STV Group plc - Interim Resul
0700 hrs, 27 August 2009
STV Group plc - Interim Results 2009
Delivering our Strategy - Building Scotland's Media Brand of Choice
FINANCIAL SUMMARY - 6 months ending 30 June 2009
|
|
STV (continuing) |
Group |
||
|
|
H1 2009 |
H1 2008 |
H1 2009 |
H1 2008 |
|
Revenue |
£41.5m |
£56.0m |
£48.8 |
£75.6m |
|
EBITDA |
£4.2m |
£5.8m |
£3.6m |
£6.6m |
|
Operating profit* |
£2.8m |
£4.9m |
£2.2m |
£5.7m |
|
Pre-tax profit* |
|
|
£0.7m |
£4.5m |
|
Pre-tax profit pre IAS19 notional interest* |
|
|
£1.6m |
£3.2m |
|
EPS* |
|
|
1.6p |
8.6p |
*Pre-exceptionals
Trading for the first half of 2009 has met Board expectations and, despite unprecedented economic conditions, the business continues to deliver a strong performance against its KPIs.
-
Trading in line with expectations and efficiency savings continuing to be delivered.
-
KPI's remain largely on track with 10 out of 12 KPI targets expected to be achieved by year end. KPI targets to 2010 to remain unchanged despite market conditions.
-
Programming strategy to create an affordable and relevant schedule for Scottish viewers successfully launched and delivering ratings successes during H1.
-
Broadcasting business remains profitable; Scottish sales continue to outperform national markets.
-
STV peak time share delivery continues to outperform network.
-
Pension deficit funding plan structured over 18 years until 2026 agreed with Trustees of defined benefit pension schemes.
STRATEGIC DEVELOPMENTS
-
Programming strategy delivering ratings successes in H1 and strong schedule developed for delivery in H2.
-
Content strategy delivering new commissions, including first ever BBC series commission.
-
Online Classified Advertising business launched in February and strong market position established.
-
STV/BBC partnership established in June.
-
Positive outcome from PSB Review and Digital Britain Report: recommendation to grant independent production status rights to Content business and establish funded news pilot in Scotland during 2010.
Richard Findlay, Chairman of STV Group plc said: 'Despite the unprecedented macro economic situation and, in particular the record decline in UK television advertising, during the period, STV has delivered significant progress in all areas of the business during the first half of 2009. Every possible measure is being taken to manage our cost base and improve efficiencies and we are well positioned to take advantage of growth opportunities beyond the downturn, developing key partnerships and building our position as Scotland's media brand of choice.'
Rob Woodward, Chief Executive Officer added: 'Despite market conditions, we are on track to achieve 10 of our 12 KPI targets and have no plans to revise these for 2009 and beyond. STV is operationally lean, and we are developing a vibrant, diverse and relevant broadcasting schedule for Scotland. Combined with our growing digital business and a revitalised content team, this places us in a strong position to address the challenges of the advertising market and to deliver on expectations.'
There will be a presentation for analysts at the offices of RBS Hoare Govett, 250 Bishopsgate, London EC2 today at 9.30am.
Investor and Analyst Enquiries:
STV Group plc
George Watt, Chief Financial Officer Tel: 020 7882 1199
Media Enquiries:
STV Group plc
Kirstin Stevenson, PR Manager Tel: 07803 970 106
Brunswick Group LLP
Simon Sporborg/Tom Batchelar Tel: 020 7404 5959
OPERATIONAL REVIEW
Business Performance
In the television business, the first half of 2009 saw revenue fall to £41.5m (2008: £56.0m) reflecting the macro economic environment. Operating profit was £2.8m (2008: £4.9m). Including Pearl & Dean, the Group's pre-tax profit, before exceptionals, has reduced to £0.7m (2008: £4.5m) on revenue of £48.8m (2008: £75.6m) with this decline partly due to the disposal of Virgin Radio in June 2008.
H1 2009 trading performance of the on-going business (in £m) is shown below:
|
|
Revenue |
Operating Profit |
||
|
|
2009 |
2008* |
2009 |
2008* |
|
Television |
|
|
|
|
|
Broadcasting |
36.6 |
46.6 |
3.9 |
5.2 |
|
Content |
2.9 |
5.7 |
(1.1) |
- |
|
Ventures |
2.0 |
3.7 |
- |
(0.3) |
|
|
41.5 |
56.0 |
2.8 |
4.9 |
|
Cinema |
7.3 |
8.3 |
(0.6) |
(0.5) |
|
Total |
48.8 |
64.3 |
2.2 |
4.4 |
*excluding Virgin Radio which had revenue of £11.3m and operating profit of £1.1m in H1 2008.
Broadcasting experienced a reduction in operating profit of 25% to £3.9m (2008: £5.2m) as the £10.0m (21%) decline in revenue arising from the recession in the advertising market could only be partially offset by cost savings.
The Content business is traditionally heavily weighted towards the second half with few programmes delivered during H1 resulting in a reduction in revenue to £2.9m (2008: £5.7m), and an operating loss of £1.1m (2008: breakeven).
In Ventures, the Solutions business revenues declined to £1.0m (2008: £1.8m) reflecting the changed nature of the Setanta contract following the decision to exit outside broadcasting activities. Digital revenues of £1.0m (2008: £1.9m) saw growth in online and classified advertising and other transactional revenues. This growth was more than offset by a decline in premium rate telephony services, reflecting a change in the commercial model within this area to one based upon lower revenue and higher margin competitions; fewer football related competitions during 2009 and a weak Q1 period, reflective of the economic situation. Profitability has improved to a breakeven position from a £0.3m loss in 2008.
Net debt at 30 June 2009 was £56.1m (30 June 2008: £15.1m). This is an increase of £19.7m from 31 December 2008, reflecting upfront payment of cinema rents, which will be partly recouped in the second half of the year and pension deficit funding contributions of £7.9m, which included a one-off payment of £4.0m arising from an agreement with the scheme trustees on disposal proceeds. Since 30 June 2008 the Group returned £30.0m to shareholders by way of a tender offer.
Earnings per share before exceptionals amounted to 1.6 pence (2008: 8.6 pence) with the effective tax rate unchanged at 10% on the previous year.
As confirmed in our pre-close Trading Update we have increased headroom in our banking facility to allow for the reduction in cinema earnings due to the current market conditions, and in the event we are unable to deliver a recommission of Taggart in 2009. The facility term is unchanged at 31 December 2012.
Broadcasting
STV performed broadly in line with the national advertising market in H1 and we are on track to outperform in Q3 with an improving position in both national and Scottish sales.
STV has taken greater control of its schedule in 2009, catering for the diverse tastes of our audience and providing a mix of strong home-grown productions, acquired series of appeal alongside network material. We are committed to maintaining a healthy creative industry in Scotland by investing in strong Scottish productions and are encouraged by some early ratings successes. This is a long term strategy that allows us the flexibility to invest significantly in Scottish productions, inject some fresh new programming and develop a relevant schedule for Scotland, whilst at the same time delivering further cost efficiencies for the company.
STV's sales team continues to offer integrated and innovative solutions for clients, across traditional spots, sponsorship and online opportunities. The team has introduced a flexible sales policy by managing our inventory more effectively to suit local advertisers in this current climate. We have formed a client services team that is fully engaged with the creative community and is embracing partnerships with creative and media agencies to build on our already strong position.
Sponsorship revenues continue to be an increasing income generator for the business, for example the sponsorship of three Homecoming series by the Daily Record and Scottish Government; Barr's sponsorship of our daily live show, The Hour; and the 230% increase in sponsored one minute programmes on STV within the last year. This gives us confidence we are on track to achieve this KPI in 2009.
Content
Content remains at the heart of our business and the content team has a number of projects in development in 2009. We are on track to successfully achieve our targets in the Content division.
In June 2009, STV Productions won its first series commission from the BBC, to produce a 20-part factual entertainment series entitled Antiques Road Trip. Other key commissions for 2009 for STV Productions and Ginger Productions include factual series Missing Children, presented by Lorraine Kelly, for Sky Real Lives; a new series of Jack Osbourne Celebrity Adrenaline Junkie for ITV2; Take A Seat for ITV4 and we are continuing to develop relationships with other broadcasters.
In May, we launched our live daily magazine show, The Hour. The programme frequently outperforms the Network and highlights our commitment to home-grown productions, with the show delivering 148 hours of original production in 2009.
ITV has ordered a re-versioning of four episodes of STV Productions' Rebus, starring Ken Stott. We have edited these episodes from 90 minutes to 60 minutes for the autumn schedule and expect a strong performance for this key brand.
We are in discussions with ITV regarding a future commission of Taggart and we remain confident about the future of the series.
We announced this year that we have become a partner in Scottish Enterprise's Scottish Co-Investment Fund aimed at developing and funding new business ventures in Scotland. We made our first investment by participating in a new start-up company, Kowalski Television and this partnership demonstrates our commitment to drive content production and invest in the creative industries in Scotland.
Ventures
Our Ventures business manages our digital and resources-based activities.
Our website, www.stv.tv, continues to grow and now has over 100,000 registered users - a significant milestone which demonstrates the appeal of this platform and represents a four-fold increase in visitors to the site year on year. The STV Player is the latest evolution in the development of our digital platforms, and allows viewers to catch up on Scottish and network material free of charge, as well as extracts from the extensive STV archive. Our partnership with leading technology company Brightcove has allowed us to develop and deliver a first rate digital service swiftly and at a very economically efficient level.
We have introduced online sales expertise into our team, working closely with our strong on-air sales team, and are on track to achieve our 2009 target for online advertising revenue.
In February we successfully launched our classified recruitment business, stvjobs.com, with the full weight of the STV brand behind it.
Last month, we moved swiftly to take advantage of a change in regulation and announced a distribution deal with NetPlay TV plc, offering an exciting new service for viewers and delivering new revenue streams for the business. The deal will see us launch a live interactive TV casino on STV, three nights of the week between 12.30am and 3am. We are currently negotiating similar deals and, whilst generating our anticipated operating profit levels, this new approach will not generate the levels of gross revenue based on revenue sharing arrangements previously forecast.
We are on track to reach our target Ventures margin subject to identifying a suitable replacement for the loss of revenues in H2 from the Setanta contract. In addition, we have reflected the £200,000 potential bad debt from Setanta in the H1 figures.
KPIs
At the interim stage, we are on track to achieve ten of our 2009 KPI targets and these targets will remain unadjusted to the year end.
|
KPI |
2007 Actual |
2008 Actual |
2009 Target |
Progress |
|
Broadcasting |
|
|
|
|
|
1. Increase advertising market share |
20% |
22% |
23% |
On track |
|
2. Grow sponsorship revenues |
1.0x |
1.5x |
1.4x |
On track |
|
3. Increase broadcast margin |
9.4% |
11.0% |
12.5% |
Below target |
|
Content |
|
|
|
|
|
4. Grow produced hours |
72hrs |
80hrs |
90hrs |
On track |
|
5. Exploit content library |
1.0x |
1.4x |
1.5x |
On track |
|
6. Grow rights exploitation business |
1.0x |
1.2x |
1.1x |
On track |
|
7. Maintain margins |
17.1% |
18.0% |
10.0% |
On track |
|
Ventures |
|
|
|
|
|
8. Grow online visitors to stv.tv |
8k/day |
30k/day |
90k/day |
On track |
|
9.Increase online advertising revenue |
£0.1m |
£0.2m |
£0.9m |
On track |
|
10. Grow regional transaction revenues |
£2.6m |
£3.0m |
£4.5m |
Below target |
|
11.Expand into Scottish classified advertising market |
0.1% |
0.5% |
1.0% |
On track |
|
12. Increase margins |
(13.8%) |
10.0% |
15.0% |
On track |
Pearl & Dean
Pearl and Dean remains as our only non-core legacy business. The business is continuing to gain market share and disposal of this business remains a key priority. The provision for the onerous Vue contract has been increased by £4.3m during H1.
Pensions
We have reached agreement with the trustees of our defined benefits pension schemes on a future funding plan to address the scheme deficits. This plan, subject to approval by the Pensions Regulator, is structured over a long-term recovery period of 18 years and commences with deficit funding contributions, unchanged from current levels, of £3.7m per annum during the period 2009-2011. The 2009 contribution has been paid during H1. The annual payments increase by increments of £0.5m every 3 years from 2011 until 2020 from which date annual payments are fixed at £6.0m until 2026.
Additionally during H1 and following consultation with scheme members, we have implemented a range of changes to future service benefits, including a cap on increases to pensionable salary levels, which will reduce future costs and risks and results in a £4.3m exceptional gain during H1.
Dividend Policy
The Board has decided that no interim dividend payment will be made. The dividend policy will next be reviewed by the Board at the year end.
LOOKING FORWARD
The second half of 2009 offers a number of potentially significant developments which could impact positively on business performance in H2 and beyond.
The OFT has made its submission to the Competition Commission and a decision on CRR appears to be imminent.
In regulatory terms we are pleased that the Government's Digital Britain Report supports the case for granting STV Productions the same benefits as independent producers. The Report also recognised the need for funding for news and we are delighted that Scotland has been selected to run one of the three pilot channel 3 news services in 2010.
In June we announced an ambitious partnership agreement with the BBC, which will see us exploring collaboration in six areas: news pictures; facilities and resources; training; content and production; archive programmes and online. We are ultimately committed to providing better services for audiences in Scotland and are exploring potential synergies with BBC to achieve this.
A carriage agreement for HD has been agreed between the Channel 3 network licensees and BBC, through which STV will have capabilities to broadcast in HD from 2010. We are also currently exploring the option of introducing STV+1, which would allow us to count viewers of this additional channel as commercial impacts, further enhancing our performance.
In addition to this, we have a strong schedule of programming lined up for H2 and into 2010; there are indications of a reduction in the rate of advertising decline and we have further cost savings identified going forward. We also have an opportunity to continue to build on our strong Scottish position as press circulations continue to decline.
Trading Outlook
Forecast visibility remains short-term, reflecting the current market conditions.
|
|
Q3
|
YTD September 2009
|
October 2009
(early forecasts)
|
|
National Market
- ITV Network
- STV
Scottish Market
- STV
|
-13%
-3%
-10%
|
-17%
-16%
-16%
|
-12%
-10% to -12%
-8% to -10%
|
Richard Findlay Rob Woodward
Chairman Chief Executive Officer
27 August 2009
|
Condensed consolidated income statement
Six months ended 30 June 2009
|
|
|||||||||
|
|
|
Six months
2009
|
Six months
2008
|
|
||||||
|
|
Note
|
Underlying
results
|
Exceptional items
|
Results
for period
|
Underlying
results
|
Exceptional items
|
Results
for period
|
|
||
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
||
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|
|||
|
CONTINUING OPERATIONS
|
|
|
|
|
|
|
|
|||
|
Revenue
|
3
|
41.5
|
-
|
41.5
|
56.0
|
-
|
56.0
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Net operating expenses before exceptional costs
|
|
(38.7)
|
-
|
(38.7)
|
(51.1)
|
-
|
(51.1)
|
|
||
|
Pension service credit
|
5
|
-
|
4.3
|
4.3
|
-
|
-
|
-
|
|
||
|
Cost of change
|
5
|
-
|
-
|
-
|
-
|
(1.0)
|
(1.0)
|
|
||
|
Net operating expenses
|
|
(38.7)
|
4.3
|
(34.4)
|
(51.1)
|
(1.0)
|
(52.1)
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Operating profit
|
|
2.8
|
4.3
|
7.1
|
4.9
|
(1.0)
|
3.9
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Interest income
|
|
0.3
|
-
|
0.3
|
-
|
-
|
-
|
|
||
|
Finance costs
|
- borrowings
|
6
|
(0.9)
|
-
|
(0.9)
|
(2.5)
|
-
|
(2.5)
|
|
|
|
|
- IAS 19 pension
|
6
|
(0.9)
|
-
|
(0.9)
|
1.3
|
-
|
1.3
|
|
|
|
|
|
|
(1.5)
|
-
|
(1.5)
|
(1.2)
|
-
|
(1.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Profit before tax
|
|
1.3
|
4.3
|
5.6
|
3.7
|
(1.0)
|
2.7
|
|
||
|
Tax charge
|
8
|
(0.1)
|
(1.2)
|
(1.3)
|
(0.2)
|
-
|
(0.2)
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Profit for the period from continuing operations
|
1.2
|
3.1
|
4.3
|
3.5
|
(1.0)
|
2.5
|
|
|||
|
|
|
|
|
|
|
|
|
|
||
|
DISCONTINUED OPERATIONS
|
|
|
|
|
|
|
|
|||
|
(Loss)/profit for the period from discontinued operations
|
7
|
(0.6)
|
(3.1)
|
(3.7)
|
0.6
|
(15.0)
|
(14.4)
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Profit/(loss) for the period
|
0.6
|
-
|
0.6
|
4.1
|
(16.0)
|
(11.9)
|
|
|||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Earnings per ordinary share
|
|
|
|
|
|
|
|
|
||
|
- basic and diluted
|
9
|
1.6p
|
|
1.6p
|
8.6p
|
|
(25.0p)
|
|||
|
Earnings per ordinary share from continuing operations
|
|
|
|
|
|
|
|
|
||
|
- basic and diluted
|
9
|
3.3p
|
|
11.8p
|
7.4p
|
|
5.3p
|
|||
|
|
|
|
|
|
|
|
|
|
||
|
Continuing (pre IAS 19)
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Profit before tax
|
|
2.2
|
|
|
2.4
|
|
|
|
||
|
Earnings per share - basic
|
|
5.4p
|
|
|
4.5p
|
|
|
|
||
|
Condensed consolidated statement of comprehensive income Six months ended 30 June 2009 |
6 months 2009 |
6 months 2008 |
|
|
£m |
£m |
|
|
(Unaudited) |
(Unaudited) |
|
|
|
|
|
Profit/(loss) for the period |
0.6 |
(11.9) |
|
|
|
|
|
Other comprehensive income: |
|
|
|
Actuarial loss on defined benefit pension schemes |
(17.9) |
(31.0) |
|
Deferred tax credit |
4.8 |
8.7 |
|
Other comprehensive expense for the period |
(13.1) |
(22.3) |
|
|
|
|
|
Total comprehensive expense for the period |
(12.5) |
(34.2) |
|
Condensed consolidated balance sheet |
|
|
|
|
|
As at 30 June 2009 |
|
|
|
|
|
|
|
30 June |
31 December |
30 June |
|
|
|
2009 |
2008 |
2008 |
|
|
Note |
£m |
£m |
£m |
|
|
|
(Unaudited) |
(Audited) |
(Unaudited) |
|
ASSETS |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Goodwill and other intangible assets |
|
8.2 |
8.2 |
8.1 |
|
Property, plant and equipment |
10 |
12.9 |
14.2 |
15.0 |
|
Deferred tax asset |
|
16.0 |
12.3 |
12.2 |
|
|
|
37.1 |
34.7 |
35.3 |
|
Current assets |
|
|
|
|
|
Inventory |
|
35.5 |
41.9 |
43.7 |
|
Trade and other receivables |
|
20.3 |
24.0 |
30.9 |
|
Cash and cash equivalents |
|
5.1 |
13.0 |
57.9 |
|
Short-term bank |
|
0.8 |
1.0 |
1.4 |
|
|
|
61.7 |
79.9 |
133.9 |
|
|
|
|
|
|
|
Assets held for sale |
7 |
30.0 |
18.8 |
24.5 |
|
|
|
|
|
|
|
Total assets |
|
128.8 |
133.4 |
193.7 |
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
Capital and reserves attributable to the Company's equity holders |
|
|
|
|
|
Share capital |
|
18.3 |
18.0 |
23.8 |
|
Share premium |
|
111.3 |
111.3 |
136.4 |
|
Merger reserve |
|
173.4 |
173.4 |
173.4 |
|
Other reserve |
|
0.5 |
0.7 |
1.1 |
|
Retained losses |
|
(333.3) |
(320.5) |
(305.4) |
|
Total equity |
|
(29.8) |
(17.1) |
29.3 |
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Borrowings |
11 |
65.2 |
53.8 |
77.4 |
|
Trade and other payables |
- |
0.1 |
- |
|
|
Provisions |
|
1.6 |
3.9 |
- |
|
Retirement benefit obligation |
14 |
45.0 |
38.3 |
40.0 |
|
|
|
111.8 |
96.1 |
117.4 |
|
Current Liabilities |
|
|
|
|
|
Trade and other payables |
|
14.3 |
25.1 |
29.0 |
|
Tax liabilities |
|
5.9 |
5.9 |
1.1 |
|
Provisions |
|
2.3 |
1.5 |
3.6 |
|
|
|
22.5 |
32.5 |
33.7 |
|
|
|
|
|
|
|
Liabilities directly associated with assets held for sale |
7 |
24.3 |
21.9 |
13.3 |
|
|
|
|
|
|
|
Total liabilities |
|
158.6 |
150.5 |
164.4 |
|
|
|
|
|
|
|
Total equity and liabilities |
|
128.8 |
133.4 |
193.7 |
Condensed consolidated statement of changes in equity
Six months ended 30 June 2009
|
||||||||
|
|
|
|||||||
|
|
Equity attributable to equity holders of the parent
|
|||||||
|
|
Share
capital
|
Share
premium
|
Merger
reserve
|
Equity
reserve
|
Other
reserve
|
Minority
interest
|
Retained
Earnings
|
Total
Equity
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2009
|
18.0
|
111.3
|
173.4
|
-
|
0.7
|
-
|
(320.5)
|
(17.1)
|
|
|
|
|
|
|
|
|
|
|
|
Net profit for the period
|
-
|
-
|
-
|
-
|
-
|
-
|
0.6
|
0.6
|
|
Actuarial loss
|
-
|
-
|
-
|
-
|
-
|
-
|
(17.9)
|
(17.9)
|
|
Deferred tax thereon
|
-
|
-
|
-
|
-
|
-
|
-
|
4.8
|
4.8
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive expense for the period
|
-
|
-
|
-
|
-
|
-
|
-
|
(12.5)
|
(12.5)
|
|
|
|
|
|
|
|
|
|
|
|
Own shares acquired
|
0.3
|
-
|
-
|
-
|
-
|
-
|
(0.3)
|
-
|
|
Movement in IFRS 2 reserve
|
-
|
-
|
-
|
-
|
(0.2)
|
-
|
-
|
(0.2)
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 June 2009 (unaudited)
|
18.3
|
111.3
|
173.4
|
-
|
0.5
|
-
|
(333.3)
|
(29.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2008
|
23.8
|
136.3
|
173.4
|
2.5
|
1.2
|
(0.2)
|
(273.3)
|
63.7
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period
|
-
|
-
|
-
|
-
|
-
|
-
|
(11.9)
|
(11.9)
|
|
Actuarial loss
|
-
|
-
|
-
|
-
|
-
|
-
|
(31.0)
|
(31.0)
|
|
Deferred tax thereon
|
-
|
-
|
-
|
-
|
-
|
-
|
8.7
|
8.7
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive expense for the period
|
-
|
-
|
-
|
-
|
-
|
-
|
(34.2)
|
(34.2)
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued
|
-
|
0.1
|
-
|
-
|
-
|
-
|
-
|
0.1
|
|
Movement in IFRS 2 reserve
|
-
|
-
|
-
|
-
|
(0.1)
|
-
|
-
|
(0.1)
|
|
Minority interest written off
|
-
|
-
|
-
|
-
|
-
|
0.2
|
-
|
0.2
|
|
Movement in own shares
|
-
|
-
|
-
|
-
|
-
|
-
|
(0.1)
|
(0.1)
|
|
Hedging reserve adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
(0.3)
|
(0.3)
|
|
Equity reserve release
|
-
|
-
|
-
|
(2.5)
|
-
|
-
|
2.5
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 June 2008 (unaudited)
|
23.8
|
136.4
|
173.4
|
-
|
1.1
|
-
|
(305.4)
|
29.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed statement of consolidated cash flows
|
|
|
|
|||
|
Six months ended 30 June 2009
|
|
|
|
|||
|
|
6 months
|
6 months
|
||||
|
|
2009
|
2008
|
||||
|
|
Note
|
£m
|
£m
|
|||
|
|
|
(Unaudited)
|
(Unaudited)
|
|||
|
|
|
|
|
|||
|
OPERATING ACTIVITIES
|
|
|
|
|||
|
Cash used by operations
|
13
|
(10.0)
|
(16.1)
|
|||
|
Taxes received
|
|
-
|
2.0
|
|||
|
Interest paid
|
|
(1.7)
|
(2.4)
|
|||
|
Pension deficit funding
|
- 10 year recovery plan payment
|
|
(3.9)
|
(3.9)
|
||
|
|
- One off disposal proceeds contribution
|
|
(4.0)
|
-
|
||
|
|
|
|
|
|||
|
Net cash used by operating activities
|
|
(19.6)
|
(20.4)
|
|||
|
|
|
|
|
|||
|
INVESTING ACTIVITIES
|
|
|
|
|||
|
Interest received
|
|
0.2
|
-
|
|||
|
Disposal of discontinued operations
|
|
-
|
53.2
|
|||
|
Purchase of property, plant and equipment
|
|
(0.3)
|
(0.8)
|
|||
|
|
|
|
|
|||
|
Net cash (used)/generated by investing activities
|
|
(0.1)
|
52.4
|
|||
|
|
|
|
|
|||
|
FINANCING ACTIVITIES
|
|
|
|
|||
|
Movement in Escrow cash
|
|
0.2
|
-
|
|||
|
Net borrowings drawn
|
|
11.4
|
15.4
|
|||
|
|
|
|
|
|||
|
Net cash generated by financing activities
|
|
11.6
|
15.4
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|||
|
Movement in cash and cash equivalents
|
|
(8.1)
|
47.4
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|||
|
Net cash and cash equivalents at beginning of period
|
|
16.4
|
13.5
|
|||
|
|
|
|
|
|||
|
Net cash and cash equivalents at end of period
|
|
8.3
|
60.9
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|||
|
Reconciliation of movement in net debt
|
|
|
|
|||
|
|
|
6 months
|
6 months
|
|||
|
|
|
2009
|
2008
|
|||
|
|
|
£m
|
£m
|
|||
|
|
|
|
|
|||
|
Opening net debt
|
|
(36.4)
|
(47.1)
|
|||
|
Movement in cash and cash equivalents in the period
|
|
(8.1)
|
47.4
|
|||
|
Net cash inflow from increase in debt financing
|
|
(11.6)
|
(15.4)
|
|||
|
|
|
|
|
|||
|
Closing net debt
|
|
(56.1)
|
(15.1)
|
|||
|
|
|
|
|
|||
Notes to the condensed set of financial statements
Six months ended 30 June 2009
1. Basis of preparation
This condensed consolidated interim financial information comprises the unaudited interim results for the six months to 30 June 2009 and 30 June 2008, together with the audited consolidated balance sheet for the year ended 31 December 2008 (hereinafter referred to as 'financial information').
This financial information has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with International Accounting Standard (IAS) 34, 'Interim financial reporting' as adopted by the European Union.
The condensed consolidated interim financial report should be read in conjunction with the annual financial statements for the year ended 2008 which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.
This financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2008 were approved by the Board of Directors on 26 February 2009 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 237 of the Companies Act 1985.
2. 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 2008, as described in those financial statements.
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.
The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 1 January 2009 and are relevant to the Group's results.
|
IAS 1 (revised) |
Presentation of financial statements |
The revised standard requires the presentation of a statement of changes in equity as a primary statement, separate from the income statement and statement of comprehensive income. As a result, a condensed consolidated statement of changes in equity has been included in the primary statements, showing changes in each component of equity for each period presented. |
|
|
|
|
|
IFRS 8 |
Operating segments |
IFRS 8 replaces IAS 14, Segment reporting. It requires a management approach under which segment information is presented on the same basis as that used for internal reporting purposes. This has not resulted in any changes in the operating segments reported by the Group. |
3. Business segments
The Group's Chief Executive considers the business primarily from a product perspective. Under IFRS 8, the reportable segments are therefore Broadcasting, Content, Ventures (within Television operating segment) and Cinema advertising (Cinema), which has not resulted in any material changes from IAS 14.
The performance of the segments is assessed based on a measure of adjusted EBIT. This measurement basis excludes the effects of non-recurring expenditure such as restructuring costs.
The Group put its Cinema and Radio businesses up for sale on 13 September 2006 and 12 April 2007 respectively. Cinema continues to meet all the conditions to be classified as held for sale and is therefore classed as discontinued operations. The completion of the Radio disposal occurred on 30 June 2008.
SEGMENT REVENUES
|
|
|
|
External sales
|
|||
|
|
|
|
|
|
6 months 2009
|
6 months
2008
|
|
|
|
|
|
|
£m
|
£m
|
|
Continuing operations
|
|
|
|
|
|
|
|
Broadcasting
|
|
|
|
|
36.6
|
46.6
|
|
Content
|
|
|
|
|
2.9
|
5.7
|
|
Ventures
|
|
|
|
|
2.0
|
3.7
|
|
Television
|
|
|
|
|
41.5
|
56.0
|
|
|
|
|
|
|
|
|
|
Discontinued operations
|
|
|
|
|
|
|
|
Cinema
|
|
|
|
|
7.3
|
8.3
|
|
Radio
|
|
|
|
|
-
|
11.3
|
|
|
|
|
|
|
7.3
|
19.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48.8
|
75.6
|
SEGMENT RESULTS
|
|
Underlying segment result
|
Exceptional items
|
Segment result
|
|||||
|
|
6 months 2009
|
6 months
2008
|
6 months
2009 |
6 months
2008
|
6 months 2009
|
6 months
2008
|
||
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
||
|
Continuing operations
|
|
|
|
|
|
|
||
|
Broadcasting
|
3.9
|
5.2
|
-
|
-
|
3.9
|
5.2
|
||
|
Content
|
(1.1)
|
-
|
-
|
-
|
(1.1)
|
-
|
||
|
Ventures
|
-
|
(0.3)
|
-
|
(1.0)
|
-
|
(1.3)
|
||
|
Television
|
2.8
|
4.9
|
-
|
(1.0)
|
2.8
|
3.9
|
||
|
|
|
|
|
|
|
|
||
|
Past service pension credit attributable to Group
|
|
|
4.3
|
-
|
||||
|
|
|
|
|
|
|
|
||
|
Operating profit
|
|
|
|
|
7.1
|
3.9
|
||
|
Financing
|
|
|
|
|
(1.5)
|
(1.2)
|
||
|
|
|
|
|
|
|
|
||
|
Profit before tax
|
|
|
|
|
5.6
|
2.7
|
||
|
Tax charge
|
|
|
|
|
(1.3)
|
(0.2)
|
||
|
|
|
|
|
|
|
|
||
|
Profit for the period from continuing operations
|
|
|
4.3
|
2.5
|
||||
|
|
|
|
|
|
|
|
||
|
Discontinued operations
|
|
|
|
|
|
|
||
|
Cinema
|
(0.6)
|
(0.5)
|
(4.3)
|
-
|
(4.9)
|
(0.5)
|
||
|
Radio
|
-
|
1.3
|
-
|
-
|
|
1.3
|
||
|
|
(0.6)
|
0.8
|
(4.3)
|
-
|
(4.9)
|
0.8
|
||
|
Tax charge
|
-
|
(0.2)
|
1.2
|
-
|
1.2
|
(0.2)
|
||
|
|
(0.6)
|
0.6
0.8
|
(3.1)
|
-
(14.7)
|
(3.7)
|
0.6
(13.9)
|
||
|
|
|
|
|
|
|
|
||
|
Loss on disposal of discontinued operations
|
|
|
|
-
|
(15.0)
|
|||
|
|
|
|
|
|
|
|
||
|
Loss for the period from discontinued operations
|
|
|
(3.7)
|
(14.4)
|
||||
|
|
|
|
|
|
|
|
||
|
Net profit/(loss) attributable to equity shareholders
|
|
|
0.6
|
(11.9)
|
||||
The result of discontinued operations for the period to 30 June 2009 includes an IFRS 5 adjustment relating to depreciation of £nil (£0.3m at 30 June 2008) which ceased to be charged when the businesses were classified as held for sale.
The exceptional item in 2008 in Ventures related to the cost of change provision.
In 2009, the exceptional item in Cinema of £4.3m relates to an increase in the Vue onerous contract provision reflecting weaker than anticipated trading.
4. Operations in the interim period
In line with the UK advertising market as a whole, the autumn season provides the Group with the highest level of business and largest element of annual revenue, and as a result the full year results are expected to be more heavily weighted towards the second half of 2009.
5. Exceptional items
Pension service credit
A past service pension credit of £4.3m has been recognised in the six months to June 2009 in relation to changes made to the Scottish and Grampian Television Retirement Benefit Scheme.
Cost of change
A provision of £1.0m was recognised in the period to June 2008 in relation to restructuring within Ventures division with all balances relating to Peopleschampion.com and Smartycars.com being written off.
6. Finance costs
|
|
6 months |
6 months |
|
|
2009 |
2008 |
|
|
£m |
£m |
|
Interest expense: |
|
|
|
Bank borrowings |
0.9 |
2.5 |
|
Pension finance charge/(credit) |
0.9 |
(1.3) |
|
Finance costs |
1.8 |
1.2 |
7. Discontinued operations
Cinema continues to meet all the conditions to be classified as held for sale and is therefore classed as discontinued operations. The completion of the Radio disposal occurred on 30 June 2008.
|
|
6 months |
6 months |
|
|
2009 |
2008 |
|
|
£m |
£m |
|
|
|
|
|
Post tax results from discontinued operations |
(3.7) |
(14.4) |
Exceptional items included within the results are as follows:
Onerous contract provision
A further £4.3m has been provided in the six months to June 2009 to cover future losses expected from the Vue contract within the Cinema division.
Loss on disposal of discontinued operations
On 30 June 2008, the Group completed the sale of its Radio business, Virgin, to TIML Golden Square Limited ('TIML') for a cash consideration of £53.2m resulting in a loss on disposal of £15.0m for that period. The final loss on sale recognised in the full year result to 31 December 2008 was £17.5m.
Cash flows from discontinued operations
|
|
6 months |
6 months |
|
|
2009 |
2008 |
|
|
£m |
£m |
|
|
|
|
|
Net cash flows from operating activities |
(0.6) |
0.8 |
|
Net cash flows from investing activities |
- |
- |
|
|
(0.6) |
0.8 |
The major classes of assets and liabilities comprising the operations classified as held for sale are as follows:
|
|
June
2009
|
December 2008
|
June
2008
|
|
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
Property, plant and equipment
|
0.1
|
0.1
|
0.2
|
|
Trade and other receivables
|
21.8
|
11.6
|
19.7
|
|
Cash and cash equivalents
|
3.2
|
3.4
|
3.0
|
|
Tax
|
4.9
|
3.7
|
1.6
|
|
Total assets classified as held for sale
|
30.0
|
18.8
|
24.5
|
|
|
|
|
|
|
Trade and other payables
|
6.1
|
5.8
|
3.0
|
|
Provisions for liabilities and charges
|
18.2
|
16.1
|
10.3
|
|
Total liabilities associated with assets classified as held for sale
|
24.3
|
21.9
|
13.3
|
|
|
|
|
|
|
Net assets/(liabilities) of disposal group
|
5.7
|
(3.1)
|
11.2
|
8. Tax
|
|
6 months |
6 months |
|
|
2009 |
2008 |
|
|
£m |
£m |
|
The charge for tax on continuing operations is as follows: |
|
|
|
Tax on profit on ordinary activities excluding exceptional items at 10% (30 June 2008: 10%) |
0.1 |
0.2 |
The effective tax rate for the Group excluding exceptional items is 10% (30 June 2008: 10%). The tax charge is lower than the standard rate of 28% due to adjustments for prior year provisions and certain tax planning initiatives.
9. Earnings per share
|
|
|
|
Restated
|
|
|
|
6 months
2009
|
6 months
2008
|
|
|
|
£m
|
£m
|
|
Underlying EPS:
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
|
|
|
Earnings attributable to ordinary shareholders
|
0.6
|
4.1
|
|
|
|
|
|
|
|
Weighted average number of shares in issue
|
36.4m
|
47.6m
|
|
|
|
|
|
|
|
EPS
|
1.6p
|
8.6p
|
|
|
|
|
|
|
|
EPS from continuing operations
|
|
|
|
|
Basic earnings
|
0.6
|
4.1
|
|
|
Pre-tax loss/(profit) from discontinued operations
|
0.6
|
(0.8)
|
|
|
Tax relating to discontinued operations
|
-
|
0.2
|
|
|
Basic underlying earnings from continuing operations
|
1.2
|
3.5
|
|
|
|
|
|
|
|
Weighted average number of shares in issue
|
36.4m
|
47.6m
|
|
|
|
|
|
|
|
EPS
|
3.3p
|
7.4p
|
|
|
|
|
|
|
EPS including exceptional items:
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
|
|
|
Earnings attributable to ordinary shareholders (including exceptional items)
|
0.6
|
(11.9)
|
|
|
|
|
|
|
|
Weighted average number of shares in issue
|
36.4m
|
47.6m
|
|
|
|
|
|
|
|
EPS
|
1.6p
|
(25.0p)
|
|
|
|
|
|
|
|
EPS from continuing operations
|
|
|
|
|
Basic earnings
|
0.6
|
(11.9)
|
|
|
Pre-tax loss from discontinued operations
|
4.9
|
14.2
|
|
|
Tax relating to discontinued operations
|
(1.2)
|
0.2
|
|
|
Basic earnings from continuing operations
|
4.3
|
2.5
|
|
|
|
|
|
|
|
Weighted average number of shares in issue
|
36.4m
|
47.6m
|
|
|
|
|
|
|
|
EPS
|
11.8p
|
5.3p
|
|
|
|
|
|
|
EPS from discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
|
|
|
Pre-tax (loss)/profit from discontinued operations
|
(4.9)
|
0.8
|
|
|
Tax relating to discontinued operations
|
1.2
|
(0.2)
|
|
|
Basic earnings from discontinued operations
|
(3.7)
|
0.6
|
|
|
|
|
|
|
|
Weighted average number of shares in issue
|
36.4m
|
47.6m
|
|
|
|
|
|
|
|
EPS
|
(10.2p)
|
1.3p
|
There is no difference between basic and diluted EPS as there is no material impact from dilutive share options.
The 2008 figures have been restated to take account of the 1 for 20 share consolidation.
10. Property, plant and equipment
During the six months to 30 June 2009, the Group has incurred expenditure of £0.3m on fixed assets
(£1.3m to 31 December 2008; £0.8m to 30 June 2008).
At 30 June 2009 the Group had no commitments outstanding in respect of contracted capital expenditure (£nil at 31 December 2008; £nil at 30 June 2008).
11. Borrowings and loans
At 30 June 2009, borrowings of £65.2m consisted of a £25.0m term facility and a net £40.2m revolving facility (£25.0m and £28.8m respectively at 31 December 2008; £40.0m and £37.4m respectively at 30 June 2008). During the six months to 30 June 2009, borrowings peaked at £67.0m which was made up of a £25.0m term and £42.0m revolving facility.
12. Share capital
During the six months to 30 June 2009, the Group acquired 700,000 of its new ordinary shares of 50p each which has resulted in an immaterial movement in share premium.
13. Notes to cash flow statement
|
|
6 months |
6 months |
|
|
2009 |
2008 |
|
|
£m |
£m |
|
Continuing operations |
|
|
|
Operating profit (before exceptional items) |
2.8 |
4.9 |
|
Depreciation and other non-cash items |
1.4 |
0.9 |
|
|
|
|
|
Operating cash flows before movements in working capital |
4.2 |
5.8 |
|
|
|
|
|
Decrease/(increase) in inventories |
6.4 |
(3.4) |
|
Decrease in trade and other receivables |
3.7 |
4.0 |
|
Decrease in trade and other payables |
(10.1) |
(6.6) |
|
Cost of change and onerous property costs |
(1.5) |
(1.8) |
|
|
|
|
|
Cash generated/(used) by continuing operations |
2.7 |
(2.0) |
|
|
|
|
|
Discontinued operations |
|
|
|
Operating (loss)/profit (before exceptional items) |
(0.6) |
0.8 |
|
Depreciation and other non-cash items |
- |
- |
|
|
|
|
|
Operating cash flows before movements in working capital |
(0.6) |
0.8 |
|
|
|
|
|
Increase in trade and other receivables |
(10.2) |
(12.2) |
|
Increase/(decrease) in trade and other payables |
0.3 |
(1.6) |
|
Onerous contract costs |
(2.2) |
(1.1) |
|
|
|
|
|
Cash used by discontinued operations |
(12.7) |
(14.1) |
|
|
|
|
|
|
|
|
|
Cash used by operations |
(10.0) |
(16.1) |
14. Retirement benefit schemes
The fair value of the assets in the schemes, the present value of the liabilities in the schemes and the expected rate of return at each balance sheet date was:
|
|
At 30 June 2009 |
At 31 December 2008 |
At 30 June 2008 |
|||
|
|
||||||
|
|
|
£m |
|
£m |
|
£m |
|
|
|
|
|
|
|
|
|
Equities |
8.0% |
106.1 |
8.0% |
108.6 |
8.0% |
118.4 |
|
Bonds |
3.7%-6.6% |
111.3 |
3.7%-6.6% |
106.7 |
4.4%-6.1% |
120.6 |
|
Fair value of schemes' assets |
|
217.4 |
|
215.3 |
|
239.0 |
|
|
|
|
|
|
|
|
|
Present value of defined benefit obligations |
|
(262.4) |
|
(253.6) |
|
(279.0) |
|
|
|
|
|
|
|
|
|
Deficit in the schemes |
|
(45.0) |
|
(38.3) |
|
(40.0) |
A related offsetting deferred tax asset of £13.0m is shown under non-current assets. Therefore the net pension scheme deficit amounts to £32.0m at 30 June 2009 (£27.0m at 31 December 2008; £28.0m at 30 June 2008).
15. Transactions with related parties
There has been no change from the 2008 year end accounts and no transactions with any related parties in the period to 30 June 2009.
16. Availability
A copy of this statement is being sent to all shareholders on 11 September 2009 and will be available for inspection by members of the public at the Company's registered office at Pacific Quay, Glasgow, G51 1PQ.
Responsibility statement
The interim management report is the responsibility of, and has been approved by, the directors of stv group plc. Accordingly, the directors confirm that to the best of their 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 the Disclosure and Transparency Rules:
DTR 4.2.7R, 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
DTR 4.2.8R, 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 2008.
By order of the Board
Jane Tames
Company Secretary
27 August 2009
Independent review report to stv group plc
Introduction
We have been engaged by the Company to review the interim financial information in the half-yearly financial report for the six months ended 30 June 2009, which comprises the condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated balance sheet, condensed consolidated statement of changes in equity, condensed statement of consolidated cash flows and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial information.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRS's as adopted by the European Union. The interim financial information included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.
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 financial statements since they were initially presented on the website.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Our responsibility
Our responsibility is to express to the Company a conclusion on the interim financial information in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, 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.
Scope of review
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.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
PricewaterhouseCoopers LLP
Chartered Accountants
27 August 2009
Glasgow
This information is provided by RNS
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