directors (Graham Oldroyd, Stephen Harris, Teté Soto and Anna Vikström Persson)
– Offer constructive challenge and advice to
the Executive Directors, assisting in
development of Group-wide strategy and
monitoring performance.
– Act with the highest levels of integrity and
governance and help to ensure this
culture is promoted within the Group.
– Oversee and set levels of remuneration for
senior management.
– Oversee development of succession
planning for senior management and
executive roles.
– Review integrity of financial reporting and
disclosures.
– Ensure that financial and risk appetite
and mitigating controls are appropriate
and robust.
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Executive
Stephen Bird
Group Chief Executive
– Provides Executive leadership across the Group.
– Informs the Chairman and Board of strategic and
operational issues facing the Group.
– Develops and executes the Group’s strategy and
commercial objectives and implements decisions of the
Board and its Committees.
– Ensures that the right corporate culture is set from
the top.
– Manages the Group’s risk profile and ensures actions
are compliant with the Board’s risk appetite.
– Leads investor relations activities – engaging with
shareholders.
– Leads the Group’s ESG programme.
Andrea Rigamonti
Group Chief Financial Officer
– Supports the Group Chief Executive in developing
and implementing strategy.
– Provides financial and risk control leadership to the
Group and guides the Group’s business and financial
strategy.
– Responsible for financial planning and analysis,
financial reporting, and tax and treasury functions, as
well as IT.
– Oversees the capital structure of the Group.
– Engages with key stakeholders alongside the Group
Chief Executive.
Marco Pezzana
Group Chief Operating Officer
– Supports the Group Chief Executive to drive synergies
between the Divisions.
– Leads the Group-wide review of operations and
develops recommendations to improve operating and
financial performance.
– Works with the Group Chief Financial Officer to set
and prepare budgets and strategic plans.
– Oversees the Group’s R&D programme and launch of
new products to market.
Jon Bolton
Group Company Secretary and HR Director
– Secretary to the Board and
its Committees.
– Ensures compliance with
Board procedures.
– Provides advice on regulatory
and governance matters to
the Board and senior
management.
– Oversees the Company’s
governance framework.
– Responsible for Group HR,
employee share schemes,
Group risk management,
insurance programme and
pension schemes.
– Helps determine and foster
the right culture and values
throughout the Group.
Jennifer Shaw
Group Communications Director
– Supports the Group Chief
Executive to develop and
articulate Group strategy.
– Supports the Group Chief
Executive and the Group
Chief Financial Officer with
investor relations and
engages with key
stakeholders.
– Works with the Group Chief
Executive to develop and
execute external and internal
communications strategy.
– Provides communications
leadership to the Divisional
teams.
– Helps foster the right culture
and values throughout
the Group.
Divisional CEOs
– Support the Group Chief Executive in developing and executing
strategy.
– Lead the Divisional operational and financial performance.
– Manage, motivate and develop employees.
– Develop business plans in collaboration with the Board.
– Oversee the daily activities throughout the Group.
– Ensure that the policies and procedures developed and set by the
Board are communicated and adopted across the Group.
– Help to foster the Group’s culture throughout the organisation.
Videndum plc
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Annual Report and Accounts 2023
Board roles and the division of responsibilities continued
Role and independence of Non-Executive Directors
All Non-Executive Directors bring their unique experience and skillset to
Videndum’s strategy, which in turn strengthens the stewardship of the
Company and overall performance of the Group. The Board considers
that Ian McHoul, Stephen Harris, Erika Schraner, Teté Soto,
Anna Vikström Persson, Graham Oldroyd, Caroline Thomson
and Richard Tyson are independent in accordance with the
recommendations of the 2018 UK Corporate Governance Code.
Except for Caroline Thomson, each of these Non-Executive Directors’
tenure on the Board is less than six years and as outlined on pages
98. Caroline Thomson has been on the Board since November 2015.
The Chairman annually leads the process of objectively evaluating
the performance of each Director. The 2023 internal Board evaluation
as detailed on page 99 covers the performance assessment of each
Director. Upon their respective appointment dates, Anna Vikström
Persson, Graham Oldroyd and Stephen Harris were deemed to
be independent Non-Executive Directors in accordance with the
recommendations of the 2018 UK Corporate Governance Code.
Relationship between the Board and Operations Executive
The following diagram illustrates the dynamic between the Board and
Operations Executive and the responsibilities they are each tasked with:
Board and the Operations Executive
The Board considers there to be an appropriate balance between
Executive and Non-Executive Directors required to lead the
business and safeguard the interests of shareholders.
As at 31 December 2023, the Board was comprised of the
Chairman, seven independent Non-Executive Directors and two
Executive Directors. This meets the requirement of the 2018 UK
Corporate Governance Code for at least half the Board, excluding
the Chairman, to be independent Non-Executive Directors.
The Operations Executive, led by the Group Chief Executive, is
responsible for running the business of the Group. The Operations
Executive meets on a monthly basis and individual members of the
Operations Executive attend Board meetings on a regular basis to
provide updates on their businesses. The Board delegates all
operational matters to the Group Chief Executive except for those
matters reserved for the Board. The Group Chief Executive in turn
uses the Operations Executive to help deliver on operational matters.
The Board Operations Executive
The Board has overall responsibility for setting the Group’s
strategy, taking risk appetite into consideration and setting
objectives for the business. It delegates overall delivery of the
strategy to the Group Chief Executive who is supported by the
Operations Executive.
The Operations Executive has responsibility for day-to-day
management of the business, including employees and delivery of
the strategy set by the Board. It is comprised of the Group Chief
Executive, Group Chief Financial Officer, the Group Communications
Director, Group Company Secretary and HR Director, Group Chief
Operating Officer, Group General Counsel, Divisional CEOs and
other senior management across the business.
Matters reserved for the Board
The Board has a formal schedule of matters reserved for its
approval which includes:
– Setting of the Group’s strategy, objectives, and review and
approval of annual budgets.
– Review of progress against strategy and budgets.
– Approval of financial results and dividends declared.
– Changes in Board composition including any key roles
on advice from the Nominations Committee.
– Consideration of mergers, acquisitions and disposals.
– Approval of material litigation.
– On advice of the Audit Committee, the operation and
maintenance of the Group’s risk appetite and profile.
– Setting the Group’s purpose, values and culture.
Operations Executive activities during 2023
– Collectively responsible for the daily operation of the Group’s
Divisions.
– Developed the Group’s strategy and budget for approval
by the Board.
– Reviewed the financing positions of all key areas of the business.
– Monitored operational and financial results against plans
and budgets.
– Reviewed regulatory and legal developments.
– Reviewed and approved capital expenditure within the delegated
authority’s framework.
– Developed leadership skills and future talent of the business,
ensuring strong succession planning.
– Monitored and measured the effectiveness of risk management
and various control procedures.
– Oversight of the Group’s health and safety performance.
Composition, succession and evaluation
Overview
The Nominations Committee is responsible for monitoring Videndum’s
Board, its Committees and senior management to ensure that they have
the appropriate breadth and balance of skills, knowledge and experience
to lead the Group effectively, both now and in the longer term.
Nominations Committee
The Nominations Committee comprises the following members:
Ian McHoul (Chairman)
Stephen Bird, Stephen Harris, Caroline Thomson, Richard Tyson, Erika
Schraner, Teté Soto, Anna Vikström Persson and Graham Oldroyd.
Role of the Nominations Committee
– Ensure the right balance and composition of the Board, which
includes size of the Board, skills, knowledge, experience and
diversity, ensuring that it remains relevant and appropriate and
making any recommendations to the Board regarding any changes.
– Lead the process with respect to appointments to the Board,
including the role of the Chairman.
– Succession planning for the Board, including Committee Chairs,
and senior management including recruitment, talent development
and identification of potential candidates internally or externally
and making such recommendations to the Board.
Board skills and experience
– International commercial experience
– Technology and e-commerce
– B2B and B2C markets
– Broadcast and photographic experience
– Marketing/Digital Marketing
– Finance and accounting
– Manufacturing
– Listed company best practice
– ESG
– M&A and private equity
– People and culture
Board gender diversity
Male: 6
Female: 4
Board tenure
0-5 years: 5
5-7 years: 3
7 years +: 2
Strategic Report Corporate Governance Financial Statements
95
Nominations Committee Chairman’s letter
Dear Shareholder
The Nominations Committee is
responsible for setting and monitoring the
Board’s balance of skills, experience and
knowledge in order to provide the
diversity of thinking and perspective
required to provide effective leadership.
The Nominations Committee operates
under terms of reference that are
available on our website.
Succession planning and Director
appointments
An important area of work for the Nominations
Committee under my Chairmanship is succession
planning around the Board and senior
management across the Company. We need to
have a management team with the right skills,
diversity and experience to sustainably operate
and grow the business. In 2023, the Committee
received updates on talent and succession plans
across the senior management teams in the
Divisions. The Board and its Committees have
regular exposure to the senior management
team to see and hear first-hand from our
executive talent.
As Chairman of the Nominations Committee, I
lead the Committee in the process of reviewing
the structure, size and composition (including
skills, knowledge, experience and diversity) of
the Board and in making recommendations to
the Board with regard to any changes. This also
covers succession planning for Directors and
senior executives in the Group.
Once the Board has identified the need for a
new Director, I as Chairman, engage the
support of an external executive search
consultant to facilitate the search. A clear
brief on the role is drafted with the skills and
personal attributes that the Board is looking
for and taking into account Board diversity.
This is followed up with a search process to
identify suitable candidates. Initial candidate
interviews are held with myself as Chairman,
and the Group Chief Executive, where
appropriate. Following this, a shortlist is
created, taking into account the skills of each
candidate and perceived cultural fit with the
Board and senior management. Following
further meetings a preferred candidate would
be chosen and each member of the Board
would then meet with, or speak to, the
preferred candidate individually to ensure that
a person with the right skills, diversity and
dynamic fit with the Board was appointed.
This same process would occur whether the
role was Executive or Non-Executive in nature.
However, if the search was for the role of
Chairman, the search would be conducted by
the Senior Independent Director with the
support of the Board. Subject to the outcome
of each search, a formal recommendation on
an appointment is made by the Nominations
Committee to the Board for approval.
The Nominations Committee used the services
of Hedley May in 2023 and followed the process
above for the recruitment of Anna Vikström
Persson. The same process was followed but
using the services of Spencer Stuart for the
appointments of Graham Oldroyd and Stephen
Harris. Neither the Company nor any individual
Director has any relationship with Hedley May
or Spencer Stuart.
The Committee oversaw the recruitment
processes for Anna Vikström Persson, who
joined the Board on 1 May 2023 as an
independent Non-Executive Director; Graham
Oldroyd, who joined the Board on 12 October
2023 as an independent Non-Executive
Director and finally, Stephen Harris, who
joined the Board on 9 November 2023 as a
Non-Executive Director and Chairman
Designate, with the purpose to succeed myself
as Chairman. For the recruitment of Stephen
Harris, since it related to my own succession,
Richard Tyson as Senior Independent Director
led that process with the support of the Group
Chief Executive.
As Chairman Designate, Stephen Harris has a
period of handover with me before taking over
as Chairman of the Board.
Both Anna Vikström Persson and Graham
Oldroyd have undertaken inductions to the
Group, involving site visits and meeting with
senior management and advisors. Stephen
Harris has also commenced an induction
process with the Group involving site visits
and meeting with senior management.
Diversity and inclusion
The Nominations Committee and the Board
consider the issue of diversity for every
appointment. The objective is to ensure that
the Board appoints the best person for every
role and to optimise the collective Board
strength. As part of this, the Board has
adopted the following policy on diversity
and inclusion, which is the same for the Board
and all its Committees.
Videndum recognises the importance of a fully
diverse and inclusive workforce in the successful
delivery of its strategy. The effective use of all
the skills and talents of our employees is
encouraged and this extends to potential new
employees. It is essential that the best person
for the job is selected regardless of race, gender,
religion, age, sexual orientation, physical ability
or nationality. Videndum is fully committed to
equal opportunity where talent is recognised.
The Board keeps under regular review the issue
of diversity including at Board and senior
management level and throughout the entire
workforce, taking into account, among other
things, Lord Davies’ review, Women on Boards,
the Hampton-Alexander review, FTSE Women
Leaders and the Parker and McGregor-Smith
reviews on ethnic diversity. We report upon
this issue annually in our Annual Report. Our
Diversity and Inclusion Policy is available on our
Ian McHoul
Chairman of the
Nominations Committee
Videndum plc
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Annual Report and Accounts 2023
The information set out in the tables below
was collected by the Group Company
Secretary requiring each member of the Board
and Operations Executive to complete forms
identifying their gender and ethnicity in
accordance with the Listing Rules as at
31 December 2023.
Engagement with key stakeholders
During 2023, we engaged with several
major shareholders on Board succession
matters. We used the feedback received
to help shape our succession planning.
Committee performance
The performance of the Nominations
Committee was considered through the
annual Board evaluation process, which in
2023 was the subject of an internal review.
From the responses provided, it was found
that the Committee was well-managed and
effectively covered Board and senior executive
succession plans. In conclusion, it was found
that the Nominations Committee was
operating effectively.
Ian McHoul
Chairman of the Board and Nominations
Committee Chairman
22 April 2024
website: videndum.com/responsibility/
our-people/. More information on diversity in
the workplace is provided in our 2023 ESG
Report, to be published in May 2024.
The Responsible business section on page 64
contains further information on diversity,
including the disclosure of gender diversity
statistics at all levels across the business in
accordance with the requirements of the
Companies Act 2006.
Under the Listing Rules, there is a requirement
to disclose gender and ethnic diversity at
Board and executive management level. The
following tables set out the gender and ethnic
diversity of both the Board and the Operations
Executive as at 31 December 2023.
As at 31 December 2023, the roles of
Chairman, Group Chief Executive, Senior
Independent Director or Group Chief Financial
Officer are occupied by male members of the
Board. While the Listing Rules set an
expectation for one of these roles to be
occupied by women (or those self-identifying
as women), that at least 40% of individuals on
the Board of Directors are women and that at
least one individual on the Board of Directors
is from a minority ethnic background. The
Board and Nominations Committee has to
plan succession over a period of time and to
appoint the best person for the role,
irrespective of gender, race or some other
characteristic. The Board currently comprises
40% women. This follows the appointments
of Graham Oldroyd and Stephen Harris in late
2023 and remains under review as and when
new Board opportunities arise and is
supported by the succession planning
activities of the Nominations Committee. One
Director – Anna Vikström Persson – has
identified as being from a minority ethnic
background.
The Chairs of both the Remuneration and
Audit Committees are currently occupied by
women – Caroline Thomson and Erika
Schraner, respectively. The Board and
Nominations Committee will have this issue in
mind when planning succession around roles
on the Board going forward. The Board
comprises a diverse mix of international
backgrounds including UK, US, Swiss, Swedish,
Italian and Spanish heritage.
Reporting table on gender representation
Number of
Board members
% of the Board
Number of senior positions on
the Board (Chair, CEO, SID, CFO)
Number in Executive
management
% of Executive
management
Men 6 60% 4 10 83.34%
Women 4 40% 0 2 16.66%
Not specified/prefer
not to say 0 0% 0 0 0%
Reporting table on ethnicity representation
Number of
Board members
% of the Board
Number of senior positions on
the Board (Chair, CEO, SID, CFO)
Number in Executive
management
% of Executive
management
White British or other
White (inc. minority-
white groups) 9 90% 4 11 91.66%
Mixed/Multiple
ethnic groups 0 0% 0 1 8.33%
Asian/Asian British 1 10% 0 0 0%
Black/African/
Caribbean/Black British
0 0% 0 0 0%
Other ethnic group,
inc. Arab
0 0% 0 0 0%
Not specified/prefer
not to say 0 0% 0 0 0%
Strategic Report Corporate Governance Financial Statements
97
Appointments
Under the Company’s Articles, the Board has
the power at any time, and from time to time,
to appoint any person to be a Director, either
to fill a casual vacancy or as an addition to the
existing Board, subject to a maximum number
of 15 Directors. Any Director so appointed
holds office only until the next AGM and shall
then put themselves forward to be reappointed
by shareholders. The current Board comprises a
Chairman, Group Chief Executive, Group Chief
Financial Officer and seven independent
Non-Executive Directors. Details of their
appointments are set out below:
Nominations Committee Report
Key activities of the Nominations Committee
Page(s)
Board succession and appointment process of new Non-Executive Directors 96
Performance of the Nominations Committee 99
Board composition 76 to 77
Diversity and inclusion 96 to 97
Board and Committee evaluation 99
Board skills, knowledge and experience
Each Director brings a complementary set of
skills and diversity to the Board, having served
in companies of varying size, complexity and
market sector. When combined, these skills
give the Board the comprehensive skillset
required to deliver the strategic objectives of
the Group and to ensure its continued success.
More insight into the Board’s overall culture
and dynamic, composition, skills, knowledge
and performance was drawn from the 2023
internal Board evaluation. The Nominations
Committee continues to monitor Board
structure and succession plans, including
internal talent development and succession
plans of senior management below Board level.
Marco Pezzana, Chief Executive Officer of the
Media Solutions Division, was appointed as
Group Chief Operating Officer on 27 February
2023. Marco continues to report to Stephen
Bird, Group Chief Executive and retains
responsibility for the Media Solutions Division
as its Chief Executive Officer. He assumed
wider responsibility for the Group’s operations
including working on strategic self-help projects
to further streamline the Company’s cost
base, maximise operational efficiencies and
deliver cross-Divisional synergies to rationalise
and accelerate Videndum’s growth.
The Nominations Committee continued in
2023 to review plans around Board succession
for both Executive and Non-Executive
Directors while being mindful of the
Company’s business needs. This culminated in
various Board changes as outlined on page 96.
The Nominations Committee continues to
assess succession around the Board,
Operations Executive and other senior
management with regular updates on talent
and also meeting with key talent.
Chairman or Non-Executive Director Appointment date First renewal of term Second renewal of term Subsequent renewal of term
Ian McHoul (Chairman)
1
25 February 2019 25 February 2022 25 February 2025
Annually from
25 February 2026 onwards
Caroline Thomson 1 November 2015 1 November 2018 1 November 2021
Annually from
1 November 2022 onwards
Richard Tyson 2 April 2018 2 April 2021 2 April 2024
Annually from
2 April 2025 onwards
Erika Schraner
2
1 May 2022 1 May 2025 1 May 2028
Annually from
1 May 2029 onwards
Teté Soto 24 November 2022 24 November 2025 24 November 2028
Annually from
24 Nov 2029 onwards
Anna Vikström Persson 1 May 2023 1 May 2026 1 May 2029
Annually from
1 May 2030 onwards
Graham Oldroyd 12 October 2023 12 October 2026 12 October 2029
Annually from
12 October 2030 onwards
Stephen Harris (Chairman Designate) 9 November 2023 9 November 2026 9 November 2029
Annually from
9 Nov 2030 onwards
Executive Director
Appointment date Subsequent renewal of term
Stephen Bird
(Group Chief Executive) 14 April 2009
Appointed under
a service contract
Andrea Rigamonti
(Group Chief Financial Officer) 13 December 2022
Appointed under
a service contract
1 Ian McHoul will not stand for reappointment at the 2024 AGM and will cease to be a Director from the close of the 2024 AGM.
2 Erika Schraner has also informed the Board that she will not seek re-election at the 2024 AGM and will cease to be a Director from the close of the AGM.
Videndum plc
98
Annual Report and Accounts 2023
The Chairman and the other Non-Executive
Directors are appointed for an initial period of
three years which, with the approval of the
Nominations Committee and the Board,
would normally be extended for a further
three years. If it is in the interests of the
Company to do so, appointments of the
Chairman and Non-Executive Directors may
be extended beyond six years, with the
approval of the Nominations Committee, the
Board and the individual Director concerned,
subject to annual reappointment by
shareholders.
Under the Company’s Articles, each Director is
required to stand for annual reappointment at
every AGM. The annual renewal of terms for a
Non-Executive Director will take into account
ongoing performance, continuing
independence and the needs and balance of
the Board as a whole. The explanatory notes
in the AGM Notice state the reasons why the
Board believes that the Directors proposed for
re-election should be reappointed.
As stated previously, Ian McHoul will not be
seeking reappointment at the Company’s
2024 AGM and will cease to be a Director at
the conclusion of the 2024 AGM. Stephen
Harris will succeed Ian McHoul as Chairman.
Erika Schraner will not seek re-election at the
2024 AGM. The Board has started a search for
a new Chair of the Audit Committee.
Director induction
Upon appointment, each Director is provided
with an extensive, tailored induction to the
Group. This includes meeting with senior Head
Office and Divisional management, meeting
the Company’s main external advisors
including Investec and Jefferies as well as the
external auditor, and visits to the key
operational facilities in the Group. The Group
Company Secretary coordinates this induction
process.
Board training
Ongoing training for new and existing
Directors is available on request. Directors
receive details of relevant training and
development courses from both the Group
Company Secretary and from the Company’s
advisors. Any requests for training are
discussed at Board or Committee meetings
and we ensure that each Director has the
required skills and knowledge to enable them
to operate efficiently on the Board. The Group
Company Secretary maintains a register of
training undertaken by Directors to facilitate
this discussion. During 2023, the Board
collectively received training sessions on
product technology, cyber security, investor
relations, ESG matters and the broadcast and
photographic markets as well as accounting
and legal updates from the Company’s
external auditor and legal advisor. The Board
also receives regular written updates on
governance, regulatory and financial matters
as they are published.
Time commitments
All Directors demonstrated strong time
commitment to their roles on our Board and
Committees and their attendance at meetings
is set out on page 85 of this report. Due to the
pressures on the business in 2023, there were a
number of short notice Board and Committee
meetings and all Directors accommodated
these meetings where possible.
The Directors have also given careful
consideration to their external time
commitments to confirm they are able to
devote an appropriate amount of time to their
roles on our Board and Committees. The
Nominations Committee reviews on an
ongoing basis Directors’ time commitments
and confirms that they are fully satisfied with
the amount of time each Director devoted to
the business.
Board and Committee evaluation 2023
In 2023, an internal Board evaluation was
conducted and consisted of the following:
– Evaluation of the performance of the
Board;
– Evaluation of the performance of the Audit,
Remuneration and Nominations
Committees; and
– Evaluation of the Chairman.
The evaluation was carried out by way of
Directors completing a series of
questionnaires coordinated by the Group
Company Secretary and the following points
came out of the evaluation:
Performance and Strategy:
– Macroeconomic challenges in 2023 put the
Board and business under increased stress
significantly impacting performance and
progress against strategy.
– Further work around strategy, particularly
emerging market dynamics (including
artificial intelligence) is needed.
– While the Board was not pleased with the
need for the Group to raise £125.0 million of
equity in response to challenges faced by
the business, the process around this was
well executed.
Governance:
– Governance is satisfactory, but further
work is needed around risk management
particularly at macro market levels and risk
around cyber security remains an issue.
Given the challenges in 2023, the Board and
organisation needs to be open to further
learnings.
– ESG programme, despite the challenges
faced by the business, remained on track
with progress towards goals made.
– Given the challenges faced in 2023, the
Board’s opportunity to see operations
first-hand and to meet with the wider
employee base was adversely impacted.
Despite this, the Board remained informed
about the views of employees through
employee surveys and the Non-Executive
responsible for employee engagement.
Priorities for 2024:
– Ensuring a strong financial recovery for the
business.
– Undertaking a detailed review of Group
strategy in light of market dynamics and
shaping the business accordingly.
– A successful transition around the
composition of the Board, notably with
Stephen Harris succeeding Ian McHoul as
Chairman.
– Developing plans around executive talent
and succession.
– Ensuring a successful transition of the
external auditor from Deloitte to
PricewaterhouseCoopers.
The last externally facilitated evaluation was
in 2021 and it is the plan to carry out an
externally facilitated evaluation in 2024.
Strategic Report Corporate Governance Financial Statements
99
Board performance against 2023 Board objectives
The Board annually sets itself objectives against which to measure its own performance and effectiveness and to remain focused on the key issues
facing the Group. The objectives set are shaped by feedback given through Board evaluations. These objectives are tracked during the year and
progress reported on at each scheduled Board meeting. The following table sets out the agreed Board objectives for 2023 and progress made
throughout the year.
Nominations Committee Report continued
2023 Board objective Progress during 2023
Board succession
Continue to develop plans and
execute around Board succession
ensuring that the collaborative
culture and dynamic is preserved
and the Board’s performance
continues to be optimised. Ensure
that new appointments receive an
appropriate induction to the Group.
– Anna Vikström Persson joined the Board as an independent Non-Executive Director with effect from
1 May 2023.
– Graham Oldroyd joined the Board as an independent Non-Executive Director with effect from
12 October 2023.
– Ian McHoul will not seek reappointment as a Director at the 2024 AGM. Stephen Harris was appointed
to the Board as an independent Non-Executive Director and Chairman Designate with effect from
9 November 2023.
– Erika Schraner will not seek re-election at the 2024 AGM. The Board has started a search for a new
Chair of the Audit Committee.
– Each newly appointed Director has or is receiving an induction to the Group including site visits and
meetings with senior employees.
Executive team succession
Progress succession plans for the
Group CEO tied into delivery
of the Group’s strategic ambition.
Develop the executive team such
that there is a succession transition
to new leadership if and when the
CEO decides to step down.
– The Board received regular updates on Board and senior management succession along with talent
and succession plans throughout the Group.
– Marco Pezzana attended all Board meetings from February 2023 in his position as Group Chief
Operating Officer.
Strategy (1)
Develop proposals to maximise
value for Creative Solutions and
execute as appropriate. Develop
Group-wide strategy, with options
dependent on the outcome of the
Creative Solutions process.
– The Board’s Blue Sky strategy sessions covered extensive updates from across the Group including
Creative Solutions.
– Divisional strategy updates given in June 2023.
– The Board took the decision to exit all non-core markets, specifically medical and gaming and to
concentrate R&D investment and capital expenditure where the Company holds competitive advantage.
– Lightstream was sold in October 2023 to Xsolla for US $500,000 and Amimon is held for sale.
Strategy (2)
Develop and execute as appropriate,
proposals to reorganise the Group
so as to optimise both revenue
opportunities and cost efficiencies.
– Throughout the year, the Board reviewed plans to restructure the Group as appropriate in response to
the macroeconomic challenges faced.
Videndum plc
100
Annual Report and Accounts 2023
2023 Board objective Progress during 2023
Growth and Performance
Progress towards delivery on the
2022 Capital Markets Day
aspiration to become a £600.0m
revenue/£100.0m operating profit
business by 2025. Deliver an outturn
for 2023 making progress towards
the strategic ambition but delivering
performance in line with the 2023
budget and shareholder
expectations including managing
the Group’s net debt, against the
backdrop of a challenging global
economy in 2023.
– The Group’s plans were significantly held back due to the impact of macroeconomic headwinds and the
writers’ and actors’ strikes in 2023.
– In the second half of the year, the Board’s attention turned to the requirement for an equity raise of
£125.0 million to strengthen the Group’s Balance Sheet.
Customers, Markets, R&D,
Technology
Develop the Board’s understanding
of its customers, markets, major
R&D projects and technology
impacting each of its Divisions with
regular updates.
– During 2023, the Board received information and insight into existing and emerging technologies,
including artificial intelligence, which could be utilised by, or posed a threat to the Group either in its
operations or products.
– The Board received updates on R&D and key customer trends from each of the Divisions as part of
Divisional strategic reviews.
Governance
Continue to develop and evolve the
Group’s governance arrangements
and reporting including ESG
programme and risk management.
– The Board oversaw the Group’s governance, risk and ESG programme throughout the year reporting in
line with the UK Corporate Governance Code.
– The Board received training on key updates to the UK governance horizon, including the 2024 UK
Corporate Governance Code.
– Progress on ESG programme with published ESG and TCFD Reports in April 2023 and progress towards
carbon neutral and net zero targets including installation of solar panels at the Feltre site in Italy.
– The Audit Committee oversaw a deep dive into the control environment during 2023 with areas for
improvement identified and corrective measures implemented.
– The Audit Committee oversaw an audit tender in 2023, culminating in the recommendation to appoint
PricewaterhouseCoopers LLP as the Group’s auditor from the 2024 AGM.
Risk
Continue to assess the Group’s risk
appetite and tolerance tied to the
Group’s operations and strategic
growth plans.
– The Board considered and approved the Group’s principal risks in the 2022 Annual Report and Accounts
and as part of the 2023 half year results.
– The Group’s overall risk appetite was reviewed at the Board meeting in December 2023.
– Divisional strategic reviews in 2023 covered Divisional strategic and operational risks.
Strategic Report Corporate Governance Financial Statements
101
Audit, risk and internal control
Overview
The Audit Committee plays a pivotal role in the Group’s governance framework, providing sound independent oversight of the Group’s financial
reporting mechanisms, system of internal controls to safeguard shareholders’ investments and the Company’s assets and employees. Furthermore,
it manages the relationship with the external auditor to assess their effectiveness and to annually assess their independence and objectivity.
Audit Committee
The Audit Committee comprises solely independent Non-Executive Directors of the Company namely:
Erika Schraner (Chair). Erika Schraner will not seek re-election at the 2024 AGM. The Board has started the search for a new Chair of the Audit
Committee.
Richard Tyson, Caroline Thomson and Teté Soto. Anna Vikström Persson and Graham Oldroyd joined the Audit Committee upon their appointments
to the Board on 1 May 2023 and 12 October 2023, respectively.
Other members of the Board, Operations Executive and other senior management including the Head of Group Risk Assurance, the Group Head of Tax,
the Group Head of IT and Cyber Security, and the Company’s external auditor, Deloitte, attend meetings of the Audit Committee by invitation only.
Role of the Audit Committee
Financial reporting
– Ensures the financial integrity of the Group through the regular
review of its financial processes and performance.
– Reviews and approves the financial statements in the Annual
Report and Accounts, and that the Annual Report, taken as a
whole, is fair, balanced and understandable and complies with all
applicable UK legislation and regulation as necessary.
– Advises the Board on the Group’s viability and going concern
status.
– Reviews the appropriateness of accounting policies and practices.
– Ensures that the Group has appropriate risk management and
internal controls, through the oversight of the internal audit
function.
– Oversees the preparation of TCFD disclosures.
External audit
– Manages the relationship with the external auditor, reviewing the
scope and terms of its engagement and monitors its performance
through regular effectiveness reviews.
– Reviews and monitors the objectivity and independence of the
external auditor, including provision of non-audit services.
– Ensures the successful transition of external audit services
from Deloitte LLP to PricewaterhouseCoopers LLP.
Role of the Audit Committee
Financial risks
– Oversees and reviews controls relating to financial risks and risks
relating to finance IT systems including cyber security.
– Reviews the operational effectiveness of key controls in place to
manage financial risks.
Governance and best practice
– Keeps up to date with developments regarding control
environment through updates from the external auditor.
– Keeps in touch with shareholders sentiments through updates and
advice from the Company’s brokers.
– Ensures that an appropriate whistleblowing service is in place for
employees and third parties.
– Oversees third-party reputational risks and anti-bribery
procedures.
Videndum plc
102
Annual Report and Accounts 2023
Audit Committee Chair letter
Dear Shareholder
On behalf of the Committee, I am pleased to
present our report for the year ending
31 December 2023.
The Audit Committee plays a critical role in
ensuring the integrity and transparency of
the Group’s financial reporting, as well as
overseeing the effectiveness of the Group’s
internal control and risk management systems.
Our mandate is to provide independent
oversight of the Group’s financial reporting
and disclosure processes, as well as to monitor
compliance with laws, regulations and ethical
standards. This report is intended to provide
shareholders with an insight into how key
topics are considered during the year and how
the Committee discharged its responsibilities.
2023 was a turbulent year for the business as
it was faced with several challenges. The
Committee focused early in 2023 on the
financial reporting and disclosures associated
with the 2022 Annual Report to ensure that
they were fair, balanced and understandable.
The Committee, the Board, Operations
Executive and the Company’s external auditor,
Deloitte, concluded that the 2022 financial
statements were a true and fair reflection of
the state of the Group and had been properly
prepared in accordance with IFRS accounting
standards and in conformity with the
requirements of the Companies Act 2006.
The Committee also oversaw the overall
risk management of the Group in 2023. Risk
appetite and tolerance are directly discussed
at Board level. Apart from the ordinary
operational risks subject to the annual risk
management review process, the business was
exposed to increasing risks from geo-political
tensions, economic headwinds, US writers’ and
actors’ strikes and continued risk surrounding
cyber security. The Committee reviewed the
Operations Executive’s response to these risks
and is satisfied that appropriate mitigation is
being taken.
During 2023 after certain risks had been
identified and as requested by the Board, the
Committee performed a detailed evaluation
of the Group’s internal control and compliance
framework. Ernst & Young LLP was retained
to provide support, assistance and advice.
During the latter part of 2023, the Committee
oversaw the implementation of the
continuous improvements.
The combination of macroeconomic
headwinds and the US writers’ and actors’
strikes together contributed to management
and subsequently, the Board, determining at
the 2023 half year that a material uncertainty
existed that may cast significant doubt on
the Group’s ability to continue as a going
concern, such that it may be unable to
realise its assets and discharge its liabilities
in the normal course of business. The key
judgements surrounding the material
uncertainty were the length and depth of
the ongoing writers’ and actors’ strikes, as
well as the length of time over how long it
takes to recover once the strikes end, and the
recovery from the broader macroeconomic
challenges faced by the Group.
At the time of approving the financial
statements for the year ended 31 December
2023, given the sensitivities of forecasts on
key assumptions, which are linked to the
precise timeline and pace of recovery from the
strikes and the financial impact on the
Company of any slower than expected
recovery, and macroeconomic conditions, the
Board also determined that a material
uncertainty exists which may cast doubt on
the Group’s ability to continue as a going
concern such that it may be unable to realise
its assets and discharge its liabilities in the
normal course of business.
The Group announced on 8 August 2023 that
the release of its results for the six-month
period ended 30 June 2023 had been delayed
because more time was required to finalise its
half year financial reporting. On 13 March
2024 it also announced that the release of its
results for the year ended 31 December 2023
had been delayed because more time was
required to finalise its full year financial
reporting, including the treatment of certain
adjusting items relating to FY 2023.
The Audit Committee further supported
the Board with the £125.0 million
equity raise and publication of a
prospectus on 21 November 2023.
Review of material issues
The Audit Committee has a key role in
ensuring that the Group’s narrative reporting
provides a fair, balanced and understandable
assessment of the Group’s position and
prospects, and in establishing that the
financial statements offer a true and fair view
of the Group’s financial affairs. As part of this
process, we considered the significant
financial judgements made during the year,
along with other key financial reporting issues.
We also considered, on a regular basis,
the potential for fraud in revenue
recognition, scope for management
override of controls and compliance
with legislation and regulations.
Further details of the main activities and
information on the other significant issues
that the Committee considered during the
year can be found on pages 109 to 110.
Dr Erika Schraner
Audit Committee Chair
Strategic Report Corporate Governance Financial Statements
103
Audit Committee Chair letter continued
External auditor transition
As previously reported, Deloitte LLP, informed
the Audit Committee in September 2022 that
from 2024 it would no longer be able to act as
auditor for the Company. The Audit
Committee on behalf of the Board conducted
a formal audit tender process, which included
gathering information, and receiving
presentations and technical demonstrations
of audit techniques and processes from
various audit firms in May 2023. The audit
tender process is detailed on page 111. The
Committee and the Board unanimously
agreed that PricewaterhouseCoopers LLP will
become the successor external audit firm and
a resolution will be put to a shareholder vote
at the 2024 AGM for their appointment and to
allow the Board to set their remuneration
accordingly.
Engagement with key stakeholders
I welcome questions from shareholders on
the Committee’s activities. If shareholders
wish to discuss any aspect of this report,
they can do so via the Group Company
Secretary. I will be present at the Company’s
2024 AGM and will be happy to answer
any questions from our shareholders.
I have informed the Board of my intention not
to seek re-election at the forthcoming AGM. I
intend to pursue new opportunities as
Videndum, supported by a successful equity
raise, enters a new phase. The Board has
started the search for a new Chair of the
Audit Committee.
ESG, climate change and TCFD
The ESG Committee reviews Videndum’s
effectiveness and controls in matters relating
to ESG across the business. The Committee
reports to the Board on a regular basis and
the Audit Committee has oversight of
reporting on TCFD and financial risks tied to
climate change. You can read more on our
TCFD programme and progress made from
page 47 and in our standalone ESG and TCFD
reports for 2023.
2023 Annual Report
After reviewing the reports from
management and following discussions with
the external auditor, the Committee is
satisfied that:
– The external auditor remains independent
and objective in their work.
– The financial statements for the year ended
31 December 2023 have appropriately
addressed any critical accounting
judgements and key sources of estimation
uncertainty.
– The correct and appropriate accounting
policies for all Divisions have been adopted.
Whistleblowing
Any cases of whistleblowing in the Group are
notified to me, as well as the Group Chief
Executive and Group Company Secretary. All
cases are investigated thoroughly and
outcomes reported to me and remedial
actions taken as appropriate. The Board is
kept abreast of any whistleblowing reports
and outcomes of any investigations. There
were eight whistleblowing reports during
2023. All cases were thoroughly investigated,
internally with the support of independent
third party service providers as required.
Committee performance and
effectiveness
The performance of the Committee was
considered through the annual Board evaluation
process, which in 2023 was the subject of an
internal review. From the responses provided,
I am pleased to report that the Audit
Committee was found to be operating
effectively with rigorous challenge from the
Committee members. Significant time had
been given to debate on risk assurance
throughout the Group, including controls,
cyber security and mitigation actions.
Overall, the Committee finds that the Group’s
financial reporting, internal controls and risk
management systems, are effective and the
governance practices are appropriate. The
Audit Committee will continue to monitor
these areas closely to ensure that the Group
remains committed to transparency,
accountability, and sound financial
management. In 2024, the Committee will
continue to focus on evolving risk
management, internal controls, cyber security,
business continuity and TCFD reporting. It will
seek in particular, to address the FRC’s new
UK Corporate Governance Code issued in
January 2024 and ensure that the Board has
greater visibility into the risk management
process and material controls. It will also
oversee the external auditor transition from
Deloitte to PricewaterhouseCoopers.
The Committee’s objectives are set annually,
the progress of which is reviewed at every
Committee meeting. The Committees’ 2023
objectives and performance against them are
set out on page 110. The Committee has set
itself objectives for 2024 and will report on
them in the 2024 Annual Report.
I would like to thank the Committee members,
the rest of the Board and our external service
providers for their support during 2023.
Dr Erika Schraner
Audit Committee Chair
22 April 2024
Videndum plc
104
Annual Report and Accounts 2023
Executive, Head of Group Risk Assurance and
members of the senior audit team at Deloitte
LLP as well as PricewaterhouseCoopers
LLP as the new incoming external
auditor. These meetings inform the work
of the Committee by identifying key
areas of focus and emerging issues.
The Committee regularly invites the external
audit engagement partner, Alistair Pritchard,
the Chairman of the Board, the Group Chief
Executive, the Group Chief Financial Officer,
the Group Chief Operating Officer, the Group
Financial Controller, and the Head of Group
Risk Assurance to its meetings.
Meetings of the Committee are held in advance
of the main Board meetings to allow the
Committee Chair to provide a report on the key
matters discussed to the Board, and for the
Board to consider any recommendations made.
All of this, along with ongoing challenge debate
and engagement, allows the Committee to
discharge its responsibilities effectively.
Audit Committee Report
How the Committee operates
The Audit Committee is composed solely of
independent Non-Executive Directors who
collectively have a wide range of skills and
experience including finance and accounting,
leadership, and technology. Erika Schraner
satisfies the requirement of having appropriate
and relevant financial and governance
experience, and leadership skills, as well as a
commitment to ongoing education and
development to effectively carry out her role.
Additionally, she has provided guidance in the
overall enhancement of the Group’s cyber
security. Page 77 sets out her full biographical
details.
The schedule of Audit Committee meetings is
built around the key dates in the financial
reporting and audit cycle. During 2023, the
Committee met on four scheduled occasions,
in February, June, August and December.
There were three additional Audit Committee
meetings also held during the year to discuss
the external audit tender, whistleblowing
investigations and for the review and
recommendation to the Board for the
approval of the half-year financial
statements, following a delay from the
scheduled August 2023 meeting.
Forward planning of agenda items guides the
business to be considered at each meeting and
is regularly reviewed and developed. This
assists and facilitates the work of the
Committee, enabling it to give thorough
consideration to matters of particular
importance to the Company.
The Committee receives information in
advance of its meetings from management
and from the external auditor and other
service providers including the main audit
report. The Committee meets privately
with the external auditor at least annually
and receives feedback from management
when considering areas for review.
Erika Schraner maintains close contact with
the Group Chief Financial Officer, Group Chief
Scheduled Audit Committee meetings held in 2023
20 February 2023 21 June 2023 7 August 2023 11 December 2023
Financial and narrative reporting
– Received the accounting
presentation and judgemental
issues report, and the report on
going concern and viability for
the year ended 31 December
2022.
– Recommended the approval of
the 2022 Annual Report and
Accounts, agreeing when taken
as a whole is fair, balanced and
understandable.
– Reviewed the letter of
representation issued to the
external auditor for the full year
results prior to being agreed by
the Board.
– Received an accounting update
and report on going concern,
discontinued operations and
factoring.
– Received the accounting
presentation and judgemental
issues report, and the report
on going concern for the half
year ended 30 June 2023.
– Reviewed the letter of
representation issued to the
external auditor for the half
year results prior to being
agreed by the Board.
– Tax and Treasury updates.
External audit
– Received a full year report from
the external auditor on the 2022
financial statements and
accounting disclosures.
– Reviewed effectiveness of
external auditor
– Discussed the results of the
audit tender process and made
a recommendation to the
Board to appoint
PricewaterhouseCoopers LLP
as the new auditor.
– Presented the 2023 half year
audit plan and initial planning
report on the 2023 full year
audit.
– Presented update on TCFD to
be reported on in the 2023
Annual Report and Accounts.
– Considered an update on
potential audit fees for 2023.
– Received half year report from
the external auditor on the
2023 half year financial
statements and accounting
disclosures.
– Discussed and approved the
audit fees for 2023.
– Received the final planning
report on the 2023 external
audit.
– Considered the 2023 year-end
process to date by the external
auditor.
– Discussed the external audit
transition process for the first
half of 2024.
Strategic Report Corporate Governance Financial Statements
105
20 February 2023 21 June 2023 7 August 2023 11 December 2023
Governance
– Agreed the disclosures in the
2022 Audit Committee report.
– Update on governance and
proposed changes to the UK
Corporate Governance Code.
– Group whistleblowing update. – Update on whistleblowing,
third-party reputational risk
management and anti-bribery
and corruption programme.
– TCFD programme update
including preparation of TCFD
disclosures.
– Approved Committee
objectives for 2024.
– Updates on governance by
external auditor.
Risk management and internal control
– Conducted a bi-annual review of
the principal and operational risks
identified across the Group.
– Update on cyber security and
insurance cover.
– Received the risk assurance
report of internal audit activities
from 2022 and plans for 2023 and
status of key controls.
– Approved the 2023 internal audit
programme.
– Risk assurance update against
the 2023 risk assurance
programme.
– Update on cyber security.
– Bi-annual review of the principal
risks identified across the Group
and progress against agreed
2023 risk assurance programme.
– Update on cyber security.
– Risk assurance update against
2023 risk assurance programme
and agreed the risk assurance
and internal audit programme
for 2024.
– Received full year report of
internal audit activity in 2023,
internal audit plans for 2024 and
status of key controls.
– Update on cyber security and
reviewed business continuity
plans for 2024.
Risk management and control
The Board delegates responsibility to the Audit
Committee for oversight of the Group’s system
of internal controls to safeguard shareholders’
investments and Company assets. The Audit
Committee formally reviews the effectiveness
of the Group’s internal controls twice a year.
There are systems and procedures in place for
internal controls that are designed to provide
reasonable control over the activities of the
Group and to enable the Board and Audit
Committee to fulfil their legal responsibility
for the keeping of proper accounting records,
safeguarding the assets of the Group and
detecting fraud and other irregularities.
This approach provides reasonable assurance
against material misstatement or loss,
although it is recognised that as with any
successful company, business and commercial
risks must be taken and enterprise, initiative
and the motivation of employees must not be
unduly stifled. It is not our intention to avoid
all commercial risks and judgements in the
course of the management of the business.
The Board has completed a robust assessment
of the Company’s emerging and principal risks
and has adopted a risk-based approach to
establishing the system of internal controls.
The application and process followed by the
Board in reviewing the effectiveness of the
system of internal controls during the year
were as follows:
– Each Division is charged with the ongoing
responsibility for identifying the existing
and emerging risks it faces and for putting
in place procedures to monitor and manage
those risks. This includes climate change
risks identified at a site level.
– The responsibilities of senior management
in each Division to manage existing and
emerging risks within their businesses are
periodically reinforced by the Operations
Executive.
– Major strategic, operational, financial,
regulatory, compliance and reputational
risks are formally assessed during the
annual long-term business planning process
around mid-year. These plans and the
attendant risks to the Group are reviewed
and considered by the Board.
– Large financial capital projects, property
leases, product development projects,
significant restructuring and all acquisitions
and disposals require advance Board
approval.
– The process by which the Board reviews the
effectiveness of internal controls has been
agreed by the Board and is documented.
This involves regular reviews by the Board
of the major business risks of the Group,
including emerging risks, together with the
controls in place to mitigate those risks. In
addition, each Division conducts a
self-assessment of its internal controls.
Every year, the results of these assessments
are reviewed by the Head of Group Risk
Assurance who provides a report on the
status of internal controls and internal
controls self-assessment to the Group Chief
Financial Officer and the Chair of the Audit
Committee. The Board is made aware of
any significant matters arising from the
self-assessments. The risk and control
identification and certification process is
monitored and periodically reviewed by
Group financial management.
– A register of risks facing the Group, as well
as each individual business, and an
evaluation of the impact and likelihood of
those risks is maintained and updated
regularly by the Head of Group Risk
Assurance. The Group’s principal risks and
uncertainties and mitigation for them are
set out on pages 36 to 41 of this Annual
Report and this includes consideration of
risks relating to climate change.
The Board has established a control
framework within which the Group operates.
This contains the following key elements:
– Strategic planning process, including
horizon scanning, identifying key actions,
initiatives and risks, including emerging
risks and opportunities, to deliver the
Group’s long-term strategy. This involves a
comprehensive review of macroeconomic ,
social and political trends. The Group has
identified artificial intelligence as an
emerging risk and opportunity, which may
also affect demand for specific products
within the Group. This risk is being
monitored proactively. The threat of
geopolitical instability was also identified
as an emerging risk.
Audit Committee Report continued
Videndum plc
106
Annual Report and Accounts 2023
– Organisational structure with clearly defined lines of responsibility,
delegation of authority and reporting requirements.
– Defined expenditure authorisation levels.
– Operational review process covering all aspects of each business
conducted by the Operations Executive on a regular basis throughout
the year.
– Comprehensive system of financial reporting including weekly flash
reports, monthly reporting, quarterly forecasting and an annual
budget process. The Board approves the Group budget, forecasts and
strategic plans. Monthly actual results are reported against prior
year, budget and latest forecasts, and are circulated to the Board.
These forecasts are revised where necessary but formally once every
quarter. Significant changes and adverse variances are reviewed by
the Group Chief Executive and Operations Executive and remedial
action is taken where appropriate. Group tax and treasury functions
are coordinated centrally. There is regular cash and treasury
reporting to Group financial management and monthly reporting to
the Board on the Group’s tax and treasury position.
This system has been in place for the year under review and to the date
of approval of the Annual Report.
The Audit Committee is satisfied that an adequate framework is in place
to manage risks and internal controls, however it was agreed during 2023
that additional resources would need to be deployed to this area, in order
to meet increased regulatory requirements and increased risks, and other
ad hoc requirements such as investigatory work. As a result, the Group
increased Risk Assurance headcount, and increased budget assigned to
internal audits conducted with the support of co-source internal audit
providers. The Group also recognised that additional work is needed in
order to reinforce a culture of compliance, therefore additional budget
was assigned to training on ethics and recommunicating the Group’s
Code of Conduct. Some further improvements will be made in 2024 as
the Group responds to the 2024 UK Corporate Governance Code, and will
further strengthen its risk management processes.
The Board carries out a periodic assessment of the Group’s risk appetite,
which includes the identification of the risk thresholds against each
organisational objective. Key elements of the risk appetite (for example, our
commitment to innovation, compliance and sustainability practices) are
summarised in the overview section of the Principal risks and uncertainties.
Internal controls and risk, and risk management
The Committee’s role is to review the effectiveness of the internal
control, compliance and risk management systems which it carries out in
support of the Board’s formal review of significant risks and material
controls. The Committee values the internal audit function and has
enhanced this proposition in 2024 by increasing headcount and making
use of co-source functions to further support and drive enhancements
across controls. The internal audit plan is based on a review of the Group’s
key risks which are considered high risk or have not been subject to a
recent audit. During the internal and external audits, a number of control
findings were identified.
Management have committed to fully addressing control findings raised
by our auditors at the prior period end through their audit response plan.
Key controls have been implemented in 2023, most noticeably relating to
the strengthening of revenue related controls during the latter stages of
H2 2023. Furthermore, in relation to revenue, an external independent
firm was appointed in 2023 who assessed the design of the newly
initiated controls, with no issues noted. The Committee was consulted on
the initial plan for H2 2023 implementation and received regular updates
from management on implementation.
Following internal and external year-end audits, further findings were
identified, and areas of continuous improvement noted. Management is
developing a robust plan to address the findings and will be regularly
communicating updates to the Audit Committee. As most of these areas
occur bi-annually, management is confident that a strong plan will be
implemented in 2024 to address these observations. The key findings relate
to the judgemental areas, and specifically relate to inventory provisioning,
review controls over going concern, acquired intangibles impairments, and
adjusting items. It is recognised that further improvements are required to
address these control findings and the Committee will continue to oversee
actions taken to remediate the remaining control observations. Set out
below is a summary of the key features of the Group’s internal controls and
risk management system.
Internal audit
Internal audit is independent of management and has a reporting line to
the Chair of the Audit Committee, providing independent and objective
assurance and advice on the adequacy and effectiveness of governance
and risk management. An internal audit plan for 2023 was prepared and
agreed with the Audit Committee at its February 2023 meeting and
progress against the internal audit plan was tracked throughout the year.
The Head of Group Risk Assurance conducted several internal audits
and additional assurance reviews during 2023, the details of which were
presented to the Audit Committee. The internal audits included reviews
of the appropriateness and effectiveness of controls within the Group
including, but not limited to purchasing and payments, sales and cash
collection, inventory management, accounting and reporting, human
resources, and IT systems and processes.
The Audit Committee reviews the output of the internal audit function
to assess the quality of deliverables and breadth of assurance provided.
In early 2024, resource in the internal audit function was expanded by one
headcount and through the use of an internal audit co-source provision.
External audit
Deloitte were appointed as the Company’s external auditor at the
Company’s AGM in May 2018, following a formal tender process. In
September 2022, Deloitte LLP informed the Company that it would not
continue to audit the Company after FY23. The Audit Committee
considered changing the external audit for the FY23 audit and several
external audit firms were contacted. They informed the Company that
while they would be interested in the FY24 audit, there would not be
sufficient time and resources to complete risk assessment procedures,
and the orderly transition for FY23.
With that, a resolution to reappoint Deloitte for a further 12 months was
submitted at the Company’s AGM on 11 May 2023. Alistair Pritchard was
appointed as the engagement audit partner with effect from the 2023
AGM, taking over as lead engagement partner from David Halstead.
Deloitte’s final audit will be for the financial year ended 31 December
2023. The Board recommends to shareholders the appointment of
PricewaterhouseCoopers LLP as external auditor with effect from the
Company’s 2024 AGM.
Communications with the Financial Reporting Council (“FRC”)
During 2023, the FRC wrote to the Company in relation to the disclosure
around non-current tax assets in relation to EU State Aid investigation
and Directors’ remuneration around the estimated value of the 2020
LTIP award in the Company’s 2022 Annual Report and Accounts.
Following the Company’s response to this matter, the FRC responded to
our explanations and closed their enquiries. Enhanced disclosure with
regard to the EU State Aid non-current tax asset disclosure has been
made to the 2023 Annual Report and Accounts. The 2023 Remuneration
report also clarifies the exact value of the 2020 LTIP award that vested
on 21 September 2023 to Executive Directors. In their letter, the FRC
also highlighted for consideration our presentation of certain other
items in the Financial Statements and, following this, we have made a
small number of minor disclosure improvements in the 2023 Financial
Statements. The Audit Committee reviewed and approved the changes
proposed by management. The review carried out by the FRC provides
Strategic Report Corporate Governance Financial Statements
107
no assurance that the Annual Report and Accounts were correct in all
material respects; the FRC’s role is not to verify the information
provided but to consider compliance with reporting requirements.
Audit independence and fees
The Audit Committee reviews reports on the audit firm’s own internal
quality control procedures together with the policies and processes for
maintaining independence and monitoring compliance with relevant
requirements. Deloitte has confirmed its independence as external
auditor of the Company in a letter addressed to the Directors. 2023 saw
a substantial increase in fees paid to the external auditor. The primary
drivers for the incremental audit work resulted from enhanced work
around going concern and the associated disclosure, extended work on
adjusted items, enhanced procedures around revenue following its
elevation to a key audit matter, and a lower materiality and threshold
being applied by Deloitte to perform their testing. Additionally,
non-audit fees were paid to Deloitte for their role as the Reporting
Accountant in 2023.
The fees payable for 2023 and previous years are as follows:
2023 2022 2021 2020 2019 2018
Fees payable to
Deloitte for the audit
of the Company’s
financial statements £1.4m £0.9m £0.5m £0.2m £0.1m £0.1m
Fees payable to
Deloitte for audit of
subsidiaries £1.0m £0.8m £0.8m £0.5m £0.5m £0.4m
Fees related to
corporate finance
transactions £0.9m £nil £nil £nil £nil £0.2m
Fees related to
non-audit services £0.5m £0.1m £0.1m £0.1m £0.1m £0.3m
Total fees payable
to Deloitte £3.8m £1.8m £1.4m £0.8m £0.7m £1.0m
Non-audit services
As required by the Code, the Audit Committee has a formal policy
governing the engagement of our external auditor, Deloitte, to supply
non-audit services and to assess the threats of self-review, self-interest,
advocacy, familiarity and management. Written permission must be
obtained from the Chair of the Audit Committee and Group Chief
Financial Officer before the external auditor is engaged for any
non-audit work. There is a cap on permissible non-audit services of a
maximum of 70% of the average of the fees paid in the last three
consecutive financial years for the external audit services. The policy
ensures that any non-audit work provided by Deloitte does not impair
their independence or objectivity and is divided into two parts:
Excluded services Appropriate services
Include:
– Internal accounting or other
financial services.
– Design, development or
implementation of financial
information or internal control
systems.
– Internal audit services or their
outsourcing.
– Forensic accounting services.
– Executive or management
roles and functions.
– IT consultancy.
– Litigation support services and
other financial services such as
broker, financial advisor or
investment banking services.
With approval from the Chair of
the Audit Committee and Group
Chief Financial Officer, these
include:
– Accounting advice in relation to
acquisitions and divestments.
– Corporate governance advice.
– Defined audit-related work and
regulatory reporting.
– Reporting accountant services.
– Compliance services.
– Valuation and actuarial services.
– Transaction work (M&A and
divestments).
– Fairness opinions and
contribution reports.
– Work closely related to the audit.
During 2023, the non-audit services policy was followed with no
exceptions. During 2023, £0.5 million (2022: £0.1 million) was paid to
Deloitte in respect of non-audit work compared to an audit fee of £2.4
million (2022: £1.7 million). This non-audit work mainly comprised the
review of the half yearly financial statements and additional assurance-
related services.
The approval of Deloitte LLP to act as the Reporting Accountant in
relation to Videndum’s £125.0 million equity raise in 2023 was approved
by the Audit Committee and the Financial Reporting Council. The
associated fees totalled £0.9m.
External auditor effectiveness
The effectiveness of the external auditor and the audit process is
assessed by the Audit Committee, meeting the audit partner and senior
audit managers regularly through the year. Annually, the Committee
assesses the qualifications, expertise, resources and independence of the
Group’s external auditor, as well as the effectiveness of the audit process
through discussion with the Group Chief Financial Officer. The Chairman
of the Committee also meets with the Deloitte engagement partner.
Every couple of years, a detailed survey is performed of all employees
who have interacted with the external auditors, the main purpose being
to identify opportunities to improve the audit process. We review the
output of the audit process, as presented to the Audit Committee, to
ensure that there is a clear logical planning and scoping process. This
allows the Audit Committee to ascertain that all areas of audit risk are
being addressed.
Management was instrumental in delivering the external audit and the
key attributes have been drawn out below:
– The management team involved in the audit process is well organised,
prepares good quality papers and is committed to the value of
independent audit and the development of respected professional
relationships with the auditors.
– The audit timetable set by management allows sufficient time for
robust quality control and takes into account the auditor’s input
about the time needed to conduct a quality audit.
– Management is proactive in seeking early input from the auditor, for
instance on the application of new accounting standards or
accounting for complex, unusual or sensitive transactions. The
auditor is afforded sufficient time to consult with specialists and
experts and conclude on these areas, raising relevant issues for the
audit committee to pursue further with management where
appropriate.
– Management takes seriously the control observations and
deficiencies raised by the external auditor, together with any
Audit Committee Report continued
Videndum plc
108
Annual Report and Accounts 2023
challenges regarding the control environment or individual controls raised by internal audit or by the audit committee, and remediates deficiencies
or weaknesses in a timely fashion.
– Encouraged by the audit committee, management considers all proposed audit adjustments and prefers to book all but trivial audit adjustments.
Throughout the external audit, the Audit Committee has provided rigorous challenge around certain judgements made, as an example around the
going concern material uncertainty conclusion, the budget supporting going concern and the associated disclosures. The Audit Committee assessed
the improved disclosures which resulted from both the FRC review of the 2022 annual report and through the external auditor’s review and satisfied
themselves with the enhanced disclosure.
However, the culmination of the challenging environment required management and the external auditor further time to complete the half-year and
year-end 2023 audits and delayed the announcement of both results.
The Audit Committee is satisfied that the external audit process for 2023 was effective in meeting Governance requirements and fully addressing
audit risk areas.
2023 Annual Report and Accounts – fair, balanced and understandable
The Committee provides assurance to the Board that the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the
information necessary for shareholders to assess the Group’s position, financial performance, business model and strategy. The Committee
concentrated its review of the full year results on the financial statements only and the process which underpinned the drafting of the Going
Concern and Viability statement. The Board understands the Audit Committee’s review process and reviews the Annual Report to ensure that it is
fair, balanced and understandable. The contents of the financial statements and the Going Concern and Viability statements were reviewed by the
Committee at the 19 April 2024 meeting. The Board as a whole is responsible for preparing the Annual Report and Accounts. The Committee
reported to the Board that, based on its review of the evidence, it was satisfied that the Annual Report and Accounts, taken as a whole, is fair,
balanced and understandable, and provides the information necessary for shareholders to assess the Group’s performance, business model and
strategy.
Significant accounting issues
Significant accounting issues and judgements are identified by the finance team, or through the external audit process and are reviewed by the
Audit Committee. The significant issues considered by the Committee in respect of the year ended 31 December 2023 are set out below:
Significant
accounting issue
How it was addressed
Going concern The Audit Committee considered whether it was appropriate to prepare the financial statements on a going concern basis.
Management prepared a number of severe but plausible downside scenarios. Management presented and discussed the
forecasts with the Audit Committee and noted that there is a possibility under certain scenarios whereby the Group’s
covenants are breached. The material uncertainty relates to the timing of the recovery from the challenges faced in 2023 and it
is due to this uncertainty that the Audit Committee deemed that a material uncertainty exists on going concern and that
adequate disclosure is presented within the financial statements. The Audit Committee recommended to the Board that a
material uncertainty exists. Refer to section 1 on page 161 for further information. The forecast was performed through to
2026, which is the time period over which the viability assessment is reviewed. The Board concluded that is was appropriate to
prepare the financial statements on a going concern basis.
Working capital
valuation
The Audit Committee critically reviewed the carrying value of the Group’s working capital. This took into account
management’s assessment of the appropriate level of provisioning including collectability of receivables and inventory
obsolescence throughout the year and with special emphasis on the 2023 year-end process. With regard to inventory, the gross
levels held by inventory type, the provisions recorded against obsolescence, and inventory days analysis were also presented
to the Committee. In addition, the external auditor presented their findings with regard to the key audit testing over working
capital covering all the major locations. The Audit Committee concurred with management’s assessment of the Group’s
working capital position. Refer to section 3.3 on page 187 for further disclosure and quantification around working capital and
the exiting of the motion controls inventory.
Provisions and
liabilities
The Audit Committee considered the judgemental issues relating to the level of provisions and other liabilities. The more
significant items include restructuring, tax-related, and grant repayment provisions, and taxation. For each area management
presented to the Audit Committee the key underlying assumptions and key judgements and, where relevant, the range of
possible outcomes. The external auditor also presented on each of these areas and their assessment of these judgements.
The Audit Committee has used this information to review the position adopted in terms of the amounts charged and recorded
as provisions, acknowledging the level of subjectivity that needs to be applied. The Audit Committee has agreed with the
conclusions reached by management and the associated disclosure in the financial statements. The provision has decreased
from £7.9 million in 2022 to £5.5 million at the end of 2023. Refer to section 3.5 on page 192 for further detail.
Adjusting items
and
discontinued
operations
The Audit Committee considered the validity of adjusting items and discontinued operations that were reported in 2023.
Adjusting items from continuing operations included within profit before tax were £20.1 million which relate to the amortisation
of intangibles assets that are acquired in a business combination (£4.0 million), impairment of assets (£7.3 million), acquisition
related charges (£1.3 million), integration, restructuring costs and other costs (£4.9 million), and amortisation of loan fees
on borrowings for acquisitions and other interest (£2.6 million). The Committee robustly challenged management around
certain adjusting items, specifically on certain restructuring projects. Refer to section 2.2 on page 171 for further detail.
The external auditor presented their findings with regard to key audit testing over adjusting items and the treatment of
discontinued operations. The Committee agreed with management’s accounting and disclosures.
Strategic Report Corporate Governance Financial Statements
109
Significant
accounting issue
How it was addressed
Capitalisation
of development
costs
The Committee considered whether the development costs capitalised during the year complied with IAS 38. Management
presented a list of the key projects that had been capitalised, along with an assessment of future profitability to support the
value on the Balance Sheet. The external auditor also presented their findings. The Committee agreed with management’s
accounting treatment and related disclosures.
Adjusting items from discontinuing operations included within profit before tax were £54.5 million which relate to amortisation
of intangible assets (£2.2 million), acquisition related charges (£1.4 million), goodwill impairment (£26.8 million), acquired
intangibles impairment (£14.0 million), development costs impairment (£9.1 million), fixed assets impairment (£0.3 million),
integration costs (£0.4 million) and amortisation of loan fees on borrowings for (£0.3 million).
The treatment of discontinued operations in relation to Lightstream, Amimon, and Syrp were considered, and the Committee
agreed with the proposed reporting treatment.
Acquired
intangibles
The Committee critically reviewed management’s assessment of acquired intangible assets tested for impairment.
The external auditor also presented their assessment. The Committee concurred with management’s assessment.
Deferred tax The Committee critically reviewed management’s recognition of deferred tax assets. During 2023, the Group’s deferred
tax asset increased by £2.2 million to £55.4 million. Management has also considered the FRC Thematic review published
in September 2022 in relation to IAS 12 and has increased disclosures surrounding the deferred tax asset recognition and
sensitivities, including in relation to the material uncertainty around going concern.
The external auditor also presented their assessment. The Committee concurred with management’s assessment.
Audit Committee objectives
The following table sets out the agreed Audit Committee objectives for 2023 and an assessment of progress against each.
2023 Audit Committee objective Progress during 2023
External auditor
Carry out an external audit tender process in early 2023
and ensure an orderly handover from Deloitte LLP.
An audit tender process was carried out in May 2023 with the Committee
recommending the appointment of PricewaterhouseCoopers LLP as external auditor
with effect from the 2024 AGM, subject to shareholder approval. Five audit firms
were invited to participate in the tender including two challenger firms. Three
proceeded to the final stage, including one challenger firm. The selection committee
included the Audit Committee members and management representatives.
Input from the Divisions was also considered.
Cyber security
Track progress on the Group’s cyber security initiatives
at each meeting in the year. Define a plan and provide
updates on NIST assessment and propose adjustments
to the approach to cyber security as appropriate.
The Committee received regular updates on cyber security initiatives during 2023 and
was tasked with implementing various solutions in all Divisions to streamline cyber
security. During 2023, cyber awareness training was rolled out to all employees.
NIST assessments continued throughout the year and will continue into 2024.
Risk management and Business continuity
Continue to review the key risks affecting the Group
including the macro-economic background, inflation and
regulations in the UK and internationally. Assess the
adequacy and efficacy of current risk appetite and
update this as necessary.
Risk management and business continuity updates were received regularly through
the year from the Head of Group Risk Assurance. The Committee recommended to
increase the staff in the Risk Assurance function and to retain a third party internal
audit firm to add capacity to the team ahead of the 2024 UK Corporate Governance
Code changes. Both recommendations were taken on board by management and are
expected to be completed in early 2024.
ESG / TCFD
Obtain regular updates on ESG and TCFD initiatives in
the Group and ensure the climate change framework is
appropriate for the Group.
Regular updates were provided to the Committee throughout 2023
by the Head of Group Risk Assurance and in preparation for the year end
reporting for 2023.
Governance
Keep abreast of the main governance updates in the UK.
The Committee received updates on UK corporate governance from Deloitte LLP,
particularly on the 2024 UK Corporate Governance Code.
Management of personnel
Manage effectively changes in the Committee’s
composition, within the finance and risk assurance teams
and with the external auditor.
There were several Board and Committee changes in the year and the Committee
recommended the approval of PricewaterhouseCoopers LLP as external auditor of the
Company, with effect from the 2024 AGM, subject to shareholder approval.
Audit Committee Report continued
Videndum plc
110
Annual Report and Accounts 2023
Audit tender process – 2023 for financial year-end 2024
onwards
In 2023, the Audit Committee led a thorough competitive tender
process, supported by the Head of Group Risk Assurance, Group
Company Secretary and other members of senior management,
taking into account the FRC’s guidelines on audit tenders during
the process.
A timetable for the tender process was produced with the purpose
to secure a successor firm to Deloitte for the 2024 year-end audit
onwards. The timetable allowed sufficient time to enable any new
auditor firm to fully prepare to assume responsibility for a complex
and international audit across the Group and to plan for an orderly
transition of non-audit services if there were to be a change of
auditor.
The Audit Committee, after an initial evaluation, decided on three
firms, giving careful consideration to all potential firms that were
invited to tender. The Chair of the Audit Committee held meetings
with audit partners from candidate firms, supported by the Group
Chief Financial Officer, Group Financial Controller and Head of Group
Risk Assurance, to assess interest and capability to tender for the
audit with a focus on geographical coverage, capability and resources
to conduct a complex and international audit.
Following review, the Committee gave approval for a request for
proposal to be issued to the shortlisted candidate firms that were
eligible to tender. These were issued to candidate firms in March
2023, including full details of the selection criteria to be applied by
the Committee.
To ensure that every candidate firm received sufficient information
about the Group to adequately inform their tender proposal, each firm
attended a series of meetings with members of the Committee and
senior management across the Group to discuss key topics. The firms
were also provided with equal access to a broad range of information
about the Group and the scope of its audit requirements through
a data room. Management invited the firms to present to them
across a number of areas, such as a use of information technology
within the external audit. The firms were invited, and welcomes the
opportunity, to visit key locations in the UK, Italy and USA.
The Committee reviewed the tender proposals from each of the
candidate firms and met in May 2023 to receive presentations
from each firm, led by the proposed Audit Partner of each firm.
All members of the Audit Committee attended the presentations as
well as key members of senior management involved in the process.
Each firm was rated by the Audit Committee on their audit approach,
audit service, fees, capability and competence, team set up,
behaviour and deliverables and were rated accordingly.
Audit Committee recommendation
Following a thorough review of each of the candidate firms’ proposals
and presentations, review of the FRC’s review of the firms, results
the partners received from internal reviews and partner availability,
the Audit Committee was satisfied that each firm had fully
participated in the tender process, had demonstrated the capability,
geographical reach and capacity to act as the external auditor and,
where applicable, would be able to demonstrate independence within
required timeframes if selected. Senior management held debrief
sessions with each tendering firm to provide feedback to independent
partners on the overall process.
At the June 2023 Audit Committee, the Audit Committee
subsequently and unanimously recommended PricewaterhouseCoopers
LLP as the preferred audit firm, giving supporting justification for the
recommendation. The Audit Committee’s recommendation was
accepted by the Board and a resolution proposing the appointment
of PricewaterhouseCoopers LLP as the external auditor for financial
year-ending  December , will be put forward to shareholders
for approval at the Company’s  AGM.
Strategic Report Corporate Governance Financial Statements
111
Videndum plc
112
Annual Report and Accounts 2023
Dear Shareholder
Videndum’s Directors’ Remuneration report
for 2023 comprises three separate sections:
– Section 1 – my annual statement setting
out the work of the Remuneration
Committee in 2023 and priorities for 2024.
– Section 2 – the Directors’ Remuneration
Policy (“the Policy”) that sets out the
Company’s policy on Directors’
remuneration that was approved by
shareholders at the Company’s AGM in May
2023.
– Section 3 – the 2023 Annual Report on
Remuneration sets out the remuneration
paid to Directors in 2023 as well as details of
how the Committee intends to implement
our Policy for 2024. Shareholders will have
the opportunity for an advisory vote on the
Directors’ Remuneration report at the 2024
AGM.
2023 proved to be a very challenging year for
Videndum with several macroeconomic
headwinds significantly impacting the
financial performance of the business. These
included weakened consumer confidence,
higher interest rates and retailers and
distributors destocking across our three
Divisions. The effects of this were
compounded by the US writers’ and actors’
strikes that started in May 2023 and ran
through to the end of the year and severely
impacted the Company’s performance. These
events and the Group’s financial position
resulted in the Directors seeking approval
from shareholders to a £125.0 million equity
raise that completed on 8 December 2023.
The Directors believe that this equity raise will
allow Videndum to focus its resources on
strategic execution and long-term value
creation for shareholders from our market-
leading, premium brands focused on the
content creation market.
As a consequence, remuneration for the
Executive Directors was impacted in several
ways. Appropriate performance conditions
could not be set as a result of the business
uncertainty. This and the material decline in
the Company’s share price meant that no LTIP
awards were made in 2023 to Executive
Directors. The weakened financial
performance of the Group has also meant that
no bonus has been earned in respect of 2023
by the Executive Directors. The structure and
outcomes for executive remuneration in 2023
under our Remuneration Policy are therefore
aligned to the experience of our shareholders.
It is also noteworthy that both Executive
Directors significantly participated in the
equity raise demonstrating their confidence
and commitment to the Company. Indeed, all
the Directors and some senior managers
together contributed £1.2 million of proceeds.
The Group Chief Executive and his senior
leadership team worked tirelessly during 2023
against this challenging backdrop and it is
clear to the Board and Remuneration
Committee that management was and is fully
committed to ensuring that Videndum remains
well placed to recover from these events.
During 2023 we renewed our Directors’
Remuneration Policy at the 2023 AGM with
over 99% of shareholders voting in favour of
the new policy. The 2023 AGM also approved
the 2022 Remuneration report with over 97%
support and renewed the Long Term Incentive
Plan rules with over 99% support. The
Remuneration Committee is grateful for this
level of support which gives assurance that
the Committee has structured the Company’s
remuneration arrangements in the right way
to deliver remuneration in line with the
Company’s performance and aligned to
shareholders interests.
Remuneration outcomes for 2023
performance
At the start of 2023, the Committee awarded
a salary increase to Stephen Bird of 5% with
effect from 1 April 2023 to reflect the same
level of increase given to the wider employee
population and to ensure that his remuneration
remained in line with CEOs of similar sized
companies. Andrea Rigamonti’s salary was not
increased as he had only just been appointed
to the role of Group Chief Financial Officer
in December 2022.
Having set financial targets for the 2023
Annual Bonus Plan at its February 2023
meeting it became evident that due to
macroeconomic challenges and the impact
of the writers’ and actors’ strikes the
Company would not achieve threshold profit
targets for the 2023 Annual Bonus Plan.
The Committee acknowledges the
extraordinary efforts of the Executive
Directors and senior management
throughout 2023 to protect the business
and that performance in respect of the Cash
Conversion* metric and Personal Objectives
would have merited payment of a partial
bonus. However, given the experience of
shareholders and also taking into account
that many of our employees were on short-
time working in 2023 the Committee has
determined to exercise its discretion and
that no bonus should be payable to the
Executive Directors in respect of 2023.
The 2023 Annual Bonus Plan was based 50%
on Group adjusted profit before tax* (“PBT”),
25% on Group cash conversion* and 25% on
personal objectives, and full details of the
targets and outcomes are set out on page 127
to 129.
Caroline Thomson
Remuneration Committee Chair
Remuneration report
Annual statement
Strategic Report Corporate Governance Financial Statements
113
LTIP awards made in September 2020 to
Executive Directors achieved 46.9% of their
performance conditions that were measured
to 28 February 2023 with an absolute share
price of £11.63 achieved compared to a share
price at the time of the award of £7.53 and
vested at that level on 21 September 2023.
The Committee when considering this vesting
level was mindful of the deterioration in the
Company’s share price between the end of the
performance period and the vesting date. It
noted that the macroeconomic events
including the US writers’ and actors’ strikes,
were events beyond management’s control.
The Committee considered the need to retain
and incentivise management and that the
vesting profile of LTIP awards over the last
five years showed zero vesting for three of
those years. The level of total realised pay was
also a consideration. This demonstrated that
there is no history of soft targets being set for
the LTIP. The 2020 LTIP award had been
delayed as a consequence of the impact of
COVID-19 on the business and management in
the period following COVID-19 had delivered
on recovering the business from the impact
the pandemic had. On this basis, the
Committee felt that vesting at this level was
an equitable outcome for all stakeholders and
in the long-term interests of the Company.
The LTIP award made on 3 March 2021 had its
performance based two thirds on adjusted
Earnings Per Share* (“EPS”) growth and one
third on the Company’s Total Shareholder
Return (“TSR”) performance measured
against a comparator group through to
31 December 2023. Neither performance
condition achieved threshold and the 2021
award lapsed in its entirety on 3 March 2024.
The Committee usually makes Executive
Directors and senior managers LTIP awards
and RSP awards in March/April. In 2023
this was not possible due to the challenging
macroeconomic conditions and particularly
the impact of the US writers’ and actors’
strikes. The Committee was unable to set
meaningful performance conditions which
both stretch and motivate management.
Given this situation the Committee, during
2023, decided that no LTIP awards would be
made to Executive Directors. This decision
was a necessity in the circumstances the
business faced but is clearly not ideal in
terms of retaining and incentivising the
Executive Directors and senior management
and the Committee will take this into
account when making awards in 2024.
The Committee approved some modest
retention awards of Restricted Share Plan
(“RSP”) awards in October 2023 to provide
retention for key talent in the Group, excluding
the Executive Directors. This was considered
essential by the Committee to retain and
motivate key talent during a particularly
challenging and unsettling time for the Group.
This RSP award will deliver shares to
participants remaining employed with
Videndum by the vesting date of March 2026.
Governance and performance of the
Remuneration Committee in 2023
The Remuneration Committee during 2023
comprised the following:
Caroline Thomson – Chair
Richard Tyson, Erika Schraner, Teté Soto, Anna
Vikström Persson (from 1 May 2023) and
Graham Oldroyd (from 12 October 2023).
All members of the Remuneration Committee
are independent Non-Executive Directors of
the Company.
The Remuneration Committee has been
delegated by the Board responsibility to
set the remuneration framework for the
Group Chief Executive, other Executive
Directors and members of the Operations
Executive. As Chair of the Committee, I lead
this process with the support of the other
Committee members. During 2023, we invited
the Chairman of the Board, Ian McHoul,
Group Chief Executive, Stephen Bird, Group
Chief Financial Officer, Andrea Rigamonti,
the Chairman Designate, Stephen Harris,
the Group Chief Operating Officer, Marco
Pezzana and Group Company Secretary,
Jon Bolton to attend meetings and to
give input unless they were conflicted in a
particular matter. To further support the
Committee in its duties, the Committee uses
the advice and services of FIT Remuneration
Consultants who provide independent
advisory services on executive remuneration
and wider market remuneration issues.
In my role as Chair of the Remuneration
Committee, I am available to shareholders
to discuss matters relating to Directors,
and senior executive remuneration. During
2023 I engaged with several shareholders
in the run-up to the 2023 AGM.
The Remuneration Committee held four
scheduled meetings in 2023 and one
short notice meeting. All members of the
Committee attended all meetings in 2023
except for the short notice meeting held
in April 2023 which Erika Schraner due to
a pre-existing commitment was unable to
attend. Despite this, Erika Schraner gave
feedback in advance of the meeting on the
meeting’s business. Apart from normal
business such as Directors’ duties and
conflicts of interest, minutes of previous
meetings, matters arising and tracking
progress against agreed Committee
objectives for 2023, the following specific
business was covered at each meeting:
February 2023 – approved the 2022 Annual
Remuneration report submitted to the
2023 AGM; approved the Policy report to
cover Directors’ remuneration that was also
submitted to the 2023 AGM for approval;
approved new LTIP rules to be submitted
to the 2023 AGM for approval; approved
the outcome of the 2022 Annual Bonus
Plan including an assessment of Executive
Directors’ personal objectives for 2022 and
bonus deferral; update on the indicative
outcome of 2020 LTIP awards against
performance measures; considered the
structure of 2023 LTIP awards and associated
performance conditions; approved the
final structure of the 2023 Annual Bonus
Plan; and approved personal objectives
for the Executive Directors for 2023.
April 2023 – short notice meeting – considered
the proposed structure and performance
conditions to be tied to proposed 2023 LTIP
awards. Due to challenges with setting
performance conditions given the uncertainty
around the Company’s performance, the
Committee deferred making an award.
August 2023 – considered an update on the
proposed 2023 LTIP award and associated
performance conditions; the Committee
decided it could not set LTIP awards at this
time; approved the final vesting level for the
2020 LTIP award.
October 2023 – update on executive
remuneration trends provided by FIT
Remuneration Consultants; considered an
update on proposed 2023 LTIP awards;
approved the making of RSP awards to senior
executives in the business (excluding Executive
Directors); and considered the impact upon
share schemes with a potential equity raise
for the Company.
December 2023 – considered the proposed
structure for the 2024 bonus plan; considered
an update on the 2023 bonus plan and
potential outcome; 2024 pay rises for
Executive Directors and Operations Executive
members; decided that no 2023 LTIP awards
could be made due to macroeconomic
uncertainty; and adjustment of share awards
following the £125 million equity raise.
Minutes of each meeting are prepared by the
Group Company Secretary and circulated to
Committee members following each meeting.
The Remuneration Committee annually sets
itself objectives and in 2023, it set the
following ones and has measured progress
against each.
Videndum plc
114
Annual Report and Accounts 2023
2023 Remuneration
Committee objectives Progress during 2023
1. Preparation of a new
Directors’ Remuneration
Policy including new LTIP rules
and involving consultation
with major shareholders
ahead of the final Policy being
approved by the Committee in
February 2023 and submitted
for approval at the 2023 AGM.
The updated Policy and LTIP
rules were put to shareholders
at the Company’s AGM on 11
May 2023 and both resolutions
were approved with over 99%
support from shareholders
voting.
2. Prepare and publish a
Remuneration report for 2022
setting out clear disclosures
and narrative to support
remuneration paid (including
2022 bonus) and that ensures
sufficient shareholder
support at the 2022 AGM.
Remuneration report for 2022
received over 97% support from
shareholders at the 2023 AGM
demonstrating significant
support to the operation of
Directors’ remuneration and
the associated disclosures.
3. Ensure that 2023 incentives
(covering the LTIP and Annual
Bonus Plan) are set at an
appropriate level with suitably
stretching performance
conditions that balance
interests of shareholders and
also incentivise management
to deliver stretching
performance.
Challenging market conditions
during 2023 made the setting
of performance conditions for
the LTIP impossible given the
severe downturn in performance.
Consequently, no LTIP awards
were made in 2023. While
financial targets for the 2023
Annual Bonus Plan were set,
the downturn in performance
culminating in the raising of
£125 million of equity means
that no bonus was paid for
2023.
2023 Remuneration
Committee objectives Progress during 2023
4. Review the performance of
the Committee’s
remuneration adviser, FIT
Remuneration Consultants.
FIT Remuneration Consultants
provided independent advice to
the Committee throughout
2023 including advice on a new
Policy report and Annual
Remuneration report, both of
which received significant
support from shareholders at
the 2023 AGM. FIT
Remuneration Consultants
further provided guidance to
the Committee in dealing with
remuneration matters against
the background of challenging
market conditions and the
outcome of executive
remuneration is reflective of
the Company’s performance in
2023.
5. Ensure that incentive
arrangements drive growth in
the business.
Market challenges for 2023
undermined the performance
for the business. Incentive
arrangements with the
exception of the 2020 LTIP
award have not achieved
threshold performance
conditions and have either
lapsed or are unlikely to vest.
6. Put in place appropriate
retention and incentive
arrangements tied to
Creative Solutions.
RSP awards for Creative
Solutions employees vested in
2023 and secured retention of
talent within Creative Solutions
with minimal regretted leavers
for the business.
7. Progress with succession
around committee membership
including the chair.
During 2023 Anna Vikström
Persson and Graham Oldroyd
joined the Committee with a
view to progressing succession
for the Committee.
Remuneration report continued
Strategic Report Corporate Governance Financial Statements
115
Apart from the process of setting itself
objectives and measuring progress against
each, the Remuneration Committee was also
subject in 2023 to an internal evaluation led by
the Chairman and Group Company Secretary.
The internal evaluation involved a
questionnaire to each Committee member.
The output from the 2023 Remuneration
Committee evaluation included:
– The Remuneration Committee performed
well in 2023, meeting high standards in
terms of governance despite a very
challenging business environment.
– Remuneration Committee meetings are
well run with good governance and a
rigorous cycle of business followed and the
Committee Chair effectively leads the
Committee.
– The Remuneration Committee has taken
into account the views and experience of
shareholders and remuneration outcomes
for 2023 are in line with shareholders and
other stakeholders experience.
– The Directors’ Remuneration Policy is well
structured and delivered outcomes in 2023
in line with performance of the business. A
priority for the Committee in 2024 is to
support the business recovery with
appropriately set performance conditions
tied to variable remuneration.
– The performance of the Committee’s
advisor, FIT Remuneration Consultants, was
good and supported the Committee on
executive remuneration during a challenging
year for the Group.
– Succession for the Committee Chair is an
issue that requires attention in 2024.
An externally facilitated evaluation
will be conducted in 2024.
Implementation of the Policy in 2024
The Committee has approved salary increases
for the Executive Directors to be implemented
with effect from 1 July 2024 (a deferral of six
months) to ensure that the business is
showing recovery from 2023 and also to be
aligned with the wider workforce. Stephen
Bird’s salary will be increased by 4% reflecting
the same rate for employees and taking into
account inflation and remuneration packages
for very experienced chief executives. The
Committee noted in the 2022 Annual Report
that it would look over time to increase
Andrea Rigamonti’s remuneration in
accordance with the policy as Andrea’s
experience, contribution and importance to
the Group increases. The Committee
therefore has approved an increase with
effect from 1 July 2024 of 10% for Andrea
Rigamonti taking into account his
remuneration package agreed upon his
appointment in December 2022 and to reflect
his increasing value to the business and his
experience in the role.
Having reviewed fees paid by the market for
similar sized companies, the time commitment
required by the Chairman and Non-Executive
Directors and the Company’s current financial
performance, it has been agreed that the fees
paid to the Chairman and Non-Executive
Directors will not be increased in 2024.
The 2024 Annual Bonus Plan for Executive
Directors must support the recovery of the
business following the challenges experienced
in 2023 and deliver against challenging
targets for 2024 as well as incentivising and
driving the right behaviours. Its structure has
similar financial targets as used in 2023
(Group adjusted PBT*, free cash flow and
personal objectives) and is tied to delivery of
the 2024 budget. The 2024 Annual Bonus Plan
is structured so that Profit and free cash flow
conversion measures are independently
assessed. Financial targets and personal
objectives for the 2024 Annual Bonus Plan,
against which actual performance will be
measured, will be disclosed in the 2024
Remuneration report. Malus and clawback
provisions will also operate on the 2024
Annual Bonus Plan.
The Committee intends to make awards under
the LTIP to the Executive Directors and
Restricted Shares to the senior leadership
team in 2024 and will take into account the
fact that no LTIP awards were made in 2023.
The structure of LTIP awards to the Executive
Directors will be in line with the Directors’
Remuneration Policy and details of the award
including performance conditions will be
announced to the market when the awards
are made. The 2024 LTIP award will take
account of both the fall in the share price and
the absence of any award in 2023.
Committee priorities for 2024
The Committee in 2024 will focus on the
following matters:
– Securing shareholder approval at the 2024
AGM for the 2023 Annual Remuneration
report.
– After a period of disruption building a more
stable remuneration policy on firm
foundations which has the confidence of
shareholders and helps motivate and retain
key managers.
– Ensuring that the 2024 Annual Bonus Plan
drives performance and rewards recovery
of the business especially given challenging
market conditions.
– Granting LTIP awards in 2024 with suitable
award levels and performance conditions
that motivate and retain management and
drive the recovery of the business.
– Succession planning for the Committee.
Annual General Meeting
The Company’s AGM in 2024 will consider an
advisory vote on the Annual Remuneration
report covering Directors’ remuneration paid
in 2023. I encourage all shareholders to vote in
favour of this resolution. I will attend the AGM
and be available to answer questions on
remuneration issues either at the meeting
itself or ahead of the AGM should any
shareholder wish to contact me at
info@videndum.com.
Caroline Thomson
Remuneration Committee Chair
22 April 2024
* In addition to statutory reporting, Videndum plc reports Alternative Performance Measures (“APMs”) which are not defined or specified under the requirements of International Financial
Reporting Standards (“IFRS”). The Group uses these APMs to aid the comparability of information between reporting periods and Divisions, by adjusting for certain items which impact upon
IFRS measures, to aid the user in understanding the activity taking place across the Group’s businesses. APMs are used by the Directors and Management for performance analysis, planning,
reporting and incentive purposes. A summary of APMs used and their closest equivalent statutory measures is given in the Glossary on pages 226 to 232. APMs are indicated by a * throughout
this report.
Videndum plc
116
Annual Report and Accounts 2023
Directors’ Remuneration Policy
2023 Directors’ Remuneration Policy (“the Policy”)
The following is a summary of the Policy that covers remuneration for Directors of the Company for a three-year period from the Company’s
AGM on 11 May 2023 until the Company’s AGM in 2026. The full Policy, as approved by shareholders, is available on the Company’s website –
videndum.com – and is contained in the 2022 Annual Report.
Should there be a need to change the Company’s 2023 Policy ahead of the 2026 AGM, shareholders will be asked to approve a revised Policy.
This report contains further information required under the Listing Rules and the 2018 UK Corporate Governance Code.
2023 Remuneration Policy table for Executive Directors
Base salary
Base salary is set at a level to secure the services of talented Executive Directors with the ability to develop and deliver a growth strategy.
Operation Maximum opportunity Performance measures
Fixed contractual cash amount usually paid
monthly in arrears.
Normally reviewed annually, with any increases
taking effect from 1 January each year, although
the Committee may award increases at other
times of the year if it considers it appropriate.
This review is dependent on continued
satisfactory performance in the role of an
Executive Director. It also includes a number of
other factors, including experience,
development and delivery of Group strategy
and Group profitability, as well as external
market conditions and pay awards across the
Company.
The Committee has not set a maximum level
of salary and the Committee will usually
award salary increases in line with average
salary increases awarded across the Company.
Larger increases may, in certain circumstances,
be awarded where the Committee considers
that there is a genuine commercial reason to
do so, for example:
– Where there is a significant increase in the
Executive Director’s role and duties.
– Where an Executive Director’s salary falls
significantly below market positioning.
– Where there is significant change in the
profitability and/or size of the Company or
material change in market conditions.
– Where an Executive Director was recruited
on a lower than market salary and is being
transitioned to a more market standard
package as he or she gains experience.
Not applicable
Benefits
To provide Executive Directors with ancillary benefits to assist them in carrying out their duties effectively.
Operation Maximum opportunity Performance measures
Executive Directors are entitled to a range of
benefits including car allowance, private health
insurance and life assurance.
Other ancillary benefits may also be provided
where relevant, such as income protection,
expatriate travel or accommodation allowances.
Executive Directors are entitled to participate
on the same terms as all employees in the
Sharesave Plan or any other relevant
all-employee share plan.
There is no maximum level of benefits set,
given that the cost of certain benefits will
depend on the individual’s particular
circumstances. However, benefits are set at an
amount which the Committee considers to be
appropriate, based on individual circumstances
and local market practice.
Executive Directors’ participation in the UK
all-employee Sharesave Plan is capped by the
rules of the Sharesave Plan (currently £500
per month maximum). An International
Sharesave Plan also operates for non-UK
employees.
Not applicable
Strategic Report Corporate Governance Financial Statements
117
Annual bonus
To provide a material incentive to drive Executive Directors to deliver stretching strategic and financial performance and to grow long-term
sustainable shareholder value.
Half of any earned annual bonus (after tax) is deferred into the Deferred Bonus Plan held in the form of shares and focuses the Executive Director
on long-term value delivery and growth.
Operation Maximum opportunity Performance measures
Paid annually based on performance in the
relevant financial year. The amount is determined
based on published full year results after the
financial year end.
Award levels and performance measures are
reviewed annually. The Committee ensures
that performance measures remain aligned to
the Company’s business objectives and
strategic priorities for the year.
Up to half of the annual bonus paid (after tax)
is deferred into awards under the Deferred
Bonus Plan for a period of three years on a
mandatory basis unless the Committee
determines an alternative deferral period is
appropriate. Awards may be granted in the
form of conditional awards, nil-cost options,
forfeitable shares or similar rights. After a
period of three years, the awards vest in the
form of shares in the Company.
The Committee retains full discretion to amend
the bonus payout (upwards or downwards), if
in its opinion any calculation of payout does not
produce a fair result for either the individual or
the Company, taking into account the overall
business performance of the Company. Any
such use of discretion will be clearly reported in
the next published Remuneration report.
Participants may also receive the value of any
dividends which would have been paid on shares
in respect of which the award vests, which may
be calculated assuming reinvestment of the
dividends in the Company’s shares on a
cumulative basis. Such dividends are paid out
in the form of additional shares in the Company.
In the event of any material misstatement of
the Company’s financial results, serious
reputational damage to the Company caused
by a breach of the Company’s Code of Conduct
or otherwise, a miscalculation or an assessment
of any performance conditions that was based
on incorrect information, or the occurrence of
an insolvency or administration event, malus
and clawback provisions may apply for three
years from the date of payment of any bonus
or the grant of any deferred bonus share
award permitting the Committee to reduce,
cancel or impose further conditions on awards.
An absolute maximum of 125% of base salary
to be paid in each year.
Measures and targets for the annual bonus are
set annually by the Committee.
Annual bonus measures may be based on the
achievement of annual targets set against the
Group’s adjusted profit before tax*, cash
conversion and/or strategic or personal
objectives.
The Committee reserves the right to change
measures or introduce new metrics for each
financial year to ensure alignment with the
short-term priorities of the business. The
Committee reviews targets and objectives
annually to ensure the annual bonus remains
appropriate and challenging.
Targets are typically measured over a one-year
period. Payments range between 0% for
threshold and 125% of base salary for
maximum performance.
Awards granted under the Deferred Bonus
Plan are not subject to any further
performance conditions.
Videndum plc
118
Annual Report and Accounts 2023
Long Term Incentive Plan (“LTIP”)
To provide a long-term performance and retention incentive for the Executive Directors involving the Company’s shares.
To link long-term rewards to the creation of long-term sustainable shareholder value by way of delivering on the Group’s agreed strategic
objectives.
Operation Maximum opportunity Performance measures
Under the LTIP, awards are made over a fixed
number of shares, which will vest based on the
achievement of performance conditions over a
performance period of, typically, at least three
years. The performance conditions are set by
the Committee at the start of the
performance period. Awards can take the form
of a conditional award of shares, a nil-cost
option or similar rights.
Awards may be settled in cash (for participants
in territories that prohibit settlement in shares).
Participants may also receive the value of any
dividends which would have been paid on
shares in respect of which the award vests,
which may be calculated assuming reinvestment
of the dividends in the Company’s shares on a
cumulative basis.
The Committee retains full discretion to amend
the vesting outcome upwards or downwards if,
in its opinion, any calculation or payout does not
produce a fair result for either the individual or
the Company, taking into account the overall
business performance of the Company. Any
such use of discretion will be clearly reported in
the next published Remuneration report.
For Executive Directors, awards are normally
subject to a mandatory two-year holding
period for any shares that vest.
In the event of any material misstatement of
the Company’s financial results or serious
reputational damage to the Company caused
by a breach of the Company’s Code of Conduct
or otherwise, a miscalculation of an assessment
of any performance conditions that was based
on incorrect information, or the occurrence of
an insolvency or administration event, malus
and clawback provisions may apply for up to
three years from the vesting of an award
permitting the Committee to reduce or impose
further conditions on awards.
The maximum value of shares over which
awards may be granted in respect of each year
is 150% of base salary. 200% is permitted in
exceptional circumstances determined by the
Committee.
LTIP awards may be based on financial,
non-financial and/or share price-based
performance conditions as determined from
time to time by the Committee. The Committee
will determine the choice of measures and their
weighting prior to each grant and reserves the
right to change the balance of the measures as
it deems appropriate, such that no measure
accounts for less than 25% of the total award.
Currently, 33% of the award is subject to the
Company’s Total Shareholder Return (“TSR”)
compared to a comparator group measured
over a three-year performance period. 67% of
the award is subject to targets set against
growth (adjusted by the Committee as it
considers appropriate) in the Company’s
adjusted basic Earnings Per Share* (“EPS”)
over the same three-year performance period.
The Remuneration Committee additionally
adopts a discretionary underpin on vesting of
the LTIP, whereby the Committee will assess
the Group’s underlying performance in
finalising vesting outcomes. In particular, the
Committee will assess the Group’s ROCE*
performance when approving outcomes under
the EPS element of awards.
At threshold, up to 25% of the award will vest,
increasing on a straight-line basis up to 100%
for performance in line with maximum. Below
threshold none of the award will vest.
There is no retesting of any performance
measure.
Pension contribution
To provide a benefit comparable with market rates, helping with the recruitment and retention of talented Executive Directors able to deliver a
long-term growth strategy.
Operation Maximum opportunity Performance measures
Usually paid monthly in arrears.
Executive Directors may receive a contribution
into the Company’s Defined Contribution Plan,
a personal pension arrangement and/or a
payment as a cash allowance.
All Executive Directors receive a pension
contribution of 8% of base salary which is in
line with pension contributions provided to the
wider UK employee workforce. Salary is the
only pensionable element of Executive Director
remuneration.
Not applicable.
Directors’ Remuneration Policy continued
Strategic Report Corporate Governance Financial Statements
119
Notes to the Directors’ Remuneration Policy table for Executive
Directors
Under the Company’s share plans the Committee may: (1) in the event of
any variation of the Company’s share capital, demerger, delisting, special
dividend or other event which may affect the price of shares, adjust or
amend awards in accordance with the terms of the plan; and (2) amend
a performance condition if an event occurs which causes it to consider an
amended condition would be more appropriate and not materially less
difficult to satisfy. Any such amendment would be reported in a
subsequent Remuneration report. The equity raise of £125.0 million on
8 December 2023 is one such event and adjustment of existing share
scheme awards is set out on page 134 of this Report.
When determining Executive Director remuneration policy and
practices, the Remuneration Committee takes into account a range of
factors as follows:
Clarity – remuneration arrangements are transparent, as set out in the
policy table above. The Committee has taken into account the views of
shareholders consulting on the content of the policy and further
considered remuneration arrangements amongst the wider Videndum
workforce. An example of this includes aligning the Executive Directors
pension contribution with that of the wider UK employee workforce.
Simplicity – the remuneration structure for the Executive Directors is
simple and clearly explained, comprising a mix of short-term and
long-term incentives aligned to the Company’s strategic objectives. As
detailed in the illustrative remuneration performance scenarios on page
121, a significant proportion of Executive Directors remuneration is tied
to the achievement of annual and long-term financial performance for
the Company.
Risk – remuneration arrangements are structured to avoid excessive
risk taking – both reputational and other risks. Malus and clawback
provisions operate on the Annual Bonus Plan and LTIP and Executive
Directors are required to defer a significant proportion of their annual
bonuses for three years and to hold shares vesting under the LTIP for a
further two-year holding period, thereby aligning their interests with
the long-term interests of shareholders.
Predictability – Videndum’s Policy sets out a range of outcomes for
Executive Directors, only rewarding for significant growth in the
Company. The illustrative remuneration performance scenarios in the
table on page 121 sets this out and when determining remuneration
outcomes, the Committee ensures to consider that they are aligned to
the Company’s performance and the experience of shareholders and
other stakeholders.
Proportionality – Videndum’s Policy and outcomes for Executive
Directors remuneration are proportionate and do not reward poor
performance. Notably, bonus deferral and the requirement to hold
shares vesting under the LTIP for a further two-year holding period
from vesting, as well as building up share interests in the Company
representing at least 200% of base salary ensure that Executive
Directors are focused on the long-term performance of the Company.
Alignment to culture – the Company’s incentive schemes are structured
to be aligned with the Company’s culture, driving the right behaviours.
Malus and clawback provisions operate over both the Annual Bonus Plan
and LTIP. Performance conditions tied to both also reflect long-term
performance being delivered. A proportion of the Executive Directors
annual bonus is tied to delivery of ESG targets.
Legacy plans
The Committee reserves the right to make any remuneration payments
and payments for loss of office notwithstanding that they are not in
line with the Policy set out above where the terms of the payment were
agreed: (1) before the Policy came into effect; or (2) at a time when the
relevant individual was not a Director of the Company and, in the
opinion of the Committee, the payment was not in consideration for the
individual becoming a Director of the Company. For these purposes
payments include the Committee satisfying awards of variable
remuneration and, in relation to an award over shares, the terms of the
payment are agreed at the time the award is granted. Andrea
Rigamonti, who was appointed an Executive Director on 13 December
2022, has an RSP award given to him on 16 November 2021 before he
became a Director of the Company. This award will vest to him on 1 July
2024. Details of this legacy award for Andrea Rigamonti are set out on
page 136.
Shareholding requirements (including after-employment ceases)
Executive Directors during their tenure are expected to build a
shareholding in the Company representing 200% or more of their base
salary. All net of tax vested LTIP awards, DBP awards and exercised
Sharesave options should be retained by the Executive Director until
this requirement has been met. This level of shareholding aligns
Executive Directors with the interests of shareholders and ensures that
Executive Directors are focused on long-term shareholder value.
Post-employment, Executive Directors are expected to maintain a
material level of shareholding in the Company for at least two years
from the date of departure made up of the following elements:
– Awards held under the DBP will only vest on their normal vesting
dates and will not be accelerated to the date of departure. Upon
vesting, such shares are to be retained until at least the second
anniversary of the departure date.
– For an Executive Director who is a good leaver, LTIP awards will vest
on their normal vesting date and be subject to performance testing,
pro rata treatment to the date of leaving and be subject to a
two-year holding period (subject to that two-year holding period not
being beyond two years from when the individual ceased to be an
Executive Director).
– Awards that have already vested under the LTIP are normally subject
to a two-year holding period following vesting (but not longer than
two years from the date of departure).
– For the avoidance of doubt, any shares purchased by an Executive
Director using their own personal funds will not be subject to this
post-employment shareholding policy.
The Chairman and Non-Executive Directors are not subject to any such
shareholding requirement. However, they are encouraged to hold shares
in the Company. Details of Directors shareholdings are set out on page
132 of this Report.
Performance measures
The Annual Bonus Plan is based on both personal and Group financial
measures. Typically, the majority of the bonus will be based on financial
measures such as Group adjusted profit before tax*. The measures have
been chosen to provide a balance between incentivising the delivery of
the Group’s key financial priorities in any particular year and important
individual strategic objectives. The Committee may vary the specific
measures and targets year-on-year to ensure that they reflect the key
financial and strategic priorities for the Company in any given year. The
selection of measures and the setting of targets takes into account the
Company’s business priorities and risk appetite.
LTIP awards traditionally are based on adjusted basic Earnings Per
Share* growth and on TSR performance against a specific comparator
group. The Committee considers these to be important measures of
performance for the Company over the longer term. While TSR links a
portion of the LTIP to the creation of value for shareholders, adjusted
basic Earnings Per Share* growth is a Key Performance Indicator for the
Group with the combination providing an appropriate balance between
growth and returns. The Committee has also adopted a discretionary
underpin on vesting of the LTIP, whereby the Committee will assess
the Group’s underlying performance in finalising vesting outcomes.
Videndum plc
120
Annual Report and Accounts 2023
In particular, the Committee will assess the Group’s ROCE* performance when approving outcomes under the EPS element of awards. While the
Committee does not disclose a formulaic target in advance, the Committee will ensure that it provides full retrospective disclosure around its
decision-making process, including a summary of the ROCE* trajectory over the performance period. Any changes to these measures will be aligned
with the long-term strategy of the Group.
Provisions for the withholding and recovery of sums from the Directors (malus and clawback) are as set out on page 141.
Remuneration Policy for the Chairman and Non-Executive Directors
The table below sets out a description of the Chairman and Non-Executive Directors’ remuneration.
Neither the Chairman nor the Non-Executive Directors participate in any Annual Bonus Plan or the Company’s share plans.
Role Purpose Operation
Chairman To recruit and retain an independent Non-Executive
Chairman reflecting the responsibilities and time
commitment for the role. To lead an effective Board
enabling delivery on the Group’s growth strategy and
creation of long-term sustainable shareholder value.
While the Board has not set a maximum level of fee payable
to the Chairman, the Board will review the level of fee paid
usually on an annual basis and determine whether that is
sufficient in terms of market conditions and also the time
commitment for the role.
The Chairman’s fee is an all-inclusive consolidated amount.
It is paid in cash, not shares, usually on a monthly basis in
arrears.
Fees are benchmarked against FTSE-listed companies of a
similar size and complexity to Videndum. Any future
increases will take into account the need to ensure that the
fee remains competitive and reflects the time commitment
for the role.
The Chairman’s remuneration also covers his chairmanship
of the Nominations Committee.
Non-Executive
Directors
To recruit and retain independent Non-Executive
Directors reflecting the responsibilities and time
commitment for the role to contribute to an effective
Board and to deliver on the Group’s growth strategy and
creation of long-term sustainable shareholder value.
Fees paid to Non-Executive Directors of the Company
consist of the following:
– A base fee.
– An additional fee for the role of the Senior Independent
Director.
– An additional fee for chairing the Audit and Remuneration
Committee or for the designated Non-Executive Director
tasked with oversight of employee engagement.
Fees are usually reviewed annually and are benchmarked
against FTSE-listed companies of a similar size and
complexity to Videndum. All fees are paid in cash, not
shares, usually on a monthly basis in arrears.
Benefits To reimburse the Chairman and Non-Executive Directors
for reasonable expenses incurred and bear any costs
associated with tax, where relevant.
Expenses are reimbursed as and when incurred relating to
the Company’s business (including travel and hotel
accommodation).
Directors’ Remuneration Policy continued
Strategic Report Corporate Governance Financial Statements
121
Illustrative remuneration performance scenarios
The following charts set out scenarios for the remuneration of Stephen Bird and Andrea Rigamonti for 2024 in line with the Policy. This includes
scenarios for full vesting of LTIP awards based on an award at 150% of salary for Stephen Bird and 125% for Andrea Rigamonti, with one chart
showing no share price appreciation and one chart showing a 50% share price appreciation. The charts also reflect Stephen Bird’s and Andrea
Rigamonti’s salary for 2024 (increased with effect from 1 July 2024).
Stephen Bird
Basic remuneration
Minimum base salary
(with effect from 1 July 2024)
Benefits
Pension (8% of salary)
Total fixed pay (minimum)
On-target performance:
Fixed pay
Annual bonus
LTIP
Total on target pay
Maximum pay:
Fixed pay
Annual bonus
LTIP
Total maximum pay
£612,157 (29%)
£667,250 (32%)
£800,700 (39%)
£2,080,107
Maximum pay (including 50% share price
appreciation for LTIP award):
Fixed pay
Annual bonus
LTIP
Total maximum pay
£612,157 (25%)
£667,250 (27%)
£1,201,050 (48%)
£2,480,457
£612,157 (53%)
£333,625 (29%)
£200,175 (18%)
£1,145,957
533,800 (88%)
£35,653 (5%)
£42,704 (7%)
£612,157
Andrea Rigamonti
Basic remuneration
Benefits
Pension (8% of salary)
Total fixed pay (minimum)
On-target performance:
Fixed pay
Annual bonus
LTIP
Total on target pay
Maximum pay:
Fixed pay
Annual bonus
LTIP
Total maximum pay
£395,030 (32%)
£427,500 (34%)
£427,500 (34%)
£1,250,030
Maximum pay (including 50% share price
appreciation for LTIP award):
Fixed pay
Annual bonus
LTIP
Total maximum pay
£395,030 (27%)
£427,500 (29%)
£641,250 (44%)
£1,463,780
£395,030 (55%)
£213,750 (30%)
£106,875 (15%)
£715,655
£342,000 (86%)
£25,670 (7%)
£27,360 (7%)
£395,030
Minimum base salary
(with effect from 1 July 2024)
Notes to illustrative remuneration performance scenarios:
– Fixed pay – base salary as at 1 July 2024 for Stephen Bird and
Andrea Rigamonti.
– The total value of benefits received in the year ended 31 December
2023 which included car allowance, private healthcare, income
protection and any Sharesave options granted during 2023.
– Pension contribution of 8% for Stephen Bird and Andrea Rigamonti
which is in line with the contribution given to the wider UK workforce.
– Annual bonus
– At threshold – nil.
– On target – 50% of maximum payout (representing 62.5% of
base salary).
– At maximum – 100% of the maximum payout (representing 125%
of base salary).
– LTIP
– At minimum – nil.
– On target – 25% vesting under the LTIP (representing 37.5% of
base salary for Stephen Bird and 31.25% of base salary for
Andrea Rigamonti) and set out at face value, with no share price
growth.
– At maximum – 100% of the maximum payout (representing
150% of base salary for Stephen Bird and 125% of base salary for
Andrea Rigamonti) and set out at face value, with no share price
growth or dividend assumptions.
– At maximum with share price appreciation – 100% of the
maximum payout (representing 150% of base salary for Stephen
Bird and 125% of base salary for Andrea Rigamonti) and showing
a 50% appreciation in the share price over the LTIP vesting
period.
Videndum plc
122
Annual Report and Accounts 2023
Consideration of employment conditions elsewhere
in the Company
The Committee, when determining Executive Directors’ remuneration,
takes into account remuneration and employment terms and conditions,
including levels of pay for all employees of the Company. The Committee
is kept informed of:
– Salary increases for the general employee population.
– Company-wide benefits including pensions, share incentives, bonus
arrangements and other ancillary benefits.
– Overall spend on annual bonus.
– Participation levels and outcomes in the Annual Bonus Plan and the
LTIP.
When setting the remuneration of the Executive Directors, the
Committee has regard to general employment terms and conditions
within the Company as set out above. However, it is recognised that the
roles and responsibilities of Executive Directors are such that different
levels of remuneration apply, with a greater proportion of remuneration
tied to the financial performance of the Company. The Committee did
not consult with the Company’s employees when drawing up the
Directors’ Remuneration Policy set out in this report. Caroline Thomson is
the Non-Executive Director with responsibility for employee engagement,
and as part of that role holds regular staff engagement sessions through
which she is informed on remuneration issues for the wider Group
workforce and keeps the Board fully updated. The detail of this role is
given on page 88 of this Annual Report.
Policy on outside appointments
The Committee believes it is beneficial both for the individual and the
Company for an Executive Director to take up one external non-executive
appointment. Remuneration received by an Executive Director in respect
of such an external appointment would be retained by the Director.
Stephen Bird is an independent non-executive director and senior
independent director of Headlam plc and in this role he receives an annual
fee of £50,000 as an independent non-executive director and an annual
fee of £10,000 as senior independent director. Under the terms of his
service contract, Andrea Rigamonti, with the agreement of the
Chairman and Group Chief Executive, may take up one external
non-executive appointment of a listed company. As of the date of this
report Andrea Rigamonti had not taken up any such external non-
executive appointment.
Remuneration Policy for senior managers and other employees
of the Group
The Remuneration Policy for senior managers in the Company is similar
to that of the Executive Directors although the incentive potential is
lower as are salary levels in accordance with levels of responsibility and
complexity. They participate in the Annual Bonus Plan with the same
structure as the Executive Directors, as well as the LTIP or participation
in a RSP, and therefore a significant element of their remuneration is
also dependent upon the financial performance of the Company and
the Company’s share price in addition to individual performance.
Remuneration for all other employees is set taking into account local
market conditions to ensure that pay and benefits attract and retain
employees in those local markets and help deliver the Group’s agreed
strategy. A large proportion of employees are able to participate in
bonus plans that are tied to Company, Divisional and business unit
financial performance as well as individual performance against
personal objectives. The structure of bonus plans varies across the
employee workforce to achieve different objectives.
Full-time employees of the Company in the UK, US, Italy, France,
Germany, Israel, Australia, Japan, Singapore and Costa Rica are able to
participate in an all-employee Sharesave Plan granting employees an
option to save and purchase a limited number of shares in the Company
at a discount to the market price at the time an offer of the Plan is made.
Further information on this Plan is given on page 133. Senior managers
participate in a RSP (excluding Executive Directors). The RSP awards
shares to key employees over a vesting period of up to three years and
helps retain and motivate key talent to deliver on the Group’s strategic
growth objectives.
All full-time employees are also offered membership of a pension
scheme upon joining the Company which is compliant with local legal
requirements. In the UK, employees are able to join a defined
contribution pension plan with the employer making an 8% fixed
contribution and the employee required to make a minimum contribution
of 4%. The pension contribution is based on base salary only.
The Remuneration Committee is kept informed on Remuneration Policy
and arrangements for the wider employee population with regular
updates to enable it to stay informed and to assist in setting Executive
Directors’ remuneration.
Approach to recruitment remuneration
The Committee’s Policy is to seek to recruit Directors with the requisite
skill and experience to lead the business and grow the value of the
Company over the long term. Generally, pay on recruitment will be
consistent with the Policy for Executive Directors as set out in the Policy
table and set at a level to reflect overall responsibilities.
The Committee has the flexibility to set the salary of a new Executive
Director at a lower level initially, with a series of planned increases
implemented over the following years to bring the salary to the desired
level. Consistent with the regulations, any cap on base salary does not
apply. Benefits will be consistent with the Remuneration Policy. Certain
additional benefits may be provided such as relocation expenses or
allowances. The pension contribution for an Executive Director will be in
line with the UK workforce contribution rate (currently 8% of base salary).
However, the Committee may, in its absolute discretion, include
remuneration components or awards which are not specified in the
Policy table, subject to the maximum level of variable pay set out in the
following paragraph, where this facilitates the hiring of candidates of
an appropriate calibre and skillset to deliver on the Group’s strategy.
The Committee will ensure this is only done where there is a genuine
commercial need, and where this is in the best interests of the Company
and its shareholders. The Committee does not intend to use this discretion
to make a non-performance related payment (for example a “golden
hello” payment).
The absolute maximum level of variable pay will be 325% of base salary
(excluding any buy-out awards) which is in line with the Remuneration
Policy set out on the previous page. This comprises up to 125% of base
salary under the Annual Bonus Plan and up to 200% of base salary
under the Company’s LTIP.
In certain circumstances, the Committee may need to make payments
or awards to an executive in respect of buying out remuneration
arrangements relinquished on leaving a previous employer. When doing
so, the Committee will aim to do so broadly on a like-for-like basis with
a fair value no higher than the awards foregone. It will take a number of
relevant factors into account which may include any performance
conditions attached to these awards and the time at which they would
have normally vested. These payments or awards are excluded from the
maximum level of variable remuneration referred to above.
Directors’ Remuneration Policy continued
Strategic Report Corporate Governance Financial Statements
123
In the event of any such treatment, the Committee will explain in the next
Annual Remuneration report the rationale for the relevant arrangements.
Executive Directors’ service contracts
The Executive Directors’ service contracts are as follows:
Role Date of contract
Notice period
from the Company
to the Executive
Notice period
from the Executive
to the Company
Stephen Bird,
Group Chief
Executive
– appointed on
14 April 2009
28 January
2009
12 months 6 months
Andrea
Rigamonti,
Group Chief
Financial
Officer
– appointed on
13 December
2022
13 December
2022
12 months 6 months
The terms of the service contracts for Executive Directors do not
provide for predetermined amounts of compensation in the event of
early termination by the Company. The Remuneration Committee’s
policy in the event of early termination of employment is set out below.
For future appointments of Executive Directors, notice periods due
from any new Executive Directors will be symmetrical with the notice
period from the Company.
Policy on payment for loss of office
Executive Directors’ notice periods under service contracts are
summarised in the table above. The Committee believes that the
Company’s policy on payment for loss of office and the structure of
notice periods is sufficient to ensure that the Executive Director has
security of tenure and also that the Company has sufficient retention
and notice periods to enable an orderly process for succession planning.
In the Committee’s opinion, any shorter notice period would not be in
the Company’s best interests and would risk the stable running of its
operations. The Committee, however, will not give any Executive
Director a service contract of greater than 12 months’ notice.
In the event of termination of office, the Committee will consider the
circumstances including notice period contained within the service
contract, the circumstances surrounding the termination notably
including the individual’s performance and what is considered to be in
the Company’s best interests. The terms of service contracts do not
provide for predetermined amounts of compensation in the event of
early termination of employment. The Committee maintains full
discretion as how to treat each such termination upon its merits when
trying to mitigate the cost of termination but ultimately honouring
contracted terms. Dealing with each specific element of remuneration
for an Executive Director this would mean the following:
– Base salary, pension and other benefits (including legal fees and
outplacement costs) – these will be paid for the notice period, subject
to being mitigated if the Executive Director finds other suitable
employment. This means that each element will continue to be paid
on a monthly basis in arrears during the notice period either to the
end of the notice period or if earlier to the point at which the
Executive Director finds other suitable employment or a mutually
agreed date within the notice period. Although not covered by the
service contract, the Company will pay reasonable legal expenses and
any recruitment outplacement costs to assist the Executive Director
in their exit. The Committee will determine the reasonableness of
such costs keeping in mind shareholders’ best interests.
– Annual Bonus Plan – as a general rule, Executive Directors have no
entitlement to a bonus payment in the event that they cease to be
employed. However, they may be considered for a bonus payment in
certain good leaver circumstances. In such cases the Committee will
generally prorate an annual bonus to the date of termination and the
payment of the annual bonus will usually be dependent upon the
satisfaction of financial performance conditions and an assessment
of the achievement of personal objectives up to the point of leaving
the Company. The Committee reserves an absolute discretion in
circumstances which it considers appropriate to enable a full year’s
annual bonus to be paid in full to an Executive Director in accordance
with the limits and rules of the Annual Bonus Plan applying to the
Executive Director.
– Long Term Incentive Plan – awards granted under the Company’s
LTIP are generally treated as follows: if a participant ceases office or
employment with the Group his/her award will lapse unless he/she is
deemed to be a good leaver or dies in service. An individual is a good
leaver if he/she ceases employment because of ill-health, injury,
disability, the sale of the employing company or business out of the
Group or for any other reason at the Committee’s discretion, for
example early retirement, but expressly not for where a participant is
summarily dismissed. Except in the case of death (where awards vest
following death, unless the Committee determines otherwise),
awards will normally vest on the normal vesting date, unless the
Committee determines that awards should vest at the time the
individual ceases employment. The Committee, when determining the
level of an award to vest, will take into account satisfaction of
relevant performance conditions tied to the award and the period of
time that has elapsed since the award was granted until the date of
cessation of employment.
– Deferred Bonus Plan – awards under the DBP will vest on their
normal vesting date (unless the Committee determines that awards
should vest on the individual’s cessation of employment) except in the
case of: (1) death – when awards will vest following an individual’s
death; and (2) gross misconduct – when awards will lapse.
When negotiating the exit package of an Executive Director, the
Committee will ultimately aim to mitigate the cost of any termination
payment while also treating fairly the Executive Director, honouring the
terms of a service contract and acting in the Company’s best long-term
interests. The Committee will, upon reaching an agreement with an
Executive Director on the terms of termination, publish details both
with an announcement and with details published in the subsequent
Remuneration report and this will include an explanation of any use of
discretion.
Change of control
In the event of a change of control of the Company, LTIP and DBP awards
will vest with the Committee taking into account, in the case of LTIP
awards, the extent to which the relevant performance conditions have
been satisfied and, unless the Committee determines otherwise, the
period of time that has elapsed since grant. In the event of a winding-up
of the Company, demerger, delisting, special dividend or other event
that may affect the share price, the Committee may also allow awards
to vest on the same basis.
Videndum plc
124
Annual Report and Accounts 2023
Chairman and Non-Executive Directors
The Chairman and Non-Executive Directors do not have service
contracts but serve under letters of appointment.
The initial period of their appointments is three years but their
appointments may, by mutual consent and with the approval of the
Nominations Committee and the Board, be extended for a further three
years. Appointments may be extended beyond six years by mutual
consent and with the approval of the Nominations Committee and the
Board, if it is in the interest of the Company to do so. Under the letters
of appointment, notice can be given by either party upon one month’s
written notice. Apart from the disclosure under the Policy table for the
Chairman and Non-Executive Directors there are no further obligations
which could give rise to a remuneration or loss of office payment under
the letters of appointment. All Directors are subject to annual
reappointment by the shareholders at the AGM.
Copies of the Executive Directors’ service contracts, the Chairman’s
and each Non-Executive Director’s letters of appointment are available
on our website at videndum.com.
Consideration of shareholder views
The Committee took into account the views of its shareholders
concerning the 2023 Policy for the remuneration of Directors that was
approved at the 2023 AGM. This followed a consultation process in late
2022 and early 2023. This consultation gave assurance to the
Remuneration Committee on the structure of the Policy.
The Company received over 97% support for the 2022 Annual Report on
Remuneration at the 2023 AGM, and over 99% support for the
Directors’ Remuneration Policy report. This indicates a strong level of
support from shareholders to the Company’s remuneration policy and
operation of that policy.
The Committee would engage with shareholders ahead of any material
change to the Policy for the Company relating to its Directors and in
accordance with the UK Corporate Governance Code engages with
shareholders should there be a material level of dissatisfaction from
shareholders with Directors’ remuneration. A material level of
dissatisfaction from shareholders would be more than 20% of
shareholders voting against, or abstaining on, a vote related to
Directors’ remuneration.
Caroline Thomson, Remuneration Committee Chair, remains available
to discuss the Company’s Remuneration Policy and implementation of it
with shareholders.
This Annual Report on Remuneration and the Annual Statement will be
put to an advisory vote at the 2024 AGM.
Directors’ Remuneration Policy continued
Strategic Report Corporate Governance Financial Statements
125
Directors’ single figure of total remuneration (audited)
The following table sets out the single figure of total remuneration for Directors for the financial years ended 31 December 2023 and 2022.
Salary/
fees
£
Benefits
1
£
Pension
2
£
Annual
bonus
3,6
£
LTIP
4
£
Total
£
Total
fixed
remuneration
Total
variable
remuneration
Executive Directors
Stephen Bird
2023 507,199 35,653 40,576 0 0 583,428 583,428 0
2022 488,868 31,292 97,774 307,987 224,956
1,150,877
4
617,934 532,943
Andrea Rigamonti
(appointed 13 December 2022)
5
2023 310,000 25,670 24,800 0 0 360,470 360,470 0
2022 16,439 1,336 1,315 8,564 0 27,654 19,090 8,564
Chairman and Non-Executive
Directors
Ian McHoul
2023 181,750 0 0 0 0 181,750 181,750 0
2022 175,000 0 0 0 0 175,000 175,000 0
Caroline Thomson
2023 69,738 0 0 0 0 69,738 69,738 0
2022 67,750 0 0 0 0 67,750 67,750 0
Richard Tyson
2023 62,738 0 0 0 0 62,738 62,738 0
2022 53,144 0 0 0 0 53,144 53,144 0
Erika Schraner
(appointed 1 May 2022)
2023 64,738 0 0 0 0 64,738 64,738 0
2022 39,007 0 0 0 0 39,007 39,007 0
Teté Soto
(appointed 24 Nov 2022)
2023 54,738 0 0 0 0 54,738 54,738 0
2022 5,395 0 0 0 0 5,395 5,395 0
Anna Vikström Persson
(appointed 1 May 2023)
2023 36,933 0 0 0 0 36,933 36,933 0
2022 0 0 0 0 0 0 0 0
Graham Oldroyd
(appointed 12 October 2023)
2023 12,171 0 0 0 0 12,171 12,171 0
2022 0 0 0 0 0 0 0 0
Stephen Harris
(appointed 9 November 2023)
2023 7,974 0 0 0 0 7,974 7,974 0
2022 0 0 0 0 0 0 0 0
Total
2023 1,307,979 61,323 65,376 0 0 1,434,678 1,434,678 0
2022 845,603 32,628 99,089 316,551 224,956 1,518,827 977,320 541,507
Annual Report on Remuneration
Videndum plc
126
Annual Report and Accounts 2023
Each Director has confirmed in writing to the Company that the information in the single figure remuneration table is correct and that they have not
received from the Company any other items of remuneration other than disclosed.
Further notes to the Directors’ single figure of total remuneration table (audited)
(1) Base salary
The table below shows base salaries paid for each Executive Director in 2023.
Executive Director 2023 salary
Stephen Bird £507,199
Andrea Rigamonti £310,000
(2) Benefits
The single figure of total remuneration table sets out the total value of benefits received by each Executive Director in 2023. Details are as follows:
Executive Director
Car
allowance
Healthcare
cover
Income
protection
Other
(Sharesave) Total
Stephen Bird £25,356 £5,497 £4,800 £0 £35,653
Andrea Rigamonti £18,323 £2,547 £4,800 £0 £25,670
(3) Pension allowance
The table below sets out the value of the cash payment in lieu of pension for each Executive Director in 2023.
Executive Director
Pension
allowance
Stephen Bird (representing 8% of base salary) £40,576
Andrea Rigamonti (representing 8% of base salary) £24,800
Stephen Bird’s pension contribution was reduced to 8% of base salary with effect from 1 January 2023 (from 20%). The level of 8% of base salary is
in line with pension contributions to the wider UK employee workforce in the Group.
Notes:
1 Taxable benefits include car allowance, healthcare cover and income protection.
2 Stephen Bird received a pension contribution of 20% of base salary in the year ended 31 December 2022 which was taken in the form of a cash payment. Stephen Bird’s pension contribution was
reduced to 8% of salary with effect from 1 January 2023. Andrea Rigamonti received a pension contribution of 8% of salary.
3 For the 2023 Annual Bonus Plan, Stephen Bird’s and Andrea Rigamonti’s bonus potential was 125% of base salary. 50% of the annual bonus is deferred into the Deferred Bonus Plan. Further
details are set out in the “Further notes” section on the following page.
4 The 2020 LTIP award had a performance period running to 28 February 2023 and vested on 21 September 2023 at a rate of 46.9% . The 2022 Remuneration report provided an estimated value for
the vesting based on performance conditions being assessed at 31 December 2022 and with an indicated vesting level of 46.8% and using a closing mid-market share price of £10.78 based on
31 December 2022. The final vesting outcome and actual value delivered to participants is updated and shown in the table above for 2022. The value in the table above has been updated to reflect
the actual value received by the Executive Directors on 21 September 2023 (£3.095 per share) in contrast to the value shown in the 2022 Remuneration report. Full details of the 2020 LTIP award
are set out on page 129. The LTIP award for 2021 failed to achieve its performance conditions and lapsed in full on 4 March 2024. Details are set out on page 130 of this report.
5 Andrea Rigamonti was appointed a Director on 13 December 2022 under a service contract of the same date. Remuneration disclosed reflects the term of the appointment as a Director in 2022.
6 In 2023, the Remuneration Committee used discretion not to pay a bonus under the Annual Bonus Plan to the Executive Directors. Despite a bonus being earned under certain elements (personal
objectives and cash conversion*), the Committee took the view that no bonus should be paid to reflect the experience of shareholders in 2023 and employees, many of whom were on short-time
working.
Directors’ single figure of total remuneration (audited) continued
Annual Report on Remuneration continued
Strategic Report Corporate Governance Financial Statements
127
(4) Annual bonus
In 2023, each Executive Director was eligible to receive, subject to performance, a maximum bonus of up to 125% of base salary, half of which is
deferred into the DBP. The structure of the 2023 Annual Bonus Plan was as follows:
– The financial elements of the Annual Bonus Plan for each Executive Director were based upon actual financial results achieved for Group adjusted
profit before tax* and Group conversion of adjusted operating profit* into adjusted operating cash flow* (over a half year and full year average
target) measured against financial targets set by the Board. The Group adjusted profit before tax* financial element represented 50% of the
maximum bonus that could be earned and the Group conversion of adjusted operating profit* into adjusted operating cash flow* represented 25%
of the maximum bonus that could be earned (with one-third based on half year 2023 performance and two-thirds based on the full year 2023
performance).
– Under the rules of the 2023 Annual Bonus Plan, each of the above financial performance metrics are assessed independently of one another so that
should threshold not be achieved for one performance condition, that bonus could still be earned for the other financial performance condition.
– The Remuneration Committee considered that these two financial performance conditions are key financial measures for the Group driving the
right behaviour in terms of achieving adjusted operating profit* and adjusted operating cash flow* generation and had the most direct impact
upon shareholder value for the year ended 31 December 2023. The financial targets were set by the Board and Remuneration Committee at the
beginning of 2023.
– The personal objective element of the 2023 Annual Bonus Plan for each Executive Director, representing 25% of the maximum bonus that could be
earned, was based upon individual performance measured against stretching personal objectives set by the Board and Remuneration Committee,
as set out in summary below.
Stephen Bird – 2023 personal objectives
Objective Assessment
Continue to build a world-class organisation including: development
of the Group Chief Operating Officer and Group Chief Financial
Officer; keep the Operations Executive team motivated with
increasing attention around succession. (20%)
Objective largely achieved despite the impact of macroeconomic
events in 2023, notably including the promotion of Marco Pezzana to
the role of Chief Operating Officer, retention of the Operations
Executive and development of the Group Chief Financial Officer
following his appointment in December 2022 in an extremely
challenging financial year.
Deliver Group strategy including: reposition the Group’s stated
financial ambition with stakeholders; develop strategic thinking and
execution around Creative Solutions; execute on strategic ambition
for other parts of the Group including audio ambition; and
development of defence strategy. (35%)
Objective significantly impacted by macroeconomic environment in
2023. The business determined to focus Creative Solutions on its
core content creation market and to divest of both Lightstream
(sold October 2023) and Amimon (held for sale).
Develop Group structure: with the Group Chief Operating Officer
develop and deliver cross divisional operating synergies and a
Group-wide operating structure to support the strategy and
maximise value. (20%)
Restructuring initiatives in 2023 delivered circa £8.0 million cash
savings in 2023. Wider plans to optimise the Group structure were
impacted by the macroeconomic environment.
ESG: continue the development of a well-rounded Group ESG
programme with publication of ESG and TCFD report in line with GRI
standards; clear roadmap to carbon neutral by 2025; net zero by 2035;
ensure that main operational sites have specific plans for emissions
reductions tied to Group targets; develop the Group’s product
sustainability and life cycle of products; and progress gender diversity
in the organisation particularly in the senior leadership. (15%)
Progress on the Group’s ESG programme in 2023 continued to be
made including publication of standalone ESG and TCFD Reports in
April 2023, an 18% reduction in Scope 1 and 2 emissions in 2023
moving towards carbon neutral and net zero targets, continuing
collection of Scope 3 emissions data and progress on product
sustainability including the successful launch of Salt-E Dog, a
sodium battery designed and built for the motion picture and
television industry that delivers reliable power that is cleaner and
more environmentally safe than fossil fuel or lithium generators.
Develop the Board’s knowledge particularly around markets,
customers, R&D and technological developments. (10%)
Objective significantly impacted by macroeconomic environment in
2023 and Board changes.
Videndum plc
128
Annual Report and Accounts 2023
Andrea Rigamonti – 2023 personal objectives
Objective Assessment
Build a world-class finance organisation: recruit a Group Financial
Controller; development of direct reports; ensure appropriate
delegation to direct reports; limit turnover and develop career paths
for wider finance teams; and evolve Financial Planning and Analysis
team. (25%)
Foundation steps taken towards a world class finance team
notwithstanding the delays in the half-year and year-end results.
Successfully recruited and inducted a Group Financial Controller and
ensured clarity of reporting with four direct reports. Despite the
macroeconomic challenges in 2023, successfully retained the wider
finance team and elevated the team’s capabilities notably
responding to a series of challenging events in 2023.
Deliver 2023 performance: deliver H1 and 2023 financial performance
in line with consensus; develop and execute on self-help plans;
execute on an audit tender; execute term loan refinancing; and
simplification of Group structure. (20%)
Objective significantly impacted by the macroeconomic environment
in 2023 and the writers’ and actors’ strikes. Despite these
challenges, successfully developed and delivered on self-help cost
control measures with the Group Chief Operating Officer, delivering
circa £8.0 million cash savings in 2023. Executed on an audit tender
with the outcome being the recommended appointment of
PricewaterhouseCoopers LLP. Renegotiated financial covenants tied
to the Group’s finance arrangements and delivered on an equity
raise of £125 million.
Progress delivery of Group strategy in line with ambition: progress
restructuring initiatives with the Group Chief Operating Officer;
develop in conjunction with the Group CEO the Group’s strategy; and
minimise macroeconomic challenges upon strategic ambition. (15%)
Objective significantly impacted by the macroeconomic
environment, but delivered on self-help cost control measures.
Supported the Group Chief Executive on a strategy review
particularly focusing on costs, leverage and net debt implications.
Proactively manage Investor Relations programme including: leading
financial aspects of IR meetings with investors and analysts; and
proactively developing the share register including with prospective
investors. (10%)
Supported a proactive investor relations programme in 2023
culminating in the £125 million equity raise.
Progress with personal development given appointment to Group
CFO role in December 2022: work with an experienced coach to
broaden vision, behavioural and leadership; leverage third party
resources to support development; and regular engagement with
Board Chair and Audit Chair and Group Chief Operating Officer.
(20%)
Engaged with an external mentor in 2023 to develop broader vision,
behavioural and leadership competencies coupled with attendance
at the Deloitte Academy to broaden skills.
Review the Group’s risk management approach and activities,
incorporating a formal Board review of risk appetite and risk
tolerance. (10%)
Delivered a detailed risk appetite and tolerance update to the Board
ensuring a more considered risk management process.
The personal objectives set out above are a summary and are underpinned by more detailed objectives which are considered to be commercially
sensitive. The 2023 personal objectives were set by the Board and Remuneration Committee at the start of 2023. Despite both Executive Directors
performing strongly in 2023, the Committee, due to the financial performance of the Company and experience of shareholders in 2023 as well as
that many employees for the Group were on short-time working, decided that no bonus would be payable under the personal objectives element of
the 2023 Bonus Plan.
Annual Report on Remuneration continued
Strategic Report Corporate Governance Financial Statements
129
For the 2023 Annual Bonus Plan, a straight-line sliding scale operated between each of the above trigger points for both financial targets. The Board
and Remuneration Committee considered and approved the above financial metric trigger points at its meeting in February 2023 and at that point
in time considered that they were appropriate and sufficiently stretching for 2023. Having set the financial targets in February 2023, it became
evident that a combination of challenging macroeconomic factors combined with the US writers’ and actors’ strikes in mid-2023 meant that the
Company’s financial performance would be materially lower than those set for the 2023 Bonus Plan. The material decline in the Company’s share
price during 2023, the suspension of dividend payments to shareholders, a large number of employees on short-time working and culminating in the
Board raising £125 million from shareholders by way of an equity raise in December 2023 led the Committee to decide to exercise discretion and
determine that no bonus would be paid for 2023. The Remuneration Committee acknowledged the tremendous dedication of the Executive Directors
and senior management who all worked tirelessly during 2023 but it was clear to the Committee that no bonus could be paid for 2023.
In the event that a bonus is earned, half of the annual bonus (after tax) is deferred into the DBP. The deferred bonus is used to purchase award
shares to be held in trust for a three-year period. No matching award shares can be earned under the DBP. After three years, the award shares are
released from the trust to the Executive Directors.
(5) Long-term incentives – Long Term Incentive Plan (“LTIP”) and Deferred Bonus Plan (“DBP”)
The long-term incentive awards value shown in the single figure of total remuneration table relate to the following awards:
Awards made in 2020 and vesting on 21 September 2023 in respect of performance to 28 February 2023
In 2020, due to the impact of COVID-19 upon the business, the award of LTIPs to Executive Directors and senior management was delayed. This was
due to difficulties in setting appropriate performance conditions tied to awards given the impact of the pandemic upon the business and its financial
performance. Given this challenge, the Committee consulted with its major shareholders to consider how to structure LTIP awards for 2020 with the
objective to drive management in the recovery of the business following the impact of COVID-19.
On the basis of this feedback, the 2020 LTIP awards were granted on 21 September 2020 and only vested if stretching absolute targets around
share price were met and if Videndum’s relative TSR was also in the top half of the FTSE 250 constituents (excluding financial services companies
and investment trusts).
2023 annual bonus outcome
The table below sets out the annual bonus outcome for Executive Directors in respect of the year ended 31 December 2023 including the financial
trigger points used in determining whether a bonus was payable. While the Executive Directors in 2023 performed strongly during a very challenging
year for the Group, the Committee, in light of the experience of shareholders and also with many of the Group’s employees on short-time working,
decided that no bonus was payable to the Executive Directors for 2023. This outcome does not reflect the performance of the individuals but is
simply reflective of the financial performance of the Group due to external factors beyond management’s control.
Name
Bonus
potential
Elements
of bonus
potential Threshold Target Maximum
Actual Group
performance/
assessment of
personal objective
performance Payout Total
Stephen Bird 125% of
annual salary
50% Group
adjusted PBT*
£45.9m £54.0m £62.1m £1.0m £0 0%
25% Group H1: 45.0% 50.0% 55.0% H1: 93.4% £0 0%
Conversion of adjusted
operating profit* into
adjusted operating cash
flow*
FY: 63.0% 70.0% 77.0% FY: 84.4%
25% personal objectives 0% £0
Payout due to Executive
Director at each level
£160,410 £320,819 £641,638
Total £0 0%
Andrea
Rigamonti
125% of
annual salary
50% Group
adjusted PBT*
£45.9m £54.0m £62.1m £1.0m £0 0%
25% Group H1: 45.0% 50.0% 55.0% H1: 93.4% £0 0%
Conversion of adjusted
operating profit* into
adjusted operating cash
flow*
FY: 63.0% 70.0% 77.0% FY: 84.4%
25% personal objectives 0% £0
Payout due to Executive
Director at each level
£96,875 £193,750 £387,500
Total £0 0%
Videndum plc
130
Annual Report and Accounts 2023
For the awards to vest in full, Videndum’s share price needed to be £18 or
higher on 28 February 2023 and Videndum’s relative TSR needed to be at
least in the upper quartile of the FTSE 250. Given the stretching nature
of the targets and the exceptional circumstances the Remuneration
Committee made awards to the Executive Directors of 200% of salary
which is the maximum permitted under the Directors’ Remuneration Policy.
The Remuneration Committee retained discretion to reduce vesting of
the 2020 LTIP if it felt appropriate to do so.
The following provides details of the 2020 LTIP awards made on
21 September 2020 to the Executive Directors including performance
conditions.
(1) Absolute share price target
– The first performance condition was based on the achievement of
absolute share price targets by 28 February 2023, whereby 25% of
the total award would vest should Videndum’s absolute share price
reach £9.00 and full vesting of the total award be achieved if
Videndum’s absolute share price reached £18. Vesting between these
prices operated on a straight-line basis in accordance with the
Directors’ Remuneration Policy and in line with the table below.
– No shares vested if the absolute share price does not reach £9.00.
– The share price at the start and end of the performance period will be
averaged over three months.
Videndum absolute share price
% of total award to
vest
£9.00 25%
£10.00 33.33%
£11.00 41.67%
£12.00 50%
£13.00 58.33%
£14.00 66.67%
£15.00 75.00%
£16.00 83.33%
£17.00 91.67%
£18.00 100%
(2) Relative TSR target
– The second performance condition was that the award was also
subject to a relative TSR condition, with vesting at points shown
below (which remain unchanged from arrangements for existing LTIP
awards and in line with existing policy). For the award to vest in full,
Videndum needed to have met the absolute share price target and be
in the upper quartile of the FTSE 250 Index (excluding financial
services companies and investments trusts). The relative TSR ranking
effectively worked as a downward modifier and none of the shares
vested if Videndum’s performance were below the median at the end
of the performance period. This performance condition was
measured from 1 July 2020 through to 28 February 2023 with the
same averaging of share price over three months.
– A straight-line sliding scale operated at points between this and
vesting will not occur below the median.
Videndum’s TSR ranking compared to FTSE 250 constituents
(excluding financial services companies and investment trusts)
% of total award to
vest
Below median 0%
Median 25%
Upper quartile 100%
ROCE
– The Remuneration Committee also took into account a ROCE*
underpin to ensure the underlying financial performance of the
business as part of the vesting outcome. The Committee also
retained a discretion to scale back the vesting of an award should it
result in an unfair outcome for shareholders.
Dividends that would have been paid on shares vesting under the LTIP
during the performance period are reinvested in additional shares for
each of the above awards. The two-year holding period post-vesting will
apply in the normal way.
There is no retesting of any performance condition under any of the
above awards.
TSR is calculated on the basis of growth in the Company’s share price
over the performance period from 1 July 2020 through to 28 February
2023 plus dividends paid during that period and is expressed as a
percentage of average compound annual growth. Share price
performance is averaged over three months at the start and end of a
performance period to eliminate volatility that may result in anomalous
outcomes. The TSR performance is independently verified by FIT
Remuneration Consultants on behalf of the Committee to determine
the outcome.
Outcome
FIT Remuneration Consultants on behalf of the Committee assessed
the final outcome of the 2020 LTIP award as at 28 February 2023. That
assessment was that 46.9% of the 2020 LTIP award vested based on:
Videndum’s absolute share price for the three months ended
28 February 2023 being £11.63 and Videndum’s relative TSR being
ranked at the 82nd percentile against the comparator group. The
remuneration table on page 125 shows the value actually delivered to
the Directors in respect of the vesting 2020 LTIP award that vested on
21 September 2023. It is noted that the Company’s ROCE* for the year
ended 31 December 2022 was 18.8% (2021: 18%, 2020: 4.2%).
LTIP awards made in 2021 and vesting
in respect of performance to 31 December 2023
For awards made in 2021, 33% of an award was subject to TSR with the
Company’s TSR performance ranked against the constituents of the
FTSE 250 Index (excluding financial services companies and investment
trusts) over a three-year performance period. Threshold performance
for the TSR performance condition will be at the median point of the
comparator group and will result in 25% of an award vesting. Full
vesting for the TSR element will be at the upper quartile point of the
comparator group. A straight-line sliding scale operated between each
of the above points. Below threshold performance none of the award
will vest.
67% of the award is subject to adjusted Earnings Per Share* growth
over a three-year performance period ending 31 December 2023. The
threshold for adjusted basic Earnings Per Share* vesting was set at 60
pence per share and full vesting for adjusted basic earnings per share*
was set at 100 pence per share with a straight-line progression
between each point. Below threshold performance, none of the
adjusted basic Earnings Per Share* element will vest.
Vesting will be underpinned by Remuneration Committee discretion
that will take into account, in particular, ROCE performance over the
performance period for the EPS* element of the award.
The Company’s adjusted basic EPS* for the year ended 31 December
2023 was 8.5 pence and the Company’s TSR for the three-year
performance period ended 31 December 2023 was -56% and with the
Company ranked at the 8th percentile against the comparator group.
Neither the TSR performance condition or EPS* performance condition
achieved threshold performance and so the 2021 award did not vest and
lapsed in full on 4 March 2024.
Annual Report on Remuneration continued
Strategic Report Corporate Governance Financial Statements
131
LTIP award – 2023
The Committee would normally make an LTIP award to the Executive Directors following the announcement of the prior year results in March/April
each year. This would be on the basis of an award representing 150% of salary for the Group Chief Executive and 125% for the Group Chief Financial
Officer. The Committee at its February 2023 meeting considered the structure of such an award with performance conditions based on the following:
– Adjusted EPS* growth over a three-year period with threshold set at a certain level of EPS* and full vesting set at a higher level of EPS* and with a
straight-line progression between each point.
– TSR – 33% of the award is based on the Company’s TSR performance measured over a three-year performance period plus dividends paid during
that period and expressed as a percentage of average compound annual growth. Share price performance is averaged over three months at the
start and end of the performance period to eliminate volatility that may result in an anomalous outcome. The TSR performance is independently
verified by FIT Remuneration Consultants on behalf of the Committee and is ranked against the comparator group companies’ TSR performance
to determine the outcome.
– Vesting of an award would normally be underpinned by Remuneration Committee discretion that takes into account, in particular, ROCE*
performance over a three-year performance period for the EPS* element of the award.
Given the significant impact of macroeconomic events coupled with the writers’ and actors’ strikes, the Committee made no LTIP awards in 2023 on
grounds that it was not possible to set meaningful performance conditions at such a turbulent time for the Group.
Deferred Bonus Plan 2023 awards
The following table provides details of the awards made under the DBP on 3 April 2023 in respect of the 2022 annual bonus. There are no performance
conditions or matching shares associated with these awards. The shares are held in an Employee Benefit Trust on behalf of the Directors. The deferral
represents 50% of the after tax bonus paid for the 2022 annual bonus for the Group CEO. Andrea Rigamonti’s deferral of 2022 bonus was at a
proportional level given his appointment as Group CFO with effect from 13 December 2022. Normally, Executive Directors are required to defer 50%
of any after tax annual bonus into the DBP. The 2023 DBP award will be released on the third anniversary of the award – 3 April 2026.
Director Type of award
Number of
shares awarded Face value
1
End of holding period
Stephen Bird
Shares awarded using
deferred Annual Cash Bonus
9,093 £80,492 100% of award on 3 April 2026
Andrea Rigamonti
2
317 £2,805 100% of award on 3 April 2026
1 Face value has been calculated using the Company’s share price at the date of the award of £8.76.
2 Andrea Rigamonti became a Director on 13 December 2022. His 2023 DBP award will remain in the Employee Benefit Trust and only vest at the end of the deferral period on 3 April 2026.
Payments to past Directors for loss of office (audited)
There were no payments to past Directors of the Company for loss of office in 2023.
Chairman and Non-Executive Directors
The Chairman and Non-Executive Directors were paid the following fees in 2023:
Role 2023 annual fee Comment
Chairman £184,000 Fee increased to £184,000 with effect from 1 April 2023 from
£175,000 reflecting a 5% increase given to the wider UK workforce in
2023 and also benchmarked against roles for Chairman of similar
sized listed companies and the time commitment for the role
Non-Executive Director £55,400 Base fee increased to £55,400 with effect from 1 April 2023 from
£52,750 reflecting a 5% increase given to the wider UK workforce
and benchmarked against roles for non-executive directors of similar
sized listed companies and the time commitment for the role
Chair of Audit Committee £10,000 Fee was last increased on 1 January 2014
Chair of Remuneration Committee £10,000 Fee was increased on 1 January 2019
Senior Independent Director £8,000 Fee was increased on 1 January 2019
Employee Engagement Non-Executive Director £5,000 Fee introduced with effect from 1 January 2019
to reflect new role under 2018 UK Corporate Governance Code
The above fees are reviewed annually by the Board with the support of FIT Remuneration Consultants providing market data to ensure that fees
remain appropriate given the size of the Company, time commitment and the need to attract the right experience for the role. The Chairman and
Non-Executive Directors do not receive any other benefits from the Company.
Videndum plc
132
Annual Report and Accounts 2023
Directors’ shareholding requirements and share interests (audited)
The Board has determined that Executive Directors of the Company are required to build up, over a reasonable period of time, a substantial
shareholding in the Company. This shareholding requirement is to represent at least two times base salary. Stephen Bird satisfied this requirement
throughout 2023 with his holding representing 223% as at 31 December 2023. Andrea Rigamonti’s shareholding as at 31 December 2023 represents
53% of salary given his recent appointment on 13 December 2022 and he will work towards this shareholding requirement over the next few years.
Other members of the Operations Executive are encouraged to do the same up to a level of 50% of base salary.
The Chairman and Non-Executive Directors of the Company have no such requirement and have discretion as to whether to hold shares in the
Company or not. The tables below set out the interests in the ordinary shares of the Company held by each Director (or connected persons) of the
Company during the year ended 31 December 2023. In December 2023 each Director participated in the equity raise that completed on 8 December
2023 and the increase in their respective shareholdings through this is reflected in the following table.
Under the 2018 UK Corporate Governance Code there is a requirement for the Company to develop a post-employment shareholding policy,
encompassing vested and unvested shares. The detail of this post-employment shareholding policy is as follows and applies from the 2020 AGM.
Upon the departure of an Executive Director, the post-employment shareholding policy will operate as follows:
– Shares held in the Employee Benefit Trust under the DBP will continue to be held in trust and will be released to the former Executive Director in
accordance with their normal vesting dates. The former Executive Director will be expected to hold any vested DBP shares at least until the
second anniversary of their departure date.
– Shares that have vested to an Executive Director under the LTIP and are subject to the two-year post vesting holding period will continue to be
required to be held by the former Executive Director until the expiry of the two-year post vesting holding period.
– In the event that an Executive Director is treated as a “good leaver” under the LTIP, then any outstanding LTIP awards that have not vested will be
prorated to the date of leaving and remain subject to satisfaction of performance conditions. Subject to those conditions being achieved at the
normal vesting date, shares will typically be released at the earlier of the expiry of the normal two-year post vesting holding period and the second
anniversary of their departure date.
– Shares purchased by an Executive Director using their own personal funds shall not be subject to this post-employment shareholding policy.
Executive Directors’ shareholdings as at 31 December 2023 (audited)
Executive Director
Share ownership
requirement (%
of salary)
Number of
shares owned
outright
(including
connected
persons)
Number of
shares
beneficially
owned (DBP
award shares)
Number of
shares unvested
and subject to
performance (LTIP
shares)
Number of shares
under option
(Sharesave)
Number of shares
under Restricted
Share Plan (RSP)
Ownership
requirements met
(based on shares
owned outright and
DBP award shares)
Stephen Bird 200% 306,364 22,745 153,018 0 0 223%
Andrea Rigamonti 200% 46,842 317 13,388 990 8,680 53%
Chairman and Non-Executive Directors’ shareholdings as at 31 December 2023 (audited)
Director
1 January 2023
or date of appointment if later
31 December
2023
Ian McHoul (Chairman) 20,000 38,726
Erika Schraner 3,805 7,550
Teté Soto 268 5,436
Caroline Thomson 8,407 15,897
Richard Tyson 2,654 6,399
Graham Oldroyd (appointed 12 October 2023) 0 37,453
Anna Vikström Persson (appointed 1 May 2023) 0 26,217
Stephen Harris (appointed 9 November 2023) 0 112,359
– The closing mid-market share price on 29 December 2023 (the last trading day of the year) was £3.48 and the calculation of the percentage shareholding requirement achieved for the Executive
Directors is based on this closing mid-market share price.
– The shares shown in the beneficial holdings table above were acquired by the Directors using their own funds and in the case of the Executive Directors, also through share incentive schemes (or
similar) – see the disclosures below.
– Stephen Bird’s share interests include 22,745 shares (at 31 December 2023) purchased in the market using deferred Annual Cash Bonus and held by the Employee Benefit Trust; the trust used to
hold shares in respect of awards made under the DBP. These shares will vest out of the DBP in 2024, 2025 and 2026, respectively. Neither these shares nor any of the other shares held by
Stephen Bird have any performance conditions attached to them. During the year ended 31 December 2023 Stephen Bird had the following share dealings:
– On 3 April 2023 exercised and retained award shares under the DBP for 2020 over 5,676 ordinary shares and 347 dividend shares.
– On 3 April 2023 acquired 9,093 ordinary shares through the DBP that are held in the Employee Benefit Trust.
– On 29 September 2023 transferred 20,000 shares to his former spouse in compliance with a court order.
– On 29 September 2023 retained 38,394 ordinary shares following the exercise of the 2020 LTIP award that vested at a rate of 46.9%.
– 2,000 shares of Stephen Bird’s holding are held by his spouse.
Annual Report on Remuneration continued
Strategic Report Corporate Governance Financial Statements
133
– Andrea Rigamonti’s share interests include 317 shares (at 31 December 2023) purchased in the market using deferred Annual Cash Bonus and held by the Employee Benefit Trust, the trust used
to hold shares in respect of awards made under the DBP. These shares will vest out of the DBP in 2026. Neither these shares nor any of the other shares held by Andrea Rigamonti have any
performance conditions attached to them. During the year ended 31 December 2023 Andrea Rigamonti had the following share dealings:
– On 1 March 2023 acquired 3,500 ordinary shares.
– On 3 April 2023 acquired 317 ordinary shares through the DBP that are held in the Employee Benefit Trust.
– On 9 May 2023 acquired 3,500 ordinary shares.
– On 8 December 2023, following shareholder approval at a General Meeting on 7 December 2023, each Director subscribed for new ordinary shares in the Company at a price of £2.67 per share.
This direct placement was tied into the £125.0 million equity raise also approved by shareholders at that same General Meeting. Each Director’s respective subscription was as follows:-
– Ian McHoul – 18,726 ordinary shares.
– Stephen Harris – 112,359 ordinary shares.
– Stephen Bird – 93,632 ordinary shares.
– Andrea Rigamonti – 37,453 ordinary shares.
– Caroline Thomson – 7,490 ordinary shares.
– Richard Tyson – 3,745 ordinary shares.
– Erika Schraner – 3,745 ordinary shares.
– Teté Soto – 3,745 ordinary shares.
– Anna Vikström Persson – 26,217 ordinary shares.
– Graham Oldroyd – 37,453 ordinary shares.
– There has been no change to the Directors’ shareholdings described in the table above in the period from 31 December 2023 to 22 April 2024, the date of signing of this report.
Sharesave
The Group operates an all-employee savings-related share option scheme in the UK (“Sharesave”) and a similar international plan in respect of
overseas employees in certain countries (US, Italy, Costa Rica, Japan, France, Singapore, Israel, Australia and Germany). The Scheme and Plan are
open to all the Group’s employees in those countries, including the Executive Directors, and approximately 1,100 of the Group’s employees
participate in this valuable benefit. As at 31 December 2023 Stephen Bird’s and Andrea Rigamonti’s participation in the UK Scheme is shown below.
Director Date of grant
At 1 January
2023
(shares)
Options
exercised
during the
year
Options
lapsed
during the
year
Options
granted
or adjusted
during the
year
At 31
December
2023
(shares)
Exercise
price
(pence)
Market
price at
date of
grant
(pence)
Date from which
exercisable Expiry date
Stephen Bird 24 September
2020
2,282 0 2,282 0 0 552 690
1
1 November
2023
30 April
2024
Andrea
Rigamonti
4
27 September
2021
984 0 0 6 990 1272 1600
2
1 November
2024
30 April
2025
1 The market price for the grant of shares under option was calculated on the basis of the three-day average of the closing mid-market share price from 26 August 2020 to 28 August 2020
inclusive. A 20% discount was applied to this price under this HMRC approved Sharesave Plan. Stephen Bird lapsed his sharesave option in December 2023.
2 The market price for the grant of shares under option was calculated on the basis of the three-day average of the closing mid-market share price from 25 August 2021 to 27 August 2021
inclusive. A 20% discount was applied to this price under this HMRC approved Sharesave Plan.
3 There is no performance condition attached to the exercise of the Sharesave Plan, which is an all-employee plan.
4 Andrea Rigamonti’s sharesave option was adjusted as a consequence of the open offer element of the £125.0 million equity raise with effect from 8 December 2023 in line with HMRC approved
methodology. The original exercise price was £12.80.
Videndum plc
134
Annual Report and Accounts 2023
Long Term Incentive Plan
Each year the Executive Directors are made a conditional award of shares in the Company. For 2020 and 2021, and to encourage the Executive
Directors to recover the business as quickly as possible from the impact of the COVID-19, it was agreed that LTIP awards for the Executive Directors
would represent 200% of salary. LTIP awards are subject to satisfaction of performance conditions over a three-year performance period as
summarised above. The LTIP awards for 2022 reverted to a pre-pandemic level representing 125% of salary. Due to challenging macroeconomic
circumstances in 2023 no LTIP awards for 2023 were made. The following table sets out the outstanding awards under the LTIP as at 31 December
2023 for the Executive Directors. As explained on page 131 of this Report, no LTIP awards were made in 2023.
Director
Date of
award
Awards
at 1 January
2023
Awards
exercised
during the
year
Associated
dividend shares
with the
exercised
award
Awards
lapsed
during the
year
Awards
made
during the
year
3
At 31
December
2023
Market
price on
which
award
made
(pence)
Market
price at
exercise
date
(pence)
Face value
of award
Percentage of
interest that
vests if threshold
performance
achieved
End of
performance
period
Stephen Bird 21
Sept
2020
1
126,023 59,124 13,546 66,899 – – 753 309.5 200% of
annual
salary
25% 28 February
2023
3
March
2021
2
96,273 – – – 648 96,921
3
986 – 200% of
annual
salary
25% 31 December
2023
11
March
2022
55,722 – – – 375 56,097
3
1097 – 125% of
salary
25% 31 December
2024
Total 278,018 59,124 13,546 66,899 1,023 153,018
Andrea
Rigamonti
(appointed
13 December
2022)
11
March
2022
13,299 – – – 89 13,388
3
1097 – N/A 25% 31 December
2024
Total 13,299 – – – 89 13,388
1 The LTIP award made on 21 September 2020 had a performance period running to 28 February 2023 and vested at a level of 46.9% on 29 September 2023.
2 The LTIP award made on 3 March 2021 failed to achieve its performance conditions and lapsed in full on its third anniversary of 3 March 2024.
3 Following the £125.0 million equity raise that completed on 8 December 2023, outstanding LTIP awards for 2021 and 2022 were adjusted to reflect the open offer element of the equity raise in
line with HMRC approved methodology.
Annual Report on Remuneration continued
Strategic Report Corporate Governance Financial Statements
135
Deferred Bonus Plan
Each year, Executive Directors are required to defer a proportion of their annual bonus into the DBP representing 50% of any after tax bonus. As
explained on page 129 of this Report, no bonus was payable to the Executive Directors for 2023. The following table sets out the outstanding awards
under the DBP as at 31 December 2023 for the Executive Directors.
Director
Date of
award
Awards at 1
January
2023
(shares)
Awards
exercised
during the
year
Associated
dividend
shares with
the exercised
awards
Awards
lapsed
during the
year
Awards
made
during the
year
At 31
December
2023
Market
price on
which
award
made
(pence)
Market
price at
exercise
date
(pence)
Face value
of award
Percentage of
interest that
vests if
threshold
performance
achieved
End of
performance
period
Stephen Bird 1 April
2020
1
5,676 5,676 347 – – – 581 – 50% of
annual
bonus
Not
applicable
Shares held in
Employee
Trust to third
anniversary of
award date
13 May
2021
2
2,537 – – – – 2,537 1394 – 50% of
annual
bonus
Not
applicable
Shares held in
Employee
Trust to third
anniversary of
award date
4 April
2022
3
11,115 – – – – 11,115 1351 – 50% of
annual
bonus
Not
applicable
Shares held in
Employee
Trust to third
anniversary of
award date
3 April
2023
4
– – – – 9,093 9,093 885 – 50% of
annual
salary
Not
applicable
Shares held in
Employee
Trust to vest
on third
anniversary of
the award
Total 19,328 5,676 347 – 9,093 22,745
Andrea
Rigamonti
3 April
2023
4
– – – – 317 317 885 – 50% of
annual
salary
Not
applicable
Shares held in
Employee
Trust to vest
on third
anniversary of
the award
Total – – – – 317 317
1 The DBP award made on 1 April 2020 vested on its third anniversary of 1 April 2023. The award plus associated dividend shares were paid out to Stephen Bird on 3 April 2023.
2 The DBP award made to Stephen Bird on 13 May 2021 will vest on the third anniversary of the award on 13 May 2024.
3 The DBP award made on 4 April 2022 to Stephen Bird covered 50% of the bonus earned in respect of the financial year ended 31 December 2021. The award will vest on its third anniversary on
4 April 2025.
4 The DBP award made on 3 April 2023 to Stephen Bird covered 50% of the bonus earned in respect of the financial year ended 31 December 2022. Andrea Rigamonti’s DBP award on 3 April 2023
represented a proportion of his bonus earned in 2022 and is tied to his appointment as a Group Chief Financial Officer on 13 December 2022. The award will vest on its third anniversary of
3 April 2026.
Videndum plc
136
Annual Report and Accounts 2023
Restricted Share Plan (“RSP”)
Before being appointed a Director on 13 December 2022 and not in connection with his service as a Director, Andrea Rigamonti had been given a RSP
award of shares in the Company that vest on the basis of remaining in employment with Videndum at a fixed date. The RSP award was put in place
when he joined Videndum in October 2021 as part of the measures to compensate for other share incentives held with a previous employer. The
details of the RSP award are set out in the table below. Dividend award shares will also be given on the vesting ordinary shares based on dividends
paid during the period of the award. No individual will be given an RSP award once they become a Director of the Company.
Andrea Rigamonti –
Award Date Vesting date
Number of
ordinary shares Performance condition
Share price
for award
16 November 2021 1 July 2024 8,680
1
Remaining employed at
vesting date with Videndum
£14.65
1
The number of ordinary shares awarded has been adjusted to reflect the open offer element of the £125.0 million equity raise on 8 December 2023 in line with HMRC approved methodology
(original amount 8,622 adjusted to 8,680).
Ten-year performance graph of the Company’s ordinary shares compared to comparator group
The Company is required to include a line graph showing the Company’s ordinary share performance compared to an appropriate index over a
ten-year performance period ending 31 December 2023. The graph below illustrates the Company’s annual TSR (share price growth plus dividends
that have been declared, paid and reinvested in the Company’s shares) relative to the FTSE 250 for the preceding ten-year period ending
31 December 2023, assuming an initial investment of £100. This index has been chosen since it is the comparator group (excluding financial services
companies and investment trusts) for one of the performance conditions tied to awards under the LTIP. The Committee notes that the FTSE 250
Index is a recognised broad market equity index, relatively complex and international in nature and is comparable to the Company’s business
operations where approximately 90% of revenues are generated outside the UK. TSR data is taken from Datastream.
Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Dec 18 Dec 19 Dec 20 Dec 21
£161
£73
£300
£50
£100
£150
£200
£250
Dec 23
Videndum ordinary share FTSE 250 Index
Source: Datastream (a LSEG product)
Dec 22
Annual Report on Remuneration continued
Strategic Report Corporate Governance Financial Statements
137
Performance table setting out the total remuneration of the Group Chief Executive
The following table sets out the single figure of total remuneration paid and the amount vesting under short-term and long-term incentives
(as a percentage of the maximum that could have been achieved) to the Group Chief Executive for each of the ten years ended 31 December 2023.
Year (ended 31 December) Group Chief Executive
CEO single figure of total
remuneration
Annual bonus payout
against maximum
opportunity % (including
actual amount paid)
Long-term incentive
vesting rates against
maximum opportunity %
2023 Stephen Bird £583,428 0% 0%
2022 Stephen Bird £1,150,877 50.4% 46.9%
£307,987
2021 Stephen Bird £1,166,196 95.5% 0%
(£566,588)
2020 Stephen Bird £701,744 22.5% 0%
(£133,489)
2019 Stephen Bird £1,151,858 21.5% 72.06%
(£124,445)
2018 Stephen Bird £2,280,723 66.9% 100%
(£377,925)
2017 Stephen Bird £1,596,214 88.4% 67.5%
(£486,771)
2016 Stephen Bird £962,299 77.9% 0%
(£418,450)
2015 Stephen Bird £636,374 20% 0%
(£104,876)
2014 Stephen Bird £745,388 44.25% 0%
(£226,378)
Videndum plc
138
Annual Report and Accounts 2023
Percentage change in remuneration of the Directors and employees
The table below shows the year-on-year percentage change in salary, benefits and annual bonus earned between the year ended 31 December 2023
and the years ended 31 December 2022, 2021 and 2020 for the Directors, compared to the average of earnings of the parent Company employees.
The Remuneration Committee has selected this comparator group on the basis that each of the Directors is UK based and this provides a local
market reference, is a sizeable population and a fair representation of the Group’s employee base.
2019/20
Annual
salary
2019/20
Taxable
benefits
2019/20
Annual
bonus
2020/21
Annual
salary
2020/21
Taxable
benefits
2020/21
Annual
bonus
2021/22
Annual
salary
2021/22
Taxable
benefits
2021/22
Annual
bonus
2022/23
Annual
salary
2022/23
Taxable
benefits
2022/23
Annual
bonus
Stephen Bird,
Group Chief Executive 2.5% 2.5% -7% 0% 0% 324% 3% 3% -45% 5% 5% -100%
Andrea Rigamonti,
Group Chief Financial Officer
(from 13 December 2022) n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Ian McHoul, Chairman 0% n/a n/a 0% n/a n/a 3% n/a n/a 5% n/a n/a
Caroline Thomson,
Non-Executive Director 2.5% n/a n/a 0% n/a n/a 3% n/a n/a 5% n/a n/a
Richard Tyson,
Non-Executive Director 2.5% n/a n/a 0% n/a n/a 3% n/a n/a 5% n/a n/a
Erika Schraner,
Non-Executive Director
(appointed 1 May 2022) n/a n/a n/a n/a n/a n/a n/a n/a n/a 5% n/a n/a
Teté Soto
(appointed 24 November 2022) n/a n/a n/a n/a n/a n/a n/a n/a n/a 5% n/a n/a
Anna Vikström Persson
(appointed 1 May 2023) n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Graham Oldroyd
(appointed 12 October 2023) n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Stephen Harris
(appointed 9 November 2023) n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Parent Company employees 2.5% 2.5% -36% 2.2% 2.2% 2.92% 3% 3% -42% 5% 5% -100%
Group Chief Executive’s pay ratio disclosure
In accordance with Option C as set out in the Companies (Miscellaneous Reporting) Regulations 2018, the following table sets out Stephen Bird’s
(Group Chief Executive) total remuneration for the year ended 31 December 2023 compared with all UK employees of the Group at the 25th
percentile, 50th percentile and 75th percentile. The data has been compiled from available data as at 31 December 2023 for all UK-based employees
and no element of remuneration has been excluded from the calculation. This table will build up over a ten-year period. We have chosen Option C as
it reflects all our UK workforce and is more complete in showing the Group Chief Executive’s remuneration compared to the entire UK workforce. It
uses bonus information for 2022 paid in March 2023 as bonus information for 2023 is not calculated until March 2023 for many UK employees. It is
therefore not possible to use 2023 bonus data since the 2023 Annual Report was approved on 22 April 2024. The same principle applies for prior
years disclosed. The Company believes the median ratio is consistent with the Company’s wider policies on employee pay, reward and progression.
We seek to pay all employees including the Chief Executive fairly for the roles they perform and taking into account a range of factors including the
relevant role, their performance and internal and external measures including pay rates and pay gaps.
Year Method 25th percentile 50th percentile 75th percentile
2019 Option C 82:1 57:1 35:1
£27,833 £40,002 £64,086
2020 Option C 44:1 31:1 19:1
£25,866 £36,965 £61,245
2021 Option C 28:1 19:1 12:1
£26,361 £37,726 £58,866
2022 Option C 52:1 37:1 22:1
£29,804 £42,020 £69,610
2023 Option C 22:1 14:1 8:1
£26,901 £42,172 £69,489
Annual Report on Remuneration continued
Strategic Report Corporate Governance Financial Statements
139
The actual salaries paid for each UK employee at the respective quartiles for 2023 were: 25th percentile – £25,427; 50th percentile – £38,035; and
75th percentile – £59,000. The change in the pay ratios from 2019 to 2023 has been greatly impacted by COVID-19. In 2020, the Company
implemented short-time working and other measures such as salary waivers in response to the pandemic. In 2021, Executive Directors did not receive
any pay increase in contrast to the wider UK employee population and long-term incentives for the Executive Directors did not vest due to
performance conditions not being achieved. As the Company has recovered from the impact of the pandemic in 2023 and the Group had delivered a
record profit in 2022 leading to a higher proportion of variable remuneration being delivered to the Group Chief Executive, the pay ratio gap widens
where annual bonuses and long-term incentives are payable. The impact of challenging macroeconomic factors in 2023 coupled with the writers’ and
actors’ strikes in 2023 have significantly impacted the Group’s performance in 2023 with the result that variable remuneration has been significantly
reduced. We consider that the use of Option C and the percentiles shown for UK employees are reasonably representative.
Relative importance of spend on pay
The following table sets out for the year ended 31 December 2023 compared to the year ended 31 December 2022 the actual expenditure of the
Company in terms of remuneration paid to or receivable by all employees of the Group and distributions to shareholders by way of dividends. There
have been no other significant distributions and payments required to be disclosed that would assist in understanding the relative importance of
spend on pay.
Year ended 31
December 2023
Year ended 31
December 2022 % change
Total remuneration paid to all Videndum employees £95.8m £114.4m -16.3%
Total dividends paid to shareholders £0m £18.0m -100%
Statement of implementation of Directors’ Remuneration Policy in the year ending 31 December 2024
This section provides an overview of how the Committee is proposing to implement the Remuneration Policy in 2024.
(1) Base salary
The table below sets out the 2024 base salary for each Executive Director, together with the percentage increase from 2023. Salary increases in
2024 are to be implemented with effect from 1 July 2024 and the figure in brackets shows the base salary for the period from 1 January 2024 to
30 June 2024.
Executive Director 2023 salary Increase
Stephen Bird £533,800
(£513,310)
4%
Andrea Rigamonti £342,000
(£310,000)
10%
The Committee decided that in line with normal practice, a 4% increase for Stephen Bird’s salary was merited for 2024 and with effect from
1 July 2024. This was based on several factors including: (i) that the wider employee population across the Group received a 4% increase for 2024;
(ii) in recognition of the skills, experience and high performance of Stephen Bird and his contribution to the Group; (iii) the need to provide a
remuneration package to the Executive Directors that is competitive and retains and incentivises the individuals; and (iv) in recognition of a period of
sustained high inflation in the wider labour market.
Andrea Rigamonti’s salary of £342,000 has been determined on the basis that it reflects his growing value to the Company and his experience in the
role following his appointment in December 2022 and compared to market data for comparable roles with other FTSE SmallCap companies with
input from the Committee’s remuneration consultants. His salary on appointment was set at a level that was around 15% below his predecessor’s
salary reflecting Andrea Rigamonti’s experience. The increase of 10% will be with effect from 1 July 2024. As noted in the 2022 Remuneration report,
the Remuneration Committee would look over time to increase Andrea Rigamonti’s remuneration in accordance with the Policy as Andrea’s
experience, contribution and importance to the Group increased.
(2) Benefits
Benefits, including car allowance, private healthcare and income protection will be paid at the same rate as in 2023.
(3) Pension allowance
Pension allowances paid to Executive Directors are set out in the table below. All Executive Directors receive a pension contribution of 8% of base
salary which is in line with pension contributions provided to the wider UK employee workforce. Stephen Bird’s and Andrea Rigamonti’s pension
contributions in the table below reflects that base salaries in 2024 as set out in (1) above.
Executive Director
Pension
allowance
Stephen Bird (8% of salary) £41,884
Andrea Rigamonti (8% of salary) £26,080
Videndum plc
140
Annual Report and Accounts 2023
(4) Annual bonus
The maximum opportunity remains unchanged at 125% of base salary. Half of any net after tax annual bonus earned for the year ended
31 December 2024 will be deferred into the DBP for a period of three years and held in the form of shares in the Company. There will be no matching
award that can be earned on this deferred bonus. The table below provides information on the performance measures against which performance
for the 2024 Annual Bonus Plan will be measured.
Core measures for 2024 Annual Bonus Plan
Weighting
(% of overall opportunity)
Adjusted Group profit before tax* 50%
Free cash flow 25%
Role-specific personal objectives set by the Board and Remuneration Committee for the Executive Director 25%
The performance measures selected reflect the strategic and operational objectives of the Group. The profit and free cash flow measures are
independently assessed. Both the Profit Before Tax and Free cash flow performance measures are to be measured against targets set for the Full
Year 2024. The Committee considers that the specific targets and personal objectives for 2024 are commercially sensitive at this time and therefore
has not disclosed them. The Committee will disclose these targets and objectives once a bonus has been paid and subject to the Committee
considering that they are no longer commercially sensitive.
(5) Long Term Incentive Plan
Stephen Bird and Andrea Rigamonti will each receive an award of shares under the LTIP of 150% of salary in the case of the Group Chief Executive
and 125% of salary for the Group Chief Financial Officer. These awards will be made in the 42-day period following the announcement of the full year
results for the year ended 31 December 2023 that will be announced on 22 April 2024. The performance conditions for the 2024 LTIP awards will be as
follows: 67% of the award will be subject to adjusted basic EPS* growth over a three-year performance period. The Remuneration Committee will
determine the precise adjusted EPS* targets for threshold and maximum vesting in the 42-day period following the announcement of the full year
results for the year ended 31 December 2023, to be announced on 22 April 2024. The remaining 33% of the award will be subject to TSR with the
Company’s TSR performance ranked against the constituents of the FTSE 250 Index (excluding financial services companies and investment trusts)
over a three-year performance period. Threshold performance for the TSR element will be at the medium point of the comparator group and will
result in 25% of an award vesting. Full vesting of the TSR element will be at the upper quartile of the comparator group. A straight-line sliding scale
will operate between each of the above points. Below threshold, none of the TSR element will vest. Vesting will be underpinned by Committee
discretion that will take into account, in particular, ROCE* performance over the performance period for the EPS* element of the award. Once the
LTIP award is made, details will be announced to the market, including the specific performance targets. Any awards vesting under the LTIP 2024, after
deduction of taxes, will be subject to a further two-year holding period, thereby more closely aligning the participants’ interests with the long-term
interests of shareholders. The quantum for awards to the Executive Directors for the 2024 will be confirmed at the time of the award but will be
within limits for the Policy on remuneration.
(6) Chairman and Non-Executive Directors’ remuneration
The fee structure for the Chairman and Non-Executive Directors for 2024 is set out in the following table. It has been agreed that fees for 2024 will
not be increased from their level in 2023.
Role 2024 fee 2023 fee
Chairman (Ian McHoul)
£184,000
£184,000
(£175,000)1
Non-Executive Directors’ base fee
£55,400
£55,400
(£52,750)2
Chairman Designate
5
£210,000 –
Chair of Audit Committee £10,0003 £10,000
Chair of Remuneration Committee £10,0003 £10,000
Senior Independent Director £8,0003 £8,000
Employee Engagement Non-Executive Director £5,0004 £5,000
1 Ian McHoul became Chairman on 21 May 2019 when the Chairman’s fee was £170,000 per annum. The fee was increased to £175,000 from 1 January 2022 and increased on 1 April 2023 to
£184,000 per annum. This increase in 2022 and 2023 reflected a similar level given to the wider employee workforce of 3% and 5% respectively in 2022 and 2023, is in line with market data
provided by FIT Remuneration Consultants for the role and reflects the time commitment for the role.
2 Following a review of Non-Executive Directors’ fees with the support of FIT Remuneration Consultants, it was agreed that no fee increase for 2024 would be implemented. In 2023, a 5% increase
to the base fee would be applied with effect from 1 April 2023. This aligned the Non-Executive Directors increase with the Executive Directors and wider employee workforce, also took into
account market data provided by FIT Remuneration Consultants for the role and reflects the time commitment for the role.
3 The fees of the Chair of the Remuneration Committee and Senior Independent Director were last increased to their current level in 2019 to take account of the nature of each role, the time
commitment, performance of the respective individuals, market rates for the complexity of the roles and the calibre of individuals. The Audit Committee Chair’s fee upon review was considered
to be in line with market rates and appropriate for the demands of the role and complexity of the Company.
4 In 2019, the Company appointed Caroline Thomson as the Non-Executive Director with responsibility for employee engagement in accordance with the 2018 UK Corporate Governance Code.
Given the responsibility of this role and additional work associated with it, the Board approved that a fee of £5,000 per annum be payable to Caroline Thomson for that role. This fee will be paid
to any other successor Non-Executive Director in future years. A full description of the activity involved with this role is given on pages 88 and 92 of the Annual Report.
5 Upon his appointment as Chairman at a date to be confirmed in 2024, Stephen Harris’ fee as Chairman will be £210,000 per annum. Until such appointment, Stephen Harris will receive the
Non-Executive Directors’ base fee.
Annual Report on Remuneration continued
Strategic Report Corporate Governance Financial Statements
141
The Board has agreed that fees will typically be reviewed annually to ensure that they remain appropriate.
Malus and clawback
Under the rules of the Annual Bonus Plan, LTIP and DBP, awards are subject to a malus rule whereby the Remuneration Committee has the power to
reduce, cancel or impose further conditions upon a bonus or award in circumstances that the Committee determines such action is appropriate,
including circumstances where a material misstatement of the Company’s audited financial results has occurred, or serious reputational damage to
the Company has occurred as a result of a participant having breached the Company’s Code of Conduct, a miscalculation or an assessment of any
performance conditions that was based on incorrect information, or the occurrence of an insolvency or administration event. In addition, under the
above plans, a clawback provision exists where in the same circumstances as for malus, any future award that is paid out can be clawed back from a
participant for a period of up to three years from it vesting or being paid out.
Voting at Annual General Meeting
At the Company’s AGM held on 11 May 2023, shareholders were asked to vote on the new Remuneration Policy Report and for an advisory vote on
the Directors’ Annual Remuneration report for the year ended 31 December 2022. Both resolutions were approved by shareholders on a poll at the
2023 AGM and the table below sets out the proxy votes voted for, against and withheld for the resolution.
Resolution
For proxy votes
and % of
votes cast
Against proxy
votes and % of
votes cast
Withheld
proxy votes
To approve the Directors’ Remuneration Policy – to cover Directors remuneration for the period
from the 2023 AGM through to the 2026 AGM
38,446,561 5,001 252,150
99.2% 0.8%
Resolution
For proxy votes
and % of
votes cast
Against proxy
votes and % of
votes cast
Withheld
proxy votes
Advisory vote on the Annual Report on Remuneration for the year ended 31 December 2022 37,802,074 927,732 41,102
97.6% 2.4%
As at the date of the Company’s AGM on 11 May 2023 the Company had 46,596,422 ordinary shares in issue. The Remuneration Committee,
in line with guidance, considers that an against vote of 20% or more of the votes cast is deemed to be significant in connection with a resolution on
Directors’ remuneration. In the event that a significant level of concern is raised at future AGMs, both the Chairman of the Board and the Chair of
the Remuneration Committee will contact the Company’s major shareholders following an AGM to understand the precise detail of the concern
being raised. Subject to that, the Committee and the Board as a whole will consider how best to address the concern being raised. This may involve a
revision to the Company’s Policy on Directors’ remuneration at a subsequent AGM or some other change which can be implemented without further
shareholder consultation. The Committee and the Board are committed to an open and transparent dialogue with shareholders on material matters
of concern.
The Remuneration Committee
The Remuneration Committee comprised the following members during 2023: Caroline Thomson – Chair, Richard Tyson, Erika Schraner, Teté Soto,
Graham Oldroyd (from 12 October 2023) and Anna Vikström Persson (from 1 May 2023).
All of the Committee members are independent Non-Executive Directors.
The Committee, on behalf of the Board, determines the Policy, base salaries, annual cash bonus arrangements, participation in incentive schemes,
pension arrangements and all other benefits received by the Executive Directors including any exit packages.
The Committee also oversees the framework of remuneration for the Operations Executive, including terms of service, pay structure, annual cash
bonus, pensions, share incentive arrangements and all other benefits and also has regard to wider employee remuneration within the Group.
The Committee invites individuals to attend meetings, as it deems necessary, to assist with consideration of remuneration matters. During 2023 the
following individuals attended meetings of the Committee: Ian McHoul (Board Chairman), Stephen Bird (Group Chief Executive), Andrea Rigamonti
(Group Chief Financial Officer), Marco Pezzana (Group Chief Operating Officer and Divisional CEO, Media Solutions), Stephen Harris (Chairman
Designate) and Jon Bolton (Group Company Secretary and HR Director). Representatives of the Committee’s remuneration advisor, FIT
Remuneration Consultants, also attended meetings in 2023.
The Executive Directors or members of the Operations Executive are not present when their own remuneration is being considered.
The remuneration of the Chairman and the Non-Executive Directors is determined by the Board as a whole, with the Chairman or the relevant
Non-Executive Director abstaining when his or her remuneration is considered.
For further information regarding governance for the Remuneration Committee see pages 113 and 141 to 142 of this Annual Report.
Videndum plc
142
Annual Report and Accounts 2023
External advisors
The Committee appointed FIT Remuneration Consultants as its
external remuneration advisor in 2019. Their appointment involved the
Committee Chairman reviewing several potential advisors including
written proposals and interviews. Following this process, the
Remuneration Committee selected FIT Remuneration Consultants. FIT
Remuneration Consultants charge for their time given in providing a
service to the Company and during 2023 the level of fees paid to
remuneration advisors totalled £60,060 (2022: £44,759) and was
charged on a time basis. This fee covered advice relating to disclosures
in the 2022 Directors’ Remuneration report, measurement of
performance conditions associated with long-term incentive
arrangements, preparation around a new Remuneration Policy including
consultation with major shareholders and general remuneration advice
including recruitment and retention packages. FIT Remuneration
Consultants do not provide any other services to the Company. FIT
Remuneration Consultants are a member of the Remuneration
Consultants Group and operate under that Group’s voluntary code of
practice for remuneration consultants in the UK. The Committee is
satisfied that the advice it received from FIT Remuneration Consultants
during 2023 was objective and independent. The Company or any of its
individual Directors has no other connection with FIT Remuneration
Consultants other than as acting as the Committee’s external
remuneration advisor. The Committee also received advice and
administrative support during 2023 from the Group Company Secretary
and HR Director, Jon Bolton.
This Annual Remuneration report has been approved by the
Remuneration Committee and signed on its behalf by:
Caroline Thomson
Remuneration Committee Chair
22 April 2024
Annual Report on Remuneration continued
Directors
The Directors who held office at 31 December 2023 and up to the date
of this report are set out on pages 76 and 77 along with their
biographies and photographs.
Anna Vikström Persson joined the Board as an independent Non-Executive
Director from 1 May 2023 and became a member of the Audit,
Remuneration and Nominations Committees.
Graham Oldroyd was appointed an independent Non-Executive Director
with effect from 12 October 2023 as well as becoming a member of the
Audit, Remuneration and Nominations Committees.
On 26 September 2023, the Company announced Ian McHoul’s intention
not to seek re-election at the Company’s 2024 Annual General Meeting
due to personal reasons. After a search process, as outlined in the
Nominations Committee Report on page 96, the Company announced
the appointment of Stephen Harris to the Board as an independent
Non-Executive Director and Chairman Designate with effect from
9 November 2023. Stephen Harris will succeed Ian McHoul as Chairman
on a date to be confirmed.
Erika Schraner has also informed the Board that she will not seek
re-election at the 2024 AGM and will cease to be a Director from the
close of the AGM.
All Directors of the Company, with the exception of Ian McHoul and
Erika Schraner as outlined previously, will stand for reappointment as
Directors at the Company’s 2024 AGM and further details can be found
in the AGM Notice.
The remuneration of the Directors including their respective
shareholdings in the Company is set out in the Remuneration report on
pages 112 to 142.
Directors’ and Officers’ liability insurance and indemnification
of Directors
The Company maintains Directors’ and Officers’ liability insurance
which gives appropriate cover for any legal action brought against its
Directors. The Company has also granted indemnities to each of its
Directors to the extent permitted by law. Qualifying third-party
indemnity provisions (as defined in Section 324 of the Companies Act
2006) have been adopted for each Director and indemnify in relation to
certain losses and liabilities which the Directors may incur to third
parties in the course of acting as Directors of the Company.
Equity raise
On 7 December 2023, shareholders approved the £125.0 million equity
raise which helped to strengthen the Company’s Balance Sheet. The
equity raise comprised a Firm Placing of 28,122,472 Ordinary Shares at
£2.67 per New Ordinary Share and a Placing and Open Offer of
18,748,315 New ordinary Shares at £2.67 per New Ordinary Share.
Following shareholder approval at a general meting, the equity raise
completed on 8 December 2023. The price of £2.67 represented a 3.3%
discount to the closing share price on 20 November 2023. Directors’
participation in the equity raise is set out on page 133.
Shareholder rights
The Company’s shareholders have a series of rights in connection with
the governance of the Company. These are contained in statute,
principally the Companies Act 2006, regulations such as the UKLA’s
Listing Rules and in the Company’s Articles of Association. A shareholder,
or shareholders acting together, can use procedures set out in the
Companies Act 2006, to requisition a general meeting of the Company.
The Directors are required to call such a general meeting once the
Company has received requests to do so from shareholders representing
at least 5% of the paid-up capital of the Company as carries the right of
voting at general meetings of the Company (excluding any paid-up
capital held as treasury shares).
Under the Companies Act 2006, either (i) a member or members
representing at least 5% of the total voting rights of all the members
having a right to vote on the resolution at the AGM (excluding voting rights
attached to any treasury shares); or (ii) at least 100 members with the
right to vote on the resolution at the AGM and each holding, on average,
at least £100 of paid-up share capital, may require the Company to give
members of the Company entitled to receive notice of the next AGM,
notice of a resolution which may properly be moved at that meeting.
Such a resolution may be properly moved unless it is defamatory,
frivolous or vexatious or if it would be ineffective for any reason.
Such a request may be in hard copy or electronic form and must identify
the resolution of which notice is to be given or the matter to be included
in the business, must be authorised by the person or persons making it
and must be received by the Company not less than six weeks before
the meeting. A request for a matter to be included in the business of the
meeting must also be accompanied by a statement setting out the
grounds for the request.
Shareholders have an express right to vote annually on the Directors’
Remuneration report and at least every three years they have the right
to vote on the policy governing Directors’ remuneration. Under the
Company’s Articles of Association, shareholders have the right to vote
on the re-election of all Directors of the Company annually at the AGM.
It is also confirmed that under the Company’s governance
arrangements, including the Articles of Association, there are no
anti-takeover devices or provisions to prevent a takeover of the
ownership of the Company through the normal ways permitted under
UK law and regulation. There are no limitations on share ownership and
the issuance of new capital, subject to shareholder approval, would be
to address funding needs and is not a tool for an anti-takeover measure.
Share capital and powers for the Company issuing or buying
back its own shares
The Company was authorised by shareholders at the 2023 AGM to
purchase in the market up to 10% of the Company’s issued share
capital, as permitted under the Company’s Articles of Association. No
shares were bought back under this authority during the year ended
31 December 2023 and up to the date of this report. The Company has
only ordinary shares of 20 pence nominal value in issue and does not
have any shares held in treasury. Note 4.3 to the consolidated financial
statements on page 205 summarises the rights of the ordinary shares
as well as the number issued during 2023. An analysis of shareholdings
is shown on page 234. The closing mid-market price of a share of the
Company on 31 December 2023, together with the range during the
year, is also shown on page 234. For details of own shares held by the
Company see note 4.3 to the consolidated financial statements.
This standard authority is renewable annually and the Directors will
seek to renew it at the 2024 AGM.
The Directors were granted authority at the 2023 AGM to allot ordinary
shares up to a nominal amount of £931,776, which, at the time
represented 4,658,884 ordinary shares of 20 pence each. This authority
will apply until the conclusion of the 2024 AGM. At the 2024 AGM,
shareholders will be asked to grant an authority to allot ordinary shares
up to a nominal amount of £1,884,017 (representing 10% of the
Company’s issued share capital).
At the 2023 AGM, a special resolution was passed to authorise the
Directors to allot ordinary shares for cash without first offering them to
existing shareholders in proportion to their existing shareholdings. At the
2024 AGM, shareholders will be asked to renew this authority – in line with
the latest institutional shareholder guidelines – to make non-pre-emptive
issues for cash only and otherwise up to a nominal amount of £942,008
(representing 5% of the Company’s issued share capital).
Directors’ report
Strategic Report Corporate Governance Financial Statements
143
Directors’ report continued
A special resolution will also be proposed at the 2024 AGM to renew the
Directors’ authority to repurchase up to 10% of the Company’s issued
ordinary shares in the market. While the Directors have no present
intention of exercising the authority to make market purchases, the
authority provides the flexibility to allow them to do so in the future and
any shares purchased pursuant to this authority may be held in treasury
or may be cancelled.
Dividends
No final dividend has been recommended by the Board given the current
financial performance of the business. The Board will look to resume
dividend payments when appropriate to do so.
Substantial shareholdings
The Company had been advised under the Disclosure Guidance and
Transparency Rules, or had ascertained from its own analysis, that the
following held notifiable interests in the voting rights in the Company’s
issued share capital, as at 22 April 2022:
Shareholder
Number of voting
rights
% of voting
rights
Alantra Asset Management 21,463,126 22.78%
Aberforth Partners 14,638,741 15.54%
Royal London Asset Management 7,566,024 8.03%
M&G Investments 5,938,279 6.30%
Janus Henderson Investors 3,992,785 4.24%
BGF Investments 3,227,700 3.43%
Invesco 2,851,393 3.03%
Committees of the Board
The Board has established Audit, Nominations and Remuneration
Committees. Details of these Committees, including membership,
governance and their activities during 2023, are contained in the
Governance section of this Annual Report and in the Remuneration report.
Stakeholder engagement
The Board’s engagement with various stakeholders is outlined on pages
42 to 43 and pages 87 and 88.
Companies Act 2006 disclosures
In accordance with Section 992 of the Companies Act 2006 the
Directors disclose the following information:
– The Company’s capital structure and voting rights are summarised in
note 4.3, and there are no restrictions on voting rights nor any
agreement between holders of securities that result in restrictions on
the transfer of securities or on voting rights.
– The Company did not purchase any of its own shares during 2023 and
holds no ordinary shares in treasury.
– There exist no securities carrying special rights with regard to the
control of the Company.
– Details of the substantial shareholders holding over 3% of the issued
share capital and their shareholdings in the Company are listed in the
table on the left.
– Shares awarded under the Company’s DBP are held in a nominee
capacity by the Employee Benefit Trust (“EBT”). The Trustees of the
EBT do not seek to exercise voting rights on shares held in the EBT. No
voting rights are exercised in relation to shares unallocated to
individual beneficiaries.
– The rules concerning the appointment and replacement of Directors,
amendment to the Articles of Association and powers to issue or buy
back the Company’s shares are contained in the Articles of
Association of the Company and the Companies Act 2006.
– There exist no agreements to which the Company is party that may
affect its control following a takeover bid.
– There exist no agreements between the Company and its Directors
providing for compensation for loss of office that may occur because
of a takeover bid.
Articles of Association
The Company’s Articles of Association set out the rights of shareholders
including voting rights, distribution rights, attendance at general
meetings, powers of Directors, proceedings of Directors as well as
borrowing limits and other governance controls. A copy of the Articles
of Association can be requested from the Group Company Secretary.
Amendments to the Company’s Articles of Association were approved
by shareholders at the 2023 AGM to bring them into line with market
best practice.
Conflicts of interest
During the year no Director held any beneficial interest in any contract
significant to the Company’s business, other than a contract of
employment. The Company has procedures set out in the Articles of
Association for managing conflicts of interest. Should a Director
become aware that they, or their connected parties, have an interest in
an existing or proposed transaction with the Group, they are required to
notify the Board as soon as reasonably practicable.
Videndum plc
144
Annual Report and Accounts 2023
Political donations
Further to shareholder approval at the 2021 AGM empowering the Directors to make political donations, it is confirmed that no such donations were
made in the year ended 31 December 2023. The Company’s policy is not to make political donations. The 2025 AGM will be asked to renew this
existing authority that expires in May 2025.
Reporting requirements
The following sets out the location of additional information which forms part of the Directors’ report:
Reporting requirement Comprising Location
Strategic report – An indication of the Group’s likely future business
developments.
– An indication of the Group’s research and development
activities.
– Information on the Group’s policies for the employment of
disabled persons and employee involvement.
– The Group’s disclosures regarding greenhouse gas emissions.
Pages 2 to 71.
Non-financial information statement – Environmental matters, employees, social matters, respect
for human rights, anti-corruption and anti-bribery matters.
– Business model.
– Policies.
– Principal risks.
– Non-financial KPIs.*
Page 71.
Statement on corporate governance – Review of the Board’s governance arrangements during the
year.
– Review of the Board’s Committee’s arrangements during the
year.
Pages 74 to 75 and 80 to 82.
Financial instruments – Financial risk management objectives and policies of the
Group.
– The exposure of the Group to foreign currency risk, interest
rate risk, and liquidity risk.
Page 198.
Responsible business – Explanation of our approach to business ethics, employees,
community and the environment.
Pages 60 to 70.
Employee engagement statement – Explanation of how the Directors have engaged with
employees and taken them into account when making
principal decisions.
Employee engagement section on
pages 88. Stakeholder engagement
on pages 87.
Statement regarding fostering
relationships with suppliers,
customers and others
– Explanation of how the Directors have fostered the
Company’s business relationships with suppliers, customers,
employees and others, and taken each group into account
when making principal decisions.
Section 172 statement on page 86.
Going concern
The Board has, as at the date of signing these financial statements, determined that, given the sensitivities over the timeline and pace of recovery
from the strikes and the financial impact on the Group (including potential covenant breaches) of a slower than expected recovery and worsening
macroeconomic conditions, a material uncertainty exists which may cast significant doubt on the Group’s ability to continue as a going concern such
that it may be unable to realise its assets and discharge its liabilities in the normal course of business. The full going concern and viability statement
is outlined on pages 31 to 33.
* The Group uses APMs to aid the comparability of information between reporting periods and Divisions, by adjusting for certain items which impact upon IFRS measures, to aid the user in
understanding the activity taking place across the Group’s businesses. APMs are used by the Directors and Management for performance analysis, planning, reporting and incentive purposes.
Where relevant, further information on specific APMs is provided in the Glossary on page 226. The Group believes that these APMs, which are not considered to be a substitute for or superior to
IFRS measures, provide stakeholders with additional helpful information and enable an alternative comparison of performance over time.
Strategic Report Corporate Governance Financial Statements
145
Statement of Directors’ responsibilities in respect of the Annual
Report and the financial statements
The Directors are responsible for preparing the Annual Report and the
Group and Parent Company financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial statements for
each financial year. Under that law the Directors have elected to
prepare the Group financial statements in accordance with United
Kingdom adopted international accounting standards. The financial
statements also comply with International Financial Reporting
Standards (“IFRSs”) as issued by the IASB. The Directors have chosen to
prepare the Parent Company financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law), including FRS 101
“Reduced Disclosure Framework”. Under company law the Directors
must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the Company
and of the profit or loss of the Company for that period. Under
company law, the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state
of affairs of the Group and Parent Company and of their profit or loss
for that period. In preparing each of the Group and Parent Company
financial statements, the Directors are required to:
– Select suitable accounting policies and apply them consistently.
– Make judgements and estimates that are reasonable and prudent.
– For the Group financial statements, state whether they have been
prepared in accordance with IFRS as adopted by the EU.
– For the Parent Company financial statements, state whether
applicable UK Accounting Standards have been followed.
– Prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Group and the Parent Company
will continue in business.
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Parent Company’s
transactions and disclose with reasonable accuracy, at any time, the
financial position of the Parent Company and enable them to ensure
that its financial statements comply with the Companies Act 2006.
They have general responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the Group and to prevent and
detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible
for preparing a Strategic Report, Directors’ Report, Directors’
Remuneration report and Corporate Governance statement that
complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company’s website.
Legislation in the UK governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
In addition, each of the Directors considers that the Annual Report,
taken as a whole, is fair, balanced and understandable and that it
provides all the information necessary for shareholders to assess the
Company’s position and performance, business model and strategy.
Post Balance Sheet events
On 5 January 2024 certain land and buildings of the Production
Solutions Division were sold for a net sale price of £2.5 million.
There were no other events after the Balance Sheet date that require
disclosure.
Disclosure of information to the auditor
The Directors who held office at the date of approval of this Directors’
report confirm that, so far as they are each aware, there is no relevant
audit information (as defined in Section 418(2) of the Companies Act
2006) of which the Company’s auditor is unaware; and each Director
has taken all the steps that they ought to have taken as a Director to
make themselves aware of any relevant audit information and to
establish that the Company’s auditor is aware of that information.
Responsibility Statement of the Directors in respect of the
Annual Report and Accounts
Each of the Directors, whose names and functions are listed on page 76
to 77 of the Annual Report and Accounts, confirm that, to the best of
their knowledge:
– the financial statements, prepared in accordance with the applicable
set of accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the issuer and the
undertakings included in the consolidation taken as a whole; and
– the Strategic report and Directors report (including the Governance
report) include a fair review of the development and performance of
the business and the position of the issuer and the undertakings
included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties they face.
Annual General Meeting (“AGM”)
The 2024 AGM will be held at 9.00am on Wednesday, 19 June 2024 at
116 Pall Mall, London SW1Y 5ED. Should it be necessary to rearrange the
venue and timing for the AGM, we will communicate this to
shareholders by way of a stock exchange announcement.
The Company will be making use of the electronic voting facility
provided by its registrars, Equiniti Limited. The facility includes CREST
voting for members holding their shares in uncertificated form. For
further information, please refer to the section on online services and
electronic voting set out in the notes to the Notice of Meeting.
The notice of the AGM and an explanation of the resolutions to be put
to the meeting are set out in the Notice of Meeting accompanying this
Annual Report. The Board fully supports all the resolutions set out in the
Notice and encourages shareholders to vote in favour of each of them as
they intend to in respect of their own shareholdings. Voting at the AGM
will be conducted by way of a poll and shareholders are encouraged to
submit a completed proxy form in line with the Notice of AGM.
Auditor
Deloitte LLP will continue in office as auditor to complete the 2023
year-end audit, however separate resolutions will be proposed at the
2024 AGM concerning the appointment of PricewaterhouseCoopers LLP
and to authorise the Board to agree their remuneration.
The Directors’ report was approved and authorised for issue by the
Board of Directors on 22 April 2024 and signed on its behalf by
Jon Bolton
Group Company Secretary
22 April 2024
Directors’ report continued
Videndum plc
146
Annual Report and Accounts 2023
Independent auditor’s report to the members
of Videndum plc
Report on the audit of the financial statements
1. Opinion
In our opinion:
– the financial statements of Videndum plc (the ‘parent company’) and its subsidiaries (the ‘group’) give a true and fair view of the state of
the group’s and of the parent company’s affairs as at 31 December 2023 and of the group’s loss for the year then ended;
– the group financial statements have been properly prepared in accordance with United Kingdom adopted international accounting
standards and International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB);
– the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice, including Financial Reporting Standard 101 “Reduced Disclosure Framework”; and
– the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
– the consolidated income statement;
– the consolidated statement of comprehensive income;
– the consolidated and parent company balance sheets;
– the consolidated and parent company statements of changes in equity;
– the consolidated statement of cash flows; and
– the related notes 1 to 5 and parent company notes a to q.
The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and United Kingdom
adopted international accounting standards and IFRSs as issued by the IASB. The financial reporting framework that has been applied in the
preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced
Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the group and the parent company in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public interest entities, and we
have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services provided to the group and parent
company for the year are disclosed in note 2.1 to the financial statements. We confirm that we have not provided any non-audit services prohibited
by the FRC’s Ethical Standard to the group or the parent company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
3. Material uncertainty related to going concern
We draw attention to Section 1 of the notes to the financial statements, which indicates the sensitivities of the forecasts on key assumptions, which
are linked to the timeline and pace of recovery from the Strikes and the financial impact on the Group (including potential covenant breaches) of any
slower than expected recovery, and worsening macroeconomic conditions.
As stated in note 1, these events or conditions indicate that a material uncertainty exists that may cast significant doubt on the group’s and parent
company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in preparation of the
financial statements is appropriate.
Our evaluation of the directors’ assessment of the group’s and the parent company’s ability to continue to adopt the going concern basis of
accounting included:
– Evaluated past performance of the Group as impacted by the actors’ and writers’ strikes and other macroeconomic headwinds;
– Obtained the terms of the Group’s financing facilities and the recent equity raise and evaluated the terms including the nature of the facilities,
repayment terms and revised covenants;
– Obtained an understanding of the Directors’ assessment over going concern including relevant controls (see also section 7.2);
– Challenged the assumptions in the Directors’ forecasts including the base case and reasonable downside scenarios, by performing sensitivity
analysis, evaluating contradictory evidence including market research, and testing historical accuracy of forecasts and testing the underlying data;
– Checking the consistency of forecasts and assumptions with each other and those used in other areas;
– Assessing the feasibility of the Directors’ mitigating actions by considering additional facts or information available; and
– Assessing the appropriateness of disclosures in the financial statements.
In relation to the reporting on how the group has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to
in relation to:
– The directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of
accounting; and
– The directors’ identification in the financial statements of the material uncertainty related to the group’s and parent company’s ability to continue
as a going concern over a period of at least twelve months from the date of approval of the financial statements.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant section of this report.
Strategic report Corporate Governance Financial Statements
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4. Summary of our audit approach
Key audit matter The key audit matters that we identified in the current year were:
– Going concern (see material uncertainty related to going concern section)
– Valuation of inventory obsolescence provision
– Revenue cut-off
– Deferred taxation
Within this report, key audit matters are identified as follows:
Newly identified
Increased level of risk
Similar level of risk
Decreased level of risk
Materiality The materiality that we used for the Group financial statements was £1.3 million (2022: £2.6 million) which
was determined based on a blended approach of adjusted profit before tax*, revenue and net assets.
Scoping The group has subsidiaries across several global locations. Our scoping is determined based on their
contribution to revenue and net assets. Based on this, we have identified certain entities as full scope audits,
certain entities where we performed audit procedures on specified balances and certain entities where we
performed analytical procedures. The entities subject to either full scope audits or procedures on specified
account balances collectively accounted for 84% (2022: 80%) of Group revenue and 81% (2022: 75%) of net
assets. We utilised Deloitte teams in the USA and Italy for the audits of entities in those locations.
Significant changes
in our approach
We have identified the material uncertainty related to going concern (section 3 of this report) and revenue
cut-off as key audit matters in the current year. We continue to recognise the valuation of inventory
obsolescence provision and deferred taxation as key audit matters (refer to section 5 below). We also used a
different basis for materiality compared to the prior year (refer to section 6 below).
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the
current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These
matters included those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts
of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. In addition to the matter described in the material uncertainty related to going concern section, we
have determined the matters described below to be the key audit matters to be communicated in our report.
5.1. Valuation of inventory obsolescence provision
Key audit matter description At 31 December 2023, the gross inventory balance from continuing and discontinuing operations was £124.3
million (2022: £130.5 million), against which there was £28.8 million (2022: £23.2 million) provision.
Significant management judgement is involved in determining the adequacy of the inventory obsolescence
provision across a wide range of products, held within different geographical regions, and set against a
backdrop of ever-changing technology in the image capture and sharing market as well as the writers’ and
actors’ strikes that occurred during 2023.
In respect of future forecast usage management consider the provision as a percentage of sales demand for
previous years, and use historic information on the consumption of inventory and inventory write offs as part
of a retrospective review of discontinued and slow moving inventory items which form part of the inventory
provision. Additionally management perform overlays to the provision to comply with IAS 2. Given the high
level of management judgement involved, particularly in respect of forecast future usage, we deemed this a
potential fraud risk for our audit.
Management has highlighted inventory obsolescence provisioning as a key accounting estimate in note 1. The
Audit Committee report on page 103 also refers to inventory provisioning as one of the significant issues and
judgements. Further information is included in note 3.3 to the financial statements.
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How the scope of our audit
responded to the key audit
matter
In order to address this key audit matter, we have completed audit procedures including:
– Obtaining an understanding of the controls relating to inventory provisioning;
– Evaluating the appropriateness of the methodology used to calculate the inventory provision;
– Challenging the reasonableness of the Group’s judgements and the assumptions used; specifically by
assessing the provision percentages in relation to sales demand with comparison to prior years;
– Challenging management’s overlays to the base provision calculation;
– Assessing the integrity of the underlying calculation by checking the accuracy of the ageing of discontinued
and slow-moving inventory items as well as assessing the rate of the current and prior year consumption of
inventory;
– Assessing the level of inventory write-offs in the year as part of a retrospective review of the accuracy of
the overall inventory provision at 31 December 2022;
– Assessing the exposure of inventory relating to slow-moving ranges but for which no provision is included;
– Assessing how the impact of the writers’ and actors’ strikes, the macroeconomic environment in which the
group operates in, and lower than expected consumer confidence has been factored into the inventory
provisioning; and
– Assessing the appropriateness of the disclosures made in relation to inventory provisioning in the Group’s
financial statements.
Key observations Based on the audit procedures performed we are satisfied the overall inventory provision is appropriate.
During the course of our audit process we identified and reported to the Audit Committee a number of control
observations (please refer to section 7.2 for further information).
5.2. Revenue cut-off
Key audit matter description During the year the Group recognised total revenue of £306.9m (2022: £442.5m) as disclosed in note 2.
The Group determines the point at which the revenue performance obligation has been fulfilled based on
different shipping terms and estimates the delivery times to the point at which control passes to the
customer.
The Group uses a variety of shipping terms which can result in different revenue recognition points. The
complexity and variety of shipping methods along with varying delivery timeframes and application of any
discounts and incentives requires judgement and a change in any of these can make it difficult for the Group
to determine when the performance obligation has been fulfilled.
The increase in risk classification from the prior year reflects the variety of shipping terms and arrangements
and challenging macroeconomic conditions as well as the impact of the writers’ and actors’ strikes. We
therefore deem this a potential fraud risk for our audit.
The accounting policy is described in note 1 where this is also included as a critical accounting judgement.
These significant judgement areas are also referred to within the Audit Committee report on page 109-110.
How the scope of our audit
responded to the key audit
matter
In order to address this key audit matter, we have completed audit procedures including:
– Obtaining an understanding of the controls relating to the recognition of revenue in the appropriate period;
– Selecting a sample of the revenue transactions in the period both pre and post year-end to assess whether
revenue has been recorded appropriately,
– Reviewing and assessing the commercial arrangements, to determine the correct point of revenue
recognition for different shipping arrangements and agreements with customers;
– Testing a sample of revenue transactions at each component, responsive to the risk identified, and
obtaining support for appropriate revenue recognition including shipping documentation and payments
received;
– Performing post-year end debit and credit notes testing to ensure transactions have been recorded in the
correct period; and
– Inspecting any changes to contractual terms, customer incentives, credit terms, or whether any side
agreements have been made around the year end to test revenue has been recorded in the correct period.
Key observations Based on the audit procedures performed we are satisfied revenue has been appropriately recorded in 2023.
During the course of our audit process we identified and reported to the Audit Committee a number of control
observations (please refer to section 7.2 for further information).
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149
5.3. Deferred Tax
Key audit matter description At 31 December 2023, the deferred tax asset (net after deferred tax liabilities) has increased to £44.2 million
(2022: £43.7 million).
The Group recognises deferred tax assets relating to carried forward losses and similar attributes in accordance
with IAS 12 Income Taxes. Deferred tax assets are recognised to the extent it is probable that future taxable
profit will be available against which the unused tax losses, unused tax credits and deductible temporary
differences can be utilised. Deferred tax assets are assessed for realisability as of each reporting date.
Based on the facts and circumstances and forecasts at the balance sheet date, management concluded that
deferred tax assets are appropriate to be recognised. The Group have continued to recognise deferred tax
assets, acknowledging there is a material uncertainty with respect to going concern as discussed in note 4.2.
Further information on the deferred tax asset is included in note 2.4 to the financial statements.
How the scope of our audit
responded to the key audit
matter
In order to address this key audit matter, we have completed audit procedures including:
– With the involvement of our tax specialists, considering whether the sources of forecast taxable income
were of the appropriate character to utilise the related deferred tax assets;
– Evaluating the forecasts of future taxable profit and considering whether they are consistent with evidence
obtained in other areas of the audit;
– Evaluating the corroborating and contradictory evidence to assess whether it is probable that the affected
entities will be able to use all available deferred tax assets;
– Assessing the consistency of the deferred tax forecast with other forecasts prepared by management, such
as the going concern forecast;
– Assessing the historical accuracy of forecasts by comparing the current period actual trading performance
against the Board approved forecasts; and
– Assessing the appropriateness of the disclosures made in the Group’s financial statements.
Key observations Based on the audit procedures performed we are satisfied the overall deferred tax asset balance is appropriate.
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a
reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in evaluating
the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements Parent Company financial statements
Materiality £1.3 million (2022: £2.6 million) £1.2 million (2022: £2.5 million)
Basis for determining materiality The materiality that we used for the Group financial
statements was £1.3 million which was determined
based on a blended approach of adjusted profit before
tax (excluding acquisition related charges and integration
and restructuring costs), revenue and net assets.
In the prior year we based materiality on 5% of
adjusted profit before tax.
Parent company is initially determined based on 1%
of net assets, which is capped at 95% of Group
materiality. This is consistent with the prior year.
Rationale for the benchmark
applied
We have changed the basis on which we have
determined materiality in the current year to reflect the
deterioration of the Group’s performance. We have
used a blended approach to determine a materiality
that is appropriate for a business of this size and most
relevant for the users of the financial statements.
Materiality of £1.3 million represents 100% of adjusted
profit before tax (2022: 2.2%), 0.4% of revenue (2022:
0.3%) and 0.9% of net assets (2022: 1.3%).
Net assets benchmark has been used as this is a
non-trading holding company and it is the most
relevant metric to users of the financial statements.
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected
misstatements exceed the materiality for the financial statements as a whole.
Group financial statements Parent Company financial statements
Performance materiality 60% (2022: 70%) of Group materiality
60% (2022: 70%) of Parent Company materiality
Basis and rationale for determining
performance materiality
In determining the decreased performance materiality for the current period, we considered the following factors:
– the continued adverse impact of the macroeconomic environment and the implications for the going
concern assessment;
– the overall quality of the control environment including internally identified control observations; and
– the level of corrected and uncorrected misstatements identified in previous audits.
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6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £65,000 (2022: £130,000), as well as
differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure
matters that we identified when assessing the overall presentation of the financial statements.
7. An overview of the scope of our audit
7.1. Identification and scoping of components
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including Group-wide controls, and assessing the risks
of material misstatement at the Group level. Based on that assessment we focused our scope on the main trading subsidiaries of the group and
divided these into full scope audits, specified account balance audits and analytical reviews.
Our scoping is determined based on components’ contribution to revenue and net assets. The subsidiaries that were subject to either a full scope
audit or audits of specified account balances collectively covered 84% (2022: 80%) of Group revenue and collectively covered 81% (2022: 75%) of net
assets. These audit procedures were performed to materiality levels applicable to each component, which was lower than the Group materiality level
and ranged from £1.2 million to £0.5 million (2022: £2.5 million to £0.7 million).
At the Group level we also tested the consolidation process and carried out analytical procedures to confirm our conclusion that there were no
significant risks of material misstatement of the aggregated financial information of the remaining components not subject to full scope or
specified scope audits.
Full audit scope 47
%
Audit of specified
account balances
37%
Review at Group level
16%
Revenue
Full audit scope 58%
Audit of specified
account balances 23%
Review at Group level
19%
Net assets
7.2. Our consideration of the control environment
In the current year we planned to obtain an understanding of relevant controls within a number of key business processes and test the operating
effectiveness of the revenue controls.
With the assistance of our IT specialists we also obtained an understanding of the relevant IT controls within the above mentioned business
processes and those which underpin the revenue cycle.
The results of our testing identified a number of control deficiencies. The nature of these deficiencies, including those relating to IT, primarily related to:
– The precision of controls around the inventory provision calculations;
– Preparation of the going concern and acquired intangible impairment models and the precision of the management review controls of these
models;
– Precision of review controls around monthly reconciliations and comparison of actuals to budget;
– Completeness of controls over accounting for marketing related costs and any changes in customer terms; and
– The level of management challenge relating to the classification of adjusting items.
As such we extended the scope of our substantive procedures in response to the identified deficiencies and did not place reliance on controls.
We intended to take controls reliance in revenue across the Group however we were only able to achieve this in two components.
As described in the Internal controls and risk management section on page 107, the Audit Committee will continue to oversee the actions taken to
remediate the findings.
7.3. Our consideration of climate-related risks
The Group continues to develop its assessment of the potential impacts of climate change, as explained in the Chief Executive Officer’s review
within the strategic report on page 17. Climate change and the transition to a low carbon economy were considered in the Group’s key judgements
and estimates in the financial statements as disclosed in note 1. These incorporate actions and strategies, to the extent they have been approved
and can be reliably estimated in accordance with the Group’s accounting policies. We evaluated the Group’s assessment of the impact of climate
risks where they have the potential to impact the key judgements and estimates within the financial statements, including the assessment of the
carrying value of non-current assets and environmental provisions and evaluating whether appropriate disclosures have been made in the financial
statements. We also considered whether information included in the climate related disclosures in the Annual Report were materially consistent
with our knowledge obtained in the audit and the financial statements.
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7.4. Working with other auditors
The Group audit was conducted exclusively by the global network of Deloitte member firms under the direction and supervision of the Group audit
team. Component auditors were assigned to perform audit procedures in line with the scoping of the respective components within their jurisdiction.
For the Group audit, the component auditors focused on components classified for full scope audits and audits of specified account balances.
Further work was performed at a Group level over the consolidation and components not in scope. Dedicated members of the Group audit team
were assigned to each component to facilitate an effective and consistent approach to component oversight.
The planned programme which we designed as part of our involvement in the component auditors’ work was delivered over the course of the Group
audit. The extent of our involvement which commenced from the planning phase included:
– Setting the scope of each component auditor and assessment of the component auditors’ independence.
– Designing the audit procedures for all significant risks to be addressed by component auditors and issuing Group audit instructions detailing the
nature and form of the reporting required by the Group engagement team.
Frequent calls and meetings (including in person meetings) were held between the Group and component teams and our procedures included, where
appropriate, providing direction on enquiries made by the component auditors through online and telephone conversations, a review of each
component auditor’s engagement file by a senior member of the Group audit team and Group team virtual or in-person attendance at local
component audit close meetings. Component visits were performed at the Italian, US and UK sites. Each component team was led by a component
partner, with direction and supervision provided by the Group audit partner.
8. Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon.
The directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we
do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue as a going
concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend
to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
10. Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: frc.org.uk/
auditorsresponsibilities. This description forms part of our auditor’s report.
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of
detecting irregularities, including fraud is detailed below.
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11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and
regulations, we considered the following:
– the nature of the industry and sector, control environment and business performance including the design of the group’s remuneration policies, key
drivers for directors’ remuneration, bonus levels and performance targets;
– the Group’s own assessment of the risks that irregularities may occur either as a result of fraud or error;
– results of our enquiries of management, internal audit, the Group’s in-house legal counsel, the directors and the audit committee about their own
identification and assessment of the risks of irregularities, including those that are specific to the group’s sector;
– any matters we identified having obtained and reviewed the group’s documentation of their policies and procedures relating to:
– identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
– detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
– the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
– the matters discussed among the audit engagement team including significant component audit teams and relevant internal specialists, including
tax, valuations, pensions, IT, financial instrument and fraud specialists regarding how and where fraud might occur in the financial statements
and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the
greatest potential for fraud in the following areas: revenue cut-off, impairment cut-off and the valuation of the inventory obsolescence provision. In
common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory framework that the group operates in, focusing on provisions of those laws and
regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and
regulations we considered in this context included the UK Companies Act, Listing Rules, pensions legislation and tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with
which may be fundamental to the group’s ability to operate or to avoid a material penalty.
11.2. Audit response to risks identified
As a result of performing the above we identified valuation of inventory obsolescence provision and revenue cut-off as key audit matters related to
the potential risk of fraud or non-compliance with laws and regulations. The key audit matters section of our report explains the matters in more
detail and also describes the specific procedures we performed in response to those key audit matters.
In addition to the above, our procedures to respond to risks identified included the following:
– reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and
regulations described as having a direct effect on the financial statements;
– enquiring of management, the audit committee and in-house legal counsel concerning actual and potential litigation and claims;
– performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
– reading minutes of meetings of those charged with governance, reviewing internal audit reports reviewing correspondence with HMRC;
– in addressing the risk of fraud in the impairment of Lightstream, testing the appropriateness of the timing of the recognition of the impairment
by obtaining an understanding of the key assumptions used in the model and challenging these by performing independent sensitivity analysis;
reviewing pre and post year end Board minutes for any contradictory evidence with respect to the timing of the impairment; and challenging
management’s communications evidencing the timeline of events resulting in an impairment; and
– in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments;
assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale
of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including internal
specialists and significant component auditors, and remained alert to any indications of fraud or non-compliance with laws and regulations
throughout the audit.
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
– the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
– the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit,
we have not identified any material misstatements in the strategic report or the directors’ report.
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13. Corporate Governance Statement
The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that part of the Corporate
Governance Statement relating to the group’s compliance with the provisions of the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance
Statement is materially consistent with the financial statements and our knowledge obtained during the audit:
– the directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material
uncertainties identified set out on pages 31-33;
– the directors’ explanation as to its assessment of the group’s prospects, the period this assessment covers and why the period is appropriate
set out on pages 31-33;
– the directors’ statement on fair, balanced and understandable set out on page 146;
– the board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 36-41;
– the section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on pages
36-41; and
– the section describing the work of the audit committee set out on pages 103-111.
14. Matters on which we are required to report by exception
14.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
– we have not received all the information and explanations we require for our audit; or
– adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches
not visited by us; or
– the parent company financial statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’ remuneration have not been made or
the part of the directors’ remuneration report to be audited is not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
15. Other matters which we are required to address
15.1. Auditor tenure
Following the recommendation of the audit committee, we were appointed by the members of the Company’s Annual General Meeting on 15 May 2018
to audit the financial statements for the year ending 31 December 2018 and subsequent financial periods. The period of total uninterrupted
engagement including previous renewals and reappointments of the firm is 6 years, covering the years ended 31 December 2018 to 31 December 2023.
This will be our final year as auditor, with PwC LLP succeeding us as auditor of the Group for the year ending 31 December 2024.
15.2. Consistency of the audit report with the additional report to the Audit Committee
Our audit opinion is consistent with the additional report to the audit committee we are required to provide in accordance with ISAs (UK).
16. Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work
has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and
for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the
company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.15R – DTR 4.1.18R, these financial
statements form part of the Electronic Format Annual Financial Report filed on the National Storage Mechanism of the FCA in accordance with DTR
4.1.15R – DTR 4.1.18R. This auditor’s report provides no assurance over whether the Electronic Format Annual Financial Report has been prepared in
compliance with DTR 4.1.15R – DTR 4.1.18R.
Alistair Pritchard FCA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
22 April 2024
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Introduction and table of contents
Primary Statements
Consolidated Income Statement 156
Consolidated Statement of Comprehensive Income 157
Consolidated Balance Sheet 158
Consolidated Statement of Changes in Equity 159
Consolidated Statement of Cash Flows 160
Section 1 – Basis of Preparation 161
Section 2 – Results for the Year 167
2.1 (Loss)/profit before tax (including segmental information) 167
2.2 Adjusting items 171
2.3 Net finance expense 174
2.4 Tax 175
2.5 Earnings per share 180
Section 3 – Operating Assets and Liabilities 182
3.1 Intangible assets 182
3.2 Property, plant and equipment 185
3.3 Working capital 187
3.4 Discontinued operations and non-current assets classified as held for sale 189
3.5 Provisions 192
3.6 Leases 193
3.7 Acquisitions 195
Section 4 – Capital Structure 196
4.1 Net debt 196
4.2 Financial instruments 198
4.3 Share capital and reserves 205
Section 5 – Other Supporting Notes 207
5.1 Employees 207
5.2 Pensions 208
5.3 Share-based payments 212
5.4 Contingent liabilities 214
5.5 Related party transactions 215
5.6 Group investments 215
5.7 Subsequent events 217
Videndum plc Company Financial Statements 218
Company Balance Sheet 218
Company Statement of Changes in Equity 219
Notes to the Company Financial Statements 220
Glossary of Alternative Performance Measures 226
Five Year Financial Summary 233
Shareholder Information and Financial Calendar 234
Each section sets out the accounting policies applied in producing these financial statements together
with any key judgements and estimates used. Text boxes provide an introduction to each section.
Strategic report Corporate Governance Financial Statements
155
Consolidated Income Statement
For the year ended 31 December 2023
Notes
2023 2022
£m£m
Continuing operations
Revenue
2.1
30 6 .9
4 42. 5
Cost of sales
(193.0)
(2 51 .7)
Other income
0.7
–
Gross profit
114. 6
19 0.8
Operating expenses
2.1/2.2
(1 1 9. 3)
(14 1.8)
Operating (loss)/profit
2.1
(4 . 7)
49. 0
Comprising
– Adjusted operating profit
12 .8
66.2
– Adjusting items in operating (loss)/profit from continuing operations
2.2
(1 7. 5)
(17.2)
Finance income
2.4
3.0
Finance expense
(16. 5)
(9. 8)
Net Finance expense
2.3
(1 4 .1)
(6 . 8)
(Loss)/profit before tax
(1 8. 8)
42.2
Comprising
– Adjusted profit before tax
1.3
6 0.2
– Adjusting items in (loss)/profit before tax from continuing operations
2.2
(2 0 .1)
(1 8 .0)
Taxation
2.4
6.7
4.7
Comprising
– Taxation on adjusted (loss)/profit
2 .9
(15.6)
– Adjusting items in taxation
3.8
2 0. 3
(Loss)/profit for the year after tax from continuing operations
(1 2 .1)
4 6 .9
Loss for the year after tax from discontinued operations
3.4
(6 6 . 0)
(1 4 .0)
(Loss)/profit for the year attributable to owners of the parent
(7 8 .1)
3 2 .9
Earnings per share from continuing operations
Basic earnings per share
2.5
(2 4 . 4)p
101.8p
Diluted earnings per share
2.5
(2 4 . 4)p
9 7.9p
Earnings per share from discontinued operations
Basic earnings per share
2.5
(1 3 3 .1)p
(3 0 . 4)p
Diluted earnings per share
2.5
(1 3 3 .1)p
(3 0 . 4)p
Earnings per share from continuing and discontinued operations
Basic earnings per share
2.5
(157.5)p
71.4p
Diluted earnings per share
2.5
(157.5)p
6 8 . 7p
1
2022 has been re-stated to present discontinued operations separately from the continuing operations. See note 3.4 “Discontinued operations and non-current assets classified as held for sale”.
Average exchange rates
1 .1 5
Euro
1 .1 7
1.24
US$
1.24
1
Videndum plc
156
Annual Report and Accounts 2023
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
Notes
20232022
£m£m
(Loss)/profit for the year
(7 8 .1)
3 2 .9
Other comprehensive income/(expense):
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit obligation
5.2
0 .1
9.1
Related tax
–
(2 .1)
Items that are or may be reclassified subsequently to profit or loss:
Currency translation differences on foreign currency subsidiaries
(12 .2)
22.6
Net investment hedges – net gain/(loss)
–
(5.8)
Fair value of cash flow hedges reclassified to the Income Statement
(4 . 2)
2.2
Effective portion of changes in fair value of cash flow hedges
2 .9
3.2
Tax associated with changes in cash flow hedges
0. 3
(1.4)
Other comprehensive (expense)/income, net of tax
(1 3 .1)
2 7. 8
Total comprehensive (expense)/income for the year attributable to owners of the parent
(91.2)
60.7
Strategic report Corporate Governance Financial Statements
157
Consolidated Balance Sheet
As at 31 December 2023
Notes
20232022
£m£m
Assets
Non-current assets
Intangible assets
3.1
152 .6
2 1 7. 9
Property, plant and equipment
3.2
56.4
6 6.6
Employee benefit asset
5.2
4.2
3 .9
Trade and other receivables
3.3
5. 2
7. 4
Derivative financial instruments
2.3
3.8
Non-current tax assets
2.4
3 .1
3 .0
Deferred tax assets
2.4
55. 4
53.2
Total non-current assets
2 7 9. 2
355.8
Current assets
Inventories
3.3
94 . 5
1 0 7. 3
Contract assets
3.3
2.0
1.8
Trade and other receivables
3.3
4 7. 1
67 .1
Derivative financial instruments
1.8
2.3
Current tax assets
2.4
5 .7
4 .1
Cash and cash equivalents
4.1
8 .7
15.8
Total current assets
1 5 9. 8
198.4
Assets of the disposal group classified as held for sale
3.4
12 . 3
–
Total assets
451. 3
554. 2
Liabilities
Current liabilities
Bank overdrafts
4.1
4.0
–
Interest-bearing loans and borrowings
4.1
0. 2
3 6 .0
Lease liabilities
4.1
5.6
6.0
Contract liabilities
3.3
2.4
2.5
Trade and other payables
3.3
42 . 5
78.8
Derivative financial instruments
0 .1
0 .9
Current tax liabilities
2.4
7. 8
16 .7
Provisions
3.5
3 .1
5.5
Total current liabilities
65.7
14 6. 4
Non-current liabilities
Interest-bearing loans and borrowings
4.1
9 9. 0
13 8.5
Lease liabilities
4.1
28 .4
28. 8
Other payables
3.3
1.2
1.8
Employee benefit liabilities
5.2
2 .9
3 .1
Provisions
3.5
0. 8
2.4
Deferred tax liabilities
2.4
11.2
9. 5
Total non-current liabilities
143. 5
1 8 4 .1
Liabilities of the disposal group classified as held for sale
3.4
4 .6
–
Total liabilities
213.8
3 30. 5
Net assets
2 3 7. 5
22 3 .7
Equity
Share capital
1 8 .9
9. 4
Share premium
133.7
24 .3
Translation reserve
(13 .0)
(0. 8)
Capital redemption reserve
1.6
1.6
Cash flow hedging reserve
2 .9
3 .9
Retained earnings
93. 4
185.3
Total equity
4.3
2 3 7. 5
22 3 .7
Balance Sheet exchange rates
Euro
1 .1 5
1 .1 3
US$
1.27
1.21
Approved and authorised for issue by the Board of Directors on 22 April 2024 and signed on its behalf by:
Andrea Rigamonti
Group Chief Financial Officer
Videndum plc
158
Annual Report and Accounts 2023
Notes
Capital Cash flow
Share Share Translation redemption hedging Retained Total
capital premium reserve reserve reserve earnings equity
£m£m£m£m£m£m£m
Balance at 1 January 2022
9. 3
2 3 .1
(17 .6)
1. 6
(0 .1)
1 5 7. 6
1 7 3 .9
Profit for the year
–
–
–
–
–
3 2 .9
3 2 .9
Other comprehensive income for the year
–
–
16.8
–
4 .0
7. 0
2 7. 8
Total comprehensive income for the year
–
–
16.8
–
4 .0
3 9.9
6 0.7
Contributions by and distributions to owners
Dividends paid
–
–
–
–
–
(1 8 .0)
(1 8 .0)
Own shares purchased
–
–
–
–
–
(5 .8)
(5.8)
Own shares sold
–
–
–
–
–
3 .1
3 .1
New shares issued
0 .1
1.2
–
–
–
–
1.3
Share-based payment charge, net of tax
–
–
–
–
–
8.5
8.5
Balance at 31 December 2022 and 1 January 2023
9. 4
24.3
(0. 8)
1.6
3 .9
185.3
223.7
Loss for the year
–
–
–
–
–
(7 8 .1)
(7 8 .1)
Other comprehensive (expense)/income for the year
–
–
(12 . 2)
–
(1 .0)
0.1
(1 3 .1)
Total comprehensive loss for the year
–
–
(12 .2)
–
(1 . 0)
(7 8. 0)
(91.2)
Contributions by and distributions to owners
Dividends paid
–
–
–
–
–
(1 1 . 6)
(1 1 . 6)
Own shares purchased
–
–
–
–
–
(3.7)
(3.7)
Own shares sold
–
–
–
–
–
1.2
1.2
New shares issued, net of costs
4.3
9. 5
1 0 9. 4
–
–
–
(0 .8)
1 1 8 .1
Share-based payment charge, net of tax
–
–
–
–
–
1.0
1 .0
Balance at 31 December 2023
1 8 .9
133.7
(13 .0)
1.6
2 .9
93 .4
2 37. 5
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
Strategic report Corporate Governance Financial Statements
159
Notes
20232022
£m£m
Cash flows from operating activities
(Loss)/profit for the year
(7 8 .1)
3 2 .9
Adjustments for:
Net finance expense
14 .5
6.8
Taxation
(2 . 6)
(8 .2)
Depreciation
14. 4
15. 3
Impairment of fixed assets
3.1/3.2
53.8
1 .9
Amortisation of intangible assets
14 .0
18.3
Net loss on disposal of property, plant and equipment
0. 3
–
Fair value (gains)/losses on derivative financial instruments
(0. 2)
0 .1
Foreign exchange losses
–
0.6
Share-based payment charge
1.5
8 .9
Earnout charges and retention bonuses
1.7
4. 5
Loss on disposal of business before tax
1.0
–
Cash generated from operating activities before changes in working capital, including provisions
20. 3
8 1 .1
Decrease/(increase) in inventories
7. 6
(8. 0)
Decrease/(increase) in trade debtors
16.3
(6 . 8)
Decrease in other debtors and contract assets
0.7
1.8
(Decrease)/increase in trade creditors
(2 0.5)
1.3
Decrease in other creditors and contract liabilities
(12 . 3)
(6 .9)
(Decrease)/increase in provisions
(2 . 3)
2.8
Cash generated from operating activities
9. 8
65. 3
Interest paid
(1 5 . 4)
(9. 4)
Tax paid
(1 0. 5)
(7. 2)
Net cash (used in)/from operating activities
(1 6 .1)
4 8 .7
Cash flows from investing activities
Proceeds from sale of property, plant and equipment and software
0.2
–
Purchase of property, plant and equipment
(4 . 8)
(7. 1)
Capitalisation of software and development costs
(13 .7)
(1 3 .1)
Acquisition of businesses, net of cash acquired
3.7
(1 . 6)
(33 .2)
Disposal of business
3.4
(0.9)
–
Net cash used in investing activities
(2 0.8)
(5 3 . 4)
Cash flows from financing activities
Proceeds from the issue of shares, net of costs
1 1 8 .1
1. 3
Proceeds from the sale of own shares
1.2
3 .1
Own shares purchased
(3.7)
(5. 8)
Principal lease repayments
(6 . 7)
(6 . 4)
Repayment of interest-bearing loans and borrowings
(3 1 3 .9)
(93. 8)
Borrowings from interest-bearing loans and borrowings
24 0.0
13 0. 3
Dividends paid
(1 1 . 6)
(1 8. 0)
Net cash from financing activities
23.4
10.7
(Decrease)/increase in cash and cash equivalents
4.1
(13 .5)
6.0
Cash and cash equivalents at 1 January
15.8
7. 9
Effect of exchange rate fluctuations on cash held
2.4
1 .9
Cash and cash equivalents and overdrafts at 31 December
4.7
15 .8
1
1
1 Total cash outflow for leases is £8.2 million (2022: £7.9 million) of which £1.5 million (2022: £1.5 million) relates to interest and £6.7 million (2022: £6.4 million) to principal lease repayments.
Consolidated Statement of Cash Flows
For the year ended 31 December 2023
Videndum plc
160
Annual Report and Accounts 2023
This section sets out the Group’s accounting policies that relate to the financial statements as a whole. Where an accounting policy is specific
to one note, the policy is described in the note to which it relates.
Videndum plc (“the Company”) is a public company limited by shares incorporated in the United Kingdom under the Companies Act. The Company is
registered in England and Wales and its registered address is Bridge House, Heron Square, Richmond, TW9 1EN, United Kingdom. The consolidated
financial statements of the Company as at and for the year ended 31 December 2023 comprise the Company and its subsidiaries (together referred
to as “the Group”).
The Group’s financial statements have been prepared in accordance with UK-adopted International Accounting Standards, and have been approved
by the Directors.
The financial statements are principally prepared on the basis of historical cost. Areas where other bases are applied are identified in the accounting
policy outlined in the relevant note.
Climate change risks and opportunities, as detailed in TCFD on pages 45 to 57, were considered together with the Board approved budget, the
strategy, and Management cash flow projections. The budget and cash flow projections have been utilised in the assessment of the carrying value of
assets, impairment of CGUs and goodwill, and the going concern and viability assessment.
In reporting financial information, the Group presents Alternative Performance Measures (“APMs”) which are not defined or specified under the
requirements of International Financial Reporting Standards (“IFRS”). The Group believes that these APMs, which are not considered to be a
substitute for or superior to IFRS measures, provide stakeholders with additional helpful information and enable an alternative comparison of
performance over time. A glossary on pages 226-232 provides a comprehensive list of APMs that the Group uses, including an explanation of how
they are calculated, why they are used and how they can be reconciled to a statutory measure where relevant.
The Company has elected to prepare its Parent Company financial statements in accordance with Financial Reporting Standard 101 Reduced
Disclosure Framework (“FRS 101”).
Going concern
Background and context
2023 was an exceptionally challenging year for Videndum, with the Group suffering from the prolonged adverse impacts of three major headwinds.
These headwinds were (1) the weakened macroeconomic climate, (2) destocking of inventory by retail customers and distribution partners, and (3)
the US writers’ and actors’ strikes (together “the strikes”).
First, from late 2022, the Group’s performance from its consumer and Independent Content Creator (“ICC”) markets was impacted by
macroeconomic conditions, mainly the increase in interest rates and inflation, which led to weakening demand and customers delaying purchases.
Second, concerns amongst the Group’s retail customers and distribution partners regarding the global economy, higher interest rates, and their working
capital levels, led to destocking. These two headwinds affected the consumer segment as well as the ICC segment (together c.40-50% of Group revenue).
Third, the unprecedented and unforeseen impact from the lengthy strikes significantly affected demand for the Group’s high-end cine and scripted
TV products (c.20% of Group revenue exposed to the US cine market, and a further c.10% to global cine markets). During the early part of the first
half of 2023, demand from the cine and scripted TV markets weakened as contract renewal negotiations between the Writers Guild of America
(“WGA”) and Alliance of Motion Picture and Television Producers (“AMPTP”) created uncertainty for the Group’s customers. Negotiations
subsequently broke down and the WGA called a strike for the first time since 2007. Whilst the WGA strike officially commenced on 2 May 2023, the
impact from the decline in orders received by Videndum began to be noticed in the months leading up to May 2023. On 14 July 2023, the Screen
Actors Guild – American Federation of Television and Radio Artists (“SAG-AFTRA”), the actors’ union who had also been conducting its own contract
renewal negotiations with the AMPTP, also started strike action. This resulted in all cine and scripted TV productions ceasing in the US and spreading
globally where US actors were involved. In addition, the strikes meant that some of the Group’s new product launches were delayed.
The adverse impact on revenue from continuing operations in 2023 from the strikes was c.£60 million, the reduction from destocking was
c.£25 million, and the residual reduction of c.£50 million was from challenging trading conditions across our markets impacting demand in the
consumer and ICC segments.
Against this challenging backdrop, the Group took significant mitigating actions, including agreeing covenant amendments with its lending banks,
cost reductions including restructuring projects, and developed plans to conserve cash.
The Group has had, and continues to have, support from its lending banks which was evidenced in 2023 by the Group agreeing an extension of
£35 million of its Revolving Credit Facility (“RCF”), as well as negotiating and agreeing Amended Covenants.
Self-help actions taken to reduce discretionary costs in the short-term included applying La Cassa Integrazione Guadagni Ordinaria (“CIGO”), the
non-refundable Italian government supported furlough programme, in the Group’s Italian-based facilities to partly mitigate the lower demand whilst
ensuring employees were looked after and retained by the business. In addition, reduced marketing and travel spend was implemented across the
Group, shortened working hours were implemented at the Creative Solutions Division, hiring freezes, and bonuses across the Group were not awarded.
The Group implemented several restructuring projects to reduce its cost base and focus on the more profitable areas. The most noticeable activities
included the disposal of the Lightstream business, commencing the sale process of Amimon, the closure of the Syrp research and development
centre in New Zealand and the exit from the motion controls market, moving Media Solutions’ US distribution out of New Jersey into its Savage
facilities in Arizona, transferring Wooden Camera operations from Texas to Costa Rica, and moving Rycote operations to the Ashby-de-la-Zouch
factory in the UK.
The combined benefit of the self-help and restructuring actions was to reduce costs by c.£13 million in 2023 versus 2022. However, the actions only
partly mitigated the weaker trading, and as a result, having reviewed all options, the Board decided that an equity raise was required. Videndum
successfully completed an equity raise in December 2023, generating net proceeds of £117.9 million. Refer to note 4.3 “Share capital and reserves” for
further information on the equity raise. The principal purpose of the equity raise was to repay indebtedness and improve the Group’s capital position.
These proceeds were used to reduce external debt, which meant that the two term loans were repaid (£44.0 million) and the remaining balance was
used to reduce the drawn down amount on the RCF facility by £73.9 million.
Section 1
Basis of Preparation
Strategic report Corporate Governance Financial Statements
161
Section 1 continued
Basis of Preparation continued
Borrowing facilities and financial position at 31 December 2023 and at 31 March 2024
The Group has a committed £200 million Multicurrency Revolving Credit Facility (“RCF”) with a syndicate of five banks with a term until 14 February
2026 (see note 4.1 “Net debt”).
At 31 December 2023, liquidity (cash headroom) was £105.3 million, comprising £100.6 million unutilised RCF and £8.7 million of cash less £4.0 million
utilised overdraft. Liquidity at 31 March 2024 totalled £112.1 million, comprising £94.7 million unutilised RCF and £17.4 million of cash with £nil utilised
overdraft.
The RCF lending covenants relate to net debt:EBITDA and EBITA:net interest (see “Glossary of alternative performance measures (“APMs”)” for the
definition of these measures as set out in the RCF), which historically are tested at 30 June and 31 December, to be no higher than 3.25x and at least
4.0x respectively (“Existing Covenants”).
During 2023, given the challenges facing the Group, particularly the unpredictability of the end of the strikes and uncertainty relating to the timing
and pace of the market recovery, the macroeconomic climate and destocking, the Group proactively negotiated amended covenants (“Amended
Covenants”) to the RCF with its lending banks.
As a result of the good relationship between the Group and its lending banks, the Group agreed with its lending banks:
– an extension of £35 million of its RCF from 14 February 2025 to 14 February 2026, which was confirmed on 19 July 2023 and brought this
commitment to be in line with the remainder of the RCF which matures at the same time in February 2026 (the total RCF facility is £200 million);
– to amend the “Existing Covenants” to the new “Amended Covenants” as follows:
– net debt:EBITDA to be no higher than 4.25x (December 2023) and 3.75x (June 2024);
– EBITA:net interest of at least 1.25x (December 2023) and 1.75x (June 2024).
No restrictions apply to these Amended Covenants, for example there are no restrictions on declaring a dividend but new testing dates for 31 March
2024 (net debt:EBITDA to be no higher than 4.25x and EBITA:net interest of at least 1.5x) and 30 September 2024 (net debt:EBITDA to be no higher
than 3.75x and EBITA:net interest of at least 3.25x) were agreed. From 31 December 2024, the covenants are net debt:EBITDA to be no higher than
3.25x and EBITA:net interest of at least 4.00x. The test dates in 2025 are 30 June and 31 December.
At 31 December 2023 these ratios were 3.3x for net debt: EBITDA and 2.0x for EBITA:net interest (31 December 2022: 2.1x and 9.8x respectively). At
31 March 2024 these ratios were 3.0x for net debt: EBITDA and 2.2x for EBITA:net interest.
Base case
The Board is continuing to monitor the Group’s ability to meet its lending covenants. As part of the Board’s consideration of the appropriateness of
adopting the going concern basis of accounting in preparing the 2023 year-end financial statements, a range of scenarios have been modelled over
the 12 months following the signing of the Group’s Annual Report. For this, the Board has considered base case projections and several severe, but
plausible, downside scenarios.
The base case follows the Board-approved budget for 2024 which acknowledges the challenges and opportunities being faced by the Group and
assumes a recovery in the cine and scripted TV segment during 2024, following the ending of the strikes. It also assumes that the ICC/consumer
segment will continue to deteriorate, albeit at a lower rate than 2023. The Board approved budget for 2024 is within the range of forecasts approved
by the Directors as part of the equity raise.
The base case assumed a slower recovery in January and February 2024, with improvement thereafter. This forecast is partly supported by the
contracted revenue relating to the 2024 Summer Olympic games and the typical seasonal uplift in Q2 and Q4.
The Q1 2024 budget assumed an improvement in revenue of 5% when compared to Q1 2023. The FY 2024 budget assumes an improved second half,
including the assumptions of a recovery from the challenges previously discussed and the generation of revenue from new product launches. The
recovery in H2 2024 forecasts revenue to be broadly in line with H2 2022. The overall budgeted revenue acknowledges the current challenges faced in
2024 and contains a judgement around the speed of recovery from the challenges faced in 2023. The 2024 budget therefore does not assume to
reach 2022 levels.
The most material judgements for the 2024 budget relate to how long it will take for the Group’s financial performance to recover from the strikes
and how much worse or better the macroeconomic environment might be in 2024 vs 2023. The Group does not plan to make any structural changes
under the scenarios that have been modelled. The judgements and sensitivities are expanded on in further detail below. The base case does not
forecast a breach of covenants in 2024. In terms of liquidity, the lowest point between the time of signing these financial statements and April 2025
is £113 million at 30 April 2024.
Current sell-side analysts’ forecasts are below this budget for 2024, as is typical for this stage in the financial year.
Severe but plausible downside assessment
In acknowledging the challenges faced in 2023, the Board has also modelled several severe but plausible downside scenarios. The material
judgements considered in these scenarios are:
– estimating the recovery from the strikes, both in terms of the length of the recovery and the quantum thereof, which is at a slower pace than the
base case;
– trading conditions and, in particular, the impact of the macroeconomic environment being worse than expected; and
– continuing self-help actions that would partly offset the effects of the above.
Whilst most of the Group’s modelled forecasts do not result in breaching covenants, there are severe but plausible downside scenarios which would
result in a breach of the Amended Covenants at the test dates from 30 June 2024. The severe but plausible scenarios that exist assume (1) a slower
recovery in the cine and scripted TV market in 2024; (2) a worsening macroeconomic environment for the Group’s consumer/ICC products; and (3) no
additional mitigation.
Videndum plc
162
Annual Report and Accounts 2023
The most severe modelled slower recovery assumes that the ICC/consumer segment declines by 30% on 2023 and that the cine and scripted TV
market only recovers to 50% of 2022. Under these scenarios, there would be a breach of the Amended Covenant at each of the 2024 test dates from
30 June 2024. In the event that the results for Q2 2024 were to be the same as Q1 2024, this would result in a breach of the Amended Covenant at
30 June 2024. Albeit the average revenue uplift between the first and second quarters of the year over the last ten years, excluding 2020
(COVID-19), has been 22% and every Q2 has been higher than Q1.
The Board, in light of its experience, past practice and performance, and historical evidence and current trading, considers that (a) it is not possible
to determine the length of time it will take to recover from the strikes, (b) there is limited forecasting visibility supportable by externally sourced
market evidence, (c) the typical levels of the Group’s order book are between one and two months sales, and (d) the impact of the macroeconomic
environment on ICC and retail customers and distribution partners remains uncertain.
The Board is proactively managing the options available to the Group to mitigate risks and deliver cost and cash saving measures as set out in the
“Mitigation plans” below.
Trading update for the first quarter of 2024
Although industry confidence in the post-strike recovery remains strong, the Group did not see the significant pick up in the cine and scripted TV
market that it was expecting to happen in the month of March. As a result, although orders for the first quarter of 2024 were 6% ahead at constant
currency than the same period of 2023 (strikes began in May 2023), revenue was 3% below at constant currency. Adjusted operating profit was
£0.7 million behind the prior year, reflecting a consistent treatment for bonus accruals, with continuing tight control on costs, capex, and working
capital. The macroeconomic environment for the sell-out from the Group’s customers for its consumer/ICC products continued to decline, albeit at a
slower rate than experienced throughout 2023.
Compared to base case, orders for the first quarter of 2024 were 9% below, at constant currency, with revenue 8% below, at constant currency.
Revenue was £8.1 million below base case and, reflecting a consistent treatment for bonus accruals in both the base case and Q1 results, adjusted
operating profit was £3.0 million below base case.
The Group has reforecast Q2 2024 (“Outlook”), in light of the unexpected weakness in Q1 2024 and current expectations from its Divisions, including
a lower rate of recovery in the cine and scripted TV market which, in the Outlook, is anticipated to pick-up only from June 2024. The Outlook represents
current expectations and lies within the range of plausible downside scenarios, and would not result in a breach of covenants at 30 June 2024.
Material uncertainty
The Board has, at the date of signing these financial statements, determined that given the sensitivities over the timeline and pace of recovery from
the strikes and t he financial impact on the Group (including potential covenant breaches) of a slower than expected recovery and worsening
macroeconomic conditions, a material uncertainty exists which may cast significant doubt on the Group’s ability to continue as a going concern such
that it may be unable to realise its assets and discharge its liabilities in the normal course of business.
Mitigation plans
The Board implemented mitigating actions during 2023 to offset the lost revenue. These included the restructuring projects and cost reductions
previously mentioned. The benefits of these actions was to reduce 2023 costs by c.£13 million versus 2022. The majority of the reduction will remain
in 2024, with discretionary costs returning in a phased and controlled manner, as trading conditions improve.
The Board is proactively managing the mitigating options available to the Group. These include:
– cost and cash saving measures in addition to those factored into the forecast;
– incremental revenue generating activities; and
– renegotiating the committed facility, extension and quantum, and the lending covenants.
As a result of the challenging trading conditions experienced in Q1 2024, the Group has developed a set of actions being delivered during Q2 2024
that will reduce costs and secure incremental revenue opportunities in addition to those included in the Outlook set out above. Cost and revenue
actions have currently highlighted Q2 operating profit benefits of £3.8 million, with £2.1 million being within the Group’s control.
During the second quarter of 2024, the Group will negotiate with its banks an amendment and extension of its RCF. As part of this process, the
Group will also endeavour to agree with its banks a new relaxation of its covenants, along with a reduction of the overall committed facility,
currently £200 million.
Notwithstanding the above material uncertainty, the Board has, on balance of the available evidence and modelled scenarios, concluded that there
is a reasonable prospect that improvements in the Group’s performance, along with mitigating actions, will be achieved and it is appropriate to
adopt the going concern basis of accounting in preparing the 2023 year-end financial statements.
Strategic report Corporate Governance Financial Statements
163
Section 1 continued
Basis of Preparation continued
Basis of consolidation
Subsidiaries are entities that are controlled by the Group. Control exists when the Group has the rights to variable returns from its involvement with
an entity and has the ability to affect those returns through its power over the entity. The results of subsidiaries sold or acquired during the year are
included in the Financial Statements up to, or from, the date that control exists.
Foreign currencies
The consolidated financial statements are presented in Sterling with the reporting currency of the Group’s subsidiaries generally being that of the
local country.
Transactions in foreign currencies are translated at the exchange rate on that day.
Foreign currency monetary assets and liabilities are translated at the year-end exchange rate. Where there is a movement in the exchange rate
between the date of the transaction and the year end, a currency translation gain or loss may arise. Any such differences are recognised in the
Income Statement.
Non-monetary assets and liabilities measured at historical cost are translated at the exchange rate on the day of the transaction, unless they are
stated at fair value in which case they are translated at the exchange rate on the day the fair value was determined.
The assets and liabilities of overseas subsidiaries, including goodwill and fair value adjustments arising on consolidation, are translated at the
year-end exchange rate. The revenues and expenses of these subsidiaries are translated at the weighted average exchange rate for the year. Where
differences arise between these rates, they are recognised in the translation reserve within equity and other comprehensive income (“OCI”).
The cash flows of these companies are typically translated at the weighted average exchange rate for the year.
In the consolidated financial statements, currency translation gains and losses on external loans and borrowings which are designated as net
investment hedges and on long-term inter-company loans that form part of the net investment in the subsidiaries are recognised directly in the
translation reserve within equity and OCI.
In respect of all overseas companies, only those translation differences arising since 1 January 2004, the date of transition to IFRS, are presented as
a separate component of equity. On disposal of such a company, the related translation reserve is released to the Income Statement as part of the
gain or loss on disposal.
Critical accounting judgements and key sources of estimation uncertainty
The following provides information on those policies that the Directors consider critical because of the level of judgement and estimation required
which often involves assumptions regarding future events which can vary from what is anticipated. The Directors review the judgements and
estimates on an ongoing basis with revisions to accounting estimates recognised in the period in which the estimates are revised and in any future
periods affected. The Directors believe that the consolidated financial statements reflect appropriate judgements and estimates and provide a true
and fair view of the Group’s performance and financial position.
Critical accounting judgements in applying the Group’s accounting policies
The following are critical accounting judgements that the Group makes, apart from those involving estimations (which are dealt with above), that
the Directors have made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts
recognised in the financial statements.
Development costs
The Group capitalises development costs which meet the criteria under IAS 38 “Intangible Assets” and discloses the amount capitalised in note 3.1
“Intangible assets”. The Group makes significant judgements in the application of IAS 38, particularly in relation to its requirements regarding the
technical feasibility of completing the asset and the Group’s ability to sell and generate future economic benefits from the intangible asset.
Going concern assessment
There were material judgements made by the Board to determine if the Group is a going concern. These judgements are disclosed under “going
concern” in Section 1 “Basis of Preparation”. The key judgements surrounding the going concern assessment relate to the recovery of the business
from headwinds faced during 2023 by the Group.
Assets held for sale and discontinued operations
The critical judgement is in relation to determining if the assets held for sale and those that have been abandoned meet the criteria to be classified
as a discontinued operation under IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”, particularly if they represent either a
separate major line of business or a geographical area of operations. Management has deemed that all three assets have met this requirement and
if this criteria was not met then it would not be accounted for as a discontinued operation. Amimon and Lightstream, were disclosed as a non-
current asset held for sale as at 30 June 2023. Since then, a war broke out in the Middle East which has impacted the sales process and the Group
has further impaired Amimon as at 31 December 2023. The intention as at 31 December 2023 and at the time of signing the 2023 financial
statements, is to dispose of Amimon and generate as much value as possible. Lightstream was sold during 2023 and Syrp was closed in 2023. See
note 3.4 “Discontinued operations and non-current assets classified as held for sale”.
Tax
In relation to tax, these include the interpretation and application of existing legislation. The Group’s key judgement relates to the application of tax
law in relation to the EU State Aid Investigation. Details in relation to this judgement are set out in note 2.4 “Tax”.
Videndum plc
164
Annual Report and Accounts 2023
Key sources of estimation uncertainty in applying the Group’s accounting policies
The following are the key sources of estimation uncertainty that the Directors have made in the process of applying the Group’s accounting policies
and that have a significant risk of resulting in material adjustments to the carrying amounts of assets and liabilities within the next financial year.
Impairment of discontinued operations
Non-current assets held for sale are measured at the lower of carrying amount and fair value less costs to sell. Estimations and assumptions were
applied by Management in determining the recoverable amount of these assets. These estimations relate predominantly to the valuation and
estimated disposal proceeds provided by an independent third-party, both of which impacted the final carrying value. The valuation provided an
indicator as to how much the Amimon business could be sold for in an arm’s length transaction. This valuation combined with additional relevant
information, such as the macroeconomic climate and current situation in the Middle East, along with Amimon’s balance sheet determined a
reasonable estimate of fair value less costs to sell. This led to a range of potential valuations, ultimately leading to a further impairment being booked
in the second half of 2023. The ultimate carrying value recorded on the balance sheet, is therefore sensitive to the possible range of net disposal
proceeds. Further detail about the assumptions used and sensitivities are set out in note 3.4 “Discontinued operations and non-current assets
classified as held for sale”.
Pension benefits
The actuarial valuations associated with the pension schemes involve making assumptions about discount rates and life expectancy. All assumptions
are reviewed at each reporting date. Further details about the assumptions used and sensitivities are set out in note 5.2 “Pensions”.
Tax
The Group is subject to income taxes in a number of jurisdictions. Management is required to make estimates in determining the provisions for
income taxes and deferred tax assets and liabilities recognised in the consolidated financial statements. Tax benefits are recognised to the extent
that it is probable that sufficient taxable income will be available in the future against which temporary differences and unused tax losses can be
utilised. The most significant estimates made are in relation to the recognition of deferred tax assets arising from carried forward tax losses. The
recovery of those losses is dependent on the future profitability of Group entities based in the jurisdictions with those carried forward tax losses,
most significantly in the United States. The assumptions used in the measurement of the deferred tax assets are consistent with those as disclosed
in note 3.1 “Intangible assets” in relation to the impairment tests of cash-generating units (“CGUs”) containing goodwill. See note 2.4 “Tax” for
further details of the carrying amounts of deferred tax assets and sensitivities on tax losses.
Impairment of acquired intangibles
The impairment of acquired intangibles involve making assumptions. The most judgemental assumptions include determination of the WACC,
growth rates, operating leverage and operating cash conversion. All assumptions are reviewed at each reporting date. Further details about the
assumptions used and sensitivities are set out in note 3.1 “Intangible assets”.
Inventory
Provisions are required to write down slow-moving, excess and obsolete inventory to its net realisable value. Management assessed the level of
inventory provisioning by category and judgements and estimates were made in determining if a provision was required and at what level. The key
estimates relate to supply chains and their lead times, future selling price, anticipated future sales of products over particular time periods, the
susceptibility of the underlying product to obsolescence and current year trading performance. The anticipated level of future sales is determined
primarily based on actual sales over a specified historic reference period, which has been enhanced to a period of between six and 24 months, which
is determined by Management and is deemed appropriate to the type of inventory. Further details about the sensitivities are set out in note 3.3
“Working capital” .
Strategic report Corporate Governance Financial Statements
165
New and amended IFRS Accounting Standards that are effective for the current year
In the current year, the Group has applied a number of amendments to IFRS Accounting Standards issued by the International Accounting Standards
Board (“IASB”) that are mandatorily effective for an accounting period that begins on or after 1 January 2023. Their adoption has not had any
material impact on the disclosures or on the amounts reported in these financial statements.
– IFRS 17: “Insurance Contracts”
– Amendments to IAS 1: “Presentation of Financial Statements” and IFRS Practice Statement 2: “Making Materiality Judgements” – Disclosure of
accounting policies
– Amendments to IAS 12: “Income Taxes” – Deferred tax relating to assets and liabilities arising from a single transaction – Following this
amendment the deferred tax assets and deferred tax liabilities relating to lease liabilities and lease assets which were disclosed net in the prior
year have been disclosed gross in both the current and prior year. Refer to note 2.4 “Tax” for more detail. International tax reform – Pillar two
model rules
– Amendments to IAS 8: “Accounting Polices, Changes in Accounting Estimates and Errors” – Definition of accounting estimates
New standards and interpretations effective for future periods and not yet adopted
Amended standards and interpretations not yet effective are not expected to have a significant impact on the Group’s consolidated financial statements.
At the date of authorisation of these financial statements, the Group has not applied any new or revised IFRS Accounting Standards that have been
issued but are not yet effective. The standards applicable to the Group are shown below:
– Amendments to IFRS 10 and IAS 28 – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
– Amendments to IAS 1 – Non-current Liabilities with Covenants and Classification of Liabilities as Current or Non-current
– Amendments to IAS 7 and IFRS 7 – Supplier Finance Arrangements
– Amendments to IFRS 16 – Lease Liability in a Sale and Leaseback
Section 1 continued
Basis of Preparation continued
Videndum plc
166
Annual Report and Accounts 2023
This section focuses on the profitability of the Group. On the following pages you will find disclosures relating to the following:
2.1 (Loss)/profit before tax (including segmental information)
2.2 Adjusting items
2.3 Net finance expense
2.4 Tax
2.5 Earnings per share
2.1 (Loss)/profit before tax (including segmental information)
This shows the analysis of the Group’s profit/(loss) before tax by reference to its three Divisions. Further segmental information and an
analysis of key operating expenses are also shown here.
Accounting policies
Government grants
For government assistance which meets the definition of a government grant under IAS 20, the Group applies the income approach to account for
the grants received. As such, the grant is recognised in the Income Statement as a reduction of the related costs incurred.
Revenue recognition
Sale of goods
Revenue from the sale of goods is recognised when the Group sells a product to a customer (distributors, dealers, retailers, e-tailers and
intermediaries) and control has passed. This is either once the product has been shipped or delivered to the customer, depending on the terms and
conditions of the sale. Payment terms vary by Division and customer but where credit terms are given, payments are due generally 30 days after
control of the goods has passed to the customer. Revenue is recognised at the transaction price exclusive of sales tax, adjusted for the expected level
of returns, trade discounts and volume rebates. For the products expected to be returned, both a refund liability and a right to the returned goods
are recognised using an expected value method based on past history.
Some contracts include multiple deliverables, such as the sale of the product and its installation. If material, distinct goods and services are
accounted for as separate performance obligations. The transaction price is allocated to each performance obligation based on their standalone
selling prices.
Service contracts
Revenue from rental service contracts which are fulfilled using the Group’s equipment and operators is recognised in the accounting period in which
the services are rendered. Payment terms vary and there can be small advance payments but generally payments are due as services are rendered.
Generally, contracts with customers are for periods of one year or less. As a result, the transaction price allocated to any unsatisfied contracts is not
disclosed, as permitted by IFRS 15.
Licences
Software licences are sold by the Group on a standalone basis and together with a tangible product. If the licence is considered distinct, the revenue
recognition pattern is based on whether the licence is a right-to-use intellectual property (revenue recognised at a point in time) or a right-to-access
intellectual property (revenue recognised over time). The majority of the licences granted by the Group represent a right-to-use intellectual property
for which payments are generally in advance. From a right-to-access intellectual property, payments are normally on a monthly basis with a credit
period of 30 days.
Financing components
The Group generally does not have contracts where the period between the transfer of the promised goods or services to the customer and payment
by the customer exceeds one year.
Section 2
Results for the Year
Strategic report Corporate Governance Financial Statements
167
Segment reporting
The Group has three reportable segments which are reported in a manner that is consistent with the internal reporting provided to the Chief
Operating Decision Maker on a regular basis to assist in making decisions on capital allocated to each segment and to assess performance. Further
details on the nature of these segments and the products and services they provide are contained in the Strategic Report.
Section 2 continued
Results for the Year continued
Media Production
Solutions Solutions
2023 2022 2023 2022
£m £m £m £m
Analysis of revenue from external customers, by location of customer
United Kingdom
11.9
17.7
11.0
15.3
The rest of Europe
51.7
75.2
21.9
32.7 7.1 9.3 – – 80.7 117.2 0.5 0.7 81.2 117.9
North America
52.3
74.4
47.3
63.3 34.5 60.6 – – 134.1 198.3 6.7 6.4 140.8 204.7
Asia Pacific
31.8
42.8
13.1
16.3 6.4 10.1 – – 51.3 69.2 0.8 1.2 52.1 70.4
The rest of the World
6.0
7.7
7.9
10.2 0.9 1.4 – – 14.8 19.3 0.1 0.4 14.9 19.7
Total revenue from external customers
153.7
217.8
101.2
137.8 52.0 86.9 – – 306.9 442.5 8.1 8.7 315.0 451.2
Inter-segment revenue
0.1
0.1
1.1
0.4 0.3 0.1 (1.5) (0.6) – – – – – –
Total revenue
153.8
217.9
102.3
138.2 52.3 87.0 (1.5) (0.6) 306.9 442.5 8.1 8.7 315.0 451.2
Adjusted operating profit/(loss)
11.4
35.1
12.1
31.4 0.8 16.7 (11.5) (17.0) 12.8 66.2 (6.3) (6.2) 6.5 60.0
Amortisation of intangible assets that are acquired in a business combination
(3.9)
(4.3)
(0.1)
(0.2) – (1.4) – – (4.0) (5.9) (2.2) (5.0) (6.2) (10.9)
Impairment of assets
(4.5)
–
(1.7)
– (1.1) (2.3) – – (7.3) (2.3) (50.2) (1.3) (57.5) (3.6)
Acquisition related charges
(1.0)
(4.3)
(0.3)
(0.1) – – – – (1.3) (4.4) (1.4) (4.9) (2.7) (9.3)
Integration, restructuring and other costs
(3.4)
(0.9)
(0.5)
(1.0) (0.6) (1.0) (0.4) (1.7) (4.9) (4.6) (0.4) (0.1) (5.3) (4.7)
Operating profit/(loss)
(1.4)
25.6
9.5
30.1 (0.9) 12.0 (11.9) (18.7) (4.7) 49.0 (60.5) (17.5) (65.2) 31.5
Finance income 2.4 2.3 – 0.1 2.4 2.4
Finance expense (16.5) (9.1) (0.4) (0.1) (16.9) (9.2)
Net finance expense (14.1) (6.8) (0.4) – (14.5) (6.8)
(Loss)/profit before tax (18.8) 42.2 (60.9) (17.5) (79.7) 24.7
Taxation 6.7 6.0 (4.1) 2.2 2.6 8.2
Loss on disposal of discontinued operation after tax – – (1.0) – (1.0) –
(Loss)/profit for the year (12.1) 48.2 (66.0) (15.3) (78.1) 32.9
Segment assets
206.8
242.5
112.7
119.7 40.2 107.4 6.4 8.5 366.1 478.1 12.3 – 378.4 478.1
Unallocated assets
Cash and cash equivalents
Non-current tax assets 3.1 3.0 3.1 3.0 – – 3.1 3.0
tax assets 5.7 4.1 5.7 4.1 – – 5.7 4.1
Deferred tax assets 55.4 53.2 55.4 53.2 – – 55.4 53.2
Total assets 439.0 554.2 12.3 – 451.3 554.2
Segment liabilities
47.2
62.8
26.5
38.9 7.8 20.6 5.5 7.5 87.0 129.8 4.6 – 91.6 129.8
Interest-bearing loans and borrowings
0.6
0.6
–
– – – 98.6 173.9 99.2 174.5 – – 99.2 174.5
Unallocated liabilities
Bank overdrafts
Current tax liabilities 7.8 16.7 7.8 16.7 – – 7.8 16.7
Deferred tax liabilities 11.2 9.5 11.2 9.5 – – 11.2 9.5
Total liabilities 209.2 330.5 4.6 – 213.8 330.5
Non-current assets, by location
United Kingdom
10.0
10.3
31.2
33.3
The rest of Europe
38.9
37.4
0.3
0.4 – – – – 39.2 37.8 – – 39.2 37.8
North America
75.2
85.8
17.3
20.4 21.6 42.7 – 0.5 114.1 149.4 – – 114.1 149.4
Asia Pacific
0.4
2.4
1.0
0.8 – – – – 1.4 3.2 – – 1.4 3.2
The rest of the World
8.3
8.7
8.6
9.5 – 38.0 – – 16.9 56.2 7.1 – 24.0 56.2
Total non-current assets
132.8
144.6
58.4
64.4 21.6 80.7 1.4 2.2 214.2 291.9 9.6 – 223.8 291.9
Cash flows from operating activities
14.7
26.5
4.3
30.5 4.0 14.2 (31.8) (15.5) (8.8) 55.7 (7.3) (7.0) (16.1) 48.7
Cash flows from investing activities
(7.3)
(39.9)
(5.1)
(5.3) (4.3) (3.3) – – (16.7) (48.5) (4.1) (4.9) (20.8) (53.4)
Cash flows from financing activities
(2.9)
(2.9)
(2.1)
(2.1) (0.9) (0.9) 29.7 17.5 23.8 11.6 (0.4) (0.9) 23.4 10.7
Capital expenditure
Property, plant and equipment
2.6
3.6
1.9
3.0
Software and development costs
3.2
3.2
3.4
2.4 4.1 2.8 – – 10.7 8.4 3.0 4.7 13.7 13.1
Creative
Solutions
Corporate
and unallocated
Continuing
operations
Discontinued operations and
non-current assets held for sale
4
Continuing and discontinued
operations
2023
£m
2022
£m
2023
£m
2022
£m
2023
£m
2022
£m
2023
£m
2022
£m
2023
£m
2022
£m
3.1 5.5 – – 26.0 38.5 – – 26.0 38.5
1
8.7 15.8 8.7 15.8 – – 8.7 15.8
4.0 – 4.0 – – – 4.0 –
– – 1.4 1.7 42.6 45.3 2.5 – 45.1 45.3
2
3
0.1 0.3 – – 4.6 6.9 0.2 0.2 4.8 7.1
1 Inter-segment pricing is determined on an arm’s length basis. These are eliminated in the Corporate column.
2 Non-current assets exclude employee benefit asset, derivative financial instruments and non-current tax assets.
3 A cash outflow of £1.5 million previously included in the 2022 Corporate and unallocated has been reclassified to Media Solutions Division (£0.7 million) and Discontinued operations (£0.8 million).
4 In the Production Solutions Division, certain land and buildings of £2.5 million have been classified as a disposal group held for sale within the year.
The Group’s operations are located in several geographical locations, and sell products and services on to external customers in all parts of the world.
The £60.5 million (2022: £17.5 million) operating loss of discontinued operations comprises £3.4 million (2022: £2.1 million) in Media Solutions Division
and £57.1 million (2022: £15.4 million) in Creative Solutions Division.
Videndum plc
168
Annual Report and Accounts 2023
Media
Solutions
Production
Solutions
Creative Corporate Continuing Discontinued operations and Continuing and discontinued
Solutions and unallocated operations
non-current assets held for sale
4
operations
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
£m £m £m £m £m £m £m £m £m £m
3.1
5.5
–
–
26.0
38.5
–
–
26.0
38.5
The rest of Europe 51.7 75.2 21.9 32.7 7.1
9.3
–
–
80.7
117.2
0.5
0.7
81.2
117.9
North America 52.3 74.4 47.3 63.3 34.5
60.6
–
–
134.1
198.3
6.7
6.4
140.8
204.7
Asia Pacific 31.8 42.8 13.1 16.3 6.4
10.1
–
–
51.3
69.2
0.8
1.2
52.1
70.4
The rest of the World 6.0 7.7 7.9 10.2 0.9
1.4
–
–
14.8
19.3
0.1
0.4
14.9
19.7
Total revenue from external customers 153.7 217.8 101.2 137.8 52.0
86.9
–
–
306.9
442.5
8.1
8.7
315.0
451.2
0.1 0.1 1.1 0.4 0.3
0.1
(1.5)
(0.6)
–
–
–
–
–
–
Total revenue 153.8 217.9 102.3 138.2 52.3
87.0
(1.5)
(0.6)
306.9
442.5
8.1
8.7
315.0
451.2
Adjusted operating profit/(loss) 11.4 35.1 12.1 31.4 0.8
16.7
(11.5)
(17.0)
12.8
66.2
(6.3)
(6.2)
6.5
60.0
Amortisation of intangible assets that are acquired in a business combination (3.9) (4.3) (0.1) (0.2) –
(1.4)
–
–
(4.0)
(5.9)
(2.2)
(5.0)
(6.2)
(10.9)
Impairment of assets (4.5) – (1.7) – (1.1)
(2.3)
–
–
(7.3)
(2.3)
(50.2)
(1.3)
(57.5)
(3.6)
Acquisition related charges (1.0) (4.3) (0.3) (0.1) –
–
–
–
(1.3)
(4.4)
(1.4)
(4.9)
(2.7)
(9.3)
Integration, restructuring and other costs (3.4) (0.9) (0.5) (1.0) (0.6)
(1.0)
(0.4)
(1.7)
(4.9)
(4.6)
(0.4)
(0.1)
(5.3)
(4.7)
Operating profit/(loss) (1.4) 25.6 9.5 30.1 (0.9)
12.0
(11.9)
(18.7)
(4.7)
49.0
(60.5)
(17.5)
(65.2)
31.5
Finance income 2.4
2.3
–
0.1
2.4
2.4
Finance expense (16.5)
(9.1)
(0.4)
(0.1)
(16.9)
(9.2)
Net finance expense (14.1)
(6.8)
(0.4)
–
(14.5)
(6.8)
(Loss)/profit before tax (18.8)
42.2
(60.9)
(17.5)
(79.7)
24.7
Taxation 6.7
6.0
(4.1)
2.2
2.6
8.2
Loss on disposal of discontinued operation after tax –
–
(1.0)
–
(1.0)
–
(Loss)/profit for the year (12.1)
48.2
(66.0)
(15.3)
(78.1)
32.9
Segment assets 206.8 242.5 112.7 119.7 40.2
107.4
6.4
8.5
366.1
478.1
12.3
–
378.4
478.1
8.7
15.8
8.7
15.8
–
–
8.7
15.8
Non-current tax assets 3.1
3.0
3.1
3.0
–
–
3.1
3.0
tax assets 5.7
4.1
5.7
4.1
–
–
5.7
4.1
Deferred tax assets 55.4
53.2
55.4
53.2
–
–
55.4
53.2
Total assets 439.0
554.2
12.3
–
451.3
554.2
Segment liabilities 47.2 62.8 26.5 38.9 7.8
20.6
5.5
7.5
87.0
129.8
4.6
–
91.6
129.8
Interest-bearing loans and borrowings 0.6 0.6 – – –
–
98.6
173.9
99.2
174.5
–
–
99.2
174.5
4.0
–
4.0
–
–
–
4.0
–
Current tax liabilities 7.8
16.7
7.8
16.7
–
–
7.8
16.7
Deferred tax liabilities 11.2
9.5
11.2
9.5
–
–
11.2
9.5
Total liabilities 209.2
330.5
4.6
–
213.8
330.5
–
–
1.4
1.7
42.6
45.3
2.5
–
45.1
45.3
The rest of Europe 38.9 37.4 0.3 0.4 –
–
–
–
39.2
37.8
–
–
39.2
37.8
North America 75.2 85.8 17.3 20.4 21.6
42.7
–
0.5
114.1
149.4
–
–
114.1
149.4
Asia Pacific 0.4 2.4 1.0 0.8 –
–
–
–
1.4
3.2
–
–
1.4
3.2
The rest of the World 8.3 8.7 8.6 9.5 –
38.0
–
–
16.9
56.2
7.1
–
24.0
56.2
132.8 144.6 58.4 64.4 21.6
80.7
1.4
2.2
214.2
291.9
9.6
–
223.8
291.9
14.7 26.5 4.3 30.5 4.0
14.2
(31.8)
(15.5)
(8.8)
55.7
(7.3)
(7.0)
(16.1)
48.7
Cash flows from investing activities (7.3) (39.9) (5.1) (5.3) (4.3)
(3.3)
–
–
(16.7)
(48.5)
(4.1)
(4.9)
(20.8)
(53.4)
Cash flows from financing activities (2.9) (2.9) (2.1) (2.1) (0.9)
(0.9)
29.7
17.5
23.8
11.6
(0.4)
(0.9)
23.4
10.7
0.1
0.3
–
–
4.6
6.9
0.2
0.2
4.8
7.1
Software and development costs 3.2 3.2 3.4 2.4 4.1
2.8
–
–
10.7
8.4
3.0
4.7
13.7
13.1
2023
£m
2022
£m
2023
£m
2022
£m
Analysis of revenue from external customers, by location of customer
United Kingdom 11.9 17.7 11.0 15.3
Inter-segment revenue
1
Unallocated assets
Cash and cash equivalents
Unallocated liabilities
Bank overdrafts
Non-current assets, by location
United Kingdom 10.0 10.3 31.2 33.3
Total non-current assets
2
Cash flows from operating activities
3
Capital expenditure
Property, plant and equipment 2.6 3.6 1.9 3.0
1 Inter-segment pricing is determined on an arm’s length basis. These are eliminated in the Corporate column.
2 Non-current assets exclude employee benefit asset, derivative financial instruments and non-current tax assets.
3 A cash outflow of £1.5 million previously included in the 2022 Corporate and unallocated has been reclassified to Media Solutions Division (£0.7 million) and Discontinued operations (£0.8 million).
4 In the Production Solutions Division, certain land and buildings of £2.5 million have been classified as a disposal group held for sale within the year.
One customer (2022: one) accounted for more than 10% of external revenue. In 2023, the total revenue from this customer, which was recognised in
all continuing operations was £38.9 million (2022: £60.8 million).
The Lightstream and Amimon businesses, which are part of the Creative Solutions Division, and Syrp which is part of the Media Solutions Division,
have been classified as discontinued operations in the current year. Their performance in this year and comparative years are therefore part of
discontinued operations as presented in note 3.4 “Discontinued operations and non-current assets classified as held for sale”.
Strategic report Corporate Governance Financial Statements
169
Operating expenses
2023 2022
£m £m
Analysis of operating expenses
Adjusting items in operating profit
17.5
17.2
Adjusting items in cost of sales
(4.2)
(2.6)
– Adjusting items in operating expenses
13.3
14.6
– Other administrative expenses
49.8
58.7
Adjusting items and administrative expenses
63.1
73.3
Marketing, selling and distribution costs
41.3
51.3
Research, development and engineering costs
14.9
17.2
Total operating expenses from continuing operations
119.3
141.8
–
Adjusting items in operating expenses
54.2
11.3
–
Other administrative expenses
2.6
3.2
Adjusting items and administrative expenses
56.8
14.5
Marketing, selling and distribution costs
1.7
2.4
Research, development and engineering costs
5.6
5.3
Total operating expenses from discontinued operations
64.1
22.2
1
1
1 Adjusting items in (loss)/profit before tax from continuing operations are £20.1 million (2022: £18.0 million) of which £13.3 million (2022: £14.6 million) are recognised in operating expenses,
£4.2 million (2022: £2.6 million) in cost of sales and £2.6 million (2022: £0.8 million) in finance expense.
Adjusting items in operating loss from discontinued operations are £54.5 million (2022: £11.3 million), of which £54.2 million (2022: £11.3 million) are
recognised in operating expenses and £0.3 million (2022: £nil) in finance expense.
See note 2.2 “Adjusting items”.
Operating profit
2023 2022
£m £m
The following items are included in total operating profit
Fees payable to Deloitte for the audit of the Company's financial statements
1.4
0.9
Fees payable to Deloitte for:
–
The audit of the subsidiaries
1.0
0.8
–
Audit-related assurance services
0.5
0.1
–
Non-audit related assurance services
0.9
–
Section 2 continued
Results for the Year continued
Videndum plc
170
Annual Report and Accounts 2023
2.2 Adjusting items
The Group presents APMs in addition to its statutory results. These are presented in accordance with the Guidelines on APMs issued by the
European Securities and Markets Authority (“ESMA”).
APMs used by the Group and, where relevant, a reconciliation to statutory measures are set out in the glossary to these financial statements on
pages 226 to 232. Adjusting items are described below along with more detail of the specific adjustment and the Group’s rationale for the
adjustment.
The Group’s key performance measures, such as adjusted operating profit, exclude adjusting items.
The following are the Group’s principal adjusting items when determining adjusted operating profit:
Amortisation of acquired intangible assets:
Acquired intangibles are measured at fair value, which takes into account the future cash flows expected to be generated by the asset rather than
past costs of development. Additionally, acquired intangibles include assets such as brands, know-how and relationships which the Group would not
normally recognise as assets outside of a business combination. The amortisation of the fair value of acquired intangibles is not considered to be
representative of the normal costs incurred by the business within the Group on an ongoing basis.
Amortisation of capitalised development costs:
On an ongoing basis, the Group capitalises development costs of intangible assets and the costs of purchasing software. These intangible assets are
recognised at cost and the amortisation of these costs are included in adjusted operating profit.
Impairment charges:
The impairment of disposed entities or groups of asset(s) held for sale are adjusted for to ensure consistency between periods.
Impairment of goodwill, acquired intangible assets and capitalised development costs:
Impairments to acquired intangibles arose as a result of the estimated net present values of cash flows being lower than the carrying value at year end.
Within discontinued operations the impairment of goodwill, acquired intangibles and capitalised development costs resulted from the assets being
classified as non-current assets held for sale, measured at the lower of the carrying amount and the expected fair value less costs to sell.
Impairment of property, plant and equipment:
Impairment of property, plant and equipment resulted from the asset being classified as non-current assets held for sale, measured at the lower of
the carrying amount and the expected fair value less costs to sell.
Impairment of inventory:
The impairment of inventory relates to a discontinuation of product lines which are significant in nature and not considered by the Group to be part
of the normal operating result of the business.
Acquisition related charges:
Earnout charges and retention bonuses agreed as part of the acquisition:
Under IFRS 3, most of the Group’s earnout charges and retention bonuses are treated as post combination remuneration, although the levels of
remuneration generally do not reflect market rates and do not get renewed as a salary (or other remuneration) might. The Group considers this to be
inconsistent with the economics reflected in the deals because other consideration for the acquisition is effectively included in goodwill rather than
in the Income Statement. Retention agreements are generally entered into with key management at the point of acquisition to help ensure an
efficient integration.
Transaction costs:
Transaction costs related to the acquisition of a business do not reflect its trading performance and so are adjusted to ensure consistency
between periods.
Effect of fair valuation of acquired inventory:
As part of the accounting for business combinations, the Group measures acquired inventory at fair value as required under IFRS 3. This results in the
carrying value of acquired inventory being higher than its original cost-based measure. The impact of the uplift in value has the effect of increasing
cost of sales thereby reducing the Group’s gross profit margin which is not representative of ongoing performance.
Effect of fair valuation of property, plant and equipment:
Under IFRS 3, acquired fixed assets are measured at fair value. This measure does not reflect the undepreciated cost of the acquired asset from the
perspective of the acquiree and as such alters the depreciation cost from the Group’s perspective after the acquisition. This does not reflect the
ongoing profitability of the acquired business.
Grant payments in excess of the liability recognised on acquisition:
These are costs relating to pre-acquisition funding activity. As they are not relevant to understanding the in-year performance of the business, they
are adjusted to ensure consistency between periods .
Strategic report Corporate Governance Financial Statements
171
Integration and restructuring costs:
For an acquired business, the costs of integration, such as termination of third-party distributor agreements, severance and other costs included in
the business’s defined integration plan, do not reflect the business’s trading performance and so are adjusted to ensure consistency between periods.
Restructuring and other associated costs arising from significant strategy changes that are not considered by the Group to be part of the normal
operating costs of the business.
Finance expense:
Amortisation of loan fees on borrowings for acquisitions:
These are upfront borrowing fees related to funding for acquisitions and do not reflect the ongoing funding cost of the investment.
Unwind of discount on liabilities and other interest: This is discount being unwound on the payment of deferred consideration, and interest charged
on deferred retention payments, both relating to acquisitions.
The above are adjusted to ensure consistency between periods.
Unwind of discount on liabilities and other interest:
Unwinding of discounts and interest charged on deferred payments relating to acquisitions do not reflect the ongoing funding cost of the investment
and so are adjusted to ensure consistency between periods.
Other adjusting items:
– profit/(loss) on disposal of businesses;
– past service charges associated with defined benefit pensions, such as gender equalisation of guaranteed minimum pension (“GMP”) for
occupational schemes; and
– other significant initiatives not related to trading.
In addition to the above, the current and deferred tax effects of adjusting items are taken into account in calculating post-tax APMs. In addition, the
following are treated as adjusting items when considering post tax APMs:
– significant adjustments to current or deferred tax which have arisen in previous periods but are accounted for in the current period; and
– the net effect of significant new tax legislation changes.
The APMs reflect how the business is measured and managed on a day-to-day basis including when setting and determining the variable element of
remuneration of senior management throughout the Group (notably cash bonus and the Long Term Incentive Plan (“LTIP”)) as disclosed in the
Remuneration report and described in more detail in note 5.3 Share-based payments.
Adjusted operating profit/(loss), adjusted profit/(loss) before tax and adjusted profit/(loss) after tax are not defined terms under IFRS and may not
be comparable with similarly titled profit measures reported by other companies. They are not intended to be a substitute for IFRS measures. All
APMs relate to the current year results and comparative periods where provided.
2023 2022
£m £m
Continuing operations
Amortisation of intangible assets that are acquired in a business combination
(4.0)
(5.9)
Impairment of assets
(7.3)
(2.3)
Acquisition related charges
2
(1.3)
(4.4)
Integration, restructuring, and other costs
(4.9)
(4.6)
Adjusting items in operating (loss)/profit from continuing operations
(17.5)
(17.2)
Finance expense – amortisation of loan fees on borrowings for acquisitions and other financing initiatives
(2.6)
(0.8)
Adjusting items in (loss)/profit before tax from continuing operations
(20.1)
(18.0)
1
3
1 The impairment of assets of £7.3 million (2022: £2.3 million) relates to inventory: £3.7 million (2022: £1.7 million), which mainly comprises the discontinuation of the motion controls market and
Wooden Camera inventory following the relocation to Costa Rica; land and buildings: £1.5 million (2022: £nil) which is predominantly the £1.3 million impairment of the building which was
classified as non-current assets held for sale; acquired intangible assets: £1.8 million (2022: £nil) and capitalised development costs: £0.3 million (2022: £0.6 million).
2 Acquisition related charges of £1.3 million (2022: £4.4 million) comprise a retention payment charge of £1.1 million (2022: £3.4 million) relating to continued employment, transaction costs
relating to the acquisition of Audix of £nil million (2022: £0.4 million), the effect of fair valuation of acquired inventory of £0.1 million (2022: £0.5 million), and the effect of fair valuation of
acquired property, plant and equipment of £0.1 million (2022: £0.1 million).
3 Integration, restructuring and other costs of £4.9 million (2022: £4.6 million) relate mainly to site rationalisation and other restructuring activities of which employee related charges were
£4.1 million (2022: £3.7 million); and corporate related initiatives £0.8 million (2022: £0.9 million). The most significant restructuring projects entered into in 2023 were:
Creative Solutions Division: exit costs relating to the migration of the Wooden Camera manufacturing plant from Texas to Costa Rica.
Media Solutions Division: exit costs relating to the closure of Videndum Media Distribution US (“VMD US”) and incorporation of its operations into Savage, which involved moving from New
Jersey to Phoenix; and the rationalistion of the UK operations of Rycote to Videndum Media Distribution UK (“VMD UK”) within the UK. The consolidation of VMD US operations into Savage will
result in improved efficiency and capability, delivering savings and new opportunities for further incremental synergies in the coming years, mainly within logistics. The rationalisation of Rycote
to VMD UK will reduce costs and streamline production.
Corporate initiatives incurred relate to the multi-year rebranding initiative which commenced in 2022 and other one off projects.
Corporate: initiatives incurred in 2023 relating to corporate activities and rebranding.
Section 2 continued
Results for the Year continued
Videndum plc
172
Annual Report and Accounts 2023
The two significant restructuring charges relate to:
Motion Controls: during the second half of 2023, the Group took a strategic decision to close Syrp, its Media Solutions mechatronic research and
development centre in New Zealand, and exit from the lower margin motion control product category. A restructuring charge of £2.4 million (2022:
£nil) was incurred reflecting inventory losses incurred and the write-down to net realisable value of the motion control inventory which has been
reported within adjusting items.
During this period, the disposal of inventory, resulted in revenue of £1.2 million recognised within operating profit from continuing operations and
associated cash flows of £1.1 million, which are not expected to be part of underlying operations of the business going forward. The remaining
£0.9 million of inventory at hand, which has been written down to fair value is expected to be disposed during first half of 2024.
Wooden Camera: the restructuring project within Creative Solutions involved the relocation of Wooden Camera to Costa Rica from Texas and
resulted in the scrapping of £1.0 million worth of inventory.
The retention payment charge of £1.1 million relates to Quasar: £0.3 million, Savage: £0.6 million and Audix: £0.2 million. The charge incurred in 2022
was £3.4 million relating to Quasar: £0.1 million, Savage: £0.7 million and Audix: £2.6 million.
An amount of £4.2 million (2022: £2.6 million) was adjusted from cost of sales. This related to the fair value uplift of £0.1 million (2022: £0.5 million)
relating to acquired inventory sold by the Group since the business combination, inventory impairment was £3.7 million (2022: £1.7 million), and
redundancy costs £0.4 million (2022: £0.4 million).
2023 2022
£m £m
Discontinued operations
Amortisation of intangible assets that are acquired in a business combination
(2.2)
(5.0)
Impairment of assets
(50.2)
(1.3)
Acquisition related charges
(1.4)
(4.9)
Integration, restructuring, and other costs
(0.4)
(0.1)
Adjusting items in operating loss from discontinued operations
(54.2)
(11.3)
Finance expense – unwind of discount on liabilities and other interest
(0.3)
–
Adjusting items in loss before tax from discontinued operations
(54.5)
(11.3)
1
2
3
See note 2.5 “Earnings per share” for the above, net of tax.
1 The impairment of assets charge of £50.2 million (2022: £1.3 million) relates to goodwill: £26.8 million (2022: £nil), acquired intangible assets: £14.0 million (2022: £nil), capitalised development
costs: £9.1 million (2022: £1.3 million), and land and buildings: £0.3 million (2022: £nil). The goodwill, acquired intangibles and capitalised development costs resulted from the recognition of
Lightstream and Amimon as non-current assets held for sale at the half year 2023.
2 Acquisition related charges of £1.4 million comprise a retention payment charge relating to continued employment of £1.1 million (2022: £2.5 million), transaction costs relating to the acquisition
of businesses of £0.3 million (2022: £0.6 million), and grant payments in excess of liability recognised at acquisition of £nil (2022: £1.8 million).
3 Integration, restructuring and other costs of £0.4 million (2022: £0.1 million), relates to the closure of the Syrp operations in New Zealand, within the Media Solutions Division.
To ensure fair review of the development and performance of the business and of the position of the Group from a cash flow standpoint, the table
below shows a reconciliation from “Net cash (used in)/from operating activities” to “Adjusted net cash from operating activities”, considering the
impact of cash flows from discontinued operations and cash flows associated with items disclosed as adjusting within the income statement.
2023 2022
£m £m
Net cash (used in)/from operating activities
(16.1)
48.7
Add back:
Adjusting items in net cash (used in)/from operating activities
– Net cash used in operating activities from discontinued operations
7.3
7.0
– Earnout and retention bonuses
3.6
0.3
– Transaction costs
–
0.6
– Cash generated from the sale of impaired inventory
(1.1)
–
– Restructuring and integration costs
6.4
2.0
Adjusted net cash from continuing operating activities
0.1
58.6
Strategic report Corporate Governance Financial Statements
173
2.3 Net finance expense
This note details the finance income and expense generated from the Group’s financial assets and liabilities.
Accounting policies
Net finance expense comprises:
– foreign exchange gains and losses on cash and external loans that are not net investment hedges;
– fair value gain/loss on interest rate swaps designated as cash flow hedges;
– interest expense on lease liabilities;
– interest expense on borrowings and deferred payments;
– interest receivable on funds paid on account or invested;
– unwind of discount on liabilities; and
– net interest expense on net defined benefit pension scheme.
Net finance expense
2023 2022
£m £m
Finance expense
Interest expense on interest-bearing loans and borrowings
(16.3)
(8.3)
Fair value gain on interest rate swaps designated as cash flow hedges
3.0
0.7
Interest expense on net defined benefit pension scheme
(0.1)
(0.1)
Interest expense on lease liabilities
(1.5)
(1.4)
Other interest expense
3
(1.6)
–
(16.5)
(9.1)
Finance income
Net currency translation gains
2.0
2.3
Other interest income
0.2
–
Interest income on net defined benefit pension scheme
0.2
–
2.4
2.3
Net finance expense from continuing operations
(14.1)
(6.8)
Finance expense
Interest expense on lease liabilities
–
(0.1)
Net currency translation losses
(0.1)
–
Unwind of discount on liabilities and other interest
(0.3)
–
(0.4)
(0.1)
Finance income – net currency translation gains
–
0.1
Net finance expense from discontinued operations
(0.4)
–
1
2
2
4
1 Interest expense on interest-bearing loans and borrowings of £16.3 million (2022: £8.3 million) relates to interest expense of £14.4 million (2022: £7.0 million); amortisation of loan fees
£0.7 million (2022: £0.5 million ); and an adjusting amount of £1.2 million (2022: £0.8 million) relating to loan fees on borrowings for acquisitions of £0.6 million (2022: £0.8 million) and other
financing initiatives of £0.6 million (2022: £nil). See note 2.2 “Adjusting items”.
2 See note 5.2 “Pensions”.
3 Other interest expense of £1.6 million (2022: £nil) includes an adjusting amount of £1.4 million (2022: £nil) relating to other financing initiatives, not related to underlying trading that has been
written off during the year. See note 2.2 “Adjusting items”.
4 Unwind of discount on liabilities and other interest of £0.3 million (2022: £nil) is an adjusting charge in loss before tax from discontinued operations. See note 2.2 “Adjusting items”.
At the end of 2021, the Group entered into material Term Loans, refer to note 4.1 “Net debt” for further details, and following the increase in interest
rates throughout 2023, this resulted in a material increase in finance expense.
Section 2 continued
Results for the Year continued
Videndum plc
174
Annual Report and Accounts 2023
2.4 Tax
This note sets out the tax accounting policies, the total tax charge or credit in the Income Statement, and tax assets and tax liabilities in the
Balance Sheet. This includes amounts relating to deferred tax.
Accounting policies
Income tax
The tax expense in the Income Statement represents the sum of current and deferred tax.
Current tax is the expected tax payable on the taxable income for the year, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the Balance Sheet liability method, providing for temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates substantively enacted at the Balance
Sheet date.
Deferred tax assets are recognised for all deductible temporary differences and carried forward unused tax credits and unused tax losses, to the
extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused
tax credits and unused tax losses, can be utilised.
The carrying amount of deferred income tax assets is reviewed at each Balance Sheet date and increased or reduced to the extent of the probable
level of taxable profit that would be available to allow all or part of the deferred income tax asset to be utilised.
Deferred tax liabilities are not recognised for the following temporary differences:
– goodwill not deductible for tax purposes or the initial recognition of an asset or liability in a transaction that is not a business combination and, at
the time of the transaction, affects neither the accounting profit nor the taxable profit or loss; and
– differences relating to investments in subsidiaries to the extent that the timing of the reversal is controlled by the Company and they will probably
not reverse in the foreseeable future.
Strategic report Corporate Governance Financial Statements
175
Tax – Income Statement
2023 2022
£m £m
The total taxation charge/(credit) in the Income Statement is analysed as follows:
Summarised in the Income Statement as follows
Continuing operations
Current tax
1.0
9.0
Deferred tax
(7.7)
(13.7)
(6.7)
(4.7)
Discontinued operations
Current tax
(0.6)
(0.5)
Deferred tax
4.7
(3.0)
4.1
(3.5)
Continuing and discontinued operations
Current tax
0.4
8.5
Deferred tax
(3.0)
(16.7)
(2.6)
(8.2)
Adjusting items
Continuing operations
Current tax
(1.8)
(1.7)
Deferred tax
(2.0)
(18.6)
(3.8)
(20.3)
Discontinued operations
Current tax
(0.4)
–
Deferred tax
(5.2)
(0.4)
(5.6)
(0.4)
Continuing and discontinued operations
Current tax
(2.2)
(1.7)
Deferred tax
(7.2)
(19.0)
(9.4)
(20.7)
Before adjusting items
Continuing operations
Current tax
2.8
10.7
Deferred tax
(5.7)
4.9
(2.9)
15.6
Discontinued operations
Current tax
(0.2)
(0.5)
Deferred tax
9.9
(2.6)
9.7
(3.1)
Continuing and discontinued operations
Current tax
2.6
10.2
Deferred tax
4.2
2.3
6.8
12.5
1
2
1 Current tax credit of £2.2 million (2022: £1.7 million credit) was recognised in the year of which £1.6 million credit (2022: £0.7 million credit) related to restructuring and integration costs, £nil
million charge (2022: £nil) related to tax on the acquisition and disposal of businesses, £0.6 million credit (2022 £0.2 million credit) related to financial expense and £nil relates to non-taxable
Foreign exchange (2022: £0.8 million credit).
2 Deferred tax credit of £7.2 million (2022: £19.0 million credit) was recognised in the year of which £2.6 million credit (2022: £0.7 million credit) relates to restructuring and impairment costs,
£0.7 million credit (2022: £1.7 million credit) to acquisitions, £3.9m million credit (2022: £2.3 million credit) to amortisation and impairment of intangible assets and £nil (2022: £14.3 million)
credit relates to a deferred tax asset recognition. Further details on deferred tax assets are below.
Section 2 continued
Results for the Year continued
Videndum plc
176
Annual Report and Accounts 2023
2023 2022
£m £m
Current tax expense/(credit)
Charge for the year
1.9
8.9
Adjustments in respect of prior years
(1.5)
(0.4)
Total current tax expense
0.4
8.5
The Group current tax charge of £0.4 million (2022: £8.5 million) charge represents UK current tax charge £0.7 million (2022: £3.2 million) with the
remaining £0.3 million credit (2022: £5.3 million charge) relating to overseas tax.
2023 2022
£m £m
Deferred tax (credit)/expense
Origination and reversal of temporary differences
(2.8)
(16.4)
Adjustments in respect of prior years
(0.2)
(0.3)
Total deferred tax credit
(3.0)
(16.7)
The Group deferred tax credit of £3.0 million (2022: £16.7 million credit) represents US deferred tax credit of £7.4 million credit (2022: £15.0 million
credit), UK deferred tax charge of £0.4 million (2022: £0.1 million charge) with £4.0 million charge (£1.8 million credit) relating to overseas tax.
2023 2022
£m £m
Tax charge/(credit) recognised in Statement of Changes in Equity (“SOCIE”)
Current tax recognised in SOCIE
–
–
Deferred tax recognised in SOCIE
0.6
0.4
0.6
0.4
3 No current tax deductions have been reflected in the SOCIE in both the current and prior year.
3
4
4 A deferred tax charge of £0.6 million (2022: £0.4 million charge) relating to the impact of share-based payments on outstanding options, has been reflected in the SOCIE.
Reconciliation of Group tax charge/(credit)
2023 2022
£m £m
(Loss)/profit before tax
(80.7)
24.7
Income tax using the domestic corporation tax rate at 23.5% (2022: 19%)
(19.0)
4.7
Effect of tax rates in foreign jurisdictions
1.5
1.1
Beneficial tax rates and incentives
(0.6)
(0.6)
Non-deductible expenses
1.1
1.3
Non-taxable income
(0.8)
(1.0)
Non-deductible impairment of goodwill and intangible assets
5.4
–
Other – including movement on assessment of tax risks
1.2
(0.3)
UK rate change
–
0.1
Movement on unrecognised deferred tax
–
2.1
Impact of losses and other tax attributes derecognised relating to discontinued operations
10.2
–
Deferred tax asset increase relating to recognition of US tax losses
–
(14.3)
Adjustments in respect of prior years
(1.6)
(1.3)
Total income tax credit in Income Statement
(2.6)
(8.2)
5
6
7
5 The beneficial tax rates and incentives of £0.6 million credit (2022: £0.6 million credit) relates to the beneficial tax rate in Costa Rica.
6 The derecognised amount of £10.2 million relates to £1.2 million derecognised in FY23 and £9.0 million relates to derecognition of FY22 tax losses and other tax attributes.
7 The Deferred tax asset increase relates to a one-off recognition of the US tax losses in FY22 arising from an increase in forecasted sustainable profits, see note “Deferred tax assets and
liabilities” below.
On 24 May 2021 the UK government substantively enacted to increase the UK corporation tax from 19% to 25% with effect from 1 April 2023.
The applicable UK tax rate for the period 1 January 2023 to 31 December 2023 was 23.5% (FY22: 19%).
On 22 February 2024, the 2024 Finance Act was enacted. The existing temporary full expensing relief for expenditure on plant and machinery was
made permanent on 22 February 2024. There is no tax impact on the income statement but this does provide an acceleration of tax relief with a
resulting in an estimated upfront cash tax saving of c.£0.6 million for FY24.
Strategic report Corporate Governance Financial Statements
177
Tax – Balance Sheet
Current tax
The current tax liability of £7.8 million (2022: £16.7 million) represents the amount of income taxes payable in respect of current and prior periods,
including a provision in relation to uncertain tax positions. The current tax asset of £5.7 million (2022: £4.1 million) relates to income tax receivable in
the UK, the US and Italy, and includes a provision in relation to uncertain tax positions.
The international tax environment has received increased attention and seen rapid change over recent years, both at a US and European level, and by
international bodies such as the Organisation for Economic Co-operation and Development (“OECD”). In light of this, the Group has been monitoring
developments and continues to engage transparently with the tax authorities in countries where the Group operates, to ensure that the Group
manages its tax arrangements on a sustainable basis.
As for most multinationals, the current tax environment is creating increased levels of uncertainty and the Group is potentially subject to tax audits
in many jurisdictions. By their nature these are often complex and could take a significant period of time to be agreed with the tax authorities. The
Group estimates and accrues taxes that will ultimately be payable when reviews or audits by tax authorities of tax returns are completed. These
estimates include management judgements about the position expected to be taken by each tax authority, primarily in respect of transfer pricing as
well as in respect of financing arrangements and tax credits and incentives.
Management estimates of the level of risk arising from tax audit may change in the next year as a result of changes in legislation or tax authority
practice or correspondence with tax authorities during a specific tax audit. It is not possible to quantify the impact that such future developments
may have on the Group’s tax positions. Actual outcomes and settlements may differ significantly from the estimates recorded in these consolidated
financial statements.
Non-current tax
The non-current tax asset of £3.1 million relates to the payment made on account to HMRC in 2021 which is considered to be recoverable in more
than one year. Further details are below.
EU State Aid investigation
In October 2017, the European Commission (“EC”) opened a State Aid investigation into the Group Financing Exemption in the UK controlled foreign
company (“CFC”) rules (an exemption introduced into the UK tax legislation in 2013). In common with other UK-based international companies
whose intragroup finance arrangements are in line with current controlled foreign company rules, Videndum is affected by this decision.
In June 2019, the UK government submitted an appeal to the EU Commission against its decision. In common with a number of other affected
taxpayers, Videndum has also filed its own annulment application.
In 2021 the Group received a Charging Notice and Interest Charging Notice from HMRC, and accordingly paid £3.0 million. The Group considers it
probable that its appeal against the Charging Notice and/or its annulment application against the European Commission’s (“EC”) State Aid decision
will be successful and as such has recorded a non-current asset in relation to the payment on the basis that it will ultimately be refunded.
It is considered possible, however, that the appeal and/or annulment might be unsuccessful which would result in a liability contingent on the outcome.
In 2022, the General Court of the European Union upheld the EC’s original decision to the Court of Justice of the European Union (“CJEU”). The
applicants in both of the lead cases making applications for annulment of which the Group’s own annulment application is currently stood behind
have appealed against this judgement.
On 11 April 2024, the Advocate General delivered an independent, but non-binding, opinion on the case, stating that the CJEU should set aside the
judgement of the General Court and annul the EC’s decision which found that the UK provided State Aid to certain multinational groups between
2013 and 2018. The final judgement is expected to be delivered in the coming months, although there is no prescribed timeframe for the issue of that
final decision.
Management remains of the view that it is probable that its appeal and/or its annulment application will be successful based on the technical facts
of the case.
The non-current tax asset at 31 December 2023 is £3.1 million which represents the £3.0 million described above plus £0.1 million interest receivable.
Section 2 continued
Results for the Year continued
Videndum plc
178
Annual Report and Accounts 2023
Deferred tax assets and liabilities
Recognised
in goodwill Transfer
Recognised and Exchange between
2023 in income reserves movements categories 2022
£m £m £m £m £m £m
Assets
Inventories
2.3
(0.5)
–
–
–
2.8
Intangible assets
1.9
0.9
–
(0.1)
–
1.1
Tax losses
1
36.8
3.9
–
(1.8)
–
34.7
Property, plant, equipment and other
9.1
(2.3)
(0.6)
(0.5)
–
12.5
Lease liability
5.3
3.4
–
(0.2)
–
2.1
55.4
5.4
(0.6)
(2.6)
–
53.2
Liabilities
Pension
(2.5)
1.6
–
0.2
–
(4.3)
Property, plant, equipment and other
(1.0)
–
–
–
–
(1.0)
Intangible assets
(2.6)
(0.6)
0.3
–
–
(2.3)
Right-of-use assets
(5.1)
(3.4)
–
0.2
–
(1.9)
(11.2)
(2.4)
0.3
0.4
–
(9.5)
Net
44.2
3.0
(0.3)
(2.2)
–
43.7
2
2
Recognised in Transfer
Recognised goodwill and Exchange between
2022 in income reserves movements categories 2021
£m £m £m £m £m £m
Assets
Inventories
2.8
0.2
–
–
–
2.6
Intangible assets
1.1
–
(0.2)
0.2
–
1.1
Tax losses
1
34.7
10.8
–
2.8
(0.4)
21.5
Property, plant, equipment and other
12.5
5.5
(1.1)
0.5
(0.8)
8.4
Lease liability
2.1
2.1
–
–
–
–
53.2
18.6
(1.3)
3.5
(1.2)
33.6
Liabilities
Pension
(1.0)
–
(2.1)
–
1.1
–
Property, plant, equipment and other
(2.3)
(0.7)
(1.4)
–
0.1
(0.3)
Intangible assets
(4.3)
0.7
–
(0.5)
–
(4.5)
Right-of-use assets
(1.9)
(1.9)
–
–
–
–
(9.5)
(1.9)
(3.5)
(0.5)
1.2
(4.8)
Net
43.7
16.7
(4.8)
3.0
–
28.8
2
2
1 The table below shows deferred tax on losses.
2 See note “Deferred Tax on leases” below.
Gross Tax Gross Tax
2023 2023 2022 2022
£m £m £m £m
Recognised
160.0
36.8
165.9
34.7
Unrecognised
9.0
1.9
9.0
1.9
Total
169.0
38.7
174.9
36.6
3
3 Excludes unrecognised losses in FY23 in respect of Amimon Ltd, a discontinued business, of gross £56.9 million and tax £9.1 million. The unrecognised tax losses have no expiry date.
Strategic report Corporate Governance Financial Statements
179
Deferred Tax
Deferred tax assets are recognised to the extent it is probable that future taxable profit will be available against which the unused tax losses,
unused tax credits and deductible temporary differences can be utilised in the relevant jurisdictions. As of 31 December 2023, Videndum has
recognised deferred tax assets of £55.4 million (2022: £53.2 million).
Deferred tax assets of $42.5 million are recognised in respect of losses, interest and other temporary differences in the Group’s US business, which
have no time expiry. While the DTA has increased in the current year due to additional losses, the Group considers there to be convincing positive
evidence of forecast future taxable profits to support the recognition of these deferred tax assets.
In assessing the probability of recovery, the Directors have reviewed the Group’s three-year Plan that has been used for both the going concern,
viability assessment and the goodwill and fixed asset impairment testing. This plan anticipates a recovery of the US business following the end of
the actors’ and writers’ strike in December 2023. The strike was a one-off event and is not expected to reoccur in the immediate future.
The assessment has also considered the fact that there is a material uncertainty in relation to going concern. This uncertainty predominately relates
to the short-term timing of the business recovery over the coming months. The recognition of the DTA is predominately based on longer-term 10+
year forecasts, as such it is still probable that the losses will be recovered in full and that the short-term uncertainty does not undermine the
longer-term forecasts.
The three-year plan and DTA forecast and the forecasts for going concern, viability assessment and goodwill use consistent assumptions.
A risk factor of 8% has been applied to US taxable profit forecasts after three years, 2027 onwards, to take into account the reduction in reliability
of forecasts as they extend into the future. The majority of the DTAs are expected to be recovered by 2034 (11 years) after taking into account tax
law restrictions.
The Group continues to hold the Amimon business as a discontinued business. At 31 December 2023 the Group has reviewed the DTA in relation to
the Israeli tax losses and other temporary differences. Given there is an ongoing conflict in Israel and while the Group continues to search for a
suitable purchaser, it has been concluded that the DTA of £9.0 million as at 31 December 2022 is not supportable and has been derecognised in full.
The deferred tax asset decrease of £0.2 million (2022: £4.8 million decrease) recognised in goodwill and reserves relates to the following: £nil
recognised in SOCIE in relation to defined benefit obligations, £0.6 million decrease reflected in the SOCIE in relation to share options, £0.3 million
increase relating to financial instruments, and £nil recognised in SOCIE in relation to US acquisitions.
No taxes have been provided for liabilities which may arise on the distribution of unremitted earnings of subsidiaries on the basis of control, except
where distributions of such profits are planned. Cumulative unremitted earnings of overseas subsidiaries totalled approximately £142.7 million at
31 December 2023 (2022: £171.8 million). As dividends remitted from overseas subsidiaries to the UK should be exempt from additional UK tax, no
significant tax charges would be expected.
Deferred Tax on leases
Following the amendment to IAS 12 in connection with “Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction”, which
applies for annual reporting periods beginning on or after 1 January 2023, the deferred tax assets and deferred tax liabilities relating to Videndum’s
lease liabilities and lease assets are disclosed above separately. In FY22 the deferred tax assets and liabilities were disclosed net and have for FY23
been disclosed gross.
Sensitivity analysis on tax losses
Changes in the estimated future US taxable forecasted profits will affect future profits and therefore the recoverability of the deferred tax assets.
To demonstrate the impact of these changes on the recoverability of deferred tax assets, sensitivities involving a 5% increase and decrease in margin
in the US markets which encompasses Teradek, Audix and Savage business units have been modelled.
A 5% increase in net operating margin has no impact on the deferred tax asset (“DTA”) recognition or the forecast timing of the use of the US tax
losses. A 5% decrease in net operating margin has no impact on the recognition of the deferred tax asset but results in the majority of the DTA’s
being expected to be recovered by 2035 (12 years).
2.5 Earnings per share
Earnings per share (“EPS”) is the amount of post-tax profit/(loss) attributable to each share.
Basic EPS is calculated on the profit/(loss) for the year divided by the weighted average number of ordinary shares in issue during the year.
Diluted EPS is calculated on the profit for the year divided by the weighted average number of ordinary shares in issue during the year, but adjusted
for the effects of dilutive share options. The key features of share option contracts are described in note 5.3 “Share-based payments”.
A negative basic EPS is not adjusted for the effects of dilutive share options.
The adjusted EPS measure is calculated based on adjusted profit/(loss) and is used by Management to set performance targets for employee
incentives and to assess performance of the businesses.
Section 2 continued
Results for the Year continued
Videndum plc
180
Annual Report and Accounts 2023
The calculation of basic, diluted and adjusted EPS is set out below:
2023 2022
£m £m
(Loss)/profit for the financial year from continuing operations
(12.1)
46.9
Add back adjusting items, all net of tax:
Amortisation of intangible assets that are acquired in a business combination, net of tax
3.3
3.9
Impairment of fixed assets, net of tax
6.2
2.3
Acquisition related charges, net of tax
1.1
2.9
Integration, restructuring and other costs, net of tax
3.7
3.1
Finance expense – amortisation of loan fees on borrowings for acquisitions and other interest, net of tax
2.0
0.6
Current tax credit
–
(0.8)
Deferred tax credit
–
(14.3)
Add back adjusting items from continuing operations, all net of tax:
16.3
(2.3)
Adjusted profit after tax from continuing operations
4.2
44.6
Loss for the financial period from discontinued operations
(66.0)
(14.0)
Add back adjusting items, all net of tax:
Amortisation of intangible assets that are acquired in a business combination, net of tax
1.9
4.8
Impairment of intangible assets
45.5
1.3
Acquisition related charges, net of tax
0.9
4.7
Integration, restructuring and other costs, net of tax
0.3
0.1
Finance expense – unwind of discount on liabilities and other interest, net of tax
0.3
–
Add back adjusting items from discontinued operations, all net of tax:
48.9
10.9
Add back loss on disposal of discontinued operation after tax
1.0
–
Adjusted loss after tax from discontinued operations
(16.1)
(3.1)
(Loss)/profit for the financial year
(78.1)
32.9
Adjusted (loss)/profit after tax
(11.9)
41.5
1
2
1 A current tax credit of £nil (2022: £0.8 million) relates to non-taxable foreign exchange gains.
2 A deferred tax credit of £nil (2022: £14.3 million) relates to the recognition of deferred tax assets.
Weighted average number
of shares ‘000
Adjusted earnings per share
Earnings per share
2023 2022 2022 2022
Number
Number
2023 pence
pence
2023 pence
pence
From continuing operations
Basic
49,584
46,064
8.5
96.8
(24.4)
101.8
Dilutive potential ordinary shares
318
1,850
(0.1)
(3.7)
–
(3.9)
Diluted
49,902
47,914
8.4
93.1
(24.4)
97.9
From discontinued operations
Basic
49,584
46,064
(32.5)
(6.7)
(133.1)
(30.4)
Dilutive potential ordinary shares
318
1,850
–
–
–
–
Diluted
49,902
47,914
(32.5)
(6.7)
(133.1)
(30.4)
From continuing and discontinued operations
Basic
49,584
46,064
(24.0)
90.1
(157.5)
71.4
Dilutive potential ordinary shares
318
1,850
–
(3.5)
–
(2.7)
Diluted
49,902
47,914
(24.0)
86.6
(157.5)
68.7
1
2
2
1 For the year ended 31 December 2023, potential 318,000 ordinary shares are dilutive for the purposes of adjusted earnings per share but antidilutive for statutory earnings per share.
2 318,000 (2022: 1,850,000) potential ordinary shares are antidilutive for both adjusted earnings per share and statutory earnings per share.
Strategic report Corporate Governance Financial Statements
181
This section shows the assets and liabilities used to generate the Group’s trading performance. Liabilities relating to the Group’s financing
activities are addressed in Section 4. Current tax and deferred tax assets and liabilities are shown in note 2.4 “Tax”.
On the following pages, there are disclosures covering the following:
3.1 Intangible assets
3.2 Property, plant and equipment
3.3 Working capital
3.4 Discontinued operations and non-current assets classified as held for sale
3.5 Provisions
3.6 Leases
3.1 Intangible assets
This shows the non-physical assets used by the Group to generate revenues and profits. These assets include the following:
– Goodwill
– Acquired intangible assets
– Software
– Capitalised development costs
Accounting policies
Goodwill
The goodwill recognised by the Group has all arisen as a result of acquisitions and is stated at cost less any accumulated impairment losses. Goodwill
is allocated on acquisition to CGUs, or groups of CGUs, assessed to be the three segments of the Group, that are anticipated to benefit from the
combination. It is not subject to amortisation but is tested annually for impairment. Impairment is determined by assessing the recoverable amount
of the segment to which the goodwill relates. This estimate of recoverable amount is determined at each Balance Sheet date.
The estimate of recoverable amount requires significant assumptions to be made and is based on a number of factors such as the near-term
business outlook for the segment, including both its operating profit and operating cash flow performance. Where the recoverable amount of the
segment is less than the carrying amount, an impairment loss is recognised. Impairment losses on goodwill are not reversed.
All acquisitions that have occurred since 1 January 2010 are accounted for by applying the acquisition method. Goodwill on these acquisitions
represents the excess of the fair value of the acquisition consideration over the fair value of the identifiable net assets acquired, all measured at the
acquisition date. Subsequent adjustments to the fair values of net assets acquired can be made within 12 months of the acquisition date where
original fair values were determined provisionally. These adjustments are accounted for from the date of acquisition.
Other intangible assets
Acquired intangible assets
Other intangible assets acquired as part of a business combination are shown at fair value at the date of acquisition less accumulated amortisation
at the rates indicated below:
Brand 3 to 20 years
Customer relationships 3 to 10 years
Technology 3 to 20 years
Software
The cost of acquiring software (including associated implementation and development costs where applicable) is classified as an intangible asset.
Costs that are directly associated with the production of identifiable and unique software products controlled by the Group, and that are assessed
as likely to generate economic benefits exceeding costs beyond one year, are also capitalised and recognised as intangible assets. Costs associated
with maintaining computer software programs are recognised as an expense as incurred. Software expenditure is amortised over its estimated
useful life of between three to five years, and is stated at cost less accumulated amortisation and impairment losses.
Capitalised development costs
Research and development costs are charged to the Income Statement in the year in which they are incurred unless development expenditure meets
the criteria for capitalisation. Once detailed and strict criteria have been met that confirm that the product or process is both technically and
commercially feasible and the Group has sufficient resources to complete the product, any further expenditure incurred on the project is capitalised.
The capitalised expenditure includes the cost of materials, direct labour and an appropriate portion of overheads. Capitalised expenditure is
amortised over the life of the product, and is stated at cost less accumulated amortisation and impairment losses.
Section 3
Operating Assets and Liabilities
Videndum plc
182
Annual Report and Accounts 2023
Impairment tests for CGUs or groups of CGUs containing goodwill
In accordance with the requirements of IAS 36 “Impairment of Assets”, goodwill is allocated to the CGU groups, assessed to be the three segments
of the Group, which are expected to benefit from the combination and are identified by the way goodwill is monitored for impairment. The Group’s
total consolidated goodwill of £94.8 million at 31 December 2023 (£125.7 million at 31 December 2022) is allocated to: Media Solutions: £52.7 million
(2022: £55.4 million); Production Solutions: £31.1 million (2022: £31.9 million); and Creative Solutions: £11.0 million (2022: £38.4 million). Goodwill
allocated to each segment is assessed for impairment annually and whenever there is a specific indicator of impairment.
As part of the annual impairment test review, the carrying value of goodwill has been assessed with reference to value in use over a projected period
of five years together with a terminal value. This reflects the projected cash flows of each segment based on the actual operating results, the most
recent Board approved budget, the strategy, and Management projections.
As part of determining the value in use of each CGU group and carrying value of long-term assets, Management has considered the potential impact
of climate change on the business performance over the next five years, and the terminal growth rates. While there is considerable uncertainty
relating to the longer term and quantifying the impact on a range of outcomes, Management considers that environmental related incremental
costs are expected to have a moderate impact; the Group has already implemented strategies to mitigate this impact.
Recognising that there are extreme but unlikely scenarios, the Group considers that while exposed to physical risks associated with climate change
(such as flooding, heatwaves, sea level rises and increased precipitation) the estimated impact of these on the Group is not deemed material when
determining the value in use of each CGU group and carrying value of associated long-term assets. In addition, the Group is exposed to transitional
risks which might arise, for example, from government policy, customer expectations, material costs and increased stakeholder concern. The
transitional risks could result in financial impacts such as higher environmentally focused levies (e.g. carbon pricing) and increased material costs.
While the Group is exposed to the potential financial impacts associated with transitional risks after expected mitigating actions these are not
deemed to have a significant impact on the value in use of each CGU group, determination of available headroom, and carrying value of associated
long-term assets.
The key assumptions on which the value in use calculations are based relate to (i) business performance over the next five years, (ii) long-term
growth rates beyond 2028; and (iii) discount rates applied.
(i) Business performance over the next five years – Forecast sales growth rates are based on past experience and take into account current and
future market conditions and opportunities, and strategic decisions made in respect of each CGU group. Operating profits are forecast based on
historical experience of operating margins adjusted for the impact of changes in product costs, cost-saving initiatives already implemented or
committed to at the balance sheet date and new product launches. Cash conversion is the ratio of operating cash flow to operating profit.
Management forecasts the cash conversion rate based on historical experience.
(ii) Long-term growth rates beyond 2028 – These are based on Management’s assessment of the outlook for overall market growth with both
Media Solutions and Production Solutions broadly similar to long-term world GDP growth, whereas for Creative Solutions, we believe the
end-markets and geographies in which the division operates indicate higher growth potential.
(iii) Discount rates applied – The pre-tax discount rates were measured based on the interest rate of 30-year government bonds issued in the
relevant market, adjusted for a risk premium to reflect both the increased risk of investing in equities generally and the systematic risk of the
CGU group.
Growth rates for 2027 and 2028 were assumed to be 9% and 4% for Media Solutions, 1% and 5% for Production Solutions and 8% and 4% for
Creative Solutions respectively (2022: 2% for Media Solutions and Production Solutions and 10% for Creative Solutions for both 2026 and 2027).
Growth rates for the period beyond 2028 were assumed to be 2.0% for Media Solutions and Production Solutions, and 4.0% for Creative Solutions
(2022: 2.0% for Media Solutions and Production Solutions, and 4.0% for Creative Solutions). The pre-tax discount rates applied to discount the
pre-tax cash flows were 15% (2022: 15%) for Media Solutions; 14% (2022: 14%) for Production Solutions; and 16% (2022: 14%) for Creative Solutions.
No reasonably possible change of key assumption would result in a material impairment to the goodwill of any CGU group. The following scenarios
would be required to result in an impairment of goodwill: the pre-tax WACC, which is the most sensitive assumption and therefore the only
sensitivity provided, would need to increase by c.10% points for Media Solutions; c.25% points for Production Solutions; and c.28% points for
Creative Solutions.
Impairment tests for acquired intangible assets
The key sources of estimation uncertainty relate to the discount and terminal growth rates. A 2% increase in the discount rate or a 2% decrease in
the terminal growth rate would decrease the value in use by c.£2.0 million for the acquired intangible assets relating to the acquisition of Savage.
Strategic report Corporate Governance Financial Statements
183
Intangible assets
Acquired Capitalised
intangible development
Total Goodwill assets Software costs
£m £m £m £m £m
Cost
At 1 January 2022
281.3
99.4
114.0
18.2
49.7
Currency translation adjustments
28.6
10.4
13.2
1.0
4.0
Additions
13.1
–
–
1.0
12.1
Business combinations
31.5
16.4
15.1
–
–
At 31 December 2022 and 1 January 2023
354.5
126.2
142.3
20.2
65.8
Currency translation adjustments
(13.6)
(4.5)
(6.0)
(0.6)
(2.5)
Additions
13.7
–
–
0.7
13.0
Disposals
(21.9)
(11.2)
(9.8)
(0.4)
(0.5)
Held for sale
(63.7)
(15.3)
(28.4)
–
(20.0)
At 31 December 2023
269.0
95.2
98.1
19.9
55.8
Amortisation and impairment losses
At 1 January 2022
107.6
0.4
68.0
15.7
23.5
Currency translation adjustments
8.8
0.1
6.2
0.8
1.7
Amortisation in the year
18.3
–
10.9
1.0
6.4
Impairment losses in the year
1.9
–
–
–
1.9
At 31 December 2022 and 1 January 2023
136.6
0.5
85.1
17.5
33.5
Currency translation adjustments
(6.1)
(0.4)
(3.7)
(0.5)
(1.5)
Amortisation in the year
14.0
–
6.2
0.9
6.9
Impairment losses in the year 
52.0
26.8
15.8
–
9.4
Disposals
(21.9)
(11.2)
(9.8)
(0.4)
(0.5)
Held for sale
(58.2)
(15.3)
(28.4)
–
(14.5)
At 31 December 2023
116.4
0.4
65.2
17.5
33.3
Carrying amounts
At 1 January 2022
173.7
99.0
46.0
2.5
26.2
At 31 December 2022 and 1 January 2023
217.9
125.7
57.2
2.7
32.3
At 31 December 2023
152.6
94.8
32.9
2.4
22.5
1 Goodwill impairment losses of £26.8 million relate to Amimon: £15.0 million, Lightstream: £11.2 million and Syrp: £0.6 million.
Acquired intangible asset impairment losses of £15.8 million relate to Lightstream: £7.5 million, Amimon: £6.3 million, Savage: £0.8 million, Lowepro: £0.6 million, Quasar: £0.4 million and Syrp:
£0.2 million. Following the impairment charges, the acquired intangible assets in the above entities were fully impaired apart from Savage and Lowepro in which the assets were written down
to their recoverable amounts of £15.6 million and £3.1 million respectively. Recoverable amount was determined as value in use. Discount rates applied were 12.7% and 11.7% respectively.
Capitalised development impairment losses of £9.4 million relate to Amimon: £8.4 million, Lightstream: £0.5 million, £0.3 million relate to various abandoned projects due to the exit from the
motion controls market and Syrp: £0.2 million. Following the impairment charges, capitalised development costs in the above entities were fully impaired apart from Amimon, in which the asset
was written down to recoverable amount, being fair value less cost to sell, of £5.5 million. The main valuation input used was a market value obtained from an independent valuer. The estimated
costs of disposal were a significant unobservable input, therefore the fair value of the capitalised development costs is classified as a level 3 fair value.
The carrying value of individually material acquired intangible assets is £nil (2022: £2.6 million) for software and algorithms, £11.2 million
(2022: £13.1 million) for trademarks, £nil (2022: £3.2 million) for patents, £15.9 million (2022: £19.7 million) for customer relationships and £5.3 million
(2022: £13.8 million) for technology. The remaining amortisation period of these intangible assets is between nine and 19 years for trademarks, eight
years for customer relationships and 19 years for technology.
The carrying value of individually material capitalised development costs is £6.8 million (2022: £3.0 million) with a remaining amortisation period of
five years.
Amortisation of intangible assets of £14.0 million (2022: £18.3 million) and impairment losses of £52.0 million (2022: £1.9 million) are included within
operating expenses.
Section 3 continued
Operating Assets and Liabilities continued
Videndum plc
184
Annual Report and Accounts 2023
3.2 Property, plant and equipment
This shows the physical assets used by the Group to generate revenues and profits. These assets include the following:
– Land and buildings
– Plant, machinery and vehicles
– Equipment, fixtures and fittings
Accounting policies
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Rental assets are recorded as plant and
machinery. Right-of-use assets under lease contracts are included within property, plant and equipment. See note 3.6 “Leases”.
Depreciation
Depreciation is provided to write off the cost of property, plant and equipment, less estimated residual value, on a straight-line basis over their
estimated useful lives. The annual depreciation charge is sensitive to the estimated useful life of each asset and expected residual value at the end of
its life. The major categories of property, plant and equipment are depreciated as follows:
Freehold land
not depreciated
Freehold buildings
up to 50 years
Leasehold improvements
shorter of estimated useful life or remaining period of the lease
Plant and machinery
4 to 10 years
Motor vehicles
3 to 4 years
Equipment, fixtures and fittings
3 to 10 years
Rental assets
3 to 6 years
Impairment of assets
Property, plant and equipment that is subject to depreciation is reviewed for impairment when events or changes in circumstances indicate that the
carrying amount may not be recoverable. Indicators of impairment may include changes in technology and market conditions.
The impact of climate change on useful economic lives of property, plant and equipment is not deemed to be significant.
Strategic report Corporate Governance Financial Statements
185
Property, plant and equipment
Plant, Equipment,
Land and machinery fixtures and
Total buildings and vehicles fittings
£m £m £m £m
Cost
At 1 January 2022
173.3
74.6
88.7
10.0
Currency translation adjustments
11.3
5.2
5.6
0.5
Additions
11.9
4.9
5.4
1.6
Disposals
(4.9)
(3.2)
(1.2)
(0.5)
Business combinations
5.5
4.4
1.0
0.1
At 31 December 2022 and 1 January 2023
197.1
85.9
99.5
11.7
Currency translation adjustments
(5.7)
(2.8)
(2.6)
(0.3)
Transfers between asset categories
–
–
(0.2)
0.2
Additions
12.5
7.3
4.1
1.1
Disposals
(11.4)
(4.3)
(5.4)
(1.7)
Held for sale
(5.0)
(3.9)
(1.0)
(0.1)
At 31 December 2023
187.5
82.2
94.4
10.9
Depreciation
At 1 January 2022
112.6
37.1
68.1
7.4
Currency translation adjustment
6.9
2.3
4.3
0.3
Depreciation charge in the year
15.3
7.1
7.2
1.0
Disposals
(4.3)
(2.7)
(1.1)
(0.5)
At 31 December 2022 and 1 January 2023
130.5
43.8
78.5
8.2
Currency translation adjustment
(3.7)
(1.4)
(2.1)
(0.2)
Transfers between asset categories
–
–
(0.2)
0.2
Depreciation charge in the year
14.4
6.6
6.7
1.1
Impairment losses in the year
1.8
1.4
0.4
–
Disposals
(10.5)
(3.8)
(5.2)
(1.5)
Held for sale
(1.4)
(1.0)
(0.3)
(0.1)
At 31 December 2023
131.1
45.6
77.8
7.7
Carrying amounts
At 1 January 2022
60.7
37.5
20.6
2.6
At 31 December 2022 and 1 January 2023
66.6
42.1
21.0
3.5
At 31 December 2023
56.4
36.6
16.6
3.2
1
1 Land and buildings impairment losses of £1.4 million comprise £1.3 million relating to the impairment of the building classified as non-current asset held for sale, and £0.1 million relating to the
relocation of the Wooden Camera operations to Costa Rica. The recoverable amount of the building classified as a non-current asset held for sale is £2.5 million determined as fair value less cost
to sell. The main valuation input used was a market value of £2.5 million determined by an independent offer. The estimated costs of disposal were a significant unobservable input, therefore
the fair value of the capitalised development costs is classified as a level 3 fair value.
Plant, machinery and vehicles impairment losses of £0.4 million relates to the write-off of assets in the Production Solutions Division: £0.2 million,
and the Media Solutions Division: £0.2 million.
Plant, machinery and vehicles includes equipment rental assets with an original cost of £11.6 million (2022: £11.7 million) and accumulated
depreciation of £9.3 million (2022: £8.8 million).
Capital commitments at 31 December 2023 for which no provision has been made in the accounts amount to £nil (2022: £nil).
Property, plant and equipment of £3.6 million classified as assets held for sale within the year comprises land and buildings of £2.5 million in
Continuing operations (Production Solutions Division) and £1.1 million in Discontinued operations (Creative Solutions Division).
Depreciation is included within the operating expenses and cost of sales disclosed on the consolidated Income Statement.
Section 3 continued
Operating Assets and Liabilities continued
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Annual Report and Accounts 2023
3.3 Working capital
Working capital represents the assets and liabilities the Group generates through its trading activities. These include inventories, trade and
other receivables, and trade and other payabl es.
Careful management of working capital is vital as it ensures that the Group can meet its trading and financing obligations within its ordinary
operating cycle.
Accounting policies
Inventories
Inventories and work in progress are carried at the lower of cost and net realisable value. Inventory acquired as part of business combinations is
initially measured at fair value. Cost represents direct costs incurred and, where appropriate, production or conversion costs and other costs to bring
the inventory to its existing location and condition. In the case of manufacturing inventory and work in progress, cost includes an appropriate share
of production overheads based on normal operating capacity. Inventory is accounted for on an average cost method. Net realisable value is the
estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. Provisions for inventories are
recognised when the book value exceeds their net realisable value.
In the ordinary course of business, judgement is applied to assess the level of provisions required to write down slow-moving, excess and obsolete
inventory to its net realisable value.
During the second half of 2023, the Group took a strategic decision to close Syrp, its Media Solutions mechatronic research and development centre
in New Zealand, and exit from the lower margin motion control product category. A restructuring charge of £2.4 million (2022: £nil) was incurred
reflecting inventory losses incurred and the write-down to net realisable value of the motion control inventory which has been reported within
adjusting items.
During this period, the disposal of inventory, resulted in revenue of £1.2 million recognised within operating profit from continuing operations and
associated cash flows of £1.1 million, which are not expected to be part of underlying operations of the business going forward. The remaining
£0.9 million of inventory at hand, which has been written down to fair value is expected to be disposed of during the first half of 2024.
The key estimates relating to the inventory provision include; consideration of supply chain and their lead times, future selling price, anticipated
future sales of products over particular time periods, the susceptibility of the underlying product to obsolescence and current year trading
performance. The anticipated level of future sales is determined primarily based on actual sales over a specified historic reference period, which has
been enhanced to a period of between six and 24 months, which is determined by Management and is deemed appropriate to the type of inventory.
The inventory provision calculation is based on a standard Group policy which is reviewed in detail and overlain with a range of management
estimates based on the specific circumstances around each line of inventory. Updating the specific management overlays by 30% would result in an
additional £1.3 million impairment being booked or released.
Contract assets and receivables
Trade receivables and contract assets are recognised initially at fair value, and subsequently at amortised cost using the effective interest rate
method, less provision for impairment.
A receivable is recognised when performance obligations are satisfied as this is the point in time that the consideration is unconditional because only
the passage of time is required before the payment is due.
The Group applies the IFRS 9 simplified approach to measure expected credit losses which uses a lifetime expected loss allowance for all trade
receivables and contract assets. To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared
credit risk characteristics and the number of days past due. The expected loss rates are based on payment profiles of sales over a preceding
36-month period and the corresponding historical credit losses experienced within this period. When appropriate, the historical loss rates are
adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the
receivables where a trend exists.
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery
include, amongst others, the failure of a debtor to engage in a repayment plan with the Group, and a failure to make contractual payments for an
extended period.
Amounts recoverable on contracts are included in contract assets and represent revenue recognised in excess of payments on account.
Factoring of trade receivables
Trade receivables are derecognised through schemes with a financial institution, where the counterparty assumes the risk of non-payment by the
customer. The transfer is on a limited recourse basis in which there is no obligation to the factor for non-payment by a customer and substantially all
risks and rewards have been transferred.
Derecognition occurs when cash is received from the financial institution (less reverse factoring discount).
On 28 June 2023 the Group signed a €20.0 million (£17.3 million) uncommitted evergreen receivables factoring facility. The amount of receivables
factored at year end was £7.9 million (2022: £nil), maximum usage during the year was £8.2 million.
Contract liabilities and payables
Trade payables are generally recognised at the value of the invoice received from a supplier.
When customer payments are received in advance and the amount of consideration exceeds the revenue recognised, a contract liability is recognised
in the Balance Sheet.
Strategic report Corporate Governance Financial Statements
187
Inventories
2023 2022
£m £m
Raw materials and components
35.7
35.7
Work in progress
7.4
8.9
Finished goods
52.4
62.7
Total inventories, net of impairment provisions
95.5
107.3
Finished goods, net of impairment provisions – discontinued operations
(1.0)
–
Inventories, net of impairment provisions – continuing operations
94.5
107.3
Continuing operations:
Inventories of continuing operations recognised as an expense during the year ended 31 December 2023 amounted to £193.0 (2022: £251.7 million).
These were included in cost of sales.
Inventory of continuing operations of £94.5 million (2022: £107.3 million) is stated net of impairment provisions of £28.1 million (2022: £23.2 million).
During the year £7.2 million (2022: £5.1 million) was recognised as an expense resulting from the impairment and write-down of inventory. A reversal
of £0.8 million (2022: £1.6 million) was recognised as a reduction of the amount of inventory recognised as an expense.
Discontinued operations:
Inventories of discontinued operations recognised as an expense during the year ended 31 December 2023 amounted to £4.5 million
(2022: £4.0 million). These were included in cost of sales.
Inventory of discontinued operations of £1.0 million is stated net of impairment provisions of £0.7 million. During the year £0.3 million was
recognised as an expense resulting from the write-down of inventory.
Contract assets
As at 1 January 2022 the balance of contract assets was £2.9 million.
Trade and other receivables
2023 2022
£m £m
Current receivables
Trade receivables, net of impairment provisions
36.5
54.7
Recoverable VAT
3.7
5.1
Other receivables
3.3
2.8
Right to returned goods
0.5
0.4
Prepayments
4.8
4.1
Total current receivables
48.8
67.1
Discontinued operations – trade receivables, net of impairment provisions
(1.3)
–
Other receivables – discontinued operations
(0.4)
–
Current receivables – continuing operations
47.1
67.1
Non-current receivables
Other receivables
5.7
7.4
Discontinued operations – other receivables
(0.5)
–
Non-current receivables – continuing operations
5.2
7.4
Total receivables – continuing operations
52.3
74.5
1
1 Other receivables include an amount of £3.7 million (2022: £4.3 million) relating to the recoverable by the Group under the escrow and indemnity arrangement with the vendors of Savage,
acquired in 2021.
Section 3 continued
Operating Assets and Liabilities continued
Videndum plc
188
Annual Report and Accounts 2023
2023 2022
£m £m
Gross trade receivables – ageing
Not yet due
30.4
46.4
1-30 days
5.3
6.9
31-60 days
0.8
1.7
61-90 days
0.6
0.9
over 90 days
2.6
2.9
Gross trade receivables
39.7
58.8
2
2 Days overdue are measured from the date an invoice was due to be paid.
Overdue
Total debts Discounts
£m £m £m
Impairment provisions against trade receivables
Balance at 1 January 2023
4.1
2.3
1.8
Net increase/(decrease) during the year
0.7
(0.1)
0.8
Utilised during the year
(1.5)
(0.5)
(1.0)
Currency translation adjustments
(0.1)
–
(0.1)
Balance at 31 December 2023
3.2
1.7
1.5
Contract liabilities
As at 1 January 2022 the balance of contract liabilities was £2.6 million.
Trade and other payables
2023 2022
£m £m
Current trade and other payables
Trade payables
20.8
42.3
Other tax and social security costs
5.0
5.9
Expected refunds to customers
1.0
0.5
Accruals
10.5
14.0
Other creditors
7.9
16.1
Total current trade and other payables
45.2
78.8
Trade payables – discontinued operations
(0.8)
–
Other payables – discontinued operations
(1.9)
–
Current trade and other payables – continuing operations
42.5
78.8
Non-current payables
Other non-trade payables – continuing operations
1.2
1.8
Total trade and other payables – continuing operations
43.7
80.6
3
3 Other creditors includes an amount of £2.7 million (2022: £9.6 million) relating to employee benefits.
3.4 Discontinued operations and non-current assets classified as held for sale
Discontinued operations
In accordance with IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”, the assets and liabilities of the Syrp business, which is
part of the Media Solutions Division, Amimon business, which is part of the Creative Solutions Division, and land and buildings of £2.5 million within
the Production Solutions Division have been classified as a disposal group held for sale within the year.
Discontinued operations are businesses that have been sold, abandoned, or which are held for sale and contribute to a separate major line of
business or geographical area of operations. Amimon, Lightstream, and Syrp have all been classified as discontinued operations in the current year.
Strategic report Corporate Governance Financial Statements
189
These operations meet the definition of a discontinued operation due to them all being separate major lines of business and part of a single
coordinated plan to be disposed of.
As at 30 June 2023 Amimon was classified as an asset held for sale and a discontinued operation.
On 2 October 2023 the Group sold its Lightstream business based in the US for a cash consideration of $0.5 million (£0.4 million) resulting in a loss
on disposal before tax of £1.0 million after taking into account £1.4 million costs of disposal. Immediately before the initial classification of
Lightstream as held for sale, the carrying amounts of all the assets and liabilities in the disposal group were measured in accordance with applicable
IFRSs. As a result of measuring the disposal group at the lower of carrying amount and fair value less costs to sell, an impairment charge of
£19.2 million (goodwill: £11.2 million; acquired intangibles: £7.5 million; capitalised development costs: £0.5 million) was incurred.
On 31 December 2023 the Syrp business based in New Zealand was closed. Employee termination costs of £0.4 million were incurred and an
impairment charge of £0.4 million was made to plant, machinery and vehicles. The property lease was terminated on 21 January 2024.
On 5 January 2024 certain land and buildings of the Production Solutions Division were sold for a net sale price of £2.5 million.
The tables below shows the results of the discontinued operations which are included in the Consolidated Income Statement and Consolidated
Statement of Cash Flows respectively, and the effect of the disposal group on the Group Balance Sheet.
Sensitivities
The key source of estimation uncertainty relates to the estimated disposal proceeds, which would have an impact on the final carrying value. There is
a direct correlation between the estimated disposal proceeds and the final carrying value. A £2 million increase/decrease in estimated disposal
proceeds would cause a £2 million increase/decrease in the carrying value.
a) Income Statement – discontinued operations Notes
2023 2022
£m £m
Revenue
2.1
8.1
8.7
Expenses
(68.6)
(26.2)
Operating loss
(60.5)
(17.5)
Comprising
– Adjusted operating loss
(6.3)
(6.2)
– Adjusting items in operating loss
2.2
(54.2)
(11.3)
Finance expense
(0.4)
–
Loss before tax
(60.9)
(17.5)
Comprising
– Adjusted loss before tax
(6.4)
(6.2)
– Adjusting items in loss before tax
2.2
(54.5)
(11.3)
Taxation
(4.1)
3.5
Comprising taxation on
– Taxation on adjusted loss
(9.7)
3.1
– Adjusting items in taxation
5.6
0.4
Loss after tax from discontinued operations
(65.0)
(14.0)
Loss on disposal of discontinued operation after tax
(1.0)
–
Loss after tax from discontinued operations attributable to owners of parent
(66.0)
(14.0)
b) Statement of Cash Flows – discontinued operations
2023 2022
£m £m
Net cash used in operating activities
(7.3)
(7.0)
Net cash used in investing activities
(4.1)
(4.9)
Net cash used in financing activities
(0.4)
(0.9)
Net cash used in discontinued operations
(11.8)
(12.8)
Loss on disposal of discontinued operation after tax
(1.0)
–
Add back share-based payment charge
0.1
–
Disposal of business in cash flow
(0.9)
–
Section 3 continued
Operating Assets and Liabilities continued
Videndum plc
190
Annual Report and Accounts 2023
c) Assets and liabilities of the disposal group classified as held for sale
2023
£m
Assets
Intangible assets
5.5
Property, plant and equipment 3.6
Inventories
1.0
Trade and other receivables
1.7
Other non-current receivables
0.5
12.3
Liabilities
Lease liabilities
(0.3)
Trade payables
(0.8)
Other payables
(1.9)
Current provisions
(0.6)
Non-current provisions
(1.0)
(4.6)
1
1 Property, plant and equipment of £3.6 million classified as assets held for sale within the year comprises land and buildings of £2.5 million in Continuing operations (Production Solutions
Division) and £1.1 million in Discontinued operations (Creative Solutions Division) .
Strategic report Corporate Governance Financial Statements
191
3.5 Provisions
A provision is recognised by the Group where an obligation exists, relating to events in the past, and it is probable that an outflow of economic
benefits will be required to settle it.
Accounting policies
Provisions
Provisions are recognised in the Balance Sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is
probable that an outflow of economic benefits will be required to settle it. If the effect is material, provisions are determined by discounting the
expected future cash flows at an appropriate discount rate.
Provisions for warranties, based on historical warranty data, are recognised when the underlying products or services are sold.
Obligations arising from restructuring plans are recognised when detailed formal plans have been established and the restructuring has either
commenced or has been announced.
Tax-related Grant
Total Warranty Restructuring provisions repayment Other
£m £m £m £m £m £m
At 1 January 2023
7.9
1.4
2.1
2.0
1.8
0.6
Provisions made during the year
8.3
0.3
7.6
0.1
0.1
0.2
Provisions utilised during the year
(10.2)
(0.4)
(9.5)
–
(0.3)
–
Provisions reversed during the year
(0.3)
(0.1)
–
(0.2)
–
–
Currency translation adjustments
(0.2)
–
–
(0.1)
(0.1)
–
At 31 December 2023
5.5
1.2
0.2
1.8
1.5
0.8
Current
3.7
1.0
0.2
1.8
0.5
0.2
Non-current
1.8
0.2
–
–
1.0
0.6
5.5
1.2
0.2
1.8
1.5
0.8
Current
0.6
–
–
–
0.5
0.1
Non-current
1.0
–
–
–
1.0
–
Discontinued operations
1.6
–
–
–
1.5
0.1
Current
3.1
1.0
0.2
1.8
–
0.1
Non-current
0.8
0.2
–
–
–
0.6
Continuing operations
3.9
1.2
0.2
1.8
–
0.7
Warranty provisions
Warranties over the Group’s products typically cover periods of between one and five years. The provision represents Management’s best estimate
of the Group’s liability based on past experience.
Restructuring
The restructuring provision is expected to be utilised during 2024.
Tax-related provisions
In relation to Savage, which was acquired in 2021, the Group recognised a provision of £1.8 million for a tax-related contingent liability which is not in
the scope of IAS 12 “Income Taxes”. As part of the acquisition agreement, the Group obtained indemnities from the sellers and an amount of the
potential consideration was transferred to an escrow account. An amount of £0.1 million was reversed during the year. The amount of any payment
would be recoverable by the Group under the escrow and indemnity arrangements, and as such, the Group has also recognised a corresponding
receivable of £1.8 million included in trade and other receivables. This is expected to be resolved by 2025.
Grant repayment
A provision of £1.5 million in Amimon relates to grant re-payments to the Israeli Innovation Authority (“IIA”). The amounts repayable are based on
royalties from future sales of the products that were developed using the grant fund. A payment of £0.3 million was made during the year.
Other
Other provisions include an amount of £0.6 million relating to potential dilapidation costs on the termination of leases on occupied property that the
Group has entered into.
Section 3 continued
Operating Assets and Liabilities continued
Videndum plc
192
Annual Report and Accounts 2023
3.6 Leases
This note provides information in relation to leases when the Group is a lessee. The Group does not have any material leases where it acts as a
lessor.
Accounting policies
Leases
Each lease is recognised as a right-of-use asset with a corresponding liability at the date at which the leased asset is available for use by the Group.
Assets and liabilities arising from a lease are initially measured on a present value basis. Interest expense is charged to the Consolidated Income
Statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability. The right-of-use asset
is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.
For the Group, lease payments generally comprise the following:
– fixed payments, less any lease incentives receivable;
– variable payments that are based on an index or rate; and
– payments to be made under extension options which are reasonably certain to be exercised.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing
rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic
environment with similar terms and conditions. Generally, the interest rate implicit in the lease is not readily determinable, as such the incremental
borrowing rate is used to discount future lease payments.
Right-of-use assets are measured at cost comprising the amount of the initial measurement of the lease liability, and lease payments made at or
before the commencement date less any lease incentives received, any initial direct costs, and restoration costs.
When an adjustment to lease payments based on an index takes effect, the liability is remeasured with a corresponding adjustment to the right-of-
use asset.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in the Consolidated
Income Statement.
The Group’s leasing activities
The Group enters into leases of land and buildings in relation to offices, warehouses and factory premises around the world. In addition, the Group
leases plant, machinery and vehicles, as well as other equipment.
Contracts entered into by the Group have a wide range of terms and conditions but generally do not impose any additional covenants. Several of the
Group’s contracts include indexation adjustments to lease payments in future periods which are not reflected in the measurement of the lease
liabilities at 31 December 2023.
Many of the contracts entered into by the Group include extension or termination options which provide the Group with additional operational
flexibility. If the Group considers it reasonably certain that an extension option will be exercised or a termination option not exercised, the additional
period is included in the lease term. Generally, extension options are not included in the lease term for plant, machinery and vehicles, and equipment,
fixtures and fittings. Most options in respect of land and buildings are not included in the calculation of the lease term.
During 2023, the financial effect of revising lease terms arising from the effect of exercising extension and termination options was a decrease of
£1.3 million in the recognised lease liabilities.
As at 31 December 2023, potential future cash outflows of £9.1 million (undiscounted) have not been included in the lease liability because it is not
reasonably certain that the leases will be extended (or not terminated).
A maturity analysis of lease liabilities is included in note 4.2 “Financial instruments”.
Strategic report Corporate Governance Financial Statements
193
Right-of-use assets
Plant, Equipment,
Leasehold land machinery and fixtures and
Totaland buildings vehicles fittings
£m £m £m £m
Cost
At 1 January 2022
51.0
48.5
1.9
0.6
Currency translation adjustments
3.6
3.4
0.2
–
Additions
4.8
4.2
0.3
0.3
Termination of leases
(4.0)
(3.2)
(0.4)
(0.4)
Business combinations
4.4
4.4
–
–
At 31 December 2022 and 1 January 2023
59.8
57.3
2.0
0.5
Currency translation adjustments
(2.0)
(1.9)
(0.1)
–
Additions
7.7
6.9
0.6
0.2
Termination of leases
(5.0)
(4.0)
(0.8)
(0.2)
At 31 December 2023
60.5
58.3
1.7
0.5
Depreciation
At 1 January 2022
22.5
21.2
0.8
0.5
Currency translation adjustment
1.2
1.1
0.1
–
Depreciation charge in the year
6.7
6.0
0.6
0.1
Depreciation on termination of lease
(3.4)
(2.6)
(0.4)
(0.4)
At 31 December 2022 and 1 January 2023
27.0
25.7
1.1
0.2
Currency translation adjustments
(0.9)
(0.9)
–
–
Depreciation charge in the year
6.4
5.8
0.5
0.1
Impairment losses in the year
0.2
0.2
–
–
Depreciation on termination of lease
(4.7)
(3.8)
(0.8)
(0.1)
At 31 December 2023
28.0
27.0
0.8
0.2
Carrying amounts
At 1 January 2022
28.5
27.3
1.1
0.1
At 31 December 2022 and 1 January 2023
32.8
31.6
0.9
0.3
At 31 December 2023
32.5
31.3
0.9
0.3
Total cash outflow for leases is £8.2 million (2022: £7.9 million) of which £1.5 million (2022: £1.5 million) relates to interest and £6.7 million
(2022: £6.4 million) to principal lease repayments.
Section 3 continued
Operating Assets and Liabilities continued
Videndum plc
194
Annual Report and Accounts 2023
3.7 Acquisitions
This note outlines how the Group has accounted for businesses that it has acquired.
Acquisitions are accounted for under the acquisition method, based on the fair values of the consideration paid. Assets and liabilities, with
limited exceptions, are measured at their fair value at the acquisition date. This process continues as information is finalised, and accordingly
any fair values presented in the tables below are provisional amounts. In accordance with IFRS 3, until the assessment is complete the
measurement period will remain open up to a maximum of 12 months from the acquisition date so long as information remains outstanding.
The Group estimates the provisional fair values and useful lives of acquired assets and liabilities at the date of acquisition. The valuation of
acquired intangibles is subject to estimation of future cash flows and the discount rate applied to them. Determination of the useful economic
lives of technology-related intangible assets requires assumptions about future market trends and future risk of replacement or obsolescence of
those assets. The useful economic lives of intangible assets are disclosed in note 3.1 “Intangible assets”.
The excess of the consideration transferred, any non-controlling interest recognised and the fair value of any previous equity interest in the
acquired entity over the fair value of net identifiable assets acquired is recorded as goodwill. Acquisition-related costs are recognised in the
Income Statement as incurred in accordance with IFRS 3.
Acquisitions provide opportunities for further development of the Group’s activities and create enhanced returns. Such opportunities and the
workforces inherent in each of the acquired businesses represent much of the assessed value of goodwill.
Acquisition of Audix
On 11 January 2022, the Group acquired 100% of the issued share capital of Audix LLC (“Audix”), a US company, for consideration of US$45.8 million
(£33.7 million). Under the terms of the acquisition, a deferred consideration of US$2.0 million (£1.6 million) was paid in January 2023.
Strategic report Corporate Governance Financial Statements
195
This section outlines the Group’s capital structure. The Group defines its capital structure as its equity and non-current interest-bearing loans
and borrowings, and aims to manage this to safeguard its ability to continue as a going concern, so that it can continue to provide returns to
shareholders and benefits for other stakeholders. The Group manages its capital and makes adjustments to it in light of changes in economic
conditions and the risk characteristics of the underlying assets. In order to maintain or adjust its capital structure, it may return capital to
shareholders, through dividends and share buybacks, issue new shares or sell assets to reduce debt. The Group considers its dividend policy at
least twice a year ahead of announcing results in the context of its ability to continue as a going concern and deliver its business plan. The Group
focuses on leverage, credit ratings and interest cost, particularly when considering investment.
On the following pages there are disclosures concerning the following:
4.1 Net debt
4.2 Financial instruments
4.3 Share capital and reserves
4.1 Net debt
The Group’s net debt comprises the following:
– Cash and cash equivalents (cash on hand and demand deposits at banks)
– Bank overdrafts that are payable on demand
– Interest-bearing loans and borrowings
– Lease liabilities
Accounting policies
Cash and cash equivalents
Cash and cash equivalents in the Balance Sheet represents cash on hand and at banks.
Cash and cash equivalents in the Statement of Cash Flows includes bank overdrafts that are repayable on demand and form an integral part of the
Group’s cash management.
Interest-bearing loans and borrowings
Interest-bearing borrowings are recognised initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition,
these transaction costs are recognised in the Income Statement over the term of the related borrowings.
Lease liabilities
See note 3.6 “Leases” .
Section 4
Capital Structure
Videndum plc
196
Annual Report and Accounts 2023
Analysis of net debt
The table below analyses the Group’s components of net debt and their movements in the period:
Interest- Liabilities
bearing loans from
and financing Cash and cash
borrowings Leases Sub-total equivalents Total
£m £m £m £m £m
Opening at 1 January 2022
(122.8)
(30.3)
(153.1)
7.9
(145.2)
Other cash flows
–
–
–
(24.3)
(24.3)
Business combinations
–
(4.4)
(4.4)
0.2
(4.2)
Repayments
93.8
6.4
100.2
(100.2)
–
Borrowings
(130.3)
–
(130.3)
130.3
–
Leases entered into during the year
–
(4.8)
(4.8)
–
(4.8)
Leases – early termination
–
0.6
0.6
–
0.6
Fees incurred
1.0
–
1.0
–
1.0
Amortisation of fees
(1.3)
–
(1.3)
–
(1.3)
Foreign currency
(14.9)
(2.3)
(17.2)
1.9
(15.3)
Closing at 31 December 2022 and opening at 1 January 2023
(174.5)
(34.8)
(209.3)
15.8
(193.5)
Other cash flows
–
–
–
67.1
67.1
Repayments
313.9
6.7
320.6
(320.6)
–
Borrowings
(240.0)
–
(240.0)
240.0
–
Leases entered into during the year
–
(7.7)
(7.7)
–
(7.7)
Leases – early termination
–
0.4
0.4
–
0.4
Fees incurred
0.3
–
0.3
–
0.3
Amortisation of fees
(1.3)
–
(1.3)
–
(1.3)
Foreign currency
2.4
1.1
3.5
2.4
5.9
Discontinued operations
–
0.3
0.3
–
0.3
Closing at 31 December 2023 from continuing operations
(99.2)
(34.0)
(133.2)
4.7
(128.5)
1
2
1 Interest-bearing loans and borrowings include unamortised fees and transaction costs of £0.8 million (2022: £1.7 million).
2 Cash and cash equivalents include bank overdrafts of £4.0 million (2022: £nil).
On 14 February 2020, the Group signed a new £165.0 million five-year (with one optional one-year extension) multi-currency RCF with a syndicate of
five banks. On 12 November 2021, the Group signed an amendment and restatement agreement to change the underlying benchmark from LIBOR to
the relevant risk-free rates (SONIA, SOFR, TONA), due to the cessation of LIBOR on 31 December 2021. The one-year extension was agreed with four
syndicate banks in January 2022 and the fifth syndicate bank extended in July 2023, increasing the RCF maturity to 14 February 2026. In December
2022, a £35.0 million accordion was agreed with four syndicate banks, resulting in the total commitments increasing to £200.0 million. The Group
was utilising 51% of the RCF as at 31 December 2023.
During the second half of 2023, the Group agreed new covenants with its lending banks, that apply instead of the existing covenants for the
following testing periods: net debt:EBITDA to be no higher than 4.25x (December 2023) and 3.75x (June 2024); and EBITA:net interest of at least
1.25x (December 2023) and 1.75x (June 2024). No restrictions apply to these new covenants but new testing dates were introduced for March 2024
(net debt:EBITDA to be no higher than 4.25x and EBITA:net interest of at least 1.5x) and September 2024 (net debt:EBITDA to be no higher than
3.75x and EBITA:net interest of at least 3.25x) have been agreed.
Under the terms of the RCF the Group expects to and has the discretion to roll over the obligation for at least 12 months from the Balance Sheet
date, and as a result, these amounts are reported as non-current liabilities in the Balance Sheet.
On 14 November 2021, the Group signed a new US$53.0 million (£43.8 million) three-year (expiry 14 November 2024) amortising Term Loan with a
syndicate of four banks to facilitate the acquisition of Savage. Following the payment of 25% of the original amount during 2022 and 20% in June
2023, the outstanding balance of US$29.1 million (£23.3 million) was pre-paid on 11 December 2023 and the facility cancelled.
On 7 January 2022, the Group signed a new US$47.0 million (£38.8 million) three-year (maturity 7 January 2025) amortising Term Loan with a
syndicate of four banks to facilitate the acquisition of Audix. Following the payment of 25% of the original amount during 2022 and 20% in June
2023, the outstanding balance of US$25.9 million (£20.7 million) was pre-paid on 11 December 2023 and the facility cancelled.
The RCF was reduced by £73.9 million on 11 December 2023, following the receipt of the equity proceeds.
The Group has uncommitted bank overdraft facilities totalling £4.3 million and a £5.0 million committed bank overdraft facility, which is carved out
of the £200.0 million revolving credit facility when in use. As at 31 December 2023, £4.0 million bank overdrafts were in use.
Strategic report Corporate Governance Financial Statements
197
4.2 Financial instruments
This note provides details on:
– Financial risk management
– Derivative financial instruments
– Fair value hierarchy
– Interest rate profile
– Maturity profile of financial liabilities
Financial risk management
The Group’s multinational operations and debt financing expose it to a variety of financial risks. In the course of its business, the Group is
exposed to foreign currency risk, interest rate risk, liquidity risk and credit risk.
Financial risk management is an integral part of the way the Group is managed. Financial risk management policies are set by the Board of
Directors. These policies are implemented by a central treasury department that has formal procedures to manage foreign currency risk,
interest rate risk and liquidity risk, including, where appropriate, the use of derivative financial instruments. The Group has clearly defined
authority and approval limits built into these procedures.
Foreign currency risk
Foreign currency risk arises both where sale or purchase transactions are undertaken in currencies other than the respective functional currencies of
Group companies (transactional exposures) and where the results of overseas companies are consolidated into the Group’s reporting currency of
Sterling (translational exposures).
Transactions and balances
The Group has businesses that operate around the world and accordingly record their results in a number of different functional currencies. Some of
these operations also have some customers or suppliers that transact in a foreign currency. Foreign currency transactions are translated into the
functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of
such transactions, and from the translation of monetary assets and liabilities denominated in foreign currencies at year-end exchange rates, are
generally recognised in profit or loss. They are deferred in equity if they relate to qualifying net investment hedges or are attributable to part of the
net investment in a foreign operation.
The Group manages its transactional exposures to foreign currency risks through the use of forward exchange contracts including the US Dollar,
Euro and Japanese Yen. Forward exchange contracts are used to hedge the Group’s forecasted foreign currency exposure in respect of forecast cash
transactions for the following 12 months. Forward exchange contracts may also be used to hedge a proportion of the forecast cash transactions for
the following 13 to 24 months. The forward exchange contracts currently have maturities of less than two years at the Balance Sheet date.
The Group ensures that its net exposure to foreign denominated cash balances is kept to an acceptable level by buying or selling foreign currencies at
spot rates when necessary to address short-term imbalances. In addition, the Group manages the denomination of surplus cash balances across the
overseas subsidiaries to allow natural hedging where effective in any particular country .
Translation to presentation currency
The Group’s results, which are reported in Sterling, are exposed to changes in foreign currency exchange rates across a number of different
currencies with the most significant exposures relating to the US Dollar (“USD”) and Euro (“EUR”). The Group is exposed to the underlying
translational movements which remain outside the control of the Group.
The Group’s translational exposures to foreign currency risks relate to both the translation of income and expenses and net assets of overseas
subsidiaries which are converted into Sterling on consolidation. The Group does not seek to hedge the translational exposure that arises from the
translation of income and expenses which arises from changes in the exchange rates of the US Dollar, Euro and Japanese Yen against Sterling.
However, the Group does finance overseas investments partly through the use of foreign currency borrowings in order to provide a net investment
hedge over the foreign currency risk that arises on translation of its foreign currency subsidiaries.
Sensitivities
It is estimated that the Group’s adjusted operating profit from continuing operations for the year ended 31 December 2023 would have increased/
decreased by approximately £1.3 million (2022: £2.3 million) from a ten cent stronger/weaker US Dollar against Sterling and by approximately
£0.5 million (2022: £2.4 million) from a ten cent stronger/weaker Euro against Sterling. This reflects the impact of the sensitivities to the
translational exposures and to the proportion of the transactional exposures that are not hedged.
It is estimated that the statutory operating profit from continuing and discontinued operations for the year ended 31 December 2023 would have
increased/decreased by £1.2 million (2022: £0.3 million) from a ten cent stronger/weaker US Dollar against Sterling and by approximately
£0.5 million (2022: £2.4 million) from a ten cent stronger/weaker Euro against Sterling.
It is estimated that the Group’s equity for the year ended 31 December 2023 would have increased/decreased by £4.4 million (2022: £9.3 million)
from a ten cent stronger/weaker US Dollar against Sterling; by approximately £0.8 million (2022: £0.5 million) from a ten cent stronger/weaker Euro
against Sterling; and by £0.1 million (2022 £0.1 million) from a one thousand stronger/weaker Japanese Yen against Sterling .
Section 4 continued
Capital Structure continued
Videndum plc
198
Annual Report and Accounts 2023
Interest rate risk
Interest rate risk comprises the interest cash flow risk that results from borrowing at variable rates.
The Group is exposed to cash flow interest rate risk arising from long-term borrowings bearing variable interest rates. The Group policy is to
maintain up to 75% (2022: 75%) of its borrowings at fixed rate. At 31 December 2023, the Group’s variable interest rate borrowings were mainly
denominated in Sterling and US Dollars, with 69% of the Group’s floating rate debt fixed using floating-to-fixed interest rate swaps.
The borrowings are periodically contractually repriced which exposes the Group to the risk of future changes in market interest rates.
For the year ended 31 December 2023, it is estimated that a general increase of 1% in interest rates would decrease the Group’s profit before tax by
approximately £0.8 million (2022: £0.7 million) and a general decrease of 1% in interest rates would increase the Group’s profit before tax by
approximately £0.7 million (2022: £0.7 million).
For the year ended 31 December 2023, it is estimated that a general increase of 1% in interest rates would increase the Group’s equity by
approximately £0.6 million (2022: £1.0 million) and a general decrease of 1% in interest rates would decrease the Group’s equity by approximately
£0.6 million (2022: £1.0 million).
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group was utilising 51% (2022: 57%) of the £200.0 million multi-currency RCF as at 31 December 2023.
The two Term Loans totalling $55.0 million (£44.0 million) were pre-paid and facilities cancelled on the 11 December 2023 following the receipt of
funds from the equity raise.
The Group was utilising €9.1 million (£7.9 million) of the €20.0 million (£17.3 million) receivables factoring facility as at 31 December 2023. See
note 3.3 “Working capital”.
Credit risk
Credit risk arises because a counterparty may fail to meet its obligations. The Group is exposed to credit risk on financial assets such as trade
receivables, cash balances and derivative financial instruments. The Group’s maximum exposure to credit risk is represented by the carrying amount
of each financial asset, including derivative financial instruments, in the Group Balance Sheet.
a) Trade receivables
The Group’s credit risk is primarily attributable to its trade receivables. Trade receivables are subject to credit limits, and control and approval
procedures in the operating companies. At the Balance Sheet date, one of the Group’s largest customers, which has a high credit rating, accounts for
10% of the gross outstanding trade receivables (2022: 10%) which represents a concentration of credit ris k.
b) Cash balances and derivative financial instruments
Credit risk associated with cash balances is managed by transacting with a number of major financial institutions worldwide and periodically
reviewing their creditworthiness. 85% (2022: 77%) of the Group’s cash and cash equivalents are held in counterparties with a credit rating of A- or
above; 11% (2022: 18%) with credit ratings between BBB+ and BBB- with the remaining 4% (2022: 5%) held at banks with a credit rating of BB+ or
lower. Transactions involving derivative financial instruments are managed centrally. These are only with banks that are part of the Group’s
multi-currency RCF and all of which have strong credit ratings between BBB+ and A+. Accordingly, the Group’s associated credit risk is limited. The
Group has no significant concentration of credit risk.
Derivative financial instruments
This is a summary of the derivative financial instruments that the Group holds and uses to manage transactional exposure. The value of these
derivatives changes over time in response to underlying variables such as interest and exchange rates. They are carried in the Balance Sheet at
fair value.
The fair value of forward exchange contracts is determined by estimating the market value of that contract at the reporting date. Derivatives
with a positive fair value are recorded as assets and negative fair values as liabilities, and presented as current or non-current based on their
contracted maturity dates.
The fair value of interest rate swaps are determined by estimating the market value of that swap at the reporting date. Derivatives with a
positive fair value are recorded as assets and negative fair values as liabilities, and presented as current or non-current based on their
contracted maturity dates.
Contracts with derivative counterparties are based on ISDA Master Agreements. Under the terms of these arrangements, only in certain
situations will the net amounts owing/receivable to a single counterparty be considered outstanding. The Group does not have the present legal
ability to set-off these amounts and so they are not offset in the Balance Sheet. Of the derivative assets and derivative liabilities recognised in
the Balance Sheet, an amount of £nil (2022: £0.6 million) would be set-off under enforceable master netting agreements.
Strategic report Corporate Governance Financial Statements
199
Accounting policies
Financial assets classification and measurement
The Group classifies its financial instruments depending on the business model for managing the financial assets and their contractual cash flows.
Trade receivables and contract assets are measured at amortised cost while derivatives are measured at fair value through profit or loss unless
designated in a qualifying hedging relationship.
Derivative financial instruments
In accordance with Board-approved policies, the Group uses derivative financial instruments such as forward foreign exchange contracts and
interest rate swaps to hedge its exposure to fluctuations in foreign exchange rates and interest rates arising from operational activities. The Group
does not hold or use derivative financial instruments for trading or speculative purposes.
Cash flow hedge accounting
Cash flow hedges are used to hedge the variability in cash flows of highly probable forecast transactions caused by changes in foreign currency
exchange rates and interest rates.
Where a derivative financial instrument is designated in a cash flow hedge relationship with a highly probable forecast transaction, the effective
part of any change in fair value arising is deferred in the cash flow hedging reserve within equity, via the Statement of Comprehensive Income. The
gain or loss relating to the ineffective part is recognised in the Income Statement within net finance expense. Amounts deferred in the cash flow
hedging reserve are reclassified to the Income Statement in the periods when the hedged item is recognised in the Income Statement.
If a hedging instrument expires or is sold but the hedged forecast transaction is still expected to occur, the cumulative gain or loss at that point
remains in equity and is recognised in accordance with the above policy when the transaction occurs. If the hedged transaction is no longer expected
to take place, the cumulative unrealised gain or loss recognised in equity is recognised immediately in the Income Statement.
If a derivative financial instrument is not formally designated in a cash flow hedge relationship, any change in fair value is recognised in the
Income Statement.
Forward exchange contracts
For hedges of foreign currency sales, the Group enters into hedge relationships where the critical terms of the hedging instrument match exactly
with the terms of the hedged item and the Group designates the forward exchange rate as the hedged risk. The Group therefore performs a
qualitative assessment of effectiveness. In hedges of foreign currency sales, ineffectiveness may arise if the timing of the forecast transaction
changes from what was originally estimated, or if there are changes in the credit risk of the Group or the derivative counterparty.
The following table shows the forward exchange contracts in place at the Balance Sheet date. These contracts mature in the next 24 months,
therefore the cash flows and resulting effect on profit and loss are expected to occur within the next 24 months.
As at As at
31 December Average 31 December Average
2023 exchange rate of 2022 exchange rate of
Currency (millions) contracts (millions) contracts
Cash flow hedging contracts (buy/sell)
GBP/USD forward exchange contracts
USD
16.8
1.18
27.8
1.21
EUR/USD forward exchange contracts
USD
33.4
1.05
58.6
1.05
GBP/EUR forward exchange contracts
EUR
28.7
1.13
15.3
1.15
GBP/JPY forward exchange contracts
JPY
627.6
172.8
288.0
155.6
EUR/JPY forward exchange contracts
JPY
1,235.0
152.8
656.0
138.4
A net gain of £1.2 million (2022: £2.9 million loss) relating to forward exchange contracts was reclassified to the Income Statement, to match the
crystallisation of the hedged forecast cash flows which affect the Income Statement.
The balances and movements into and out of the cash flow hedging reserve are shown in the Consolidated Statement of Comprehensive Income and
the Consolidated Statement of Changes in Equity, respectively. Amounts reclassified from the cash flow hedging reserve to the Consolidated
Statement of Comprehensive Income are included in revenue for foreign currency forward exchange contracts.
The table below provides further information on the Group’s forward contracts.
2023 2022
£m £m
Forward exchange contracts asset
2.7
2.1
Forward exchange contracts liability
–
(0.9)
Recognised in OCI
2.5
(1.4)
Reclassified from OCI to the Income Statement
(1.2)
2.9
Maturity dates
January 2023 to December 2025
January 2022 to December 2024
Hedge ratio
1:1
1:1
Change in value of hedging instruments since 1 January
2.5
(1.4)
Change in value of the hedged item used to determine hedge effectiveness
(2.5)
1.4
Section 4 continued
Capital Structure continued
Videndum plc
200
Annual Report and Accounts 2023
Interest rate swaps
The Group enters into interest rate swaps that have the same critical terms as the hedged item, such as reference rate, reset dates, payment dates,
maturities and notional amount. As all critical terms matched during the year, there is an economic relationship.
The following table shows the interest rate swap contracts in place at the Balance Sheet date. The interest is payable quarterly on 31 March,
30 June, 30 September and 31 December.
Nominal Nominal
amounts as at Weighted amounts as at
31 December average 31 December
Currency 2023 fixed rate Maturity 2022
Interest rate swap contracts
USD Interest rate swaps float (SOFR) to fix
USD
40.0
5.18%
Sep24
35.0
GBP Interest rate swaps float (SONIA) to fix
GBP
37.0
1.01%
Jan25
47.0
1
1
In addition to these fixed rates, the margin relating to the interest swapped of the underlying RCF or term loans continues to apply.
The Group entered into a new $40.0 million floating-to-fixed interest rate swap to replace the maturing $35.0 million swap in September 2023. As
at 31 December 2023, a total of £68.4 million (£137.9 million 31 December 2022) remain in place following the maturity of the $35.0 million
(£27.5 million) swap and the early closures of the $55.0 million (£44.0 million) and £10.0 million swaps, due to the underlying debt repayment
following the equity raise. Swaps currently in place cover 69% of the variable loan principle outstanding.
Hedge ineffectiveness for interest rate swaps is assessed using the same principles as for hedges of foreign currency sales. It may occur due to:
– changes in credit risk on the interest rate swaps which is not matched by the loan; and
– differences in critical terms between the interest rate swaps and loans.
There was no recognised ineffectiveness during 2023 in relation to the interest rate swaps.
The gain or loss relating to the effective portion of the interest rate swaps that are hedging variable rate borrowings is recognised in the Income
Statement within net finance expense at the same time as the interest expense on the hedged borrowings.
For interest rate swaps hedging interest rate risk on term loans, the notional amount of interest rate swaps decreases in line with the repayments of
the hedged borrowings.
For interest rate swaps on other borrowings, the notional amounts are consistent over the term of the hedging relationship.
The balances and movements into and out of the cash flow hedging reserve are shown in the Consolidated Statement of Comprehensive Income and
the Consolidated Statement of Changes in Equity, respectively. Amounts reclassified from the cash flow hedging reserve to the Consolidated
Statement of Comprehensive Income are included in revenue for net finance cost for interest rate swaps.
The table below provides further information on the Group’s interest rate swaps:
2023 2022
£m £m
Interest rate swaps asset
1.4
4.0
Interest rate swaps liability
(0.1)
–
Recognised in OCI
0.3
4.6
Reclassified from OCI to the Income Statement
(3.0)
(0.7)
During the period ended 31 December 2023 a net gain of £3.0 million (2022: £0.7 million) relating to
interest rate swaps was reclassified to the Income Statement, to match the crystallisation of the
hedged forecast cash flows which affects the Income Statement.
January 2024 January 2023
Maturity dates to January 2025 to January 2025
Hedge ratio
1:1
1:1
Change in value of hedging instruments since 1 January
0.3
4.6
Change in value of the hedged item used to determine hedge effectiveness
(0.3)
(4.6)
Interest rate swap average hedged rate for the year
(2.4%)
(1.9%)
Strategic report Corporate Governance Financial Statements
201
Fair value hierarchy
The following summarises financial instruments carried at fair values and the major methods and assumptions used in estimating these fair
values.
The different levels of fair value hierarchy have been defined as follows:
Level 1
Fair value measured using quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2
Fair values measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices).
Level 3
Fair values measured using inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The carrying values of the Group’s financial instruments approximate their fair value. The fair value of floating rate borrowings approximates to the
carrying value because interest rates are at floating rates where payments are reset to market rates at intervals of less than one year. The Group’s
derivative financial instruments are Level 2. The fair value of forward foreign currency exchange derivative financial instruments is determined based
on the present value of future cash flows using forward exchange rates at the Balance Sheet date. The fair value of interest rate swap derivative
financial instruments is estimated as the present value of the future cash flows based on observable yield curves at the Balance Sheet date.
Accounting policies
Net investment hedge accounting
The Group uses its US Dollar, Euro and Japanese Yen denominated borrowings as a hedge against the translation exposure on the Group’s net
investment in overseas companies. The Group designates the spot rate of the loans as the hedging instrument. There was no ineffectiveness to be
recognised on hedges of net investments in foreign operations.
Where the hedge is fully effective at hedging the variability in the net assets of such companies caused by changes in exchange rates, the changes in
value of the borrowings are recognised in the translation reserve within equity, via the Statement of Comprehensive Income. The ineffective part of
any change in value caused by changes in exchange rates is recognised in the Income Statement.
The effective portion will be recycled into the Income Statement on the sale of the foreign operation.
Of the £45.6 million US Dollar and £11.9 million Euro debt held at December 2023, £36.1 million US Dollar and £11.3 million Euro debt was designated
as at 31 December 2023.
The table below provides further information on the Group’s net investment hedging relationships:
2023 2022
£m £m
Hedge ratio
1:1
1:1
Change in value of hedging instruments due to foreign currency movements since 1 January
–
5.8
Change in value of the hedged item used to determine hedge effectiveness
–
(5.8)
The balances and movements into and out of the foreign currency translation reserve are shown in the Consolidated Statement of Comprehensive
Income and the Consolidated Statement of Changes in Equity, respectively.
The amount in the foreign currency translation reserve in relation to hedge accounting is a loss of £40.8 million (2022: £40.7 million loss) and is split
as follows:
– net investment hedges loss from continuing operations of £11.7 million (2022: £11.8 million loss); and
– hedging relationships for which hedge accounting is no longer applied, a loss of £29.1 million (2022: £28.9 million loss).
Section 4 continued
Capital Structure continued
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Annual Report and Accounts 2023
Interest-bearing loans and borrowings
The table below analyses the Group’s interest-bearing loans and borrowings, including bank overdrafts, by currency:
Currency
Fixed rate Floating rate
Total borrowings borrowings
£m £m £m
US Dollar
45.6
31.4
14.2
Sterling
45.9
37.0
8.9
Euro
12.5
0.6
11.9
Japanese Yen
–
–
–
Unamortised fees and transaction costs
(0.8)
–
(0.8)
At 31 December 2023
103.2
69.0
34.2
US Dollar
106.4
90.9
15.5
Sterling
58.5
47.0
11.5
Euro
9.4
0.6
8.9
Japanese Yen
1.9
–
1.9
Unamortised fees and transaction costs
(1.7)
–
(1.7)
At 31 December 2022
174.5
138.5
36.1
1
1 Of the £69.0 million fixed rate borrowings, £68.4 million is fixed synthetically using interest rate swaps.
The floating rate borrowings comprise borrowings bearing interest at rates based on SONIA, SOFR, EURIBOR and TONA for Sterling, US Dollar, Euro
and Japanese Yen borrowings, respectively.
The floating rate borrowings are repriced between one and three months.
Strategic report Corporate Governance Financial Statements
203
Maturity profile of financial liabilities
The table below analyses the Group’s financial liabilities and derivative financial liabilities into relevant maturity groupings based on the period
remaining until the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows (including
interest), so will not always reconcile with the carrying amounts disclosed on the Balance Sheet.
The following are the contractual maturities of financial liabilities, including undiscounted future interest payments:
Total From Greater
Carrying contractual Within two to than
amount cash flows one year five years five years
£m £m £m £m £m
2023
Unsecured interest-bearing loans and borrowings including bank overdrafts
(103.2)
(123.2)
(8.3)
(114.9)
–
Lease liabilities
(34.3)
(40.2)
(7.2)
(23.4)
(9.6)
Trade payables
(20.8)
(20.8)
(20.8)
–
–
Provisions
(1.5)
(1.5)
(0.5)
(1.0)
–
Forward exchange contracts outflow
(0.1)
(0.1)
(0.1)
–
–
Total outflows
(159.9)
(185.8)
(36.9)
(139.3)
(9.6)
Forward exchange contracts inflow
–
–
–
–
–
Net outflows
(159.9)
(185.8)
(36.9)
(139.3)
(9.6)
2022
Unsecured interest-bearing loans and borrowings including bank overdrafts
(174.5)
(200.0)
(46.6)
(153.4)
–
Lease liabilities
(34.8)
(34.9)
(6.7)
(18.5)
(9.7)
Trade payables
(42.3)
(38.1)
(38.1)
–
–
Provisions
(1.8)
(1.8)
(0.3)
(1.5)
–
Forward exchange contracts outflow
(0.9)
(42.2)
(42.2)
–
–
Total outflows
(254.3)
(317.0)
(133.9)
(173.4)
(9.7)
Forward exchange contracts inflow
–
41.3
41.3
–
–
Net outflows
(254.3)
(275.7)
(92.6)
(173.4)
(9.7)
The Group had the following undrawn borrowing facilities at the end of the year:
Expiring in:
2023 2022
£m £m
Less than one year
– Uncommitted facilities
2.8
3.5
More than one year but not more than five years
– Committed facilities
97.3
86.3
Total
100.1
89.8
Section 4 continued
Capital Structure continued
Videndum plc
204
Annual Report and Accounts 2023
4.3 Share capital and reserves
This note explains the movements in share capital, and the nature and purpose of other reserves forming part of equity. The movements in
reserves are set out in the Consolidated Statement of Changes in Equity.
The Group utilises share award schemes as part of its employee remuneration packages. Options that have been granted and remain
outstanding at 31 December 2023 are set out below. The various share-based payment schemes are explained in note 5.3 “Share-based
payments”.
Share capital
Number of Nominal
shares value
(thousands) £m
Issued, authorised and fully paid
At 1 January 2023
46,585
9.4
New shares issued for equity raise
47,330
9.5
Share-based payments awards
286
–
At 31 December 2023
94,201
18.9
Each ordinary share carries one vote, participates equally with the other ordinary shares in distribution of dividends and capital (including on a
winding up) and is not redeemable.
At 31 December 2023, the following options had been granted and remained outstanding under the Company’s share option schemes:
Number of
shares Dates normally
(thousands) Exercise prices exercisable
UK Sharesave Schemes
203
552p-1280p
2024-2028
International Sharesave Schemes
762
552p-1280p
2024-2026
965
Share capital and share premium
Equity raise:
On 8 December 2023, the Company issued 47,329,954 new ordinary shares for an offer price of 267.0 pence, generating gross proceeds of
£126.4 million. Expenses of £8.5 million were incurred and have been offset in the share premium account leaving net proceeds of £117.9 million.
Share-based payments awards:
The Company issued 285,454 shares for share-based payments awards, generating gross proceeds of £0.2 million.
Other reserves
The nature and purpose of other reserves forming part of equity are as follows:
Translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign
subsidiaries, including gains or losses arising on net investment hedges.
Capital redemption reserve
The capital redemption reserve of £1.6 million was created on the repurchase and subsequent cancellation of 885,000 ordinary shares by the
Company in 1999.
Cash flow hedging reserve
This reserve records the cumulative net change in the fair value of forward exchange contracts and interest rate swaps where they are designated as
effective cash flow hedge relationships.
Retained earnings
Retained earnings are the cumulative gains and losses recognised by the Group, not recorded in any other reserves. On 12 April 2021, the Company
issued 309,753 ordinary shares as part of the consideration for the acquisition of Lightstream. The excess of the fair value of the shares issued over
their nominal value was recorded in retained earnings.
Strategic report Corporate Governance Financial Statements
205
Own shares held
Own shares held by the Company’s Employee Benefit Trust are recognised as a deduction from retained earnings. As at 31 December 2023, the
Employee Benefit Trust held 12,428 (2022: 291,044) ordinary shares at 20 pence nominal value. The Company holds no shares in treasury (2022: nil).
The Employee Benefit Trust purchased 100,200 own shares on 29 September 2023 (average price of 329.9p per share) used to satisfy the Restricted
Share Plan (“RSP”) on the same day.
Dividends
Dividends are recognised through equity on the earlier of their approval by the Company’s shareholders or their payment.
2023 2022
£m £m
Amounts arising in respect of the year
Interim dividend for the year ended 31 December 2023 of nil pence (2022: 15.0p) per ordinary share
–
6.9
Proposed final dividend for the year ended 31 December 2023 of nil pence (2022: 25 .0p) per ordinary share
–
11.6
–
18. 5
The aggregate amount of dividends paid in the year
Final dividend for the year ended 31 December 2022 of 25.0p (2021: 24 .0p) per ordinary share
11.6
11.1
Interim dividend for the year ended 31 December 2023 of nil pence (2022: 15.0p) per ordinary share
–
6.9
11.6
18.0
Section 4 continued
Capital Structure continued
Videndum plc
206
Annual Report and Accounts 2023
This section explains items that are not explained elsewhere in the financial statements.
On the following pages, there are disclosures covering the following:
5.1 Employees
5.2 Pensions
5.3 Share-based payments
5.4 Contingent liabilities
5.5 Related party transactions
5.6 Group investments
5.7 Subsequent events
5.1 Employees
2023 2022
£m £m
Employee costs, including Directors’ remuneration, comprise:
Government grants repaid voluntarily towards employee costs
(0.2)
–
Wages and salaries
82.5
96.5
Redundancy costs
4.8
1.5
Employers' social security costs
11.7
12.9
Employers' pension costs – defined benefit schemes
0.2
0.1
Employers' pension costs – defined contribution schemes
3.7
4.0
Other employment benefits
3.2
3.6
Share-based payment charge
1.6
8.9
107.5
127.5
1
1 This excludes amounts paid directly to employees by governments. There were no unfulfilled conditions or other contingencies attached to this government assistance.
Details of Directors’ remuneration and share incentives are disclosed in the Remuneration Report.
2023 2022
Total Total
Monthly average number of employees during the year
Media Solutions
800
904
Production Solutions
539
569
Creative Solutions
267
306
Head Office
28
27
From continuing operations
1,634
1,806
From discontinued operations
83
102
1,717
1,908
Section 5
Other Supporting Notes
Strategic report Corporate Governance Financial Statements
207
Section 5 continued
Other Supporting Notes continued
5.2 Pensions
This note explains the accounting policies governing the Group’s treatment of the pension schemes, followed by an analysis of these schemes.
Accounting policies
Defined contribution schemes
The assets are held separately from those of the Group in independently administered funds. The costs of providing pensions for employees under
defined contribution schemes are expensed as incurred.
Defined benefit schemes
The Group operates pension schemes providing benefits based on final pensionable pay. The assets of the schemes are held separately from those of
the Group. The Group’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of
future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its
present value, and the fair value of any plan assets is deducted. The discount rate is determined by reference to market yields at the Balance Sheet
date on high quality corporate bonds.
The calculation is performed by a qualified actuary using the projected unit credit method. Actuarial gains and losses are recognised in full in the
period in which they arise in the Statement of Comprehensive Income.
The Group recognises the ongoing service cost, past service costs and any cost or income relating to the curtailment or settlement of a pension
scheme in operating expenses in the Income Statement. The unwinding of the discount (above) is recognised as part of net financial expense.
Pension schemes
The Group has defined benefit pension schemes in the UK, Italy, Germany, Japan and France. The UK defined benefit scheme was closed to future
benefit accrual with effect from 31 July 2010. All UK employees of the Group are now offered membership of the defined contribution pension
scheme. Other overseas subsidiaries have their own defined contribution schemes.
Defined contribution schemes
The total Income Statement charge of the defined contribution schemes for the year ended 31 December 2023 was £3.7 million (2022: £4.0 million).
There were no outstanding or prepaid contributions to these plans as at 31 December 2023 (or at 31 December 2022).
Defined benefit schemes
The Group’s defined benefit schemes are disclosed below:
2023 2022
£m £m
Amounts recognised on the Group Balance Sheet
Plan assets
–
Equities
0.1
12.6
–
Bonds
36.7
19.5
–
Other
13.6
17.6
Total fair value of plan assets
50.4
49.7
Present value of defined benefit obligation
(49.1)
(48.9)
Net asset recognised on the Group Balance Sheet
1.3
0.8
2023 2022
£m £m
Analysis of net recognised deficit
Total funded plan (UK pension scheme)
4.2
3.9
Total unfunded plans (non-UK pension schemes)
(2.9)
(3.1)
Net asset recognised on the Group Balance Sheet
1.3
0.8
Videndum plc
208
Annual Report and Accounts 2023
2023 2022
£m £m
Amounts recognised in the Group Income Statement
–
Administration costs incurred during the period
0.2
0.2
–
Past service gains
–
(0.1)
Included in operating expenses
0.2
0.1
Net interest expense on net defined benefit pension scheme liabilities
0.1
0.1
Total amounts charged to the Group Income Statement
0.3
0.2
UK pension scheme
The UK defined benefit pension scheme, being significant, is disclosed below.
The UK defined benefit scheme is in an actuarial surplus position at 31 December 2023 (measured on an IAS 19 “Employee Benefits” basis) of
£4.2 million (31 December 2022: £3.9 million). The surplus has been recognised on the basis that the Group has an unconditional right to a refund,
assuming the gradual settlement of Scheme liabilities over time until all members have left the Scheme.
The nature of the UK scheme is a funded final salary scheme closed to future benefit accrual with effect from 31 July 2010. As a result, since that
date, no contributions are payable in respect of future accrual of benefits. As the 23 April 2020 funding valuation of the scheme disclosed a funding
surplus, no recovery plan is required under the Pensions Act 2004. As such, member and employer contributions to the scheme over the year to
31 December 2024 are expected to be £nil. The scheme is subject to all legislation and regulations that apply to UK occupational pension schemes.
The main risk to which the Group is exposed by the scheme is that the cost of the benefits provided by the scheme is greater than expected, for
example due to lower than expected investment returns or members of the scheme living longer than expected, which may result in additional
contributions being required from the Group.
In accordance with UK trust and pensions law, the pension scheme has a corporate trustee. Although the Group bears the financial cost of the
scheme, the responsibility for the management and governance of the scheme lies with the trustee, which has a duty to act in the best interest of
members at all times. The assets of the scheme are held in trust by the trustee who consults with the Group on investment strategy decisions.
Impact on defined benefit obligation (“DBO”) of changes in the three key individual assumptions
2023
2022
Discount rate increased by 0.25% points (2022: 0.1% points)
-3%
-1%
Inflation increased by 0.25% points (2022: 0.1% points)
+2%
+1%
Life expectancy increased by one year
+4%
+3%
A decrease in the assumptions noted above results in an equal and opposite movement to those disclosed.
The sensitivity applied is based on a reasonable possible change expected in the underlying assumptions.
Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the
sensitivity of the assumptions shown.
2023 2022
% pa % pa
Assumptions used by the actuary to value the liability of the defined benefit plan, on 31 December, were:
Price inflation (RPI)
3.0
3.3
Price inflation (CPI)
RPI less 1%
RPI less 1%
pa to 2030,
pa to 2030,
and RPI less
and RPI less
0.1% pa from
0.1% pa from
2030
2030
Life expectancy of male/female aged 65 at Balance Sheet date
21.8/24.3
22.2/24.7
Life expectancy of male/female aged 65 in 2037
22.4/25.1
22.8/25.5
Pension increase rate (% pa)
Various
Various
Discount rate (% pa)
4.5
4.8
Strategic report Corporate Governance Financial Statements
209
2023 2022
£m £m
Change in DBO for the year to 31 December
Present value of DBO at start of year
45.8
74.8
Interest cost
2.1
1.4
Actuarial loss on experience
0.7
0.8
Actuarial gain on demographic assumptions
(1.2)
–
Actuarial loss/(gain) on financial assumptions
0.9
(28.9)
Actual benefit payments
(2.1)
(2.2)
Past service gains
–
(0.1)
Present value of DBO at end of year
46.2
45.8
At 31 December 2023, the weighted average duration of the scheme’s DBO was 13 years (2022: 13 years). The proportion of DBO in respect of
pensions in payment is approximately 56% and that in respect of deferred pensioners is approximately 44%.
Fair value Quoted Unquoted Fair value
2023 split split 2022
£m % % £m
Scheme assets and proportion which have quoted market price, at 31 December
Bonds
36.7
100
–
19.5
Equities
0.1
–
100
12.6
Infrastructure
3.0
–
100
9.0
Cash/non-cash assets
10.5
–
100
8.5
Insurance policies
0.1
–
100
0.1
Total value of assets
50.4
49.7
Note: The asset values shown are, where relevant, estimated bid values of market securities.
2023 2022
£m £m
Change in fair value of assets for the year to 31 December
Fair value of assets at start of year
49.7
70.2
Interest income on scheme assets
2.3
1.3
Return on scheme assets greater/(less) than discount rate
0.5
(19.7)
Contributions by the employer
–
0.1
Actual benefit payments
(2.1)
(2.2)
Fair value of assets at end of year
50.4
49.7
2023 2022
£m £m
Development of net Balance Sheet position at 31 December
Present value of defined benefit obligation
(46.2)
(45.8)
Assets at fair value
50.4
49.7
Net defined benefit scheme asset
4.2
3.9
Section 5 continued
Other Supporting Notes continued
Videndum plc
210
Annual Report and Accounts 2023
2023 2022
£m £m
Reconciliation of net Balance Sheet position
Net defined benefit scheme asset/(liability) at start of year
3.9
(4.6)
Contributions by the employer
–
0.1
Total amounts credited to the Income Statement
0.2
–
Remeasurement effects recognised in OCI
0.1
8.4
Defined benefit scheme asset at end of year
4.2
3.9
2023 2022
£m £m
Amounts recognised in the Income Statement
Past service gains included in operating expenses
–
(0.1)
Net interest (income)/expense on net defined benefit pension scheme asset
(0.2)
0.1
Total amounts credited to the Income Statement
(0.2)
–
2023 2022
£m £m
Amounts recognised in OCI
Actuarial loss due to liability experience
0.7
0.8
Actuarial gain due to liability assumption changes
(0.3)
(28.9)
Actuarial gain arising during the period
0.4
(28.1)
Return on scheme assets (greater)/less than discount rate
(0.5)
19.7
Remeasurement effects recognised in OCI
(0.1)
(8.4)
2023 2022
£m £m
Defined benefit pension scheme cost
Past service gains
–
(0.1)
Net interest (income)/expense on net defined benefit pension scheme asset
(0.2)
0.1
Remeasurement effects recognised in OCI
(0.1)
(8.4)
Total defined benefit pension scheme credit
(0.3)
(8.4)
Strategic report Corporate Governance Financial Statements
211
5.3 Share-based payments
Group employees participate in a number of employee incentive schemes including a Sharesave Scheme, an LTIP, a Deferred Bonus Plan and a
Restricted Share Plan.
This note explains the accounting policy governing share-based payments and the impact of various share schemes operated by the Group.
Accounting policies
Share-based payments
The Group operates a number of share-based incentive schemes, which are treated as equity-settled awards. The fair value of equity-settled awards
is determined at grant date and charged to the Income Statement over the vesting period of the award, with a corresponding adjustment to equity.
Any potential employer’s Social Security liability on share awards is calculated based on the intrinsic value of the awards at the Balance Sheet date
and recognised over the vesting period of the related award.
Exercises of share options granted to employees can be satisfied by a market purchase or an issue of new shares. Shares purchased in the market
are held by the Company’s Employee Benefit Trust.
Further details of the accounting for the schemes provided by the Group are set out below.
Long Term Incentive Plan
The awards granted under this scheme include a portion linked to a non-market condition (adjusted EPS) as well as a portion linked to a market
condition (Total Shareholder Return, “TSR”). A description of the LTIP including its general terms and conditions, such as performance conditions and
vesting requirements, is set out in the Remuneration report.
The fair value of the awards linked to the EPS condition is the Company’s share price at grant date, while the fair value of awards containing market
conditions is determined using Monte Carlo simulation models. The number of awards which are expected to vest is estimated by Management
based on levels of expected forfeitures and the expected outcome of the EPS condition. For awards subject to market conditions, no adjustment is
made to reflect the likelihood of the market condition being met nor the actual number of awards which lapse as a result of the condition not being
met.
Sharesave Scheme
Options granted under the Sharesave Scheme vest subject to continued employment and a saving condition in some countries. The options entitle
employees to purchase shares in the Company at a fixed price. Further details of the Group’s Sharesave arrangement are included in the Strategic
Report.
The fair value of options granted under the Sharesave Scheme is determined using a Black–Scholes model with the key inputs to the model set out
below. The number of awards which are expected to vest is estimated by Management based on levels of expected forfeitures. At an employee’s
discretion they can choose to withdraw from a particular scheme and stop saving. This action is accounted for as a cancellation and results in an
acceleration of the Income Statement charge related to the cancelled options.
Restricted Share Plan (RSP)
The RSP was introduced in 2019 to support retention plans for key employees, excluding Directors. The fair value of awards under the RSP is the
Company’s share price at grant date. Under the RSP, shares which are awarded, generally vest over three years and are subject to a continued
employment condition. The number of awards which are expected to vest is estimated by Management based on levels of expected forfeitures.
Share-based payment expense
The amount recognised in the Income Statement for share-based payment transactions with employees for the year ended 31 December 2023 was
£1.6 million (2022: £8.9 million). This includes an amount of £0.6 million (2022: £1.4 million) relating to a share award for retention agreements
entered into with key employees of Lightstream, which was acquired in 2021.
Section 5 continued
Other Supporting Notes continued
Videndum plc
212
Annual Report and Accounts 2023
Share options outstanding at the end of the period
Options outstanding under the 2020 UK Sharesave Scheme and 2020 International Sharesave Scheme as at 31 December 2023, together with their
exercise prices and vesting periods, are as follows:
Range of exercise prices
Weighted
Weighted average
Number average remaining
outstanding exercise price contractual life
(thousands) (£) (years)
£5.51-£6.50
723
5.52
0.42
£8.51-£10.50
1
9.84
0.68
£10.51-£11.50
94
11.30
2.35
£11.51-£14.00
147
12.37
1.33
Total
965
7.13
0.75
Movements in these share option plans were as follows:
Weighted
average
exercise
Sharesave price
(thousands) (£)
Awards at 31 December 2021
1,565
6.89
Exercised during 2022
(378)
7.35
Cancelled during 2022
(32)
6.73
Forfeited during 2022
(73)
8.52
Lapsed during 2022
(4)
6.40
Granted during 2022
227
11.62
Awards at 31 December 2022
1,305
7.49
Exercised during 2023
(54)
10.63
Cancelled during 2023
(168)
8.35
Forfeited during 2023
(95)
8.93
Lapsed during 2023
(23)
8.48
Awards at 31 December 2023
965
7.13
Awards exercisable at 31 December 2023
151
5.66
The weighted average share price at the date of exercise for share options exercised during the year was £6.11 (2022: £11.88).
Strategic report Corporate Governance Financial Statements
213
Restricted Share
Arrangement Plan
Nature of arrangement
Share award plan
Date of grant
09 Oct 2023
Number of instruments granted 198
(thousands)
Exercise price
n/a
Share price at date of grant
Various
Contractual life (years)
Up to 2.5 years
Expected option life (years)
Up to 2.5 years
Up to 2.5-year
Vesting conditions service period
Settlement
Shares
Expected volatility n/a
Risk-free interest rate
n /a
Expected dividend yield
n/a
Expected departures 7%
(per annum from grant date)
Expected outcome of non-market n/a
based related performance condition
Expected outcome of non-vesting n/a
condition
Fair value per granted instrument £3.18
determined at the grant date
Valuation model
n/a
1
2
5.4 Contingent liabilities
Tax-related contingent liabilities are disclosed in note 2.4 “Tax”.
There are no other contingent liabilities at 31 December 2023.
Section 5 continued
Other Supporting Notes continued
Videndum plc
214
Annual Report and Accounts 2023
5.5 Related party transactions
A related party relationship is based on the ability of one party to control or significantly influence the other.
The Group has identified the Directors, the Videndum DB Pension Scheme and members of the Operations Executive as related parties to the
Group under IAS 24 “Related Party Disclosures”.
Transactions with key management personnel
Details of Directors’ remuneration along with their pension, share incentive, bonus arrangements and holdings of the Company’s shares are shown in
detail in the Remuneration Report. This also shows the highest paid Director.
The compensation of the 13 (2022: 14) key management personnel during the year, including the Executive Directors, is shown in the table below:
2023 2022
£m £m
Salaries
3.5
3.5
Employers' social security costs
0.7
0.9
Performance-related bonuses
–
1.7
Share-based payment (income)/charge
(0.9)
1.8
Other short-term employee benefits
0.4
0.4
Employers' pension costs – defined contribution schemes
0.3
0.5
1
1 IFRS 2 charge recognised in the Income Statement for share-based payment transactions with key management personnel.
5.6 Group investments
The Group’s subsidiaries at 31 December 2023 are listed below. All subsidiaries are 100% owned within the Group.
Company
Country of incorporation
Issued securities
Videndum Media Distribution Australia Pty Ltd
Australia
Ordinary shares of AUD1 each
Videndum Media Distribution Shanghai Limited
China
Ordinary shares of US$1 each
Lowepro Huizhou Trading Co Ltd
China
Ordinary shares of HK$3,000,000 each
JOBY Technology (Shenzhen) Co. Limited
China
Ordinary shares of RMB1,814,855 each
Videndum Production Solutions Limitada
Costa Rica
Shares of CRC50 each
Autocue Limited‡
England & Wales
Ordinary shares of £1 each
Autoscript Limited
England & Wales
Ordinary shares of £1 each
Camera Corps Ltd
England & Wales
Ordinary shares of £1 each
Colorama Photodisplay Holdings Limited
England & Wales
Ordinary shares of £1 each
Gitzo Limited‡
England & Wales
Ordinary shares of £1 each
Kata UK Limited‡
England & Wales
Ordinary shares of £1 each
Lastolite Limited‡
England & Wales
Ordinary shares of £1 each
Litepanels Ltd
England & Wales
Ordinary shares of US$1 each
Manfrotto Distribution Limited‡
England & Wales
Ordinary shares of £1 each
Palmer Dollar Finance
England & Wales
Ordinary shares of US$1 each
Palmer Finance
England & Wales
Ordinary shares of €1 each
Palmer Yen Finance
England & Wales
Ordinary shares of JP¥100 each
Petrol Bags Limited‡
England & Wales
Ordinary shares of £1 each
Radamec Broadcast Systems Limited
England & Wales
Ordinary shares of £1 each
Ordinary shares of £1 each and Deferred
Rycote Microphone Windshields Ltd
England & Wales
shares of £1 each
Sachtler Limited‡
England & Wales
Ordinary shares of £1 each
The Camera Store Limited
England & Wales
Ordinary shares of £1 each
Vinten Broadcast Limited‡
England & Wales
Ordinary shares of £1 each
Videndum Creative Solutions UK Limited
England & Wales
Ordinary shares of £1 each
25
16
30
31
26
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
Strategic report Corporate Governance Financial Statements
215
Company
Country of incorporation
Issued securities
Videndum Group Holdings Limited‡
England & Wales
Ordinary shares of £1 each
Videndum Pensions Trust Company (UK) Limited‡
England & Wales
Ordinary shares of £1 each
Videndum Media Solutions UK Limited
England & Wales
Ordinary shares of £1 each
Videndum Investments Limited
England & Wales
Ordinary shares of £1 each
Videndum Production Solutions Limited‡
England & Wales
Ordinary shares of £1 each
Vizua Limited
England & Wales
Ordinary shares of £1 each
VTC International Limited‡
England & Wales
Ordinary shares of £1 each
Camera Dynamics sarl
France
Ordinary shares of NPV
Gitzo S.A.
France
Ordinary shares of NPV
Videndum Media Distribution SAS
France
Ordinary shares of €16 each
Videndum Media Distribution GmbH
Germany
Shares of €25,000 each
LCB Beteiligungs GmbH
Germany
Ordinary shares of €25,000
Videndum Production Solutions GmbH
Germany
Ordinary shares of DEM50,000 each
Videndum Media Distribution HK Limited
Hong Kong
Shares of HK$1 each
Videndum Media Solutions HK Limited
Hong Kong
Shares of HK$1 each
Palmer Dollar Finance Ireland Investment DAC‡
Ireland
Ordinary shares of US$1 each
Palmer Euro Finance Ireland Investment DAC‡
Ireland
Ordinary shares of €1 each
Petrol Bags Limited
Israel
Ordinary shares of ILS1 each
Amimon Ltd
Israel
Ordinary shares of ILS 0.01 each
Manfrotto Bags Ltd
Israel
Ordinary shares of ILS1 each
Videndum Italia spa
Italy
Ordinary shares of €1,000 each
Videndum Holdings Italia Srl
Italy
Ordinary shares of €10,000 each
Videndum Media Solutions Spa
Italy
Ordinary shares of €5.556 each
Videndum Media Distribution KK‡
Japan
Shares of JP¥1 each
Videndum Production Solutions KK‡
Japan
Ordinary shares of JP¥1,000 each
Amimon Japan Co. Ltd
Japan
Ordinary shares of JP¥10,000 each
Palmer Dollar Finance Luxembourg Investment Sarl‡
Luxembourg
Ordinary shares of US$1,000 each
Palmer Euro Finance Luxembourg Investment Sarl‡
Luxembourg
Ordinary shares of €1,000 each
Videndum Media Distribution Benelux B.V.
Netherlands
Ordinary shares of €454 each
Palmer Euro Finance Netherlands B.V.‡
Netherlands
Ordinary shares of €1 each
BRCT Holdings Limited
New Zealand
Ordinary shares of NZD1.00
Syrp Limited
New Zealand
Ordinary shares of NZD1.00
Videndum Production Solutions Pte. Limited‡
Singapore
Ordinary shares of SGD1 each
Teradek Ukraine LLC
Ukraine
Membership interests of NPV
Audix LLC
United States
Membership interests of NPV
Creative Solutions Division Inc.
United States
Ordinary shares of US$0.001 each
Videndum Media Distribution US Inc.
United States
Ordinary shares of NPV
Videndum Production Solutions Inc
United States
Ordinary shares of US$0.01 each
Mount Olive 2016, LLC
United States
Membership units of NPV
Offhollywood, LLC
United States
Membership units of NPV
SmallHD LLC
United States
Membership units of NPV
Teradek, LLC
United States
Membership units of NPV
Autocue LLC
United States
Membership units of NPV
Wooden Camera, Inc
United States
Ordinary shares of NPV
Camera Corps, Inc.
United States
Ordinary shares of US$0.01 each
Amimon Inc
United States
Ordinary shares of NPV
1
1
1
1
1
1
1
4
6
6
12
9
9
13
29
18
18
21
35
8
10
10
10
15
15
34
19
19
11
20
2
2
27
23
14
32
5
39
17
5
22
24
3
28
32
33
Section 5 continued
Other Supporting Notes continued
Videndum plc
216
Annual Report and Accounts 2023
Company
Country of incorporation
Issued securities
WHDI LLC
United States
Membership unit of NPV
Savage Paper Specialties, LLC
United States
Membership units of NPV
Savage Universal LLC
United States
Membership units of NPV
Superior Paper Specialties, LLC
United States
Membership units of NPV
Chalfont Investments Inc.
United States
Ordinary shares of US$0.01 each
Videndum US Holdings, Inc.
United States
Ordinary shares of US$0.01 each
Quasar Science LLC
United States
Membership units of NPV
Infiniscene Inc.
United States
Ordinary shares of US$0.001 each
32
36
32
32
5
5
37
38
‡ Investment held directly by Videndum plc.
The registered addresses are as follows:
1 Bridge House, Heron Square, Richmond, TW9 1EN, United Kingdom
2 32 Crummer Road, Grey Lynn, Auckland, 1021, New Zealand
3 124 West 30th Street, Suite 312, New York, NY 10001, United States
4 171 avenue des Grésillons, 92635 Gennevilliers cedex, France
5 Corporation Service Company, 2711 Centerville Road – Suite 400, Wilmington, DE 19808, United States
6 Parc Tertiaire Silic, 44 Rue De La Couture, 94150 Rungis, France
7 Removed
8 Abraham & Bachar cp., Keren HaYesod 36, Jerusalem, Israel
9 Parkring 29, 85748 Garching, Germany
10 Via Valsugana 100, 36022 Cassola VI, Italy
11 J.P. Poelstraat 5, 1483 GC De Rijp, Netherlands
12 Ferdinand-Porsche-Strasse 19, 41149 Cologne, Germany
13 Unit No.03, 3/F, Tower 3, Phase 1, Enterprise Square, No.9 Sheung Yuet Road, Kowloon Bay, Hong Kong
14 9400 SW Barber St, Wilsonville, Oregon, 97070, United States
15 Shibakoen 3-chome Bldg, 1F, 3-1-38 Shibakoen, Minato-ku, Tokyo 105-0011, Japan
16 Room 2704-05, Shanghai Mart Tower, No.2299, Yan’an Road (West), Shanghai, 200336, China
17 Corporation Service Company, 2595 Interstate Drive – Suite 103, Harrisburg, PA 17110, United States
18 6th Floor, Riverpoint, Lower Mallow Street, Co. Limerick, Ireland
19 9B Boulevard du Prince Henri, L-1724, Grand Duchy of Luxembourg, Luxembourg
20 Kerkrade, Netherlands
21 3 HaSolelim Street, 67897, Tel Aviv, Israel
22 Corporation Service Company, 327 Hillsborough Street, Raleigh, NC 27603, United States
23 Per.Nechipurenko 4, Suite 15, Odessa, 65045, Ukraine
24 CSC-Lawyers Incorporating Service, 2710 Gateway Oaks Drive – Suite 150N, Sacramento, CA 95833-3505, United States
25 2 Baldwin Road, Altona North VIC 2025, Australia
26 Parque Industrial de Cartago, Edificio Numero 68, Cartago, Costa Rica
27 601 Macpherson Road, #15-16, 368242, Singapore
28 1826 West Commerce Street, Dallas TX 75208, United States
29 Unit 901-2, 9/F, Metroplaza Tower 2, No. 223 Hing Fong Road, Kwai Fong, N.T. Hong Kong
30 No.68, 2F, Hu Mei Street, Da Shu Ling, Qing Tang Village, Xiao Jin Kou Town, Huizhou City, Guangdong Province, China
31 Unit 3301, 3302, 3316, Office Tower, Shun Hing Square, Di Wang Commercial Centre, 5002 Shen Nan Dong Road, Shenzhen, 518008, China
32 Corporate Service Company, 251 Little Falls Drive, Wilmington, County of New Castle, DE, 19808, United States
33 8 Mason Drive, Irvine, CA 92618, United States
34 701 A105 Gotanda Building, 1-10-7 Higashi Gotanda, Shinagawa-Ku, Tokyo, Japan
35 Zarhin 26, POB 2308, Ra’anana 4366250, Israel
36 2050 South Stearman Drive, Chandler, AZ, 85286, United States
37 909 Third Avenue, 27th Floor, New York, NY, 10022, United States
38 25 West Hubbard Street, 5th Floor, Chicago,IL, 60654, United States
39 14 Progress Drive, Shelton, CT, 06484, United States
5.7 Subsequent events
On 5 January 2024 certain land and buildings of the Production Solutions Division were sold for a net sale price of £2.5 million.
There were no other events after the Balance Sheet date that require disclosure.
Strategic report Corporate Governance Financial Statements
217
Company Balance Sheet
As at 31 December 2023
Notes
2023
£m
2022
£m
Fixed assets
Intangible assets f) – 0.1
Property, plant and equipment g) 1.4 1.6
Investments in subsidiary undertakings h) 547.7 603.5
Other receivables i) 2.3 3.8
Non-current tax assets 3.1 3.0
554.5 612.0
Current assets
Debtors i) 127.1 85.6
Cash at bank and in hand – 2.2
127.1 87.8
Liabilities falling due within one year
Creditors j) (86.4) (111.4)
Provisions l) – (0.6)
(86.4) (112.0)
Net current assets/(liabilities) 40.7 (24.2)
Total assets less current liabilities 595.2 587.8
Liabilities falling due after one year
Creditors j) (147.1) (232.2)
Provisions l) (0.1) (0.1)
(147.2) (232.3)
Net assets 448.0 355.5
Capital and reserves
Called up share capital m) 18.9 9.4
Share premium account 133.7 24.3
Cash flow hedge reserve o) 1.0 3.0
Other reserves n) 58.8 58.8
Profit and Loss Account 235.6 260.0
Shareholders' funds 448.0 355.5
The Company’s loss after tax for the year ended 31 December 2023 was £10.5 million (2022: profit £0.2 million).
Approved and authorised for issue by the Board of Directors on 22 April 2024 and signed on its behalf by:
Andrea Rigamonti
Group Chief Financial Officer
Videndum plc
Registered in England and Wales no. 227691
Videndum plc
218
Annual Report and Accounts 2023
Company Statement of Changes in Equity
Notes
Share
capital
£m
Share
premium
£m
Cash flow
hedging
reserve
£m
Other
reserves
£m
Profit and
Loss
Account
£m
Total
equity
£m
Balance at 1 January 2022 9.3 23.1 0.1 58.8 271.5 362.8
Total comprehensive income for the year
Profit for the year – – – – 0.2 0.2
Fair value gain – interest rate swap – – 2.9 – – 2.9
Total comprehensive income for the year – – 2.9 – 0.2 3.1
Contributions by and distributions to owners
Dividends paid – – – – (18.0) (18.0)
Own shares purchased – – – – (5.8) (5.8)
Own shares sold – – – – 3.1 3.1
New shares issued 0.1 1.2 – – – 1.3
Share-based payment charge, net of tax – – – – 9.0 9.0
Balance at 31 December 2022 and 1 January 2023 9.4 24.3 3.0 58.8 260.0 355.5
Total comprehensive income for the year
Loss for the year – – – – (10.5) (10.5)
Fair value of cash flow hedges reclassified to the
Income Statement – – (3.0) – – (3.0)
Effective portion of changes in fair value of cash flow
hedges – – 0.3 – – 0.3
Tax associated with changes in cash flow hedges – – 0.7 – – 0.7
Total comprehensive income for the year – – (2.0) – (10.5) (12.5)
Contributions by and distributions to owners
Dividends paid – – – – (11.6) (11.6)
Own shares purchased – – – – (3.7) (3.7)
Own shares sold – – – – 1.2 1.2
New shares issued, net of costs m) 9.5 109.4 – – (0.8) 118.1
Share-based payment charge, net of tax – – – – 1.0 1.0
Balance at 31 December 2023 18.9 133.7 1.0 58.8 235.6 448.0
Strategic report Corporate Governance Financial Statements
219
a) Basis of preparation
These financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (“FRS 101”).
These financial statements have been prepared in accordance with International Accounting Standards in conformity with the requirements of the
Companies Act 2006 and International Financial Reporting Standards as issued by the IASB but makes amendments where necessary in order to
comply with the Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions have been taken.
The financial statements have been prepared under the historical cost convention, and in accordance with the Companies Act 2006.
Under Section 408(3) of the Companies Act 2006, the Company is exempt from the requirement to present its own Profit and Loss Account.
Critical accounting judgements and key sources of estimation uncertainty
The following provides information on those policies that the Directors consider critical because of the level of judgement and estimation required
which often involves assumptions regarding future events which can vary from what is anticipated. The Directors review the judgements and
estimates on an ongoing basis with revisions to accounting estimates recognised in the period in which the estimates are revised and in any future
periods affected. The Directors believe that the Company’s financial statements reflect appropriate judgements and estimates and provide a true
and fair view of the Company’s performance and financial position.
Key sources of estimation
The Directors have reviewed the estimates and deemed that there are no key sources of estimation uncertainty that will result in a material change
in the assets and liabilities of the Company within the next financial year.
Critical accounting judgements
The following are critical accounting judgements that the Company makes, apart from those involving estimations (which are dealt with above),
that the Directors have made in the process of applying the Company’s accounting policies and that have the most significant effect on the amounts
recognised in the financial statements.
Tax
In relation to tax, these include the interpretation and application of existing legislation. The Company’s key judgement relates to the application of
tax law in relation to the EU State Aid Investigation. Details in relation to this judgement are set out in note 2.4 “Tax” of the Group’s consolidated
financial statements.
Impact of adoption of new accounting standards or amendments
The impact of adoption of new accounting standards or amendments is disclosed in Section 1 – Basis of Preparation of the Group’s consolidated
financial statements.
Notes to the Company Financial Statements
Videndum plc
220
Annual Report and Accounts 2023
b) Exemptions taken by the Company under FRS 101
The Company has applied the exemptions available under FRS 101 in respect of the following disclosures:
– Cash Flow Statement and related notes;
– comparative period reconciliations for share capital, tangible fixed assets and intangible assets;
– disclosures in respect of information related to key management personnel, and transactions with wholly owned subsidiaries;
– disclosures in respect of capital management;
– disclosures in respect of leases;
– the effects of new but not yet effective IFRSs; and
– disclosures in respect of the compensation of key Management personnel.
As the consolidated financial statements of Videndum plc include the equivalent disclosures, the Company has also taken the exemptions under FRS
101 available in respect of the following disclosures:
– IFRS 2 “Share-based Payments” in respect of Group settled share-based payments; and
– certain disclosures required by IFRS 13 “Fair Value Measurement” and the disclosures required by IFRS 7 “Financial Instruments: Disclosures”.
c) Accounting policies
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to these financial
statements.
Investments in subsidiary undertakings
Investments in subsidiaries are stated at historical cost, less provision for any impairment in value.
The Company holds investments in all of the Group’s intermediate holding companies, financing companies and trading subsidiaries.
It is possible that changes in outlook over the next year that are different to the assumptions made by Management could require a material
adjustment to the carrying value of the Company’s investments in its subsidiaries.
Pensions
The Company participates in the Group’s defined benefit scheme operated in the UK, which was closed to future benefit accrual with effect from
31 July 2010. All UK employees of the Company are now offered membership of the defined contribution scheme. The assets of the schemes are held
separately from those of the Company. The Company has a very small proportion of the scheme’s total members. As such, the Company has
adopted a policy to recognise the full net pension cost, and hence pension asset, in its subsidiary Videndum Production Solutions Limited’s financial
statements prepared in accordance with FRS 101.
Details in respect of the UK defined benefit pension scheme are disclosed in note 5.2 “Pensions” of the Group’s consolidated financial statements.
Dividends receivable
Dividends received and receivable are credited to the Company’s Income Statement.
Other significant accounting policies are consistent with the Group’s consolidated financial statements and below are references
where they are disclosed:
Foreign currencies Section 1 – Basis of Preparation
Intangible assets 3.1 "Intangible assets"
Property, plant and equipment 3.2 "Property, plant and equipment"
Debtors and Creditors 3.3 "Working capital"
Provisions 3.5 "Provisions"
Leases 3.6 "Leases"
Cash and cash equivalents 4.1 "Net debt"
Bank loans 4.1 "Net debt"
Derivative financial instruments and hedging activities 4.2 "Financial instruments"
Share capital and reserves 4.3 "Share capital and reserves"
Share-based payments 5.3 "Share-based payments"
Strategic report Corporate Governance Financial Statements
221
d) Employees
2023
£m
2022
£m
Employee costs comprise:
Wages and salaries 3.9 4.7
Employers’ social security costs 0.1 0.5
Employers’ pension costs – defined contribution schemes 0.2 0.2
Share-based payment charge (0.3) 0.9
3.9 6.3
2023 2022
Monthly average number of employees during the year 28 27
Further details of Directors’ remuneration and share incentives are disclosed in the Remuneration Report.
e) Audit fees
The details regarding the remuneration of the Company’s auditor are included in note 2.1 “(Loss)/Profit before tax (including segmental information)”
of the Group’s consolidated financial statements under “Fees payable to Deloitte for the audit of the Company’s financial statements”.
f) Intangible assets
Capitalised
software
£m
Cost and net book value
At 31 December 2022 0.1
Depreciation (0.1)
At 31 December 2023 –
g) Property, plant and equipment
Total
£m
Right-of-use
assets
– Leasehold
land and
buildings
£m
Leasehold
improvements
£m
Cost
At 31 December 2022 and 1 January 2023 3.6 3.1 0.5
Cost at 31 December 2023 3.6 3.1 0.5
Accumulated depreciation
At 31 December 2022 and 1 January 2023 2.0 1.5 0.5
Depreciation charge in the year 0.2 0.2 –
At 31 December 2023 2.2 1.7 0.5
Carrying amounts
At 31 December 2022 and 1 January 2023 1.6 1.6 –
At 31 December 2023 1.4 1.4 –
Notes to the Company Financial Statements continued
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Annual Report and Accounts 2023
h) Investments in subsidiary undertakings
Total
£m
Shares in Group
undertakings
£m
Loans to Group
undertakings
£m
Cost
At 1 January 2023 895.8 736.0 159.8
Additions 132.0 132.0 –
Disposals/repayments (395.0) (236.8) (158.2)
At 31 December 2023 632.8 631.2 1.6
Provisions
At 1 January 2023 292.3 292.3 –
Impairment losses 3.6 3.6 –
Disposals (210.8) (210.8) –
At 31 December 2023 85.1 85.1 –
Net book value
At 1 January 2023 603.5 443.7 159.8
At 31 December 2023 547.7 546.1 1.6
The additions to shares in Group undertakings during the year reflect an increase in the Company’s subsidiary holding, Videndum Group Holdings
Limited.
The disposals to shares in Group undertakings during the year reflect a wider Group rationalisation of financing companies.
The investment in Lightstream of £3.6 million was fully impaired during the year.
The Company’s investments in subsidiaries as at 31 December 2023 are included in note 5.6 “Group investments” of the Group’s consolidated
financial statements.
Loans to Group undertakings are unsecured, bear floating rates of interest and are repayable after more than one year.
During the year the Group entered into restructuring projects that resulted in rationalisation of intercompany loans.
i) Debtors
2023
£m
2022
£m
Amounts falling due within one year
Amounts owed by subsidiary undertakings
1
122.9 80.7
Other debtors 1.0 0.1
Prepayments 0.4 0.2
Derivative financial instruments – interest rate swap
2
– 1.6
Derivative financial instruments – forward exchange contracts
2
1.7 1.6
Deferred tax assets
3
1.1 1.4
127.1 85.6
Long-term receivables
Derivative financial instruments – interest rate swap
2
1.4 2.4
Derivative financial instruments – forward exchange contracts
2
0.9 1.4
Total receivables 129.4 89.4
1 Amounts owed by subsidiary undertakings are unsecured and payable on demand.
2 Derivative financial instruments of £1.4 million (2022: £4.0 million) relate to interest rate swaps. Of the amounts included in Derivative financial instruments  forward exchange contracts, £nil
(2022: £0.9 million) relate to contracts with subsidiary undertakings which mirror the terms of contracts held by the Company with external third parties. Details of these derivatives are
included in note 4.2 “Financial instruments” of the Group’s consolidated financial statements.
3 Deferred tax asset of £1.1 million is made up of £0.8 million losses and £0.3 million other temporary timing difference. In 2022, deferred tax asset of £1.4 million is made up of £1.2 million share
options and £0.2 million relating to other temporary timing differences. Deferred tax asset in respect of £0.8 million losses in FY23 is supported by profit forecasts which show that the losses
will be utilised within one year.
Strategic report Corporate Governance Financial Statements
223
j) Creditors
2023
£m
2022
£m
Amounts falling due within one year
Bank overdraft (unsecured) 3.4 –
Bank loans (unsecured) – 36.0
Lease liabilities 0.2 0.3
Amounts owed to subsidiary undertakings 77.8 69.8
Derivative financial instruments – forward exchange contracts 1.7 1.6
Deferred tax 0.3 1.0
Trade payables 1.2 1.3
Other creditors – 0.1
Accruals 1.8 1.3
86.4 111.4
Amounts falling due after more than one year
Bank loans (unsecured) 89.1 137.9
Lease liabilities
1
1.3 1.5
Taxation and social security – 0.4
Derivative financial instruments – forward exchange contracts 0.9 1.4
Amounts owed to subsidiary undertaking 55.8 91.0
147.1 232.2
1 Lease liabilities of £1.3 million (2022: £1.5 million) comprise £0.8 million (2022: £0.8 million) of amounts falling due after more than one year and less than five years, and £0.5 million (2022: £0.7
million) of amounts falling due after more than five years.
Amounts owed to subsidiary undertakings due within one year are unsecured and payable on demand. Amounts owed to subsidiary undertakings
due after more than one year are unsecured, bear floating rates of interest and are repayable after more than one year. Derivative financial
instruments of £2.6 million (2022: £2.1 million) relate to contracts with subsidiary undertakings which mirror the terms of contracts held by the
Company with external third parties.
During the year the Group entered into restructuring projects that resulted in rationalisation of intercompany loans.
Bank loans reduced during the year as a result of significant transactions relating to the repayment of the two term loans totalling £44.0 million (US
$55.0 million) and £73.9 million Revolving Credit Facility, following the receipt of the equity proceeds. Details in relation to the term loans are set out
in note 4.1 “Net debt” of the Group’s consolidated financial statements.
Lease payments of £0.3 million were made in the year.
Notes to the Company Financial Statements continued
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Annual Report and Accounts 2023
k) Contingent liabilities
There are no contingent liabilities at 31 December 2023 (2022: £nil).
l) Provisions
Provisions
£m
At 31 December 2022 and 1 January 2023 0.7
Provisions utilised during the year (0.6)
At 31 December 2023 0.1
Provisions of £0.1 million relates to dilapidations.
m) Called up share capital
Disclosure in respect of the Company’s share capital are provided in note 4.3 “Share capital and reserves” of the Group’s consolidated financial
statements.
The registered address of the Company is Bridge House, Heron Square, Richmond, TW9 1EN, United Kingdom.
Options over shares of the Company have been granted to employees of the Company under various plans. Details of the terms and conditions of
each share-based payment plan are given in the Annual Report on Remuneration on pages 123 to 140 and note 5.3 “Share-based payments” of the
Group’s consolidated financial statements.
n) Other reserves
Other reserves of £58.8 million represent the reduction of the share premium account; £22.7 million in 1989 and £37.3 million in 1995 less £16.0 million
of share repurchases in 1995; a capital redemption reserve of £1.6 million created on the repurchase and subsequent cancellation of 885,000 ordinary
shares by the Company in 1999; and £13.2 million in relation to a merger reserve.
o) Cash flow hedge reserve
As described in note 4.2 “Financial instruments” of the Group’s consolidated financial statements, the Company hedges the variability in cash flows
of a proportion of its floating rate borrowings. This reserve records the effective portion of the cumulative net change in the fair value of derivative
financial instruments where they are designated in cash flow hedge relationships.
p) Related party transactions
The Company has identified a related party relationship with its Board, the Videndum DB Pension Scheme and members of the Operations
Executive as disclosed in the Remuneration report and note 5.5 “Related party transactions” of the Group’s consolidated financial statements. There
are no other related party transactions to disclose.
q) Post Balance Sheet events
There were no events after the Balance Sheet date that require disclosure.
Strategic report Corporate Governance Financial Statements
225
Glossary of Alternative Performance Measures (“APMs”)
The Group believes that these APMs, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders with
additional helpful information and enable an alternative comparison of performance over time.
The Group uses APMs to aid the comparability of information between reporting periods and Divisions, by adjusting for certain items which impact
upon IFRS measures, to aid the user in understanding the activity taking place across the Group’s businesses. APMs are used by the Directors and
Management for performance analysis, planning, reporting and incentive purposes. Where relevant, further information on specific APMs is provided
in each section below.
The APMs refer to continuing operations; 2022 has been represented to ensure fair comparability.
APM
Closest equivalent IFRS
measure Definition and purpose
Income Statement measures from continuing operations
Adjusted gross profit Gross profit Calculated as gross profit before adjusting items.
The table below shows a reconciliation:
See note 2.1 “(Loss)/profit before tax (including segmental information)”.
2023
£m
2022
£m
Gross profit 114.6 190.8
Adjusting items in cost of sales 4.2 2.6
Adjusted gross profit 118.8 193.4
Adjusted gross profit margin None
Calculated as adjusted gross profit divided by revenue.
Adjusted operating expenses Operating expenses Calculated as operating expenses before adjusting items.
The table below shows a reconciliation:
See note 2.1 “(Loss)/profit before tax (including segmental information) –
operating expenses”.
2023
£m
2022
£m
Operating expenses 119.3 141.8
Adjusting items in operating expenses (13.3) (14.6)
Adjusted operating expenses 106.0 127.2
Adjusted operating profit (Loss)/profit before tax Calculated as (Loss)/profit before tax, before net finance expense, and before
adjusting items. This is a key management incentive metric.
Adjusting items include non-cash charges such as amortisation of intangible
assets that are acquired in a business combination, impairment of disposed
entities or groups of asset(s) and effect of fair valuation of acquired inventory
and property, plant and equipment. Cash charges include items such as
transaction costs, earnout, retention and deferred payments, and significant
costs relating to the integration of acquired businesses.
2023
£m
2022
£m
(Loss)/profit before tax (18.8) 42.2
Net finance expense 14.1 6.8
Adjusting items in operating (loss)/profit 17.5 17.2
Adjusted operating profit 12.8 66.2
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226
Annual Report and Accounts 2023
APM
Closest equivalent IFRS
measure Definition and purpose
Adjusted operating profit margin None Calculated as adjusted operating profit divided by revenue. Progression in
adjusted operating margin is an indicator of the Group’s operating efficiency.
Adjusted net finance
income/(expense)
None Calculated as finance expense, less finance income, and less amortisation of
loan fees on borrowings for acquisitions and other financing initiatives.
The table below shows a reconciliation:
2023
£m
2022
£m
Finance expense (16.5) (9.1)
Finance income 2.4 2.3
Adjusting finance expense – amortisation of loan
fees on borrowings for acquisitions and other
financing initiatives 2.6 0.8
Adjusted net finance expense (11.5) (6.0)
Adjusted profit before tax Profit before tax Calculated as profit before tax, before adjusting items. This is a key
management incentive metric and is a measure used within the Group’s
incentive plans as set out in the Remuneration report.
See Consolidated Income Statement for a reconciliation.
Adjusted profit after tax Profit after tax Calculated as profit after tax before adjusting items.
See Consolidated Income Statement for a reconciliation.
Adjusted basic earnings per share Basic earnings per share Calculated as adjusted profit after tax divided by the weighted average
number of ordinary shares outstanding during the period. This is a key
management incentive metric and is a measure used within the Group’s
incentive plans as set out in the Remuneration report.
See note 2.5 “Earnings per share” for a reconciliation.
Cash flow measures from continuing operations
Free cash flow Net cash from
operating activities
Net cash from operating activities after proceeds from property, plant and
equipment and software, purchase of property, plant and equipment, and
capitalisation of software and development costs. This measure reflects the
cash generated in the period that is available to invest in accordance with the
Group’s capital allocation policy.
See “Adjusted operating cash flow” below for a reconciliation.
See “Five Year Financial Summary” on page 233.
Strategic report Corporate Governance Financial Statements
227
APM
Closest equivalent IFRS
measure Definition and purpose
Cash flow measures from continuing operations continued
Adjusted operating cash flow Net cash from operating
activities
Free cash flow before payment of interest, tax, restructuring, integration and
other costs, retention bonuses and transaction costs relating to the acquisition
of businesses, and before proceeds from sale of impaired inventory. This is a
measure of the cash generation and working capital efficiency of the Group’s
operations. Adjusted operating cash flow as a percentage of adjusted
operating profit is a key management incentive metric.
2023
£m
2022
£m
(Loss)/profit for the period from continuing
operations (12.1) 46.9
Add back:
Taxation and net finance expense 7.4 2.1
Adjusting items in operating (loss)/profit 17.5 17.2
Adjusted operating profit 12.8 66.2
Depreciation excluding effect of fair valuation of
property, plant and equipment 14.0 14.4
Amortisation of capitalised software and
development costs 6.5 5.7
Adjusted trade working capital movement
1
(1.1) (15.6)
Adjusted non-trade working capital movement
1
(7.1) (2.4)
Adjusted provision movement
1
– (0.7)
Other:
– Net loss on disposal of property, plant and
equipment and software 0.2 –
– Fair value losses on derivative financial
instruments (0.2) –
– Foreign exchange losses (0.3) 0.6
– Share-based payments 1.0 6.9
– Proceeds from sale of property, plant and
equipment and software 0.3 –
Purchase of property, plant and equipment (4.6) (7.0)
Capitalisation of software and development costs (10.7) (8.4)
Adjusted operating cash flow 10.8 59.7
Interest paid (15.3) (9.3)
Tax paid (10.4) (7.2)
Income/(payments) relating to:
Restructuring and integration costs (6.4) (2.0)
Proceeds from sale of impaired inventory 1.1
Retention bonuses (3.6) (0.3)
Transaction costs – (0.6)
Free cash flow (23.8) 40.3
Proceeds from sale of property, plant and
equipment and software (0.3) –
Purchase of property, plant and equipment 4.6 7.0
Capitalisation of software and development costs 10.7 8.4
Net cash (used in)/from operating activities (8.8) 55.7
1 See “Adjusted trade working capital movement” and “Adjusted non-trade working capital
movement” and “Adjusted provision movement” below for a reconciliation.
Glossary of Alternative Performance Measures (“APMs”) continued
Videndum plc
228
Annual Report and Accounts 2023
APM
Closest equivalent IFRS
measure Definition and purpose
Adjusted trade working capital
movement
None The adjusted trade working capital movement includes movements in
inventories, trade debtors and trade creditors, excluding movements relating
to adjusting items.
2023
£m
2022
£m
Decrease/(increase) in inventories 6.9 (7.5)
Decrease/(increase) in trade debtors 17.1 (6.7)
(Decrease)/increase in trade creditors (20.2) 0.8
Decrease/(increase) in trade working capital 3.8 (13.4)
Deduct inflows from adjusting charges:
Effect of fair valuation of acquired inventory (0.1) (0.5)
Adjustments for integration, restructuring and
other costs (3.7) (1.7)
Proceeds from the sale of impaired inventory (1.1) –
Adjusted trade working capital movement (1.1) (15.6)
Adjusted non-trade working capital
movement
None The adjusted non-trade working capital movement includes movements in
other debtors, other creditors and contract assets/liabilities, excluding
movements relating to adjusting items.
2023
£m
2022
£m
Decrease in other debtors and contract assets 0.5 1.9
Decrease in other creditors and contract liabilities (10.9) (4.6)
Increase in non-trade working capital (10.4) (2.7)
Deduct inflows from adjusting charges:
Adjustments for integration, restructuring and other
costs, transaction costs relating to acquisition of
businesses, and retention bonuses 3.3 0.3
Adjusted non-trade working capital movement (7.1) (2.4)
Adjusted provisions movement Increase/(decrease) in
provisions
The adjusted provisions movement excludes movements relating to adjusting
items.
2023
£m
2022
£m
Increase/(decrease) in provisions (1.9) 1.1
Adjustments for integration, restructuring and
other costs 1.9 (1.8)
Adjusted provision movement – (0.7)
Strategic report Corporate Governance Financial Statements
229
APM
Closest equivalent IFRS
measure Definition and purpose
Other measures from continuing operations
Return on capital employed (ROCE) None ROCE is calculated as annual adjusted operating profit for the last 12 months
divided by the average total assets (excluding defined benefit pension asset
and deferred tax assets), current liabilities (excluding current interest-bearing
loans and borrowings), and non-current lease liabilities.
The average is based on the opening and closing of the 12-month period. See
“Five Year Summary”.
2023
£m
Adjusted operating profit for the last 12 months 12.8
Capital employed at the beginning of the year 296.3
Capital employed at the end of the year 289.1
Average capital employed 292.7
Adjusted ROCE % 4.4%
Dropthrough None Dropthrough is the change in adjusted operating profit as a percentage of the
change in revenue.
Organic revenue None Organic revenue is revenue from existing business, and not from new mergers
and acquisitions.
Organic adjusted
operating profit
None Organic adjusted operating profit is adjusted operating profit from existing
business, and not from new mergers and acquisitions.
Organic growth None Organic growth is the growth achieved year-on-year from existing business,
and not from new mergers and acquisitions.
Constant currency None Constant currency variances are derived by calculating the current year
amounts at the applicable prior year foreign currency exchange rates,
excluding the effects of hedging in both years.
Revenue growth is represented on a constant currency basis as this best
represents the impact of volume and pricing on revenue growth.
Organic revenue
at constant currency
None Calculated as organic revenue at constant currency.
The table below shows a reconciliation:
See “Consolidated Income Statement”
See “Constant currency”, “Organic revenue” and “Organic growth” above for
definitions.
2023
£m
2022 Revenue 442.5
Add from acquisitions 0.1
2022 Organic revenue 442.6
2023 Revenue 306.9
Exclude effects of foreign currency exchange rates:
Translational effects 0.3
Transactional effects (4.1)
2023 Organic revenue at constant currency 303.1
Organic growth at constant currency % (32%)
Glossary of Alternative Performance Measures (“APMs”) continued
Videndum plc
230
Annual Report and Accounts 2023
APM
Closest equivalent IFRS
measure Definition and purpose
Organic adjusted operating profit
at constant currency
None Calculated as organic adjusted profit at constant currency.
The table below shows a reconciliation:
See “Consolidated Income Statement”
See “Adjusted operating profit” above for a reconciliation.
See “Constant currency”, “Organic adjusted operating profit”
and “Organic growth” above for definitions.
2023
£m
2022 Adjusted operating profit 66.2
Add from acquisitions –
2022 Organic adjusted operating profit 66.2
2023 Organic adjusted operating profit
1
12.8
Exclude effects of foreign currency exchange rates:
Translational effects (0.4)
Transactional effects (2.8)
Organic adjusted operating profit at constant currency 9.6
Organic growth at constant currency % (85%)
1 See “Adjusted operating profit” above for a reconciliation.
Cash conversion None Calculated as adjusted operating cash flow divided by adjusted operating
profit. This is a key management incentive metric and is a measure used
within the Group’s incentive plans as set out in the Remuneration report.
Adjusted EBITDA None Calculated as adjusted operating profit for the last 12 months before
depreciation of tangible fixed assets and amortisation of intangibles (other
than those already excluded from adjusted operating profit).
The table below shows a reconciliation:
2023
£m
Adjusted operating profit for the last 12 months 12.8
Add back:
Depreciation excluding effect of fair valuation of property, plant
and equipment 14.0
Amortisation of capitalised software and development costs 6.5
Adjusted EBITDA 33.3
Covenant EBITDA None Calculated as adjusted EBITDA for the last 12 months before share-based
payment charge, and after interest income/(expense) unrelated to gross
borrowings.
The table below shows a reconciliation:
2023
£m
Adjusted EBITDA for the last 12 months 33.3
Add back share-based payment charge 1.0
Add back material items of an unusual nature 4.1
Add interest income unrelated to gross borrowings
1
1.4
Covenant EBITDA 39.8
1 See “Interest income/(expense) unrelated to gross borrowings”
below for a reconciliation.
Strategic report Corporate Governance Financial Statements
231
APM
Closest equivalent IFRS
measure Definition and purpose
Covenant EBITA None Calculated as Covenant EBITDA for the last 12 months less depreciation of
tangible fixed assets and amortisation of intangibles (other than those
already excluded from adjusted operating profit).
The table below shows a reconciliation:
2023
£m
Covenant EBITDA for the last 12 months 39.8
Less depreciation excluding effect of fair valuation
of property, plant and equipment (14.0)
Covenant EBITA 25.8
Interest income/(expense) unrelated
to gross borrowings
None This is currency translation gains/(losses), other interest income/(expense),
interest income/(expense) on net defined benefit pension scheme, and
amortisation of loan fees on borrowings, excluding those on borrowings for
acquisitions and other financing initiatives.
2023
£m
Net currency translation gains 2.0
Other interest income 0.2
Interest income on net defined benefit pension
scheme 0.2
Interest expense on net defined benefit pension
scheme (0.1)
Other interest expense (1.6)
Amortisation of loan fees on borrowings (1.9)
Less amortisation of loan fees on borrowings for
acquisitions and other financing initiatives 2.6
Interest income unrelated to gross borrowings 1.4
Covenant net interest None Calculated as adjusted net finance income/(expense)
1
for the last 12 months
less interest income/(expense) unrelated to gross borrowings
1
.
2023
£m
Adjusted net finance expense for the last 12 months (11.5)
Less interest income unrelated to gross borrowings (1.4)
Covenant net interest (12.9)
1 See “Adjusted net finance income/(expense)” and “Interest income/(expense) unrelated to gross
borrowings” above for a reconciliation.
Net debt None See note 4.1 “Net debt” for an explanation of the balances included in net
debt, along with a breakdown of the amounts.
Covenant net debt None Calculated as Net debt before unamortised loan fees on borrowings, and
before lease liabilities from discontinued operations.
2023
£m
Net debt 128.5
Add back unamortised loan fees on borrowings 0.8
Add back lease liabilities from discontinued
operations 0.3
Covenant net debt 129.6
Glossary of Alternative Performance Measures (“APMs”) continued
Videndum plc
232
Annual Report and Accounts 2023
Five Year Financial Summary
Years ended 31 December
Continuing operations Continuing and discontinued operations
2023
£m
2022
£m
2023
£m
2022
£m
2021
1,2
£m
2020
1
£m
2019
1
£m
Continuing operations 306.9 442.5 306.9 442.5 – – –
Discontinued operations – – 8.1 8.7 – – –
Revenue 306.9 442.5 315.0 451.2 394.3 290.5 376.1
Continuing operations 12.8 66.2 12.8 66.2 – – –
Discontinued operations – – (6.3) (6.2) – – –
Adjusted operating profit 12.8 66.2 6.5 60.0 46.2 9.9 52.4
Adjusted net interest on interest-bearing loans and
borrowings (13.7) (7.5) (13.7) (7.5) (3.2) (3.9) (3.7)
Interest on lease liabilities (1.5) (1.4) (1.5) (1.5) (1.0) (0.8) (0.9)
Other net financial income 3.7 2.9 3.6 3.0 0.4 0.3 0.2
Adjusted profit before tax 1.3 60.2 (5.1) 54.0 42.4 5.5 48.0
Cash generated from operating activities 16.9 72.2 9.8 65.3 65.7 34.0 59.2
Interest paid (15.3) (9.3) (15.4) (9.4) (4.5) (5.9) (4.3)
Tax paid (10.4) (7.2) (10.5) (7.2) (6.5) (3.1) (6.3)
Net cash from operating activities (8.8) 55.7 (16.1) 48.7 54.7 25.0 48.6
Net capital expenditure on property, plant and
equipment, software and development costs (15.0) (15.4) (18.3) (20.2) (21.6) (15.5) (18.1)
Free cash flow (23.8) 40.3 (34.4) 28.5 33.1 9.5 30.5
Capital employed
Total assets 451.3 554.2 451.3 554.2 441.1 334.6 360.6
Current liabilities (65.7) (146.4) (65.7) (146.4) (116.5) (114.0) (7 7.8)
Total assets less current liabilities 385.6 407.8 385.6 407.8 324.6 220.6 282.8
Less defined benefit asset (4.2) (3.9) (4.2) (3.9) – – –
Less deferred tax assets (55.4) (53.2) (55.4) (53.2) (33.6) (24.6) (21.0)
Add the current portion of interest-bearing liabilities 0.2 36.0 0.2 36.0 13.2 50.6 0.2
Less non-current lease liabilities (28.4) (28.8) (28.4) (28.8) (24.6) (11.5) (12.4)
297.8 357.9 297.8 357.9 279.6 235.1 249.6
Exclude discontinued operations:
Less total assets (12.3) (67.1) – – – – –
Add current liabilities 3.6 4.9 – – – – –
Add non-current lease liability – 0.6 – – – – –
289.1 296.3 297.8 357.9 279.6 235.1 249.6
Statistics
Adjusted operating profit (%) 4.2 15.0 2.1 13.3 11.7 3.4 13.9
Adjusted effective tax rate (%) n/a 25.9 n/a 23.2 24.3 25.4 24.4
Adjusted basic earnings per share (p) 8.5 96.8 (24.0) 90.1 69.9 9.0 80.6
Basic earnings per share (p) (24.4) 101.8 (157.5) 71.4 56.4 (11.6) 44.9
Dividends per share (p) – 40.0 – 40.0 35.0 4.5 12.3
ROCE (%) 4.4 25.5 2.0 18.8 18.0 4.1 20.9
Year-end mid-market share price (p) 348 1,078 348 1,078 1,420 917 1,100
1 Capital employed was restated in these years for the exclusion of deferred tax assets, and changes to IFRS 16 “Leases” in 2020.
2 In 2022, the process to measure the fair values of the assets and liabilities acquired was completed in respect of the Savage acquisition. The 2021 Balance Sheet was adjusted to reflect a
decrease in goodwill of £0.7 million as a result of adjustments increasing deferred tax assets by £0.5 million, increasing acquired intangible assets by £0.3 million, and increasing other creditors
by £0.1 million.
Strategic report Corporate Governance Financial Statements
233
Shareholder Information and Financial Calendar
Shareholder information
The Investors section of the Group website, videndum.com, contains
detailed information on news, key financial information, Annual
Reports, financial calendar, share price information, dividends and key
contact details. The following is a summary and readers are encouraged
to view the website for more detailed information.
Shareholder enquiries
The Company’s Registrar is Equiniti Limited.
Equiniti provides a range of services to shareholders.
Extensive information including many answers to
frequently asked questions can be found online.
Use the QR code to register for FREE
at shareview.co.uk
Equiniti’s registered address is:
Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA.
Alternatively you can contact the Group Company Secretary either by
phone on +44 (0)20 8332 4600 or email on info@videndum.com.
Share price information
The closing mid-market price of a share of Videndum plc on
31 December 2023 was £3.48. During 2023, the share price fluctuated
between £2.73 and £11.67. The Company’s share price is available on our
website with a 15-minute delay, and from the Financial Times website,
ft.com, with a similar delay.
Share scams
Shareholders should be aware that fraudsters may try and use
high-pressure tactics to lure investors into share scams. Information on
share scams can be found on the Financial Conduct Authority’s website,
fca.org.uk/scams, or via their consumer helpline:
0800 111 6768.
Annual General Meeting
The Company’s Annual General Meeting will be held at 9.00am on
Wednesday, 19 June 2024 at 116 Pall Mall, London, SW1Y 5ED.
Analysis of shareholdings as at 31 December 2023
Shares held
Number of
holders
% of
holders
Number of
shares
% of
shares
Up to 1,000 370 44.26% 124,456 0.13%
1,001 to 5,000 221 26.44% 530,798 0.56%
5,001 to 10,000 57 6.82% 391,831 0.42%
10,001 to 50,000 78 9.33% 1,864,709 1.98%
50,001 to 100,000 38 4.55% 2,748,273 2.92%
100,001 and over 72 8.61% 88,540,674 93.99%
Total 836 100% 94,200,741 100%
Institutions and
companies
288 34.41% 92,389,072 98.08%
Individuals including
Directors and their
families
548 65.59% 1,811,669 1.92%
Total 836 100% 94,200,741 100%
CBP00019082504183028
Printed by a CarbonNeutral® Company certified to ISO 14001
environmental management system.
Printed on material from well-managed, FSC® certified forests
and other controlled sources.
100% of the inks used are HP Indigo ElectroInk which complies
with RoHS legislation and meets the chemical requirements of the
Nordic Ecolabel (Nordic Swan) for printing companies, 95% of press
chemicals are recycled for further use and, on average 99% of any
waste associated with this production will be recycled and the
remaining 1% used to generate energy.
The paper is Carbon Balanced with World Land Trust, an international
conservation charity, who offset carbon emissions through the purchase
and preservation of high conservation value land. Through protecting
standing forests, under threat of clearance, carbon is locked-in, that
would otherwise be released.
Videndum plc
Bridge House
Heron Square
Richmond
TW9 1EN
United Kingdom
t +44 (0)20 8332 4600
info@videndum.com
videndum.com
Registered in England and Wales (no. 00227691)
Videndum plc
234
Annual Report and Accounts 2023
Back cover image: Chris Schmid
Videndum plc
Bridge House
Heron Square
Richmond
TW9 1EN
United Kingdom
t +
44 (0)20 8332 4600
info@videndum.com
videndum.com