TIDMUTV
RNS Number : 8045L
UTV Media PLC
14 January 2016
14 January 2016
UTV Media plc Transaction and Trading Update
The Board of UTV Media plc ("UTV") today provides the following
update in respect of the proposed sale of UTV Limited and UTV
Ireland Limited ("UTV Television") to ITV Broadcasting Ltd ("ITV")
(the "Sale"), the strategy of UTV and its subsidiary undertakings
following completion of sale of UTV Television (the "Continuing
Group") and current trading.
Highlights
Transaction
- Sale of UTV Television anticipated to result in net cash proceeds of GBP98 million
- Liability to fund the UTV Pension Scheme will cease from completion.
- Return GBP55 million (c. 57p per share(1) ) of cash to shareholders following completion.
- Good progress in respect of regulatory clearances.
- Completion expected by end March 2016.
- Post-disposal, UTV will be a focussed radio group with highly
attractive, market-leading assets.
Strategy and trading
- Three new national radio stations to be launched on the D2 multiplex in Q1 2016.
- Strategic review of the Company's GB local radio stations now
concluded with youth station, Juice FM, sold for GBP10 million.
- New annualised cost savings identified of GBP3.0 million for
the full year 2017, and GBP1.9 million in 2016.
- Plan in place to deliver double digit profit growth over the
medium term with upside potential from D2 investment.
- 2015 trading remained in-line with Board's expectations.
Sale of the Television Business
The Sale was conditional upon the approval of UTV's shareholders
(which was obtained on 1 December 2015) and regulatory clearances
from the Irish Competition and Consumer Protection Commission
("CCPC"), the Broadcasting Authority of Ireland ("BAI") and the
Minister for Communications, Energy and Natural Resources in
Ireland.
The BAI approved the Sale at their meeting on 17 December 2015
and the CCPC provided clearance on 12 January 2016. Clearance from
the CCPC paves the way for the Minister of Communication, Energy
and Natural Resources to consider the proposed Sale.
Subject to the above clearance, completion of the Sale of UTV
Television is expected to take place by the end of March 2016,
although completion could take place as early as the end of
February 2016 depending on the rate of progress with this final
clearance.
Return of cash to shareholders and dividend policy
The Group is expected to receive net cash proceeds, after
transaction costs, of approximately GBP98 million from the Sale,
subject to a working capital adjustment. The Board intends to repay
existing bank facilities in full and has put in place new bank
facilities of GBP30 million for a 4-year term beginning on
completion of the Sale. Taking account of the expected net proceeds
of the Sale and the new bank facility referred to above, together
with the operating cash flow of the Continuing Group, including
associated working capital and capital expenditure requirements,
the Board proposes to return approximately GBP55 million (c. 57p
per share(1) ) of cash to shareholders as soon as possible after
completion of the Sale.
The Board has consulted with a large percentage of its
shareholders in deciding the most appropriate method(s) for
returning cash to shareholders. Following this consultation the
Board has decided to effect the return of cash primarily through
the issue of redeemable B shares as soon as possible after
completion of the Sale. The Company currently has GBP50.8 million
of share premium and so will return up to GBP50.8 million through
the redemption of the newly issued B shares. It is intended that
any amount returned above this level will be by way of a special
dividend payment in July 2016. The proposed return of capital will
require shareholder approval and a circular including further
details on the return of capital as well as any associated share
consolidation is anticipated to be posted to shareholders during
the month following completion of the Sale.
The Board believes that this two-stage approach is most
appropriate as it ensures that all shareholders benefit from the
return of cash and it can be executed in an efficient
timeframe.
With profitable trading divisions, reduced central costs, no
defined benefit pension scheme and no significant capital
expenditure requirements the historically strong cash flow
generation of the business is anticipated to continue. The Group
plans to operate a progressive dividend strategy with a targeted
dividend cover ratio in the longer-term of 1.75 to 2.0 times,
subject to available cash flow and to limiting Net Debt / EBITDA to
less than 2.0 times.
Key strategic objectives
The Continuing Group will be a focussed radio group with highly
attractive, market-leading assets, a robust balance sheet and
strong cashflows. The Group plans to deliver double digit profit
growth over the medium term, with further upside potential from its
D2 investment. This plan is based on a number of key strategic
objectives which are summarised below:
- To successfully launch three new national radio stations,
talkRADIO, talkSPORT2 and Virgin Radio on the second national radio
multiplex D2. These stations are on track to be launched by the end
of Q1 2016. talkRADIO will be an entertaining talk-led service with
a focus on current affairs and entertainment, talkSPORT2 will be a
complementary sports service focussed on live action and a broad
range of sports, and Virgin Radio will be a music station operating
under a 12-year brand licence agreement with Virgin Group. The
Continuing Group expects to invest GBP4.3 million in D2 (including
capex of GBP0.7 million) in 2016, moving to a small loss in 2017
and to grow profitably beyond this.
- To consolidate talkSPORT's position in the UK as the premier
sports radio station, while leveraging its strong brand identity in
the market to promote its new sister stations on D2.
- To further develop talkSPORT International by expanding its
geographical footprint, by broadening its broadcaster base and by
creating attractive packages for sponsors and advertisers, as the
appeal of the Premier League increases globally.
- To maximise the profitability of the Group's GB local radio
stations following the successful disposal of its youth station in
Liverpool, Juice FM, to Global Radio for GBP10 million.
- To leverage UTV Radio Ireland's position as the leading local
commercial radio operator in key urban areas throughout Ireland by
further focus on broadcast and online content. Strong audience
delivery will be at the heart of UTV Radio Ireland's ability to
optimise its revenue and profit performance in the fast growing
Irish economy.
- To implement identified cost savings of GBP1.9 million in 2016
and a further GBP1.1 million in 2017.
Trading for the year ended 31 December 2015 has remained in-line
with the Board's expectations.
The Chairman of UTV, Richard Huntingford, comments:
"The above strategic objectives provide a strong growth platform
for the Continuing Group. The modest level of financial gearing and
strong cash flow generation of the business will provide
shareholders with an attractive combination of dividend and capital
growth over the coming years."
(1) Based on current total voting rights outstanding of
95,849,528 shares, comprising shares outstanding of 95,902,528 less
53,000 shares held by the UTV Employee Benefit Trust.
Enquiries:
Orla McKibbin, Director of Communications +44 (0) 28 9026
2188
James Devas, Maitland +44 (0) 20 7379 5151
This information is provided by RNS
The company news service from the London Stock Exchange
END
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