ITV propping up advertising revenue
STV hands £10m to shareholders despite profits fall
STV is to return £10 million to shareholders over the next 18 months despite a 26% fall in profit and a decline in advertising revenue.
The company said the capital return is a sign of confidence in the underlying strength of the business.
It said trading arrangements with ITV provide a buffer against weakness in the national advertising market, (down 10% in H1), and changing macro-economic circumstances.
STV reported strong profitable growth in digital activities with revenue up 14%, at £4m.
It has also declared an 25% rise in its interim dividend to 5p a share giving a total of 17p for the year, up 13%.
Group pre-tax profit is down 26% from £10.2m to £7.5m. Before exceptional items and interest it was down 16% from £10.4m to £8.7m. Earnings per share before exceptional items and interest was 18.8p, down 14%.
In a statement on the half year to the company said: “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.
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. The new division of the STV External Lottery Manager delivered revenue of £3.3m from providing services to the Scottish Children’s Lottery which it does on a breakeven basis.
Four episodes of drama series The Victim have been commissioned by BBC1 with a strong pipeline of other productions in line for the second half.
The company said its 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.
Rob Woodward, who is stepping down this year as chief executive, 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.”
Mr Woodward will be succeeded by ITV executive Simon Pitts.