ITV (ITV) is almost three years through its ongoing transformation plan and the benefits continue to accrue as the 16 per cent rise in underlying EPS last year clearly highlights. What's more, a 46 per cent increase in the share price over the last six months suggests the market is really getting behind the story.
A key part of the strategy is investment in production, which fuelled a 16 per cent increase in ITV Studios' revenues to £712m while cash profits jumped 29 per cent to £107m - a fifth of the total. The drive to increase online, pay and interactive revenues is paying off, too, as turnover there rose 26 per cent to £102m.
While big sporting events on other channels meant a 3 per cent drop in audience numbers, ITV still managed to outperform a declining advertising market with flat national ad revenue (NAR). Overall, broadcast and online revenues edged upto £1.8bn and cash profits rose 9 per cent to £413m.
The group made saving of £30m last year and strong cash generation led to a £161m increase in year-end net cash, although ITV did suffer a £161m rise in the pension deficit to £551m. So, while a 4p special dividend will be welcomed, the £156m return of capital fell short of the £250m some analysts had predicted.
Broker Numis Securities expects to raise 2013 pre-tax profit and EPS forecasts by 5 per cent to £520m and 9.8p. Estimates for 2014 are £550m and 10.7p, respectively (from £464m and 9.2p in 2012).
| ITV (ITV) | ||||
|---|---|---|---|---|
| ORD PRICE: | 122p | MARKET VALUE: | £4.8bn | |
| TOUCH: | 121-122p | 12-MONTH HIGH: | 125p | LOW: 69p |
| DIVIDEND YIELD: | 2.1%* | PE RATIO: | 18 | |
| NET ASSET VALUE: | 21p** | NET CASH: | £206m | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 2.03 | -2732 | -65.9 | 0.70 |
| 2009 | 1.88 | 25.0 | 2.30 | nil |
| 2010 | 2.06 | 286 | 6.90 | nil |
| 2011 | 2.14 | 327 | 6.40 | 1.60 |
| 2012* | 2.20 | 348 | 6.90 | 2.60 |
| % change | +3 | +6 | +8 | +63 |
Ex-div: 1 May Payment: 31 May *Excluding 4p a share special dividend **Includes intangible assets of £932m, or 24p a share | ||||
