Vitec : Download the 2020 Annual Report

Enabling the capture and sharing of exceptional content

The Vitec Group plc

Annual Report and Accounts 2020

Strategic Report

2020 financial highlights 01

At a glance 02

Chairman's welcome 04

CEO review 06

Market trends 10

Our business model 12

Our people and culture 14

Employee engagement 16

Principal risks and uncertainties 18 Operational reviews:

Vitec Imaging Solutions 24

Vitec Production Solutions 28

Vitec Creative Solutions 32

Financial review 36

Responsible business 40

Business ethics 42

Employees 44

Community 50

Environment 52

Corporate Governance

Board of Directors 54

Chairman's statement 56

Nominations Committee report 68

Remuneration Committee report 70

Audit Committee report 72

Stakeholder engagement 78

Remuneration report 80

Remuneration Policy Report 83

Annual report on remuneration 92

Directors' report 111

Independent auditor's report 115

Financial Statements

Introduction and table of contents 122

Primary Statements 123

Section 1 - Basis of Preparation 128

Section 2 - Results for the Year 132 Section 3 - Operating Assets

and Liabilities 142

Section 4 - Capital Structure 152

Section 5 - Other Supporting Notes 161

Company Financial Statements 171 Glossary of Alternative Performance

Measures 180

Five Year Financial Summary 182 Shareholder Information and

Financial Calendar 183

View our reports and presentations online

www.vitecgroup.com

Front cover image captured by: Brandon Woodard, Creative Director, Vitec Creative Solutions

Capture. Share.

Vitec is a leading global provider of premium branded hardware products and software solutions to the growing content creation market.

Our customers include broadcasters, film studios, production and rental companies, photographers, independent content creators ("ICCs"), and enterprises.

We design, manufacture and distribute high performance products and solutions, including camera supports, video transmission systems and monitors, live streaming solutions, smartphone accessories, robotic camera systems, prompters, LED lighting, mobile power, bags and motion control, audio capture and noise reduction equipment.

We employ around 1,600 people in 11 different countries and are organised in three Divisions: Imaging Solutions, Production Solutions and Creative Solutions.

Image:RachidDahnoun

2020 financial highlights1 Revenue Adjusted operating profit*Statutory operating loss £290.5m Recommended final dividend per share £9.9m £-3.3m Down 22.8% Down 81.1% Down £35.3m 4.5p 20 £9.9m 19 £52.4m 18 £53.5m Net debt Adjusted operating margin*Statutory operating marginInterim dividend per share £90.8m 3.4% -1.1% 0.0p 20 19 18 £90.8m Down 1050 bps Down 960 bps £96.0m £103.4m Adjusted basic earnings per share* 9.0p Basic loss per share from continuing and discontinued operations Recommended total dividend per share -11.6p 4.5p (1) 2018 net debt has been restated and prepared under IFRS 16 "Leases" 20 19 18 9.0p Down 7.8pDown 56.5p 80.6p 93.2p *This report provides 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 improve 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 180 and 181.

Key points FY 2020 results as expected; H2 significantly outperformed H1 as markets started to recover having been only about 20% open in April when film and scripted TV productions shut down, sporting events postponed, professional photographers affected, and many retail outlets closed Many areas saw revenue growth vs 2019, including JOBY smartphonography accessories (+c.70%) and streaming products (+c.50%) with recurring revenue doubling £22.6 million FY 2020 cost reductions delivered vs FY 2019; completed the expanded restructuring in Imaging Solutions and delivered further operating efficiencies in Production Solutions Vitec is starting to benefit from the structural market changes that have occurred over the last 12 months as more video content is being created, consumed and shared than ever before Strong cash performance, high operating cash conversion* leading to net debt reduction Intend to repay CCFF early and to repay UK furlough proceeds Resuming dividend payments with a proposed final dividend of 4.5p per share We have had a strong start to 2021, with a record order book, even though our markets are only about 70% open *In addition to statutory reporting, Vitec 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 improve 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 180 and 181.

At a glance

Vitec's purpose is to enable our customers to capture and share exceptional content.

Our portfolio of market-leading brands encompasses a variety of technologies, designed and engineered to ensure that, whatever the conditions, the content creator has the best equipment to capture the moment.

These technologies range from traditional mechanically engineered products, for example manual camerasupports, through to electronics and software. Nonetheless, the user is the same - a content creator - who may be a broadcaster, film studio or production company, a corporate or religious establishment, operating as an independent business or a professional photographer or vlogger.

We sell our products globally via multiple distribution channels, our own sales teams, and through e-commerce via our own and third party websites.

Our core customersOur product categories and brands

Professional or hobby photographer/videographer, professional influencer and social media vlogger Broadcaster creating TV programmes, news or live sports in a studio or on location Production company and content creator making content for feature films, scripted TV shows and advertisements Enterprises, governments, healthcare providers, education establishments and churches, communicating with their employees, customers and communities

Our brands are leaders in the markets we serve, both in terms of premium products and market share. Our products typically attach to, or support, a camera - primarily for broadcast, cinematic, video, photographic and smartphone applications. Our products serve a wide range of end users and are offered as a cohesive package. Camera accessories - Teradek - Wooden Camera Bags - Gitzo - Lowepro Supports - Avenger - Manfrotto - National Geographic # - Gitzo - Sachtler - JOBY - Manfrotto - OConnor Video transmission systems - Teradek - Sachtler - Vinten Monitors - SmallHD Robotic camera systems - Camera Corps - Vinten Audio capture - JOBY - Rycote Prompters - Autocue - Autoscript Mobile power - Anton/Bauer Distribution, rental & services - Camera Corps - The Camera Store Motion control & stabilisers - Manfrotto - Syrp Smartphonography - JOBY IP video - Teradek Lighting & controls Live streaming - Teradek - Colorama - JOBY - Lastolite by Manfrotto Lens control systems - Teradek - Litepanels # Manufactured under licence

Our Divisions

Imaging Solutions	Production Solutions	Creative Solutions
Vitec's Imaging Solutions Division designs, manufactures and distributes premium branded equipment for photographic and video cameras and smartphones, and provides dedicated solutions to professional and amateur image makers, ICCs, professional influencers, vloggers and enterprises. This includes camera supports and heads, camera bags, smartphone accessories, lighting supports, LED lighting, lighting controls, motion control, audio capture and noise reduction equipment. Vitec's Production Solutions Division designs, manufactures and distributes premium branded and technically advanced products and solutions for broadcasters, film and video production companies, ICCs and enterprises. Products include video heads, tripods, LED lighting, batteries, prompters and robotic camera systems. It also supplies premium services including equipment rental and technical solutions. Vitec's Creative Solutions Division develops, manufactures and distributes premium branded products and solutions for ICCs, enterprises, broadcasters, and film and video production companies. It is made up of a number of brands that Vitec has acquired and includes Teradek, SmallHD, Amimon, Wooden Camera and RTMotion. Products include video transmission and lens control systems, monitors, camera accessories, live streaming solutions and software applications. Read more about Imaging Read more about Production Read more about Creative Solutions in the operational review on page 24 Solutions in the operational review on page 28 Solutions in the operational review on page 32 £156.7m £80.1m £53.7 m Revenue: down 20.3% Revenue: down 28.4% Revenue: down 20.7%

Our global footprint

US

Israel

China

Japan

2020 revenue

Costa Rica

Singapore

US

Israel

China

Japan

Australia

New Zealand

Costa Rica

UK

Singapore

Germany

Italy

North America: 44%

Europe: 35%

APAC: 19%

Australia

Rest of the world: 2%Total:

100%

New Zealand

Vitec manufacturing, R&D and procurement sitesDistribution sites

Chairman's welcome

Dear Shareholder

2020 was a year like no other for our employees, shareholders, customers, suppliers and wider society in general. At the time of writing, while our end markets have started to recover, it is clear that the COVID-19 pandemic is set to continue until a widescale vaccination programme is well progressed across the globe and as a consequence, there will be some continuing impact upon Vitec. Our thoughts are with those who have been directly impacted by this disease and we are immensely grateful for the efforts of all front-line workers.

Vitec's end markets were significantly impacted from March 2020 onwards. In April 2020, we estimated that only 20% of our end markets were open and a significant number of our sites closed, with employees either working remotely or being placed on furlough. A clear priority has been to protect the health and wellbeing of our people, and once the impact of the pandemic became clearer, we introduced stringent guidelines and sites were reopened but with strict adherence to social distancing and safety measures. The Board worked closely with the executive management team to look after our people and to ensure the financial wellbeing of the Company, meeting more frequently to coordinate Vitec's response. Our main goals in 2020 were to deliver an acceptable financial performance, preserve the long-term capabilities of the business and maintain the trust of our stakeholders. On reflection, the Board and I believe that the management team has navigated the Company well through this unprecedented period, achieving these goals and ensuring that we are well placed to take advantage of growth opportunities as our markets fully reopen.

While 2020's financial performance was significantly impacted by COVID-19, the Company achieved a small adjusted profit for 2020 and delivered strong operating cash flow, reducing Group net debt compared to 2019. This is an exceptional outcome and was achieved while ensuring that the Company remains well placed to take advantage of future growth opportunities.

During the pandemic, the Board has not been able to function as normal, with all of our meetings held remotely. Despite the obvious drawbacks, the Board performed very well. We conducted an internal Board performance evaluation at the end of 2020, and we are confident that the Board continues to operate to high standards. Full details are in the Governance section of this Annual Report. We aim to conduct an externally facilitated Board evaluation in 2021. Due to the pandemic, we were not able to physically visit our sites and meet our people, however we continued to maintain close contact with the senior leadership team and are looking forward to getting out to our businesses when we are able to do so.

Key measures to deal with the pandemic included the need to cancel the 2019 final dividend and 2020 interim dividend. Whilst this was disappointing, it was entirely appropriate to ensure the financial wellbeing of the Company. We have announced that we are to reinstate a final dividend for 2020 of 4.5 pence per share, that subject to approval at the AGM on 6 May 2021, will be paid on Friday, 14 May 2021. We rigorously controlled the cost base of the business to ensure it remained aligned with the reality of performance, protecting R&D investment to be able to benefit from growth opportunities as markets reopened. We accessed Government furlough schemes to protect the long-term capabilities of the business, and we also took advantage of the UK Government's Covid Corporate Finance Facility ("CCFF"). We have agreed to repay the CCFF money early in March 2021 and will also repay the UK Government furlough money. The Board and senior leadership team waived a percentage of their 2020 salary in response to the pandemic. In addition, we agreed revised covenants for 2020 under our £165 million Revolving Credit Facility with our existing banks, who remain unanimously supportive.

I maintained close dialogue with several of our major shareholders during 2020 to discuss first-hand the response to the pandemic, business recovery and strategy. I will continue to do this in 2021.

Despite the challenges presented by COVID-19, the Board remained focused on the strategic direction of the Group, including key growth opportunities around 4K/HDR products and live streaming solutions. We have a robust balance sheet, our market drivers remain intact and we are seeing recovery in our end markets. We believe that the Company is well positioned to take advantage of the increased demand for content as circumstances improve; Vitec has an agile business model and is able to respond swiftly to emerging or accelerated market trends.

The Board makes succession planning a priority, including developing the management team to build for the future. As a great example of this, and as reported in last year's statement, Martin Green became Group Finance Director on 10 February 2020, following a detailed search process. It has been a baptism of fire for Martin, given the impact of COVID-19, however I am delighted to report that Martin settled into the role very well and has been pivotal in steering the Company through this unprecedented period. There were no other changes to the Board in 2020.

Vitec has a clear purpose and strategy, and integral to delivering this is being a socially responsible company which demonstrates strong governance and ethical behaviour. These behaviours are well embedded within the organisation and are closely monitored by the Board. One focus in the year ahead will be to enhance the monitoring and reporting of our sustainability initiatives, as well as setting new ESG targets. We will report on this during 2021, on our website and in detail in 2021's Annual Report.

Details regarding our 2021 AGM are included in the accompanying AGM Notice.

In conclusion, the Board and I would like to sincerely thank the Group's employees for their efforts and sacrifices during this most challenging of years. Thanks to the fantastic response of our people, the Company is well placed for the future.

Ian McHoul Chairman

25 February 2021

Image:DaleCampbell

Investment case

Vitec is a strong, agile business and the Group's market-leading brands, operational excellence and sustained technology innovation make us uniquely positioned to take advantage of the growing content creation market and to deliver long-term value to our shareholders.

Content creation market will return to growthRobust financial position, long-term financing and short-term flexibility

Well positioned for medium-term organic growth post COVID-19

Market-leading brands with premium pricing, increasing technology capability

M&A opportunities

Our strategy for long-term growth and value creation remains just as relevant as it was before the pandemic

CEO review

Stephen Bird Group Chief Executive

Strategic priorities Our strategic priorities remain unchanged. 2021 will be a year of recovery and investment, and we believe that our markets will grow faster longer term than we previously expected and that we will deliver strong margin recovery. Organic growth We leverage our premium brands by investing in faster growing market segments. We launch innovative new products, expand our geographical reach, and maximise our distribution and digital channels to get closer to our customers and increase market share. Our experienced people and agile organisation allow us to adapt swiftly to changing market trends. Margin improvement We are focused on improving our operating profit margins by optimising our manufacturing and assembly portfolio, by improving productivity, by growing our higher margin e-commerce channel and Creative Solutions Division, and from capturing synergies from acquisitions. M&A activity Although we did not complete any acquisitions in 2020, we continue to review opportunities which could expand our addressable markets and further increase our technology capabilities.

Image:PaulZizka

2020 was a tough year and COVID-19 clearly had a significant impact on our financial performance. We acted swiftly to protect our people and our financial position, while preserving the long-term capabilities of the business.

2020 was a tough year and COVID-19 clearly had a significant impact on our financial performance. We acted swiftly to protect our people and our financial position, while preserving the long-term capabilities of the business. This was achieved thanks to the outstanding hard work of employees across the Group.

Our response to the COVID-19 pandemic

COVID-19 significantly impacted customer demand from March onwards, with film and scripted TV productions shut down, sporting events postponed, professional photographers affected, and many retail outlets closed. Markets began to recover in H2 and our performance significantly improved compared to H1. We estimate that our markets were only c.20% open in April but had recovered to be c.70% open by the end of the year.

We implemented significant and far-reaching mitigating actions to cut costs and manage cash, incremental to restructuring and other ongoing efficiency savings. The benefit was to reduce costs by £22.6 million versus 2019. The majority of these costs will return, but in a phased and controlled manner, as trading conditions continue to improve. We used government support globally where possible to limit making permanent headcount reductions. We received £2.8 million from these schemes (£1.2 million from the UK furlough scheme, which in 2021 the Board decided to repay). The Group has largely protected R&D investment and continues to develop world leading products to maximise our future growth potential. Gross R&D spend in 2020 was £20.3 million versus £23.1 million in 2019 (7% of revenue in 2020 versus 6% in 2019).

Our logistics hubs remained open throughout the pandemic; and although all of our manufacturing sites were closed for short periods of 2020, all of them are now operational.

The response of our teams has been outstanding. We have worked hard to safeguard our people while ensuring that our operations have been able to continue. We developed and executed comprehensive operating guidelines and internal communications plans to inform, reassure and retain the trust of our employees. The Group has worked with its manufacturing teams and followed Government guidelines to put stringent health & safety and social distancing measures in place.

2020 financial performance

Revenue decreased by 23% to £290.5 million (2019: £376.1 million), resulting in adjusted operating profit* of £9.9 million (2019: £52.4 million).

Revenue declined by 10% in H2 at constant currency versus 2019, which was significantly better than in H1 (37% decline), despite the second wave of the pandemic in the last few months of 2020. Adjusted profit before tax* of £5.5 million was £42.5 million lower than the prior year (2019: £48.0 million). Adjusted basic earnings per share* was 9.0 pence (2019: 80.6 pence). Strong operating cash conversion was a record 257%.

Net debt at 31 December 2020 was £5.2 million lower than at 31 December 2019 (£96.0 million) and £16.6 million lower than at 30 June 2020 (£107.4 million). We consider this a strong performance given the impact on our business from COVID-19.

Liquidity at 31 December 2020 totalled £143.2 million; comprising £122.3 million unutilised RCF, £17.3 million of cash and £3.6 million unused overdraft facility. As previously announced, the Group has drawn down £50 million of the CCFF, which is to be repaid during March, earlier than planned, given the strong cash generation in 2020.

Market and strategy update, and medium-term prospects

Our markets are recovering well, our end market drivers remain intact and we have seen many areas of growth. More people have become accustomed to communicating via video and watching more video content on subscription platforms, and we believe that the demand for, and investment in, original content (e.g. films, scripted TV shows, live news, sport, videos and photos) will continue to grow. This benefits Vitec as our market-leading technology enables people to capture and share content.

In addition, we are investing to benefit over time from the substantial opportunities that exist as a result of the structural changes to our market. In the medium-term, we believe that our Total Addressable Market has expanded, mainly due to our ability to serve the streaming market. This has grown strongly during the pandemic, the high end enterprise segment has doubled in the last 12 months, and this represents a significant growth opportunity for us. Video communication has grown exponentially driving demand for our streaming solutions. More content has been consumed on subscription channels like Netflix and Amazon Prime and when production sets reopen we expect original content creation to grow dramatically driving demand for our video transmission and monitoring systems. Further automation of TV studios to ensure safe distancing will benefit our robotic camera systems and voice-activated prompting solutions, and vlogging, social media usage and homeworking has increased, with more people using smartphones and compact system cameras to create content using our JOBY products.

We continue to make good progress delivering our strategic objectives and although 2021 will be a year of recovery and investment, we believe our markets will grow faster than we previously expected.

Organic growth

We have broadly maintained our R&D investment to leverage our premium brands in the faster growing market segments.

Imaging Solutions - we expect to recover well and are focusing on continued growth in the higher margin e-commerce channel and JOBY smartphone and compact system camera accessories, as well as new audio and motion control products.

We expect a recovery of the professional, high end photographic segment (c.55% of our Imaging Division's revenue), driven by the reopening of studios and rental houses. In addition, 2020 releases of higher value compact system cameras target the professional market, thus benefiting Vitec's premium brands versus lower quality competitors. The entry-level (hobbyist) camera segment is declining, and this impacts our low end photo supports and bags (c.20% of our Imaging Division's revenue). However, we expect continued growth from JOBY, with premium products used by professional vloggers, YouTubers and podcasters, along with growth in our B2B, motion control and audio capture products, to offset this decline. We expect the transition to the higher margin e-commerce channel to continue in the short to medium-term and we have already restructured the Division to benefit from this continued change.

2020 saw the launch of numerous new products, including a new line of Manfrotto handheld stabilisers, which sold out within two weeks of the October 2020 launch, and new Rycote stands and grips for audio professionals.

During 2021, production of some of the flagship JOBY GorillaPod products will be brought in-house to our automated facility in Italy from China. The "Made in Italy" stamp differentiates us from our competitors, gives us greater control of the design and manufacturing process, improves customer service, has a lower environmental impact, is cost competitive, and enables us to capture the manufacturing margin. We will continue to target further operational improvements across the Division.

CEO review (continued)

Production Solutions - we expect a strong recovery and are focusing on products for on-location news and rescheduled sporting events, as well as robotic camera systems and voice-activated prompting to enable safe distancing in studios.

TV and news productions continue globally, and safe distancing and continuing cost pressures in studios and at live events should benefit remote controlled products such as robotic camera systems and voice-activated prompting, although short-term equipment budgets could be constrained. We also expect to benefit from growth in LED lighting and mobile power for the broadcast, cine and ICC segments, as well as the rescheduling of major sporting events from 2020 to 2021.

During 2020, we launched a significant number of new products, including Sachtler's revolutionary aktiv fluid head and the largest ever expansion of Anton/Bauer's battery range. In addition, our Litepanels brand won an Emmy Award for its pioneering engineering development and creativity in LED lights for television production.

Creative Solutions - we expect a strong bounce back from the increasing spend on original content, although the exact timing is uncertain. We are focusing on the 4K/HDR replacement cycle and the significant new streaming opportunity in both the cine and enterprise markets.

We expect the volume of new cine productions and scripted TV shows to increase once production sets reopen, and therefore spending on equipment should recover quickly. The potential shift from large blockbuster films to smaller budget scripted TV productions is a positive trend for Vitec as it will mean a greater volume of productions.

2020 saw the launch of our new SmallHD 4K/HDR Production Monitors, which completed the end-to-end 4K/HDR workflow of wireless video products for the cine market. Despite the temporary closure of many film sets during the pandemic, these products have been well received. Although short-term sales have been impacted by the pandemic, we remain focused on the significant multi-year opportunity to replace the installed base of HD transmitters and receivers.

In February 2021, Creative Solutions received two Oscars (Scientific and Engineering Awards) from the Motion Picture Academy of Arts and Sciences, for the development of the Teradek Bolt wireless video transmission system and the Amimon wireless chipset technology that is incorporated within the Bolt. These awards reflect the team's technological expertise which has changed the way video content is produced. The development and distribution of Amimon's unique technology inside the rugged Teradek Bolt has freed video cameras from the restriction of long and tethered cables, allowing creatives to deploy cameras in an entirely new and dynamic way.

The pandemic is driving fundamental and lasting structural changes to the cine market to enable safe productions and social distancing on set. This change includes growth in live streaming, more remote monitoring and remote production, and "back to work" legislation mandating more monitors on set. Throughout 2020, Teradek and SmallHD provided solutions to get cine customers back to work by enabling the collaboration of off-set personnel, post-production workflows and greater distance between crew on set.

2020 saw an exponential growth in the streaming of video across all industries to facilitate remote working. A wide range of customers, including enterprises, governments and schools, used Teradek's market-leading live streaming solutions to maintain communications with their employees, customers and communities during lockdowns. We believe that many forms of remote working will remain post-pandemic and are focusing our resources to invest in incorporating Amimon's unique technology to develop a patented, high quality, low latency, premium video streaming solution.

Margin improvement

We will continue to optimise our manufacturing and assembly portfolio, improve productivity, grow our higher margin e-commerce channel and Creative Solutions Division, and capture synergies from acquisitions.

M&A activity

Although we did not complete any acquisitions in 2020, we continue to review opportunities which could expand our addressable markets and further increase our technology capabilities. We feel well positioned to make opportunistic acquisitions that will strengthen our position in the longer term.

Outlook

Our markets are recovering well, our end market drivers remain intact and we have seen many areas of growth. We are investing to benefit over time from the substantial opportunities that exist as a result of the structural changes to our market:

• - Video communication has grown exponentially driving demand for our streaming solutions

• - More content has been consumed on subscription channels like Netflix and Amazon Prime and when production sets fully reopen we expect original content creation to grow dramatically driving demand for our video transmission and monitoring systems

• - Further automation of TV studios to ensure safe distancing will benefit our robotic camera systems and our voice-activated prompting solutions

• - Vlogging, social media usage and homeworking have increased with more people using smartphones and compact system cameras to create content and communicate via video using our JOBY products

We have had a strong start to 2021. Although there remains some uncertainty about the duration of the impact of COVID-19 and FX is an increasing headwind, our confidence that underlying trading conditions will continue to improve has increased. 2021 will be a year of recovery and investment, but we believe our markets will grow faster in the longer term than we previously expected, and that we will deliver strong margin recovery.

Approval of Strategic Report

We have provided information in this report on our strategy, business model and objectives. You will find the Strategic report on pages 1 to 53 and its content has been approved by the Board.

Stephen Bird

Group Chief Executive 25 February 2021

Image:BenjaminBrandon

Market trends

The content creation market is a dynamic market that has transformed over the past decade and is continuing to change. Technology innovation, social media and remote working have driven the "democratisation" of content creation and consumption, and a sustained demand for new and replacement products.

10

1 2 Multiple new image capture devices Pro me Imaging technology has continued to improve. Many different devices now enable customers to create content. Grow strea in a s cons In the cine and broadcast markets, most cameras now film in at least 4K and have high quality recording capabilities. In the professional photography market, many cameras can shoot video as well as stills. The transition from traditional DSLR to compact system cameras ("CSC") has become clearer, and most of the traditional manufacturers have launched new CSC flagship models which have become the technology of choice for professional content creators. Creat platfo to bu their allow to moContinued technology enhancements mean that mirrorless cameras, drones, action cameras and smartphones have been adopted by customers to complement or replace traditional DSLRs. However, small viewfinders make it difficult to monitor the shot and poor audio deteriorates the video experience. In ad platfo Amaz spen enco platfo prod This indep requi This has opened up further opportunities for Vitec to develop innovative products. Creative Solutions has led the market with daylight viewable monitors from SmallHD. Imaging Solutions has developed a comprehensive range of products designed for use with CSCs such as Manfrotto gimbals, a new generation of Syrp robotic heads, JOBY compact tripods, lights and microphones for smartphones and CSCs, alongside well established Manfrotto Befree and Gitzo Traveler tripods. Our p need and i equip JOBY Litep Terad syste on se Esti cont 14000 CAG $4.7b 0 19 Net Source:

3 liferation of new dia platformsGrowth in streaming and remote video transmission th in new media and third party ming applications has resulted ignificant increase in video umption, and thus video creation. Growth in transmitting data, video and images through Ethernet, Wi-Fi, cellular networks or proprietary video networks. ives must deliver content to more rms and devices than ever before ild brand awareness and retain audience. Free streaming platforms content creators to stream live bile devices and computers. COVID-19 saw an exponential growth in the streaming of video across all industries to maintain communications, using streaming products to facilitate remote working. dition, online subscription rms such as Netflix and on Prime continue to increase ding on original content. To urage subscriptions, these rms have invested in high value uctions akin to traditional films. has driven the growth of smaller endent producers who typically re more affordable products. For example, professional content creators working from home for the first time required remote streaming with high image quality, low delay and robust security for post-production. And governments, enterprises, schools and businesses also needed to communicate with their communities, customers and employees. roducts are designed to meet the s nclude a wide range of mobile ment such as Manfrotto and tripods and monopods, and anels and JOBY portable lights. ek's wireless video transmission ms are used to monitor video t as well as remotely. of these ICCs and companies, ated $bn spend on original ent creation 2019-2024: R 20% $11.7bn $8.8bn $10.3bn $7.3bn $6.0bn Teradek saw a substantial increase in the sale of streaming software and solutions and has introduced new and improved products at both the high end professional and low end ICC price points. We believe that many forms of remote working will stay post-pandemic and are investing further in our streaming solutions to meet this need, especially targeting the professional remote workflows that can not use consumer grade applications like Zoom. We are also transferring the Amimon zero delay technology to other vertical markets - for example, medical, education, governments, houses of worship and e-sports, which increasingly rely on high quality, secure, zero or low delay video transmission. 20 21 22 23 24 ixHulu AppleAmazon Prime 2020 S&P Global Market Intelligence

Image:DanielKordan

COVID-19 impacted the Group's end markets significantly at the start of the pandemic. However, our markets are recovering well, our end market drivers remain intact and we have seen many areas of growth. More people have become accustomed to communicating via video and watching more video content on subscription platforms, and we believe that the demand for, and investment in, original content (e.g. films, scripted TV shows, live news, sport, videos and photos) will continue to grow. This benefits Vitec as our market-leading technology enables people to capture and share content.

In addition, we are investing to benefit over time from the substantial opportunities that exist as a result of the structural changes to our market. In the medium-term,we believe that our Total Addressable Market has expanded, mainly due to our ability to serve the streaming market. Video communication has grown exponentially driving demand for our streaming solutions. More content has been consumed on subscription channels like Netflix and Amazon Prime and when production sets reopen we expect original content creation to grow dramatically driving demand for our video transmission and monitoring systems. Further automation of TV studios to ensure safe distancing will benefit our robotic camera systems and voice-activated prompting solutions, and vlogging, social media usage and homeworking have increased with more people using smartphones and compact system cameras to create content using our JOBY products.

4 5 6 Changes in distribution channels Further technology innovation Continued growth in digital distribution channels and online retailers. The pandemic accelerated the transition to the e-commerce channel and Vitec continued to grow direct sales through our own websites as well as through pure e-tailers such as Amazon and JD.com, and established outlets such as B&H Photo and Video who also have a strong online presence. 4K/HDR resolution adoption has increased rapidly, with Netflix, Amazon, Sky and Apple all offering 4K Ultra HD streaming services, and advances in 5G, Artificial Intelligence ("AI") and Virtual Reality ("VR") are revolutionising amateur photography. As a result, there has been further consolidation among photo speciality stores and consumer electronics outlets; in parallel, new routes to market have opened up, for example, telecoms resellers for JOBY, and B2B for education and training, corporate and medical applications. As adoption grows around the globe, studios and video cameras are being upgraded with new technology resulting in increased demand for our high end products and software to accommodate the new formats. Imaging Solutions and Creative Solutions have adapted to the change in distribution channels by transforming their digital and e-commerce capabilities. In 2020, approximately half of Imaging Solutions revenue came from online platforms, and Creative Solutions direct e-commerce and Amazon sales grew significantly in the year. The adoption of 4K/HDR video technology in DSLRs, CSCs and prosumer video cameras is attracting a growing number of creatives who can now produce high quality visual content in either still or motion picture formats with highly dependable, portable and affordable equipment. This positive trend is expected to further consolidate with the evolution of 4K into 8K technology. In 2020, Vitec launched the world's first 4K/HDR zero delay wireless video eco-system for the cine market including SmallHD monitors. We also launched Manfrotto fast deployment video tripods and multiple new smartphone and CSC accessories under the JOBY brand to enhance photo/video capabilities.

iting and unusual tent ent creators are increasingly on novel viewing angles pture innovative and entiated content. ional broadcasters and sports holders, such as the Olympic dcasting Services, welcome pportunity to feature original . This can enable them to entiate their content from other casters and to increase viewing s. Dynamic, untethered camera ment is required to achieve This has become even more rtant during the pandemic with ed or no live audiences. crews need to be able to deploy equipment quickly and efficiently CCs are keen to deploy new such as sliders, gimbals and s to make their content more sting by using, for example, apses and hyper lapses. has pioneered the use of alist cameras in sports events e Olympic Games and we are alising on Rycote's audio expertise velop innovative audio products. s carbon fibre flowtech tripod is lar for electronic news gathering ith ICCs as it allows much faster asier camera deployment. In , we also launched the Sachtler fluid head which, together with ech, enables camera operators pture the widest range of shots shortest time. In 2020 we the first company to launch an ated system of gimbal supports. 11

Exciting and unusual content Content creators are increasingly keen on novel viewing angles to capture innovative and differentiated content. Traditional broadcasters and sports rights holders, such as the Olympic Broadcasting Services, welcome the opportunity to feature original shots. This can enable them to differentiate their content from other broadcasters and to increase viewing figures. Dynamic, untethered camera movement is required to achieve this. This has become even more important during the pandemic with reduced or no live audiences. News crews need to be able to deploy their equipment quickly and efficiently and ICCs are keen to deploy new tools such as sliders, gimbals and drones to make their content more interesting by using, for example, time lapses and hyper lapses. Vitec has pioneered the use of specialist cameras in sports events like the Olympic Games and we are capitalising on Rycote's audio expertise to develop innovative audio products. Vitec's carbon fibre flowtech tripod is popular for electronic news gathering and with ICCs as it allows much faster and easier camera deployment. In 2020, we also launched the Sachtler aktiv fluid head which, together with flowtech, enables camera operators to capture the widest range of shots in the shortest time. In 2020 we were the first company to launch an integrated system of gimbal supports.

Our business model

Our experienced teams, clear strategy, premium brands, efficient supply chain and global distribution focus on delivering long-term value to our shareholders, outstanding products and service to our customers, and rewarding careers for our people.

Structured for long-term growth and value creation:

How we create value:

Clear strategy

Our strategy is focused on delivering long-term growth and margin improvement. We consider how key strategic decisions will impact our stakeholders and the environment, and you can read more on this in the Governance report on pages 78 and 79.

Our structure

Our structure is agile and lean with only two layers - Group and Divisions. This enables focused decision-making and allows us to react quickly to customer, market and technological changes. Our three Divisions focus on the different needs of our customer segments. They are decentralised and entrepreneurial but work with a global mindset in specific areas, where it makes sense to share our capabilities to benefit our stakeholders.

Robust Group governance

At Group level, we create value by setting and monitoring strategic plans, budgets and forecasts, managing treasury and tax, health and safety, and assessing risk. The team ensures that a robust governance framework, policies and procedures are in place to ensure a strong culture and ethical behaviour, as well as managing acquisitions and disposals, corporate reporting and investor relations.

People, communities and culture

We work across the Group to ensure that we have consistent policies and processes in place to acquire, engage and retain our best talent. We focus on supporting the communities we operate in and further reducing our impact on the environment.

Section 172

Under the 2018 UK Corporate Governance Code and The Companies (Miscellaneous Reporting) Regulations 2018 there is a requirement for the Board to understand the views of the Company's key stakeholders and to describe how those interests and the matters set out in Section 172 of the Companies Act 2006 have been considered in Board discussions and decision-making. Section 172 imposes a duty on a director to act in a way that he or she considers, in good faith, to be most likely to promote the success of the Company for the benefit of its members as a whole. Further information on how the Board engages with its stakeholders is set out in the Governance report on pages 78 and 79.

Market knowledge and customer insight

Designing innovative products to make our customers' lives easier is what drives us. Our Divisions continually obtain customer feedback on market trends, competitors and their products, as well as from research.

Our long-standing and extensive market expertise enables us to remain close to our customers, anticipating and responding to developments to ensure that our brands remain at the forefront of the industry, renowned for their premium offerings and innovative technology.

See page 24 for more on our Imaging Solutions Division

See page 28 for more on our Production Solutions Division

See page 32 for more on our Creative Solutions Division

Image:RachidDahnoun

Innovative product developmentSourcing and manufacturing excellence

Distribution and routes to market

For a business like Vitec, intelligent and sustained investment in new products, technologies, markets and people enables us to retain our market-leading positions and create value in the future.

Focused on safety, quality, efficiency, sustainability, cost and on-time delivery, sourcing and manufacturing excellence is one of Vitec's core competitive strengths.

We market our products and services through our own sales and marketing teams.

Our experienced, specialist engineers apply new technologies, products and materials to develop high quality, high performance solutions. Our innovative products are protected by patents and trademarks and marketed under our world-renowned brands.

Our supply chain is efficient and 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.

The majority of our sales are conducted via a global network of distributors, dealers, retailers and e-tailers who sell on to customers. The breadth of our product portfolio and our strong brand heritage means that our network of channel partners is unrivalled in the markets we serve.

We produce the majority of our products in-house and work with selected, market-leading partners for specialist solutions. We supplement in-house new product development with carefully selected acquisitions or partnerships in new markets and technologies.

The majority of our operations are relatively low-volume, small-batch processes and our continuous improvement culture enables us to optimise our global operations to maximise quality, service and efficiency, while reducing costs.

We continue to expand our growing digital and e-commerce capabilities, working closely with our customers and suppliers to develop our online presence. This has been accelerated due to the COVID-19 pandemic.

Going forward, we will have a greater focus on product sustainability; for example our Imaging Division has made sustainability a pivotal part of future product development, which includes making extensive use of recycled packaging and textiles.

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.

Our people and culture

Vitec's clear strategy, simple structure and entrepreneurial culture allows us to adapt quickly to changing markets, constantly innovating to make our products the best in the world.

Our people are key to Vitec. Their attitude and abilities, experience and market knowledge, talent and commitment create a culture that supports product excellence, creativity and integrity.

The Group has a decentralised structure with three Divisions, which allows us to react quickly to customer, market and technological changes. This, together with our entrepreneurial culture, enables focused decision-making and minimised bureaucracy.

Response to COVID-19

Throughout the pandemic, our priority has been to protect the health and wellbeing of our people and to ensure a safe working environment so our operations can continue.

We developed and executed comprehensive operating guidelines and internal communications plans to inform, reassure and retain the trust of our employees, and we worked with our manufacturing teams and followed Government guidelines to put stringent health & safety and social distancing measures in place. We implemented a wide range of measures, including enhanced hygiene protocols, homeworking, split shifts and social distancing in the workplace. We used Government support globally where possible to limit making permanent headcount reductions to preserve the long-term capabilities of the business.

Employee Survey

Our employees are critical to our success. Passionate, engaged and skilled employees in safe working environments positively contribute to our strategy, performance and reputation.

In May 2020, we conducted an all employee survey to help gather direct feedback from employees on how the Company was responding to the COVID-19 pandemic. Feedback was overwhelmingly positive demonstrating that our employees are highly engaged and very supportive of the Group. Further details can be found on page 17.

Employee Assistance Programme

During the year, we introduced a new wellness programme for all employees and their direct families to help resolve financial, legal, physical and psychological issues. This is a confidential and free service delivered by a third party company and is accessible 24 hours a day, 365 days a year. It includes counselling sessions, practical guidance and support on legal, financial, family and work matters, as well as online health and wellbeing resources such as videos, podcasts and downloads.

Development, succession and retention

We monitor and improve areas that are important to our people, ensuring that we have consistent policies and processes in place 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 and retain talent, and remain competitive globally. Participation in our Sharesave Scheme is excellent and demonstrates close alignment between our employees and shareholders.

Learning and development is encouraged in line with personal development plans, annual performance appraisals and organisational need. Reviews of senior employees include succession planning matrices to understand the organisation's capacity and capability for achieving its strategic plans. We encourage inter-company recruitment between Divisions, including the Group Head Office. Senior management communicates with employees on a regular basis, keeping them informed of strategy and business performance at a Group, Divisional and regional level.

After four years with Vitec, I was given the opportunity to lead the Manfrotto communications team. This is the first time I've been in a working environment that inspires me and where I discover new skills and opportunities every day. I am delighted to be part of an incredibly motivated team.

Martina Testarmata

Communications Manager Video, Vitec Imaging Solutions, Cassola, Italy

Working at Amimon for the past three years, I have had the opportunity to learn from the best, most creative and innovative Engineers and to develop Algorithms that directly affect the user's experience of Creative Solutions products. Exciting times are ahead of us as we develop new technology aimed at new markets.

Dvir Olansky

Algorithms Design Engineer, Vitec Creative Solutions, Israel

After five years at Wooden Camera, most recently as the Director of Marketing Strategy, I was thrilled to be tasked with developing a new e-commerce department for the Creative Solutions Division. To work remotely this past year and build a team based on talent not location, has been a privilege.

Kaitlin McNaughton

E-Commerce Manager, Vitec Creative Solutions, Dallas, US

From the Vitec Group to Creative Solutions Divisional level, we saw all necessary measures taken to guarantee the safety of employees during the pandemic.

There's no way I could have imagined the year ahead when I joined Vitec in January 2020.

Core values

Besides, the Employee Assistance Programme shows Vitec really cares for its people.

We have a clear purpose that is founded on a set of core values that form the Vitec Mindset: "Enabling the capture and sharing of exceptional content"

I feel safe and honoured to work for Vitec.

The company has been extremely supportive throughout, including allowing flexible hours to accommodate juggling a one year old before the nurseries opened.

David Barclay

Mark Ye

Country Manager, Vitec Creative Solutions, China

Head of Financial Planning & Analysis, Richmond, UK

Exceptional product performance We set the highest standards of technical performance

Customer focus

We are nothing without our customers

Leading a fast-changing market

I joined Vitec in 2013 as a Quality Engineer, and in January 2020 I got promoted to Manufacturing Improvement Manager.

In 2020, I was promoted to the role of Supply Chain and Logistics Manager.

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

2020 brought us a whole new challenge with the pandemic. We had to introduce new measures to protect our employees and to keep our production safe and efficient.

I feel privileged to be part of an organisation that values and cultivates the unique skills of each individual, and that demonstrates that it cares for the wellbeing of its people.

Jared Cornish

Kirti Rajwani

Supply Chain and Logistics Manager, Vitec Imaging Solutions, Australia

Transparency, integrity, respect

We hold to the highest professional and corporate standards

Manufacturing Improvement Manager, Vitec Production Solutions, Bury St Edmunds, UK

Employee engagement

Despite the impact of COVID-19 during 2020, we have been able to continue with our employee engagement initiatives. Notably, we undertook an all employee survey focused on the Company's response to the pandemic and we carried out an employee review in our Creative Solutions Division for the first time. The Board and I remain clear that Vitec remains a great place to work and that our people are our greatest asset.

Caroline Thomson

Non-Executive Director

In response to the 2018 UK Corporate Governance Code, the Board considered how best to handle Code Provision 5 - dealing with the Board's engagement mechanism with the wider workforce at Vitec. It was agreed that this was best achieved by the Board designating one of the existing Non-Executive Directors to cover this role. Given her wide industry experience, notably at the BBC, and also her role as Chair of the Remuneration Committee, the Board considered that Caroline Thomson was best suited to fulfil this important role.

2020 was the second full year of this arrangement. Due to the pandemic we had to structure employee engagement so that remote sessions were held with no face-to-face meetings or site visits organised. Working with Jon Bolton, the Group Company Secretary and Group HR Director, and the Creative Solutions HR Vice President, a series of meetings were held remotely with employees at several Creative Solutions sites. The sessions covered employee engagement, including how the Company had responded to the pandemic and ensured the safety and wellbeing of employees, working conditions, remuneration and benefits, work-life balance, communications, and development and training.

Creative Solutions

In December 2020, several video conference sessions were held with over 30 Creative Solutions employees and Caroline Thomson, covering the Creative Solutions sites at Irvine, Cary and Dallas in the US, and Ra'anana, Israel. Originally, it was intended that these meetings would be held face-to-face in June 2020, however, this was not possible due to the pandemic. Caroline had a preliminary meeting with Nicol Verheem, Creative Solutions Divisional CEO, and Efrat Birav, Creative Solutions HR Vice President, to hear about HR initiatives and working practices, particularly to bring the separate business units of Teradek, SmallHD, Wooden Camera and Amimon under one Divisional structure. The update covered business progress, remuneration and benefits across the Division, engagement, working conditions, health and safety, longevity of service, CSR initiatives and engagement with all employees.

Do you feel that Vitec is responding appropriately to the COVID-19 crisis?

Yes 98.6%

No 1.4%

Do you feel that the Company is communicating with you enough?

Yes 95.7%

No 4.3%

Feedback from the sessions was gathered on a no names basis to give comfort to employees that they could give open views on working within Creative Solutions. Key feedback noted that employees felt that they had been well looked after during the pandemic and that the Company had taken the right steps to ensure their safety and wellbeing both on sites and working from home. Communication had been good, regular and clear. Good progress on creating a cohesive divisional structure was being made across each of the business units with further work remaining to be done. Finally, further work around employees, talent and development, including a better understanding of remuneration decisions, was needed in 2021. This feedback has been shared with Divisional management to develop HR initiatives and address any employee concerns going forward. Caroline Thomson reported back to the Board on the key issues coming out of the employee engagement session for Creative Solutions at the December 2020 Board meeting.

Employee survey

In May 2020 we conducted an all employee survey to help gather direct feedback from employees on how the Company was responding to the COVID-19 pandemic. The survey focused on three key questions - (1) Do you feel that Vitec is responding appropriately to the COVID-19 crisis? (2) Do you feel the Company is communicating enough with you? (3) Is there anything that you would like the Company to think about or do differently in connection with the crisis? 1,364 employees out of 1,600 participated in the survey, representing 85% of the Group's workforce. Feedback was overwhelmingly positive demonstrating that our employees are highly engaged and very supportive of the Group; 99% of employees believe the Company was doing the right things and 96% believe that the Company was communicating well.

Comments focused on when offices/facilities would reopen, ensuring safe working practices in response to the pandemic, support to employees given the need for remote working, smart working arrangements and ongoing communications.

As a consequence of the survey, the Board and executive management team were assured that the Company's response and level of communication was appropriate, and that the trust of our people had been maintained during this unprecedented period. Management continued to ensure a regular flow of communication to all employees and that safe working practices were being adhered to, with many employees working remotely from home where possible.

Future plans

In 2021, subject to restrictions, we plan to recommence site visits and face-to-face meetings with employees. While video conference meetings are satisfactory, it is simply not as good as physically visiting sites and meeting our employees in person. We aim to revisit Production Solutions and Imaging Solutions employees, who were last seen by a Board member in 2019, and to cover our European Services employees for the first time. We will continue to report annually on this important initiative to demonstrate the importance of our employees to our wider stakeholders.

Principal risks and uncertainties

The Group has a well established framework for reviewing and assessing these risks on a regular basis, and has put in place appropriate processes and procedures to mitigate against them.

Overview

In order to achieve its strategic objectives, Vitec recognises that it will take on certain business risks.

The Company 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.

The risk management framework includes formal risk reviews and risk registers maintained at Group, Divisional and business unit 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 drive the way in which we proactively manage risks. These include: being a strong innovator and investing in research and development; identification of acquisition opportunities; optimising supply chain efficiency and operational excellence; and robust HR processes for resourcing and talent development.

Update since 2019

Our principal risks are reported net (after mitigation).

The majority of risks are long-term in nature and in general do not change significantly in the short-term. The impact of COVID-19 affects several of the principal risks.

COVID-19 has had a material impact on the short-term demand for Vitec's products, and there is still some uncertainty about the timing of recovery of several industry sectors which are critical to Vitec. At the same time, there are promising growth segments/some areas which have done well throughout the crisis - this has led to a reorientation of certain R&D activities.

The risk relating to new markets and channels of distribution has increased due to Vitec increasing its presence in markets, in particular streaming, with which it is less familiar. The prominence of e-commerce has continued to increase relative to traditional distribution.

The risk relating to reputation has increased, due to the greater scrutiny of businesses and increased stakeholder expectations in several areas, particularly in relation to the Group's ESG (Environmental, Social and Governance) programme. We fully embrace our responsibility in this area.

The risk related to the effectiveness and impact of restructuring projects is no longer a principal risk; the main restructuring initiatives, including Imaging Solutions' Digital programme, are now substantially complete.

High

Likelihood

LowLow

Impact

High

Strategic

Operational and compliance

Financial

Principal risks

Movement

• 1. Demand for Vitec's productsStable

• 2. New markets and channels of distribution

  Increased

• 3. Acquisitions

  Stable

• 4. Pricing pressure

  Stable

• 5. Dependence on key suppliersStable

• 6. Dependence on key customersStable

• 7. People

  Stable

• 8. Laws and regulations

  Stable

• 9. Reputation

  Increased

• 10. Exchange rates

  Stable

• 11. Business continuity including cyber security

Stable

Principal riskSpecific priority

Demand for Vitec's products

Demand for our products may be adversely affected by many factors, including changes in customer and consumer preferences and our ability to deliver appropriate products or to support changes in technology. Demand may be impacted by changes in distribution channels.

The Group increasingly produces and sells products that are more technologically advanced, including encoders, transmitters and on-camera monitors. These products have a shorter life cycle than our historical products, and continuous investment in new product development is needed to keep up with changing demand. Demand may also be impacted by competitor activity, particularly from low-cost countries.

The COVID-19 pandemic has had a short-term impact on demand for Vitec's products due to postponement of large sporting events, cine market closure, and temporary retail closures. The timing and extent of the recovery and pent-up demand is still uncertain.

We expect that there may be a more permanent impact in some markets, in particular we expect that the photographic hobbyist segment will contract further. This will be offset by growth opportunities in several other areas such as streaming, smartphonography, gimbals, and monitoring solutions which facilitate social distancing on set. The long-term fundamentals for the content creation market remain strong.

New markets and channels of distribution

As we enter new markets and channels of distribution we may achieve lower than anticipated trading volumes and pricing levels or higher costs and resource requirements. This may impact the levels of profitability and cash flows delivered.

We expect that the proportion of our business conducted through online channels will continue to increase, and we will continue our investment in new innovative products which address the needs of independent content creators. We are also increasing our presence and investment in APAC.

During 2020, due to COVID-19, the Group has also increased its exposures and attention to those markets which remained active and where we are seeing an increased demand, in particular the JOBY vlogging and smartphonography products, and other products such as encoders which support content streaming.

The Group is planning to further invest in developing its streaming capabilities. Some of the Group's proprietary wireless communication modules have applications in other vertical segments, such as medical, which we wish to leverage further.

As a result, the risk relating to New Markets and Channels of Distributions has increased.

Acquisitions

In pursuing our business strategy, we continuously 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.

MovementStrategic priority

• 1 Organic growth

• 2 Margin improvement

• 3 M&A activity

• 1 Organic growth

• 2 Margin improvement

• 3 M&A activity

3 M&A activity

Mitigation

We value our relationships with our customers and to mitigate this risk we closely monitor our target markets and user requirements. We maintain good relationships with our key customers and make significant investments in product development and marketing activities to ensure that we remain competitive. We complete appropriate market analyses before developing new products to ensure that they are appropriately designed for our target markets. We closely monitor the demand for new products and phase out old product lines. We are actively pursuing growth in selected emerging markets.

We actively pursue a strategy to reduce reliance on traditional market segments through the development of e-commerce platforms, and products for adjacent niche markets.

In response to COVID-19, we have further reoriented our product strategy and research and development. For instance, some of the new product development budget is redirected to streaming products, in order to quickly capitalise on growth in that area.

To mitigate these risks, we have a thorough process for assessing and planning the entry into new markets and related opportunities. This includes marketing and advertising strategies for our products and services. We continuously assess our performance and the related opportunities and risks in these markets. We adapt our approach taking into account our actual and anticipated performance. We review our channels of distribution to make sure that they remain appropriate. Our increased online presence creates

IT security and compliance challenges which the Group is continually addressing.

In 2020, we continued to invest in new online platforms, in particular through the launch ofwww.Joby.com. We have further streamlined our e-commerce infrastructure.

We have continued to invest in developing our streaming solutions and plan to further increase this in 2021. Using our unique Amimon wireless technology, we seek to expand our product offering to other industry segments.

We mitigate these risks by having a clear acquisition strategy with a robust valuation model. Thorough due diligence processes are completed including the use of external advisors where appropriate. The post-acquisition performance of each business is closely monitored and, before completion of any acquisition, a plan is developed to integrate the acquired businesses in an effective way.

Principal risks and uncertainties (continued)

Principalrisk

Specific priorityPricing pressure

Vitec provides premium branded products and faces a number of competitors. The strength of this competition varies by product and geographical market.

We continue to face price pressure from new market entrants, which we are responding to through the launch of new competitive product ranges. We continually review our production and sourcing activities for cost saving opportunities. We have also faced issues relating to parallel trades/ price arbitrage particularly in our Imaging Solutions business which led us to enforce "Minimum Advertised Price" where this is permitted.

MovementStrategic priority

2 Margin improvement

Mitigation

We ensure that our product and service offering remains competitive by investing in new product development and in appropriate marketing and product support, and by improving the management of supply chain costs. This, and by working closely with our suppliers and managing expenses and cost base appropriately, allows us to support price increases when required. We are rationalising our product range to reduce complexity, which will also allow us to achieve some cost saving on production.

Most of our products and services have a premium or niche differentiation. Vitec has in the past exited markets where the margins and sales volumes were unattractive. We continue to monitor our pricing across the main currencies to reflect ongoing fluctuations.

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.

Our overall dependence on key suppliers has increased over the last few years as a result of the Group's decision to reduce its costs by outsourcing some manufacturing and assembly activities. For several of our products we are heavily dependent on a specific supplier for the provision of core elements of the products.

• 1 Organic growth

• 2 Margin improvementTo address this risk, we aim to secure multiple sources of supply for all materials and components, and develop strong relationships with our major suppliers. We review the performance of strategically important suppliers and outsourced providers globally on an ongoing basis. Where economical we look to source materials closer to the manufacturing facilities to reduce lead times and improve control over the supply chain. For example, some of the Group's metal firmware requirements are now sourced from Vitec's Costa Rica plant. We look to insource manufacturing capability for strategic components where possible, in order to reduce reliance on third parties.

Group's business interruption insurance (within deductible limits) provides coverage for named suppliers.

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.

Vitec's largest customer accounted for marginally more than 10% of the Group's total turnover in 2020. The business also works with a variety of customers on large sporting events, and the extent of these activities varies year-on-year.

• 1 Organic growth

• 2 Margin improvementWe mitigate this risk by closely monitoring our performance with all customers through developing strong relationships and dedicated account management teams, and we monitor the financial performance of our key customers and the receivable balances outstanding from them. We continue to expand our customer base including entering into new channels of distribution. The increased investment in digital platforms will enable the Group to better serve end consumers and reduce reliance on third party distributors.

In 2020, we started to insure against the risk of bad debt (covering approximately 50% of the total trade debtor portfolio).

Principal riskSpecific priorityPeople

We employ around 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.

The overall risk is stable. There is a strong talent pool at all levels in the organisation. Turnover of management personnel is low and retention plans are in place for key employees.

At the same time, the health and safety compliance requirements are more challenging due to COVID-19. There may also be a risk that the morale of our employees becomes eroded by the impact of the crisis and initiatives such as furlough and other cost reduction programmes.

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, 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 impact the Group's reputation and could expose the Group to fines and penalties. We may also incur additional cost from any legal action that is required to protect our intellectual property. The EU state aid investigation is still ongoing and may result in a maximum exposure of £8.5m.

The recent increases in tariffs on imports from China to the US have had an adverse effect on the purchase cost for some of our raw materials.

The UK's exit from the European Union (Brexit) is not expected to have a material impact on the Group's results. The longer term legal, regulatory and commercial ramifications need to be monitored closely.

MovementStrategic priority

1 Organic growth 3 M&A activity

• 1 Organic growth

• 2 Margin improvement

Mitigation

We recognise that it is important to motivate and retain capable people across our businesses to ensure we are not exposed to risk of unplanned employee turnover. We reward our people fairly and have appropriate recruitment, appraisal, talent management and succession planning strategies to ensure we recruit and retain diverse, good quality people and leadership across the business. We take our employees' health and safety very seriously and have appropriate processes in place to allow us to monitor and address any issues appropriately.

During the COVID-19 pandemic our primary concern is the health of our employees and their relatives. The Group complies fully with all regulatory requirements. We have put in place additional measures and safe working practices, maximised the use of remote working, and implemented a programme of regular testing at some of the largest sites. We have engaged with our employee population throughout the pandemic and have launched an employee wellness programme which offers a free, professional counselling service.

We mitigate the risk around our people by normalising pay in line with recovery and adopting mitigating measures such as restricted shares.

We address this risk by having resources dedicated to legal and regulatory compliance supported by external advice where necessary. We monitor and respond to 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. The Group has processes in place, including senior management training, to ensure that its worldwide business units understand and apply the Group's culture and processes to their own operations. We actively protect our intellectual property, and will legally pursue parties that infringe our intellectual property rights.

We will continue to monitor the impact of Brexit, in particular any trade flow disruption which so far has been minimal. Due to the Group's diversified geographical footprint, and the characteristics of the industry sectors in which the Group operates, we believe that we are well positioned to manage any negative impact.

With regard to the China/US tariffs affecting imports from China into the US, we continually evaluate our pricing and sourcing strategy to mitigate the impact of additional tariff costs.

We are sourcing products in alternative locations if possible (e.g. LED lights now sourced from Thailand and some of the bags production moved out of China).

Principal risks and uncertainties (continued)

Principalrisk

Specific priorityReputation 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 Vitec products and our investor community.

Exchange 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.

MovementStrategic priority

1 Organic growth

• 1 Organic growth

• 2 Margin improvement

Mitigation

We manage this risk by recognising the importance of our reputation and attempting to identify any potential issues quickly and address them appropriately. We recognise the importance of providing high quality products, good customer service and managing our business in a safe and professional manner. This requires all employees to commit to, and comply with, the Vitec Code of Conduct. Our IT Policy covers social media matters and is communicated to all employees and contractors. A whistleblowing facility is in place to allow employees to confidentially report any compliance issues.

We have implemented a compliance programme with key vendors which includes site inspections and compliance database checks, and we require all vendors to sign up to the Vitec Code of Conduct or equivalent standards.

For many years, we have implemented corporate citizenship initiatives and programmes to reduce Vitec's environmental impact. We have now launched a structured, Board-led ESG programme.

We regularly review and assess our exposure to changes in exchange rates. We reduce the impact of sudden movements in exchange rates with the use of appropriate hedging activities on forecast foreign exchange net exposures. We do not hedge the translation effect of exchange rate movements on the Income Statement or Balance Sheet of overseas subsidiaries. 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.

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. 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 in supporting our business and therefore there is a cyber security risk for the Group. The latter continues to be a major focus for the Group; arguably the risk is exacerbated by the increased extent of remote working due to COVID-19.

The pandemic also provided a test of the resilience of key functions including distribution, IT and manufacturing.

The COVID-19 outbreak impacted our supply chain and availability of components in the early phases of the pandemic.

1 Organic growthWe address this risk with Business Continuity Plans and Disaster Recovery Plans at our key sites, and by carrying out periodic IT and cyber security vulnerability assessments. There are standard procedures in place to escalate breaches and remediate IT security incidents.

We have global insurances in place which provide cover for certain business interruption events. We review coverage annually to determine whether adjustments are needed.

We continue to closely monitor our supply chain following the COVID-19 pandemic. Overall, we believe that Vitec's proactive response to the pandemic has allowed it to maintain continuity of key functions.

Operational review

The Imaging Solutions Division designs, manufactures and distributes premium branded equipment for photographic and video cameras and smartphones, and provides dedicated solutions to professional and amateur image makers, ICCs, professional influencers, vloggers and enterprises. This includes camera supports and heads, camera bags, smartphone accessories, lighting supports, LED lights, lighting controls, motion control, audio capture and noise reduction equipment marketed under the most recognised accessories brands in the industry.

Revenue

£156.7m

Down 20.3%

Adjusted operating profit*

£9.7m

Down 64.2%

Revenue

20 19 18

£196.6m £201.6m

Adjusted operating pro t*

Statutory operating pro t

20 £5.8m

*For Imaging Solutions, before charges associated with acquisition of businesses and other adjusting items of £3.9m (2019: £9.3m).

Image:RenanOzturk

We are passionate about helping content creators elevate the quality of their portfolios to stand out in an industry where more still and video content is being produced and shared than ever before.

Marco Pezzana

Divisional Chief Executive, Vitec Imaging Solutions

Addressable market

Pre-pandemic, we estimated the addressable market for products manufactured by Vitec's Imaging Solutions Division to be worth around £1.1 billion annually and growing at c.1% CAGR over the 2019-2022 period. During the pandemic, we believe the market temporarily reduced but that it will recover to 2019 levels in the near future. The photographic market represents 60% of this and ICCs make up the remainder. CSCs and smartphones have also been adopted by professionals and advanced consumers as the distribution of images via social media continues to grow. Vitec is focusing on the opportunity to develop and commercialise innovative, high end accessories for CSCs and smartphones, as well as its more traditional DSLR market. We sell our products globally via multiple distribution channels and increasingly online via our own direct e-commerce capability and third party platforms.

Market position

Vitec has leading premier brands in camera supports and heads, camera bags, smartphone accessories, motion control, lighting, audio capture and noise reduction equipment for the professional and enthusiast photographer, videographer, professional influencer and vlogger.

Operational review

We expect Imaging Solutions to recover well and we are focusing on the continued growth in the higher margin e-commerce channel and JOBY smartphone and compact system camera accessories, as well as new audio and motion control products.

Target audience

Our brands

Photographic market: 60%

ICC/cine market: 40%

#

Manufactured under licence.

† Management estimates by sales value in the market segments in which these products are sold.

Product category	Brand	Market position†
Supports	Avenger JOBY Gitzo Manfrotto	1
Bags	Lowepro Manfrotto National Geographic#	1
Lighting & controls	Colorama JOBY Lastolite by Manfrotto	2
Motion control & stabilisers	JOBY Syrp	New
Smartphonography	JOBY	1
Audio capture	JOBY Rycote	New

Vitec Imaging Solutions (continued)

Operational review (continued)

Imaging Solutions' revenue declined by 20% to £156.7 million and by 21% at constant exchange rates compared with 2020. Revenue in H2 declined by 9% at constant currency compared with 2020, as markets started to recover from the severe disruption in Q2 2020.

In the consumer segment (c.15% of Divisional revenue), there was strong growth in JOBY smartphone and compact system camera accessories, driven in part by the new vlogging kit launched at the start of 2020. JOBY smartphonography revenue grew by c.70% compared to 2019.

B2B revenue (c.10% of Divisional revenue) increased by 12% compared to 2019 due to demand for a variety of supports for thermal cameras, portable audio/video recording, distance learning, in-house photo studios and portable medical equipment.

Lastolite Chroma Key Backgrounds revenue grew by c.90% compared to 2019. The backgrounds offered a low-cost, re-usable solution to enable production to continue by keying in location backgrounds in a strict COVID-controlled studio environment.

The professional (c.55% of Divisional revenue) and hobbyist (c.20% of Divisional revenue) segments saw significant declines in demand due to the global restrictions on travel and events, such as weddings, and the closure of physical retail outlets. While the markets started to recover in H2, they are estimated to still only be at 80% of the level they were pre-COVID. The destocking trend that occurred in 2019 continued into the first half of 2020 but now has ended.

In 2019, Imaging Solutions announced a restructure to benefit from the move to the higher margin e-commerce channel. As previously announced, this has been expanded following the accelerated shift to e-commerce as a result of the pandemic. The expected total investment is now £9.7 million and annual savings from 2021 of £7.0 million.

In 2020, £1.6 million of expense was incurred and £3.0 million of cash cost, with £3.5 million incremental savings delivered. Cumulatively by the end of 2020, £7.4 million of expense and £5.9 million of cash cost has been incurred, with £4.9 million of savings delivered.

Adjusted operating profit* decreased to £9.7 million primarily due to lower volumes, partly offset by the mitigating actions taken (2019: £27.1 million). Adjusted operating margin* was 6.2%.

Statutory operating profit was £5.8 million (2019: £17.8 million), which included £3.9 million of charges associated with acquisition of businesses and other adjusting items (2019: £9.3 million).

Case studies JOBY growth - THE accessory brand for smartphones and compact system cameras JOBY launched a new brand strategy in early 2020, expanding its accessory product range for consumers and professional influencers to include lights and microphones. We also entered new distribution partnerships with global telecoms companies. Despite being launched just a few weeks before the first lockdown, 2020 sales of smartphonography accessories were up c.70% year-on-year, and in April, JOBY became the number two photographic support brand in the US, second to Vitec's Manfrotto brand at number one. During 2021, production of some of the flagship JOBY GorillaPod products will be brought back to our automated facility in Italy from China. The "Made in Italy" stamp differentiates us from our competitors, gives us greater control of the design and manufacturing process, improves customer service, has a lower environmental impact, is cost competitive, and enables us to capture the manufacturing margins. Digital acceleration with scalable direct e-commerce capabilities 2020 saw exponential growth in e-commerce and social media consumption. Vitec expanded the previously announced restructuring to improve our web marketing and e-commerce capabilities across all of Imaging Solutions' brands, where we outperform the competition and enjoy higher margins. The restructuring was completed during the year, rebalancing our sales and marketing competencies by channel. As a result, Imaging is positioned as the largest online community in the industry, and total direct e-commerce revenue grew c.50% year-on-year. We also continued to grow with our key e-commerce partners, and in 2020, approximately half of total Divisional revenue came from online platforms. Manfrotto's all new Gimbal Collection comes to life In an era where professional videographers and vloggers are looking to produce smooth and dynamic footage, Manfrotto developed a new line of handheld stabilisers which sold out within two weeks of the October 2020 launch. Manfrotto's gimbals are designed with intuitive LCD touchscreen controls and a quick attach mechanism, ideal for creative and high quality shots. Manfrotto is the first company to launch an integrated eco-system of gimbal supports, including an innovative gimbal-dedicated boom, "GimBoom". Rycote professional audio supports In 2020, Vitec developed the new Rycote-branded quick release connection system ("PCS") between microphones and a variety of stands and grips to improve the workflow for sound professionals and to enable social distancing, whether in the field, studio, or at live events. Made in Italy, the ergonomic design of the PCS ensures a simple and safe one-handed operation, while the new stands and grips allow sound professionals to flexibly, accurately and quickly position microphones and accessories in unusual settings.

The Manfrotto FAST GimBoom is an essential filmmaking tool that allows me to elevate my shots and shooting angles. The GimBoom is unique - smaller form factor for travelling, fast set up time, sturdy carbon construction and mounting points for accessories such as monitors or mics. Alan Stockdale Filmmaker and producer We are thrilled to see the PCS system becoming an industry standard, one-stop solution for all mechanical connections in the audio broadcast world. Rycote's audio knowledge combined with Manfrotto's mechanical experience creates a unique system. Timo Klinge Audio Innovation Manager & CTO, Rycote Lastolite's Panoramic Chroma Key background was a game changer. A fantastic portable green screen that gave us the environment to produce broadcast quality webinars. We need the right tools to get the job done professionally and Lastolite provides the perfect solution. Tuhin Dasgupta CEO, Studio Stream and Toinspire Productions 90% year-on-year sales growth of Lastolite Chroma Key Backgrounds Severe travel restrictions during the pandemic curtailed on-location filming and photographic shoots. Lastolite's Chroma Key Backgrounds offer a low-cost, re-usable solution to enable production to continue by keying in virtual location backgrounds in a strict COVID-controlled environment. The 2-metre distance rule was easily achievable against the 4-metre wide Panoramic background. In addition, the Panoramic Chroma Key was used extensively by businesses and schools to deliver online training and education. 27

Operational review

The Production Solutions Division designs, manufactures and distributes premium branded and technically advanced products and solutions for broadcasters, film and video production companies, ICCs and enterprises. Products include video heads, tripods, LED lighting, batteries, prompters and robotic camera systems. It also supplies premium services including equipment rental and technical solutions.

Revenue

£80.1m

Down 28.4%

Adjusted operating profit*

£7.6m

Down 61.2%

Revenue

20 19

18 £118.7m

Adjusted operating pro t*

20 £7.6m

19 £19.6m

18 £20.1m

Statutory operating pro t

20 £6.7m

19 £18.9m

18 £18.7m

* For Production Solutions, before charges associated with acquisition of businesses and other adjusting items of £0.9m (2019: £0.7m).

Working closely with our customers, we are advancing production technology for broadcasters, cinematographers and content creators, enabling them to improve workflows and expand their creativity.

Nicola Dal Toso

Divisional Chief Executive, Vitec Production Solutions

Addressable market

Pre-pandemic, we estimated that the broadcast market for products and services supplied by Vitec's Production Solutions Division was worth around £0.4bn annually and was broadly flat. During the pandemic, we believe the market temporarily reduced but that it is recovering. Vitec is well positioned due to its broad geographical reach and premium products. We have a global sales team that offers a full range of products and services to our customers all over the world, either directly or via distributors, both online and in stores.

Market position

Vitec is the market leader in most of its product categories, providing leading products through our brands to the broadcast, cinema and video production markets, as well as to ICCs.

Operational review

We expect a strong recovery in Production Solutions and are focusing on products for on-location news and rescheduled sporting events, as well as robotics and voice-activated prompting to enable safe distancing in studios.

In February 2021, Nicola Dal Toso succeeded Alan Hollis as Divisional Chief Executive of Vitec Production Solutions. After five years with the Company, Alan Hollis decided to step back from the day-to-day management of the Division. Alan has done a tremendous job rebuilding Production Solutions through a period of significant change and is working with Nicola as he transitions into the role.

Nicola has been with Vitec for six years, most recently as Chief Operating Officer for Imaging Solutions, with additional responsibility for Syrp gimbals and sliders, and developing audio products under the JOBY and Rycote brands. Nicola's promotion

Target audience

Our brands

Broadcast market: 60%

ICC/cine market: 40%

Product category	Brand	Market position†
Supports	OConnor Sachtler Vinten	1
Prompters	Autocue Autoscript	1
Lighting	Litepanels	2
Mobile power	Anton/Bauer	1
Robotic camera systems	Camera Corps Vinten	2
Distribution, rental & services	Camera Corps TCS	1

† Management estimates by sales value in the market segments in which these products are sold.

Vitec Production Solutions (continued)

Operational review (continued)

demonstrates Vitec's commitment to developing our internal talent to ensure that we have a strong leadership pipeline for the future.

Production Solutions' revenue decreased by 28% to £80.1 million. This was driven by the slowdown in broadcast, feature film and scripted TV production and on-location news, as well as the postponement of live sporting events. Revenue in H2 declined by 16% at constant currency compared with 2020 as broadcast started to reopen, although the recovery in scripted TV has been slower than in other segments.

There were two significant new products in H2 2020. Voice-activated prompting, developed by Autoscript, enables and helps broadcasters adapt to social distancing and began shipping in H2, with a full launch to come in 2021. The new generation Sachtler aktiv fluid heads, launched in October, allow camera operators to mount, level and lock the head in seconds and to switch quickly from tripod, slider or hand-held shots in an instant to capture the widest range of shots in the shortest time. These have seen strong sales in the first few months (1,000 systems ordered within three weeks of launch). October also saw Turner Sports use the Basecam, developed by Camera Corps, to show previously unseen camera angles from Major League Baseball.

Production Solutions continues to drive operational efficiencies and completed the transition to the same third party logistics provider in the US as used by Imaging Solutions, which delivered £0.6 million of savings in 2020. In November, a restructuring project was completed costing £0.9 million but is expected to deliver £1.7 million of annualised savings in 2021.

Adjusted operating profit* decreased to £7.6 million, driven by lower volumes, partly offset by the mitigating actions taken (2019: £19.6 million). Adjusted operating margin* decreased to 9.5%.

Statutory operating profit was £6.7 million (2019: £18.9 million), which included £0.9 million of adjusting items (2019: £0.7 million).

Case studies Sachtler reinvents the tripod head In October 2020, Sachtler launched the revolutionary aktiv fluid head which incorporates unique SpeedLevel and SpeedSwap technology. This allows camera operators to mount, level and lock the head using a single lever, enabling them to switch quickly from tripod to slider or hand-held shots. Together with Sachtler's award-winning carbon fibre flowtech tripod, aktiv enables camera operators to capture the widest range of shots in the shortest time. Customer feedback has been exceptional, with over 1,000 systems ordered within three weeks of launch. Th inc I h ha sh an St Ca Anton/Bauer comprehensive range upgrade powers space architects In 2020, Anton/Bauer announced the largest ever expansion of its battery range to include smaller and slimmer batteries ideal for monitors, follow focus and on-camera lighting, as well as pure power batteries designed for high-performance cine lights and specialist cameras. To secure a contract to design the lunar habitat, award-winning Danish Space Architects - Sebastian Aristotelis and Karl-Johan Sørensen - lived in their LUNARK habitat in Arctic Greenland for 100 days to test the extreme living conditions they would experience on the moon. With temperatures of -25°C and hurricane winds they used Anton/Bauer DIONIC XT batteries and Sachtler flowtech tripods to document each step of the way for an upcoming film in collaboration with Ridley Scott Creative Group. Yo mu mi Litepanels Gemini brought a unique colour palette to life Award winning Director of Photography, Jamie Cairney, used Litepanels Gemini LED lights on the set of the Netflix original series Sex Education to limit the environmental impact and increase flexibility. He chose the Litepanels Gemini 2x1 panel for its white light accuracy, lighting continuity between sets and locations, and the built-in power supply, meaning fewer cables, and greater flexibility and creativity. An da wa 48 pe oth Se Sp Litepanels wins an Emmy® Award for Technology and Engineering Litepanels won an Emmy® Award in 2020 for its pioneering engineering development and creativity in LED Lights for TV production. Continued margin improvement Production Solutions continued to drive underlying margin improvements in 2020. We completed the transition of our US logistics operation to a 3rd party during Q1 2020, delivering a c.£0.6 million year-on-year benefit. Supply chain optimisation through purchasing price initiatives and refinement of our supplier base delivered a further c.£0.3 million savings. The Division continues to invest in optimising processes and driving efficiencies, for example, enhancing our flowtech machine shop at our Bury St Edmunds site and increasing our in-house paint shop capability at our Costa Rica site, both of which will deliver further benefit in 2021.

e aktiv range is just redible and means that ave no concerns about ving time to get that ot - this system is so quick d so easy. uart Howells meraman and Journalist We work a lot during golden hour with a limited window to catch the best light, so we need to have gear that is fast; aktiv is perfect for this. Mortiz Sieber Creative Director, Peak Frames u can only bring so ch equipment on these ssions. We used the ton/Bauer batteries every y. The temperature outside s -25°C, and they ran for hours, incredible! They rformed better than any er batteries we had. bastian Aristotelis ace Architect Gemini addresses many of the shortcomings of LED lighting technology, specifically skin tone reproduction and working at low dimming levels. They were operated remotely using a tablet via Wi-Fi. I could zone the lighting in seconds; everyone looked great under the Gemini lighting. Jamie Cairney Director of Photography

Operational review

The Creative Solutions Division develops, manufactures and distributes premium branded products and solutions for ICCs, enterprises, broadcasters, and film and video production companies. It is made up of a number of brands that Vitec has acquired and includes Teradek, SmallHD, Amimon, Wooden Camera and RTMotion. Products include wireless video transmission and lens control systems, monitors, camera accessories, live streaming and IP video devices, and software applications.

Revenue

£53.7m

Down 20.7%

Adjusted operating profit*

£3.3m

Down 78.9%

Revenue

20 19

Adjusted operating pro t*

20 £3.3m

Statutory operating (loss)/pro t

*For Creative Solutions, before charges associated with acquisition of businesses and other adjusting items of £8.1m (2019: £10.3m).

The demand for original content continues to grow as daily screen time and video consumption expand. We make the tools to help tell the stories, share the news or spread the word.

Nicol Verheem

Divisional Chief Executive, Vitec Creative Solutions

Addressable market

Pre-pandemic, we estimated that the camera accessories market, focusing on content creators for products and services supplied by Vitec's Creative Solutions Division, was worth around £0.5bn annually and growing at 6% CAGR over the 2019-2022 period. This included film, scripted television series, independent video and enterprise video production. During the pandemic, we believe the market temporarily reduced but that it will recover shortly. On top of this traditional TAM, we have identified a growth opportunity in the mid to high end, hardware-enabled live streaming market, for those companies looking for better quality, secure streaming with low latency (corporates, churches, medical, police, education, governments, etc.). We believe the addressable market to be c.£0.2bn in 2020 (c.£0.1bn in 2019 pre-pandemic) and growing fast. Vitec has a strong position 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.

Market position

Vitec is the market leader in most of its product categories, providing leading products through our brands to the independent content creator, enterprise and filmmaker markets.

Operational review

Of our three Divisions, Creative Solutions has the greatest market opportunity, fastest area of growth and potentially the highest margins. We continue to expect a strong bounce back from the increasing spend on original content, although the exact timing is uncertain. Also, we are focusing on the 4K/ HDR replacement cycle and the significant new streaming opportunity in both the cine and enterprise markets.

Target audience

Our brands

Broadcast market: 7%

ICC/cine market: 60%

Streaming: 33%

Product category	Brand	Market position†
Video transmission systems	Teradek	1
Monitors	SmallHD	1
Lens control systems	Teradek	3
Live streaming	Teradek	1 (in our niche)
IP video	Teradek	3
Camera accessoriesWooden Camera 3

† Management estimates by sales value in the market segments in which these products are sold.

Vitec Creative Solutions (continued)

Operational review (continued)

Creative Solutions' revenue decreased by 20% to £53.7 million.

While scripted TV shows and feature film productions were initially paused in response to COVID-19 and some have remained on hold, the revenue decline was less than in the other Divisions owing to revenue growth in the streaming market.

H2 2020 revenue was in line with H2 2019 at constant currency, which was significantly better than the 38% decline seen in H1. The improvement was driven by growth in streaming solutions, and cine production starting to recover.

The enterprise and independent content creator markets turned to Teradek as a trusted supplier to help them live stream news and information. Streaming solutions grew by c.50% compared to 2019. R&D investment is now underway to further improve the product range.

The cine market is estimated to be about 50% open and the scripted TV market is starting to recover, though feature films production is recovering more slowly. In California, productions remained open throughout the lockdown in Q4, with film and television production designated as "essential" businesses.

SmallHD 4K/HDR monitors began shipping in H2, to complete Creative Solutions' full range of 4K/HDR wireless video products. A lower end 4K Bolt was also launched in September to take advantage of opportunities in that segment of the market.

Creative Solutions continued to expand in the medical market, where Amimon's CONNEX medical solutions enable wireless procedures in operating theatres. Medical sales grew by c.80% compared to 2019, to £2.9 million.

Adjusted operating profit* decreased to £3.3 million driven by lower volumes (2019: £15.6 million, £9.1 million excluding SmallHD insurance proceeds), with an adjusted operating margin* of 6.1%. Adjusting for SmallHD insurance proceeds, which were included in profit but not revenue, the adjusted operating margin* in 2019 was 13.4%.

Statutory operating loss was £4.8 million (2019: £5.3 million profit), which included £8.1 million of charges associated with acquisition of businesses and other adjusting items (2019: £10.3 million).

Case studies Launch of 4K/HDR - wireless video transmission eco-system Designed to replace the installed base of HD transmitters and receivers, 2020 saw the launch of our new SmallHD 4K/HDR Production Monitors and the Teradek Bolt 4K LT, which completed the end-to-end 4K/HDR workflow of wireless video products for the cine market. Despite the temporary closure of many film sets during the pandemic, the 4K/HDR products have been well received. Growth in Teradek live streaming solutions to enable customers to stay connected through the pandemic 2020 saw an exponential growth in the streaming of video across all industries to facilitate remote working. A wide range of customers, including enterprises, governments and schools, used Teradek's market-leading live streaming solutions to maintain communications with their employees, customers and communities during lockdowns. We believe that many forms of remote working will remain post-pandemic and are focusing our resources to invest in incorporating Amimon's unique technology to develop a patented, high quality, low latency, premium video streaming solution. I'm my ligh Teradek and SmallHD remote monitoring solutions promote safe film and television production Bolt perf vide the f need COVID-19 is driving fundamental and lasting structural changes to the cine market to enable safe productions and social distancing on set. This includes live streaming, more remote monitoring and remote production, and "back to work" legislation mandating more monitors on set. Throughout 2020, Teradek and SmallHD provided solutions to get cine customers back to work by enabling the collaboration of off-set personnel, post-production workflows and greater distance between crew on set. Gra Prod of P Amimon's CONNEX medical solutions enable wireless procedures in operating theatres From state-of-the-art endoscopy stations to in-light cameras, operating theatres are moving to wireless connectivity. The CONNEX product line uses Amimon's patented technology to wirelessly link high quality, zero-latency video between operating room cameras and displays to enable surgeons to safely conduct live endoscopy and camera monitoring procedures. Wireless technology removes the risk of tripping over cables during surgery, as well as eliminating the expense and time taken to sterilise cables. Medical sales grew by c.80% compared to 2019. Creative Solutions awarded two Oscars In February 2021, Creative Solutions received two Oscars (Scientific and Engineering Awards) from the Motion Picture Academy of Arts and Sciences, for the development of the Teradek Bolt wireless video transmission system and the Amimon wireless chipset technology that is incorporated within the Bolt. These awards reflect the team's technological expertise which has changed the way video content is produced. Amimon's unique technology inside the rugged Teradek Bolt has freed video cameras from the restriction of long and tethered cables, allowing creatives to deploy cameras in an entirely new and dynamic way.

Teradek's wireless 4K eco-system is incredibly dynamic - the same zero-delay wireless signal, but with huge improvements in colour and image detail. This amount of clarity allows me to make confident creative decisions in the field, because I know that what I'm seeing is exactly what the audience will see. Jason Johnson Digital Imaging Technician always on the run, so gear has to be both tweight and reliable. 4K LT allows me to send ect 4K/HDR wireless o to clients - it gives me reedom to go wherever I to be. ham Ehlers Sheldon ucer and Director hotography Our crew learnt new storytelling possibilities with virtual production and collaborated through live streaming with Teradek products. Greg Ciaccio ASC Associate Member & Workflow Chair of the Motion Imaging Technology Council

Financial review

Martin Green Group Finance Director

Revenue £290.5m Down 22.8% Adjusted operating profit* Statutory operating loss £9.9m £-3.3m Down 81.1% Down £35.3m Adjusted basic earnings per share* from continuing operations 9.0p Basic (loss)/earnings per share from continuing and discontinued operations Down 88.8% -11.6p Down 56.5p *This report provides 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 improve 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 180 and 181.

Revenue decreased by 23% to £290.5 million (2019: £376.1 million), resulting in adjusted operating profit* of £9.9 million (2019: £52.4 million). Revenue declined by 10% in H2 at constant currency versus 2019, which was significantly better than in H1 (37% decline), despite the second wave of the pandemic in the last few months of 2020.

Group adjusted gross margin* of 39.0% fell from 45.2% in 2019. This primarily reflects the impact of lower volumes, offset in part by the cost actions outlined above. Adjusting for SmallHD insurance proceeds, which were included in profit but not revenue, the adjusted gross margin* in 2019 was 43.5%.

Adjusted operating expenses* were £14.2 million lower than 2019 at £103.5 million, reflecting the management actions taken. Adjusted profit before tax* of £5.5 million was £42.5 million lower than the prior year (2019: £48.0 million). Net finance expense was £4.4 million including £3.0 million of interest on loans, £0.9 million of amortisation of one-off upfront fees on the RCF and CCFF, and £0.8 million of interest expense on lease liabilities.

The Group's effective tax rate ("ETR") on adjusted profit before tax* was 25% in 2020 (2019: 24%).

Adjusted basic earnings per share* was 9.0 pence (2019: 80.6 pence). Statutory basic loss per share was 11.6 pence (2019: 44.9 pence earnings).

Statutory loss before tax of £7.7 million (2019: £27.6 million profit) decreased due to the factors referred to above. Charges associated with acquisition of businesses and other previously highlighted adjusting items were £13.2 million (2019: £20.4 million).

2020 adjusted profit before tax* included a £0.1 million favourable foreign exchange effect after hedging. The impact on 2021 adjusted profit before tax* from a one cent stronger/weaker US Dollar is expected to be an increase/decrease of approximately £0.4 million. At current spot rates there is expected to be a £4.2 million adverse impact versus 2020; primarily due to the weaker dollar.

Cash flow and net debt

Strong operating cash conversion* was a record 257% as set out below.

£m	2020	2019	Variance
Adjusted operating profit*	9.9	52.4	(42.5)
Depreciation(1)	19.0	18.6	0.4
Working capital dec/(inc)	8.0	(7.2)	15.2
Capital expenditure(2)	(15.7)	(18.6)	2.9
Other(3)	4.2	(0.7)	4.9
Operating cash flow*	25.4	44.5	(19.1)
Interest and tax paid	(9.0)	(10.6)	1.6
Earnout and retention
bonuses	(2.7)	(0.1)	(2.6)
Restructuring cash outflow	(4.2)	(3.3)	(0.9)
Free cash flow*	9.5	30.5	(21.0)

• (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 change in provisions, share based payments charge, proceeds from the sale of PP&E, gain on disposal of PP&E, fair value derivatives, impairment losses on PP&E, and foreign exchange movements.

Working capital decreased by £8.0 million in 2020, driven by a £10.6 million reduction in inventory following sustainable actions taken to run with a leaner level of inventory. A decrease in trade payables (£11.3 million) was largely offset by a decrease in trade receivables (£8.3 million).

Capital expenditure included £5.1 million of property, plant and equipment (of which £1.4 million was on assets for the postponed Tokyo Olympics and Euros, which will be used in 2021 and beyond) compared with £6.2 million in 2019 and £8.4 million in 2018. This reflects the drive to limit non-essential capital expenditure.

R&D investment was largely protected and as such did not reduce by the same level as property, plant and equipment spend.

£m	2020	2019	Variance
Gross R&D	20.3	23.1	(2.8)
Capitalised	(10.1)	(11.2)	1.1
Amortisation	4.8	3.4	1.4
P&L Impact	15.0	15.3	(0.3)

'Other' cash flow primarily relates to share based payments; £3.7 million in 2020 compared to £2.3 million in 2019, higher in part due to payment of salaries via shares held by the Employee Benefit Trust to conserve cash.

Interest and tax paid decreased by £1.6 million due to lower tax payments following lower profit; partly offset by the payment of the RCF upfront and arrangement fees, and CCFF fees.

Restructuring cash outflow mainly reflects the restructuring in the Imaging Solutions Division.

Net debt at 31 December 2020 was £5.2 million lower than at 31 December 2019 (£96.0 million) and £16.6 million lower than at 30 June 2020 (£107.4 million). We consider this a strong performance given the impact on our business from COVID-19.

December 2019 closing net debt (96.0)

Free cash flow* 9.5

Upfront fees on RCF 1.4

Employee incentive shares (1.2)

Net lease additions (3.5)

FX (1.0)

December 2020 closing net debt (90.8)

Liquidity at 31 December 2020 totalled £143.2 million; comprising £122.3 million unutilised RCF, £17.3 million of cash and £3.6 million unused overdraft facility. As previously announced, the Group has drawn down £50.0 million of the CCFF, which is to be repaid during March; earlier than planned given the strong cash generation in 2020.

Charges associated with acquisition of businesses and other adjusting items

Charges associated with acquisition of businesses and other adjusting items in profit before tax were £13.2 million versus £20.4 million in 2019.

2020	2019
£m	£m
Amortisation of acquired intangible assets	7.6	9.4
Restructuring costs	2.8	6.2
Earnout charges and retention bonuses	1.9	2.5
Effect of fair valuation of acquired inventory	0.9	1.8
Loss on disposal of business	-	0.4
Transaction costs relating to acquisition
of businesses	-	0.1
Charges associated with acquisition of
businesses and other adjusting items	13.2	20.4

Financial review (continued)

Viability statement

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 Group's current financial and trading position as summarised in this Annual Report, the principal risks and uncertainties set out on pages 18 to 22 and the latest management forecasts. Based on this assessment, the Directors confirm that they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the period from the date of this Annual Report to 31 December 2023.

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 Group's strategic and financial planning process reflects the Directors' best estimate of the future prospects of the Group, but they have also considered a range of scenarios through to the end of 2023. Modelling is impacted by a number of factors including assumptions around the overall global economic environment, how long it takes for our end markets to fully resume creation of original content, and continued actions that governments might take in relation to controlling the pandemic such as the closure of retail stores.

The Directors have reviewed the forecast scenarios as set out below: - The Group's latest forecast, which projects an improvement in trading performance in 2021 and beyond, following the deterioration in 2020 due to COVID-19;

-

Three downside scenarios which primarily vary the speed and length of recovery with the key changes to estimates being as follows:

• 1. Reducing the rate at which forecast sales would recover across all three years;

• 2. Lower level of sales in 2021 versus scenario 1, with recovery to forecast by 2023; and

• 3. Considering the possibility of a further wave in the US along with reversal of the easing of restrictions.

The downside scenarios are considered possible but not probable and include an assumed operating leverage of 55% versus forecast. They also factor in cost savings from management actions which would be taken to partly offset a decline in trading performance. These are proportionate and do not take into account all discretionary actions which could be taken; nor do they consider renegotiation of the RCF covenants or Government support (both of which occurred in 2020).

Revenue in 2020 declined by 23% versus 2019, with a decline of 35% in the first half followed by a significant recovery in the second half (decline of 11% versus H2 2019). Revenue would need to decline by 18% in 2021 versus 2019 to result in a breach of the covenants. Although the pace and shape of the recovery in our markets is hard to predict, the Directors currently consider this scenario remote, given markets have now adapted to respond to trading under pandemic conditions.

The Directors have also considered the Group's capacity to remain viable after consideration of future cash flows, expected debt service requirements, undrawn facilities and access to capital markets. The two main elements of the Group's committed borrowing facilities at 31 December 2020 were the £165 million five-year RCF and the £50 million Bank of England's CCFF. As at 31 December 2020, the Group had utilised £42.7 million (26%) of the RCF and £50 million of the CCFF.

Dividend

Given the strong management of the cash position, and improving outlook of market conditions, the Board recommends the resumption of dividends. A total dividend of 4.5 pence per share amounting to £2.1 million (2019: 12.3 pence per share, amounting to £5.6 million), subject to shareholder approval at the 2021 Annual General Meeting, will be paid on Friday, 14 May 2021 to shareholders on the register at the close of business on Friday, 23 April 2021. The Board's objective is for a growing and sustainable dividend and believes it is appropriate for the Group to target a future dividend cover of 2.0-2.5 times underlying EPS, subject inter alia to maintaining a strong financial position.

Martin Green

Group Finance Director 25 February 2021

Key Performance Indicators

Image:DanielKordan

KPI

Progress

Link to strategy

Health and safety: accident record

20 0 In 2020 we met our target of zero accidents

n/a

Number of accidents resulting in greater than three days' absence

Constant currency revenue (decline)/growth

Change in revenue on 19

operations at constant 18 exchange rates excluding the impact of EU Services

Driven by reduced customer demand from March onwards due to the pandemic. This improved from -37% at HY 2020 as markets began to reopen in the second half of the year

1, 3

Adjusted operating margin*

Adjusted operating profit* divided by revenueDecline in adjusted operating margin driven

2, 3

19 13.9% by lower volumes and the non-repeat of SmallHD

insurance income, partly offset by management's cost saving actions

Adjusted profit before tax*

Adjusted profit before tax*Decline driven by lower volumes, partly offset

1, 2, 3

19 £48.0m by £23m of cost saving actions

Adjusted EPS*

Adjusted operating profit* divided by average total assets less current liabilities excluding the current portion of interest bearing borrowings

Decline driven by lower adjusted profit*

1, 2, 3

Return on Capital Employed(1)

Decline driven by lower profit*

1, 2, 3

Adjusted operating profit* divided by the average total assets, current liabilities excluding the current portion of interest-bearing borrowings, and non-current lease liabilities

Operating cash conversion*

Operating cash flow* divided by adjusted operating profit*

2020 operating cash conversion* driven by tight control of cash including sustainable reduction in inventory

1, 2

Revenue in APAC

Revenue from selling to countries in the Asia Pacific region as a percentage of total revenue

Revenue in APAC as a percentage of Group

1, 3

19 20.2% revenue was slightly lower than 2019 due to streaming

growth predominantly focused in the US

* A summary of APMs is given in the Glossary on pages 180 and 181.

(1) 2019 has been restated to include the non-current lease liabilities, which were not included in the 2019 calculation.

Responsible business

Stephen Bird, Group Chief Executive, explains how Vitec tackles environmental, social and governance issues, and our ambitions for the future.

2020 has been a wake-up call on the importance of ensuring we have a sustainable business and that we do business in the right way as a socially responsible company within the communities in which we operate and wider society in general. The impact of COVID-19 and the changes it has brought cannot be underestimated. In addition, climate change and the negative impact it is having and will continue to have on all of society is something that Vitec and our employees must work harder at addressing. We all have a part to play and the Board and I are firmly committed to ensuring that Vitec enhances its sustainability initiatives. There are also continuing issues around inclusivity, diversity and opportunity in wider society to which Vitec can contribute.

Our Code of Conduct is key to how we do business, how we behave and sets out our responsibility to our stakeholders. We are a small company but with a global footprint and we aim to continue to improve our environmental, social and governance credentials. The Board has therefore committed to several important initiatives in 2021 that we will regularly report on.

Vitec is a socially responsible company which demonstrates strong governance and ethical behaviour, and we are committed to continually enhancing our existing environmental, social and governance activities.

We have established an ESG Committee that I chair. It comprises representatives from each Division and sets objectives, monitors progress and will deliver continuing improvement in this area. To ensure traction with this, myself and my senior team have an element of personal objectives under the Annual Bonus Plan tied to our ESG performance.

We have set ourselves the objective to be carbon neutral by 2050 and we will commence a planned programme to deliver on this. We will expand our reporting, particularly on environmental issues including our energy usage, our water consumption, and our waste and recycling initiatives. We will look to set targets around these to track a continuing programme of improvement.

We will also look to task our supply chain to deliver these same goals going forward.

These are challenging aspirations and we need to ensure we deliver on them. We will report progress through our Annual Report and also through our website.

Stephen Bird

Group Chief Executive

We remain committed to our aim for Vitec to positively impact one disadvantaged person for every Vitec employee in the communities in which we operate. So, 1,600 students or young people by 2021. In 2019 our employees helped 410 people and in 2020, despite the challenges of COVID-19 we helped 122 people. By the end of 2021 we aim to achieve this goal.

The following pages show our commitment to being a socially responsible company, what we have done in 2020 despite the challenge presented by COVID-19 and that we have a sound basis upon which to develop further. I am confident that we can deliver significantly on this over the next few years and that our people will rise to this great challenge.

Stephen Bird

Group Chief Executive 25 February 2021

Contents

Business ethics 42

Employees 44

Community 50

Environment 52

Responsible business

Business ethics

Our vision

To ensure that our employees have a clear understanding of what is expected of them in conducting business ethically, with a common set of values. We expect our business partners to act in a manner which aligns with our approach.

Our approach

Vitec's Code of Conduct sets out our values, beliefs and behaviours and has been communicated to all employees and business partners. It is available on our website and is translated into local languages used within the Group. We regularly educate and train our employees on business ethics.

Despite 2020 being the most challenging of years, Vitec has continued with its robust programme on ethics and business values.

Jon Bolton

Group Company Secretary and Group HR Director

Our Code of Conduct

Whistleblowing poster

Management of responsible business

The Board has overall responsibility for compliance and ethics and considers and approves our key policies, including but not limited to our Code of Conduct ("Code"), Environmental Policy, Anti-Corruption and Bribery Policy, Health and Safety Policy, Modern Slavery

Policy, Supply Chain Policy, IT Policy and Cyber Security Policy. These policies set a standard for all our employees, are available on our website, and are central to our approach to being a responsible business.

The Board has delegated the coordination of our responsible business efforts to Stephen Bird and, together with the Executive Management Board and senior management, he focuses his efforts on the areas outlined above. We established a cross-divisional Environmental, Social and Governance Committee in early 2021 that will oversee the Group's continuing approach to ESG. This is chaired by the Group Chief Executive and Group Company Secretary and meets on a regular basis to review progress against all ESG matters. We will report on this in more detail in 2021's Annual Report as well as on our website.

The Board and Executive Management Board regularly consider the Group's reputation and measures progress against our responsible business objectives. Examples include: monthly health and safety performance reviews; whistleblowing and anti-bribery reports; and regular training of employees ensuring that the right corporate culture and good governance practices are developed.

Anti-bribery and corruption

We educate our employees to ensure that they are clear on the right ways of doing business and that there is a zero tolerance of bribery and corruption. Our Code of Conduct is expressly clear that bribery and corruption will not be tolerated. We have a policy on anti-bribery and corruption measures. The policy is available on our website and sets out a zero tolerance approach to bribery and corruption, a clear commitment to doing business the right way, covers gifts and hospitality, prohibition on facilitation payments and kickbacks and how employees are to raise issues of concern. We regularly train our employees on anti-bribery and corruption measures using web-based training modules and through face-to-face training on our Code of Conduct.

To mitigate the risk around bribery and corruption, we actively screen all major third parties we do business with including customers, suppliers, distributors and agents. This is done through a third party software that screens third parties for reputational risk issues including bribery and corruption, sanctions, politically exposed persons and adverse media reports. This covers over 750 entities and continues to be expanded. We train our people to ensure that as part of doing business with a new partner, that the new partner is screened through this service.

The Board and the Audit Committee are regularly updated on the Group's anti-bribery and corruption measures including training initiatives and status of screening of third parties.

Our agents and distributors are party to agreements which prohibit bribery and set out our expectations on behaviour and values.

Whistleblowing service

We operate an independent whistleblowing service in conjunction with NAVEX. This enables any employee or third party who feels that the normal reporting channels through line management are not appropriate, to confidentially report on any issues around alleged wrongdoing or other Code contraventions. Anyone making a report can choose to do so anonymously.

All reports are notified to the Group Chief Executive, the Group Company Secretary and the Chairman of the Audit Committee and are investigated independently by senior management who are not connected to the report. The outcome of investigations is reported to the Chairman of the Audit Committee and remedial action taken where necessary. The Board is notified of all whistleblowing reports and the outcome of all investigations.

This service is communicated to all employees with posters prominently visible at all sites, and a letter sent explaining the service to ensure that it remains visible and understood. The documents are also available on the Group intranet with all communications translated into local languages. There is a policy on how whistleblowing reports will be investigated and the Board is expressly clear that all reports made in good faith which are genuine and not malicious in intent, will not result in an employee or third party being subject to recriminations or disciplinary action. During 2020, there were four whistleblowing reports that were HR related and that related to the US and UK. Each matter was thoroughly investigated and corrective actions taken where necessary.

We plan to recommunicate the whistleblowing service to all employees in 2021.

Slavery and human trafficking statement

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 existence in our operations or supply chain. The statement can be viewed on our website. 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. We expect our business partners to have similar values to our own to ensure that slavery and human trafficking is not something we are associated with. Our internal audit function also checks the integrity of the supply chain as part of its internal audit programme. We train our employees on this issue through a combination of web-based training modules and also through our Code of Conduct.

Code of Conduct

Our Code forms the backbone of our culture and provides clear guidance to our employees on how they are expected to behave towards colleagues, suppliers, customers, shareholders and on our wider responsibility to the communities within which we operate.

Our Code defines our approach to business integrity, including an absolute prohibition on bribery, kickbacks and political donations, along with guidance on gifts and hospitality, conflicts of interest, books and records, competition, share dealing, respect for the UN Universal Declaration of Human Rights, compliance with anti-slavery legislation, respect for the individual and privacy, diversity, health and safety, environmental sustainability, business partners and charitable donations.

Our Code has been communicated to all employees, including new employees joining the Group, and is available on the Company website translated into local languages. We require all senior management to undertake an online training module covering the Code, good corporate governance including issues such as share dealing, conflicts of interest, legal duties and other reputational issues.

Breach of the Code of Conduct, upon investigation, may lead to disciplinary action being taken against an individual and in the worst case, dismissal. Any investigation around the Code of Conduct would be conducted by the Group's HR functions. During 2020 no employee was dismissed from the business due to a breach of the Code of Conduct.

Human rights

The Company fully supports the principles set out in the UN Universal Declaration of Human Rights. The Company's policies and procedures reflect the principles contained within the Declaration.

Information systems and technology

Given the ever-increasing importance of Information Technology to the Company's operations and performance, we have an IT policy that is available on our website. Responsibility for IT ultimately rests with the Group Finance Director and the IT policy sets out standards to be followed across the Group for its employees, contractors and third parties around the use of the Group's IT systems. The policy has been implemented to ensure that the Company's IT is fit for 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 issues such as confidentiality of data, GDPR requirements, inappropriate content, security of data including cyber security and reporting processes. The Group's Audit Committee receives regular updates on the Group's IT arrangements including matters such as pen testing, user access and training of employees.

Responsible business

Employees

Our vision

To be the preferred employer for the very best people in our sector by providing an entrepreneurial environment that offers opportunities for our people to develop and thrive.

Our approach

To attract, retain and grow a talented and diverse workforce, providing equal opportunities for all, while nurturing a sense of pride in being part of Vitec.

Our people

Our employees are the best in the sector, our greatest single asset and critical to our success. Passionate, motivated and skilled employees in safe working environments directly contribute to our strategy, performance and reputation.

Employee engagement

We aim to provide our employees with an engaging and stimulating entrepreneurial environment where they are encouraged to learn and develop. We communicate with our employees on a regular basis using multiple channels, keeping them informed of business performance at a Group and Divisional level. In 2020 we increased the amount of engagement with our employees in response to COVID-19. This was to give assurance to our people and to retain their trust through this most challenging of years. The Employee Engagement section of this Annual Report on pages 16 and 17 sets out more detail.

During 2020 employees received regular updates on the business, performance and measures to deal with the pandemic from the Group Chief Executive. These took the form of all-employee emails, and videos. Employees also received regular all-hands updates on performance and business issues from Divisional senior management.

We also undertook an all-employee staff survey in 2020 to seek feedback from employees about the Company's response to the pandemic. The detail of this is covered in the Employee Engagement section on pages 16 and 17.

More informal communications also take place. Breakfast with the Divisional CEO is an informal opportunity for employees in our Imaging Solutions Division to exchange ideas and opinions on business strategies and takes place globally. While we had to suspend this in early 2020 due to COVID-19, we are planning to reintroduce these events virtually. Welcome meetings take place at the Imaging Solutions' sites quarterly to introduce new colleagues to the business in an informal way and we have adapted this in 2020 using technology to allow such meetings virtually. In the Production Solutions Division, The View is a quarterly publication sent to all employees updating them on business activities, product launches, employee initiatives and introducing colleagues. On Air is a local publication to employees in the Bury St Edmunds, UK office which lets them know about local events and updates on operations at that site. All-hands meetings take place at all our sites, allowing employees to hear regularly from management on progress for the business and in 2020 particularly to stay in touch with large numbers of employees working remotely.

Health and wellbeing

Vitec understands the importance of healthy and nurturing working environments for our staff. 2020 has provided the greatest challenge to this and we have had to adapt to the impact of COVID-19. As part of ensuring the wellbeing of all our employees during this most difficult period, in 2020 we introduced an all-employee assistance programme in conjunction with ICAS. This service provides free and confidential support to all our employees and their families on a range of matters including counselling for emotional and psychological support, practical guidance and support on legal, financial, family and work matters and online health and wellbeing guidance. This service has been rolled out to every employee and translated into the local languages used in the Group.

ICAS employee assistance programme

Canteen in Imaging Solutions with screens for separation

In addition to the wellness programme we offer our employees in many territories several levels of healthcare cover for employees and their families. In the UK this is provided as a non-contributory taxable benefit through AXA Health. UK employees who do not join this healthcare arrangement can join an alternative arrangement provided by Healthshield. In the US, our employees are offered healthcare cover through several providers including Cigna and Kaiser, with employees able to select the level of healthcare cover they want.

While the pandemic has curtailed the opportunity to hold face-to-face meetings and events in 2020 we have looked for ways to ensure that our people are engaged, motivated and looked after. At our manufacturing sites we have provided meals to employees in staff canteens enabling employees to get a healthy meal and avoid the need to travel and expose themselves to risks. Meals have either been subsidised or provided for free.

Several of our sites including Bury St Edmunds, UK and Cartago, Costa Rica, offered flu jab clinics during the year with over 140 employees taking up the offer of flu jabs.

Health and safety

An important part of our culture is to ensure that all our employees are able to work in a safe and secure environment and we encourage our management and employees to actively take responsibility for this. 2020 has added an additional complication with the business having to deal with the impact of COVID-19. From the outset of the pandemic we have implemented stringent safe-working practices at all our sites around the world following local government guidance and ensuring a minimum Group-wide standard. At the start of the pandemic, many of our sites were closed for a period of time with employees either working from home, placed on furlough or similar arrangements. As permitted, we have reopened our sites, especially the manufacturing sites of Bury St Edmunds, Feltre, Cartago, Ashby-de-la-Zouch, Irvine, Cary and Stroud, ensuring that only those employees necessary have been on site and that strict safe-working practices are adhered to. This has included social distancing measures, wearing of masks, ensuring that employees regularly wash hands, providing tests if required, ensuring that travel to and from work is by safe means, regular cleaning of facilities and also ensuring that the workflow around sites ensures social distancing. Where employees have been able to work from home, we have provided appropriate equipment to enable them to ergonomically continue to work during this challenging period. Each site has prepared risk assessments to mitigate the risks around COVID-19 and practices have evolved as the pandemic has progressed.

We have actively recorded where employees have been infected or have had to self-isolate and provided support where possible. We have tracked health and safety performance throughout the pandemic to ensure that issues are identified early, that employees feel safe and that best practice is shared across the Group.

We have a Health and Safety policy that is available on our website. This policy sets guidelines for the prevention of accidents and work-related ill health and provides guidance for the adequate control of health and safety risks arising from work-related accidents. We expanded the policy in 2020 to reflect the reality of dealing with COVID-19. The policy is communicated to site management and employees. Our objective is to eliminate all accidents on site and while we achieved this for accidents resulting in over three days' absence in 2020, we still experienced accidents resulting in less than three days absence.

All accidents and near misses are reported, whether they result in absence from work or not. Any remedial actions are identified and implemented to prevent repeat occurrences. Reporting is prompt and any accident resulting in over three days' absence is reported to senior management as well as the Group Chief Executive within 24 hours. Every month the health and safety performance of each Division is reviewed with the Divisional Health and Safety representatives, Group Risk Assurance Manager and Group Company Secretary to review accidents or near misses, corrective measures and to ensure that best practices and lessons learned are shared across the Group. Health and safety performance is regularly reviewed with the Executive Management Board and at every Board meeting.

Our five-year accident record is shown on the following page and details the number of accidents resulting in over three days' absence from work across the Group. There were no such accidents in 2020 compared to two in 2019. There were, however, 43 accidents resulting in under three days' absence and 109 recorded near misses. Each one of these events has been investigated and remedial actions taken. There have been no work-related fatalities since the Group began collating health and safety statistics in 2002.

Responsible business

Employees (continued)

All major sites have Health and Safety Committees who hold regular meetings to review safety, ensure that operating practices are safe and address potential safety concerns. Our structure for health and safety management across the Group is as follows:These included: dividing workers into shifts to ensure social distancing and use of smart working; continuous training on new safety standards in operation at sites; body temperature measurement upon entrance to premises; distribution of masks and sanitising products to employees on site; ban of visits from customers and suppliers to our premises; weekly site sanitisation; serological tests and rapid swab tests performed in a screening mode every few weeks. All canteens and offices were equipped with Plexiglass separators and safe virtual communication, and safety check lists were applied in all our offices worldwide, also according to local legislation.

During 2020, we continued to train our people on safe working practices relevant to their roles and also expanded this to cover safe working practices on our sites in response to COVID-19 and ensure that our employees working from home did so in a safe manner. All employees received training on COVID-19 safety measures during 2020. Notably, training material focused on social distancing, need to wear masks, regular hand washing and to ensuring employees are sitting properly at their desks with adequate lighting and taking regular breaks to ensure their wellbeing while working from home.

The Production Solutions' sites in Cartago, Costa Rica, and Bury St Edmunds, UK, as well as the Imaging Solutions' sites in Bassano and Feltre, Italy, were certificated with the standard UNI EN ISO 45001. This means that over 700 employees (44%) of the Group are covered by accreditation on health and safety. This management system audit helps in building a framework to manage health and safety impacts and in meeting legal compliance.

To protect employees' health and to reduce the risk of transmission within the Production Solutions Division, consistent standards that met or exceeded local standards were implemented globally during 2020. These included social distancing measures, increased sanitising and hygiene provision, maximum attendance on site for those unable to work from home and additional employee training and guidance for all working situations. These were audited by the Division's occupational health service provider and BSI Auditor. These measures ensured good business continuity within Production Solutions.

4 accidents

The Imaging Solutions Division also gave the highest priority to the health and safety of employees, implementing several actions to prevent and protect during the pandemic.

Representing 239 accidents per 100,000 employeesAverage number of employees - 1,676

Working on site in Costa Rica

An employee working safely on site in Production Solutions, Bury St Edmunds, UK

Sharesave 2020

Level of Sharesave participation as at 31 December 2020

We offer the Sharesave Scheme to all our employees in the UK, US, Italy, Costa Rica, France, Germany, Singapore, Hong Kong, Japan, Australia, New Zealand and Israel. Sharesave allows employees to save a fixed monthly amount up to £350 with the option to purchase a fixed number of shares in the Company at a discount of up to 20% on the prevailing share price at the time of the offer. Sharesave is extremely popular among our employees as a valuable employee benefit and we have specifically improved communication of Sharesave to employees to ensure it is well understood and that as many employees as possible participate in the scheme. This has included face-to-face presentations at sites and eye-catching communications. In 2020, given the challenges presented by COVID-19 with many employees working from home and social distancing on sites, we used a microsite on the Company's website to make the offer to employees with a short explanatory video and supporting materials. Communications use plain language to explain Sharesave and are translated into local languages. As a consequence, participation rates have continued to improve and by the end of 2020 over 1,000 Group employees participated in Sharesave.

CountryOutstanding options at 31-Dec-2020

Active participants at 31-Dec-2020

AUSTRALIA COSTA RICA FRANCE GERMANY HONG KONG ITALY JAPAN NETHERLANDS NEW ZEALAND SINGAPORE ISRAEL

19,276 17

32,149 43

11,590 6

37,844 20

20,407 8

645,001 318

74,165 35

3,046 1

31,510 16

22,452 7

111,966 49

UK USA

401,717 229

335,837 271

Total

1,746,960

1,020

We plan to offer Sharesave in future years to enable as many of our employees as possible to share in the success of the Company. With this in mind we obtained shareholder approval at the 2020 AGM to renew the Sharesave scheme for a further ten years.

The launch of Sharesave has become an annual tradition in Ashby that is genuinely looked forward to. The microsite set up to promote the scheme this year was positively received, especially by those new to the process.

Sharesave microsite

Annette Grigg

HR Business Partner UK & DE, Vitec Imaging Solutions, UK

Responsible business

Employees (continued)

Due to the pandemic, I started working from home in 2020. I'm safe and I'm able to do my job in the same way. The support from Vitec during these hard times has been crucial to carrying on.

Mariel Gonzalez

Senior Quality Engineer Anton Bauer/Litepanels, Vitec Production Solutions, Costa Rica

Diversity and inclusion

Benefits

We strive to employ a diverse workforce and foster an equal opportunities culture, and our Code of Conduct sets out an express prohibition on discrimination of any kind. 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. Flexible working policies are in place across our three Divisions and open to all employees. This is usually granted, unless the needs of the business cannot otherwise be met.

It is Vitec's policy that applications for employment by disabled persons are always fully considered, bearing in mind the respective aptitudes and abilities of the applicant concerned. In the event of employees becoming disabled, all reasonable effort is made to ensure that their employment within the Group continues.

We employ around 1,600 people in 11 countries who are managed in accordance with local employment legislation, policies and our organisational values. The Group adopts and adapts comprehensive benefits packages as appropriate to ensure we attract and retain the right talent. These benefits assist in supporting our employees and allow us to remain competitive in a global market where talent is in short supply. A supplementary labour agreement was negotiated during 2020 for Italian employees with the aim of keeping pace with the latest ways of working in the new digital era, especially making employees feel part of the Company and ensuring the right work-life balance.

It is our policy that the training, career development and promotion of disabled persons should be, as far as possible, identical to that of all other employees. Our Diversity and Inclusion Policy is available on our website.

Employees are given the option to join pension plans appropriate to local markets. In the UK, this involves a Company-approved pension plan with minimum employer and employee contributions (currently 8% Employer and 4% Employee), and in the US a 401k plan. Since April 2014 in the UK, all employees except for those who have expressly opted out, are auto-enrolled into a qualifying pension plan.

Employee turnover by Division

The table shows employee turnover in 2020, reflecting employees who had resigned from their employment within the Group.

Creative Solutions 9.0%

Production Solutions 2.1%

Imaging Solutions 2.9%

European Services 4.0%

Group/Head office 0.0%

Average across the whole Group 3.6%

Our UK defined contribution pension arrangement is with Hargreaves Lansdown and we are committed to improving employee education on pensions and other financial matters and to improve the overall pensions offering. Hargreaves Lansdown ran several workshops online in 2020 due to the pandemic with focus on the investment decision-making taken by employees and expectations around retirement. We have seen higher levels of engagement and investment decision-making by employees. Over 340 employees in the UK now participate in the Hargreaves Lansdown pension arrangement and investment in the default fund represents 60% of investments held, showing that many employees are taking active control of their investment decisions. Further educational workshops will be held in 2021 to help educate our UK employees on this important employee benefit.

Gender diversity#

The Board continues to monitor progress on equality and the Group's gender breakdown at the end of 2020, with 2019 as a comparison, is shown below. The Company works to attract women to Vitec and to encourage them to apply for promotions.

We employ around 1,600 employees in 11 countries who work in accordance with local employment legislation, policies and our organisational values.

# Contractors are excluded.

• (1) Group Board of Directors are those listed on pages 54 to 55 of the Annual Report.

• (2) The Executive Management Board are those listed on page 60 of the Annual Report and includes the Group CEO and Group Finance Director.

• (3) The Senior Management Team are the senior most employees or teams within each Division and Group head office.

2020	2019
M	%	F	%	M	%	F	%
Group Board of Directors(1)	6	86%	1	14%	6	86%	1	14%
Executive Management Board(2)	6	86%	1	14%	6	86%	1	14%
Senior Management(3)	28	88%	4	12%	31	86%	5	14%
Rest of Organisation	1,041	70%	446	30%	1,089	69%	484	31%

Regular temperature checks in Italy

We continually review and expand training options for staff. In 2020, the Imaging Solutions Division initiated several training courses including a new appraisal system and also a specific course for non-Italian employees across the Division to learn to speak and read Italian.

Vitec is supportive of employees enjoying a healthy work-life balance. Flexible working policies are in place across our businesses, and a positive impact can be seen. Examples of flexible working policies above statutory requirements include: smartworking, part time working for parents with young children, optional maternity leave and flexible hours working.

In 2020, given the increasing risk around cyber security and the ever present need to ensure that data is securely handled, we ran an online training programme for our employees around the need for vigilance on cyber security and the issue of data protection. Approximately 800 employees have completed this training and we will continue to build on awareness and knowledge. This has been increasingly important in 2020 with a large number of our employees having to work remotely as part of the response to COVID-19.

Each Division provides further benefits for employees: discounted childcare options and gym memberships in the UK, Italy and US; long service awards; or a cash allowance to be spent on a multitude of benefits such as gym membership or private healthcare to suit an individual's needs in Italy.

Employee volunteering

In Italy where we employ over 450 employees, the supplementary labour agreement was extended for 2021. The agreement focuses on employee benefits including flexible working, childcare and bonus arrangements.

We encourage a culture of active participation in the communities in which we operate and staff around the world give their time and money to various social programmes in their local communities. Our HR policies provide the opportunity for employees to take time off from work to dedicate time to support social programmes and charities in their local communities. In response to the pandemic, Imaging Solutions had 15 employees based in Cassola, Italy, volunteer for worthwhile causes around the world, sharing their skills and knowledge.

Many of our sites including Feltre, Bassano, Bury St Edmunds, Irvine and Costa Rica either have on-site canteens providing good, healthy meals or organise for meals to be brought on site. Such arrangements are subsidised for employees.

Diversity and Culture

Our employees are entitled to freedom of association and trade unions operate at our sites in Cassola and Feltre, Italy, and Bury St Edmunds, UK.

We promote a diverse workforce and culture of inclusivity. Our Code of Conduct expressly prohibits any form of discrimination. Page 48 of this Annual Report give further details about our culture and diversity. Our Diversity and Inclusivity Policy is available on our website.

We offer our employees maternity and paternity leave above statutory requirements and we operate flexible policies to help our employees with dependants' care needs and special leave if necessary to deal with exceptional personal circumstances.

Training and development

Vitec aims to offer a comprehensive training and development programme, linked to performance reviews and development plans, taking all Divisional requirements into consideration. In 2020 the Board reviewed leadership and succession plans across each of the Group's Divisions to ensure there was a structured approach to growing and developing the Company's future leaders.

All employees receive training on health and safety procedures that are appropriate to their line of work and environment. For example, training in warehouse operations, working at heights, fire safety or more general initiatives to make employees aware of the dangers that can be encountered in the execution of their various duties.

Working safely at our Cary, US, site

Responsible business

Community

Our vision

To support and integrate with the local communities and economies where we operate.

Our approach

We invest in projects that align with our core values and look for opportunities to positively impact one disadvantaged person for every Vitec employee in the communities in which we operate.

The positive power of images

We believe in the positive power of images to convey ideas, create wealth and positive social and environmental value. As a leader in our markets, our employees are experts in photography, videography, engineering and technology, and we aim to share this knowledge to enable positive social and environmental outcomes. In particular, we focus on ways in which our products and skills can benefit those who are disadvantaged.

Supporting our communities

Access to our communities was restricted due to the pandemic but our teams adapted to support our communities remotely and via donations. The following are a few examples of positive contributions we made in 2020 in the communities in which we operate.

Investing in future industry talent

Vitec often donates or lends its professional photographic, TV and cinematic equipment to educational institutions around the world in order to assist with the upskilling of future talent in the image capture and sharing industry. Examples of this have included Kingston University, UK, and the University of North Texas, US.

Picture of Life

Imaging Solutions' Picture of Life project is a photography education initiative comprising training programmes for young people who have faced hardship and disenfranchisement. The collaboration between Vitec, the non-profit organisation, Jonathan and the Italian Justice Ministry started in 2014. As part of it, Divisional ambassadors teach techniques in different locations and under different circumstances (e.g. city, nature, wildlife), aimed at educating young people to use photography and videography to work through difficult personal issues.

Vitec supports the project by donating photographic equipment to equip participants with all they need for the duration of the programme and by organising all aspects of the course. Since its initial launch in Italy, the initiative has proved so successful that it has been replicated in New York and Chicago, US; Shanghai, China; Johannesburg, South Africa; and the UK. The 2020 course was run by Imaging Solutions' ambassador Salvatore Esposito and the focus was on Street Photography in Naples. The participants' goal was to capture meaningful images related to the "new normal" the city was experiencing due to the pandemic.

Charity

The Production Solutions team in Costa Rica took part in a textbook donation that supported 12 students and encouraged them to consider a technical or engineering career in the future. The team in Costa Rica also assisted a further 12 students at the Argentina Góngora School by providing them with new school kit to enable them to continue with their primary school education.

The Production Solutions team in Shelton, US, made virtual monetary donations to the Connecticut Food Bank, surpassing their fundraising goal to raise over $600 which allowed 52 turkeys for Thanksgiving to be purchased to support struggling families. The team in the US also donated gifts to the 2020 Under the Tree Project which benefits families affected by domestic violence, mental illness and addiction.

School kit donation in Costa Rica

Textbook donation in Costa Rica

In Imaging Solutions in Italy, Christmas cakes were purchased from the Giotto Bakery in Padua. Located inside a prison, the bakery allows detainees to learn a skill which they can use upon their release.

The Production Solutions US-based sales team donated over $1,200 in 2020 to provide bikes to young children through a Connecticut organisation called Bikes for Kids whose objective is to provide bikes to children in need.

In April 2020, Creative Solutions launched a project called The Still Rolling Initiative in response to the impact of COVID-19 on the filmmaking community. The business wanted to throw a lifeline to individuals who had lost work and been impacted by the pandemic. A total of over $14,000 was raised through a series of initiatives enabling grants and donations to be made to charities and individuals in the filmmaking community.

Partnership with Richmond Theatre Trust to jointly run Young Filmmakers courses

In January 2020, Vitec announced a three-phase partnership with The Richmond Theatre Trust to reach one local teenager in the Richmond, UK, area who has faced hardship or marginalisation and not had access to the creative arts, for every employee at the Company's Richmond Head Office. The aim of the partnership is to give teenagers new life skills and build their confidence in the creative arts. The first phase took place in February 2020, with 20 teenagers taking part in a four-day filmmaking course and receiving an Arts Award qualification.

Vitec donated equipment to each participant including the JOBY GorillaPod Mobile Rig as well as a £2,000 contribution to course supplies. The participants received a product demonstration from Vitec before breaking into film companies. A screening session for friends and families was held on the final day. Feedback from participants was overwhelmingly positive and Vitec plans to deliver phase two in 2021.

We estimate that in 2020 the Group as a whole donated approximately £15,000 to charitable and community good causes.

Apprenticeships and work experience initiatives

In Italy, the Imaging Solutions team continued to collaborate with universities to share employee know-how with students and future industry professionals via webinars and online lectures.

A mentoring partnership was set up with the Universities of Venice and Padua which included virtual meetings and online HR lectures.

The Production Solutions team in Costa Rica worked with a local university to develop a ventilator in response to the pandemic for use in Costa Rican healthcare services.

Participants in 2020's Picture of Life programme

The Still Rolling Initiative

Responsible business

Environment

Our vision

Ensuring we limit any negative impact on the environment and protect the natural resources we rely on, creating long-term sustainability for the business.

Our approach

We adopt technologies, materials and processes that ensure we minimise our impact on the environment and maximise our use of sustainable resources. Our environmental policy is available on our website.

The ESG Committee that we have established has responsibility for climate change and the climate change policy for the Group. It will oversee environmental reporting and initiatives to mitigate the Group's impact upon the environment.

ESG Committee

We have established an Environmental, Social and Governance ("ESG") Committee that coordinates the Group's environmental, social and governance initiatives. It meets regularly and its terms of reference are available on the Company's website. The ESG Committee comprises representatives from each Division and the Head Office and it regularly reports on ESG initiatives to the Board and is responsible for developing and implementing our ESG programme. Priorities for 2021 will be developing the Company's environmental initiatives including responding to climate change and reporting on wider environmental matters.

Vitec's products and processes

We continue to implement initiatives aimed at sustaining and protecting the environment in the areas of energy efficiency, reducing carbon emissions, water use and waste; and sustainable use of materials, packaging and waste disposal. We also encourage a culture of environmentally sustainable behaviour at work and ensure that our employees understand how they can contribute.

Our products and services have a comparatively low impact on the environment. We use low hazard materials, minimise the use of resources during the manufacturing process and search for materials that are sustainable and can be recycled or re-used.

Our efforts and environmental awareness have continued to evolve, not only to comply with regulations but also to make our business better and more sustainable.

The pandemic put a restriction on international travel but all facilities and locations were able to utilise their on-site conferencing facilities with virtual meetings held with internal and external parties. This is a practice the Company intends to continue with in the future to reduce the need for unnecessary air travel.

We have set ourselves the objective to be carbon neutral by 2050 and are starting a planned programme to deliver on this.

Energy use

We monitor and track our usage of electricity, gas and water across our manufacturing, warehouse and administrative sites and make efforts, where possible, to reduce our usage.

Many buildings within the Group have timer and motion sensors for lighting to save on electricity usage. The majority of the Group's sites already have or are working towards having LED lighting throughout, which will significantly cut our overall electricity usage. For example, in 2020 in Feltre, Italy, 220-240W neon lights were replaced with LED bulbs resulting in a 58,000kWh reduction and a cost saving of £11,000 per annum. The Feltre facility also installed new air compressors with an energy saving inverter system. Other buildings have programmable thermostats that are centrally managed to optimise heating and cooling needs.

Electricity at our Bury St Edmunds, UK, and Cartago, Costa Rica, facilities is supplied from renewable energy sources to reduce the impact of our operations on the environment. Due to the pandemic and resulting changes in working patterns and number of employees on site, there has been a significant reduction in energy use at these manufacturing sites.

The electricity contracts with Green Certificates at our two main sites in Italy were renewed in 2017 until 2021, confirming Vitec's commitment to use energy generated by renewable sources. Sites in Italy, Bury St Edmunds and Costa Rica maintained their ISO 14001 compliance which were renewed in 2020.

Sustainable resource management

Greenhouse Gas Reporting and Energy Usage

Our 2020 Greenhouse Gas Emissions (Scope 1 and 2) and Energy Usage compared to 2019 are set out on the next page.

Emissions arising from on-site energy use and owned transport have been recorded at 22 of our sites in the 12 months ending 30 September 2020. We have selected these sites as they are the material operating sites for the Group, and included operations at Cassola and Feltre, Italy; Bury St Edmunds, UK; Cartago, Costa Rica; Irvine, USA; Ashby-de-la-Zouch, UK; Stroud, UK; Ra'anana, Israel; Cary and Shelton, USA. These sites represent over 95% of Group revenue for 2020. Smaller sites have been excluded as their size and operations are comparatively immaterial for Greenhouse Gas or Energy usage reporting.

Reporting is based on the requirements for quoted companies introduced by The Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Reporting) Regulations 2018 effective from 1 April 2019. In reporting our Greenhouse Gas Emissions we have followed the UK Government's Environmental Reporting Guidelines issued in March 2019. Our operational carbon footprint is stated in tonnes carbon dioxide (CO2e) equivalent and covers Scope 1 and 2 emissions as described in the GHG Protocol - Corporate Standard (March 2004 revised edition). The financial control approach has been applied in our corporate GHG reporting. We have selected a reporting period of 1 October 2019 to

30 September 2020 to enable data to be collated in time for inclusion in the Annual Report. The Intensity Ratio we have adopted is tonnes Total Carbon Dioxide equivalent (CO2e) per £m of Group revenue.

Scope 1 Emissions (direct emissions from our own operations e.g. fuel combustion) are converted to CO2e figures using conversion factors published by BEIS/DEFRA in June 2020. These factors are also used for converting UK and global data into kWh.

Scope 2 Emissions (indirect emissions generated from purchased electricity) are calculated based on the "location" method outlined in the GHG Protocol. For all UK facilities we use the BEIS/DEFRA 2020 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. For USA sources we use the latest regional intensity factors available from the Environmental Protection Agency's Emissions & Generation Resource Integrated Database (eGrid).

The following table sets out the emissions for 2020 compared with 2019. Carbon emissions relating to diesel transport were understated in 2019. The table below shows the corrected Scope 1 figure and corresponding revised total.

GHG Scope 1 & 2 Emissions

Scope

1 2

Global total (excluding UK)

UK total

UK proportion of total

Total scope 1 + 2 Intensity

(Tonnes CO2e per £m of Group revenue)

2020 tonnes

CO2e

833 1,328

2,072 2,677

2,905 4,005

630 724

17.8% 18.1%

10 10.64

Energy Use

Global total (excluding UK) UK total

10,860,347 15,432,224

2020 kWh

2,900,826 3,109,797

UK Proportion of total

2019 tonnes

CO2e

2019 kWh

21.1%

16.8%

COVID-19 impact

The pandemic has understandably led to reduced carbon emissions for the period March 2020 to September 2020. Electricity consumption has been reduced due to safe working practices introduced at our facilities to deal with the pandemic, including fewer employees working in our facilities and some facilities being closed for a period of time with many staff working from home. Travel restrictions meant significantly fewer journeys were made in terms of visiting customers, suppliers and distributors during the pandemic. It is reasonable to expect that as the pandemic subsides and normal working practices begin to return that carbon emissions will increase. The Group's response to the pandemic including the safety and wellbeing of its employees and the financial security of the Group has been the priority in 2020. We recognise however that our focus will shift over the next year or two to ensure that the Group works towards dealing with its impact upon the environment and climate change.

During 2021, we plan to capture the Group's water usage, waste and recycling initiatives at all our sites, as well as use of packaging, to report on the amount of business-related travel, including flights, and to report on this in a similar manner to Greenhouse Gas Reporting and Energy usage.

Various initiatives around the Group took place in 2020 to build on our work to reduce the amount of waste created in our operations. At our Production Solutions site in the US, Call2Recycle recycles batteries for the site as well as for existing Vitec customers. Tradebe in the US recycles electronic waste from the Shelton site. Waste metals at our Bury St Edmunds site are sorted and recycled with a return on revenue. We sort waste for recycling at our manufacturing sites in Italy, the UK, the US and Costa Rica using colour coded bins to improve segregation.

The Imaging Solutions Division launched the Safe & Green Project which aims to reduce plastic use within the Division through a few small but significant actions. All employees were provided with reusable stainless steel water bottles to eradicate the need for plastic water bottles. Still or sparkling water is available from dispensers in all break areas. Disposable plastic coffee cups were replaced with tetra pack ones and all stirrers are now wooden. With this initiative the Division estimates that they will eliminate 1,500kg of plastic waste per year from their Italian sites alone. The aim of this initiative is also to encourage employees to start adopting sustainable behaviours in their everyday lives.

The printers at our Italian facilities are automatically programmed to print in black and white and double-sided to reduce costs, waste and emissions.

Going forward, we will have a greater focus on product sustainability. For example our Imaging Division has made sustainability a pivotal part of future product development, which includes making extensive use of recycled packaging and textiles.

The Production Solutions Division has adopted DocuSign to reduce its impact on the environment by enabling employees to electronically sign documents reducing the need for printing. DocuSign also helps to reduce the transmission of COVID-19 by avoiding the handling of paper and pens. The Division also reuses packaging boxes and bubble wrap to ship between sites to reduce waste generated.

Our Bury St Edmunds, UK, and Cartago, Costa Rica, sites are both certificated to ISO14001 environmental management systems. The Management system audit helps in building a framework to manage environmental impacts and assist in meeting legal compliance.

In our Creative Solutions Ra'anana office in Israel, colleagues have embraced a Green Revolution, whereby they aim to stop using disposable tools in order to reduce unnecessary waste.

None of the Group's businesses were subject to any environmental fines in 2020.

Board of Directors

Ian McHoul

Stephen Bird

Martin Green

BSc, ACA

MA

MA, MBA, ACCA

Role Chairman

Appointed to Board

25 February 2019 - tenure of 2 years (Chairman from 21 May 2019)Group Chief Executive

14 April 2009 - tenure of 11 years and 10 monthsGroup Finance Director

4 January 2017 - tenure of 4 years and 1 month

Nationality British

British

British

Age 61

60

52

Committee membership Nominations (Chairman)

Skills and membership

Ian is currently a non-executive director and the Chairman of the Audit Committee of Bellway plc, Young & Co's Brewery P.L.C and Britvic plc, where he is also Senior Independent Director. He was formerly 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 to 2017, Group Finance Director at Scottish & Newcastle plc from 2001 to 2008 (Ian was with the business from 1998 in the role of Finance Director for Scottish Courage Ltd), and Finance & Strategy Director, The Inntrepreneur Pub Company from 1995 to 1998. Prior to this he held several roles with Foster's Brewing Group and qualified as a Member of the Institute of Chartered Accountants in England and Wales when with KPMG.

NominationsStephen is currently a non-executive director and the Senior Independent Director of Dialight plc. He was formerly a non-executive director of Umeco plc. He was responsible for setting up Weir's Oil & Gas Division, part of Weir Group plc, and was its Managing Director until he left to join Vitec. Prior to this he worked in senior roles at Danaher Corporation, Black & Decker, Unipart Group, Hepworth PLC and Technicolor Group. Stephen has an MA from St John's College, Cambridge.

-

Martin was appointed to the Board on 4 January 2017 as Group Business Development Director. Martin has been with the Group since April 2003 in a variety of roles and on

10 February 2020 was appointed Group Finance Director. Martin is an ACCA-qualified accountant and began his Vitec career in financial reporting. He has an MA in Law from Trinity Hall, Cambridge, and an MBA from Cranfield School of Management. He trained and qualified as a solicitor with Linklaters & Alliance in the UK. Previously he held corporate development positions at Bunzl plc, at a broadcast equipment rental business and worked in investment banking at N M Rothschild.

Christopher Humphrey

BA, MBA, FCMA

Duncan Penny

Caroline Thomson

Richard Tyson

MA

BA, D.Univ

BSc (Hons), DipM, FRAes

Independent Non-Executive Director

Independent Non-Executive Director

Independent Non-Executive Director

Independent Non-Executive Director

1 December 2013 - tenure of 7 years and 2 months

1 September 2018 - tenure of 2 years and 5 months

1 November 2015 - tenure of 5 years and 3 months

2 April 2018 - tenure of 2 years and 10 monthsBritish

British

64

Audit (Chairman), Nominations, Remuneration

58

Audit, Nominations, RemunerationBritish

66

Audit, Nominations, Remuneration (Chairman)British

50

Audit, Nominations, Remuneration

CorporateGovernanceChris is Senior Independent Director and Chairman of the Audit Committee of AVEVA Group plc and Non-Executive Chairman of Eckoh plc. He was a non-executive director of SDL PLC from June 2016 to November 2020 and formerly Group Chief Executive Officer of Anite plc, holding that position from 2008 until August 2015. Previously, he was their Group Finance Director between 2003 and 2008. He has held senior positions in finance at Conoco, Eurotherm International plc and Critchley Group plc. He was previously a non-executive director of Alterian plc between 2011 and 2012. He is a Chartered Management Accountant and a Fellow of CIMA.

Duncan is currently an Executive Director at XP Power having formerly been its Chief Executive from February 2003 to January 2021 and was previously its Finance Director from April 2000 to 2003. Duncan will retire from XP Power in April 2021. Prior to XP Power, Duncan held senior roles with Dell Computer Corporation and LSI Logic Corporation and was an audit manager at Coopers & Lybrand. Duncan has an MA in Chemistry from Oxford University.

Caroline is currently Chair of Digital UK, a non-executive director of UKGI and Chair of its Remuneration Committee, and a trustee of Tullie House Gallery in Cumbria. She was formerly Executive Director of English National Ballet where she is now a trustee. 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. She is a Fellow of the Royal Television Society, a trustee of The Conversation and of the National Gallery Trust. Caroline is a Deputy Lieutenant for Cumbria.

Richard is currently Chief Executive Officer of TT Electronics plc, holding that position since 2014. 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.

Corporate Governance

Chairman's statement

Our response to COVID-19 has been positive and timely and we have maintained our focus on business with strong governance.

This report provides detailed information on how Vitec has managed its response to COVID-19 and the governance, culture and framework under which Vitec operates.

COVID-19

The COVID-19 pandemic impacted Vitec earlier than many other businesses. The first effects were felt on our supply chain at the end of February, with half of the Group's revenue coming either from products sourced from China or made in Italy. We acted quickly and our focus was to safeguard our employees' health and wellbeing, continue to support our customers, protect the Group's financial position and manage our supply chain. The response of our teams has been outstanding. We prioritised actions to significantly reduce our costs, manage cash and reinforce our liquidity, and this has ensured that we are well placed to take advantage of growth opportunities going forward.

We developed and executed comprehensive operating guidelines and internal communications plans to inform, reassure and retain the trust of our employees. We implemented plans to deal with the short-term facility closures and fall in demand, which included short-time working and asking our employees to take annual leave or be placed on furlough.

All non-essential capital expenditure was postponed, pay rises were deferred, recruitment was frozen and all non-essential operating spend was reduced. We also took out Government support initiatives in the markets in which we operate as well as new financing facilities to see the business through the worst of the pandemic. In February 2020, the Group signed a new £165 million multicurrency Revolving Credit Facility with a syndicate of five banks, together with a £35 million accordion and extension options. We renegotiated the financial covenants tied to the Facility in May 2020 and borrowed a further £50 million under the UK Covid Corporate Finance Facility to ensure the financial security of the Group during this unprecedented period. We have announced that we will repay the CCFF in March 2021 given that markets are recovering and we are confident about the financial security of the Group. We will also repay £1.2 million of UK government furlough money.

Having announced a final dividend with the 2019 Full Year Results on 28 February 2020, given the impact of the pandemic, the Board announced on 25 March 2020 its decision to cancel the final dividend in respect of the full year 2019. This decision also applied to the interim dividend for 2020 that would normally have been declared in October 2020. The Board is mindful of the importance of dividends to the Group's shareholders and, given the strong management of the cash position and improving outlook of market conditions, the Board recommends the resumption of dividends. A final dividend of 4.5 pence per share is recommended, and subject to approval at the 2021 AGM, will be paid on 14 May 2021 to shareholders on the register on 23 April 2021.

The Group's long-term prospects remain strong. The Board is focusing on the growth potential from the launch of the complete 4K eco-system in the cine market as well as new wireless products for the adjacent live production market, plus JOBY smartphonography accessories in the independent content creator market. We have come through the most challenging period in the Company's history with a strong organisation, having looked after our people and stakeholders, and while 2021 will undoubtedly be a year of transition, we are well placed to continue to grow.

Governance and compliance statement

We have reported against the UK Corporate Governance Code 2018 ("the Code") issued by the Financial Reporting Council and applying to accounting periods beginning on or after 1 January 2019. The Code can be found atwww.frc.org.uk. My governance review, along with information in the Strategic and Remuneration Reports, explains how we applied its principles and provisions. Each principle was applied and provision complied with throughout 2020, as required by the Listing Rules, except for Provision 38. Provision 38 provides that Executive Director pension contribution rates (or payments in lieu) should be in line with those available to the workforce. As clarified on page 86 of this report, the CEO's pension contribution will change to 8% of base salary on 1 January 2023 and become aligned to the wider UK employee workforce.

The Board considers that the Annual Report taken as a whole is fair, balanced and understandable. It provides the information necessary for shareholders to assess the Group's position, performance, business model and strategy. To achieve this we asked the Executive Directors and the Executive Management Board to provide us with evidence around the content and process for preparing the 2020 Annual Report at our February 2021 Board meeting. The February 2021 Audit Committee meeting confirmed to us that: the 2020 financial statements are true and fair; the work of the external auditor was effective; and the process supporting the Viability Statement was robust. Consequently, the Board is able to confirm that the 2020 Annual Report taken as a whole is fair, balanced and understandable through reliance on management and knowledge of the following processes:

• - detailed planning including drafting guidance and coordinated project management;

• - a verification process dealing with the factual content of the Annual Report;

• - comprehensive reviews undertaken at different levels in the Group to ensure consistency and overall balance; and

• - a comprehensive review by the senior management team.

Board leadership and purpose

Throughout 2020, the Board remained the same and as detailed on pages 54 and 55 of this Report. The only change, as reported in 2019's Annual Report, was that Martin Green on 10 February 2020 was appointed Group Finance Director from the position as Acting Group Finance Director.

I believe we have the right-sized Board with the necessary balance of skills given the scale of our operations. The Board collectively has skills in the areas of strategy, finance, technology, human resources and global commercial experience to assist with the implementation of our strategy. The Board is also diverse in terms of professional and global experience. The Board has a strong independent element, with four independent Non-Executive Directors to ensure that the interests of all stakeholders are reflected in the running of the Company.

The Board satisfies itself that the Company's purpose is aligned with business practices through a variety of resources such as receiving regular monthly updates from the senior management team by way of video conference meetings. These updates are fed back to the Board by the Executive Directors on a regular basis as well as at scheduled Board meetings.

All Directors will stand for reappointment by shareholders at the 2021 AGM. Each Director provides a unique perspective on Company matters and brings to the Board specific skills. Biographical details for each member of the Board are on pages 54 and 55 of this report.

Culture

We strongly believe in doing business in the right way. Our Code of Conduct is available on our website, sets out our expectations around behaviours in all aspects of how we do business and conduct ourselves at Vitec. It is given to all employees and is available to all our stakeholders including customers and suppliers. Breaches of our Code of Conduct can result in immediate dismissal and senior management are focused on encouraging our employees to behave in line with our values and on promoting our purpose and strategy.

Health and safety is a key priority for our business, with the Board and management focused on safe working conditions and accurate reporting of any near misses and accidents supported by root cause investigations. At every Board meeting, the health and safety performance of our business is reviewed with any material issues discussed. Our five-year accident record can be found on page 46. Reports are provided to the Board on a monthly basis to track incidents and remedial actions taken as necessary. The detail of our health and safety practices is set out on page 45 of this Annual Report. COVID-19 necessitated that all our health and safety practices were urgently updated at the start of the pandemic to ensure that those employees attending our sites were able to socially distance and that appropriate preventative measures were taken.

We offer an independent whistleblowing service run by NAVEX that has been communicated to all our employees. Whistleblowing and the whistleblowing service is a Board responsibility. The Board receives regular updates on the whistleblowing service including its communication to employees, its operation and the detail of reports and investigations. This service enables employees or third parties to confidentially raise any concerns, especially if they feel unable to do so through normal line management channels. During 2020, four whistleblowing reports were raised through NAVEX relating to HR issues. The reports were independently investigated with Christopher Humphrey, in his role as Chairman of the Audit Committee, and he was kept informed on the reports and investigation. The detail of our whistleblowing service is set out in the Business Ethics section of this Annual Report on pages 42 and 43.

Due to the pandemic all Board site visits were postponed in 2020. Despite this, I still held several one-to-one phone calls with Divisional Chief Executives during 2020 to understand issues facing each Division. We hope to resume visits to our businesses in 2021 when appropriate to do so. We believe meeting face-to-face with employees and sharing key messages helps to promote the right culture and behaviours. The right business culture and tone from the top can only be promoted with proactive steps and leadership. The Board is optimistic that site visits to our operations and meeting with our people will recommence and further reinforce our values and culture.

In February 2020 Jon Bolton, the Group Company Secretary, was assigned Group HR responsibilities from Martin Green to enable Martin to focus on his new role as Group Finance Director. Jon was considered best suited to fill this role as he has wide Group experience and a good level of understanding about our people, organisation and remuneration benefits.

CorporateGovernance

Corporate Governance

Chairman's statement (continued)

In November 2020, we launched an Employee Wellness Programme supported by ICAS to cover our 1,600 employees and their families providing personal support and life management services. Employees received communication materials launching the service including an introduction from Stephen Bird and communications from ICAS and each Division had further communications with employees in team meetings and all-hands briefings. The programme is an extremely valuable resource and is there to support our people.

Caroline Thomson is the independent Non-Executive Director with responsibility for employee engagement. In 2020, despite it not being possible to meet physically face-to-face with employees, she held an employee engagement session by video conference with a number of our Creative Solutions employees in December to hear first-hand their views and opinions about working for Vitec, including any feedback during the pandemic. Employees from Irvine, Cary, Dallas and Ra'anana joined video conference meetings with Caroline and there were general discussions including the approach to safety and wellbeing, communications and a wide range of issues. Further employee engagement sessions will be held in 2021. Further information on her employee engagement can be found on pages 16 and 17 of the Strategic Report.

Strategy

Due to the fast-changing nature of COVID-19, Vitec was forced to reassess its strategic approach in March 2020. A base case model was prepared and an action plan to deliver the base case was discussed and agreed. The Board also agreed on revised objectives for 2020 with a new objective added to monitor progress on the Company's response to COVID-19 including the wellbeing and safety of employees, financial performance in line with base case, ensuring the financial security of the Company and that key stakeholders remained supportive. This new objective was clearly the priority for 2020.

In accordance with our Board programme, we conducted virtual strategic review sessions in June and December 2020. Out of this strategy review a detailed list of key strategic growth opportunities was identified. The pandemic has resulted in more content than ever being consumed by individuals and the Group is now faced with a series of new opportunities and while some traditional opportunities have been adversely impacted, the key is to focus on the new opportunities.

We will look to revisit our Blue Sky strategic review process again in 2021. We are confident about our growth strategy and that it will recover from the pandemic and deliver long-term sustainable growth for shareholders.

Board purpose

The role of the Board is to promote the long-term sustainable success of the Company, generating value for shareholders and contributing to wider society. To fulfil its duty, the Board has separate roles for each member and we have a clear division of responsibilities between the Chairman and Group Chief Executive. Full details of our respective roles and responsibilities can be found on our website.

It is my responsibility to manage the Board and to ensure that it is effective. I work closely with the Group Chief Executive and Group Company Secretary to achieve this by ensuring that all Directors: are kept advised of key developments; receive accurate, timely and clear information; and actively participate in the decision-making process. Board agendas are reviewed and agreed in advance to ensure each Board meeting utilises the Board's time mostefficiently. I encourage all Board members to openly and constructively challenge the proposals made by executive management led by the Group Chief Executive. I ensure that each Director properly exercises the power vested in them and in accordance with the Company's Articles of Association, relevant laws and any directions as provided by the Company in general meeting. 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 2020. The Board has a clear policy for dealing with any such conflicts or potential conflicts of interest. All Directors are reminded at the start of every Board meeting about their duties, including the need to disclose any conflicts of interest. The Group Company Secretary maintains a record of all declared conflicts of interest.

Maintaining stakeholder dialogue

During 2020 maintaining regular contact with our key stakeholders was a priority, which for the Board involves primarily our major shareholders and employees. This remains an important part of our activities and is fundamental to good corporate governance. The Executive Directors and Board members held meetings with each of our major shareholders tied into the strategy of the COVID-19 response, publication of our full year and half year results and also periodically as requested.

During these meetings we covered the ongoing pandemic, Group strategy, governance and remuneration matters. Caroline Thomson, in her capacity as Chair of the Remuneration Committee, also engaged with our major shareholders during 2020 to discuss executive LTIP and restricted share plan awards.

The skill, passion and dedication of our employees in delivering products and solutions to enable our customers to capture and share exceptional content is evident to see. Our employees are our greatest asset and we ensure we support them in succeeding in their roles. We have a talented and stable executive management team, with great experience in our markets and who are clearly incentivised to deliver on our growth strategy. Engagement with our employees during 2020 is covered in detail on pages 16 and 17 of this Report.

2020 and 2021 Annual General Meeting

Due to the pandemic the Board considered the impact of the Government's Stay at Home Measures and the ICSA guidance on the 2020 AGM. The 2020 AGM was held at the Company's registered office on Wednesday, 27 May 2020 taking into account the safety and wellbeing of all employees and shareholders. Shareholders were unable to attend the AGM with only the Company Secretary and I, the Chairman, attending in person, to ensure that the meeting was quorate and to conduct the business of the meeting. No other Directors were present in person. The meeting was limited to the formal business as set out in the AGM notice dated 25 March 2020 and the voting results of all resolutions put before the meeting were announced to the market following the AGM.

As previously explained, we withdrew the resolution in connection with the 2019 final dividend at the 2020 Annual General Meeting.

Subject to Government advice and the ongoing COVID-19 measures, it is the Company's intention to hold the 2021 AGM on 6 May 2021 at Bridge House, Heron Square, Richmond, TW9 1EN. In light of the current COVID-19 restrictions, shareholders will not be permitted to attend the AGM in person but can be represented by the Chairman of the meeting acting as their proxy. Shareholders are encouraged therefore to submit their votes by submitting a proxy form. More information is outlined in the Notice of AGM.

Details of the AGM are included in the Notice of Meeting that accompanies this Annual Report and which is available on our website.

Shareholders voting at the AGM

All resolutions are voted on by way of a poll. This reflects best practice and ensures that the views of all shareholders who submit proxy forms are considered in terms of the actual voting at the meeting. The outcome of the voting at the AGM will be announced by way of a London Stock Exchange announcement and full details will be published on the Company's website shortly after the AGM. At the 2020 AGM, over 79% of our issued shares were voted by way of proxies submitted. Separate resolutions are proposed for each substantive issue upon which shareholders are asked to vote.

Shareholders attending the AGM can ask questions at the meeting. If a resolution is opposed by a significant proportion of shareholders, the Company will endeavour to explain, as soon as practically possible following the meeting, the actions it intends to take to understand shareholders' concerns and how best to address the concerns being raised. The Board considers that a vote against in excess of 20% of shareholders voting to be significant.

Other forms of shareholder communication

We publish an Annual Report each year, usually in March, following the end of the financial year on 31 December. We will continue to send out the Notice of Meeting and related papers to shareholders at least 20 working days before the AGM, to allow shareholders to review the Annual Report in advance of the AGM and create an informed view of the Group. The Board communicates with its shareholders via a combination of public announcements through the London Stock Exchange, analyst briefings, roadshows and press interviews at the time of the announcements of the half year and full year results and, when appropriate, at other times in the year.

Regular updates from the Executive Directors at Board meetings keep the Board advised of the views of major shareholders.

We also receive monthly reports on market and investor sentiment along with a full shareholder analysis.

Our website contains information on the Group including financial results, presentations, investor relations and products and services. Shareholders and other stakeholders are encouraged to view the website and sign up to our alerts to receive up-to-date information.

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, mayrequire 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.

I also confirm 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.

Division of responsibilities

The Group Chief Executive is responsible for managing the business. The Executive Management Board supports the Group Chief Executive in this duty. I continue to work closely with Stephen Bird and his direct reports through regular meetings and speaking frequently outside of scheduled Board meetings to discuss the strategy and performance of the business.

Christopher Humphrey is the Senior Independent Director having been appointed to this role with effect from 2 April 2018. In this role, Christopher leads the process around the evaluation of my performance as part of the 2020 Board evaluation, information on which is provided later in this report. The Board considers that Christopher Humphrey remains independent and has the right experience and background to fill this important role on the Board.

The Board has a Schedule of Matters Reserved to it which includes: setting of Group strategy; setting of annual operating budgets; review of progress against strategy and budgets; approval of financial results; approval of dividends; changes in Board composition including key roles; consideration of acquisitions and disposals; approval of material litigation; changes in capital structure; setting of risk management strategy; and various statutory and regulatory approvals. The Board meets regularly throughout the year to receive updates on business performance and consider proposals within its remit. The Schedule of Matters Reserved to the Board is reviewed annually and is available on our website. Despite the challenges presented by the pandemic, the Board continued with its normal programme of meetings, and business and held several short notice meetings to deal with specific matters relating to the pandemic. While this was not face-to-face, meetings were held by video conference and ensured that the Board continued to perform effectively.

CorporateGovernance

Corporate Governance

Chairman's statement (continued)

Vitec's governance and control structure is as follows:

Board

Executive Management Board - Comprising the Group Chief Executive, Group Finance Director, Divisional CEOs, Group Company Secretary and Group Communications Director - Chaired by Stephen Bird	Nominations Committee - Comprising the Chairman, Group Chief Executive and the independent Non-Executive Directors - Chaired by Ian McHoul	Remuneration Committee - Comprising the independent Non-Executive Directors - Chaired by Caroline Thomson	Audit Committee - Comprising the independent Non-Executive Directors - Chaired by Christopher Humphrey
- Manages the day-to-day operations of the business Read more on page 61	- Oversees and reviews the overall composition of the Board - Oversees succession planning of the Board - Oversees the leadership skills requirements and succession planning of key senior management Read more on page 68	- Reviews framework and policy on Executive Director and senior management remuneration and benefits - Reviews and benchmarks incentive arrangements and ensures they fit with the Group's culture Read more on page 70	- Responsible for financial control and financial statements integrity - Oversees risk management and control systems - Reviews external auditor effectiveness and leads audit tender process - Monitors internal audit mechanisms and process and effectiveness Read more on page 72

Board governance

The Board has delegated certain items of business to its principal Committees, which are detailed above. This ensures the Board has sufficient time to deal with strategic matters while retaining oversight on salient points by virtue of its Committees. The Board's principal Committees are the Audit, Remuneration and Nominations Committees. Each Committee has terms of reference, copies of which are available on our website. Each Committee can seek any information it requires from any employee of the Company in order to perform its duties and to obtain, at the Company's expense, outside legal or other professional advice on any matter within its remit. Each Committee annually reviews its performance, constitution and terms of reference to ensure it is operating effectively and recommends any changes it considers necessary to the Board for approval. Each Committee's responsibilities and activity in 2020 are set out later in this report.

Directors' meetings

Ordinarily, the rest of the Board and I would spend time together outside of scheduled Board meetings to learn not only about the business but each other's skills and personalities, which helps ensure an effective, unitary Board. However, during 2020, apart from the February 2020 Board meeting and due to COVID-19,we could not hold the usual dinners for the Board before each scheduled Board meeting to enable Directors to informally discuss current business matters. This informal environment creates an opportunity for members of the Executive Management Board, other senior management or external advisors to attend to give updates on the business. This is a very useful and effective format. We continued to hold Non-Executive Director only meetings, scheduled around Board meetings but held by video conference. These enable the Non-Executive Directors to raise any issues without executive management present. As Chairman, I feed back to the Group Chief Executive on these discussions and take any actions necessary to address matters raised. As soon as practical to do so we plan to restart this process of meeting informally as it is a valuable opportunity to improve the running of the business.

Several days in advance of meeting, the Board and its principal Committees receive detailed agendas and supporting papers to enable each Board member to be informed with timely, accurate and clear information on proposals coming forward. The Group Company Secretary in conjunction with the Chairman oversees this process to ensure that the Board and its Committees work effectively. The information includes detailed budgets, forecasts, strategy papers, reviews of the Group's financial position and

operating performance, and annual and half yearly reports. Each Director receives a detailed monthly report from the Group Chief Executive, Group Finance Director, 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. During 2020 and in response to the pandemic, the Group Chief Executive increased the frequency of updates to the Board, providing information on the safety of our employees, site operations, financial performance and the Company's response to the pandemic.

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. The Group Company Secretary's appointment and removal is a matter to be considered by the Board.

All Board and Committee meetings are minuted by the Group Company Secretary. Minutes are reviewed by the Chairman of that meeting before being circulated to all Directors and then tabled for approval at the next meeting.

Directors' attendance

Details of Directors' attendance at Board and Committee meetings is shown in the table below. All Directors attended each scheduled Board meeting and the six called at short notice, with the exception of Christopher Humphrey who could not attend the short notice Board meeting in February 2020 due to a prior commitment. When any Director is unable to attend they continue to receive the necessary papers and I contact them in advance of the meeting to obtain their input.

The Executive Management Board

The Executive Management Board, which is led by the Group Chief Executive, meets regularly to discuss ongoing business performance and enables the Group Chief Executive to manage the business with his direct reports. I receive an update from the Group Chief Executive on any salient matters resulting from each meeting. The Board regularly meets with members of the Executive Management Board around its scheduled Board meetings. This attendance allows the Board to directly question senior management responsible for the business and to gain a better understanding of their respective technologies, markets, products, customers and competitors.

Directors' attendance table for 2020 (1)

Board	Audit	Nominations
Scheduled	Short notice	Scheduled	Scheduled	Short notice	Scheduled
Number of meetings	6	6	5	4	2	2
Directors:
Ian McHoul	6	6	-	-	-	2
Christopher Humphrey	6	5	5	4	2	2
Duncan Penny	6	6	5	4	2	2
Caroline Thomson	6	6	5	4	2	2
Richard Tyson	6	6	5	4	2	2
Stephen Bird	6	6	-	-	-	2
Martin Green	6	6	-	-	-	-

Remuneration

Board activities in 2020

At each scheduled Board meeting the following standing items are considered:

• - Directors' duties and conflicts of interest

• - Minutes of previous meetings and matters arising

• - Progress against agreed Board objectives

• - Reports from the Group Chief Executive, Group Finance Director and Group Company Secretary on key aspects of the business including health and safety, current trading, strategy, acquisitions and disposals, financial results, governance, HR and legal matters

• - Key Performance Indicators.

There were six scheduled Board meetings and six short notice Board meetings in 2020. In addition to the standing items, page 62 sets out a summary of the business considered at each meeting in 2020. With the exception of the February scheduled Board meeting, all other meetings were held by video conference.

The Board has a rolling calendar of activities and has agreed scheduled Board and Committee meeting dates for 2021 and 2022. This enables a structured process to manage the business including financial reporting, strategic reviews, operational performance and governance related matters.

(1) All Directors had 100% attendance at all Board and Committee meetings during 2020, whether scheduled or called at short notice with the exception of Christopher Humphrey who could not attend the short notice February 2020 Board meeting due to a prior commitment. As a consequence Christopher Humphrey's attendance percentage was 91.6% for Board meetings.

CorporateGovernance

Corporate Governance

Chairman's statement (continued)

2021 Board Meetings

February

• - Board objectives

• - Approved annual results, including review and approval of: principal risks and mitigation, report on going concern and Viability Statement, final dividend recommendation, 2019 full year results announcement, 2019 Annual Report, notice of AGM and management representation letter

• - Approved the reappointment of Deloitte LLP as auditor

• - Group strategy review including acquisition updates

• - Approved Sharesave scheme rules renewal

• - Appointment of Group Finance Director and executive remuneration

• - Revolving Credit Facility update.

March

• - Considered a market update and approved cancellation of the recommended final dividend

• - Update on COVID-19 response plan

• - Update on COVID-19 financials and actions.

April

• - Updates on response to COVID-19

• - Group forecast and revenue update

• - Approval of Revolving Credit Facility renegotiation and Covid Corporate Finance Facility.

May

• - COVID-19 update

• - Financial outlook 2020-2022

• - 2020 trading year to date update

• - AGM update

• - Group property lease - Amimon.

June

• - Strategy review session

• - Current trading and business update - including COVID-19 response

• - 2020 Sharesave offer to employees.

August

• - Approved half year results for the six months ended 30 June 2020, including review and approval of: principal risks and mitigation, report on going concern, 2020 half year results announcement and management representation letter

• - Global insurance renewal

• - Presentation from the Company's broker, Investec

• - Update on strategic R&D projects

• - 2020 internal Board evaluation process.

  October

• - Update on current trading and COVID-19 response

• - Capital expenditure projects for Imaging Solutions

• - Restructuring progress

• - Update on UK pension arrangements

• - Progress on internal Board evaluation.

November - Reviewed current trading and trading update.

December -

Update on current trading including COVID-19 response

• - Update on Group strategy and strategic plan actions including Creative Solutions update

• - Renegotiation of the Revolving Credit Facility

• - Approved 2020 budget

• - Group property leases - Imaging Solutions USA and Camera Corps UK

-

Risk appetite review

• - Outcome of the 2020 internal Board evaluation

• - Annual review of Group's governance arrangements and policies

• - Review of Chairman's and Non-Executive Directors' fees.

Composition, succession and evaluation

The appointment of Directors

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 Finance Director and four independent Non-Executive Directors. Details of their appointment are set out on page 63.

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 election by shareholders.

Under the Company's Articles, each Director is required to stand for annual reappointment at every AGM. The annual renewals 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.

Board diversity policy

The Board considers 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 a policy on diversity as set out below:

Vitec recognises the importance of a fully diverse 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. Vitec is fully committed to equal opportunity where talent is recognised. The Board will keep under regular review the issue of diversity including at Board level, 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 will report upon this issue annually in our Annual Report.

Chairman or Non-Executive Director	Appointment date	First renewal of term	Second renewal of term	Subsequent renewal of term
Ian McHoul (Chairman)	25 February 2019	25 February 2022	25 February 2025	Annually from 25 February 2026 onwards
Christopher Humphrey	1 December 2013	1 December 2016	1 December 2019	Renewed tenure to 1 December 2022
Duncan Penny	1 September 2018	1 September 2021	1 September 2024	Annually from 1 September 2025 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
Executive Director	Appointment date	Term
Stephen Bird
(Group Chief Executive)	14 April 2009
Martin Green
(Group Finance Director)	4 January 2017

Appointed under a service contract and subject to annual reappointment by shareholders in accordance with the Company's ArticlesAppointed under a service contract and subject to annual reappointment by shareholders in accordance with the Company's Articles

Our people and culture on pages 14 and 15, and Employees under the Responsible business section on page 48 details further information on diversity, including the disclosure of gender diversity statistics in accordance with the requirements of the Companies Act 2006.

Independence of Non-Executive Directors

Each of the Non-Executive Directors bring independent character and judgement to bear on strategic matters, the performance of the Group, the adequacy of resources and standards of conduct. The Board considers that Ian McHoul, Christopher Humphrey, Duncan Penny, Caroline Thomson and Richard Tyson are independent in accordance with the recommendations of the Governance Code. Except for Christopher Humphrey, each of these Non-Executive Directors' tenure on the Board is less than six years and I lead the process of ensuring that each year the performance of each Director is objectively appraised.

Each Director is required to declare any conflict of interest arising on any matter. During the April Board meeting Caroline Thomson reported that she was a non-executive board member of UKGI, which had an advisory role on the committee operating the triage for the grading of loans for the Bank of England's Covid Corporate Finance Facility scheme. The potential conflict of interest was noted and in accordance with the Company's Articles of Association the Board authorised Caroline Thomson to participate in discussion and decisions relating to that matter. I confirm that no other such conflict arose in 2020.

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 your Board the comprehensive skillset required to deliver the strategic objectives of the Group and to ensure its continued success.

Induction programme

On appointment, we provide each Director with a tailored and extensive induction to the Group. This includes meeting with all senior Head Office and Divisional management, meeting the Company's main external advisors including Deloitte and Investec and site visits to key facilities in the Group. Each Director is encouraged to continue visiting the Group's operations as their schedule permits.

Board training

Ongoing training for new and existing Directors is available at the request of the Director. Each Director receives details of relevant training and development courses from both the Group Company Secretary and from the Company's advisors. The requirement for training is discussed at Board and Committee meetings and I 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 2020 the Board collectively received training sessions on product technology, cyber security, investor relations 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 written updates on governance, regulatory and financial matters as they are published.

Independent external advice for Directors

All Directors, having notified me in the first instance, are able to take independent professional advice at the Company's expense in furtherance of their duties. During 2020 no Director took such advice.

Measuring effectiveness and performance of the Board

The Board annually sets itself clear objectives and monitors progress against each throughout the year. The Board rigorously challenges itself on delivery of strategy, financial performance measured against budgets, governance and operational performance KPIs. In compliance with the Code, even though we are not a FTSE 350 company, we conduct an external Board evaluation every three years to ensure that we independently measure the effectiveness and performance of the Board. The last external Board evaluation was carried out in 2017 and reported on in the 2018 Annual Report. Due to the impact of COVID-19 in 2020, we took the decision to delay an externally facilitated evaluation until 2021 to enable a more thorough review involving face-to-face meetings. For 2020 we therefore conducted an internal Board evaluation.

Board evaluation 2020

The process for the 2020 internal Board evaluation was led by myself and the Group Company Secretary. It entailed several questionnaires being sent to each Director including:

• - Evaluation of the performance of the Board

• - Evaluation of the performance of the Board Committees

• - Evaluation of the Non-Executive Directors by the Chairman

CorporateGovernance

Corporate Governance

Chairman's statement (continued)

- Evaluation of the Chairman led by the Senior Independent Director taking into account the views of the Board

Furthermore, the questionnaires covered every aspect of the Board and the business, including the composition and expertise of the Board as well as its performance and dynamic, the Board's response to the pandemic, overall Group-wide strategy, governance arrangements for the Group, succession planning and talent, customers and competition and risk and controls amongst other areas.

I then followed up with each Director on the content of the evaluation forms, including feedback on each Director's performance and areas for improvement around the time of the December 2020 Board meeting.

For my own evaluation, Christopher Humphrey, as Senior Independent Director, coordinated the process with evaluation forms completed by each Director. Christopher Humphrey also held follow up meetings with each Director around the time of the December 2020 Board meeting.

The outcome of the questionnaires and the follow-up meetings helped to draft the Board and Committee objectives for 2021.

The 2020 evaluation asked each Director to identify their top three priorities and the following were commonly repeated:

Board performance against 2020 Board objectives

-

Strategic direction of the Group and evaluating the portfolio of businesses to maximise value

- Acceptable 2020 financial outcome and ensuring a recovery in 2021 and getting the business back to 2019 financial levels as soon as possible

-

Executive succession and talent.

The results of the evaluation showed that the Board responded well to COVID-19 and is performing to a high standard. It demonstrated that the Group's strategy continues to be assessed and challenged despite current operational difficulties and that there are robust governance arrangements in place. The Board is confident that it has the right approach and senior management team in place to successfully deliver for our shareholders.

Each Committee was deemed to be well managed and effective along with individual Directors contributing sufficient time and effort both during and outside of meetings.

Performance evaluations of each of the Executive Directors also took place against achievement of specific personal objectives, the detail of which can be found in the Remuneration Report and forms part of the 2020 Annual Bonus Plan.

We will conduct an externally facilitated Board evaluation in 2021 and will report on that in the 2021 Annual Report.

The Board set itself several objectives for 2020. These are summarised below with an assessment of performance against each:

2020 Board objective

Respond to COVID-19

Oversee the Company's response to COVID-19 including; (i) wellbeing and safety of employees; (ii) financial performance in

Progress during 2020

• - Board approved the renegotiation of RCF financial covenants and the setting up of a Covid Corporate Finance Facility with the Bank of England

• - Preparation of financial scenarios with mitigation steps to manage the impact of the pandemic on the Group

line with base case and necessary mitigation -

steps to deliver performance in line with that; (iii) ensure the financial security of the Company including RCF renegotiation and CCFF; and (iv) ensure that key stakeholders remain supportive of the Company's response and recovery from COVID-19.

Strategy

Focus on delivery of strategic growth initiatives with regular updates, milestones and KPIs to track progress through 2020.

• - The 2019 final dividend was cancelled and Directors and senior management took a 20% reduction in remuneration for a period of time

• - Weekly updates to the Board on performance and the response to COVID-19 from the CEO

• - Regular communications from the CEO to all employees covering markets, operations, products, cash and costs

• - Safe working practices implemented and adhered to with employees continuing to work from home where possible

-

• - Received progress update on strategic growth initiatives

• - Reviewed a high-level update on strategy for the Group and divisions in response to COVID-19

• - Blue Sky strategy session planned for May was postponed so that management could focus on responding to COVID-19

Develop strategy further in 2020 through the - 2020 Blue Sky and Strategy sessions.

Regular updates on the response to COVID-19 given to the marketIntroduced an all-employee wellness programme.

Received presentations on the Group and Divisional strategic plans for the coming year Considered the progress made against the strategic priorities set at the strategic review meeting in June 2019

• - Reviewed a strategy tracker setting out the Group and Divisional priorities for the short and mid term

• - Update on progress against strategic priorities for each Division and their outlook for 2020 and 2021

• - Strategy update session at December meeting.

2020 Board objective

Financial

Deliver business to return to underlying growth including performance in line, if not better, than 2020 budget.

Board succession

Notably around the executive, including the appointment of a permanent Group CFO and clear succession plan around the Group CEO.

Creative Solutions

See progress of the Division with a stable

Progress during 2020

• - Tracked the Group's financial performance and recovery throughout 2020 in response to the pandemic ensuring an outturn in line with expectations

• - Ensured that measures put in place to deal with the pandemic were not to the long-term detriment of the Group and its growth opportunities

• - Reviewed the Group's 2021 budget.

• - Appointment of Martin Green as Group Finance Director with effect from 10 February 2020

• - Received an update on Board succession along with talent and succession plans throughout the Group

• - Board evaluation indicates that Board succession is a key issue for 2021.

- Division being managed in line with agreed response to COVID-19

-

structure, performance and growth including - successful launch of 4K products into the market.

Oversee the recovery of SmallHD to a more stable position following the 2018 fire.

Board visit to Teradek in June 2020 as part of seeing progress in Creative Solutions.

Imaging Solutions

• - Held a successful virtual employee engagement session for Creative Solutions in December involving Caroline Thomson

• - Board update at its December meeting on progress with the Creative Solutions business including its growth plans and budget for 2021.

-

See the transition of the Division with Project -

Digital fully implemented and return the business to a more stable environment with growth opportunities (including Syrp, JOBY and Rycote) being delivered.

Environmental Social & Governance Oversee a cohesive Group-wide ESG policy and programme ensuring that shareholders and stakeholders are supportive and that reputational risk associated with ESG is minimised.

Board visit to Teradek in June was cancelled

Reviewed Divisional strategy update at virtual strategy meeting in June. This covered the building of a more cohesive Division bringing the constituent businesses closer together focusing on end markets

-

Received regular updates on the Division throughout the year Division being managed in line with agreed response to COVID-19 Reviewed an update with the restructure of certain parts of the Division

- Approved capital expenditure project to bring JOBY manufacturing into Italy.

- Reviewed ESG summary that covers the Group's operations and builds on the existing programme

-

The 2020 Annual Report covers progress on ESG matters on pages 40 to 53.

Further work on this objective will be carried over into 2021.

CorporateGovernance

Corporate Governance

Chairman's statement (continued)

Board objectives for 2021

The 2020 Board evaluation helped to set Board objectives for 2021 and these focus on the areas of: strategic growth initiatives; strategic direction; evaluating the portfolio of businesses; financial performance to ensure a recovery in 2021 and Board succession. The Board will track progress against each during 2021 and we will report on these objectives in the 2021 Annual Report.

Each of the Board Committees was reviewed with individual outputs and actions created. As with the Board, the output helped set the 2021 objectives that will be reported on in the 2021 Annual Report.

For the Audit Committee, 2021's focus will be on: cyber security; business continuity (COVID-19 and Brexit); treasury strategy with focus on interest rate risk management; tax strategy with focus on Group financing arrangements and impact on Effective Tax Rate ("ETR") and oversight of R&D activity.

The Remuneration Committee's objectives for 2021 include: ensuring that the 2021 LTIP award and 2021 Bonus Plan are appropriate and incentivise management to recover and grow the business with suitably stretching performance conditions; ensuring that the 2020 Remuneration Report complies with best practice; ensuring that executive remuneration is fit for purpose in rewarding, motivating and retaining executive management; expanding personal objectives tied to the 2021 Bonus Plan to include achievement of agreed ESG objectives with clear KPIs set and measured against; maintain employee engagement sessions in 2021 ideally with face-to-face engagement sessions; training to ensure the Committee remains briefed and up to speed on emerging issues relating to executive/director remuneration.

The Nominations Committee in 2021 will focus on Executive Director succession and the development of talent and succession plans for senior management.

Finally, my review led by Christopher Humphrey highlighted that I have settled in well as Chairman and I am providing effective leadership both during and in between meetings, ensuring that the Board functions well with all members providing input. The Board felt I effectively managed the frequency and communication of the additional meetings that have been held virtually in 2020 to discuss primarily the COVID-19 pandemic and the Company's response, ensuring that all Directors have been able to contribute. It was also highlighted that I have developed an open and supportive relationship with the executive management team and all Board members, as well as major shareholders. I am pleased to say that my performance was well rated by the Board.

Audit, risk and internal control

Financial and business reporting

The Board considers that this report accords with the Financial Reporting Council's ("FRC") Guidance on Risk Management, Internal Control and related Financial and Business Reporting, as issued in 2014, and has reported against the recommendations in this Annual Report.

Board oversight of internal control and risk management

The Board has delegated responsibility to the Audit Committee for oversight of the Group's system of internal controls to safeguard shareholders' investments and the Company's assets. As part of its responsibility, 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 commercial judgements in the course of the management of the business.

The Board 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 business unit 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

• - The responsibilities of senior management in each business unit to manage existing and emerging risks within their businesses are periodically reinforced by the Executive Management Board

• - 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 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, every business unit conducts a self-assessment of its internal controls. Every year, the results of these assessments are reviewed by the Group Risk Assurance Manager who provides a report to the Group Finance Director and the Chairman 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 Group Risk Assurance Manager. The Group's principal risks and uncertainties and mitigation for them are set out on pages 18 to 22 of this Annual Report.

The Board has established a control framework within which the Group operates. This contains the following key elements:

• - strategic planning process identifying key actions, initiatives and risks to deliver the Group's long-term strategy

• - 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 Group executive management on a regular basis throughout the year and

• - 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 at least once every quarter. Any significant changes and adverse variances are reviewed by the Group Chief Executive and Executive Management Board 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 up to the date of approval of the Annual Report.

The Group's internal audit function, led by the Group Risk Assurance Manager, conducted several internal audits and additional assurance reviews during 2020, the details of which were presented to the Audit Committee. The 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 processes. An internal audit plan for 2020 was prepared and agreed with the Audit Committee at its February 2020 meeting. The Committee in response to COVID-19 subsequently flexed this plan to reflect the impact of the pandemic. For example, this included remote internal audit visits with a strong focus on key financial controls.

The sections on the following pages covering governance overviews of the Nominations, Remuneration and Audit Committees, and the pages on our engagement with stakeholders form part of this Governance report.

Ian McHoul Chairman

25 February 2021

CorporateGovernance

Nominations Committee report

Chairman

Ian McHoul

Members during 2020

-

Stephen Bird

• - Christopher Humphrey

• - Caroline Thomson

• - Richard Tyson

• - Duncan Penny

Role of the Committee

The Board has appointed the Nominations Committee to:

- Oversee the composition of the Board (including size, skills, knowledge, experience and diversity), ensuring that it remains appropriate and making any recommendations to the Board regarding any changes

-

Lead the process regarding appointments to the Board, including the role of the Chairman

- Succession planning for the Board and senior executives including recruitment, talent development and identification of potential candidates internally or externally and making such recommendations to the Board.

Current Committee members are set out above. Other members of the Board attend Nominations Committee meetings by invitation and where there is no conflict.

Nominations Committee activities in 2020 and plans for 2021

During 2020 the Nominations Committee focused attention on Board succession, succession planning more widely and talent development for the direct reports of the Executive Directors and senior management.

In the early part of 2020, the Committee finalised the recruitment process for a new Group Finance Director which culminated in Martin Green's appointment to the role on 10 February 2020.

The Committee received a detailed update on executive talent and succession plans for the senior leadership teams covering Production Solutions, Imaging Solutions, Creative Solutions and the Head Office at its October 2020 meeting.

In 2021 the Committee will focus in further detail on Executive Director succession and the development of talent and succession plans for senior management within each of the Group's Divisions.

New Director appointment process

Once the Board has identified the need for a new Director, the Chairman, except where the search relates to his role, engages the support of an external executive search consultant where necessary to facilitate the search. The Chairman works with the consultant to draft a clear brief on the role, skills and personal attributes that the Board is looking for, taking into account Board diversity, and ensuring that the consultant is mindful of potential candidates' other time commitments. This is followed up with a search process to identify suitable candidates. Initial interviews would be held with candidates with both the Chairman and the Group Chief Executive, where appropriate, following which a shortlist would be 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, should the search be for the role of Chairman, it 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.

Board balance and diversity

I am confident that we have the necessary mix and balance of skills, personalities and diversity on the Board to meet the challenges the Group faces, deliver on strategy, monitor ongoing performance and exercise good corporate governance. During 2020 each Board member assessed the current mix of the Board and skills of Directors to identify potential areas for improvement. This will help to support the recruitment of new Directors as we move forward. I will remain mindful of the need to have the right balance on the Board and future Board changes will take into account the diversity of experience, thought, background and ethnicity. The Nominations Committee will continue to monitor Board structure and succession plans, including talent development and succession plans of senior management below Board level.

Nominations Committee activities during 2020

At each main meeting the Committee considers: - Directors' duties and conflicts of interest - Minutes of previous meetings and matters arising.

The Committee had two meetings in 2020 and covered the following matters:

February	-	Martin Green's appointment as Group Finance
Director
-	Board succession update - skills and experience
October	-	Progress update on Board succession
-	Progress update on talent and succession across
the Group's businesses

CorporateGovernance

Remuneration Committee report

Chairman

Caroline Thomson

Members during 2020

• - Christopher Humphrey

• - Richard Tyson

• - Duncan Penny

Role of the Committee

The Board has delegated to the Remuneration Committee the setting of a remuneration framework for the Company's Group Chief Executive, other Executive Directors and members of the Executive Management Board. An overview of the work completed by the Remuneration Committee during the year is set out in the table opposite. The Remuneration Committee is chaired by Caroline Thomson and comprises exclusively independent Non-Executive Directors. The Chairman, Group Chief Executive, Group Finance Director, and Group Company Secretary were all invited to attend meetings throughout 2020. The Committee also uses the services of FIT Remuneration Consultants who provide advisory services on executive remuneration and wider market remuneration issues.

Caroline Thomson in her role as Chairman on the Remuneration Committee is available to shareholders to discuss matters relating to Directors and senior executive remuneration.

The Remuneration Report for the year ended 31 December 2020 on pages 80 to 82 provides an introduction from the Committee Chairman. It sets out an overview of the Group's remuneration policy for Executive and Non-Executive Directors which was approved by shareholders at the 2020 AGM and will next be put to shareholders at the 2023 AGM. The Report also provides details of Executive and Non-Executive Directors' remuneration during 2020.

Remuneration Committee activities during 2020

During 2020 the Remuneration Committee had four scheduled meetings and two meetings held at short notice. At each scheduled meeting the Committee considered the following matters:

• - Directors' duties and conflicts of interest

• - Minutes of previous meetings and matters arising

• - Progress against 2020 objectives.

The following specific business was dealt with at each meeting held in 2020:

February

• - Approved the 2019 Remuneration Committee Report including Policy Report to be submitted to the 2020 AGM for approval

• - Approved the outcome of personal objectives for Executive Directors for 2019 and agreed Executive Directors' 2020 personal objectives

• - Approved the outcome of 2019 Annual Bonus Plan and confirmed financial targets for 2020 Annual Bonus Plan

• - Approved the outcome of performance conditions tied to 2017 Long Term Incentive Plan ("LTIP") awards

• - Approved Deferred Bonus Plan ('DBP') to be applied to bonuses to be paid to the Executive Directors and Executive Management Board members for the 2019 Annual Bonus Plan

• - Reviewed plans for employee engagement meetings to be held in 2020

August

- Noted an update on executive remuneration from

FIT Remuneration Consultants in response to COVID-19 and following the 2020 AGM season

-

Received proposal for LTIP and Restricted Share Plan awards to be made for 2020 in light of impact of COVID-19

September - Approved a revised proposal for LTIP awards for 2020 following consultation with major shareholders

October

-

Received detail of LTIP and RSP awards made in September 2020

- Received TSR Interim Report as at 30 September 2020

December - Approved the outcome of the Committee's 2020 objectives and set 2021 objectives

• - Considered further feedback on Executive Remuneration relating to COVID-19 and post 2020 AGM season from FIT Remuneration Consultants

• - Considered indicative outcome for the 2020 Annual Bonus Plan and Executive Directors 2021 personal objectives

• - Considered proposed salary increases for 2020 for the Executive Directors and Executive Management Board

• - Considered the structure of the 2021 Annual Bonus Plan

• - Received feedback on Creative Solutions employee engagement meetings

Remuneration Committee performance measurement

The Remuneration Committee set itself several objectives for 2020, the detail and progress against which is shown in the table below. It has set itself objectives for 2021 and will report on progress against these in the 2021 Annual Report.

2020 Remuneration Committee objectives

Secure shareholder approval at the 2020 AGM to a new Policy Report to cover Directors' and senior executives' remuneration to the 2023 AGM.

2020 Incentives - ensure that suitably stretching performance conditions for the LTIP and Annual Bonus Plan are adopted driving performance and the right behaviours and reflecting investors' feedback from the shareholder consultation in late 2019.

Ensure that the 2019 Remuneration Report submitted to the 2020 AGM complies with best practice in terms of clear disclosures on Directors' remuneration, including bonus scheme achievement, exit package and CEO pay ratio disclosure and is approved by shareholders at the 2020 AGM.

Ensure that 2020 personal objectives for Executive Directors are suitably stretching, SMART and that performance against them is clearly reported with appropriate detail and in line with best practice and shareholders' feedback.

Tied to the recruitment of a permanent Group CFO, ensure that the remuneration package is sufficient to recruit and incentivise the right calibre individual and is aligned with shareholders' interests and market guidance.

Assess the performance of FIT Remuneration following the 2020 AGM and in light of support given to the Policy Report submitted to shareholders at that meeting.

Ensure that key employees are retained through the setting of appropriate remuneration packages tied to the delivery of key strategic objectives.

Progress during 2020

- Reviewed draft Policy Report reflecting shareholder consultation and FIT Remuneration Consultants input

-

At the 2020 AGM, over 88% of shareholders voted in favour of the Directors' Remuneration Policy.

- Committee considered and approved financial targets tied to the 2020

Annual Bonus Plan. Due to the impact of COVID-19, the financial targets set were not achievable and so no bonus for 2020 was payable relating to the financial objectives

-

Following the impact of COVID-19 it was not possible to award LTIP awards in early 2020 that followed the traditional structure with performance conditions based on EPS growth and TSR. Following a detailed consultation with our major shareholders a revised proposal was approved for the LTIP with awards made in September 2020. Details are set out in the Remuneration Report.

- 2019 Remuneration Report compliant with regulations and received over 96% support of shareholders voting on the advisory resolution at the 2020 AGM.

- Received and reviewed personal objectives of Stephen Bird and Martin

Green

-

Agreed objectives updated to reflect the response to the COVID-19 pandemic.

- Considered and approved a remuneration package for Martin Green further to his appointment as Group Finance Director.

-

Reviewed FIT Remuneration's performance during their first year of supporting the Committee including their input to the Policy Report and shareholder consultation

- FIT Remuneration provided further input to the revised LTIP proposal in 2020.

- Revised LTIP and RSP awards were made to Executive Directors and senior management in September following input from shareholders

-

Additional RSP award was made to several key employees as part of ongoing retention packages.

CorporateGovernance

Audit Committee report

Chairman

Christopher Humphrey

Members during 2020

• - Caroline Thomson

• - Richard Tyson

• - Duncan Penny

Role of the Committee

The Audit Committee has been appointed by the Board to ensure the financial integrity of the Group through the regular review of its financial processes and performance. It confirms to the Board that the financial statements within the Annual Report are fair, balanced and understandable and comply with all applicable UK legislation and regulation as appropriate. It is also responsible for ensuring that the Group has appropriate risk management and internal controls, through the oversight of the internal audit function. The Committee manages the relationship with the external auditor, reviews the scope and terms of its engagement, and monitors its performance through regular effectiveness reviews. It also ensures that an appropriate whistleblowing service is in place for employees and third parties.

Christopher Humphrey, as Chairman of the Committee, is responsible for engagement with the Company's shareholders on accounting issues relating to the Company's financial statements.

Audit Committee Chairman - skills

I was appointed as Chairman of the Audit Committee on 12 May 2015. The Board believes I continue to have the necessary recent and relevant financial experience, along with financial competence, as required by the UK Corporate Governance Code. I am a Chartered Management Accountant and a Fellow of CIMA, and most recently held the role of Chief Executive Officer and previously Group Finance Director of Anite plc, formerly a UK listed company. In my earlier career I held senior positions in finance at Conoco, Eurotherm International plc and Critchley Group plc. I continue to maintain an up-to-date understanding of financial and corporate governance knowledge and best practice by attending training sessions and updates presented by major accounting firms. The Board also considers that the other members of the Committee are all independent, have a broad range of appropriate skills and experiences covering financial, commercial and operational matters, along with competence of the manufacturing and technological aspects of the industry in which Vitec operates, and their biographies are summarised on pages 54 and 55.

Committee activities in 2020

In 2020 I chaired five scheduled meetings of the Committee and I worked closely with the Group Finance Director, the Group Risk Assurance Manager and the Deputy Company Secretary to ensure the Committee was provided with the necessary information it requires to discharge its duties. We operate with a rolling agenda programme, taking into account our terms of reference (which can be found on our website), the Group's annual reporting requirements and any other matters which arise on an ad hoc basis. The Committee sets aside appropriate time for the review of financial reporting and the risk assurance process to ensure they both receive robust consideration and challenge.

During the five scheduled meetings in 2020, the Committee considered the following matters:

• - Directors' duties and conflicts of interest

• - Minutes of previous meetings and matters arising

• - Progress against agreed objectives

• - Risk assurance report covering risk, assurance, internal audit and internal controls

• - Auditor remuneration

• - R&D updates

• - Treasury updates

• - Cyber security

• - Taxation

• - Brexit

• - Whistleblowing.

Engagement of external auditor - Deloitte LLP

The 2020 audit is the third under Deloitte LLP with David Halstead as the audit partner. Deloitte was appointed at the Company's AGM in May 2018 following a tender process and reappointed at the 2020 AGM. Separate resolutions will be put to the 2021 AGM to cover Deloitte's reappointment and remuneration.

External auditor effectiveness review

The effectiveness of the external audit process is assessed by the Committee, which meets regularly throughout the year with the audit partner and senior audit managers.

In 2020 the Group Risk Assurance Manager issued a survey to key finance and governance colleagues in the business along with all Directors asking them to provide feedback on the quality and effectiveness of the audit of the results for the year ended 31 December 2019. This was the second effectiveness review of Deloitte. Questions were open-ended and allowed employees and Directors to include any information that they believed was relevant in the assessment of the external auditor. Topics in the questionnaire covered the capability and professionalism of the team, approach to the planning process, project management and communication throughout the process, quality and timeliness of reporting, and identifying areas where value was added. The results of the review confirmed that the audit process was thorough and robust, and that Deloitte challenged management in appropriate areas. Areas for improvement were identified and discussed with Deloitte.

I also meet regularly with the Group Finance Director and external audit partner to provide necessary support to their roles, and also individually with the Group Risk Assurance Manager to discuss the findings of his work and to maintain an open line of communication.

Auditor independence

The Committee receives a summary of all fees, audit and non-audit, payable to the external auditor. Deloitte LLP has confirmed its independence as external auditor of the Company in a letter addressed to the Directors. The table below sets out fees paid to Deloitte over the last three years.

Fees payable to Deloitte for the audit of the Company's financial statements

Fees payable to Deloitte for audit of subsidiaries

Fees related to corporate finance transactions

2020

2019

2018

£0.2m

£0.1m

£0.1m

£0.5m

£0.5m

£0.4m

£nil

£nil

£0.2m

CorporateGovernance

Corporate Governance

Audit Committee report (continued)

FRC reviews

The Company was not subject to any Financial Reporting Council reviews during 2020. Should this occur in the future, we will advise shareholders in the subsequent Annual Report.

The following specific business was dealt with at each meeting held in 2020:

February

• - Annual results for year ended 31 December 2019, including:

  • - Accounting issues report

  • - Report from the external auditor including Auditor's Report to be included in the 2019 Annual Report

  • - Consolidated financial statements

  • - Principal risks and uncertainties

  • - Report on internal controls

  • - Separate report on the work of the Audit Committee

  • - Performance, effectiveness and independence of the external auditor

  • - Fees for non-audit services and professional fees - Deloitte LLP

  • - Process behind the drafting of the Viability Statement

• - Recommendations to the Board on:

  • - Consolidated financial statements

  • - Reappointment of Deloitte LLP as the external auditor

  • - Independence and objectivity of Deloitte

  • - Management's representation letter to Deloitte

  • - Viability Statement

• - Reviewed results of enhanced controls self-assessment process

• - Reviewed 2020 internal audit plan

• - Agreed Audit Committee objectives for 2020

• - R&D update

• - Private meeting between the Committee and external auditor excluding executive management

June

• - Reviewed external audit strategy for the year ended 31 December 2020

• - Reviewed risk assurance update

• - Reviewed Half Year audit planning

• - EU state aid update

• - Reviewed Deloitte fees

August

• - Reviewed response from Deloitte on auditor effectiveness survey

• - Reviewed risk assurance report

• - R&D update

• - Treasury update

• - Half year results for 30 June 2020, including reviews of:

  • - Accounting issues report

  • - Report from the external auditor

  • - Financial results

  • - Fees for non-audit services and professional fees

  • - Principal risks and uncertainties

• - Recommendations to the Board on: - The half year results - Management's representation letter to Deloitte LLP

October

• - Reviewed cyber security update

• - Reviewed Brexit planning update

• - Presentation on audit strategy 2020 - planning report

• - Reviewed Deloitte audit fees 2020

• - Update on subsidiary impairment and distributable reserves

December - Considered the outcome of 2020 objectives and agreed 2021 objectives

• - Update on whistleblowing and third party reputational risk

• - Presentation on the Group's tax strategy

• - Presentation on the Group's treasury strategy

• - Reviewed inventory reduction update

• - Reviewed risk assurance update

• - Update on R&D

• - Update on cyber security

• - Update on subsidiary impairment and distributable reserves

Assessing the content of the Annual Report

The Board takes responsibility for determining 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, performance, business model and strategy. At the request of the Board, the Audit Committee concentrated its review of the full year results on the financial statements only and the process which underpinned the drafting of the Viability Statement. The process for determining content of the financial statements and the Viability Statement was reviewed by the Audit Committee in February 2021. The Audit Committee recommended to the Board the adoption of the financial statements as at 31 December 2020, and that they provide a true and fair view of the financial position and performance of the Group.

Attendance at Committee meetings

The Chairman, Group Chief Executive, Group Finance Director, Group Risk Assurance Manager, Group Company Secretary and Deputy Company Secretary attend meetings by invitation and other members of the senior management team attend as required.

I invite the audit partner from the Company's external auditor to attend meetings of the Committee on a regular basis and during 2020 David Halstead, as the audit partner of Deloitte LLP, attended all scheduled meetings, either in whole or for part of the meeting. At two of the meetings the Executive Directors and senior management were not present for part of the meeting so that members of the Committee could meet with the external auditor in private. The Committee will continue with the practice of meeting in private with the external auditor in the future.

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 2020 are set out in the following table:

Significant issue Going concernHow was it addressed

The Committee considered whether it was appropriate to prepare the financial statements on the going concern basis. It was noted that there was significant covenant headroom at 31 December 2020, and, on the basis of stress testing performed on the Group's financial forecasts, covenants were not expected to be breached through to the end of 2023 which is the time period over which the exercise is completed. It was further noted that there was sufficient cash headroom, with undrawn amounts left on the RCF facility under each scenario each month through to at least February 2022 (12 months from the date of signing the accounts). Management therefore concluded it was appropriate to prepare the financial statements on the going concern basis. The external auditor also presented their assessment. The Committee concurred with management's assessment.

CorporateGovernance

Working capital valuation

The 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 2020 year-end process. Management presented to the Committee the experience of bad debts during 2020, and the debtor concentration and days outstanding. 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 Committee concurred with management's assessment of the Group's working capital position.

Provisions and liabilitiesThe Committee considered the judgemental issues relating to the level of provisions and other liabilities. The more significant items include pensions and taxation. For each area management presented to the 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 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.

Restructuring costs The Committee considered the validity of restructuring costs that were included in adjusting items in 2020.

In total, restructuring costs of £2.8 million were incurred in 2020, which mainly related to a strategic project in Imaging Solutions to rebalance the allocation of resources from offline to online to enable growth, reduce operating costs and improve margins. The main costs incurred include severance costs, asset impairments and professional fees. The external auditor presented their findings with regard to key audit testing over restructuring costs. The Committee agreed with management's accounting and disclosures.

Capitalisation of development costsThe 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.

Corporate Governance

Audit Committee report (continued)

Acquired intangiblesThe Committee critically reviewed management's assessment of acquired intangible assets for impairment. The external auditor also presented their assessment. The Committee concurred with management's assessment.

Non-audit services provided by the external auditor

We have a policy on limiting the use of the external auditor for non-audit services which is reviewed annually. There were no changes to the items of work covered by the policy. Written permission must be obtained from the Chair of the Audit Committee before the external auditor is engaged for any non-audit work. The use of the external auditor is determined by their demonstrable competence, knowledge of the Group, and competitive pricing, and monetary thresholds for the approval of non-audit work by Deloitte have been set by the Committee. The policy ensures that the non-audit work provided by Deloitte does not impair their independence or objectivity and is divided into two parts:

Excluded services

Appropriate services

These include but are not limited to: internal accounting or Subject to pre-approval from the Group Finance Director and Chairman of theother internal financial services; design, development orAudit Committee, these include: accounting advice in relation to acquisitionsimplementation of financial information or internal controls and divestments; corporate governance advice; defined audit related worksystems; 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.

and regulatory reporting; reporting accountant services; compliance services; transaction work (mergers, acquisitions and divestments); fairness opinions; and contribution reports.

I confirm that during 2020 the policy was followed without exception. A report on the level of non-audit work provided by Deloitte is given to the Committee half-yearly and the Committee is satisfied that the advice they received from Deloitte has been objective and independent. During 2020, £0.1 million was paid to Deloitte in respect of non-audit work compared to an audit fee of £0.7 million. This non-audit work mainly comprised the review of the half-year financial statements.

Committee performance in the annual evaluation

Our performance as a Committee was assessed through the internal Board performance evaluation, information on which is provided in the Governance report. The Audit Committee is working effectively and is supported by the internal finance and internal audit teams. A number of suggestions for areas to focus on have been incorporated in our 2021 objectives. To ensure that we continue to be an effective Committee, we set and measure our performance against specific objectives every year. These objectives are set annually and the details of our objectives for 2020 and the progress made is summarised on the next page. I am pleased to confirm that we successfully achieved all of these objectives. Progress on achievement against our 2021 objectives will be reported in next year's Annual Report.

2020 Audit Committee objectives

The following table sets out the agreed Audit Committee objectives for 2020 and an assessment of progress achieved against each:

2020 Audit Committee objective

Ensure management continues to coordinate risk assessments to support the Group's strategic objectives.

Oversee resources of internal audit team and ensure appropriate.

Review risk management activity of the Group's third parties, including both customers and suppliers.

Ensure that the induction processes for the new Group Finance Director are thorough.

Oversee the Group's treasury strategy.

Oversee the Group's tax strategy.

Receive updated governance and training materials as they relate to financial reporting, risk, internal control, bribery and whistleblowing matters.

Progress during 2020

• - Reviewed the approach taken to internal audit and risk assurance and provided support to the processes

• - Critically reviewed and approved the principal risks disclosed in the 2019 Annual Report and made suggestions for improvement

• - Due to the COVID-19 pandemic the structure of the internal audit plan and a review of key controls were discussed. The internal audit plan was refocused towards those areas of priority while remote working is in place.

• - Reviewed regular risk assurance reports from the Group Risk Assurance Manager

• - Reviewed cyber security programme and Group's Brexit plan

• - Received risk assurance update report

• - Presented 2021 internal audit plan.

- Martin Green has been working closely with the Group and Divisional

Finance teams, David Halstead as the Audit Partner and Christopher Humphrey as the Audit Committee Chairman throughout the 2020 year-end process. He has also met with the Group's UK and US tax advisors, all five of the lenders under the RCF and presented to major shareholders.

• - Received an update on the Group's treasury strategy in December 2020.

• - Received an update on the Group's tax strategy in December 2020.

• - Received technical briefings on various governance matters

• - Oversaw the Group's whistleblowing and anti-bribery arrangements

• - Received regular updates regarding governance changes aligned to the COVID-19 pandemic have been shared

• - Regular updates were given by internal finance employees and the external auditor at each Committee meeting.

Receive update on Group's overall R&D strategy including - Received an update on the Group's R&D strategy and key projects in Junethe Group's top ten R&D projects.

and December 2020.

CorporateGovernance

Stakeholder engagement

Vitec's Board strongly believes in doing business in the right way. All our decisions are underpinned by the impact that they have on our five main stakeholder groups. The detailed content in this Annual Report sets out how the Directors strive to comply with their duty under Section 172 of the Companies Act 2006 in considering stakeholders in the Group's decision-making process in order to promote the Company's success. The following summary demonstrates how this was achieved in 2020 despite severely challenging circumstances.

Long-term decision-making

The Board has a structured governance model in place with scheduled Board meetings, clear documentation and authority levels to control its decision-making process. Our governance model supports the Group in ensuring that decisions are considered, documented and reported on to evidence clear processes and alignment with strategic plans. Detailed budgets and reforecasts are prepared to enable the Board to track and ensure that performance is as expected, or that mitigation steps are actioned to deliver performance in line or close to expectations. The Board and individual Directors operate within this structure with the objective of promoting the success of the Company and to deliver long-term shareholder value. All business proposals are documented in accordance with authority levels and performance tracked against each. 2020, however, presented significant challenges to this structured approach, but the Board and senior leadership team adapted to the circumstances with more frequent Board meetings, reforecasts to reflect the reality and anticipated impact of the pandemic, and rigorous control of the cost base. While short-term measures were actioned to protect the business and ensure that it was well positioned for growth as the business recovered from the pandemic, the Board and senior management did not lose sight of the importance of ensuring that long-term prospects for the business were not harmed. This notably included ensuring that our employees were protected during the pandemic with only a limited number of redundancies and ensuring that operations continued with safe working practices in place thereby preserving jobs and the supply of our products to end customers.

High standards of business conduct

The Company has put in place a Code of Conduct that is communicated to all employees and major third parties setting out the behaviours and values expected of Vitec and its people. Directors regularly receive updates on the operation of the Code of Conduct and there is also an independent whistleblowing service to enable employees and third parties to anonymously raise issues of concern. The Board considers that its people and operations work to the highest standards of business conduct and ensures this through regular training in, and clear communication of, the Code of Conduct. Any reports of inappropriate behaviour are independently investigated and action taken where necessary.

1Employees

Our employees work to the highest professional and corporate standards. Our employees are rewarded fairly and incentivised to deliver our strategy

We consider our employees to be some of the best in the sector, our greatest single asset and critical to our success. Passionate, motivated and skilled employees in safe working environments directly contribute to successfully delivering our strategy, performance and reputation. They are concerned with opportunities for personal development and career progression, a safe and inclusive working culture, and the ability to deliver great products for our customers.

The interests of the Company's 1,600 employees are considered by the Board with regular updates on talent and succession plans. The Board and its Remuneration Committee are kept informed on employees' remuneration, benefits (including pension arrangements and the all-employee Sharesave Scheme) and employee engagement. Caroline Thomson is the independent Non-Executive Director with responsibility for employee engagement and in 2020 continued with a programme of employee engagement, notably involving employees in our Creative Solutions Division and this is summarised in more detail on pages 16 and 17. Despite the challenges presented by COVID-19, the Company undertook greater levels of employee engagement to reassure our employees and to ensure their health and wellbeing. This included increased levels of communication, employee surveys, ensuring that stringent safe working practices were adhered to and introducing an Employee Wellness Programme.

The health and safety of all employees is a top priority for the Board with robust reporting of accidents and near misses, and corrective measures. Management is clear on the importance of a safe working environment and the need to constantly improve in this area. Details on the processes and performance on Health and Safety are detailed on page 45 of this Report. The Board is confident that the Company's employees are its greatest asset in delivering the long-term success of the Company.

2Customers

Vitec's purpose is to enable our customers to capture and share exceptional content

Our customers include broadcasters, film studios, photographers, independent content creators ("ICCs") and enterprises, and we design, manufacture and distribute high performance products and solutions for them. They want to be able to buy the best quality products from us to support their image-making experiences, and to enable them to capture and share exceptional content.

The Board is kept informed about the wide variety of the Company's customers, their changing needs and trends in their buying patterns. In prior years, Directors have had an opportunity to meet with our customers at major trade shows such as IBC, NAB, BSC and Photokina, which are held in various cities around the world, along with scheduled visits to our major customers, such as B&H Photo & Video. However, in 2020 due to COVID-19 there was no global travel and major trade shows were cancelled. Our sales teams adapted to this situation utilising technology to remain in close contact with our customers. All major customers are actively screened for reputational and financial risks to ensure that there are no apparent issues of concern that could reputationally or financially damage the Company. Clear terms and conditions are documented including service levels, payment terms and working practices.

3Suppliers

We build close and mutually beneficial relationships with our suppliers to source the best possible materials

We have a large number of suppliers globally, as the majority of our operations are relatively low-volume, small-batch processes. We source raw materials from suppliers close to our manufacturing operations where possible. The payment of invoices is of prime importance to our suppliers.

The Board is kept informed about major third parties the Company deals with including suppliers and other third parties such as banks and regulators. The integrity of the supply chain is a key consideration with robustness of supply an issue that is actively managed. COVID-19 demonstrated the importance of this and despite some challenges, the Company managed to ensure the integrity and robustness of its supply chain throughout the pandemic. All major third parties that the Company does business with are actively screened for reputational and financial risks to ensure that there are no apparent issues of concern that could reputationally or financially damage the Company. Clear terms and conditions are documented including service levels, payment terms and working practices. Banks and regulators are kept informed on the Company's business with regular updates. The Board of Directors is expressly clear that the Company strives to comply with all its legal obligations in the territories in which it operates.

communication with our investors to ensure that they remain informed on mitigation to address the impact of the pandemic and supportive. Directors are clear on their duty to treat all members fairly and decisions of the Board are taken with all members' long-term interests in mind. The Chairman explains his approach to shareholder engagement in the Governance report on pages 58 to 59.

Principal decision

The following example demonstrates a principal decision taken by the Board in 2020 and how the Board reached its conclusion.

Cancellation of the 2020 Final Dividend

We have a number of manufacturing and office facilities around the world and aim to limit any negative impact on the environment and protect the natural resources we rely on, creating long-term sustainability for the business. We encourage our employees to involve themselves within the local community to foster a relationship between our business and local people. We aim to positively impact one disadvantaged person for every Vitec employee in the communities in which we operate.

In March 2020, the Board was advised that due to the COVID-19 pandemic the Group expected to experience significantly more disruption than anticipated, not only to end user demand but also to the global manufacturing facilities (most of which were temporarily shut down) and to the Group's distribution hubs. As a result, substantial actions were taken to manage costs and cash, to reinforce the financial strength and resilience of the Group and to ensure that the business emerged in good shape once the crisis was over. As part of the mitigating actions to address the effects of the pandemic, the Board considered what the impact of cancelling the 2020 final dividend would be, including:Directors are increasingly aware of the need to ensure that the Company's operations, products and services do not adversely impact the environment and positively contribute to the communities within which the Company operates. The Company provides engaging and well-remunerated employment within the communities in which it operates, and its operations are focused on minimising the Company's impact upon the environment including use of raw materials, natural resources and energy, and cutting down on waste and any harmful emissions, components or by-products. A corporate responsibility programme is in place across each of the Company's operations with clear objectives in place. Further information can be found in the Responsible Business section on pages 40 to 53.

• - The impact of the pandemic on employees with majority of sites closed due to global government stay at home orders. The Board worked hard to safeguard employees while ensuring that operations were able to continue and regularly reviewing all communications made to employees. The Group also implemented plans to deal with the short-term facility closures and fall in demand, which included working remotely from home, furlough, salary waivers, short-time working and asking employees to take annual leave

  CorporateGovernance

• - Reduced demand from customers including key event cancellations such as the European Football Championships and 2020 Olympics, as well as film industry cancellations from content creators due to global government lockdowns. Online streaming products and products allowing remote production capabilities however, showed an increased appeal

  5Investors

• - Short-term manufacturing and facility closures due to global lockdowns

  Our clear strategy is focused on delivering long-term growth and value creation

• - Logistical issues caused by the pandemic and difficulties getting products to market

  Our investors are our source of capital without whom we could not grow and invest for future success. They are concerned with a wide range of issues including our financial and operational performance, execution of our strategy, governance and remuneration matters, environmental and corporate responsibility, acquisitions, and capital allocation.

• - Operating costs to fund the business and the unknown duration of the pandemic with no certainty around recovery of revenue and profitability.

The Board has put in place a proactive investor relations programme to provide all shareholders with regular updates on financial and operational performance. This includes regular market announcements, presentations, face-to-face meetings with investors and a detailed investor relations section on the Group website. During 2020 with the impact of the pandemic upon the business a major concern, the Board has undertaken extra

Given the circumstances, the Board concluded at a meeting on 24 March 2020 that cancelling the final dividend payment in May 2020 gave the Group the best opportunity to protect and conserve cash in the business for essential expenditure, protecting the livelihoods of its employees and enabling the best opportunity for the Group to recover from the COVID-19 pandemic and to preserve the long-term capabilities of the business.

4Community and Environment

Doing the right thing for our community and our environment is a core part of our values

Remuneration report

Annual statement by Caroline Thomson, Chairman of the Remuneration Committee

In 2020 we secured shareholder approval to a new Directors' Remuneration Policy and this has been fundamental in enabling us to respond to the impact of COVID-19, ensuring that we retain, motivate and reward executives for restoring the business and growing long-term shareholder value.

Dear Shareholder

Vitec's Remuneration Report for 2020 comprises three separate sections:

• - Section 1 - my annual statement setting out the work of the Remuneration Committee in 2020 and priorities for 2021 particularly in responding to the impact of COVID-19 on the business

• - Section 2 - a summary of the Directors' Remuneration Policy Report ("the Policy") that was approved by shareholders at the May 2020 AGM and sets out the Company's Policy on Directors' remuneration covering the period through to May 2023. This Policy will need to be put to shareholders for approval again in 2023

• - Section 3 - the 2020 Annual Report on Remuneration sets out the remuneration paid to Directors in 2020 as well as details of how the Committee intends to implement our Policy for 2021. Shareholders will have the opportunity for an advisory vote on this report at the 2021 AGM.

A major focus for the Committee at the start of 2020 was finalising a new Directors' Remuneration Policy put to shareholders for approval at the 2020 AGM. This involved a detailed review of the existing Policy with the Committee's independent advisor, FIT Remuneration Consultants, and consultation with the Company's largest shareholders. The detail of the new Policy is set out on pages 83 to 91. At the 2020 AGM shareholders approved the new Policy that will cover Directors' remuneration through to the AGM in 2023 with 88.7% of shareholders voting in favour of the new Policy. The 2019 Annual Report on Remuneration received over 96% of votes in favour and we are grateful for the support received.

2020 performance - business context

2020 was a year like no other for Vitec, its employees and wider society in general with the impact of COVID-19 felt initially in February/March 2020 and escalating as the year progressed.

As the early impact of the pandemic became clear in the first quarter of the year, the Board took swift, decisive and stringent measures to ensure the wellbeing of our people, to continue supporting our customers and to ensure the financial security of the Group, positioning it for recovery and growth in 2021 and beyond. Alongside the immediate fall in end market demand, we closed the majority of our sites as required in order to protect the health and wellbeing of our employees and put in place systems that enable those who work in roles that can be done from home to do so. As our manufacturing sites reopened, we sought to flex production with demand and carefully manage inventory levels. Some of the early actions taken included postponement of non-essential capital expenditure and deferred pay rises, including a 20% salary and fee reduction by the Board and senior management from mid-April to the end of July 2020 and a freeze on all recruitment, as well as reduced non-essential operating spend.

During the year we reinforced our liquidity position by accessing the Bank of England's Covid Corporate Finance Facility. We propose to repay that in March 2021. The Group used government support to limit making permanent headcount reductions. This included £1.2 million from the UK furlough scheme and we are to repay that money shortly. We were able to fully and partially top up the pay of employees furloughed in the UK and in other territories including Italy. We cancelled the payment of full year and interim dividends for

2020. As announced, we have reinstated the final dividend for 2020, that subject to approval by shareholders at the 2021 AGM, will be paid on 14 May 2021.

With markets estimated to be 80% closed in April 2020, the Group and senior leadership team have worked relentlessly to run the business and deliver a financial outturn for 2020 that, while short of the tough targets we had set at the start of 2020, is extremely creditable with adjusted Group profit before tax ("PBT") of £5.5 million and Group net debt of £90.8 million at the end of 2020. The Group's balance sheet remains strong despite the impact of COVID-19. This level of performance has allowed us to pay a modest cash bonus to all employees for 2020. We also operated our Sharesave scheme for our employees in 2020 which has an excellent level of participation across the whole workforce. While our share price was hit hard by the pandemic it improved in the second half of 2020 and continues to recover. The Board has been impressed by the resilience of the Executive Directors and all employees and would like to thank them for their performance.

Remuneration outcomes for 2020 performance

As profit targets for 2020 were not met the Executive Directors were not eligible for a bonus in respect of financial performance measures. The Committee, however, debated at considerable length whether any other element of bonus should be paid in relation to 2020 particularly given the impact of COVID-19 on the business and society in general. On the other hand, the Committee felt that management and employees had worked very effectively throughout 2020 to deliver the business through the pandemic in very difficult circumstances, notably ensuring the health and wellbeing of employees and delivering a very creditable financial outturn. All other Company employees have been awarded a bonus in recognition of their performance for 2020.

All the Directors during the year took a 20% pay cut for several months and the Board took some tough decisions to ensure that the Company came through the pandemic well positioned to grow and take advantage of our competitive position and to benefit from structural changes to the market. Taking all things into consideration, the Committee felt that it was important to reward management's performance even though financial targets were not met. The Committee therefore decided that bonus payments should be made to Stephen Bird and Martin Green in relation to the achievement of personal objectives. The payments for 2020 were 22.5% of the maximum potential award for both Stephen Bird and Martin Green. The assessment of personal objectives for each Executive Director is set out on pages 93 to 96 as are the 2020 financial targets.

The Committee believed that in reaching this decision it was an important consideration that the Group had generated an adjusted PBT of £5.5 million and that the bonus based on personal objectives for 2020 for all Group employees would cost £3.2 million. We believe this aligns with the interests of all our stakeholders as part of our approach to reward, motivate and retain a talented executive team. Executive Directors are required to defer half of their earned bonus into the Deferred Bonus Plan ("DBP") held in the form of the Company's shares for three years ensuring focus on long-term growth for the Group.

We have described the approach to assessing performance against the personal objectives set out on pages 94 to 95.

Long Term Incentive Plan ("LTIP") awards made in 2018 to Executive Directors did not achieve threshold performanceconditions based on EPS growth and TSR performance. Accordingly, the 2018 LTIP award will lapse on the third anniversary of the award on 2 March 2021.

The remuneration policy, despite the unprecedented challenges faced in 2020 has operated as intended, in terms of the Company's performance and the quantum of remuneration paid to the Directors.

Terms of the 2020 LTIP award

As set out in last year's report, the Committee had intended to grant LTIP awards to Executive Directors and senior managers subject to EPS and relative TSR conditions. The grant of the award was delayed due to the pandemic.

The Committee sought the views of its largest shareholders in determining appropriate performance metrics and structure of the 2020 LTIP award. The general feedback received was that in a very uncertain financial market, targets were impossible to set and shareholders wanted to ensure that there was a clear and strong incentive for executives to achieve a swift recovery in the share price. Following a comprehensive shareholder consultation, the Remuneration Committee made awards to Executive Directors and senior management on 21 September 2020. The awards will vest subject to the achievement of performance conditions based on absolute share price growth and relative TSR. The Committee will also take into account the underlying performance of the Company, in particular ROCE performance over the performance when determining vesting of awards. Details of the award are set out on pages 98 to 99.

The performance measures of the 2020 LTIP award were changed from our normal structure but remained within the terms of our Directors' Remuneration Policy, to reflect the impact of the pandemic on the business and to drive management in the recovery of the business.

For awards to vest in full, Vitec's share price will need to be £18 or higher at the end of February 2023 and Vitec's relative TSR will need to be in the upper quartile of the FTSE 250. A share price at vesting of £18 would deliver over £480 million additional shareholder value between grant and vesting. 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 believes the 2020 LTIP award helps to align our Executive Directors and PDMRs with the achievement of a strong recovery over the performance period. The structure will help reward for significant growth in shareholder value and will drive management to that goal.

Share awards made to Executive Directors under the 2020 LTIP award are subject to a further two-year holding period following the vesting date in September 2023 thereby aligning with the long-term interests of shareholders. The Committee retains full discretion to reduce the vesting outcome taking into account underlying business performance.

The Committee approved Restricted Share Plan ("RSP") awards in 2020 for key talent in the Group, excluding the Executive Directors. The RSP delivers shares over a three-year period to retain and incentivise key talent to deliver on strategic growth initiatives.

CorporateGovernance

Remuneration report

Remuneration report (continued)

Implementation of Policy for 2021

The Committee felt that for 2021 an increase in base salaries for Executive Directors was not appropriate given the continuing challenges to the recovery of the business and in light of the bonus for 2020's performance and the enhanced LTIP award in 2020. They therefore have received no pay rise while the wider employee population received on average an increase of 2.2% for 2021.

Fees paid to the Chairman and Non-Executive Directors were also not increased for 2021.

The 2021 Annual Bonus Plan has been designed to ensure that it motivates Executive Directors to deliver against challenging targets for 2021 driving the recovery of the business following the pandemic. Its structure retains the same combination of financial targets (Group adjusted profit before tax* and operating cash flow* generation) and personal objectives as used in previous years. Given the uncertainties of 2021 and the importance of cash generation, the Committee will use its powers under the Policy Report to structure the 2021 Annual Bonus Plan so that Profit and Cash Conversion measures are independently assessed, but also ensuring that the best interests of shareholders are preserved. Financial targets and personal objectives for the 2021 Annual Bonus Plan, against which actual performance will be measured, will be disclosed in the 2021 Remuneration Report.

The Committee intends that the LTIP awards for 2021 will revert to the structure before the pandemic and be based on the Company's EPS and TSR performance ranked against a comparator group. However, for the EPS performance condition, representing 67% of the award, we propose a challenging EPS performance corridor to reflect the ambitions of the 2020 award and uncertainty of recovering the business from COVID-19. We therefore propose an adjusted EPS corridor with threshold set at 60 pence and a stretch set at 100 pence for the year ended 31 December 2023 with a straight line progression in between. 33% of the award will be measured using the Company's TSR performance compared to the constituents of the FTSE 250 index (excluding financial services companies and investment trusts). As before we will also operate a ROCE underpin on the 2021 LTIP award. To reflect the exceptionally high standard of performance that the targets will require, the continuing challenges faced by the Executive team in recovering the business and the stretch nature of the EPS targets while providing a strongly motivating incentive to grow shareholder value, we will also on an exceptional basis, award LTIPs to the Executive Directors at a value of 200% of base salary.

The Committee also took into account the promising performance of the Company's share price, particularly in the weeks following the end of the financial year. Some shareholders may question why an enhanced award was necessary for the second successive year. In our view, the uncertainties of the pandemic will continue for some time and we believe in the power of well-designed incentives to focus the Executive Directors on value-creating activity, to reward them for delivering and to retain them over the next few years when we expect the scale of the commercial challenges and the demands on the executive team to be great. The shares will only vest if the Company performs and our shareholders also benefit.

Committee priorities for 2021

The Committee in 2021 will focus on the following matters:

• - Securing shareholder approval at the 2021 AGM for the 2020 Annual Remuneration Report

• - Granting LTIP awards in 2021 with stretching EPS and TSR performance conditions

• - Ensuring that the 2021 Annual Bonus Plan drives performance and rewards sustainable growth in the Company and is set against appropriate financial targets given the recovery from COVID-19

• - We have agreed with the Group Chief Executive that his current contractual pension contribution of 20% will be aligned with the wider UK workforce pension contribution of 8% by

  1 January 2023. We will finalise the details of implementing this during 2021.

Annual General Meeting

We will be putting the Annual Remuneration Report covering Directors' remuneration paid in 2020 to the Company's shareholders for an advisory vote at the 2021 AGM. I encourage all shareholders to vote in favour of this resolution.

Caroline Thomson

Chairman, Remuneration Committee 25 February 2021

*This report provides 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 improve 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 180 and 181.

Remuneration report

Remuneration Policy report

2020 Remuneration Policy report

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 27 May 2020 until the 2023 AGM. The full Policy, as approved by shareholders, is available on the Company's website and is contained in the 2019 Annual Report. Should there be any need to change the Company's Policy ahead of the 2023 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.

Element of remunerationPurpose and link to strategy

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.

To provide Executive Directors with ancillary benefits to assist them in carrying out their duties effectively.

Operation

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.

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.

Maximum opportunity

The Committee has not set a maximum level of salary and the Committee will usually award salary increases in line with average 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 and

• - 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.

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 £350 per month maximum). An International Sharesave Plan also operates for non-UK employees.

Performance measures

Not applicableNot applicableCorporateGovernance

Remuneration report

Remuneration Policy report (continued)

Element of remunerationPurpose and link to strategy

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

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, 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.

Maximum opportunity

An absolute maximum of 125% of base salary to be paid in each year.

Performance measures

Measures and targets for the annual bonus are set annually by the Committee.

Currently, half of the annual bonus is based on the achievement of annual targets set against the Group's adjusted profit before tax*, with the remainder based on the achievement of annual personal objectives and achievement of annual targets set against the Group's operating cash flow* generated as a percentage of adjusted operating profit* (25%).

The Committee reserves the right to vary these proportions and also the measures annually to ensure the annual bonus remains appropriate and challenging.

Targets are measured over a one-year period. Payments range between 0% and 125% of base salary for threshold and maximum performance.

Awards granted under the Deferred Bonus Plan are not subject to any performance conditions.

Element of remunerationPurpose and link to strategy

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

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, unless the Committee determines otherwise, 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, 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.

Maximum opportunity

The maximum value of shares over which awards may be granted in respect of each year is 150% of base salary (although 200% is permitted in exceptional circumstances determined by the Committee).

Performance measures

LTIP awards may be based on 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 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 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, 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.

CorporateGovernance

Remuneration report

Remuneration Policy report (continued)

Element of remunerationPurpose and link to strategy

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

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.

Notes to the 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.

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.

Shareholding requirements (including post-employment)

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.

Maximum opportunity

Stephen Bird currently receives a pension contribution of 20% of base salary. Martin Green and any subsequently appointed Executive Director receives a pension contribution of 8% of base salary which is in line with pension contributions provided to the wider UK employee workforce. The Committee has agreed that Stephen Bird's pension contribution will change to 8% of base salary on 1 January 2023, being aligned with the wider UK employee workforce.

Salary is the only pensionable element of Executive Director remuneration.

Performance measures Not applicable.

Post-employment, Executive Directors are expected to maintain a material level of shareholding in the Company at least for 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 shares held by the Chairman and Non-Executive Directors are set out on page 101.

Performance measures

The Annual Bonus Plan is based on both personal and 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 strategicpriorities 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 67% on adjusted basic Earnings Per Share* growth and 33% 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. 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. The Committee will measure ROCE using a standard definition of adjusted operating profit* divided by average total assets, current liabilities excluding the current portion of interest bearing borrowings and non current lease liabilities. Any changes to these measures will be aligned with the long-term strategy of the Group. In 2020, given the impact of COVID-19 on the business, the Committee, after consulting with our major shareholders, adjusted the performance conditions tied to the 2020 LTIP award. In summary, this was based on share price growth and the Company's TSR performance. Full details of this are set out on page 98 of this Report.

Provisions for the withholding and recovery of sums from the Directors (malus and clawback) are as set out on page 109.

Remuneration Policy table 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.

Purpose

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.

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.

To reimburse Non-Executive Directors for reasonable expenses incurred and bear any costs associated with tax, where relevant.

Operation

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 Vitec. 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.

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 and

• - An additional fee for chairing Board Committees 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 Vitec. All fees are paid in cash, not shares, usually on a monthly basis in arrears.

Expenses are reimbursed as and when incurred relating to the Company's business (including travel and hotel accommodation).

CorporateGovernance

Remuneration report

Remuneration Policy report (continued)

Illustrative remuneration performance scenarios

The following charts set out scenarios for the remuneration of Stephen Bird and Martin Green for 2021 in line with the Policy. This includes scenarios for full vesting of LTIP awards based on an award at 200% of salary, with one chart showing no share price appreciation and one chart showing a 50% appreciation in share price. There was also no increase given for base salaries in 2021, due to the Company responding to the COVID-19 pandemic:

Stephen Bird	Martin Green
Basic remuneration	Basic remuneration
Minimum base salary	£474,629 (79%)	Minimum base salary	£355,000 (87%)
Bene ts	£32,787 (5%)	Bene ts	£26,391 (6%)
Pension (20% of salary)	£94,926 (16%)	Pension (8% of salary)	£28,400 (7%)
Total xed pay (minimum)	£602,342

Total xed pay (minimum) £409,791

On-target performance (no share price appreciation):

Fixed pay	£602,342 (53%)	Fixed pay	£409,791 (51%)
Annual bonus	£296,643 (26%)	Annual bonus	£221,875 (27%)
LTIP	£237,315 (21%)	LTIP	£177,500 (22%)
Total on target pay	£1,136,300	Total on target pay	£809,166

Maximum pay (no share price appreciation):

Fixed pay	£602,342 (28%)	Fixed pay	£409,791 (26%)
Annual bonus	£593,286 (28%)	Annual bonus	£443,750 (28%)
LTIP	£949,258 (44%)	LTIP	£710,000 (46%)
Total maximum pay	£2,144,886	Total maximum pay	£1,563,541

Maximum pay (including 50% share price appreciation for LTIP award):

The illustrations are based on the following assumptions:

Fixed pay	£602,342 (23%)	Fixed pay	£409,791 (21%)
Annual bonus	£593,286 (23%)	Annual bonus	£443,750 (23%)
LTIP	£1,423,887 (54%)	LTIP	£1,065,000 (56%)
Total maximum pay	£2,619,515	Total maximum pay	£1,918,541
-	LTIP
- At minimum - nil

• - Fixed pay - base salary as at 1 January 2021

• - The total value of benefits received in the year ended 31 December 2020 which include car allowance, private healthcare, income protection and any Sharesave options granted during 2020

• - Pension contribution of 20% for Stephen Bird and 8% for Martin Green

• - Annual bonus

  • - At minimum - nil

  • - On target - 50% of maximum payout (i.e. 62.5% of base salary)

  • - At maximum - 100% of the maximum payout (i.e. 125% of base salary)

On-target performance (no share price appreciation):Maximum pay (no share price appreciation):Maximum pay (including 50% share price appreciation for LTIP award):

• - On target - 25% vesting under the LTIP (i.e. 50% of base salary) and set out at face value, with no share price growth or dividend assumptions

• - At maximum - 100% of the maximum payout (i.e. 200% of base salary) 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 (i.e. 200% of base salary) and showing a 50% appreciation in the share price over the vesting period.

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 is informed on remuneration issues for the wider Group workforce and keeps the Board fully updated. The detail of this role is given on pages 16 and 17 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 of Dialight plc. In this role he receives a basic fee of £38,500 per annum and an additional £4,675 per annum in the role of senior independent director. Under the terms of his service contract, Martin Green, 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 Martin Green had not taken up any such external non-executive appointment.

Remuneration Policy for senior managers and other employees of the Company

The remuneration policy for senior managers in the Company is similar to that of the Executive Directors other than the quantums are lower. They will participate in the Annual Bonus Plan with the same structure as the Executive Directors, as well as the LTIP or participation in a Restricted Share Plan, and therefore a significant element of their remuneration is 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 all of the territories of the UK, US, Italy, France, Germany, Israel, Australia, New Zealand, Japan, Hong Kong, 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 pages 47 and 102 of this Annual Report. In 2020, up to 70 senior managers participated in a Restricted Share Plan ("RSP") (excluding Executive Directors). The RSP awards shares to key employees over a three-year vesting period 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 a new 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).

CorporateGovernance

Remuneration report

Remuneration Policy report (continued)

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.

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:

The terms of the service contracts for Executive Directors do not provide for pre-determined 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.

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 pre-determined amounts of compensation in the event of early termination of employment. The Committee maintains full discretion at 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 pro rate 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 fairly treating 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. No Director left the Company in 2020 and so no details are reportable for 2020.

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.

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 byeither 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 the Non-Executive Directors and Chairman (as well as the Executive Directors) are subject to annual reappointment by the shareholders at the AGM.

Copies of the Executive Directors' service contracts, Chairman's and each Non-Executive Director's letters of appointment are available on our website atwww.vitecgroup.com.

Consideration of shareholder views

The Committee has continued to take into account the views of its shareholders concerning the Policy on remuneration of Directors.

The Company received 89% support for the Remuneration Policy Report at the 2020 AGM and over 96% support for the 2019 Annual Report on Remuneration at the 2020 AGM, indicating a strong level of support for the structure of Directors' remuneration.

During 2020, the Committee took into account feedback given by major shareholders on the proposed structure of the 2020 Policy Report with that Policy submitted and approved at the May 2020 AGM. In addition, the Committee consulted with its major shareholders on the proposed structure of LTIP awards for 2020 given the impact of COVID-19 upon the Company. This consultation involved a letter to each major shareholder setting out the proposed quantum and performance conditions for 2020 LTIP awards. In light of this feedback, the structure of 2020 LTIP awards was changed with awards made on 21 September 2020. The details are set out on pages 98 and 99 of this report.

The Committee would engage with shareholders ahead of any material change to the Policy for the Company relating to its Directors and would also engage 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.

CorporateGovernance

Remuneration report

Annual report on remuneration

This Annual Report on Remuneration together with the Annual Statement will be put to an advisory vote at the AGM to be held on Thursday, 6 May 2021.

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 2020 and 2019:

Salary/fees	Benefits(1)	Pension(2)	Annual bonus(3)	LTIP(4)	Total Fixed	Total Variable
£	£	£	£	£	Total	remuneration	remuneration
Stephen Bird
2020	446,223	32,787	89,245	133,489	0	701,744	568,255	133,489
2019	463,053	29,078	92,611	124,445	442,671	1,151,858	584,742	567,116
Martin Green
2020	331,549	26,391	28,500	99,843	0	486,283	386,440	99,843
2019	298,669	25,961	44,800	81,201	261,131	711,762	369,430	342,332
Kath Kearney-Croft
(left 13 September 2019)(5)
2020	18,459	0	0	0	0	18,459	18,459	0
2019	325,694	23,286	48,854	0	0	397,834	397,834	0
Ian McHoul
(appointed 25 Feb 2019)
2020	159,826	0	0	0	0	159,826	159,826	0
2019	116,413	0	0	0	0	116,413	116,413	0
Christopher Humphrey
2020	65,105	0	0	0	0	65,105	65,105	0
2019	68,000	0	0	0	0	68,000	68,000	0
Caroline Thomson
2020	62,285	0	0	0	0	62,285	62,285	0
2019	65,000	0	0	0	0	65,000	65,000	0
Richard Tyson
2020	48,183	0	0	0	0	48,183	48,183	0
2019	50,000	0	0	0	0	50,000	50,000	0
Duncan Penny
2020	48,183	0	0	0	0	48,183	48,183	0
2019	50,000	0	0	0	0	50,000	50,000	0
John McDonough
(left 21 May 2019)
2020	0	0	0	0	0	0	0	0
2019	59,606	0	0	0	0	59,606	59,606	0
TOTAL
2020	1,179,813	59,178	117,745	233,332	0	1,590,068	1,356,736	233,332
2019	1,496,435	78,325	186,265	205,646	703,802	2,670,473	1,761,025	909,448
Notes:

• (1) Taxable benefits include car allowance, healthcare cover and income protection. This also includes the grant of Sharesave options to Stephen Bird and Martin Green in 2020 and shows the value of the 20% discount on the option granted. Stephen Bird and Martin Green were both granted 2,282 Sharesave options on 24 September 2020 at an option price of £5.52 compared to a market price of £6.90 per share.

• (2) Stephen Bird receives a pension contribution of 20% of base salary which is taken in the form of a cash payment. With effect from Martin Green's appointment as Group Finance Director on 10 February 2020, he receives a pension contribution of 8% of base salary. Prior to this date he received a contribution of 15% of base salary.

(3)For the Annual Bonus Plan 2020, Stephen Bird's and Martin Green's bonus potential was 125% of base salary. Further details are set out in the "Further notes" section on the following page.

(4) Long-term incentives comprise LTIP awards. Awards made in 2018 failed to achieve their performance conditions based on EPS growth and TSR performance. The 2018 award will therefore lapse on its third anniversary of 2 March 2021. LTIP Awards made in 2017 achieved performance conditions based on TSR and growth in adjusted basic Earnings Per Share at a blended rate of 72.06% and vested on 15 May 2020 for the Executive Directors. Further details on the vesting of the 2017 LTIP awards are set out in the "Further notes" section on the following pages. The value of the vested award has been updated from that published in 2019's Remuneration Report to reflect the actual value of shares on the date of vesting (£6.84). This is shown in the table above.

(5)Kath Kearney-Croft ceased to be Group Finance Director on 13 September 2019, and as detailed in 2019's Annual Report, her fixed pay and benefits was paid on a monthly basis up until 20 January 2020.

• (6) The Remuneration Committee has not used discretion in the award of Directors' remuneration in 2020.

• (7) The base salary/fee paid column for 2020 shows the actual remuneration paid in 2020, taking into account salary/fee waivers implemented in response to COVID-19.

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 2020. Stephen Bird and Martin Green both waived 20% of their salaries from 14 April to 1 August 2020 as part of several cash preservation measures in response to COVID-19. Their respective contractual salary amounts are shown in brackets for full disclosure:

Executive Director	2020 Actual Paid Salary	(2020 Contractual Salary)
Stephen Bird	£446,223	(£474,629)
Martin Green	£331,549	(£355,000)
(2) Benefits

The single figure of total remuneration table sets out the total value of benefits received by each Executive Director in 2020. Details are as follows:

(3) Pension allowance

CorporateGovernance

The table below sets out the value of the cash payment in lieu of pension for each Executive Director in 2020:

Executive Director

Pension allowance

Stephen Bird Martin Green

£89,245 £28,500

(4) Annual bonus

In 2020, 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 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 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 operating cash flow* represented 25% of the maximum bonus that could be earned.

The rules of the 2020 Annual Bonus Plan linked the two financial performance conditions so that the conversion of adjusted operating profit* into operating cash flow* element will only pay out if the Group adjusted profit before tax* element has at least achieved threshold performance.

Remuneration report

Annual report on remuneration (continued)

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 profit* and operating cash flow* generation and had the most direct impact upon shareholder value for the year ended 31 December 2020. None of the financial performance conditions was achieved for 2020 due to the impact of COVID-19 on the business shortly after the start of the financial year. The financial targets were set by the Board/Remuneration Committee before the impact of the pandemic upon the business became apparent. The Committee did not consider it appropriate to adjust the financial performance conditions set or use discretion at the end of the year and so no bonus was payable in respect of the financial performance conditions for 2020.

The personal objective element of the 2020 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 below.

Stephen Bird - 2020 personal objectives - 90% achieved

• - Continue to build a world-class organisation including: retain, motivate and improve the Operations Executive team including development of succession plans around this team; continuing development of senior leadership team and strengthening bench strength within Creative Solutions; ensuring the success of Martin Green as Group Finance Director and Jon Bolton with responsibility for Group HR.

  Representing 20% of personal objectives

• - Re-build the investment case for the Group: focus on key growth initiatives including 4K to drive performance; continue and develop progressive communications with shareholders; and development of ESG initiatives.

  Representing 25% of personal objectives

• - Imaging Solutions strategic model: Review the Imaging Solutions strategic model in light of challenging and evolving photographic market including successful execution on Project Digital; successful launch of JOBY new products; and optimise the manufacturing footprint for the Imaging business.

  Representing 20% of personal objectives

• - Strategic Plan execution: Deliver on key strategic plan priorities including JOBY, audio, LED, sliders and gimbals.

  Representing 20% of personal objectives

• - Further develop Creative Solutions into a more mature organisation: working with the Divisional CEO, develop the Division into a more cohesive, joined up organisation bringing the separate businesses into a more cohesive Division; ensure the success of a new Chief Operating Officer for the Division; deliver on new 4K products; and recovery of the SmallHD business following the fire in 2018.

  Representing 15% of personal objectives

Martin Green - 2020 personal objectives - 90% achieved

• - Build a world-class finance function that adds value: ensuring cross Divisional collaboration; reducing complexity of reporting and improving speed and accuracy of forecasting; regular reviews on R&D spend particularly on key projects; leveraging price increases; and optimising the management of inventory across the Group.

  Representing 40% of personal objectives

• - Support the Group CEO in re-building the investment case for the Group: focus on key growth initiatives including 4K to drive performance; continue and develop progressive communications with shareholders; and development of ESG initiatives.

  Representing 25% of personal objectives

• - Group Tax and Treasury function: review interest rate and cash flow hedging strategies and execute as appropriate; re-finance the Group's credit facility; and improve the Group's corporation tax position.

  Representing 15% of personal objectives

• - Strategic Plan execution: support the Group CEO on delivery on key strategic plan priorities including JOBY, audio, LED, sliders and gimbals.

  Representing 20% of personal objectives

The above personal objectives were set by the Board and Remuneration Committee before the impact of the pandemic became evident in February/March 2020. Once the pandemic hit, the primary focus of the Group CEO and Group Finance Director was fixed on delivering an acceptable financial performance for the Group for our shareholders for 2020; delivering on key cost containment initiatives; securing the financial security of the Group ensuring that the business would be well placed to take advantage of growth initiatives as the pandemic passed; ensuring the safety and wellbeing of our employees throughout the pandemic; and retaining the trust of key stakeholders throughout this unprecedented period.

This is shown in the following diagram:

2020 Overall Objectives

PERFORMANCE - Deliver FY20

£10m* PBT and net debt of £100-110m - Shareholders perceive professional & effective management

Deliver FY20 £10m* PBT

Deliver net debt of £100-110m

2. FUNDING

Secure £30m additional funding

3. COST REDUCTIONS

Reduce costs by £20-25m; broadly consistent across the Group

4. TRUST

Retain the trust of key stakeholders through this period; ensure we deal with our employees fairly and consistently

• - 95% employees believe fair

• - Shareholders perceive professional and effective management

Revenue of c.£290m and agreed revised PBT of c.£6m subject to audit adjustments

Achieved agreed revised target of c.£91m

Achieved stretch target

• - £50m drawn down in H1 from CCFF

• - Avoided the need to raise equity

Achieved stretch target

Actions were taken across the Group to improve performance with cost savings of c. £26m vs 2019 (c. £13m in H120)

Achieved stretch target

85% participation in employee survey in May 2020

• - 99% felt that Vitec was responding appropriately to the COVID-19 crisis

• - 96% felt that the Company was communicating enough with them

Launched Employee Wellness Programme

Major shareholders remain fully engaged and supportive; share price increased from the low of c.£5 in April to the current £9.68

The Board set these additional objectives and the Remuneration Committee assessed performance against them alongside the above personal objectives in deciding whether to pay a bonus and at what level. Central to this has been the need to ensure that all stakeholders are treated fairly and that the business is well placed to grow for the future. As part of the assessment of performance against personal objectives, the Committee also considered a number of factors including:

• - Response and recovery of the business from the impact of COVID-19 including financial performance

• - Safety and wellbeing of the Company's employees throughout 2020

• - Experience of the Company's shareholders throughout the pandemic

• - The Company's access of government financial support measures during the pandemic and plans to repay

• - The experience of other stakeholders including customers and suppliers.

The Committee on balance considered that a pay-out on the personal objectives element of the 2020 Annual Bonus Plan was merited based on the above factors. This decision was considered at great length by the Committee particularly given the impact of COVID-19 on the business and society in general. The Committee felt that some bonus should be paid not just because of the strength of the Executive Directors performance but also in light of the fact that all employees would be paid a bonus for 2020. The Executive Directors and the wider leadership team worked effectively through the pandemic and delivered what we consider to be a strong financial result for 2020 - notably adjusted Group PBT of £5.5 million and Group Net Debt of £90.8 million at the year-end, which was lower than that in 2019. They have also led the business through the pandemic ensuring the health and wellbeing of our employees.

The Board took some tough decisions to ensure that the Company will come through the pandemic and is well positioned to grow and take advantage of our competitive position and well placed to benefit from structural changes to the market. These measures included cancelling dividend payments in 2020, the Board and senior executives taking a 20% salary cut for a period of time and accessing government financial support measures, including furlough of employees and additional finance under the Covid Corporate Finance Facility. The Committee, however, felt it important to reward management's performance even given that the financial targets were not met. The Group has generated a profit, the Executive Directors met the additional objectives set for them and the modest bonus based on personal objectives for the Executive Directors will cost £233,332. We believe this aligns with the interests of all our stakeholders as part of our approach to rewarding, motivating and retaining a talented executive team.

Executive Directors are required to defer half of their earned bonus into the Deferred Bonus Plan held in the form of the Company's shares for three years ensuring focus on long-term growth for the Group.

CorporateGovernance

Remuneration report

Annual report on remuneration (continued)

2020 annual bonus outcome

The table below sets out the annual bonus awards made to Executive Directors in respect of the year ended 31 December 2020 including the financial trigger points used in determining whether a bonus was payable.

Actual Group performance/ assessment of personal objective

Name

Bonus potential

Elements of bonus potentialThreshold

TargetMaximumperformancePayout and % of maximum

125% of annual salary

50% Group PBT*

£46.4m

25% Group conversion of operating profit* into operating cash flow*

H1: 57.5%

FY: 76.5%

£51.5m 63.9% 85%

£56.7m

£5.5m

-

0%

• 70.3% H1: n/m

  -

  0%

• 93.5% FY: 257%

25% Personal objectives

90%

£133,489

Payout due to Executive

£148,322

£296,643

£593,286

Director at each level

TOTAL

£133,489

22.5%

125% of annual salary

50% Group

£46.4m

PBT*

25% Group conversion of operating profit* into operating cash flow*

H1: 57.5%

FY: 76.5%

£51.5m 63.9% 85%

£56.7m

£5.5m

-

0%

• 70.3% H1: n/m

  -

  0%

• 93.5% FY: 257%

25% Personal objectives

90%

£99,843

Payment due to Executive

£110,938

£221,875

£443,750

Director at each level

TOTAL

£99,843

22.5%A straight-line sliding scale operates between each of the above trigger points for both financial targets. The Remuneration Committee considered that these trigger points were appropriate and sufficiently stretching for 2020.

Under the rules of the Annual Bonus Plan the Remuneration Committee retains full and absolute discretion as to whether a bonus is payable or not and that discretion may only be used in exceptional circumstances, taking into account the overall financial performance of the Company. Any use of this discretion in connection with an Executive Director will be clearly explained in the Remuneration Report. For the 2020 Annual Bonus Plan, the Remuneration Committee exercised no discretion in respect of the Executive Directors' bonus.

Half of the 2020 annual bonus (after tax) will be deferred into the DBP. The 2020 deferred bonus will be 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 2018 and vesting in respect of performance to 31 December 2020

These relate to awards made in 2018 under the LTIP. Awards are measured based 33% upon the Company's TSR measured against a comparator group and 67% subject to growth in the Company's adjusted basic Earnings Per Share*. Each performance condition is entirely independent from the other performance condition and there is no retesting of either performance condition. Vesting is 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 detail of each performance condition for each award is set out on the next page.

For that part of an award made in 2018 under the LTIP measured against TSR, if the Company's TSR performance is at the median of the comparator group at the end of the three-year performance period, 25% of that element of an award may vest. The full element of an award may vest if the Company's TSR performance is in the top 25% of the comparator group. There is a pro rata straight-line vesting between these two points. The comparator group comprised the constituents of the FTSE 250 Index (excluding financial services companies and investment trusts) and performance was measured over a three-year period.

For that part of an award measured against EPS growth, if the percentage growth in the EPS of the Company exceeds 6% per annum (Compound Average Annual Growth Rate), 25% of that element of an award may vest. Full vesting of an award occurs if the growth in EPS over the performance period exceeds growth by 14% (Compound Average Annual Growth Rate) or greater. There is a pro rata straight-line vesting between these two points.

An award lapses if threshold performance is not achieved during the performance period.

The Remuneration Committee also considered the underlying financial performance of the Company before it confirmed vesting, notably the Company's ROCE performance.

Performance outturn

The table below summarises the value of awards vesting for the 2018 award. The award failed to achieve threshold performance and will therefore lapse in full on the third anniversary of the award on 2 March 2021.

Vesting as a

2018 awards	Actual performance	% of award
TSR	Vitec ranked in the 36th percentile of the comparator group with TSR performance of -22.2% over the
three-year performance period	0%
EPS	Adjusted "normalised" EPS of 9.0 pence compared to a base EPS point of 68.1 pence	0%
ROCE underpin	The Company's ROCE performance over the performance period was as follows:
2017: 19.6%; 2018: 21.8%; 2019: 18.5%; 2020: 3.7%
Total vesting	0%

TSR is calculated on the basis of growth in the Company's share price over a three-year performance period 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 and is ranked against the comparator group companies' TSR performance to determine the outcome.

CorporateGovernance

EPS is determined in accordance with note 2.5 of the Financial Statements on page 141. The base point for the EPS performance condition was 68.1 pence per share, being the EPS figure for the year ended 31 December 2017.

The Remuneration Committee at its meeting on 22 February 2021 confirmed that 2018 awards will therefore lapse as the performance conditions had not been achieved.

Awards made in 2017 and vesting in respect of performance to 31 December 2019

These relate to awards made in 2017 under the LTIP. The performance conditions for these awards are the same as those made in 2018 split 33% based on TSR and 67% based on EPS growth, both over a three-year performance period. The adjusted EPS growth targets were 6% growth per annum (Compound Average Annual Growth Rate) for 25% of that element of an award to vest and 14% or more growth per annum for full vesting, respectively. The Remuneration Committee also considered the underlying financial performance of the Company, notably the Company's ROCE performance before it confirmed vesting.

As disclosed in the 2019 Annual Report on Remuneration, the TSR performance condition was fully achieved (resulting in 33% of the award vesting) and the EPS part of the award achieved 58.3% vesting. This resulted in a total vesting level of 72.06% for the 2017 LTIP. The 2017 LTIP vested on 2 March 2020 for the majority of participants and on 28 May 2020 for the Executive Directors. The actual value of this vested award for each of the Executive Directors is shown in the Directors' single figure of total remuneration table on page 92.

Other outstanding awards made in 2019 and vesting in respect of performance to 31 December 2021

For awards made in 2019, 33% of an award is 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 will operate between each of the above points. Below threshold performance none of the award will vest.

67% of the award will be subject to adjusted EPS growth over a three-year performance period. For awards made in 2019 the adjusted EPS* growth figures are set at 6% per annum for 25% vesting and 14% plus per annum for full vesting. A straight-line sliding scale will operate between each of the above points and below 6% adjusted EPS* growth none of the award will vest. Subject to satisfaction of

Remuneration report

Annual report on remuneration (continued)

performance conditions to 31 December 2021, these awards will vest in March 2022.

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.

Awards made in 2020 and vesting 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.

The Committee was grateful for the valuable input and support given by shareholders in addressing this issue given the need to incentivise, motivate and retain its senior leadership team. The general feedback received was that shareholders wanted to ensure that there was a clear and strong incentive for executives to achieve a swift recovery in the share price and this should be the priority.

The 2020 LTIP awards were granted on 21 September 2020 and these will only vest if very stretching absolute targets around share price are met and if Vitec's Total Shareholder Return ("TSR") is also in the top half of the FTSE 250 constituents (excluding financial services companies and investment trusts). The challenge is particularly great against the context of the continuing impact of COVID-19. If achieved, the Group's performance and increase in share price will significantly reward both shareholders and management. The terms remain in line with the Directors' Remuneration Policy approved by shareholders at the 2020 AGM.

For the awards to vest in full, Vitec's share price will need to be £18 or higher in February 2023 and Vitec's relative TSR will need to be at least in the upper quartile of the FTSE 250. A £18 share price would deliver over £480 million additional shareholder value between grant and vesting. 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 believes the structure of the 2020 LTIP award helps to align our Executive Directors and PDMRs with the achievement of a strong recovery over the performance period. The structure will help reward for significant growth in shareholder value and will drive management towards that goal.

LTIP awards made in 2018 and 2019 will not be adjusted from their existing structure and it is the Committee's intention that the 2021 and future awards under the current Directors' Remuneration Policy will revert to their traditional structure based 33% on TSR and 67% based on EPS growth and with a ROCE underpin. The Committee has discretion to reduce vesting if it feels appropriate to do so. It is only the 2020 LTIP award that has this unique structure.

The following provides details of the 2020 LTIP awards made on 21 September 2020 to Stephen Bird and Martin Green including performance conditions.

(1) Absolute share price target

• - The first performance condition is based on the achievement of absolute share price targets by 28 February 2023, whereby 25% of the total award will vest should Vitec's absolute share price reach £9.00 and full vesting of the total award be achieved if Vitec's absolute share price reaches £18. Vesting between these prices will operate on a straight-line basis in accordance with the Directors' Remuneration Policy and in line with the table below

• - No shares will vest 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.

  % of total
  Vitec absolute share price	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 is that the award will also be 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, Vitec will need 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 will effectively work as a downward modifier and none of the shares will vest if Vitec's performance is below the median at the end of the performance period. To illustrate, if Vitec's absolute share price is at £20 at the end of the performance period (above the maximum of the range) and Vitec's TSR performance is at median against the FTSE 250 constituents, then 25% of the award will vest. This performance condition will be 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 will operate at points between this and vesting will not occur below the median.

Vitec's TSR ranking compared to FTSE 250 constituents	% of award
(excluding financial services companies and investment trusts)	to vest
Below median	0%
Median	25%
Upper quartile	100%