STV Group plc Half Year Results 2017

RNS Number : 3672P

STV Group PLC

31 August 2017

Performance in line with expectations; increasing returns to shareholders

Strategic Developments

- Simon Pitts to be appointed Chief Executive Officer as of January 2018

- Intended return of capital to shareholders of £10m over next 18 months, reflecting confidence in underlying strength of the business

- Interim dividend of 5.0 pence per share declared, representing an increase of 25% year on year. Proposed total 2017 dividend of 17.0 pence per share, up 13%.

- Drama series commission secured by STV Productions (The Victim, 4 episodes for BBC1) with strong pipeline in H2

- Second network channel, STV2, launched in April 2017 and delivering four-fold increase in commercial impacts

Highlights

- Trading arrangements with ITV providing buffer against weakness in the national advertising market, (down 10% in H1), and changing macro-economic circumstances

- Continued strong profitable growth in digital activities with revenue up 14%, at £4.0m and margin of 50%

Financial highlights

- H1 performance in line with expectations

- No change in full year guidance

	H1 2017	H1 2016	Year on year
Revenue	£54.6m	£56.2m	-3%
EBITDA (see note 16)	£10.5m	£11.5m	-9%
Operating profit	£9.2m	£11.0m	-16%
Pre-tax profit and IAS 19 interest	£8.7m	£10.4m	-16%
Pre-tax profit	£7.5m	£10.2m	-26%
EPS pre IAS 19 interest (see note 19)	18.8p	21.8p	-14%
Statutory EPS	16.2p	21.2p	-24%
Net debt	£34.0m	£29.1m	+17%
Dividend per share	5.0p	4.0p	+25%

Rob Woodward, Chief Executive Officer, said: "Significant markers of progress have been delivered during the first half of 2017 including the launch of STV2, a new channel for Scotland, which will enable the company to continue to grow its share of the Scottish market.

"Digital activities continue to deliver double digit growth while maintaining high margins after taking account of additional investment to support future development.

"STV Productions has built a good pipeline for the rest of this year and into 2018 with a number of commissions secured in the period, including a new drama series for BBC1.

"The performance of the business in the first half of 2017 is in line with expectations despite the weak advertising market.

"The Board's confidence in the underlying financial strength of the business is conveyed through today's announcement of an additional return of capital to shareholders. The Board expects to propose a full year dividend of 17 pence per share."

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: 0141 300 3000).

Enquiries:

STV Group plc

George Watt, Chief Financial Officer Tel: 0141 300 3049

Ellen Drummond, PR & Communications Manager Tel: 07803 970 143

Charlotte Street Partners

Harriet Moll Tel: 07717 501 626

Financial performance

Performance during the first half of the year is in line with expectations, reflecting weakness in the advertising market and macro-economic environment. The outlook for the full year remains unchanged against key financial measures and KPI targets.

Total revenues are down 3% at £54.6m, impacted primarily by a weaker national airtime market as a result of ongoing economic uncertainty. Despite this overall decline, digital activities delivered increased revenue growth, up 14% at £4.0m. Sponsorship revenue increased by 8%, to £2.8m, and the regional airtime market position was slightly up year on year.

Additionally, newly launched service STV2 delivered a 50% increase in revenue from the former CityTV services. STV2 covers 85% of the STV licence area.

STV Productions' revenues were £2.6m, down 26%, as a result of timing of deliveries across the year; however, the business has a secured pipeline for the second half of 2017. The new division of the STV External Lottery Manager (ELM) delivered revenue of £3.3m from providing services to the Scottish Children's Lottery (SCL) which it does on a breakeven basis.

Operating profit was £9.2m, down 16%, reflecting the weaker national airtime market with an offset from reduced programme and advertising sales costs under our agreements with ITV. These agreements resulted in only 40% of the decline in national revenues flowing through to operating profit. The first half was also impacted by the phasing of costs under the new advertising sales agreement which increased costs by £0.9m, however, this will reverse in the second half of 2017.

PBT before exceptional items and IAS19 interest was £8.7m, down 16%. Earnings per share before exceptional items and IAS19 interest was 18.8p, down 14%.

The balance sheet continues to be strong, supporting increased returns to shareholders and continued investment in key growth activities. Net debt increased to £34.0m, up 17%, but will reduce in H2 before the effects of the intended capital return to shareholders. The increase from December 2016 is principally due to ongoing working capital requirements to fund the working capital of the SCL and the timing of receiving the cost rebate from ITV. The SCL debt of £8.1m at 30 June 2017 will be recouped in future years with progress towards cash flow breakeven on track.

Shareholder returns

In line with the Board's commitment to the long-term delivery of increased shareholder returns, and reflecting the underlying financial strength and stability of the business, it is the Board's intention that an additional return of capital will be delivered to shareholders over the next 18 months.

It is intended that the capital return will amount to £10m and is in addition to planned dividend payments to be delivered through the previously announced progressive dividend policy. This policy is structured to achieve a distribution of 60% to 80% of cash generation after pension deficit funding payments.

An interim dividend of 5.0 pence per share, up 25%, is declared with a proposed final payment of 12.0 pence per share, resulting in a proposed total dividend of 17 pence per share, up 13%.

Operational Review

STV Consumer

The consumer business has performed in line with expectations. Despite the decline in national airtime revenues, growth is continuing to be delivered in regional sales, sponsorship and digital activities.

Growth in digital revenues has continued during the first half with revenues up 14%, principally driven by VoD revenues on the STV Player.

Operating profit amounted to £10.1m, down 14%, reflecting a decline of 10% in national airtime revenues and phasing of costs under the Airtime Sales Agreement with ITV.

In April, a second networked service, STV2, was launched. Formed from the integration of the L-DTPS licences secured by STV to deliver local television in five areas within Scotland, this is a unitary programme service. Early performance is positive with both peak-time audience doubling and commercial impacts increasing four-fold. To date, the performance of the newly formed channel is ranking within the top 30 commercial channels operating in the UK.

Core channel, STV, has continued to perform ahead of the Network, up 0.68 share points. This out-performance is expected to continue in the second half of the year with a strong autumn schedule and improved Network performance.

Supporting the development of deeper engagement with consumers, consumer insights are now held for over 50% of all adults in Scotland.

Outlook

STV national airtime revenue is expected to be down 2% to 3% in September, down 8% in Q3 and a cumulative position from January to September of down 9%.

The steady growth in the regional market during the first half is expected to continue with a cumulative position from January to end September of up 1%.

Digital revenues are expected to continue to grow, up 15%-20% year on year to the end of Q3 and this rate is expected to be maintained for the full year, as previously indicated.

STV Productions

A number of new commissions have been secured in the period including, significantly, a new drama series for BBC1, The Victim (4 episodes) scheduled for delivery in 2018. Other commissions include returnable series Antiques Road Trip for BBC1 (series 15-18, 80 episodes) and Celebrity Antiques Road Trip for BBC2 (series 7, 20 episodes); a daytime entertainment series for ITV, Babushka, (20 episodes); the first commission secured for More4, a one off documentary, Highland Odyssey; a new one off factual documentary for BBC4, Fizz Bang Wallop; and a documentary for ITV as part of the forthcoming crime and punishment series on the Network.

Revenue was down 26%, at £2.6m, reflecting the timing of deliveries, however, as noted above a good pipeline of deliveries has been secured for the second half.

STV Productions delivered an operating loss of £0.9m, broadly in line with the prior year performance.

Pensions

The settlement of the 2015 triennial valuation was announced in December 2016. An 11-year funding plan based upon deficit funding contributions of £8.6m per annum increasing by 2% per annum over the term of the plan. The annual deficit contribution payment is made evenly across the year.

Under the valuation settlement, 20% contingent funding of any outperformance over an agreed cash generation target will apply, with this cash generation target determined following all other funding needs of the business having been accounted for and prior to commitment of pension funding payments and shareholder returns.

The net deficit at 30 June 2017 has reduced to £69m, down from £74m reflecting minor updates to the discount rate and inflation assumptions at 30 June 2017.

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 2016 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 with the exception of the reduction in trading risk resulting from the renewed Airtime Sales Agreement, agreed with ITV plc, the terms of which will apply for an 8-year term commencing January 2017, and the launch of the STV ELM.

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 as follows:-

Regulatory environment

Our broadcast business is operated under licences, regulated by Ofcom, which contain conditions that must be adhered to, and although measures have been put in place internally to ensure that this occurs, it is possible that these terms may inadvertently be breached and sanctions imposed by Ofcom, the most serious of which could be the withdrawal of the licences.

Dependence on advertising

STV's results could vary from period to period as a result of a variety of factors, some of which are outside STV's control, including general economic conditions. In response to the operating and competitive environment, STV may elect to make certain decisions that could have a material adverse effect on sales, results of operations and financial conditions.

Performance of the ITV Network

A significant amount of STV's programming content is provided by the ITV Network. Therefore, its ability to attract and retain audiences and the advertising airtime sales performance of ITV's sales house - which is responsible for the sale of STV's UK national airtime and sponsorship to advertisers - are factors that affect the performance of STV Consumer and, therefore, the Group as a whole. The terms of the Airtime Sales Agreement with ITV were amended in December 2016 to provide improved efficiency, simplicity and transparency.

Pension scheme shortfalls

The STV pension schemes' investment strategy is calculated to reduce any material market movement impacts; however, it is possible that the Group may be required to increase its contributions at the next triennial valuation which could have an adverse impact on results and cash flow.

Possible second independence referendum

STV Group plc is both headquartered and incorporated in Scotland. Following the result of the EU referendum, it is uncertain whether there will be a further referendum on Scottish independence and, if there is to be one, the timing and the outcome are also unknown. The Group has in place a number of measures as mitigation against increased volatility in the advertising and financial markets. These include the Network Affiliate Agreement with ITV in relation to volatile advertising markets and the Group's bank facilities maturing in the medium term (2019) together with half of the core net debt (£15m) being subject to interest rate hedges to July 2018 to reduce exposure to financial market movements. In addition, the Scottish Government has agreed that our Public Service Broadcast licences will be respected through their full duration (to 2024).

Reputational and financial risk of lottery operation

The Scottish Children's Lottery was launched in October 2016. The lottery engages the services of an external lottery manager, STV External Lottery Management Limited, a subsidiary of the Group, to deliver the lottery product to consumers. The lottery was awarded licences by the UK Gambling Commission and while operated independently of STV, in accordance with the requirements of these licences, it is provided with financial support by the Group, which amounted to a debtor of £8.1m at 30 June 2017. Internal controls have been put in place to ensure that the terms of the operating licence are adhered to. In the event that the lottery was unsuccessful then the recoverability of the SCL debtor would be at risk.

Financial risk

STV may be constrained by the Group's leverage and other debt arrangements. An increase in LIBOR interest rates would have an adverse impact on the financial position and business results. STV is exposed to currency risk, credit risk, liquidity risk and cash flow interest rate risk.

Basis of preparation

These condensed interim financial statements for the six months ended 30 June 2017 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority (previously the Financial Services Authority) and with IAS34, '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 2016, 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.

Responsibility statement of the directors in respect of the half-yearly financial report

Each of the directors (as detailed below) confirms that to the best of his/her knowledge:

- the condensed set of financial statements has been prepared in accordance with IAS 34, Interim Financial Reporting, as adopted by the European Union.

- the interim management report on pages 1 to 6 includes a fair review of the information required by:

(a) DTR 4.2.7R of the Disclosure and Transparency Rules (DTR), 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 financial year; and

(b) DTR 4.2.8R of the DTR, 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 the performance of the Company during that period; and any changes in the related party transactions described in the last annual report that could do so.

For and on behalf of the directors:

Baroness Margaret Ford

31 August 2017

Baroness Margaret Ford, Chairman

Simon Miller, Senior Independent Director

Rob Woodward, Chief Executive Officer

George Watt, Chief Financial Officer

Anne Marie Cannon, Non-Executive Director

Michael Jackson, Non-Executive Director

Ian Steele, Non-Executive Director

Christian Woolfenden, Non-Executive Director

Appendix 1

KPI targets - progress update towards 2018 targets

	2018 KPI target	Progress update at 2017 interim
1 Non broadcast earnings share	30.0%	On track
2 Audience to outperform ITV Network	To exceed Network	Tracking ahead
3 Consumer division margin	20.0%	Tracking below due to weak advertising market
4 Consumer reach	Target for each consumer service for end of 2018	On track
5 Consumer engagement	Target for each consumer service for end of 2018	On track
6 Consumer insights	2.6 million	Tracking ahead
7 Digital revenues	£11.4 million	On track
9 Digital margin	55.0%	On track
10 STV Productions revenue	£20.0 million	On track
11 STV Productions margin	6.0%	On track

Condensed interim income statement Six months ended 30 June 2017

			Six months	Six months
			2017	2016
			£m	£m
		Note	Unaudited	Unaudited

Revenue		7	54.6	56.2

Net operating expenses			(45.4)	(45.2)
Operating profit			9.2	11.0

Finance costs	- borrowings	8	(0.5)	(0.6)
	- IAS 19 pension	8	(1.2)	(0.2)
			(1.7)	(0.8)

Profit before tax			7.5	10.2
Tax charge		9	(1.2)	(2.0)
Profit for the period			6.3	8.2

Earnings per share
Basic		10	16.2p	21.2p
Diluted		10	15.9p	20.8p

A reconciliation of the statutory results to the adjusted results is included at note 19.

Condensed interim statement of comprehensive income Six months ended 30 June 2017

	Six months	Six months
	2017	2016
	£m	£m
	Unaudited	Unaudited

Profit for the period	6.3	8.2

Items that will not be reclassified to profit or loss:
Remeasurement gains/(losses) on defined benefit pension schemes	2.9	(53.6)
Deferred tax (charge)/credit	(0.5)	9.6
Other comprehensive income/(expense) for the period	2.4	(44.0)

Total comprehensive income/(expense) for the period	8.7	(35.8)

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

Condensed interim balance sheet As at 30 June 2017

		30 June	31 December
		2017	2016
		£m	£m
	Note	Unaudited	Audited

Non-current assets
Property, plant and equipment	12	8.2	7.3
Other intangible assets	13	2.6	2.7
Investments		0.8	0.8
Deferred tax asset		20.4	21.7
Trade and other receivables		8.1	5.9
		40.1	38.4
Current assets
Inventories		20.2	19.5
Trade and other receivables		20.6	22.8
Cash and cash equivalents		2.8	13.3
		43.6	55.6

Total assets		83.7	94.0

Equity attributable to owners of the parent
Ordinary shares	15	19.8	19.8
Share premium	15	101.9	101.9
Merger reserve		173.4	173.4
Other reserve		0.6	0.4
Accumulated losses		(345.6)	(348.5)
Total equity		(49.9)	(53.0)

Non-current liabilities
Borrowings	14	36.8	39.7
Derivative financial instruments		0.1	0.1
Provisions		0.2	0.3
Retirement benefit obligations	17	83.5	88.8
		120.6	128.9
Current Liabilities
Trade and other payables		12.5	17.9
Corporation tax		0.3	-
Provisions		0.2	0.2
		13.0	18.1

Total liabilities		133.6	147.0

Total equity and liabilities		83.7	94.0

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 2017

	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 2017		19.8	101.9	173.4	0.4	(348.5)	(53.0)

Profit for the period	-		-	-	-	6.3	6.3
Other comprehensive income	-		-	-	-	2.4	2.4
Total comprehensive income for the period	-		-	-	-	8.7	8.7

Acquisition of treasury shares	-		-	-	-	(1.4)	(1.4)
Share based compensation	-		-	-	0.2	-	0.2
Issue of treasury shares to employees	-		-	-	-	0.1	0.1
Value of employee services	-		-	-	-	(0.2)	(0.2)
Dividends	-		-	-	-	(4.3)	(4.3)
Balance at 30 June 2017 (unaudited)	19.8		101.9	173.4	0.6	(345.6)	(49.9)

Balance at 1 January 2016	19.6	101.8	173.4	0.9	(284.8)	10.9

Profit for the period	-	-	-	-	8.2	8.2
Other comprehensive expense	-	-	-	-	(44.0)	(44.0)
Total comprehensive expense for the period	-	-	-	-	(35.8)	(35.8)

Issue of share capital	0.2	1.0	-	-	-	1.2
Acquisition of treasury shares	-	-	-	-	(1.1)	(1.1)
Share based compensation	-	-	-	(0.5)	-	(0.5)
Issue of treasury shares to employees	-	-	-	-	1.3	1.3
Dividends	-	-	-	-	(2.7)	(2.7)
Balance at 30 June 2016 (unaudited)	19.8	102.8	173.4	0.4	(323.1)	(26.7)

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 2017

			Six months	Six months
			2017	2016
			£m	£m
		Note	Unaudited	Unaudited

Operating activities
Cash generated by operations		16	4.0	7.2
Interest paid			(0.3)	(0.6)
Pension deficit funding	- recovery plan payment		(3.6)	(7.8)

Net cash generated/(used) in operating activities			0.1	(1.2)

Investing activities
Capitalised web development spend			(0.3)	(0.6)
Purchase of property, plant and equipment			(1.7)	(1.3)

Net cash used in investing activities			(2.0)	(1.9)

Financing activities
Net (purchase)/issue of treasury shares			(1.3)	1.3
Issue of new shares			-	1.2
Net borrowings repaid			(3.0)	-
Dividend paid		11	(4.3)	(2.7)

Net cash used in financing activities			(8.6)	(0.2)


Net decrease in cash and cash equivalents			(10.5)	(3.3)


Net cash and cash equivalents at beginning of period			13.3	13.7

Net cash and cash equivalents at end of period			2.8	10.4

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 2017

	Six months	Six months
	2017	2016
	£m	£m

Opening net debt	(26.4)	(25.7)
Net decrease in cash and cash equivalents in the period	(10.5)	(3.3)
Net movement in debt financing	2.9	(0.1)

Closing net debt	(34.0)	(29.1)

Notes to the condensed set of financial statements

Six months ended 30 June 2017

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 and lottery management services.

These condensed interim financial statements were approved for issue on 31 August 2017 and have been reviewed not audited. They do not comprise statutory accounts within
the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year
ended 31 December 2016 were approved by the board of directors on 13 March 2017 and
delivered to the Registrar of Companies. The report of the auditors on those accounts was
unqualified, did not contain an emphasis of matter paragraph and did not contain any
statement under section 498 of the Companies Act 2006.

2. Basis of preparation

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 at least twelve months from the date of approval of the financial statements. The directors therefore consider it appropriate to continue to adopt the going concern basis in preparing its condensed 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 2016.

A number of amendments to IFRSs became effective for the financial year beginning on 1 January 2017 however the Group did not have to change its accounting policies or make material retrospective adjustments as a result of adopting these new standards.

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

4. 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 2016, with the exception of changes in estimates that are required in determining the provision for income taxes.

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 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 2016.

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

6. Seasonality of operations

In line with the UK advertising market 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. 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, Productions and ELM (external lottery management).

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

	External sales
Segment revenues	Six months 2017	Six months 2016
	£m	£m

Consumer	48.7	52.7
Productions	2.6	3.5
ELM	3.3	-
	54.6	56.2

Segment result	Six months 2017	Six months 2016
	£m	£m

Consumer	10.1	11.8
Productions	(0.9)	(0.8)
ELM	-	-
Operating profit	9.2	11.0
Financing	(1.7)	(0.8)
Profit before tax	7.5	10.2
Tax charge	(1.2)	(2.0)
Profit attributable to owners of the parent	6.3	8.2

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.

8. Finance costs

	Six months	Six months
	2017	2016
	£m	£m

Bank borrowings	0.5	0.6
IAS 19 Pension finance charge	1.2	0.2
Finance costs	1.7	0.8

9. Tax

Tax on underlying results for the six month period is charged at 16% (30 June 2016: 20%) representing the best estimate of the average annual effective tax rate expected for the full year, applied to the pre-tax profit of the six month period. The tax charge is lower than the standard rate of 19.25% due to use of brought forward losses not recognised for deferred tax and the impact of the anticipated reduction in the statutory rate of corporation tax on the realisation of deferred tax assets in the current period.

10. Earnings per share

	Earnings £m	Six months 2017 Weighted average number of shares (m)	Per share Pence	Earnings £m	Six months 2016 Weighted average number of shares (m)	Per share Pence

EPS:
Earnings attributable to ordinary shareholders	6.3	38.9	16.2p	8.2	38.6	21.2p
Basic EPS	6.3	38.9	16.2p	8.2	38.6	21.2p

EBT purchased shares		0.6			0.8
Diluted EPS	6.3	39.5	15.9p	8.2	39.4	20.8p

11. Dividends

A dividend of £4.3m (2016: £2.7m) which relates to the year ended 31 December 2016 was paid in May 2017.

An interim dividend of 5.0p per share (2016: 4.0p per share) has been proposed and is subject to approval by the board of directors. It is payable on 27 October 2017 to shareholders who are on the register at 29 September 2017. This interim dividend, amounting to £2.0m (2016: £1.6m), 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 2017.

12. Property, plant and equipment

During the six months to 30 June 2017, the Group has incurred expenditure of £1.7m on property, plant and equipment (£1.8m in the year to 31 December 2016; £1.3m in the six months to 30 June 2016).

13. Other intangible assets

During the six months to 30 June 2017, the Group has incurred expenditure of £0.3m on web development (£1.4m in the year to 31 December 2016; £0.6m in the six months to 30 June 2016).

14. Borrowings and loans

At 30 June 2017, the Group had revolving credit and overdraft bank facilities in place totalling £60.0m (£60.0m at 31 December 2016; £60.0m at 30 June 2016). At 30 June 2017, £37.0m of the facility was drawn down (2016: £40.0m).

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.

15. Share capital and share premium

There were no movements in share capital during the six months to 30 June 2017.

16. Notes to the condensed interim statement of cash flows

	Six months	Six months
	2017	2016
	£m	£m

Operating profit	9.2	11.0
Adjustments for:
Depreciation	0.8	0.9
Amortisation	0.4	0.1
Share based compensation	0.1	(0.5)
EBITDA	10.5	11.5

Increase in inventories	(0.7)	(1.4)
Decrease/(increase) in trade and other receivables (excluding ELM)	2.2	(0.5)
Decrease in trade and other payables (excluding ELM)	(5.2)	(2.4)
Increase in ELM trade and other receivables	(2.2)	-
Decrease in ELM trade and other payables	(0.6)	-
Cash generated by operations	4.0	7.2

17. Retirement benefit schemes

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

	At 30 June	At 31 December
	2017	2016
	£m	£m

Fair value of plan assets	359.3	359.4
Present value of defined benefit obligations obligations	(442.8)	(448.2)
Liability in the balance sheet	(83.5)	(88.8)

A related offsetting deferred tax credit of £14.3m is shown under non-current assets. Therefore the net pension scheme deficit amounts to £69.2m at 30 June 2017 (£73.5m at 31 December 2016).

18. Transactions with related parties

There has been no change from the 2016 Annual Report and no transactions with any related parties in the period to 30 June 2017.

19. Reconciliation of statutory results to adjusted results

	2017			2016
	Profit before tax	Basic EPS	Diluted EPS	Profit before tax	Basic EPS	Diluted EPS
	£m	pence	pence	£m	pence	pence

Statutory results	7.5	16.2p	15.9p	10.2	21.2p	20.8p

Add back: IAS 19	1.2	2.6p	2.5p	0.2	0.6p	0.5p

Adjusted results	8.7	18.8p	18.4p	10.4	21.8p	21.3p

Independent review report to STV Group plc

Report on the condensed interim financial statements

Our conclusion

We have reviewed STV Group plc's condensed interim financial statements (the "interim financial statements") in the interim financial report of STV Group plc for the 6 month period ended 30 June 2017. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

What we have reviewed

The interim financial statements comprise:

• the condensed interim balance sheet as at 30 June 2017

• the condensed interim income statement and condensed interim statement of comprehensive income for the period then ended;

• the condensed interim statement of cash flows for the period then ended;

• the condensed interim statement of changes in equity for the period then ended; and

• the explanatory notes to the condensed interim financial statements.

The 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.

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

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

The interim financial report, including the 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 Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Our responsibility is to express a conclusion on the interim financial statements in the 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 Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

What a review of condensed 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 interim financial statements.

PricewaterhouseCoopers LLP

Chartered Accountants

Glasgow

August 2017

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 statements may differ from legislation in other jurisdictions.

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR EAPPEDLXXEFF