Earnings Call: H1 2021

Jul 28, 2021

Good morning, everyone. Thank you for watching ITV's interim results. In a moment, Chris will take you through our operational and financial performance. I will then update you on our strategic progress and our priorities going forward. At 9:30 a. M, we will be holding a live Q and A and I really hope many of you will be able to join us for that. ITV delivered a strong performance in Juan, as we continue to manage and mitigate the challenges presented by COVID. The vast majority of our programs remained in and our advertising revenues have rebounded strongly, up 29% compared to 2020. Within that, AMOD revenues were up 55%. And if we look through 2 years to 2019, Tal was up 2% over H1. Throughout the pandemic, we have protected investment in our strategic priorities as we have continued to manage our costs tightly. In H1, we delivered £21,000,000 of savings £15,000,000 of which are permanent. And we are making really good progress in executing Gee. ITV Studios continues to grow as we strengthen our creative talent and diversify our customer base. We've accelerated transformation of the Hub and successfully rolled out Planet V. And our SVOD propositions continue to grow strongly And we now have over 3,000,000 global subscriptions with BrookeBox UK up over 10% in 6 months. We emerged stronger from the pandemic, but there remain risks, of course, associated with it. Our financial position is robust. We are confident about the future and the board recognizes the importance of the dividend for ITV shareholders. So assuming the economy continues to recover, the board intends to resume the dividend with a notional 5p full year dividend. Given the current uncertainty, the Board will not pay an interim dividend but intends to propose a final dividend of 3.3p fee for the full year 2021. This is based on 2 thirds of the notional full year dividend. The board intends to grow the ordinary dividend over time whilst balancing further investment behind our strategy and our commitment to investment grade metrics. On the slide Other highlights of our financial results, which demonstrate the progress we're making in transforming ITV into a digitally led media Payment Company. The innovation and agility our Studios teams have shown in keeping productions running, how our commercial teams are deepening relationships with advertisers with innovative partnerships and agreements and the strong recovery in the ad market. I'm now going to hand you over to Chris to go through the performance in more detail. Thanks, Carolyn, and good morning, everyone. I'll start with the performance of Studios. ITV Studios maintained good momentum throughout H1 and had a strong end to the period, with a number of productions and licenses being delivered earlier than expected. As a result, total revenues were up 26%. There was good growth across the business, but particularly from the U. S. And Global Formats and Distribution. Studios U. S. Benefited from a number of significant drama deliveries in the first half, and Global Formats and Distribution has taken advantage Of both the continuing demand for archive content and of the strong set of U. K. Drama deliveries in H1. Percentage of revenue outside the U. K. Rose from 55% to 58% as we continue to diversify the business. Adjusted EBITA was up 53 percent at £95,000,000 with an adjusted EBITA margin of 12%, helped by high margin license deals £9,000,000 of cost savings, which partly offset the increased costs associated with COVID restrictions and investments in the period. £5,000,000 of those cost savings are permanent. While Studios has had a great start to the year and remains on track for the full year, we expect there to be continued challenges And COVID, especially affecting dramas, shows with audiences and multilocation filming. Moving on to media and entertainment. As Carolyn said, we've seen a very strong recovery in the ad market, up 29% compared to 2020. June performed better than we expected, largely driven by the euros. And in fact, it was the largest June in ITV's history. Across June July together, Tara is expected to be over £45,000,000 higher Than in the same period in 2018 when we had the Football World Cup. This exceptional performance is driven by the quality of our schedule, pent up demand from advertisers and the relative weakness of cinema, outdoor and print media. It's also a confirmation of the continued demand for TV advertising And the unique impact it can generate for advertisers. However, it will create challenging comparatives for the same period next year, Given the Football World Cup next year is in H2. Within this, VOD advertising has been very strong, Up 55% compared to the same period in 2020. Planet V continues to be well received by agencies and advertisers We welcome the opportunity to run data driven campaigns in a brand safe environment. It also enables ITV to attract brands that have never used TV before. Direct to consumer revenue was down slightly as a result of a decrease in competition's revenues. The first half of twenty twenty was particularly strong as viewing of daytime ITV Wynn, our rebranded competitions portal, continues to see a good uplift in traffic, Which has helped to offset the impact of the decline of daytime viewing as the COVID restrictions will loosen this year. SDN's revenue increased marginally in the period due to the sale of increased capacity. However, we continue to expect revenue to be under pressure in the medium term as older contracts Renewed at the new lower market price for DTT capacity. Other revenue increased by 16%, largely due to BritBox U. K. Total costs were up 11%, primarily as a result of increased schedule costs due to a return to a more normal schedule and the euros. We continue to expect schedule costs to be around £1,100,000,000 over the full year. Variable costs were also up 11%, Mainly driven by increased marketing costs compared to last year and content costs for BritBox U. K. Infrastructure and overhead costs increased by percent due to additional overhead costs in 2021 for staff bonuses, which were canceled in 2020 And investments of £4,000,000 in data, the Hub, Hub Plus and technology, in line with our strategic priorities. This was partly offset by £12,000,000 of cost savings, £10,000,000 of which are permanent. Net investment in BritBox U. K. Was £22,000,000 With venture losses of £31,000,000 in line with expectations. And we expect venture losses for the full year To be at a similar level to 2020 and decline thereafter. Adjusted EBITA, excluding BritBox UK, It was up 109% to £263,000,000 with a margin of 26%. And adjusted EBITA, including BritBox UK, Was up 125 percent to €232,000,000 with a 23% margin. Now turning to viewing. We had a strong schedule of drama, entertainment and sport in H1. Share of viewing on the main channel and for the ITV family both grew in the period. The total viewing was down 6% against last year's tough comparator when viewing rose due to the pandemic. ITV's peak schedule continued to be impacted by COVID, with the loss of key programs such as Britain's Got Talent and some dramas being delayed. Online viewing on the ITV Hub was up 6% year on year as more people engaged with the hub and for longer periods. Monthly active users were up 7% and dwell time was up 4%. And finally, simulcast viewing hours were up 20% as viewers used the ITV Hub as a destination for live viewing via connected TVs and streaming devices, particularly for sport. We've seen a strong recovery in total advertising spend since March as lockdown restrictions have eased, with advertisers across the majority of categories increasing spend year on year in Q2. Retail, entertainment and leisure and car categories have been particularly strong due to both the return to TV of advertisers who virtually stopped advertising last Cheah. And others attracted by the huge audiences around the euros. Despite an uplift in Q2, airlines and travel has remained weak due to the continued uncertainty around travel restrictions. E commerce companies, excluding gambling, continue to spend heavily with TAR up 37% in H1. Comps get tougher into H2, but we are seeing momentum continuing into Q3, with July up 68%, August up 17% to 20%, And very early indications are that September will be another positive month. On to adjusted and statutory results. Adjusted EBITA increased by 98 percent to £327,000,000 and adjusted EPS increased by 103 percent to 5.9p. This compares to 6.2p in 2019. Adjusted financing costs were broadly in line with last year. And over the full year, we expect them to be around the same level as Our adjusted tax rate was 20%, and we expect it to remain around 18% to 19% in 2021 2022 And then move to around 25% over the medium term, in line with increases in U. K. Corporation tax. Statutory EPS rose from 0 point 5p to 2.4p and exceptional items were £136,000,000 Exceptional items are above our original guidance Due to an increase in the final Talpa earn out payment of £108,000,000 following the expert determination. As we disclosed in the annual report, there was a wide range of And this outcome is within that range. It's the final payment in respect to Talpa. And going forward, Acquisition related expenses will be at a much lower level. The other significant exceptional item is a £16,000,000 ownerless contract provision. Last year, we began a review of the efficiency of our satellite transponder usage, enabling us to reorganize and clear all channels from 1 transponder in 2020. This year, we've cleared a second transponder. Over the full year, we expect exceptional costs to be around 150,000,000 Looking at the balance sheet. Profit to cash on a rolling 12 month basis is lower than in previous years at 72%, as expected, due to the reversal of the working capital benefits in 2020. As we previously guided, we expect profit to cash to be around 30% over the full year. But taking 2020 2021 together, we expect cash conversion to be 80% to 85% over that 2 year period, which is in line with historic levels. Our objective remains to manage our capital structure over the medium term to be consistent with investment grade metrics. Our reported net debt at the end of the period was €467,000,000 This is before the Telpra earn out payment, which will be made in H2. Reported net debt to adjusted EBITDA is 0.6x, and our covenant leverage is 0.5x. On a pro form a basis, including the earnout payment, Net debt to adjusted EBITR would be 0.9 times. We have good access to liquidity with £778,000,000 of undrawn facilities, Which, together with £704,000,000 of gross cash, gives us total liquidity of £1,500,000,000 Our pension schemes are reporting a deficit of £10,000,000 And we continue to reduce the volatility of the pensions' obligations through a combination of inflation and longevity hedging and the cash matching of investments and future liabilities. And finally, planning assumptions, which are based on our current best view but, of course, will depend on how events unfold over the rest of the year. In terms of cost savings, we're on track to deliver our £30,000,000 target. And in addition, we expect £8,000,000 of temporary savings. This will more than fund the €25,000,000 of investment that we're making this year in our strategic priorities. In terms of cash, We've now paid the €75,000,000 of VAT deferred from 2020. CapEx for the full year will be around €75,000,000 as we further invest in our digital transformation. The cash cost of exceptionals is expected to be around 3.10,000,000 And finally, pension deficit funding is expected to be £74,000,000 I'll now hand you back to Carolyn. Thanks, Chris. As I said, we have made significant progress in delivering our strategy focused on our three priorities: growing our U. K. And Global Production business Creating our Media and Entertainment Business and Accelerating Transformation and thirdly, expanding our now established direct to consumer businesses and relationships. I'm going to now take you through that progress shortly. But firstly, I wanted to remind you why being an integrated producer broadcaster gives us real competitive advantage. Page. Number 1, it provides a base of core commissions and a significant promotional engine. 2, it enables 360 degree monetization of Studios content across our pillars of value. 3, it secures great content for ITV channels and platforms and enables us to be more innovative in how we window our content across linear and streaming. 4, it provides content pricing protection for the broadcaster. And 5, it helps us attract and retain talent, which is, of course, key in a creative business like ours. Our ESG strategy is, as you know, an integral part of delivering our purpose and our strategy. In fact, it adds value to every aspect of our business. Through the significant reach of our platforms, we have a really unique ability to inspire meaningful change and help shape culture for good. ITV does much more than entertain. Our social purpose strategy is driven by our 4 priorities: 1st, better physical and mental health Our flagship mental health campaign Britain Get Talking encourages audiences to keep in touch with others and to speak up and support their mental health. 56,000,000 actions have now been taken since the launch of this campaign. We've also launched a new partnership in ITV2 and CALM aimed specifically at younger people. Our healthy eating campaign Eat Them TO Defeat Them ran for a 3rd year with 500,000 children participating in schools and 1,000,000 more reached by the On Air campaign. Our second pillar is diversity and inclusion. Earlier this month, we published a review of our diversity acceleration plan 1 year to launch. And we've made good progress including a 33% increase in diversity in lead roles on screen. We've created 62 opportunities in production for underrepresented groups. We've hired over 40 apprentices and we've launched a production trainee scheme. Improving disability representation will be a particular focus going forward. Thirdly, climate action. In 2020, we set our ambitious target to be a net zero carbon emissions business by 2,030. Teams across ITV are now implementing carbon reduction strategies to achieve that goal. And finally, giving back. We've launched a new mentoring scheme focused on encouraging emerging talent from underrepresented backgrounds. 150 ITV mentors have been paired with mentees. We are enabling ITV colleagues to go to schools to inspire teenagers to think about a career in TV and Video. I'm now going to take you through the progress we're making in each of our strategic priorities. First, ITV Studios, where we have 4 priorities to create a stronger and more diversified business: Number 1, growing our scripted business number 2, creating more global formats number 3, diversifying our customer base And number 4, strengthening our talent. We've made good progress on scripted, which is an area of high growth driven by the demand from streamers. In the U. K, We have a large portfolio of long running dramas, and we've produced 6 of the top 10 rating dramas in the first half, including Pembrokeshire Murders and Line of In the U. S, we're establishing ourselves as a leading independent script TV studio. We have a strong pipeline including Snowpiercer, Physical, Cowboy Bebop and 10 Year Old Tom. And our international scripted businesses, which create and produce Critically acclaimed dramas including Paris Police 1900 and Sentinels from Treacher in France and Gomorrah and Summertime by Catalea in Italy. Since 2018, our h1 scripted revenues have grown 75%. 2nd priority, creating more global formats. We have a large portfolio of some of the world's most successful entertainment and factual entertainment brands, many of which are made globally through ITV Studios' production basis. We continue to protect, strengthen and exploit our established brands, selling them to more countries internationally such The Voice, which has now been sold in 70 countries Love Ireland in about 21 countries and Let Love Rule, our newest format in 6 countries. We also have the Chase in 17 countries including Beat The Chasers which won format spin off of the year. We also have a good pipeline of new formats in the U. K. With the potential to be global hits. These include The Void, Moneyball, Ready to Mingle and Ratam Kitchen, which has already been commissioned in the U. S. Our third priority, diversifying our customer base. We are on track to double our revenues from streamers in 2021 compared to last year, particularly driven by America. We have over 20 projects now in production or in development with all the major OTT platforms. We're enhancing the strength and position of the ITV Studios Group and our key creative talent to develop relationships with all of these platforms. In H1, original hours delivered to streaming platforms increased 84%. And recent deliveries include The Serpent, Snowpiercer, Generation 56 ks to Netflix, physical to Apple Plus and Love Ireland, Netherlands to Video Land. We have a good pipeline of future deliveries including Spymonks Friends for BritBox U. K. Why Didn't They Ask Evans for BritBox U. S? Queer Eye for Netflix in the U. S? And The Offenders for BBC and Amazon. In addition, Global Distribution's 2 largest customers of library content are OTT platforms. And finally, we have strengthened our creative talent, which remains so critical to continuing to build a successful Studios business. We have 3 new talent deals in the first half: Scripted labels in Catalina Producioni in Spain and Windlight Pictures in Germany and a new scripted label, rollercoaster TV in the U. K. We are also seeing real progress in the recent talent deals we've done. Dominic Treadwell Collins is already starting to win commissions such as Holding and You and Me. And Nicola Schindler, after just a few months, has a Significant number of programs in development. We look forward to seeing those. And our new labels in the U. S, Work Friends, which is a primetime animation label and Bedrock are both developing projects with global streamers as we speak. In total, we now have 25 scripted labels, up from 2019 and 20 18 and 35 unscripted labels. I'd now like to show you a tape which demonstrates the strength of our scripted and formats business and of course key parts of the ITV schedule from soaps to daytime to dramas, to entertainment. Let's talk So, citizens of Snowpiercer. Are you ready? You're really awesome, bro. Want to thank our distributor, Everything's going to be okay. Baby, I'm back. Oh my god. I hope I have smashed it. Turning now to M&E. We announced the restructure of Broadcast last year to create M and E with 2 business units Broadcast and Streaming to help us better serve changing viewer habits. Each unit's priorities are clear. Broadcast is focused on delivering mass live audiences with high reach and streaming is focused on driving digital viewing both advertiser funded on ITV Hub, ITV2, ITVB and CITV and Direct to Consumer through SVOD as well as supporting our interactive business. We completed this in March and can already see the benefits. It's enabling us to be more agile and flexible in decision making. It's further developing all our digital capabilities in the business and it's also streamlining the ways we work, so making us much more productive and efficient. I'm now going to show you some of the highlights from the first half across our platforms, including some of our innovative advertising campaigns, which we're really pleased with and Partnerships and a preview of our exciting slate of programs to come. I can't wait to get going. That is great stuff. You like what you see? It is the sickest person the team of doctors have treated this list. This is exactly what we've told. Lots of questions to ask. Lots of questions I'm getting excited Just thinking about it. You're in for a real treat. Just grab where that spirit is. Yes. Do you think, like, your head could be times down? You are Boy, have we got a lot to talk Goodbye. We can all do our bit Looking for romance? Dive in this summer to swipe Ireland. Not everyone likes to talk about their feelings. It's always just a It's all a bit easier when it's not face to face. You guys have been brilliant. Even to defeat them. Well, you've waited a We found new evidence in the game several of the suspects. The press called in the Nightstalker that he's recently become active again. Mark and Barnet, Mark and Barnet, you don't know your husband. He's dangerous and you need to do something. I need to know why my boy died to game a football. Let's aim to decide who you think is the best. Breathtaking. It's now celebrating families. Half These boys are only in it for the money and are already in relationships. You are going to love it. Pure artistry. Now to Linear Broadcast. ITV continues to be the home of mass simultaneous reach. And this is becoming increasingly valuable as you'd deck to advertisers as viewing becomes more fragmented. There are a few platforms that can deliver anything like our scale in such a brand safe way, and that's a critical differentiation for us. England v Scotland peaked at 19,900,000 viewers. And then, of course, the England semifinal Against Denmark in July was even bigger peaking at over 26,000,000 viewers. The Pembroke sur Murders was the most watched new drama of the first half with 9,600,000 viewers. And in entertainment, we have aired the 2 largest entertainment shows The Masked Singer, which averaged 10,600,000 viewers and Saturday Night Takeaway, which averaged 7,400,000. Across the half, we delivered 92% of commercial audiences over 3,000,000 93% of commercial audiences over 5,000,000 and 100% of commercial audiences over 7,000,000. Now on to streaming. Our investment has been focused on continuing to improve the ITV Hub and drive viewing, which is up 6% and increase AVOD revenue, which as I said has grown 55% in the first half. This includes improving the user experience with increased personalization, recommendations and curatable rails using our data and insight. Rolling out the redesign of the new hub interface With around 70% of MAUs now viewing the new design and strengthening the content offering with the 12 month extended catch up window, short form content and trialing different windowing strategies. We've done a number of full series drops which have been very successful and which will help inform our content strategy going forward. We've also improved our news site, which drives significant traffic And is now on Facebook News, we're working with other platforms to integrate ITV News as well. We have 34 point 6,000,000 registered users now, which is up 7% and have delivered very significant audiences on the hub for programs such as the Euros and Love Island and delivered 139,000,000 drama streams in H1, up 26% on last year. We've continued, as I said, to successfully rollout Planet V, our scaled programmatic addressable advertising platform to a really positive response from agencies and advertisers. 90% of all hub inventory is now executed through Planet V with 650 people fully trained 65% of all campaign bookings are now self serve. PlanetV is now the 2nd largest programmatic video advertising platform in the U. K. Behind Google. PlanetV enables advertisers to buy ITV Hub premium inventory seamlessly and cost effectively from their own terminals. Using over 10,000 data points within the platform, they can build their own audiences and monitor their own campaigns. This has driven a 2 50% increase in VOD only advertisers in H1. As William Purcell at 7 Stars said, Planet V has opened up a whole wealth of new and improved targeting opportunities for advertisers, enabling them to harness ITV Hub's large audience in a much more efficient way. Enabling access to both first and third party data has brought Broadcaster VOD more in line with digital targeting. We are also piloting data match campaigns through our tech partnership with InfoSum, which allows as advertisers to use their own first party data in their campaigns in a secure and compliant way. We are also, of course, continuing to deepen our strategic relationships with our existing clients, and we're working more creatively and collaboratively with them to support their businesses and create value for them. This includes product placement, ad funded programming and commercial partnerships where we can use the power of our brands to help advertisers engage with audiences in different ways. This is made possible and more valuable by being an integrated producer broadcaster Castor with editorial, commercial, creative and production working really closely together to provide unique opportunities for advertisers. Just an example, but a big example M and S and Cooking with the Stars. It's an ad funded program with promotion right across ITV and throughout the M and S retail and online estate including new ready meals and ingredients and even a Percy Pig Chef. This is building on the success M and S saw with us with their fresh market update date campaign last year. That saw sales for some featured products go up by 90%. Another example is Purple Bricks and Coronation Street How we have credibly tied products into future story lines, not simply placing them in shows. And TikTok was the biggest single product placement deal we have ever done on Saturday 9th Takeaway. This year, we've a record number of 9 commercial partners for Love Island in program sponsorship, brand licenses, in store branding and product placement. So our commercial team has really created a number of initiatives to attract new advertisers to ITV and ITV Hub and to support businesses to recover. In H1 alone, we brought 160 new brands to TV, which is brilliant. These initiatives include briefly: 1st, Adventures Ignite, which works with digitally native brands for example, Button Up Box, Gripton dog food brand. Secondly, through our media for equity funds, Adventures Invest. We've already invested in 2 companies Spoke and What3Words. We have a number of other projects in the pipeline. 3rd, backing business, which Ports British Businesses with a number of initiatives including incentives and rewards to support their media investment as well as webinars and teach ins to help Tysers stay close to their customers. We've also made it more flexible to advertise with ITV removing all late booking penalties. Recent advertisers we have worked with include HiHi Phones and Weleda Beauty Products. Finally, ITV Home Planet It's helping brands tell their environmental stories. It's informing and inspiring more sustainable habits in their consumers. And advertisers or sponsors like Korn and the World Wildlife Fund are very much a part of that. We also did an Ad Break takeover for World Environment Day with brands such as VW, IntraCider, Ribena and Sainsbury's. There is lots more to come on COP26 and Climate Action Week in the autumn. Turning now to our direct to consumer business. We've seen strong growth in our global subscriptions, as I set up around 15% in the half to just over £3,000,000 We're pleased to see BritBox U. K. Continue to grow up over 10% in the half to 555,000 in spite of the tougher environment for streamers many of whom have seen minimal growth as lockdown restrictions have loosened over the last few weeks. We've seen churn rates continuing to improve and app ratings for our products on Apple and Android both increased over 4 stars. During the first half, BritBox U. K. Launched its first original scripted series The These must die. And this saw higher free trial conversion rates than average conversion. We also ran our first original factual commission, The Secret of the Craze, received critical acclaim. There's a strong pipeline of originals for H2 and throughout 2022 with the second series of Splitting Image, Magpie Murders and Wedding of the Century. Hub Plus continues to perform well with 452,000 subs up on last year. Subscriptions for BritBox International have again grown strongly to £2,000,000 up around 18% in 6 months. BritBox U. S. Continues It performed really well, and it's profitable. BritBox Australia is ahead of plan following its successful launch in Q4 last year. And we are on track for a further rollout with South Africa launching in August. While Interactive's performance, as Chris said, has been impacted by strong parities in 2020. ITV Win, our competition portal, continues to do well with increasing traffic and revenue. This tape demonstrates the great progress we're making on BritBox in the U. K. And internationally. So how about a bit of bricks? We have to be careful making heroes of people who don't deserve I am going to tell a man. I know his name. I know what he looks like. The only thing I don't know There is always a lot of you mean you know who did it? Of course, I do. That's why I'm here. Crisis. Why do we stop caring about honesty? There's no place I'm gonna fight it. Careful. Once it gets Fancy a trip in the box? Let's go. As you all know an important part of our strategy is to create strong partnerships and our aim here is to work with Select partners to ensure our content is available, prominent and we can monetize it wherever it is consumed. In the first half, we've continued to build those strong Vipps. We've agreed a new partnership with Sky in the U. K, bringing many advantages for our advertisers by delivering addressable advertising through Planet V at scale on ITV Hub and Homes with Sky. This is a big step in delivering on our objective of building a scale AVOD proposition across the U. K. Market. We have executed our new distribution partnership with Amazon to make BritBox available on Amazon Prime Video Channels, which makes it accessible now in over 90% of VOD homes. And with the BBCM Channel 4, we've also successfully brought together Digital UK, which facilitates the provision of Freeview and FreeSat into a single PSB owned venture. This will benefit from a more streamlined approach technological innovation and product development and will help ensure viewers continue to have access to a range of high quality free to view TV services in the U. K. I think you also know that Ofcom recently reported on its review of the regulatory framework for the public service broadcasters. The report demonstrates the high value that audiences place on the whole range of PSB content and concludes that current outdated legislation needs a radical update for the global online era. We're encouraged by this report and the fact that the government has said it will publish draft legislation this year to ensure the future of our thriving PSB system. We set out our More Than TV strategy in July 2018, and we have completed the first phase of this, delivering across our four pillars of value. Firstly, Studios, which is now a world class international production and distribution company and one of the largest independent producers globally. We have grown our scripted business, strengthened our talent, diversified our customer base and created more international formats. And of course, we are always looking for one of our labels to create the next big global hit. Secondly, our linear broadcast channels, which have maintained their unique ability to drive live mass audiences in a trusted environment, which are an important part of many marketing campaigns. And our own marketing campaigns for our brands and our programs have attracted light viewers and acclaim for the impact they have had. Thirdly, streaming, where ITV Hub is capturing the shift to online viewing and the strong demand for online advertising. The rollout of Planet V provides advertisers targeted advertising, as you know, in a brand safe environment. We've built our data result, and are now in the process of implementing our full data strategy. And finally, direct to consumer, where our number of Subscriptions is growing strongly as we monetize our Best of British content in the U. K. And internationally. In addition, we're driving revenues from our IP as consumers are increasingly willing to engage with the trusted brand and its contents. The development of gaming, licensing and merchandising revenues, while a small part of our D2C business, has been harder partly due to COVID and we will continue to trial, Test and Learn in these areas as we go forward. Digital transformation is key to unlocking success in so many areas of our strategy, And we are digitally transforming many of our products as you have seen. And we are also making progress in digitally transforming the way we work our internal systems, Processes, Ways of Working, Culture and Behaviors to support a digital business and be more agile, efficient and productive. We are now entering the next phase of our strategy. We are positive about the future. Our goal remains to be a digitally led media Attainment business that creates and brings our brilliant content to audiences wherever, whenever and however they choose. We will continue to execute our strategy at pace. And we will further strengthen and diversify ITV Studios by genre and customer to take advantage of the strong demand for global content. In M and E, we will have one content budget across every platform, including BritBox UK, allowing us to Optimize our windowing strategy to create the best experience for viewers and the best value for advertisers and for ITV. This will balance our ability to deliver mass audiences and increase on demand viewing. Our streaming strategy will be AVOD led With a compelling SVOD proposition, positioning us well to respond to the evolving viewing and advertising environments, we will continue to invest in data and analytics, technology and skills to enable further platform integration and a more seamless viewer experience. We look Forward to discussing this with you in much more detail and we'll be holding 2 investor seminars in the autumn to do deeper dives into ITV Studios and into Media and Entertainment as a division. Pippa will be in touch with more information on this shortly. Turning to our outlook. We are encouraged by the positive trends we are seeing. ITV Studios is performing well as it continues to successfully manage The Challenges Presented by COVID. Advertising comparatives get tougher in H2, but the demand for advertising remains strong. July is expected to be up 68% and August up 17% to 20% compared to the same period in 2020. It is too early to give a range for September given the current uncertainty, but we expect it to be positive. The pandemic continues to pose a potential risk to our advertising and Studios revenue, but we will monitor this very closely and continue to tightly manage our cash and our costs. We are on track to deliver our target of £30,000,000 cost savings here. Finally, as I said at the start of the presentation, the board intends to reinstate the dividend at the full year. Thank you for your time and I hope you can join us for the live Q and A at 9:30 this morning. Details of how to join are in our announcement. Thanks very much.