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Half year results

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STV Group plc – Half Year Results 2013
Half year results for the six months ended 30 June 2013
 
An innovative media company delivering sustained growth
 
Financial Highlights H1 2013 H1 2012 Year on year
Revenue £51.2m £47.6m    +8%
EBITDA (pre exceptionals)  £9.3m  £9.3m  No change
Operating profit*  £8.2m  £8.1m    +1%
Pre-tax profit*  £6.7m  £6.4m    +5%
EPS**  14.3p  13.6p    +5%
Statutory EPS  13.2p   2.7p +389%
Net debt £43.4m £55.9m   -22%
 
*Pre exceptionals and IAS19
**Pre exceptionals and IAS19 and normalised for equivalent 20% tax rate (2012: 15%)
 
Highlights
  • Board announce intention to propose a resumption of the dividend with a planned 1.5 pence per share final dividend in respect of 2013, to be confirmed in early 2014
  • Performance ahead of forecasts on all key financial measures
  • Net debt down 22% at £43.4 million and on track for sub 2x EBITDA at year end
  • Revenues up 8% to £51.2 million:
    • 84% growth in STV Productions’ revenues
    • 19% growth in digital growth revenues
  • Operating profit in line with expectations up 1% at £8.2 million
  • Pre-tax profit pre-exceptionals and IAS19 up 5% at £6.7m
  • KPI performance in line with growth expectations
 
Strategic Developments
  • Continued progress towards achievement of KPIs and 2015 strategic aims with Productions and Digital contribution improving
  • Launch of ground breaking city companion sites (mobile and on-line) to super-serve consumers in Scotland’s four largest cities
  • STV Productions continues to secure new commissions with a further commission of 12 episodes of Catchphrase for ITV1 announced today
 
Rob Woodward, Chief Executive Officer, said: “We have delivered another strong financial performance with a further significant reduction in net debt.  We are pleased to announce our intention to return to dividend for the 2013 full year.  Today we announce the launch of an innovative range of mobile sites and companion sites targeted at consumers in Scotland’s largest cities. STV Productions continues to secure further returning series commissions with the announcement of a second series ratings success Catchphrase for ITV.
 
As Richard Findlay steps down as Chairman, I would like to thank him for his significant contribution in re-establishing STV as a focused, consumer-facing business and look forward delivering the next phase of the company’s growth strategy under the chairmanship of Margaret Ford.”
 
21 August 2013
 
 
There will be a presentation for analysts at the offices of Peel Hunt, Moor House, 120 London Wall, London EC2Y 5ET today at 12.30pm.  Should you wish to attend the presentation, please contact Katie Martin, STV (Tel: 0141 300 3000).
 
Enquiries:
 
STV Group plc
George Watt, Chief Financial Officer                                         
Tel: 0141 300 3049

Eleanor Marshall, PR & Communications Manager        
Tel: 0141 300 3670
 
College Hill      
James Hogan
Jamie Ramsay                                                                                                 
Tel:  0207 457 2020
 
  
Financial performance
STV has delivered a strong performance ahead of forecasts across all key financial measures during the first half of the year. 
 
The Board has reviewed the dividend policy and the intention is for a return to a dividend payment upon confirmation of the 2013 full year results, with a planned 1.5 pence per share full year 2013 payment.
 
A further significant reduction in net debt has been achieved and this remains on track to achieve the target of 2x EBITDA; revenue has increased by 8%; operating profit has increased by 1% to £8.2m, due to the impact of the higher 2013 network fee payable under the new Channel 3 affiliate agreement.
 
Margin performance across all areas of activity remains strong and operating profit to free cash flow conversion of over 90% is being achieved.
 
 
Operational Review
 
STV Consumer
Channels
The consumer business continues to deliver growth across an increasing range of platforms.  Core broadcast channel, STV, has once again achieved peak-time performance in excess of the Network, and double digit growth in digital revenues continues with digital growth revenue categories up 19%.  The consumer business margin is ahead of target at 19% with the fast growing digital activities returning a margin of 34%.
 
STV’s aim is to inform and entertain audiences and consumers with engaging and relevant content.  In addition to delivering the best of Network content, earlier this year we set out our commitment to provide a platform for debate on Scotland's constitutional future towards the independence referendum in autumn 2014.  A strong track record in delivering engaging public service content places STV in a key position to be at the heart of this debate. As part of this commitment a three part series, Road to Referendum, providing an accessible and engaging insight into the political history of Scotland was produced and broadcast earlier this year.  This series has been commissioned by ITV for adaptation into a one-hour special to be broadcast later this year on ITV1.  Additionally, nightly current affairs programme, Scotland Tonight, will broadcast a series of major TV debates.
 
Our commercial team continues to attract new advertisers to core channel STV with over 80 new brands advertising on the channel during the period.
 
The development of new platforms enables the commercial team to innovate and enhance the solutions available to advertisers incorporating all of STV’s multi-platform assets. A number of our long term commercial partners, including Lidl and Bank of Scotland, have used these opportunities and secured campaigns including spot advertising; programme and channel sponsorship on air and on digital; mobile display and short form branded content.
 
As consumer and audience relationships continue to evolve we are successfully building audiences on social media. As we continue to gain consumer insights we will launch our partnership with Gigya later this year.

 
Broadcasting Outlook
STV national airtime revenue was up 4% in H1 and is expected to continue to outperform the market during Q3 with the cumulative forecast to the end of Q3 up 6%.   The regional airtime market has continued to strengthen during Q2 and against challenging comparatives ended the period down 6%.  The performance of the regional market continues to improve in Q3, with a return to cumulative growth of 2% expected by end of September.

 
Digital
Digital revenue has increased by 19% in growth categories as the consumer centric approach applied to the development of services continues to create new and innovative opportunities for advertisers to reach their customers and increase the range of platforms available to access STV content. We expect broadly similar levels of growth in H2.
 
Seventy per cent of our broadcast audience accesses STV online with an average of more than one million streams being viewed on the STV Player each month.
 
Growth in unique browsers on mobile platforms continues to increase, up 51% year on year.  Our consumer centric product development strategy is delivering to support this trend with a high priority being placed on ensuring our services and products are mobile and online compatible. 
 
Today the roll-out of a new platform of city digital services, available as mobile with online companion sites, is announced.  These services reinforce STV’s commitment to serving local audiences and augment our existing local broadcast and online news services.
 
As these city sites deliver a ground breaking and innovative service for our consumers and have the potential to be transferred to other locations, patents have been filed in the EU and US.
 
We continue to increase options to access STV content anywhere and anytime and free of charge. This year we have launched the STV Player on new platforms including Samsung Smart TV; Windows 8 and Kindle Fire and Kindle Fire HD.   Additionally, a new look STV Player will be launched in September.
 
 
STV Productions
STV Productions continues to grow and establish itself as a leading multi-genre production business securing commissions with a growing number of networks. Due to a strong delivery schedule during H1, revenues are up 84%.
 
Following the ratings success of Catchphrase, produced for ITV1, a re-commission of a further 12 episodes is announced today. 
 
During the period we have also announced the following re-commissions: a second series of Fake Reaction (10 episodes) for delivery in late 2013; 60 episodes of long running returning series Antiques Road Trip and 10 episodes of Celebrity Antiques Road Trip; a first commission from UKTV for comedy series Jo Brand’s Great Wall of Comedy (5 episodes) and a one-off documentary for Channel 5, Fighters’ Wives.  We also delivered our first feature documentary film, Fire in the Night, commissioned by BBC2 to mark the 25th anniversary of the Piper Alpha disaster and broadcast nationwide and released in cinemas across Scotland and the north of England to widespread critical acclaim.

 
Regulatory
We welcome the outcome of Ofcom’s recent consultation on programming obligations and the methodology for determining the financial terms of the new Channel 3 licences and look forward to the award of the licences for a further 10-year term later this year. 
 
Good progress is being made towards the launch of new City TV services in H1 of 2014 following the award of licences to deliver local digital television programme services (L-DTPS) in Glasgow and Edinburgh. These services will enhance STV’s strong community links in these areas and provide a complementary service to the core broadcast channel with opportunities to build strong audience and community engagement.

 
Dividend
The Board has reviewed the dividend policy and as a result of the normalised net debt position and underlying financial strength of the Group there is an intention to return to dividend payments upon confirmation of the 2013 full year results, with a planned 1.5 pence per share full year 2013 payment.

 
Pensions
Reduction of pension liabilities remains a key corporate priority and discussions are progressing with the pension scheme trustees to conclude the latest triennial valuation.  The net deficit at 30 June 2013 on an IAS19 basis has reduced from £23m at the year end to £15m due to an increase in gilt yields, improved asset performance and deficit funding payments, partly offset by an increase in inflation expectations.

 
Principal Risks and Uncertainties
This announcement contains certain statements that are or may be forward-looking with respect to the financial condition, results or operations and business of STV Group plc. By their nature forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future.
 
The group set out in its 2012 Annual Report and Financial Statements the principal risks and uncertainties that could impact its performance.  These remain unchanged since the Annual Report was published. The group has rigorous internal systems to identify, monitor and manage any risks to the business.  The principal risks identified are set out in detail on pages 24 and 25 of the 2012 Annual Report which is available on the STV Group plc website: www.stvplc.tv

 
Basis of preparation
These condensed interim financial statements are unaudited and do not constitute statutory accounts within the meaning of the Companies Act 2006.  These condensed interim financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting', the Disclosure and Transparency Rules and the Listing Rules of the Financial Conduct Authority ('FCA'), and were approved on behalf of the Board by the Chief Executive Officer, Rob Woodward  and Chief Financial Officer, George Watt on 20 August 2013.
 
The accounting policies and methods of computation applied in these condensed interim financial statements are consistent with those applied in the Group's most recent annual financial statements for the year ended 31 December 2012, except as described in note 3.
 
The financial statements for the year ended 31 December 2012, which were prepared in accordance with International Financial Reporting Standards, as endorsed by the European Union ('IFRS'), and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, have been delivered to the Registrar of Companies. The auditors' opinion on those financial statements was unqualified and did not contain a statement made under s498(2) or (3) of the Companies Act 2006. 

 
Responsibility Statement of the Directors in Respect of the Half Yearly Financial Report 
We confirm that to the best of our knowledge the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. 
 
The interim management report includes a fair review of the information required by: 
 
a.   DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and 
 
b.   DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so. 
 
The Directors of STV Group plc are listed in the STV Group plc Annual Report for 31 December 2012 and on 1 June 2013, The Baroness Ford of Cunninghame was appointed to the Board.


STV Group plc - Half Year Results 2013 - Appendix

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