REG - ITV PLC - Final Results
02/03/2023 07:00
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RNS Number : 5967R ITV PLC 02 March 2023
ITV Full Year results for the period ending 31 December 2022
Strong end to 2022; successful strategic execution; powerful momentum into
2023 and on track to deliver KPI targets for 2026
Carolyn McCall, ITV Chief Executive, said:
"2022 was a year of significant strategic progress and ITV delivered a robust
set of financial results. The successful execution and delivery of ITVX in Q4
was a major digital milestone. The platform has received a very positive
reception from viewers and advertisers alike, with its newly expanded range of
original content and a superior user experience engaging more viewers, and
lighter viewers, and encouraging them to spend more time with ITV. The user
experience and personalisation elements will continue to improve throughout
2023.
"Our total external revenue growth of 8% was driven by double-digit increases
from our growth drivers, ITV Studios and our digital businesses in M&E.
Our mass reach linear advertising business has also performed well and ITV
total advertising revenue (TAR) was down only 1%, delivering the second
highest TAR in ITV's history.
"As a result of ITV's deliberate strategic actions and strong execution, ITV
has a scaled and expanding global production business, a rapidly growing
targeted digital advertising business, a resilient linear TV advertising
business and a unique vertically integrated producer broadcaster and streamer
model. This means that ITV is now a demonstrably more balanced business which
is ideally placed to take advantage of the growing demand for quality content
from viewers, broadcasters and streamers and take a larger share of the
digital advertising market.
"We enter 2023 with strong momentum and are on track to deliver all our 2026
KPI targets(1) despite a continuing uncertain macro environment. ITV's balance
sheet is robust enabling us to continue to invest to support our strategy and
deliver returns to shareholders."
Group financial highlights: revenue driven by double digit growth in ITV
Studios and M&E digital revenues
· Total external revenue up 8% at £3,728 million, total group
revenue(2) up 7% at £4,345 million
o Total ITV Studios revenue up 19% at £2,096 million with growth across the
business
o Media & Entertainment (M&E) revenue down 1% at £2,249 million
driven by 1% decline in total advertising revenue (TAR), as expected. Within
this digital advertising revenue was up 17% to £343 million(3)
· Adjusted group EBITA(4) was down 12% at £717 million (31
December 2021: £813 million) largely reflecting the planned investment in
M&E to drive future growth, which was partly funded by £23 million of
cost savings. This takes total savings delivered since 2018 to £106 million
· Adjusted EPS(2) was down 14% at 13.2p (31 December 2021: 15.3p)
· EBITA(5) was £668 million (31 December 2021: £784 million).
Statutory operating profit was £519 million (31 December 2021: £519 million)
and statutory EPS was 10.7p (31 December 2021: 9.4p)
· Profit to cash conversion(2) was 75%, reflecting the growth in
Studios and commissions for ITVX
· Balance sheet strength with net debt of £623 million (31
December 2021: £414 million) and net debt to adjusted EBITDA leverage of 0.8x
(31 December 2021: 0.5x).
· In-line with ITV's dividend policy, the Board has proposed a
final dividend of 3.3p (2021: 3.3p), giving an ordinary dividend of 5.0p per
share for the full year 2022 (2021: 3.3p)
ITV Studios: growing ahead of the market and increasing diversification
· Strong revenue growth, ahead of the market, and industry leading
adjusted EBITA margin of 12.4% driven by
o 58% increase in high-end scripted hours produced as we have taken
advantage of the global demand for scripted content
o 19 formats sold in three or more countries, as our programmes continue to
travel, including My Mom, Your Dad and Make Love Fake Love (2021: 15
formats)
o Percentage of total Studios revenue from streaming platforms grew from 13%
to 22% with commissions or development deals with most of the major streamers.
Given this success we are increasing our target for 2026 from 25% to 30%
· Total ITV Studios revenues in 2022 are 15% higher than 2019 with
a record Q4 which was stronger than expected due to the phasing of
deliveries
Media & Entertainment (M&E): Record digital viewing and revenues;
Second highest TAR in ITV's history
· M&E KPIs demonstrate strong strategic progress with a
significant increase in the volume of content available for streaming from
4,000 in 2021 to 19,000 hours; improved user experience; successful launch of
ITVX; and further roll out and development of Planet V, ITV's self-service
programmatic advertising platform. Planet V is the second largest video ad
tech platform in the UK, after Google and underpins our ability to drive
digital targeted advertising revenues whilst retaining control of our own
sales and avoiding value leakage to adtech intermediaries
o Total digital revenues up 18% to £411 million(3); total streaming hours
up 9% and within that, total monetisable streaming hours up 18%(6); monthly
active users up 6%; and UK subscribers up 17% to 1.4 million
o 90% of ITV's digital inventory is now sold through Planet V, which has
over 20,000 data targeting options around which advertisers can build
campaigns, and helped attract 400 new digital advertisers to ITV in the year
o In its first two months since launch, ITVX has attracted more users, and
harder to reach lighter viewers, who are spending longer on ITV's digital
content. In the first two months, ITVX attracted 1.5 million new
registrations, saw total streaming hours grow 69% and streaming hours of
lighter viewers grow 94% compared to the same period in the prior year on
ITV's streaming platforms
· TAR performance reflects the resilience of linear and the
important role of mass reach to build brands and drive performance. ITV
maintained its strength in linear with
o 33.8% share of commercial viewing (SOCV) (2021: 33.1%) and
o 93% of top 1,000 commercial broadcast TV programmes (2021: 93%)
· M&E adjusted group EBITA(4) was down 22% at £464 million
largely reflecting the planned investment in content and ITVX to drive future
growth
· BritBox International subscribers are up 25% to 3.0 million
(1) See KPI section for further details
(2) See APM section for further details
(3) See note 5 in Notes to Editors for a breakdown of digital revenue
(4) Reconciliation between adjusted and statutory results in provided in the
APM section
(5) Statutory profit before interest, tax, amortisation and exceptional items
(6) See note 4 in Notes to Editors
Outlook: entering 2023 with strong momentum
ITV Studios
· With ITV's strong position in a growing market, we expect ITV
Studios to deliver at least 5% average revenue growth per annum to 2026, and
grow ahead of the market.
· We remain committed to our ITV Studios adjusted EBITA margin
guidance of 13% to 15% from 2023 onwards. Given the current inflation in the
production market and general cost inflation, we expect the margin to be at
the lower end of the range in the shorter term, as we previously guided. We
continue to drive efficiencies through the digital innovation programme.
Media & Entertainment
· With 18% growth in digital revenues to £411 million(7) in 2022
and our planned continuous enhancements in ITVX's product, content and
distribution, we remain confident in delivering at least £750 million of
digital revenues by 2026
· In Q1 we continue to see strong growth in digital advertising
with revenues expected to be up around 25%. Nevertheless, the outlook for TAR
is challenging given the current macroeconomic environment and TAR is expected
to be down around 11% in Q1 compared to 2022 and down around 1% compared to
2019. Early indications are that TAR will be down between 10 and 15% in
April
Overall, our progress in delivering Phase 2 of the More Than TV Strategy gives
us confidence in our ability to achieve our KPI targets for 2026(8).
We are mindful of the current macro and geopolitical uncertainty and continue
to manage our costs tightly. We expect to deliver £15 million of cost savings
in 2023 as part of our previously announced £50 million cost saving target by
2026. This is in addition to the £106 million saving programme between 2018
and 2022. We continue to look carefully at further mitigation measures to
offset the impact of high levels of inflation on our cost base.
ITV's balance sheet is robust enabling it to invest behind the strategy and
deliver returns to shareholders in line with its capital allocation policy.
Virtual Results presentation webcast and Q&A:
ITV's virtual results presentation and Q&A session will be held for
investors and analysts at 9.30am today via the following link:
https://www.investis-live.com/itv/63ca6e6baba36a0c00445512/shate
(https://www.investis-live.com/itv/63ca6e6baba36a0c00445512/shate)
You are now able to pre-register to join.
If you would like to ask a question, you will be able to do so via the
following Conference Call details:
· United Kingdom: 0800 640 6441
· United Kingdom (Local): 020 3936 2999
· All other locations: +44 203 936 2999
· Participant access code: 313837 - Participants will be greeted
by an operator who will register their details.
(7) See note 5 in Notes to Editors for a breakdown of digital revenue
(8) See KPI section for further details
Notes to editors
1. Unless otherwise stated, all financial figures refer to the 12
months ended 31 December 2022, with the change compared to the same period in
2021.
2. Group financial performance
2022 2021 Change £m Change
12 months to 31 December £m £m %
ITV Studios total revenue 2,096 1,760 336 19%
Total advertising revenue 1,931 1,957 (26) (1%)
M&E non-advertising revenue 318 325 (7) (2%)
M&E total revenue 2,249 2,282 (33) (1%)
Total group revenue 4,345 4,042 303 7%
Internal supply (617) (589) (28) (5%)
Group external revenue 3,728 3,453 275 8%
ITV Studios adjusted EBITA 259 213 46 22%
M&E adjusted EBITA 464 598 (134) (22%)
Adjusted EBITA 723 811 (88) (11%)
Unrealised profit in stock adjustment (6) 2 (8) (400%)
Group adjusted EBITA 717 813 (96) (12%)
Group adjusted EBITA margin 19% 24%
Statutory operating profit 519 519 - -
Profit before tax (statutory) 501 480 21 4%
Profit before tax (adjusted) 672 774 (102) (13%)
Adjusted EPS 13.2p 15.3p (2.1p) (14%)
Statutory EPS 10.7p 9.4p 1.3p 14%
Net debt as at 31 December (623) (414) (209) (50%)
Reported net debt to adjusted EBITDA leverage 0.8x 0.5x
Profit to cash conversion 75% 80%
3. Total advertising revenue (TAR), which includes ITV Family NAR,
digital advertising and sponsorship is forecast to be down around 11% in Q1
with January down 9%, February down 9% and March down around 16% compared to
the same period in 2022. Q1 is expected to be down around 1% compared to 2019.
Early indications are that total advertising revenue will be down between 10
and 15% in April. Figures for ITV plc are based on ITV estimates and current
forecasts.
4. Key performance indicators
12 months to 31 December 2022 2021 Change
%
Group adjusted EPS 13.2p 15.3p (14%)
Cost savings £23m £37m -
Profit to cash conversion 75% 80% (5% pts)
ITV Studios total revenue growth 19% 28% -
ITV Studios adjusted EBITA margin % 12.4% 12.1% 0.3% pts
Total high-end scripted hours 276 hrs 175 hrs 58%
Number of formats sold in 3 or more countries 19 15 27%
% of ITV Studios total revenue from streaming platforms 22% 13% 9% pts
Total digital revenue £411m £347m 18%
Total streaming hours* 1,139m 1,048m 9%
Monthly active users** 10.5m 9.9m 6%
UK subscribers 1.4m 1.2m 17%
Share of top 1,000 commercial broadcast TV programmes 93% 93% -
Share of commercial viewing (SOCV) 33.8% 33.1% 0.7% pts
Total BritBox International subscribers 3.0m 2.4m 25%
· Total digital revenue includes digital advertising revenue and
subscription revenue as well as linear addressable revenue, digital
sponsorship and partnership revenue, ITV Win and any other revenues from
digital business ventures.
· UK subscribers captures total UK subscriptions to ITV streaming
platforms and services (including free trials).
· Total streaming hours measures the total number of hours viewers
spent watching ITV across all streaming platforms. This figure includes both
ad-funded and subscription streaming
· Monthly active users captures the average number of registered
users throughout the period who accessed our owned and operated on demand
platforms each month.
· The share of top 1,000 commercial broadcast TV programmes KPI
includes TV viewing from transmission and seven days post-transmission on
catch up, as well as six weeks prior to the transmission window. It excludes
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