ITV Full year results for the year ended 31st December 2016Rebalanced ITV delivers continued growth
Revenue growth driven by double-digit increase in non-NAR
- Total external revenue up 3% to £3,064m (2015: £2,972m), including currency benefit
- Total non-NAR revenue up 11% to £1,855m (2015: £1,664m), now 53% of total revenues
- Total ITV Studios revenue up 13% to £1,395m (2015: £1,237m)
- Online, Pay & Interactive revenue up 23% to £231m (2015: £188m)
- Net Advertising revenue down 3% to £1,672m (2015: £1,719m), performing ahead of the TV ad market
Rebalanced business delivering adjusted profit growth
- Adjusted EBITA up 2% to £885m (2015: £865m), despite the decline in the ad market
- Studios adjusted EBITA up 18% to £243m (2015: £206m)
- Broadcast & Online adjusted EBITA down 3% to £642m (2015: £659m)
- Adjusted EPS up 3% to 17.0p (2015: £16.5p)
- Statutory EPS down 10% to 11.2p (2015: 12.4p) impacted by restructuring and earnout costs
Confident in the underlying strength of the business
- Broadcast business remains robust: Main channel SOV up 3%, online viewing up 42%
- ITV Studios has a healthy pipeline of new and returning programmes
- Building our digital business in Studios and Broadcast
Strong balance sheet, healthy liquidity
- Flexibility and capacity to continue to invest across the business and deliver sustainable returns to our shareholders
- Given our good performance the Board is proposing a final dividend of 4.8p, giving a full year dividend of 7.2p, up 20%, in line with our policy
- Reflecting ITV's strong cash generation and the Board's confidence in the business, the Board is proposing a special dividend of 5.0p per share, worth just over £200 million
- The Board is committed to a long term sustainable dividend policy. The ordinary dividend will grow broadly in line with earnings, targeting dividend cover of around 2x adjusted earnings per share over the medium term.
Outlook for 2017 and beyond
- ITV Studios on track to deliver good organic revenue growth in 2017
- Online, Pay & Interactive will continue to perform strongly
- ITV Family NAR forecast to be down around 6% over the first 4 months, impacted by current economic uncertainty
- Over the full year ITV will outperform the TV ad market
- Will deliver £25m of incremental cost savings in 2017 as previously announced
- We have a strong balance sheet and continue to see clear opportunities to invest behind our strategy in the UK and internationally
Adam Crozier, ITV plc Chief Executive, said:
ITV delivered a good performance in 2016 as we continue our strategy of rebalancing and strengthening the business creatively, commercially and financially. The continued growth in revenue and adjusted profit, despite a 3% decline in spot advertising revenues resulting from wider political and economic uncertainty, is clear evidence that our strategy is working and remains the right one for ITV.
External revenue was up 3% to more than £3bn, driven by strong growth in non-NAR as we further reduce our dependence on spot advertising and grow new revenue streams. In 2016, 53% of total ITV revenues came from sources outside traditional TV spot advertising.
Our production business, ITV Studios, is a global player of scale with 50% of total revenues coming from outside the UK and a stronger than ever pipeline of new and returning programmes in the key genres of scripted and formats. In 2016 ITV Studios supplied around 7,800 hours of content to 234 channels and platforms in the UK and internationally, including 155 hours of drama and 80 formats. There is growing demand for our content on OTT platforms with over 200 programme supply agreements in place.
Our Broadcast business is robust and onscreen we performed well with share of viewing up 3% on our main channel. ITV maintains its leading position in the UK television advertising market, delivering 99% of all UK commercial audiences over 5 million, and remains highly demanded by advertisers. Whilst our net advertising revenues have declined, we again outperformed the UK television ad market as a whole.
Our Online, Pay & Interactive revenues rose 23% driven by increased demand for advertising online. The ITV Hub continues to thrive with online viewing up 42% and around half of all the UK's 16 to 24 year olds registered. We are also making selective investments in digital content companies including New Form, Rocket Jump, AwesomenessTV and Ginx TV as we build our expertise in digital first content.
We've taken an important step forward in our strategy of building our pay and distribution business with the soon to launch BritBox US, an SVOD 50/50 joint venture with the BBC offering the best of British TV from both broadcasters including recent series and classics. It is our intention to roll the service out internationally under the BritBox brand.
Looking forward to 2017, ITV Studios will return to good organic revenue growth. As we previously stated, increased investment in US scripted content including Somewhere Between, The Good Witch, Sun Records and Snowpiercer, along with the reversal of the one-off benefit of The Voice of China in 2016, means that ITV Studios profits in 2017 are likely to be broadly in line with 2016.
We expect ITV NAR to be down around 6% over the first four months against the backdrop of current economic uncertainty, although over the full year we expect to again outperform our estimate of the television advertising market. Online Pay & Interactive will perform strongly and a particular focus for 2017 will be the launch of BritBox.
We see a good pipeline of investment opportunities across ITV, organically and through acquisitions, and our strong balance sheet and healthy cash flow allows us to take advantage of these while delivering sustainable returns to our shareholders. We remain focused on growing our int
