ITV plc (LON:ITV) has today announced its trading update, Annual Report and Accounts and Notice of AGM.
Trading Update
ITV continues to closely monitor the evolving COVID-19 (coronavirus) situation and its impact on the business. ITV’s priority remains to protect its people and we will continue to follow all government guidelines.
The recent restrictions on working practices are now having a significant impact on ITV Studios’ ability to film productions. We have had to pause a significant number of productions in the UK and internationally, which we are doing in a systematic manner to ensure that we are well placed to resume production as soon as we are able to and to minimise the costs of disruption. We are implementing contingency plans to enable us to continue to produce as many programmes as possible, particularly our news output and live productions. It is too early to quantify the impact of this on ITV Studios’ revenue and profit. This depends on how long the restrictions are in place.
ITV Studios cost base is largely variable. We expect to benefit from an additional offset due to increased demand for library sales. As a leading global distributor, we are well placed to deliver this, with a high quality library and strong relationships with broadcasters and platform owners. Demand for quality content remains strong and therefore we continue to work on our development slate and we are ready to resume production as soon as we are able. As one of the largest international producers of unscripted content which has a shorter lead time, we will be able to ramp up production quickly.
The additional measures implemented by Government, which have led to the closure of shops, factories and entertainment facilities, have had an increasing impact on our advertising revenues and therefore forecasts for March and April have deteriorated since we last updated the market on 16th March. We have seen further deferrals in advertising which are now coming from across the advertiser categories rather than just in travel and we are staying in close contact and working constructively with our client and agency partners. The situation remains dynamic and therefore we are not in a position today to give guidance for March or April. We will update again at our Q1 Trading Update in May. Over a full year each 1% decline in total advertising revenue reduces revenue and profit by c.£17 million, before any mitigation.
Management is very focused on cash and has implemented measures to reduce our costs and to tightly manage our cash flow. We have reviewed our programming spend in light of the weaker advertising environment and we expect to reduce our programme budget by at least £100m. This reflects savings from sport including the postponement of Euro 2020, the late delivery of commissioned programming and active decisions to reduce our spend. We have also taken steps to reduce discretionary spending by £20m in 2020. This is in addition to the £10m of savings already guided for 2020. Further, we have identified £30m of savings in our capex.
Given the current uncertainty we are withdrawing our market guidance for 2020. In addition, the Board has decided that it is prudent not to propose the final dividend of 5.4 pence per ordinary share (£216 million in total) for the year ended 31 December 2019 at the forthcoming AGM, and to withdraw its previously announced intention to pay an 8p full year dividend for 2020. The savings from not paying the 2019 final dividend, taken with the cash impact of our cost and capex savings, will ensure that more than £300m of cash will be retained within the business. The Board recognises the importance of the dividend to our shareholders and will consider the quantum of any interim dividend for 2020 in light of this and of circumstances at that stage.
As we stated on 16th March 2020, ITV has good access to liquidity. We have £150m of unrestricted cash, a £630 million Revolving Credit Facility expiring in December 2023, of which £100 million is currently drawn, and a £300 million undrawn bilateral facility expiring in June 2021. In addition, we have no bond repayments until September 2022.
We will continue to execute our strategy over the medium term and will carefully monitor our ongoing investment in the ITV Hub, Planet V and BritBox in 2020, as we continue to build a digital media and entertainment company.
Our talent across the organisation is a key driver of our future success. We’ll do everything we can to protect our employees to ensure that we are in the best possible position to succeed when the conditions normalise again.
As a Public Service Broadcaster we know how important our programmes are to inform, connect and entertain millions of viewers. In the event of a protracted period of production restrictions, we will strive to broadcast news and our daytime programmes and we have a good slate of scheduled drama and entertainment (pre-recorded) in the coming months.
Annual Report and Accounts
ITV released its Preliminary Announcement of annual results for the year ended 31 December 2019 on 5 March 2020. Further to the Preliminary Announcement, the Company can confirm that the 2019 Report and Accounts and Notice of 2020 Annual General Meeting (AGM) is now being made available to shareholders. The Report and Accounts is available on the Company’s website at www.itvplc.com with the Notice of AGM and Form of Proxy at www.itvplc.com/investors/shareholder-information/AGM.
All of the material required to be communicated to the media in unedited full text through a Regulatory Information Service under DTR 6.3.5 was in the Preliminary Announcement issued on 5 March 2020. This material is not a substitute for reading the 2019 Report and Accounts in full.
AGM
The Company’s 2020 AGM will be held at 11.00 a.m. on Friday 24 April 2020 at Atlantic House, Holborn Viaduct, London EC1A 2FG . Shareholders can vote online via www.myitvshares.com.
The evolving COVID-19 situation and the related guidelines from governmental authorities will clearly impact the ability of shareholders to attend the AGM. Whilst, in normal circumstances, the Board values very highly the opportunity to meet shareholders in person at its AGM, recent Government advice is for people to avoid both mass gatherings and all non-essential travel and social contact. Furthermore, whilst the Government’s advice is currently advisory, some or all of its recommendations could become mandatory at any time. On this basis, the Board feels that it is appropriate to advise shareholders against attending the AGM in person this year and, instead, to submit proxy votes.
To facilitate remote access to the meeting, the Company’s is currently intending to set up a live stream of the AGM via its website, www.itvplc.com/investors/shareholder-information/agm. The Board is also inviting shareholders to submit questions for the Board to consider in advance of the meeting. Further details will be posted on the Company’s website in due course.
National Storage Mechanism
In compliance with LR 9.6.3, the following documents have been submitted to the National Storage Mechanism and will shortly be available for inspection at: www.morningstar.co.uk/uk/NSM.
· 2019 Report and Accounts
· Notice of 2020 Annual General Meeting
· Form of Proxy for 2020 Annual General Meeting
Gender Pay Gap Report
The ITV 2019 Gender and Ethnicity Pay Gap Report is also now available on our website www.itvplc.com/investors/governance.
Carolyn McCall, ITV Chief Executive, said
“We are operating in unprecedented and uncertain times, requiring us to take difficult decisions, plan carefully and act with speed. Our absolute priority is to protect our people, while trying to ensure that we deliver the news and programmes our viewers value and love to watch, and to keep them informed. We are actively taking measures to reduce costs and manage our cash flow so that we are best positioned to continue to deliver our strategy of building a digitally led media and entertainment company over the medium term.”
