Hello everybody. Yes, I'm Stephen Harrison, Chairman of Videndum PLC. I'm joined here today by our CFO, Sean Glithero, and we're going to take you through these half-year results. Thank you for coming. Before we get into the business of the day, I'd just like to talk about the structure of how we're going to move forward. Given that virtually everybody on this call is either a shareholder or a lender, we are not going to take questions at the end in an open forum. What we'd rather do is answer your queries on a direct basis. If you haven't already made an appointment with us to talk through this information, please do so and reach out to us, and we'll actually take you through everything to your heart's content, as it were. With that, can we move on to the next slide, please?
This is the agenda for the day. I'm just doing a quick overview here. I will then hand over to Sean to take you through the financial review. I'll then come back for the market update and just a heads-up on that. I want to talk about a point of inflection in the markets. We'll move on to operational actions, what we've been doing, and then finish off with a summary and outlook. Can we move on to the next slide, please? These are what we would call our key achievements in the first half here. They pretty much speak for themselves, but we are currently on track for GBP 15 million of savings in the full year for 2025. We've already achieved GBP 6 million of that, and our exit rate now at the end of 2025 annualized is now up to GBP 19 million.
Just a point on these savings, these are what you would call permanent savings. We would not expect to reinvest in the areas where we've taken this cost out as volume goes up. This is actually just elimination of duplication of work, duplication of offices, factories, everything else. We don't expect them to come back. The next issue is just a general point. Our order book continues to build. It's moving ahead quite well. Shipments are not following at the same rate, and it's mostly in the U.S. It's due to everything that's happened since April 2nd, and uncertainty around basically global trade and in particular North American trade. In terms of those tariffs that started coming out on April 2nd, we have passed those on in our pricing. We'll come back to that later, perhaps. The key point here is that it's not been very long.
It's not a great quantum. Just to say that our prices have passed through, and of course, that goes through to our distribution channels. The next thing to point out is that we did, as most people will probably know, raise gross equity of GBP 8 million in April 2025. That passed off very well. Clearly, discussions with our lenders are still ongoing, and Sean will cover that in much more detail. In terms of disposals, we did sell our Israeli business, Amimon, in April 2025. A key point is, though, that we retained the intellectual property on that, which is really where the value was, and that is now resident in our U.S. operations. The piece that we sold in Israel was really the R&D labs that we didn't have any real further use for.
Finally, and we'll see more of this as we go forward, we have restarted our new product introduction program that had been on hold for some time, with Manfrotto ONE. I'll come back to that later, but I do encourage you to have a good look at that. It was very successful and continues to upgrade prospects going forward. With that, we can move on to the financial review, please, and I will hand over to Sean.
Thank you, Stephen. I will first update on covenant and refinancing discussions before moving into the financial review of the first half of 2025. Next slide, please. As outlined back in April, we successfully reset our RCF covenants through to the end of the facility in August next year. Through this process, we did cap our drawings to a maximum of GBP 139 million, above which lender consent is required. We paused on the leverage and interest cover covenants until December 2025 onwards and put in place minimum liquidity and EBITDA covenants. We also said we would complete a refinancing or agree a deleveraging plan by October and would raise equity, and we raised that equity in April as Stephen outlined. Next slide, please. Where are we? All the minimum liquidity thresholds have been exceeded, and the June EBITDA covenant was also met.
We're looking ahead to the rest of the year, but we need an improvement in revenue run rates to pass the September and December tests. Despite a comprehensive outreach to potential lenders, we are unlikely to complete a refinancing of the existing debt prior to October 2025. We have found the macroeconomic environment, and particularly the U.S. tariff situation, to be weighing heavily on lender sentiment, and the gap between what we are seeking and what is being offered is just too large. We are therefore back to formulating a deleveraging plan and agreeing that with RCF lenders. We are in constructive dialogue on this with our existing lenders who remain supportive. The net result means we anticipate agreeing a significant amendment to the RCF this autumn. Next slide, please. Moving now to the financial review of the half with a summary on page seven.
We've adopted a three-column approach to highlight progression through the periods and what has been the challenging environment. At GBP 115 million, revenue was down 25% year- on- year compared to the first half of 2024. That included the previously disclosed pull forward of sales. Against the second half of 2024, the decline was just 9%. To better analyze the cost base, we have excluded the GBP 18 million of non-cash one-off charges booked in H2 2024 that we described in more detail at the full year 2024 results. Lower volumes impact gross margin through the underabsorption of factory overheads. At 35% for the first half, gross margin was down year on year. Through savings and efficiencies, we have been able to hold it flat against H2 2024. Good progress has been made on operating expenses that were down year- on- year and GBP 7 million lower than H2 2024.
Net finance expense has increased through higher average borrowings and higher margin, but also less FX gains. Operating cash flow was a small outflow similar to H2 2024, and from a year-on-year perspective, it mirrors the fall in operating profit before one-off charges. A free cash outflow of GBP 13 million includes interest, restructuring, and financing costs, but is before proceeds from the April equity raise. Next slide, please. The timing of the 2024 Paris Olympics benefited H2 2024, and excluding that, divisional revenue was similar to H2 2024 in the first half of this year. BMS is the most impacted by the seasonal uplift that comes with the Q4 gifting season, which is a factor in the GBP 4 million half and half decline. Tariffs led to uncertainty in Q2, which hit demand, particularly in the U.S., and Stephen will talk to that more later.
Moving on to the next slide in gross profit. Lower volumes and the timing of the Olympic contract were headwinds against gross profit progression. Through restructuring, related cost savings, and other operating efficiencies, gross margin was held at 35% of revenue in line with the second half of 2024. Next slide on operating expenses. Looking at the bridge on the left, we see further cost savings from the restructuring program delivered GBP 3 million, with an additional GBP 4 million coming from the smoother phasing of costs compared to 2024, where spend for the second half waited. Together, these reduce operating expenses as a percentage of sales to 41% compared to 43% in H2 2024. A good result in the context of revenue being 9% lower half and half. Next slide, please. The divisional split of revenue and operating profit is shown here on slide 11.
The split of revenue remains broadly consistent, with VMS contributing 50%, BPS 30%, and BCS 20%. If the Olympics impact is excluded, all three divisions, as well as corporate costs, improved on the H2 2024 operating loss. This is despite the revenue reduction, which put pressure on gross margin through cost absorption. The driver of these savings was restructuring activity and the focus on discretionary spend. The net result is that whilst there is more to come from operational efficiencies, the divisions are well positioned for profitable growth. Next slide, please. So far, I've talked to the result before adjusting items at an operating profit level. Looking at the full profit and loss account in statutory format, we had GBP 9 million of adjusting items as outlined in the box below the P&L. GBP 2 million is our regular amortization of acquired intangibles, with another GBP 1 million of non-cash impairment.
GBP 6 million relates to restructuring and other costs. Breaking this down further, there is GBP 2 million of refinancing costs relating to professional fees, and the rest of the GBP 6 million is essentially restructuring, mainly in respect to the previously announced projects by the relocation of manufacturing from Bury St Edmunds to Feltre, but also the planned closure of the Ashby-de-la-Zouch site and simplification of operations in the U.S. and China. Amimon was sold in April, and the sale, together with the predisposal trading losses, are accounted for within the discontinued operation line that shows a net GBP 3 million profit. GBP 5 million is the profit on disposal, which includes GBP 2 million of FX gains recycled from reserves, and these are offset by GBP 2 million of predisposal losses. The loss per share of 22 pence takes account of the additional shares following the equity raise in April. Next slide, please.
Turning now to cash flow on page 13, with depreciation and amortization constant, the change in operating loss period- on- period flows through to EBITDA. Positive working capital trade movement of GBP 5 million adds to the GBP 2 million EBITDA in the half as we focused efforts on reducing inventory to boost cash. Offsetting this is a non-working capital outflow and CapEx of GBP 5 million to give a small operating cash outflow similar to H2 2024. Below operating cash flow, cash interest is slightly higher in line with the P&L trajectory. Most of the interest spend was offset by tax receipts, including a refund of the EU state-aid claim that has taken four years to settle. Restructuring costs mainly relate to the cash unwind of the provision at the FY 2024 year-end.
Debt amendment and refinancing costs of GBP 5 million include the GBP 2 million refinancing costs taken to the P&L account and GBP 3 million of RCF amendment costs first booked to the balance sheet and then amortized over the remaining life of the RCF. Finally, moving now to net debt on page 14. Net debt opened the period at GBP 133 million. Adding to this was the free cash outflow of GBP 13 million and losses from Amimon predisposal trading of a further GBP 4 million. Cash receipts from the equity raise and the Amimon disposal reduced net debt by GBP 10 million. Positive balance sheet movements helped position debt to finish at GBP 138 million, just GBP 5 million above the starting position. Thank you. I'm now going to pass to Stephen to provide a market update.
Thank you, Sean. If we could pause on slide 15 for the moment. I just would like to, before we go into the rest of the pack here, I'd just like to give you a personal view. Some of you will know, many of you will know I joined this company fairly recently in the last year and a half, effectively. When I joined the company, it was pretty apparent that virtually everybody in the business was expecting our markets to turn up and turn up pretty sharply. I learned over the months that we are not alone in that as a company, but pretty much everybody in the various participants in these markets, our peer sets, have all been expecting the same thing. The problem has been, I think, or I know that everybody thinks that they will turn up sooner or later.
The problem with that assumption has been the sooner or later because projecting when they would turn up has been a massive problem for everybody, including this company. One of the reasons for that is there is not a lot of information that is out there that can actually provide you with a signpost of when it's going to happen. When you hear people saying in six months' time something's going to happen, I've decided that's a bit of a fool's errand. Doing forecasts on market inflection points, which is what we're talking about here, more than a reasonably short period of time out is extremely difficult and likely to be wrong. Forward forecasting of inflection points as opposed to trends is quite difficult in all the markets and, in fact, the niches of the markets that we serve in particular. However, I think that's about to change.
What's about to change is that it might be difficult to forecast an inflection in the future unless you're already in it. I suspect, and I'm going to show you the data, and you can make your own minds up on this, but I suspect we are in a point of inflection right now across our markets. With that, let's move on to slide 16. These following slides here, there's three of them in a row, four actually, but three of the different markets as we've categorized them externally that show you, I'll explain the graph itself. We're talking about orders here because there tends to be a bit of a disconnect between orders and revenue depending on all kinds of factors, including disruptions in the market and trade logistics and the like. Looking at actually what's happening, it's better to look at orders, I think.
We're showing you here quarterly orders. All of these graphs are on the same scale. You can see the relative contributions to the different markets. I'll comment about those as we move through it. This first one is what is currently our largest market exposure. It's what we call independent content creators. Just to point out, this does not map one-to-one with any of our divisions. The reason for that is actually all three of our divisions do sell into this market in one way, shape, or form. Arguably, our VMS division sells the most, but so do the other two. What we can say about this market is that end-user sentiment is definitely improving here. There's quite a lot of evidence about that. You can see the quarterly trend of our orders, but I'm talking about the sentiment of the users that our distribution channels sell to.
That's moving quite a bit faster, it appears, than our orders at this point because there is a lag coming through the distribution channels. One of the pieces of evidence is that the trade show size and the attendance of those trade shows are massively bigger than they were in prior years. That's accommodating the interest in this market. We've seen in the U.S. in particular shows that are three times the size in terms of attendance that they were last year. There are a lot of inbound inquiries about different kinds of product groups and markets. There's a lot of interest out there. If you back that up with a trend that's been going on for a couple of years now, at least, that's the so-called ILC growth, interchangeable lens cameras. They continue to show strong growth, particularly in the compact system cameras.
Year-to-date shipments to June are 22% up in these product areas compared to prior year. Now, why is that important for us? We don't actually do those cameras, but what we do do are the accessories and supports that go with those cameras. There is an attachment rate to them. There's a percentage of those sales that will come through to us. It's just a question of lag. We're seeing those cameras and lenses growing strongly, continuing to grow strongly. Therefore, we conclude that our orders will turn up. It's just a question of when. Now we're seeing the interest of the market growing as well. It would appear that we're right on the verge of getting more sales, more orders in this market. If we move on to slide 17, this is City and Scripps TV.
Now, this market is probably the most documented out there in terms of observers at it in the market, and it's quite well-defined. I think the strap line on this is that there is an increasing sign of pent-up demand. There's no doubt about that. We can see it in terms of the data that is being published, and it's happening here and now. If we look at new production starts in particular, whilst Q1 to Q2 increased by just 5%, if we look at the shooting days in Q2, particularly in the main market where this occurs, which is in Hollywood, Los Angeles area, what we see there is scripted TV and feature films have gone up 43% versus Q1. That is the largest quarter-on-quarter growth since 2019. It's quite a large pickup.
In Q3, and let's remember that Q3 is typically the peak season for shooting when you're doing feature films and scripted TV. People don't go home in August when they're in this industry. That's when they start shooting these things. Just to point about shooting, people can book studios, and this company has talked about studio booking sound studios going up. That doesn't necessarily mean it turns into business because it's quite cheap for production companies to just cancel the booking and pay a small penalty fee on that booking rather than commit to the big expense of starting shooting. Once they commit and start shooting, that's when the money flows. In fact, the money flows from those production companies through to the rental companies who are our distributing partners and then to us in a matter of four to six weeks after the shoots start.
That's the mechanics of it. What we see now in Q3, and of course, we're into Q3, is that the new production starts are forecasted for the quarter to be up 80% on Q2 2025. That would take, if you look at the details month by month here, which is also published, the July shoot days are the largest month that we see since 2021 and before. We only go look at data back to 2022. It is a massive increase. I think we could conclude July is already taking place here. This is live data. By the way, for those that are interested, this data comes from organizations like LA Film and SoloNet. Excuse me. This market generally is really starting to move from the end-user demand, and it's going to flow through distribution channels, and we're fairly sure then, of course, it will come to us.
The other point to note about this market is those sides of those bars, that's they're our orders. If you remember the size of the bars that were in the previous chart for ICC, these bars should be similar to the bars that you saw in ICC in terms of quantum, but they're much lower. That just shows you how depressed Sydney has been. Actually, the last five quarters, it's been a complete desert in this area and where it should be going in short order. There's quite a lot of growth available in this business. I'll repeat again, these markets turn very quickly, and when they turn, they turn hard. We look like we're at a point of inflection in both those markets. Moving on to chart 18. Chart 18 shows you the broadcast market.
Now, broadcast in reality is much, much larger than the Sydney and scripted TV market, but we aren't. I mean, we have quite a small set of niches in broadcast, and therefore, they don't necessarily follow the trends of the market at all, just the specific niches. The niches that we're in tend to be portions of the studio market, which is weak. In fact, linear TV and studios is on a long-term decline, it would appear. The sports and outside broadcast market has shown quite a bit of growth. We are just penetrating that at this point in time. It's not been an area of strength. Another area in broadcast that we moved into quite strongly is we have a new venture in public safety using our Teradek technology. We've got excellent traction. Now, just what is public safety? It's not military work.
It's actually for things like law enforcement agencies. The buzz term in the industry is situational awareness. What we do is stream the data pictures from the assets that they use: drones, fixed-wing aircraft, helicopters, and that's all collated centrally so that the law enforcement agency could see what's going on in real time when they're on top of an incident. That's a new market for us. It's a new market for most people. We're moving quite strongly in it, and we've got some good traction, and we expect that to grow in the years ahead here very, very fast. It's helped, of course, because the public safety markets in the U.S., thanks to the political movement over there, those budgets are going up quite fast as well. With that, let's go to slide 19. Excuse me. This is just to show geographically what's going on.
A key point out of this is, again, these are orders. You can see the North American order trend is going up. That doesn't match the revenues. That's partly an issue about the U.S., actually it's a lot of an issue about U.S. tariffs and shipments into the United States being held back and restrained. It looks like it's going to be ebbing in terms of shipments into the U.S. picking up here now because most people have got their heads around the tariff situation. They now understand how to get stuff in, legally I might point out, but without paying massive tariffs. It's all about how you code the stuff. You have to code it correctly, and you have to get it in from the right place. For us, there's a lot of uncertainty in the markets because of these tariffs, but they're settling down.
We think end-user demand in the U.S. is running well ahead of the sales that we have to our distribution channels. Just to point on that, there's not a lot of inventory in the United States at all. It's dry as a bone. The reason for that is that when these tariffs came in, our channels started using their stock and our U.S. stock, which, of course, was tariff-free at that point because they'd already been shipped in-country. Until people understood what was going to happen, basically, no more shipments into the U.S., and this ran stocks down in North America and in the United States. That's where we are now. It's bone dry. When you see orders pick up, it's going to flow through to us very quickly, and we need to be able to respond very quickly.
We've put in place steps so that we can turn very quickly. We've got long lead items under our control so that we can respond fast to that demand that is coming. Overall, the order book is continuing to build, which is good stuff. The U.S. tariffs have really caused a problem, but the markets seem to be recovering. If we could move to slide 20 and the operational actions. There's a lot of activity that's been going on, as you can imagine, given the situation that we find ourselves in. Let's look at chart 21. This chart's got a lot of information on it, and we could spend a lot of time if we chose to just on this chart. I'll just go on the headlines. I mentioned earlier about Manfrotto ONE. This isn't just about the product. The product is a new-to-world kind of product.
It's a hybrid that's brought together what traditionally was two separate markets for photographic and videography into one. That's because the users of the products are now combined photographers and videographers. It's not two separate professions, as it were. The fact that we've launched the first product into that new market is good for us. I think the other thing to understand is that we were pretty much on pause in this company in terms of introducing new products. Given that our product lifecycles are relatively short in the scheme of things in the world, new product introductions are the lifeblood of the company. Actually getting back into new product introductions is a very important step forward. As we see from the launches which we've done this year, that is actually happening now. The second main area is reinstating pricing discipline. That's what we said we were going to do.
We've achieved that and are achieving it. We've got not so much control of how you price the list price, but how you operate on discounting because we operate on discounting from a list price right across the world. That is now more centrally controlled rather than being at the whim of the local organization or salesman. Similarly, promotional spending. We do provide promotional spending to our channels. That's now coordinated and much more effective. From a structural standpoint, it's been really a lot of work on that. We've been closing manufacturing facilities. We've done two in the U.K. and consolidating them into other areas, into Italy and Costa Rica. We've restructured some of our Chinese operations, consolidating those. We've reduced our global overhead, and we've reduced it in areas where we will not put it back. Gross margin expansion has been something we've been pushing at very hard.
That's all about sourcing the components, getting better sourcing, better pricing on components, but also on services. You can imagine logistics services, warehouse services, and the like. It's been a big push to actually get the gross margin up. That is something that is a never-ending story. We will be doing that going forward for quite a long time. There's a lot of scope available on margin expansion. Irrespective of what the market demand is, we will be able to drive margin expansion going forward. Operating efficiencies, the consolidation and better utilization of manufacturing facilities naturally drives operating efficiencies, and that's what we're seeing. Our procurement processes are now in a better place. We've brought some specific professionals that concentrate only on that rather than it being a part-time job for somebody. We now focus on that. The final point here is our operating expenses.
When you actually have a lower headcount, people are not there. They don't turn on the lights because they're not there. They don't run the photocopier, and you get secondary effects from reduced headcount. That's coming through. We've improved the sourcing of third-party support. Let's call that consulting for want of a better word. Discretionary spending has been very much under the spotlight and will remain that way. Gone are the days of the fancy flights. We're now actually doing it much more efficiently. Can we move on to chart 22, please? This is just an illustration of the headcount projection. As you can see towards the right-hand side here at the end of this year, we're currently forecasting that we'll be down to just below 1,300 in headcount. Quite a strong move over these periods.
What I will say is not just on headcount, but on the cost savings and efficiency going forward, we're not at the end of the journey. There is still stuff we can do. We've obviously done the easiest stuff. It'll get more difficult as we go forward, but there is more to come. If we look at in this session, slide 23, this is our Manfrotto tripod, our Manfrotto ONE. I would encourage you to look at the online videos that are posted on the web. They're actually inside in the deck on page 32. There are links there, and you can go from a five-minute snapshot to almost an hour from different people evaluating the product and how it looks, feels, and comparatively how it stands up. It's very, very impressive, I would say. Let's just move on to the summary and outlook.
That's chart 24, and then 25, please. This is just a recap of the very first slide I started on, chart key achievements. I'm not going to read them through bullet by bullet again, but you can see from that that we're actually making quite a lot of progress under the things that we control. Clearly, the market demand out there has a life of its own. We seem to be at a point where, thankfully, there's an inflection going on. That brings me on to our final chart, which is chart 26. Here, this is our summary and outlook. It's exactly the same word for word as in the R&S. I won't read it out word for word, but just to say, there is an uptick going on out there. We will see that coming through.
We've got lots of efficiency and cost savings going on as to what we've been doing. The final point, I think, is that the range of outcomes, and this is in the final paragraph here, for this year at this point is quite large. It's larger than it would normally be because we have extremes of going up or down looking forward here. We don't really have a good view at this point in the year. We should have a much better view by the time we get to October, but right now, it's a limited visibility. Lots of volatility out there. It could be much better. It could be a little worse than where we were thinking originally. That brings us to the end of the presentation. There are some more slides in the appendix, but I'd like to just wrap it up there.
I would encourage people, if you haven't already made an appointment to see us, please do so. We will answer your questions that you have on a one-to-one basis. Thank you very much.