Broadcast Services Division

Rental services and technical support mainly for the broadcast market

Overview

The Broadcast Services business provides rental equipment and technical support for events, principally in the US, from a network of ten depots across the US. With a reputation for superior service and knowhow, Bexel equipment and people are found on the most demanding shows. The division provides both video and audio services and acts as an integrator for complex audio systems.

Strategy

With a unique geographical footprint, Bexel has a great advantage in offering pan-US services, which we aim to exploit. With a reputation for technical excellence, we have the ability to offer rentals that require complex engineering, either in preparation for an event or as the show is made. Bexel can also provide broadcast networks that are looking to outsource services such as equipment maintenance, and rentals that incorporate future technical upgrades.

2005 performance

Sales were down £2.6 million (9.0%) following a very strong 2004. Operating profit before significant items* was down £0.4 million to £1.2 million (2004: £1.6 million), reflecting the rigorous cost control environment that the business operates within.

At the end of 2004 we had hoped that the buoyant market that had supported the 10.4% increase in revenues achieved that year would continue into 2005 and more than outweigh the Athens Olympics and US Presidential election revenues falling out. That did not prove to be the case, partly because fewer new large reality TV shows were launched that needed our level of technical services during the year, although we did win renewals on the top shows that we already support. We also added several shorter and smaller scale new series, including Channel 5's 'Killer Shark Live'. A number of large, lower margin projects from 2004 did not repeat in 2005 which reduced our turnover, but without a proportionate effect on operating profit.

We also entered into our first substantial agreements with domestic television networks that span multiple seasons for various types of speciality equipment, including high definition super slow-motion camera systems. One example is the agreement with NBC to supply them with high definition content management and replay systems and support for the Turin and Beijing Olympics.

We continued to fulfil more of our contracts with our own equipment rather than with expensive subrentals from third parties. Those cost savings dropped through to operating profit, offsetting the reduction in turnover.

Going forward into 2006, we have built a '3G 'Live' prototype that provides an independent production stream for near-realtime delivery of alternative content from live event venues, primarily for distribution to the web, mobile phones and other new media devices. We became an authorised Apple Broadcast Services Partner, and have demonstrated the prototype to a number of major network and production customers. It has recently been used for editing the TWI/IMG 'Olympus Fashion Week', webcasting through MSN. With our new Chief Technology Officer on board, Vitec will be the major sponsor of the 2006 Techforum, an event at which the leaders of US broadcasting meet to learn about technical events in the industry.

Although neither the Techforum nor the '3G Live' system will provide significant revenues by themselves in 2006, they are keeping us in closer contact with customers who often then end up renting other equipment and services from us. They also reinforce our image as a leading solutions and services provider as distinguished from more commoditised 'box renters' that add little value beyond fulfilling orders.

*Before significant items. Significant items are negative goodwill of £nil (2004: £0.6 million)

Information correct at 26/04/2006

• Photographic Division
• Broadcast Systems Division
• Broadcast Services Division