Half Yearly Report

RNS Number : 6048K

STV Group PLC

23 August 2012

 



0700 hours, 23 August 2012   

STV Group plc Half Yearly Results 2012

Half Yearly Results for the six months ended 30 June 2012

STV Half Yearly Financial Results showing strong financial performance and continued growth in STV Productions and digital business

Financial Highlights

	H1 2012	H1 2011	Year on year
Revenue	£47.6m	£47.2m	+1%
EBITDA*	£9.3m	£8.1m	+15%
Operating profit*	£8.1m	£7.0m	+16%
Pre-tax profit*	£7.0m	£6.5m	+8%
Adjusted EPS**	16.0p	15.0p	+7%
Statutory EPS	5.3p	(17.7p)	-
Net debt	£55.9m	£57.5m	-3%

*  Pre-exceptionals

** Adjusted EPS reflects EPS performance pre-exceptionals year-on-year assuming equivalent 15% tax rate (2011: Nil%). 

Highlights

·      Production and digital revenues grow by 13%

·      EBITDA pre-exceptionals up 15% at £9.3m

·      Operating profit pre-exceptionals up 16% at £8.1m

·      Pre-tax profit pre-exceptionals up 8% at £7.0m

·      Net debt down 3% to £55.9m

Strategic Developments

·    Good progress towards achievement of 2015 strategic aims and KPIs on track with 2 ahead and

2 below target

·    New Channel 3 Network affiliate arrangements approved by Regulator and now in operation

·    Digital business growth continues with 13% increase in revenue and increased traffic through:

-     further enhancements to digital and consumer propositions

-     implementation of new ad serving technology improving commercial proposition

·      STV Productions achieving growth:

-     new commission announced for BBC Two, 20 episodes of daytime, celebrity cooking show 

-     new drama commission for ITV announced earlier this month and increased focus on drama development through strategic partnership with Sally Head Productions

·      Innovative bids made in partnership with leading Scottish universities to secure local television licences for Glasgow and Edinburgh

Richard Findlay, Chairman, said: "I am pleased to be announcing another period of significant progress for STV. Securing the new Channel 3 arrangements, whereby STV is now an affiliate of the Network, is a key strategic development.  These arrangements provide stability for our business, our consumers and our advertisers and represent commercially sustainable networking arrangements between the Channel 3 licence holders."

Rob Woodward, Chief Executive Officer, said: "We are continuing to deliver growth in the non-broadcast areas of our business with a 13% increase in revenues in these activities.  The strong financial performance delivered in the period demonstrates the underlying strength of our business and we are successfully extending our reach and engaging with new consumers across an increased range of platforms.  Today's announcement of another new BBC series commission for STV Productions demonstrates the growth momentum in that business."

23 August 2012

There will be a presentation for analysts at the offices of Peel Hunt, Peel Hunt, Moor House, 120 London Wall, London EC2Y 5ET today at 12.30pm. Should you wish to attend the presentation, please contact Jamie Ramsay, College Hill, on 0207 457 2047.

Enquiries:

STV Group plc
Eleanor Marshall, PR Manager	Tel: [phone]
College Hill	Tel:  [phone]
James Hogan
Jamie Ramsay

Financial performance

STV has delivered strong financial performance across all key metrics during the first half of the year with double digit operating profit growth and increased revenues.  Our strong EBITDA performance of 15% growth is underpinned by an increase in non-broadcast revenues of 13%.

Adjusted EPS increased by 7%, however the Group's effective tax rate increasing to 15% resulting in EPS on an unadjusted pre-exceptionals basis of 16.0p, down 10%.

The trend of net debt reduction continues as we progress towards the target ratio of net debt below two times EBITDA.

Operational Review

STV Consumer

Channels

The consumer business has continued to deliver growth across all channels, with digital revenues up 13% to £3.0m.  Additionally, STV, our core broadcast channel, has delivered peak-time performance in excess of the Network, a key performance indicator, during the first half of the year. 

Our schedule continues to feature the best of Network content along with home grown productions, in addition to our local news services to cater for the preferences of our audience and provide opportunities for our commercial partners.    Our commitment to, and investment in, high quality public service content continues to secure a high level of audience engagement and positive brand profile with 25% of Scots viewing the evening news on STV,  higher than the Channel 3 UK average of 18%.  In addition to our comprehensive schedule of news programming, our new current affairs programme, Scotland Tonight, which has aired during H1 is already Scotland's most popular current affairs programme. 

The Euro 2012 menu of programming delivered a particularly high audience on the channel for ABC1 men and, through our extensive cross-platform content coverage of Euro 2012, we increased consumer registrations by 8% in June, and by 50% across the first half of the year.   

Delivering innovative solutions for our advertisers is increasingly being fulfilled through multi-platform campaigns, where we can integrate brands across all of our assets.  In a recent campaign for Disney Pixar, we applied digital technology from MirriAd - in which STV has a strategic investment - to maximise brand exposure of new film release, Brave.

In February we secured an integrated, multi platform sponsorship of all of STV's channels by The Scottish Sun on Sunday.  Using our in-house commercial production team, STV Creative, we were able to rapidly develop an innovative campaign demonstrating the reach and impact of our portfolio of channels and platforms.

Broadcasting Outlook

We remain cautious on the economic outlook given continuing macro-economic uncertainty and the effect on the TV advertising market. We expect our national advertising revenues to perform broadly in line with the ITV Network for the year as a whole.

STV national airtime revenue was down 1% in July and we expect August to be down 6% with September expected to be down 2%.  The regional airtime market remains challenging, reflecting the wider Scottish economy, and we expect Q3 to be down 12% with regional revenues expected to be up 4% across the whole year.

Digital

Digital revenues continue to grow as we enhance our consumer services across our digital channels. Over 60% of our broadcast audience now accesses STV online and growth in unique users generated from mobile devices has continued to grow rapidly.  Our mobile app strategy is addressing this trend with the upgrade of our highly popular STV News app and the launch of our STV Player app on iOS and Android devices.

Our strategy of providing locally focused media services, extending our reach, continues.  In April we launched the first STV Local metro sites for Glasgow and Edinburgh, offering compelling editorial and video content, as the targeted platform to support local advertisers and service providers in reaching their customers and reinforcing our focus on community.Our Local service is now reaching over 400,000 unique users per month.

We continue to explore additional revenue generating opportunities to extend our consumer offering and the introduction of metro sites to the STV Local portfolio will provide further opportunities for commercial partnerships with providers of geo-targeted services. 

STV Anywhere, our strategy of delivering STV content in innovative ways across platforms, took a further significant development when STV was confirmed as one of the additional content partners to be available on YouView when the platform launches in September.   YouView received over 300 expressions of interest from potential content partners and STV was one of two selected to be available from launch.

STV Productions

Our content Production business is successfully broadening its customer base and securing new commissions across genres with a strong delivery schedule for H2.

Today we have announced a new commission for BBC Two, a 20 episode daytime format for delivery later this year. 

Our relationship with GroupM continues to develop and, following their involvement as co-producer of a four-part series delivered to ITV2 last year, we have partnered on a drama production of the highly successful novel, The Poison Tree. Earlier this month we announced The Poison Tree commission from ITV Network for the two-part peak time drama for delivery later this year.

During the period we have also announced the development of an international co-production, Wallace, a historical drama series, to be developed in association with LA based Creative Media; Nine/8 Entertainment; Digital Rights Group (DRG) and Creative Scotland.

Regulatory

The agreement and subsequent regulatory approval of new networking arrangements, through which STV will become an affiliate of the Channel 3 Network, provide a sustainable cost basis to secure the continued delivery of high quality commercially sustainable public services in the long term.  We are now actively engaged with the Government on the process to secure a ten-year renewal of our licences.

Earlier this month we announced our participation in the bidding process to secure the new local television licence services to be launched in Glasgow and Edinburgh.  Our bids are based upon a unique partnership with leading universities in each of the licence areas.

Dividend

Following consultation with our major shareholders we continue to keep this under review and will provide an update in February.

Pensions

Reduction of our pension liabilities and associated risks is a key corporate priority. An on-going programme of risk and liability reduction measures is being discussed and progressed with our advisors and the scheme trustees.  The net deficit at 30 June 2012 is unchanged from the prior year end at £23m.  The triennial valuation process is ongoing and the outcome of this is expected in Q1 of 2013.

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 2011 Annual Report and Financial Statements the principal risks and uncertainties that could impact its performance.  These remain largely unchanged since the Annual Report was published.

The group has rigorous internal systems to identify, monitor and manage any risks to the business. The main areas of potential risk and uncertainty are in relation to the regulatory environment, dependence on advertising, performance of the ITV Network and shortfalls within the pension schemes. These risks, together with examples of mitigating activity, are set out in more detail on pages 34 and 35 of the 2011 Annual Report which is available on the STV Group plc website: www.stvplc.tv

Basis of preparation 

These condensed interim financial statements are unaudited and do not constitute statutory accounts within the meaning of the Companies Act 2006.  These condensed interim financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting', the Disclosure and Transparency Rules and the Listing Rules of the Financial Services Authority ('FSA'), and were approved on behalf of the Board by the Chief Executive Officer, Rob Woodward  and Chief Financial Officer, George Watt on 22 August 2012.

The accounting policies and methods of computation applied in these condensed interim financial statements are consistent with those applied in the Group's most recent annual financial statements for the year ended 31 December 2011.

The financial statements for the year ended 31 December 2011, which were prepared in accordance with International Financial Reporting Standards, as endorsed by the European Union ('IFRS'), and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, have been delivered to the Registrar of Companies. The auditors' opinion on those financial statements was unqualified and did not contain a statement made under s498(2) or (3) of the Companies Act 2006. 

Responsibility Statement of the Directors in Respect of the Half Yearly Financial Report 

We confirm that to the best of our knowledge the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. 

The interim management report includes a fair review of the information required by: 

a.   DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year 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 year; and 

b.   DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so. 

The Directors of STV plc are listed in the STV plc Annual Report for 31 December 2011.

Rob Woodward 

CEO, STV plc

Appendix

KPI Update

    Appendix 1 - KPI UPDATE (at 30 June 2012)

	2011 actual	2012 target	Position at Interim
Consumer
1. Peak time audience v ITV Network	Exceeded (Actual +0.85 share points)	To exceed Network performance	Tracking ahead
2. Consumer margin	Exceeded (Actual 15.5%)	15.5%	On track
3. Consumer insights	New KPI target for 2012	0.7m	On track
4. Monthly unique users (Q4 monthly average)	Exceeded (Actual 3.0m)	3.3m	On track
5. Monthly page impressions (Q4 monthly average)	Exceeded (Actual 17.0m)	20.0m	Tracking ahead
6. Monthly video streams (Q4 monthly average)	Exceeded (Actual 2.9m)	3.3m	On track
7.  Digital revenue	Not met (Actual £7.1m)	£9.1m	Tracking below
8. Digital margin	Not met (Actual 17.0%)	20.0%	On track
Production
9. Production hours	Not met (Actual 121 hours)	140 hours	On track
10. Production revenues	New KPI target for 2012	£12.0m	On track
11. Production margin	Not met (Actual 6.0%)	10.0%	Tracking below

Condensed consolidated income statement Six months ended 30 June 2012
			Six months 2012			Six months 2011
			Underlying results	Exceptional items	Results for period	Underlying results	Exceptional items	Results for period
			£m	£m	£m	£m	£m	£m
Note			(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Continuing operations
Revenue		4	47.6	-	47.6	47.2	-	47.2
Net operating expenses before exceptional costs			(39.5)	-	(39.5)	(40.2)	-	(40.2)
Affiliate status change		6	-	(4.9)	(4.9)	-	-	-
Litigation matters		6	-	-	-	-	(13.0)	(13.0)
Net operating expenses			(39.5)	(4.9)	(44.4)	(40.2)	(13.0)	(53.2)
Operating profit/(loss)			8.1	(4.9)	3.2	7.0	(13.0)	(6.0)
Finance income			0.1	-	0.1	0.2	-	0.2
Finance costs	- borrowings	7	(1.8)	-	(1.8)	(1.3)	-	(1.3)
	- IAS 19 pension	7	0.6	-	0.6	0.6	-	0.6
			(1.1)	-	(1.1)	(0.5)	-	(0.5)
Profit/(loss) before tax			7.0	(4.9)	2.1	6.5	(13.0)	(6.5)
Tax (charge)/credit		8	(1.0)	0.9	(0.1)	-	-	-
Profit/(loss) for the period			6.0	(4.0)	2.0	6.5	(13.0)	(6.5)
Earnings/(loss) per share
From continuing operations
-  basic*		9	16.0p		5.3p	17.7p		(17.7p)
-  diluted		9	15.3p		5.1p	16.8p		(16.8p)

* The 2011 basic EPS has been restated (see note 9).

Condensed consolidated statement of comprehensive income Six months ended 30 June 2012
	Six months 2012	Six months 2011
	£m	£m
	(Unaudited)	(Unaudited)
Profit/(loss) for the period	2.0	(6.5)
Actuarial (loss)/gain on defined benefit pension schemes	(1.7)	5.3
Deferred tax charge	-	(1.6)
Other comprehensive (expense)/income for the period	(1.7)	3.7
Total comprehensive income/(expense) for the period	0.3	(2.8)

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

Condensed consolidated balance sheet
As at 30 June 2012
		30 June	31 December	30 June
		2012	2011	2011
	Note	£m	£m	£m
		(Unaudited)	(Audited)	(Unaudited)
Non-current assets
Property, plant and equipment	10	9.0	9.5	9.6
Goodwill and other intangible assets		7.9	7.9	7.9
Deferred tax asset		15.5	15.5	9.5
		32.4	32.9	27.0
Current assets
Inventories		18.1	29.1	35.8
Trade and other receivables		26.6	24.2	22.4
Cash and cash equivalents		3.4	0.5	3.9
		48.1	53.8	62.1
Total assets		80.5	86.7	89.1
Equity attributable to owners of the parent
Ordinary shares	12	19.5	19.5	19.5
Share premium	12	112.0	112.0	112.0
Merger reserve		173.4	173.4	173.4
Other reserve		0.6	0.6	0.5
Accumulated losses		(334.0)	(335.2)	(328.2)
Total equity		(28.5)	(29.7)	(22.8)
Non-current liabilities
Borrowings	11	59.3	-	56.4
Trade and other payables		-	0.7	1.0
Provisions		1.4	2.5	2.9
Retirement benefit obligation	14	30.0	30.9	12.6
		90.7	34.1	72.9
Current Liabilities
Borrowings	11	-	55.0	5.0
Trade and other payables		17.0	25.6	33.3
Provisions		1.3	1.7	0.7
		18.3	82.3	39.0
Total liabilities		109.0	116.4	111.9
Total equity and liabilities		80.5	86.7	89.1

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

Condensed consolidated statement of changes in equity Six months ended 30 June 2012
	Equity attributable to owners of the parent
	Ordinary		Share	Merger	Other	Accumulated	Total
	shares		premium	reserve	reserve	losses	equity
	£m		£m	£m	£m	£m	£m
Balance at 1 January 2012	19.5		112.0	173.4	0.6	(335.2)	(29.7)
Net profit for the period	-		-	-	-	2.0	2.0
Actuarial loss	-		-	-	-	(1.7)	(1.7)
Deferred tax thereon	-		-	-	-	-	-
Total comprehensive income for the period	-		-	-	-	0.3	0.3
Own shares awarded	-		-	-	-	0.9	0.9
Balance at 30 June 2012 (unaudited)	19.5		112.0	173.4	0.6	(334.0)	(28.5)
Balance at 1 January 2011	19.2		111.4	173.4	0.8	(324.6)	(19.8)
Net loss for the period	-		-	-	-	(6.5)	(6.5)
Actuarial profit	-		-	-	-	5.3	5.3
Deferred tax thereon	-		-	-	-	(1.6)	(1.6)
Total comprehensive expense for the period		-	-	-	-	(2.8)	(2.8)
Own shares issued and acquired		0.3	0.6	-	-	(0.9)	-
Own shares awarded		-	-	-	-	0.1	0.1
Equity settled share based payments		-	-	-	(0.3)	-	(0.3)
Balance at 30 June 2011 (unaudited)		19.5	112.0	173.4	0.5	(328.2)	(22.8)

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

Condensed statement of consolidated cash flows
Six months ended 30 June 2012
				Six months	Six months
				2012	2011
				£m	£m
			Note	(Unaudited)	(Unaudited)
Operating activities
Cash generated by operations			13	3.1	0.8
Interest paid				(1.8)	(1.0)
Pension deficit funding	- 18 year recovery plan payment			(2.1)	(3.7)
Net cash used by operating activities				(0.8)	(4.4)
Investing activities
Interest received				0.1	-
Purchase of property, plant and equipment				(0.7)	(0.6)
Net cash used by investing activities				(0.6)	(0.6)
Financing activities
Release of cash on deposit				-	0.1
Net borrowings drawn				4.3	1.2
Net cash generated by financing activities				4.3	1.3
Net increase/(decrease) in cash and cash equivalents				2.9	(3.7)
Net cash and cash equivalents at beginning of period				0.5	7.6
Net cash and cash equivalents at end of period				3.4	3.9

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 and short term deposits.

Reconciliation of movement in net debt
Six months ended 30 June 2012
		Six months	Six months
		2012	2011
		£m	£m
Opening net debt		(54.5)	(52.2)
Net increase/(decrease) in cash and cash equivalents in the period		2.9	(3.7)
Net movement in debt financing		(4.3)	(1.5)
Net movement in escrow cash		-	(0.1)
Closing net debt		(55.9)	(57.5)

Notes to the condensed set of financial statements

Six months ended 30 June 2012

1.   General information

STV Group plc is a company which is listed on the London Stock Exchange and is incorporated and domiciled in the UK.  The address of the registered office is Pacific Quay, Glasgow, G51 1PQ.  The nature of the Group's operations and its principal activities are set out in note 4.

2.   Basis of preparation

This condensed consolidated interim financial information comprises the unaudited interim results for the six months to 30 June 2012 and 30 June 2011, together with the audited consolidated balance sheet as at 31 December 2011 (hereinafter referred to as "financial information"). 

This financial information has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with International Accounting Standard (IAS) 34, 'Interim financial reporting' as adopted by the European Union. The condensed consolidated interim financial report should be read in conjunction with the annual financial statements for the year ended 31 December 2011 which have been prepared in accordance with International Financial Reporting Standards (IFRS's) as adopted by the European Union.

This financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006.  Statutory accounts for the year ended 31 December 2011 were approved by the Board of Directors on 23 February 2012 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.

These condensed consolidated interim financial statements were approved for issue on 23 August 2012 and have been reviewed not audited.

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 consolidated interim financial statements.

3.   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 2011.

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

The following new standards, amendments to standards or interpretations are mandatory for the first time for accounting periods beginning on or after 1 January 2012.  They either were not relevant for the Group or had no material impact on the financial statements of the Group.

		Effective date
IAS 12 (amendment)	Deferred tax: Recovery of underlying assets	1 January 2012

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 2011, with the exception of changes in estimates that are required in determining the provision for income taxes and disclosure of exceptional items (see note 6).

4.   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.  This measurement basis excludes the effects of exceptional items.

					External sales
Segment revenues					Six months 2012	Six months 2011
					£m	£m
Continuing operations
Consumer					45.1	45.0
Productions					2.5	2.2
					47.6	47.2

Segment result					Six months 2012	Six months 2011
					£m	£m
Continuing operations
Consumer					9.6	8.2
Productions					(1.5)	(1.2)
					8.1	7.0
Affiliate status change					(4.9)	-
Litigation matters					-	(13.0)
Operating profit/(loss)					3.2	(6.0)
Financing					(1.1)	(0.5)
Profit/(loss)					2.1	(6.5)
Tax charge					(0.1)	-
Profit/(loss) attributable to owners of the parent					2.0	(6.5)

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.

5.   Operations in the interim period

In line with the UK advertising market as a whole, the autumn season provides the Group with the highest level of revenues. 

6.   Exceptional items

Affiliate status change

A non-cash stock writedown of £4.1m has been booked in 2012 relating to the Group's new ITV network affiliate status.  This stock would have unwound over future years under the previous networking arrangements but will not do so under the new affiliate arrangements. In addition, legal and other costs of £0.8m in relation to this were incurred.

Litigation matters

On 27 April 2011, STV agreed a wide ranging settlement with ITV plc and ITV Network over various longstanding legal disputes. Under the terms of the settlement, STV will pay ITV £18.0m, of which £7.2m was paid in cash in 2011.  The remaining £10.8m is being paid by a transfer of stock and cash in 2012. 

The settlement was recognised as follows:

·  The exceptional write off of legal and other costs incurred by the Group in relation to the claims of £3.5m;

·  The recognition of an exceptional charge of £9.5m.

7.   Finance costs

	Six months	Six months
	2012	2011
	£m	£m
Bank borrowings	1.8	1.3
Pension finance credit	(0.6)	(0.6)
Finance costs	1.2	0.7

The increase in finance costs reflects the terms of the renewed bank facility which commenced on 20 January 2012.

8.   Tax

	Six months	Six months
	2012	2011
	£m	£m
The charge for tax on continuing operations is as follows:
Tax on profit on ordinary activities excluding exceptional items at 15% (30 June 2011: 0%)	1.0	-

The effective tax rate for the Group excluding exceptional items is 15% (30 June 2011: 0%). The tax charge is lower than the standard rate of 24.5% due to adjustments for prior year provisions and certain tax planning initiatives.

A number of changes to the UK Corporation tax system were announced in the March 2012 UK Budget Statement. Legislation to reduce the main rate of corporation tax from 24% to 23% from 1 April 2013 was included in the Finance Act 2012.  Further reductions to the main rate are proposed to reduce the rate to 22% from 1 April 2014.  These further changes had not been substantively enacted at the balance sheet date and, therefore, are not included in these financial statements.

The effect of the changes enacted in the Finance Act 2012 would be to reduce the deferred tax asset provided at the balance sheet date by £0.6m.  This £0.6m decrease in the deferred tax asset would decrease profit by £0.3m and decrease other comprehensive income by £0.3m.  This decrease in the deferred tax asset is due to the reduction in the corporation tax rate from 24% to 23% with effect from 1 April 2013.

The proposed reduction of the main rate of corporation tax to 22% from 1 April 2014 is expected to be enacted separately.  The overall effect of this further change, if it applied to the deferred tax balance at the balance sheet date, would be to further reduce the deferred tax asset by an additional £0.6m.

9.   Earnings per share

	Earnings £m	Six months 2012 Weighted average number of shares (m)	Per share Pence	Earnings £m	Restated Six months 2011 Weighted average number of shares (m)	Restated Per share Pence
UNDERLYING EPS:
Earnings attributable to ordinary shareholders	6.0	37.5	16.0p	6.5	36.7	17.7p
Basic EPS
Basic underlying EPS from continuing operations	6.0	37.5	16.0p	6.5	36.7	17.7p
Diluted EPS
EBT purchased shares		1.6			1.9
Diluted underlying EPS from continuing operations	6.0	39.1	15.3p	6.5	38.6	16.8p
EPS INCLUDING EXCEPTIONAL ITEMS:
Earnings attributable to ordinary shareholders (including exceptional items)	2.0	37.5	5.3p	(6.5)	36.7	(17.7p)
Basic EPS
Basic EPS from continuing operations	2.0	37.5	5.3p	(6.5)	36.7	(17.7p)
Diluted EPS
EBT purchased shares		1.6			1.9
Diluted EPS from continuing operations	2.0	39.1	5.1p	(6.5)	38.6	(16.8p)

The 2011 EPS figures have been restated to exclude ordinary shares held by the "EBT" Employee Benefit Trust from the weighted average number of ordinary shares calculation.

10.  Property, plant and equipment

During the six months to 30 June 2012, the Group has incurred expenditure of £0.7m on property, plant and equipment (£1.8m to 31 December 2011; £0.6m to 30 June 2011).

11.  Borrowings and loans

At 30 June 2012, the Company had bank facilities in place totalling £70.0m consisting of a £37.5m term facility and a £32.5m revolving credit and overdraft facility (£55.0m and £10.0m respectively at 31 December 2011; £55.0m and £15.0m respectively at 30 June 2011). 

The renewal of the banking facilities was agreed on 20 January 2012. The new facilities expire on 31 December 2014 with the term loan partially amortising across the facility term.  Security is provided to the debt providers by way of cross guarantees and a share pledge.

12.  Share capital

There were no movements in share capital during the six months to 30 June 2012.

13.  Notes to the condensed statement of consolidated cash flows

	Six months	Six months
	2012	2011
	£m	£m
Continuing operations
Operating profit  (before exceptional items)	8.1	7.0
Depreciation and other non-cash items	1.2	1.1
Operating cash flows before exceptional items and movements in working capital	9.3	8.1
Decrease in inventories	7.0	-
(Increase)/decrease in trade and other receivables	(2.9)	2.7
Decrease in trade and other payables	(5.8)	(1.0)
Underlying cash generated by continuing operations	7.6	9.8
Litigation matters	(3.6)	(9.6)
Cost of change	(0.9)	(0.9)
Cash generated/(used) by continuing operations	3.1	(0.7)
Cash generated by discontinued operations	-	1.5
Cash generated by operations	3.1	0.8

14.  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 2012			At 31 December 2011		At 30 June 2011
			£m		£m		£m
Equities	8.0%		130.8	8.0%	129.4	8.0%	132.2
Bonds	3.0%-5.0%		136.2	3.0%-5.0%	134.7	4.2%-5.6%	132.2
Fair value of schemes' assets			267.0		264.1		264.4
Present value of defined benefit obligations  obligations			(297.0)		(295.0)		(277.0)
Deficit in the schemes			(30.0)		(30.9)		(12.6)

A related offsetting deferred tax asset of £7.3m is shown under non-current assets.  Therefore the net pension scheme deficit amounts to £22.7m at 30 June 2012 (£23.0m at 31 December 2011; £7.9m at 30 June 2011).

15.  Transactions with related parties

There has been no change from the 2011 Annual Report and no transactions with any related parties in the period to 30 June 2012.

 

Independent review report to STV Group plc

Introduction

We have been engaged by the Company to review the condensed consolidated set of financial statements in the half-yearly financial report for the six months ended 30 June 2012, which comprises the condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated balance sheet, condensed consolidated statement of changes in equity, condensed statement of consolidated cash flowsand related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated set of financial statements.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed consolidated set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, 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.

Scope of review

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.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated set of financial statements in the half-yearly financial report for the six months ended 30 June 2012 is 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 Services Authority.

PricewaterhouseCoopers LLP
Chartered Accountants
Glasgow

23 August 2012

(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 financial statements since they were initially presented on the website.

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

 

END

 

 

IR UURWRUBAWUAR