ITV is a remarkable place to work and employs remarkable people. It is thanks to their hard work that we have produced these results.”
The last year has seen another period of strong progress at ITV with record financial performance and further evolution in the shape of the business.
This represents the sixth successive year of growth and the turnaround days of 2010 are now long behind us. As a result ITV is a very different business today, from that which this team inherited.
The success of ITV depends on driving ahead creatively, commercially and financially, while at the same time combining these strands successfully in the context of very strong management leadership. Creative potential sits at the core of our business, and measured in terms of talented people and new programme generation, ITV is stronger than it has ever been. Commercially the year has seen further progress in rebalancing the business towards content and multi-platform broadcasting. Financially we have a business generating strong cash flows and high return on capital.
When we started on the original transformation programme it was commonplace to hear television referred to as a no-growth business. In fact, many saw our model as in decline. Instead we have grown strongly every year and emphatically believe our combination of multi-platform broadcasting and content provides a platform for continued growth.
That is not to say that the changing broadcast landscape is entirely benign. We can all see that changing viewing habits, especially amongst young people will affect conventional linear television. The arrival of new global video on demand broadcasters is affecting viewing habits and provides new competition for top-end drama. And new online advertising models provide our commercial customers with different routes to market.
These challenges are also opportunities for ITV. Great content is in demand globally. As new viewing opportunities emerge so the thirst for really good programmes increases. Under its international umbrella ITV has an extraordinarily diverse but high talent set of content businesses. In the UK our integrated producer broadcaster model is stronger than ever with increasing in-house output.
Our audience strength in the UK and close working relationships with advertisers provides a uniquely powerful marketing platform. Far from replacing television, the online advertising market has reinforced our unique ability to provide advertisers with rapid access to very large audiences with persuasive and emotional branding messages. The strength of ITV’s offering has enabled it to grow its share of broadcast advertising revenues over the last five years.
One of the hallmarks of our approach has been disciplined control of costs and spending. As a result, over 90% of our operating profit is converted into cash and we have been able to both invest in acquisitions and grow progressively our dividend. Our approach is to invest carefully in selected new growth opportunities while at the same time making returns to shareholders. Within this context we continue to look at potential acquisitions that could further enhance our ability to execute our strategy.
Against this context we maintain a conservative balance sheet. That is not just a consequence of strong performance but a Board policy – to maintain low financial risk and to take where appropriate bold creative and operating decisions.
Our Board structure and workings reflect our commitment to a creative, commercial and financial management philosophy. The ‘team sheet’ includes strands of experience and knowledge in all three areas. We have a relatively small Board, closely engaged with the business, supporting but also challenging the executive. We believe that the strength of a Board comes from its understanding of what really goes on in the business and a spirit of openness and transparency around the Board table.
We are very selective about Board appointments. Each addition needs to add to our skill base and diversity, but also relate to the business. Against this context I am delighted to welcome Anna Manz to our Board. She will bring new insight from the consumer world and valuable experience.
I believe that the well spring of our success is our people and the culture that binds them together. ITV is a remarkable place to work and employs remarkable people. It is thanks to their hard work that we have produced these results.
Lastly, after the AGM I pass the baton on to a talented and accomplished new Chairman. After nearly six and a half years in what has been a carefully planned succession I want to thank all our shareholders and colleagues for their commitment.
Being part of ITV during this exciting period has been a great privilege.
Archie Norman Chairman