Products and systems primarily for broadcast applications
Design and manufacture of high quality equipment used principally by broadcast and live entertainment professionals. Focused on studio and outside broadcast and film production markets with applications in the air traffic control and government markets.
Divisional Report
Taken from the Annual Report 2008
Overview
The Broadcast Systems division provides equipment principally for video professionals engaged in producing live events or video content, frequently for subsequent broadcast. The business units, Camera Dynamics, Communications, Mobile Power, RF Systems and now Litepanels, sell their products worldwide, either direct to the end-customer or through a network of professional dealers. The division's brands are frequently the acknowledged leaders in their fields.
Strategy
The market for broadcast equipment is benefiting from the trend to make programmes in High Definition (HD). This involves upgrading cameras and associated ancillary equipment, much of which is provided by Vitec Group companies. We have responded to the changed needs of the marketplace by managing our brands within single business units, enabling us to achieve economies of scale in manufacturing and distribution and to develop exciting new product ranges.
2008 performance
2008 revenue increased by 33% to £172.6 million (2007: £129.8 million), with a significant improvement in operating profit - a rise of 63% to £21.7 million (2007: £13.3 million).
Camera Dynamics had a very strong year and it was a fitting time to celebrate the 50th anniversary of the Sachtler brand. We saw growth in volumes in all product groups, with a number of major installations of our Fusion robotic system, including the Spanish state broadcaster, TVE Spain. New products included the Sachtler FSB8 and Vinten Pro Touch 6HDV, which further extended our lightweight camera support range. Vinten introduced its Vector 750 head, which establishes the new standard for studio and outside broadcast applications. Our OConnor brand, which is the global market leader for camera supports in the movie industry, increased sales as it was adopted as the support of choice for the innovative new RED HD digital video camera.
Autoscript continued to make progress, winning the Persian TV equipment and multi-year services contract with the BBC, and is now co-located in Twickenham with The Camera Store rental business acquired in September 2008. We continued to invest in advanced machine tools at our Bury St Edmunds plant, and manufacturing of OConnor camera supports was moved successfully from California to our Costa Rican facility.
RF Systems launched many new wireless HD products and were able to deliver significant quantities under the BAS contract, which helped Sprint Nextel meet its commitments. We have stepped up our marketing to international and nonbroadcast US customers and were pleased to win a major contract for the Houston Police Department, with delivery commencing in early 2009. Developing these additional markets is important as they will help offset the reduction in revenue we will see when deliveries under the BAS contract are completed in about August 2009.
Our Communications business delivered a strong performance, reflecting greatly improved management, outsourced manufacturing and its refreshed product range. Key successes in 2008 were providing intercoms matrix systems for the Chinese state broadcaster, CCTV, at the Olympics and its new studio buildings and to ZDF, the German national TV broadcaster. We see intercoms-over-internet-protocol as a major growth area for the future and in October 2008 we were delighted to acquire Talkdynamics, a Montreal-based R&D business which was already a supplier to our Communications business.
Following a weakening in demand in the US broadcast market, Anton/Bauer, our mobile power business, had lower sales in 2008 than 2007. Nevertheless, with the recent introduction of the VCLX battery for HD video film cameras, together with other non-broadcast marketing initiatives that are being pursued, we are confident that the business will be able to grow more strongly as and when market conditions allow.
In August 2008 we announced the acquisition of Litepanels, a manufacturer of LED lights for the broadcast market, located in North Hollywood. LEDs use around 10% of the power of traditional tungsten lights and, because they generate less heat, are more portable and require significantly less airconditioning when used in studios. The business has performed well and we are pleased by a number of initiatives that are underway between Litepanels and our other businesses, which demonstrate how the Group is able to add value to its acquisitions. The business has an exciting pipeline of new products which will be launched this year. We expect Litepanels' revenue to continue to grow in 2009.
Market developments
In December 2008 we announced headcount reductions in Camera Dynamics of 25, with an associated charge in the year of £0.4 million. In the first two months of 2009 overall order intake has been in line with our expectations; however, we have experienced lower volumes in a number of our businesses, which has led to some cost under-recovery. As a consequence we have taken further cost reduction actions, including those within Camera Dynamics and Communications, which will reduce headcount by some 50 people. We will continue to flex our capacity and cost base as we respond to material changes in demand.
| 2008 | 2007 | |
| Revenue | £172.6m | £129.8m |
| Operating profit* | £21.7m | £13.3m |
| Operating margin* | 12.6% | 10.2% |
Divisional summaries for previous years can be found under each Annual Report in the reports archive.
