ITV Plc (LON:ITV), today announced full year results for the year ending 31st December 2018
Carolyn McCall, ITV Chief Executive, said:
“ITV’s operational performance across 2018 was strong despite the uncertain economic and political environment, with total external revenue up 3%, including total advertising revenues up 1%. We delivered great viewing figures on air and online with ITV setting a host of new records and achieving an impressive 3% growth in total viewing.
“ITV Studios continued to show good growth producing a range of great shows including The Voice, Bodyguard, Love Island and a host of other hits.
“ITV is making good progress as we invest in our More than TV strategy – repositioning the ITV brand, developing our data and digital capabilities, increasing our ability to offer addressable advertising and expanding our direct to consumer activities. Cost savings, which will partly offset this essential investment are on track.
“We are in the concluding phase of talks with the BBC to establish a strategic partnership to bring BritBox, an exciting new SVOD service, to UK audiences. This will provide an unrivalled collection of British boxsets and original series in one place. We have agreed a joint vision for the service and are now working on a formal agreement. We anticipate that other partners will be added to BritBox and we will both speak to regulators and the wider industry about our proposals.
“We have started 2019 with strong onscreen and online viewing. However, the economic and political headwinds for the UK will have an effect on the advertising market and while ITV is increasingly diversified, we remain sensitive to this. We continue to be very focused on delivering in the areas we can control and actively mitigating the factors outside the company’s control.
“We have a robust balance sheet which enables us to make the right investment decisions to build a growing and sustainable business for the future and to deliver returns to shareholders.”
2018: Resilient in an uncertain economic environment
o Total external revenue up 3% at £3,211 million (2017: £3,130 million), with total non-advertising revenues up 5% at £1,971 million (2017: £1,874 million)
o Total ITV Studios revenue up 6% at £1,670 million (2017: £1,579 million), with 4% growth in organic revenue at constant currency
o ITV total advertising revenue up 1%, with 36% growth in Online more than offsetting the decline in spot advertising
o ITV Studios adjusted EBITA up 5% at £255m (2017: £243 million)
o Broadcast & Online adjusted EBITA down 7% at £555 million (2017: £599 million), due to increased programming spend
o Adjusted EBITA down 4% at £810 million (2017: £842 million)
o Adjusted EPS down 4% at 15.4p (2017: 16.0p)
o Statutory EBITA down 3% at £785 million (2017: £810 million)
o Statutory EPS up 15% at 11.7p (2017: 10.2p)
2018: Strong operating performance
o Strong on-screen and online viewing
§ Total viewing up 3% with total ITV Family impacts up 1% and online viewing up 32%
§ ITV Family SOV up 7% and 98% of all commercial audiences over 5m delivered by ITV
o ITV Studios revenue growth driven by strong growth in ITV Studios Rest of World
o Significant growth in ITV Studios total hours of production to over 8,900 and healthy pipeline of new and returning shows
o 25% growth in Direct to Consumer revenue to £81m
o 265,000 Hub+ subscribers and over 500,000 BritBox US subscribers
Good progress with ITV’s More than TV strategy
o Confirmation of ITV and BBC’s proposal for BritBox, a new transformational SVOD service.
o ITV’s net investment in BritBox will be up to £25 million in 2019, rising to around £40m million in 2020 and declining thereafter
o This is in addition to the previously announced £40 million essential investment for 2019
o The offsetting £15 million cost savings programme is on track to be delivered in full in 2019
o Strong progress on developing a scaled addressable advertising proposition for the ITV Hub
o Strengthened our capabilities in advertising, data and technology
o Brand communication being rolled out for ITV and ITV Hub, targeting light viewers
Robust balance sheet and healthy liquidity
o Strong profit to cash conversion of 88%
o Good access to liquidity
o 1.1x reported net debt to adjusted EBITDA
o Flexibility and capacity to continue to invest across the business
o Reflecting the strong cash flows and the Board’s confidence in the business, it has proposed a full year dividend of 8p, up 3%, in line with our stated policy
Outlook for 2019
o We have started the year well with:
§ ITV Family share of viewing up 6% and volume of viewing up 2%
§ Online viewing up 33%
o Economic and political uncertainty continues to impact the demand for advertising as we expected, with total advertising forecast to be down 3% to 4% for the first 4 months
o First half revenues and profits will also be impacted by tough comparatives against the revenues of the Football World Cup, the investments we are making and ITV Studios deliveries being weighted to H2
o Over the full year we are confident that
§ We will continue to execute well on the strategy
§ We will deliver double digit online revenue growth
§ ITV Studios will deliver good organic revenue growth, with £100m more revenue secured at this point than last year, and
§ We will maintain a robust balance sheet and deliver on our full year dividend commitment of at least 8p per share
o We remain focused on delivering in the areas of the business which are under our control whilst actively mitigating the impact of exogenous factors.
