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CEO claims 'robust' results

STV profits slip as productions written down

STV catchphraseSTV reported a 3% fall in pre-tax profits to £18.5m and has written down the value of its productions division which has missed its targets.

The company saw revenues rise 3% to £120.4m as advertising showed some resilience to changes in the market.

The company said there were a number of returning series such as Catchphrase and Antiques Road Trip and it will be looking for more drama productions.

Almost a quarter of revenue (23%) is now coming from non-broadcast activities. The proposed total dividend rises 50% to 15p a share.

Independent director David Shearer will retire from the board at the annual general meeting after ten years service.

STV2 will launch in the spring which will include a half-hour Scottish and national news programme.

The company said a rebalancing of the business remains a key strategic priority and a new KPI target to achieve 30% of earnings from non-broadcast activities by end of 2018 was announced during 2016.  

The growth of the non-broadcast business has been driven by the continued development of the digital services and a return to revenue growth in STV Productions. 

However, despite an increase in revenues in STV Productions, the underperformance against targets and growth projections for this business have resulted in an exceptional writedown of £2.8m of the remaining goodwill related to STV Productions. 

A new operating division has been established – the STV External Lottery Manager.  This will support a newly launched charitable society lottery, the Scottish Children’s Lottery.

Rob Woodward, chief executive, said: “Today’s strong results demonstrate robust and resilient performance in our core business and growth in STV Productions and our highly profitable digital activities.

“The Consumer division has delivered its highest margin for 11 years, despite a weak airtime market in the second half of 2016.  We are continuing to de-risk the core business placing the company in a strong position to deal with any weakness in the advertising market in the short to mid-term whilst relentlessly pursuing our growth objectives.

“Our digital activities are performing strongly with a margin of 52%.  These products enable us to extend our reach and impact through our family of consumer services.”                             

Strategic Developments

·     Acceleration of progressive dividend policy reflecting the Board’s confidence in the underlying financial strength of the company, resilience of the core business and clarity of growth objectives

·     Confirmation of a dividend policy which aims to pay out between 60% to 80% of cash generation after pension deficit funding.  This results in a full year dividend payment of 15p per share, up 50% year on year

·     De-risking of business through agreement of long term Airtime Sales Agreement with ITV covering sale of national airtime and sponsorship. Additionally, settlement of 2015 triennial pension valuation delivers certainty and long term visibility of cashflow requirements

·     Innovative second TV network service to launch in spring 2017; STV2 will increase the reach of the STV Family of consumer services 

Highlights

·     Continuing to deliver profitable digital growth with digital revenues up 20% at £7.9 million and digital margin continuing to grow above target level at 52%

·     Data and insights strategy progressing with over 2m insights building consumer engagement and creating new opportunities for advertisers and commercial partners

·     Consumer Division margin at 11 year high at 18.5%, despite a 4% decline in national revenues, as resilient core business builds reach and engagement through the STV Family of consumer services

·     STV Productions returns to revenue growth, up 53% to £12.7m

·     Launch of a new operating division, STV External Lottery Management Limited, to supply services to newly launched charitable society lottery, the Scottish Children’s Lottery

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