Information  X 
Enter a valid email address

STV Group PLC (STVG)

  Print      Mail a friend       Annual reports

Thursday 06 March, 2014

STV Group PLC

Final Results 2013

RNS Number : 6416B
STV Group PLC
06 March 2014
 



0700 hours, 6 March 2014

STV Group plc - Final Results 2013

 

Commercially focused

Creatively led

 

Financial Highlights

2013

2012***

Year on year

Revenue

£112.1m

£102.7m

  +9%

EBITDA*

 £20.1m

  £19.5m

  +3%

Operating profit*

 £18.0m

  £17.1m

  +5%

Pre-tax profit**

 £15.2m

  £13.1m

 +16%

EPS**

 34.4 pence

  30.4 pence

 +13%

Statutory EPS

 32.2 pence

  13.0 pence

+147%

Net debt

 £35.7m

  £45.3m

  -21%

*Pre-exceptionals

**Pre-exceptionals and IAS19

***2012 results have been restated to reflect the accounting for employee benefits following changes to the IAS19 standard (IAS19(R))

 

Highlights

 

·      Revenue up 9% to £112.1 million

·      Operating profit* up 5% at £18.0 million

·      EPS** up 13% to 34.4p per share

·      Net debt down 21% to £35.7 million

·      Robust KPI performance

·      STV Productions revenues up 32% to £13.5 million

·      Digital revenues up 23% in growth areas and digital operating profit up 76% to £3.0m

·      Dividend recommended at 2.0 pence per share full year payout

 

 

Strategic Developments

 

·      Payment of a full year dividend of 2.0 pence per share in respect of 2013 and, subject to achievement of 2014 financial targets, a payment of 3.0 pence per share for 2014 to be paid one third as an interim dividend and two thirds as a final dividend payment.  It is intended to pursue a continuation of this progressive dividend policy in future years.

·      Net debt down 21% to £35.7m and on track to achieve target of net debt level of 1.5x EBITDA by end 2014.

·      Successful diversification of earnings base with non-broadcast earnings increasing by 8 percentage points to 19% in 2013 through growth in STV Productions and digital activities.

·     STV Productions continues to secure commissions with 25 episodes of new quiz show, The Link, commissioned by BBC One.  Additionally, a deal has been agreed with Warner Bros International Television Production to bring new format, The Link, to an international market. 

·      Continued growth momentum in digital with 23% revenue growth and 40% margin as successful locally focused products and services are launched.

·      Channel 3 licences renewed for maximum term of 10 years until end 2024 with consequent bank facility extension to 31 March 2016.

 

Rob Woodward, Chief Executive Officer, said: "This is a strong set of financial and operational results underpinned by confirmation of broadcast licences being renewed which provides long-term stability and continuity for investors and stakeholders. We have delivered further significant reduction in net debt and through strong growth in our digital and productions business; we delivered 19% of earnings from non-broadcast activities and are on track to meet our 33% target by the end of 2015."

 

6 March 2014

There will be a presentation for analysts at the offices of Peel Hunt, Moor House, 120 London Wall, London EC2Y 5ET today at 12.30pm.  Should you wish to attend the presentation, please contact Katie Martin, STV (Tel: 0141 300 3000).

 

Enquiries:

 

STV Group plc

George Watt, Chief Financial Officer                                            Tel: 0141 300 3049

Eleanor Marshall, PR & Communications Manager                       Tel: 0141 300 3670

 

Instinctif           

Jamie Ramsay                                                                           Tel:  0207 457 2020

 

 

 

 

Operational Review

 

Introduction

STV has delivered a strong operational and financial performance, achieving growth in STV Productions and digital activities through the introduction of new consumer services and deepening relationships with consumers across all platforms and channels.

 

Significant progress has been made towards achievement of the strategic aim to grow non-broadcast earnings to represent one third of Group earnings by end of 2015 with this increasing from 11% to 19% year on year.

 

The KPIs which have served as a useful and highly transparent measure of progress have been reviewed and refreshed.  We have today set out updated targets through to 2016. New KPIs focused on monitoring consumer reach and engagement have been introduced for the consumer business.  The key strategic aim of achieving 33% of earnings from non-broadcast activities has been incorporated into the KPIs to underscore the strategic importance of this target. The target to measure hours of commissioned content secured by STV Productions has been removed as this is no longer relevant with a number of long running series commissions secured as we continue our organic growth strategy.

 

STV Consumer

STV is Scotland's most popular peak time channel and in 2013 peak time share achieved a three-year high at 22%.  Peak time audience share continued to exceed the Network in 2013, tracking 1.5 share points ahead, and reaching over 3.6m viewers per month.

 

The underlying profitability of the consumer division was maintained during the year with the KPI margin target exceeded, achieving a margin of 17.8%. This was a particularly strong performance as the business bore a significant increase in costs arising from planned increases to Network programme costs and continued investment in digital services.

 

As new consumer products and services are developed the range of opportunities for our commercial partners to reach their target markets continues to grow. Increasingly, advertisers are taking advantage of STV's key differentiator: the ability to take their brands to customers at both a national and local level.  The positive response from commercial partners to the digital city services, launched in the autumn, demonstrates the demand from advertisers for geographically targeted services and this ability will be further enhanced when STV's City TV services are launched during 2014. 

 

The pace of growth of the digital business continued with digital revenues up 15% to £7.5m, with revenues in digital growth categories* up 23% driven principally by long-form catch up viewing which was up 125% year on year.

 

*Growth categories are transactional, video on display, display, mobile and classified advertising

 

 

Public service content serves as a cornerstone of our connection with our consumers.  We continue to  deliver in excess of our licence obligations for news.

 

STV News achieved an audience share of 25.6% throughout the year and Scotland Tonight is the most watched Scottish current affairs programme.  STV has secured the position as the leading media provider for coverage of the Scottish independence referendum campaign. This commitment will continue during 2014 with an extensive range of programmes, features and coverage delivered through STV News, Scotland Tonight, and online coverage.

 

The popularity of STV news content online has grown again with news delivering half of page views in 2013 and monthly news browsers up 43% year on year to 1.6m each month.

 

We have continued to make progress in deepening our consumer relationships through collecting consumer insights data.  Despite not meeting our KPI target of 1.2 million we increased the number of registrations held by 25% on the previous year.  The deployment of the infrastructure provided by our technology partners, Gigya, will generate further opportunities to progress towards our target of 2.4m by 2016.

 

Our product development strategy is based on a philosophy of 'mobile first' to meet the emerging demand profile of our consumers with over 77% of page views via mobile devices in the period. 

 

In 2013, the STV Player was introduced on further platforms including Windows 8, Samsung Smart TV and Kindle Fire, supporting the increase of 125% in long form video stream views to 11.5m during the year.

 

Our overall digital operating profit increased by 76% to £3.0m.

 

STV Productions

STV Productions has enhanced its reputation as a thriving UK content production business successfully increasing the number of new commissions secured during the year across a number of genres, including further commissions of long-running returning series.

 

Today we have announced a new commission for 25 episodes of a new quiz show, The Link, for BBC One. Coinciding with this, a deal has been agreed with Warner Bros International Television Production to bring this new format to an international market.

 

During 2013 over 20 commissions have been secured, including a commission for eight episodes of entertainment show Let Me Entertain You for ITV1's weekend schedule; a re-commission for 13 episodes of peak-time entertainment show Catchphrase, including four celebrity specials also for ITV; 10 episodes of Fake Reaction for ITV2; and two one-off documentaries for Channel 5. The first feature film produced by the business, Fire in the Night, was made for BBC2 and was subsequently awarded a BAFTA Scotland for Best Single Documentary.

 

In addition to the success delivered through commissions secured in 2013, the pipeline is strong into 2014 with a number of new creative formats commissioned, including The Lie, a co-production for TV3 in Ireland, GroupM Entertainment and STV.

 

A further commission for four series of Antiques Road Trip for BBC One (80 episodes) and a fourth series (20 episodes) of Celebrity Antiques Road Trip was announced earlier this week.

 

The profile of STV Productions is successfully developing internationally.  In October a new strategic international partnership with Red Arrow Entertainment Group, incorporating co-investment, co-development and worldwide distribution was announced.  The innovative format deal with Kinetic Content, US production company, continues providing each business with exclusivity to license each other's original format in their respective countries.

 

We have reviewed the KPI metrics for STV Productions and the KPI to measure produced hours will not be used going forward as it is now less relevant as the business has a strong base of long running returning series.  The KPI targets for revenues and margin are maintained and the targets have been updated.

 

In 2013, revenues were up 32% at £13.5m and operating profit doubled to £0.4m.  The number of produced hours in the year was 157 hours exceeding the target of 150 hours.

 

Outlook

Our outlook for Q1 for total airtime revenues will be up 5% with Scottish airtime revenues up 6% year-on-year, and national revenues are expected to be up 4% in Q1. In the four months to April, we expect total airtime revenues to be up 7% to 8%.

 

Digital growth revenues are expected to be up 15-20% in Q1, which is also their expected run rate for the full year. 

 

Financial Performance Review

 

Revenue

Total revenue amounted to £112.1m (2012: £102.7m). Consumer revenues at £98.6m (2012: £92.5m) reflect a strong airtime performance, with national airtime revenues up 6%, outperforming the broader television market. Digital revenues grew by 15% to £7.5m (2012: £6.5m), with digital growth revenues up 23% year on year driven by continued strong growth in long form catch up viewing.

 

Productions revenue grew by 32% to £13.5m (2012: £10.3m) as the business continues to win new commissions and secure returning commissions, particularly of long running series.

                                                                                                             

Operating Profit

Operating profit before exceptional items increased by £0.9m (5%) to £18.0m.  Consumer division operating profit improved to £17.6m (2012: £16.9m) through continued focus on cost control.  Despite an increase in the cost base of the Consumer business arising from an increase in the Network programme costs of £2.1m, the consumer division margin was ahead of the KPI target of 16% at 17.8%, broadly flat year on year (2012: 18.3%).

 

Although STV Productions continued with its investment phase of the rebuilding and expansion strategy, operating profit doubled to £0.4m (2012: £0.2m).  As the business enters a growth phase, the margin targets have been increased in the updated KPI targets for 2014 to 2016.

 

Finance Costs

Net finance costs decreased by £1.7m to £3.7m (2012: £5.4m) principally due to a reduction in cash interest costs of £1.2m.

 

Profit Before Tax

Profit before tax and exceptional items and IAS 19 increased by 16% to £15.2m (2012: £13.1m).

 

Exceptional Items

There were no exceptional items in 2013 (2012: £5.3m).

 

Statutory Result

The statutory result for the year after tax and exceptional items amounted to a profit of £12.2m (2012: £4.9m).

 

Earnings Per Share

EPS on a statutory basis increased to 32.2 pence (2012: 13.0 pence).

 

Balance Sheet

The principal balance sheet movements over the last 12 months were a reduction in net debt and a movement from a pension deficit to surplus on an IAS 19 basis.

 

The prior year deficit of £17.7m (net of deferred tax) moved to a surplus of £1.2m due to improvements in the asset values and deficit funding payments.

 

 

 

Cash Flow

Net debt fell by 21% to £35.7m (2012: £45.3m) resulting in a reduction of over one-third in the last two years. The further reduction was due to the strong cash generation of the core operating business and a conversion rate of operating profit to free cash flow of 94% (2012:120%).

 

The net debt EBITDA ratio for the period reduced to 1.8x EBITDA (2012: 2.3x) and is on track to meet the Group's 1.5x EBITDA target level in 2014.

 

The principal cash outflows during the period arose from pension deficit funding of £4.2m, interest payments of £2.5m and capital expenditure of £1.4m.

 

Dividends

The Board has declared the payment of a full year dividend of 2.0 pence per share in respect of 2013 and, subject to achievement of 2014 financial targets, a payment of 3.0 pence per share for 2014 to be paid one third as an interim dividend and two thirds as a final dividend payment.  It is intended to pursue a continuation of this progressive dividend policy in future years.

 

Board Change

It is announced today that Vasa Babic will retire from the Board at the Group's forthcoming Annual General Meeting after seven years valued service.

 

Principal Risks and Uncertainties

This announcement contains certain statements that are or may be forward-looking with respect to the financial condition, results or operations and business of STV Group plc. By their nature forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future.

 

The Group set out in its 2012 Annual Report and Financial Statements the principal risks and uncertainties that could impact its performance.  These remain largely unchanged since the Annual Report was published.  The 2013 Annual Report is scheduled to be circulated to shareholders on 21 March 2014.

 

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.

 

The renewal of the current licences was confirmed in February 2014.  The new licences will apply for a 10 year term from 1 January 2015. 

 

In August 2012 Scotland's First Minister confirmed that should Scotland become an independent country, STV's broadcasting licences would be honoured for their full duration through until December 2024.  In addition, the Scottish Culture Cabinet Secretary confirmed in November 2013 that the local TV licences covering Glasgow and Edinburgh would also be honoured for their full duration.

 

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

The significant amount of STV Consumer'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 to advertisers - are factors that affect the performance of STV Consumer and, therefore, the Group as a whole.

 

Pension scheme shortfalls

The STV pension schemes are relatively strong and the investment strategy is calculated to reduce any market movement impacts, however, it is possible that the Group may be required to increase its contributions which could have an adverse impact on results and cash flow.

 

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.  The Group's borrowings are denominated in Sterling which is also the Group's intra-UK net currency flow.

 

 

Rob Woodward

CEO, STV Group plc



 

 

Appendix 1 - 2013 KPI Update

 

 


2013 Actual

2013 Target

Consumer

1.  Peak time audience v ITV Network

 

+1.5 share points

 

Exceeded

 

To exceed the  Network

2. Increase consumer division margin

 

17.8%

 

Exceeded

 

16.0%

 

Upgraded target

 

3.  Consumer insights

0.6 million

 

Not met

 

1.2 million

4. Unique users per month

    (Q4 monthly average)

 

3.1 million

 

Not met

 

 

3.5 million

 

5. Page impressions per month

    (Q4 monthly average)

 

27.0 million

 

Exceeded

 

22.0 million

 

 

6. Video streams per month

    (Q4 monthly average)

 

2.3 million

 

Not met

 

3.8 million

7. Digital revenue value

 

£7.5 million

 

Not met

 

£11.3 million

8. Digital margin

 

40%

 

Exceeded

 

25%

STV Productions

9. Produced hours

 

157 hours

 

Exceeded

 

150 hours

10. Production revenues

 

£13.5m

 

Not met

 

£15.0m

11. Production margin

 

3%

 

Not met

 

10%

 



 

       

Consolidated income statement

   Year ended 31 December 2013




Restated

(note 3)



2013

2012


Note

 

£m

£m





Revenue

6

112.1

102.7





Net operating expenses


(94.1)

(90.9)

 

Operating profit


 

18.0

 

11.8





Analysed as:




Operating profit before exceptional items


18.0

17.1

-     Exceptional items

7

-

(5.3)

Operating profit after exceptional items


18.0

11.8










Finance income



-

0.1

Finance costs

- borrowings

8

(2.8)

(4.1)


- IAS 19 pension

8

(0.9)

(1.4)



(3.7)

(5.4)





Profit before tax


14.3

6.4

Tax charge

9

(2.1)

(1.5)

 

Profit for the year


 

12.2

 

4.9





Earnings per share




Basic earnings per share

11

32.2p

13.0p





Diluted earnings per share

11

31.2p

12.5p

 

A reconciliation of the statutory results to the adjusted results is included at note 19.

 

 

Consolidated statement of comprehensive income

   Year ended 31 December 2013



Restated

(note 3)


2013

2012


£m

£m




Profit for the year

12.2

4.9




Other comprehensive income:



Items that will not be reclassified to profit or loss



Re-measurement gains on defined benefit pension schemes

21.2

5.2

Deferred tax charge

(4.9)

(1.9)

Other comprehensive income for the year

16.3

3.3




Total comprehensive income for the year

28.5

8.2

 

 



                                                                                                                                                                                                                                                                                                                                                                                                                                                   

Consolidated balance sheet

At 31 December 2013




Restated (note 2)



2013

2012


Note

£m

            £m

Non-current assets




Goodwill

12

7.9

7.9

Other intangible assets

13

0.7

-

Property, plant and equipment

14

6.7

8.2

Investments

15

0.9

0.6

Deferred tax asset


5.1

12.1

Retirement benefit asset

18

1.3

-



22.6

28.8

Current assets




Inventories


17.6

18.5

Trade and other receivables


21.4

18.9

Cash and cash equivalents


8.8

3.9



47.8

41.3





Total assets


70.4

70.1





Equity attributable to owners of the parent




Ordinary shares

16

19.5

19.5

Share premium

16

112.0

112.0

Merger reserve


173.4

173.4

Other reserve


0.3

0.4

Accumulated losses


(297.6)

(326.2)

Total equity


7.6

(20.9)

   




Non-current liabilities




Borrowings


-

44.2

Provisions


0.8

1.1

Derivative financial instruments


-

0.2

Retirement benefit obligation

18

-

23.0



0.8

68.5

Current liabilities




Borrowings


44.5

5.0

Trade and other payables


16.9

17.0

Provisions


0.6

0.5



62.0

22.5





Total liabilities


62.8

91.0





Total equity and liabilities


70.4

70.1

 



 

Consolidated statement of changes in equity

Year ended 31 December 2013

 


Equity attributable to owners of the parent

 

 

 

Ordinary

 shares

Share

premium

Merger

reserve

Other

reserve

Accumulated

losses

Total

equity

£m

£m

£m

£m

£m

£m








Balance at 1 January 2013

19.5

112.0

173.4

0.4

(326.2)

(20.9)








Profit for the year

-

-

-

-

12.2

12.2

Re-measurement gain

-

-

-

-

21.2

21.2

Deferred tax thereon

-

-

-

-

(4.9)

(4.9)

Total comprehensive income for the year

 

-

 

-

 

-

 

-

 

28.5

 

28.5








Equity-settled share based payments

 

-

 

-

 

-

 

(0.1)

 

0.1

 

-








Balance at 31 December 2013

19.5

112.0

173.4

0.3

(297.6)

7.6















Balance at 1 January 2012

19.5

112.0

173.4

0.6

(335.2)

(29.7)








Profit for the year restated

-

-

-

-

4.9

4.9

Re-measurement gain restated

-

-

-

-

5.2

5.2

Deferred tax thereon restated

-

-

-

-

(1.9)

(1.9)

Total comprehensive income for the year

 

-

 

-

 

-

 

-

 

8.2

 

8.2








Own shares awarded

-

-

-

-

0.6

0.6

Equity-settled share based payments

 

-

 

-

 

-

 

(0.2)

 

0.2

 

-








Balance at 31 December 2012

19.5

112.0

173.4

0.4

(326.2)

(20.9)










 

Statement of consolidated cash flows




Year ended 31 December 2013







Restated (note 2)



2013

2012


Note

£m

£m





Operating activities




Cash generated by operations

17

18.3

11.9

Interest paid


(2.5)

(2.2)

Pension deficit funding

- recovery plan payment


(4.2)

(4.3)





Net cash generated by operating activities


11.6

5.4





Investing activities




Interest received


-

0.6

Loan note received


-

5.0

Purchase of investment


(0.3)

(0.1)

Capitalised web development spend


(0.7)

-

Purchase of property, plant and equipment


(0.7)

(1.0)





Net cash (used in)/generated by investing activities


(1.7)

4.5





Financing activities




Net borrowings repaid


(5.0)

(6.5)





Net cash used by financing activities


(5.0)

(6.5)





Net increase in cash and cash equivalents


4.9

3.4





Net cash and cash equivalents at beginning of year


3.9

0.5





Net cash and cash equivalents at end of year

17

8.8

3.9

 

Although not required under IFRS the directors have provided the following reconciliation of net debt for further clarity.  Net debt represents Group borrowing less cash and cash equivalents and short term deposits.

 

 

Reconciliation of movement in net debt




Year ended 31 December 2013






2013

2012


Note

£m

£m





Opening net debt


(45.3)

(54.5)

Net increase in cash and cash equivalents in the year


4.9

3.4

Net movement in debt financing


4.7

5.8





Closing net debt

17

(35.7)

(45.3)









 



Notes to the preliminary announcement

Year ended 31 December 2013

 

 

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.

 

2.   Basis of preparation

 

The financial information set out in the preliminary announcement does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006 in respect of the accounts for the year ended 31 December 2013. The statutory accounts for the year ended 31 December 2012, upon which the Company's auditors have given a report which was unqualified and did not contain a statement under the Companies Act 2006, have been delivered to the Registrar of Companies. The statutory accounts for the year ended 31 December 2013 have yet to be signed. They will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies in due course.  

 

Restatement

Investments at 1 January 2013 have been restated to include an amount of £0.6m previously held within trade and other receivables. The effect on the cash flow has been to increase cash generated by operations by £0.1m and decrease cash generated by investing activities by £0.1m.

 

Going concern basis

The Group meets its day-to-day working capital requirements through its bank facilities.  The Group's forecasts and projections, taking account of reasonable possible changes in trading performance, show that the Group should be able to operate within the level of its current facilities.  The Group therefore continues to adopt the going concern basis in preparing its consolidated financial statements.

 

3.   Accounting policies

 

The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2012.

 

The following new standards, amendments to standards or interpretations are mandatory for the first time for accounting periods beginning on or after 1 January 2013:

 

IAS 1

Amendments to financial statement presentation

IAS 19 (revised)

Amends the accounting for employee benefits

IFRS 10

Consolidated financial statements

IFRS 11

Joint arrangements

IFRS 12

Disclosures of interests in other entities

IFRS 13

Fair value measurement

 

IFRS 10, 11, 12 and 13 and IAS 1 were either not relevant for the Group or had no material impact on the financial statements of the Group.

 

There are no IFRS or IFRIC interpretations which are not yet effective that would have a material impact on the Group.

 

IAS 19 amends the accounting for employee benefits.  The Group has applied the standard retrospectively in accordance with the transition provisions of the standard.  The impact on the Group has been in the following areas:

 

·      The standard replaces the interest cost on the defined benefit obligation and the expected return on plan assets with a net interest cost based on the net defined benefit asset or liability and the discount rate, measured at the beginning of the year. There is no change to determining the discount rate; this continues to reflect the yield on high quality corporate bonds. This has changed the income statement interest from a credit to a charge as the discount rate applied to assets is lower than the expected return on assets.  This has no effect on comprehensive income as the increased charge in profit is offset by a credit in other comprehensive income.  The effect has been that the income statement profit for the year to 31 December 2012 has decreased by £2.0m.  The basic EPS has decreased by 5.3p to 13.0p and the diluted EPS has decreased by 5.1p to 12.5p. 

 

·      There is a new term "re-measurements".  This is made up of actuarial gains and losses, the difference between actual investment returns and the return implied by the net interest cost.

 

·      The effect of the change in accounting policy on the statement of cash flows was immaterial.

 

4.   Estimates

 

The preparation of the 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 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 2012.

 

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 consolidated 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 2012.  There have been no changes in any risk management policies since the year end.

 

The carrying value of non-derivative financial assets and liabilities, comprising cash and cash equivalents, trade and other receivables, trade and other payables and borrowings is considered to materially equate to their fair value.  Derivative financial instruments, which are measured at fair value, comprise interest rate swaps of £24.0m categorised as level 2.  As the interest rate swaps expire on 23 January 2014, their fair value at 31 December 2013, calculated at the present value of the estimated future cash flows using market interest rates, is immaterial. The valuation techniques employed are consistent with the year end annual report.

 

6.   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 and Productions.

 

The performance of the segments is assessed based on a measure of adjusted operating profit.  This measurement basis excludes the effects of exceptional items.

 




External sales

Segment revenues





2013

2012






£m

£m








Consumer





98.6

92.5

Productions





13.5

10.2






112.1

102.7

 

Turnover in 2013 includes £1.2m of revenues from sources outside the UK (2012: £1.1m).

 

Segment result






Restated






  2013

2012






£m

£m








Consumer





17.6

16.9

Productions





0.4

0.2






18.0

17.1

Affiliate status change

-

(5.3)








Operating profit





18.0

11.8

Financing





(3.7)

(5.4)








Profit before tax





14.3

6.4

Tax charge





(2.1)

(1.5)

Profit attributable to owners of the parent



12.2

4.9

 

Operating profit in 2013 includes £0.6m arising outside the UK (2012: £0.6m).

 

7.   Exceptional items

 

Affiliate status change

A non-cash stock write-down of £4.1m was booked in 2012 relating to the Group's ITV network affiliate status. In addition, legal and other costs of £1.2m in relation to this were incurred.

 

8.   Finance costs



Restated


2013

2012


            £m

            £m




Bank borrowings

2.8

3.9

Fair value loss on interest rate swaps

-

0.2


2.8

4.1

Pension finance charge

0.9

1.4

Finance costs

3.7

5.5

 



 

 

9.   Tax charge



Restated


2013

2012


£m

£m

The charge for tax is as follows:



Tax on profit on ordinary activities excluding exceptional items at 15% (2012: 15%)

2.1

1.5

Tax effect of exceptional items

-

-


2.1

1.5

 

The effective tax rate for the Group excluding exceptional items is 15% (2012: 15%). The tax charge is lower than the standard rate of 23.25% due to adjustments for prior year provisions and utilisation of prior year losses.

 

During the year, a change in the UK corporation tax rate from 24% to 23%, effective from 1 April 2013, was substantively enacted in March 2013.

  
In addition, a number of further changes to the UK corporation tax system were announced in the March 2013 UK Budget statement.  Legislation to reduce the main rate of corporation tax from 23% to 21% from 1 April 2014 and to 20% from 1 April 2015 was included in the Finance Act 2013, which was enacted in July 2013.  The closing deferred tax balances have therefore been re-measured accordingly.

 

10.  Dividends

 


2013

2012


£m

            £m




Proposed final dividend for the year ended 31 December 2013 of 2.0p (2012: nil) per share

 

0.8

 

-

 

The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.



 

11.  Earnings per share


 

 

 

Earnings

£m

2013

Weighted average number of shares (m)

 

 

Per share

Pence

 

 

Restated

Earnings

£m

2012

Weighted average number of shares (m)

 

Restated

Per

share

Pence







EPS (PRE-EXCEPTIONAL ITEMS):






Earnings attributable to ordinary shareholders

 

12.2

 

37.8

 

32.2p

 

10.2

 

37.7

 

27.1p






 

Basic EPS

 

12.2

 

37.8

 

32.2p

 

37.7








Potential dilutive ordinary shares


 

1.3



 

1.4


 

Diluted EPS

 

12.2

 

39.1

 

31.2p

 

10.2

 

39.1

 

26.1p








EPS (INCLUDING EXCEPTIONAL ITEMS):

Earnings attributable to ordinary shareholders (including exceptional items)

 

 

12.2

 

 

37.8

 

 

32.2p

 

 

37.7








 

Basic EPS

 

12.2

 

37.8

 

32.2p

 

37.7








Potential dilutive ordinary shares


 

1.3



 

1.4


 

Diluted EPS

 

12.2

 

39.1

 

31.2p

 

4.9

 

39.1

 

12.5p

 

12.  Goodwill

 

Goodwill at 1 January and 31 December 2013 was £7.9m (2012: £7.9m). It comprises capitalised goodwill on acquisitions completed since 1 January 1998 and the cost and impairment provision is split £10.6m and £2.7m respectively. 

 

13.  Other intangible assets




Web development

£m

Cost




At 1 January 2013



-

Additions



0.7

At 31 December 2013



0.7





Accumulated depreciation and impairment




At 1 January 2013 and 31 December 2013



-





Net book value at 31 December 2013



0.7





Net book value at 31 December 2012



-



 

 

14.  Property, plant and equipment

 


 

Leasehold

buildings

£m

Plant, technical

equipment

and other

£m

 

 

Total

£m

Cost




At 1 January 2013

0.2

26.2

26.4

Additions

-

0.7

0.7

Write offs

(0.1)

(2.1)

(2.2)

At 31 December 2013

0.1

24.8

24.9





Accumulated depreciation and impairment




At 1 January 2013

0.1

18.1

18.2

Charge for year

-

2.1

2.1

Write offs

-

(2.1)

(2.1)

At 31 December 2013

0.1

18.1

18.2





Net book value at 31 December 2013

-

6.7

6.7





Net book value at 31 December 2012

0.1

8.1

8.2

 

15.  Investments

 



£m




At 1 January 2013


-

Adjustment (see below)


0.6

At 1 January 2013 restated


0.6

Additions


0.3

At 31 December 2013


0.9

 

Investments at 1 January 2013 have been restated to include an amount of £0.6m previously held within trade and other receivables.

 

16.  Share capital

 


Number of shares (thousands)

Ordinary shares

£m

Share

premium

£m

 

Total

£m






At 1 January and 31 December 2013

39,050

19.5

112.0

131.5

 

On 20 February 2014, the Court of Session granted a reduction in the share premium account of £11.0m.

 

17.  Notes to the consolidated statement of cash flows

 



Restated


2013

2012


£m

£m




Operating profit (before exceptional items)

18.0

17.1

Depreciation and other non-cash items

2.1

2.4

  




20.1

19.5




Decrease in inventories

0.9

6.5

Increase in trade and other receivables

(2.5)

(1.2)

  Decrease in trade and other payables

(0.2)

(6.6)

Underlying cash generated by operations

18.3

18.2




Litigation matters

-

(5.1)

Cost of change

-

(1.2)




Cash generated by operations

18.3

11.9

 

Analysis of movements in net debt

 


At 1

January 2013

 

 

Cash flow

 

Non-cash

movements

At  31 December 2013


£m

£m

£m

£m






Cash and cash equivalents

3.9

4.9

-

8.8

Bank borrowings

(49.2)

5.0

(0.3)

(44.5)






Net debt

(45.3)

9.9

(0.3)

(35.7)

 

At 31 December 2013, the Company had bank facilities in place totalling £57.5m consisting of a £25.0m term facility and a £32.5m revolving credit and overdraft facility (2012: £30.0m and £32.5m respectively). At 31 December 2013 £45.0m of the facility was drawn down.

 

The facilities were due to expire on 31 December 2014 and consequently the borrowings have all been classified as current liabilities as at 31 December 2013.  Subsequent to the balance sheet date, the renewal of the Channel 3 broadcast licences in February 2014 resulted in the facilities being extended to 31 March 2016.

 

The term loan partially amortises across the facility term and £5.0m was amortised on 31 December 2013. Security is provided to the debt providers by way of cross guarantees and a share pledge.

 

 

18.  Retirement benefit schemes

 

The Group operates two defined benefit pension schemes. The schemes are trustee administered and the schemes' assets are held independently of the Group's finances. Pension costs are assessed in accordance with the advice of an independent professionally qualified actuary.

 

The schemes are the Scottish and Grampian Television Retirement Benefit Scheme and the Caledonian Publishing Pension Scheme.  They are closed schemes and therefore under the projected unit method the current service cost will increase as the members of the scheme approach retirement.



 

 

A full actuarial valuation of the schemes was carried out at 1 January 2009 and updated to 31 December 2013 by a qualified independent actuary.   The major assumptions used by the actuary were:

 


At 31 December

2013

At 31 December

2012





Rate of increase in salaries

1.00%

1.00%

Rate of increase of pensions in payment

3.35%

3.15%

Discount rate

4.55%

4.35%

Rate of price inflation (RPI)

3.35%

3.15%

 

Assumptions regarding future mortality experience are set based on advice, published statistics and experience in each scheme.

 

The average life expectancy in years of a pensioner retiring at age 65 on the balance sheet date is as follows:

 


At 31 December

2013

At 31 December

2012



Years

Years




Male

14.3

14.3

Female

17.1

17.1

 

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 31 December 2013

At 31 December 2012


£m

£m




Equities

150.5

140.4

Bonds

146.5

139.0

Fair value of schemes' assets

297.0

279.4




Present value of defined benefit obligations

(295.7)

(302.4)




Surplus/(deficit) in the schemes

1.3

(23.0)

 

A related offsetting deferred tax charge of £0.2m (2012: asset £5.3m) is shown under non-current assets.  Therefore the net pension scheme surplus amounts to £1.1m at 31 December 2012 (£17.7m deficit at 31 December 2012).



 

 

19.  Reconciliation of statutory results to adjusted results

 


2013

2012


Profit

 before tax

Basic

EPS

Diluted

EPS

Profit

 before tax

Basic

EPS

Diluted

EPS


£m

pence

pence

£m

pence

pence








Post-exceptional

14.3

32.2p

31.2p

6.4

13.0p

12.5p

Add back: Exceptionals

-

-

-

5.3

14.1p

13.6p








Pre-exceptional

14.3

32.2p

31.2p

11.7

27.1p

26.1p








Add back: IAS 19

0.9

2.2p

2.0p

1.4

3.3p

3.1p








Adjusted results

15.2

34.4p

33.2p

13.1

30.4p

29.2p

 

20.  Mailing

 

A copy of the annual report is being sent to all shareholders on 19 March 2014 and will be available for inspection by members of the public at the Company's registered office at Pacific Quay, Glasgow, G51 1PQ.

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR UVOORSKAORUR

a d v e r t i s e m e n t