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"2002 was a year of rapid and fundamental change in British television.
The advertising recession continued for a second year, competition from pay
television intensified and a resurgent BBC, backed by increased funding, tried to
challenge ITV’s lead in peak time.
Against this background, the Board of Carlton has endeavoured to secure
long term value for shareholders. We reduced our cost base aggressively and
focused our management energies on our core businesses.
As we announced at the time of our interim results in May, the decision to
discontinue our investment in ITV Digital was difficult, but essential for the
future health of our company. Closure costs were fully provided for at the time
and no further charges have been incurred.
We are making good progress with our partners in streamlining ITV’s
management and resource base and in October we announced a proposed
merger with Granada. Creating "one ITV" has long been a strategic goal for
Carlton and the Board is convinced that the merger is the right move at the
right time. A single company with a single management team and a single focus
will benefit viewers, advertisers and shareholders. By unifying ITV we can
eliminate duplicated costs and concentrate all our energies on maximising the
performance and value of Britain’s most watched commercial television channel.
A strong commercial public service broadcaster leading the industry will be
good for British television. We will be urging our regulators to look at the wider
competitive landscape when considering our proposals.
To secure the long term success of ITV we are investing further in
programmes, with total schedule investment now amounting to almost £1
billion a year. Viewing figures are on an improving trend and, after a difficult first
half, advertising revenues returned to growth in May.
The majority of the UK population now has multi-channel television.
A powerful, performing ITV1 supported by a fast growing ITV2 is the right
response to this increasingly competitive market place. Last year ITV2 increased
its viewing share in multi-channel homes faster than any other channel.
Carlton has continued to expand its distribution of television programmes
and films. Carlton International is one of Europe's leading programme
distributors and achieved double digit revenue growth in 2002. Our creative
teams continue to make an essential contribution to ITV, while also producing
programmes for other channels in the UK and overseas. For 2003 we have a
substantially stronger order book of new commissions. In cinema advertising,
we are expanding in the US and Europe and are the world leader in this
dynamic market.
Group turnover from continuing businesses for the year was £965 million
(2001: £1,040 million) and total operating profit from continuing businesses
before exceptional items was £65.3 million (2001: £65.8 million). Continuing
earnings per share were 4.8p (2001: 2.0p) before amortisation and exceptionals.
Taking into account the Group’s financial and trading position and the
planned merger with Granada, the Board has proposed a maintained final
dividend of 5p per ordinary share giving a total of 8.275p for the year.
Looking ahead, our focus is clear. We will build on ITV’s progress, prepare
for merger and bear down on costs. We will continue to build our businesses
outside ITV in programme distribution, cinema advertising and post-production.
ITV has started the year well. Advertising revenues in the first quarter of
2003 are expected to be up 2 per cent year-on-year. However, like other
broadcasters and advertiser-supported businesses, we expect the market place
to be challenging in the months ahead. A strong ITV schedule, improved ratings
and our proposed merger put Carlton in the best possible position to benefit as
advertising demand starts to recover.
Gerry Murphy will be leaving Carlton in January. I thank him for his dedication
and contribution to Carlton and wish him every success at Kingfisher plc.
Anthony Forbes stood down from the Board after eight years as a non-executive
director. We are grateful for his sound guidance and wise counsel and he leaves
with our very best wishes.
I would like to thank all our employees for their hard work and loyalty over
the past year. We should look forward to the opportunities of the coming year
with enthusiasm and confidence."
Michael Green, Chairman, 26 November 2002 |
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