21st Jun 2006 09:00
ITV PLC21 June 2006 ITV announces additional cash return to shareholders, efficiency savings and new SOCI target June 21 -- ITV plc will today outline its growth strategy for its channels,content, consumer and commercial operations. Highlights include: • Increasing return of cash to shareholders from £300 million to £500 million in 2006. • Delivering efficiency savings of £100 million by end 2008 from business re-engineering and operational reviews. This is in addition to the £120 million savings already delivered as part of the merger. • ITV plc H1 total revenue estimated to be up 2% on 2005. • Launching a new channel and increasing investment in multichannel programming by £20 million in 2007. • ITV SOCI (share of commercial impacts) target for switchover at 2012. • Potential to deliver PSB and licence fee benefits of £200 million by switchover in 2012. £500 million to be returned to shareholders in 2006 At its full year results for 2005 in March 2006 ITV announced an initial returnof cash to shareholders of £300 million. The Company said then that it wouldcontinue to review the capital structure of the business and would assess: - the appropriate level of distributions to shareholders, as the disposal of non-core assets continued - while maintaining a stable and efficient balance sheet and taking into account the needs of its stakeholders - and improving the returns for its shareholders, who have generally expressed the view that the Company should retain an investment grade credit rating. Taking all this into account, together with the current market environment, theBoard has increased the amount of this initial return of cash to shareholders to£500 million in 2006. ITV will continue to review the capacity to return cash toshareholders in future years as its capital structure allows. Deliver efficiency savings of £100 million by 2008 Since the merger ITV has delivered more than £120 million of merger related costsavings ahead of schedule. Last September the Company announced a majorrestructuring. Since January 2006, ITV has been looking across the business toimprove further its processes and its operational efficiency in light of thisrestructure. That process continues but ITV has already identified an additional£40 million per annum of savings from improved overhead efficiencies, £30million for schedule efficiencies, in part as a result of the evolution of ITV'sPSB requirements as digital switchover approaches, and a further £30 million perannum from 2007 in reduced sports programming costs. ITV SOCI target for digital switchover at 2012 As television transitions from an analogue world of five channels to digitalplatforms with several hundred channels there will inevitably be a reduction inthe number of viewers to ITV1. ITV's performance is relatively stable on each platform and the Company believesthat once switchover is completed ITV's overall share of viewing will stabiliseand ITV will benefit from viewers being able to watch all of its digitalchannels. These channels are proving very popular with viewers and in 2006 todate are delivering a 6% SOCI, up 28% on the same period in 2005. Later in 2006ITV will launch a +1 version of ITV2 on satellite and cable platforms and in2007 will invest a further £20 million in programming for its digital channels. ITV is now targeting a SOCI across its channels of 38.5% at digital switchoverin 2012. In the next few years there are factors which will affect this measureincluding the rate of change in ITV's public service broadcasting obligations,the speed of digital take up and equalisation of advertising minutage with otherchannels, and the target is based upon ITV maintaining expenditure levels on theprogramme schedule. ITV Revenue outside ITV1 ITV has previously announced targets for £250 million of advertising andinteractive revenue from digital channels by the end of 2008 and for 50% oftotal revenues to come from sources outside ITV1 spot advertising by the end of2010. Building on the 2005 base of £715 million of revenue outside ITV1 spotadvertising, ITV has identified additional revenue potential that increases thatfigure to between £1,265 million and £1,465 million by the end of 2010. ITV Revenue in H1 Whilst the advertising sector has been weaker than forecast over recent months,television has been less affected than other traditional media such asnewspapers and radio. Regional television advertising, which ITV is uniquelyable to provide on a focused local area, is up 18% at £98 million across allITV's channels in the first half of 2006 year-on-year. ITV's broadcast revenue outside ITV1 continues to grow. ITV's digital channelscontinue to perform strongly and in the first half are up 42% at £69 million.Sponsorship is increasingly attractive to advertisers and is up 24% at £21million. Interactive advertising and online revenue, whilst smaller revenuestreams, are up by 175% and 46% respectively. ITV plc total net advertising revenue at the half year is estimated at £750million, down 4.6% year-on-year, in line with expectations. Total Broadcast andConsumer revenues for the half year are estimated to be £930 million (includingCSA), up 3% on 2005. External revenues in the Content business are 5% ahead inthe first half of 2006 (excluding discontinued operations) at £125 millionreflecting increased sales both to other UK broadcasters and internationally.ITV's US production business currently has five series on Network Television.Total revenues for the half year are estimated to be up by 2% on 2005. Charles Allen, CEO said: "Since the merger ITV has increased its profitability, delivered ahead of allits targets, raised £400 million from the disposal of non-core assets and willhave paid £1.1 billion to shareholders in dividends and share buy backs by theend of 2006. We continue to set ourselves aggressive targets. ITV with itsstrong brand, original content, Freeview capacity and cross promotionalcapability is uniquely well-positioned to benefit as the UK television marketcontinues to fragment and the number of outlets and demand for high qualitycontent continues to increase. We have a renewed focus, a clear strategy and theright management team that will enable us to deliver increasing value to ourviewers, advertisers and shareholders." -ENDS- Enquiries Investors: ITVGeorgina Blackburn, Head of Investor Relations - 020 843 8000 Media: ITVBrigitte Trafford, Jim Godfrey - 020 7843 8000 Citigate Dewe RogersonSimon Rigby, Anthony Kennaway - 020 7638 9571 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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