Half year results

RNS Number : 1779Q

STV Group PLC

28 August 2014

 



28 August 2014

STV Group plc Half Year Results 2014

Half year results for the six months ended 30 June 2014

Commercially focused; creatively led

Financial highlights	H1 2014	H1 2013	Year on year
Revenue	£54.7m	£51.2m	7%
EBITDA	£10.7m	£9.4m	14%
Operating profit	£9.8m	£8.2m	20%
Pre-tax profit and IAS 19 interest	£8.4m	£6.7m	25%
Pre-tax profit	£8.4m	£6.2m	35%
EPS pre IAS 19 interest	18.7p	14.3p	31%
Statutory EPS	18.7p	13.2p	42%
Net debt	£40.1m	£43.4m	-8%

Highlights

-       Enhanced dividend policy announced with increase to planned level of interim dividend payment from 1.0 pence to 2.0 pence per share and an intended final 2014 dividend of 4.0 pence per share; making a total of 6.0 pence per share for the full year

-       Financial performance in line with forecasts and KPI performance in line with growth expectations

-       Robust balance sheet as net debt continues to reduce, down 8% at £40.1m, and on track to achieve net debt: EBITDA target of less than 1.5x for year end

-       Revenues up 7% to £54.7m with digital revenues up 16%

-       Operating profit up 20% at £9.8m

-       Profit before tax and IAS 19 up 25% at £8.4m

Strategic Developments

               -       Continued progress towards achievement of 2015 strategic aims

               -       City TV service, STV Glasgow, launched in June to strong audience ratings and positive response from

                  advertisers and commercial partners. Launch of second service, STV Edinburgh, on track for January 2015

               -       Pension valuation settlement based on reduced deficit recovery period agreed with trustees

               -       Extension of bank facility until 2019 on improved terms and providing flexibility to support future growth               strategy

Rob Woodward, Chief Executive Officer, said: "Today's results represent a strong performance at the half year with continuing progress towards our 2015 strategic aims. The enhanced dividend policy reflects the transformation of STV to a business that is well positioned to deliver sustainable growth and returning value to shareholders."

28 August 2014

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

Enquiries:

STV Group plc

George Watt, Chief Financial Officer                                       Tel: [phone]

Eleanor Marshall, PR & Communications Manager                    Tel: [phone]

Instinctif Partners

Kay Larsen/Chantal Woolcock                                                Tel: [phone]

Financial performance

Performance during the first half of the year is strong and in line with forecasts against all key financial measures.

The Board is committed to the long-term delivery of increased shareholder returns and has further reviewed the dividend policy following the re-instatement of dividend payments for the 2013 full year.  It is planned that dividend payments will be increased over the next two years with an interim dividend payment of 2.0 pence per share confirmed today, payable in October, and an intended final dividend payment for 2014 of 4.0 pence per share, for a total of 6.0 pence per share. This represents a 200% increase on 2013 and a doubling from previous guidance.  We also plan to increase the dividend by a further 33% in 2015.

The balance sheet has continued to improve and, combined with strong cash generation, net debt has reduced by 8% at £40.1m, despite higher levels of capital investment and the normal seasonal working capital outflow during H1.  Revenue has increased by 7% to £54.7m and operating profit has increased by 20% to £9.8m, reflected in an increased margin performance of 17.9% for the Group.

In order to aid understanding, 'ex-growth' digital revenues are now included in 'other' revenues and all references to digital revenues and profit reflect only the 'growth' areas.

Operational Review

STV Consumer

The consumer business has performed strongly during the period reflecting improved advertising revenues and continued growth in digital activities.  Overall, consumer revenues are up 7% benefitting from the World Cup matches, with digital revenues continuing to perform strongly up 16% and in line with expectations.

Operating profit amounted to £10.9m, up 25% on last year, with a consequent increase in margins to 21.5%, up from 18.7% in the same period last year. Included in this total, digital operating profit grew by 20% to £0.5m, achieving a margin of 23% and on track for the 2014 target of 30%.

At the beginning of 2014, refreshed key performance indicator targets for the consumer business were confirmed to measure progress through to 2016. The new measures include increased focus on monitoring consumer reach and engagement across every platform within the STV family of services: STV; STV Player; City TV services; STV City Apps and stv.tv.

This increased focus by platform has been supported by a brand refresh of all of the consumer services to introduce a more cohesive relationship between each of these and support increased reach of the STV brand whilst underscoring the range of assets available to commercial partners to reach their target markets.

The core channel, STV, has continued to perform robustly achieving peak-time performance of 0.4 share points in excess of the Network.  The consistently high performance of STV is being used as a platform to maximise audience share and drive new revenues, supporting the growth and development of new services, particularly City TV.

The first of the City TV services, STV Glasgow, successfully launched in June to a positive audience reaction, reaching almost 650,000 viewers on average in the first two months, 33% of the available audience.  This secures a position as the 25^th best watched commercial channel within its broadcast area.  The response from commercial partners has been positive with 60% of advertisers in the first three months representing new customers to STV, many of whom have committed to repeat bookings in Q3.  In addition to the interest from a new advertising base; existing STV clients, both direct and agency, have added STV Glasgow to bookings for Q3. Furthermore, the available audience data points to the channel reaching a new and younger profile than core channel, STV.

The early audience data also indicates effective cross-platform promotion is driving traffic to the STV Glasgow city app and the STV Player, with browsers to the Glasgow city app up 50% in June.  Monthly streams to the STV Player have increased by 14% year on year averaging over one million per month.

As the nature of the relationship with audiences across all services in the STV family continues to evolve and deepen, the acquisition of consumer insights is key to achieving stronger consumer engagement.  The KPI target is to achieve 0.8m insights by end of 2014, and 2.4m registered users by end of 2016, creating new opportunities for our commercial partners to address the Scottish market on a targeted basis whilst enhancing the experience of our consumers when enjoying STV services. This is on track and has been enhanced considerably by the successful launch of pre-registration on live streaming service, STV Live, during the World Cup, which has generated a 39% increase in registrations year on year.

In a year of unparalleled political significance for Scotland, the strong track record in delivering engaging public service content has placed STV at the heart of the debate on the referendum on independence for Scotland.  News and current affairs programming continues to receive widespread critical acclaim and has successfully created increased engagement and raised the profile of the STV brand across audience groups, through high quality programming and innovative use of technology and social media. As a result of this approach, over one quarter of visits to STV News sites are via social media and STV News is the most liked news Facebook page in Scotland.

Double digit growth in digital revenue has been maintained with an increase of 16% during H1 and is on track to maintain this rate of growth for the full year as the reach and engagement levels achieved across the STV family of services continue to grow.

As accessibility to STV content is now secured across a wide range of platforms, free at the point of consumption, the focus of the product development strategy in the next phase of growth is to continue to harness innovation to deliver a consumer experience with a content offering and guarantee of service as strong as the core broadcast business. Ensuring the availability of STV content reflects changes in consumption habits is also the aim of the development strategy.  This is being achieved with a 66% increase year on year in downloads of the STV Player app whilst engagement continues to increase with the average time spent by viewers of the STV Player increasing by 20% since last year.

Outlook

STV national airtime revenue was up 8% in H1, largely driven by the World Cup, and is expected to continue to perform in line with the market during Q3 with the cumulative forecast to the end of Q3 up 7% year on year.

The regional market was flat in H1 due to the dominance of national campaigns related to the World Cup during May and June.  The regional market continues to be more volatile than the national market with revenues down 9% in Q3 but up 35% in October, giving a cumulative forecast for the 10 month period of up 6% year on year.

Digital revenues are expected to continue to grow by 15%-20% year on year in Q3 and also maintain this rate for the full year.

STV Productions

The key aim of securing returning series commissions continues to be fulfilled.  Today the commission of 40 episodes of daytime quiz show, The Link, for BBC One has been announced following a successful run of 25 episodes during which the show ranked number one programme in this slot.

During the period re-commissions have been announced for a third series of Catchphrase (12 episodes, including two celebrity specials) for ITV; four series of Antiques Road Trip for BBC One (80 episodes) and a fourth series (20 episodes) of Celebrity Antiques Road Trip for BBC Two; and a second series of The Lie for both TV3 and STV.

Additionally, a one-off documentary for BBC1, Discovery Canada and the Smithsonian channel, Tutankhamun - The Boy Behind The Golden Mask, will be delivered this autumn.

Pensions

The 2012 triennial valuation was agreed with the trustees in July and provides forecasting certainty against a reduced recovery plan period of 11 years. Deficit funding payments of £5.5m will be made in 2014 and between £7.0m and £7.7m in 2015-2025.

The net surplus at 30 June 2014 on an IAS 19 basis increased to £5.3m from £1.3m at the 2013 year end due to asset value increases and planned deficit funding contributions.  The next triennial valuation will commence in January 2015 and in the meantime the Group continues to progress a programme of liability reduction measures in conjunction with the trustees of both defined benefit schemes.

Principal Risks and Uncertainties

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

The Group set out in its 2013 Annual Report and Financial Statements the principal risks and uncertainties that could impact its performance.  These remain unchanged since the annual Report was published.  The Group has rigorous internal systems to identify, monitor and manage any risks to the business.  The principal risks identified are set out in detail on pages 29 and 30 of the 2014 Annual Report which is available on the STV Group plc website:  www.stvplc.tv

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

Basis of preparation

These condensed interim financial statements for the six months ended 30 June 2014 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority (previously the Financial Services Authority) and with IAS 34, 'Interim financial reporting', as adopted by the European Union. The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2013, which have been prepared in accordance with IFRSs as adopted by the European Union.

Going-concern basis

The group meets its day-to-day working capital requirements through its bank facilities. The current economic conditions continue to create uncertainty particularly over (a) the level of demand for the group's products; and (b) the availability of bank finance for the foreseeable future. The group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the group should be able to operate within the level of its current facilities. After making enquiries, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. The group therefore continues to adopt the going concern basis in preparing its condensed interim financial statements.

Statement of directors' responsibilities

The directors' confirm that these condensed interim financial statements have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union 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:

a.   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

b.   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 STV Group plc Annual Report for 31 December 2013, with the exception of the following change in the period: Christian Woolfenden was appointed on 1 June 2014. A list of current directors is maintained on the STV Group plc website: www.stvplc.tv

Appendix 1

KPI Update (as at 30 June 2014)

		2014 Target	Comment at 2014 interim
Group
1 Non broadcast earnings share		33% by end of 2015	On track
Consumer
2 Audience to outperform ITV Network		To exceed Network	On track
3 Consumer division margin		16.5%	On track
4 Consumer reach		Various targets to 2016	All services on track
5 Consumer engagement		Various targets to 2016	All services on track
6 Consumer insights		0.8m	On track
7 Long form video streams		14.0m	On track
8 Digital revenues		£5.3m	On track
9 Digital margin		30%	On track
STV Productions
10 STV Productions revenue		£16.8m	On track
11 STV Productions margin		5%	Tracking below

Condensed interim income statement SSix months ended 30 June 2014
			Six months	Six months
			2014	2013
			£m	£m
		Note	Unaudited	Unaudited
Revenue		5	54.7	51.2
Net operating expenses			(44.9)	(43.0)
Operating profit			9.8	8.2
Finance costs	- borrowings	7	(1.4)	(1.5)
	- IAS 19 pension	7	-	(0.5)
			(1.4)	(2.0)
Profit before tax			8.4	6.2
Tax charge		8	(1.3)	(1.2)
Profit for the period			7.1	5.0
Earnings per share
Basic earnings per share		9	18.7p	13.2p
Diluted earnings per share		9	18.2p	12.8p

A reconciliation of the statutory results to the adjusted results is included at note 17.

Condensed interim statement of comprehensive income SSix months ended 30 June 2014
	Six months	Six months
	2014	2013
	£m	£m
	Unaudited	Unaudited
Profit for the period	7.1	5.0
Items that will not be reclassified to profit or loss:
Re-measurement gains on defined benefit pension schemes	(0.7)	4.6
Deferred tax credit/(charge)	0.1	(1.1)
Other comprehensive income for the period	(0.6)	3.5
Total comprehensive income for the period	6.5	8.5

The above condensed interim income statements should be read in conjunction with the accompanying notes.

Condensed interim balance sheet As at 30 June 2014
		30 June	31 December	30 June
		2014	2013	2013
		£m	£m	£m
	Note	Unaudited	Audited	Unaudited
Non-current assets
Property, plant and equipment	11	8.5	6.7	7.8
Goodwill		7.9	7.9	7.9
Other intangible assets	12	1.4	0.7	-
Investments		1.0	0.9	-
Deferred tax asset		3.9	5.1	9.9
Retirement benefit asset	16	5.3	1.3	-
		28.0	22.6	25.6
Current assets
Inventories		18.8	17.6	18.2
Trade and other receivables		21.4	21.4	19.2
Cash and cash equivalents		10.1	8.8	6.1
		50.3	47.8	43.5
Total assets		78.3	70.4	69.1
Equity attributable to owners of the parent
Ordinary shares	14	19.5	19.5	19.5
Share premium	14	100.7	112.0	112.0
Merger reserve		173.4	173.4	173.4
Other reserve		0.4	0.3	0.5
Accumulated losses		(281.0)	(297.6)	(317.7)
Total equity		13.0	7.6	(12.3)
Non-current liabilities
Borrowings	13	50.2	-	44.5
Derivative financial instruments		-	-	0.1
Provisions		0.8	0.8	0.5
Retirement benefit obligation	16	-	-	14.7
		51.0	0.8	59.8
Current Liabilities
Borrowings	13	-	44.5	5.0
Trade and other payables		13.8	16.9	15.8
Provisions		0.5	0.6	0.8
		14.3	62.0	21.6
Total liabilities		65.3	62.8	81.4
Total equity and liabilities		78.3	70.4	69.1

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 2014
	Equity attributable to owners of the parent
	Ordinary  shares		Share premium	Merger reserve	Other reserve	Accumulated losses	Total equity
	£m		£m	£m	£m	£m	£m
Balance at 1 January 2014	19.5		112.0	173.4	0.3	(297.6)	7.6
Profit for the period	-		-	-	-	7.1	7.1
Re-measurement gain	-		-	-	-	(0.7)	(0.7)
Deferred tax thereon	-		-	-	-	0.1	0.1
Total comprehensive income for the period	-		-	-	-	6.5	6.5
Share premium reduction (net)		-	(11.3)	-	-	11.0	(0.3)
Value of employee services	-		-	-	0.1	-	0.1
Credit to equity for equity-settled share based payments		-	-	-	-	(0.1)	(0.1)
Dividends	-		-	-	-	(0.8)	(0.8)
Balance at 30 June 2014 (unaudited)	19.5		100.7	173.4	0.4	(281.0)	13.0

Balance at 1 January 2013	19.5	112.0	173.4	0.4	(326.2)	(20.9)
Profit for the period	-	-	-	-	5.0	5.0
Re-measurement gain	-	-	-	-	4.6	4.6
Deferred tax thereon	-	-	-	-	(1.1)	(1.1)
Total comprehensive income for the period	-	-	-	-	8.5	8.5
Value of employee services	-	-	-	0.1	-	0.1
Balance at 30 June 2013 (unaudited)	19.5	112.0	173.4	0.5	(317.7)	(12.3)

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 2014
			Six months	Six months
			2014	2013
			£m	£m
		Note	Unaudited	Unaudited
Operating activities
Cash generated by operations		15	6.0	8.3
Interest paid			(1.3)	(1.3)
Pension deficit funding	- recovery plan payment		(4.7)	(4.2)
Net cash generated by operating activities			-	2.8
Investing activities
Purchase of investment			(0.1)	-
Capitalised web development spend			(0.7)	-
Purchase of property, plant and equipment			(2.7)	(0.6)
Net cash used in investing activities			(3.5)	(0.6)
Financing activities
Net borrowings drawn			5.6	-
Dividend paid		10	(0.8)	-
Net cash used in by financing activities			4.8	-
Net increase in cash and cash equivalents			1.3	2.2
Net cash and cash equivalents at beginning of period			8.8	3.9
Net cash and cash equivalents at end of period			10.1	6.1

Although not required under IFRS the directors have provided the following reconciliation of net debt for further clarity.  The net debt represents Group borrowings less cash and cash equivalents.

Reconciliation of movement in net debt Six months ended 30 June 2014
		Six months	Six months
		2014	2013
		£m	£m
Opening net debt		(35.7)	(45.3)
Net increase in cash and cash equivalents in the period		1.3	2.2
Net movement in debt financing		(5.7)	(0.3)
Closing net debt		(40.1)	(43.4)

Notes to the condensed set of financial statements

Six months ended 30 June 2014

1.   General information

STV Group plc ("the Company") and its subsidiaries (together "the Group") is listed on the London Stock Exchange and incorporated and domiciled in the UK.  The address of the registered office is Pacific Quay, Glasgow, G51 1PQ.  The principal activities of the Group are the production and broadcasting of television programmes, internet services and the sale of advertising airtime and space in these media.

These condensed interim financial statements were approved for issue on 28 August 2014 and have been reviewed not audited.

2.   Accounting policies

Basis of preparation

These condensed interim financial statements for the six months ended 30 June 2014 have been prepared in accordance with IAS34, 'Interim financial reporting'.  The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2013, which have been prepared in accordance with IFRSs.

Going concern basis

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

Changes in accounting policies

Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2013.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss.

The following new standards, amendments to standards or interpretations are mandatory for the first time for accounting periods beginning on or after 1 January 2014. They either were not relevant for the Group or had no material impact on the financial statements of the Group.

IFRS 7 (amendment)	Financial instruments: disclosures
IFRS 9 (amendment)	Financial instruments
IAS 36 (amendment)	Impairment of assets
IAS 38 (amendment)	Intangible assets
IFRIC 21	Levies

3.   Estimates

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these condensed interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2013, with the exception of changes in estimates that are required in determining the provision for income taxes.

4.   Financial risk management and financial instruments

The Group's activities expose it to a variety of financial risks:  currency risk, credit risk, liquidity risk and cash flow interest rate risk.

The 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 as at 31 December 2013.  There have been no changes in any risk management policies since the year end.

5.   Business segments

The Group's Chief Executive, the chief operating decision maker, considers the business primarily from a product perspective. Under IFRS 8, the reportable segments are therefore Consumer and Productions.

The performance of the segments is assessed based on a measure of adjusted operating profit. 

	External sales
Segment revenues	Six months 2014	Six months 2013
	£m	£m
Consumer	50.8	46.6
Productions	3.9	4.6
	54.7	51.2

Segment result	Six months 2014	Six months 2013
	£m	£m
Consumer	10.9	8.7
Productions	(1.1)	(0.5)
Operating profit	9.8	8.2
Financing	(1.4)	(2.0)
Profit before tax	8.4	6.2
Tax charge	(1.3)	(1.2)
Profit attributable to owners of the parent	7.1	5.0

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

There are no differences from the last annual financial statements in the basis of segmentation or in the basis of measurement of segment profit or loss.

6.   Seasonality of operations

In line with the UK advertising market as a whole, the autumn season provides the Group with the highest level of revenues.  The Productions business also delivers the majority of its programmes to broadcasters in the second half of the year.

7.   Finance costs

	Six months	Six months
	2014	2013
	£m	£m
Bank borrowings	1.4	1.5
Pension finance charge	-	0.5
Finance costs	1.4	2.0

8.   Tax

Tax for the six month period is charged at 15% (30 June 2013: 20%) representing the best estimate of the average annual effective tax rate expected for the full year, applied to the pre-tax income of the six month period.  The tax charge is lower than the standard rate of 21.5% due to adjustments for prior year provisions and certain tax planning initiatives.

9.   Earnings per share

	Earnings £m	Six months 2014 Weighted average number of shares (m)	Per share Pence	Earnings £m	Six months 2013 Weighted average number of shares (m)	Per share Pence
EPS (pre-exceptional items):
Earnings attributable to ordinary shareholders	7.1	37.9	18.7p	5.0	37.8	13.2p
Basic EPS	7.1	37.9	18.7p	5.0	37.8	13.2p
EBT purchased shares		1.2			1.3
Diluted EPS	7.1	39.1	18.2p	5.0	39.1	12.8p

10. Dividends

A dividend of £0.8m (2013: £nil) which relates to the year ended 31 December 2013 was paid in May 2014.  When the payment was made the Company had sufficient distributable reserves to pay the dividend and interim accounts were prepared reflecting this and made available to shareholders via RNS.  However, the interim accounts were inadvertently not filed at Companies House prior to the payment of the dividend resulting in a technical infringement of the Companies Act 2006.  The Company will bring a special resolution to shareholders at the AGM to ratify the payment of the dividend and related matters.

An interim dividend of 2.0p per share (2013: nil per share) has been proposed and is subject to approval by the board of directors. This dividend is made in accordance with the Companies Act 2006. It is payable on 14 October 2014 to shareholders who are on the register at 10 September 2014. This interim dividend, amounting to £0.8m (2013: £nil), has not been recognised as a liability in this interim financial information.  It will be recognised in shareholders' equity in the year to 31 December 2014. 

11. Property, plant and equipment

During the six months to 30 June 2014, the Group has incurred expenditure of £2.7m on property, plant and equipment (£0.7m in the year to 31 December 2013; £0.6m in the six months to 30 June 2013).

12. Other intangible assets

During the six months to 30 June 2014, the Group has incurred expenditure of £0.7m on web development (£0.7m in the year to 31 December 2013; £nil in the six months to 30 June 2013).

13. Borrowings and loans

At 30 June 2014, the Group had revolving credit and overdraft bank facilities in place totalling £60.0m. The facility previously consisted of a term facility and a revolving credit and overdraft facility (£25.0m and £32.5m respectively at 31 December 2013; £30.0m and £32.5m respectively at 30 June 2013). At 30 June 2014, £51.0m of the facility was drawn down.

The amendment and extension of the bank facility was agreed on 4 June 2014 and the £60.0m revolving credit and overdraft facility has a maturity date of June 2019.  Security is provided to the debt providers by way of cross guarantees and a share pledge.

14. Share capital and share premium

There were no movements in share capital during the six months to 30 June 2014.

On 14 February 2014, the Court of Session granted a reduction in the share premium account of £11.0m.

15. Notes to the condensed interim statement of cash flows

	Six months	Six months
	2014	2013
	£m	£m
Operating profit	9.8	8.2
Depreciation	0.9	1.1
	10.7	9.3
(Increase)/decrease in inventories	(1.2)	0.3
Decrease in trade and other receivables	-	0.3
Decrease in trade and other payables	(3.5)	(1.6)
Cash generated by operations	6.0	8.3

16. Retirement benefit schemes

The fair value of the assets in the schemes, the present value of the liabilities in the schemes and the expected rate of return at each balance sheet date was:

	At 30 June	At 31 December	At 30 June
	2014	2013	2013
	£m	£m	£m
Equities	153.1	150.5	145.2
Bonds	153.6	146.5	143.0
Fair value of schemes' assets	306.7	297.0	288.2
Present value of defined benefit obligations  obligations	(301.4)	(295.7)	(302.9)
Surplus/(deficit) in the schemes	5.3	1.3	(14.7)

A related offsetting deferred tax charge of £1.0m is shown under non-current assets.  Therefore the net pension scheme surplus amounts to £8.2m at 30 June 2014 (surplus £1.1m at 31 December 2013; deficit £11.4m at 30 June 2013).

17. Transactions with related parties

There has been no change from the 2013 Annual Report and no transactions with any related parties in the period to 30 June 2014.

18. Reconciliation of statutory results to adjusted results

	2014			2013
	Profit  before tax	Basic EPS	Diluted EPS	Profit  before tax	Basic EPS	Diluted EPS
	£m	pence	pence	£m	pence	pence
Statutory results	8.4	18.7p	18.2p	6.2	13.2p	12.8p
Add back: IAS 19	-	-	-	0.5	1.1p	1.0p
Adjusted results	8.4	18.7p	18.2p	6.7	14.3p	13.8p

Independent review report to STV Group plc

Report on the condensed interim financial statements

Our conclusion

We have reviewed the condensed interim financial statements, defined below, in the interim financial report of STV Group plc for the six months ended 30 June 2014.  Based on our review, nothing has come to our attention that causes us to believe that the condensed interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

This conclusion has to be read in the context of what we say in the remainder of this report.

What we have reviewed

The condensed interim financial statements, which are prepared by STV Group plc, comprise:

·      the condensed interim balance sheet as at 30 June 2014;

·      the condensed interim income statement and the 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 condensed interim financial statements.

As disclosed in note 2, the financial reporting framework that has been applied in the preparation of the full annual financial statements of STV Group plc is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

The condensed interim financial statements included in the interim financial report have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting', as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

What a review of condensed 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 Ireland) 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 interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed interim financial statements.

Responsibilities for the condensed interim financial statements and the review

Our responsibilities and those of the directors

The interim financial report, including the condensed interim financial statements, is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the interim financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Our responsibility is to express to the Company a conclusion on the condensed interim financial statements in the interim financial report 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 and Transparency Rules of the 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.

PricewaterhouseCoopers LLP
Chartered Accountants
Glasgow

28 August 2014

Notes:

(a)    The maintenance and integrity of the STV Group plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim financial statements since they were initially presented on the website.

(b)    Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.

 

END

 

 

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