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ITV PLC (ITV)

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Thursday 09 September, 2004

ITV PLC

Interim Results

ITV PLC
09 September 2004



9 September 2004

                          ITV plc results for 6 months

                               ended 30 June 2004



           Delivering revenue growth and significantly higher profits



                     Making the vision of one ITV a reality



Financial Highlights



•         ITV plc net advertising revenue up 4%

•         ITV2 and ITV News channel advertising revenue up 68%


                                               Pro forma*                       Reported*
•         Operating profit*               £123m           +32%            £122m           +54%
•         Pre-tax profit                  £132m           +42%            £132m           +59%
•         Basic EPS                       2.3p            +48%            2.4p            +14%



•         Net cash inflow from operating activities £207m

•         Cost savings delivered ahead of schedule

          -         Target raised to £120m



Broadcasting



•        Continued multichannel growth:

         -        ITV3 launches 1 November 2004

         -       Advertising revenue target £150m pa by end 2007

         -       Programme investment up 150% to £60m pa

•        ITV Sales' new Customer Relationship Management programme launches
         October 2004

•        CRR does not result in cash paybacks

•        18.00 news hour viewing up 6%**



Production



•        Focus on profitable high margin programmes

•        Well placed to become Europe's largest programme producer for the US
         market with major sales to US networks and cable achieved

•        Granada produced seven out of the top 10 UK highest rating non-sport
         programmes on British television, all of which appeared on ITV1

•        Sales to ITV were up 6%



 ITV Advertising Revenue and Viewing



Combined advertising revenues for all ITV channels in the first half were up
4.9% on last year, the best performance since the dotcom boom in 2000.  In the
quarter to September 2004 those advertising revenues are estimated to be up
5.5%, with a strong September up nearly 10% on last year.


    
*     Continuing operations before amortisation and exceptional items(2004
excludes £6m (2003: £1m) of operating profit from assets held for resale
including MPC)

**    This is following a new format introduction since the integration of ITV
national and regional news



ITV plc's share of those advertising revenues rose by 4% in the first half, and
in the quarter to September 2004 is estimated to have risen by 5.2% on the same
quarter last year.



Looking ahead, ITV1 has a strong autumn schedule in place.  In drama, where ITV1
is the clear market leader, our autumn schedule includes a host of major events
with stars such as Martin Clunes, Caroline Quentin, Ray Winstone and Brenda
Blethyn.  ITV1's schedule will also feature a number of returning drama series,
such as Rosemary and Thyme and Foyle's War, that rated highly on their last
transmission.  We also have many star-studded entertainment programmes in the
schedule; particularly on Saturday evenings with shows such as The X Factor, Ant
& Dec's Saturday Night Takeaway and Parkinson.



Multichannel



In the first half, revenue growth from ITV2 and the ITV News channel has
continued - up 68%. ITV2's viewing share was up 20%.  ITV2's success has been
based on the effective complementary scheduling and cross-promotional strategy
we have adopted across the channel portfolio. This will be further enhanced with
the introduction of ITV3 on 1 November.  ITV3 will be targeted at the lucrative
35+ demographic, who control 80% of the nation's wealth, and will screen recent
high-quality dramas in addition to specially commissioned programme extensions
and acquired material.  In order to boost performance further, investment in
multichannel programming will increase from £24m to £60m pa. Multi-channel
revenue of £150m pa is targeted by the end of 2007.



Production



Granada produced seven out of the ten highest rating programmes on British
television (excluding sport) in the first six months of 2004.  In the same
period, it also produced all one hundred of ITV's top one hundred performing
programmes.  Sales to ITV grew by 6% in the period, including many successful
new titles such as 'Life Begins,' 'Wall of Silence' and 'Donovan', as well as
returning series 'I'm A Celebrity...Get Me Out of Here!' and 'Coronation Street
'.  Significant commissions were won from US broadcasters, including two prime
time series for Fox, and a number of long-running series for MTV, A&E and TLC.



Commenting, Charles Allen, Chief Executive of ITV said:



'This is a good set of results and I'm delighted that ITV is delivering on all
aspects of the merger with operating profit up by 32%.  We are driving real
growth, restructuring ITV, achieving our cost saving targets six months early
and increasing our cost saving target for the future.  This has been the result
of excellent team work across the business.



We have a great autumn programme schedule on ITV1 and ITV2 that is already
proving popular with viewers and advertisers.  ITV3 will be an excellent
complement to these channels and will mark another ITV milestone.



We are actively working on the review of the financial terms of our licences and
discussing with our regulator the terms of digital replacement licences for
2005: We expect positive progress during the next few months.'



For further enquiries please contact:



ITV plc                              Tel:     020 7620 1620



Charles Allen                        Chief Executive
Henry Staunton                       Finance Director
James Tibbitts                       Company Secretary
Brigitte Trafford                    Communications Director








Citigate Dewe Rogerson               Tel:     020 7638 9571



Jonathan Clare
Simon Rigby
Alex Brown



Website:          www.itv.com        investor information      www.itvplc.com







An analysts presentation will be held at 09.00hrs on 9 September 2004 at the
City Presentation Centre, 4 Chiswell Street, London EC1Y 4UP.



Notes to Editors:



1.      ITV's seven tenet strategy is to:

•         Lead and grow the UK TV market

•         Deliver commercial impacts

•         Develop ITV channel package

•         Place news at the centre of Public Service Broadcasting

•         Produce valuable programmes

•         Improve efficiency

•         Reduce regulatory costs



2.      Details of the pro forma results for the period are:



ITV pro forma trading financial information for six months to 30 June 2004



The merger of Granada plc and Carlton Communications Plc to form ITV plc was
completed on 2 February 2004.  Pro forma results have been prepared to show the
results of the new group for the six months ended 30 June 2004, with a
comparative for the same period in 2003, as if the merger had taken place on 31
December 2002.



Basis of preparation of pro forma trading results

The pro forma results for the six month periods to 30 June 2003 and 2004 have
been prepared on the following basis:



1. They incorporate the results of Granada and Carlton. They also consolidate
the results of new subsidiaries London News Network, ITV News Channel, ITV2 and
ITFC which were previously treated as joint ventures or associates, as well as
the ITV Network Centre.

2. The results have been presented under the accounting policies that have been
adopted by ITV plc.

3. Transactions between Granada, Carlton, the ITV Network Centre and subsidiary
companies previously reported as joint ventures or associates (listed in point
1) have been eliminated as inter-company transactions.

4. The results are shown only for continuing operations before amortisation and
exceptional items.

5. The results exclude the profits of Carlton businesses which ITV expects to
sell within a year of the merger date (2004: £6 million, 2003: £1 million).

6. The 2003 interest charge has been adjusted to exclude major one-off or non
recurring items including gains on the sale of derivative instruments and the
impact of foreign exchange.

7. The pro forma 2003 tax charge has been set using ITV's 2004 effective rate of
27% on profit before tax, goodwill, profits on sale of fixed assets and
exceptional items.

8. The EPS figure for both periods uses the average number of shares in issue
for the six months to June 2004 as if the merged company had been in existence
for the whole of this period.




                 Published        Remove      Remove       Add  Consolidation   Pro forma    Pro forma   Growth
                      2004       JVs and      tax on   Carlton adjustments £m        2004         2003        % 
                              associates exceptional   January                       
                        £m  amortisation       items   trading                                                          
                                      £m          £m        £m                         £m           £m
Group turnover         959            -            -          55         (25)         989          977        1
Group                   62
operating
profit
Add back                37
amortisation
Add back                23
exceptional
items
Operating              122            -            -           1            -         123           93       32
EBITA
Joint ventures           3            1            -           -            -           4            2
Associated               2            1            -           -            -           3            2
undertakings
Investment               4            -            -           -            -           4            4
income
Profit on sale           5            -            -           -            -           5            -
of fixed
assets
Profit before          136            2            -           1            -         139          101       38
interest and
tax
Net interest           (6)            -            -         (1)            -         (7)          (8)
payable
Profit on              130            2            -           -            -         132           93       42
ordinary
activities
before
taxation
Tax on profit         (28)            -          (6)           -            -        (34)         (25)
on ordinary
activities
Profit/(loss)          102            2          (6)           -            -          98           68       44
on ordinary
activities
after taxation
Minority               (5)            -            -           -            -         (5)          (5)
interests
Profit/(loss)           97            2          (6)           -            -          93           63       48
for the
financial
period

Adjusted
earnings per
share
Basic                                                                                2.3p         1.6p       48






Turnover

Turnover of £989 million (2003: £977 million) is up 1%. Net Advertising Revenue
of £760 million (2003: £729 million) is up 4% reflecting growth of 3% from ITV1
and growth of 68% from ITV2 and ITV News Channel. Other Broadcasting sales
principally comprising cinema advertising, sponsorship income, fees for airtime
sales on behalf of third parties, and sales of ITV programming by the ITV
Network Centre to Channel 3 licences not owned by ITV plc amounted to £95
million (2003: £96 million).  The majority of sales by the Granada production
business of £201 million (2003: £190 million) are to ITV Broadcasting and
therefore excluded from the above figures.  External production turnover
includes international production and distribution sales, non ITV programme
sales, studios and facilities turnover and sales by the education business.



Profit

Operating EBITA of £123 million (2003: £93 million) is up 32% benefiting from
increased advertising revenue and cost savings. Joint venture income is from
ITV's 50% holding in GMTV and the Screenvision businesses in the US and Europe.
Associate income is from stakes in TV3, Granada Sky Broadcasting and ITN.
Investment income represents dividend receipts from investments in Thomson in
France and Channel 7 in Australia.  Profit on sale of fixed assets is from the
disposal of properties which were sold as part of the merger restructuring
process.  Minority interests reflect dividend payments to external preference
shareholders in Carlton Communications Plc.










Chairman's statement



I am very pleased to be introducing the first results for ITV plc since the
merger of Carlton and Granada at the beginning of the year.



It has been an exceptionally active period with a number of major initiatives
being undertaken, and we have also delivered a very good set of results with
advertising revenues and profits rising strongly.  The detail of the financial
results is set out in the Operating and Financial Reviews on the following
pages, and here I would focus on two aspects.  Firstly the good growth in first
half operating profits (before amortisation and exceptional items) to £122
million (up 32% to £123 million on a pro forma basis) and secondly the strong
cash inflow from operating activities of £207 million.  Both of these measures
have benefited from the 4% growth in advertising revenues and from the cost
saving programme that has been delivered ahead of schedule, where we are raising
our final target to £120 million.



During the coming months, we will be working hard on the ITV1 programme schedule
and believe that we have a strong line-up for the autumn season including a
large number of returning series that rated highly on their last screening.
This gives us confidence that we will recover some of the viewing share that
over recent months has moved towards the smaller digital channels, including
ITV2 which has continued to be extremely successful.  Much of that viewing share
movement has been the result of the success of Freeview in converting
terrestrial analogue viewers into the digital world.



Following the success of ITV2 we are launching ITV3 on 1 November 2004, a
channel aimed at the 35+ age group and complementary to ITV2's 16-34 target
demographic and the mass audiences of ITV1.



One ITV

Rapid progress has been made in bringing together the Carlton and Granada
operations as a single business with a single set of objectives.  The senior
team was established at an early stage and they have worked hard to deliver the
merger benefits for us.



The integrated Production teams are focused on delivering high value programmes;
the Broadcasting teams on leading and growing the UK TV advertising market,
developing our channel package and on delivering commercial impacts; and the
News teams on placing news at the centre of our Public Service Broadcasting ('
PSB'). Across all our businesses we are increasing operational efficiencies and
over the coming months we will be seeking to reduce our regulatory costs imposed
through the licence fees and through the PSB requirements in our licences.
Licence fees and PSB requirements are almost unique to ITV in commercial
television and were conceived decades ago before the development of the
competitive market in which we now operate.



Corporate Governance and CSR

In my role as Chairman I oversee the company's compliance with the Combined Code
on Corporate Governance.  Our Audit Committee is chaired by John McGrath, the
Remuneration Committee by Sir George Russell and I chair the Nomination
Committee.



ITV plc's heritage as a major presence in each region of England and Wales has
established a special connection with the audiences we serve.  Each licensee
works with their local community on areas where ITV can make a real difference,
as well as joining together on national projects to make best use of the
resources and scale of ITV plc.  Notable recent initiatives include investing in
the future; with arts, cultural, educational and training schemes; reaching out
to minorities in the community; and the successful 2003 computer literacy
campaign, 'IT's For Life'.  ITV's 2004 campaign, 'Britain on the Move', has got
off to an excellent start using network programming, regional programming, and
off-air resources to encourage everyone to be more physically active.  Our
Corporate Social Responsibility Report 2003 is on our website at www.itvplc.com.



People

Etienne de Villiers retired from the Board on 6 September 2004 and I would like
to record our thanks to him for his contribution during these formative months
for the merged Company.



On behalf of my fellow directors I would like to thank all our employees for the
professionalism that they have displayed in forging the merged company over
recent months.  I look forward to continuing to work with them and to building
our broadcasting and production operations as we develop our channels in the
future.



Sir Peter Burt

Chairman





Operating review



Introduction

I am delighted with our strong financial results for our first six months as ITV
plc. It lays down a solid foundation for future growth and investment. Our pro
forma operating profit for continuing businesses for the six months to 30 June
2004 (before exceptional items and amortisation of goodwill and intangibles) was
up 32% at £123 million from £93 million in 2003. On the same basis our statutory
operating profit (which excludes Carlton for January 2004, prior to the merger)
was £122 million.

Our cash flow has been strong in the first half with a net cash inflow from
operating activities of £207 million.



Your Board has decided to declare an interim dividend of 1.1 pence per share, an
increase of 10% on 2003.





UK advertising market

ITV has had a positive first six months of the year, with ITV1 channel
advertising revenue up by 4% and the advertising revenue of ITV2 and ITV News
Channel up by 68%. This is the best advertising revenue performance since 2000
when the dotcom boom was at its height. As the UK's market leader, ITV has
worked hard to raise awareness of the unique and tangible results that
television advertising can achieve to drive sales, enhance brand value and
increase brand recognition. ITV's refocused sales operations have been working
closely with advertisers to deliver proven solutions and maximise the proportion
of advertising budgets spent on television.



The result is that all three of the highest spending categories on ITV1 -
retail, cars and finance - have increased spend year-on--year.



Regional advertising has been another success story, increasing revenue by 19%
year-on-year up to £76 million.



ITV continues to be the best placed broadcaster in the UK to offer tailored
advertising solutions to reach mass audiences, with the potential for integrated
multichannel, sponsorship and interactive support.



Contract Rights Renewal (CRR)

CRR was implemented to protect ITV advertisers as a condition of the merger. In
its first report on the CRR system, Ofcom concluded that they were satisfied
with the implementation of the arrangements. The CRR mechanism codifies the
previous commercially negotiated relationship linking advertising spend to
ITV1's share of commercial impacts (one impact represents one viewer watching a
30 second advertisement). If the share of commercial impacts declines, then in
the following year under CRR advertisers/media buyers have the right to reduce
the proportion of their total television advertising expenditure that they give
to ITV1. However, the combination of our work to grow the television advertising
market and our expanding multichannel advertising revenues will partly counter
any such effect.  CRR does not result in any cash repayments to advertisers.



Schedule performance

ITV1's all-important peaktime schedule has performed well with a 31.5% share of
viewers. Principally due to the increase in digital penetration this is 0.4%
down year-on-year. Nevertheless, ITV1 has extended its peaktime lead over BBC1
to 5 share points and has a lead over Channel 4, our nearest commercial rival,
of 22 share points.  Football dominated the television ratings in the first half
of 2004. Euro 2004 matches were the three most watched programmes of the first
half of the year, with the first England game against France ranking as ITV1's
highest rating programme this year with 17.8 million viewers and a 66% share. In
total, 13 out of the top 20 performing programmes on TV in the first half of
2004 were shown on ITV1. This performance is on a par with the equivalent period
last year.



Coronation Street remains the top non-sport programme across all channels in
2004. Its highest performing episode in H1 attracted 16.3 million which is 1.5
million more viewers than the most popular episode of EastEnders. Optimisation
of break patterns, and strong casting and writing, have enabled Coronation
Street and Emmerdale to deliver more commercial impacts. Across the genres ITV1
continued to dominate: A Touch of Frost was the most popular drama excluding
soaps and I'm a Celebrity...Get Me Out of Here! was the most popular factual
programme.



Outside peak, ITV1's daytime (9.30 am-3.15 pm) share of viewing has grown
year-on-year. Building the success of the off-peak schedule is a priority, and
the ITV Network has appointed a dedicated head of off-peak commissioning to give
a coherent commissioning overview of all off-peak hours.



ITV1's total audience share for the first half of the year was 23.3%, only 0.5%
down year-on-year. This compares to BBC1's drop of 1.1%. ITV1's all-time lead
over Channel 4 was 14 share points and more than 16 share points over Five.



The share of commercial impacts for the half year was 41.0% which compares to
42.7% for calendar 2003. Much of the reduced year-on-year performance is a
result of the rapid growth in Freeview multichannel penetration and weaker BBC
viewing where BBC viewers have tended towards similar genres of programming on
Channel 4 and some digital channels. We have planned an extremely strong autumn
schedule with many returning hit programmes. This is discussed in more detail in
the outlook section below.



Production

The focus for our production unit is to make valuable programmes. This strategy
is well under way with initiatives including a systematic approach to cost
control and a rationalisation of production facilities that have already
delivered increased efficiency per employee and overhead savings of £5 million
in the first half. Following the merger a number of unprofitable programmes have
ceased production contributing to reduced turnover in the first half.



The value of being a producer broadcaster continues to be proved, with in-house
production again delivering the highest number of commercial impacts per pound
of programme spend.



Our brands have again proven their huge importance to ITV1, with five programmes
- Coronation Street, Emmerdale, This Morning, Trisha and A Touch of Frost -
delivering almost 30% of commercial impacts. Other established brands Heartbeat,
The Royal and William and Mary all returned to audiences of more than 9 million.



We have also continued our record of producing successful new programme brands,
delivering four of the top five new dramas of the period across all channels.
Life Begins, an outstanding new show, was watched by 10.4 million viewers and
the second series will be broadcast in 2005. The other three were Wall Of
Silence, Donovan and The Second Quest.



Internationally, we continue to increase the value of core brands as well as
developing new titles. Our American operation has increased turnover by £5
million with key commissions including First 48 for A&E and Room Raiders for
MTV.



Granada International, the UK's largest commercial programme distributor, has
concluded major output deals in Australia, Italy, Canada and Scandinavia.



News

ITV puts news at the heart of its PSB operations. We therefore continue to
invest in news technology to optimise the efficiency of our news crews and this
investment is already delivering results. The relaunched ITV Evening News
incorporating international, national and regional news between 6 pm and 7 pm
has grown its audience by 6% for the first half of 2004, compared to the same
period last year. The rise is also marked among key demographics: viewing by
16-34 year olds is up 7% and viewing by males is up 7%.



In the regions, the single management focus in news is proving successful, with
every ITV region improving their 6 pm ratings performance in 2004, leading to a
9% rise for the half-hour.



New premises in Meridian will be operational by the end of the year with an
additional studio and upgraded news facilities for Central in Birmingham and a
new news gathering centre in the East Midlands coming on stream in February.
Further investment in Newcastle, Norwich and Leeds will take place next year.
These regions are leading the roll out of an integrated digital desktop editing
system; incorporating graphics, sound dubbing, editing and playout functions in
one package. Additionally, we have agreed a deal that will equip all regions in
England and Wales with new state-of-the-art digital satellite vehicles. These
measures, along with the creation of a new London hub within ITN premises, are
helping to increase efficiency, reduce overheads and give our journalists
greater flexibility and better facilities.



The ITV News Channel continues to leverage the maximum value from ITV's
investment in news and current affairs and cross-promotional potential. In
April, ITV plc bought ntl's 35% stake in the channel to give it outright
ownership.




ITV multichannel

ITV2 and the ITV News Channel have increased their advertising revenue in the
first half by 68% to £24 million and ITV2 is on track to deliver a full year
profit in excess of £10 million.



ITV2 is the third most watched non-terrestrial channel increasing its share of
viewing in multichannel homes from 1.46% to 1.60%. ITV2 also has the highest
monthly reach of any non-terrestrial channel and in homes with Freeview, the
fastest growing digital platform, ITV2 is the most watched non-terrestrial
channel.



ITV2 has had success across all genres of programming. Particular highlights
have been the brand extensions of I'm a Celebrity (with the highest rating
episode getting more than 2 million viewers and a 22% share) Hell's Kitchen,
UEFA Cup and Euro 2004 football and American Idol. Films have also performed
well on the channel, and celebrity-based programmes have taken large proportions
of our competitors' audience.



Restructuring

The merger has allowed ITV to rationalise the management structure of the West,
Westcountry and Wales regions. This gives ITV Wales its own dedicated management
with a mandate to deliver the very best service to Welsh viewers and enables ITV
West and ITV Westcountry to collaborate more closely and serve their audiences
better.



Regulatory update

ITV continues negotiations with Ofcom regarding the cost of its broadcasting
licences, due for renewal in mid-2005. It is now widely accepted that a range of
factors will affect these, such as lower than expected total TV NAR growth,
faster digital penetration than expected and an accelerated timetable to digital
switchover. This means that the value of the ITV analogue licences has declined,
and we will therefore be looking to achieve significant savings on our licence
payments.



ITV is also in discussion with Ofcom as part of their review of public service
obligations across all PSB channels. This may impact the level of public service
genre programming on ITV1, which currently accounts for around a third of the
schedule. Ofcom will publish their conclusions and recommendations later in
2004.



Outlook



Advertising sales

ITV Sales has quickly established itself as the market leader, with a single
sales system and a fully integrated sales team that can deliver spot
advertising, sponsorship, online and interactive campaigns for network and local
advertisers. A key strategy is to continue to promote the unique ability of
television advertising to build brand fame. As part of this we will embark upon
an extensive tour of advertisers and media agencies in Autumn 2004; publish case
studies in Winter 2004; and host a major advertiser conference at the start of
2005. In addition, ITV is undertaking a highly targeted Customer Relationship
Management programme which will involve presentations, case studies and the
development of detailed sales plans. This will also focus on encouraging brands
that have cut their TV spend back onto ITV and help develop a television
advertising strategy for brands that have large off-air budgets.



The strong growth we have seen in the first half has continued for the three
months to 30 September 2004 during which ITV1 Channel advertising revenue from
the combined ITV1, 2 and News Channels is estimated to be up by 5.5%.



ITV1

The ITV1 autumn 2004 schedule features some of the biggest names in television
and sees the return of some of the most successful programme brands of recent
years.



In drama some of the famous faces taking leading roles on ITV this autumn
include Brenda Blethyn, Stephen Fry, Tamzin Outhwaite, Ray Winstone, Caroline
Quentin, Martin Clunes, Joanna Lumley and James Nesbitt. Successful returning
drama series include Foyle's War, Taggart, Rosemary and Thyme and Midsomer
Murders, along with new murder mysteries from Miss Marple and Poirot.



In factual and entertainment, I'm a Celebrity...Get Me Out of Here! peaked with
an audience of 15 million to become one of the TV events of the year, whilst
Ant and Dec's Saturday Night Takeaway achieved audiences of more than 9 million
earlier in 2004. Simon Cowell returns to ITV1 with The X-Factor and Parkinson
has launched a new season of his chat show on Saturday nights.



ITV1 has also secured the rights to some key sporting events including the
University Boat Race and the Super Bowl, to sit alongside our existing portfolio
of live Formula 1 motor racing, UEFA Champion's League and football's World Cup
2006.











Production

Life Begins, the major drama success of winter 2004 starring Caroline Quentin,
and Prime Suspect have been recommissioned for 2005. ITV1 has also
recommissioned all of Production's banker shows which form the backbone of the
schedule: Trisha, This Morning, Today with Des & Mel, Tonight with Trevor
McDonald, The South Bank Show, Emmerdale, Coronation Street, Heartbeat, The
Royal and Where the Heart Is.



A new ITV1 teatime show is to be produced, along with a range of new drama,
factual and entertainment programmes including Miss Marple and the new Parkinson
show.



RTL in Germany has bought a second series of I'm a Celebrity to be aired this
autumn. In the US, major commissions to air this autumn include Hell's Kitchen
for Fox and Wallet Roulette for ABC.



ITV multichannel

ITV is committed to multichannel television and has a key role to play in its
future. As part of this, ITV has confirmed an annualised increase of £36 million
in multichannel programme investment with a target of delivering £150 million of
multichannel revenues by the end of 2007. This will enable a doubling of ITV2's
programme budget and support a strong launch schedule for ITV3. This allows ITV
to continue to improve the opportunity for complementary commissioning,
scheduling and marketing and capitalises on the unique benefits of the ITV
brand.



On ITV2, we will continue with the successful formula of extended coverage of
ITV1 programmes, premium sport and films. The strategy of acquiring our
competitors' strongly performing American series has proved successful in the
daytime schedule (taking Judge Judy from Living and Sallie Jesse Raphael from
Sky One). We will replicate this strategy in peaktime, as well as looking at
original commissions to extend the scope of the channel.



ITV3 will target the 35+ demographic with a powerful collection of dramas and
films. This demographic represents a significant commercial opportunity for ITV
as it controls more than 80% of the nation's wealth and is currently underserved
in the UK.



Summary

I would like to join Sir Peter Burt in praising the professionalism and hard
work of all our employees, and to thank them for driving through the merger
restructuring and delivering these excellent results. We are now well placed to
deliver on our plans and with advertising revenue continuing to grow in the
third quarter we look forward to good results for ITV's first full financial
year.







Charles Allen

Chief Executive


Financial review



The merger of Granada and Carlton to form ITV plc was completed on 2 February
2004. The statutory results for the six months ended 30 June 2004 have
comparative information for the six month period ended 31 March 2003 relating to
Granada plc only. As the comparative disclosed is for a different time period
(which includes a higher share of annual advertising revenue due to seasonal
factors) and includes only the results of Granada plc, pro forma results of the
new group are shown for the six months ended 30 June 2003 and 2004 (as if the
merger had taken place on 31 December 2002). Below is a financial review of pro
forma results for the six months ended 30 June 2004.



Pro Forma Results for six months to 30 June 2004

Turnover for the six months to 30 June 2004 on continuing operations less joint
ventures was up 1% at £989 million (2003: £977 million). Net advertising revenue
of £760 million (2003: £729 million) is up 4% reflecting growth of 3% from ITV1
and 68% from ITV2 and ITV News Channel. For continuing businesses our operating
profit before amortisation and exceptional items was up 32% at £123 million
(2003: £93 million). Profit before tax, amortisation and exceptional items
increased by 42% to £132 million (2003: £93 million).



Tax was charged on our profit before tax and goodwill amortisation and other
disallowable items at the rate of 27% (2003: 27%). Adjusted earnings per share
on continuing operations, before exceptional items and amortisation, were up 48%
at 2.3 pence (2003: 1.6 pence).



Statutory Results for the six months to 30 June 2004

Turnover on continuing operations less joint ventures was up 33% at £959 million
(2003: £723 million) following the inclusion of Carlton from 2 February 2004.
Profit before tax and exceptional items increased by 45% to £93 million (2003:
£64 million). Basic earnings per share were 1.0 pence (2003: loss of 1.5 pence)
with earnings per share adjusted to exclude exceptional items and amortisation
rising 14% to 2.4 pence (2003: 2.1 pence).



Dividend

The interim dividend is 1.1 pence per share (2003: 1.0 pence). This is covered
2.1 times by the pro forma earnings per share (before goodwill amortisation and
exceptional items) for continuing businesses of 2.3 pence. This dividend will be
paid on 10 January 2005 to shareholders on the register on 12 November 2004 and
the ex-dividend date will be 10 November 2004. Over the medium term, the Company
intends to rebalance the respective levels of interim and final dividend such
that the interim dividend represents approximately one third of the total
dividend. At the full year, the Company intends, as an initial move towards that
objective and in the absence of any unforeseen circumstances, to increase the
final dividend by more than the increase in the interim dividend.



Acquisition of businesses

As required by FRS 7, Fair Values in Acquisition Accounting, Carlton assets have
been adjusted to reflect the fair value of the acquired net assets at the date
ITV assumed effective control.



The principal fair value adjustments are shown and explained below:


                                                                        £m                £m
Opening Carlton net liabilities                                                         (79)
Fair value adjustments:
- Film libraries                                                      (39)
- Assets held for resale                                                40
- Borrowings and interest rate swaps                                  (42)
- Pension deficits                                                    (94)
- Other (mainly taxation)                                               37
                                                                                        (98)
Fair value of Carlton net liabilities acquired                                         (177)



Further details are shown in note 6 to the accounts.



- Film libraries: revaluation and accounting policy alignment of the ITC and
Rank film libraries to amortised replacement cost. The libraries are now
amortised over 20 years on a reducing balance basis. This will result in a
charge to ITV approximately £3 million higher for calendar 2004 than the charge
previously booked by Carlton for calendar 2003.



- Assets held for resale: Carlton businesses expected to be sold within a year
of the merger are shown at expected net proceeds discounted to present value at
date of acquisition. The profits made by these businesses in the six months to
30 June 2004 of £6 million (2003: £1 million) have been excluded from the
consolidated results of the Group and the pro forma financial information.



- Borrowings and interest rate swaps; Carlton funded itself through the bond
markets - Its £200 million 7.625% 2007 bond was issued at a time of higher
interest rates compared to those at the date of the merger. This has resulted in
an increase in the market value of the bond (increasing the fair value of the
liability to ITV) of £13 million.  Fair value adjustments on other debt
instruments amounted to a £2 million increase in borrowings. Carlton
additionally entered into floating rate swaps to match its bond issues. At
merger the market value of the swap liabilities to ITV was £27 million higher
than book value reflecting higher sterling rates and embedded options.



- Pension deficits: inclusion of Carlton pension deficits (calculated on a SSAP
24 basis) at date of acquisition in accordance with FRS 7.



- Other: principally deferred taxation provided as appropriate on the fair value
adjustments.



Total goodwill additions amounted to £2,302 million as a result of the merger
between Granada and Carlton.



Net debt

The principal movements in net debt in the period are shown in the table below:
                                                                                                 £m
Opening net funds                                                                               127
Net debt of acquired businesses                                                               (526)
Net cash inflow from operating activities                                                       207
Redemption of Granada redeemable shares issued on merger                                      (200)
Purchase of Carlton Preference shares                                                         (146)
Other movements                                                                                (33)
Closing net debt                                                                              (571)



Net debt acquired was from Carlton and new subsidiary companies (ITV2, ITV News
Channel, ITFC, London News Network and the ITV Network Centre) at the date of
merger. The cash inflow from operating activities reflects strong trading and a
working capital inflow benefiting from prepaid sports rights transmitted in the
period. A £200 million payment was made to Granada shareholders as part of the
terms of the merger with a further £146 million paid to purchase Carlton
Cumulative Convertible Preference shares. At 30 June 2004, 87% of the issued
Preference shares had been purchased by ITV plc, satisfied by £140 million of
cash and £6 million of new loan notes.





International Financial Reporting Standards

ITV plc will comply with IFRS from 1 January 2005. The project team, reporting
to the Audit Committee, is well advanced in the conversion process and will
ensure that appropriate accounting policies, processes and procedures are in
place for a smooth transition. Key decisions have been taken and the main areas
of impact assessed. Conversion will have a low impact on ITV's core operating
results with no anticipated effect on revenue recognition.  The main areas
impacting profit before tax are IAS 39 - Financial instruments: recognition and
measurement, IFRS 2 - Share based payments and IAS 19 - Employee benefits. In
addition, under IFRS goodwill will no longer be amortised (but will be subject
to annual impairment reviews), whilst intangible assets arising on acquisition
accounting for Carlton will be amortised.



ITV pro forma trading financial information for six months to 30 June 2004



The merger of Granada plc and Carlton Communications Plc to form ITV plc was
completed on 2 February 2004.  Pro forma results have been prepared to show the
results of the new group for the six months ended 30 June 2004, with a
comparative for the same period in 2003, as if the merger had taken place on 31
December 2002.



Basis of preparation of pro forma trading results

The pro forma results for the six month periods to 30 June 2003 and 2004 have
been prepared on the following basis:



1. They incorporate the results of Granada and Carlton. They also consolidate
the results of new subsidiaries London News Network, ITV News Channel, ITV2 and
ITFC which were previously treated as joint ventures or associates, as well as
the ITV Network Centre.

2. The results have been presented under the accounting policies that have been
adopted by ITV plc.

3. Transactions between Granada, Carlton, the ITV Network Centre and subsidiary
companies previously reported as joint ventures or associates (listed in point
1) have been eliminated as inter-company transactions.

4. The results are shown only for continuing operations before amortisation and
exceptional items.

5. The results exclude the profits of Carlton businesses which ITV expects to
sell within a year of the merger date (2004: £6 million, 2003: £1 million).

6. The 2003 interest charge has been adjusted to exclude major one-off or non
recurring items including gains on the sale of derivative instruments and the
impact of foreign exchange.

7. The pro forma 2003 tax charge has been set using ITV's 2004 effective rate of
27% on profit before tax, goodwill, profits on sale of fixed assets and
exceptional items.

8. The EPS figure for both periods uses the average number of shares in issue
for the six months to June 2004 as if the merged company had been in existence
for the whole of this period.




                 Published         Remove      Remove       Add  Consolidation  Pro forma    Pro forma    Growth
                      2004        JVs and      tax on   Carlton adjustments £m       2004         2003         %        
                               associates exceptional   January                      
                        £m   amortisation       items   trading                                                         
                                       £m          £m        £m                        £m           £m
Group turnover         959            -             -          55         (25)        989          977         1
Group operating         62
profit
Add back                37
amortisation
Add back                23
exceptional
items
Operating EBITA        122            -             -           1            -        123           93        32
Joint ventures           3            1             -           -            -          4            2
Associated               2            1             -           -            -          3            2
undertakings
Investment               4            -             -           -            -          4            4
income
Profit on sale           5            -             -           -            -          5            -
of fixed assets
Profit before          136            2             -           1            -        139          101        38
interest and
tax
Net interest           (6)            -             -         (1)            -        (7)          (8)
payable
Profit on              130            2             -           -            -        132           93        42
ordinary
activities
before taxation
Tax on profit         (28)            -           (6)           -            -       (34)         (25)
on ordinary
activities
Profit/(loss)          102            2           (6)           -            -         98           68        44
on ordinary
activities
after taxation
Minority               (5)            -             -           -            -        (5)          (5)
interests
Profit/(loss)           97            2           (6)           -            -         93           63        48
for the
financial
period

Adjusted
earnings per
share
Basic                                                                                2.3p         1.6p        48






Turnover

Turnover of £989 million (2003: £977 million) is up 1%. Net Advertising Revenue
of £760 million (2003: £729 million) is up 4% reflecting growth of 3% from ITV1
and growth of 68% from ITV2 and ITV News Channel. Other Broadcasting sales
principally comprising cinema advertising, sponsorship income, fees for airtime
sales on behalf of third parties, and sales of ITV programming by the ITV
Network Centre to Channel 3 licences not owned by ITV plc amounted to £95
million (2003: £96 million).  The majority of sales by the Granada production
business of £201 million (2003: £190 million) are to ITV Broadcasting and
therefore excluded from the above figures.  External production turnover
includes international production and distribution sales, non ITV programme
sales, studios and facilities turnover and sales by the education business.



Profit

Operating EBITA of £123 million (2003: £93 million) is up 32% benefiting from
increased advertising revenue and cost savings. Joint venture income is from
ITV's 50% holding in GMTV and the Screenvision businesses in the US and Europe.
Associate income is from stakes in TV3, Granada Sky Broadcasting and ITN.
Investment income represents dividend receipts from investments in Thomson in
France and Channel 7 in Australia.  Profit on sale of fixed assets is from the
disposal of properties which were sold as part of the merger restructuring
process.  Minority interests reflect dividend payments to external preference
shareholders in Carlton Communications Plc.






Consolidated profit and loss account


                                           30 June 2004                                      31 March 2003
For the six months ended:      Note          Continuing     Continuing     Discontinued              
                                             operations     operations       operations              Total
                                                              restated         restated           restated
                                                     £m             £m               £m                 £m
                                                                    
Turnover:
Group and share of joint                            596            723              100                823
ventures' turnover
Less share of joint ventures'                      (35)              -             (90)               (90)
turnover
Acquisitions                                        398              -                -                  -
Group turnover                                      959            723               10                733
Operating costs before                            (818)          (629)              (7)              (636)
depreciation, amortisation and
exceptional items
Operating costs - exceptional        1             (23)              -                -                  -
items
EBITDA                                              118             94                3                 97
Depreciation of tangible fixed       7             (19)           (15)              (2)               (17)
assets
EBITA                                                99             79                1                 80
Amortisation                         6             (37)           (18)                -               (18)
Total operating costs                             (897)          (662)              (9)              (671)
Operating profit before                              63             61                1                 62
exceptional items and
acquisitions
Operating profit -                                   22              -                -                  -
acquisitions before
exceptional items
Operating loss - exceptional         1              (9)              -                -                  -
items
Operating loss - acquisitions        1             (14)              -                -                  -
exceptional items
Group operating profit*                              62             61                1                 62
Share of operating profit/
(losses) in:
Joint ventures before                                 4              -               20                 20
exceptional items and goodwill
amortisation
Joint ventures - goodwill                           (1)              -              (9)                (9)
amortisation
Joint ventures - exceptional         1                -              -              (3)                (3)
items
Joint ventures                                        3              -                8                  8
Associated undertakings before                        3              2                -                  2
goodwill amortisation
Associated undertakings -
goodwill amortisation                               (1)            (1)                -                (1)
Associated undertakings                               2              1                -                  1
Investment income                                     4              2                -                  2
Profit on sale of fixed assets                        5              -                -                  -
Amounts written off fixed            1                -           (75)                -               (75)
asset investments -
exceptional items
Profit/(loss) before interest                        76           (11)                9                (2)
and tax
Net interest (payable)/
receivable and similar
(charges)/income
Group                                               (6)              -                2                  2
Joint ventures                                        -              -             (17)               (17)
Net interest                                        (6)              -             (15)               (15)
Profit/(loss) on ordinary                            70           (11)              (6)               (17)
activities before taxation
Tax on profit/(loss) on              5             (28)           (24)                -               (24)
ordinary activities
Profit/(loss) on ordinary                            42           (35)              (6)               (41)
activities after taxation
Minority interests                                  (5)              -                -                  -
Profit/(loss) for the period                         37           (35)              (6)               (41)
Dividends                            4             (45)                                               (28)
Amount transferred from             12              (8)                                               (69)
reserves

Earning/(loss) per share             3             1.0p         (1.3)p           (0.2)p             (1.5)p
(basic)
Earnings/(loss) per share            3             1.0p         (1.3)p           (0.2)p             (1.5)p
(diluted)
Adjusted earnings per share:
before exceptional items             3             1.4p           1.4p
(basic)
before exceptional items and         3             2.4p           2.1p
amortisation (basic)



Discontinued operations in the six months ended 31 March 2003 include Boxclever
and Granada Business Technology.

*Group operating profit comprises £8million from businesses acquired in the
period and £54million in relation to other continuing operations.



Consolidated balance sheet


                                             30 June            31 December 2003                   31 March
                                                                                                       2003
                                                2004                    restated                   restated
                        Note        £m            £m         £m               £m             £m          £m
Fixed assets:

Intangible assets          6                    3598                        1259                      1,287
Tangible assets            7                     263                         193                        221
Investments:
Interest in net
assets of joint
ventures:
Share of gross                                                                               
assets                             154                       24                              30
Share of gross                                                                             
liabilities                       (95)                     (24)                            (22)
Share of net assets                 59                        -                               8                         
                                    
Loans to joint                                                                                
ventures                            27                        -                               7
                                                                                            
                           8        86                        -                              15
Associated                                                                                  
undertakings               8        26                       33                              25
Other investments          8       151                      157                             159                         
Investments                8                     263                         190                        199
                                               4,124                       1,642                      1,707
Current assets:
Current asset             10       168                        -                               -                         
investments                        
Assets held for           11        40                        -                               -                         
resale                              
Stocks                             342                      276                             269                         
Debtors: amounts                                                                            
falling due within                 337                      206                             246
one year
Debtors: amounts                                                                             
falling due after                   87                        9                              28
more than one year

Debtors                            424                      215                             274                         
Cash at bank and in        9       398                      185                             160                         
hand and short term                
deposits
                                 1,372                      676                             703
                                 
Creditors: amounts
falling due within
one year:

Borrowings                 9     (412)                      (4)                            (13)
                                 
Other creditors                  (935)                    (512)                           (564)
                                 
                                                                                          
                               (1,347)                    (516)                           (577)
Net current assets                                25                         160                        126
Total assets less                              4,149                       1,802                      1,833
current liabilities
Creditors: amounts
falling due after
more than one year:

Borrowings                 9     (557)                     (54)                            (32)

Other creditors                   (45)                     (45)                            (52)
                                  
                                               (602)                        (99)                       (84)
Interest in net
liabilities of joint
ventures:
Share of gross                                                                              
assets                               -                        -                             338
Share of gross                                                                            
liabilities                          -                        -                           (584)
Share of net                                                                              
liabilities                          -                        -                           (246)
Loans to joint                                                                               
ventures                             -                        -                              69
                                                   -                           -                      (177)
Provisions for                                 (169)                        (47)                       (25)
liabilities and
charges
Net assets                                     3,378                       1,656                      1,547

Capital and
reserves:
Called up share           12                     422                         277                        277
capital                                          
Share premium             12                      90                           -                          -
account                                           
Capital reserve           12                     112                         112                        112
Revaluation reserve       12                      39                          39                         40
Merger reserve            12                   1,671                           -                          -
Other reserve             12                     879                       1,079                      1,079
Profit and loss           12                     143                         148                         38             
account                                          
Shareholders' funds       12                   3,356                       1,655                      1,546
- equity
Minority interest:                                 1                           1                          1
- equity                                           
Minority interests:                               21                           -                          -             
- non-equity                                      
                                               3,378                       1,656                      1,547









Summary consolidated cash flow statement
                                                                   30 June 2004         31 March 2003
For the six months ended:                       Note              £m         £m         £m         £m
Net cash inflow from operating                     2                        207                   102
activities
Net cash (outflow)/inflow from returns                                     (15)                     2
on investments and servicing of finance
Taxation                                                                    (8)                     3
Free cash flow                                                              184                   107
Capital expenditure and financial
investment:
Purchase of tangible fixed assets                                (7)                  (10)
Purchase of investments                                          (2)                   (4)
Sale of tangible fixed assets                                     19                     4
Sale of investments                                                2                     5
Net cash inflow/(outflow) from capital                                       12                   (5)
expenditure and financial investment
Acquisitions and disposals:                                                                         -
Purchase of subsidiary undertakings                              (8)                     -
Cash acquired with subsidiary                                    441                     -
undertakings
Acquisition of minority interest                               (140)                     -
Net cash inflow from acquisitions and                                       293                     -
disposals
Net cash inflow before dividends, liquid                                    489                   102
resources and financing
Equity dividends paid                                                      (28)                  (28)
Net cash inflow before liquid resources                                     461                    74
and financing
Management of liquid resources -                                              2                  (18)
decrease/(increase)
Cash inflow before financing                                                463                    56
Financing:
Bank and other loans repaid                                     (85)                  (35)
Redemption of Granada redeemable shares                        (200)                     -
issued on merger
Cash inflow on sale and leaseback                                  -                    20
transactions
Net cash outflow from financing                                           (285)                  (15)
Increase in cash in the period                                              178                    41












Reconciliation of net cash flow to movement in net debt




For the six months ended:                                                 30 June 2004      31 March 2003
                                                                                    £m                 £m
Increase in cash in the period                                                     178                 41
(Reduction)/increase in liquid resources                                           (2)                 18
Cash outflow from decrease in debt financing                                        85                 35
Cash inflow on sale and leaseback transactions                                       -               (20)
Change in net debt resulting from cash flows                                       261                 74
Loans, loan notes and finance lease obligations acquired with                    (994)                  -
subsidiary undertakings
Liquid resources acquired with subsidiary undertakings                              27                  -
Non-cash movements                                                                   8                  -
Movement in net debt in the period                                               (698)                 74
Opening net funds                                                                  127                 41
Closing net (debt)/funds                                                         (571)                115





Consolidated statement of total recognised gains and losses


For the six months ended:                                                    30 June 2004  31 March 2003
                                                                                       £m       restated
                                                                                                      £m
Profit/(loss) for the period
Group                                                                                  34           (33)
Joint ventures                                                                          2            (9)
Associates                                                                              1              1
                                                                                       37           (41)
Currency translation differences                                                      (1)              -
Total recognised gains and losses relating to the period                               36           (41)
Prior period adjustments (notes 12 & 13)                                             (10)              -
Total gains and losses recognised during the period                                    26           (41)



Historical cost profit is not materially different from that presented in the
consolidated profit and loss account.  Accordingly no separate analysis has been
presented.


Notes to the accounts



1 Exceptional items


                                                  30 June 2004                                     31 March
                                                                                                       2003
For the six months ended:                           Continuing     Continuing     Discontinued        Total
                                                                   operations       operations
                                                    operations       restated         restated     restated             
                                                            £m             £m               £m           £m             
                                                                                            
Exceptional operating items - Group:
Reorganisation and integration costs                      (23)              -                -            -
                                                          (23)              -                -            -
Exceptional operating items - joint venture:
Share of Boxclever reorganisation costs                      -              -              (3)          (3)
                                                             -              -              (3)          (3)
Exceptional non-operating items:
Provision against listed investments                         -           (75)                -         (75)
                                                             -           (75)                -         (75)
Total exceptional items before tax                        (23)           (75)              (3)         (78)





2 Reconciliation of operating profit to net cash inflow from operating
activities


                                                       30 June                                      31 March
                                                       2004                                             2003
For the six months        Continuing      Discontinued       Total     Continuing    Discontinued      Total
ended:                    operations        operations                 operations      operations   restated
                                                                £m       restated        restated
                                  £m                £m                         £m              £m         £m
                                                                               
Operating profit                  85                 -          85             61               1         62
before exceptional
items
Depreciation charges              19                 -          19             15               2         17
Amortisation of                   37                 -          37             18               -         18
goodwill
Movement in working               96                 -          96             28             (3)         25
capital
Net cash inflow from             237                 -         237            122               -        122
operating activities
before exceptional
items
Expenditure relating
to exceptional items:
Operating loss                  (23)                 -        (23)              -               -          -
Provision for                      -                 -           -              -               -          -
impairment
Decrease in stocks                 -                 -           -              -               -          -
Decrease in creditors            (1)               (6)         (7)              -            (20)       (20)
and provisions
Net cash outflow from           (24)               (6)        (30)              -            (20)       (20)
exceptional items
Net cash inflow/                 213               (6)         207            122            (20)        102
(outflow) from
operating activities



Cash flow for discontinued operations in the six months ended 30 June 2004
relates to expenditure in respect of ITV Digital which was provided for in
previous years.





3  Earnings per share




                                                                30 June 2004               31 March 2003
For the six months ended:                           Basic            Diluted         Basic       Diluted
                                                                                  restated      restated
                                                       £m                 £m            £m            £m
                                                                                        
                                                                                                      
Profit/(loss) for the period attributable to           37                 37          (41)          (41)
shareholders
Discontinued operations                                 -                  -             6             6
Continuing operations                                  37                 37          (35)          (35)
Continuing operations exceptional items                17                 17            75            75
(including related tax effect of £6 million)
Continuing operations before exceptional               54                 54            40            40
items
Continuing operations amortisation                     39                 39            19            19
Profit for the period for continuing                   93                 93            59            59
operations before exceptional items and
amortisation
Weighted average number of shares in issue -        3,824              3,824         2,747         2,747
million
Dilution impact of share options and                    -                 70             -            10
convertible preference shares - million
                                                    3,824              3,894         2,747         2,757

Earnings/(loss) per ordinary share                   1.0p               1.0p        (1.5)p        (1.5)p

Adjusted earnings per share
Basic earnings/(loss) per share                      1.0p               1.0p        (1.5)p        (1.5)p
Deduct: Loss per ordinary share on                      -                  -          0.2p          0.2p
discontinued operations
Earnings/(loss) per share on continuing              1.0p               1.0p        (1.3)p        (1.3)p
operations
Add: loss per share on continuing operations         0.4p               0.4p          2.7p          2.7p
exceptional items
Earnings per share on continuing operations          1.4p               1.4p          1.4p          1.4p
before exceptionals
Add: Loss per ordinary share on continuing           1.0p               1.0p          0.7p          0.7p
operations amortisation
Earnings per share for the period for                2.4p               2.4p          2.1p          2.1p
continuing operations before exceptional
items and amortisation



An adjusted earnings per share has been disclosed because in the view of the
directors this gives a true reflection of the underlying performance of the
business.



4  Dividends

The Company has declared an interim dividend of 1.1 pence (six months ended 31
March 2003: 1.0 pence) per ordinary share totalling £45 million (six months
ended 31 March 2003: £28 million) which will be paid on 10 January 2005 to
shareholders on the register at 12 November 2004.  The ordinary shares will be
quoted ex-dividend from 10 November 2004.



5  Taxation

The effective tax rate in 2004 on profits from continuing operations is higher
(six months ended 31 March 2003: higher) than the nominal rate of UK corporation
tax primarily as a result of amortisation which is not deductible for
corporation tax purposes.  The underlying tax rate on continuing operations
after taking account of this and other items is 27% (2003: 27%).






6  Intangible assets


                                                                     Goodwill Film libraries        Total
                                                                           £m      and other           £m
                                                                                          £m
Cost:
At 1 January 2004                                                       1,621              8        1,629
Additions                                                               2,302             74        2,376
At 30 June 2004                                                         3,923             82        4,005
Amortisation:
At 1 January 2004                                                         365              5          370
Charge for the period                                                      34              3           37
At 30 June 2004                                                           399              8          407
Net book value:
At 30 June 2004                                                         3,524             74        3,598
At 31 December 2003                                                     1,256              3        1,259



The goodwill relating to the digital broadcasting business, with a carrying
value of £2,883 million, is considered by ITV to have an indefinite useful life.
This is because of the durability and long term profitability of the
broadcasting business and the strength of the underlying brand.  Therefore the
directors consider it appropriate to depart from the requirements of the
Companies Act 1985 and do not amortise digital goodwill to give a true and fair
view.  If such goodwill had been amortised over a 20 year useful life (in line
with the rebuttable presumption in FRS 10) operating profit before exceptional
items for the six months ended 30 June 2004 would have decreased by £67 million
(six months ended 31 March 2003: £25 million) and capitalised goodwill at 30
June 2004 would have been £129 million (31 December 2003: £62 million) lower
than reported.

As required by FRS 10 'Goodwill and Intangible Assets' a formal impairment
review will be carried out at 31 December 2004 in relation to the digital
goodwill.

Goodwill additions include Carlton of £2,265 million (see below) with the
balance relating to new subsidiaries acquired.



Acquisition of businesses

The following adjustments were made to the Carlton assets in order to reflect
the fair values of the acquired net assets at the date ITV assumed effective
control.


                                Book value    Revaluations   Accounting         Other     Assets         Fair
                                    before              £m       policy   adjustments   held for        value
                               acquisition                   alignments            £m     resale   to ITV plc       
                                        £m                           £m                       £m           £m
Intangible fixed assets*               113            (13)         (26)             -          -           74
Tangible fixed assets                   87               3            -             -          -           90
Fixed asset investments                 97              26            -             -          -          123
Stocks                                 164             (5)         (20)             -          -          139
Debtors                                156             (5)          (1)             -          -          150
Current asset investments              182            (10)            -             -          -          172
Assets held for resale                   -               -            -             -         40           40
Cash                                   408               -            -             -          -          408
Creditors and provisions           (1,214)            (24)            -          (11)          -      (1,249)
Pensions provision                     (4)            (94)            -             -          -         (98)
Taxation                              (68)              38            4             -          -         (26)
Total net (liabilities)/              (79)            (84)         (43)          (11)         40        (177)
assets
Elimination of Carlton                                                                                    168
preference shares
Share consideration                                                                                     1,899
Acquisition costs                                                                                          21
Goodwill                                                                                                2,265







*Stated after the removal of the existing goodwill at acquisition of £188
million.





The principal fair value adjustments were:



Intangible fixed assets: revaluation and accounting policy alignment of acquired
ITC and Rank film and programme libraries to value at amortised replacement
cost.

Tangible fixed assets: acquired properties stated at market value.

Investments: revaluation of fixed asset investments to estimated market
value.Stocks: written down to net realisable value and alignment with ITV's
accounting policy.

Assets held for resale: expected net sale proceeds of certain assets held for
sale discounted to their present value at date of acquisition.Creditors:
revaluation of financial instruments to market value and provisions for
properties. Pensions: inclusion of pension deficits on acquisition as calculated
in accordance with SSAP 24. Taxation: deferred taxation on all acquisition
accounting adjustments as appropriate.



The acquisition accounting adjustments shown above are the best estimate
currently available but may be subject to adjustment in the full year accounts.







7  Tangible assets


                          Freehold  Leasehold land and   Vehicles, equipment
                              land           buildings          and fittings
                               and       Long    Short      Owned     Leased  Rental assets        Total
                         buildings
                                £m         £m       £m         £m         £m             £m           £m
Cost or valuation:
At 1 January 2004               62         57        8        337         48             19          531
Additions                        -          -        -          7          -              -            7
Businesses acquired             33         25        5         57         12              -          132
Disposals                        -       (14)      (3)        (5)          -              -         (22)
At 30 June 2004                 95         68       10        396         60             19          648
Depreciation:
At 1 January 2004                7          8        5        256         46             16          338
Charge for the period            -          1        1         17          -              -           19
Businesses acquired              2          2        5         19          8              -           36
Disposals                        -        (2)      (3)        (3)          -              -          (8)
At 30 June 2004                  9          9        8        289         54             16          385
Net book value:
At 30 June 2004                 86         59        2        107          6              3          263
At 31 December 2003             55         49        3         81          2              3          193
                                           



8  Investments


                               Joint       Associated         Trade        Listed     Investment       Total
                            ventures     undertakings   investments   investments  in own shares          £m
                                  £m               £m            £m            £m             £m
                                                   
At 1 January 2004                  -                33            10           147             31         221
Prior period adjustment            -                 -             -             -           (31)        (31)
(note 13)                                                                                              
Restated at 1 January              -                33            10           147              -         190
2004                                                                                                    
Additions                          -                 2             -             -              -           2
Acquisitions                      80                41             2             -              -         123
Reclassification as                -              (43)             -             -              -        (43)
subsidiaries (ITV2, LNN,                                                                               
ITFC, ITV News Channel)
Reclassification (GMTV)            6               (6)             -             -              -           -
Share of attributable              2                 1             -             -              -           3
profits                            
Exchange movement and            (2)               (2)             -           (8)              -        (12)
other                                                                                                   
At 30 June 2004                   86                26            12           139              -        263
                                  
                                                                                                         



9  Net debt


                                         1 January     Acquisitions          Net          Currency   30 June
                                              2004               £m    cash flow      and non-cash      2004            
                                                £m                            £m         movements        £m
                                                                                                £m
Cash at bank and in hand                        91              441        (263)                10       279
Liquid resources                                94               27          (2)                 -       119
                                               185              468        (265)                10       398
Loans due within one year                      (3)            (412)            -                 5     (410)
Loans and loan notes due after one               -            (554)           85               (7)     (476)
year
Finance leases                                (55)             (28)            -                 -      (83)
                                              (58)            (994)           85               (2)     (969)
Net funds/(debt)                               127            (526)        (180)                 8     (571)



Included within liquid investments is £82 million (31 December 2003: £55
million) the use of which is restricted to meeting finance lease commitments.



10  Current asset investments

Current asset investments represents the acquired investment in Thomson shares
which are expected to be disposed of within a year and certificates of tax
deposits.



11 Assets held for resale

Assets held for resale represent acquired businesses which are expected to be
sold within a year of acquisition. These are stated at expected proceeds
discounted to their present value at date of acquisition.



12  Reconciliation of movements in shareholders' funds


                     Share        Share    Capital     Revaluation     Merger        Other       Profit    Total
                   capital      premium    reserve         reserve    reserve      reserve     and loss       £m
                        £m           £m         £m              £m         £m           £m      account
                                                                                                     £m
Balance at 1           277            -        112              39          -        1,079          183    1,690
January 2004*
Prior period             -            -          -               -          -            -         (35)     (35)
adjustments**
Restated balance       277            -        112              39          -        1,079          148    1,655
at 1 January
2004
Acquisition            143           85          -               -      1,671            -            -    1,899
accounting for
Carlton
Redemption of            -            -          -               -          -        (200)            -    (200)
Granada
redeemable
shares
Shares issued in         2            5          -               -          -            -            -        7
the period
Movements due to         -            -          -               -          -            -            4        4
share based
compensation
Retained loss            -            -          -               -          -            -          (8)      (8)
for period for
equity
shareholders
Currency                 -            -          -               -          -            -          (1)      (1)
adjustments
At 30 June 2004        422           90        112              39      1,671          879          143    3,356



* The opening reserves represent ITV plc consolidated reserves, combining ITV
plc with the Granada plc Group as if it had always existed as required under
merger accounting (see note 13).



** Of these, £10 million would have impacted prior periods retained profits, so
is reflected in the statement of total recognised gains and losses.  The
remaining £25 million is a balance sheet reclassification as a result of the
implementation of UITF 38 - accounting for ESOP trusts (see note 13).



13  Basis of preparation

These accounts have been prepared under the historical cost convention as
modified by the revaluation of certain assets.  ITV plc has not previously
prepared audited consolidated financial statements and will draw up its first
consolidated statutory accounts in respect of the period to 31 December 2004.
The consolidated interim accounts for ITV plc have been prepared by adopting
group reconstruction accounting principles to account for the acquisition of
Granada plc by ITV plc and acquisition accounting principles to account for the
acquisition of Carlton Communications Plc by ITV plc.  The comparative results
of the Group comprise the results of Granada plc.



The Group's accounting policies are the same as those adopted by Granada plc.
These accounting policies have been revised to reflect UITF 17 (revised 2003) -
Employee share schemes and UITF 38 - Accounting for ESOP trusts.  Additionally
the prior period adjustments reflect the harmonisation of accounting policies
between Carlton and Granada for the International Distribution.  Comparatives
have been restated to reflect these changes.  There were no other significant
changes to the accounting policies from those published in the Granada plc
financial statements for the 15 months ended 31 December 2003.  Copies of these
accounts can be obtained from the Company Secretary at the registered office.



The comparative information at 31 March 2003 and 31 December 2003 is abridged
and therefore not Granada plc's statutory accounts for those financial periods.
The accounts for the 15 months ended 31 December 2003 have been reported on by
Granada plc's auditors.  The report of the auditors was unqualified and did not
contain a statement under section 237(2) or (3) of the Companies Act 1985.  This
is a statutory disclosure required by the Companies Act 1985.
















Independent review by KPMG Audit Plc to ITV plc



Introduction

We have been engaged by the Company to review the financial information set out
on pages 6 to 14 and we have read the other information contained in the interim
report and considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.

This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the Listing
Rules of the Financial Services Authority.  Our review has been undertaken so
that we might state to the Company those matters we are required to state to it
in this report and for no other purpose.  To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than the Company
for our review work, for this report, or for the conclusions we have reached.



Directors' responsibilities

The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors.  The directors
are responsible for preparing the interim report in accordance with the Listing
Rules.



Review work performed

We conducted our review in accordance with guidance contained in Bulletin 1999/
4: Review of interim financial information issued by the Auditing Practices
Board for use in the United Kingdom.  A review consists principally of making
enquiries of group management and applying analytical procedures to the
financial information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed.  A review is substantially less
in scope than an audit performed in accordance with Auditing Standards and
therefore provides a lower level of assurance than an audit.  Accordingly we do
not express an audit opinion on the financial information.



Review conclusion

On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2004.



KPMG Audit Plc

Chartered Accountants

London

9 September 2004







Shareholder information



Registrars and transfer office



All administrative enquiries relating to shareholdings should, in the first
instance, be directed to Capita Registrars, The Registry, 34 Beckenham Road,
Beckenham, Kent BR3 4TU.  Telephone 0870 1623100 from the UK and +44 20 8639
2157 from outside the UK. Alternatively you could email them at:
ssd@capitaregistrars.com



Shareholders who receive duplicate sets of Company mailings because they have
multiple accounts should write to the registrar to have the accounts
amalgamated.



By logging on to www.capitaregistrars.com and selecting Shareholder Account
Services you can benefit from a number of online services as follows:



•                     View share price and current value of shareholding.



•                     View shareholding details



•                     View share transaction history.



•                     View details of dividends paid.



•                     Apply/change dividend mandate instruction.



•                     Apply/change dividend reinvestment plan mandate.



•                     Change registered postal address.



•                     Proxy voting.



•                     Register email address to receive future shareholder
                      communications and reports via the
                      internet rather than by post.



You will need your investor code which is printed on your share certificate(s).



Share dealing service

ITV has established a low-cost postal share dealing service. Shareholders
wishing to take advantage of the service should contact Hoare Govett Limited,
Low-Cost Share Dealing Department for details, telephone 020 7678 8300.



Dividend Reinvestment Plan

ITV operates a Dividend Reinvestment Plan to provide UK shareholders with a
facility to invest cash dividends by purchasing further ITV shares. Further
details are available from the registrar.



Individual Savings Accounts (ISAs)

ITV has introduced corporate sponsored Maxi and Mini ISAs. The ISAs offer UK
resident shareholders a simple low-cost and tax efficient way to invest in ITV
ordinary shares. Full details together with a form of application are available
from HSBC Trust Company (UK) Limited, Corporate PEP & ISA, 5th Floor, City
Plaza, 2 Pinfold Street, Sheffield S1 2QZ. Telephone 0845 745 6123.



The Unclaimed Assets Register

ITV participates in The Unclaimed Assets Register, which provides a search
facility for financial assets, which may have been lost or forgotten and which
donates 10% of its public search fees to a wide range of UK charities.





For further information contact:

The Unclaimed Assets Register

Lloyds Chambers

1 Portsoken Street

London E1 8DF

Telephone +44(0) 870 241 1713

www.uar.co.uk



Share price information

The current price of ITV ordinary shares is available on Ceefax, Teletext, FT
Cityline (operated by the Financial Times), telephone 0906 483 2753 and on ITV's
corporate website www.itvplc.com. The current  price of ITV convertible shares
is also available on ITV's corporate website.



Unsolicited mail

ITV is legally obliged to make its register of members available to the public.
As a consequence of this some share holders might receive unsolicited mail.
Shareholders wishing to limit the amount of such mail should write to the
Mailing Preference service ('MPS'), Freepost 22, London W1E 7EZ.  MPS will then
notify the bodies that support its service that you do not wish to receive
unsolicited mail.





Registered office

ITV plc

The London Television Centre

Upper Ground

London SE1 9LT

Telephone 020 7620 1620

Company registration number: 4967001



Corporate website

Further information about the Company is available on the internet at
www.itvplc.com and www.itv.com.



Financial calendar

Full year results announcement in March 2005.



Annual General Meeting on 26 May 2005.



Dividends



Interim 2004



Ex-dividend date

10 November 2004



Record date

12 November 2004



Final date for return of DRIP mandate forms

21 December 2004



Payment date and DRIP purchase

10 January 2005



Share certificates posted and Crest accounts credited

21 January 2005



Merger

A general guide to the UK tax treatment of former Granada and Carlton shares in
respect of the merger was set out in the merger documents sent to both sets of
shareholders in December 2003. In addition, a letter was sent to ITV
shareholders on 4 March 2004 containing information for former Granada
shareholders on the base cost of the Granada redeemable shares and for former
Carlton shareholders on the base cost of ITV ordinary and ITV convertible
shares. Copies of all of these documents are on our website or are available on
request from the Company Secretary's office



Copies of this statement are being sent to all shareholders and are available
from the registered office.





DISCLOSURE NOTICE: The information contained in this document is as of 9
September 2004. The delivery of this document shall under no circumstances
create any implication that there has been no change in the affairs of ITV since
the date hereof or that the information contained herein is correct as of any
time subsequent to its date.



Forward-looking statement



ITV is providing the following cautionary statement. This document contains
certain statements that are or may be forward-looking with respect to the
financial condition, results or operations and business of ITV. By their nature
forward-looking statements involve risk and uncertainty because they relate to
events and depend on circumstances that will occur in the future. There are a
number of factors that could cause actual results and developments to differ
materially from those expressed or implied by such forward-looking statements.
These factors include, but are not limited to (i) adverse changes to the current
outlook for the UK television advertising market, (ii) adverse changes in tax
laws and regulations, (iii) the risks associated with the introduction of new
products and services, (iv) pricing, product and programme initiatives of
competitors, including increased competition for programmes, (v) changes in
technology or consumer demand, (vi) the termination or delay of key contracts
and (vii) fluctuations in exchange rates.








--------------------------


*      Continuing operations before amortisation and exceptional items(2004
excludes £6m (2003: £1m) of operating profit from assets held for resale
including MPC)

**      This is following a new format introduction since the integration of ITV
national and regional news





                      This information is provided by RNS
            The company news service from the London Stock Exchange