30th Aug 2007 07:00
UTV plc ("UTV" or "the Company" or "the Group") Interim Results for the six months ended 30 June 2007
UTV, the multi media group which broadcasts radio and television and provides a range of new media including web development and design, internet and telephony services, announces its interim results for the six months to 30 June 2007.
Financial highlights:
* Diluted adjusted earnings per share growth of 13% to 12.76p (2006: 11.33p) * Group turnover broadly flat at ‚£57.2m (2006: ‚£57.1m) * Group operating profit, including associates, before exceptional items up 4% at ‚£13m (2006: ‚£12.5m) * Radio operating profit up by 7% to ‚£6.8m (2006: ‚£6.4m) after deducting start-up losses of ‚£1.3m (2006: ‚£1.4 loss) at two radio stations, Talk 107 in Edinburgh and U105 in Belfast. * Television operating profit of ‚£5.6m (2006: ‚£5.6m) * New Media operating profit up 25% to ‚£0.6m (2006: ‚£0.5m) * A 4% increase in interim dividend to 5.20p (2006: 5.00p)
Operational highlights:
* Radio advertising in Ireland remained flat on a like-for-like basis * Radio advertising in Great Britain remained flat on a like-for-like basis * Television advertising revenue reduced by 1% but again outperformed the ITV Network * New Media revenue grew by 12%
John McCann, Group Chief Executive, UTV, said:
"UTV has again performed strongly in a challenging period for the media industry. I am particularly pleased with the performance of the television and UK radio divisions which have once again outpaced their peers. While the performance of Irish radio in Q2 was disappointing, we have taken steps to address this and are confident of an improvement in the second half of this year.
"Radio is becoming increasingly important to the group, and now contributes 55% of group revenues. We are pleased with the progress being made by talkSPORT, and delighted to have been part of the C4 consortium which won the licence to operate the UK's second national commercial DAB multiplex.
"The outlook for Q3 is positive. We expect growth in UK and Irish radio advertising markets and television should start to benefit from better programming. While we expect market conditions to remain challenging, we remain confident that we will continue to deliver solid earnings growth."
Key dates:
* 7 September 2007 : record date for payment of dividends
* 5 October 2007 : payment of dividends
For further information contact:
Powerscourt +44 20 7236 5615 Sarah Daly +44 78 0952 6834 Paul Durman +44 77 9352 2824 UTV plcJohn McCann Group Chief Executive +44 28 9026 2202 Paul O'Brien Group Finance Director +44 28 9026 2098 Orla McKibbin Head of Press and PR +44 28 9026 2188
Chairman's Statement
Introduction
In another challenging period in the media industry, our company again performed strongly by increasing diluted adjusted earnings per share by 13%. A very strong first half performance in our radio operations in G.B. more than offset second quarter underperformance in radio in Ireland, delivering a 7% improvement in total radio operating profitability. Our television division significantly outperformed its peer group to broadly maintain profitability in a difficult advertising market. Our new media business again achieved good growth, boosting its profitability by 25%.
Results and Dividend
Group turnover in the first half was broadly flat at ‚£57.2m (2006: ‚£57.1m). Operating profit, including associates, before exceptional items was up by 4% to ‚£13.0m (2006: ‚£12.5m), with radio operating profit increasing by 7% to ‚£6.8m (2006: ‚£6.4m) after deducting start-up losses of ‚£1.3m (2006: ‚£1.4m loss) at our two stations in Edinburgh and Belfast. Television operating profit was in line with last year at ‚£5.6m (2006: ‚£5.6m) while new media operating profit increased to ‚£0.6m (2006: ‚£0.5m). After reduced net interest charges of ‚£3.7m (2006: ‚£4.0m), pre-tax profits before exceptional items were up by 8% to ‚£9.3m (2006: ‚£8.5m).
Your Board has declared an interim dividend of 5.20p which represents a 4% increase over last year. The dividend will be paid on 5 October to all shareholders on the Register at the close of business on 7 September.
Radio
Our radio division in G.B. performed particularly well in the first half of 2007. In a U.K. radio advertising market down by 1%, talkSPORT was marginally up and our local radio stations were flat giving rise to an overall flat position on a like for like basis. The modest increase in talkSPORT was against a comparative which included significant revenue in respect of the 2006 football World Cup. With the additional costs associated with our coverage of the World Cup also dropping out, our radio operating profit in G.B. increased by 16% to ‚£4.7m (2006: ‚£4.0m) after accounting for start-up losses of ‚£0.9m (2006: ‚£0.9m loss) at our Edinburgh station talk 107.
Our Irish radio stations got off to a good start in 2007 but short term weakness in local advertising revenue in Q2 undermined this promise. The economic fundamentals remained positive, as evidenced by the 9% increase in our national advertising revenue, but a 11% decrease in local advertising revenue resulted in an overall increase of 1.5% in local currency, giving a flat revenue performance in the first half due to currency fluctuation. After accounting for start-up losses of ‚£0.4m (2006: ‚£0.5m loss) at our Belfast station, U105, Irish radio operating profits were down at ‚£2.2m (2006: ‚£2.4m).
Television
Outperformance of the ITV network by our television division continued throughout the period with advertising revenue down by just 1% compared to a reduction of 9% at ITV1. While the television advertising market in the U.K. was difficult, it was the impact of the Contract Rights Renewal mechanism which caused much of this reduction. We achieved a record share of 2.93% of total ITV1 advertising revenue. Our total television revenues were ‚£20.6m (2006: ‚£ 20.9m) but tight cost control ensured television operating profits were maintained at ‚£5.6m (2006: ‚£5.6m).
New Media
This division recorded a 12% increase in revenue to ‚£5.0m (2006: ‚£4.5m) which resulted in a 25% improvement in operating profit to ‚£0.6m (2006: ‚£0.5m). This improvement means that profitability has increased by more than 60% over the same period two years ago. The extent to which further growth could be driven was a key factor in our strategic review of this division, which concluded that greater focus on content potentially could deliver more value.
Prospects
There are some signs of recovery in the U.K. radio advertising market, with growth of 6% being predicted for Q3. Despite the particularly strong growth recorded by talkSPORT in the comparative football World Cup period, we would expect our G.B. radio division to achieve growth in line with the market in the current quarter.
In Irish radio we put considerable effort into remedying the issues which led to underperformance in Q2 in our local radio advertising revenue and an improving position is now starting to emerge. In the third quarter, advertising revenue from our radio stations in Ireland is expected to be up by 4%.
The RAJAR audience research published on 16 August 2007 showed mixed results for our start-up radio stations. U105 in Belfast again recorded significant increases in reach and share and is well on course to achieve break-even by the end of next year. talk 107 in Edinburgh has delivered disappointing audience figures and will need to show considerable improvement if it is to achieve breakeven by the end of year three. Forecast losses for the full year 2007 for U105 and talk 107 are ‚£0.6m (2006: ‚£0.9m loss) and ‚£1.7m (2006: ‚£1.7m loss) respectively.
As with radio, market conditions in U.K. television advertising are showing some improvement, with ITV1 predicting 1% revenue growth in the third quarter of 2007 albeit against a very weak comparative. We expect to underperform ITV1 in this quarter with a 6% reduction in our television advertising revenue, but against a much tougher comparative than that of the network. Encouragingly, the network's recent programming performance has been stronger and, if this can be sustained into the autumn, should mitigate some of the drag created by Contract Rights Renewal.
Our new media division continues to perform well and we are exploring a number of ways of generating additional revenue from improved content. Broadband and telephony service provision, however, will continue to be the mainstay of further profit growth for the remainder of this year.
Group Income Statement
for the six months ended 30 June 2007
Results before Exceptional Exceptional Items Items Total Total 30 30 30 30 June June June June Notes 2007 2007 2007 2006 ‚£000 ‚£000 ‚£000 ‚£000 Continuing operation Revenue 2 57,178 - 57,178 57,125 Operating costs 3 (44,304) (307) (44,611) (44,763) -------- ----- -------- -------- Operating profit from 2 12,874 (307) 12,567 12,362continuing operations before tax and finance costs Share of results of 116 - 116 108associates accounted for using the equity method -------- ----- -------- -------- Profit from continuing 12,990 (307) 12,683 12,470operations before tax and finance costs Finance revenue 534 - 534 127 Finance costs (4,265) - (4,265) (4,119) Foreign exchange gain 27 - 27 17 -------- ----- -------- -------- Profit before tax 3 9,286 (307) 8,979 8,495 Taxation 3 (2,212) 1,480 (732) (2,075) -------- ----- -------- -------- Profit for the period 7,074 1,173 8,247 6,420 -------- ----- ------- -------- Attributable to: Equity holders of the parent 7,044 1,173 8,217 6,241 Minority interests 30 - 30 179 -------- ----- -------- -------- 7,074 1,173 8,247 6,420 -------- ----- -------- --------Earnings per share Note 2007 2006 Diluted 5 14.89p 11.33p Basic 5 15.00p 11.44p Adjusted 5 12.86p 11.44p Diluted adjusted 5 12.76p 11.33p ------ ------Dividends Note ‚£000 ‚£000 Declared and paid during the period 8.00p per share (2006: 7.75p) 4 4,384 4,227 ----- -----
Group Statement of Recognised Income and Expense
for the six months ended 30 June 2007
30 30 June June Note 2007 2006 ‚£000 ‚£000 Income and expenses recognised directly in equity Exchange difference on translation of foreign 29 348operations Net actuarial gains on defined benefit pension 5,520 2,640schemes Profit on cash flow hedges taken to equity 1,133 1,253 Tax on items taken directly to or transferred from (1,715) (1,132)equity ------ ----- Net income recognised directly to equity 4,967 3,109 Profit for the period 8,247 6,420 ------ ----- Total recognised income and expense 13,214 9,529 ------ ------ Attributable to: Equity holders of the parent 8 13,184 9,350 Minority interests 8 30 179 ------ ------ 8 13,214 9,529 ------- ------Group Balance Sheetas at 30 June 2007 30 30 31 June June December Notes 2007 2006 2006 ‚£000 ‚£000 ‚£000 ASSETS Non-current assets Property, plant and equipment 10,626 11,311 11,036 Intangible assets 184,532 205,603 183,706 Investments accounted for using the equity 197 114 116method Other investments 32 32 32 Deferred tax asset 18,634 6,848 22,178 Pension surplus 1,842 - - ------- ------- ------- 215,863 223,908 217,068 ------- ------- ------- Current assets Inventories 700 649 538 Trade and other receivables 25,839 27,588 27,694 Financial assets 2,712 1,134 1,579 Cash and short term deposits 5,509 2,998 7,897 ------- ------- ------- 34,760 32,369 37,708 ------- ------- ------- TOTAL ASSETS 250,623 256,277 254,776 ------- ------- -------- EQUITY AND LIABILITIES Equity attributable to equity holders of the parent Equity share capital 8,327 7,824 8,220 Treasury Shares (360) - (360) Foreign currency reserve (1,566) 456 (1,595) Cash flow hedge reserve 2,712 1,134 1,579 Retained earnings 54,211 43,847 46,479 ------ ------ ------ 63,324 53,261 54,323 Minority interest 190 306 215 ------ ------ ------ Total equity 8 63,514 53,567 54,538 ------ ------ ------ Non-current liabilities
Interest bearing loans and borrowings 6 108,929 115,354 115,352
Pension liability - 3,680 3,983 Provisions 1,135 908 992 Deferred tax liabilities 39,260 44,999 41,081 ------- ------- ------- 149,324 164,941 161,408 ------- ------- ------- Current liabilities Trade and other payables 26,066 23,763 27,560 Current portion of interest bearing loans 6 10,030 12,564 10,131and borrowings Tax payable 1,534 1,190 1,001 Provisions 155 252 138 ------- ------- ------- Net current liabilities 37,785 37,769 38,830 ------- ------- ------- TOTAL LIABILITIES 187,109 202,710 200,238 ------- ------- ------- TOTAL EQUITY AND LIABILITIES 250,623 256,277 254,776 ------- ------- -------Group Cash Flow Statement
for the six months ended 30 June 2007
30 30 June June 2007 2006 ‚£000 ‚£000 Operating activities
Cash generated from operations before exceptional costs 13,545 12,213
Exceptional costs (357) (20) Tax paid (259) (1,616) ------- ------- Net cash inflow from operating activities 12,929 10,577 ------- ------- Investing activities Interest received 517 124 Proceeds on disposal of property, plant and equipment 43 104 Purchase of property, plant and equipment (680) (1,474) Income from investments 30 - Income from associates - 227 Payment to acquire investments (300) - Income from sale of shareholding in a joint venture 257 - ------- ------- Net cash flows from investing activities (133) (1,019) ------- ------ Financing activities Borrowing costs (4,100) (3,966) Proceeds from exercise of share options 107 - Dividends paid to equity holders of the parent (4,384) (4,227)
Dividends paid to minority shareholders of subsidiaries (55) -
Repayment of borrowings (6,754) (12,844) Proceeds from borrowings - 8,000 Repayment of capital element of finance lease - (5) --------- --------- Net cash flows used in financing activities (15,186) (13,042) --------- --------- Net decrease in cash and cash equivalents (2,390) (3,484) Net foreign exchange differences 2 12 Cash and cash equivalents at 1 January 7,897 6,470 --------- -------- Cash and cash equivalents at 30 June 5,509 2,998 --------- ---------Notes to the Interim Reportat 30 June 20071. Basis of preparation
The interim financial statements have been prepared on a basis consistent with the accounting policies adopted for the year ended 31 December 2006 and in accordance with the accounting policies that the directors anticipate will be complied with in the annual financial statements. These policies are set out in the Group's Annual Report and Accounts.
The interim results are unaudited and do not constitute full accounts within the meaning of Article 262 of the Companies (Northern Ireland) Order 1986. The auditors have issued an unqualified report on the Company's full accounts for the year ended 31 December 2006, which were prepared under IFRS, as endorsed by the EC, and have been filed with the registrar of Companies.
2. Segmental analysis
The following is an analysis of the revenue and results for the period, analysed by business segment, the Group's primary basis of segmentation.
Revenue
Six months ended 30 June 2007 Radio GB Radio Television New Media Total Ireland ‚£000 ‚£000 ‚£000 ‚£000 ‚£000
Sales to third parties 23,739 7,750 20,648 5,041 57,178
Intersegmental sales 499 335 461 30 1,325 ------- ------- ------- ------- -------
Total segmental revenue 24,238 8,085 21,109 5,071 58,503
------- ------- ------- ------- ------- Six months ended 30 June 2006 Radio GB Radio Television New Media Total Ireland ‚£000 ‚£000 ‚£000 ‚£000 ‚£000
Sales to third parties 23,928 7,796 20,903 4,498 57,125
Intersegmental sales 508 269 688 31 1,496 ------- ------- ------- ------- -------
Total segmental revenue 24,436 8,065 21,591 4,529 58,621
------- ------- ------- ------- ------ResultsSix months ended 30 June 2007 Radio GB Radio Television New Media Total Ireland ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 Operating profit for the 4,548 2,169 5,549 608 12,874period before exceptional costs Exceptional items allocable - - (307) - (307)to a business segment Share of results of 116 - - - 116associates ------- ------- ------- ------- ------- Profit from continuing 4,664 2,169 5,242 608 12,683operations before tax and finance costs ------- ------- ------- ------- Net finance costs (3,731) Foreign exchange gain 27 ------- Profit before taxation 8,979 Income tax expense (732) ------- Net profit for the period 8,247 ------- Six months ended 30 June 2006 Radio GB Radio Television New Media Total Ireland ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 Operating profit for the 3,898 2,387 5,589 488 12,362period before exceptional costs Share of results of 108 - - - 108associates ------- ------- ------- ------- ------- Profit from continuing 4,006 2,387 5,589 488 12,470operations before tax and finance costs ------- ------- ------- ------- Net finance costs (3,992) Foreign exchange gain 17 ------- Profit before taxation 8,495 Income tax expense (2,075) ------- Net profit for the period 6,420 -------3. Exceptional items 30 30 June June 2007 2006 ‚£000 ‚£000 Costs associated with aborted transactions (307) - Tax credit associated with aborted transaction cost 92 - Gain on net deferred tax liability due to future UK 1,388 -corporation tax being 28% which was incorporated in the 2007 Finance Act ------ ------ 1,173 - ------ ------4. Dividends 30 30 June June 2007 2006 ‚£000 ‚£000 Equity dividends on ordinary shares Declared and paid during the period Final for 2006: 8.00p (2005: 7.75p) 4,384 4,227 ------ ------ Proposed but not recognised as a liability at 30 June Interim for 2007: 5.20p 2,850 ------ 5. Earnings per share
Basic earnings per share is calculated based on the profit for the period after exceptional items and on the weighted average number of shares in issue during the period. Adjusted earnings per share is calculated based on the profit for the period before exceptional items and on the weighted average number of shares in issue during the period.
Diluted earnings per share is calculated based on the profit for the period andon the weighted average number of shares adjusted to reflect the dilutivepotential of the Share Option Schemes. The impact of these are summarisedbelow.Net profit 30 30 June June 2007 2006 ‚£000 ‚£000 Net profit attributable to equity holders 8,217 6,241 ------ ------- 30 30 June June 2007 2006 ‚£000 ‚£000 Net profit attributable to equity holders 8,217 6,241 Exceptional costs 307 - Taxation relating to exceptional items (92) - Restatement of deferred tax to 28% (1,388) - ------- -------
Net profit attributable to ordinary shareholders for 7,044 6,241 adjusted earnings per share
------- ------- Weighted average number of shares 30 30 June June 2007 2006 Thousands Thousands Weighted average number of shares for basic earnings 54,777 54,546per share Effect of dilution: Share options 407 546 ------- -------
Adjusted weighted average number of ordinary shares 55,184 55,092 for diluted earnings per share
------- -------6. Financial liabilities 30 30 31 June June December 2007 2006 2006 ‚£000 ‚£000 ‚£000 Current Current instalments due on bank loans 10,030 12,551 10,131 Current obligations under finance leases and - 13 -hire purchase contracts ------- ------- ------- 10,030 12,564 10,131 ------- ------- ------- Non-current
Non-current instalments due on bank loans 108,929 115,266 115,352
Non-current obligations under finance leases - 88 -and hire purchase contracts ------- ------- ------- 108,929 115,354 115,352 ------- ------- ------- Total 118,959 127,918 125,483 ------- ------ ------- The bank loans at 30 June 2007 are stated net of deferred financing costsamounting to ‚£959,000 (30 June 2006 : ‚£1,358,000, 31 December 2006 : ‚£1,152,000).7. Net debt 30 30 31 June June December 2007 2006 2006 ‚£000 ‚£000 ‚£000 Bank loans (119,918) (129,276) (126,635) Cash and short term deposits 5,509 2,998 7,897 --------- --------- --------- Net debt (114,409) (126,278) (118,738) --------- --------- ---------
8. Reconciliation of movements in equity
Equity Treasury Foreign Cash flow Retained Shareholder share shares currency hedge earnings equity capital reserve reserve ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 Balance at 1 7,824 - 108 (119) 40,325 48,138January 2006 Total recognised - - 348 1,253 7,749 9,350income and expense in the year Dividends - - - - (4,227) (4,227) ------ ------ ------ ------ ------ ------ Balance at 30 June 7,824 - 456 1,134 43,847 53,2612006 Exercise of share 396 - - - - 396options Acquisition of - (360) - - - (360)treasury shares Total recognised - - (2,051) 445 5,369 3,763income and expense in the year Dividends paid to - - - - (2,737) (2,737)equity shareholders ------ ------ ------ ------ ------ ------ Balance at 31 8,220 (360) (1,595) 1,579 46,479 54,323December 2006 Exercise of share 107 - - - - 107options Total recognised - - 29 1,133 12,022 13,184income and expense in the year Share based payment - - - - 94 94 Dividends paid to - - - - (4,384) (4,384)equity shareholders ------ ------ ------ ------ ------ ------ Balance at 30 June 8,327 (360) (1,566) 2,712 54,211 63,3242007 ------ ------ ------ ------ ------ ------ Shareholder Minority Total equity interest ‚£000 ‚£000 ‚£000 Balance at 1 January 2006 48,138 127 48,265 Total recognised income and expense in 9,350 179 9,529the year Dividends (4,227) - (4,227) ------ ------ ------ Balance at 30 June 2006 53,261 306 53,567 Exercise of share options 396 - 396 Acquisition of treasury shares (360) - (360) Total recognised income and expense in 3,763 176 3,939the year Dividends paid to minority interests - (267) (267) Dividends paid to equity shareholders (2,737) - (2,737) ------ ------ ------ Balance at 31 December 2006 54,323 215 54,538 Exercise of share options 107 - 107 Total recognised income and expense in 13,184 30 13,214the year Share based payments 94 - 94 Dividends paid to minority interests - (55) (55) Dividends paid to equity shareholders (4,384) - (4,384) ------ ------ ------ Balance at 30 June 2007 63,324 190 63,514 ------ ------ ------
Independent Review Report to UTV plc
Introduction
We have been instructed by the company to review the financial information for the six months ended 30 June 2007 which comprises the Group Income Statement, Group Statement of Recognised Income and Expense, Group Balance Sheet, Group Cash Flow Statement and the related notes 1 to 8. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information.
This report is made solely to the company in accordance with guidance contained in Bulletin 1999/4 'Review of interim financial information' issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/ 4 'Review of interim financial information' issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data, and based thereon, assessing whether the accounting policies and presentation have been consistently applied, unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with International Standards on Auditing (UK and Ireland) and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2007.
Ernst & Young LLP
Belfast
UTV PLCRelated Shares:
WLG.L