Half Yearly Report

RNS Number : 1404M

STV Group PLC

21 August 2013

 



STV Group plc - Half Year Results 2013

Half year results for the six months ended 30 June 2013

An innovative media company delivering sustained growth

Financial Highlights	H1 2013	H1 2012	Year on year
Revenue	£51.2m	£47.6m	+8%
EBITDA (pre exceptionals)	£9.3m	£9.3m	No change
Operating profit*	£8.2m	£8.1m	+1%
Pre-tax profit*	£6.7m	£6.4m	+5%
EPS**	14.3p	13.6p	+5%
Statutory EPS	13.2p	2.7p	+389%
Net debt	£43.4m	£55.9m	-22%

*Pre exceptionals and IAS19

**Pre exceptionals and IAS19 and normalised for equivalent 20% tax rate (2012: 15%)

Highlights

·      Board announce intention to propose a resumption of the dividend with a planned 1.5 pence per share final dividend in respect of 2013, to be confirmed in early 2014

·      Performance ahead of forecasts on all key financial measures

·      Net debt down 22% at £43.4 million and on track for sub 2x EBITDA at year end

·      Revenues up 8% to £51.2 million:

-     84% growth in STV Productions' revenues

-     19% growth in digital growth revenues

·      Operating profit in line with expectations up 1% at £8.2 million

·      Pre-tax profit pre-exceptionals and IAS19 up 5% at £6.7m

·      KPI performance in line with growth expectations

Strategic Developments

·      Continued progress towards achievement of KPIs and 2015 strategic aims with Productions and Digital contribution improving

·      Launch of ground breaking city companion sites (mobile and on-line) to super-serve consumers in Scotland's four largest cities

·      STV Productions continues to secure new commissions with a further commission of 12 episodes of Catchphrase for ITV1 announced today

Rob Woodward, Chief Executive Officer, said: "We have delivered another strong financial performance with a further significant reduction in net debt.  We are pleased to announce our intention to return to dividend for the 2013 full year.  Today we announce the launch of an innovative range of mobile sites and companion sites targeted at consumers in Scotland's largest cities. STV Productions continues to secure further returning series commissions with the announcement of a second series ratings success Catchphrase for ITV.

As Richard Findlay steps down as Chairman, I would like to thank him for his significant contribution in re-establishing STV as a focused, consumer-facing business and look forward delivering the next phase of the company's growth strategy under the chairmanship of Margaret Ford."

21 August 2013

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]
College Hill
James Hogan
Jamie Ramsay	Tel:  [phone]

Financial performance

STV has delivered a strong performance ahead of forecasts across all key financial measures during the first half of the year. 

The Board has reviewed the dividend policy and the intention is for a return to a dividend payment upon confirmation of the 2013 full year results, with a planned 1.5 pence per share full year 2013 payment.

A further significant reduction in net debt has been achieved and this remains on track to achieve the target of 2x EBITDA; revenue has increased by 8%; operating profit has increased by 1% to £8.2m, due to the impact of the higher 2013 network fee payable under the new Channel 3 affiliate agreement.

Margin performance across all areas of activity remains strong and operating profit to free cash flow conversion of over 90% is being achieved.

Operational Review

STV Consumer

Channels

The consumer business continues to deliver growth across an increasing range of platforms.  Core broadcast channel, STV, has once again achieved peak-time performance in excess of the Network, and double digit growth in digital revenues continues with digital growth revenue categories up 19%.  The consumer business margin is ahead of target at 19% with the fast growing digital activities returning a margin of 34%.

STV's aim is to inform and entertain audiences and consumers with engaging and relevant content.  In addition to delivering the best of Network content, earlier this year we set out our commitment to provide a platform for debate on Scotland's constitutional future towards the independence referendum in autumn 2014.  A strong track record in delivering engaging public service content places STV in a key position to be at the heart of this debate. As part of this commitment a three part series, Road to Referendum, providing an accessible and engaging insight into the political history of Scotland was produced and broadcast earlier this year.  This series has been commissioned by ITV for adaptation into a one-hour special to be broadcast later this year on ITV1.  Additionally, nightly current affairs programme, Scotland Tonight, will broadcast a series of major TV debates. 

Our commercial team continues to attract new advertisers to core channel STV with over 80 new brands advertising on the channel during the period.

The development of new platforms enables the commercial team to innovate and enhance the solutions available to advertisers incorporating all of STV's multi-platform assets. A number of our long term commercial partners, including Lidl and Bank of Scotland, have used these opportunities and secured campaigns including spot advertising; programme and channel sponsorship on air and on digital; mobile display and short form branded content.

As consumer and audience relationships continue to evolve we are successfully building audiences on social media. As we continue to gain consumer insights we will launch our partnership with Gigya later this year.

Broadcasting Outlook

STV national airtime revenue was up 4% in H1 and is expected to continue to outperform the market during Q3 with the cumulative forecast to the end of Q3 up 6%.   The regional airtime market has continued to strengthen during Q2 and against challenging comparatives ended the period down 6%.  The performance of the regional market continues to improve in Q3, with a return to cumulative growth of 2% expected by end of September.

Digital

Digital revenue has increased by 19% in growth categories as the consumer centric approach applied to the development of services continues to create new and innovative opportunities for advertisers to reach their customers and increase the range of platforms available to access STV content. We expect broadly similar levels of growth in H2.

Seventy per cent of our broadcast audience accesses STV online with an average of more than one million streams being viewed on the STV Player each month.

Growth in unique browsers on mobile platforms continues to increase, up 51% year on year.  Our consumer centric product development strategy is delivering to support this trend with a high priority being placed on ensuring our services and products are mobile and online compatible. 

Today the roll-out of a new platform of city digital services, available as mobile with online companion sites, is announced.  These services reinforce STV's commitment to serving local audiences and augment our existing local broadcast and online news services.

As these city sites deliver a ground breaking and innovative service for our consumers and have the potential to be transferred to other locations, patents have been filed in the EU and US.

We continue to increase options to access STV content anywhere and anytime and free of charge. This year we have launched the STV Player on new platforms including Samsung Smart TV; Windows 8 and Kindle Fire and Kindle Fire HD.   Additionally, a new look STV Player will be launched in September.

STV Productions

STV Productions continues to grow and establish itself as a leading multi-genre production business securing commissions with a growing number of networks. Due to a strong delivery schedule during H1, revenues are up 84%.

Following the ratings success of Catchphrase, produced for ITV1, a re-commission of a further 12 episodes is announced today. 

During the period we have also announced the following re-commissions: a second series of Fake Reaction (10 episodes) for delivery in late 2013; 60 episodes of long running returning series Antiques Road Trip and 10 episodes of Celebrity Antiques Road Trip; a first commission from UKTV for comedy series Jo Brand's Great Wall of Comedy (5 episodes) and a one-off documentary for Channel 5, Fighters' Wives.  We also delivered our first feature documentary film, Fire in the Night, commissioned by BBC2 to mark the 25^th anniversary of the Piper Alpha disaster and broadcast nationwide and released in cinemas across Scotland and the north of England to widespread critical acclaim.

Regulatory

We welcome the outcome of Ofcom's recent consultation on programming obligations and the methodology for determining the financial terms of the new Channel 3 licences and look forward to the award of the licences for a further 10-year term later this year. 

Good progress is being made towards the launch of new City TV services in H1 of 2014 following the award of licences to deliver local digital television programme services (L-DTPS) in Glasgow and Edinburgh. These services will enhance STV's strong community links in these areas and provide a complementary service to the core broadcast channel with opportunities to build strong audience and community engagement.

Dividend

The Board has reviewed the dividend policy and as a result of the normalised net debt position and underlying financial strength of the Group there is an intention to return to dividend payments upon confirmation of the 2013 full year results, with a planned 1.5 pence per share full year 2013 payment.

Pensions

Reduction of pension liabilities remains a key corporate priority and discussions are progressing with the pension scheme trustees to conclude the latest triennial valuation.  The net deficit at 30 June 2013 on an IAS19 basis has reduced from £23m at the year end to £15m due to an increase in gilt yields, improved asset performance and deficit funding payments, partly offset by an increase in inflation expectations.

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 2012 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 24 and 25 of the 2012 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 Conduct Authority ('FCA'), and were approved on behalf of the Board by the Chief Executive Officer, Rob Woodward  and Chief Financial Officer, George Watt on 20 August 2013.

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 2012, except as described in note 3.

The financial statements for the year ended 31 December 2012, 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 Group plc are listed in the STV Group plc Annual Report for 31 December 2012 and on 1 June 2013, The Baroness Ford of Cunninghame was appointed to the Board.

APPENDIX 1

KPI UPDATE (at 30 June 2013)

	2012 actual	2013 target	Position at Interim
Consumer
1. Peak time audience v ITV Network	Exceeded (Actual +1.30 share points)	To exceed Network performance	Tracking ahead
2. Consumer margin	Exceeded (Actual 18.3%)	16.0%	Tracking ahead
3. Consumer insights	Not met (Actual 0.5m)	1.2m	Tracking below
4. Monthly unique users (Q4 monthly average)	Not met (Actual 3.2m)	3.5m	On track
5. Monthly page impressions (Q4 monthly average)	Exceeded (Actual 20.4m)	22.0m	Tracking ahead
6. Monthly video streams (Q4 monthly average)	Not met (Actual 3.1m)	3.8m	Tracking below in total, however, long form VoD tracking ahead
7.  Digital revenue	Not met (Actual £6.5m)	£11.3m	Tracking below
8. Digital margin	Exceeded (Actual 26.0%)	25%	Tracking ahead
Production
9. Production hours	Exceeded  (Actual 141 hours)	150 hours	On track
10. Production revenues	Not met (Actual £10.2m)	£15.0m	On track
11. Production margin	Not met (Actual 2.0%)	10.0%	Tracking below

Condensed consolidated income statement Six months ended 30 June 2013
				Six months	Six months
				2013	2012
				£m	£m
			Note	Unaudited	Unaudited and restated (note 3)
Revenue			6	51.2	47.6
Net operating expenses				(43.0)	(44.4)
Operating profit				8.2	3.2
Analysed as:
Operating profit before exceptional items				8.2	8.1
-     Exceptional items			8	-	(4.9)
Operating profit after exceptional items				8.2	3.2
Finance income				-	0.1
Finance costs	- borrowings		9	(1.5)	(1.8)
	- IAS 19 pension		9	(0.5)	(0.7)
				(2.0)	(2.4)
Profit before tax				6.2	0.8
Tax (charge)/credit			10	(1.2)	0.2
Profit for the period				5.0	1.0
Earnings per share
Basic earnings per share			11	13.2p	2.7p
Diluted earnings per share			11	12.8p	2.6p

A reconciliation of  the statutory results to the adjusted results is included at note 18.

Condensed consolidated statement of comprehensive income Six months ended 30 June 2013
	Six months	Six months
	2013	2012
	£m	£m
	Unaudited	Unaudited and restated (note 3)
Profit for the period	5.0	1.0
Items that will not be reclassified to profit or loss:
Actuarial gain/(loss) on defined benefit pension schemes	4.6	(0.4)
Deferred tax charge	(1.1)	(0.3)
Other comprehensive income/(expense) for the period	3.5	(0.7)
Total comprehensive income for the period	8.5	0.3

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

Condensed consolidated balance sheet As at 30 June 2013
		30 June	31 December	30 June
		2013	2012	2012
		£m	£m	£m
	Note	Unaudited	Audited	Unaudited
Non-current assets
Property, plant and equipment	12	7.8	8.2	9.0
Goodwill		7.9	7.9	7.9
Deferred tax asset		9.9	12.1	15.5
		25.6	28.2	32.4
Current assets
Inventories		18.2	18.5	18.1
Trade and other receivables		19.2	19.5	26.6
Cash and cash equivalents		6.1	3.9	3.4
		43.5	41.9	48.1
Total assets		69.1	70.1	80.5
Equity attributable to owners of the parent
Ordinary shares	14	19.5	19.5	19.5
Share premium	14	112.0	112.0	112.0
Merger reserve		173.4	173.4	173.4
Other reserve		0.5	0.4	0.6
Accumulated losses		(317.7)	(326.2)	(334.0)
Total equity		(12.3)	(20.9)	(28.5)
Non-current liabilities
Borrowings	13	44.5	44.2	59.3
Derivative financial instruments		0.1	0.2	-
Provisions		0.5	1.1	1.4
Retirement benefit obligation	16	14.7	23.0	30.0
		59.8	68.5	90.7
Current Liabilities
Borrowings	13	5.0	5.0	-
Trade and other payables		15.8	17.0	17.0
Provisions		0.8	0.5	1.3
		21.6	22.5	18.3
Total liabilities		81.4	91.0	109.0
Total equity and liabilities		69.1	70.1	80.5

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 2013

	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 2013	19.5	112.0	173.4	0.4	(326.2)	(20.9)
Net profit for the period	-	-	-	-	5.0	5.0
Actuarial 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)

Balance at 1 January 2012	19.5	112.0	173.4	0.6	(335.2)	(29.7)
Net profit for the period restated	-	-	-	-	1.0	1.0
Actuarial loss restated	-	-	-	-	(0.4)	(0.4)
Deferred tax thereon	-	-	-	-	(0.3)	(0.3)
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)

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 2013
			Six months	Six months
			2013	2012
			£m	£m
		Note	Unaudited	Unaudited
Operating activities
Cash generated by operations		15	8.3	3.1
Interest paid			(1.3)	(1.8)
Pension deficit funding	- 18 year recovery plan payment		(4.2)	(2.1)
Net cash generated/(used) by operating activities			2.8	(0.8)
Investing activities
Interest received			-	0.1
Purchase of property, plant and equipment			(0.6)	(0.7)
Net cash used by investing activities			(0.6)	(0.6)
Financing activities
Net borrowings drawn			-	4.3
Net cash generated by financing activities			-	4.3
Net increase in cash and cash equivalents			2.2	2.9
Net cash and cash equivalents at beginning of period			3.9	0.5
Net cash and cash equivalents at end of period			6.1	3.4

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 2013
		Six months	Six months
		2013	2012
		£m	£m
Opening net debt		(45.3)	(54.5)
Net increase in cash and cash equivalents in the period		2.2	2.9
Net movement in debt financing		(0.3)	(4.3)
Closing net debt		(43.4)	(55.9)

Notes to the condensed set of financial statements

Six months ended 30 June 2013

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.

2.   Basis of preparation

This condensed consolidated interim financial information comprises the unaudited interim results for the six months to 30 June 2013 and 30 June 2012, together with the audited consolidated balance sheet as at 31 December 2012 (hereinafter referred to as "financial information"). 

This financial information has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority (previously 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 2012 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 2012 were approved by the Board of Directors on 22 February 2013 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 21 August 2013 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 2012.

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 2013:

IAS 19 (revised)	Employee benefits
IFRS 10	Consolidated financial statements
IFRS 11	Joint arrangements
IFRS 12	Disclosures of interests in other entities
IFRS 13	Fair value measurement

IFRS 10, 11, 12 and 13 were either not relevant for the Group or had no material impact on the financial statements of the Group.

IAS 19 amends the accounting for employee benefits.  The Group has applied the standard retrospectively in accordance with the transition provisions of the standard.  The impact on the Group has been in the following areas:

·    The standard replaces the interest cost on the defined benefit obligation and the expected return on plan assets with a net interest cost based on the net defined benefit asset or liability and the discount rate, measured at the beginning of the year. There is no change to determining the discount rate; this continues to reflect the yield on high quality corporate bonds. This has changed the income statement interest from a credit to a charge as the discount rate applied to assets is lower than the expected return on assets.  This has no effect on total comprehensive income as the increased charge in profit is offset by a credit in other comprehensive income.  The effect has been that the income statement profit for the period to 30 June 2012 has decreased by £1.3m and for the year to 31 December 2012 has decreased by £2.8m.  The basic EPS has decreased by 2.6p to 2.7p and the diluted EPS has decreased by 2.5p to 2.6p.

·    There is a new term "remeasurements".  This is made up of actuarial gains and losses, the difference between actual investment returns and the return implied by the net interest cost.

·    The effect of the change in accounting policy on the statement of cash flows was immaterial.

4.   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 2012, with the exception of changes in estimates that are required in determining the provision for income taxes and disclosure of exceptional items (see note 8).

5.   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 consolidated 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 2012.  There have been no changes in any risk management policies since the year end.

The carrying value of non-derivative financial assets and liabilities, comprising cash and cash equivalents, trade and other receivables, trade and other payables and borrowings is considered to materially equate to their fair value.  Derivative financial instruments, which are measured at fair value, comprise interest rate swaps of £24.0m categorised as level 2.  The fair value of interest rate swaps is calculated at the present value of the estimated future cash flows using market interest rates. The valuation techniques employed are consistent with the year end annual report.   There are no financial instruments measured as level 3.

	Fair value of
	financial derivatives
		£m
Opening balance at 1 January 2013		0.2
Reduction in fair value loss on interest swaps		(0.1)
Closing balance at 30 June 2013		0.1

6.   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 2013	Six months 2012
	£m	£m
Consumer	46.6	45.1
Productions	4.6	2.5
	51.2	47.6

Segment result	Six months 2013	Restated Six months 2012
	£m	£m
Consumer	8.7	9.6
Productions	(0.5)	(1.5)
	8.2	8.1
Affiliate status change	-	(4.9)
Operating profit	8.2	3.2
Financing	(2.0)	(2.4)
Profit before tax	6.2	0.8
Tax (charge)/credit	(1.2)	0.2
Profit attributable to owners of the parent	5.0	1.0

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.

7.   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. 

8.   Exceptional items

Affiliate status change

A non-cash stock writedown of £4.1m was booked in 2012 relating to the Group's ITV network affiliate status. In addition, legal and other costs of £0.8m in relation to this were incurred.

9.   Finance costs

	Six months	Restated Six months
	2013	2012
	£m	£m
Bank borrowings	1.5	1.8
Pension finance charge	0.5	0.7
Finance costs	2.0	2.5

10.  Tax charge

	Six months	Restated Six months
	2013	2012
	£m	£m
Tax charge on profit on ordinary activities excluding exceptional items at 20% (30 June 2012: 15%)	1.2	0.7
Tax credit on exceptional items	-	(0.9)
Tax charge/(credit) on profit on ordinary activities including exceptional items	1.2	(0.2)

The effective tax rate for the Group excluding exceptional items is 20% (30 June 2012: 15%). The tax charge is lower than the standard rate of 23.25% due to adjustments for prior year provisions and certain tax planning initiatives.

The UK Corporation tax rate fell in the period from 24% to 23%.  This rate change was substantively enacted as part of Finance Bill 2012 and took effect from 1 April 2013.

In addition to the change in Corporation tax rate disclosed above, further changes to the UK Corporation tax rates were substantively enacted as part of the Finance Bill 2013 on 2 July 2013.  These include changes to reduce the main rate to 21% from 1 April 2014 and to 20% from 1 April 2015.

 
As these changes had not been substantively enacted at the balance sheet date their effects are not included in these financial statements. The overall effect of these changes, if they had applied to the deferred tax balance at the balance sheet date, would be to reduce the deferred tax asset by £1.3m.  This £1.3m reduction in the deferred tax asset would decrease profit by £0.8m and decrease other comprehensive income by £0.5m.

11.  Earnings per share

	Earnings £m	Six months 2013 Weighted average number of shares (m)	Per share Pence	Restated Earnings £m	Six months 2012 Weighted average number of shares (m)		Restated Per share Pence
EPS (pre-exceptional items):
Earnings attributable to ordinary shareholders	5.0	37.8	13.2p	5.0		37.5	13.3p
Basic EPS	5.0	37.8	13.2p	5.0		37.5	13.3p
EBT purchased shares		1.3				1.6
Diluted EPS	5.0	39.1	12.8p	5.0		39.1	12.8p
EPS (including exceptional items):
Earnings attributable to ordinary shareholders (including exceptional items)	5.0	37.8	13.2p	1.0		37.5	2.7p
Basic EPS	5.0	37.8	13.2p	1.0		37.5	2.7p
EBT purchased shares		1.3				1.6
Diluted EPS	5.0	39.1	12.8p	1.0		39.1	2.6p

12.  Property, plant and equipment

During the six months to 30 June 2013, the Group has incurred expenditure of £0.6m on property, plant and equipment (£1.2m to 31 December 2012; £0.7m to 30 June 2012).

13.  Borrowings and loans

At 30 June 2013, the Company had bank facilities in place totalling £62.5m consisting of a £30.0m term facility and a £32.5m revolving credit and overdraft facility (£30.0m and £32.5m respectively at 31 December 2012; £37.5m and £32.5m respectively at 30 June 2012). At 30 June 2013, £49.5m of the facility was drawn down.

The facilities expire on 31 December 2014 with an extension to 31 March 2016 agreed with the lender group on the renewal of the Channel 3 broadcast licences. The term loan partially amortises across the facility term, £5.0m of which will be amortised on 31 December 2013.  Security is provided to the debt providers by way of cross guarantees and a share pledge.

14.  Share capital

There were no movements in share capital during the six months to 30 June 2013.

15.  Notes to the condensed statement of consolidated cash flows

	Six months	Six months
	2013	2012
	£m	£m
Operating profit  (before exceptional items)	8.2	8.1
Depreciation and other non-cash items	1.1	1.2
	9.3	9.3
Decrease in inventories	0.3	7.0
Decrease/(increase) in trade and other receivables	0.3	(2.9)
Decrease in trade and other payables	(1.6)	(5.8)
Underlying cash generated by operations	8.3	7.6
Litigation matters	-	(3.6)
Cost of change	-	(0.9)
Cash generated by operations	8.3	3.1

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
	2013	2012	2012
	£m	£m	£m
Equities	145.2	141.4	130.8
Bonds	143.0	138.0	136.2
Fair value of schemes' assets	288.2	279.4	267.0
Present value of defined benefit obligations  obligations	(302.9)	(302.4)	(297.0)
Deficit in the schemes	(14.7)	(23.0)	(30.0)
Equities	8.0%	8.0%	8.0%
Bonds	3.2% - 4.7%	3.2% - 4.7%	3.0% - 5.0%

A related offsetting deferred tax asset of £3.3m is shown under non-current assets.  Therefore the net pension scheme deficit amounts to £11.4m at 30 June 2013 (£20.5m at 31 December 2012; £24.0m at 30 June 2012).

17.  Transactions with related parties

There has been no change from the 2012 Annual Report and no transactions with any related parties in the period to 30 June 2013.

18.  Reconciliation of statutory results to adjusted results

	2013			2012
	Profit  before tax	Basic EPS	Diluted EPS	Profit  before tax	Basic EPS	Diluted EPS
	£m	pence	pence	£m	pence	pence
Post-exceptional	6.2	13.2p	12.8p	0.8	2.7p	2.6p
Add back: Exceptionals	-	-	-	4.9	10.6p	10.2p
Pre-exceptional	6.2	13.2p	12.8p	5.7	13.3p	12.8p
Add back: IAS 19	0.5	1.1p	1.0p	0.7	1.6p	1.5p
Adjusted results	6.7	14.3p	13.8p	6.4	14.9p	14.3p

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 2013, 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 half-yearly 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 Conduct Authority.

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of half-yearly 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 half-yearly 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 Conduct 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 UK. 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 half-yearly financial statements in the half-yearly financial report for the six months ended 30 June 2013 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 Conduct Authority.

PricewaterhouseCoopers LLP
Chartered Accountants
Glasgow

21 August 2013

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 half-yearly 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

 

 

IR URUBROAAWUAR