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STV Group PLC (STVG)

  Print          Annual reports

Thursday 09 September, 2021

STV Group PLC

Half Year Results

RNS Number : 1914L
STV Group PLC
09 September 2021
 

 

 

 Press Release 0700 hours, 9 September 2021

 

STV Group plc Half Year Results to 30 June 2021

 

Strong strategic momentum and financial performance ahead of pre Covid levels

 

Highlights

 

· Strong financial performance, with revenue and adjusted operating profit accelerating ahead of pre-Covid levels

· Advertising recovery continues, with Total Advertising Revenue (TAR) +32% in H1 and expected to be +25-30% for the 9 months to end of September

· Record audience growth maintained on both STV (+5%) and STV Player (+66%)

· Good momentum in Studios, with further new commissions and an 8th creative label added

· Sale of lottery completed, with long term advertising contract in place

· Following a return to cash dividend in May, Board proposes interim dividend of 3.7p, +23% on 2020

 

Financial Summary

 

2021

2020

Change

Revenue

£60.3m

£44.7m

     35%

EBITDA*

£13.9m

£7.8m

 78%

Operating profit**

£11.4m

£5.2m

   118%

Operating margin

19%

12%

 7pps

Adjusted profit before tax***

£10.6m

£4.4m

 137%

Profit/(loss) before tax

£8.5m

£(4.9)m

 273%

Adjusted basic EPS***

19.2p

10.7p

79%

Statutory basic EPS****

15.4p

(9.1)p

 269%

Net debt +

£17.6m

£33.5m

47%

Dividend per share

3.7p

3.0p

 23%

 

*

Earnings before interest, tax, depreciation & amortisation

**

Before exceptional items

***

Before exceptional items and IAS19 interest

****

2020 restated to reflect bonus issue of shares in December 2020

+

Excluding lease liabilities

 

Refer to note 23 to the condensed interim financial statements for a reconciliation of the adjusted to statutory numbers

 

Financial highlights

 

· Total revenue of £60.3m, +35% on 2020 and +10% on 2019

· Adjusted operating profit of £11.4m, +118% on 2020 and +3% on 2019

· STV-controlled advertising continues to outperform the wider market, with video on demand (VOD) advertising on the STV Player +62% (2019: +83%) and regional advertising revenues +27% (2019: +4%) in H1

· Studios revenue +265% on 2020 (2019: +202%), reflecting the recovery in production activity and recent commissioning momentum

· Operating margin of 19%, +7 percentage points and broadly back to pre-Covid levels

· Adjusted EPS is 19.2p, up 79% on 2020, with the higher effective tax rate in the current period diluting the year on year growth relative to operating profit

· Net debt of £17.6m in line with opening position for the year

 

Another record viewing performance on screen and online

 

· Six consecutive years of viewing share growth, with STV's all time share at 20.8%, the highest growth of all of the UK's 500+ TV channels so far in 2021

Total audience on STV +5%, even against 2020 lockdown comparators

STV still the most watched channel in Scotland, with largest lead over BBC1 since 2008

99.5% of all commercial audiences over 500k viewers on STV

STV News audiences at a 19-year high at 541k viewers, +11% on 2020

· Online viewing on STV Player up 66%, still the fastest growing UK broadcaster VOD service

Total streams up 94%

Monthly active users up 61%

Registered users up 11% to 4m

 

Strong strategic momentum

· STV's Growth Fund has attracted more than 60 new advertisers so far in 2021, taking the total to 285 since launch, with STV Self Service now allowing SMEs to design and book their own advertising campaigns

· STV's Digital strategy continues to accelerate rapidly:

11 new content deals in H1 including Sony, EOne and Banijay adding 100+ titles

Player-exclusive viewing up 137% in H1, now 43% of all VOD viewing vs 6% in 2019  

Ex-Scotland already 10-15% of streams, viewing and users

Successful STV Player VIP launch to drive future engagement and viewing

· STV Studios maintaining growth momentum:

15 new commissions so far in 2021 and 8 new returnable series

Focus is on high value formats like Screw (C4), The Bridge of Lies (BBC1) and Murder Island (C4), all filming in Scotland in 2021

8th creative label added through a minority investment in entertainment indie Hello Mary founded by former MTV, C4 and C5 exec Steve Regan

 

 

· Good early progress towards STV's 3-year growth targets to 2023 to:

Double digital viewing, users and advertising revenue (to £20m)

Quadruple production revenue (to £40m)

Achieve at least 50% of operating profit from outside traditional broadcasting

 

Important regulatory developments

 

· In July, Ofcom published its recommendations to ensure public service media thrives in the digital age. These emphasised the importance of sustaining choice in local news; the urgent need for new rules to ensure public service media like STV receive prominence on new digital platforms; and the introduction of a new objective to support the UK's creative economy to generate sustainable economic value across the nations and regions in the years to come.

· Last month the UK Government also confirmed the extension of the public service broadcasters' Freeview licences for a further 12-year period, guaranteeing certainty of distribution for STV on its most important TV platform into the 2030s.

· Taken together these developments are very positive steps towards the long-term renewal of STV's public service broadcasting licences from 2024.  We expect clarity on this during 2022.

 

Positive outlook

 

· Strong H2 programme schedule on TV and online:

c.50 hours of new network drama

30+ new boxsets on STV Player

· Advertising trends continuing to strengthen through the Autumn:

Q3 TAR expected to be +20-25%; 9-month TAR to September expected to be +25-30%

Q3 outlook for regional is expected to be +10-15% and VOD +40-45%

October TAR positive though tougher overall comparators in Q4

· Studios on track for best ever financial performance in 2021:

Confirmed revenues of £20-25m

Good visibility of 2022 performance given stronger returning series.

 

Capital allocation

· The Board proposes an interim cash dividend of 3.7p per share, +23% on 2020

· As previously communicated, the Board is committed to a balanced approach to capital allocation across investing for growth, fulfilling pension obligations, and paying a sustainable, progressive dividend to shareholders

· STV has already identified an investment programme of £30m to drive Digital and Studios growth with the target of delivering at least 50% of operating profit from outside traditional broadcasting by 2023.  The 2020 triennial valuation of the defined benefit pension schemes is on-going.  The Board remains mindful of the importance of the dividend to our shareholders and will seek to strike the most appropriate balance between sustainability of the dividend and pursuing growth opportunities.

Simon Pitts, Chief Executive Officer, said: 

"Ahead of expectations, STV has returned to pre-pandemic levels of growth and profitability, thanks to the strength of our programming, the success of our diversification strategy, and the commitment and creativity of our people.

Our record viewing performance has continued into 2021, with TV audiences up 5% even on last year's lockdown levels, and online viewing via STV Player up a further 66% thanks to huge audiences for Euro 2020, dramas like The Pembrokeshire Murders, and our increasingly popular Player-exclusive boxsets which now constitute over 40% of our on-demand viewing. This has driven a 32% advertising bounceback in the first half which is continuing into the autumn.

Our strategy of creating a more diversified business through a relentless focus on digital and production growth is delivering.  STV Studios is going from strength to strength, winning 15 programme commissions so far this year, and we're delighted to be filming new, large scale returnable formats in Scotland like drama series Screw (C4), quiz show The Bridge of Lies (BBC1) and the genre-bending Murder Island (C4), as we aim to become the UK's leading nations and regions producer.

Our high margin digital business continues to accelerate with streams nearly doubling so far this year and much more to look forward to for the remainder of 2021, with a new drama boxset drop on the STV Player every week, together with huge events like I'm a Celebrity and the return of the FA Cup.

STV also continues to drive positive social change through a range of important initiatives, from the STV Children's Appeal, to our campaign to improve on and off screen diversity and inclusion, and our advertising Green Fund which has set aside £1m to champion Scottish businesses taking climate action as Glasgow prepares to host COP26 in November.

With an improved financial position and good growth prospects, the Board has proposed an interim dividend of 3.7p, +23% on 2020."

There will be a presentation for analysts today, 9 September 2021, at 12.30 pm, via Zoom.  Should you wish to attend the presentation, please contact Angela Wilson, [email protected] or telephone: 0141 300 3000.

Enquiries:

STV Group plc:  Kirstin Stevenson, Head of Communications   Tel: 07803 970 106

Camarco:  Geoffrey Pelham-Lane, Partner  Tel: 07733 124 226

Ben Woodford, Partner  Tel: 07790 653 341

 

 

 

Financial and operating review

 

Group overview

Total revenue increased by 35% to £60.3m (2020: £44.7m), underpinned by the recovery in advertising and the resumption of programme production. Total advertising revenues of £51.4m were up 32% on the same period in the prior year, aided by the rebound in national advertising and continued success in STV controlled regional and digital advertising. Regional advertising revenues of £7.6m (2020: £6.0m) and national advertising revenues of £36.1m (2020: £28.0m) were generated during the period. 

Digital revenues increased by 45% in the period to £8.5m (2020: £5.9m), with VOD advertising accounting for most of the growth, and a net contribution to operating profit of £3.9m (2020: £2.8m).

Studio revenues were £6.0m (2020: £1.6m) with an operating loss of £0.9m (2020: loss of £1.5m).  In line with historic norms, the phasing of programme deliveries is heavily weighted towards H2.  Although challenges remain in delivering programmes under covid-19 restrictions and margins continue to be under pressure with the associated costs, the division is on track for its most successful year yet in terms of the number of commissions delivered, and the associated revenue and flow through to operating profit.

As a result, adjusted operating profit of £11.4m was up 118% on the first half of 2020 and up 3% on the pre-pandemic interim period to June 2019.

Total finance costs were £1.2m (2020: £1.4m before exceptional items).  These comprised interest on the Group's borrowings of £0.7m (2020: £0.7m) with the balance being non-cash costs in relation to the Group's defined benefit pension schemes of £0.4m (2020: £0.6m) and interest on lease liabilities of £0.1m (2020: £0.1m).

As intimated in our 2020 year end results announcement, in March 2021 the Board decided to repay all monies received through the Government's Coronavirus Job Retention Scheme ('CJRS') in advance of returning to payment of cash dividends in May 2021.  The repayment of CJRS monies has been recorded as an exceptional charge in the income statement of £1.7m, as it was a voluntary repayment and does not relate to trading performance in the first half of the year.

Before exceptional items and IAS19 interest, the Group generated a profit before tax of £10.6m (2020: £4.4m).  The statutory result for the year was a profit before tax of £8.5m (2020: loss before tax of £4.9m).  The effective tax rate (ETR) on the profit before exceptional items is 17.7%, lower than the standard rate in the UK of 19% and mainly driven by the impact of restating the opening deferred tax asset from 19% to 25% following the passing of legislation confirming that the rate of UK corporation tax would increase to 25% from 1 April 2023.  The tax credit on exceptional items represents an ETR of 19.0% as it relates wholly to the repayment of CJRS monies received in 2020 and which were taxed at the standard rate.

Adjusted earnings per share (before exceptional items and IAS19 interest) increased by 79% to 19.2p.  On a statutory basis, earnings per share was 15.4p as a result of the exceptional charge recognised.

The Group's leverage (ratio of net debt to EBITDA) at the end of the period was 0.6 times, slightly lower than the position at the start of the year (December 2020: 0.7 times).  During the first half, the Group realised net proceeds of £3.3m following partial disposal of its minority investment in Unity Technologies Inc in April 2021.  In March 2021, the Group refinanced its bank facilities, agreeing a new £60m revolving credit facility, with a £20m accordion, for a minimum tenor of 3 years (two one-year extension options are available).  The covenant package is in line with the Group's previous facility, namely net debt to EBITDA must be less than 3 times, and interest cover must be greater than 4 times.

Across the Group's two defined benefit pension schemes, the accounting deficit before tax decreased to £42.1m at the half year (31 December 2020: £70.3m). This was largely driven by an increase in the discount rate due to a rise in corporate bond yields, offset to some extent by an increase in long-term inflation expectations. 

Broadcast

STV's exceptional viewing performance throughout the pandemic continued into 2021, with an all time share of 20.8%, STV's highest half-year share since 2006, and the highest growth in H1 2021 of all the UK's 500+ channels.  STV remains the best watched channel in Scotland, achieving the largest lead over BBC1 since 2008. 

This viewing success was driven by a strong schedule of drama, entertainment, factual and sport output, including Six Nations Rugby and, in particular, Euro2020, which captured the attention of a nation of football fans. The much-anticipated England v Scotland match saw STV's highest ever peak audience at 1.94m, becoming our most watched programme of the last decade and best watched football match ever.

Other highlights in H1 included entertainment juggernauts The Masked Singer and Ant and Dec's Saturday Night Takeaway; crime dramas The Pembrokeshire Murders and Grace; and Oprah's interview with Meghan and Harry, which one million Scots tuned into making it our second top programme of H1. 

STV News is the jewel in our regional crown and is watched by over half (54%) of the Scottish population each month, across all STV News bulletins; with STV News at Six the most watched news programme in the country. Audiences are up 11% on 2020 with an average audience of 541k, our tireless, talented news team is delivering the programme's highest audience since records began in 2002.

This strong content offering, and unrivalled reach of the channel, have helped drive Total Advertising Revenue growth of 32% for H1 which, encouragingly, is 5% up on the same period in 2019.

We continue to work closely with the Scottish business community, ensuring that advertising is both affordable and accessible via our innovative STV Growth Fund. This initiative is more important than ever as we seek to boost economic recovery post pandemic.  Since launching the Growth Fund in 2019, we have secured 675 deals and 285 new advertisers to television, with more than 60 in 2021.  In March, we launched a £1m Green Fund aimed at sustainable Scottish businesses; and in July, £1m from the Growth Fund was allocated to businesses committed to inclusive practices, reflecting STV's commitment to sustainability and diversity in business.  The recent launch of STV Self Service, enabling our advertisers to design and book their own campaigns, will provide ease of access to our leading marketing platform for SMEs.

Digital

The significant growth of our digital business has continued, with an exceptional performance in H1, ensuring we remain the UK's fastest growing broadcaster streaming service.  Viewing on STV Player was up 66% with total streams almost doubling to 64m from January to June, up 94% for the same period year on year; with Video On Demand (VOD) advertising on STV Player up 62% compared with the same period in 2020.

There is strong evidence of the progression of our strategy to significantly increase our addressable audience via UK wide rollout and expand our high-quality content offering.  STV Player is now available on all major platforms, and 43% of our streams came from our Player-only content in H1, up from only 6% two years ago. Ex-Scotland streams increased to 10-15% of the total from a standing start.

In line with our growth strategy, in H1 we agreed 11 new content deals, adding more than 650 hours of content to our ever-expanding catalogue including 22 drama box sets and over 100 new titles including drama, true crime and factual entertainment programming.

Drama, both Channel 3 and acquired, along with soaps dominate STV Player's top 15 shows, with 8 of the top 15 best watched shows being Player-only content.  These include titles such as US crime drama, The Bridge (2.5m total streams to date), UK crime thriller, Thorne (1.2m streams); and US legal drama, The Firm (1.1m streams).  Given the increase in STV Player exclusive titles, STV's dependency on soaps to drive streams continues to diminish with soaps now accounting for only 1 in 5 VOD streams.

Euro2020 saw STV Player breaking records, with football fans watching in their millions. The day of the France v Switzerland and Croatia v Spain clashes on 28 June saw the STV Player deliver its best performing day ever with more than 1m streams.  The Denmark v England semi-final was STV Player's most watched live event, drawing in almost half a million streams. Total streams across the tournament were 3.9m.

In June, we became the first broadcaster video on demand service to launch a VIP rewards scheme to help build stronger connections with our viewers and further drive streams.  STV Player VIP brings members a range of benefits including personalised email recommendations, opportunities to win prizes every month as well as a reduced advertising load, and we will constantly be refining and improving this offer.

We continue to develop strong relationships with distributors and platforms and are beginning to focus our content offering around the most popular genres, with more drama box sets being added monthly.  This July, we secured our biggest ever content deal to date, partnering with Banijay Rights to bring 1,250 hours of new programming to our free streaming service, with regular content drops into 2022.

STV Studios

Despite the impact of the pandemic on the whole production community, STV Studios has shown resilience and creativity, ensuring that 2021 will be its most successful year to date, with forecast revenues of £20-25m.

The business entered 2021 with a strong pipeline of commissions, which were developed and won during the height of the pandemic and has continued that positive momentum through 2021. The team has secured new commissions across all genres - 15 in total for 2021 to date - and successfully delivered a range of shows, despite the ongoing impact of Covid restrictions. 

Importantly, we are creating returning and returnable series, which are particularly valuable to the business.  Highlights include: a significant entertainment commission from the BBC, a 25-part quiz show The Bridge of Lies with Ross Kemp; a recommission of the successful Yorkshire Auction House for Discovery, involving 2x10 part series plus a celebrity series; and a 13-episode commission for Celebrity Catchphrase, the biggest since the show's launch in 2013.  This was no doubt fuelled by the show attracting its highest ever viewing figures, with the fifth series of Celebrity Catchphrase being the most-watched series of the show ever with an average audience of 5.1m viewers across its eight-week run.

Our Factual team has had a strong H1. They secured and produced our first commission from UKTV to produce a new six-part factual entertainment travel series for Dave, British as Folk, featuring three comedians travelling the country interrogating the stereotypes that make up British life today. The team also completed production on Murder Island for Channel 4, an innovative competition format that blends crime drama and factual entertainment and sees members of public find out if they've got what it takes to solve a murder. Murder Island was the first production to be commissioned via Channel 4's new Contestable Fund, which seeks to find their next channel defining format.

Filming has now concluded on our high-end prison drama for Channel 4, Screw, a six-part returnable series starring Nina Sosanya (His Dark Materials) and Jamie-Lee O'Donnell (Derry Girls). One of our biggest drama productions to date, we expect this to air next year.  The series was the first production to film in Scotland's new creative hub in the west end of Glasgow, in the historic Kelvin Hall, contributing significantly to the county's cultural economy and delivering new training opportunities in partnership with Screen Scotland and Channel 4.

The new creative labels within our production family are all making encouraging progress. Belfast-based Two Cities announced a significant win in March this year with an original returnable police drama, Blue Lights, for BBC One - its first commission as part of the STV Studios family.  Primal's ground-breaking series for Sky Arts, Landmark, launched this week.  Both Tod Productions and Barefaced are in advanced discussions with broadcasters and streaming services on key projects.

STV Studios has also focused on continuing to strengthen its creative pipeline with the addition of an 8th label through a minority investment in Brighton-based entertainment indie Hello Mary, run by former MTV, Channel 4 and Channel 5 exec Steve Regan. Hello Mary has already secured 3 series commissions, the most recent an 8-part paranormal series for Discovery, announced last week.

Principal risks and uncertainties


The Board considers the principal risks and uncertainties affecting the business activities of the Group are:

· Regulatory environment

· Market volatility and advertising spend

· Post Brexit uncertainty

· Reliance on ITV

· Cyber

· Defined benefit pension scheme shortfalls

· Group funding

Further details of the Group's policies on principal risks and uncertainties are contained within the Group's 2020 Annual Report, a copy of which is available at www.stvplc.tv.

 

 

Condensed interim income statement

Six months ended 30 June 2021

 

 

 

2021

2020

 

 

 

 

 

 

 

 

 

 

 

Before

exceptional

items

Unaudited

Exceptional

 items

(note 8)

 Unaudited

 

Results

for period

Unaudited

Before

exceptional

items

Unaudited

Exceptional

 items

(note 8)

  Unaudited 

 

Results

for period

Unaudited

 

Note

£m

£m

£m

£m

£m

  £m

 

 

 

 

 

 

 

Revenue

7

60.3

-

60.3

44.7

-

44.7

 

 

 

 

 

 

 

 

Net operating expenses

 

(48.9)

(1.7)

(50.6)

(39.5)

-

(39.5)

 

Operating profit

 

 

11.4

 

(1.7)

 

9.7

 

5.2

 

-

 

5.2

 

 

 

 

 

 

 

 

Finance costs

 

 

 

 

 

 

 

- borrowings

 

(0.7)

-

(0.7)

(0.7)

-

(0.7)

- defined benefit pension schemes

(0.4)

-

(0.4)

(0.6)

-

(0.6)

- lease interest

 

(0.1)

-

(0.1)

(0.1)

-

(0.1)

Provision for impairment losses - ELM receivable (net)

 

 

-

 

-

 

-

 

 -

 

(8.7)

 

(8.7)

 

 

(1.2)

-

(1.2)

(1.4)

(8.7)

(10.1)

 

 

 

 

 

 

 

 

Profit/(loss) before tax

10.2

(1.7)

8.5

3.8

(8.7)

(4.9)

 

 

 

 

 

 

 

 

Tax (charge)/credit

9

(1.8)

0.3

(1.5)

(0.4)

1.6

1.2

 

Profit/(loss) for the period

 

8.4

 

(1.4)

 

7.0

 

3.4

 

(7.1)

 

(3.7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

Owners of the parent

8.5

(1.4)

7.1

3.5

(7.1)

(3.6)

Non-controlling interests

 

(0.1)

-

(0.1)

(0.1)

-

(0.1)

 

8.4

(1.4)

7.0

3.4

(7.1)

(3.7)

 

 

 

 

 

 

 

Earnings per share (restated) *

 

 

 

 

 

 

Basic

10

18.4p

 

15.4p

9.3p

 

(9.1)p

Diluted

10

17.9p

 

15.0p

9.0p

 

(9.1)p

 

* The number of shares reported in 2020 for the purposes of earnings per share has been updated to reflect the bonus issue in December 2020; those shares issued are assumed to have been in issue since the start of the comparator period.

 

A reconciliation of the statutory results to the adjusted results is included at note 23. The above condensed interim income statement should be read in conjunction with the accompanying notes.

 

 

Condensed interim statement of comprehensive income

Six months ended 30 June 2021

 

 

2021

2020

 

Unaudited

Unaudited

 

£m

£m

 

 

 

Profit/(loss) for the period

7.0

(3.7)

 

 

 

Items that will not be reclassified to profit or loss:

 

 

Gain/(loss) on re-measurement of defined benefit pension schemes

24.0

(15.2)

Deferred tax (charge)/credit

(3.9)

2.9

Revaluation (loss)/gain on listed investment to market value

(2.2)

0.1

Other comprehensive income/(expense) - net of tax

17.9

(12.2)

 

 

 

Total comprehensive income/(expense) for the period

24.9

(15.9)

 

 

 

Attributable to:

 

 

Owners of the parent

25.0

(15.8)

Non-controlling interests

(0.1)

(0.1)

 

24.9

(15.9)

 

The above condensed interim statement of comprehensive income should be read in conjunction with the accompanying notes.

 

 

Condensed interim balance sheet

As at 30 June 2021

 

 

 

 

30 June

31 December

 

 

2021

2020

 

 

Unaudited

Unaudited

 

Note

£m

£m

Non-current assets

 

 

 

Intangible assets

12

2.0

2.3

Property, plant and equipment

13

10.1

9.9

Right-of-use assets

13

9.6

10.4

Investments

14

1.5

6.7

Deferred tax asset

15

15.2

19.9

Trade and other receivables

17

0.8

0.9

 

 

39.2

50.1

Current assets

 

 

 

Inventories

16

23.7

15.4

Trade and other receivables

17

26.6

25.6

Cash and cash equivalents

20

7.6

5.2

 

 

57.9

46.2

 

 

 

 

Total assets

 

97.1

96.3

 

 

 

 

Equity

 

 

 

Ordinary shares

19

23.3

23.3

Share premium

 

115.1

115.1

Capital redemption reserve

 

0.2

0.2

Merger reserve

 

173.4

173.4

Other reserve

 

1.1

1.0

Accumulated losses

 

(320.5)

(342.8)

Shareholders' equity

 

(7.4)

(29.8)

Non-controlling interests

 

(0.2)

(0.1)

Total equity

 

(7.6)

(29.9)

 

 

 

 

Non-current liabilities

 

 

 

Borrowings

18

25.2

22.7

Lease liabilities

 

8.5

9.1

Retirement benefit obligations

21

42.1

70.3

 

 

75.8

102.1

Current liabilities

 

 

 

Trade and other payables

 

27.3

22.4

Lease liabilities

 

1.6

1.7

 

 

28.9

24.1

 

 

 

 

Total liabilities

 

104.7

126.2

 

 

 

 

Total equity and liabilities

 

97.1

96.3

 

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 2021

 

 

 

Share capital

 

Share premium

Capital redemption reserve

 

Merger reserve

 

 

Other reserve

 

Accumulated losses

Attributable to owners of the parent

 

Non-controlling interest

 

 

Total equity

 

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

 

£m

£m

£m

£m

£m

£m

£m

£m

£m

 

 

 

 

 

 

 

 

 

 

At 1 January 2021

23.3

115.1

0.2

173.4

1.0

(342.8)

(29.8)

(0.1)

(29.9)

 

 

 

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

-

7.1

7.1

(0.1)

7.0

Other comprehensive income

-

-

-

-

-

17.9

17.9

-

17.9

Total comprehensive income for the period

 

-

 

-

 

-

 

-

 

-

 

25.0

 

25.0

 

(0.1)

 

24.9

 

 

 

 

 

 

 

 

 

 

Share based compensation

-

-

-

-

0.1

-

0.1

-

0.1

Dividends paid (note 11)

-

-

-

-

-

(2.7)

(2.7)

-

(2.7)

At 30 June 2021

23.3

115.1

0.2

173.4

1.1

(320.5)

(7.4)

(0.2)

(7.6)

 

 

 

At 1 January 2020

19.6

102.0

0.2

173.4

0.9

(343.2)

(47.1)

(0.2)

(47.3)

 

 

 

 

 

 

 

 

 

 

Loss for the

period

-

-

-

-

-

(3.6)

(3.6)

(0.1)

(3.7)

Other

comprehensive

expense

-

-

-

-

-

(12.2)

(12.2)

-

(12.2)

Total

comprehensive

expense for the

period

 

-

 

-

 

-

 

-

 

-

 

(15.8)

 

(15.8)

 

(0.1)

 

(15.9)

 

 

 

 

 

 

 

 

 

 

Share based compensation

-

-

-

-

0.2

-

0.2

-

0.2

At 30 June 2020

19.6

102.0

0.2

173.4

1.1

(359.0)

(62.7)

(0.3)

(63.0)


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 2021

 

 

 

2021

2020

 

 

Unaudited

Unaudited

 

Note

£m

£m

Operating activities

 

 

 

Cash generated by operations

20

9.5

11.9

Interest and fees in relation to banking facilities paid

 

(1.1)

(0.9)

Net taxes paid

 

(0.4)

(0.9)

Share based payments

 

0.1

0.2

Exceptional costs - repayment of furlough monies received

 

(1.7)

-

Pension deficit funding - recovery plan payment

 

(4.6)

(3.0)

Contingent cash payment to pension schemes

 

(0.3)

-

 

 

 

 

Net cash generated by operating activities

 

1.5

7.3

 

 

 

 

Investing activities

 

 

 

Proceeds from sale of investment

14

3.3

-

Purchase of investment in associate

 

-

(1.1)

Purchase of intangible assets

 

(0.2)

(0.5)

Purchase of property, plant and equipment

 

(1.3)

(0.9)

Loan notes provided to associate

 

(0.4)

-

 

 

 

 

Net cash generated by/(used in) investing activities

 

1.4

(2.5)

 

 

 

 

Financing activities

 

 

 

Payment of obligations under leases

 

(0.8)

(1.0)

Borrowings drawn

 

3.1

10.0

Borrowings repaid

 

(0.1)

(8.0)

Dividends paid

11

(2.7)

-

 

 

 

 

Net cash (used in)/generated by financing activities

 

(0.5)

1.0

 

 

 

 

Net increase in cash and cash equivalents

 

2.4

5.8

 

 

 

 

Cash and cash equivalents at beginning of period

 

5.2

6.2

 

 

 

 

Cash and cash equivalents at end of period

 

7.6

12.0

 

 

 

Unaudited notes to the condensed interim financial statements

Six months ended 30 June 2021

 

1.  General information

 

STV Group plc (the "Company") is a public limited company incorporated and domiciled in Scotland and listed on the London Stock Exchange.  The address of the registered office is Pacific Quay, Glasgow, G51 1PQ.

 

The principal activities of the Company and its subsidiaries (together "the Group") are the production and broadcasting of television programmes, provision of internet services and the sale of advertising airtime and space in these media.  Outside the core business, the Group operated an external lottery management company throughout the period, however this business was sold on 20 August 2021 (see note 24).

 

These condensed interim financial statements were approved for issue on 9 September 2021 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 2020 were approved by the Board of Directors on 16 March 2021 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 2021 have been prepared based on the policies set out in the 2020 annual financial statements and in accordance with UK adopted IAS 34 and the Disclosure Guidance and Transparency Rules sourcebook of the UK's Financial Conduct Authority. These should be read in conjunction with the annual consolidated financial statements for the year ended 31 December 2020 which were prepared in accordance with IFRS in conformity with the requirements of the Companies Act 2006 and IFRS adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.

 

The year to 31 December 2021 annual financial statements will be prepared in accordance with IFRS as adopted by the UK Endorsement Board. This change in basis of preparation is required by UK company law for the purposes of financial reporting as a result of the UK's exit from the EU on 31 January 2020 and the cessation of the transition period on 31 December 2020. This change does not constitute a change in accounting policy but rather a change in framework which is required to ground the use of IFRS in company law.  There is no impact on recognition, measurement or disclosure between the two frameworks in the period reported.

 

Going concern

As part of the going concern review, the Group considers forecasts of the advertising market to determine the impact on liquidity and assesses the likelihood of crystallisation of other key risks and their impact on the Group's ability to execute its strategy.  

 

As set out by the Directors in March 2021, the next stage of the Group's strategy continues to focus on diversification of operations to drive a greater proportion of the Group's results from non-broadcast earnings. At the end of 2020, the Group had achieved its initial target of generating at least one third of the Group's operating profit from non-broadcast activity, and a new target has been set to achieve at least 50/50 between broadcast/non-broadcast earnings by the end of 2023.  Underpinning this ambition are separate targets in relation to Digital and Studios, with the Group aiming to double the size of the digital business and quadruple Studios revenues over the same period. 

 

 

The directors performed a full review of principal risks and uncertainties at the start of 2021, coincident with approval of the three-year plan covering the period to 31 December 2023. A severe but plausible downside scenario was identified that reflected crystallisation of a number of risks.  Even under this scenario, the Group generated sufficient cash to enable it to continue in operation and remain within covenant levels under the Group banking arrangements.  

 

In March 2021, the Group refinanced its bank facilities, agreeing a new £60m revolving credit facility, with £20m accordion, for a minimum tenor of 3 years (two one-year extension options are available).  The covenant package is in line with the Group's previous facility, namely net debt to EBITDA (leverage) must be less than 3 times, and interest cover must be greater than 4 times. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group will be able to operate within the level of its current available funding and covenant levels. 

 

As part of the going concern assessment at the end of the interim period, the directors have assessed current trading relative to the budget for the year and reconfirmed that the downside scenario previously identified remains appropriate.  Following completion of this work, the Directors have a reasonable expectation that the Group has adequate resources to continue in operation for at least 12 months from the date of this report. Accordingly, the Group 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 2020.  There were no changes to accounting standards in the period that had any material impact on the financial statements.

 

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.  Judgements and estimates

 

Judgements

The Group applies judgement in how it applies its accounting policies, which do not involve estimation, but could materially affect the numbers disclosed in these financial statements. The key accounting judgements, without estimation, that have been applied in these financial statements are as follows:

 

Inventory

Deferred programme production stock forms part of inventory and is stated in the financial statements at the lower of cost or net realisable value. Programme costs are expensed in line with expected future revenues which is an area involving significant management judgement. A detailed forecast of future secondary sales is prepared by management based on historic experience and expected future trends. £0.5m was expensed through the income statement in the period (2020: £0.3m).

 

Estimates

The preparation of the Group's financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

 

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

 

Pension obligations

The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for pensions include the discount rate and mortality rate. Any changes in these assumptions will impact the carrying amount of pension obligations.

 

The Group determines the appropriate discount rate at the end of each period. This is the rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Group considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability. With regard to mortality, the base tables used are updated every three years (to coincide with triennial valuations) or more frequently when there is evidence of a change in experience. The CMI tables relating to future improvements in mortality are updated when new information is available, usually annually. Other key assumptions for pension obligations are based in part on current market conditions.  Refer to note 21 for further disclosure.

 

 

5.  Financial risk management and financial instruments

 

The Group's activities expose it to a variety of financial risks, to varying degrees: 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 for the year ended 31 December 2020. 

 

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, the autumn season provides the Group with its highest level of revenues, as trading picks up from the quieter months of July/August.  The Studios business delivers the majority of its programmes to broadcasters in the second half of the year which results in higher work in progress inventory at the interim period end compared to the year end position (see note 16).  In the current year, guidance is for the Studios division to generate revenues of £20-25m, of which £6.0m has been realised in the six months ended 30 June 2021. 

 

7.  Business segments

 

Information reported to the Group's Chief Executive for the purposes of resource allocation and assessment of segment performance is by product.  The Group's reportable segments, which remain the same as the prior year, are Broadcast, Digital and Studios.  The STV ELM (which is an operating but not reportable segment) is included in 'Other' below. 

 

 

Broadcast

Digital

Studios

  Other

  Total

Six months

2021

2020

2021

2020

2021

2020

2021

2020

2021

2020

 

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

Revenue

 

 

 

 

 

 

 

 

 

 

Sales

50.2

35.8

8.5

5.9

6.2

1.7

0.9

2.2

65.8

45.6

Inter-segment sales

(5.3)

(0.8)

-

-

(0.2)

(0.1)

-

-

(5.5)

(0.9)

Segment revenue

44.9

35.0

8.5

5.9

6.0

1.6

0.9

2.2

60.3

44.7

 

 

 

 

 

 

 

 

 

 

 

Segment result

 

 

 

 

 

 

 

 

 

 

Operating profit

10.5

5.4

3.9

2.8

(0.9)

(1.5)

-

-

13.5

6.7

 

 

 

 

 

 

 

 

 

 

 

Unallocated corporate expenses

 

 

 

 

 

 

(2.1)

(1.5)

Operating profit (excluding exceptional items)

 

 

 

11.4

5.2

Exceptional items

 

 

 

 

 

 

 

 

(1.7)

(8.7)

Finance costs (excluding exceptional items)

 

 

 

 

 

(1.2)

(1.4)

Profit/(loss) before tax

 

 

 

 

 

 

 

8.5

(4.9)

 

 

 

 

 

 

 

 

 

 

 

Tax (charge)/credit

 

 

 

 

 

 

 

 

(1.5)

1.2

Profit/(loss) for the period

 

 

 

 

 

7.0

(3.7)

 

There has been no significant change in total assets from the amount disclosed in the last annual financial statements.

 

8.  Exceptional items

 

2021

During 2020, and principally over the second quarter, the Group applied for grants under the Government's Coronavirus Job Retention Scheme ('CJRS') totalling £1.7m.  These monies were received at a time when the business was operating under the tightest of lockdown restrictions, with total advertising revenue down 38% year on year, no programme production activity possible, and visibility over key markets very limited.  The amounts received under the CJRS were allocated against payroll within operating costs in 2020. Over the second half of 2020 and into 2021, the Group's trading improved significantly, despite further lockdown measures in Q1 2021, demonstrating the resilience of its Broadcast business and the successful execution of strategy in Digital in particular.  In March 2021, the Board announced its intention to resume payment of a cash dividend to shareholders.  Although there was no obligation on the Group to repay furlough grants, the Board decided that CJRS monies received would be repaid in full prior to re-commencing payment of a cash dividend.  As the repayment of furlough grants does not relate to the current period of trading, nor was it required under any law or regulation, the Group has presented the cost as exceptional so as not to distort the underlying trading results of the business.

 

2020

The exceptional item recognised in the first half of 2020 related entirely to the increase in the provision for the debtor receivable from the Scottish Children's Lottery, recognised in the books of STV ELM, the Group's external lottery management company.  The gross debtor was provided for in full as at 30 June 2020, with the additional provision of £8.7m recognised as an exceptional finance cost in the period.  A related exceptional tax credit was also recognised, totalling £1.6m.

 

 

 

9.  Tax

 

 

 

 

Six months

2021

Six months

2020

 

 

 

   m

  £m

 

 

 

 

 

The charge/(credit) for taxation is as follows:

 

 

 

 

Charge for the period before exceptional items

 

 

1.8

0.4

Tax effect on exceptional items

 

 

(0.3)

  (1.6)

Charge/(credit) for the period

 

 

 

1.5

(1.2)

      

 

The tax on the results for the six month period is charged at the rate that represents the best estimate of the average annual effective tax rate (ETR) expected for the full year, applied to the pre-tax result for the six month period.

 

The ETR on the results before exceptional items has been charged at 17.7% (30 June 2020: 9.3%), which is lower than the standard rate of 19%, primarily because of the change in rate at which deferred tax is recognised.

 

The Government announced in the Budget on 3 March 2021 that the main rate of corporation tax for the financial year beginning 1 April 2023 will increase to 25% from the current rate of 19% previously legislated. The 25% rate was substantively enacted on 24 May 2021 when the Budget Provisional Collection of Taxes Act resolution was passed. The Finance Act 2020 included this amendment and set the main rate at 25% for the financial year beginning 1 April 2023. Therefore, the Group has remeasured the deferred tax balances to be carried at the 25% rate.

 

The ETR on exceptional items was 19%. This relates wholly to the repayment of furlough monies received which were treated as taxable in the prior year.

 

10. Earnings per share 

 

The calculation of earnings per share is based on earnings after tax and the weighted average number of ordinary shares in issue during the period, excluding ordinary shares purchased by the Company and held for use by the STV Employee Benefit Trust.     

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Group has one type of dilutive potential ordinary share namely share options granted to employees. In the prior period, as the group reported a basic loss per share, any potential ordinary shares were anti-dilutive and therefore excluded from the calculation of diluted loss per share.

 

The adjusted earnings per share figures have also been calculated based on earnings before adjusting items that are significant in nature and/or quantum and therefore considered to be distortive.  The adjusting items include the impact of operating and non-operating exceptional items and the IAS 19 net financing cost; as well as the tax adjustments relating to these items. Adjusted earnings per share have been presented to provide shareholders with an additional measure of the Group's year-on-year performance.

 

The number of shares reported in 2020 for the purposes of earnings per share has been updated to reflect the bonus issue in December 2020, with those shares issued assumed to have been in issue since the start of the comparator period.

 

 

 

 

Earnings per share

 

Six months

2021

Restated

Six months

2020

 

Pence

Pence

 

 

 

Basic earnings per ordinary share

15.4p

(9.1)p

Diluted earnings per ordinary share

15.0p

(9.1)p

 

 

 

Earnings per ordinary share (before exceptional items)

18.4p

9.3p

Diluted earnings per ordinary share (before exceptional items)

17.9p

9.0p

 

 

 

Adjusted basic earnings per share 

19.2p

10.7p

Adjusted diluted earnings per share

18.6p

10.3p

 

The following reflects the earnings and share data used in the calculation of earnings per share:

 

Earnings

£m

£m

 

 

 

Profit/(loss) for the period attributable to equity shareholders

7.1

(3.6)

Exceptional items (net of tax)

1.4

7.1

Profit for the period before exceptional items

8.5

3.5

 

 

 

Adjustment for IAS 19 financing cost (net of tax)

0.3

0.5

Adjusted profit

8.8

4.0

 

 

 

 

 

Restated

Number of shares

Million

Million

 

 

 

Weighted average number of ordinary shares in issue

45.4

38.4

Dilution due to share options

1.3

1.3

Total weighted average number of ordinary shares in issue

46.7

39.7

 

 

11. Dividends

 

An interim dividend (equivalent to 3.0p per share) in respect of 2020 was made by way of a bonus issue of new ordinary shares in December 2020. A final cash dividend of 6.0p per share in respect of 2020 was paid on 29 May 2021.

 

An interim dividend of 3.7p per share has been proposed and is subject to approval by the board of directors. It is payable on 5 November 2021 to shareholders who are on the register at 1 October 2021. This interim dividend, amounting to £1.7m has not been recognised as a liability in this interim financial information.  It will be recognised in shareholders' equity in the year ending 31 December 2021. 

 

 

12. Intangible assets

 

During the six months ended 30 June 2021, the Group incurred expenditure of £0.2m on web development (£0.7m in the year to 31 December 2020; £0.5m in the six months ended 30 June 2020).  The net disposals amounted to £nil in the current period and for the year ended 31 December 2020.

 

 

13. Property, plant and equipment

 

During the six months ended 30 June 2021, the Group incurred expenditure of £1.3m on property, plant and equipment (£1.4m in the year ended 31 December 2020; £0.9m in the six months ended 30 June 2020).  The net disposals amounted to £nil in the current period and for the year ended 31 December 2020.

 

During the six months ended 30 June 2021, the Group incurred additions of £0.1m on right-of-use assets (£0.2m in the year ended 31 December 2020; £0.2m in the six months ended 30 June 2020). The net disposals amounted to £nil in the current period and for the year ended 31 December 2020.

 

 

14. Investments

 

On 30 April 2020, the Group sold the majority of its investment in Unity Technologies Inc., realising net proceeds of £3.3m.  A loss of £1.8m has been recognised in the interim condensed statement of comprehensive income.

 

 

15. Deferred tax asset

 

At 30 June 2021, total deferred tax assets of £15.2m were recognised on the balance sheet (31 December 2020: £20.4m).  Of this, £10.5m relates to the deficit on the Group's defined benefit pension schemes (31 December 2020: £14.6m) and the balance of £4.7m relates to tax losses, accelerated capital allowances and short-term timing differences (31 December 2020: £5.8m).

 

 

16. Inventory

 

 

 

 

30 June

2021

31 December

2020

 

 

 

   m

  £m

 

 

 

 

 

Deferred programme production

 

 

10.6

10.3

Programme production work in progress

 

 

12.6

4.4

Recorded programmes

 

 

0.5

0.7

 

 

 

 

23.7

15.4

      

 

 

17. Trade and other receivables

 

 

 

 

30 June

2021

31 December

2020

 

 

 

   m

  £m

 

 

 

 

 

Trade receivables

 

 

19.0

13.7

Prepayments and contract assets

 

 

5.6

10.0

Other receivables

 

 

2.6

2.5

Income tax recoverable

 

 

0.2

0.3

 

 

 

 

27.4

26.5

      

 

Amounts included in current assets

 

 

26.6

25.6

Amounts included in non-current assets

 

 

0.8

0.9

 

 

 

 

27.4

26.5

      

18. Borrowings

 

In March 2021, the Group refinanced its bank facilities, agreeing a new £60m revolving credit facility, with £20m accordion, for a minimum tenor of 3 years (two one-year extension options are available).  The covenant package is in line with the Group's previous facility, namely net debt to EBITDA must be less than 3 times, and interest cover must be greater than 4 times.

 

19. Share capital

 

Issued share capital at 30 June 2021 amounted to £23.3m (46,722,499 shares). Issued share capital at 30 June 2020 amounted to £19.6m (39,192,137 shares). The increase was a result of an equity placing of 7,050,665 new ordinary shares in July 2020 and a bonus issue of 476,679 shares in December 2020.

 

 

20. Notes to the condensed interim statement of cash flows

 

 

 

 

 

Six months

2021

Six months

2020

 

£m

£m

 

 

 

Operating profit (before exceptional items)

11.4

5.2

 

 

 

Adjustments for:

 

 

Depreciation on property, plant and equipment

1.1

1.1

Amortisation of intangible assets

0.5

0.6

Amortisation of right-of-use assets

0.9

0.9

 

 

 

Adjusted EBITDA

13.9

7.8

 

 

 

Increase in inventories

(8.3)

(1.0)

(Increase)/decrease in trade and other receivables

(1.8)

4.4

  Increase in trade and other payables

5.4

1.4

  Net decrease/(increase) in STV ELM Ltd working capital

0.3

(0.7)

Cash generated by operations

9.5 

11.9 

 

Net debt reconciliation

 

 

 

 

Long-term borrowings

 

Cash and cash equivalents

 

 

 

Net debt

 

 

Lease liabilities

Net debt including lease liabilities

 

£m

£m

£m

£m

£m

 

 

 

 

 

 

At 1 January 2021

(22.7)

5.2

(17.5)

(10.8)

(28.3)

Cash flows

(2.2)

2.4

0.2

0.8

1.0

Non-cash flows (i)

(0.3)

-

(0.3)

(0.1)

(0.4)

At 30 June 2021

(25.2)

7.6

(17.6)

(10.1)

(27.7)

 

(i)  Non cash changes for long-term borrowings relate to the capitalisation and amortisation of

borrowing costs, and for lease liabilities the acquisition of right-of-use assets.

 

 

 

 

 

 

21. Retirement benefit schemes

 

The fair value of the assets and the present value of the liabilities in the Group's defined benefit pension schemes at each balance sheet date was:

 

 

 

 

 

 At 30 June

2021

At 31 December

2020

 

£m

£m

 

 

 

Defined benefit scheme obligations

(468.8)

(507.5)

Defined benefit scheme assets

426.7

437.2

Net pension deficit

(42.1)

(70.3) 

 

The reduction in the net pension deficit is largely driven by an increase in the discount rate due to a rise in corporate bond yields.

 

Assumptions used to estimate the scheme obligations

The significant actuarial assumptions used for accounting purposes reflect prevailing market conditions in the UK and are as follows:

 

 

 

 

 At 30 June

2021

At 31 December

2020

 

%

%

 

 

 

Rate of increase in salaries

nil

nil

Rate of increase of pensions in payment

3.30

3.00

Discount rate

1.80

1.25

Rate of price inflation (RPI)

3.30

3.00

 

Assumptions regarding future mortality experience are set based on advice, published statistics and experience in each scheme and are reflected in the table below (average life expectations of a pensioner retiring at age 65).

 

 

 

 

 

 At 30 June

2021

At 31 December

2020

Retiring at balance sheet date:

 

 

Male

19.6

19.6

Female

21.9

21.9

Retiring in 25 years

 

 

Male

21.5

21.5

Female

23.5

23.5

 

The sensitivities regarding the principal assumptions used to measure the defined benefit obligation are set out below:

 

Assumption

Change in assumption

Impact on scheme liabilities

 

 

 

Discount rate

Increase/decrease by 0.25%

Increase/decrease by 3.1%

Rate of price inflation (RPI)

Increase/decrease by 0.25%

Increase/decrease by 1.3%

Rate of mortality

Decrease by 1 year

Decrease by 4.5%

 

These sensitivities have been calculated to show the movement in the defined benefit obligations in isolation, and assuming no other changes in market conditions at the balance sheet date.

 

22. Transactions with related parties

 

Other than the loan notes provided to associate referred to in the statement of cash flows, there are no transactions with any related parties in the period to 30 June 2021.

 

23. Reconciliation of statutory results to adjusted results

 

In reporting financial information, the Group presents alternative performance measures (APMs) which are not defined or specified under the requirements of IFRS.  The Group believes that these APMs, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders with additional helpful information on the performance of the business.

 

In calculating adjusted operating profit, profit before tax and EPS, the Group excludes exceptional items and amounts in relation to IAS19, as well as the tax charge or credit on those amounts. Exceptional items are items of income or expense which, because of the nature, size and/or infrequency of the events giving rise to them, are one-off and do not necessarily directly relate to the underlying trading of the Group. These items are excluded to reflect performance in a consistent manner and in line with how the business is managed on a day-to-day basis. They are also shown separately on the face of the primary financial statements. IAS19 related items, principally the net interest expense included in the income statement, are excluded from non-statutory measures as they are non-cash items that relate to historical defined benefit pension schemes.

 

A reconciliation of the statutory results to the adjusted results is presented below.  As the Group reported a loss during the prior period, the diluted EPS measure was taken to be the same as basic EPS as any potential ordinary shares would have been anti-dilutive.

 

The number of shares reported in 2020 for the purposes of earnings per share has been updated to reflect the bonus issue in December 2020, with those shares issued assumed to have been in issue since the start of the comparator period.

 

 

 

2021

2020

 

 

Profit

 before tax

 

Basic

EPS

 

Diluted

EPS

Profit

 before tax

Restated

Basic

EPS

Restated

Diluted

EPS

 

£m

pence

pence

£m

pence

pence

 

 

 

 

 

 

 

Post-exceptional items

8.5

15.4p

15.0p

(4.9)

(9.1p)

(9.1p)

Add back: exceptional items

1.7

3.0p

2.9p

8.7

18.4p

18.1p

 

 

 

 

 

 

 

Pre-exceptional items

10.2

18.4p

17.9p

3.8

9.3p

9.0p

 

 

 

 

 

 

 

Add back: IAS 19

0.4

0.8p

0.7p

0.6

1.4p

1.3p

 

 

 

 

 

 

 

Adjusted results

10.6

19.2p

18.6p

4.4

10.7p

10.3p

 

 

 

24. Post balance sheet event

 

On 26 August 2021, the Group announced completion of the transaction to dispose of the STV ELM Limited, the external lottery management company operating the Scottish Children's Lottery, following approval by the UK Gambling Commission.  As previously disclosed, the agreement combines up-front consideration for the business with a multi-year advertising contract.

 

 

Independent review report to STV Group plc

Report on the condensed consolidated interim financial statements

Our conclusion

We have reviewed STV Group plc's condensed consolidated interim financial statements (the "interim financial statements") in the half year results to 30 June 2021 of STV Group plc for the 6 month period ended 30 June 2021 (the "period").

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 UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

What we have reviewed

The interim financial statements comprise:

· the Condensed interim balance sheet as at 30 June 2021;

· the Condensed interim income statement and Condensed interim statement of comprehensive income for the period then ended;

· the Condensed interim statement of cash flows for the period then ended;

· the Condensed interim statement of changes in equity for the period then ended; and

· the explanatory notes to the interim financial statements.

The interim financial statements included in the half year results to 30 June 2021 of STV Group plc have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

The half year results to 30 June 2021, including the interim financial statements, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the half year results to 30 June 2021 in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Our responsibility is to express a conclusion on the interim financial statements in the half year results to 30 June 2021 based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

What a review of interim financial statements involves

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We have read the other information contained in the half year results to 30 June 2021 and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

 

 

PricewaterhouseCoopers LLP

Chartered Accountants

Glasgow

9 September 2021

 

 

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