Accelerating ITV's Digital Transformation
Total Page:16
File Type:pdf, Size:1020Kb
ITV plc Annual Report and Accounts for the year ended 31 December 2019 Accelerating ITV’s digital transformation We are More than TV. We connect with millions of people every day, make content they can’t get enough of and reflect and shape the world we live in… …and we do all this through the power of creativity. Our strategic vision We will be a digitally led media and entertainment company that creates and brings our brilliant content to audiences wherever, whenever and however they choose. Strategic Report Governance Financial Statements Additional Information 3 Contents Key financial Adjusted EBITA Statutory EBITA highlights £729m £693m Strategic Report (-10%) (2018: £810m) (-12%) (2018: £785m) 2019 Highlights 2 ITV at a Glance 4 Chairman’s Statement 6 Chief Executive’s Report 8 Group external revenue1 Adjusted EPS Statutory EPS Investor Proposition 15 Market Review 16 £3,308m 13.9p 11.8p Our Strategy 22 (+3%) (2018: £3,211m) (-10%) (2018: 15.4p) (+1%) (2018: 11.7p) Our Business Model 24 Key Performance Indicators 26 Operating and Performance Review 30 Social Purpose 44 Non-advertising revenue2 Dividend per share Leverage4 Our People 50 (ordinary) Alternative Performance Measures 52 £2,117m 1.0x Finance Review 54 (+7%) (2018: £1,971m) 8.0p (2018: 1.1x) Task Force on Climate-related (2018: 8.0p) Financial Disclosures (TCFD) 62 Section 172 Statement 63 Non-Financial Information Statement 64 Notes Risks and Uncertainties 66 Alternative Performance Measures Governance We use both statutory and adjusted Chairman’s Governance Statement 80 measures in our Strategic Report. The Board of Directors 82 latter, in management’s view, reflects the Management Board 84 underlying performance of the business and Corporate Governance 86 provides a more meaningful comparison of Nominations Committee Report 99 how the business is managed and measured Audit and Risk Committee Report 102 day-to-day. A full reconciliation between Remuneration Report 116 our reported and adjusted results is Directors’ Report 144 provided in our Alternative Performance Measures section on pages 52 and 53. Financial Statements Our KPIs are set out on pages 26 to 29. Financial Statements 149 1. The Strategic Report also refers to total Independent Auditor’s Report 150 revenue, which includes all ITV revenue, both Primary Statements 157 internal and external. ITV plc Company Financial 2. Non-advertising revenue includes all ITV Statements 222 revenue (both internal and external), and excludes total advertising revenue. Additional Information 3. EBITA before exceptional items has been Glossary 236 adjusted to reflect the inclusion of production tax credits (‘adjusted EBITA’). Strategic Report 4. Leverage is reported net debt to adjusted The Strategic Report explains in detail how we have EBITDA. performed this year and sets out, amongst other things, a fair review of the business, a balanced and comprehensive analysis of our performance, the use of key performance indicators to explain the progress we have made, a description of the principal risks and uncertainties facing the Company, and an indication of potential future developments. Corporate website The Strategic Report is prepared in line with the relevant We maintain a corporate provisions of the Companies Act 2006 and the Company website at www.itvplc.com has had regard to the guidance issued by the Financial containing our financial Reporting Council. It is intended to provide shareholders and other stakeholders with a better understanding of results and a wide range the Company, of its position in the markets within which of information of interest it operates, and of its prospects. In setting out the to institutional and Company’s main risks and uncertainties, an indication of private investors. potential future developments, and in other content, this report and accounts contains statements that are based on knowledge and information available at the date of preparation of the Strategic Report, and what are believed to be reasonable judgements, and therefore cannot be considered as indications of likelihood or certainty. A wide range of factors may cause the actual outcomes and results to differ materially from those contained within, or implied by, the various forward-looking statements in this Annual Report and Accounts. None of these statements should be construed as a profit forecast. 1 Strategic Report ITV delivered a good performance in 2019, with the full year results ahead +13% of expectations, and made significant increase in Online viewing progress in executing our strategy to build a digitally led media and entertainment company. 98% of all commercial audiences over 5 million were on ITV (2018: 98%) Bradley Walsh & Son: Breaking Dad was ITV’s most watched pre-watershed documentary in more than a decade, with >1.0m an average audience of 6.1 million. subscribers of BritBox US The 2019 Rugby World Cup final was the most watched sport’s programme of the year with an average match audience of 11.8 million. +9% 2019 increase in ITV Studios total revenue Highlights The Chase had its best ever series in the UK in 2019. It averaged 3.4 million viewers, up 4% on 2018. 2 ITV plc Annual Report and Accounts 2019 2019 Highlights Strategic Report Governance Financial Statements Additional Information I’m A Celebrity...Get Me Out Of Here! was the most watched entertainment series of the year in the UK, including for 16–34s, with an average of 10.6 million viewers. Coronation Street remains the UK’s most watched soap, with an average of 6.8 million viewers across all devices. It celebrates its 60th anniversary in 2020 making it the world’s longest running soap. 58% of ITV Studios total revenue generated outside the UK 95% increase in original hours of content Manhunt was the most watched new supplied to over-the-top (OTT) drama on any channel in 2019, and ITV’s providers by ITV Studios most watched new drama in six years. It averaged nine million viewers. Good Morning Britain had its best year ever, averaging 0.8 million viewers a day, up 3% on 2018. 3 Strategic Report ITV at a Glance ITV, as an integrated producer broadcaster (IPB), creates, owns and distributes high-quality content on multiple platforms globally. We also continue to diversify our business through the opportunities presented from consumers’ willingness to pay for great content and to engage with ITV as a trusted brand. ITV Studios We have built significant scale in key ITV Studios creates and produces content in the creative markets around the world, UK and internationally across 13 countries, while creating and producing programmes our global formats and distribution business sells, commercialises and distributes formats and formats that return and travel, and finished programmes worldwide. namely drama, entertainment and factual. 46,000+ hrs 50+ labels 62 ITV of content in our catalogue in 13 different countries supplying over 200 channels formats or platforms sold in 2019 (2018: 57 ITV formats) ITV Studios UK ITV Studios ITV Studios UK is the largest International commercial producer in the UK. ITV Studios also operates in the We produce programming Netherlands, Germany, France, across a diverse range of genres, Italy, Australia, the Nordics, such as drama, entertainment and the Middle East, producing and factual entertainment for entertainment, unscripted ITV’s own channels, as well and scripted content, for as for other UK broadcasters local broadcasters and OTT such as the BBC, Channel 4, platforms. This is either locally Channel 5 and Sky. created content, or are formats that have been created elsewhere by ITV. ITV Studios US Global formats ITV Studios US is underpinned by and distribution the production of unscripted Global formats focuses on Snowpiercer is content (through ITV America). the sale and exploitation of a scripted production However, we have been growing unscripted formats around the by Tomorrow our presence in the scripted world. The distribution business Studios. It will air on content market (through ITV focuses on the international TNT in the US, and Studios America), using our distribution of drama, third- Netflix globally. strong cash flows to produce party content and the finished high-profile dramas with the tape versions of all other ITV x The Voice potential to travel and build Studios shows to broadcasters remains a successful international appeal. We sell and platforms internationally. global format. to over 30 broadcasters and Within this business, we also The Voice is produced in 70 countries, with platform owners across the US. finance productions for ITV and The Voice Kids in third parties to acquire global 40 countries. distribution rights. 4 ITV plc Annual Report and Accounts 2019 ITV at a Glance Strategic Report Governance Financial Statements Additional Information ITV total revenue ITV adjusted EBITA ITV Studios ITV Studios £1,822m Broadcast £267m (2018: £255m) (2018: £1,670m) £2,063m Broadcast (2018: £2,096m) £462m (2018: £555m) Broadcast We operate the largest family of Our investment in programming is primarily free-to-air commercial channels in the funded by television and online advertising UK, and deliver our content through revenue. We sell all of our key demographics across 13 regional licences, with more targeted linear television broadcasting and on advertising on the ITV Hub. demand via the ITV Hub. 23.2% 6% 31m share of viewing for the increase in 16-34s share of registered user accounts on ITV Family in 2019 viewing on ITV2 to 6.4% the ITV Hub, up 12% (2018: 23.2%) (2018: 6.0%) (2018: 28m) Our family of channels consists In addition to linear broadcast, and through direct content deals of ITV main channel, which is the ITV delivers its content across with services such as Amazon largest commercial channel in multiple platforms. This is either and Apple. the UK, ITV2 and ITV3 – the two through our advertiser funded largest digital channels in the OTT service, the ITV Hub, pay UK, ITV4, ITVBe, and CITV.