REG - STV Group PLC - Half Year Results

STVAnnouncement

09/09/2021 07:05

RNS Number : 1914L
  
STV Group PLC
  
09 September 2021
  
 

 
 
 Press Release 0700 hours, 9 September 2021
 
STV Group plc Half Year Results to 30 June 2021
 
Strong strategic momentum and financial performance ahead of pre Covid levels
 
Highlights
 
·    Strong financial performance, with revenue and adjusted operating profit accelerating ahead of pre-Covid levels
·    Advertising recovery continues, with Total Advertising Revenue (TAR) +32% in H1 and expected to be +25-30% for the 9 months to end of September
·    Record audience growth maintained on both STV (+5%) and STV Player (+66%) 
·    Good momentum in Studios, with further new commissions and an 8th creative label added
·    Sale of lottery completed, with long term advertising contract in place
·    Following a return to cash dividend in May, Board proposes interim dividend of 3.7p, +23% on 2020
 




Financial Summary
 


2021


2020


Change




Revenue


£60.3m


£44.7m


              35%




EBITDA*


£13.9m


£7.8m


  78%




Operating profit**


£11.4m


£5.2m


             118%




Operating margin


19%


12%


 7pps




Adjusted profit before tax***


£10.6m


£4.4m


 137%




Profit/(loss) before tax


£8.5m


£(4.9)m


 273%




Adjusted basic EPS***


19.2p


10.7p


79%




Statutory basic EPS****


15.4p


(9.1)p


 269%




Net debt+


£17.6m


£33.5m


47%




Dividend per share


3.7p


3.0p


 23%




 




*


Earnings before interest, tax, depreciation & amortisation 




**


Before exceptional items 




***


Before exceptional items and IAS19 interest




****


2020 restated to reflect bonus issue of shares in December 2020




+


Excluding lease liabilities




 


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




 
Financial highlights
 
·    Total revenue of £60.3m, +35% on 2020 and +10% on 2019
·    Adjusted operating profit of £11.4m, +118% on 2020 and +3% on 2019
·    STV-controlled advertising continues to outperform the wider market, with video on demand (VOD) advertising on the STV Player +62% (2019: +83%) and regional advertising revenues +27% (2019: +4%) in H1
·    Studios revenue +265% on 2020 (2019: +202%), reflecting the recovery in production activity and recent commissioning momentum
·    Operating margin of 19%, +7 percentage points and broadly back to pre-Covid levels
·      Adjusted EPS is 19.2p, up 79% on 2020, with the higher effective tax rate in the current period diluting the year on year growth relative to operating profit
·    Net debt of £17.6m in line with opening position for the year 
 
Another record viewing performance on screen and online
 
·    Six consecutive years of viewing share growth, with STV's all time share at 20.8%, the highest growth of all of the UK's 500+ TV channels so far in 2021
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  8th creative label added through a minority investment in entertainment indie Hello Mary founded by former MTV, C4 and C5 exec Steve Regan
 
 
·    Good early progress towards STV's 3-year growth targets to 2023 to: 
o  Double digital viewing, users and advertising revenue (to £20m)
o  Quadruple production revenue (to £40m)
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 £20-25m
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 £30m to drive Digital and Studios growth with the target of delivering at least 50% of operating profit from outside traditional broadcasting by 2023.  The 2020 triennial valuation of the defined benefit pension schemes is on-going.  The Board remains mindful of the importance of the dividend to our shareholders and will seek to strike the most appropriate balance between sustainability of the dividend and pursuing growth opportunities.
Simon Pitts, Chief Executive Officer, said: 
"Ahead of expectations, STV has returned to pre-pandemic levels of growth and profitability, thanks to the strength of our programming, the success of our diversification strategy, and the commitment and creativity of our people. 
Our record viewing performance has continued into 2021, with TV audiences up 5% even on last year's lockdown levels, and online viewing via STV Player up a further 66% thanks to huge audiences for Euro 2020, dramas like The Pembrokeshire Murders, and our increasingly popular Player-exclusive boxsets which now constitute over 40% of our on-demand viewing. This has driven a 32% advertising bounceback in the first half which is continuing into the autumn. 
Our strategy of creating a more diversified business through a relentless focus on digital and production growth is delivering.  STV Studios is going from strength to strength, winning 15 programme commissions so far this year, and we're delighted to be filming new, large scale returnable formats in Scotland like drama series Screw (C4), quiz show The Bridge of Lies (BBC1) and the genre-bending Murder Island (C4), as we aim to become the UK's leading nations and regions producer.
Our high margin digital business continues to accelerate with streams nearly doubling so far this year and much more to look forward to for the remainder of 2021, with a new drama boxset drop on the STV Player every week, together with huge events like I'm a Celebrity and the return of the FA Cup.
STV also continues to drive positive social change through a range of important initiatives, from the STV Children's Appeal, to our campaign to improve on and off screen diversity and inclusion, and our advertising Green Fund which has set aside £1m to champion Scottish businesses taking climate action as Glasgow prepares to host COP26 in November.
With an improved financial position and good growth prospects, the Board has proposed an interim dividend of 3.7p, +23% on 2020."
There will be a presentation for analysts today, 9 September 2021, at 12.30 pm, via Zoom.  Should you wish to attend the presentation, please contact Angela Wilson, 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 £60.3m (2020: £44.7m), underpinned by the recovery in advertising and the resumption of programme production. Total advertising revenues of £51.4m were up 32% on the same period in the prior year, aided by the rebound in national advertising and continued success in STV controlled regional and digital advertising. Regional advertising revenues of £7.6m (2020: £6.0m) and national advertising revenues of £36.1m (2020: £28.0m) were generated during the period. 
Digital revenues increased by 45% in the period to £8.5m (2020: £5.9m), with VOD advertising accounting for most of the growth, and a net contribution to operating profit of £3.9m (2020: £2.8m).
Studio revenues were £6.0m (2020: £1.6m) with an operating loss of £0.9m (2020: loss of £1.5m).  In line with historic norms, the phasing of programme deliveries is heavily weighted towards H2.  Although challenges remain in delivering programmes under covid-19 restrictions and margins continue to be under pressure with the associated costs, the division is on track for its most successful year yet in terms of the number of commissions delivered, and the associated revenue and flow through to operating profit. 
As a result, adjusted operating profit of £11.4m was up 118% on the first half of 2020 and up 3% on the pre-pandemic interim period to June 2019. 
Total finance costs were £1.2m (2020: £1.4m before exceptional items).  These comprised interest on the Group's borrowings of £0.7m (2020: £0.7m) with the balance being non-cash costs in relation to the Group's defined benefit pension schemes of £0.4m (2020: £0.6m) and interest on lease liabilities of £0.1m (2020: £0.1m).
As intimated in our 2020 year end results announcement, in March 2021 the Board decided to repay all monies received through the Government's Coronavirus Job Retention Scheme ('CJRS') in advance of returning to payment of cash dividends in May 2021.  The repayment of CJRS monies has been recorded as an exceptional charge in the income statement of £1.7m, as it was a voluntary repayment and does not relate to trading performance in the first half of the year.
Before exceptional items and IAS19 interest, the Group generated a profit before tax of £10.6m (2020: £4.4m).  The statutory result for the year was a profit before tax of £8.5m (2020: loss before tax of £4.9m).  The effective tax rate (ETR) on the profit before exceptional items is 17.7%, lower than the standard rate in the UK of 19% and mainly driven by the impact of restating the opening deferred tax asset from 19% to 25% following the passing of legislation confirming that the rate of UK corporation tax would increase to 25% from 1 April 2023.  The tax credit on exceptional items represents an ETR of 19.0% as it relates wholly to the repayment of CJRS monies received in 2020 and which were taxed at the standard rate. 
Adjusted earnings per share (before exceptional items and IAS19 interest) increased by 79% to 19.2p.  On a statutory basis, earnings per share was 15.4p as a result of the exceptional charge recognised.
The Group's leverage (ratio of net debt to EBITDA) at the end of the period was 0.6 times, slightly lower than the position at the start of the year (December 2020: 0.7 times).  During the first half, the Group realised net proceeds of £3.3m following partial disposal of its minority investment in Unity Technologies Inc in April 2021.  In March 2021, the Group refinanced its bank facilities, agreeing a new £60m revolving credit facility, with a £20m accordion, for a minimum tenor of 3 years (two one-year extension options are available).  The covenant package is in line with the Group's previous facility, namely net debt to EBITDA must be less than 3 times, and interest cover must be greater than 4 times.
Across the Group's two defined benefit pension schemes, the accounting deficit before tax decreased to £42.1m at the half year (31 December 2020: £70.3m). This was largely driven by an increase in the discount rate due to a rise in corporate bond yields, offset to some extent by an increase in long-term inflation expectations.  
Broadcast
STV's exceptional viewing performance throughout the pandemic continued into 2021, with an all time share of 20.8%, STV's highest half-year share since 2006, and the highest growth in H1 2021 of all the UK's 500+ channels.  STV remains the best watched channel in Scotland, achieving the largest lead over BBC1 since 2008.  
This viewing success was driven by a strong schedule of drama, entertainment, factual and sport output, including Six Nations Rugby and, in particular, Euro2020, which captured the attention of a nation of football fans. The much-anticipated England v Scotland match saw STV's highest ever peak audience at 1.94m, becoming our most watched programme of the last decade and best watched football match ever.
Other highlights in H1 included entertainment juggernauts The Masked Singer and Ant and Dec's Saturday Night Takeaway; crime dramas The Pembrokeshire Murders and Grace; and Oprah's interview with Meghan and Harry, which one million Scots tuned into making it our second top programme of H1.  
STV News is the jewel in our regional crown and is watched by over half (54%) of the Scottish population each month, across all STV News bulletins; with STV News at Six the most watched news programme in the country. Audiences are up 11% on 2020 with an average audience of 541k, our tireless, talented news team is delivering the programme's highest audience since records began in 2002.
This strong content offering, and unrivalled reach of the channel, have helped drive Total Advertising Revenue growth of 32% for H1 which, encouragingly, is 5% up on the same period in 2019.
We continue to work closely with the Scottish business community, ensuring that advertising is both affordable and accessible via our innovative STV Growth Fund. This initiative is more important than ever as we seek to boost economic recovery post pandemic.  Since launching the Growth Fund in 2019, we have secured 675 deals and 285 new advertisers to television, with more than 60 in 2021.  In March, we launched a £1m Green Fund aimed at sustainable Scottish businesses; and in July, £1m from the Growth Fund was allocated to businesses committed to inclusive practices, reflecting STV's commitment to sustainability and diversity in business.  The recent launch of STV Self Service, enabling our advertisers to design and book their own campaigns, will provide ease of access to our leading marketing platform for SMEs.
Digital
The significant growth of our digital business has continued, with an exceptional performance in H1, ensuring we remain the UK's fastest growing broadcaster streaming service.  Viewing on STV Player was up 66% with total streams almost doubling to 64m from January to June, up 94% for the same period year on year; with Video On Demand (VOD) advertising on STV Player up 62% compared with the same period in 2020. 
There is strong evidence of the progression of our strategy to significantly increase our addressable audience via UK wide rollout and expand our high-quality content offering.  STV Player is now available on all major platforms, and 43% of our streams came from our Player-only content in H1, up from only 6% two years ago. Ex-Scotland streams increased to 10-15% of the total from a standing start.
In line with our growth strategy, in H1 we agreed 11 new content deals, adding more than 650 hours of content to our ever-expanding catalogue including 22 drama box sets and over 100 new titles including drama, true crime and factual entertainment programming.
Drama, both Channel 3 and acquired, along with soaps dominate STV Player's top 15 shows, with 8 of the top 15 best watched shows being Player-only content.  These include titles such as US crime drama, The Bridge (2.5m total streams to date), UK crime thriller, Thorne (1.2m streams); and US legal drama, The Firm (1.1m streams).  Given the increase in STV Player exclusive titles, STV's dependency on soaps to drive streams continues to diminish with soaps now accounting for only 1 in 5 VOD streams.
Euro2020 saw STV Player breaking records, with football fans watching in their millions. The day of the France v Switzerland and Croatia v Spain clashes on 28 June saw the STV Player deliver its best performing day ever with more than 1m streams.  The Denmark v England semi-final was STV Player's most watched live event, drawing in almost half a million streams. Total streams across the tournament were 3.9m.
In June, we became the first broadcaster video on demand service to launch a VIP rewards scheme to help build stronger connections with our viewers and further drive streams.  STV Player VIP brings members a range of benefits including personalised email recommendations, opportunities to win prizes every month as well as a reduced advertising load, and we will constantly be refining and improving this offer.
We continue to develop strong relationships with distributors and platforms and are beginning to focus our content offering around the most popular genres, with more drama box sets being added monthly.  This July, we secured our biggest ever content deal to date, partnering with Banijay Rights to bring 1,250 hours of new programming to our free streaming service, with regular content drops into 2022. 
STV Studios
Despite the impact of the pandemic on the whole production community, STV Studios has shown resilience and creativity, ensuring that 2021 will be its most successful year to date, with forecast revenues of £20-25m. 
The business entered 2021 with a strong pipeline of commissions, which were developed and won during the height of the pandemic and has continued that positive momentum through 2021. The team has secured new commissions across all genres - 15 in total for 2021 to date - and successfully delivered a range of shows, despite the ongoing impact of Covid restrictions.  
Importantly, we are creating returning and returnable series, which are particularly valuable to the business.  Highlights include: a significant entertainment commission from the BBC, a 25-part quiz show The Bridge of Lies with Ross Kemp; a recommission of the successful Yorkshire Auction House for Discovery, involving 2x10 part series plus a celebrity series; and a 13-episode commission for Celebrity Catchphrase, the biggest since the show's launch in 2013.  This was no doubt fuelled by the show attracting its highest ever viewing figures, with the fifth series of Celebrity Catchphrase being the most-watched series of the show ever with an average audience of 5.1m viewers across its eight-week run.
Our Factual team has had a strong H1. They secured and produced our first commission from UKTV to produce a new six-part factual entertainment travel series for Dave, British as Folk, featuring three comedians travelling the country interrogating the stereotypes that make up British life today. The team also completed production on Murder Island for Channel 4, an innovative competition format that blends crime drama and factual entertainment and sees members of public find out if they've got what it takes to solve a murder. Murder Island was the first production to be commissioned via Channel 4's new Contestable Fund, which seeks to find their next channel defining format.
Filming has now concluded on our high-end prison drama for Channel 4, Screw, a six-part returnable series starring Nina Sosanya (His Dark Materials) and Jamie-Lee O'Donnell (Derry Girls). One of our biggest drama productions to date, we expect this to air next year.  The series was the first production to film in Scotland's new creative hub in the west end of Glasgow, in the historic Kelvin Hall, contributing significantly to the county's cultural economy and delivering new training opportunities in partnership with Screen Scotland and Channel 4.
The new creative labels within our production family are all making encouraging progress. Belfast-based Two Cities announced a significant win in March this year with an original returnable police drama, Blue Lights, for BBC One - its first commission as part of the STV Studios family.  Primal's ground-breaking series for Sky Arts, Landmark, launched this week.  Both Tod Productions and Barefaced are in advanced discussions with broadcasters and streaming services on key projects.
STV Studios has also focused on continuing to strengthen its creative pipeline with the addition of an 8th label through a minority investment in Brighton-based entertainment indie Hello Mary, run by former MTV, Channel 4 and Channel 5 exec Steve Regan. Hello Mary has already secured 3 series commissions, the most recent an 8-part paranormal series for Discovery, announced last week.
Principal risks and uncertainties


The Board considers the principal risks and uncertainties affecting the business activities of the Group are:
·      Regulatory environment
·      Market volatility and advertising spend
·      Post Brexit uncertainty
·      Reliance on ITV
·      Cyber
·      Defined benefit pension scheme shortfalls
·      Group funding
Further details of the Group's policies on principal risks and uncertainties are contained within the Group's 2020 Annual Report, a copy of which is available at www.stvplc.tv.
 
 
Condensed interim income statement
Six months ended 30 June 2021
 




 


 


2021


2020




 


 


 


 


 


 


 


 




 


 
 


Before
exceptional
items
Unaudited


Exceptional
 items
(note 8)
 Unaudited


 
Results
for period
Unaudited


Before
exceptional
items
Unaudited


Exceptional
 items
(note 8)
  Unaudited  


 
Results 
for period
Unaudited




 


Note


£m


£m


£m


£m


£m


       £m




 


 


 


 


 


 


 




Revenue


7


60.3


-


60.3


44.7


-


44.7




 


 


 


 


 


 


 


 




Net operating expenses


 


(48.9)


(1.7)


(50.6)


(39.5)


-


(39.5)




 
Operating profit


 


 
11.4


 
(1.7)


 
9.7


 
5.2


 
-


 
5.2




 


 


 


 


 


 


 


 




Finance costs


 


 


 


 


 


 


 




- borrowings


 


(0.7)


-


(0.7)


(0.7)


-


(0.7)




- defined benefit pension schemes


(0.4)


-


(0.4)


(0.6)


-


(0.6)




- lease interest


 


(0.1)


-


(0.1)


(0.1)


-


(0.1)




Provision for impairment losses - ELM receivable (net)


 


 
-


 
-


 
-


 
 -


 
(8.7)


 
(8.7)




 


 


(1.2)


-


(1.2)


(1.4)


(8.7)


(10.1)




 


 


 


 


 


 


 


 




Profit/(loss) before tax


10.2


(1.7)


8.5


3.8


(8.7)


(4.9)




 


 


 


 


 


 


 


 




Tax (charge)/credit


9


(1.8)


0.3


(1.5)


(0.4)


1.6


1.2




 
Profit/(loss) for the period


 
8.4


 
(1.4)


 
7.0


 
3.4


 
(7.1)


 
(3.7)




 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 




Attributable to:


 


 


 


 


 


 




Owners of the parent


8.5


(1.4)


7.1


3.5


(7.1)


(3.6)




Non-controlling interests


 


(0.1)


-


(0.1)


(0.1)


-


(0.1)




 


8.4


(1.4)


7.0


3.4


(7.1)


(3.7)




 


 


 


 


 


 


 




Earnings per share (restated) *


 


 


 


 


 


 




Basic


10


18.4p


 


15.4p


9.3p


 


(9.1)p




Diluted


10


17.9p


 


15.0p


9.0p


 


(9.1)p




 
* The number of shares reported in 2020 for the purposes of earnings per share has been updated to reflect the bonus issue in December 2020; those shares issued are assumed to have been in issue since the start of the comparator period.
 
A reconciliation of the statutory results to the adjusted results is included at note 23. The above condensed interim income statement should be read in conjunction with the accompanying notes.
 
 
Condensed interim statement of comprehensive income
Six months ended 30 June 2021
 




 


2021


2020 




 


Unaudited


Unaudited




 


£m


£m




 


 


 




Profit/(loss) for the period


7.0


(3.7)




 


 


 




Items that will not be reclassified to profit or loss:


 


 




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


24.0


(15.2)




Deferred tax (charge)/credit 


(3.9)


2.9




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


(2.2)


0.1




Other comprehensive income/(expense) - net of tax


17.9


(12.2)




 


 


 




Total comprehensive income/(expense) for the period


24.9


(15.9)




 


 


 




Attributable to:


 


 




Owners of the parent


25.0


(15.8)




Non-controlling interests


(0.1)


(0.1)




 


24.9


(15.9)




 
The above condensed interim statement of comprehensive income should be read in conjunction with the accompanying notes.
 
 
Condensed interim balance sheet
As at 30 June 2021
 
 




 


 


30 June 


31 December




 


 


2021


2020




 


 


Unaudited


Unaudited




 


Note


£m


£m




Non-current assets


 


 


 




Intangible assets


12


2.0


2.3




Property, plant and equipment


13


10.1


9.9




Right-of-use assets


13


9.6


10.4




Investments


14


1.5


6.7




Deferred tax asset


15


15.2


19.9




Trade and other receivables


17


0.8


0.9




 


 


39.2


50.1




Current assets


 


 


 




Inventories


16


23.7


15.4




Trade and other receivables


17


26.6


25.6




Cash and cash equivalents


20


7.6


5.2




 


 


57.9


46.2




 


 


 


 




Total assets


 


97.1


96.3




 


 


 


 




Equity 


 


 


 




Ordinary shares


19


23.3


23.3




Share premium 


 


115.1


115.1




Capital redemption reserve


 


0.2


0.2




Merger reserve


 


173.4


173.4




Other reserve


 


1.1


1.0




Accumulated losses


 


(320.5)


(342.8)




Shareholders' equity


 


(7.4)


(29.8)




Non-controlling interests


 


(0.2)


(0.1)




Total equity


 


(7.6)


(29.9)




 


 


 


 




Non-current liabilities


 


 


 




Borrowings 


18


25.2


22.7




Lease liabilities


 


8.5


9.1




Retirement benefit obligations


21


42.1


70.3




 


 


75.8


102.1




Current liabilities


 


 


 




Trade and other payables


 


27.3


22.4




Lease liabilities


 


1.6


1.7




 


 


28.9


24.1




 


 


 


 




Total liabilities


 


104.7


126.2




 


 


 


 




Total equity and liabilities


 


97.1


96.3




 
The above condensed interim balance sheet should be read in conjunction with the accompanying notes.


Condensed interim statement of changes in equity
Six months ended 30 June 2021
 




 


 
Share capital


 
Share premium


Capital redemption reserve


 
Merger reserve


 
 
Other reserve


 
Accumulated losses


Attributable to owners of the parent


 
Non-controlling interest


 
 
Total equity




 


Unaudited


Unaudited


Unaudited


Unaudited


Unaudited


Unaudited


Unaudited


Unaudited


Unaudited




 


£m


£m


£m


£m


£m


£m


£m


£m


£m




 


 


 


 


 


 


 


 


 


 




At 1 January 2021 


23.3


115.1


0.2


173.4


1.0


(342.8)


(29.8)


(0.1)


(29.9)




 


 


 


 


 


 


 


 


 


 




Profit for the period


-


-


-


-


-


7.1


7.1


(0.1)


7.0




Other comprehensive income


-


-


-


-


-


17.9


17.9


-


17.9




Total comprehensive income for the period


 
-


 
-


 
-


 
-


 
-


 
25.0


 
25.0


 
(0.1)


 
24.9




 


 


 


 


 


 


 


 


 


 




Share based compensation


-


-


-


-


0.1


-


0.1


-


0.1




Dividends paid (note 11)


-


-


-


-


-


(2.7)


(2.7)


-


(2.7)




At 30 June 2021


23.3


115.1


0.2


173.4


1.1


(320.5)


(7.4)


(0.2)


(7.6)




 
 
 




At 1 January 2020


19.6


102.0


0.2


173.4


0.9


(343.2)


(47.1)


(0.2)


(47.3)




 


 


 


 


 


 


 


 


 


 




Loss for the 
period


-


-


-


-


-


(3.6)


(3.6)


(0.1)


(3.7)




Other 
comprehensive 
expense


-


-


-


-


-


(12.2)


(12.2)


-


(12.2)




Total 
comprehensive 
expense for the 
period


 
-


 
-


 
-


 
-


 
-


 
(15.8)


 
(15.8)


 
(0.1)


 
(15.9)




 


 


 


 


 


 


 


 


 


 




Share based compensation


-


-


-


-


0.2


-


0.2


-


0.2




At 30 June 2020


19.6


102.0


0.2


173.4


1.1


(359.0)


(62.7)


(0.3)


(63.0)






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


Condensed interim statement of cash flows
Six months ended 30 June 2021
 




 


 


2021


2020




 


 


Unaudited


Unaudited




 


Note


£m


£m




Operating activities


 


 


 




Cash generated by operations 


20


9.5


11.9




Interest and fees in relation to banking facilities paid 


 


(1.1)


(0.9)




Net taxes paid


 


(0.4)


(0.9)




Share based payments


 


0.1


0.2




Exceptional costs - repayment of furlough monies received


 


(1.7)


-




Pension deficit funding - recovery plan payment


 


(4.6)


(3.0)




Contingent cash payment to pension schemes


 


(0.3)


-




 


 


 


 




Net cash generated by operating activities


 


1.5


7.3




 


 


 


 




Investing activities


 


 


 




Proceeds from sale of investment


14


3.3


-




Purchase of investment in associate


 


-


(1.1)




Purchase of intangible assets


 


(0.2)


(0.5)




Purchase of property, plant and equipment


 


(1.3)


(0.9)




Loan notes provided to associate


 


(0.4)


-




 


 


 


 




Net cash generated by/(used in) investing activities


 


1.4


(2.5)




 


 


 


 




Financing activities


 


 


 




Payment of obligations under leases


 


(0.8)


(1.0)




Borrowings drawn


 


3.1


10.0




Borrowings repaid


 


(0.1)


(8.0)




Dividends paid


11


(2.7)


-




 


 


 


 




Net cash (used in)/generated by financing activities


 


(0.5)


1.0




 


 


 


 




Net increase in cash and cash equivalents


 


2.4


5.8




 


 


 


 




Cash and cash equivalents at beginning of period


 


5.2


6.2




 


 


 


 




Cash and cash equivalents at end of period


 


7.6


12.0




 
 
 
Unaudited notes to the condensed interim financial statements
Six months ended 30 June 2021
 
1.   General information
 
STV Group plc (the "Company") is a public limited company incorporated and domiciled in Scotland and listed on the London Stock Exchange.  The address of the registered office is Pacific Quay, Glasgow, G51 1PQ.
 
The principal activities of the Company and its subsidiaries (together "the Group") are the production and broadcasting of television programmes, provision of internet services and the sale of advertising airtime and space in these media.  Outside the core business, the Group operated an external lottery management company throughout the period, however this business was sold on 20 August 2021 (see note 24). 
 
These condensed interim financial statements were approved for issue on 9 September 2021 and have been reviewed, not audited.  They do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006.  Statutory accounts for the year ended 31 December 2020 were approved by the Board of Directors on 16 March 2021 and delivered to the Registrar of Companies.  The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.
 
2.   Basis of preparation
 
These condensed interim financial statements for the six months ended 30 June 2021 have been prepared based on the policies set out in the 2020 annual financial statements and in accordance with UK adopted IAS 34 and the Disclosure Guidance and Transparency Rules sourcebook of the UK's Financial Conduct Authority. These should be read in conjunction with the annual consolidated financial statements for the year ended 31 December 2020 which were prepared in accordance with IFRS in conformity with the requirements of the Companies Act 2006 and IFRS adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. 
 
The year to 31 December 2021 annual financial statements will be prepared in accordance with IFRS as adopted by the UK Endorsement Board. This change in basis of preparation is required by UK company law for the purposes of financial reporting as a result of the UK's exit from the EU on 31 January 2020 and the cessation of the transition period on 31 December 2020. This change does not constitute a change in accounting policy but rather a change in framework which is required to ground the use of IFRS in company law.  There is no impact on recognition, measurement or disclosure between the two frameworks in the period reported.
 
Going concern 
As part of the going concern review, the Group considers forecasts of the advertising market to determine the impact on liquidity and assesses the likelihood of crystallisation of other key risks and their impact on the Group's ability to execute its strategy.  
 
As set out by the Directors in March 2021, the next stage of the Group's strategy continues to focus on diversification of operations to drive a greater proportion of the Group's results from non-broadcast earnings. At the end of 2020, the Group had achieved its initial target of generating at least one third of the Group's operating profit from non-broadcast activity, and a new target has been set to achieve at least 50/50 between broadcast/non-broadcast earnings by the end of 2023.  Underpinning this ambition are separate targets in relation to Digital and Studios, with the Group aiming to double the size of the digital business and quadruple Studios revenues over the same period. 
 
 
The directors performed a full review of principal risks and uncertainties at the start of 2021, coincident with approval of the three-year plan covering the period to 31 December 2023.  A severe but plausible downside scenario was identified that reflected crystallisation of a number of risks.  Even under this scenario, the Group generated sufficient cash to enable it to continue in operation and remain within covenant levels under the Group banking arrangements.   
 
In March 2021, the Group refinanced its bank facilities, agreeing a new £60m revolving credit facility, with £20m accordion, for a minimum tenor of 3 years (two one-year extension options are available).  The covenant package is in line with the Group's previous facility, namely net debt to EBITDA (leverage) must be less than 3 times, and interest cover must be greater than 4 times. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group will be able to operate within the level of its current available funding and covenant levels. 
 
As part of the going concern assessment at the end of the interim period, the directors have assessed current trading relative to the budget for the year and reconfirmed that the downside scenario previously identified remains appropriate.  Following completion of this work, the Directors have a reasonable expectation that the Group has adequate resources to continue in operation for at least 12 months from the date of this report. Accordingly, the Group continues to adopt the going concern basis in preparing its consolidated financial statements.
 
3.   Accounting policies
 
The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2020.  There were no changes to accounting standards in the period that had any material impact on the financial statements.
 
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss.
 
4.   Judgements and estimates
 
Judgements 
The Group applies judgement in how it applies its accounting policies, which do not involve estimation, but could materially affect the numbers disclosed in these financial statements. The key accounting judgements, without estimation, that have been applied in these financial statements are as follows:
 
Inventory
Deferred programme production stock forms part of inventory and is stated in the financial statements at the lower of cost or net realisable value. Programme costs are expensed in line with expected future revenues which is an area involving significant management judgement. A detailed forecast of future secondary sales is prepared by management based on historic experience and expected future trends. £0.5m was expensed through the income statement in the period (2020: £0.3m).
 
Estimates 
The preparation of the Group's financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. 
 
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Group. Such changes are reflected in the assumptions when they occur.
 
Pension obligations
The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for pensions include the discount rate and mortality rate. Any changes in these assumptions will impact the carrying amount of pension obligations.
 
The Group determines the appropriate discount rate at the end of each period. This is the rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Group considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability. With regard to mortality, the base tables used are updated every three years (to coincide with triennial valuations) or more frequently when there is evidence of a change in experience. The CMI tables relating to future improvements in mortality are updated when new information is available, usually annually. Other key assumptions for pension obligations are based in part on current market conditions.  Refer to note 21 for further disclosure.
 
 
5.   Financial risk management and financial instruments
 
The Group's activities expose it to a variety of financial risks, to varying degrees: currency risk, credit risk, liquidity risk and cash flow interest rate risk.
 
The condensed interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with the Group's annual financial statements for the year ended 31 December 2020.  
 
There have been no changes in any risk management policies since the year end.
 
 
6.   Seasonality of operations
 
In line with the UK advertising market, the autumn season provides the Group with its highest level of revenues, as trading picks up from the quieter months of July/August.  The Studios business delivers the majority of its programmes to broadcasters in the second half of the year which results in higher work in progress inventory at the interim period end compared to the year end position (see note 16).  In the current year, guidance is for the Studios division to generate revenues of £20-25m, of which £6.0m has been realised in the six months ended 30 June 2021. 
 
7.   Business segments
 
Information reported to the Group's Chief Executive for the purposes of resource allocation and assessment of segment performance is by product.  The Group's reportable segments, which remain the same as the prior year, are Broadcast, Digital and Studios.  The STV ELM (which is an operating but not reportable segment) is included in 'Other' below.  
 




 


Broadcast


Digital


Studios


    Other


    Total




Six months


2021


2020


2021


2020


2021


2020


2021


2020


2021


2020




 


£m


£m


£m


£m


£m


£m


£m


£m


£m


£m




Revenue


 


 


 


 


 


 


 


 


 


 




Sales


50.2


35.8


8.5


5.9


6.2


1.7


0.9


2.2


65.8


45.6




Inter-segment sales


(5.3)


(0.8)


-


-


(0.2)


(0.1)


-


-


(5.5)


(0.9)




Segment revenue


44.9


35.0


8.5


5.9


6.0


1.6


0.9


2.2


60.3


44.7




 


 


 


 


 


 


 


 


 


 


 




Segment result


 


 


 


 


 


 


 


 


 


 




Operating profit 


10.5


5.4


3.9


2.8


(0.9)


(1.5)


-


-


13.5


6.7




 


 


 


 


 


 


 


 


 


 


 




Unallocated corporate expenses


 


 


 


 


 


 


(2.1)


(1.5)




Operating profit (excluding exceptional items)


 


 


 


11.4


5.2




Exceptional items


 


 


 


 


 


 


 


 


(1.7)


(8.7)




Finance costs (excluding exceptional items)


 


 


 


 


 


(1.2)


(1.4)




Profit/(loss) before tax


 


 


 


 


 


 


 


8.5


(4.9)




 


 


 


 


 


 


 


 


 


 


 




Tax (charge)/credit


 


 


 


 


 


 


 


 


(1.5)


1.2




Profit/(loss) for the period


 


 


 


 


 


7.0


(3.7)




 
There has been no significant change in total assets from the amount disclosed in the last annual financial statements.
 
8.   Exceptional items
 
2021
During 2020, and principally over the second quarter, the Group applied for grants under the Government's Coronavirus Job Retention Scheme ('CJRS') totalling £1.7m.  These monies were received at a time when the business was operating under the tightest of lockdown restrictions, with total advertising revenue down 38% year on year, no programme production activity possible, and visibility over key markets very limited.  The amounts received under the CJRS were allocated against payroll within operating costs in 2020. Over the second half of 2020 and into 2021, the Group's trading improved significantly, despite further lockdown measures in Q1 2021, demonstrating the resilience of its Broadcast business and the successful execution of strategy in Digital in particular.  In March 2021, the Board announced its intention to resume payment of a cash dividend to shareholders.  Although there was no obligation on the Group to repay furlough grants, the Board decided that CJRS monies received would be repaid in full prior to re-commencing payment of a cash dividend.  As the repayment of furlough grants does not relate to the current period of trading, nor was it required under any law or regulation, the Group has presented the cost as exceptional so as not to distort the underlying trading results of the business.
 
2020
The exceptional item recognised in the first half of 2020 related entirely to the increase in the provision for the debtor receivable from the Scottish Children's Lottery, recognised in the books of STV ELM, the Group's external lottery management company.  The gross debtor was provided for in full as at 30 June 2020, with the additional provision of £8.7m recognised as an exceptional finance cost in the period.  A related exceptional tax credit was also recognised, totalling £1.6m.
 
 
 
9.   Tax
 




 


 


 


Six months
2021


Six months
2020




 


 


 


            £m


            £m




 


 


 


 


 




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


 


 


 


 




Charge for the period before exceptional items


 


 


1.8


0.4




Tax effect on exceptional items


 


 


(0.3)


    (1.6)




Charge/(credit) for the period


 


 


 


1.5


(1.2)



 
 
 
 
 
 



 
The tax on the results for the six month period is charged at the rate that represents the best estimate of the average annual effective tax rate (ETR) expected for the full year, applied to the pre-tax result for the six month period.
 
The ETR on the results before exceptional items has been charged at 17.7% (30 June 2020: 9.3%), which is lower than the standard rate of 19%, primarily because of the change in rate at which deferred tax is recognised.
 
The Government announced in the Budget on 3 March 2021 that the main rate of corporation tax for the financial year beginning 1 April 2023 will increase to 25% from the current rate of 19% previously legislated. The 25% rate was substantively enacted on 24 May 2021 when the Budget Provisional Collection of Taxes Act resolution was passed. The Finance Act 2020 included this amendment and set the main rate at 25% for the financial year beginning 1 April 2023. Therefore, the Group has remeasured the deferred tax balances to be carried at the 25% rate.
 
The ETR on exceptional items was 19%. This relates wholly to the repayment of furlough monies received which were treated as taxable in the prior year. 
 
10. Earnings per share  
 
The calculation of earnings per share is based on earnings after tax and the weighted average number of ordinary shares in issue during the period, excluding ordinary shares purchased by the Company and held for use by the STV Employee Benefit Trust.                                                                                                                       
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Group has one type of dilutive potential ordinary share namely share options granted to employees. In the prior period, as the group reported a basic loss per share, any potential ordinary shares were anti-dilutive and therefore excluded from the calculation of diluted loss per share.
                                                                                                     
The adjusted earnings per share figures have also been calculated based on earnings before adjusting items that are significant in nature and/or quantum and therefore considered to be distortive.  The adjusting items include the impact of operating and non-operating exceptional items and the IAS 19 net financing cost; as well as the tax adjustments relating to these items. Adjusted earnings per share have been presented to provide shareholders with an additional measure of the Group's year-on-year performance. 
       
The number of shares reported in 2020 for the purposes of earnings per share has been updated to reflect the bonus issue in December 2020, with those shares issued assumed to have been in issue since the start of the comparator period.
 
 
 
 




Earnings per share


 
Six months
2021


Restated
Six months
2020




 


Pence


Pence




 


 


 




Basic earnings per ordinary share


15.4p


(9.1)p




Diluted earnings per ordinary share


15.0p


(9.1)p




 


 


 




Earnings per ordinary share (before exceptional items)


18.4p


9.3p




Diluted earnings per ordinary share (before exceptional items)


17.9p


9.0p




 


 


 




Adjusted basic earnings per share                       


19.2p


10.7p




Adjusted diluted earnings per share 


18.6p


10.3p




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




Earnings


£m


£m




 


 


 




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


7.1


(3.6)




Exceptional items (net of tax)


1.4


7.1




Profit for the period before exceptional items


8.5


3.5




 


 


 




Adjustment for IAS 19 financing cost (net of tax)


0.3


0.5




Adjusted profit


8.8


4.0




 


 


 




 


 


Restated




Number of shares


Million


Million




 


 


 




Weighted average number of ordinary shares in issue 


45.4


38.4




Dilution due to share options


1.3


1.3




Total weighted average number of ordinary shares in issue


46.7


39.7




 
 
11. Dividends
 
An interim dividend (equivalent to 3.0p per share) in respect of 2020 was made by way of a bonus issue of new ordinary shares in December 2020. A final cash dividend of 6.0p per share in respect of 2020 was paid on 29 May 2021. 
 
An interim dividend of 3.7p per share has been proposed and is subject to approval by the board of directors. It is payable on 5 November 2021 to shareholders who are on the register at 1 October 2021. This interim dividend, amounting to £1.7m has not been recognised as a liability in this interim financial information.  It will be recognised in shareholders' equity in the year ending 31 December 2021.  
 
 
12. Intangible assets
 
During the six months ended 30 June 2021, the Group incurred expenditure of £0.2m on web development (£0.7m in the year to 31 December 2020; £0.5m in the six months ended 30 June 2020).  The net disposals amounted to £nil in the current period and for the year ended 31 December 2020.
 
 
13. Property, plant and equipment
 
During the six months ended 30 June 2021, the Group incurred expenditure of £1.3m on property, plant and equipment (£1.4m in the year ended 31 December 2020; £0.9m in the six months ended 30 June 2020).  The net disposals amounted to £nil in the current period and for the year ended 31 December 2020.
 
During the six months ended 30 June 2021, the Group incurred additions of £0.1m on right-of-use assets (£0.2m in the year ended 31 December 2020; £0.2m in the six months ended 30 June 2020). The net disposals amounted to £nil in the current period and for the year ended 31 December 2020.
 
 
14. Investments
 
On 30 April 2020, the Group sold the majority of its investment in Unity Technologies Inc., realising net proceeds of £3.3m.  A loss of £1.8m has been recognised in the interim condensed statement of comprehensive income.
 
 
15. Deferred tax asset
 
At 30 June 2021, total deferred tax assets of £15.2m were recognised on the balance sheet (31 December 2020: £20.4m).  Of this, £10.5m relates to the deficit on the Group's defined benefit pension schemes (31 December 2020: £14.6m) and the balance of £4.7m relates to tax losses, accelerated capital allowances and short-term timing differences (31 December 2020: £5.8m).
 
 
16. Inventory
 




 


 


 


30 June
2021


31 December
2020




 


 


 


            £m


            £m




 


 


 


 


 




Deferred programme production


 


 


10.6


10.3




Programme production work in progress


 


 


12.6


4.4




Recorded programmes


 


 


0.5


0.7




 


 


 


 


23.7


15.4



 
 
 
 
 
 



 
 
17. Trade and other receivables
 




 


 


 


30 June
2021


31 December
2020




 


 


 


            £m


            £m




 


 


 


 


 




Trade receivables


 


 


19.0


13.7




Prepayments and contract assets


 


 


5.6


10.0




Other receivables


 


 


2.6


2.5 




Income tax recoverable


 


 


0.2


0.3




 


 


 


 


27.4


26.5



 
 
 
 
 
 



 




Amounts included in current assets


 


 


26.6


25.6




Amounts included in non-current assets


 


 


0.8


0.9




 


 


 


 


27.4


26.5



 
 
 
 
 
 



18. Borrowings
 
In March 2021, the Group refinanced its bank facilities, agreeing a new £60m revolving credit facility, with £20m accordion, for a minimum tenor of 3 years (two one-year extension options are available).  The covenant package is in line with the Group's previous facility, namely net debt to EBITDA must be less than 3 times, and interest cover must be greater than 4 times.
 
19. Share capital 
 
Issued share capital at 30 June 2021 amounted to £23.3m (46,722,499 shares). Issued share capital at 30 June 2020 amounted to £19.6m (39,192,137 shares). The increase was a result of an equity placing of 7,050,665 new ordinary shares in July 2020 and a bonus issue of 476,679 shares in December 2020.
 
 
20. Notes to the condensed interim statement of cash flows
 




 


 


 




 


Six months
2021


Six months
2020




 


£m


£m




 


 


 




Operating profit (before exceptional items)


11.4


5.2




 


 


 




Adjustments for:


 


 




Depreciation on property, plant and equipment


1.1


1.1




Amortisation of intangible assets


0.5


0.6




Amortisation of right-of-use assets


0.9


0.9




   


 


 




Adjusted EBITDA


13.9


7.8




 


 


 




Increase in inventories


(8.3)


(1.0)




(Increase)/decrease in trade and other receivables


(1.8)


4.4




  Increase in trade and other payables 


5.4


1.4




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


0.3


(0.7)




Cash generated by operations


9.5  


11.9  




 
Net debt reconciliation
 




 


 
 
Long-term borrowings


 
Cash and cash equivalents


 
 
 
Net debt


 
 
Lease liabilities


Net debt including lease liabilities




 


£m


£m


£m


£m


£m




 


 


 


 


 


 




At 1 January 2021


(22.7)


5.2


(17.5)


(10.8)


(28.3)




Cash flows 


(2.2)


2.4


0.2


0.8


1.0




Non-cash flows (i)


(0.3)


-


(0.3)


(0.1)


(0.4)




At 30 June 2021


(25.2)


7.6


(17.6)


(10.1)


(27.7)




 
(i)   Non cash changes for long-term borrowings relate to the capitalisation and amortisation of 
borrowing costs, and for lease liabilities the acquisition of right-of-use assets.
 
 
 
 
 
 
21. Retirement benefit schemes
 
The fair value of the assets and the present value of the liabilities in the Group's defined benefit pension schemes at each balance sheet date was:
 




 


 


 




 


 At 30 June
2021


At 31 December
2020




 


£m


£m




 


 


 




Defined benefit scheme obligations


(468.8)


(507.5)




Defined benefit scheme assets 


426.7


437.2




Net pension deficit


(42.1)


(70.3)  




 
The reduction in the net pension deficit is largely driven by an increase in the discount rate due to a rise in corporate bond yields.
 
Assumptions used to estimate the scheme obligations
The significant actuarial assumptions used for accounting purposes reflect prevailing market conditions in the UK and are as follows:




 


 


 




 


 At 30 June
2021


At 31 December
2020




 


%


%




 


 


 




Rate of increase in salaries


nil


nil




Rate of increase of pensions in payment


3.30


3.00




Discount rate


1.80


1.25




Rate of price inflation (RPI)


3.30


3.00




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




 


 


 




 


 At 30 June
2021


At 31 December
2020




Retiring at balance sheet date:


 


 




Male


19.6


19.6




Female


21.9


21.9




Retiring in 25 years


 


 




Male


21.5


21.5




Female


23.5


23.5




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




Assumption


Change in assumption


Impact on scheme liabilities




 


 


 




Discount rate


Increase/decrease by 0.25%


Increase/decrease by 3.1%




Rate of price inflation (RPI)


Increase/decrease by 0.25%


Increase/decrease by 1.3%




Rate of mortality


Decrease by 1 year


Decrease by 4.5%




 
These sensitivities have been calculated to show the movement in the defined benefit obligations in isolation, and assuming no other changes in market conditions at the balance sheet date.
 
22. Transactions with related parties
 
Other than the loan notes provided to associate referred to in the statement of cash flows, there are no transactions with any related parties in the period to 30 June 2021.
 
23. Reconciliation of statutory results to adjusted results
 
In reporting financial information, the Group presents alternative performance measures (APMs) which are not defined or specified under the requirements of IFRS.  The Group believes that these APMs, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders with additional helpful information on the performance of the business.
 
In calculating adjusted operating profit, profit before tax and EPS, the Group excludes exceptional items and amounts in relation to IAS19, as well as the tax charge or credit on those amounts. Exceptional items are items of income or expense which, because of the nature, size and/or infrequency of the events giving rise to them, are one-off and do not necessarily directly relate to the underlying trading of the Group. These items are excluded to reflect performance in a consistent manner and in line with how the business is managed on a day-to-day basis. They are also shown separately on the face of the primary financial statements. IAS19 related items, principally the net interest expense included in the income statement, are excluded from non-statutory measures as they are non-cash items that relate to historical defined benefit pension schemes.
 
A reconciliation of the statutory results to the adjusted results is presented below.  As the Group reported a loss during the prior period, the diluted EPS measure was taken to be the same as basic EPS as any potential ordinary shares would have been anti-dilutive.
 
The number of shares reported in 2020 for the purposes of earnings per share has been updated to reflect the bonus issue in December 2020, with those shares issued assumed to have been in issue since the start of the comparator period.
 
 




 


2021


2020




 


 
Profit
 before tax


 
Basic
EPS


 
Diluted
EPS


Profit
 before tax


Restated
Basic
EPS


Restated
Diluted
EPS




 


£m


pence


pence


£m


pence


pence




 


 


 


 


 


 


 




Post-exceptional items


8.5


15.4p


15.0p


(4.9)


(9.1p)


(9.1p)




Add back: exceptional items 


1.7


3.0p


2.9p


8.7


18.4p


18.1p




 


 


 


 


 


 


 




Pre-exceptional items


10.2


18.4p


17.9p


3.8


9.3p


9.0p




 


 


 


 


 


 


 




Add back: IAS 19 


0.4


0.8p


0.7p


0.6


1.4p


1.3p




 


 


 


 


 


 


 




Adjusted results


10.6


19.2p


18.6p


4.4


10.7p


10.3p




 
 
 
24. Post balance sheet event
 
On 26 August 2021, the Group announced completion of the transaction to dispose of the STV ELM Limited, the external lottery management company operating the Scottish Children's Lottery, following approval by the UK Gambling Commission.  As previously disclosed, the agreement combines up-front consideration for the business with a multi-year advertising contract.
 
 
Independent review report to STV Group plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed STV Group plc's condensed consolidated interim financial statements (the "interim financial statements") in the half year results to 30 June 2021 of STV Group plc for the 6 month period ended 30 June 2021 (the "period").
Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
·    the Condensed interim balance sheet as at 30 June 2021;
·    the Condensed interim income statement and Condensed interim statement of comprehensive income for the period then ended;
·    the Condensed interim statement of cash flows for the period then ended;
·    the Condensed interim statement of changes in equity for the period then ended; and
·    the explanatory notes to the interim financial statements.
The interim financial statements included in the half year results to 30 June 2021 of STV Group plc have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The half year results to 30 June 2021, including the interim financial statements, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the half year results to 30 June 2021 in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim financial statements in the half year results to 30 June 2021 based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the half year results to 30 June 2021 and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.
 
 
PricewaterhouseCoopers LLP
Chartered Accountants
Glasgow
9 September 2021
 
 

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