The Broadcast Division designs, manufactures and distributes premium branded products for broadcasting, film and video production for broadcasters and independent content creators. It also provides premium services including equipment rental and technical solutions to TV production teams, film crews, and corporate enterprises.
Revenue for 2016 was £224.8 million, an increase of 18.9% on the prior year. At constant exchange rates revenue grew by 5.6% on 2015 with a strong performance from the higher technology businesses. Adjusted operating profit* increased by £0.7 million to £21.0 million although it was 2.7% lower than the prior year at constant exchange rates.
Adjusted operating profit* and margins reflected a strong performance by the higher margin technology businesses but also the negative impact of the anticipated lower volumes in the Haigh-Farr antenna business and the lower activity at the US asset rentals business. The Haigh-Farr business is a non-core activity. On a constant currency basis excluding Haigh-Farr’s results, the Division’s revenue grew by 7.0% and its adjusted operating profit* was 11.2% higher.
The Division has continued to increase its sales of higher technology products particularly for independent content creators, including wireless transmitters and receivers, camera monitors and mobile power. Our mobile power business has grown, with the US broadcast battery market performing well and we have gained a number of large medical mobile power orders. This was offset by lower sales in more mature markets.
We have continued to invest in new product development in line with the changing nature of the broadcast market. New products launched in the year include: large High Dynamic Range (HDR) monitors; virtual reality capabilities; the Vinten Vantage, a compact robotic head providing smooth on-air motion that supports many cameras and lenses; and the Teradek Live:Air, an iOS app enabling live video production with a full range of real time features, using only an iPad.
Our higher technology offering was further enhanced with the acquisitions of Offhollywood in April 2016 and Wooden Camera in September 2016. Both of these acquisitions provide the Group with innovative ranges of high quality branded camera accessories that we are selling through our global distribution channel. This builds on our recent strong acquisition track record including the purchases of Teradek and SmallHD, with SmallHD delivering growth in 2016 as it benefited from investment in its monitor technology.
Revenue from the equipment rental and broadcast services business was higher than the prior year, benefiting from supporting the Rio 2016 Olympics and the award of a significant contract with the NFL for project management and technical support. However, the NFL contract included high material costs with a low pass-through margin.
The performance of the broadcast services business was negatively impacted by a significant downturn in the more competitive traditional US asset rentals market, particularly in the second half of the year. We are carefully reviewing the business’ performance and taking appropriate actions to drive improvement. This resulted in a strong positive cash flow from this business despite it making an operating loss in 2016. This has been achieved by restructuring and further simplifying the business model while significantly reducing the asset base through lower levels of investment and by proactively selling underperforming rental assets.
As previously identified, the Division’s results were also negatively impacted by the anticipated lower volumes and planned cost investments within the higher margin Haigh-Farr defence antenna business. The business remains profitable but its outlook is much weaker having performed particularly strongly for the last few years.