Earnings Transcript for ITVPY - Q4 Fiscal Year 2017

Executives: Carolyn McCall - Chief Executive Officer Ian Griffiths - Group Finance Director, Chief Operating Officer and Executive Director Julian Bellamy - Managing Director, ITV Studios

Analysts: William Packer - Exane BNP Paribas Laurie Davison - Deutsche Bank Steve Liechti - Investec Julien Roch - Barclays Capital Patrick Wellington - Morgan Stanley Richard Eary - UBS Steve Malcolm - Arete Research

Carolyn McCall: Good morning, everyone. Thank you for joining us on this very cold morning for ITV's 2017 full year results. It's very good to be standing here as ITV's Chief Executive. I am joined by Ian Griffiths of course and also member of management board. In a moment, as this is customary, I am told as an ITV results presentation I would play you a show reel. This shows some of the fantastic programs ITV broadcast in 2017 which drove such a strong viewing performance on the screen and online. It also includes some of what's coming up on ITV in 2018 and the high quality productions which ITV Studious creates, owns and distributes. Great content and driving value from that content is that very hard to what we do, quite simply all platforms need brilliant programs to attract and retain audiences. In terms of format of this morning after the show reel, I'll give you some of my initial thoughts and observations. It is still early days of course, but I wanted to give you an idea of what I've been up to in my first seven weeks and some thoughts as to I think ITV is really well positioned for the future. We are currently as I think you will know undertaking a strategic refresh to help us highlight the opportunities of ITV and also the gaps we will need to address in light of changing media landscape. I will share with you some of the key questions we are asking ourselves as part of that process. Ian will then take you through the operational and financial performance for 2017 and I will then come back to give you some early insights into what lies ahead for 2018. We will then have time for your questions. Although I am sure you will understand that we want to finish the refresh before we answer your key statistic questions. So let's play the show reel. If you are watching on the webcast instantly, unfortunately you wouldn't be able to see this bit. [Advertisement] So some fantastic content to look forward to there, it has clearly been interim 2017 a challenging year for business generally with continuing economic and political uncertainty and for ITV, this has obviously impacted TV advertising spend. But despite the challenges, ITV's operational performance has actually been strong. Share viewing was up for the second year running a first ever for ITV. There was a significant increase in online viewing up over 30% and with good revenue growth. And the Studios business delivered significant revenue growth both in total and excluding acquisitions. The board is proposing a full-year dividend of 7.8p, up 8% which reflects confidence in the business and the outlook for 2018. This is very much in line with our ordinary dividend policy. So a solid foundation to build on as the media landscape continues to change and evolve rapidly with more content to watch and more ways to watch it. Traditional broadcasters are no longer our only competitors for viewers for advertising and for quality content. The relatively new competitors are also our customers. The strategy refresh we have kicked off will address all of this including the need for effective and deep partnerships with advertisers, platforms and content owners to ensure they are the right partnerships ITV and that we get paid the appropriate value for our content. We will come out of it with a clear strategy and well defined priorities to reestablish and establish what ITV needs to be in three to five years' time and what we need to do to face the challenges and exploit the opportunities ahead. We are undertaking a very thorough and rigorous process and at the half year, we will share those headlines with you and then we will do a deeper dive at Capital Markets Day in September. I have now been as I said ITV for about seven weeks and while I obviously still have a great deal to see and to learn, I have already visited many parts of the business, I met many, many people and they have talented people at ITV. I spent time in our offices in the U.K. of course but also our U.S. headquarters in New York. I've been to our news rooms in Meridian Granada and Yorkshire where I was really struck as to how they have embraced digital technology to deliver not only award winning news but to drive real efficiencies. I've been on the set of the U.K.'s biggest and shows Coronation Street and Emmerdale, it's just incredible to see what goes into producing the high volume quality content six episodes of each every single week. I've also visited some of our production companies including Mammoth, one of our recent acquisitions which has a phenomenal slate of dramas including Many Witch you just saw, Victoria, Poldark, Vanity Fair. The producers of Paul O'Grady for The Love Of Dogs you'd be amazed how popular that program is and Piers Morgan's Life Stories two four he produced this time next year in the real Marigold Hotel and you sourced clips of ITV America who produced scripted reality programs such as Hell's Kitchen, Alone and Forged in Fire and Amsterdam based Talpa our former business and of course producer of The Voice. I've been very much in listening mode as I want to understand what the people who know this business best I think. It's also been a really good way of getting people involved in the structure of refresh and hearing that feedback and their views. Over the coming months, I have plans to visit many of our other locations in the U.K. and internationally. As you'd expect, I've also been meeting people in the industry much more widely including Ofcom some of our major advertisers, our partners, the government and industry bodies. What has struck me in all of these conversations and meetings is the pride and passion ITV people have for what they do and rightly so. And also the critical role ITV plays in the wider media ecology but also importantly in society as a whole. One of the reasons I joined is because of that and also because ITV is I believe a really strong consumer proposition and it makes fantastic content which drives mass audiences and key demographics which are so valuable to advertisers. It has the potential to do more targeted advertising offering advertisers the benefits of both and that is a pretty unique position to be in and I can say that as a former advertiser. Live TV remains the preferred way of watching content even for younger audiences and that really surprised me. It gives immediate scale, reach and fame for advertisers that just cannot be gained anywhere else. It also provides a safe trusted and transparent environment in which to advertise and generates the highest return on investment of any media. Recent research found that for every pound spent, TV generates over £4 of profit compared to just over £2 for online video and less than £1 for online display. We've got copies of this research for you to take away if you're interested. And this is clearly something we are talking to our advertisers and media agencies about. So while online advertising continues to grow, advertisers are beginning to challenge and actually quite vocally what some online advertising actually delivers and we are now starting to see more questions being asked about kind of unacceptable content and contextual advertising, measurability and actually indeed the trust. The ITV Hub delivers our high quality trusted and measured environment for advertisers. It allows us to build direct to consumer relationships around our great content and our program brands something we are just at the beginning of but already we have 75% of all 16 to 34 year olds registered. And through voting in competitions within our programs, we had over 100 million interactions last year just think of all that data. Another thing that has become increasingly cares me during my first weeks at ITV is that creating and owning quality content is a real advantage and how the integrated producer broadcast model benefits the whole of ITV. We have a great opportunity to make content famous on our channels in the U.K. before selling it around the world not only does our success on screen and online depend on having great content but the global demand for high quality programming remains strong as broadcasters and platform owners look for brand defining content. Netflix and Amazon have become important buyers of our content. And it isn't all about drama which is what you read about all the time, they are also looking at unscripted content in the U.S. ITV Studios is now an international production business off scale revenues of over £1.5 billion, 54% of that was generated outside the U.K. it is active in 11 countries with a library of over $45,000. We have strong relationships through our global production and distribution network and we sell content to over 200 channels globally. So I thought I would now share with you some of the key questions we will be asking ourselves as part of the strategy refresh. We have three big themes in this refresh, content production, advertising and direct to consumer. For content, we are asking ourselves how we best positioned ITV studios to meet the changing demand for content, how we prioritize ITV Studios in the key genres and geographies. Those are just a couple of the questions. For advertising, we need to determine how to remain the strongest marketing platform in the U.K. and what opportunities we can capture in advanced advertising solutions. For direct to consumer, some of the questions we're looking at how our ITV's online proposition should be, how we create a winning direct to consumer proposition and what is ITV's platform distribution strategy. We are also exploring questions around data of course, data strategy is absolutely critical. Of course we need to ensure we have the right integrated strategy and operating model, so we are also looking at skills and capabilities. There's a lot to get our teeth into here but everyone I have met at ITV is really energized about this refresh and I look forward to sharing that with you when we have those outcomes. I'm now going to hand over to Ian.

Ian Griffiths: Thanks Carolyn. Good morning, everyone. 2017 was always going to be an interesting year and it certainly turned out that way. Continued economic uncertainty led to preference advertising earnings, but we've seen strong revenue growth in studios and online which led to non-advertising revenues being up 11% and external revenues are up 2%. And that growth coupled with tight control of costs has mitigated around half the impact of a 5% decline in advertising. However profits are down 5% to 842 million which translates to 16p of earnings. Against this uncertain backdrop as Carolyn said, the operating performance of the business has been strong. We did have a good share of unit growth, saw 39% growth in online viewing and in studios, we have strong organic growth. With more debt due to paying a special dividend and tight cash management, so profit to cash conversion of 91%. On the board's confidence in the core business, it's cash flows and our strong start to the year both on and off screen underpin an 8% increase in the full year dividend to 7.8p. This very much in line with our dividend policy of paying roughly half of our earnings over the medium term. And given this year's ordinary dividend, five years a special dividend, leverage of one times and the strategy refresh underway, the border decided not to pay a special dividend this year. Operationally, broadcast for a strong year, growing share of viewing for the second year in a row, delivering a stocky index over 100%, increasing share of advertising to 47.6%, and continued to grow online and pay both in terms of viewing and revenues. However advertising most down 4.8% or £81 million pound and that's hard to mitigate. We had the benefit of £25 million pounds less spend on screen as it was a non-sport year and we took action on the cost base. However, profits fell to just under £600 million and margins down 1% to 29%. Within broadcast, online had a strong year with revenues up 15% and online viewing was up nearly 40% measured by requests all time spent on the hub. In fact all our view in KPI showed real progress. Share of viewing across the family was up 0.4 percentage points to 21.7% with growth on the main channel and ITV2 and ITV4. This reflects the quality of the shuttle across all our channels. Commercially it's important we continue to deliver scale audience and the demographics demanded by advertisers. If we do that we'll keep our compelling advertising proposition. We delivered 99% of commercial audiences over 5 million, which is around 780 shows, roughly the same numbers last year, but without the benefit of a big sports tournament. This shows the importance of the shows being strong and continued investment in quality drama and entertainment. ITV2 and ITV4 performed well in delivering their target demographic, viewing from 16-34s on ITV2 was up 17% driven by the Love Island and Seth Macfarlane shows, movie's in sports delivered a 12% increase in male audience is in ITV4. And as already mentioned, Hope view increased strongly held by investment in new functionality such as improved personalization, recommendations and notifications. The hope starting to become a scale proposition with 21 million registered views and we're starting to understand them better. For example we now know that over half are online viewing is from 16.34s. They love our content and once who watch it whenever and wherever. And the hope delivers real incremental profit as a cost of the content are largely paid for through linear broadcast. In 2017, we also invested generous business in the U.K. with the Hub+, Cirkus in the Nordics in Germany, and Britain and BritBox in the U.S. which is now launched in Canada. BritBox is ahead of plan and it's already got over 250,000 subscribers. At the start of the year, the economic uncertainty when forecasting now was difficult. We plan for challenging first half and expecting things to improve as the year progressed. It's a very much the way the year evolved and we're encouraged by Q4 returning to growth. And this growth looks set to continue into this year. The category spend is clearly mixed, tech and telco spend was strong on the back of new product launches, card revenues were positive all year, again driven by new models and the supermarkets also spent more of that weakness in the high street and the retail category as a whole was down 3%. FMCG advertising was weak to start but improved as the year progressed as we saw money allocated back to T.V. by some of the bigger advertisers. Across Q4, we saw supermarkets, FMCG finance cars, entertainment and telco advertising all up year on year. We've maintained our investment in original content through the advertising cycle and with a healthy mix of drama entertainment in the soaps and daytime, this quality content continues to underpin the strength of our advertising proposition. Moving to Studios, which had a strong year delivering nearly 1.6 billion of revenue, 13% growth, 7% on an organic basis. There's been growth across all areas of the business, the U.K. benefiting from new dramas and producing the voice, the U.S. growing by 28% excluding currency with the return of Hell's Kitchen, Good Witch and a drama pilot Snowpiercer, the international business especially France and Australia had a strong year, driven by the production of UK and Talpa formats and the growth in GE came from drama offsetting or decline in DVD sales. Overall profits were as we expected flat year on year. The reason for this was the 2016 comparatives had £37million pound benefit from the voice China format sale. This is a one off so being flat year-on-year is a good result and shows a continuing growth from the underlying business. Margins are down a couple of percent to 15% primarily, primarily because there's no repeat of the high margin format deal and as I'll show, we've got more new content especially drama which is coming through at a slightly lower margin. We told before about the lumpiness of our Studios business and how shows move around. This means is always churn. And last year to standstill, we had to replace over £300 million of revenue. In fact, we delivered almost £430 million pounds of revenue, £135 million pounds from returning formats, entertainment and drama and £293 million pounds of new shows that all had the potential to return which they won't but that's the nature of this business. A healthy Studios business needs to keep investing in shows with the potential to return and travel. We recognize that these fluctuations can make it hard to assess the underlying business. Looking back over the last few years provides a better understanding of our performance. On this basis, Studios has delivered 5% compound annual revenue growth from the core business. That's the business we had before 2012 excluding all acquisitions and currency. Similarly, it's importantly we produce a decent return on the capital we invest. And the return on investment the 2017 across the portfolio of acquired companies is 13% and we've averaged 12% return over the last three years. On either basis, this return is well ahead of our cost of capital. Studio is a much stronger business delivering good organic growth and a positive return on capital. It's also a portfolio much more focused on drama and entertainment. And as this slide shows, we produced over 300 hours a scripted concept last year. The U.K. grow nicely with series such as Victoria, Unforgotten, Cold Feet and we're gaining momentum in the U.S. through shows like Snowpiercer and Good Witch. The recent acquisitions of world Tetra and Cattleya, our drama team is focused on series with international appeal. In 2017, we invested around £240 million pounds in producing scripted content. It's around £80 million pounds more than last year. And this growth in returning series reflects the quality of the pipeline. The number of hours of returning dramas nearly trebled over three years and we now own nineteen series which is sold to over 100 countries. Entertainment is a different model, as quite often successful formats are remade in local territories. We've over 3.000 hours of entertainment we make globally including the voice on the celebrity Hell's Kitchen and The Chase. And the number of hours produced is growing by over 80% in the last couple of years. We sold over 60 formats international last year and now have 17 formats being made in more than three countries. We've chosen to invest in rights in concert with the potential to return and travel. To that end we made good progress in building a stronger more international studios business. Putting all the above together, the Nordic line have the biggest impact on profit down £81 pounds. Lower schedule costs and £29 million of overhead savings in part of set this one is Studios the good growth from the underlying business is held back by the difficult comps. We did continue to invest in the business on the Hub, our Box Office trial and new creative studios especially in the U.S. and the net of all this is our EBITDA of £842 million down £43 million or 5%. Our associates were a loss of £4 million which includes our share of BritBox which although I had a plan remains lost making. And after interest which came in a £33 million of tax and effective rate of 19%, EPS was 16p down 6%. On a statutory basis, EPS is down 9% or 10.2p. Exceptional items not in our adjusted numbers are £154 million. The bulk of this relates to acquisition earn outs and this has led to a charge of just under £100 million mainly relating to Talpa. There's £30 million of property related costs which are fees and asset write-offs and move costs and this £27 million relating to a provision on the Voice of China. Our Chinese partners have defaulted on payments relating to the 2016 format deal. And even though we're pursuing them for the impaired amounts and with credit insurance in place, the accounting standards as such we've had to provide what they owes and we're unable to recognize any offsetting recovery. We believe we've a robust position and ultimately they'll be no material impact on ITV. Therefore which reason this is exceptional because in our judgment this is going to be a timing difference between this accounting provision and future cash being received. Moving on, the balance sheet remains robust supporting our investment grade credit and we continue to have good access liquidity. Our leverage is increased to one times to net debt to EBITDA primarily as a result of last year's special. Operating cash flow is over 90% which is a real positive not least when we invested so much in scripted projects, which had around a £55 million negative impact on our working capital. Then our pension deficit is £83 million. This is £245 million lower than last year due to £80 million of company contributions, good asset returns and an updated member experience data. We've agreed the key aspects of the China evaluation for the main section of the pension scheme and our cash contributions remained unchanged. We expect a similar result on the other sections. And finally some of the planning assumptions for 2108. Our schedule cost will increase around 1060 million because of the Football World Cup and we expect around 580 million of this to be in the first half. We're also likely to see an increase in schedule cost for 2019. This will be driven by sport having 10 England games as part of the new schedule of matches plus with the Rugby World Cup. And we also plan to invest more in drama, ideally drama we create own and control the rights to, benefiting from being an integrated producer broadcaster. This will impact broadcast in 2019 but deliver future returns to studios. These two investments mean the 2019 schedule costs will be around £1.1 billion. Coming back to 2018, there are some investments we're already committed to. These will impact profit by around £15 million to £20 million. Half of this relates to cost of occupying New London properties plus those initial investments in addressable advertising, our self-serve advertising trial and improve functionality for the Hub such as series so far and box sets which will get back full in the closure of the Encore channel on Sky later this year. The Encore closure will impact our pay revenues by around £20 million though this will be offset by the continued double-digit growth in online advertising. Tax rate is expected to be 90% and this has been reassessed in light of the U.S. Tax Reforms and at this level, the rate should be sustainable for the next couple of years. As far as CapEx is concerned, the £60 million of business as usual CapEx and in addition there will be around £40 million of investment in our London property project, including fit of new offices and design and initial demolition costs all subject to the final planning approvals. There also be around £30 million of moving relocation costs as we vacate the tower. These will go through the P&L and be treated as exceptional. This project will run for several years probably to 2023 and we'll update as the project progresses and we decide on exactly how we will procure the various space of the building. So in summary, there's no doubt 2017 was a tough year for advertising but all of the part of the business to perform well both financially and operationally and we have really strong foundation as we plan for the future. Thank you and back to Carolyn.

Carolyn McCall: So, on the 2018, so as Ian as indicated, we have had a great start to the year, viewing has been really strong with the shuttle including the return of Dancing on Ice, The Voice, Vera, Endeavor Trauma, Six Nations record viewing for our key daytime shows and the sixth episode of Coronation Street . Our family share of viewing so far is up 7% and total viewing volumes are actually up 3% and online viewing up 22%. We are incredibly encouraged by TV studios great pipeline of new and returning shows including unforgotten Vanity Fair, Survival of the Fittest, I'm a Celebrity, Poldark those will for ITV by the way, Poldark, Bodyguard and Shetland for BBC, Living the Dream for Sky and internationally Love Island, The Voice, The Chase, Big Star's Little Star, and Good Witch. We have already secured over 60% of our expected revenue for 2018, about £100 million more than this time last year. The economic outlook remains uncertain. We expect ITV Family NAR to be positive in the first half with Q1 up 1%, a continuation of the improvement we saw towards the end of 2017. The World Cup obviously starts in June, very exciting, ITV has a great pick of games throughout the competition with 31 matches including England's big first round match against Belgium. It drives a really valuable audience driving mess and the hard to reach male demographics for advertisers as well as strong simulcast viewing online particularly for those for club games where people are at their desks. We have already sold sponsorship to three brands and we are currently selling the advertising slots demand for which is really strong. Love Island returns to ITV2 this year for an extended series, it's a great example of ITV operating as an integrated producer broadcaster, but also in a very 360 way and more of that when we do the strategy refresh. It was a big success last year as you know and from that we have already sold the format to six countries as you saw in the show reel. Vanity Fair is an ambitious seven part drama to be broadcast on ITV in 2018. It's being produced by Mammoth which ITV acquired in 2015. It will be a glorious production with filming already taking place in Budapest in London with fantastic on and off screen talent. We've maintained the rights to the initial broadcast and the online windows in the U.K. and have sold the international rights to Amazon. So there is a lot to look forward to in 2018. We have kicked off our strategy refresh and we report to you at the interims, we will be able to give you an update on some of the key headlines from that. And of course we remain extremely focused on the business. As I said, lots to do and the energy and the commitment of ITV people both creatively and commercially will help us to deliver what is a very full agenda. We have a solid foundation to build on as you have seen with a strong balance sheet, healthy cash flows, this gives ITV the flexibility to make the right strategic choices to the long term in a competitive environment while we still deliver sustainable returns to shareholders. Thank you for your time this morning and we're now very happy to take your questions.

Q - William Packer: Hi, it's William Packer from Exane BNP Paribas. Three questions for me please. Firstly, could you give us your view on the retransmission fee debate and where you see things your predecessor was pretty vocal that the Pay TV players should pay material revenues to ITV. Do you share that view or are you looking for a more cooperative relationship with the Pay TV companies? Secondly, thanks for sharing the data on the returns of your Studios assets. Could you disentangle the returns on the U.S. assets, there's a perception within the TV production industry that perhaps they've relatively struggle, is that fair, any thoughts there would be helpful? And then finally, two positive years of viewing, very strong relative to history, can you sustain that for a third year? Thanks.

Carolyn McCall: Okay. On what you described on retransmission. I mean we believe and continue to believe that we have to be paid fairly for our content, so that hasn't changed. I think when you look at partnerships, we are very, very, I think it's very important that we take a broad view of those partnerships and we decide which partnerships are very important to ITV going forward and those then become partnerships and commercial agreements which are quite broad in their nature. So I would say that our position on being paid fairly for our content has not changed at all, but our approach is a much broader approach which is ITV dealing with partners rather than just one element of ITV dealing with a partner. So it's constructive. On your question, I mean now hand over to Ian on Studios, but I would just observe on your question that there is quite lost noise about the U.S. business it feels. But it's strange really because having been to New York and had a really deep dive into ITV America, early days I know, but I would say it's very clear that what we're doing in America. ITV America, New York mainly and L.A. but mainly New York is a production business that is just producing high volume unscripted content for multiple channels in America and it's doing well and it's profitable. The scripted business which is in L.A. is and I get and I only spent 0.5% leading that but it's a very - it's totally different business with a totally different model. And actually ITV has done that in a very stealthy kind of low risk way actually. And so I've been quite surprised at how much kind of how much attention that gets for a relatively small part of the overall Studios portfolio. And of course we are looking in the strategy refresh is to here we are said to you about geography and about - and both things are - those things are very important I think questions to address when it comes to scripted in America.

Ian Griffiths: I'm not going to pick the numbers but just as a bit of context the U.S. market has undoubtedly changed in recent times, primarily because the traditional buyers of content, the cable networks are going through a really tough time. However, when we look at our Studios business today in the U.S. they're no longer our sole customers. We've got a much broader mix of customers in particular some of the S Ford and Fang group of companies, who are looking for different types of concept, one of the things on the slide, Queer Eye for the Straight Guy is a reboot of an old format being sold to one of those companies and we find that quite interesting, because they're now looking, we've talked before about the new demand for drama demand for drama from Netflix and Amazon. Actually in the U.S. they looking for a broader range than just drama, they are looking for all types of different genre and we're well placed to serve that. The thing about return on investment especially Studios company is how you measure it and whatever point in time you measure it, you can get all sorts of strange answers. So I'll give an example of someone outside about this, we've got a business called High Noon, I'm just picking one purely random. Within eighteen months, they lost their biggest show which happened to be Cake Boss. You do return on investment at that point in time where that business is, you could get a very strange number and you could actually make some strange decisions on the back of that. If we do return on investment on High Noon today, because it's got a great show called Fixer Upper, there some of our investment looks fantastic. So you have to look at these things in the round as portfolio in the quality to pipeline. You've seen the accounts is no write-offs in the accounts is no concerns about the quality of the business in the accounts. And CJ's business has delivered 7% growth organically, 13% in total, the health of the business is there in the numbers and I think it's a much stronger business than it was.

Carolyn McCall: On viewing, I am going to ask Kevin to answer that question because here always take kind of you're saying, but I think actually you know we've done a really, really well and I think that's really about the quality of our content and also about developing these kind of the way we deal with consumers and actually the more we can get consumer insights, the closer we can get to our consumers the more likely it will be that we can sustain that. And I think our aim obviously is to sustain that.

William Packer: Just to come back in the retransmitted question, in consensus numbers for 2018, 2019 and beyond, is there anything for retransmission fees and if so should they come out?

Ian Griffiths: There's a real mix of what people have done, some people put numbers in as an estimate and other people haven't. So there's a mix in there.

William Packer: Okay. Thanks.

Carolyn McCall: Sorry about that. I was just writing down that point about consensus.

Unidentified Analyst: Again three questions. First of all just looking at your decision not to pay a special dividend on things. Maybe if you look at this business net debt to EBITDA is one times, you are very cash flow generative, and obviously you said with the strategic refresh that's why you're holding things back. Here sort of I mean that sounds as though there is the potential sort of for quite a significant outlays, so from your very initial views of the moment, I mean would you think sort of the use of the cash it was saved by a special in with more sort of internal organic investments or you open to the potential for quite significant acquisitions moving forward? The second thing is just in terms of the video on demand revenues. So if you - sort of you talked about the strong growth is coming to terms of the viewers out there, but in terms of the actual revenue growth is coming through is much lower. So that the explanation of past has been you obviously don't want to sort of put too many outputs on there for the user experience. Just wondering what point you start to close the gap between the user growth and the actual revenue growth within that business? And then third of all just in terms of I guess is more sort of how you sort of report numbers moving forward in terms of advertising. You'd know is down five but if includes sponsorship in VOD growth you're actually down three for 2018. So there is a case for you having a more integrated that number that's how sort of the business is moving forwards and sort of in terms that delta between the two, 18 you've got extra sponsorship revenues presumably from the World Cup, you've got continued strong growth in the VOD. In 2018 should we sort of think about it still being a 2% point difference or could there be a wider gap between now and the total number?

Carolyn McCall: That would be guiding you, but anyway let's just take it one at a time. On the special, so for me, we laugh about this because when I found out that you'd had that there'd been five consecutive special dividends, I kind of said what's special about those then because you know what I mean, my background is you do special dividend when it's unusual, it's something different, right. Now, that's not being flippant, I think philosophically, I would just say my track record in track record is not set on cash right, so noise the board, the board is not going to want sits on cash. So the most important thing here is if we have cash to give back, we will give it back in one way or another, we will give it back to shareholders. It is very, very - that's a very important kind of thing for us. However, what we're saying here is, I don't want to prejudge the strategy refresh. I don't say we're going to use what we would have had for a special dividend to do this that and the other because actually that would be totally prejudging we're trying to do rigorously and thoroughly and comprehensively. And so I think when we come back to you at the half year, we'll be able to be in a much better position to talk to you about that. I think the most important thing is that we disciplined about the use of cash. We are not - it is entirely about the returns we will get to shareholders. That's what we will do. But that also means we have to have a healthy and thick business for the next five years. We have to be competitive and that's what we're assessing at the moment which is how can we be competitive over the next five years for content, for advertising and retaining viewers in all our platforms and how do we monetized them, which I think comes really down to your question about volatile revenue and how we drive that with the user experience kind of interrelated with that because we've just got to make sure that we don't do something too quickly that has unintended consequences on something else. So that's partly with strategy refresh is doing. And I'll bring in at the moment. But it is interesting your point about know and don't know, because of course we don't I mean of course we care about any shifts, but effectively it will we really care about is the total part and that we're getting the revenue from our advertisers and also we're getting it from other means. So I think you're right to say that over time, the integrated number will be a very - is a very meaningful number.

Ian Griffiths: Yeah, I agree. As we look at the strategy and new priorities reporting needs to align with that and the same applies to capital policy. And once we're clear on that we can come back with a view on our capital policy which will reflect what Carolyn has just said around will be very disciplined as we have been will protect their investment grade, but the capital policy needs to enable us to execute strategy and those things will need to be aligned as reporting.

Unidentified Analyst: Just a follow-up question. I mean you mentioned terms of advertisers some advertisers coming back in the second half. So is that sort of just initial sort of an initial steps sort of initial steps or you starting to see now an accelerations of advertisers saying hold on a minute in terms of online advertising, there are doubts let's shift it back into TV?

Carolyn McCall: I think it's a combination of things, I don't think it's a very clear club binary thing. I think there definitely more questions about online advertising, not simply the transparency and the trust and the content, there's a whole issue around content where you advertising is seen and advertisers did pull off Google for instance. So that's one issue. There's a whole issue around measurability and what you're actually paying for and how much of it is driven by bots and how much is actually worth paying for. So there is a big, big issue around transparency and measurability that benefits ITV. And therefore obviously ITV within that benefits TV because we are so highly kind of measured. I mean you have to watch an entire ad, you have to watch at the right speed, if you're if you're fast forwarding you're not counted into the numbers, the ASA is highly regulates the type of advertising we can carry. So we have a very, very trusted environment and a very measurable environment. That is definitely permeating advertising. There's no question about that. But it all takes a bit of time. I think that there is that there's the factor which is and this will beneficial some way because we are also online we're also doing VOD. You don't get fired as a media buyer for buying digital, because if you're not going to show people going well you not really keeping up, right. And I think that's will start swinging back because that that isn't the way to really plan media right. You want to plan media to be effective and if it's not effective then it doesn't matter what you're doing to be seen to be keeping up with the trend. So I think there are all sorts of factors. There is the other factor that that just hits in 2016 and has lagged is the fact that FMGC had input costs because of the devaluation of the pound and the whole Brexit scenario that they've been dealing with. And you've Unilever and P&G come out and say very openly that they are cutting costs, but actually where they're cutting costs from is agency fees and production budgets rather than on media spend, because I think people know that you have to spend money to advertise when you having a tough time.

Unidentified Analyst: Okay.

Carolyn McCall: There is a question up there. Oh sorry, I beg your pardon, yeah.

Laurie Davison: Hi, it's Laurie Davison from Deutsche. I understand you - first question, I understand you don't want to prejudge the refresh. Just some broad questions though about the sector, why do you think TV advertising is starting to dislocate from relatively strong macro across Europe given what you said about FMCG and the strong place for TV? Second question, when you're looking at best in class model for ITV, which other media groups or even more broadly than TMC to look at as the right model? And then thirdly, on Studios outlook, are we on course for organic growth consistent with that 5% that we saw that we've seen over the past five years? Thanks.

Carolyn McCall: Okay. There's a very big questions the first two. I think Studios one's quite relatively easy to answer. But I think that I don't actually think there has been that much of a dissertation, I don't think the economic environment is that strong. And remember, we're driven - our advertising is a U.K. driven, advertising in the U.K. has been weak, has been the weakest in Europe and the devaluation of the pound is affected lots and lots of companies in here. And uncertainty, political and economic uncertainty is not good for advertising because it does depressed because of consumer uncertainty, it's all linked. So actually I don't think there has been the dislocation you've been talking about in the way you've described actually that's not what we've seen, we've seen actually quite a big economic effect on our advertising spend because of economic uncertainty and consumer lack of confidence actually. It's hard about the other models. I mean bring in here, because I think actually what is quite amazing about ITV is what - it's a really unique model because if you think about it we're the only free-to-air advertiser that that has no safety net, I mean Channel 4 has safety net which is because it's government owned, BBC has the license fee it starts with £3.8 billion from the bank, Sky is a hybrid model of satellite and subscription avatar. So we are the only free-to-air model and I think that gives us quite a lot to think about. Of course we're going to remain free-to-air but we have to then think about how we evolve our own way of looking at us going forward in five years, ten years' time. So what happens in, but I think that's an opportunity, because I think there are opportunities for excellence for instance, there are opportunities with data with communities of viewers. I think it gives us the opportunity going forward in terms of the model.

Ian Griffiths: Then anything I'd add to that is when you look at what's happening in the world around us owning more of your own console and being in control of more of your own console definitely feels like a strategic advantage. When you look at what everybody else is doing around us that seems a really good place to be starting from. On the Studios outlook, we fully expect Studios have another good year of revenue growth. And as Carolyn said in her script, we've got roughly two thirds of our target revenue already secured. Now whether that's going to be 5%, 7% or 3%, we'll see how the year progresses but we are looking like another good year of growth. The reason we don't give a specific guidance on this is things do move around quite significantly. And we mentioned this drama Snowpiercer we've got coming out of the U.S. This is a big project for us. TNT have commissioned it. And we're having conversations with TNT about when it's best to be scheduled and exactly how many episodes we have in the first series. And it could well be that the right thing to do for the show is to be broadcast on TNT in Q1 next year. Now we could rush it all out to have a conversations like let's do it later this year and get the revenue in this year. But to give the show the best chance success and we only recognize the revenue when we deliver to them the right thing to do maybe to wait. And that causes quite a lot of fluctuation in terms of things moving around, in terms of one year to the next. But the fundamentals of Studios business as hopefully you heard today right across the board both in the U.K. the U.S. the rest of the world are in really good shape in part, new shows coming through is good. And the reason we did that bit about looking back over five years you all seen the numbers over those five years or so. We've had years of no growth of 2% and years of seven we did last year and nine the average is around 5%, the market feels like it's grown around 5%, 6% and there's no reason through that cycle we shouldn't be grown at similar level.

Carolyn McCall: Last questions, should we go there and then there's just over here.

Steve Liechti: Thanks. Hi, it's Steve Liechti from Investec. Just on the refresh and given the fact you've given program spend out 2019, does that mean the refresh will have no particular implications on that program spending you are sort of setting now your agenda there all kind of change? That's the first question. And then second question drama, have you ever actually broken out how much drama revenues are of the roughly £1.5 revenues in Studios business on a revenue level. Any thoughts in terms of the split of that going forward I guess for the refresh? And the last one, just a quick here on IFRS 15, can just remind us, is there any effect on that particular Studios business I guess?

Carolyn McCall: On the program spent, I mean I think that you've seen for 2019, it's been driven really by sports and also by drama. So at the moment that's - the reason we put that out there is that we didn't want any surprises. We know about that now. You have to get sports rights, you get years in advance not just kind of months in advance. So I think that's a good thing for you to see as the program spent for that year because that's what we've said. Do you want to take the drama and the revenue right now?

Ian Griffiths: Yeah, it's a good question Steve about breaking down the £1.6 billion or so Studios revenue by genre, we never presented it that way, we tend to do geographically because that's largely how we run the business and within those geographies is a mix of genre. I'll take that when I think about. And then what's the other question?

Carolyn McCall: IFRS.

Ian Griffiths: IFRS, there is no material impact on either broadcast or Studios from IFRS, in fact there is no impact on the Studios business looking back historically and the opening position. There's a bit of revenue cost gross up in broadcast, it's immaterial less than £10 million and has no profit impact.

Carolyn McCall: So we go to back then, if you come down here.

Julien Roch: Good morning. It's Julien Roch, Barclays. I'll do like everybody else not prejudging the refresh, but questions about the refresh. So BritBox, 250,000 subscribers but the losses within associates are only £4 million, so it looks like you've not been aggressive on marketing. As you all say you were roll out internationally, would it be a good idea to be aggressive on marketing to grow the business quickly but in Colossus? That's my first question. The second question is on content, ones we're in a couple of weeks in do you feel that this is the right size and it's about execution or do you feel you still subscale in content? That's my second question. And then the third question is how do you feel about the way advertising you sold in the U.K. which means 100% feel that inventory which is not the case in other countries, which kind of prevents you from doing a lot of media for revenues which has been very successful for even or a lot of targeted advertising, do you feel that is something you should change?

Carolyn McCall: Julian will do BritBox first.

Julian Bellamy: Carolyn is going to smile when I answer this question.

Carolyn McCall: Here we go.

Julian Bellamy: Because it's about marketing spend which we have, actually genius, it's a really good point and Carolyn won't small. Because when I went over and met the BritBox team shortly after launch and they were actually quite proud that they were performing ahead of plan in terms of subscribers and hadn't spent much on marketing. So I actually said, what would have been if you had actually spent more money. And to address that we've actually put some of our marketing team over there to work with the BBC team. So marketing will be an important part of rolling out BritBox as we look to expand that as a direct to consumer proposition and not least of which is we look to see what the international rollout is having just launched in Canada. This is not the only thing…

Carolyn McCall: So the joke there is that I'm obviously a believer in marketing. I've had very great success in marketing brands effectively and driving traffic and profitability and we have a constant discussion about.

Julian Bellamy: I count my final stretch to happen occasionally.

Carolyn McCall: He puts the CFO on.

Ian Griffiths: It's not the only thing in that £4 million, we have as you may have seen during the year also invested in a couple of scripted businesses in the U.S. circle of confusion Bloomhouse TV so they're also in that number.

Carolyn McCall: So on content and obviously Ian can come in here as well and mainly Kevin and Julian. I mean I don't think - I think it's very interesting to talk about subscale because actually I think it's really about the quality of your content and how many viewers you attract or how much money you get for the value of your content. So I think we're doing well on both of those things. And so - and of course you are competing with viewers with big budget productions and I think our way of handling that is to find different ways of co-producing. So we wouldn't on our own necessarily do a very, very big thing, but we would do that in a different kind of model with somebody else. So I think Snowpiercer is a good example of that, World on Fire is a good example of that. There's just a whole there's a range of things that we do that where we fund differently. So I don't think we feel that we're subscale in any way, I think we feel that our content is incredibly strong and that we have to continue to be very strong because content is the thing that drives our viewers and therefore that drives everything that we do.

Julien Roch: The last question on the…

Carolyn McCall: Oh the advertising. Okay. So I think it is your question is largely about CRR, I think isn't it?

Julien Roch: Well CRR and share deal so, yeah

Carolyn McCall: Yes, CRR.

Julien Roch: You need to move CRR.

Carolyn McCall: I'll share deals about CRR. I think actually the less I say about that in this forum the better because I think we have got CRR and I think it can obviously be restrictive, I mean it's for those I don't how many people are familiar with CRR but I mean the fact is you can reduce spend and still get your share and therefore - and you get no penalty as a result of that whereas most media more volume you put in, you will get a price advantage, but the less volume you put in your price probably goes up. So it is different, it's a very different trading model. But I think again one of things we have to look at very closely is all of the advertising proposition rather than just CRR, I think is one important element of what we do, a very important element, but it is something we have to look at in the round. And of course it doesn't just affect ITV, it affects all the TV, so more of that in the future.

Patrick Wellington: Hi, it's a Patrick Wellington, Morgan Stanley.

Carolyn McCall: Hello.

Patrick Wellington: And three questions. First one is going back on the schedule spend, can you break down the 2019 extra £50 million between the accidental football element and the drama and which might be bit more steady. And normally one would expect then 2020 to drop back down again, is that going to be the case? Second think probably linked to this £83 million extra investment drama, 160 to 243, can you show us how that flows through P&L? And then thirdly, and studied use of the word refresh, if I were remodeling it, I would knock it down and put a few extra walls and whatever, if I am refreshing that's a bit more of a paint. So generically are you saying that they broadly got it right and few things needs smartening up or does there indeed a bit of more structural work?

Ian Griffiths: Just to walk you through the program spend, schedule cost, so current year 1025 as we've been quite clear on all the way through this is a nonsupport year. 2018, we got 1055, 1060 as we reflect the Football World Cup. 2019, we have got these 10 England games which is a change of how the international games are being scheduled because it's got this new term called a League of Nations which is meant that all of the qualifying games are concert scene it into set years. So you have a big year in 2019, we will have 10 England games, we will have no qualifying games in 2020, we will have 10 England games back again in 2021. So to your point Patrick, we will see spike in 2019, it'll fall back a bit in 2020 and will increase again in 2021. The drama spend which is we are working through is roughly around an incremental £25 million a part of that £1.1 billion of 2019. So looking at it as of today, the cost in 2020 should fall back to around 1070, 1080. And then on the studio side of things, the £240 million, that's a cost of production and it's linked directly, slightly to Steve's point about breaking our dramas. So we made 300 hours last year of drama and the £240 million is the cost of making those 300 hours and that just goes through the accounts hitting the P&L as and when we recognize the revenue for delivering those shows. So it's all in the numbers in the round.

Carolyn McCall: So on the strategy refresh, I think if we were saying we're doing a comprehensive strategy review, it would mean that we would be looking at every single thing and we're not doing that. Because as we as you've just heard from presentation today, diversifying into Studios is the right strategic decision, it is doing well, it is diversifying us, it is doing all the things it needs to do for ITV. So we're not operating that and saying should we revalidate, should we relook at that or we will be doing within that is saying okay what's the next five years look like for Studios, what do we need to do for the next five years to do this even more effectively than we have been doing. So that's why we use the word refresh because it is really about looking at the gaps because things have changed rather a lot in the last year. So the strategy laid out - the turnaround strategy was a five year plan and it was very, very effective. We're now in a different world and we are going to have to compete harder for viewers and advertisers and it's really about identifying how we do that and how we compete in the next five years and what we look like in five years' time in order to be as fit and healthy as we are today.

Richard Eary: Hi. It's Richard Eary from UBS. Just three questions. First one is the follow-up on Patrick's on the change in content spent. Ian you told about £25 million. Can you walk us through, is essentially an upgrade in terms of quality or is it increased hours and how do we think about that terms of the price versus volume? The second question just on the studios you talked about revenues in touch on profitability. In 2017, there was obviously some benefits of some cost savings coming through, there were some benefits or some FX gains as well, how do we think about 2018 given that you've obviously got investments coming in and you've obviously got some FX headwinds and obviously you've got probably more shows that are coming through that maybe lower margin initially? And then the last question just on understand in terms of the same about committed to the ordering dividend policy, I know that you made an opening remark Carolyn about special is not really special if it's five years. How do we think about that ordinary dividend policy as we go forward given sort less than 50% today and do we think we will start up to 80 or what do we got?

Carolyn McCall: All yours.

Ian Griffiths: Thanks. The incremental spend in the schedule for drama in 2019 which is stuff we have to start working on now. As we said quite carefully in the script, ideally we want that to come from shows that we own and have creation and the rights to and distribute globally. Because of the heart of that is giving ourselves the best chance of creating the next Broadchurch or best downturn a breakout hits. And actually we're in a position to do that now because of the strength of our teams and acquisitions lying world and Mammoth of really enhanced the quality of our drama business. The internal labels we had before are in really good shape as well, so you add those together, we've got the strongest pipeline of ideas we've ever had. So it's not about cost of revenues, actually just about using our schedule to see if we can turbo charge our studios business and as Carolyn said acting more as an integrated producer broadcaster and that £25 million is a rough net impact on the program spend in terms of shows going in, in terms of drama out of the shows have to come out because clearly we got full schedule so you do get saving that. So that's what's going on that. In terms of Studios' profitability, I agree you Richard, there are moving costs around Studios in terms of potentially currency, potentially more scripted coming through which initially starts a low margin. You really get your turns on script when you're in series three and series four and you're selling to the big S4 players or into multiple tariffs, that's when you make your profits. But I am confident despite those headwinds that will grow our Studios profit next year. And a good way to think of Studios to some extent put in currency aside a little bit is that growth we talked about earlier whether it around 5% if you think actually come through a round of 15% of margin that's a good proxy through the cycle for us year's business should look like. And then on the dividend policy, I just come back to what we said earlier around capital and how we use it. It all needs to join up, we need to have the use of capital aligned to the strategy and it all just needs to be a consistent message.

Carolyn McCall: And I think at the Capital Markets Day, will be a great opportunity to look at capital policy because we will be the structure refresh will be concluded, will be into executing some of the strategy and we will have to I think take a broader view of that then.

Richard Eary: Can I ask just a follow-up on that in terms of presume you have outlined sort of that parameters as well in terms of actually how you think about business going forward and whether you think?

Ian Griffiths: Again that would has to consistent and as we've said, our credit rating is important to us, running a tight balance sheet important to us, having a balance sheet to support strategy is very, very important as well. So that all just needs to join up. So yeah, we'll come back with a whole lot.

Richard Eary: Okay, thanks.

Unidentified Analyst: Hi. [Indiscernible] from Bloomberg Intelligence. Just one question on the Studio's business, how do you think about the interplay with your broadcast business, I guess if you give studios free rain and it starts to commission more content for BBC, Channel 4 and that successful potentially compromises your own channel advertising, so does that have free rain or is there some kind of constraints around the kind of concept produced rather other broadcasters?

Carolyn McCall: They have free rain actually in their commercial business and they have to make money out of content that's what they were set up to do and they have to do that really well and they have to sell to whoever commissions. So there are the commissioned or they sell and they would do that for anybody. It's up to Kevin to ensure that we get the best commissions. So if you can, so it's up to you, he is Head of Drama and Entertainment and factual to make sure that they are supposing the right shows. And so it's a good creative, it's not even attention, it's just it's a good creative flow, I mean that's the way it goes.

Unidentified Analyst: Thank you. [Indiscernible]. Three questions again, please. Firstly, on FMCG spend, Ian you said you're seeing them allocating more to TV. Is that more the percentage of a declining part or you're actually seeing in absolute terms going up in the fourth quarter and possibly given indication the first quarter? Secondly on the ownership of Sky, Comcast's presentation centered on the strategic rationale revolving around the scale, benefits, distribution and content. Does the ownership of Sky whether it's in the hands of Fox or Disney or Comcast make a difference to you, I mean it appears that arguing that they are going to be beneficiaries from scale. In my mind that means somebody is losing out. And then thirdly, just on the restructuring - sorry on the exceptional charge guidance for 2018, of the £85 million in how much is not related to acquisition accounting? Thank you.

Ian Griffiths: I'll deal with that one first because it's the easiest. £85 million, roughly £55 million relates to accounting and £30 relates to the property side of things which is essentially the move costs and a bit of deal cost of having rent and rates for business for buildings, so that's how it's split stance. On the FMCG side, we did see a return to growth from FMCG across Q4. That has continued into Q1 but it's slightly more mixed in Q1. Food is good because metrics is good, household is down. I wouldn't read too much into that because the phasing in the first half of the year around the various categories is often skewed by what their plans are for the full-year especially when you've got a big event like the sport. So I'd say won't extrapolate that too much.

Carolyn McCall: I think generally that it just does feel that there is an uptick overall in FMCG, just feel that it does feel better but early days. What were then, Sky Comcast?

Unidentified Analyst: Yeah.

Carolyn McCall: You want to take?

Ian Griffiths: Yeah. Sky's content is interesting because they have to bid for every three years, if you think of what really differentiates Sky content. I think that's an interesting place to be. And clearly got the content that's on Sky Atlantic which a change of ownership of that might lead to question marks about who gets that content as well. So the Comcast is fantastic company and they run a great business ask the Disney and maybe Fox who knows.

Carolyn McCall: I didn't answer the question. Like who knows. There is a question right in the back.

Steve Malcolm: Hi. It's Steve Malcolm, Arete. Go for a couple in a second maybe in a couple of parts. First, just on the sort of whole online digital journey that ITV is on, it feels like the Hub sort of improved but still playing catch up with rival platforms. Can you just sort of give some initial and impressions Carolyn about where you think it needs to get to in terms of pay per view capabilities, the anecdotal evidence you got some problems around the growth, UBank finding signing up customers to a large insertion, whether you think you can - where you are in that journey whether you think you can get there organically or you need sort of some sort of external investment to fix that potential problem? And just coming back to Comcast and Sky and possibly Disney Sky and possibly Fox Sky, can you sort of give some thoughts on the regulator issues that you might see around any or all of those deals? And also it's obvious that most of your emerging competitors are global, are going to be part of large global media groups, how comfortable are you in ITV's position medium long termers still large the U.K. free-to-air broadcaster against those guys that are buttressed by global reach, global distribution all those kinds of things? Thank you.

Carolyn McCall: Okay. I mean outlook, I think the Hub at the moment is catch up TV, that's all it does. We've just started doing box sets, so we'll start you'll start seeing more box sets that really improves the user experience. So if you've missed a series, you'll be able to catch up on the series before watching the new series, that's good for users but it's good for ITV. I think we now have to work out what the next steps are and what we should do that will actually place us in a better position competitively but also that gets returns, because you can do, I think what we have to do is be quite careful about how we look at this rationally because I think you can be - get very, very excited about doing lots of things that actually don't make money. So we absolutely have to think about consumers and the user experience and then we've got a flow from there. Then we have to say how do we monetize, what we do on Hub further, so what are the other models that we can use? So I think that that is what the strategy refresh will address that is really important part of what we're going to focus on. Box Office is an experiment. It's a trial. It's probably one of the first that was the first big fights that we had. I think lots of lessons learnt on that because consumers are vocal if they don't get what they want when they want it and it's very different experience for ITV to be at the sharp end of because viewers aren't like that. I mean they might complain to of come about something on screen but it's much - it takes a bit of time and then it whereas with this it's much more visual and mediate and you've got to have the way of responding to that quickly and the infrastructure to do that. And at the moment we outsource all of that because it's too small, so it's a trial. So lots and lots of learnings for that and we need to absorb that and then think what more do we want to do on that kind of thing. It's interesting and it's definitely another revenue scream, it's also more data of course because I think that what Sky got 350,000 subscribers, so it's actually very successful from a subscriber point of view. And remember I mean they'll be vocal, your Twitter feeds about what some people didn't get now, but it will be a minority of people that didn't get, it's still not good but it will be a minority, it was a problem with the platform, is a problem with the Sky platform for a number for a minority of users on that platform. So just putting it in perspective, it was a good thing for us to do and it was a good experience for us to do. On the addressable and we won't do that organically. We will need to but it is budgeted for. So I don't know we're going to put lot of more money into the numbers because actually we've already put aside a sum of money to actually look at this whole area of our technology and how we can accelerate what we do in that area. Disney, Fox, Sky. And what?

Ian Griffiths: I think the regulatory position probably gets a big clearer and cleaner with Disney, Comcast versus Fox but we'll leave that to the experts to determine because it was clearly a challenge around Fox and I can't say reality.

Carolyn McCall: Reality, is a hard word.

Ian Griffiths: Which is the word of the moment but it's probably a base in Comcast and Disney.

Carolyn McCall: As to the global media groups, I mean I think that we are very, very strong in our home market and we are global media player on the content side and I think recognized to be global on content. The most important thing we have to do, we are an advertising funded business and our advertisers are U.K. advertise, they're trying to reach U.K. audiences. So actually being the number one media in the U.K. is a formidable thing to be. And so I think ITV is in a very strong position, is very well positioned for the future regardless of the kind of global consolidation that is going on. I mean global is not - global and massive is not without its issues i.e. it adds complexity, it adds silos, it does add something different. ITV actually one of the things we are really, really focused on is being agile and nimble and being able to move quite quickly over the next five years on things that we need to do and really focusing on the things that we do better than anybody else. And there are quite a lot of things we do better than anybody else and that's again that's an important thing that we're going to be very concentrated on. Any other questions? One over there.

Richard Eary: Thanks. It's Richard Eary again from UBS. Just coming back to sort of like trading so far this year, obviously March benefits from it to which obviously means the March numbers up and January, February are honestly quite weak. You look to share a viewing numbers they seem quite positive in terms of audience numbers but advertising conditions are actually quite weak in January, February off a very weak comp from last year but you talk about FMCG coming back, can you just talk us through what's the disconnect between some of those numbers?

Ian Griffiths: There has been a fundamental change in the broader level of confidence across U.K. corporates. I think corporates are behaving quite cautiously, quite carefully, spending money with a fair degree of rigor and balance across the board. It's different sector by sector. As a whole, I think we're still operating in an environment with the overhang of uncertainty. I think what we've done is give a view across the first half of the year, we want first half of the year to be strong. We don't normally go that far out. But the month-to-month numbers and I've said this for these more times than I can't remember. We shouldn't get too hung up on where the rate falls down or March is up, it's what does the year feel like, what conference feel like and the fact we're up across the first six months after Q4 being up in 2018. So just least things calmed down and I think that's a place we were 12 to 18 months ago, so that's a start.

Carolyn McCall: I think that's a really good way of putting. I think that the shrillness of the noise around corporates placed June 2016 for various reasons, I mean about kind of about what does that mean, what does that mean to customs, what does that mean to cost, what is that - that feels like it's the transition agreement has calm down versus business, but it hasn't solved any issues yet because we still don't know whether that transition agreement is going to be signed and also whether - what that's going to contain. So that there is still uncertainty which - but it is definitely a calmer corporate environments.

Richard Eary: Just a sort of quick one. On 2017, you did £29 million in terms of savings, it doesn't look as though in terms of the statement as anything for 2018 in there, just odd numbers, should we assume zero or sort of are there any incremental savings you could make?

Ian Griffiths: Embedded into how we operate is managing inflationary pressures, but we're not doing anything incremental on top of that for 2017 - sorry 2018. No doubt will be looking at as Carolyn mentioned in her view at the start, what's the right operating model for us and that creates an opportunity to look things again.

Carolyn McCall: And again just there.

Laurie Davison: Could you just confirm on the interest on the voice and the treatment of that is an exceptional fake on the failure to actually pay that, when do you actually expect to receive or what's the actual cash schedule for receiving that?

Ian Griffiths: Well there isn't a cast schedule set out and we're pursuing very vigorously both talents who are our partner in China and we've got an insurance claim in with the credit insurers who underwrote the original content and we're in those conversations now Laurie.

Laurie Davison: And so it's pretty underwritten?

Ian Griffiths: The receivable is, yes fully insured.

Laurie Davison: Yeah.

Carolyn McCall: Are there any more questions? No. Great. Thank you very much for being here.