11th Sep 2006 07:00
UTV plc("UTV" or "the Company" or "the Group")Interim Resultsfor the six months ended 30 June 2006UTV GROUP OPERATING PROFIT UP BY 30%UTV, the multi media group which broadcasts radio and television and providesinternet and telephony services, announces its interim results for the sixmonths to 30 June 2006.Financial highlights: * Group turnover up 60% at ‚£57.1m (2005: ‚£35.6m) * Group operating profit before exceptional items up 30% at ‚£12.4m (2005: ‚£ 9.6m) * Radio operating profit of ‚£6.3m (2005: ‚£1.9m) after deducting start-up losses of ‚£1.4m (2005: ‚£NIL) at two new radio stations, Talk 107 in Edinburgh and U105 in Belfast. * Television operating profit of ‚£5.6m (2005: ‚£7.3m) * New Media operating profit of ‚£0.5m (2005: ‚£0.4m) * Diluted Earnings per share increased by 4% to 11.33p (2005: 10.85p) * A 5% increase in interim dividend to 5.00p (2005: 4.75p) Operational highlights: * Radio advertising in Ireland grew by 16% on a like-for-like basis * Radio advertising in Great Britain grew by 16% on a like-for-like basis * Television advertising revenue reduced by 6% but again outperformed the ITV Network * New Media revenue grew by 16% John McCann, Group Chief Executive, UTV, said:"We have once again outperformed our peer groups in delivering improvedoperating and pre-tax profits in an advertising market which has beenchallenging for the industry as a whole. I am particularly pleased with thesuccessful integration of the former Wireless Group where a 16% improvement inlike-for-like revenue was recorded against a 3% decline in the market. Asimilar 16% increase in our Irish radio advertising helped lift radio's totalshare of group turnover to 56% and share of operating profit to 51%. Thetelevision advertising marketplace, however, was weak and, despite achieving arecord share of 2.76% of ITV1's advertising revenue, our television revenue wasdown by 6%. New media grew strongly with a 16% improvement in revenue."Our outperformance has continued into the second half and, although theadvertising environment remains difficult, I am confident that the group willmaintain its leading position throughout the rest of the year."Key dates:¢â€" 22 September 2006 : record date for payment of dividends¢â€" 16 October 2006 : payment of dividendsFor further information contact:Powerscourt +44 20 7236 5615 Anthony Silverman +44 7818 036 579 UTV plc John McCann, Group Chief Executive +44 28 9026 2202 Jim Downey, Group Finance Director +44 28 9026 2176 Felicity Templeton, Head of Press and PR +44 28 9026 2188 Chairman's StatementIntroductionDevelopment of our radio business continued apace, with revenue of ‚£31.7m(2005: ‚£9.4m) accounting for 56% of group turnover in the six months to 30 June2006. New media revenue grew by 16% to ‚£4.5m (2005 : ‚£3.9m) but televisionrevenue was down by 6% to ‚£20.9m (2005 : ‚£22.3m), reflecting the poor marketconditions which obtained throughout the period.Results and DividendGroup turnover in the first half increased to ‚£57.1m (2005: ‚£35.6m). Operatingprofit before exceptional items was up by 30% to ‚£12.4m (2005 : ‚£9.6m) withradio operating profit more than trebling to ‚£6.3m (2005 : ‚£1.9m) even afterdeducting start-up losses of ‚£1.4m (2005 : ‚£NIL) at our two new stations, Talk107 in Edinburgh and U105 in Belfast. Television operating profit fell to ‚£5.6m(2005 : ‚£7.3m) while new media operating profit increased to ‚£0.5m (2005 : ‚£0.4m). After net interest charges of ‚£4.0m (2005 : ‚£0.5m), pre-tax profits wereup by 5% to ‚£8.5m (2005 : ‚£8.1m).Your Board has declared an interim dividend of 5.00p which represents a 5%increase over last year. The dividend will be paid on 16 October 2006 to allshareholders on the Register at the close of business on 22 September 2006.RadioIn the Republic of Ireland, our strategy of creating leading positions in keyurban markets has proven attractive to both local and national advertisers anddelivered a 16% increase in advertising revenue in the first half. The launchof our new Belfast station, U105, brought an all-Ireland dimension to ourmarketing proposition although, in the six months under review, a plannedoperational loss of ‚£0.5m was incurred at this station. Before accounting forthis start-up loss, operating profits at our Irish radio stations were up by52% to ‚£2.8m (2005 : ‚£1.9m).Our radio division in Great Britain also performed strongly. Turnover in thefirst half was ‚£23.9m (2005 : ‚£3.1m) with like-for-like growth in advertisingrevenue of 16% compared to a market decline of 3% in the same period. Weinvested heavily in the production of talkSPORT around the football World Cupand also in promoting the brand to listeners and advertisers and this helped todrive a 38% increase in revenue at the station over the first half. Wecontinued with our long term development programme to improve performance atour local radio stations which were able to record a 4% increase in revenue inan otherwise depressed market. Before accounting for start-up losses of ‚£0.9m(2005 : ‚£NIL) at our new radio station in Edinburgh, Talk 107 which launched on14 February 2006, operating profits from our radio stations in Great Britainwere ‚£4.8m (2005 : ‚£NIL) for the first six months of 2006.TelevisionThe World Cup failed to deliver any real stimulus to a total television airtimemarket which was down by 2% in the first half. With the Contract Rights Renewalmechanism creating further drag for ITV1, advertising revenue for the ITVnetwork fell by 8%. Our television station again outperformed and achieved arecord share of ITV1's advertising revenue of 2.76%, but this still resulted ina reduction in our television revenue to ‚£20.9m (2005 : ‚£ 22.3m). As aconsequence, our television operating profits fell to ‚£5.6m (2005 : ‚£7.3m).New MediaIn New Media our strategy has been to grow our customer base through thebundling of broadband, telephony and wholesale line rental services across theisland of Ireland in order to maximise future profit streams. Given the highwholesale installation and associated customer acquisition costs, profit growthhas lagged sales growth during this expansion. In the period under review, arenewed focus on profitability has led to a strong financial performance inthis division, with sales up by 16% to ‚£4.5m (2005: ‚£3.9m) and operating profitup by 31% to ‚£0.5m (2005: ‚£0.4m).ProspectsThe strong growth enjoyed by our Irish radio stations in the first 6 months hascontinued into the third quarter where radio revenue in Ireland is expected tobe up by 16% on a like-for-like basis. This radio market tends to be quiteshort-term, and, therefore, difficult to forecast, but our excellentlistenership figures in the context of encouraging economic fundamentals shouldunderpin a positive final quarter and another full year of sustained growth.Future growth will be enhanced by the development of our new radio station inBelfast, although start-up losses will act as a drag on short-termprofitability.The radio market in Great Britain is much less buoyant than the Irish market,but our significant outperformance is delivering a solid revenue increase inthe third quarter, which is now expected to be up by 2% over the same periodlast year. Even in the post football World Cup period, talkSPORT is achievinggood revenue growth and is forecast to be up by 7% in the quarter. Advertisingrevenue in our local radio stations in Great Britain is expected to be in linewith last year in a total radio market which is forecast to be 6% lower. Profitgrowth in our radio division in Great Britain will be tempered by start-uplosses at our new radio station in Edinburgh.On 4 July 2006, Ofcom published the new financial terms which will apply totalkSPORT's licence for the four year extension period 1 January 2009 to 31December 2012. The existing financial terms in respect of the current licence,which will expire on 31 December 2008, are a cash sum of approximately ‚£0.56mand 6% of qualifying revenue. The new financial terms will require a cashpayment of ‚£0.1m but no percentage payment will apply to qualifying revenue.Our television advertising revenue is expected to fall by 9% in the thirdquarter compared to an 18% reduction for ITV1. Decreases in our advertisingrevenue of 21% and 10% in July and August respectively are expected to befollowed by a 4% increase in September. However, the improvement in Septemberwill not be sustained into October, for which early indications are that ourtelevision advertising revenue will be down by 10%. With this level ofvolatility in the market it is difficult to predict television revenue for thelast two months of the year.Our new media business continues to enjoy strong growth with revenue in thethird quarter expected to be up by 20%. While the broadband and telephonymarket remains highly competitive, nevertheless our efforts to maintain orimprove margins should ensure enhanced profitability in the full year.Overall, strong performances from our radio divisions in both the U.K. andIreland should help to mitigate weakness in the television marketplace andenable your company to outperform its peer groups.Group Income Statementfor the six months ended 30 June 2006 Notes 30 30 June June 2006 2005 ‚£000 ‚£000 Continuing operations Revenue 2 57,125 35,610 Operating costs (44,763) (26,059) -------- -------- Operating profit from continuing operations before 2 12,362 9,551tax and finance costs Exceptional costs 3 - (939) Share of results of associates accounted for using 108 10the equity method -------- -------- Profit from continuing operations before tax and 12,470 8,622finance costs Finance revenue 127 69 Finance costs (4,119) (607) Foreign exchange gain 17 - -------- -------- Profit before tax 8,495 8,084 Taxation (2,075) (2,125) -------- -------- Profit for the period 6,420 5,959 -------- -------- Attributable to: Equity holders of the parent 6,241 5,959 Minority interests 179 - -------- -------- 6,420 5,959 -------- --------Earnings per shareDiluted 5 11.33p 10.85p Basic 5 11.44p 10.97p Adjusted 5 11.44p 12.18p Diluted adjusted 5 11.33p 12.05p -------- -------- ‚£000 ‚£000 Dividends Declared and paid during the period (7.75p per share (2005: 7.00p)) 4,227 3,803 ------ ------Group Statement of Recognised Income and Expensefor the six months ended 30 June 2006 Notes 30 30 June June 2006 2005 ‚£000 ‚£000 Income and expenses recognised directly in equity Exchange difference on translation of foreign 348 (3,041)operations Exchange difference on loans hedging net investment - 1,662in foreign subsidiaries Net actuarial gains/(losses) on defined benefit 2,640 (1,210)pension schemes Profit on cash flow hedges taken to equity 1,253 - Tax on items taken directly to or transferred from (1,132) 363equity -------- -------- Net income recognised directly to equity 3,109 (2,226) Profit for the period 6,420 5,959 -------- -------- Total recognised income and expense 9,529 3,733 -------- -------- Attributable to: Equity holders of the parent 7 9,350 3,733 Minority interests 7 179 - -------- -------- 7 9,529 3,733 -------- --------Group Balance Sheetas at 30 June 2006 Notes 30 30 31 June June December 2006 2005 2005 ‚£000 ‚£000 ‚£000 ASSETS Non-current assets Property, plant and equipment 11,311 10,552 10,938 Intangible assets 205,603 198,772 205,165 Financial assets 1,134 - - Investments accounted for using the equity 114 225 268method Other investments 32 - 32 Deferred tax asset 6,848 9,793 8,725 ------ ------ ------ 225,042 219,342 225,128 ------ ------ ------ Current assets Inventories 649 939 832 Trade and other receivables 27,588 22,848 29,367 Cash and short term deposits 2,998 8,820 6,470 ------ ------ ------ 31,235 32,607 36,669 ------- ------ ------ TOTAL ASSETS 256,277 251,949 261,797 ------ ------ ------ EQUITY AND LIABILITIES Equity attributable to equity holders of the parent Equity share capital 7 7,824 7,824 7,824 Foreign currency reserve 7 456 (1,140) 108 Cash flow hedge reserve 7 1,134 - (119) Retained earnings 7 43,847 31,076 40,325 ------ ------ ------ 53,261 37,760 48,138 Minority interest 7 306 (7) 127 ------ ------ ------ Total equity 7 53,567 37,753 48,265 ------ ------ ------ Non-current liabilities Interest bearing loans and borrowings 6 115,354 121,104 119,935 Pension liability 3,680 8,376 6,320 Provisions 908 - 1,176 Deferred tax liabilities 44,999 42,842 44,646 ------ ------ ------ 164,941 172,322 172,077 ------ ------ ------ Current liabilities Trade and other payables 23,763 32,292 26,738 Current portion of interest bearing loans 6 12,564 7,386 12,736and borrowings Tax payable 1,190 2,169 1,811 Provisions 252 27 170 ------ ------ ------ Net current liabilities 37,769 41,874 41,455 ------ ------ ------ TOTAL LIABILITIES 202,710 214,196 213,532 ------ ------ ------ TOTAL EQUITY AND LIABILITIES 256,277 251,949 261,797 ------ ------ ------Group Cash Flow Statementfor the six months ended 30 June 2006 30 30 June June 2006 2005 ‚£000 ‚£000 Operating activities Cash generated from operations before exceptional costs 12,213 11,605 Exceptional costs (20) (343) Tax paid (1,616) (2,437) ----------- ----------- Net cash inflow from operating activities 10,577 8,825 ----------- ----------- Investing activities Interest received 124 69 Proceeds on disposal of property, plant and equipment 104 23 Purchase of property, plant and equipment (1,474) (533) Acquisition of subsidiaries, net of cash acquired - (98,994) Income from associates 227 10 ----------- ----------- Net cash flows from investing activities (1,019) (99,425) ----------- ----------- Financing activities Borrowing costs (3,966) (588) Proceeds from exercise of share options - 236 Dividends paid to equity holders of the parent (4,227) (3,803) Repayment of borrowings (12,844) (35,546) Proceeds from borrowings 8,000 131,581 Repayment of capital element of finance lease (5) - ----------- ----------- Net cash flows used in financing activities (13,042) 91,880 ----------- ----------- Net (decrease)/increase in cash and cash equivalents (3,484) 1,280 Net foreign exchange differences 12 (167) Cash and cash equivalents at 1 January 6,470 7,707 ----------- ----------- Cash and cash equivalents at 30 June 2,998 8,820 ----------- ----------- Notes to the Interim Reportat 30 June 20061. Basis of preparationThe interim financial statements have been prepared on a basis consistent withthe accounting policies adopted for the year ended 31 December 2005 and inaccordance with the accounting policies that the directors anticipate will becomplied with in the annual financial statements. These policies are set out inthe Group's Annual Report and Accounts.The interim results are unaudited and do not constitute full accounts withinthe meaning of Article 262 of the Companies (Northern Ireland) Order 1986. Theauditors have issued an unqualified report on the Company's full accounts forthe year ended 31 December 2005, which were prepared under IFRS, as endorsed bythe EC, and have been filed with the registrar of Companies.2. Segmental analysisThe following is an analysis of the revenue and results for the period,analysed by business segment, the Group's primary basis of segmentation.RevenueSix 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 ------ ------ ------ ------ ------ Six months ended 30 June 2005 Radio GB Radio Television New Media Total Ireland ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 Sales to third parties 3,054 6,359 22,307 3,890 35,610 Intersegmental sales 28 140 182 30 380 ------- ------ ------ ------ ------ Total segmental revenue 3,082 6,499 22,489 3,920 35,990 ------- ------ ------ ------ ------ResultsSix 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 Share of results of 108 - - - 108associates ------ ------ ------ ------ ------ 4,006 2,387 5,589 488 12,470 ------ ------ ------ ------ Net finance costs (3,992) Foreign exchange 17 ------ Profit before taxation 8,495 Income tax expense (2,075) ------ Net profit for the period 6,420 ------ Six months ended 30 June 2005 Radio Radio Television New Media Total GB Ireland ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 Operating profit for the 15 1,869 7,295 372 9,551period Exceptional costs, allocable (673) - (266) - (939)to a business segment ------ ------ ------ ------ ------ (658) 1,869 7,029 372 8,612 Share of results of 10 - - - 10associates ------ ------ ------ ------ ------ (648) 1,869 7,029 372 8,622 ------ ------ ------ ------ Net finance costs (538) ------ Profit before taxation 8,084 Income tax expense (2,125) ------ Net profit for the period 5,959 ------3. Exceptional costs 30 30 June June 2006 2005 ‚£000 ‚£000 Fundamental restructuring costs - 939 ------ ------Following the acquisition of The Wireless Group plc on 6 June 2005, the staffstructure within the UTV Group was reviewed and the fundamental rationalisationresulted in redundancy costs and other related costs.4. Dividends 30 30 June June 2006 2005 ‚£000 ‚£000 Equity dividends on ordinary shares Declared and paid during the period Final for 2005: 7.75p (2004: 7.00p) 4,227 3,803 ------ ------ Proposed but not recognised as a liability at 30 June Interim for 2006: 5.00p 2,727 ------ 5. Earnings per shareBasic earnings per share is calculated based on the profit for the period afterexceptional items and on the weighted average number of shares in issue duringthe period. Adjusted earnings per share is calculated based on the profit forthe period before exceptional items and on the weighted average number ofshares 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 2006 2005 ‚£000 ‚£000 Net profit attributable to equity holders 6,241 5,959 ------ ------ 30 30 June June 2006 2005 ‚£000 ‚£000 Net profit attributable to equity holders 6,241 5,959 Exceptional costs - 939 Taxation relating to exceptional items - (282) ------ ------ Net profit attributable to ordinary shareholders for 6,241 6,616adjusted earnings per share ------ ------ Weighted average number of shares 30 30 June June 2006 2005 Thousands Thousands Weighted average number of shares for basic earnings per 54,546 54,300share Effect of dilution: Share options 546 621 ------ ------ Adjusted weighted average number of ordinary shares for 55,092 54,921diluted earnings per share ------ ------6. Financial liabilities 30 30 31 June June December 2006 2005 2005 ‚£000 ‚£000 ‚£000 Current Bank overdrafts - - 194 Current instalments due on bank loans 12,551 7,373 12,410 Current obligations under finance leases and 13 13 13hire purchase contracts Interest rate swaps - - 119 ------ ------ ------- 12,564 7,386 12,736 ------ ------ ------ Non-current Non-current instalments due on bank loans 115,266 121,003 119,841 Non-current obligations under finance leases and hire purchase contracts 88 101 94 ------ ------ ------ 115,354 121,104 119,935 ------ ------ ------The bank loans at 30 June 2006 are stated net of deferred financing costsamounting to ‚£1,358,000 (30 June 2005 : ‚£Nil, 31 December 2005 : ‚£1,574,000).7. Group statement of changes in equity Attributable to equity holders Minority Total interest of the parent __________________________________ Equity Foreign Cash Retained Share Currency Flow earnings capital reserve Hedge reserve ‚£000 ‚£000 ‚£'000 ‚£000 ‚£000 ‚£000 Balance at 01 January 6,584 239 - 29,767 (7) 36,5832005 Exercise of share 236 - - - - 236options Shares issued on 1,004 - - - - 1,004acquisition of subsidiary Total recognised income - (1,379) - 5,112 - 3,733and expense in the period Dividends - - - (3,803) - (3,803) ----- ----- ----- ----- ----- ----- Balance at 30 June 2005 7,824 (1,140) - 31,076 (7) 37,753 Total recognised income - 1,248 (119) 11,152 134 12,415and expense in the period Dividends - - - (2,592) - (2,592) Reserves on the wind up - - - 689 - 689of The Wireless Group Employee Benefit Trust ----- ----- ----- ----- ----- ----- Balance at 31 December 7,824 108 (119) 40,325 127 48,2652005 Total recognised income - 348 1,253 7,749 179 9,529and expense in the period Dividends - - - (4,227) - (4,227) ----- ----- ----- ----- ----- ----- Balance at 30 June 2006 7,824 456 1,134 43,847 306 53,567 ------ ------ ------ ------ ------ ------Independent Review Report to UTV plcIntroductionWe have been instructed by the company to review the financial information forthe six months ended 30 June 2006 which comprises the Consolidated IncomeStatement, Consolidated Balance Sheet, Consolidated Cash Flow Statement,Consolidated Statement of Changes in Equity, and the related notes 1 to 7. Wehave read the other information contained in the interim report and consideredwhether it contains any apparent misstatements or material inconsistencies withthe financial information.This report is made solely to the company in accordance with guidance containedin Bulletin 1999/4 'Review of interim financial information' issued by theAuditing Practices Board. To the fullest extent permitted by law, we do notaccept or assume responsibility to anyone other than the company, for our work,for this report, or for the conclusions we have formed.Directors' responsibilitiesThe interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed.Review work performedWe conducted our review in accordance with guidance contained in Bulletin 1999/4 'Review of interim financial information' issued by the Auditing PracticesBoard for use in the United Kingdom. A review consists principally of makingenquiries of group management and applying analytical procedures to thefinancial information and underlying financial data, and based thereon,assessing whether the accounting policies and presentation have beenconsistently applied, unless otherwise disclosed. A review excludes auditprocedures such as tests of controls and verification of assets, liabilitiesand transactions. It is substantially less in scope than an audit performed inaccordance with International Standards on Auditing (UK and Ireland) andtherefore provides a lower level of assurance than an audit. Accordingly we donot express an audit opinion on the financial information.Review conclusionOn the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for six months ended30 June 2006.Ernst & Young LLPBelfastENDUTV PLCRelated Shares:
WLG.L