An innovative media company delivering sustainable, profitable growth Half year results 21 st August 2013
Richard Findlay Chairman
An innovative media company delivering sustainable, profitable growth Focused strategy delivering sustainable growth Returning value to shareholders; timetable set for return to dividend Balance sheet continues to strengthen A consumer centric, creativity led business An ambitious profitable growth company
George Watt Chief Financial Officer
Financial results pre exceptionals Turnover +8% 84% growth in productions and 19% in digital growth revenues EBITDA Impact of higher network fee Operating Profit +1% 51.2 47.6 flat 9.3 9.3 8.2 8.1 H1 13 H1 12 H1 13 H1 12 H1 13 H1 12 Profit before tax* +5% Lower interest costs improve PBT -4% EPS* Tax rate normalises to 20% from 15% - on an equivalent tax rate EPS is up by 5% -22% Net Debt Strong cash generation results in net debt reduction 6.7 6.4 14.3p 14.9p 43.4 55.9 H1 13 H1 12 *normalised excludes IAS 19 H1 13 H1 12 H1 13 H1 12
Turnover 2013 2012 m m Consumer - National Airtime 34.4 33.2 +4% - Regional Airtime 6.0 6.4-6% - Digital - growth* 1.9 1.6 +19% - ex growth* 1.6 1.4 +14% - Sponsorship 1.9 1.7 +12% - Other 0.8 0.8-46.6 45.1 +3% Outperforming ITV Network Recovering in Q2 Strong growth continues Improved rates achieved Productions 4.6 2.5 +84% Total 51.2 47.6 +8% Increased H1 deliveries *Growth areas include VoD, classified, local and transactional revenues. Ex growth areas are PRTS and music income
Operating profit pre-exceptionals Operating profit 2013 2012 2013 2012 m m Operating margins Consumer 8.7 9.6 18.7% 21.3% Productions (0.5) (1.5) (10.9%) (60.0%) Total 8.2 8.1 16.0% 17.0% 10 9 8 m 7 6 5 4 1.3 0.8 8.1 8.2 1.1 1.0 0.3 2012 H1 2013 H1
Digital Profit and Loss Account Growth Areas 2013 2012 m m Turnover 1.9 1.6 +19% Costs (1.5) (1.3) +15% Operating Profit 0.4 0.3 +33% Ex Growth Areas +171% 1.6 1.9 0.7 2011 2012 2013 2013 2012 m m Turnover 1.6 1.4 +14% Costs (0.8) (0.7) +14% Operating Profit 0.8 0.7 +14% 2.0 1.4 1.6 Total 2013 2012 m m Turnover 3.5 3.0 +17% Costs (2.3) (2.0) +15% Operating Profit 1.2 1.0 +20% Operating Margin 34% 33% 2011 2012 2013 +30% 2.7 3.0 3.5 2011 2012 2013
Cashflow m 2013 2012 Operating Profit 8.2 8.1 Non-cash Items 1.1 1.2 EBITDA 9.3 9.3 Working Capital Movements (1.2) 4.5 Capex (0.6) (0.7) Operating Cashflow 7.5 13.1 Pension deficit payments (4.2) (2.1) Interest paid (1.4) (1.7) Litigation settlement & costs - (9.8) Cost of change - (0.9) 1.9 (1.4) Net Debt 43.4m 55.9m Net Debt: EBIDTA covenant ratio 2.2x 2.7x Interest cover 6.2x 7.9x 2012 benefitted from Network stock sale to ITV Operating cash flow conversion of 91% in H1 13. On track for 100% target at year end No further costs in these categories after 2012 Comfortably within covenant levels of 2.75x and 4.00x 62.5m bank facility extends to 31 December 2016 on licence renewal and amortises by 5.0m at 31 December 2013
Pensions - Overview m June 2013 Dec 2012 June 2012 Dec 2011 Liabilities 303 303 297 295 Assets 288 280 267 264 Deficit - gross 15 23 30 31 - net 12 18 23 23 Discount rate 4.50% 4.35% 4.85% 4.95% Inflation 3.5% 3.1% 2.8% 3.3% Pension deficit payment due under existing valuation of 4.2m was paid in January 2013 Discussions continue on 1 January 2012 valuation Record low bond yields will impact future cash contributions
Dividend policy Proposed return to dividend at 2013 year end Initial proposal of 1.5p* for full year 2013 Policy of one third/two thirds payout from 2014 2014 expectation for total dividend of 2.5p** per share * Expected to be declared as a final dividend to be put to shareholders for approval at 2014 AGM ** The expected total dividend for 2014 of 2.5 pence per share is currently anticipated to be split as 0.8 pence interim and 1.7 pence final
KPI Update 1. Peak time audience v ITV Network Tracking ahead aim to exceed in all years 2. Consumer division margin Tracking ahead 16.0% 2013 target 3. Consumer insights Tracking below 1.2m by end December 2013 4. Monthly unique users (Q4 ave) On track 3.5m in Q4 13 5. Monthly page impressions (Q4 ave) Tracking ahead 22.0m in Q4 13 6. Monthly video streams (Q4 ave) Tracking below in total 3.8m in Q4 13 Long form VoD tracking ahead
KPI Update - continued 7. Digital revenue Tracking below 11.3m in 2013 8. Digital margin Tracking ahead 25.0% 2013 target 9. Grow produced hours On track 150 in 2013 10. Production revenue On track 15.0m in 2013 11. Productions margin Tracking below 10% in all years
Rob Woodward Chief Executive Officer
Our strategic aims by 2015 Grow non-broadcast earnings to represent 33% of Group earnings To double STV Productions revenues from 2011 Maintain our position as the voice of Scotland Be the most used digital service in Scotland Launch two new marketleading digital consumer propositions
STV - Our core consumer connection
STV - Our core consumer connection Scotland s largest media platform - STV reaches 92% of Scots across a month STV continues to outperform ITV network in peak time Linear schedule continues to dominate STV broadcast 49 out of the top 50 commercial programmes Jan-June 2013 STV s average peak time audience is three times Channel 4 and four times that of Channel 5
Delivering relevant content for Scotland
Delivering relevant content for Scotland Compelling channel 3 network content complemented by relevant Scottish content STV News at Sixcontinues to increase share of ratings Scotland Tonight is Scotland s most watched current affairs programme STV is at the heart of the referendum debate STV Appeal generating over 2m to support Scotland s children and connecting with communities across Scotland
Providing free to consume content across multiple platforms
Providing free to consume content across multiple platforms Delivering STV content Anytime, Anywhere STV Player holds exclusive rights to Channel 3 network content in Scotland STV Player available on web, YouView, PS3, Samsung Smart TV, iphone, ipad, Android tablets & smartphones, Windows 8 tablets & PCs and Kindle Fire Rapid growth in mobile -visits from mobile and tablets in H1 up 51% year on year 125% increase in long form streams in H1 2013 600,000 downloads of STV Player App to date
Deepening our consumer relationships
Deepening our consumer relationships Consumer data generated through transactional services, registration and loyalty awards STV database up 50% year on year to over 550,000 and continues to grow Gigya deployment in Q3 2013 will boost consumer insights through seamless social media integration Next stage enhance earnings, deepen consumer understanding, and personalise services for consumers and advertisers
Developing innovative commercial partnerships
Developing innovative commercial partnerships Lidl tested TV advertising in Scottish market; extension of campaign across all STV platforms and success achieved has led to UK wide campaign Bank of Scotland long term TV advertiser; relationship now working with all STV assets -sponsor for upgraded STV Player in August; use of mobile display; spot campaign and short form branded content itison new services for STV consumers; location based daily deals offer; supports consumer insights strategy Driving increased share of London market
Super serving Scotland s cities
Super serving Scotland s cities
Super serving Scotland s cities Unique combination of city apps and companion sites product patent in US & EU 3m Scots covered by next generation of city based digital services launching Sept 2013 Most localised news service in the UK In addition, city TV for Glasgow and Edinburgh to launch in 2014 will reach over 50% of Scotland s population Compelling new commercial platform for commercial partners
We ve got Scotland covered
STV Productions - continuing growth momentum
STV Productions - continuing growth momentum Recommisison of Catchphrasefor ITV1 H2 deliveries: Fake Reaction (Series 2), Antiques Road Trip (Series 7 & 8) and Celebrity Antiques Road Trip (Series 3) Delivering ratings and achieving awards across genres award winning feature documentary, Fire in the Night for BBC2 Working with all major UK broadcasters
Priorities Continued diversification of earnings to meet 33% target by end 2015 Drive growth of STV Productions Ensure STV super serves Scotland Develop and launch a new digital consumer service Launch STV s city TV services
Summary Focused strategy delivering sustainable growth Successfully exploiting digital opportunities for advertisers A consumer centric, creativity led business
An innovative media company delivering sustainable, profitable growth Half year results 21 st August 2013