Ulster Television
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Interim Report for the 6 months to 30 June 2016 22 August 2016 Wireless Group plc ("WLG" or "the Company" or "the Group") Wireless Group plc today announces interim results for the six months ended 30 June 2016. Financial highlights* Disposal of TV business to ITV for a purchase price of £100m completed in February 2016 Profit on disposal of £79.2m and associated return of capital of £55.0m Group revenue from continuing operations of £38.2m (2015 restated: £37.0m) Group operating profit of £4.7m (2015 restated: £6.1m) Group operating profit includes £1.8m start-up losses for D2 Pre-tax profits from continuing operations of £4.5m (2015 restated: £5.0m) Reported profit for the period of £82.1m (2015 restated: loss of £0.5m) Diluted adjusted earnings per share of 4.4p (2015 restated: 3.6p) Net debt reduced to £1.6m (2015: £46.9m) Recommended cash offer of 315p per share from News Corporation (“News Corp”), totalling £220m No interim dividend declared in light of News Corp offer Operational highlights Strong performance by talkSPORT assisted by the European Football Championships Three packages won for Premier League live audio rights for next three seasons Advertising slowdown in Q2 in both the UK and Ireland impacted local radio performance Successful launch of three new digital channels on the D2 multiplex, with strong audiences recorded in first RAJAR results Richard Huntingford, Chairman, Wireless Group plc, said: “Wireless Group – and especially talkSPORT – has performed well in the first six months of the year. After a competitive bidding process, we were also delighted to be awarded three packages for Premier League live audio rights which will further underpin the outlook for talkSPORT going forward. The recent RAJAR and JNLR figures demonstrate the strength of the Group’s ongoing brands in its key markets as well as the ability to launch successfully new digital brands that are attractive to listeners which stands the Group in good stead going forward. 1 In our local stations and in Ireland, advertising trends were softer as we moved towards the referendum in Q2. Whilst it is still unclear what impact the uncertainty created by Brexit might have on advertising revenues in the all-important Q4, including in Ireland, the Group currently anticipates a full year outturn broadly in line with expectations. In the meantime, good progress is being made in respect of the regulatory clearances required in connection with the News Corp offer.” For further information contact: Investor Enquiries Norman McKeown, Group Finance Director +44 (0) 28 9026 2204 Media Enquiries Maitland James Devas +44 (0) 20 7379 5151 2 Wireless Group plc Chairman’s Statement Overview Following the sale of its television business to ITV, WLG became a focused radio group operating in the UK and Ireland with highly attractive assets including talkSPORT and a growing digital division. It is a profitable business – with a strong balance sheet – that owns and operates valuable brands that attract loyal audiences. On 30 June 2016, the Group announced a recommended cash offer of 315p per share from News Corp, subject to regulatory clearance. Good progress is being made in respect of the regulatory clearances and as at 17 August 2016, the first closing date of the offer, acceptances totalling 92 per cent. had been received from the Group’s shareholders. Financial results * Group operating profit from continuing operations was £4.7m (2015 restated: £6.1m). After net interest costs of £0.6m (2015 restated: £1.0m) and foreign exchange gains of £0.4m (2015 restated: loss of £0.1m), Group profit before tax from continuing operations was £4.5m (2015 restated: £5.0m). Group profit after tax from continuing operations was £3.7m (2015 restated: £3.6m). Group profit after tax from continuing and discontinued operations was £82.1m (2015 restated: loss of £0.5m). Group net debt was substantially lower at £1.6m (2015: £46.9m) predominantly as a result of the disposal of the TV assets. Dividend Following the offer from News Corp, the Group has agreed not to declare an interim dividend. Wireless shareholders named on the register on 20 May 2016 received on 15 July 2016 the previously announced Special Dividend of 6.15 pence as well as the 2015 Final Dividend of 7.60 pence – 13.75 pence in total. Operating review Revenue Operating profit (£m) 2016 2015 2016 2015 (restated) (restated) Radio GB 27.6 25.8 4.8 5.6 Radio Ireland 8.9 8.8 1.2 2.1 Digital services 1.7 2.4 0.1 0.1 38.2 37.0 6.1 7.8 Central Costs (1.6) (1.9) JV/Associates 0.2 0.2 Total 4.7 6.1 * As appropriate, references to operating profit includes income from associates and joint ventures but excludes discontinued operations. 3 Wireless Group plc Chairman’s Statement (continued) talkSPORT is the UK’s premier sports radio station and the strength of its offering was again demonstrated in the recent Q2 RAJAR results published on 4 August. The channel’s weekly reach increased to 3.3m listeners – the station’s second highest ever result – with four of its key weekday shows breaking listener records. talkSPORT’s reach and audience demographic both remain attractive propositions for advertisers and while some additional benefit was always expected from the Euro 2016 tournament, talkSPORT nevertheless turned in an exceptionally good first half performance. talkSPORT was also pleased to be awarded three live UK audio packages for the Premier League for three seasons from 2016/17 to 2018/19 inclusive, meaning it will have more Premier League coverage than ever before and become the only national commercial radio station carrying live Premier League games. talkSPORT's international broadcasting business, now in its fifth season, continued to achieve double digit sales and profit growth in H1. These rights are in place for three further seasons and there are now partnership agreements in 68 territories. The Group successfully launched three new national digital radio services in March – Virgin Radio, a music service which brings the iconic Virgin Radio brand back to the UK under a 12 year brand licence agreement with Virgin Group; talkRADIO, a talk-led service focussed on current affairs and entertainment; and talkSPORT 2, a complementary service to talkSPORT covering live action across a broader range of sports. Early results have been encouraging. Virgin Radio’s strong presenter line-up – led by Edith Bowman’s breakfast show – saw the station post a weekly reach of 409,000 in Q2. talkSPORT 2 has also proven a popular choice, drawing an initial 285,000 listeners, attracted by a wider range of sporting coverage backed by a range of partnerships with leading sports rights holders. talkRADIO – fronted by a number of strong personalities – has attracted 224,000 weekly listeners with an encouragingly high listening profile of 6.5 hours per week. Sales in our local radio operations in GB were down on H1 on a like-for-like basis mainly as a result of reduced demand in the lead up to the Brexit referendum. Costs were tightly controlled in this division, largely mitigating the profit decline. Results for Radio GB overall include start-up losses attributable to the new digital station totalling £1.8m in the first six months and planned cost savings of £0.5m. The Irish radio advertising market continues to lag the recovery in the Irish economy, particularly amongst larger advertising agencies, although currency tailwinds mitigated the impact of this on Radio Ireland reported revenue. The key factors affecting this included the continued move towards more measurable digital campaigns, the uncertainty around the Brexit referendum and a slower than expected return to marketing investment from some key market sectors. The recent JNLR audience figures for Q2 have confirmed the market-leading positions that the Group’s stations enjoy in key urban areas, which alongside the relaunch of our agency sales operation as Urban Media, with improved digital/social capabilities, provides confidence for the future. Costs increased in part due to currency movements, external television advertising and investment in digital activities. Profits in the Digital Services division were unchanged but substantial progress was made in the period in improving the future profitability of Simply Zesty. Outlook talkSPORT is a highly attractive medium for advertisers seeking male audiences. While a major football tournament typically would drive a 10% increase in sales over the course of a calendar year, talkSPORT is experiencing good underlying sales growth and is increasingly leveraging its brand strength through a growing number of major sponsorships and partnerships. The launch and establishment of our three recently-launched national radio stations on D2 was a key priority for 2016 and initial results are encouraging. Following the recent RAJAR results, operating losses at the three stations are still anticipated to be broadly in line with forecasts, moving to a small loss in 2017 and growing profitably beyond this. Encouragingly, 70% of our forecast 2016 revenue for the D2 stations has already been achieved. 4 Wireless Group plc Chairman’s Statement (continued) The recent RAJAR and JNLR figures demonstrate the strength of the Group’s ongoing brands in its key markets as well as the ability to launch successfully new digital brands that are attractive to listeners which stands the Group in good stead going forward. In our local stations and in Ireland, advertising trends were softer as we moved towards the referendum in Q2. Whilst it is still unclear what impact the uncertainty created by Brexit might have on advertising revenues in the all-important Q4, including in Ireland, the Group currently anticipates a full year outturn broadly in line with expectations.