ITV Full Year 2014 Results

ITV full year results for the year ended 31 December 2014

Another year of strong revenue growth in all parts of the business.

- Total external revenue up 8% to £2,590 million (2013: £2,389 million)

- 6% growth in Net Advertising Revenue to £1,629 million (2013: £1,542 million)

- Online, Pay & Interactive revenue up 30% to £153 million (2013: £118 million)

- ITV Studios revenue up 9% to £933 million (2013: £857 million)

Fifth consecutive year of double digit profit growth

- EBITA before exceptional items up 18%, to £730 million (2013: £620 million)

- Broadcast & Online EBITA up 17% to £568 million (2013: £487 million)

- ITV Studios EBITA up 22% to £162 million (2013: £133 million)

- Adjusted PBT up 23% to £712 million (2013: £581 million)

- Adjusted EPS up 23% to 13.8p (2013: 11.2p)

Delivering value from investment in quality content — ITV Studios, on screen and online

- Non-NAR revenue up £116m, or 10%, to £1,327 million (2013: £1,211 million) – now 45% of total revenue

- ITV Studios is now a global player of scale with 3 further international acquisitions in 2014

- Online, Pay & Interactive revenue is a growing and profitable part of the business

- Broadcast launched our first new channels in almost a decade

- ITV Family SOV was down 5%, after 4% growth 2013, and this remains a key area of focus for 2015

- Continued strong growth in video on demand, up 26%

Confident in delivering further strong growth in 2015

- Expect another strong performance in 2015 with continued revenue growth in all parts of the business

- NAR expected to be up 11% in Q1 and up 4-7% in April and we expect to outperform the market again over the full year

- Online, Pay & Interactive revenue will continue to grow strongly

- ITV Studios again expected to deliver around £100 million revenue growth on a constant currency basis in 2015 with a return to good organic growth

Clear opportunities for further investment while increasing shareholder returns

- Reflecting our confidence in the ongoing growth and cash generation of the business, the Board is proposing a final dividend of 3.3p per share, giving a full year dividend of 4.7p per share, up 34%

- The Board is proposing a £250m special dividend of 6.25p per share

Download the full report here.

Adam Crozier, ITV Chief Executive, said:

ITV delivered another strong performance in 2014 as we continue to rebalance the business, drive new revenue streams and invest in our future growth. All parts of the business are progressing well with Group external revenue up 8% to £2.6 billion, and for the fifth year in a row we achieved double digit profit growth, up 18% to £730 million. Across ITV we maintained our emphasis on cash generation, cost control and improving margins as we continued to strengthen ITV creatively, commercially and financially.

Non advertising revenue rose 10% to £1.3 billion, driven by a 30% increase in Online, Pay & Interactive, and by our continuing investment in quality content and creative talent in ITV Studios globally.

ITV Studios performed well, with revenue up 9% to £933 million, primarily from our acquisitions, and profit up 22% to £162 million. ITV Studios is now well established as a global business, with international production revenue up 24% and almost half its total revenue coming from outside the UK. It is the largest unscripted independent production company in the US following the acquisition during the year of Leftfield Entertainment and DiGa Vision, which join our expanding family of production companies. Both in the UK and the US we remain fully focused on growing our capability in high quality drama and we’re beginning to build a presence in digital content through investments in Indigenous Media, Believe Entertainment and Zealot Networks.

Our Broadcast business had a strong year with profit up 17% to £568 million and advertising revenue up 6% to £1,629 million, well ahead of the TV advertising market and our strongest outperformance of the market for five years. We launched our first new channels in almost a decade – ITV Encore, our first pay only channel, and ITVBe, a free-to-air channel focusing on a young female audience.

While our share of viewing on linear TV was down in 2014, we are firmly focused on improving viewing this year. Up and coming new dramas include Jekyll & Hyde, Home Fires, Arthur & George, The Trials of Jimmy Rose, The Forgotten and Safe House as well as the return of Doc Martin, Prey, Downton Abbey and Vera. Thunderbirds Are Go is back on our screens this spring – and we have the exclusive rights to the Rugby World Cup which takes place in the UK this autumn.

An increasingly important, profitable and high margin part of our business is Online, Pay & Interactive. In 2014 our video on demand viewing was up 26% as we further improved the quality and distribution of ITV Player, which is available on more platforms than ever before, most recently Windows Phone 8 and Amazon Kindle Fire. ITV is well placed to take advantage of the growth in viewing on connected TVs, including through our investments in YouView, Freeview Play and Freesat.

For 2015 we’re confident of further good revenue growth in all parts of ITV. In ITV Studios we’ll again see upside from our acquired businesses as well as a return to good organic growth as we continue to invest in creative talent and content. In our Broadcast business, Online, Pay & Interactive will deliver another strong performance and we expect again to outperform the TV advertising market.

Reflecting our confidence in the ongoing growth and cash generation of the business, the Board has committed to grow the full year ordinary dividend by at least 20% per annum for three years to 2016, by when we will achieve a dividend cover of between 2.0 and 2.5 times adjusted earnings per share. In line with this policy, the Board is proposing a final dividend for 2014 of 3.3p, which equates to a full year dividend of 4.7p (2013: 3.5p), up 34%.

ITV is now a more balanced business with strong underlying cash flows. As we enter the next phase of our strategy we continue to see investment opportunities to grow the business and enhance shareholder value but at the same time the Board recognises the importance of maintaining capital discipline and balance sheet efficiency. Therefore it is appropriate over time to increase our balance sheet leverage gradually while retaining the flexibility to continue to invest.

In line with this approach, the Board is proposing a £250 million return to shareholders by way of a special dividend of 6.25p.

ITV is now a high growth business with increasing emphasis on international content creation and distribution, and is demonstrably much stronger, both creatively and financially, than when we set out on our five year plan. We remain firmly focused on our strategy and look forward to this year and beyond with enthusiasm and confidence.