26th Feb 2014 10:23
LONDON (Alliance News) - ITV PLC increased its payout to shareholders Wednesday, although not by as much as some analysts had expected, as it reported a rise in pretax profit in 2013 driven by growth in its Studios division and gave a bullish forecast for 2014.
The television broadcaster posted a total normal dividend of 3.5 pence for the year, up from 2.6 pence in the previous year. Additionally, ITV announced a special dividend of 4.0 pence, in line with the special dividend it paid in 2012.
ITV's net cash at the end of 2013 was GBP164 million, similar to 2012.
The special dividend came in below forecasts from analysts at Liberum, who had expected a higher cash return as there are fewer calls on ITV's gross cash compared with last year. ITV's full-year normal dividend also came in below forecasts, which Liberum said "may raise questions as to whether ITV is planning more spending on acquisitions."
On a call with journalists Wednesday morning Chief Executive Adam Crozier said ITV has "always tried to balance the requirement to invest and progressive returns to shareholders." Crozier noted that ITV was always looking at opportunities when it comes to acquisitions, and that was kept in mind when proposing dividends.
ITV expressed confidence for 2014, saying it expects to see further growth across all parts of its businesses, and citing signs of improvement in the television advertising market.
The company said it expects to see growth in its ITV Studios division, which produces television shows, driven by the acquisitions that it made in the UK and internationally during the year. ITV expects to see double-digit revenue growth from its Online, Pay & Interactive division, helped by the launch of two new channels, ITV Encore and ITV Be.
ITV said the UK television advertising market continued to show signs of improvement. It said it expects to see its ITV Family net advertising revenue to show growth of 5% to 6% over the four months to the end of April, and it expects to outperform its estimate for the television advertising market over the full year.
However, ITV said it expects ITV Family net advertising revenue to be hit in the first quarter by the late timing of Easter, which falls on April 20th this year.
ITV reported pretax profit of GBP435 million, up from GBP334 million in the previous year, an increase of 30%.
On an adjusted basis, removing exceptional items including acquisition costs, impairment charges and amortisation costs, ITV posted pretax profit of GBP581 million, up from GBP457 million in the previous year.
Total revenues were up 9% to GBP2.40 billion from GBP2.20 billion in the previous year.
In the company's Broadcast & Online segment, revenue rose 3% to GBP1.90 billion from GBP1.83 billion in 2012, benefiting from a 16% growth in Online, Pay & Interactive and 2% growth in ITV Family net advertising revenue as the television advertising market returned to growth.
ITV said the television advertising market had seen fluctuations across the year, mostly driven by the timing of sports events and programmes. Schedule costs dropped as a result of savings ITV secured on its FA Cup and Champions League rights, and lower overall costs as there had been no large one-off sporting events.
ITV Studios saw revenue growth of 20% to GBP857 million from GBP712 million, driven by both organic growth and acquisitions. The company completed four acquisitions in the UK and US in 2013, The Garden and Big Talk in the UK and Thinkfactory Media and High Noon Entertainment in the US. In February ITV acquired a 51% controlling interest in US producer DiGa Vision.
UK productions revenues grew 12%, driven by programmes like 'Mr Selfridge', 'Lewis'', and 'Ant & Dec's Saturday Night Takeaway'. It also produced the 'Graham Norton show' and 'Shetland' for the BBC, '24 Hours in A&E' for Channel 4 and 'Four Weddings' for Sky Living.
International productions revenues also rose strongly, up 56%, driven by strong growth in the US.
ITV's share of UK television viewing was up 16.2% from 15.7%, and ITV Family share of viewing was up to 23.1% from 22.3%, which the company attributed to an increase in the quality and variety of its programming schedule.
ITV said it was now in the fourth year of its five-year transformation plan, and that it remains committed to this strategy of rebalancing. In 2014 the company is looking to make cost savings of GBP10 million, and an investment of GBP15million to GBP20 million covering the launch of the two new channels.
Speaking with journalists Wednesday morning, Crozier said that ITV was not looking into the potential purchase of Channel 5, following press speculation that the channel may be up for sale.
Shares in ITV were trading down 4.9% at 196.06 pence Wednesday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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