TIDMSTVG
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 8(th) 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 GBP60.3m GBP44.7m 35%
========================== ========= ========== ==========
EBITDA* GBP13.9m GBP7.8m 78%
========================== ========= ========== ==========
Operating profit** GBP11.4m GBP5.2m 118%
========================== ========= ========== ==========
Operating margin 19% 12% 7pps
========================== ========= ========== ==========
Adjusted profit before
tax*** GBP10.6m GBP4.4m 137%
========================== ========= ========== ==========
Profit/(loss) before tax GBP8.5m GBP(4.9)m 273%
========================== ========= ========== ==========
Adjusted basic EPS*** 19.2p 10.7p 79%
========================== ========= ========== ==========
Statutory basic EPS**** 15.4p (9.1)p 269%
========================== ========= ========== ==========
Net debt (+) GBP17.6m GBP33.5m 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 GBP60.3m, +35% on 2020 and +10% on 2019
-- Adjusted operating profit of GBP11.4m, +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 GBP17.6m 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
o Total audience on STV +5%, even against 2020 lockdown
comparators
o STV still the most watched channel in Scotland, with largest
lead over BBC1 since 2008
o 99.5% of all commercial audiences over 500k viewers on STV
o 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
o Total streams up 94%
o Monthly active users up 61%
o 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:
o 11 new content deals in H1 including Sony, EOne and Banijay
adding 100+ titles
o Player-exclusive viewing up 137% in H1, now 43% of all VOD
viewing vs 6% in 2019
o Ex-Scotland already 10-15% of streams, viewing and users
o Successful STV Player VIP launch to drive future engagement
and viewing
-- STV Studios maintaining growth momentum:
o 15 new commissions so far in 2021 and 8 new returnable
series
o Focus is on high value formats like Screw (C4), The Bridge of
Lies (BBC1) and Murder Island (C4), all filming in Scotland in
2021
o 8(th) 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:
o Double digital viewing, users and advertising revenue (to
GBP20m)
o Quadruple production revenue (to GBP40m)
o 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:
o c.50 hours of new network drama
o 30+ new boxsets on STV Player
-- Advertising trends continuing to strengthen through the Autumn:
o Q3 TAR expected to be +20-25%; 9-month TAR to September
expected to be +25-30%
o Q3 outlook for regional is expected to be +10-15% and VOD
+40-45%
o October TAR positive though tougher overall comparators in
Q4
-- Studios on track for best ever financial performance in 2021:
o Confirmed revenues of GBP20-25m
o 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 GBP30m
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 GBP1m 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, angela.wilson@stv.tv 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 GBP60.3m (2020: GBP44.7m),
underpinned by the recovery in advertising and the resumption of
programme production. Total advertising revenues of GBP51.4m 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
GBP7.6m (2020: GBP6.0m) and national advertising revenues of
GBP36.1m (2020: GBP28.0m) were generated during the period.
Digital revenues increased by 45% in the period to GBP8.5m
(2020: GBP5.9m), with VOD advertising accounting for most of the
growth, and a net contribution to operating profit of GBP3.9m
(2020: GBP2.8m).
Studio revenues were GBP6.0m (2020: GBP1.6m) with an operating
loss of GBP0.9m (2020: loss of GBP1.5m). 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 GBP11.4m 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 GBP1.2m (2020: GBP1.4m before
exceptional items). These comprised interest on the Group's
borrowings of GBP0.7m (2020: GBP0.7m) with the balance being
non-cash costs in relation to the Group's defined benefit pension
schemes of GBP0.4m (2020: GBP0.6m) and interest on lease
liabilities of GBP0.1m (2020: GBP0.1m).
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 GBP1.7m, 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 GBP10.6m (2020: GBP4.4m). The statutory
result for the year was a profit before tax of GBP8.5m (2020: loss
before tax of GBP4.9m). 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 GBP3.3m 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 GBP60m revolving credit facility, with a
GBP20m 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 GBP42.1m at the half
year (31 December 2020: GBP70.3m). 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 GBP1m Green Fund aimed at
sustainable Scottish businesses; and in July, GBP1m 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 GBP20-25m.
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 8(th) 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 Before Exceptional
exceptional items Results exceptional items Results
items (note for period items (note for period
Unaudited 8) Unaudited Unaudited 8) Unaudited
Unaudited Unaudited
Note GBPm GBPm GBPm GBPm GBPm GBPm
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
GBPm GBPm
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 GBPm GBPm
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
Capital Attributable
Share Share redemption Merger Accumulated to owners Non-controlling
capital premium reserve reserve Other losses of the interest Total
reserve parent equity
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
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 GBPm GBPm
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 GBP60m revolving credit facility, with GBP20m
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. GBP0.5m was expensed through the income statement in
the period (2020: GBP0.3m).
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 GBP20-25m, of which
GBP6.0m 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
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
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 GBP1.7m. 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 GBP8.7m recognised as an exceptional
finance cost in the period. A related exceptional tax credit was
also recognised, totalling GBP1.6m.
9. Tax
Six months Six months
2021 2020
GBPm GBPm
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 Restated
Six months Six months
2021 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 GBPm GBPm
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 GBP1.7m 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 GBP0.2m on web development (GBP0.7m in the year to
31 December 2020; GBP0.5m in the six months ended 30 June 2020).
The net disposals amounted to GBPnil 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 GBP1.3m on property, plant and equipment (GBP1.4m in
the year ended 31 December 2020; GBP0.9m in the six months ended 30
June 2020). The net disposals amounted to GBPnil 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 GBP0.1m on right-of-use assets (GBP0.2m in the year
ended 31 December 2020; GBP0.2m in the six months ended 30 June
2020). The net disposals amounted to GBPnil 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 GBP3.3m. A
loss of GBP1.8m has been recognised in the interim condensed
statement of comprehensive income.
15. Deferred tax asset
At 30 June 2021, total deferred tax assets of GBP15.2m were
recognised on the balance sheet (31 December 2020: GBP20.4m). Of
this, GBP10.5m relates to the deficit on the Group's defined
benefit pension schemes (31 December 2020: GBP14.6m) and the
balance of GBP4.7m relates to tax losses, accelerated capital
allowances and short-term timing differences (31 December 2020:
GBP5.8m).
16. Inventory
30 June 31 December
2021 2020
GBPm GBPm
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 31 December
2021 2020
GBPm GBPm
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 GBP60m revolving credit facility, with GBP20m
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 GBP23.3m
(46,722,499 shares). Issued share capital at 30 June 2020 amounted
to GBP19.6m (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 Six months
2021 2020
GBPm GBPm
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
Net debt
Cash and including
Long-term cash equivalents Lease lease liabilities
borrowings Net debt liabilities
GBPm GBPm GBPm GBPm GBPm
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 At 31 December
2021 2020
GBPm GBPm
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 At 31 December
2021 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 At 31 December
2021 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 Increase/decrease by
by 0.25% 3.1%
Rate of price inflation Increase/decrease Increase/decrease by
(RPI) by 0.25% 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 Restated Restated
Profit Basic Diluted before tax Basic Diluted
before tax EPS EPS EPS EPS
GBPm pence pence GBPm 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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