Ulster Television Chairman, John B McGuckian gave the company trading update at the annual general meeting of Ulster Television plc (UTV) today.
He explained that UTV Radio are performing well, and their new stations in Belfast and Edinburgh are on target to achieve profitability in year three. The full report follows..
?Your company?s success in both outperforming the market and in creating new profit streams has been amply demonstrated over the past few years and is again evident in the Report and Accounts which are laid before you today. In a landmark year, and despite difficult trading conditions, earnings per share increased by 18% while foundations for future growth were laid.
?These foundations are already being built upon in 2006, with like-for-like revenue growth in our radio stations in Great Britain up by 13% in the first quarter compared to an 8% decline in the market as a whole. Continuing outperformance is expected in the second quarter with the soccer World Cup delivering a further stimulus to our national radio station, talkSport, and helping to drive an expected 15% like-for-like improvement in our GB radio advertising revenue compared to an anticipated 2% decline in the market in the six months to 30 June 2006.
?Substantial outperformance is also being achieved in our Irish radio division where like-for-like advertising revenue is forecast to grow by 15% in the first half and where particularly favourable economic conditions in the Republic of Ireland should maintain the momentum of growth into the second six months of the year.
?Our new radio stations in Belfast and Edinburgh have got off to a good start and are on target to achieve profitability in year three as planned, although in the current year budgeted losses of just under ?2M will impact upon profit growth. Nevertheless, the strong performance of our other radio assets should enable us to readily absorb these losses while significantly improving the contribution to the bottom line.
?The contribution from television to group profitability continues to be affected by adverse trading conditions in the television advertising market. The expected stimulus to the market of the football World Cup in June has not materialised and we are now forecasting our television advertising revenue to be down by 6% in the first half of 2006. While this would significantly outperform ITV1 and take our share of network revenue to a record high of 2.78%, nevertheless the anticipated reduction in revenue, coupled with increased network programme costs in respect of the World Cup, will put margins under pressure.
?An anticipated revenue increase of 16% in our internet division in the first six months will be driven by broadband and telephony growth. Coupled with higher margins, this should deliver improved profitability for the half year.
?Overall, then, the year to date is again characterised by outperformance. This outperformance, particularly in radio, should mitigate against the generally difficult trading conditions in advertising and help to sustain further progress for your company in the current year.?