3 August 2010
ITV plc Interims Results 2010
- Improved financial performance underpins five year plan to transform ITV -
Highlights

Net advertising revenue up 18% versus a market up 15%

EBITA before exceptional items increased to £165 million (2009: £46 million)

Decisive action on cash and costs reduced net debt significantly to £437 million from
£612 million at year end

Adjusted earnings per share increased to 2.2p (2009: loss of 0.2p)

ITV NAR forecast to be up around 15% in Q3 2010

Increasingly tough comparatives and economic uncertainty give us a cautious
outlook for Q4 and 2011

Recovery in financial performance but underlying structural challenges remain

ITV today announces its five year Transformation Plan

Move into pay television with agreement to make ITV2 HD, ITV3 HD and ITV4 HD
channels on Sky

Announced launch of ITV1+1 in Q1 2011
Adam Crozier, Chief Executive of ITV plc, said:
“The good financial performance we have reported today has enabled us to reduce our
debt significantly but does not disguise the underlying challenges we face. We are
under no illusion that ITV needs to change substantially.
“For the past decade ITV has not faced up to the challenges presented by the rise of
internet-based platforms, the continuing growth of pay TV and subscription services and
the globalisation of content.
“Re-shaping the economics of ITV will require changes not only to the strategy but also
to ITV’s management, culture and organisation and to deliver this we are today
announcing a five year Transformation Plan.
“Our priority for the next 18 months is to make ITV a creatively dynamic and fit for
purpose organisation while maintaining strict financial controls. We have made swift
progress in putting together a very strong management team fully focussed on delivering
a lean ITV that can create world class content, executed across multiple platforms and
sold around the world. Over time we expect to move to a position whereby half of ITV’s
revenue base will be derived from non-television advertising sources and today we are
announcing our move into pay television with the agreement to make HD versions of ITV
2, 3 and 4 pay channels on Sky.”
Archie Norman, Chairman of ITV plc, said: “Under Adam Crozier’s leadership ITV has
already established a totally realistic understanding of the challenges, a far reaching
plan for transformation and a very strong top team that can deliver.”
Transformation Plan
ITV’s Performance
Over the past decade ITV has seen its core proposition of free-to-air broadcasting
steadily eroded by changes in technology and through the creation of new content and
distribution channels. These market dynamics will continue to evolve and will only gather
pace. Addressing them requires significant change, as well as a relentless focus on
delivery.
The Transformation Plan will focus on four priorities to:




Create a new lean, creatively dynamic and fit for purpose organisation
Maximise audience and revenue share from existing free-to-air broadcast
business
Drive new revenue streams by exploiting our content across multiple
platforms, free and pay
Build a strong international content business
As an integrated producer broadcaster, ITV is well positioned to deliver this strategy.
New Management Team
ITV’s new executive team combines extensive media experience with technology
expertise and the ability to drive forward a complex transformation process. Recently
announced appointments include:




Kevin Lygo - Managing Director, ITV Studios
Fru Hazlitt - Managing Director, ITV Commercial & Online
Paul Dale - Chief Technology Officer
Maria Kyriacou - Managing Director, ITV Studios Global Entertainment
A search for a new Marketing Director, Chief Operating Officer of ITV Studios and
Managing Director of itv.com is underway.
Progress to date
Over the last three months we have made considerable progress in the development
and delivery of the Transformation Plan. Progress to date includes:











New top team in place
New operational boards and structures in place
Announced agreement to make ITV2 HD, ITV3 HD and ITV4 HD pay channels on
Sky
Announced launch of ITV1 +1 in Q1 2011
Integration of GMTV complete and to re-launch as Daybreak in September 2010
New talent signings of Adrian Chiles, Christine Bleakley and Jonathan Ross
Secured the rights to the Rugby World Cup for 2011 and 2015
Integration of our marketing and research teams into the commissioning teams
Secured two new SDN contracts
Staff development programme for the top 150 employees launched
Delivered cost efficiencies of £31 million
Investment
Delivery of the Transformation Plan will require targeted investment and strong financial
discipline. We will hold the ITV1 network programme budget (NPB) below £800 million in
2011 and 2012.
An investment fund of £75 million, excluding the ITV1 NPB, has been allocated for
operating investments online, in content and in our digital channels over the next three
years. The strengthened balance sheet may provide some scope for capital
investments.
Dividend
Given ITV’s current level of debt, in the context of a highly geared operational model and
an uncertain economic outlook the Board has determined that it will not declare a
dividend. This will be kept under review in light of the trading performance, net debt,
pension deficit and investments needed to deliver the Transformation Plan.
Outlook
ITV television advertising revenue is currently forecast to be up around 15% in the third
quarter with ITV expected to outperform the market for the full year. However, the
outlook for the fourth quarter when comparatives become much tougher and into 2011
remains uncertain and we are planning accordingly.
INTERIM RESULTS
Broadcast
ITV television advertising revenues were up 18% in H1 at £728 million (2009: £615
million), ahead of the total market which was up 15%. The sales team outperformed the
market every quarter, but on-screen, ITV1’s share of commercial impacts was down 4%
in H1 (2009: down 7%) and viewing share declined on ITV1 and across the ITV family of
channels as a whole.
Excluding Friends Reunited, ITV's online revenues were up 20% to £12 million (2009:
£10 million). However, the online business remains subscale given the size of the online
video market. Average unique users were up 4% over the first half at 9.1 million and
cumulative video views were down by 14% at 100 million.
ITV Studios
ITV Studios EBITA was up 8% at £43 million (2009: £40 million). The benefit of cost
savings and closure of low margin activities offset the 25% decline in external revenues
to £126 million (2009: £168 million). Last year international sales of I’m A Celebrity Get
Me Out of Here made a significant contribution to revenue. These have not been
recommissioned in 2010 but may well return in some countries in 2011.
Financial Position
Net debt at 30 June 2010 is significantly lower than prior year at £437 million (at 31
December 2009: £612 million) and profit to cash conversion on a rolling 12 month basis
is 134%, well ahead of our target of 90% profit to cash conversion over three years.
Pension
The pension deficit on an IAS19 basis stands at £449 million (31 December 2009: £436
million). This excludes the benefits from the proposed enhanced transfer initiatives which
ITV is currently consulting on. ITV has also agreed with the Trustees the level of cash
contributions to the Scheme through to 2014, as announced in March.
ENDS
For further enquiries please contact:
Investor Relations
Pippa Foulds
020 7157 6555 or 07778 031097
Media Relations
Louise Evans
020 7157 3710 or 07825 680994
Tulchan Communications
Susanna Voyle
020 7353 4200
NOTES TO EDITORS
1.
Financial summary:
6 months to 30 June (£ million)
Group revenue
EBITA before exceptional items
Broadcasting & Online
ITV Studios
Profit / (Loss) before tax
Reported
Adjusted*
EPS (pence per share)
Reported
Adjusted*
2010
2009
987
165
122
43
909
46
6
40
Change
£ million
78
119
116
3
97
118
(105)
(4)
202
122
1.8
2.2
(1.8)
(0.2)
* before exceptional items, amortisation, impairment of acquired intangible assets, and financing cost
and tax adjustments, including exclusion of imputed pension interest and mark to market on swaps.
2.
Operational summary
Broadcasting and Online performance indicators
6 Months to 30 June
2010
2009
ITV family adult SOCI (%)
39.8
39.7
ITV1 SOCI (%)
27.2
28.4
ITV1 adult impacts (bill)
114
114
ITV family share of viewing
22.7
23.1
ITV1 share of viewing
15.9
16.7
itv.com average monthly unique users
9.1
8.7
(million)
itv.com average monthly video views
16.6
19.4
(million)
+/-4%
-2%
-5%
4%
-14%
Share of viewing and share of commercial impact data is for the six months to 30
June 2010, compared to equivalent period in 2009, based on BARB / Infosys
data. Share of viewing data is for individuals and SOCI data is for adults. ITV
Family includes: ITV1, ITV2, ITV3, ITV4, CITV, GMTV1, GMTV2, Men&Motors
and associated “+1” channels.
3.
Average monthly unique users are based on Omniture data. Video views are
based on internal Company data for itv.com.
4.
Figures for ITV plc and market NAR are based on ITV estimates and current
forecasts.
5.
Changes to adjusted profit and earnings:
As announced in March, ITV has changed its calculation of adjusted profit and
EPS to exclude certain non-cash items including imputed pension interest and
the mark to market on swaps and to include amortisation costs in relation to
internally-generated intangible assets.
6 months to 30 June
Adjusted profit / (loss) before tax on previous
methodology (£million)
Adjusted earnings / (loss) per share on previous
methodology (pence)
2010
138
2009
(14)
2.6
(0.5p)
6.
Adjusted cashflows are defined as cash generated from operations before
exceptional items, less cash related to the acquisition of non-current assets, but
before amortisation of internally generated intangible assets.
7.
This announcement contains certain statements that are or may be forwardlooking with respect to the financial condition, results or operations and business
of ITV plc. By their nature forward-looking statements involve risk and uncertainty
because they relate to events and depend on circumstances that will occur in the
future. There are a number of factors that could cause actual results and
developments to differ materially from those expressed or implied by such
forward-looking statements. These factors include, but are not limited to (i)
adverse changes to the current outlook for the UK television advertising market,
(ii) adverse changes in tax laws and regulations, (iii) the risks associated with the
introduction of new products and services, (iv) pricing, product and programme
initiatives of competitors, including increased competition for programmes, (v)
changes in technology or consumer demand, (vi) the termination or delay of key
contracts, (vii) fluctuations in exchange rates and (viii) volatility in financial
markets.