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  Print      Mail a friend       Annual reports

Wednesday 09 March, 2005


Final Results

09 March 2005

9 March 2005

                            ITV plc results for year
                             ended 31 December 2004

               Operating profit* up 49% and final dividend up 30%
                        Successful multichannel strategy

Financial highlights

•         ITV plc net advertising revenue in 2004 up 4.7%#
•         ITV2, ITV3 and ITV News Channel net advertising revenue up 76%

                                                     Pro forma                  Reported
Operating EBITA*                                 £325m         +49%        £324m        +64%
Pre-tax profit*                                  £340m         +57%        £341m        +58%
EPS*                                             6.3p          +76%         6.6p        +16%

Reported numbers compare ITV plc 12 months to 31 December 2004 with Granada plc for 15 months to
31 December 2003.

•         Net cash inflow from operating activities £321m
          -     £354m returned to shareholders plus ITV dividends
          -     Net debt at year-end reduced to £280m
•         Dividend for the 12 months to 31 December 2004 up 20% at 2.4p

Operating highlights

•         Strong growth from top five categories of advertisers
•         Operating margin increased by 45%
•         £120m cost saving plan delivered ahead of schedule
•         ITV Family of Channels multichannel viewing share in 2004 held at
          28.1% (2003 28.1%)
•         ITV driving digital performance
          -     ITV2 adult viewing share up by 27% in 2004
          -     ITV3 launched 1 November 2004
          -     Ratings performance a year ahead of plan
•         Good progress on regulation
•         Evening News hour viewing share up 4% in 2004
•         ITV is home of top UK programmes
          -     Top programme of the year Coronation Street
          -     Eight out of top ten UK dramas
          -     Top entertainment I'm a Celebrity - Get Me Out of Here
•         Granada commissions for other broadcasters:
          -     US network re-commission Nanny 911
          -     Australia's highest-rating new entertainment series Dancing with 
                the Stars
          -     Germany's highest-rating new entertainment series Ich bin ein 


•         ITV plc net advertising revenue from ITV1, ITV2, ITV3 and the ITV News
          Channel in quarter to March 2005 up 12%
•         In the three months since the launch of ITV3 in November 2004:
          -     ITV Family of Channels delivered a 3% increase in share of
                multichannel adult commercial impacts to 41.5%
          -     ITV2 and ITV3 accounted for 55% of total growth in multichannel 
                adult impacts

Three strategic objectives

•         Lead and grow UK commercial TV market
          -     Promote effectiveness of TV advertising
          -     Strengthen ITV Family of Channels
•         Develop content production
          -     To be Europe's leading commercial content provider
          -     Create new content for new technologies
•         Increase revenue streams beyond spot advertising

Commenting, Charles Allen, Chief Executive of ITV said:

'ITV has had an outstanding first year, delivering substantial growth in
turnover which combined with cost savings has delivered a 49% increase in pro
forma operating profit.  We have built a vibrant multichannel proposition and
have a clear strategy for future growth.'

For further enquiries please contact:

ITV plc Tel: 020 7620 1620

Press enquiries
Charles Allen  - Chief Executive
Henry Staunton - Finance Director
Brigitte Trafford - Communications Director

Analysts' enquiries
James Tibbitts - Company Secretary
Georgina Blackburn - Head of Investor Relations

Citigate Dewe Rogerson Tel: 020 7638 9571

Jonathan Clare
Simon Rigby
Anthony Kennaway

Website:, investor information
An analysts presentation will be held at 09.00hrs on 9 March 2005 at the City
Presentation Centre, 4 Chiswell Street, London EC1Y 4UP.

*Proforma figures are prepared as if the merger took place on 31 December 2002
and are presented for continuing operations before exceptional items and
amortisation (2004 excludes £9 million (2003: £4 million) of operating profit
from assets held for resale).

# NAR for ITV plc's share of ITV1 plus ITV2, ITV3, ITV News Channel  and a first
time contribution from GMTV

Chairman's statement

The past year has been an historic and busy one for ITV. In January the
shareholders of Carlton and Granada approved the merger of their two companies
to create ITV plc; and since then the senior team has been shaping and
developing the business for the future. Charles Allen, in his Chief Executive's
review, gives more detail on that activity, and I focus on some of the major
achievements and strategic initiatives in which we are involved.

2004 Results

The combination of rising turnover and rapidly reducing costs following the
merger has contributed to sharply increased profits.

Your Board is proposing a final dividend of 1.3 pence per share. This reflects
the improving profits and strong cash flow and results in a full year dividend
of 2.4 pence per ordinary share, an increase of 20% on the dividend paid by
Granada plc for the equivalent 12 month period last year.

Business development

We are concentrating on two areas in developing ITV:

First to improve our current business

This has been very much the focus for 2004. Our actions have been based on
achieving a number of the goals that we identified in our report at the
beginning of 2004. These included increasing efficiency, reducing regulatory
costs and placing news at the centre of ITV's public service programming.

We will continue to lead and grow the UK TV advertising market, promoting the
power of the medium to advertisers.

Secondly to build new businesses for the future

Whilst continuing to improve the current business, our focus is on creating new
businesses and new revenue streams for the future.  We have been active already,
building interactive revenue streams around our programmes and developing a
package of new channels like ITV2, ITV3 and ITV News Channel. We continue to
work on:

-          developing our production business to be Europe's leading commercial
           content provider and creating new content for new distribution media;
-          increasing our channel line-up and seeking revenues from additional 
-          building our non-advertising revenues.

Corporate Governance and CR

Our detailed processes for maintaining compliance with the Combined Code on
Corporate Governance are set out in the Governance section of the annual report.
As a new company we have been able to adopt processes reflecting current best
practice and we are very pleased to have won the 'Best for Corporate Governance'
in 2004 Award from Legal Week magazine.

We have been able to use our unique regional presence for the benefit of both
the local communities in which we operate and for national campaigns such as '
Britain on the Move.'  We have published a separate Corporate Responsibility
report which is also available on our website at


Etienne de Villiers retired from the Board during the year and I thank him for
his contribution to ITV.  I am delighted to welcome to the Board two new
non-executive directors who were appointed in February 2005. Baroness Usha
Prashar CBE and Sir Robert Phillis both have significant relevant media
experience that will be invaluable to us as we plan ITV's future.

During my first year as Chairman I have visited a number of ITV's sites around
the country and have been impressed by the enthusiasm and professionalism of my
colleagues at all levels. They understand the need to improve efficiency and to
drive ITV forward as a single unified business.  On behalf of my fellow Board
members, I thank all of our management and employees for their hard work and
continuing commitment. I look forward to meeting the challenges of 2005 and
beyond in the knowledge that we have the best people to take the business
forward successfully in a period of rapid change.

Sir Peter Burt

Chief Executive's review

In 2005 ITV is celebrating two anniversaries:

•    we are entering the year of ITV's 50th anniversary, with ITV1 firmly
     established as the UK's number one commercial channel, and with ITV2 and 
     ITV3 rapidly growing both audience and revenues; and

•    we have just completed our first year as a single, unified company
     and during that period we have streamlined and improved our operations and
     delivered cost savings ahead of expectations in both speed and amount.

I am very pleased that we have, with the support of the Board, achieved so much
over the last 12 months since completing the merger, which created ITV plc on 2
February 2004. In the Operating Review the annual report there is a lot more
detail on the programming successes and the development of the business over the
last year. Here I will focus on the principal factors affecting the Company, our
people, and the outlook for the future.

Results and advertising revenue

The 49% growth in pro forma operating EBITA in 2004 has resulted from a
combination of growing revenues and reducing costs which have significantly
increased our operating margin. ITV plc's advertising revenue in 2004 across the
Family of Channels (ITV1, ITV2, ITV3 and the ITV News Channel) including GMTV
was up 4.7% at £1,588 million with ITV2 revenue rising strongly. ITV3 commenced
broadcasting in November 2004, and its revenue contribution will rise in 2005 as
advertisers are attracted by its excellent ratings performance.  Each of our top
five advertiser categories was up in 2004 - retail, food, entertainment and
leisure, cars and finance.

Sponsorship revenue was also improved at £37 million in the year.

Operating profit (on a pro forma basis before amortisation and exceptional
items) was up by 49% to £325 million for the year. After tax and minority
interests, earnings per share on the same basis were up by 76% to 6.3 pence per
ordinary share.  The improved profits resulted in a strong, positive cash flow
with net cash inflow from operating activities of £321 million.

We have disposed of a number of non-core businesses raising more than £270
million which, together with good operating cash flow, results in our having a
strong balance sheet with closing net debt of £280 million.

The final dividend of 1.3 pence per share will be paid on 1 July 2005 to
shareholders on the register on 22 April 2005 and the ex-dividend date will be
20 April 2005.

The interim and final dividends for 2004 are 1.1 pence and 1.3 pence
respectively (excluding the first interim dividend of 0.5 pence per share paid
on 1 July 2004 in respect of the three months to 31 December 2003).  Over the
medium term, the Company intends to re-balance the respective levels of interim
and final dividend such that the interim represents approximately one-third of
the total dividend.  Increases in the final dividends, such as this year's, in
the absence of any unforeseen circumstances, are therefore likely to be greater
than increases in interim dividends in order to achieve that objective.

Schedule performance

ITV's viewing performance is dependent upon the quality and popular appeal of
its programmes, both those produced internally and those commissioned from
independent producers. For ITV1 we remain committed to commissioning the best
possible programmes to attract our mass audiences. For ITV2 and ITV3 we intend
to develop our programme offering, increasing the level of investment and
targeting additional acquired material over the coming months.

In the two months following the launch of ITV3 at the beginning of November 2004
the combined ITV1, ITV2, ITV3 and ITV News Channel attracted a 45.0% share of
all commercial impacts on UK television, compared to 44.7% in the same period in
2003 (one commercial impact being one person viewing one 30 second
advertisement).  The very rapid take-up of digital multichannel television in
the UK, especially the spectacular growth of Freeview, helped the strong growth
of ITV2 and ITV3 during that period.

We are embracing the rapid change towards a fully digital multichannel
environment, and are most supportive of Freeview which offers the simplest
upgrade route for our viewers.  The development of our ITV Family of Channels
will strengthen our business in that digital environment.

Our autumn schedule on ITV1 performed well, as we had expected, with a strong
line-up of returning hits including another series of I'm A Celebrity...Get Me
Out Of Here! in late November. ITV2 has been achieving a 2.4% average viewing
share of its important 16-34 target demographic.  ITV3, which targets a 35+
demographic, has been attracting an average 1.1% share of ABC1 adults during its
first three months of transmission.

ITV overall screened six of the top ten performing programmes in 2004, or seven
of them excluding sports programmes.

The all time commercial viewing share of the ITV Family of Channels in
multichannel homes over the first six weeks of 2005 was 29.5%.  Compared to the
same period in 2004 this was 4% lower mainly as a result of the very high
viewing shares achieved in 2004 for the third series of I'm A Celebrity...Get Me
Out Of Here!


Granada, ITV's production arm, continued to be the most significant supplier of
programmes internally to ITV1, ITV2 and ITV3, and is a major supplier to many
other broadcasters in the UK and internationally.

In 2004 total external sales were £267 million made up of: original productions
for the UK and overseas markets of £102 million; the distribution and
exploitation of rights and products of £109 million; and facilities and
education turnover of £56 million.

We have improved our profit margins by concentrating on high value programmes,
and we have substantially increased our international production slate with a
number of returning shows and formats such as Nanny 911 in the US and Hell's


At the same time that ITV plc was being created, so too was our regulator Ofcom
as five separate regulators became one on 29 December 2003. We have developed a
working relationship with Ofcom during 2004 which is essential for the many
regulatory processes and reviews due in 2005 and beyond. Following the grant in
December 2004 of our new digital broadcasting licences for ITV1 (replacing the
old analogue licences) these processes now include:

•           the review of the financial terms of our ITV1 licences from 2005;

•           Ofcom's review of Public Service Broadcasting ('PSB') and their
            forthcoming review of television advertising; and

•           Ongoing discussions about how the regulation of television generally
            should develop to be appropriate to the changing media landscape.

The first issue - the review of the financial terms of our ITV licences - is due
for decision in the summer and will be effective from 1 January 2005.  The
licence fee structure dates from the time that ITV1 was the UK's sole commercial
television station, and there was value in the scarcity of spectrum allocated
for television broadcasting. Today there are many hundreds of TV channels
available in the UK and yet in 2004, ITV1 paid a licence fee (net of the digital
licence rebate), of £204 million. Channel Five by contrast paid less than £20
million and none of C4, the BBC, BSkyB nor any other broadcaster paid any such
amount at all. Achieving an equitable outcome to this review is one of our short
term priorities for 2005.

Many of the potential regulatory opportunities, however, lie beyond 2005. We
expect the review of Public Service Broadcasting to be ongoing, with progressive
reductions in the level of our mandated programming.  This reflects an
acknowledgement that, as we move to a digital multichannel world, there is more
choice already available to viewers and less reason to require such PSB
programming of one commercial broadcaster and not of others. A first step this
year will see the mandated hours of non-news regional programming reduced by 1.5
hours per week in the English regions and reducing further in 2008. We remain
committed to producing much of our network programming in the regions, but our
viewers do not recognise the benefit of non-news regional programmes as a
separate product.

The Contract Rights Renewal ('CRR') remedy, under which we operate, governs the
sale of ITV1 airtime.  Airtime in the UK is sold via the Station Average Price
mechanism, which was established by the market, not ITV alone.

Ofcom have indicated that they are planning to hold a review of the airtime
sales market, and we are keen to work with them in identifying other airtime
sales models.

Alongside those reviews we are also seeking to promote discussions about other
areas of regulation. Firstly, there are already significant differences between
the form of advertising and sponsorship that is currently permitted in America
on one hand and in the UK and Europe on the other.  Secondly, television is an
evolving medium and the effects of interactivity, PVRs, broadband and mobile
distribution, all create possibilities which the current regulation never
envisaged. We will work with our regulators to ensure that the regulatory
environment evolves at the same rate as the medium and technology themselves


2005 has started strongly. With Easter falling in March this year rather than
April in 2004, March revenues have benefited from those advertisers who seek
Easter airtime. This has contributed to ITV plc's first quarter revenues across
all the ITV Family of Channels, including a first time contribution from GMTV,
being up by £56 million which is a very encouraging start to the year.

Within that, ITV2 advertising revenues have grown very strongly in the quarter
to March 2005, up by 90% on 2004, whilst ITV3 has made a first time

Under the CRR remedy we have been engaged with our advertising customers in
completing their advertising contracts for 2005.  We have been very pleased with
the level of support from many of those customers in renewing their contracts.


We have achieved a great deal during 2004 having made One ITV a reality.  We
have now delivered increased revenue, reduced costs, a more efficient structure
and a very significant improvement in both profit and cash flow. Our executives
and employees have been key to that process, both achieving the aggressive
targets set for them and identifying further actions that have helped to exceed
those targets in many areas.

I would like both to thank them for that, and to say how pleased I am that, as
we now move to the next phase of developing ITV's business for the future, we
will continue to have such talented people supporting us in those efforts.

Charles Allen CBE
Chief Executive

Financial review

The merger of Granada plc and Carlton Communications Plc to form ITV plc was
completed on 2 February 2004. As Carlton has been treated as an acquisition for
accounting purposes, the statutory results for the year to 31 December 2004
include the trading results of Granada from 1 January and following the merger,
the trading results of ITV plc from 2 February. The statutory results for the
year ended 31 December 2004 for ITV have comparative information for the 15
month period ended 31 December 2003 relating to Granada only. As the comparative
disclosed is for a different time period and includes only the results of
Granada, pro forma results of the Group are also shown for the years ended 31
December 2003 and 2004 (as if the merger had taken place on 31 December 2002).


On a pro forma basis turnover for the year to 31 December 2004 increased by 3%
to £2,083 million (2003: £2,025 million). Published turnover on continuing
operations less joint ventures was up 18% at £2,053 million (2003: £1,746
million) following the inclusion of Carlton from 2 February 2004.

Net advertising revenue ('NAR')

NAR (including a first time contribution of £18 million from GMTV for the period
from October 2004 when it became a subsidiary) increased by 4.7% during the year
to £1,588 million (2003: £1,517 million) on a pro forma basis as the overall UK
advertising market was favourable.

This reflects growth of 1.9% from ITV1 (ITV plc share) and 76% from ITV2, ITV3
and ITV News (ITV3 launched on 1 November 2004 and NAR is included from that

We have been in negotiation with many of our advertisers on the terms of their
new contracts from 1 January 2005. Our negotiations are within the framework of
the Contracts Rights Renewal ('CRR') remedy agreed with the Office of Fair
Trading as a condition to the merger creating ITV plc.

ITV's NAR is partly a function of audience share which is measured in terms of
commercial impacts.  In 2004, ITV's total share of commercial impacts on UK
television was 42.7% (2003: 44.5%). It is this level of impact delivery that
provides advertisers with the ability to achieve fast effective coverage for
their brands.  The reduction in 2004 was principally the result of the very
rapid take-up of digital multichannel television in the UK and the increasing
number of channels available to viewers.

We have experienced a very encouraging start to the year; currently, we estimate
that for the quarter to 31 March 2005 our ITV1 NAR will be approximately £369
million, reflecting ITV1 NAR up by some 9% on last year. Our combined NAR for
other ITV channels (ITV2, ITV3 and ITV News and a first time contribution from
GMTV) is estimated at £36 million, up from £10 million in 2004.

Other sales

On a pro forma basis other broadcasting sales of £216 million (2003: £200
million) comprise principally cinema advertising, sponsorship income, fees for
airtime sales on behalf of third parties, sales of ITV programming by the
Network Centre to Channel 3 licencees not owned by ITV plc and increased premium
rate telephone income.

Production turnover includes original productions for the UK and international
markets, the distribution and exploitation of internally generated acquired
rights, studios and facilities turnover and sales by the education business.
Programming made by Granada for ITV channels is not included in turnover above
as it represents an internal programming cost of sale. In 2004, total external
sales of £267 million (2003: £293 million) included original productions for
other broadcasters of £102 million, distribution and exportation sales of £109
million and facilities and education turnover of £56 million. A decrease in
facilities turnover since last year is the result of the closure of a number of
studios in 2004 and increased internal usage of facilities on programmes
produced for ITV.

ITV schedule

The cost of the ITV1 schedule (ITV plc share) in 2004 on a pro forma basis was
£796 million (2003: £783 million). The launch of ITV3 and increased investment
in ITV2 and ITV News programming resulted in a further increase of £12 million
over 2003. This further investment has been key in attracting new advertisers
and viewers to ITV resulting in a NAR increase of £53 million since last year. 
GMTV schedule costs since the date of acquisition were £7 million.

Integration synergy savings

The synergy savings delivered as a result of the merger between Carlton and
Granada are £110 million on a full year run rate basis at 31 December 2004. At
the 2004 interim results we increased the original target of £100 million of
merger savings to £120 million run rate by 31 December 2005. The synergies have
been delivered as a result of savings in property, systems, people and improved
efficiencies across our businesses.


On a pro forma basis Group operating profit from continuing operations before
charges for amortisation and exceptional items was up 49% to £325 million (2003:
£218 million).  Profit from our continuing operations before tax, amortisation
and exceptional items was up 57% to £340 million (2003: £217 million).

On a published basis Group operating profit from continuing operations before
charges for amortisation and exceptional items was £324 million (2003: £198
million). Profit on continuing operations before tax, amortisation and
exceptional items was £341 million (2003: £216 million).

A reconciliation of pro forma operating EBITA for 2004 with 2003 is shown below.

A reconciliation of 2004 pro forma operating EBITA with 2003 is shown below:            £m        £m

EBITA for 2003                                                                                              218
Increase in NAR and sponsorship (exc. GMTV)                                                       54
Licence fees                                                                          (10)
Increase in digital dividend                                                            23
Increased investment in programming (exc. GMTV)                                                 (25)
Increase in telephony and other non-advertising revenue                                           11
GMTV contribution                                                                                  8
Increased investment in ITV News Channel                                                         (4)
Granada production profitability                                                        11
Reduction in programme sales and leaseback                                             (4)
Cost savings                                                                                      49
Other movements                                                                                  (6)
EBITA in 2004                                                                                               325

Exceptional items

The operating exceptional items in the period total £69 million and primarily
represent merger integration and restructuring costs including employee
redundancy, outplacement costs and asset write-offs.

The £17 million gain from non-operating exceptional items reflects a gain from
the sale of our 18% stake in Village Roadshow during the period.

Investment income

Investment income of £7 million comprises dividend income from holdings in SMG,
Channel 7 in Australia and Thomson. Our stake in Thomson has now been sold.

Profit on sale of fixed assets

The £7 million profit arises from the sale of surplus properties in the period,
primarily in central London.


The net interest charge of £13 million includes interest income of £22 million,
mainly on bank deposits, offset by £35 million of interest payable on our
principal debt instruments and interest payments under finance lease

ITV has adopted a policy of amortising the fair value of its interest rate swaps
on a straight line basis over the remaining life of the swaps.


The effective rate of tax on PBT is 29%, which reflects the beneficial
settlement of tax related issues and the release of provisions of £10 million
following the settlement of prior years' group relief with United Business Media
plc, offset by non-deductible amortisation costs. However, the underlying
effective rate is 27% as shown below:

Underlying effective rate of tax:

Operating profit, before goodwill amortisation and exceptional items                                        £m

•  Profit before tax as reported                                                                           207
•  Amortisation charge                                                                                      82
•  Exceptional items                                                                                        52
Underlying tax charge
•       Tax charge as reported                                                                              61
•       Credit for exceptional costs                                                                        14
•       Credit in respect of prior year items                                                               17

Underlying effective rate of tax                                                                           27%

Licence fees and corporation tax

Licence fees, paid in addition to corporation tax, comprise both a fixed annual
sum and a variable element representing a percentage of our NAR and sponsorship
income relating to homes which receive ITV1 in analogue and not in digital
format. As the number of homes receiving digital television via satellite, cable
or terrestrial increases, so the variable licence fee reduces with a digital
licence rebate. In the year the fixed sum paid was £67 million and the net
amount of variable licence fee was £137 million, some £137 million less than it
would have been without the digital licence rebate. This reflects an average
digital TV penetration in the year of some 50%. The benefit from the digital
licence rebate of £137 million was £23 million more than the previous year due
to the increase in digital penetration. In addition £3 million was paid in
licence fees since acquiring a controlling interest in GMTV in October 2004.

Together with the tax charge of £61 million on our continuing businesses, this
additional licence fee of £207 million produces a combined tax and licence fee
rate of 54% on our profit before tax, licence fees and amortisation of £496
million as set out below.

An analysis of combined licence fee and corporation tax is set out below:                        £m         £m

Profit before tax                                                                                          207
Amortisation                                                                                                82
Licence fees:
Cash bid payment                                                                                 67
PQR payment                                                                                     274
Digital dividend benefit                                                                      (137)
GMTV payment (since October 2004)                                                                 3
Licence fees net                                                                                           207
2004 tax charge                                                                                  61
Licence fees net                                                                                207
Total 'tax'                                                                                                268

Tax charge and licence fees of £268 million as % of above, £496 million profit =


The Board is proposing a final dividend of 1.3 pence per share. This reflects
improving profits and strong cash flow and results in a full year dividend of
2.4 pence per ordinary share, an increase of 20% on the dividend paid by Granada
plc for the equivalent 12 month period last year (this excludes the first
interim dividend of 0.5 pence per share paid on 1 July 2004 in respect of the
three months to 31 December 2003).

Earnings per share

Pro forma adjusted earnings per share on continuing operations, before
exceptional items and amortisation, were up 76% at 6.3 pence (2003: 3.6 pence).
On the same basis published earnings per share are 6.6 pence (2003: 5.7 pence).
Basic reported earnings per share are 3.5 pence (2003: 0.3 pence loss per

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 total fair value adjustments are £86 million. This has resulted in a
reduction in goodwill of £13 million on the figure included in our half year
results following further review and developments such as the sale of the Moving
Picture Company. The table below shows the principal fair value adjustments.
These are explained below.

                                                                                                        As at 2
The principal fair value adjustments are shown below:                                             £m         £m
Opening Carlton net liabilities                                                                            (78)
Fair value adjustments:
-Film libraries                                                                                 (39)
-Assets held for resale                                                                           59
-Borrowings and interest rate swaps                                                             (42)
-Pension deficits                                                                               (96)
-Other (mainly taxation)                                                                          32
Fair value of Carlton net liabilities acquired                                                            (164)

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

-          Assets held for resale: Carlton businesses which have been sold
within a year of the merger (Carlton Books, Moving Picture Company and
Superhire) are shown at expected net proceeds discounted to present value at 2
February 2004. The profits made by these businesses in the year up to the date
of disposal of £9 million (2003: £4 million) have been excluded from the
consolidated results of the Group and the pro forma financial information.

-          Borrowing and interest rate swaps: Carlton used a series of debt
instruments as a source of funding.  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) by £12 million.  Fair value
adjustments on other bonds amounted to a £3 million decrease in borrowings.  At
merger the market value of the swap liabilities to ITV was £33 million higher
than book value, reflecting higher sterling rates and embedded options.

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

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

ITV acquired a further 25% stake in GMTV in October 2004 bringing ITV's total
shareholding in the business to 75%. The estimated fair value of the net assets
of GMTV was £3 million.

ITV also acquired a further 49.5% shareholding in GSkyB in November 2004
bringing the total shareholding to 100%. The estimated fair value of the net
assets of GSkyB was £1 million.


Total goodwill additions amounted to £2,288 million as a result of the merger
between Carlton and Granada and a further £82 million arose from the increased
shareholdings in GMTV and GSkyB.  The total operating amortisation charge in the
year is £78 million (2003: £46 million). The goodwill relating to the digital
broadcasting business is considered to have an indefinite useful life and as
such is not amortised but is subject to annual impairment reviews. Analogue
broadcasting goodwill is amortised over the period until the likely analogue
switch off in 2010.

Cash flow and net debt

The principal movements in net debt in the period are shown in the table below:                            £m
Operating profit before depreciation, amortisation and exceptional items                                  359
Movements in working capital                                                                               22
Cash flow relating to exceptional items                                                                  (60)
Cash flow from operating activities                                                                       321
Taxation, interest and dividend receipts                                                                 (34)
Capital expenditure less sale of fixed assets                                                             (1)
Purchase of investments and businesses                                                                   (56)
Sale of investments and businesses                                                                        267
Cash returned to shareholders excluding dividends                                                       (354)
Equity dividends and other movements                                                                     (42)
Net debt acquired with subsidiary undertakings                                                          (508)
Movement in net debt                                                                                    (407)
Opening net funds                                                                                         127
Closing net debt                                                                                        (280)

The cash inflow from operating activities was £321 million reflecting strong
trading and a working capital inflow which is stated after a payment of £27
million for the rights for the 2006 Football World Cup. Exceptional cash
payments of £60 million reflect the merger integration costs and payments in
respect of the exit from ITV Digital.

Capital expenditure was £36 million (broadly in line with our depreciation
charge) and £35 million was raised from property sales. The £56 million of
purchases of investments and businesses were principally to buy Sky's stake in
GSkyB and an additional 25% stake in GMTV (bringing ITV's ownership to 75%).

The sale of businesses and investments included the disposal of the Moving
Picture Company and our stakes in Village Roadshow and Thomson.

In addition to normal dividend payments, £200 million was paid to Granada
shareholders as part of the terms of the merger. A further £154 million was paid
to purchase Carlton preference shares in the year.  Net debt acquired of £508
million was from Carlton and new subsidiary companies (ITV2, ITV News Channel,
ITFC, London News Network, ITV Network Centre, GMTV and GSkyB).

Treasury operations and policies

A central department in London following policies and procedures laid down by
the Board, manages the Company's treasury operations.  The most significant
treasury exposures faced by ITV are raising finance, managing interest rate and
currency positions and investing surplus cash in high quality assets.  Treasury
policies have been approved by the Board for managing each of these exposures
including levels of authority on the type and use of financial instruments.
Transactions are only undertaken if they relate to underlying exposures. The
treasury department reports regularly to the Audit Committee and treasury
operations are subject to periodic independent reviews and internal audit.

ITV has established and retains strong relationships with a number of banks to
ensure a balanced spread of risk and to facilitate future funding requirements.

Set out below are ITV's principal treasury policies:

-          Financing: ITV's financing policy is to fund itself long term using
debt instruments with a range of maturities. It is substantially funded from the
UK and European capital markets and has bank facilities from the UK syndicated

-          Interest rate management: the Group's interest rate policy is to have
fixed interest rate debt of between 30% and 70% of its total net indebtedness
over the medium term in order to provide a balance between certainty of cost and
benefit from low floating rates.  ITV uses interest rate swaps and options in
order to achieve the desired mix between fixed and floating.

-          Currency management: the Group's foreign exchange policy is to hedge
foreign currency denominated costs at the time of commitment and to hedge a
proportion of foreign currency denominated revenues on a rolling 12 month basis.
The policies significantly reduce the Group's earnings and balance sheet
exposures to changes in exchange rates.

-          Investment in cash: ITV operates strict investment guidelines with
respect to surplus cash and the emphasis is on preservation of capital.
Counterparty limits for cash deposits are largely based upon long term ratings
published by the major credit rating agencies.  Deposits longer than three
months require the approval of the Management Committee of the Board.


The Group's pension schemes are run independently by the schemes' Trustees. The
Trustees, as advised by the schemes' actuaries are funding the schemes on a long
term basis. All pension scheme assets are held in separate Trustee administered

A valuation of the schemes' assets is carried out by the scheme actuaries for
the Trustees every three years.  The most recent valuation of the main scheme
was carried out on 1 October 2001.  A current valuation as at 31 December 2004
is in progress and the Trustees will be reviewing the results in due course.

The Company, together with the Trustees, keeps the schemes under review. Like
many UK listed companies the main ITV pension scheme has a funding deficit. The
Trustees will review future funding requirements once the 31 December 2004
valuation is complete.

The FRS 17 disclosures, which are not directly relevant for the ongoing funding
of the schemes, show a deficit, net of deferred tax, of £448 million (2003: £278
million deficit). The 2004 operating cost under FRS 17 would have been £23
million (2003: £20 million) after a curtailment gain of £4 million compared to a
SSAP 24 charge of £26 million. The total FRS 17 charge including the net return
on scheme assets and liabilities is £28 million compared to a combined Granada
and Carlton total for the 15 months to 31 December 2003 of £48 million.

The principal reasons for the increase in the reported FRS 17 net deficit are
pensions deficits in businesses acquired and revised mortality rate assumptions
as advised by the schemes' actuaries, partly offset by increases in asset
values. The changes to mortality assumptions reflect an industry wide
recognition of increased life expectancy.

International Financial Reporting Standards

ITV plc is complying with IFRS for reporting periods commencing from 1 January
2005. A project team reporting to the Audit Committee has undertaken the
conversion process to ensure that appropriate accounting policies and procedures
are in place for a smooth transition.

Conversion has a low impact on ITV's core operating results with no anticipated
effect on revenue recognition. The main areas impacting operating profit are:

IFRS 2 - Share based payments.

ITV will capture and value all share options, SAYE schemes and share awards in
accordance with this standard. This will result in an increase in the charge
under IFRS.  Our schemes will be expensed based on a fair value approach and
include share options and SAYE schemes which are not captured under UK GAAP.
ITV has not taken the IFRS 1 option to value schemes dated pre 7 November 2002.
This will result in an increased charge from 2004 to 2005 as more schemes are

IAS 19 - Employee benefits.

ITV will be required to recognise its full pensions deficit on defined benefit
schemes in the balance sheet and charge the current service cost and net
interest to the profit and loss account. If approved by the EU, ITV intends to
take the option under the amendment to IAS 19 to take actuarial gains or losses
through the statement of recognised income and expenses. The impact on the
accounts will be broadly in line with the current FRS 17 disclosure requirement
(which will replace the current SSAP 24 charge on the defined benefit schemes)
and as a result of a curtailment gain, will show a reduced pensions charge in

At the EBITDA level the additional charge from share payments is approximately
matched by the reduced pensions charge in 2004.

IFRS 3 - Business combinations.

ITV will no longer amortise goodwill but will subject it to an annual impairment
review. Intangible assets arising on acquisition accounting for Carlton and
other companies will be recognised and amortised.

The principal intangible assets acquired on the acquisition of Carlton and other
companies are the ITV brand name, customer contracts/relationships, broadcasting
licences and programme and film libraries.  The shorter useful economic lives of
customer contracts/relationships will result in a higher amortisation charge in
earlier years but a lower charge in 2006 and later years. ITV has taken the IFRS
1 exemption from applying IFRS 3 to business combinations before 1 January 2004.

The main impacts to the interest charge are from:

IAS 39 - Financial instruments: Recognition and measurements.

ITV will be required to mark to market a number of interest rate and foreign
currency swaps and contracts. This results in potential volatility in the
interest line from those instruments which do not meet the IAS 39 hedging
criteria. Additionally, fixed asset investments, such as SMG, will be marked to
market with movements being taken through reserves. ITV has taken the IFRS 1
exemption from applying IAS 39 and IAS 32 to the 2004 comparative period.

IAS 19 results in a notional charge to interest from the net of an interest
charge on pension scheme liabilities and an expected return on scheme assets.
In 2004 this amounts to £5 million.

IAS 12 - Taxation.

The increase in the number of fair valued items on the balance sheet will impact
the deferred tax charge and the effective rate of tax under IFRS. IAS 12 is
expected to have no impact on the tax payments to the Inland Revenue.

ITV's first published financial reporting under IFRS will be for the half year
to 30 June 2005. This will include the results for the period to 30 June 2004
and the 2004 full year under IFRS. The opening balance sheet for the start of
the comparative period (1 January 2004) will also be shown under IFRS.
Reconciliations will be provided to explain the adjustments made. In the
meantime, we are planning to update investors in the second quarter of 2005 on
the  impact of IFRS.

Henry Staunton
Finance Director

ITV pro forma trading financial information for year ended 31 December 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 year ended 31 December 2004, with a comparative
for the same period in 2003, as if the merger had taken place on 31 December

Basis of preparation of pro forma trading results

The pro forma results for the years ended 31 December 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 full results of GMTV and GSkyB have been consolidated from the time
they became subsidiaries (October and November 2004 respectively).  Prior to
this ITV's share of the results of GMTV are included within joint ventures and
GSkyB within associates.

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

4.    Transactions between Granada, Carlton, the ITV Network Centre and
subsidiary companies previously reported as joint ventures or associates (listed
in notes 1 and 2) have been eliminated as inter-company transactions.

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

6.    The results exclude any former Carlton businesses which ITV plc has sold
since the merger date (2004: £9 million, 2003: £4 million).

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

8.    The 2003 tax charge uses ITV plc's current 2004 underlying effective tax
rate of 27% on profit before tax, prior year items and disallowable items.

9.    The EPS figure for both periods uses the average number of shares in issue
for the year to December 2004 (4,085 million) 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 amortisation exceptional   Carlton
                                                     items (inc.   January   adjustments      2004      2003           %
                                     £m           £m tax effect)   trading
                                                              £m                      £m        £m        £m
Group turnover                    2,053            -           -        55          (25)     2,083     2,025          3%
Group operating profit              177           78          69         1             -       325       218         49%
Joint ventures                        8            2           -       (1)             -         9        10
Associated undertakings               4            2           -         -             -         6         4
Investment income                     7            -           -         -             -         7         8
Profit on sale of fixed               7            -           -         -             -         7         -
Gain on sale of investments          17            -        (17)         -             -         -         -
Profit before interest and          220           82          52         -             -       354       240         48%
Net interest payable               (13)            -           -       (1)             -      (14)      (23)
Profit/(loss) on ordinary           207           82          52       (1)             -       340       217         57%
activities before taxation
Tax on profit/(loss) on            (61)            -        (14)         -             -      (75)      (59)
ordinary activities
Profit/(loss) on ordinary           146           82          38       (1)             -       265       158         68%
activities after taxation
Minority interests                  (7)            -           -         -             -       (7)      (11)
Profit/(loss) for the               139           82          38       (1)             -       258       147         76%
financial period

Pro forma earnings per share before exceptional items and amortisation                      6.3p          3.6p     76%


Turnover of £2,083 million (2003: £2,025 million) is up 3%.  Net advertising
revenue of £1,588 million (2003: £1,517 million) is up 4.7% reflecting growth of
1.9% from ITV1, 76% from ITV2, ITV News Channel and ITV3 and the first time
contribution of GMTV from October 2004 of £18 million.  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 licencees not owned by ITV plc amounted to £216
million (2003: £200 million).  The majority of sales by Granada production of
£402 million (2003: £351 million) are to ITV Broadcasting and therefore excluded
from the above figures.  External production turnover includes original
programme production for the UK and international markets, the exploitation and
distribution of rights and products, studios and facilities turnover and sales
by the education business.


Operating profit of £325 million (2003: £218 million) is up 49% benefiting from
increased advertising revenue and cost savings following the merger.  Joint
venture income is from ITV's 50% holding in GMTV (prior to October 2004) and the
Screenvision businesses in the US and Europe.  Associate income is from stakes
in TV3, GSkyB (prior to November 2004) and ITN.  Investment income represents
dividend receipts from investments in Thomson (since sold), Channel 7 in
Australia and SMG in the UK.  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 (over 90% of which were redeemed in
the second half of 2004).

Consolidated profit and loss account

                                                       12 months ended       15 months ended 31 December 2003
                                                      31 December 2004
                                                                 Total  Continuing    Discontinued      Total
                                                                        operations      operations
                                                                          restated        restated
                                                     Note           £m          £m              £m         £m
Group and share of joint ventures' turnover                      1,297       1,746             176      1,922
Less share of joint ventures' turnover                            (79)           -           (169)      (169)
Acquisitions                                                       835           -               -          -
Group turnover                                                   2,053       1,746               7      1,753
Operating costs before depreciation, amortisation              (1,694)     (1,510)             (4)    (1,514)
     exceptional items
Operating costs - exceptional items                     1         (69)        (16)               -       (16)
EBITDA                                                             290         220               3        223
Depreciation of tangible fixed assets                   7         (35)        (38)             (3)       (41)
EBITA                                                              255         182               -        182
Amortistion of intangible fixed assets                  6         (78)        (46)               -       (46)
Total operating costs                                          (1,876)     (1,610)             (7)    (1,617)
Operating profit - before exceptional items                        174         152               -        152
and acquisitions
Operating loss - exceptional items before               1         (37)        (16)               -       (16)
Operating profit - before acquisitions                             137         136               -        136
Operating profit - acquisitions before                              72           -               -          -
exceptional items
Operating loss - acquisitions exceptional               1         (32)           -               -          -
Operating profit - acquisitions                                     40           -               -          -
Group operating profit                                             177         136               -        136
Share of operating profit/(loss) in:
Joint ventures before exceptional items and                         10           -              47         47
goodwill amortisation
Joint ventures - goodwill amortisation                             (2)           -            (18)       (18)
Joint ventures - exceptional items                      1            -           -            (10)       (10)
Joint ventures                                                       8           -              19         19
Associated undertakings before goodwill                              6           7               -          7
Associated undertakings - goodwill                                 (2)         (2)               -        (2)
Associated undertakings                                              4           5               -          5
Investment income                                                    7           5               -          5
Profit on sale of fixed assets                                       7           3               -          3
Gain on cessation of Boxclever - exceptional            1            -           -               9          9
Gain on sale of investments - exceptional items         1           17           -               -          -

Amounts provided in respect of  fixed asset
investments -
    exceptional items                                   1            -       (109)            (10)      (119)
Profit  before interest and tax                                    220          40              18         58
Net interest (payable)/receivable and similar
Group                                                             (12)           4               4          8
      Joint ventures and associated                                (1)         (1)            (35)       (36)
Net interest                                                      (13)           3            (31)       (28)
Profit/(loss) on ordinary activities before                        207          43            (13)         30
Tax on profit/(loss) on ordinary activities             5         (61)        (58)              21       (37)
Profit/(loss) on ordinary activities after                         146        (15)               8        (7)
Minority interests - equity                                        (1)           -               -          -
Minority interests - non-equity                                    (6)           -               -          -
Profit/(loss) for the period                                       139        (15)               8        (7)
Dividends                                               4         (98)                                   (76)
Amount transferred to/(from) reserves                               41                                   (83)

Earnings/(loss) per share (basic)                       3         3.5p      (0.6)p            0.3p     (0.3)p
Earnings/(loss) per share (diluted)                     3         3.5p      (0.6)p            0.3p     (0.3)p
Adjusted earnings per share:
   before exceptional items (basic)                     3         4.5p        4.0p
   before exceptional items and  amortisation           3         6.6p        5.7p
of intangible assets (basic)

All results in 2004 are from continuing operations. Discontinued operations in
2003 include Boxclever, Granada Business Technology and other discontinued joint

Consolidated balance sheet

                                                                      31 December 2004      31 December 2003
                                                            Note         £m         £m         £m         £m
Fixed assets:
Intangible assets                                              6                 3,617                 1,259
Tangible assets                                                7                   258                   193
Interest in net assets of joint ventures:
Share of gross assets                                                   110                    24
Share of gross liabilities                                             (85)                  (24)
Share of net assets                                                      25                     -
Loans to joint ventures                                                  27                     -
                                                               8         52                     -
Associated undertakings                                        8         26                    33
Other investments                                              8        140                   157
Investments                                                                        218                   190
                                                                                 4,093                 1,642
Current assets:
Stocks                                                                  490                   276
Debtors: amounts falling due within one year                            349                   206
Debtors: amounts falling due after more than one year                    50                     9
Debtors                                                                 399                   215
Cash at bank and in hand and short term deposits                        582                   185
                                                                      1,471                   676
Creditors: amounts falling due within one year:
Borrowings                                                             (10)                   (4)
Other creditors                                                     (1,054)                 (512)
                                                                    (1,064)                 (516)
Net current assets                                                                 407                   160
Total assets less current liabilities                                            4,500                 1,802
Creditors: amounts falling due after more than one year:
Borrowings                                                            (852)                  (54)
Other creditors                                                        (60)                  (45)
                                                                                 (912)                  (99)

Provisions for liabilities and charges                                           (170)                  (47)
Net assets                                                                       3,418                 1,656

Capital and reserves:
Called up share capital                                        9                   422                   277
Share premium account                                          9                    91                     -
Capital reserve                                                9                   112                   112
Revaluation reserve                                            9                    39                    39
Merger reserve                                                 9                 1,671                     -
Other reserve                                                  9                   879                 1,079
Profit and loss account                                        9                   193                   148
Shareholders' funds - equity                                   9                 3,407                 1,655
Minority interests:
Equity                                                                               3                     1
Non-equity                                                                           8                     -
                                                                                 3,418                 1,656

Consolidated cash flow statement

                                                                       12 months ended       15 months ended
                                                                      31 December 2004      31 December 2003
                                                            Note         £m         £m         £m         £m
Net cash inflow/(outflow) from operating activities:
Continuing activities                                          2                   329                   221
Discontinued activities                                        2                   (8)                  (29)
                                                               2                   321                   192
Dividends from equity accounted investments                                          4                     -
Returns on investments and servicing of finance:
Interest received                                                        19                     9
Interest paid on bank and other loans                                  (43)                   (2)
Interest paid on finance leases                                         (4)                   (3)
Preference dividend to minority shareholders                            (5)                     -
Dividends received                                                        7                     5
Net cash (outflow)/inflow from returns on investments and                         (26)                     9
servicing of finance
Taxation                                                                          (12)                  (13)
Capital expenditure and financial investment:
Purchase of tangible fixed assets                                      (36)                  (19)
Purchase of investments                                                 (2)                  (13)
Overseas equity currency impact                                           -                  (11)
Sale of tangible fixed assets                                            35                     8
Sale of investments                                                     208                     5
Net cash inflow/(outflow) from capital expenditure and                             205                  (30)
financial investment
Acquisitions and disposals:
Purchase of subsidiary undertakings                                    (54)                     -
Cash acquired with subsidiary undertakings                              461                     -
Sale of subsidiary undertakings                                           -                    12
Sale of acquired assets held for resale                                  59                     -
Acquisition of minority interest                                      (154)                     -
Net cash inflow from acquisitions and disposals                                    312                    12
Net cash inflow before dividends, liquid resources and                             804                   170
Equity dividends paid                                                             (48)                  (84)
Net cash inflow before liquid resources and financing                              756                    86
Management of liquid resources - increase                                         (19)                  (29)
Cash inflow before financing                                                       737                    57
Bank and other loans repaid                                           (192)                  (33)
Redemption of Granada redeemable shares issued on merger              (200)                     -
Capital element of finance lease repayments                             (4)                   (9)
Cash from issue of share capital                                          8                     -
Cash inflow on sale and leaseback transactions                            -                    44
Net cash (outflow)/inflow from financing                                         (388)                     2
Increase in cash in the period                                                     349                    59

Reconciliation of net cash flow to movement in net debt

                                                                             12 months ended  15 months ended
                                                                            31 December 2004      31 December
                                                                                          £m               £m

Increase in cash in the period                                                           349               59
Increase in liquid resources                                                              19               29
Cash outflow from decrease in debt financing                                             192               33
Capital element of finance lease repayments                                                4                9
Cash inflow on sale and leaseback transactions                                             -             (44)
Change in net debt resulting from cash flows                                             564               86
Loans, loan notes and finance lease obligations acquired with                          (996)                -
subsidiary undertakings
Liquid resources acquired with subsidiary undertakings                                    27                -
Non-cash movements                                                                       (2)                -
Movement in net (debt)/ funds in the period                                            (407)               86
Opening net funds                                                                        127               41
Closing net (debt)/funds                                                               (280)              127

Consolidated statement of total recognised gains and losses

                                                                                      12 months 15 months ended
                                                                                          ended     31 December
                                                                                    31 December            2003
                                                                                           2004        restated
                                                                                             £m              £m
Profit/(loss) for the financial period:
Group                                                                                       131               6
Joint ventures                                                                                5            (16)
Associates                                                                                    3               3
                                                                                            139             (7)
Currency translation differences                                                            (2)             (1)
Total recognised gains and losses relating to the period                                    137             (8)
Prior period adjustments (see note 9)                                                      (10)
Total gains and losses recognised during the period                                         127

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

1.    Exceptional items
                                                       12 months ended 15 months ended 31 December 2003
                                                      31 December 2004
                                                                 Total  Continuing    Discontinued  Total
                                                                        operations      operations
                                                                    £m           £m             £m     £m
Exceptional operating items - Group:
   Reorganisation and integration                                 (65)         (16)              -   (16)
Provision for goodwill impairment                                  (4)            -              -      -
                                                                  (69)         (16)              -   (16)
Exceptional operating items - joint
Share of Boxclever reorganisation                                    -            -           (10)   (10)
                                                                     -            -           (10)   (10)
Exceptional non-operating items:
Fixed asset investments
Provision in respect of listed                                       -        (100)              -  (100)
Provision against joint ventures                                     -            -           (10)   (10)
Gain on sale of fixed asset                                         17            -              -      -
Provision against trade investments                                  -          (9)              -    (9)
Amounts provided in respect of fixed                                17        (109)           (10)  (119)
asset investments
Write-back of investment in net                                      -            -            253    253
Provision for loans made to Boxclever                                -            -           (69)   (69)
Write-back of goodwill                                               -            -          (124)  (124)
Provision for debts due from Boxclever                               -            -           (19)   (19)
Provision for Boxclever exit costs                                   -            -           (32)   (32)
Gain on cessation of Boxclever                                       -            -              9      9
                                                                    17        (109)            (1)  (110)
Total exceptional items before tax                                (52)        (125)           (11)  (136)

Of the above £32 million of the reorganisation and integration costs relate to

A charge of £65 million has been taken to reflect the integration of the
Carlton, Granada and new subsidiary businesses into ITV plc.  The largest
element of these costs (£41 million) were staff related with further costs
incurred arising as a result of integrating our IT systems and infrastructure,
property portfolio and fixed asset base.

2.    Reconciliation of operating profit to net cash inflow from operating
                                     12 months ended 31 December 2004 15 months ended 31 December 2003
                                  Continuing   Discontinued     Total   Continuing   Discontinued     Total
                                  operations     operations        £m   operations     operations  restated
                                          £m             £m               restated       restated        £m
                                                                                £m             £m

Operating profit                         177              -       177          136              -       136
Exceptional items                         69              -        69           16              -        16
Operating profit before                  246              -       246          152              -       152
exceptional items
Depreciation charges                      35              -        35           38              3        41
Amortisation of goodwill and              78              -        78           46              -        46
intangible assets
Increase in stocks                      (80)              -      (80)         (28)              -      (28)
Decrease in debtors                       34              -        34           65              -        65
Increase/(decrease) in creditors          68              -        68         (33)            (3)      (36)
Working capital                           22              -        22            4            (3)         1
Net cash inflow from operating           381              -       381          240              -       240
activities before exceptional
Expenditure relating to
exceptional items:
Operating loss (see note 1)             (69)              -      (69)         (16)              -      (16)
Asset write-offs                           4              -         4            -              -         -
Provision for impairment                   4              -         4            -              -         -
Increase/(decrease) in creditors           9            (8)         1          (3)           (29)      (32)
and provisions
Net cash outflow from                   (52)            (8)      (60)         (19)           (29)      (48)
exceptional items
Net cash inflow/(outflow) from           329            (8)       321          221           (29)       192
operating activities

The net cash inflow from operating activities for businesses acquired in the
year was £103 million.

Cash flows on discontinued operations relates to expenditure against provisions
held in respect of Boxclever, ITV Digital and ITV Sport Channel which have been
previously discontinued.

3.    Earnings per share
                                                                    12 months ended         15 months ended
                                                                   31 December 2004        31 December 2003
                                                                 Basic      Diluted       Basic     Diluted
                                                                                       restated    restated
                                                                    £m           £m          £m          £m

Profit/(loss) for the financial period attributable to             139          139         (7)         (7)
Discontinued operations                                              -            -         (8)         (8)
Continuing operations                                              139          139        (15)        (15)
Continuing operations exceptional items (including related          38           38         125         125
tax effect of £14 million, 2003: £nil)
Continuing operations before exceptional items                     177          177         110         110
Continuing operations amortisation of intangible assets             82           82          48          48
Profit for the financial period for continuing operations          259          259         158         158
before exceptional items and amortisation of intangible
Weighted average number of shares in issue - million             3,947        3,947       2,746       2,746
Dilution impact of share options - million                           -           60           -          14
                                                                 3,947        4,007       2,746       2,760
                                                                  3.5p         3.5p      (0.3)p      (0.3)p

Earnings/(loss) per ordinary share

Adjusted earnings per share
Basic earnings/(loss) per share                                   3.5p         3.5p      (0.3)p      (0.3)p
Deduct: Earnings per ordinary share on discontinued                  -            -      (0.3)p      (0.3)p
Earnings/(loss) per share on continuing operations                3.5p         3.5p      (0.6)p      (0.6)p
Add: Loss per share on continuing operations exceptional          1.0p         0.9p        4.6p        4.6p
Earnings per share on continuing operations before                4.5p         4.4p        4.0p        4.0p
exceptional items
Add: Loss per ordinary share on continuing operations             2.1p         2.1p        1.7p        1.7p
amortisation of intangible assets
Earnings per share for the financial period for continuing        6.6p         6.5p        5.7p        5.7p
operations before exceptional items and amortisation of
intangible assets

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

The share options in the 15 months ended 31 December 2003 are antidilutive
because they reduce the loss per share. Therefore diluted earnings per share for
the 15 months ended 31 December 2003 are the same as basic earnings per share.

4.         Dividends
                                                                                       12 months    15 months
                                                                                        ended 31     ended 31
                                                                                        December     December
                                                                                            2004         2003
                                                                                              £m           £m
Equity shares:
Granada plc first interim 2003 dividend 1.0 pence per share                                    -           28
Granada plc second interim 2003 dividend 1.0 pence per share                                   -           28
ITV plc interim 2003 dividend of 0.5 pence per share                                           -           20
ITV plc interim 2004 dividend of 1.1 pence per share                                          45            -
ITV plc proposed final 2004 dividend of 1.3 pence per share                                   53            -
Total                                                                                         98           76

5.         Taxation
                                                   12 months ended    15 months ended 31 December 2003
                                                  31 December 2004
                                                             Total  Continuing   Discontinued     Total
                                                                   operations      operations
                                                                £m          £m             £m        £m
Based on the profit on ordinary activities of the

Group before exceptional items for the period:
UK corporation tax at 30% (2003: 30%)                         (71)        (58)              -      (58)
UK corporation tax credit on exceptional items                  14           -             21        21
                                                              (57)        (58)             21      (37)
Adjustment in respect of prior periods                          17           -              -         -
Share of associated                                            (1)         (1)              -       (1)
Share of joint ventures                                        (2)           -              -         -
Overseas tax                                                   (2)         (1)              -       (1)
Total current tax on profit on ordinary activities            (45)        (60)             21      (39)
Deferred tax                                                  (16)           2              -         2
Total tax on profit on ordinary activities                    (61)        (58)             21      (37)

In the 12 months ended 31 December 2004 the effective tax rate on profits from
continuing operations is lower (15 months ended 31 December 2003: higher) than
the nominal rate of UK corporation tax primarily as a result of the beneficial
settlement of tax related issues in respect of previous years, offset by
goodwill amortisation and exceptional items which are not deductable for
corporation tax purposes.  The underlying tax rate on continuing operations,
after adjusting for goodwill amortisation and exceptional items, is 27% (15
months ended 31 December 2003: 27%).

5.         Taxation (continued)

                                                                                       12 months    15 months
                                                                                        ended 31     ended 31
                                                                                        December     December
                                                                                            2004         2003
Factors affecting the tax charge for the current period:                                      £m           £m
Current tax reconciliation
Profit on ordinary activities before tax                                                     207           30
Current tax at 30% (2003: 30%)                                                              (62)          (9)
Effects of:
Expenses not deductible for tax purposes (primarily goodwill amortisation)                  (31)         (23)
Non-taxable exceptional items (2003: primarily amounts written off investments)              (2)         (42)
Utilisation of tax losses                                                                     17           27
Timing differences                                                                            16            6
Associates profits on which no tax effect                                                      -            2
Adjustment in respect of prior years (including £10 million in respect of                     17            -
settlement of prior years' group relief with United Business Media plc)
Total current tax charge                                                                    (45)         (39)

In addition there are amounts of tax losses not yet agreed with the Inland
Revenue. These are in relation to Loan Relationship Debits (effectively loans
written off) and capital losses (in relation to losses on investments). These
may be utilised in the future to the extent that there are sufficient levels of
investment income or taxable capital gains.

A deferred tax asset is recognised within debtors falling due after more than
one year as follows:


At 31 December 2003                                                                                    6
Acquisitions                                                                                          52
Utilised in the period                                                                              (16)
At 31 December 2004                                                                                   42

The deferred tax asset relates principally to accelerated capital allowances of
£11 million (31 December 2003: £6 million) and deferred tax on the pensions
deficits recognised as part of acquisition accounting for Carlton of £29 million
(31 December 2003: £nil).  Deferred tax has been provided on the basis that it
is expected that sufficient profits will be generated in future years to recover

6.         Intangible assets
                                                              Goodwill                  Film         Total
                                                                    £m   libraries and other            £m

At 31 December 2003                                              1,621                     8         1,629
Acquisitions                                                     2,330                    74         2,404
Reclassification (see note 8)                                       40                     -            40
Disposals                                                          (6)                     -           (6)
At 31 December 2004                                              3,985                    82         4,067
At 31 December 2003                                                365                     5           370
Charge for period                                                   72                     6            78
Disposal                                                           (2)                     -           (2)
Provision for impairment                                             4                     -             4
At 31 December 2004                                                439                    11           450
Net book value
At 31 December 2004                                              3,546                    71         3,617
At 31 December 2003                                              1,256                     3         1,259

The goodwill relating to the digital broadcasting business, with a carrying
value of £2,889 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 in order 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 of FRS 10) operating profit before
exceptional items for the 12 months ended 31 December 2004 would have decreased
by £135 million (15 months ended 31 December 2003: £62 million) and capitalised
goodwill at 31 December 2004 would have been £197 million (31 December 2003: £62
million) lower than reported.

As required by FRS 10 'Goodwill and Intangible Assets' a formal impairment
review was carried out at 31 December 2004 in relation to the digital goodwill.
No charge was considered necessary.

As a result of an impairment review on goodwill attached to the learning
business an impairment of £4 million has been recognised within exceptional

7.         Tangible assets
                             Freehold land      Leasehold land and  Vehicles, equipment 
                                       and            buildings       and fittings      Rental
                                 buildings      Long      Short      Owned    Leased    assets    Total
                                        £m        £m         £m         £m        £m        £m       £m

Cost or valuation
At 31 December 2003                     62        57          8        337        48        19      531
Additions                    2                     1          -         33         -         -       36
Acquisitions                            31        27          5         32         1         -       96
Disposals                             (14)      (16)          -       (15)         -         -     (45)
At 31 December 2004                     81        69         13        387        49        19      618

At 31 December 2003                      7         8          5        256        46        16      338
Charge for period                        2         2          1         30         -         -       35
Disposals                              (2)       (2)          -        (9)         -         -     (13)
At 31 December 2004                      7         8          6        277        46        16      360

Net book value
At 31 December 2004                     74        61          7        110         3         3      258
At 31 December 2003                     55        49          3         81         2         3      193

a) In accordance with FRS 15 'Tangible Fixed Assets', the Group has adopted a
policy which does not involve the periodic revaluation of its properties.  The
carrying value continues to reflect the amounts arising from the previous

b) Operational properties comprising freeholds and long and short leaseholds
were externally valued at 2 October 1993 and the directors have incorporated
those valuations into the accounts.  All such properties, with the exception of
Granada Television's studios and its specialist buildings were valued on an open
market for existing use basis.  The studios and other specialist buildings were
valued on a depreciated replacement cost basis.  The valuations were carried out
by Messrs Dunlop Heywood and GVA Grimley International Property Advisers.

c) On a historical cost basis revalued assets would have been included at the
following amount:

                                                     31 December 2004                    31 December 2003
                              Freehold land         Long        Total    Freehold          Long     Total
                              and buildings    leasehold                 land and     leasehold
                                                land and           £m   buildings      land and        £m
                                         £m    buildings                              buildings
                                                      £m                                     £m

Valuation                                40            7           47          40             7        47
Accumulated depreciation                (2)            -          (2)         (2)             -       (2)
Net book value as revalued               38            7           45          38             7        45

Cost                                      7            -            7           7             -         7
Accumulated depreciation                (1)            -          (1)         (1)             -       (1)
Net book value on a historic              6            -            6           6             -         6
cost basis

d) No deferred tax has been provided on the revaluation of fixed assets as it is
not the current intention to dispose of the related properties.

8.         Investments
                                         Joint ventures     Associated         Trade        Listed      Total
                                                          undertakings   investments   investments
                                                     £m             £m            £m            £m         £m

At 31 December 2003 restated                          -             33            10           147        190
Additions                                             -              2             -             -          2
Acquisitions                                         80              4             2             -         86
Reclassification (GMTV)                               6            (6)             -             -          -
Reclassification as subsidiaries
(ITV2, LNN, ITFC, ITV News Channel,                (36)            (9)             -             -       (45)
Disposals                                             -              -             -          (16)       (16)
Share of attributable profits                         5              3             -             -          8
Dividends received                                  (3)            (1)             -             -        (4)
Other                                                 -              -             -           (3)        (3)
At 31 December 2004                                  52             26            12           128        218

* Included within the £45 million joint ventures and associated undertakings
reclassified to subsidiaries was £40 million of goodwill (See note 6).

Included within the carrying value of investments is £19 million of goodwill
relating to joint ventures (31 December 2003: £nil) and £26 million of goodwill
relating to associates (31 December 2003: £34 million).

9. Reconciliation of movements in shareholders' funds

                                         Share     Share  Capital  Revaluation   Merger    Other  and loss  Total
                                       capital   premium  reserve      reserve  reserve  reserve   reserve   2004
                                            £m        £m       £m           £m       £m       £m        £m     £m

Balance at 31 December 2003                277         -      112           39        -    1,079       183  1,690
Prior period adjustments                     -         -        -            -        -        -      (35)   (35)
Restated balance at 31 December 2003       277         -      112           39        -    1,079       148  1,655
Acquisition accounting for Carlton         143        85        -            -    1,671        -         -  1,899
Redemption of Granada redeemable             -         -        -            -        -    (200)         -  (200)
Shares issued in the period                  2         6        -            -        -        -         -      8
Movements due to share based                 -         -        -            -        -        -         6      6
Retained profit for period for equity        -         -        -            -        -        -        41     41
Currency adjustments                         -         -        -            -        -        -       (2)    (2)
At 31 December 2004                        422        91      112           39    1,671      879       193  3,407

The reserves position at 31 December 2003 reflects the acquisition of Granada
plc as if ITV plc has always been the parent company (see note 10). This results
in a £5 million difference between Granada plc's closing profit and loss
reserves at 31 December 2003 and the opening profit and loss reserve in these
accounts arising from the difference between the £25 million dividend declared
to be paid by Granada plc to ITV plc in respect of the three months to 31
December 2003 and the £20 million paid by ITV plc to shareholders in respect of
the same period.

Of the prior period adjustments, £25 million is a balance sheet reclassification
as a result of the implementation of UITF 38 'Accounting for ESOP Trusts'.  The
remaining £10 million would have impacted prior periods retained profits so is
reflected in the statement of total recognised gains and losses.  Of this amount
£6 million is as a result of the implementation of UITF 17 (revised 2003) '
Employee Share Schemes', while £4 million relates to a harmonisation of
accounting policies between Carlton and Granada for international distribution.

10.       Basis of preparation

These accounts have been prepared under the historical cost convention as
modified by the revaluation of certain assets.  The Group accounts for the 12
months ended 31 December 2004 are the first accounts prepared by ITV plc.  These
accounts have been prepared by adopting group reconstruction principles to
account for the acquisition of Granada plc by ITV plc as if ITV plc had always
been the parent company of the Granada Group, and acquisition accounting
principles to account for the acquisition of Carlton Communications Plc by ITV
plc.  This combination took place on 2 February 2004.  The comparative
information of the Group represents the results of Granada plc for the 15 month
period ended 31 December 2003.

The Group's accounting policies are the same as those adopted by Granada plc.
These 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 international distribution.  Comparatives have been
restated to reflect these changes.

The Group accounts incorporate the accounts of ITV plc and its subsidiary
undertakings and have been prepared for the 12 months ended 31 December 2004.
The results of the businesses acquired during the year are included from the
effective date of acquisition.  The results of businesses sold during the year
are included up to the date on which control is relinquished, with the exception
of those businesses accounted for as held for resale following the acquisition
accounting for Carlton, which are not consolidated.

Joint ventures are accounted for using the gross equity method and associated
undertakings are accounted for using the equity method.  Loans to joint ventures
are taken into account when calculating the Group's net interest in joint

A joint venture is an undertaking in which the Group has a long term interest
and over which it exercises joint control.  An associate is an undertaking in
which the Group has a long term interest, usually from 20% to 50% of the equity
voting rights, and over which it exercises significant influence.

The are no discontinued operations for the 12 months ended 31 December 2004.
Discontinued operations in the 15 months ended 31 December 2003 represent the
results of Boxclever, Granada Business Technology and other discontinued joint

The financial information set out herein does not constitute the Company's
statutory report and accounts for the 12 months ended 31 December 2004.
Statutory accounts for 2004 will be delivered to the Registrar of Companies
following the Company's annual general meeting.  The auditors have reported on
those accounts; their report was unqualified and did not contain statements
under 237(2) or (3) of the Companies Act 1985.  Copies of the 2004 annual report
and accounts will be sent to all shareholders and will be available from the
registered office of the Company, London Television Centre, Upper Ground,
London, SE1 9LT.

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