REG - STV Group PLC - Interim Results for 6 months ended 30 June 2024
03/09/2024 07:00
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RNS Number : 6169C STV Group PLC 03 September 2024
Press Release 0700 hours, 3 September 2024
STV Group plc Interim Results for the 6 months ended 30 June 2024
Strong revenue and profit growth; successful Studios investment strategy
continues
Highlights
· Total revenue +20% and adjusted operating profit +33% (compared to H1
2023)
o Statutory operating profit £6.5m (2023: nil)
· Growth strategy continues to deliver:
o Studios revenue +38% with improved forward order book of £101m
o Digital pre-commission sales +14% with strong profit margin maintained
o Broadcast revenue +12% and adjusted operating profit +47%
· Improved advertising market in H1 with total advertising revenue (pre
commission) +13%; Q3 expected to be up low single digit year on year
· Incremental investment in producer Hello Halo (from 30% to 51%)
completed 30 August; deal is earnings-enhancing from day 1
· Good on-screen performance in H1, boosted by Euro 2024
· Board proposes interim dividend of 3.9p, in line with 2023
Financial Summary - 6 months to 30 June 2024 2023 vs 2023
Revenue £90.4m £75.3m +20%
Total advertising revenue (pre commission) £51.9m £45.8m +13%
Operating profit £6.5m - +100%
Adjusted operating profit* £10.6m £8.0m +33%
Profit after tax £7.1m £3.3m +115%
Statutory basic EPS 12.4p 7.2p +72%
Adjusted basic EPS* 15.5p 14.8p +5%
Net debt(+) £28.0m £16.3m +£11.7m
Dividend per share 3.9p 3.9p flat
* For reconciliation of adjusted to statutory measures see note 8
(+) Excluding lease liabilities (see note 20)
From the date of acquisition, Two Cities Television Limited and subsidiary
undertakings contributed £18.5m of revenue and £1.4m of adjusted operating
profit to the Group's results.
Financial highlights
· Total revenue of £90.4m, +20% on 2023, driven by acquisition-related
growth in Studios and an improving advertising market
· Group adjusted operating profit of £10.6m, +33% on 2023, as
Broadcast profitability bounces back and Studios and Digital margins both
maintained
· Total advertising revenue (pre commission) of £51.9m, +13%
· Studios revenue of £37.5m, +38%, with adjusted operating profit of
£0.1m, in line with H1 2023, due to drama activity and performance of
acquired production companies, with strong H2 profitability from expected
seasonal second-half weighting
· Digital pre-commission sales of £11.5m, +14% with digital adjusted
operating profit flat at £5.0m and operating margin of 49%
· Regional advertising revenue up 1% at £7.4m, with core Scottish SME
advertising +12%
· Cost savings of £0.7m in H1; on track to achieve £1.5m target for
full year 2024
· Good progress made towards agreeing 2023 pension triennial valuation;
expect to conclude shortly
· Net debt of £28.0m, down on the opening position of £32.3m at start
of period
Good audience performance
· STV & STV Player combined still the clear number 1 for commercial
audiences in Scotland
· 21% share of total peak commercial audience in H1 2024, +1% on 2023
(vs Netflix 12%, Sky 8% and C4 6%)
· 495 of top 500 commercial audiences were on STV in H1 2024 (99%)
· STV was the most watched peaktime TV channel in Scotland for the
7(th) first half-year in a row with a viewing share of 22.2%
· Average STV viewer spends 1 hour 45 minutes with the channel each day
· Mr Bates vs The Post Office was the biggest drama launch across all
channels and streamers in H1
· STV's Euros coverage tracked 3 share points ahead of ITV, with
Germany vs Scotland peaking at 1.38m viewers, the largest audience of 2024 on
any channel
Continued strategic momentum and execution
· Studios: STV Studios growing in a tough market, with investment
strategy delivering tangible results:
· Increased stake (30 Aug 24) from 30% to 51% in profitable,
Glasgow-based unscripted formats creator Hello Halo, with strong return on
invested capital expected in the short-term
· Benefits of Studios portfolio strategy being accelerated, with stakes
increased in five high potential creative labels in the last 6 months, while
exiting four others
· Greenbird integration predominantly complete delivering £1m p.a.
synergies
· 36 new programme commissions so far in 2024, 7 more than in H1 2023
· Includes high value recommissions of Criminal Record (Apple TV+),
Blue Lights series 3&4 (BBC) and The Fortune Hotel (ITV1)
· Strongest ever Studios forward order book of £101m at end July 2024,
+£15m since end May
§ Revenue of £19m recognised over June/July with future revenue associated
with commissioning wins in same period of £34m
· Digital: STV Player delivered its most successful first half ever,
driven by Euro 2024:
· Online streams of 73m, +4%, with online consumption of 34m hours,
down 5% due to lower drama hours
· VOD advertising revenue +13%, showing benefits of new ITV partnership
· Digital live viewing +33%; 18-34 streams +35%; male streams +23%
· Active registered users of 1.6m, +33%, and STV Player VIP users +19%
· Continued strong performance of STV 3rd party content, with new
10-show deal in place with Disney and over 20m Brookside streams since launch
· UK Government Media Act now enshrined in law and will guarantee
prominence for STV Player on all major digital platforms
· Scottish advertising: Back to growth in H1, with SME advertising up
strongly
· Scottish regional advertising +1%, with SME advertising +12%
· SMEs now 94% of total regional ad spend, up 9% from H1 2023 (Scottish
Govt. now only 6% of spend)
· Scottish VOD revenue +13% in H1, with 60% of brands combining linear
and VOD, showing strength of combined sell
· 400+ new advertisers attracted to STV since launch of STV Growth Fund
· On track to deliver new 3 year strategy and targets: Next-phase
strategic plan announced in March 2024 to drive STV's profitable growth, with
strategic objectives focusing on four key areas:
· CONTENT: Accelerate UK and international Studios growth
· AUDIENCE: Drive streaming growth and maximise total STV viewing
· MONETISATION: Maintain advertising leadership and grow new revenues
· ORGANISATION: Modernise and simplify business for digital-first world
· New financial targets by the end of 2026 will see STV:
· Double Studios revenues to £140m with a target to achieve a 10%
margin
· Grow Digital revenues by a further 50% to £30m* at a margin of at
least 40%
· Increase international revenues to 15% of Group / 25% of Studios
· Achieve a further £5m p.a. savings in STV's cost base
* before commission
Outlook
· Advertising market showing good growth so far in 2024
· Strong H1 TAR +13%
· Q3 TAR expected to be up low single digits year on year
· Q4 comparator includes RWC in 2023
· Studios forward order book stronger than ever
· £101m secured revenue at end July 2024, +£15m since May
· Full year Studios performance expected to be ahead of 2023
· Cost savings plan on track
· On course to meet £1.5m target for 2024
· Clear line of sight to achieve run rate of £5m p.a. by 2026
Dividend
· The Board proposes an interim dividend of 3.9p per share, in line
with H1 2023, after considering all relevant factors including ongoing
macroeconomic uncertainty
· The Board remains committed to a balanced approach to capital
allocation across investing for growth, fulfilling our pension obligations,
and paying a sustainable, progressive dividend to shareholders
Simon Pitts, Chief Executive, commented:
"Over the last 6 years STV has been successfully transformed into a
digital-first media company with a high-growth streaming service and one of
the UK's leading television production groups. This strong progress continues
in 2024, with revenue and profit both up materially in the first half,
reflecting our audience performance, the improving advertising market, and our
creative strength in STV Studios, as we continue the successful execution of
our growth plan.
Our production investment strategy is delivering tangible results, with STV
Studios continuing its strong revenue growth in the first half, and we have
today announced an exciting new deal to take majority control of profitable
unscripted formats creator, Hello Halo. With high value recommissions of
series like Criminal Record for Apple TV+ and The Fortune Hotel for ITV also
secured, we have our strongest ever future order book in Studios at £101m in
programme commissions.
Our audience position remains unrivalled, with STV again the most-watched
peaktime TV channel in Scotland, ahead of BBC1, and with nearly double the
audience share of Netflix. Euro 2024 was a major audience and commercial
success, propelling STV Player to its most successful first half-year ever in
terms of streams and delivering the most watched TV moment of the year so far,
with the Germany vs Scotland opening game peaking at 1.38m viewers in
Scotland.
We are on track to deliver our stretching new growth targets out to 2026, and
with a fantastic team in place I'm confident Rufus Radcliffe and the Board
will take the business to new heights in the years ahead."
There will be a presentation for analysts today, 3 September 2024, at 12.30
pm, via Zoom. Should you wish to attend the presentation, please contact
Angela Wilson, angela.wilson@stv.tv (mailto: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 20% to £90.4m (2023: £75.3m), with growth driven
primarily by the Studios division, which saw an increase in revenue of £10.3m
following positive contributions from Greenbird Media and Two Cities
Television. Total advertising revenues (before commission) of £51.9m were up
13% (2023: £45.8m) which reflects the momentum gained in the period, boosted
by Euro 2024, set against an H1 2023 that was heavily impacted by the
challenging macro-economic environment.
Adjusted operating profit of £10.6m was up 33% year on year as Broadcast
profitability rebounded positively following a period of improvement in the
advertising markets, with Studios and Digital margins both maintained. The
Group realised cost savings of £0.7m in H1 and is on track to achieve the
£1.5m target for the full year, as guided.
The adjusted operating profit performance is before adjusting items of £1.8m
for costs relating to acquisition and integration activities, and those
incurred in execution of the Group's cost savings plan. This figure also
includes a proportion of the earn-out payable to the founders of Greenbird
based on anticipated full year 2024 performance, and the amortisation charged
on acquisition intangibles. The adjusted operating profit also includes £2.3m
for High-End Television (HETV) tax credits, a claim that was made prior to the
introduction of the new Audio-Visual Expenditure Credits regime at the start
of the year. Under this new regime, the amount claimed is an above the line
credit and so this will no longer be an adjusting item going forward. On a
statutory basis, the Group generated £6.5m operating profit in the period
(2023: nil).
Total finance costs were £3.9m (2022: £2.3m), comprising interest on the
Group's borrowings of £1.7m (2023: £0.8m), and non-cash costs in relation to
the Group's defined benefit pension schemes of £1.1m (2023: £1.3m), interest
on lease liabilities of £0.2m (2023: £0.2m) and the unwind of discount in
relation to put option liabilities of £0.9m (2023: nil). The higher
interest payable on the Group's borrowings was driven by higher levels of both
interest rates and covenant net debt compared to the previous year, the latter
due to the acquisition of Greenbird in July 2023.
The Group recognised £2.3m of other income as an adjusting item in the first
half of the year (2023: £nil). This relates to the step acquisition of Two
Cities Television and is the gain on remeasurement to fair value of the
original investment in 2020. Further details can be found in note 15.
The Group was in a net debt position (excluding lease liabilities) of £28.0m
(December 2023: £32.3m) comprising drawdowns under its revolving credit
facility of £45.5m (December 2023: £38.3m), and production financing of
£1.5m (December 2023: £3.3m) partially offset by net cash balances of
£19.0m (December 2023: £9.3m).
The Group's key financial covenants are leverage (ratio of net debt to
EBITDA), which must be no higher than 3 times, and interest cover, which must
be at least 4 times. At the end of the period, leverage was 1.4 times,
(December 2023: 1.2 times) and interest cover was 9.8 times (December 2023:
12.9 times), with significant headroom against covenant thresholds for both.
Across the Group's two defined benefit pension schemes, the accounting deficit
before tax decreased to £45.4m at the half year (31 December 2023: £54.8m).
This was driven by an increase in the discount rate due to a rise in corporate
bond yields and deficit recovery contributions paid. The next triennial
valuation is due at 31 December 2023 and work is progressing well with the
Trustees. We expect to conclude on the outcome of the valuation in the second
half of the year.
STV STUDIOS
STV Studios has delivered strong creative and commercial momentum in the first
half of 2024, with production labels winning several high-value commissions
both in the UK and internationally. The business has scaled rapidly and
profitably following the acquisition of Greenbird Media in July 2023 and moves
ever closer to its objective of becoming the UK's number 1 nations and regions
producer. This has been achieved despite the continuing challenges that exist
in the commissioning market. We are on track to deliver on our target of
doubling Studios revenue to £140m by the end of 2026, with a 10% margin.
Our production labels have delivered a combination of exciting original format
commissions alongside recommissions of multiple existing successful series for
broadcasters and global streamers.
Early in 2024, we confirmed a number of important drama commissions, which
will contribute significantly to our revenues through to 2026. STV Studios
Drama won our first commission for global streamer, Netflix, The Witness, a
three-part series based on the memoir and experiences of Alex Hanscome, whose
mother Rachel Nickell was murdered on Wimbledon Common. This is currently in
production. Our Northern Ireland label, Two Cities, won a third and fourth
series of their critically acclaimed police drama, Blue Lights, from BBC One.
Series 2 aired in H1 2024 and delivered an audience 35% above the slot average
on BBC One. This team is also currently in production with Sky original drama,
Amadeus, with Will Sharpe (White Lotus) in the lead role. In August, we
announced that critically acclaimed drama, Criminal Record, our co-production
with Tod Productions and starring Peter Capaldi and Cush Jumbo, has been
recommissioned by Apple TV+ for a second series following the global success
of series 1.
Returning series provide increased certainty around income and enable us to
provide more reliable employment and training opportunities for the freelance
community. STV Studios has multiple returning series in production in 2024
across Unscripted and Entertainment, including:
· A 40-episode commission from Warner Bros. Discovery UK & Ireland
to produce new series of The Yorkshire Auction House, Celebrity Yorkshire
Auction House and spin-off show, The Derbyshire Auction House, for the Really
channel. The Yorkshire Auction House remains Really's most-watched programme
· Recommission from the BBC for a third series of The Travelling
Auctioneers; a 29(th) series of Antiques Road Trip and a 13(th) series of
Celebrity Antiques Road Trip
· Quiz shows Bridge of Liesand Celebrity Bridge of Lies have both been
recommissioned
· STV Studios Entertainment signed a major deal with Sony's Game Show
Network for a US version of Bridge of Lies, which saw us co-produce 100
episodes in LA
· Tuesday's Child's The Fortune Hotel was swiftly re-commissioned by
ITV in July following a successful launch in H1. They also delivered a new
series of international success, The Hit List, for BBC One
· Owl Power was commissioned to deliver an 8(th) series of Gone Fishing
for BBC; and Hello Mary won a second series of The Royals: A History of
Scandals for More 4
Our strategy of acquiring stakes in high potential production companies
continues to deliver for the business. In H1, STV Studios increased its stake
in Two Cities Television (moving to majority), Tuesday's Child and Crackit
Productions (the latter two already majority holdings). Today we've announced
that we will take a majority (51%) share in Glasgow-based Hello Halo
Productions, a deal which is earnings enhancing from day one. This team has a
strong track record in children's and formatted factual programming, and in
July won a commission from Channel 4 for a new format, The Game of Wool.
Importantly, our forward order book is stronger than ever at £101m, as is the
development pipeline across the STV Studios' family of production labels. At
this level, the orderbook is £15m higher than the previously reported June
figure of £86m and reflects £19m of revenue recognised and £34m of new
commission wins in the two months to end July.
BROADCAST
STV remains the best watched peak-time channel in Scotland, with a higher
audience than the next eight commercial channels combined. This success is
largely down to a schedule of high-quality network and regional programming
and a strong connection with our audience. Traditional broadcasters are still
attracting significant audiences to their programming, delivering 'event'
television, and valued public service broadcasting. In H1, 99% of the top 500
transmitted programmes on commercial TV channels in Scotland were on STV. 77%
of the top 500 episodes across all broadcast and SVOD channels were on STV.
The profitability of the broadcast business has bounced back in H1, with
divisional revenues +12%, due to improvements in the wider advertising market
and a strong programme offering. The UEFA Euros 2024 were a jewel in the crown
of STV's 2024 schedule, with the opening match between Germany and Scotland
scoring the channel its best watched programme in 2024 and the biggest
audience for any channel in Scotland by that point in the year, peaking at
1.38m viewers. The overall reach of the tournament on STV was 3.1m, with a 48%
viewing share across our matches, tracking +3 share points higher than the ITV
network. The tournament helped drive audience growth across hard-to-reach
commercial audiences with upmarket men and upmarket U45's showing growth of
+7% and +15% (H1 2024 v H1 2023).
STV's news and current affairs output is at the heart of our Public Service
Broadcasting remit. Our flagship programme, STV News at Six, is the
best-watched news programme in Scotland for the 7th year running. With an
average audience of 374k and 33% share, we have increased the gap between STV
News and our main competitor (Reporting Scotland, BBC One) to over 100k, the
widest gap in the last 7 years. In a year of political turbulence, STV was
proud to air the first Scottish leaders' debate of the UK General Election
campaign. The 90-minute programme tracked 4 share points ahead of the network
and reached 430k viewers. STV's news team achieved industry recognition at the
2024 RTS Scotland Awards, with STV News at Six (North) winning the News Award,
and reporter Ronnie Charters crowned Best Young Journalist.
In H1 2024, STV aired the best-watched entertainment programme, quiz show,
drama, and soap across Scotland. Four-part series, Mr Bates v the Post Office
was STV's biggest new drama since 2021 (The Pembrokeshire Murders) and indeed
the biggest drama launch across all channels and streamers in H1, delivering
an average audience of 929k. It had a considerable societal impact, bringing a
story of national interest to the attention of millions and effecting change
at a government level, further emphasising the importance and potential of
well-funded public service broadcasting.
STV has unrivalled reach in Scotland and delivers mass impact. The STV Growth
Fund, which makes advertising affordable and accessible for SMEs, has
attracted over 400 new advertisers since it launched in 2018. We also continue
to support sustainable and diverse businesses in their TV marketing journey
via our Green and Inclusion Funds.
DIGITAL
Our streaming service, STV Player, delivered its most successful first
half-year ever in 2024, with online streams up 4% to 73.1m. This success was
partly driven by Euro 2024, which delivered record breaking numbers for the
business. The tournament was STV Player's most-watched sporting event ever, up
61% compared with Euro 2020, and delivering 2.3m total viewing hours across
the tournament. The semi-final between the Netherlands and England broke
streaming records for a single match, generating 617k steams across the game.
The Euros also helped provide a new record month for live viewing in June
2024, coming in at 2.8m hours.
We are now 18 months into our commercial partnership with ITV through which
they are our exclusive agent for digital advertising. Positive from its
inception, this deal continues to deliver, with VOD advertising revenues up
13% in H1 compared with the same period in 2023.
Our deal with ITV also makes new ITVX premiere content exclusively available
on STV Player in Scotland. This high-quality, original content complements a
bank of network shows, carefully selected programming from across the world,
with a focus on high quality drama series, and popular archive material from
our extensive video library, ensuring a rich and varied on-demand offering for
viewers across the UK.
Our content has helped deliver strong audiences in H1, with eight of our top
ten titles exceeding 1m hours of viewing in the first half of the year. Soap
giants Coronation Street and Emmerdale retained the top 2 positions, and top
performing dramas on STV Player include Red Eye, After the Flood, Trigger
Point and Mr Bates v The Post Office. The hotly anticipated return of
Celebrity Big Brother delivered almost 900k views.
A key acquisition for our streaming service has been iconic soap, Brookside,
which is a top 3 title on STV Player for H1. The series has been streamed over
20 million times since it launched in February 2023, equating to over 7m hours
of viewing. STV Player has relaunched the show from the start, with five
episodes made available each week. Other acquired titles in the top 20 include
US thriller, Betrayal, and legal drama, The Fix. These two titles are part of
a 10-series scripted box-set deal with Disney, with the remaining titles
available in H2.
Consumption (viewing hours) are tracking 5% down year on year due to changes
in our content mix. In H1, the availability of live sport and entertainment
meant fewer drama box sets were available, which has impacted viewing times.
Winter is traditionally the season when STV airs more dramas and we expect
these to positively impact consumption in H2.
We continue to improve and enhance the look and user journey of the STV Player
and in H1 we launched new 'watch live' functionality to our Sky Glass, Sky Q
and Virgin Media apps.
REGULATORY
STV's Channel 3 licences have been renewed for a further 10 years to 2034,
securing the provision of public service broadcasting in the north and central
regions of Scotland, including the country's most-watched news and current
affairs programmes.
We are pleased that the UK Government Media Act is now enshrined in law and
will guarantee prominence for STV Player on all major digital platforms,
ensuring our PSB content is easy for viewers to find. It is important that
Ofcom, who are now consulting on the implementation of the Bill, have the
power to ensure this requirement is duly enforced.
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 impact on revenue generation
· Reliance on ITV for quality network programming and effective
national sales
· Changing viewing habits
· Cyber-attack or data breach incident
· Defined benefit pension scheme shortfalls
· Recruitment and retention of people
Further details of the Group's policies on principal risks and uncertainties
are contained within the Group's 2023 Annual Report and Accounts, a copy of
which is available at www.stvplc.tv (http://www.stvplc.tv)
Unaudited condensed interim income statement
Six months ended 30 June 2024
2024 2023
Note Adjusted results Adjusting Statutory Adjusted Adjusting Statutory
items results results items results
£m (note 8) (note 8)
£m £m £m £m £m
Revenue 7 90.4 - 90.4 75.3 - 75.3
Operating expenses (82.5) (1.8) (84.3) (72.5) (2.8) (75.3)
Other operating income 0.4 - 0.4 - - -
Operating profit 8.3 (1.8) 6.5 2.8 (2.8) -
Finance costs
- borrowings (1.7) - (1.7) (0.8) - (0.8)
- defined benefit pension schemes - (1.1) (1.1) - (1.3) (1.3)
- lease interest (0.2) - (0.2) (0.2) - (0.2)
- other finance costs - (0.9) (0.9) - - -
(1.9) (2.0) (3.9) (1.0) (1.3) (2.3)
Other income - 2.3 2.3 - - -
Share of loss of an associate (0.1) - (0.1) (0.1) - (0.1)
Profit/(loss) before tax 6.3 (1.5) 4.8 1.7 (4.1) (2.4)
Tax credit 9 2.2 0.1 2.3 5.1 0.6 5.7
Profit for the period 8.5 (1.4) 7.1 6.8 (3.5) 3.3
Attributable to:
Owners of the parent 7.1 (1.4) 5.7 6.8 (3.5) 3.3
Non-controlling interests 1.4 - 1.4 - - -
8.5 (1.4) 7.1 6.8 (3.5) 3.3
Earnings per share
Basic 10 15.5p 12.4p 14.8p 7.2p
Diluted 10 15.1p 12.1p 14.4p 7.0p
The above unaudited condensed interim income statement should be read in
conjunction with the accompanying unaudited notes.
Unaudited condensed interim statement of comprehensive income
Six months ended 30 June 2024
2024 2023
£m £m
Profit for the period 7.1 3.3
Items that will not be reclassified to profit or loss:
Gain on re-measurement of defined benefit pension schemes 5.9 4.8
Deferred tax charge (1.5) (1.2)
Other comprehensive income - net of tax 4.4 3.6
Total comprehensive income for the period 11.5 6.9
Attributable to:
Owners of the parent 10.1 6.9
Non-controlling interests 1.4 -
11.5 6.9
The above unaudited condensed interim statement of comprehensive income should
be read in conjunction with the accompanying unaudited notes.
Unaudited condensed interim balance sheet
As at 30 June 2024
30 June 31 December
2024 2023
Note £m £m
Non-current assets
Intangible assets 12 34.8 25.0
Property, plant and equipment 13 7.8 8.9
Right-of-use assets 13 16.5 17.9
Investments 2.9 4.1
Deferred tax asset 14 18.2 19.8
Trade and other receivables 17 0.4 1.0
80.6 76.7
Current assets
Inventories 16 22.1 24.4
Trade and other receivables 17 53.9 38.9
Cash and cash equivalents 26.5 13.9
102.5 77.2
Total assets 183.1 153.9
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 2.5 2.4
Accumulated losses (315.0) (321.9)
Shareholders' equity (0.5) (7.5)
Non-controlling interests (8.8) (5.1)
Total equity (9.3) (12.6)
Non-current liabilities
Borrowings 18 45.5 41.6
Lease liabilities 16.4 17.9
Retirement benefit obligations 21 45.4 54.8
Deferred tax liabilities 14 4.0 2.6
Trade and other payables 13.1 5.9
124.4 122.8
Current liabilities
Borrowings 18 9.0 4.6
Trade and other payables 57.7 37.9
Lease liabilities 1.3 1.2
68.0 43.7
Total liabilities 192.4 166.5
Total equity and liabilities 183.1 153.9
The above unaudited condensed interim balance sheet should be read in
conjunction with the accompanying unaudited notes.
Unaudited condensed interim statement of changes in equity
Six months ended 30 June 2024
Capital redemption reserve Attributable to owners of the parent
Share capital Share premium Merger reserve Accumulated losses Non-controlling interest
Other reserve Total equity
£m £m £m £m £m £m £m £m £m
At 1 January 2024 23.3 115.1 0.2 173.4 2.4 (321.9) (7.5) (5.1) (12.6)
Profit for the period - - - - - 5.7 5.7 1.4 7.1
Other comprehensive income - - - - - 4.4 4.4 - 4.4
Total comprehensive income for the period
- - - - - 10.1 10.1 1.4 11.5
Share based compensation - - - - 0.1 - 0.1 - 0.1
Dividends paid (note 11) - - - - - (3.4) (3.4) (0.5) (3.9)
Changes in non-controlling interest
- - - - - 0.2 0.2 (4.6) (4.4)
At 30 June 2024 23.3 115.1 0.2 173.4 2.5 (315.0) (0.5) (8.8) (9.3)
At 1 January 2023 23.3 115.1 0.2 173.4 1.8 (321.8) (8.0) (0.3) (8.3)
Profit for the period - - - - - 3.3 3.3 - 3.3
Other comprehensive income - - - - - 3.6 3.6 - 3.6
Total comprehensive income for the period
- - - - - 6.9 6.9 - 6.9
Share based compensation - - - - 0.3 - 0.3 - 0.3
Dividends paid (note 11) - - - - - (3.4) (3.4) - (3.4)
At 30 June 2023 23.3 115.1 0.2 173.4 2.1 (318.3) (4.2) (0.3) (4.5)
The above unaudited condensed interim statement of changes in equity should be
read in conjunction with the accompanying unaudited notes.
Unaudited condensed interim statement of cash flows
Six months ended 30 June 2024
Six months ended Six months ended
2024 2023
Note £m £m
Operating activities
Cash generated by operations 20 23.0 6.4
Interest and fees paid in relation to bank facilities (1.6) (0.9)
Corporation tax (paid)/received (0.9) 0.5
Pension deficit funding - recovery plan payment (5.0) (4.8)
Net cash generated by operating activities 15.5 1.2
Investing activities
Acquisition of subsidiary undertakings, net of cash acquired 15 (0.9) -
Production finance repayment from associate - 3.0
Loan provided to associate (0.2) (0.6)
Purchase of intangible assets (0.3) (0.1)
Purchase of property, plant and equipment (0.2) (0.4)
Exercise of put options 15 (4.4) -
Net cash (used in) / generated by investing activities (6.0) 1.9
Financing activities
Payment of obligations under leases (1.0) (1.0)
Borrowings drawn 13.4 8.0
Borrowings repaid (8.2) (14.0)
Dividends paid to equity holders 11 (3.4) (3.4)
Dividends paid to non-controlling interests (0.5) -
Foreign exchange loss (0.1) -
Net cash generated by / (used in) financing activities 0.2 (10.4)
Net movement in cash and cash equivalents 9.7 (7.3)
Cash and cash equivalents, including overdraft balances, at beginning of 9.3 11.3
period
Cash and cash equivalents, including overdraft balances, at end of period 19.0 4.0
30 June 2024 31 December 2023
Cash and cash equivalents 26.5 13.9
Bank overdrafts (7.5) (4.6)
Cash and cash equivalents, including overdraft balances, at end of period
19.0 9.3
Unaudited notes to the condensed interim financial statements
Six months ended 30 June 2024
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.
These condensed interim financial statements were approved for issue on 3
September 2024 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 2023 were approved
by the Board of Directors on 5 March 2024 and delivered to the Registrar of
Companies. The report of the auditors on those accounts was unqualified, did
not contain an emphasis of matter and did not contain any statement under
section 498 of the Companies Act 2006.
2. Basis of preparation
These unaudited condensed interim financial statements for the six months
ended 30 June 2024 have been prepared based on the accounting policies set out
in the 2023 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 2023
which were prepared in accordance with United Kingdom adopted international
accounting standards. The condensed interim financial statements and the
annual report are available on the Group's website at www.stvplc.tv.
The annual financial statements for the year to 31 December 2024 will be
prepared in accordance with United Kingdom adopted international accounting
standards.
Going concern
At 30 June 2024, the Group was in a net debt position (excluding lease
liabilities) of £28.0m comprising drawdowns under its revolving credit
facility of £45.5m and production financing of £1.5m, partially offset by
net cash balances of £19.0m. The Group is in a net current asset position
and generates cash from operations that enables it to meet its liabilities as
they fall due, and other obligations.
The Group's banking facilities at the interim balance sheet date comprised a
£70m revolving credit facility, with a £10m accordion, maturing in March
2026. The key financial covenants are leverage (net debt to EBITDA), which
must be less than 3 times, and interest cover, which must be greater than 4
times. At 30 June 2024, the Group's leverage was 1.4 times and its interest
cover was 9.8 times, both well within covenant limits. The facility that
remained available to the Group at 30 June 2024 was £24m plus the £10m
accordion (31 December 2023: £31m plus the £10m accordion).
As part of the going concern review, the Group considers forecasts of the
advertising market, from which the Group generates a material portion of its
cash inflows, as well as its prospects in the programme production market, to
determine the impact on liquidity. The Group's forecasts and projections,
taking account of reasonably possible changes in trading performance, and
including the impact of acquiring Two Cities Television in January 2024, show
that the Group will be able to operate within the level of its current
available funding and financial covenants.
The Directors performed a full review of principal risks and uncertainties
during 2023 as part of its process to review and approve the three-year plan
covering the period to 31 December 2026. A severe but plausible downside
scenario was identified that reflected crystallisation of several risks,
principally in relation to advertising revenues and the number and scale of
programme commissions. Under that scenario, the Group is projected to generate
sufficient cash to enable it to continue in operation and remain within
covenant levels under the Group banking arrangements. These forecasts also
included pension contributions in line with the Schedule of Contributions
agreed with the trustees, and any contingent cash payments that would be
payable under that mechanism, based on forecast cash flows.
Following completion of these activities, 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 2023. There were no
changes to accounting standards in the period that had any material impact on
the financial statements. The Group has expanded its revenue recognition
policy to specifically cover 'producer for hire' contracts following the
increase in instances of such contracts over the period. For producer for hire
contracts where, in the event of cancellation, cost is recovered plus an
agreed margin, the associated revenue is recognised over the term of the
contract.
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
In the course of preparing the condensed interim financial statements, no
judgements have been made in applying the Group's accounting policies that
have had a significant effect on the amounts recognised in the condensed
interim financial statements, other than those involving estimation below.
Estimates
The preparation of the Group's condensed interim 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 condensed interim 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.
Inventory
Deferred programme production stock forms part of inventory and is stated in
the financial statements at the lower of cost and net realisable value. The
key assumption is estimating the likely future revenues for which associated
programme costs are expensed in line with. A detailed forecast of future
secondary sales is prepared by management based on historic experience and
expected future trends. £0.7m was expensed through the income statement in
the period (30 June 2023: £0.6m).
Pension obligations
The present value of pension obligations depends on several factors that are
determined on an actuarial basis using a number of key assumptions. The
assumptions used in determining the projected benefit obligation 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.
Regarding 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 2023.
During the period, a programme has been in production overseas through Two
Cities Television Limited who entered into forward currency contracts to hedge
the foreign exchange rate utilised in the production budget. These forward
contracts were acquired as part of the fair value of identifiable assets and
liabilities by the Group (see note 15), with some contracts still due to
mature at the period end. The contracts have been recognised in line with the
relevant accounting requirements for derivatives.
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 advertising revenues, as trading picks up from the
quieter summer months. The Studios division delivers the majority of
programmes to commissioners in the second half of the year.
However, in H1 2024, the Euros 2024 football tournament was shown on STV and
STV Player in June, resulting in strong growth year on year and improving the
H1 position beyond seasonal norms. Furthermore, acquired operations in the
Studios division were earnings enhancing for the Group and resulted in a
rebalancing of revenue and profit towards H1.
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.
Broadcast Digital Studios Total
Six months 2024 2023 2024 2023 2024 2023 2024 2023
£m £m £m £m £m £m £m £m
Revenue
Pre-commission sales 46.5 42.4 11.5 10.1 38.4 27.3 96.4 79.8
Commission - - (1.2) - - - (1.2) -
Sales 46.5 42.4 10.3 10.1 38.4 27.3 95.2 79.8
Inter-segment sales (3.9) (4.4) - - (0.9) (0.1) (4.8) (4.5)
Segment revenue 42.6 38.0 10.3 10.1 37.5 27.2 90.4 75.3
Segment result
Adjusted operating profit 7.2 4.9 5.0 5.0 0.1 0.1 12.3 10.0
Unallocated corporate expenses (1.7) (2.0)
Adjusted operating profit 10.6 8.0
Adjusting items in operating profit (note 8) (1.8) (2.8)
Finance costs (3.9) (2.3)
HETV tax credits (2.3) (5.2)
Other non-operating income 2.3 -
Share of loss in associates (0.1) (0.1)
Profit/(loss) before tax 4.8 (2.4)
Tax credit 2.3 5.7
Profit for the period 7.1 3.3
Adjusted operating profit (as shown above) is the statutory operating profit
before adjusting items and includes High-End Television (HETV) tax credits
receivable. The HETV tax credits relate solely to the Studios operating
segment.
The only significant changes in total assets from the amount disclosed in the
last annual financial statements are due to the seasonality of operations,
both in terms of the advertising market and delivery of programmes. Please see
note 6 for further details.
8. Adjusting items and 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.
The Group makes certain adjustments to the statutory profit measures to
exclude the effects of material amounts that it believes do not reflect the
underlying trading performance of the Group.
By presenting these alternative performance measures, the Group believes it is
providing additional insight into the performance of the business that may be
useful to stakeholders.
Below sets out a reconciliation of the statutory results to the
adjusted results:
2024 2023
Operating profit Profit Basic Operating Profit Basic
before tax EPS Profit before tax EPS
£m £m pence £m £m pence
Statutory result 6.5 4.8 12.4p - (2.4) 7.2p
Material contract - - 2.8 2.8
implementation costs (i)*
Acquisition and integration 0.5 (1.8) - -
activities (ii)*
Restructuring costs (iii)* 0.5 0.5 - -
Amortisation of intangible
assets (iv)* 0.8 0.8 - -
IAS 19 net finance costs (v) - 1.1 - 1.3
Other finance costs (vi) - 0.9 - -
High-End Television tax 2.3 2.3 5.2 5.2
credit (vii)
Adjusted results 10.6 8.6 15.5p 8.0 6.9 14.8p
*The denoted items make up the total adjusting items of £1.8m (2023: £2.8m)
within operating profit in the income statement.
(i) Material contract implementation costs (2023 only)
In 2022, the Group announced an extended partnership with ITV for digital
content and advertising sales, effective from 1 January 2023. One-off costs of
£2.8m associated with the negotiation and implementation of the agreement
were charged in the six months ended 30 June 2023.
(ii) Acquisition and integration activities
On 6 July 2023, the Group acquired Greenbird Media Limited. Attributable costs
associated with this acquisition have been expensed since the acquisition
date. £0.5m has been recognised in the six months ended 30 June 2024,
attributable to earn outs payable to founding members, professional fees and
restructuring costs.
Non-operating other income of £2.3m has been recognised in relation to the
acquisition, achieved in stages, of Two Cities Television Limited during the
period. This other income is the gain recognised from bringing the
consideration paid for the initial 35% shareholding in line with fair value.
See note 15 for further details.
(iii) Restructuring costs
The Group announced a £5m group cost saving programme in March 2024. Costs
associated with actions taken in H1 2024 were £0.5m.
(iv) Amortisation of intangible assets
Following the acquisition of Greenbird Media Limited in July 2023 and the
acquisition of a majority stake in Two Cities Television Limited in January
2024 (see note 15), the Group has undertaken fair value assessments of the
assets acquired and liabilities assumed. The fair value attributable to
intellectual property for Greenbird was £10.0m with total amortisation to
date of £0.9m, of which £0.4m was recognised in the period. The fair value
attributable to intellectual property acquired for Two Cities was £6.5m, with
an associated amortisation charge of £0.4m incurred in the period.
Amortisation of assets acquired through business combinations and investments
are included within adjusted results. As these costs are acquisition related,
and in line with our treatment of other acquisition related costs, we consider
that they do not reflect the underlying trading performance of the Group.
(v) IAS 19 net finance costs
IAS 19 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 legacy defined benefit pension schemes.
(vi) Other finance costs
The Group has liabilities relating to amounts payable to minority shareholders
under put options that were already in force at the date of acquisition of
Greenbird Media Limited and Two Cities Television Limited (see note 15 for
details). A finance cost of £0.9m has been recognised in the period in
relation to the unwinding of the associated discount on these liabilities,
£0.6m in relation to Greenbird and £0.3m in relation to Two Cities.
(vii) High-End Television tax credit
The Group meets the eligibility criteria to claim HETV tax relief through the
production of certain dramas created in its Studios division. This incentive
was introduced in the UK to support the creative industries and is a critical
factor when assessing the viability of investment decisions in the production
of high-end drama programmes. These production tax credits are reported within
the total tax charge in the income statement in accordance with IAS 12.
However, STV considers the HETV tax credits to be a contribution to production
costs and therefore more aligned to working capital in nature. Therefore, the
adjusted results for the Group reflect these credits as a contribution to
operating cost and not a tax item. The HETV tax credit regime is being
replaced by 'above the line' Audio-Visual Expenditure credits ("AVEC") and
will be accounted for in a similar way to the alternative performance measure
presented above. Due to the timing of expenditure for the relevant production
and the transition period between the regimes, the tax credit of £2.3m
recognised in the current period will be claimed under the HETV regime, and
therefore has been adjusted in the results as shown above.
9. Tax credit
Six months Six months
2024 2023
£m £m
The credit for taxation is as follows:
Charge for the period before adjusting items (0.1) (0.1)
Tax effect on adjusting items 0.1 0.6
High-end television tax credit 2.3 5.2
Credit for the period 2.3 5.7
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.
Changes to the UK corporation tax rates were substantively enacted as part of
Finance Bill 2021 on 10 June 2021. These included an increase in the UK
corporation tax rate to 25% effective from 1 April 2023. The Finance Act 2024
which received Royal Assent on 24 May 2024, had no impact on the corporation
tax figures. The deferred tax assets at 30 June 2024 have been measured using
the rates that apply in the periods when the underlying timing differences, on
which deferred tax is recognised, are expected to unwind.
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 Group 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 the weighted average of dilutive
potential ordinary shares. The Group has one type of dilutive potential
ordinary share namely share options granted to employees.
The adjusted earnings per share figures that have also been calculated are
based on earnings before adjusting items that are significant in nature and/or
quantum and not expected to recur every year and are therefore considered to
be distortive. The adjusting items recognised in the current and prior years
are detailed in note 8 and presented below net of the related tax effect.
Adjusted earnings per share have been presented to provide shareholders with
an additional measure of the Group's year on year performance.
Earnings per share Six months Six months
2024 2023
Pence Pence
Basic earnings per share 12.4p 7.2p
Diluted earnings per share 12.1p 7.0p
Adjusted basic earnings per share 15.5p 14.8p
Adjusted diluted earnings per share 15.1p 14.4p
The following reflects the earnings and share data used in the calculation of
earnings per share:
Six months 2024 Six months 2023
Earnings £m £m
Profit for the period attributable to equity shareholders 5.7 3.3
Adjusting items (net of tax) (0.6) 2.2
Excluding IAS 19 financing cost 1.1 1.3
Other finance costs 0.9 -
Adjusted profit 7.1 6.8
Number of shares Million Million
Weighted average number of ordinary shares in issue 46.0 45.8
Dilution due to share options 1.2 1.5
Total weighted average number of ordinary shares in issue 47.2 47.3
11. Dividends
A final dividend of £3.4m relating to the year ended 31 December 2023 was
paid from the parent company's accumulated realised profits in May 2024 (30
June 2023: final dividend relating to the year ended 31 December 2022 of
£3.4m, paid in May 2023).
An interim dividend of 3.9p per share has been proposed by the Board of
Directors. It is payable on 7 November 2024 to shareholders who are on the
register at 27 September 2024. This interim dividend, amounting to £1.8m 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
2024.
12. Intangible assets
During the six months ended 30 June 2024, the Group incurred expenditure of
£0.3m on web development (£0.4m in the year to 31 December 2023; £0.1m in
the six months ended 30 June 2023). In addition, the Group acquired £6.5m of
intellectual property and recognised £4.0m of goodwill in relation to the
acquisition of Two Cities Television Limited (see note 15). There were
disposals of £nil net book value in the current period and in the year ended
31 December 2023.
13. Property, plant and equipment and right-of-use assets
During the six months ended 30 June 2024, the Group incurred expenditure of
£0.2m on property, plant and equipment (£0.8m in the year ended 31 December
2023; £0.4m in the six months ended 30 June 2023). There were disposals of
£0.2m net book value in the current period and £nil net book value for the
year ended 31 December 2023.
During the six months ended 30 June 2024, the Group did not have any additions
to right-of-use assets (£nil in the year ended 31 December 2023; £nil in the
six months ended 30 June 2023). There were disposals in the current period of
£0.6m net book value and £nil net book value for the year ended 31 December
2023. Alongside adjustments to the lease liability on termination of the lease
disposed of in the period, a gain of £0.2m was recognised within the income
statement.
14. Deferred tax
At 30 June 2024, total deferred tax assets of £18.2m were recognised on the
balance sheet (31 December 2023: £19.8m). Of this, £11.4m relates to the
deficit on the Group's defined benefit pension schemes (31 December 2023:
£13.7m) and the balance of £6.8m relates to tax losses, accelerated capital
allowances and short-term timing differences (31 December 2023: £6.1m).
At 30 June 2024, total deferred tax liabilities of £4.0m were recognised on
the balance sheet (31 December 2023: £2.6m). These relate to liabilities
recognised in regard to the acquisition of Greenbird Media Limited and Two
Cities Television Limited.
15. Business combinations
Two Cities Television Limited
In January 2020, the Group acquired a minority stake of 25% in Two Cities
Television Limited ("Two Cities"), a high-end drama production company, with
an option to increase its initial stake to a majority position upon Two Cities
becoming profitable. On 30 January 2024, this option was exercised, and the
Group increased its equity stake in Two Cities to a majority holding of 51%.
On the acquisition date, £0.4m of loan notes were converted, resulting in 10%
equity being acquired via new shares issued. In line with the accounting
requirements for a business combination achieved in stages, this overall
initial stake of 35% has been remeasured at fair value at the acquisition
date, resulting in a gain of £2.3m, which is presented within non-operating
other income in the income statement.
The consideration payable for the 16% equity that was then acquired through
the option was £2.2m, of which £1.7m was paid on completion. Deferred
consideration of £0.5m has been recognised which is payable in January 2025.
The Group has completed the majority of its work in relation to assessing the
fair values of identifiable assets and liabilities acquired with only a small
number of minor points to be finalised. Therefore, the fair values have been
presented as provisional in the table below but it is not anticipated that
there will be any material changes between the provisional and final position,
which will be finalised within 12 months from the date of acquisition, as
required by the relevant accounting standard.
Provisional fair value of identifiable assets and liabilities of Two Cities 2024
Television Limited and subsidiary companies
£m
Intangible assets 6.5
Inventory 9.4
Trade and other receivables 2.4
Cash and cash equivalents 1.3
Deferred tax liabilities (1.6)
Trade and other payables (9.2)
Contract liabilities (11.6)
Fair value of net identifiable liabilities (2.8)
Non-controlling interest measured at proportionate share of identifiable net
assets
(2.0)
Adjustments to non-controlling interest regarding put options 6.8
Goodwill 4.0
Consideration 6.0
Total net cash outflow relating to acquisition of Two Cities Television £m
Limited and subsidiary companies
Consideration paid 1.7
Cash and cash equivalents acquired (1.3)
Total cash outflow 0.4
£m
Present value of the expected liability for put options 6.8
The goodwill of £4.0m represents the value placed on the opportunity to
materially enhance the future growth prospects of STV Studios creatively,
commercially, and internationally. This has been calculated as the fair value
of the consideration transferred, plus the amount of non-controlling interest
adjusted for derivative put options relating to subsidiaries acquired, less
the net of the fair value of the identifiable assets acquired and liabilities
assumed.
From the date of acquisition, Two Cities Television Limited and subsidiary
undertakings contributed £18.5m of revenue and £1.4m of adjusted operating
profit to the Group's results.
Greenbird Media Limited
In the period, the Group finalised its fair value assessment of the
identifiable assets and liabilities of Greenbird Media Limited and subsidiary
companies, acquired on 6 July 2023. The table below sets out the adjustments
that have been made to the provisional fair values previously disclosed within
the annual financial statements for year ended 31 December 2023, to reach the
final position.
Fair value of identifiable assets and liabilities of Greenbird Media Limited
and subsidiary companies
Provisional Adjustments Final
£m £m £m
Intangible assets 10.0 - 10.0
Property, plant and equipment 0.2 - 0.2
Right of use assets 0.7 - 0.7
Investments 1.5 - 1.5
Inventory 1.8 - 1.8
Trade and other receivables 2.0 - 2.0
Contract assets 1.9 - 1.9
Cash and cash equivalents 6.9 - 6.9
Deferred tax liabilities (2.6) - (2.6)
Trade and other payables (15.4) 0.3 (15.1)
Lease liabilities (0.8) - (0.8)
Contract liabilities (3.5) - (3.5)
Fair value of net identifiable assets 2.7 0.3 3.0
Non-controlling interest measured at proportionate share of identifiable net (4.2) - (4.2)
assets
Adjustments to non-controlling interest regarding put options 9.6 (0.3) 9.3
Goodwill 14.5 - 14.5
Consideration 22.6 - 22.6
£m
Present value of the expected liability for put options 9.6 (0.3) 9.3
Since the acquisition date, finance costs of £1.1m have been recognised in
relation to the unwinding of the discount of the put option liability, with
£0.6m recognised in the current period. During the period, the put options
have been exercised, resulting in a cash outflow to the minority interests of
£4.4m. The estimated liability for the remaining amounts payable of £6.0m is
recognised in non-current trade and other payables at the balance sheet date.
Cash outflow relating to acquisition of Greenbird Media Limited and subsidiary Six months ended 30 June 2024
companies
£m
Deferred consideration paid 0.5
16. Inventory
30 June 31 December
2024 2023
£m £m
Deferred programme production stock 13.6 12.7
Programme production work in progress 7.9 11.1
Recorded programmes 0.6 0.6
22.1 24.4
17. Trade and other receivables
30 June 31 December
2024 2023
£m £m
Trade receivables 18.9 13.9
Prepayments 10.2 8.2
Contract assets 8.4 12.9
Other receivables 8.4 2.8
Income tax recoverable 8.4 2.1
54.3 39.9
Amounts included in current assets 53.9 38.9
Amounts included in non-current assets 0.4 1.0
54.3 39.9
18. Borrowings
Non-current borrowings
At the balance sheet date, the Group had a £70m revolving credit facility
(RCF), with a £10m accordion, maturing in March 2026. Total gross borrowings
at the balance sheet date under the RCF were £45.5m (31 December 2023:
£38.3m). The principle financial covenants are the ratio of net debt to
EBITDA (which must be below 3 times) and interest cover (which must be higher
than 4 times).
At 31 December 2023, the Group had a loan facility for production financing of
£3.3m, which has been repaid in the period.
Current borrowings
The Group had a bank overdraft recognised at the balance sheet date of £7.5m
(31 December 2023: £4.6m).
The Group drew down a loan facility of £1.5m for production financing in the
period, which has been repaid post period end.
19. Share capital
Issued share capital at 30 June 2024 and 31 December 2023 amounted to £23.3m
relating to 46,722,499 ordinary shares with a par value of £0.50 per share.
All issued shares are fully paid.
20. Notes to the condensed interim statement of cash flows
Six months Six months
2024 2023
£m £m
Operating profit 6.5 -
Adjustments for:
Depreciation on property, plant and equipment 1.3 1.2
Amortisation of intangible assets 1.0 0.3
Amortisation of right-of-use assets 0.8 0.7
Share based payments 0.1 0.3
Decrease in inventories 12.2 13.3
(Increase)/decrease in trade and other receivables (8.8) 6.8
Increase/(decrease) in trade and other payables 9.9 (16.2)
Cash generated by operations 23.0 6.4
Net debt reconciliation
Revolving credit facility Production financing Net cash & cash equivs Net Lease liabilities Net debt inc. lease liabilities
inc overdrafts debt
£m £m £m £m £m £m
At 1 January 2024 (38.3) (3.3) 9.3 (32.3) (19.1) (51.4)
Cash flows (7.0) 1.8 9.7 4.5 0.9 5.4
Non-cash movements (i) (0.2) - - (0.2) 0.5 0.3
At 30 June 2024 (45.5) (1.5) 19.0 (28.0) (17.7) (45.7)
(i) Non-cash movements relate to the amortisation of borrowing costs (for
long-term borrowings), and interest charged on lease liabilities net of
derecognition for liabilities relating to terminated leases.
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
2024 2023
£m £m
Defined benefit scheme obligations (329.4) (350.2)
Defined benefit scheme assets 284.0 295.4
Net pension deficit (45.4) (54.8)
The reduction in the net pension deficit is driven by a fall in the defined
benefit obligations as a result of a higher discount rate, as well as Company
contributions to the Schemes. This has been offset by a reduction in the
Schemes' asset values, which aim to hedge movements in interest rates, albeit
the reduction in the asset value was less than the reduction in the defined
benefit obligations, in part due to favourable returns on the growth assets.
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
2024 2023
% %
Rate of increase in salaries nil nil
Rate of increase of pensions in payment 3.30 3.15
Discount rate 5.10 4.50
Rate of price inflation (RPI) 3.30 3.15
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 expectation in years of a pensioner retiring at age 65:
At 30 June At 31 December
2024 2023
Retiring at balance sheet date:
Male 20.5 20.5
Female 22.8 22.7
Retiring in 25 years
Male 21.7 21.7
Female 24.1 24.0
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% Decrease/increase by 2%
Rate of price inflation (RPI) Increase/decrease by 0.25% Increase/decrease by 1%
Rate of mortality Decrease by 1 year Decrease by 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.
Funding arrangements
Deficit recovery plans, which end on 31 October 2030, were agreed with
aggregate monthly payments unchanged from the previous recovery plans. The
2024 deficit recovery payments will total £9.9m, with annual payments
increasing at the rate of 2% per annum over the term of the recovery plans. A
contingent cash mechanism is also in place, which triggers contingent funding
payments equivalent to 20% of any outperformance above a benchmark of
available cash to be paid to the schemes. There was no additional contingent
payment made to the schemes in the six month period to 30 June 2024 (£nil in
the six months ended 30 June 2023). The next triennial valuation is taking
place as at 31 December 2023, with the work well progressed at the date of
this statement.
The Group is aware of a case involving Virgin Media and NTL Pension Trustee,
which could potentially lead to additional liabilities for some pension
schemes and sponsors, including (if applicable) to the Group. On 24 July 2024,
an appeal against the original judgement was dismissed however there remains
uncertainty regarding the implications for schemes including the Group's. As
such, the impact (if any) is not known and will be assessed as relevant in the
future.
22. Transactions with related parties
The Group provided advertising with an estimated fair value of £0.2m (2023:
£0.2m) for nil consideration to the charity organisation STV Appeal. The
charity purchased advertising from the Group for a total of £0.1m (2023:
£nil).
A £0.5m dividend was paid to the Managing Director and minority shareholder
of subsidiary company Tuesday's Child Television Limited during the period.
23. Post balance sheet events
On 30 August 2024, the Group increased its shareholding in Hello Halo
Productions Limited to a majority stake, taking its equity share from 30% to
51%.
On 17 July 2024, the Group acquired the remaining ordinary shares in its
associate Rumpus Media Limited, taking its shareholding from 40% to 99%.
The total consideration for both transactions was less than £1m.
Due to the recent timing of the acquisitions, the Group is in the early stages
of its fair value assessment of the assets acquired and liabilities assumed
and has not yet finalised the accounting for the business combinations, but
expects to complete its assessment in the second half of 2024.
Statement of Directors' Responsibilities
We confirm that to the best of our knowledge, these condensed consolidated
interim financial statements 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 and that the interim management report includes a
fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
· An indication of important events that have occurred during the
first six months and their impact on the condensed set of financial
statements, and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
· Material related party transactions in the first six months and
any material changes in the related-party transactions described in the last
annual report.
The directors of STV Group plc are listed in the Annual Report and Accounts
for 31 December 2023, with the exception of the following changes in the
period:
· Ian Steele (resigned 1 May 2024)
A list of current directors is maintained on the STV plc website:
www.stvplc.tv (http://www.stvplc.tv)
For and on behalf of the Board:
Lindsay Dixon
Chief Financial & Operating Officer
Date: 3 September 2024
Independent review report to STV Group plc
Conclusion
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
June 2024 which comprises the income statement, the statement of comprehensive
income, the balance sheet, the statement of changes in equity, the cash flow
statement and related notes 1 to 23.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2024 is not prepared, in all
material respects, in accordance with United Kingdom adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" issued by the Financial Reporting
Council for use in the United Kingdom (ISRE (UK) 2410). A review of interim
financial information consists of making inquiries, 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.
As disclosed in note 2, the annual financial statements of the group are
prepared in accordance with United Kingdom adopted international accounting
standards. The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with United
Kingdom adopted International Accounting Standard 34, "Interim Financial
Reporting".
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This Conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410; however future events or conditions may cause the entity to
cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the group's ability to continue as a going concern, disclosing
as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the
company or to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly financial report, we are responsible for
expressing to the company a conclusion on the condensed set of financial
statements in the half-yearly financial report. Our Conclusion, including our
Conclusion Relating to Going Concern, are based on procedures that are less
extensive than audit procedures, as described in the Basis for Conclusion
paragraph of this report.
Use of our report
This report is made solely to the company in accordance with ISRE (UK) 2410.
Our work has been undertaken so that we might state to the company those
matters we are required to state to it in an independent review report and for
no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company, for our review work,
for this report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
Glasgow, United Kingdom
Date: 3 September 2024
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