TIDMSTVG
RNS Number : 9726K
STV Group PLC
03 September 2019
Press Release
0700 hours, 3 September 2019
Half Year Results to 30 June 2019
STV reports operating profit up 10% as strategic plan
accelerates growth
Strong financial performance ahead of expectations
-- Adjusted operating profit(1) up 10% to GBP11.0 million (2018:
GBP10.0 million) with adjusted earnings per share (EPS) up 9% to
21.8p (2018: 20.0p)
-- Operating profit of GBP11.0 million significantly up on the
2018 profit of GBP1.4 million with no exceptional items this
year
-- Broadcast operating profit up 7% to GBP9.7 million (2018: GBP9.1 million)
-- Digital operating profit up 43% to GBP3.0 million (2018: GBP2.1 million)
-- STV Productions operating loss of GBP1.7m (2018: loss of
GBP1.2m) due to the phasing of programme deliveries being strongly
weighted to the second half
-- Total advertising revenue down a marginal 0.6% to GBP48.8
million (2018: GBP49.1 million), outperforming the wider TV market,
with lower national advertising income offset by continued growth
in digital (+19%) and regional advertising (+19%)
-- Digital and regional revenues now account for 27% of total
advertising revenue, up from 21% in 2017, reducing reliance on the
national market
-- Total revenue down 5% to GBP54.9 million (2018: GBP57.7
million), primarily due to phasing in STV Productions and closure
of the loss-making STV2
-- Further increase in returns to shareholders with interim dividend of 6.3p per share (+5%)
(1) definitions of adjusted metrics are shown in the footnotes
to the Financial Highlights table
Continued excellent viewing performance on screen and online
-- Best STV all time viewing share since 2009 at 18.7%
-- Most popular peak time channel in Scotland
-- 99.7% of all commercial audiences over 500,000 in Scotland delivered by STV
-- Biggest TV channel in Scotland for young viewers, reaching 91% of all 16-34s
-- Online streams on STV Player up 17% and online viewing up 13% even without the FIFA World Cup
-- Strong viewing performance driven by entertainment hits
including Britain's Got Talent and The Chase, dramas Manhunt, Cheat
and The Bay, which broke all STV streaming records, and local
favourites Sean's Scotland and the revamped STV News at Six
Delivery of strategic plan progressing at pace
-- STV Growth Fund continues to underpin regional advertising
growth, attracting over 100 new advertisers to STV since launch
-- Virgin partnership delivering digital value to STV as
expected and Sky launch of STV Player on track for Q4 2019
-- Significant enhancements to the STV Player user experience
and content offer already driving increased consumption
-- Eleven third party content deals now in place (500+ hours)
boosting STV Player content catalogue by a third across
entertainment, drama, factual and sport
-- STV Productions drama The Victim delivered the highest drama
catch up ratings since records began, more than doubling its BBC1
overnight audience to 6.5m, and has now been sold to over 30
countries. Second drama for the BBC, Elizabeth is Missing,
currently in production
-- Primal Media, acquired on 1 July, has secured three
commissions so far; GBP0.5 million of full year synergies
identified and in delivery
-- First pilot format developed by STV Productions, The Cash
Machine, started strongly on STV on 1 September
Financial Highlights
Six months ended 30 June
============================
2019 2018 Change
============================ ============ ============= ==========
Revenue GBP54.9m GBP57.7m (4.9%)
============================ ============ ============= ==========
Adjusted EBITDA* GBP13.4m GBP11.4m 17.5%
============================ ============ ============= ==========
Adjusted operating profit* GBP11.0m GBP10.0m 10.0%
============================ ============ ============= ==========
Adjusted operating margin* 20.0% 17.3% 270 bps
============================ ============ ============= ==========
Operating profit GBP11.0m GBP1.4m +686%
============================ ============ ============= ==========
Adjusted profit before
tax** GBP10.1m GBP9.4m 7.4%
============================ ============ ============= ==========
Profit/(loss) before tax GBP9.1m (GBP4.3m) +312%
============================ ============ ============= ==========
Adjusted basic EPS** 21.8p 20.0p 9.0%
============================ ============ ============= ==========
Basic EPS 19.7p (10.9p) +281%
============================ ============ ============= ==========
Net debt GBP42.0m GBP37.8m (11.1%)
============================ ============ ============= ==========
Interim dividend per share 6.3p 6.0p +5%
============================ ============ ============= ==========
*Pre-exceptional items, see note 21 to the financial statements
for more detail
**Pre-exceptional items and IAS19 finance costs, see note 21 to
the financial statements for more detail
Outlook - good momentum into H2 despite Brexit uncertainty
-- National advertising will continue to be impacted by Brexit,
with the 9 months until the end of September expected to be 6% to
7% down
-- Regional advertising expected to be 10% to 15% up until the end of September
-- Digital advertising is expected to be 20% to 25% up for the same period
-- Overall, that would see total STV advertising broadly flat
for the first 9 months to the end of September
-- Productions will have a stronger H2, with current secured
revenues of GBP13m similar to this time last year
-- Whilst Brexit will result in market turbulence in H2 that
will affect the wider UK media market, the impact on STV's
profitability will be mitigated by our advertising trading
arrangements, on-going tight management of the cost base and a
continued focus on progressing the growth plan
Simon Pitts, Chief Executive Officer, said: "An operating profit
increase of 10% when national advertising revenues are down
supports the decisions we took to reposition the Group for
profitable growth, focusing on STV's regional strengths and the
exciting growth potential offered by our digital and production
businesses. In the first half of 2019 we have enjoyed the best all
time viewing share on STV since 2009 and our total advertising
revenue has outperformed the wider TV market, driven by continued
growth in digital and regional advertising and by the increasing
success of the STV Growth Fund which has attracted over 100 new
Scottish advertisers to television since launch. These factors have
contributed to a strong first half performance, with a significant
improvement in operating margin.
"We continue to make good progress with our strategic growth
plan and have laid solid foundations for the future. Although
current political uncertainty around Brexit will continue to impact
total national advertising revenue in the second half, we expect
further growth in digital and regional revenue and an improved
performance from STV Productions, including a new quiz format, The
Cash Machine, the first commissions from newly acquired Primal
Media, and a new drama for BBC1, Elizabeth is Missing.
"We also have an exciting programming line-up to look forward to
on STV in the second half of the year, with exclusive coverage of
the 2019 Rugby World Cup, new dramas like A Confession and
Sanditon, and entertainment juggernauts like Britain's Got Talent
The Champions and I'm a Celebrity helping to drive viewing on
screen and online."
Enquiries:
STV Group plc:
Katie Martin, PR & Communications Executive
Tel: 0141 300 3109
Camarco
Geoffrey Pelham-Lane, Partner
Ben Woodword, Partner
Tel: 0203 757 4985
Financial performance review
Reflecting the phasing of revenue in Productions and the closure
of loss-making STV2, total revenue was down 5% to GBP54.9m (2018:
GBP57.7m).
However, total advertising revenue was down a marginal 0.6%,
ahead of the wider television advertising market and supported by a
continued strong performance in digital and regional
advertising.
Adjusted operating profit increased significantly by 10% to
GBP11.0m (2018: GBP10.0m). The growth in the regional advertising
market more than offset the decline in national advertising, which
was in part due to the absence of the FIFA World Cup. Digital
revenue growth at improving margins, and the realisation of
benefits from the structural changes made in 2018 (closure of STV2
and restructure of STV News) also contributed to that strong profit
growth. The adjusted operating margin for the Group was 20.0%
(2018: 17.3%).
Broadcast division revenues were down 3% at GBP45.0m (2018:
GBP46.5m) with half of this due to the closure of STV2, and the
balance a result of the expected weaker national advertising
market. Regional advertising revenues were up 19% to GBP7.3m (2018:
GBP6.1m).
Broadcast division operating profit increased to GBP9.7m (2018:
GBP9.1m), up 7%, driven by regional advertising and the positive
impact of measures taken in 2018 to deliver efficiencies and cost
savings. Combined with the impact of profit protection in the face
of a decline in the national advertising market secured through the
trading arrangements with ITV, these elements all contributed to an
operating margin growth of 2 percentage points year on year, up to
21.6%.
The digital division delivered a 19% increase in revenue to
GBP5.6m (2018: GBP4.7m) and a 43% increase in operating profit to
GBP3.0m (2018: GBP2.1m). The division's operating margin increased
to 53.6% (2018: 44.7%). This strong performance was driven by the
launch of the STV Player on Virgin Media, an overall improved user
experience and an enhanced content offer.
Due largely to the phasing of programme deliveries, STV
Productions' revenues were GBP2.0m (2018: GBP3.7m) with an
operating loss of GBP1.7m (2018: loss of GBP1.2m). This is expected
to substantially reverse in the second half with the delivery of
already commissioned series. Following the appointment of David
Mortimer as managing director in late 2018, the focus in H1 has
been on recruitment of key creative talent and the formation of new
creative and commercial partnerships to deliver the growth
strategy.
The STV External Lottery Manager (ELM) invoiced GBP2.3m of costs
to the Scottish Children's Lottery (SCL) in the period (2018:
GBP2.8m) and the ELM continues to operate on a P&L breakeven
basis. The performance of the SCL has, however, fallen below
expectations in H1 due to slower than planned retail roll-out and
platform issues which have impacted subscriber retention. Having
briefly operated on a cash flow breakeven basis at the start of
this year, the cash flows generated since January have therefore
not been sufficient to meet all of the costs invoiced to the SCL
and, as a result the net debtor balance has increased to GBP7.0m
(2018: GBP6.4m). This is after a provision of GBP4.7m which is
considered appropriate at 30 June 2019 but will be kept under
review. A number of initiatives have been identified to improve
performance and are in various stages of implementation.
Net finance costs incurred were GBP1.9m (2018: GBP1.5m before
exceptionals), of which cash costs relating to the Group's
borrowings totalled GBP0.7m (2018: GBP0.6m). The balance of net
finance costs related to the non-cash items of IAS19 pension
interest (2019: GBP1.0m; 2018: GBP0.9m) and an interest charge of
GBP0.2m on lease liabilities under IFRS16, which the Group adopted
on 1 January 2019.
The statutory result for the period after tax was a profit of
GBP7.5m (2018: loss of GBP4.2m). The Group's effective tax rate for
the period was 18%, consistent with the same period last year.
Adjusted earnings per share was up 1.8p to 21.8p, an increase of
9% (2018: 20.0p). On a statutory basis, basic EPS was 19.7p
compared to a loss per share of 10.9p in 2018.
The net debt: EBITDA ratio at the half year was 1.49x (2018:
1.46x), within the Group's target range of 1.0x to 1.5x (covenant
maximum is 3.0x), despite an increase in net debt to GBP42.0m
(2018: GBP37.8m). Net debt is expected to reduce by the year end
reflecting the second half weighting of deliveries in Productions,
and normal seasonal trends.
The main non-operating cash outflows were pension deficit
payments of GBP5.9m, as per the recently agreed triennial valuation
and including a contingent payment based on cash generation in
2018, dividend payments of GBP5.3m, GBP0.9m of share purchases
through the buyback programme and into the Employee Benefit Trust,
and reorganisation costs of GBP0.8m arising from the restructure
implemented in 2018.
The Group's preferred measure of operating profit converted to
free cash flow, defined as operating profit plus depreciation,
amortisation and share based payments, less working capital
movements (excluding STV ELM) and capital expenditure, was 74% in
the first half of the year (2018: 109%). The lower conversion
compared to the same period in the prior year is due to increased
capital investment, alongside higher working capital requirements
of STV Productions driven by the previously mentioned H2 weighting
of deliveries. The expectation is that this cash conversion will
increase by the year end.
At 30 June 2019, the balance sheet included GBP12.8m of
right-of-use assets following adoption of IFRS16, Leases, with a
corresponding lease liability of GBP13.0m. The IAS19 pre-tax
pension deficit decreased by GBP4.1m over the first half of the
year to GBP74.4m (June 2018: GBP59.3m) with the decrease due to key
assumptions being updated for current market conditions.
The Group's GBP60m revolving credit and overdraft facility
matures in June 2022 and provides good medium term funding
certainty.
Shareholder returns
STV continues to balance the requirement to invest in the
strategic growth plan with the need for financial flexibility to
enable continued delivery of returns to shareholders. As a result
an interim dividend of 6.3 pence per share will be paid, an
increase of 5% on the 2018 interim dividend of 6.0 pence per share,
and in line with recent guidance.
Operational review
Broadcast
The aim of the Broadcast division is the delivery of high
quality, cost-effective news and entertainment to maximise the
value of this stable and profitable business. The excellent viewing
performance achieved during 2018 has been maintained throughout H1
2019 with STV achieving its highest all time share since 2009, at
18.7%. This is despite tough year on year comparatives (the absence
of the FIFA World Cup), and an even more competitive market,
including the launch of a new BBC channel in Scotland.
The impact of a weaker national advertising market, with
revenues down 6% year on year, was minimised through the protection
secured in the trading arrangements with ITV, under which STV's
programme costs decline in line with any revenue reduction.
Continued growth in the regional advertising market, up 19% year on
year to GBP7.3m, has been supported by the successful STV Growth
Fund.
So far this year, the STV Growth Fund has allocated GBP3.2m of
value across 135 advertising deals, more than half of which are
with clients new to television advertising. Since launch there have
been over 200 deals with over 100 new advertisers attracted and
over GBP5m allocated by the fund. The STV Growth Fund Incubator has
also launched offering revenue share deals to advertisers, with the
first deals already in place.
Operating profit grew by 7% year on year to GBP9.7m (2018:
GBP9.1m). The positive impact of cost saving measures implemented
in 2018, including the closure of STV2 and a change programme
implemented across STV News, contributed to an increased margin of
21.6% (2018: 19.6%).
The performance of STV News has continued to strengthen
following changes announced in 2018. In Ofcom's report: News
Consumption in the UK: 2019, STV News is now identified as the
number one source of news for Scotland. Our flagship programme, STV
News at Six, continued to increase its viewing share year on year
and to date in 2019 has secured an average share of 30%, increasing
by nearly 4 share points in the last 18 months (2017: 26.4%). The
success of the programme was recognised by the Royal Television
Society as Best News Programme in its annual awards in June
2019.
Digital
Our ambition to transform the STV Player into Scotland's digital
destination is gaining momentum with confirmation that the Player
is now the most popular commercial VoD player in Scotland. This is
being achieved through increased digital distribution, more choice
through a broader content offer, as well as an enhanced user
experience through improved product reliability and the
introduction of additional features.
Total time spent watching the STV Player increased 13%, even
with the tough comparatives of a FIFA World Cup year. Catch up
streams are up 36% to 16.4m, driving a 19% increase in revenues to
GBP5.6m (2018: GBP4.7m).
Following the successful launch of the STV Player on Virgin
Media in December 2018, to date 77% of the Virgin Media user base
has been active on STV Player, accounting for 15% to 20% of all VoD
views. STV Player will be carried on Sky from Q4, further boosting
availability and digital advertising revenues. The Sky partnership
has also secured STV's position as the first UK PSB to broadcast
all of its regional variants in HD on satellite.
In preparation for the launch on Sky, a partnership was
announced with FreeWheel to enable STV to undertake its own ad
integration onto the Sky platform, avoiding the need for commission
payments on advertising revenue.
Whilst the majority of STV Player content is original and
exclusive to STV through the Channel 3 network schedule, new
content deals are broadening the appeal of the STV Player with over
500 hours of additional content now available from a range of new
content partnerships announced to date, including Endemol Shine
International, TCB Media Rights, TVF Media, Hopster, Flame, and
Jukin'.
STV's new subscription service, STV Player+, is performing as
expected following its successful launch on iOS devices at the end
of February and will now be rolled out to all major platforms by
the year end.
An ambitious programme of product development has been delivered
during H1 providing a range of new features to enhance the customer
experience, deliver an increasingly personalised viewing
environment and extend viewing times. 'End of play'
recommendations, introduced in Q2, have so far resulted in c30% of
all content starts pursuing the recommended follow up viewing
option. 'Watch live restart' was also launched and where available
is being used on 15% to 20% of all live streams. 'Picture in
picture' is the latest new feature to be introduced and has already
increased content time per stream by 33% on the iOS platform.
STV Productions
The vision for STV Productions is to build a world class
production business, based in Scotland, which takes full advantage
of the growing local and global demand for high quality content.
During H1, implementation of the growth strategy has progressed
well with key appointments now in post and a repositioning of the
business well underway.
In June, the acquisition of a majority stake in award winning
producer Primal Media was announced.
Commissions secured in H1 included 50 episodes of long running
popular daytime antiques show, Antiques Road Trip, 20 episodes of
its sister version, Celebrity Antiques Road Trip and two further
series (total of 15 episodes) of Celebrity Catchphrase. A second
series commission of ratings success, Inside Central Station, for
new channel BBC Scotland, was announced in late June with delivery
scheduled for this year.
A key element of the growth strategy is to leverage STV's
producer/broadcaster status and pilot high potential formats
developed by the production division on STV. The first of these
formats, quiz show The Cash Machine, began its run on STV on Sunday
1 September with a 19% share of viewing, 3 share points ahead of
the network and 30% up on the slot average.
Securing drama commissions is a priority. The Victim, a
four-part high end network commission for BBC One, achieved the
highest catch up ratings for a drama since records began, with a
73% increase on the overnight ratings. It has been sold to over 30
countries including deals with Britbox US, France 2 and BBC
Worldwide Australia. Following this success, production of a second
drama commission, also for BBC One, is underway. Elizabeth Is
Missing, starring academy award winning Glenda Jackson in the lead
role, will be delivered to the BBC in late Autumn.
Newly acquired Primal Media has secured three commissions so far
this year including two factual entertainment shows for Channel 4,
as well as a further yet-to-be-announced series.
Finally, in Q1 the appointment of William Morris Endeavour - WME
- as international sales agent was announced to support the
increased focus on developing dramas and formats for UK and
international audiences. WME are working with STV Productions to
develop IP for international markets and broker co-development and
co-production deals.
Principal risks and uncertainties
The Board considers the principal risks and uncertainties
affecting the business activities of the Group are:
-- Regulatory environment
-- Dependence on advertising
-- Performance of the ITV network
-- Brexit
-- Cyber security
-- Pension scheme shortfalls
-- Reputational and financial risk of lottery operation
-- Financial risks, primarily currency, credit, liquidity and cash flow interest rate risk
Further details of the Group's policies on principal risks and
uncertainties are contained within the Group's 2018 Annual Report,
a copy of which is available at www.stvplc.tv.
Simon Pitts
Chief Executive Officer
STV Group plc
Condensed interim income statement Six months ended 30 June 2019
Six months 2019 Six months 2018
Before Exceptional
Results exceptional items Results
for period items (note 8) for period
GBPm GBPm GBPm GBPm
Note Unaudited Unaudited Unaudited Unaudited
Revenue 7 54.9 57.7 - 57.7
Net operating expense (43.9) (47.7) (8.6) (56.3)
------------- ------------- ------------ -------------
Operating profit/(loss) 11.0 10.0 (8.6) 1.4
Finance costs
* borrowings (0.7) (0.6) - (0.6)
* IAS 19 pension (1.0) (0.9) - (0.9)
(0.2) - - -
* IFRS 16
Impairment losses - exceptional
ELM provision - - (4.2) (4.2)
------------- ------------- ------------ -------------
(1.9) (1.5) (4.2) (5.7)
------------- ------------- ------------ -------------
Profit/(loss) before tax 9.1 8.5 (12.8) (4.3)
Tax (charge)/credit 9 (1.6) (1.5) 1.6 0.1
------------- ------------- ------------ -------------
Profit/(loss) for the period 7.5 7.0 (11.2) (4.2)
Earnings per share
Basic 10 19.7p 18.1p (10.9p)
Diluted 10 19.1p 17.8p (10.9p)
A reconciliation of the statutory results to the adjusted
results is included at note 21.
Condensed interim statement of comprehensive income
Six months ended 30 June 2019
Six months Six months
2019 2018
GBPm GBPm
Unaudited Unaudited
Profit/(loss) for the period 7.5 (4.2)
Items that will not be reclassified to profit
or loss:
Re-measurement of defined benefit pension schemes (0.7) 7.9
Deferred tax credit/(charge) 0.1 (1.4)
---------- ----------
Other comprehensive (expense)/income for the
period (0.6) 6.5
Total comprehensive income for the period 6.9 2.3
---------- ----------
The above condensed interim income statements should be read in
conjunction with the accompanying notes.
Condensed interim balance sheet
As at 30 June 2019
30 June 31 December
2019 2018
GBPm GBPm
Note Unaudited Audited
Non-current assets
Property, plant and equipment 12 23.4 9.8
Intangible assets 13 2.1 1.9
Investments 0.7 0.7
Deferred tax asset 14 18.5 19.5
Trade and other receivables 15 8.8 8.2
53.5 40.1
--------- -----------
Current assets
Inventories 16.1 14.4
Trade and other receivables 17.1 22.7
Cash and cash equivalents 2.7 6.3
35.9 43.4
--------- -----------
Total assets 89.4 83.5
--------- -----------
Equity attributable to owners of the
parent
Ordinary shares 17 19.6 19.6
Share premium 101.9 101.9
Capital redemption reserve 0.2 0.2
Merger reserve 173.4 173.4
Other reserve 0.9 0.8
Accumulated losses (354.4) (355.0)
--------- -----------
Total equity (58.4) (59.1)
--------- -----------
Non-current liabilities
Borrowings 16 44.7 42.6
Lease liabilities 10.7 -
Derivative financial instruments 0.1 -
Retirement benefit obligations 19 74.4 78.5
129.9 121.1
--------- -----------
Current Liabilities
Trade and other payables 14.8 20.4
Lease liabilities 2.3 -
Current tax liabilities 0.5 -
Provisions 0.3 1.1
--------- -----------
17.9 21.5
--------- -----------
Total liabilities 147.8 142.6
--------- -----------
Total equity and liabilities 89.4 83.5
--------- -----------
The above condensed interim balance sheet should be read in
conjunction with the accompanying notes.
Condensed interim statement of changes in equity
Six months ended 30 June 2019
Equity attributable to owners of the parent
Capital
Ordinary Share redemption Merger Other Accumulated Total
shares premium reserve reserve reserve losses equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
As previously reported 19.6 101.9 0.2 173.4 0.8 (355.0) (59.1)
Implementation of
IFRS 16 (note 3) - - - - - (0.1) (0.1)
---------- --------- ----------- --------- --------- ------------- --------
At 1 January 2019
as adjusted 19.6 101.9 0.2 173.4 0.8 (355.1) (59.2)
---------- --------- ----------- --------- --------- ------------- --------
Profit for the period - - - - - 7.5 7.5
Other comprehensive
expense - - - - - (0.6) (0.6)
Total comprehensive
income for the period - - - - - 6.9 6.9
---------- --------- ----------- --------- --------- ------------- --------
Acquisition of treasury
shares - - - - - (0.9) (0.9)
Share based compensation - - - - 0.1 - 0.1
Dividends - - - - - (5.3) (5.3)
Balance at 30 June
2019 (unaudited) 19.6 101.9 0.2 173.4 0.9 (354.4) (58.4)
---------- --------- ----------- --------- --------- ------------- --------
Balance at 1 January
2018 19.7 101.9 0.1 173.4 0.7 (334.1) (38.3)
------- ------- ----- ------- ----- --------- --------
Loss for the period - - - - - (4.2) (4.2)
Other comprehensive
income - - - - - 6.5 6.5
Total comprehensive
income for the period - - - - - 2.3 2.3
------- ------- ----- ------- ----- --------- --------
Acquisition of treasury
shares - - - - - (1.3) (1.3)
Shares bought back
on-market and cancelled (0.1) - 0.1 - - (0.2) (0.2)
Share based compensation - - - - 0.2 - 0.2
Value of employee
services - - - - - (0.2) (0.2)
Dividends - - - - - (4.6) (4.6)
Balance at 30 June
2018 (unaudited) 19.6 101.9 0.2 173.4 0.9 (338.1) (42.1)
------- ------- ----- ------- ----- --------- --------
The above condensed interim statement of changes in equity
should be read in conjunction with the accompanying notes.
Condensed interim statement of cash flows
Six months ended 30 June 2019
Six months Six months
2019 2018
GBPm GBPm
Note Unaudited Unaudited
Operating activities
Cash generated by operations 18 10.1 10.0
Interest paid (0.5) (0.5)
Refinancing fees paid - (0.2)
Taxes refunded/(paid) 0.2 (0.3)
Pension deficit
funding - recovery plan payment (5.9) (4.4)
Net cash generated in operating activities 3.9 4.6
----------- -----------
Investing activities
Capitalised web development spend (0.5) (0.1)
Purchase of property, plant and equipment (1.9) (0.6)
Sale of investments - 0.2
----------- -----------
Net cash used in investing activities (2.4) (0.5)
----------- -----------
Financing activities
Acquisition of treasury shares (0.9) (1.3)
Repayment of principal under lease liabilities (0.9) -
Share buyback - (0.6)
Borrowings drawn 11.0 7.0
Borrowings repaid (9.0) (8.0)
Dividend paid 11 (5.3) (4.6)
Net cash used in financing activities (5.1) (7.5)
----------- -----------
Net decrease in cash and cash equivalents (3.6) (3.4)
Net cash and cash equivalents at beginning
of period 6.3 6.1
----------- -----------
Net cash and cash equivalents at end
of period 2.7 2.7
----------- -----------
Notes to the condensed interim financial statements
Six months ended 30 June 2019
1. General information
STV Group plc ("the Company") and its subsidiaries (together
"the Group") is listed on the London Stock Exchange and
incorporated and domiciled in the UK. The address of the registered
office is Pacific Quay, Glasgow, G51 1PQ. The principal activities
of the Group are the production and broadcasting of television
programmes, internet services and the sale of advertising airtime
and space in these media, and lottery management services.
These condensed interim financial statements were approved for
issue on 3 September 2019 and have been reviewed, not audited. They
do not comprise statutory accounts within
the meaning of section 434 of the Companies Act 2006. Statutory
accounts for the year
ended 31 December 2018 were approved by the board of directors
on 12 March 2019 and
delivered to the Registrar of Companies. The report of the
auditors on those accounts was
unqualified, did not contain an emphasis of matter paragraph and
did not contain any
statement under section 498 of the Companies Act 2006.
2. Basis of preparation
These condensed interim financial statements for the six months
ended 30 June 2019 have been prepared in accordance with the
Disclosure and Transparency Rules of the Financial Conduct
Authority (previously the Financial Services Authority) and with
IAS34, 'Interim financial reporting', as adopted by the European
Union. The condensed interim financial statements should be read in
conjunction with the annual financial statements for the year ended
31 December 2018, which have been prepared in accordance with IFRS
as adopted by the European Union.
Going concern basis
The Group meets its day-to-day working capital requirements
through its bank facilities. The current economic conditions
continue to create uncertainty particularly over (a) the level of
demand for the Group's products; and (b) the availability of bank
finance for the foreseeable future. The group's forecasts and
projections, taking account of reasonably possible changes in
trading performance, show that the Group should be able to operate
within the level of its current facilities. After making enquiries,
the directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for at
least twelve months from the date of approval of the financial
statements. The directors therefore consider it appropriate to
continue to adopt the going concern basis in preparing these
condensed interim financial statements.
3. Accounting policies
Except as described below, the accounting policies applied are
consistent with those of the annual financial statements for the
year ended 31 December 2018.
Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to expected total annual profit or
loss.
Apart from the adoption of IFRS 16 described below, other
changes to accounting standards in the current period had no
material impact.
The Group adopted IFRS 16 'Leases' on 1 January 2019. As a
lessee, the Group previously classified its property and vehicle
leases as operating leases under IAS 17. Under IFRS 16, the Group
recognises a right-of-use asset and a lease liability representing
future lease payments. Lease costs are recognised as depreciation
and interest rather than as an operating cost. When measuring lease
liabilities that were classified as operating leases, the Group
discounted lease payments using its incremental borrowing rate at 1
January 2019. The weighted average rate applied is 2.3%.
The Group has applied IFRS 16 using the modified retrospective
approach. Under this approach, the comparative information is not
restated. In line with the standard, the Group has elected not to
recognise right of use assets and lease liabilities for short-term
leases or low-value leases. The amounts relating to these leases
are not material.
On transition to IFRS 16, the Group recognised right-of-use
assets within property, plant and equipment (GBP13.7m) and lease
liabilities (GBP13.7m). In addition, a property lease accrual of
GBP0.1m has been written off and adjusted through retained
earnings.
1 January
2019
GBPm
Operating lease commitment at 31 December as disclosed
in the Group's consolidated financial statements (13.8)
Impact of IFRS 16 data review* (1.1)
----------
Operating lease commitments at 31 December 2018 (14.9)
Sub- lease property rentals netted against commitment (0.4)
Discounted using the incremental borrowing rate
at 1 January 2019 1.6
----------
Lease liabilities reported at 1 January 2019 (13.7)
----------
*As part of the transition to IFRS 16, a detailed review of
leases identified a small number of commitments not included in the
2018 Annual Report operating lease commitment disclosure.
During the six months ended 30 June 2019, the Group has
recognised GBP0.9m of depreciation and GBP0.2m of interest costs
from these leases, instead of an operating lease expense. In the
Consolidated Interim Balance Sheet, right of use assets of GBP12.8m
are included within property, plant and equipment and lease
liabilities of GBP13.0m included within current and non-current
liabilities.
4. Estimates
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
In preparing these condensed interim financial statements, the
significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the consolidated financial
statements for the year ended 31 December 2018, with the exception
of changes in estimates that are required in determining the
provision for income taxes.
5. Financial risk management and financial instruments
The Group's activities expose it to a variety of financial
risks: currency risk, credit risk, liquidity risk and cash flow
interest rate risk.
The condensed interim financial statements do not include all
financial risk management information and disclosures required in
the annual financial statements; they should be read in conjunction
with the Group's annual financial statements as at 31 December
2018.
There have been no changes in any risk management policies since
the year end.
6. Seasonality of operations
In line with the UK advertising market as a whole, the autumn
season provides the Group with the highest level of revenues. The
Productions business also delivers the majority of its programmes
to broadcasters in the second half of the year.
7. Business segments
The Group's Chief Executive, the chief operating decision maker,
considers the business primarily from a product perspective. Under
IFRS 8, the reportable segments are Broadcast, Digital, Productions
and ELM (external lottery management).
The performance of the segments is assessed based on a measure
of adjusted operating profit.
External sales
Six months Six
2019 months
Segment revenues 2018
GBPm GBPm
Broadcast 45.0 46.5
Digital 5.6 4.7
Productions 2.0 3.7
ELM 2.3 2.8
----------- --------
54.9 57.7
----------- --------
Six months Six months
2019 2018
Segment result
GBPm GBPm
Broadcast 9.7 9.1
Digital 3.0 2.1
Productions (1.7) (1.2)
ELM - -
Operating profit (pre-exceptionals) 11.0 10.0
Exceptional reorganisation cost attributable
to Group - (7.8)
Exceptional loss on sale of STV2 attributable
to Group - (0.8)
Operating profit 11.0 1.4
Finance costs (1.9) (1.5)
Impairment losses - exceptional ELM provision - (4.2)
Profit/(loss) before tax 9.1 (4.3)
Tax (charge)/credit (1.6) 0.1
----------- -----------
Profit/(loss) attributable to owners of
the parent 7.5 (4.2)
----------- -----------
There has been no significant change in total assets from the
amount disclosed in the last annual financial statements.
8. Exceptional items
In the first six months of 2018, the Group recognised
exceptional costs totalling GBP12.8m. These related to a provision
for the restructuring of the business (GBP7.8m), the loss on sale
of STV2 (GBP0.8m) and recognition of a provision in relation to the
ELM debtor (GBP4.2m).
There have been no exceptional items in the first half of
2019.
9. Tax
Six months Six months
2019 2018
GBPm GBPm
The charge/(credit) for taxation
is as follows:
Charge for the year 1.6 1.5
Tax effect on exceptional items - (1.6)
1.6 (0.1)
----------- -----------
Tax on the results for the six month period is charged at 18%
(30 June 2018: 18%) representing the best estimate of the average
annual effective tax rate expected for the full year, applied to
the pre-tax profit of the six month period. The tax charge is lower
than the standard rate of 19% due to the impact of the anticipated
reduction in the statutory rate of corporation tax on the
realisation of deferred tax assets in the current period.
10. Earnings per share
Six months Six months
2019 2018
GBPm GBPm
Profit/(results) for the year attributable
to equity shareholders 7.5 (4.2)
Exceptional items (net of tax) - 7.8
Exceptional impairment losses (net of tax) - 3.4
---------- -----------
Profit for the year before exceptional items 7.5 7.0
---------- -----------
Million Million
Weighted average number of ordinary shares
in issue 38.0 38.6
Dilution due to share options* 1.2 0.7
---------- -----------
Total weighted average number of ordinary
shares in issue 39.2 39.3
---------- -----------
Pence Pence
Basic earnings per ordinary share 19.7p (10.9p)
Diluted earnings per ordinary share* 19.1p (10.9p)
Earnings per ordinary share (before exceptional
items) 19.7p 18.1p
Diluted earnings per ordinary share (before
exceptional items) 19.1p 17.8p
* As the Group reported a basic loss per ordinary share for the
six months ended 30 June 2018, any potential ordinary shares are
anti-dilutive and so excluded from the calculation of diluted loss
per share. These options could potentially dilute earnings per
share in future periods.
11. Dividends
A dividend of GBP5.3m (2018: GBP4.6m) which relates to the year
ended 31 December 2018 was paid in May 2019.
An interim dividend of 6.3p per share (2018: 6.0p per share) has
been proposed and is subject to approval by the board of directors.
It is payable on 6 November 2019 to shareholders who are on the
register at 27 September 2019. This interim dividend, amounting to
GBP2.4m (2018: GBP2.3m), has not been recognised as a liability in
this interim financial information. It will be recognised in
shareholders' equity in the year ending 31 December 2019.
12. Property, plant and equipment
During the six months to 30 June 2019, the Group has incurred
expenditure of GBP1.9m on property, plant and equipment (GBP3.0m in
the year to 31 December 2018; GBP0.6m in the six months to 30 June
2018). The net disposals amount to GBPnil (GBP0.1m in the year to
31 December 2018; GBP0.1m in the six months to 30 June 2018).
See note 3 for further information regarding the initial
application of IFRS 16. Right-of-use assets are presented within
property, plant and equipment.
13. Intangible assets
During the six months to 30 June 2019, the Group has incurred
expenditure of GBP0.5m on web development (GBP0.4m in the year to
31 December 2018; GBP0.1m in the six months to 30 June 2018). The
net disposals amount to GBPnil (GBP0.4m in the year to 31 December
2018; GBP0.4m in the six months to 30 June 2018).
14. Deferred tax asset
The deferred tax asset recognised (excluding the deferred tax
asset in relation to the pension deficit) at 30 June 2019 is
GBP5.9m (31 December 2018: GBP6.0m). This relates to tax losses
carried forward, accelerated capital allowances and short term
timing differences.
The deferred tax asset recognised relating to the pension scheme
deficit at 30 June 2019 is GBP12.6m (31 December 2018:
GBP13.2m).
15. Trade and other receivables
An amount of GBP7.0m (31 December 2018: GBP6.4m), included
within non-current assets, relates to debt due to ELM (the lottery
management company) from the Scottish Children's Lottery. The
GBP7.0m debtor is net of provision for an expected credit loss of
GBP4.7m (31 December 2018: GBP5.0m).
16. Borrowings
At 30 June 2019, the Group had revolving credit and overdraft
bank facilities in place totalling GBP60.0m (GBP60.0m at 31
December 2018). At 30 June 2019, GBP45.0m of the facility was drawn
down (GBP43.0m at 31 December 2018). The amount of borrowings is
net of GBP0.3m unamortised borrowing costs (31 December 2018:
GBP0.4m).
The GBP60.0m revolving credit and overdraft facility has a
maturity date of June 2022. Security is provided to the debt
providers by way of cross guarantees and a share pledge.
17. Share capital
Issued share capital as at 30 June 2019 and 31 December 2018
amounted to GBP19.6m (39,192,137 shares).
18. Notes to the condensed interim statement of cash flows
Six Six
months months
2019 2018
GBPm GBPm
Operating profit 11.0 1.4
Add back : exceptionals - 8.6
------- -------
Operating profit (excluding exceptionals) 11.0 10.0
Adjustments for:
Depreciation on property, plant and equipment 1.9 0.8
Amortisation of intangible assets 0.4 0.4
Share based compensation 0.1 0.2
EBITDA pre-exceptional 13.4 11.4
Increase in inventories (1.7) (5.2)
Decrease in trade and other receivables (excluding
ELM) 5.4 2.7
Decrease in trade and other payables (excluding
ELM) (5.3) (0.9)
(Increase)/decrease in ELM trade and other
receivables (0.6) 2.9
Decrease in ELM trade and other payables (0.3) (0.3)
------- -------
Underlying cash generated by operations 10.9 10.6
Exceptional reorganisation costs (0.8) (0.9)
Exceptional net cash received on sale of STV2 - 0.3
------- -------
Cash generated by operations 10.1 10.0
------- -------
Additions to property, plant and equipment during the period
amounting to GBP0.1m were financed by new leases.
Analysis of movements in net debt
At 1 At 30
January Cash flows Non-cash June 2019
2019 changes
GBPm GBPm GBPm GBPm
Cash and cash equivalents 6.3 (3.6) - 2.7
Long term borrowings (42.6) (2.0) (0.1) (44.7)
--------- ------------- ----------- -----------
Net debt (36.3) (5.6) (0.1) (42.0)
--------- ------------- ----------- -----------
Covenant EBITDA reconciliation
Six Six
months months
2019 2018
GBPm GBPm
Operating profit 11.0 10.0
Depreciation and amortisation 1.4 1.2
Post-employment benefit charges 1.2 1.3
Non-cash and other adjustments 1.8 0.9
------- -------
Covenant EBITDA 15.4 13.4
------- -------
Statutory results are adjusted above for the net debt : EBITDA
ratio on a covenant basis, which excludes the impact of IFRS 16.
They are adjusted to reflect the underlying performance of the
business, providing a more meaningful comparison of how the
business is managed and measured on a day-to-day basis.
19. Retirement benefit schemes
The fair value of the assets in the schemes and the present
value of the liabilities in the schemes at each balance sheet date
was:
At 30 June At 31 December
2019 2018
GBPm GBPm
Total defined benefit scheme obligations (450.3) (421.9)
Total defined benefit scheme assets
obligations 375.9 343.4
----------- ---------------
Net pension deficit (74.4) (78.5)
----------- ---------------
A related offsetting deferred tax credit of GBP12.5m (31
December 2018: GBP13.2m) is included in non-current assets.
Therefore the net pension scheme deficit is GBP61.9m at 30 June
2019 (31 December 2018: GBP65.3m).
20. Transactions with related parties
There has been no change from the 2018 Annual Report and no
transactions with any related parties in the period to 30 June
2019.
21. Reconciliation of statutory results to adjusted results
Statutory results are adjusted to reflect the underlying
performance of the business, providing a more meaningful comparison
of how the business is managed and measured on a day-to-day
basis.
2019 2018
Profit Basic Diluted Profit Basic Diluted
before tax EPS EPS before tax EPS EPS
GBPm pence pence GBPm pence pence
Post exceptional 9.1 19.7p 19.1p (4.3) (10.9p) (10.7p)
Add back: exceptionals - - - 12.8 29.0p 28.5p
------------ ------ -------- ------------ -------- --------
Pre-exceptional 9.1 19.7p 19.1p 8.5 18.1p 17.8p
Add back: IAS 19 1.0 2.1p 2.1p 0.9 1.9p 1.8p
Adjusted results 10.1 21.8p 21.2p 9.4 20.0p 19.6p
------------ ------ -------- ------------ -------- --------
Refer to the comment in note 10 with respect to 2018 Diluted
EPS.
22. Subsequent event
On 1 July 2019, the Group acquired a majority stake in
production company, Primal Media Limited for a nil consideration.
Under the terms of the deal, Lionsgate, the previous majority in
Primal Media will retain a minority stake in the business, with the
founders holding the remaining equity.
Independent review report to STV Group plc
Report on the condensed interim financial statements
Our conclusion
We have reviewed STV Group plc's condensed interim financial
statements (the "interim financial statements") in the half year
results of STV Group plc for the 6 month period ended 30 June 2019.
Based on our review, nothing has come to our attention that causes
us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the condensed interim balance sheet as at 30 June 2019;
-- the condensed interim income statement and condensed interim
statement of comprehensive income for the period then ended;
-- the condensed interim statement of cash flows for the period then ended;
-- the condensed interim statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the half year
results have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
As disclosed in note 2 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The half year results, including the interim financial
statements, is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the half
year results in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the half year results based on our review.
This report, including the conclusion, has been prepared for and
only for the company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the half year
results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
Glasgow
3 September 2019
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR EANNAEEPNEFF
(END) Dow Jones Newswires
September 03, 2019 02:00 ET (06:00 GMT)
Stv (AQSE:STVG.GB)
Historical Stock Chart
From Jun 2024 to Jul 2024
Stv (AQSE:STVG.GB)
Historical Stock Chart
From Jul 2023 to Jul 2024