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ITV PLC (ITV)

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Wednesday 09 August, 2006

ITV PLC

Interim Results

ITV PLC
09 August 2006


           ITV plc interim results for six months ended 30 June 2006

                    ITV plc revenue up 3% to £1,077 million


Financial Highlights

  • Revenues outside ITV1 net advertising revenue (NAR) up 25% to £423 million
  • Operating EBITA* up 1% to £205 million
  • Operating profit up 9% to £163 million
  • Profit before tax up 12% to £173 million
     • Basic EPS up 7% to 2.9 pence
     • Adjusted EPS# down 3% to 3.4 pence
  • Interim dividend up 2% to 1.35 pence


* Before exceptional items, amortisation and businesses disposed of (principally
Granada Learning)

# Before exceptional items and amortisation


Operating Highlights


  • 3% Revenue growth in H1
     • ITV1 plc NAR down 8% to £654 million

  • Viewing performance in H1
     • ITV1 SOCI cumulative % share in H1 34.2% vs. 37.5% in 2005
     • ITV family SOCI cumulative % share in H1 40.2% vs. 42.2% in 2005

  • Multichannel performance
     • ITV2, 3, 4, CITV and Men and Motors NAR up 46% to £70m
     • ITV's digital channels multichannel viewing increased by +12.3%
     • 44% of all revenue growth in multichannel in H1 from ITV's digital
       channels
     • Two channels launched in H1 2006 - CITV and ITV Play
     • ITV2+1 planned before end of 2006

  • Exploiting our content
     • Production/Worldwide revenue up 9% to £127 million
     • Three new big hit returning series for ITV1 developed in-house: Lewis, 
       Dancing on Ice and Soapstar Superstar

  • Growing new consumer revenues
     • Consumer revenue up over 300% to £69 million
     • ITV Play delivers £9 million profit in H1
     • Friends Reunited H1 revenue up +50%, margins over 50%
     • ITV Broadband portal full launch Q1 2007
     • Live streaming of Champion's League from Q4 2006
     • ITV Local broadband service to roll-out across ITV regions
     • ITV1 will be the UK's first live streamed channel over mobile operator 
       3's network.
     • Continuing disposal of non-core assets total contribution of £108
       million in first half
     • ITV will have returned £1.1 billion to shareholders by the end of 2006


  • Outlook
     • Near term weakness in advertising market
     • ITV plc total NAR 9 months to September -8%
     • Continued growth outside ITV1 NAR
     • Strong autumn schedule
     • Strong programme delivery slate


Commenting, Charles Allen, Chief Executive of ITV said:

'Despite a tough display advertising market, these results show that our
strategy for developing our businesses outside ITV1 is delivering and they
continue to grow at an impressive rate.  Our focus remains on revitalising the
ITV1 schedule performance and the Autumn and Winter schedules are looking
strong.

'We also continue to invest in ITV's digital future with the development of ITV
local and broadband in addition to our successful family of channels.'


For further enquiries please contact:

ITV plc

Tel: 020 7843 8000

Press enquiries
Brigitte Trafford                     - Communications Director
Jim Godfrey                          - Head of Corporate Affairs

Investor enquiries
James Tibbitts                      - Company Secretary
Georgina Blackburn              - Head of Investor Relations
Caroline Bailey                      - Investor Relations Analyst

Citigate Dewe Rogerson
Tel: 020 7638 9571

Jonathan Clare
Simon Rigby
George Cazenove


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

An analysts' presentation will be held at 09.30hrs on 9th August 2006 at the 
City Presentation Centre, 4 Chiswell Street, London EC1Y 4UP



Chairman's statement


First half 2006 results

Operating EBITA before exceptional items, amortisation and disposed businesses
at £205 million was similar to last year and basic earnings per share before
exceptional items and amortisation was down 3% at 3.4 pence.  We have decided to
increase the interim dividend this year by 2% to 1.35 pence, payable on 8
January 2007 to shareholders on the register at 10 November 2006.  The
ex-dividend date will be 8 November 2006.


Return of cash to shareholders

In March, when we announced the initial return of £300 million to shareholders,
we explained that we would be reviewing the ability to return more cash when our
ongoing business review showed that we had surplus capital and that we were
conducting a review of our capital structure to assess the appropriate level of
distribution to shareholders.

We completed the review of our capital structure in May. The Board decided that
ITV should continue to target an investment grade rating for its public debt.
Our principal revenue is from television advertising, which is cyclical and
combined with the fixed nature of television programme expenditure, makes free
to air broadcasting a highly operationally geared business.

As a result we announced on 21 June 2006 that we will be increasing our cash
return to shareholders from £300 million to £500 million and we have already
started an on-market buyback with £86 million worth of shares purchased prior to
30 June 2006 and the shares cancelled.

We entered into a closed period on 1 July 2006 and, following our half year
results announcement on 9 August, we will continue with the cash return.


ITV building new revenue streams

Whilst managing the transition from analogue broadcasting to digital
broadcasting, we have a number of challenging targets for the different areas of
the business and a detailed strategy to deliver them.

   • 50% of revenues from outside ITV1 Net Advertising Revenue (NAR) by end
     2010;

   • multichannel NAR /interactive revenues of £250 million per annum by
     end 2008;

   • ITV family share of commercial impacts (SOCI) at digital switchover
     (DSO) in 2012 of 38.5%;
     
   • £100 million of efficiency savings by end 2008.


Commercial

We are seeking a review of the ITV1 Contract Rights Renewal (CRR) arrangements
and are in dialogue with regulators. We are continuing to grow our revenues
outside ITV1 NAR; improving our multichannel revenues, increasing sponsorship
(across all our channels), interactive and online advertising revenues.


Channels

The aggregate viewing share of all ITV channels combined has been similar on
each major digital broadcasting platform in the first half of the year compared
to a year earlier.  However, with the increasing uptake of digital TV and an
increasing number of commercial impacts in the market place, our overall adult
SOCI is down in the first half this year from 42.2% to 40.2%.  We have launched
two more channels in the first half of 2006, ITV Play and CITV, improving our
revenue and impact growth in multichannel. As Charles explains in his operating
review we expect our SOCI to stabilise as we approach digital switchover.  We
continue to invest in our key ITV1 programme brands, and are seeking to
modernise our Public Service Broadcasting (PSB) obligations.


Production

Our sales of UK produced programmes to other UK broadcasters have continued to
grow strongly, up by 10% to £32 million in the first half. After undertaking a
business review we will be exiting Wildlife and Children's Drama. Our
International Production and Distribution business is also growing strongly.
Our production businesses have good delivery schedules for other broadcasters
over the second half of the year. We have strong positions in all key markets
and are committed to further expansion of our production businesses
internationally, particularly in the US.


Consumer

ITV Consumer (ITVC) has continued to grow its revenue and profitability
principally by building businesses which create and monetise direct consumer
relationships.  These are new and significant revenue streams for ITV.  ITVC
contributed £69 million of revenue in the first half of the year - only its
second six months of trading - and launched the highly successful ITV Play.
There are a number of projects in development using mobile and broadband
technology to continue this growth in the future.


Financial

Earlier this year your Board received a highly conditional and speculative
approach from a group of private equity funds.  Your Board concluded that their
proposal should be rejected for a number of reasons that were stated at the
time.

The final tranche of the £325 million of pension deficit funding we announced in
September 2005 was paid in early 2006, reducing the December 2005 IAS19 deficit
to £325 million on a pro forma basis.  Apart from this pension deficit funding,
there has been no material change in the net pension deficit between 31 December
2005 and 30 June 2006.


People

Charles Allen will step down as Chief Executive and Director of the Company and
will work with John Cresswell, who will be appointed as interim Chief Executive
on 1 October 2006, to ensure an orderly transition during a handover period.
The search for a permanent successor is starting immediately and headhunters are
being appointed.

Charles has been at Granada plc and then ITV plc for 15 years, 10 of which as
Chairman or Chief Executive.  The Board of ITV plc owes its thanks to him for
his success in creating a single ITV company from the federal structure that he
inherited and for preparing the company for television in the digital age.
Charles has done an excellent job over the past two years in integrating the
business after the merger, in reducing costs and in reducing the burden of
regulation on ITV and at the same time developing ITV's successful family of
digital channels.  The growth in the Company's business and profits since the
merger reflects that success.  I have enjoyed working with Charles over the past
two and a half years and we all wish him the best in the future.  We shall watch
with great interest his future contribution to UK plc.

I am delighted that we have someone of the calibre of John to take over in the
short term, and the Board has every confidence in his ability to hold the fort
pending the appointment of Charles' successor.

I would like to take this opportunity on behalf of the Board to thank our
management and employees for all their hard work in what is currently a
challenging environment for free to air broadcasters.



Operating review


Introduction

We are focused on exploiting ITV's unique assets - our brand, content,
cross-promotion and position within Freeview (the UK's free to air digital
terrestrial television distribution platform) as we implement our strategy to
develop our business operations in the digital world.  Following a detailed
business review in September 2005, we announced a management restructure. This
new team is taking decisive action to drive new revenues, grow significant new
businesses particularly within our consumer and production divisions, drive cost
savings through operational efficiencies and modernising regulation.

Against a challenging advertising market we are continuing to develop our
businesses. In the first half of 2006 we have developed consumer propositions
and are growing revenues generated from direct relationships with consumers. We
have developed our portfolio of channels by adding ITV Play and CITV,
accelerated growth in our international content businesses and have increased
the cash return to shareholders. We have also continued our disposal program for
non-core activities, selling 021 in January, Granada Learning in April and our
Seven Network stake for £87 million in May, bringing our total proceeds from
disposals to more than £400 million since the merger that created ITV plc in
2004.

In the first half of 2006 revenue increased by 3%. Revenue, excluding ITV1 NAR,
was up by 25% and now represents 39% of the Group total. We are targeting 50% of
revenue outside of ITV1 NAR by 2010 to be driven by strong performances from our
digital channels, production and consumer businesses.  Operating profit before
amortisation, exceptional items and disposed businesses increased by 1% to £205
million. Profit before tax is £173 million this year, up 12% on the same period
last year.

In June we announced that we would deliver £100 million of efficiency savings by
the end of 2008 from business re-engineering and operational reviews. This
comprises £40 million per annum of savings from improved overhead efficiencies
representing 7% of the manageable cost base; £30 million per annum from schedule
efficiencies, in part as a result of the evolution of ITV's PSB requirements as
digital switchover approaches; and a further £30 million per annum from 2007 in
reduced sports programming costs.


Commercial

UK advertising market

ITV plc's NAR was down 4% in the first six months of 2006. ITV1 plc NAR was down
8% on the same basis against a weakening UK TV advertising market which was down
2% year-on-year.  ITV1 continues to be affected by the move from analogue to
digital where our SOCI performance and viewing share, in common with the other
major terrestrial channels, is reduced.   As we approach full digital take up we
expect the overall viewing share of ITV1 to stabilise at approximately the level
currently achieved in digital homes and at the point of digital switchover we
are targeting a SOCI of 38.5% for all our channels combined.   A further factor
is CRR, a condition of the merger, which ties the ITV1 share of the total UK TV
advertising market to the ITV1 SOCI. We are working towards a review of the CRR
mechanism and are in dialogue with the relevant regulatory bodies.

The UK advertising market weakened towards the end of the second quarter of the
year with June down 6% despite the football World Cup 2006. ITV1 outperfomed its
CRR position in June and thus tracked in line with the market. We saw
particularly strong performances from retail, cars and finance who traditionally
advertise around major sporting events but weaker sectors included food,
cosmetics, toiletries and telecoms.  NAR for ITV's digital channels was up 46%
at £70 million in the first half and sponsorship up 21% at £23 million.

We continue to believe that television advertising is a very attractive market
in which to operate and one in which ITV1 and our family of digital channels
have a competitive advantage. In an era of increasing choice, television is,
more than ever, key to building enduring consumer brands. Television has been
less affected than some other traditional media and evidence suggests that
internet advertising substitutes radio and press rather than television. With
ITV1 we can offer advertisers the sole deliverer of true mass audience. ITV1
broadcast 93% of programmes attracting more than four million viewers in 2005.
Our digital channels hold the highest share of viewing of any commercial digital
channel family and were responsible for 29% of total multichannel impact growth
in the first half of the year.

ITV is able to offer advertisers bespoke multimedia brand solutions across our
channels and different platforms. We have seen strong growth in new areas across
the Group with interactive up  86% in the first half. We have developed new
analytical tools which enable us to maximise promotional effectiveness and offer
valuable viewer and customer insight.


Channels

Channels is focused on strengthening the ITV1 schedule and building a portfolio
of digital channels.

In the first half of 2006 ITV1 was home to more new programmes rating over five
million viewers than all other channels combined.  These included Wild at Heart,
Lewis and Dancing on Ice which achieved over 10 million viewers.

In addition, the football World Cup was extremely popular with viewers,
particularly with the valuable 16-34 year old male demographic, with audiences
peaking at over 20 million viewers.

We believe that there are a number of opportunities to improve on screen
performance through programming revitalisation, PSB modernisation and schedule
efficiency. We have rebuilt our commissioning team, appointing twelve new,
highly experienced commissioners and expect to see the initial results from the
new commissioning team come through in Autumn 2006. ITV1 has already seen
exciting talent such as Billie Piper and Trinny and Susannah join the channel
and will launch new comedy and entertainment series and more contemporary iconic
drama.  In the next few years there are factors which will affect this measure
including the rate of change in ITV's Public Service Broadcasting obligations,
the speed of digital take up and equalisation of advertising minutage with other
channels. The target is based on ITV maintaining expenditure levels on
programming.

Channels will improve schedule efficiency through increasing effective spend
with the 'Smart Buying' initiative across all our channels. ITV channels will
continue to spend c.£1 billion per annum over the next three years but retain
flexibility to shift spend between the digital channels and ITV1. We announced
that we would increase programming spend by investing an additional £20 million
in the digital channels in 2007 reflecting their strong growth profile. This
additional investment will allow us to drive organic growth in our channels with
more original commissions, series, sport and movies. An additional channel
ITV2+1 (ITV2's schedule broadcast an hour later) will launch towards the end of
2006, so that viewers can catch up with their favourite programmes on ITV2.

PSB commitments represent almost a third of ITV1's schedule but only 11% of
ITV1's impacts. Currently our ITV1 PSB slots are targeted by competitors with
commercially attractive programming. We believe that there are opportunities in
the medium term to modernise our PSB commitments including, for example,
adjusting the balance of children's programming across ITV1 and our newly
launched CITV channel; available to 90% of families with children.

Across all the ITV Channels (excluding GMTV) the adult SOCI in the first half of
2006 was 40.2% (compared to 42.2% in the first half of 2005).  GMTV SOCI in the
first half of 2006 was 2.5%.


Production

ITV's content business is a key part of the Company as an integrated
producer-broadcaster.  We have creative development targeted specifically at the
needs of the ITV schedule.  By creating content ITV retains the production
margin in-house, has the ability to hold and exploit rights associated with our
valuable programme brands, reduces exposure to programme price inflation and
secures access to key programmes and talent.  We have seen particularly strong
growth within the production business outside of ITV supply with revenues up 9%
in the first half of the year.

ITV Productions has continued to provide the ITV Channels with the most creative
programmes of scale and excitement including the highly successful Dancing on
Ice and Soapstar Superstar.  They also continue to be the most cost effective
provider of successful commercial shows. Critically acclaimed programmes
produced for other channels include The Street for BBC1 and popular programmes
include Brainiac for Sky and Countdown for Channel 4.

Following an extensive strategic review, the team has put a number of less
commercially attractive genres under review and has made the decision to exit
Wildlife and Children's Drama where operating margins are low.

We believe that ITV has a significant growth opportunity with both International
Production and International Distribution and Exploitation.  Our International
Production growth strategy uses a combination of:

   • rapid exploitation of programmes made by ITV Productions for ITV into new 
     territories, such as Hell's Kitchen (US version);

   • producing original shows, which can be distributed worldwide, such as
     Nanny 911 (now also shown on ITV2); and

   • using local market knowledge (combined with rapid access to new concepts 
     and formats from the UK) to create programming such as ITV Play
     participation TV.

Using this strategy our US Production business has grown by 138% during the past
3 years and had series aired across five networks in one year. These included
Gameshow Marathon for CBS, Wallet Roulette for ABC, Poor Little Rich Girls for
WB, Hit Me Baby One More Time for NBC and both Nanny 911 and Hell's Kitchen for
Fox.  We are also working for the cable networks and have a number of shows
available for syndication for 2007.  Syndication is the sale of the right to
broadcast programmes to multiple television stations, without going through a
broadcast network.  It is common in the US where television is organised around
networks with local affiliates, unlike Europe which has mainly centralised
networks without local affiliates.

ITV Worldwide's International Distribution and Exploitation team has a rich mix
of programming assets with a substantial amount of owned UK product and also our
international productions, film libraries and third party assets from both the
UK and international producers.  In the first half revenues in this area were up
8%.  There is significant potential for growth through both extracting more
value from our assets, for instance across different digital platforms with the
digitisation of our library, and by attracting more assets to offer to our
customers from the large number of UK and US independent producers.


Consumer

The Consumer team was established to build businesses which create and monetise
direct consumer relationships, exploiting ITV's unique brand and content assets
and utilising our cross-promotional capabilities.  ITV Consumer is active in
four main areas - transactional, mobile, broadband and other platforms and in
the first half revenue was up over 300% at £69 million including Friends
Reunited.

ITV Play

Our interactive participation TV format, ITV Play was launched as a channel on
19 April 2006 initially on Freeview and is now available on satellite. ITV Play
is also streamed over broadband and broadcasts during the night time slots on
ITV1 and ITV2.  Despite only launching a short time ago ITV Play is already the
market leader in the participation TV field and we expect it to contribute £20
million of profit in its first full year.  Formats include Rovers Return Quiz
Night with an innovative mass participation telephone system allowing many
viewers to play along together.

ITV Mobile

ITV Mobile was launched to consumers in June with an on-air promotional campaign
which generated an immediate uplift in both traffic and transactions. ITV Mobile
has unique content to target all demographics from the nation's best loved ITV
programmes as well as ringtones and other content from third party suppliers to
improve the choice offered to our customers and to grow revenues. We will
maximise distribution of ITV Mobile by making it available on the mobile
operators' portals over the coming year.

We see growing consumer demand for full channel access via mobile.   We have
agreed to make our channels available on 3G, initially through 3, the largest
operator.

Broadband

Broadband has achieved mass reach with penetration expected to reach 70% of
homes by 2010. With speeds increasing, broadband is now a viable platform for TV
channels and TV content and also presents significant opportunities to drive
display and classified advertising.  ITV's broadband proposition has three key
elements - ITV Local, which has completed a trial phase in the Meridian region
and we are beginning the national roll out, Friends Reunited and ITV.com.

ITV Local is our broadband proposition which is designed to capitalise on our
regional presence across the UK targeting the local display and classified
advertising market.  It offers streamed TV with news and local interest
programming as well as providing a vehicle for locally produced User Generated
Content and local comment.  We offer local dating and jobs and are reviewing
other propositions such as property advertising.

Friends Reunited, the UK's largest online community website, is a high margin
business made up of four distinct, high growth businesses - reunion, jobs,
dating and genealogy. Some initial promotion on ITV channels has already driven
strong performance and Friends Reunited represents the cornerstone of ITV's
online presence.  The next planned phase of development will increase the
integration with ITV Broadband including advertising sales, database leverage
and targeted promotion of ITV programming and services.

ITV Consumer is currently developing the next phase of ITV.com to be rolled out
in the first quarter of 2007. This re-engineered broadband offering will allow
the Company to capitalise on new opportunities including streaming of ITV
channels, catch-up and preview of ITV's valuable programme assets and other
transactional revenues.

Freeview

ITV has a key role in the marketing and development of the Freeview platform
which is forecast to be the UK's largest digital TV platform by the end of 2006
with well over 8 million homes. Freeview has just announced the launch of the
Freeview Playback brand for the marketing of standardised DTT boxes with a
Personal Video Recorder. ITV is also involved in the DTT High Definition
technical trial in London which has used ITV content including World Cup
matches.  Through our ownership of SDN, and by virtue of its Channel 3 licences,
ITV now operates 38% of the commercial DTT bandwidth and has opportunity to
access DTT capacity on a long-term basis. Between 2008 and 2010 a number of the
increasingly valuable videostreams on SDN are due for renewal which should
significantly raise SDN's revenue.


Outlook

Whilst our businesses outside ITV1 NAR are continuing to grow strongly, the
combined effect of CRR and the acknowledged weakness in the advertising market
over this summer is reducing our overall NAR estimate for ITV plc to -14% in the
quarter to September.  This partly reflects ITV1 having significantly
outperformed the CRR position in the first half of the year and a rebalancing
now taking place.  Over the nine months to September 2006 we estimate that our
overall NAR for ITV plc will be 8% lower than in the same period in 2005.  Our
production business has a strong delivery slate over the second half and we look
forward to good programme schedules across our channels in the important Autumn
season.

I have enjoyed enormously my 15 years with Granada and ITV and especially in
creating a single ITV Company and shaping the nation's number one commercial
broadcaster as a major player in the digital age.  Over that time I have worked
with the most talented and creative people in the industry and am pleased that
so many of them are now in the strong management team that is implementing our
strategy to develop ITV's businesses for the future.  I am particularly proud of
the work that my colleagues have done in creating one of the top production
companies in Europe, building the leading commercial family of digital channels,
creating the foundations of our consumer business and building confidence in our
national and regional news.  I have made many friends amongst my colleagues and
I wish them all the best for the future.  My focus now is to support John and
the Board through the transition process, following which I will move forward to
the next chapter of my life and a new set of challenges.

I would like to finish by joining Sir Peter Burt and the rest of the Board in
thanking employees for their continuing work and dedication in promoting our
core businesses, developing new, exciting programming and growing our consumer
businesses.


Financial review


Results for the six months ended 30 June 2006

Operating profit for the period increased by 9% to £163 million (2005: £150
million) with operating profit before amortisation, exceptional items and
disposed businesses up 1% at £205 million (2005: £202 million), or £202 million
(2005: £201 million) including the businesses sold.  Profit before tax increased
by 12% to £173 million (2005: £154 million) with the benefit of net gains from
the disposal of businesses and investments.

Tax was charged on profits before amortisation and exceptional items at an
effective rate of 28% (2005: 28%).

Basic earnings per share were up 7% at 2.9 pence (2005: 2.7 pence).  Adjusted
basic earnings per share before amortisation and exceptional items were 3.4
pence (2005: 3.5 pence).


Revenue

Revenue for the six months to 30 June 2006 was up 3% at £1,077 million (2005:
£1,049 million).  The increase in revenue reflects a decrease in Net Advertising
Revenue (NAR) of 4% to £752 million (2005: £786 million) with lower ITV1 NAR
being partially offset by increases from the digital channels as follows:

                                                                        2006       2005      Change
                                                                          £m         £m           %

ITV1                                                                     654        710         (8)
ITV2, ITV3, ITV4, ITV News Channel, M & M, CITV                           70         48          46
GMTV                                                                      28         28           -

Total NAR                                                                752        786         (4)


Other revenue increases have exceeded the decline in NAR.  The main sources of
these increases include contributions from newly developed businesses such as
ITV Play (£27 million) and a first time contribution from Friends Reunited (£8
million), while revenue from SDN increased by £9 million reflecting a full six
months contribution.  Businesses sold in the period contributed £8 million of
turnover in 2006 compared to £19 million in 2005.


Operating profit

Operating profit of £163 million represents a 9% increase over 2005 (£150
million).

Operating profit was reduced by exceptional costs principally relating to the
private equity approach made for the Group in March 2006, but benefited from a
reduction in amortisation costs of £22 million to £28 million (2005: £50
million) and a reduction in the accrual relating to airtime deliveries of £8
million.  Included within operating profit are losses of £3 million in respect
of the disposed businesses 021 and Granada Learning incurred during the period
up to disposal.  In the six months ended 30 June 2005 these businesses made
losses of £1 million.


Dividend

The interim dividend is increased by 2% to 1.35 pence per share (2005: 1.32
pence).  This is covered 2.52 times (2005: 2.65 times) by the adjusted earnings
per share (before amortisation and exceptional items) of 3.4 pence (2005: 3.5
pence).


Disposal of businesses and investments

During the period, as part of the ongoing process to dispose of non-core
businesses and investments, the Group sold 021 and Granada Learning and its
investment in Seven Network.  The disposal of the 021 business for £4 million
resulted in a nil gain or loss being booked.  The sale of Granada Learning took
place in April for a potential maximum consideration of £53 million.  This
comprises £17.5 million in cash, £17.5 million in loan notes and a further £18
million which is contingent upon the future performance of the business.  The
fair value of expected proceeds has been taken as £31 million for accounting
purposes resulting in a £12 million loss on disposal.  The interest in Seven
Network was sold for total consideration of £87 million resulting in a profit of
£29 million booked through the income statement.


Net debt

The principal movements in net debt during the period are shown in the table
below:
                                                                                  £m           £m
Net debt at 31 December 2005                                                                 (481)
Cash generated from operations                                                   169
Net interest paid                                                                (15)
Taxation paid                                                                    (45)
Equity dividends paid                                                            (61)
Expenditure on property, plant and equipment less proceeds from disposals        (49)
Proceeds from sale of businesses and investments                                 108
Other movements                                                                  (30)
                                                                                               77
Share buyback                                                                                 (86)
Defined benefit pension deficit funding                                                      (207)
Net debt at 30 June 2006                                                                     (697)

Cash generated from operations was £169 million (2005: £196 million) and was
down on the prior period due to a working capital outflow of £35 million.  In
2005 the working capital benefited by £34 million from the exercise of a
currency option hedging the Exchangeable Bond.

Net interest paid on the Group's net debt position was £15 million.  Taxation
paid reflects payments on account during the period.  The 2005 interim dividend
of £54 million was paid at the start of the period and along with a £7 million
payment for the dividend reinvestment plan (in respect of the 2005 final
dividend) gives a £61 million outflow.  Expenditure on property, plant and
equipment less proceeds from disposals totalled £49 million.  During the period
the Group bought three properties that were previously held under long-term
leases with the intention of subsequently disposing of them.  Two of these are
shown in the balance sheet as assets held for sale while the third does not meet
the criteria for classification at the half year.  Cash from the sale of 021 (£4
million), Granada Learning (£17.5 million) and the investment in Seven Network
(£86 million) totalled £108 million.  As detailed below, the plan to return cash
to shareholders was started during the period with £86 million being returned
through share buybacks and defined benefit pension scheme funding payments of
£207 million were made in the period.


Refinancing of debt due in 2007

At 30 June 2006 the Group's balance sheet shows a net current liabilities
position compared to a net current assets position at 31 December 2005.  This
results from a reduction in the cash balance as set out in the cash flow
statement combined with £200 million of the Group's borrowings (with a fair
value of £204 million) now being classified as current.  Two of the Group's
bonds (€356 million Exchangeable Bond and £200 million Eurobond) mature in the
first half of 2007.  In order to meet these commitments the Group has extended
the existing £450 million bank facility to June 2011 and a new £550 million 364
day bank facility, with a one year term-out option, maturing in June 2008 has
been signed and is planned to be refinanced in the capital markets.


Pensions

During the period the Group completed its planned £325 million of funding for
the Group's defined benefit pension schemes as part of a plan to address the
deficit.  An initial £118 million had been paid in December 2005 and the balance
of £207 million was paid in January and February 2006.


Return of cash to shareholders

As discussed in the Chairman's statement the Group announced it was increasing
the cash return to shareholders to £500 million following a review of the
Group's capital structure.  This process has been started through an on-market
buyback and at 30 June 2006 a total of 81 million shares had been purchased at a
cost of £86 million.  The closed period runs from 1 July 2006 to the results
announcement following which the process to return cash to shareholders will be
continued.


Consolidated income statement
                                                                                          2006         2005
                                                                                                   Restated
For the six months ended 30 June:                                              Note         £m           £m

Group and share of joint ventures' revenue                                               1,110        1,078
Less share of joint ventures' revenue                                                     (33)         (29)

Revenue                                                                                  1,077        1,049

Operating costs before amortisation of intangible assets and exceptional                 (875)        (848)
items
Operating costs - exceptional items                                               1       (11)          (1)
Earnings before interest, tax and amortisation (EBITA)                                     191          200
Amortisation of intangible assets                                                 5       (28)         (50)

Total operating costs                                                                    (914)        (899)

Operating profit                                                                           163          150

Financing income                                                                            81           63
Financing costs                                                                           (98)         (74)

Net financing costs                                                                       (17)         (11)
Share of profit of associates and joint ventures                                             4            4
Investment income                                                                            2            2
Gain on sale of property                                                                     4            9
Gain on sale of businesses and investments (exceptional items)                    1         17            -

Profit before tax                                                                          173          154
Taxation                                                                                  (52)         (43)

Profit for the period                                                                      121          111

Attributable to:
Equity shareholders of the parent company                                                  120          109
Minority interests                                                                           1            2

Profit for the period                                                                      121          111

Basic earnings per share                                                          2       2.9p         2.7p
Diluted earnings per share                                                        2       2.9p         2.7p

All results are from continuing operations.

Dividends paid during the period and shown in the cash flow statement totalled
£61 million (2005: £45 million).  Subsequent to the balance sheet date the
Company has declared a dividend in respect of the six months ended 30 June 2006
of 1.35 pence (six months ended 30 June 2005: 1.32 pence) per ordinary share
which, based on the shares in issue on 30 June 2006, totals £55 million (six
months ended 30 June 2005: £54 million).


Consolidated statement of recognised income and expense

                                                                                     2006         2005
For the six months ended 30 June:                                                    £m           £m

Exchange differences on translation of foreign operations                            (2)          (1)
Movements in respect of cash flow hedges                                             -            (2)
Revaluation of available for sale investments                                        (7)          5
Disposal of available for sale investments                                           (29)         -

Net (expense)/income recognised directly in equity                                   (38)         2
Profit for the period                                                                121          111

Total recognised income and expense for the period                                   83           113

Attributable to:
Equity shareholders of the parent company                                            82           111
Minority interests                                                                   1            2

Total recognised income and expense for the period                                   83           113



Consolidated balance sheet

                                                                        30 June      31 December      30 June
                                                                           2006             2005         2005
                                                                                        Restated     Restated
                                                              Note           £m               £m           £m

Non-current assets
Property, plant and equipment                                               250              235          240
Intangible assets                                                5        3,919            3,947        3,909
Investments in joint ventures and associates                     7           97               93           85
Equity investments                                               8           85              181          170
Distribution rights                                                          15               13           16
Deferred tax asset in respect of pension scheme deficits                     96              160          204
Other deferred tax balances                                                (52)             (86)        (144)
Net deferred tax asset                                                       44               74           60
                                                                          4,410            4,543        4,480
Current assets
Assets held for sale                                                         19               63            -
Programme rights and other inventory                                        377              388          321

Trade and other receivables due within one year                             358              362          356
Trade and other receivables due after more than one year                     22                7           10

Trade and other receivables                                                 380              369          366
Cash and cash equivalents                                        9          439              663          415

                                                                          1,215            1,483        1,102
Current liabilities
Liabilities held for sale                                                     -              (9)            -
Borrowings                                                       9        (490)            (288)        (250)

Trade and other payables due within one year                              (681)            (734)        (622)
Trade and other payables due after more than one year                       (4)              (4)            -

Trade and other payables                                                  (685)            (738)        (622)
Current tax liabilities                                                   (195)            (217)        (221)
Provisions                                                                 (22)             (23)         (28)

                                                                        (1,392)          (1,275)      (1,121)

Net current (liabilities)/assets                                          (177)              208         (19)

Non-current liabilities
Borrowings                                                       9        (646)            (856)        (549)
Defined benefit pension deficit                                           (320)            (532)        (679)
Other payables                                                             (29)             (29)          (6)
Provisions                                                                  (9)             (29)         (41)

                                                                        (1,004)          (1,446)      (1,275)

Net assets                                                                3,229            3,305        3,186

Attributable to equity shareholders of the parent company
Share capital                                                   10          405              423          423
Share premium                                                   10          120               98           94
Merger and other reserves                                       10        2,686            2,666        2,666
Translation reserve                                             10          (1)              (1)          (3)
Available for sale reserve                                      10          (5)               33           18
Retained earnings                                               10           17               74         (22)

Total attributable to equity shareholders of the parent         10        3,222            3,293        3,176
company
Minority interest                                               10            7               12           10

Total equity                                                    10        3,229            3,305        3,186



Consolidated cash flow statement

                                                                                      2006                  2005
For the six months ended 30 June:                                            £m         £m         £m         £m

Cash flows from operating activities
Operating profit before exceptional items                                   174                   151
Depreciation of property, plant and equipment                                15                    15
Amortisation of intangible assets                                            28                    50
Movement in working capital                                                (35)                     1

Cash generated from operations before exceptional items                                182                   217
Cash flow relating to exceptional items:
Operating loss                                                             (11)                   (1)
Increase in receivables                                                       -                  (11)
Decrease in payables and provisions*                                        (2)                   (9)

Cash outflow from exceptional items                                                   (13)                  (21)

Cash generated from operations                                                         169                   196
Defined benefit pension deficit funding                                   (207)                     -
Interest received                                                             9                     7
Interest paid on bank and other loans                                      (22)                  (20)
Interest paid on finance leases                                             (2)                   (2)
Investment income                                                             2                     2
Taxation paid                                                              (45)                  (66)

                                                                                     (265)                  (79)

Net cash (used in)/from operating activities                                          (96)                   117

Cash flows from investing activities
Acquisition of subsidiary undertakings, net of cash and                       -                 (136)
cash equivalents acquired, and debt repaid on acquisition
Proceeds from sale of property, plant and equipment                           6                    23
Acquisition of property, plant and equipment                               (55)                  (16)
Acquisition of investments                                                    -                  (30)
Proceeds from sale of businesses                                             22                     5
Proceeds from sale of investments                                            86                     -

Net cash from /(used in) investing activities                                           59                 (154)

Cash flows from financing activities
Proceeds from issue of ordinary share capital                                 -                    46
Purchase of US held shares                                                    -                  (42)
Share buyback                                                              (86)                     -
Purchase of own shares via employee benefit trust                          (26)                     -
Bank and other loans - amounts repaid                                       (4)                  (88)
Capital element of finance lease payments                                   (2)                   (2)
Dividend paid to minority interest                                          (6)                     -
Equity dividends paid                                                      (61)                  (45)

Net cash used in financing activities                                                (185)                 (131)

Net decrease in cash and cash equivalents                                            (222)                 (168)
Cash and cash equivalents at 1 January                                                 663                   582
Effects of exchange rate changes and fair value movements                              (2)                     1
on cash and cash equivalents

Cash and cash equivalents at 30 June                                                   439                   415


*Includes £2 million (2005: £6 million) relating to expenditure against
provisions held in respect of activities which have been previously
discontinued.



Notes to the accounts


1.    Exceptional items
                                                                                               2006         2005
For six months ended 30 June:                                                                    £m           £m

Operating items:
Reorganisation and integration costs                                                            (2)         (12)
Costs associated with private equity approach                                                  (11)            -
Receipt from the liquidators of Shop! (2005: ONdigital)                                           2           11

                                                                                               (11)          (1)

Non-operating items:
Profit on sale of investment in Seven Network (see note 8)                                       29            -
Loss on disposal of Granada Learning (see note 6)                                              (12)            -

Gain on sale of businesses and investments                                                       17            -

Total exceptional items                                                                           6          (1)



2.    Earnings per share
                                                                                     2006                   2005
                                                                       Basic      Diluted       Basic    Diluted
For the six months ended 30 June:                                         £m           £m          £m         £m

Profit for the period attributable to shareholders                       120          120         109        109
Exceptional items (including related tax effect of £5 million,           (1)          (1)           1          1
2005: £nil)

Profit before exceptional items                                          119          119         110        110
Amortisation of intangible assets (including related tax effect           20           20          35         35
of £8 million, 2005: £15 million)

Profit for the financial period before exceptional items and             139          139         145        145
amortisation of intangible assets

Weighted average number of shares in issue - million                   4,105        4,105       4,075      4,075
Dilution impact of share options - million                                 -           36           -         49

                                                                       4,105        4,141       4,075      4,124

Earnings per ordinary share                                             2.9p         2.9p        2.7p       2.7p

Adjusted earnings per share
Basic earnings per share                                                2.9p         2.9p        2.7p       2.7p
Add: Earnings/(loss) per share on exceptional items                        -            -           -          -

Earnings per share before exceptional items                             2.9p         2.9p        2.7p       2.7p
Add: Loss per ordinary share on amortisation of intangible              0.5p         0.5p        0.8p       0.8p
assets

Earnings per share for the period before exceptional items and          3.4p         3.4p        3.5p       3.5p
amortisation of intangible assets


All profits arise from continuing operations. An adjusted earnings per share has
been disclosed because in the view of the directors this gives a fairer
reflection of the results of the underlying business.


3.   Dividends

Dividends are recognised in equity during the period in which they are declared.
  Dividends recognised in equity for the six months ended 30 June 2006 total £74
million (six months ended 30 June 2005: £53 million) and represent the 2005
final dividend declared by the Company on 8 March 2006 (six months ended 30 June
2005: 2004 final dividend declared on 9 March 2005).

Subsequent to the balance sheet date the Company has declared a dividend in
respect of the six months ended 30 June 2006 of 1.35 pence (six months ended 30
June 2005: 1.32 pence) per ordinary share which, based on the shares in issue on
30 June 2006, totals £55 million (six months ended 30 June 2005: £54 million)
which will be paid on 8 January 2007 to shareholders on the register at 10
November 2006.  The ordinary shares will be quoted ex-dividend from 8 November
2006.


4.   Segmental analysis

The Group has one main producer/broadcaster reportable business segment.  This
segment includes all activities related to the production and broadcasting of
television programmes and channels, including the exploitation of related rights
and assets. Any activities falling outside of this main segment are grouped
together as other operations.

                              Producer/broadcaster            Other operations             Consolidated
                                  2006        2005          2006          2005        2006         2005
                                          restated                                             restated
                                    £m          £m            £m            £m          £m           £m

Segment revenue                  1,026       1,006            51            43       1,077        1,049
Segment result                     161         149             2             1         163          150


5.   Intangible assets
                                  Goodwill     Brands     Licences        Customer        Film        Total
                                        £m         £m           £m   contracts and   libraries
                                                                     relationships   and other           £m       
                                                                                £m          £m
Cost
At 31 December 2005                  3,425        199          121             336          78        4,159
Additions                                -          -            -               -           -            -

At 30 June 2006                      3,425        199          121             336          78        4,159

Amortisation
At 31 December 2005                      -         32           11             158          11          212
Charge for period                        -          9            5              11           3           28

At 30 June 2006                          -         41           16             169          14          240

Net book value
At 30 June 2006                      3,425        158          105             167          64        3,919

At 31 December 2005                  3,425        167          110             178          67        3,947


6.   Disposal of businesses

During the period the Group disposed of 021 and Granada Learning.  021 was sold
for proceeds of £4 million and resulted in a nil gain or loss on disposal.
Granada Learning was sold for consideration consisting of cash (£17.5 million),
loan notes (£17.5 million) and deferred consideration (up to £18 million) with a
total fair value of £31 million.  An accounting loss of £12 million has been
booked on disposal.


7.   Investments in joint ventures and associates
                                                                         Joint     Associated        Total
                                                                      ventures   undertakings
                                                                            £m             £m           £m

At 31 December 2005                                                         60             33           93
Share of attributable profits                                                2              2            4

At 30 June 2006                                                             62             35           97


8.   Equity investments
                                                                                                         £m

At 31 December 2005                                                                                     181
Disposals                                                                                              (90)
Revaluation to fair value                                                                               (6)

At 30 June 2006                                                                                          85

During the period the Group disposed of its investment in Seven Network for
proceeds of £87 million resulting in a profit of £29 million being booked
through the income statement.



9.   Analysis of net debt
                                                                               
                                                   31 December                 Currency and       30 June          
                                                          2005      Net cash       non-cash
                                                      Restated          flow      movements          2006
                                                            £m            £m             £m            £m

Cash                                                       522         (197)              -           325
Cash equivalents                                           141          (25)            (2)           114

Cash and cash equivalents                                  663         (222)            (2)           439

Loans and loan notes due within one year                 (285)             4          (207)         (488)
Finance leases due within one year                         (3)             2            (1)           (2)
Loans and loan notes due after one year                  (781)             -            209         (572)
Finance leases due after one year                         (75)             -              1          (74)

                                                       (1,144)             6              2       (1,136)

Net debt                                                 (481)         (216)              -         (697)

Included within cash equivalents is £76 million (31 December 2005: £78 million)
the use of which is restricted to meeting finance lease commitments.



10.   Consolidated statement of changes in equity


                                                        Attributable to equity shareholders
                          Share     Share    Merger  Translation             Retained   Total Minority      Total
                                          and other      reserve
                        capital   premium  reserves               Available  earnings         interest     equity
                                                                   for sale
                                                                    reserve
                             £m        £m        £m           £m         £m        £m      £m       £m         £m

At 31 December 2005         423        98     2,666          (1)         33        74   3,293       12      3,305
Share buybacks              (8)         -         8            -          -      (86)    (86)        -       (86)
Shares issued in the          2        22         -            -          -         -      24        -         24
period
Cancellation of            (12)         -        12            -          -         -       -        -          -
convertible shares
Total recognised income       -         -         -            -       (38)       120      82        1         83
and expense
Movements due to share        -         -         -            -          -      (17)    (17)        -       (17)
based compensation
Dividends paid to             -         -         -            -          -         -       -      (6)        (6)
minority interests
Equity dividends              -         -         -            -          -      (74)    (74)        -       (74)

At 30 June 2006             405       120     2,686          (1)        (5)        17   3,222        7      3,229


                                                          Attributable to equity shareholders
                          Share     Share    Merger  Translation  Available  Retained   Total  Minority      Total
                                          and other      reserve   for sale  earnings
                        capital   premium  reserves                 reserve                    interest     equity
                             £m        £m        £m           £m         £m        £m      £m        £m         £m

1 January 2005              422        91     2,666          (2)         13      (85)   3,105         8      3,113
Cancellation of shares      (3)      (39)         -            -          -         -    (42)         -       (42)
Shares issued in the          4        42         -            -          -         -      46         -         46
period
Total recognised income       -         -         -          (1)          5       107     111         2        113
and expense
Movements due to share        -         -         -            -          -         9       9         -          9
based compensation
Equity dividends              -         -         -            -          -      (53)    (53)         -       (53)

At 30 June 2005             423        94     2,666          (3)         18      (22)   3,176        10      3,186



11.   Basis of preparation

This interim financial information has been prepared under the same accounting
policies and methods of computation as applied in the Group's most recent annual
report dated 31 December 2005 except where specified below.

During the period the Group has reviewed its revenue recognition policy for
premium rate telephony services recognising the increasing significance of this
revenue stream.  The Group's policy has consequently been revised to reflect
revenue as the amount billed net of operator costs.  Previously revenue was
shown net of other costs, such as production costs, in addition to operator
costs.  The impact on the 2005 comparative is to increase revenue and operating
costs by £5 million.  There is no impact on either profit or balance sheet.
Similarly for 2006 revenue and operating costs are £7 million higher than they
would have been under the old accounting policy.

At 31 December 2005, the Company had outstanding an unsecured €356 million
Exchangeable Bond which matures in January 2007.  The Exchangeable Bond can be
exchanged at any time at the option of investors for shares in Thomson SA at an
exchange rate of €41.2 per share.  At 31 December 2005 the Thomson share price
was €17.7, having traded below €24 since August 2002.  Independent market
estimates were that the Thomson share price would not recover to the conversion
price by January 2007.  The Company therefore took the view that the possibility
of exchange before January 2007 was remote and classified the Exchangeable Bond
as a loan repayable between one and two years in the December 2005 balance
sheet. As the bond reaches ultimate maturity in January 2007, it has been
classified as a current liability in the balance sheet at 30 June 2006.  IAS
1.60(d) states that - 'a liability shall be classified as current when the
entity does not have an unconditional right to defer settlement of the liability
for at least twelve months after the balance sheet date'.  Although, as
explained above, it is very unlikely that any bondholder would exercise its
option before January 2007, bondholders can technically exercise that right at
any time. Therefore the Company does not have an unconditional right to defer
settlement.  Accordingly the Company has reclassified the liability as current
in its balance sheets as at 31 December 2005 (£245 million) and 30 June 2005
(£240 million).

For the purposes of interim reporting the defined benefit pension schemes' key
assumptions and asset values have been reviewed to assess whether material net
actuarial gains and losses have occurred during the period.  While there have
been movements in the key underlying assumptions and asset values during the
period, the net effect is such that no material change to the pensions deficit
would be expected if a formal revaluation were to be carried out.  As such no
revaluation has taken place at the reporting date and no actuarial gains and
losses have been recognised through the statement of recognised income and
expense.  A full valuation will take place at 31 December 2006 in accordance
with IAS 19.

The comparative information at 30 June 2005 and 31 December 2005 is abridged and
therefore not ITV plc's statutory accounts for those periods.  The accounts for
the year ended 31 December 2005 have been reported on by ITV plc's auditor.  The
report of the auditor was unqualified and did not contain a statement under
section 237(2) or (3) of the Companies Act 1985.  This is a statutory disclosure
required by the Companies Act 1985.




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