Broadcast Services saw a 24% growth in US dollar sales, which
translated to a 10% growth in £ sterling. Many of the drivers of
this growth are expected to persist in 2005. The ongoing
strengthening of the market, first evident in the latter part of
2003, continued, buoyed by the backdrop of improving US
advertising spend, and we have benefited from the uptake of
High Definition (HD) programming. Operating margin grew from
breakeven to 5.4%, and the unit continued to generate cash
despite increased spend on new rental equipment.
Bexel has also captured an increasing number of reality shows
as the technical standards demanded by producers have
steadily risen; examples are Survivor, The Apprentice, The
Osbournes, and most recently the latest series of American Idol
and Brat Camp. Many of these shows have also needed
sophisticated audio systems from ASG, our high end audio
integrator. During the year, progress was also made to widen the
range of services offered; for example, Bexel can now help
clients fit-out facilities with fibre optic cabling that allows
subsequent events to be staged more efficiently.
The Charter acquisition has gone well, with additional contracts
for the depots in Chicago and Orlando that were taken over, as
well as gains from the elimination of surplus equipment. The
expanded network of 10 depots means that broadcasters can
rely on us to support them with assets and technical support
throughout the country. In 2004 this led to a ‘preferred supplier’
agreement being concluded with Disney, covering ABC and
ESPN as well.
The second half saw the summer Olympics in Athens, with
contracts won for AOB (Athens Olympic Broadcasting) and with
two German broadcasters, ARD and ZDF. Both these prestigious
contracts went smoothly, a testament to the high levels of
technical service within Bexel that customers have come to rely
on. These contracts will not repeat in 2005, but we continue to
see underlying growth in rentals.
| |
2004 |
2003 |
| Turnover |
£29.8m |
£27.0m |
| Operating profit* |
£1.6m |
£0.0m |
| Operating margin* |
5.4% |
0.0% |
*before goodwill amortisation of £0.4 million (2003: £0.5 million)
and impairment of goodwill of £nil (2003: £2.1 million)
Asset management is a major determinant of success in any
rental business, and the division’s new IT systems have
facilitated the production of more sophisticated analyses of
contracts, asset acquisition costs and revenue generation, that
enable utilisation to be optimised. This is reflected in an
improved ratio of revenues to net assets, 2.4 in 2004 versus 1.7
in 2003. The application of these tools, and the continued use
of sub-rentals, has allowed higher levels of spending on new,
frequently High Definition, equipment than in the year before,
while still generating cash. The business entered 2005 with an
asset base level better aligned to its needs.
During the year the New York and Dallas facilities were
upgraded, and in December the main Burbank office relocated
from its old site with four small buildings, to new premises
where everyone is under one roof, which will yield cost and
efficiency benefits from 2005.
Gareth Rhys Williams