TIDMSTVG
RNS Number : 3672P
STV Group PLC
31 August 2017
STV Group plc Half Year Results 2017
Performance in line with expectations; increasing returns to
shareholders
Strategic Developments
- Simon Pitts to be appointed Chief Executive Officer as of January 2018
- Intended return of capital to shareholders of GBP10m over next
18 months, reflecting confidence in underlying strength of the
business
- Interim dividend of 5.0 pence per share declared, representing
an increase of 25% year on year. Proposed total 2017 dividend of
17.0 pence per share, up 13%.
- Drama series commission secured by STV Productions (The
Victim, 4 episodes for BBC1) with strong pipeline in H2
- Second network channel, STV2, launched in April 2017 and
delivering four-fold increase in commercial impacts
Highlights
- Trading arrangements with ITV providing buffer against
weakness in the national advertising market, (down 10% in H1), and
changing macro-economic circumstances
- Continued strong profitable growth in digital activities with
revenue up 14%, at GBP4.0m and margin of 50%
Financial highlights
- H1 performance in line with expectations
- No change in full year guidance
H1 2017 H1 2016 Year on
year
------------------------- --------- --------- --------
Revenue GBP54.6m GBP56.2m -3%
------------------------- --------- --------- --------
EBITDA (see note 16) GBP10.5m GBP11.5m -9%
------------------------- --------- --------- --------
Operating profit GBP9.2m GBP11.0m -16%
------------------------- --------- --------- --------
Pre-tax profit and
IAS 19 interest GBP8.7m GBP10.4m -16%
------------------------- --------- --------- --------
Pre-tax profit GBP7.5m GBP10.2m -26%
------------------------- --------- --------- --------
EPS pre IAS 19 interest
(see note 19) 18.8p 21.8p -14%
------------------------- --------- --------- --------
Statutory EPS 16.2p 21.2p -24%
------------------------- --------- --------- --------
Net debt GBP34.0m GBP29.1m +17%
------------------------- --------- --------- --------
Dividend per share 5.0p 4.0p +25%
------------------------- --------- --------- --------
Rob Woodward, Chief Executive Officer, said: "Significant
markers of progress have been delivered during the first half of
2017 including the launch of STV2, a new channel for Scotland,
which will enable the company to continue to grow its share of the
Scottish market.
"Digital activities continue to deliver double digit growth
while maintaining high margins after taking account of additional
investment to support future development.
"STV Productions has built a good pipeline for the rest of this
year and into 2018 with a number of commissions secured in the
period, including a new drama series for BBC1.
"The performance of the business in the first half of 2017 is in
line with expectations despite the weak advertising market.
"The Board's confidence in the underlying financial strength of
the business is conveyed through today's announcement of an
additional return of capital to shareholders. The Board expects to
propose a full year dividend of 17 pence per share."
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
Ellen Drummond, PR & Communications Manager Tel: 07803 970 143
Charlotte Street Partners
Harriet Moll Tel: 07717 501 626
Financial performance
Performance during the first half of the year is in line with
expectations, reflecting weakness in the advertising market and
macro-economic environment. The outlook for the full year remains
unchanged against key financial measures and KPI targets.
Total revenues are down 3% at GBP54.6m, impacted primarily by a
weaker national airtime market as a result of ongoing economic
uncertainty. Despite this overall decline, digital activities
delivered increased revenue growth, up 14% at GBP4.0m. Sponsorship
revenue increased by 8%, to GBP2.8m, and the regional airtime
market position was slightly up year on year.
Additionally, newly launched service STV2 delivered a 50%
increase in revenue from the former CityTV services. STV2 covers
85% of the STV licence area.
STV Productions' revenues were GBP2.6m, down 26%, as a result of
timing of deliveries across the year; however, the business has a
secured pipeline for the second half of 2017. The new division of
the STV External Lottery Manager (ELM) delivered revenue of GBP3.3m
from providing services to the Scottish Children's Lottery (SCL)
which it does on a breakeven basis.
Operating profit was GBP9.2m, down 16%, reflecting the weaker
national airtime market with an offset from reduced programme and
advertising sales costs under our agreements with ITV. These
agreements resulted in only 40% of the decline in national revenues
flowing through to operating profit. The first half was also
impacted by the phasing of costs under the new advertising sales
agreement which increased costs by GBP0.9m, however, this will
reverse in the second half of 2017.
PBT before exceptional items and IAS19 interest was GBP8.7m,
down 16%. Earnings per share before exceptional items and IAS19
interest was 18.8p, down 14%.
The balance sheet continues to be strong, supporting increased
returns to shareholders and continued investment in key growth
activities. Net debt increased to GBP34.0m, up 17%, but will reduce
in H2 before the effects of the intended capital return to
shareholders. The increase from December 2016 is principally due to
ongoing working capital requirements to fund the working capital of
the SCL and the timing of receiving the cost rebate from ITV. The
SCL debt of GBP8.1m at 30 June 2017 will be recouped in future
years with progress towards cash flow breakeven on track.
Shareholder returns
In line with the Board's commitment to the long-term delivery of
increased shareholder returns, and reflecting the underlying
financial strength and stability of the business, it is the Board's
intention that an additional return of capital will be delivered to
shareholders over the next 18 months.
It is intended that the capital return will amount to GBP10m and
is in addition to planned dividend payments to be delivered through
the previously announced progressive dividend policy. This policy
is structured to achieve a distribution of 60% to 80% of cash
generation after pension deficit funding payments.
An interim dividend of 5.0 pence per share, up 25%, is declared
with a proposed final payment of 12.0 pence per share, resulting in
a proposed total dividend of 17 pence per share, up 13%.
Operational Review
STV Consumer
The consumer business has performed in line with expectations.
Despite the decline in national airtime revenues, growth is
continuing to be delivered in regional sales, sponsorship and
digital activities.
Growth in digital revenues has continued during the first half
with revenues up 14%, principally driven by VoD revenues on the STV
Player.
Operating profit amounted to GBP10.1m, down 14%, reflecting a
decline of 10% in national airtime revenues and phasing of costs
under the Airtime Sales Agreement with ITV.
In April, a second networked service, STV2, was launched. Formed
from the integration of the L-DTPS licences secured by STV to
deliver local television in five areas within Scotland, this is a
unitary programme service. Early performance is positive with both
peak-time audience doubling and commercial impacts increasing
four-fold. To date, the performance of the newly formed channel is
ranking within the top 30 commercial channels operating in the
UK.
Core channel, STV, has continued to perform ahead of the
Network, up 0.68 share points. This out-performance is expected to
continue in the second half of the year with a strong autumn
schedule and improved Network performance.
Supporting the development of deeper engagement with consumers,
consumer insights are now held for over 50% of all adults in
Scotland.
Outlook
STV national airtime revenue is expected to be down 2% to 3% in
September, down 8% in Q3 and a cumulative position from January to
September of down 9%.
The steady growth in the regional market during the first half
is expected to continue with a cumulative position from January to
end September of up 1%.
Digital revenues are expected to continue to grow, up 15%-20%
year on year to the end of Q3 and this rate is expected to be
maintained for the full year, as previously indicated.
STV Productions
A number of new commissions have been secured in the period
including, significantly, a new drama series for BBC1, The Victim
(4 episodes) scheduled for delivery in 2018. Other commissions
include returnable series Antiques Road Trip for BBC1 (series
15-18, 80 episodes) and Celebrity Antiques Road Trip for BBC2
(series 7, 20 episodes); a daytime entertainment series for ITV,
Babushka, (20 episodes); the first commission secured for More4, a
one off documentary, Highland Odyssey; a new one off factual
documentary for BBC4, Fizz Bang Wallop; and a documentary for ITV
as part of the forthcoming crime and punishment series on the
Network.
Revenue was down 26%, at GBP2.6m, reflecting the timing of
deliveries, however, as noted above a good pipeline of deliveries
has been secured for the second half.
STV Productions delivered an operating loss of GBP0.9m, broadly
in line with the prior year performance.
Pensions
The settlement of the 2015 triennial valuation was announced in
December 2016. An 11-year funding plan based upon deficit funding
contributions of GBP8.6m per annum increasing by 2% per annum over
the term of the plan. The annual deficit contribution payment is
made evenly across the year.
Under the valuation settlement, 20% contingent funding of any
outperformance over an agreed cash generation target will apply,
with this cash generation target determined following all other
funding needs of the business having been accounted for and prior
to commitment of pension funding payments and shareholder
returns.
The net deficit at 30 June 2017 has reduced to GBP69m, down from
GBP74m reflecting minor updates to the discount rate and inflation
assumptions at 30 June 2017.
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 2016 Annual Report and Financial
Statements the principal risks and uncertainties that could impact
its performance. These remain largely unchanged since the Annual
Report was published with the exception of the reduction in trading
risk resulting from the renewed Airtime Sales Agreement, agreed
with ITV plc, the terms of which will apply for an 8-year term
commencing January 2017, and the launch of the STV ELM.
The Group has rigorous internal systems to identify, monitor and
manage any risks to the business.
The main areas of potential risk and uncertainty are as
follows:-
Regulatory environment
Our broadcast business is operated under licences, regulated by
Ofcom, which contain conditions that must be adhered to, and
although measures have been put in place internally to ensure that
this occurs, it is possible that these terms may inadvertently be
breached and sanctions imposed by Ofcom, the most serious of which
could be the withdrawal of the licences.
Dependence on advertising
STV's results could vary from period to period as a result of a
variety of factors, some of which are outside STV's control,
including general economic conditions. In response to the operating
and competitive environment, STV may elect to make certain
decisions that could have a material adverse effect on sales,
results of operations and financial conditions.
Performance of the ITV Network
A significant amount of STV's programming content is provided by
the ITV Network. Therefore, its ability to attract and retain
audiences and the advertising airtime sales performance of ITV's
sales house - which is responsible for the sale of STV's UK
national airtime and sponsorship to advertisers - are factors that
affect the performance of STV Consumer and, therefore, the Group as
a whole. The terms of the Airtime Sales Agreement with ITV were
amended in December 2016 to provide improved efficiency, simplicity
and transparency.
Pension scheme shortfalls
The STV pension schemes' investment strategy is calculated to
reduce any material market movement impacts; however, it is
possible that the Group may be required to increase its
contributions at the next triennial valuation which could have an
adverse impact on results and cash flow.
Possible second independence referendum
STV Group plc is both headquartered and incorporated in
Scotland. Following the result of the EU referendum, it is
uncertain whether there will be a further referendum on Scottish
independence and, if there is to be one, the timing and the outcome
are also unknown. The Group has in place a number of measures as
mitigation against increased volatility in the advertising and
financial markets. These include the Network Affiliate Agreement
with ITV in relation to volatile advertising markets and the
Group's bank facilities maturing in the medium term (2019) together
with half of the core net debt (GBP15m) being subject to interest
rate hedges to July 2018 to reduce exposure to financial market
movements. In addition, the Scottish Government has agreed that our
Public Service Broadcast licences will be respected through their
full duration (to 2024).
Reputational and financial risk of lottery operation
The Scottish Children's Lottery was launched in October 2016.
The lottery engages the services of an external lottery manager,
STV External Lottery Management Limited, a subsidiary of the Group,
to deliver the lottery product to consumers. The lottery was
awarded licences by the UK Gambling Commission and while operated
independently of STV, in accordance with the requirements of these
licences, it is provided with financial support by the Group, which
amounted to a debtor of GBP8.1m at 30 June 2017. Internal controls
have been put in place to ensure that the terms of the operating
licence are adhered to. In the event that the lottery was
unsuccessful then the recoverability of the SCL debtor would be at
risk.
Financial risk
STV may be constrained by the Group's leverage and other debt
arrangements. An increase in LIBOR interest rates would have an
adverse impact on the financial position and business results. STV
is exposed to currency risk, credit risk, liquidity risk and cash
flow interest rate risk.
Basis of preparation
These condensed interim financial statements for the six months
ended 30 June 2017 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 2016, which have been prepared in accordance with IFRSs
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 the
foreseeable future. The Group therefore continues to adopt the
going concern basis in preparing its condensed interim financial
statements.
Responsibility statement of the directors in respect of the
half-yearly financial report
Each of the directors (as detailed below) confirms that to the
best of his/her knowledge:
- the condensed set of financial statements has been prepared in
accordance with IAS 34, Interim Financial Reporting, as adopted by
the European Union.
- the interim management report on pages 1 to 6 includes a fair
review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules (DTR),
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 financial year; and
(b) DTR 4.2.8R of the DTR, 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
the performance of the Company during that period; and any changes
in the related party transactions described in the last annual
report that could do so.
For and on behalf of the directors:
Baroness Margaret Ford
31 August 2017
Baroness Margaret Ford, Chairman
Simon Miller, Senior Independent Director
Rob Woodward, Chief Executive Officer
George Watt, Chief Financial Officer
Anne Marie Cannon, Non-Executive Director
Michael Jackson, Non-Executive Director
Ian Steele, Non-Executive Director
Christian Woolfenden, Non-Executive Director
Appendix 1
KPI targets - progress update towards 2018 targets
2018 KPI target Progress update
at 2017 interim
------------------------- ------------------ -------------------------
1 Non broadcast 30.0% On track
earnings share
------------------------- ------------------ -------------------------
2 Audience to outperform To exceed Network Tracking ahead
ITV Network
------------------------- ------------------ -------------------------
3 Consumer division 20.0% Tracking below
margin due to weak advertising
market
------------------------- ------------------ -------------------------
4 Consumer reach Target for each On track
consumer service
for end of 2018
------------------------- ------------------ -------------------------
5 Consumer engagement Target for each On track
consumer service
for end of 2018
------------------------- ------------------ -------------------------
6 Consumer insights 2.6 million Tracking ahead
------------------------- ------------------ -------------------------
7 Digital revenues GBP11.4 million On track
------------------------- ------------------ -------------------------
9 Digital margin 55.0% On track
------------------------- ------------------ -------------------------
10 STV Productions GBP20.0 million On track
revenue
------------------------- ------------------ -------------------------
11 STV Productions 6.0% On track
margin
------------------------- ------------------ -------------------------
Condensed interim income statement
Six months ended 30 June 2017
Six months Six months
2017 2016
GBPm GBPm
Note Unaudited Unaudited
Revenue 7 54.6 56.2
Net operating expenses (45.4) (45.2)
---------- ----------
Operating profit 9.2 11.0
Finance
costs - borrowings 8 (0.5) (0.6)
* IAS 19 pension
8 (1.2) (0.2)
---------- ----------
(1.7) (0.8)
---------- ----------
Profit before tax 7.5 10.2
Tax charge 9 (1.2) (2.0)
---------- ----------
Profit for the period 6.3 8.2
---------- ----------
Earnings per share
Basic 10 16.2p 21.2p
Diluted 10 15.9p 20.8p
---------- ----------
A reconciliation of the statutory results to the adjusted
results is included at note 19.
Condensed interim statement of comprehensive income
Six months ended 30 June 2017
Six months Six months
2017 2016
GBPm GBPm
Unaudited Unaudited
Profit for the period 6.3 8.2
Items that will not be reclassified
to profit or loss:
Remeasurement gains/(losses) on
defined benefit pension schemes 2.9 (53.6)
Deferred tax (charge)/credit (0.5) 9.6
---------- ----------
Other comprehensive income/(expense)
for the period 2.4 (44.0)
Total comprehensive income/(expense)
for the period 8.7 (35.8)
---------- ----------
The above condensed interim income statements should be read in
conjunction with the accompanying notes.
Condensed interim balance sheet
As at 30 June 2017
30 June 31 December
2017 2016
GBPm GBPm
Note Unaudited Audited
Non-current assets
Property, plant and equipment 12 8.2 7.3
Other intangible assets 13 2.6 2.7
Investments 0.8 0.8
Deferred tax asset 20.4 21.7
Trade and other receivables 8.1 5.9
40.1 38.4
--------- -----------
Current assets
Inventories 20.2 19.5
Trade and other receivables 20.6 22.8
Cash and cash equivalents 2.8 13.3
43.6 55.6
--------- -----------
Total assets 83.7 94.0
--------- -----------
Equity attributable to owners
of the parent
Ordinary shares 15 19.8 19.8
Share premium 15 101.9 101.9
Merger reserve 173.4 173.4
Other reserve 0.6 0.4
Accumulated losses (345.6) (348.5)
--------- -----------
Total equity (49.9) (53.0)
--------- -----------
Non-current liabilities
Borrowings 14 36.8 39.7
Derivative financial instruments 0.1 0.1
Provisions 0.2 0.3
Retirement benefit obligations 17 83.5 88.8
--------- -----------
120.6 128.9
--------- -----------
Current Liabilities
Trade and other payables 12.5 17.9
Corporation tax 0.3 -
Provisions 0.2 0.2
--------- -----------
13.0 18.1
--------- -----------
Total liabilities 133.6 147.0
--------- -----------
Total equity and liabilities 83.7 94.0
--------- -----------
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 2017
Equity attributable to owners of
the parent
Ordinary Share Merger Other Accumulated Total
shares premium reserve reserve losses equity
GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 1
January 2017 19.8 101.9 173.4 0.4 (348.5) (53.0)
-------- -------- -------- -------- ----------- ----------
Profit for the
period - - - - 6.3 6.3
Other comprehensive
income - - - - 2.4 2.4
Total comprehensive
income for the
period - - - - 8.7 8.7
-------- -------- -------- -------- ----------- --------
Acquisition of
treasury shares - - - - (1.4) (1.4)
Share based compensation - - - 0.2 - 0.2
Issue of treasury
shares to employees - - - - 0.1 0.1
Value of employee
services - - - - (0.2) (0.2)
Dividends - - - - (4.3) (4.3)
Balance at 30
June 2017 (unaudited) 19.8 101.9 173.4 0.6 (345.6) (49.9)
-------- -------- -------- -------- ----------- --------
Balance at 1
January 2016 19.6 101.8 173.4 0.9 (284.8) 10.9
------ ------- ------- ----- --------- --------
Profit for the
period - - - - 8.2 8.2
Other comprehensive
expense - - - - (44.0) (44.0)
------ ------- ------- ----- --------- --------
Total comprehensive
expense for the
period - - - - (35.8) (35.8)
------ ------- ------- ----- --------- --------
Issue of share
capital 0.2 1.0 - - - 1.2
Acquisition of
treasury shares - - - - (1.1) (1.1)
Share based compensation - - - (0.5) - (0.5)
Issue of treasury
shares to employees - - - - 1.3 1.3
Dividends - - - - (2.7) (2.7)
------ ------- ------- ----- --------- --------
Balance at 30
June 2016 (unaudited) 19.8 102.8 173.4 0.4 (323.1) (26.7)
------ ------- ------- ----- --------- --------
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 2017
Six months Six months
2017 2016
GBPm GBPm
Note Unaudited Unaudited
Operating activities
Cash generated by operations 16 4.0 7.2
Interest paid (0.3) (0.6)
Pension deficit - recovery plan
funding payment (3.6) (7.8)
Net cash generated/(used) in
operating activities 0.1 (1.2)
----------- -----------
Investing activities
Capitalised web development
spend (0.3) (0.6)
Purchase of property, plant
and equipment (1.7) (1.3)
----------- -----------
Net cash used in investing
activities (2.0) (1.9)
----------- -----------
Financing activities
Net (purchase)/issue of treasury
shares (1.3) 1.3
Issue of new shares - 1.2
Net borrowings repaid (3.0) -
Dividend paid 11 (4.3) (2.7)
Net cash used in financing
activities (8.6) (0.2)
----------- -----------
Net decrease in cash and cash
equivalents (10.5) (3.3)
Net cash and cash equivalents
at beginning of period 13.3 13.7
----------- -----------
Net cash and cash equivalents
at end of period 2.8 10.4
----------- -----------
Although not required under IFRS the directors have provided the
following reconciliation of net debt for further clarity. The net
debt represents Group borrowings less cash and cash
equivalents.
Reconciliation of movement in net debt
Six months ended 30 June 2017
Six months Six months
2017 2016
GBPm GBPm
Opening net debt (26.4) (25.7)
Net decrease in cash and cash
equivalents in the period (10.5) (3.3)
Net movement in debt financing 2.9 (0.1)
Closing net debt (34.0) (29.1)
----------- -----------
Notes to the condensed set of financial statements
Six months ended 30 June 2017
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 31 August 2017 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 2016 were approved by the board of directors
on 13 March 2017 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 2017 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 2016, which have been prepared in accordance with IFRSs
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 its
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 2016.
A number of amendments to IFRSs became effective for the
financial year beginning on 1 January 2017 however the Group did
not have to change its accounting policies or make material
retrospective adjustments as a result of adopting these new
standards.
Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to expected total annual profit or
loss.
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 2016, 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
2016.
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 therefore Consumer, Productions
and ELM (external lottery management).
The performance of the segments is assessed based on a measure
of adjusted operating profit.
External sales
Six Six
months months
Segment revenues 2017 2016
GBPm GBPm
Consumer 48.7 52.7
Productions 2.6 3.5
ELM 3.3 -
--------- ---------
54.6 56.2
--------- ---------
Six months Six
2017 months
Segment result 2016
GBPm GBPm
Consumer 10.1 11.8
Productions (0.9) (0.8)
ELM - -
Operating profit 9.2 11.0
Financing (1.7) (0.8)
----------- --------
Profit before tax 7.5 10.2
Tax charge (1.2) (2.0)
----------- --------
Profit attributable to owners
of the parent 6.3 8.2
----------- --------
There has been no significant change in total assets from the
amount disclosed in the last annual financial statements. There are
no differences from the last annual financial statements in the
basis of segmentation or in the basis of measurement of segment
profit or loss.
8. Finance costs
Six months Six months
2017 2016
GBPm GBPm
Bank borrowings 0.5 0.6
IAS 19 Pension finance charge 1.2 0.2
---------- -----------
Finance costs 1.7 0.8
---------- -----------
9. Tax
Tax on underlying results for the six month period is charged at
16% (30 June 2016: 20%) 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 19.25% due to use of
brought forward losses not recognised for deferred tax and 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
2017 months
Weighted 2016
average Per Weighted Per
Earnings number share Earnings average share
GBPm of shares Pence GBPm number Pence
(m) of shares
(m)
EPS:
Earnings attributable
to ordinary
shareholders 6.3 38.9 16.2p 8.2 38.6 21.2p
----------- ----------- -------- ----------- ----------- --------
Basic EPS 6.3 38.9 16.2p 8.2 38.6 21.2p
----------- ----------- -------- ----------- ----------- --------
EBT purchased
shares 0.6 0.8
----------- ----------- -------- ----------- ----------- --------
Diluted EPS 6.3 39.5 15.9p 8.2 39.4 20.8p
----------- ----------- -------- ----------- ----------- --------
11. Dividends
A dividend of GBP4.3m (2016: GBP2.7m) which relates to the year
ended 31 December 2016 was paid in May 2017.
An interim dividend of 5.0p per share (2016: 4.0p per share) has
been proposed and is subject to approval by the board of directors.
It is payable on 27 October 2017 to shareholders who are on the
register at 29 September 2017. This interim dividend, amounting to
GBP2.0m (2016: GBP1.6m), has not been recognised as a liability in
this interim financial information. It will be recognised in
shareholders' equity in the year to 31 December 2017.
12. Property, plant and equipment
During the six months to 30 June 2017, the Group has incurred
expenditure of GBP1.7m on property, plant and equipment (GBP1.8m in
the year to 31 December 2016; GBP1.3m in the six months to 30 June
2016).
13. Other intangible assets
During the six months to 30 June 2017, the Group has incurred
expenditure of GBP0.3m on web development (GBP1.4m in the year to
31 December 2016; GBP0.6m in the six months to 30 June 2016).
14. Borrowings and loans
At 30 June 2017, the Group had revolving credit and overdraft
bank facilities in place totalling GBP60.0m (GBP60.0m at 31
December 2016; GBP60.0m at 30 June 2016). At 30 June 2017, GBP37.0m
of the facility was drawn down (2016: GBP40.0m).
The GBP60.0m revolving credit and overdraft facility has a
maturity date of June 2019. Security is provided to the debt
providers by way of cross guarantees and a share pledge.
15. Share capital and share premium
There were no movements in share capital during the six months
to 30 June 2017.
16. Notes to the condensed interim statement of cash flows
Six Six
months months
2017 2016
GBPm GBPm
Operating profit 9.2 11.0
Adjustments for:
Depreciation 0.8 0.9
Amortisation 0.4 0.1
Share based compensation 0.1 (0.5)
------- -------
EBITDA 10.5 11.5
Increase in inventories (0.7) (1.4)
Decrease/(increase) in trade and
other receivables (excluding ELM) 2.2 (0.5)
Decrease in trade and other payables
(excluding ELM) (5.2) (2.4)
Increase in ELM trade and other
receivables (2.2) -
Decrease in ELM trade and other
payables (0.6) -
------- -------
Cash generated by operations 4.0 7.2
------- -------
17. 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 At 31 December
June
2017 2016
GBPm GBPm
Fair value of plan assets 359.3 359.4
Present value of defined
benefit obligations
obligations (442.8) (448.2)
-------- ---------------
Liability in the balance
sheet (83.5) (88.8)
-------- ---------------
A related offsetting deferred tax credit of GBP14.3m is shown
under non-current assets. Therefore the net pension scheme deficit
amounts to GBP69.2m at 30 June 2017 (GBP73.5m at 31 December
2016).
18. Transactions with related parties
There has been no change from the 2016 Annual Report and no
transactions with any related parties in the period to 30 June
2017.
19. Reconciliation of statutory results to adjusted results
2017 2016
Profit Basic Diluted Profit Basic Diluted
before tax EPS EPS before tax EPS EPS
GBPm pence pence GBPm pence pence
Statutory results 7.5 16.2p 15.9p 10.2 21.2p 20.8p
Add back: IAS 19 1.2 2.6p 2.5p 0.2 0.6p 0.5p
------------ ------ -------- ------------ ------ --------
Adjusted results 8.7 18.8p 18.4p 10.4 21.8p 21.3p
------------ ------ -------- ------------ ------ --------
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 interim
financial report of STV Group plc for the 6 month period ended 30
June 2017. 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 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 2017
-- 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 condensed interim financial statements.
The interim financial statements included in the interim
financial report have been prepared in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and the Disclosure and
Transparency Rules 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 interim financial report, including the interim financial
statements, is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the interim
financial report 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 interim financial report 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 condensed 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
Ireland) 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 interim
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
Glasgow
August 2017
a) The maintenance and integrity of the STV Group plc website is
the responsibility of the directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the interim financial statements since
they were initially presented on the website.
b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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