Press Release 0700 hours, 5
March 2024
STV Group plc Full Year
Results to 31 December 2023
Diversification targets
exceeded; profit in line with guidance; new 3-year growth plan; CEO
succession
Highlights
·
Diversification strategy continues to
accelerate:
o Group revenue growth of 22%
o Studios revenue and adjusted operating profit
trebles
o Digital revenue +6% and operating profit +16%
o 75% of Group adj. operating profit outside broadcasting, well
ahead of 50% target
·
Adjusted Group operating profit of £20.1m down
22%, impacted by linear advertising revenue and cost inflation and
related to broader UK macro uncertainty, as expected
·
Strong on-screen performance, with STV Player
streams + 28% and STV the most-watched peak time TV channel in
Scotland for the 5th year in a row
·
Advertising outlook improving; Q1 total
advertising revenue expected to be up around 5%
·
Board proposes final dividend of 7.4p and a full
year dividend of 11.3p, in line with 2022
·
New 3-year targets set to drive STV's profitable
growth
·
CEO Simon Pitts to step down over the next 12
months to take up a new appointment beginning in Q1 2025
Financial Summary
|
2023
|
2022
|
Change
|
Revenue
|
£168.4m
|
£137.8m
|
+22%
|
Total advertising
revenue
|
£97.3m
|
£110.0m
|
-12%
|
Adjusted operating
profit*
|
£20.1m
|
£25.8m
|
-22%
|
Adjusted operating
margin*
|
11.9%
|
18.7%
|
-680bps
|
Statutory operating
profit
|
£6.4m
|
£25.3m
|
-75%
|
Profit for the year
|
£5.3m
|
£17.3m
|
-69%
|
Adjusted basic EPS*
|
28.2p
|
42.3p
|
-33%
|
Statutory basic EPS
|
9.7p
|
38.3p
|
-75%
|
Net debt+
|
£32.3m
|
£15.1m
|
£17.2m
|
Dividend per share (full
year)
|
11.3p
|
11.3p
|
flat
|
*
|
For reconciliation of adjusted to statutory measures see note
6
|
+
|
Excluding lease liabilities
|
Greenbird Group contribution post acquisition (from 6 July
2023) was revenue £15.0m, operating profit £3.2m. Greenbird
Group proforma full year FY23 result was revenue £27.4m, operating
profit £3.2m
|
|
|
|
| |
Financial highlights
·
Total revenue of £168.4m, +22% on 2022: Studios
and Digital growth more than offset expected linear advertising
revenue declines
·
Studios revenue of £66.8m, +182% and adjusted
operating profit of £5.2m, +280%, due to organic growth and H2
impact of Greenbird acquisition
·
Digital revenue of £20.2m, +6% (VOD revenue +7%),
with digital operating profit up 16% to £9.9m
·
Regional advertising revenue down 9% to £15.1m
(excluding Scottish Government spend, regional down only
1%)
·
Group adjusted operating profit £20.1m, down 22%
on 2022, reflecting expected impact of declines
in higher margin linear advertising revenue and inflationary cost
pressure
o Savings realised to offset broadly half the inflationary
increases, as guided
·
Total advertising revenue of £97.3m, down
12%
·
Non-recurring costs (included within adjusting
items) of £5.5m incurred in the period relating to the new
agreement with ITV for digital content and national VOD sales
representation (2023: £3.1m; 2022: £0.5m) and Greenbird acquisition
and integration costs (2023: £2.4m; 2022: £nil)
·
Net debt of £32.3m, up £17.2m on 2022 and
reflecting the consideration paid to date for Greenbird of
£21.9m. Leverage of 1.2x at year end, in line with guidance
(2022: 0.5x)
Another year of strong audience performance
·
STV & STV Player combined still the clear
number 1 for commercial audiences in Scotland
·
20% share of total peak audience in 2023 (vs
Netflix 12%, C4 11% and Sky 9%)
·
486 of top 500 commercial audiences were on STV
in 2023 (97%)
·
STV was the most watched peaktime TV channel in
Scotland for the 5th year in a row with a viewing share
of 21.8%
·
STV's lead over BBC1 in peak widened to nearly 3
share points
·
Highest lead over ITV Network (2.3 share points)
since records began
·
Most watched commercial TV channel on 361 days
out of 365 in 2023
·
STV Player delivered another record streaming
performance, with growth across all key metrics:
·
Online streams +28% and online consumption
+25%
·
Registered users up 17% to 5.7m, beating 5m
target
·
Active registered users +20% and STV Player VIP
users +33%
Continued strategic momentum and new
targets
·
Studios: STV Studios now a
leading UK production group:
·
58 new commissions in 2023, up 28 on
2022
·
68 series produced in 2023 delivering 620 hours
of new television, +154%
·
Transformative Greenbird acquisition delivered
£15.0m revenue and £3.2m operating profit post acquisition on 6
July 2023
·
Jan 2024 consolidation of Two Cities further
evidence of successful investment model:
§ £55m+
future revenues secured; acquisition is materially
earnings-enhancing
§ 3 new
drama series commissions confirmed last month
·
Major Apple drama Criminal Record launched in 100+
countries to widespread acclaim
·
Digital: STV Player
continuing to deliver strong viewing and commercial
growth:
·
Digital targets all exceeded for users, streams
and revenues
·
Year 1 of new ITV digital deal has driven
increased viewing and advertising yield
·
Long-term partnership in place until 2029 on a
variable cost basis
·
18 programmes delivered 1m+ streams, up from 12
in 2022
·
Continued strong performance of STV 3rd party
content, with over 14m Brookside streams since
launch
·
UK Government Media Bill continues to progress
through Parliament and should guarantee prominence for STV Player
on all major digital platforms
·
New 3 Year
strategy and targets: Next-phase
plan announced to drive STV's profitable growth; strategic
objectives will focus on four key areas:
·
CONTENT: Accelerate UK and
international Studios growth
·
AUDIENCE: Drive streaming
growth and maximise total STV viewing
·
MONETISATION: Maintain
advertising leadership and grow new revenues
·
ORGANISATION: Modernise and
simplify business for digital-first world
·
In terms of financial targets, by the end of 2026
STV will:
·
Double Studios revenues to £140m with a target to
achieve a 10% margin
·
Grow Digital revenues by a further 50% to £30m*
at a margin of at least 40%
·
Increase international revenues to 15% of Group /
25% of Studios
·
Achieve a further £5m p.a. savings in STV's cost
base
* before commission
Improving outlook
·
Advertising market showing resilience and growth
so far in 2024
·
Total advertising revenue (TAR) expected to be up
around 5% in Q1 year on year
·
Digital VOD advertising, before commission,
expected to be +12% in Q1
·
Scottish advertising down 4% in Q1 reflecting
Scottish Government declines (underlying SME advertising
+6-8%)
·
Q2 will include live coverage of UEFA Euro
2024
·
Studios forward order book stronger than
ever
·
£87m secured future revenue as
at March 2024, £30m+
ahead of a year ago
·
Multiple new drama commissions secured for Sky,
BBC and others
·
2024 will see full year of Greenbird consolidated
performance and 11 months of Two Cities Television
·
3-year cost savings plan in place
with £1.5m identified for delivery in 2024 and
£5m p.a. expected by end of 2026
·
As in previous years, revenue and operating
profit expected to be H2 weighted reflecting Studios delivery
schedules
Dividend
·
The Board proposes a final dividend of 7.4p per
share for 2023, giving a full year dividend of 11.3p per share, in
line with 2022, after considering all relevant factors including
ongoing macroeconomic uncertainty.
·
The Board remains committed to a balanced
approach to capital allocation across investing for growth,
fulfilling our pension obligations, and paying a sustainable
dividend to shareholders.
Simon Pitts, Chief Executive, said:
"2023 was another year of strong strategic progress for STV
as we delivered revenue growth of 22% and exceeded the stretching
3-year diversification targets we set ourselves to double the size
of our digital business and quadruple our Studios business, ending
the year with 75% of our profit coming from outside traditional
broadcasting, well ahead of our 50% target.
Despite the challenging commissioning environment, STV
Studios had a standout 2023, with revenues almost trebling and
operating profit up 280%, propelled by fantastic dramas like
Criminal Record for AppleTV+ and Screw for C4 and the
transformative acquisition of Greenbird.
Our audience position remains unrivalled, with STV the
most-watched peaktime TV channel in Scotland for the 5th
year in a row in 2023, ahead of BBC1, and nearly double the
commercial audience of Netflix. STV Player growth also continued to
accelerate, with streams up a further 28%, driving digital profit
up 16%.
Our overall financial performance was impacted by weak linear
advertising and cost inflation, as expected and related to the
challenging UK macro environment, although the start of 2024 has
been more encouraging. Q1 total advertising is expected to be up
around 5% and we have a strong H1 schedule to come, culminating in
live coverage of UEFA Euro 2024 featuring both Scotland and
England. In January we also increased our stake to a majority in
leading drama producer Two Cities, who have already secured £55m of
future revenues across 3 high-end drama series.
Over the last 6 years STV has been successfully transformed
into a digital-first media company with a high-growth streaming
service and one of the UK's leading production groups, and we have
today set out further ambitious targets for the next phase of
profitable growth. With STV's latest diversification targets fully
achieved, now is the right time to plan a smooth and orderly
succession. As such I have informed the Board that I will step down
as CEO over the next 12 months to take up a new appointment
beginning in Q1 2025.
The Board has proposed a final dividend of 7.4p per share,
giving a full year dividend of 11.3p, in line with
2022."
There will be a presentation for
analysts today, 5 March 2024, at 12.30 pm, via Zoom. Should
you wish to attend the presentation, please contact Angela
Wilson, angela.wilson@stv.tv
or telephone: 0141 300 3000.
Enquiries:
STV Group plc: Kirstin
Stevenson, Head of Communications
Tel: 07803 970
106
Camarco:
Geoffrey Pelham-Lane,
Partner
Tel: 07733 124 226
Ben Woodford,
Partner
Tel: 07790 653 341
Group overview
Total revenue grew by 22% to
£168.4m (2022: £137.8m). This was primarily related to growth in
Studios revenue, which reached £66.8m in the year, up from £23.7m
in 2022, with a contribution of £15.0m from Greenbird Media Limited
("Greenbird") in the period since acquisition. Digital
revenues also continued to grow and were up 6% on the prior
year.
Total advertising revenue (TAR)
for the year was £97.3m (2022: £110.0m), a decrease of 12% on the
2022 performance, with linear advertising revenues being heavily
impacted by the challenging macro-economic environment.
Within this, national advertising revenue was down 16% with
regional continuing to out-perform at -9% year on year.
Adjusted operating profit of
£20.1m was down 22% on the record set in 2022 of £25.8m, equivalent
to an adjusted operating margin of 11.9% (2022: 18.7%). On a
statutory basis, operating profit was £6.4m (2022: £25.3m).
The proportion of Group adjusted operating profit derived from
non-broadcast earnings was 75%, compared to 38% achieved in
2022. This increase is in part due to the absolute quantum of
Digital and Studios adjusted operating profit increasing year on
year (£5.2m equivalent to 53%) but it is also impacted by the
declines in high margin linear advertising revenues that have
resulted in a 53% reduction in Broadcast operating profit year on
year.
Adjusted profit for the year was
£13.8m (2022: £19.1m), which includes a net tax credit of £4.5m
(2022: charge of £5.0m), primarily in relation to High-End
Television (HETV) tax credits receivable, and is after charging
finance costs of £2.9m (2022: £1.6m). The finance costs comprised
interest on the Group's borrowings of £2.4m (2022: £1.1m) with the
balance being non-cash costs in relation to the Group's lease
liabilities. These adjusted results are before finance costs in
relation to the Group's defined benefit pension schemes (2023:
£2.8m; 2022: £1.4m), finance costs being the unwind of discount in
relation to put options recognised in a business combination (2023:
£0.5m, 2022: nil) and adjusting items in operating profit (2023:
cost of £6.0m; 2022: cost of £0.5m). Statutory profit after tax was
£5.3m (2022: £17.3m).
Adjusted earnings per share at
28.2p was down 33% on the prior year, driven by lower operating
profit and higher interest costs. On a statutory basis EPS
was 9.7p (2022: 38.3p).
At the balance sheet date, the
Group had net debt of £32.3m compared to £15.1m at the start of the
year. The increase is principally driven by the acquisition of
Greenbird Media, which was a net cash outflow of £15m on
acquisition. Initial cash consideration of £21.4m was paid on
completion with a further £0.5m paid in December 2023 as surplus
cash was paid via a dividend to Greenbird from one of its
subsidiaries. Operating cash conversion in the year improved
on 2022, as expected, and was 169% (2022: 45%).
The Group has in place a £70m
revolving credit facility, with £10m accordion, maturing in March
2026. The Group also has a production financing facility
relating to commissioned programme production, of which £3.3m was
drawn at the end of the year. This facility will mature when the
programme is delivered to the commissioner in H1 2024. At the
end of the year, the Group's leverage (calculated on a covenant
basis) was 1.2 times (2022: 0.5 times) and
interest cover was 12.9 times (2022: 42.8 times), both metrics well
within the covenant limits.
The IAS 19 accounting deficit
across the Group's two defined benefit pension schemes was £54.8m
at the end of the year (2022: £63.1m). The decrease in the
liability is primarily driven by updated mortality assumptions that
reduce life expectancies.
STV Studios
2023 has been a standout year for
STV Studios. The production business
continues its strong growth trajectory, with revenues almost
trebling year on year and profit growing nearly fourfold from a
combination of organic growth and the acquisition of Greenbird
Media. It is scaling rapidly and
profitably, strengthening its position as the biggest production
company in Scotland and moving closer towards our core objective of
becoming the UK's number 1 nations and regions
producer.
Over the past four years a key
part of our expansion plan, alongside organic growth, has been to
invest in new production partners. In July 2023, we accelerated
this strategy through the acquisition of Greenbird Media, significantly
increasing the number of production labels under the STV Studios
umbrella (from 9 to 24), more than trebling our portfolio of
returning series and expanding our forward pipeline of new
programme ideas. STV Studios now has expanded bases in Glasgow and
London, as well as offices in Cardiff, Belfast, Brighton and
Manchester, strengthening our ability to take advantage of the
continuing growth of production in the nations and
regions.
The Studios business was already
on track to exceed our 2023 target of £40m of revenue, but this
transformative acquisition has added
significant scale and creative firepower to the division and
accelerated STV's overall diversification strategy in terms of both
revenue and profit. The acquisition was materially
earnings-enhancing from day one and was funded from STV Group's
existing financial resources.
STV Studios - including the
Greenbird labels - has produced a record 68 series in 2023 while
securing more than 50 new commissions and recommissions. This is a
very strong performance set against a difficult global
commissioning backdrop, with many UK broadcasters and global
streaming services slowing their rate of new programme commissions
in the current economic climate.
Programme highlights across
Scripted and Unscripted for 2023 include:
·
BBC One commissioned two new series of hit
gameshow Bridge of Lies
with Ross Kemp, with the format also selling to Spain and the
US.
·
One of the BBC's biggest new dramas of the year,
critically acclaimed Belfast-based police drama, Blue Lights was recommissioned for a
second series. In Q1 2024, a further two series were ordered from
our label, Two Cities.
·
Series 2 of prison drama, Screw, which aired on Channel 4 in the
autumn, attracted an average audience of 1.6m per
episode.
·
Thriller Criminal Record, a co-production with
our exclusive partner, Tod Productions, launched globally in
January 2024 on Apple TV+ to a raft of rave reviews.
·
Antiques Road
Trip (BBC), Travelling Auctioneers (BBC) and
The Yorkshire Auction
House (Really, Discovery) are important returning series for
the business and continued to deliver strong ratings.
·
Primal Media produced innovative new reality
format, The Underdog:
Josh Must Win for Channel
4, airing in 2024; and a series development deal with US media
group, NBCUniversal, has been secured.
·
Tuesday's Child won brand new entertainment
format The Fortune Hotel
for ITV/STV and a recommission for BBC returner, The Hit List.
· Crackit Productions won and delivered a number of their
successful returning series in 2023, including titles such as
Casualty 24/7 and
Trucking Hell for Channel
5, Deadliest Families for
Discovery, and Social Media
Murders for ITV2.
As in 2022, tape sales of our
extensive programme catalogue remain very strong, proving to be a
reliable and valuable income stream for the business. Following the
acquisition of Greenbird Media, we have significantly increased the
number of episodes in our distribution portfolio, including shows
such as Antiques Road Trip, The
Travelling Auctioneers, Bridge of Lies, LEGO Masters and
A&E After
Dark.
Testament to the tenacity, talent
and creativity of our people, STV Studios was named Production Group of the Year at the
prestigious Edinburgh TV Awards in August 2023.
We move into 2024 mindful of the
ongoing uncertainty in the market. However, not only do we have a
strong stable of returning series, we have a compelling pipeline of
new programme ideas across the expanded STV Studios, and we're
excited about the year ahead for our newly enlarged creative
powerhouse.
Digital
A combination of appealing and
exclusive content, availability across all major platforms in the
UK, and a continuously improving user experience ensured that STV
Player continued its strong growth trajectory in 2023.
The migration of audiences from linear to VoD
continues and viewing hours were up 25% at
71m compared with 2022, and streams increased by 28% at
149m.
STV Player marked its biggest ever
month and quarter in terms of viewing hours, contributing to a
record-breaking year for the streamer. A strong content
line-up, including exclusives in Scotland like dramas Crime, Six Four and The Long Shadow, alongside appealing
acquired material, such as Brookside and Suspects, helped make this our biggest
year ever for Video on Demand.
Total active registered users -
individuals who have signed up to the service, provided their
details and viewed content - were up 400,000 at 1.8m across 2023,
with 1m users active every month across our STV owned and
third-party platforms. STV Player VIP users continued
to grow, with new VIPs up by two thirds year on year - that's
570,000 opted-in users by the end of 2023.
Following an agreement
with ITV in December 2022, STV Player has
exclusive Scottish rights for a range of original and premiere
content, encompassing at least 100 hours of brand new and exclusive
box sets per year. 58 new series premiered in 2023 under this
new deal, driving 28% of VOD viewing. Five of these titles are in
the top 15 best-watched VOD shows, including Irvine Welsh drama
Crime starring Dougray
Scott; true crime drama, The Long
Shadow; crime thriller, Payback, along with Six Four and Malpractice. Favourites like
The Bay, Unforgotten and
Vera also continue to
drive strong viewing numbers for STV Player.
Drama remains a big driver of digital viewing,
with almost four in ten STV drama hours viewed
via STV Player across 2023.
In addition to access to exclusive
Network content in Scotland, this agreement sees ITV's market
leading sales team take on exclusive responsibility for selling all
national and digital VOD and simulcast advertising inventory on STV
Player from 2023, allowing STV to benefit from ITV's unrivalled
scale in the UK market. We joined ITV's addressable advertising
platform, Planet V, allowing advertisers to access STV's inventory
alongside ITV's combination of mass simultaneous reach and
data-driven, targeted advertising.
This has seen the level of
targeted, programmatic advertising on our streaming service
increase from 40% to 90% across the year, with our digital brand
count increasing by 25% across the year. This partnership has also created a genuine one-stop-shop for
Scottish advertising across linear, VOD and programmatic, with the
aim of attracting new, digital-only advertisers who
haven't advertised on TV before.
Across all VOD programming, STV
third-party acquired material features strongly in our top 20 - a
proven approach which helps us broaden our audience outside of
Scotland. Our strategic acquisition of iconic soap, Brookside, delivered vast media
profile for the series and it was our number two most watched
programme across the year, with c.13m streams in 2023, of which 69%
came from outside of Scotland.
Broadcast
STV reaches 2.8m adults each
month, more than any other commercial channel, making STV a unique
commercial proposition for advertisers. STV also has a higher
daily, weekly and monthly reach than any of the subscription
streaming services.
Like all businesses, 2023 saw us
operating against a very challenging macro-economic backdrop due to
high inflation and rising interest rates. This impacted both the
national linear advertising performance the most significantly,
down 16% year on year, with the Scottish regional ad market
continuing to outperform at -9% year on year. This is down to
STV's Growth Fund, which stands at £30m and makes advertising more affordable and accessible for SMEs.
Since launch in 2018 to the end of 2023, we have allocated almost
£28m across more than 1200 deals with Scottish companies. 245 deals
were secured in 2023 and importantly, over 65% of advertisers have
returned from 2022. Within this, we have ring-fenced £1m for an
Inclusion Fund, for businesses who support diverse and inclusive
practices; and a £1m Green Fund, for businesses with a commitment
to sustainability.
For the fifth consecutive year,
STV is the most watched peak time channel in Scotland, with our
viewing share considerably ahead of BBC One; and the only PSB in Scotland to outperform its UK Network
equivalent, tracking ahead of ITV1 in terms of viewing share across
all time (1.4 percentage points) and peak time (2.3 percentage
points) in 2023.
STV delivered 97% of the top 500
commercial programme audiences last year and was the most watched
commercial channel on 361 days in 2023.
Coronation Street and
Emmerdale, continue to be
schedule favourites with loyal viewers. Other programme highlights for 2023 included new dramas like
The Long Shadow, A Spy Among
Friends and The Hunt for
Raoul Moat; returning dramas, Unforgotten
and Vera; and
entertainment shows The Masked
Singer, Deal or No
Deal and The
Chase. I'm A Celebrity… Get Me Out
Of Here! again proved our most popular show, with the top rating episode
attracting over 800k linear viewers.
Our audience was boosted
significantly by large scale sporting events in 2023.
STV's Rugby World Cup coverage reached 2.5m Scots
(53%) and attracted some of the highest audiences of the year.
Viewing to the England vs Scotland Calcutta Cup match during the
Six Nations peaked at 900k - our biggest audience of 2023. 1.3m
Scots tuned in to watch the FIFA Women's World Cup.
STV News at Six has
retained its position as the most-watched news
programme in Scotland, tracking 7 share
points ahead of BBC Reporting Scotland (its highest ever
share lead). The STV News website has also had a strong year, with
3.1m unique visitors to the site on average per month. Our Expert
Voices training scheme helps ensure we feature a diverse range of
contributors on our news and current affairs programmes and so far,
1000+ people have been trained helping us to reach our on-air
diversity targets.
In summer 2023, we launched our first ever Sustainable Scotland Week - a
seven-day, cross-platform mission which saw STV raising awareness
of how climate change is impacting Scotland's communities and
inspiring viewers to live more sustainably. Our
dedicated TV content reached 1.5m viewers. ScotPulse research
revealed that 72% of those who saw
Sustainable Scotland Week activity said it made them more likely to
make more environmentally conscious choices. All STV productions are albert certified.
Regulatory update
In March 2024, we accepted terms
from Ofcom to renew our Channel 3 licences for a further ten-year
period from January 2025, providing further long-term certainty to
our core business and securing the future provision of commercial
public service broadcasting in Scotland, including the country's
highest performing news and current affairs programmes.
STV also welcomed the introduction
of the Media Bill at Westminster and its subsequent parliamentary
progress. This represents the first major update to UK media
legislation for over 20 years and is urgently required to make
Public Service Media as prominent on digital platforms as they are
today on broadcast platforms, and to ensure STV remains easily
available and discoverable for viewers. In late February, Ofcom
published their roadmap to support full implementation of the Bill.
It's vital that the Bill now makes its way swiftly through
Parliament into law.
Consolidated income statement
Year ended 31 December 2023
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
Adjusted
results
|
Adjusting
items
(note
6)
|
Statutory
results
|
Adjusted
results
|
Adjusting
items
(note
6)
|
Statutory
results
|
|
Note
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
Revenue
|
5
|
168.4
|
-
|
168.4
|
137.8
|
-
|
137.8
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
(156.0)
|
(6.0)
|
(162.0)
|
(112.0)
|
(0.5)
|
(112.5)
|
Operating profit
|
|
12.4
|
(6.0)
|
6.4
|
25.8
|
(0.5)
|
25.3
|
|
|
|
|
|
|
|
|
Finance costs
|
|
|
|
|
|
|
|
- borrowings
|
|
(2.4)
|
-
|
(2.4)
|
(1.1)
|
-
|
(1.1)
|
- defined benefit pension
schemes
|
-
|
(2.8)
|
(2.8)
|
-
|
(1.4)
|
(1.4)
|
- lease interest
|
|
(0.5)
|
-
|
(0.5)
|
(0.5)
|
-
|
(0.5)
|
- other finance costs
|
|
-
|
(0.5)
|
(0.5)
|
-
|
-
|
-
|
Total finance costs
|
|
(2.9)
|
(3.3)
|
(6.2)
|
(1.6)
|
(1.4)
|
(3.0)
|
Share of loss of
associates
|
|
(0.2)
|
-
|
(0.2)
|
(0.1)
|
-
|
(0.1)
|
Profit before tax
|
9.3
|
(9.3)
|
-
|
24.1
|
(1.9)
|
22.2
|
|
|
|
|
|
|
|
|
Tax credit/(charge)
|
7
|
4.5
|
0.8
|
5.3
|
(5.0)
|
0.1
|
(4.9)
|
Profit for the year
|
13.8
|
(8.5)
|
5.3
|
19.1
|
(1.8)
|
17.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
Owners of the parent
company
|
13.0
|
(8.5)
|
4.5
|
19.3
|
(1.8)
|
17.5
|
Non-controlling
interests
|
|
0.8
|
-
|
0.8
|
(0.2)
|
-
|
(0.2)
|
|
13.8
|
(8.5)
|
5.3
|
19.1
|
(1.8)
|
17.3
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
|
|
Basic
|
8
|
28.2p
|
|
9.7p
|
42.3p
|
|
38.3p
|
Diluted
|
8
|
27.2p
|
|
9.4p
|
40.4p
|
|
36.6p
|
A reconciliation of the statutory
results to the adjusted results is included at note 6. The above
consolidated income statement should be read in conjunction with
the accompanying notes.
Consolidated statement of comprehensive
income
Year ended 31 December 2023
|
2023
|
2022
|
|
£m
|
£m
|
|
|
|
Profit for the year from continuing
operations
|
5.3
|
17.3
|
|
|
|
Items that will not be reclassified subsequently to profit or
loss:
|
|
|
Remeasurement of defined benefit
pension schemes
|
2.0
|
6.5
|
Deferred tax charge
|
(0.5)
|
(1.5)
|
Revaluation loss on listed
investment to market value
|
-
|
(0.3)
|
Other comprehensive expense - net of tax
|
1.5
|
4.7
|
|
|
|
Total comprehensive income for the year
|
6.8
|
22.0
|
|
|
|
Attributable to:
|
|
|
Owners of the parent
company
|
6.0
|
22.2
|
Non-controlling interests
|
0.8
|
(0.2)
|
|
6.8
|
22.0
|
The above consolidated statement
of comprehensive income should be read in conjunction with the
accompanying notes.
Consolidated balance sheet
At
31 December 2023
|
|
2023
|
2022*
|
|
Note
|
£m
|
£m
|
Non-current assets
|
|
|
|
Intangible assets
|
10
|
25.0
|
1.2
|
Property, plant and
equipment
|
11
|
8.9
|
10.6
|
Right-of-use assets
|
12
|
17.9
|
18.6
|
Investments
|
14
|
4.1
|
2.5
|
Deferred tax asset
|
15
|
19.8
|
21.9
|
Trade and other
receivables
|
|
1.0
|
0.7
|
|
|
76.7
|
55.5
|
Current assets
|
|
|
|
Inventories
|
|
24.4
|
47.0
|
Trade and other
receivables
|
|
38.9
|
39.8
|
Cash and cash equivalents
|
|
13.9
|
18.3
|
|
|
77.2
|
105.1
|
|
|
|
|
Total assets
|
|
153.9
|
160.6
|
|
|
|
|
Equity
|
|
|
|
Ordinary shares
|
17
|
23.3
|
23.3
|
Share premium
|
|
115.1
|
115.1
|
Capital redemption
reserve
|
|
0.2
|
0.2
|
Merger reserve
|
|
173.4
|
173.4
|
Other reserve
|
|
2.4
|
1.8
|
Accumulated losses
|
|
(321.9)
|
(322.7)
|
Shareholders' equity
|
|
(7.5)
|
(8.9)
|
Non-controlling interests
|
|
(5.1)
|
(0.3)
|
Total equity
|
|
(12.6)
|
(9.2)
|
|
|
|
|
Non-current liabilities
|
|
|
|
Borrowings
|
16
|
41.6
|
26.4
|
Lease liabilities
|
|
17.9
|
18.7
|
Retirement benefit
obligations
|
19
|
54.8
|
63.1
|
Deferred tax liabilities
|
15
|
2.6
|
-
|
Trade and other payables
|
|
5.9
|
-
|
|
|
122.8
|
108.2
|
Current liabilities
|
|
|
|
Borrowings
|
16
|
4.6
|
7.0
|
Trade and other payables
|
|
37.9
|
53.7
|
Lease liabilities
|
|
1.2
|
0.9
|
|
|
43.7
|
61.6
|
|
|
|
|
Total liabilities
|
|
166.5
|
169.8
|
|
|
|
|
Total equity and liabilities
|
|
153.9
|
160.6
|
The above consolidated balance
sheet should be read in conjunction with the accompanying
notes.
*Details of restatements are
disclosed in note 2
Consolidated statement of cash flows
Year ended 31 December 2023
|
|
2023
|
2022
|
|
Note
|
£m
|
£m
|
Operating activities
|
|
|
|
Cash generated by
operations
|
18
|
10.8
|
11.5
|
Interest and fees paid in relation to
banking facilities
|
|
(2.3)
|
(1.1)
|
Corporation tax received
|
|
5.0
|
0.2
|
Pension deficit funding - recovery
plan payment
|
|
(9.7)
|
(9.5)
|
Contingent cash payment to pension
schemes
|
|
-
|
(2.4)
|
|
|
|
|
Net
cash generated by/(used in) operating activities
|
|
3.8
|
(1.3)
|
|
|
|
|
Investing activities
|
|
|
|
Acquisition of subsidiary
undertakings, net of cash acquired
|
13
|
(15.0)
|
-
|
Purchase of investment in
associate
|
|
(0.3)
|
(0.9)
|
Production finance provided to
associate
|
|
(0.4)
|
(2.4)
|
Production finance repaid from
associate
|
|
3.0
|
-
|
Purchase of intangible
assets
|
|
(0.4)
|
(0.5)
|
Purchase of property, plant and
equipment
|
|
(0.8)
|
(3.4)
|
|
|
|
|
Net
cash used in investing activities
|
|
(13.9)
|
(7.2)
|
|
|
|
|
Financing activities
|
|
|
|
Payment of obligations under
leases
|
|
(1.8)
|
(1.8)
|
Borrowings drawn
|
|
36.3
|
38.0
|
Borrowings repaid
|
|
(21.0)
|
(26.0)
|
Dividends paid to non-controlling
interests
|
|
(0.2)
|
-
|
Dividends paid to equity
holders
|
|
(5.2)
|
(5.1)
|
|
|
|
|
Net
cash generated by financing activities
|
|
8.1
|
5.1
|
|
|
|
|
Net
decrease in cash and cash equivalents
|
|
(2.0)
|
(3.4)
|
|
|
|
|
Net cash and cash equivalents,
including overdraft balances, at beginning of year
|
|
11.3
|
14.7
|
|
|
|
|
Net
cash and cash equivalents, including overdraft balances, at end of
year
|
|
9.3
|
11.3
|
Notes to
the preliminary announcement
Year ended 31 December 2023
1. General information
STV Group plc ("the Company") and
its subsidiaries (together "the Group") is listed on the London
Stock Exchange, limited by shares, 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, provision
of internet services and the sale of advertising airtime and space
in these media.
2. Basis of preparation
The financial information set out
in the audited preliminary announcement does not constitute the
Group's statutory financial statements for the year ended 31
December 2023 within the meaning of Section 434 of the Companies
Act 2006 and has been extracted from the full audited financial
statements for the year ended 31 December 2023.
Statutory financial statements for
the year ended 31 December 2022, which received an unqualified
audit report, have been delivered to the Registrar of Companies.
The reports of the auditors on the financial statements for the
year ended 31 December 2022 and for the year ended 31 December 2023
were unqualified and did not contain a statement under either
section 498(2) or section 498(3) of the Companies Act 2006.
The financial statements for the year ended 31 December 2023 will
be delivered to the Registrar of Companies and made available to
all shareholders in due course.
Prior year adjustments
Presentation of cash and cash equivalents and
overdrafts
The Group previously presented
cash balances and overdrafts held with the same counterparty on a
net basis due to there being a legal right to offset, with
overdraft balances cleared down in line with trading requirements.
However, as the accounts that are used to settle the overdrafts are
normal trading accounts with routine activities processing through
them, the overdrafts should be disclosed within current
liabilities. The impact on the Group balance sheet at 31 December
2022 is to increase cash and cash equivalents from £11.3m to £18.3m
and recognise a current liability of £7.0m.
Historical overstatement of trade and other
receivables
The Group identified an historic
error of £0.9m relating to an over accrual of music revenue
expected to be collected on its behalf by a third party. The over
accrual relates to prior periods not presented in these financial
statements and therefore the correcting adjustment was disclosed as
a restatement of the 1 January 2022 trade and other receivables
balance, with a corresponding adjustment to retained earnings. The
31 December 2022 balance sheet has also been restated; non-current
trade and other receivables restated from £1.5m to £0.7m, current
trade and other receivables restated from £39.9m to £39.8m, and
retained earnings restated from £(321.8)m to £(322.7)m.
Going concern
At 31 December 2023, the Group was
in a net debt position (excluding lease liabilities) of £32.3m
comprising drawdowns under its banking facility of £39m, amounts
drawn under a separate third party production financing facility of
£3.3m, partially offset by net cash balances, including overdrafts,
of £9.3m.
The Group has in place a £70m
revolving credit facility, with £10m accordion, that matures in
March 2026. In July 2023, the Group accessed £10m of its then £20m
accordion to provide additional liquidity headroom following
acquisition of Greenbird Media Limited and against the backdrop of
a difficult macroeconomic environment impacting linear advertising
in particular. To date, we have not accessed this incremental
headroom. Our covenant package includes the key financial covenants
of net debt to EBITDA (leverage), which must be less than 3 times,
and interest cover, which must be greater than 4 times.
The Group is in a net current
asset position and generates cash from operations that enables the
Group to meet its liabilities as they fall due, and other
obligations. It has undrawn facilities under its main banking
facility of £31m, with a further £10m available through accessing
the accordion.
As part of the regular forecasting
and budgeting processes, the Group considers the outlook for the UK
advertising market and the UK and global commissioning markets and
uses them to inform the assumptions underpinning the business's own
financial forecasts. As well as defining a 'base case' set of
assumptions, the Group considers a range of alternative outcomes -
on the upside and the downside - and assesses liquidity headroom
and covenant compliance under all scenarios. The Group's forecasts
and projections for both profitability and cash generation/debt
levels, taking account of reasonably possible changes in trading
performance, show that the Group will be able to operate within the
level of its current available funding and financial
covenants.
The Directors performed a full
review of principal risks and uncertainties during the year and
approved the Group's updated three-year plan covering the period to
31 December 2026 in February 2024. As part of this process, the
Board gave specific consideration and challenge to the first year
of this plan and approved it as the budget for FY2024.
A severe but plausible downside
scenario was identified against the base case assumptions in that
budget that reflected crystallisation of a number of risks,
principally in relation to advertising revenues and the number and
scale of programme commissions won and delivered in the year. Under
this alternative scenario, the Group modelled a reduction of more
than 40% in the budgeted revenue of the Studios division combined
with a continued recession in the UK advertising market.
Even under this scenario, the
Group generated sufficient cash to enable it to continue in
operation and remain within covenant levels under the Group banking
arrangements. Therefore, the Board concluded that the Group's
forecasts and projections, taking account of reasonably possible
changes in trading performance, show it will be able to operate
within the level of its current available funding and covenant
levels.
After making enquiries, the
Directors have a reasonable expectation that the Group has adequate
resources to continue in operation for at least 12 months from the
date of this report. Accordingly, the Group continues to adopt the
going concern basis in preparing its consolidated financial
statements.
3. Accounting policies
The accounting policies applied
are consistent with those of the annual financial statements for
the year ended 31 December 2023. There were no changes to
accounting standards in the year that had any material impact on
the financial statements.
4. 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 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.
5. Business segments
Information reported to the
Group's Chief Executive for the purposes of resource allocation and
assessment of segment performance is by product. The Group's
operating segments are Broadcast, Digital and Studios.
|
Broadcast
|
Digital
|
Studios
|
Total
|
|
2023
|
2022
|
2023
|
2022
|
2023
|
2022
|
2023
|
2022
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Sales
|
90.4
|
107.6
|
20.2
|
19.0
|
67.2
|
23.9
|
177.8
|
150.5
|
Inter-segment sales
|
(9.0)
|
(12.5)
|
-
|
-
|
(0.4)
|
(0.2)
|
(9.4)
|
(12.7)
|
Segment revenue
|
81.4
|
95.1
|
20.2
|
19.0
|
66.8
|
23.7
|
168.4
|
137.8
|
|
|
|
|
|
|
|
|
|
Segment result
|
|
|
|
|
|
|
|
|
Adjusted operating
profit
|
9.8
|
20.7
|
9.9
|
8.5
|
5.2
|
1.4
|
24.9
|
30.6
|
|
|
|
|
|
|
|
|
|
Unallocated corporate
expenses
|
|
|
|
|
(4.8)
|
(4.8)
|
Adjusted operating profit
|
|
20.1
|
25.8
|
Adjusting items in operating
profit(note 6)
|
|
|
|
|
(6.0)
|
(0.5)
|
Finance cost - put
options
|
|
|
|
|
(0.5)
|
-
|
HETV tax credits
|
|
|
|
|
|
|
(7.7)
|
-
|
Finance costs
|
|
|
|
|
|
|
(5.7)
|
(3.0)
|
Share of loss of
associates
|
|
|
|
(0.2)
|
(0.1)
|
Profit before tax
|
|
|
|
|
|
-
|
22.2
|
Tax credit/(charge)
|
|
|
|
|
|
5.3
|
(4.9)
|
Profit for the year
|
|
|
|
5.3
|
17.3
|
Adjusted operating profit (as
shown above) is the statutory operating profit before adjusting
items, amortisation of the fair value of intangible assets and
includes High-End Television (HETV) tax credits receivable. The
HETV tax credits relate solely to the Studios operating segment. In
the current year, £7.7m HETV tax credit claims were made (2022:
£nil), £0.5m of amortisation on the fair value of intangible assets
has been included since acquiring Greenbird Media Limited and £0.5m
of finance costs in relation to put options, resulting in a
statutory operating loss of £3.5m for the Studios division (2022:
profit of £1.4m).
Total assets have reduced from
£160.6m to £153.9m at 31 December 2023. This movement primarily
relates to the assets acquired from the acquisition of Greenbird
Media (see note 13) offset by a reduction in programme production
work in progress (inventory) due to material deliveries in the
year.
6. Adjusting items
In reporting financial information,
the Group presents alternative performance measures (APMs) which
are not defined or specified under the requirements of IFRS. The
Group believes that these APMs, which are not considered to be a
substitute for or superior to IFRS measures, provide stakeholders
with additional helpful information on the performance of the
business.
The Group makes certain adjustments
to the statutory profit measures to exclude the effects of material
amounts that it believes are distortive to the underlying trading
performance of the Group. By presenting these alternative
performance measures, the Group believes it is providing additional
insight into the performance of the business that may be useful to
stakeholders.
The table below sets out a
reconciliation of the statutory results to the adjusted
results:
|
2023
Operating
profit
£m
|
2023
Profit before
tax
£m
|
Basic
EPS
pence
|
2022
Operating
profit
£m
|
2022
Profit
before tax
£m
|
Basic EPS
pence
|
Statutory results
|
6.4
|
-
|
9.7p
|
25.3
|
22.2
|
38.3p
|
Material contract implementation
costs (i)
|
3.1
|
3.1
|
|
0.5
|
0.5
|
|
Acquisition and integration costs
(ii)
|
2.4
|
2.4
|
|
-
|
-
|
|
Amortisation of intangible asset
(iii)
|
0.5
|
0.5
|
|
-
|
-
|
|
IAS 19 finance costs
(iv)
|
-
|
2.8
|
|
-
|
1.4
|
|
Other finance costs (v)
|
-
|
0.5
|
|
-
|
-
|
|
High-end television tax credits
(vi)
|
7.7
|
7.7
|
|
-
|
-
|
|
Adjusted results
|
20.1
|
17.0
|
28.2p
|
25.8
|
24.1
|
42.3p
|
|
|
|
|
|
|
|
(i) On 8 December 2022,
the Group announced an extended partnership with ITV for digital
content and advertising sales. The agreement was effective from 1
January 2023 and one-off costs associated with the negotiation and
implementation of the agreement reached in the year was £3.1m
(2022: £0.5m).
(ii) On 6 July 2023, the Group
acquired the independent production network of companies headed by
Greenbird Media Limited for total amounts payable of £24.2m (note
13). The associated attributable costs, totalling £2.4m, have been
expensed as incurred in the year. This includes legal and advisory
fees, amounts attributable to earns outs payable to founding
members, and restructuring costs.
(iii)
Following the acquisition of Greenbird Media
Limited in July 2023, the Group has undertaken a provisional fair
value assessment of the assets acquired and liabilities assumed.
The provisional fair value attributable to intellectual property
acquired was £10.0m, with an associated amortisation charge of
£0.5m incurred since acquisition. Amortisation of assets acquired
through business combinations and investments are included within
adjusted results. As these costs are acquisition related, and in
line with our treatment of other acquisition related costs, we
consider them to be capital in nature as they do not reflect the
underlying trading performance of the Group.
(iv)
IAS 19 related items, principally the net finance
cost included in the consolidated income statement, are excluded
from non-statutory measures as they are non-cash items that relate
to legacy defined benefit pension schemes.
(v) The Group recognised
liabilities of £9.6m payable to minority shareholders under put
options already in force at the date of acquisition of Greenbird
Media Limited, which was estimated based on discounted profit
forecasts. Since the date of acquisition, £0.5m has been recognised
as a finance cost in relation to the unwinding of the associated
discount.
(vi)
The Group meets the eligibility criteria to claim
HETV tax relief through the production of certain dramas created in
its Studios division. This incentive was introduced in the UK to
support the creative industries and is a critical factor when
assessing the viability of investment decisions in the production
of high-end drama programmes. These production tax credits are
reported within the total tax charge in the Consolidated Income
Statement in accordance with IAS 12. However, STV considers the
HETV tax credits to be a contribution to production costs and
therefore more aligned to working capital in nature. Therefore, the
adjusted results for the Group reflect these credits as a
contribution to operating cost and not a tax item. Post year end,
HETV tax credits are being replaced by 'above the line'
Audio-Visual Expenditure credits and are accounted for in a similar
way to the alternative performance measure presented
above.
7. Tax
|
|
|
2023
|
2022
|
|
|
|
£m
|
£m
|
|
|
|
|
|
The credit/(charge) for taxation is
as follows:
|
|
|
|
|
Credit/(charge) for the year before
adjusting items
|
|
|
4.5
|
(5.0)
|
Tax effect on adjusting
items
|
|
|
0.8
|
0.1
|
Credit/(charge) for the year
|
|
|
|
5.3
|
(4.9)
|
|
|
|
|
| |
Changes to the UK corporation tax
rates were substantively enacted as part of Finance Bill 2021 on 10
June 2021. These included an increase in the UK corporation tax
rate to 25% effective from 1 April 2023. The Finance Act 2023 which
received Royal Assent on 10 January 2023, had no impact on
corporation tax figures. The deferred tax balances at 31 December
2023 have been stated at a rate of 25% (2022:25%), which is the
rate at which the temporary differences are expected to
unwind.
8. Earnings per share
The calculation of earnings per
share is based on earnings after tax and the weighted average
number of ordinary shares in issue during the year, excluding
ordinary shares purchased by the Company and held for use by the
STV Employee Benefit Trust.
For diluted earnings per share,
the weighted average number of ordinary shares in issue is adjusted
to assume conversion of all dilutive potential ordinary shares. The
Group has one type of dilutive potential ordinary shares namely
share options granted to employees.
The adjusted earnings per share
figures that have also been calculated are based on earnings before
adjusting items that are significant in nature and/or quantum and
not expected to recur every year and are therefore considered to be
distortive. The adjusting items recognised in the current and prior
years are detailed in note 6 and presented below net of the related
tax effect. Adjusted earnings per share has been presented to
provide shareholders with an additional measure of the Group's year
on year performance.
Earnings per share
|
2023
|
2022
|
|
Pence
|
Pence
|
|
|
|
Basic earnings per ordinary
share
|
9.7p
|
38.3p
|
Diluted earnings per ordinary
share
|
9.4p
|
36.6p
|
|
|
|
Adjusted basic earnings per
share
|
28.2p
|
42.3p
|
Adjusted diluted earnings per
share
|
27.2p
|
40.4p
|
The following reflects the
earnings and share data used in the calculation of earnings per
share:
Earnings
|
£m
|
£m
|
|
|
|
Profit for the year attributable to
equity shareholders
|
4.5
|
17.5
|
Adjusting items in operating profit
(net of tax)
|
5.2
|
0.4
|
IAS 19 finance cost
|
2.8
|
1.4
|
Other finance costs
|
0.5
|
-
|
Adjusted profit
|
13.0
|
19.3
|
|
|
|
Number of shares
|
Million
|
Million
|
|
|
|
Weighted average number of ordinary
shares in issue
|
45.8
|
45.6
|
Dilution due to share
options
|
1.6
|
2.2
|
Total weighted average number of
ordinary shares in issue
|
47.4
|
47.8
|
9. Dividends
|
2023
|
2022
|
2023
|
2022
|
|
per share
|
per
share
|
£m
|
£m
|
Dividends on equity ordinary shares
|
|
|
|
|
Paid final dividend
|
7.4p
|
7.3p
|
3.4
|
3.3
|
Paid interim dividend
|
3.9p
|
3.9p
|
1.8
|
1.8
|
Dividends paid
|
11.3p
|
11.2p
|
5.2
|
5.1
|
A final dividend of 7.4p per share
(2022: 7.4p per share) has been proposed by the Board of Directors
and is subject to approval by shareholders at the 2024 AGM
scheduled for 1 May 2024. The proposed dividend would be
payable on 31 May 2024 to shareholders who are on the register at
19 April 2024. The ex-dividend date is 18 April 2024. This final
dividend, amounting to £3.4m has not been recognised as a liability
in these financial statements.
10. Intangible assets
|
Goodwill
£m
|
Intellectual
property
£m
|
Web
development
£m
|
Total
£m
|
Cost
|
|
|
|
|
At 1 January 2023
|
-
|
-
|
6.6
|
6.6
|
Additions
|
-
|
-
|
0.4
|
0.4
|
Acquisitions (note 13)
|
14.5
|
10.0
|
-
|
24.5
|
Disposals
|
-
|
-
|
(0.3)
|
(0.3)
|
At 31 December 2023
|
14.5
|
10.0
|
6.7
|
31.2
|
|
|
|
|
|
Accumulated amortisation and
impairment
|
|
|
|
|
At 1 January 2023
|
-
|
-
|
5.4
|
5.4
|
Amortisation
|
-
|
0.5
|
0.6
|
1.1
|
Disposals
|
-
|
-
|
(0.3)
|
(0.3)
|
At 31 December 2023
|
-
|
0.5
|
5.7
|
6.2
|
|
|
|
|
|
Net book value at 31 December 2023
|
14.5
|
9.5
|
1.0
|
25.0
|
|
|
|
|
|
Net book value at 31 December
2022
|
-
|
-
|
1.2
|
1.2
|
11. Property, plant and equipment
|
Leasehold
improvements
£m
|
Plant,
technical
equipment
and other
£m
|
Assets under
construction
£m
|
Total
£m
|
Cost
|
|
|
|
|
At 1 January 2023
|
0.4
|
36.1
|
1.9
|
38.4
|
Additions
|
-
|
0.4
|
0.4
|
0.8
|
Acquisitions (note 13)
|
0.1
|
0.1
|
-
|
0.2
|
Transfers
|
-
|
2.0
|
(2.0)
|
-
|
Disposals
|
(0.1)
|
(13.7)
|
-
|
(13.8)
|
At
31 December 2023
|
0.4
|
24.9
|
0.3
|
25.6
|
|
|
|
|
|
Accumulated depreciation and impairment
|
|
|
|
|
At 1 January 2023
|
0.2
|
27.6
|
-
|
27.8
|
Charge for year
|
0.1
|
2.6
|
-
|
2.7
|
Disposals
|
(0.1)
|
(13.7)
|
-
|
(13.8)
|
At
31 December 2023
|
0.2
|
16.5
|
-
|
16.7
|
|
|
|
|
|
Net
book value at 31 December 2023
|
0.2
|
8.4
|
0.3
|
8.9
|
|
|
|
|
|
Net book value at 31 December
2022
|
0.2
|
8.5
|
1.9
|
10.6
|
12. Right of use assets
|
Property
|
Vehicles
|
Total
|
|
£m
|
£m
|
£m
|
Cost
|
|
|
|
At 1 January 2023
|
24.9
|
0.3
|
25.2
|
Acquisitions (note 13)
|
0.7
|
-
|
0.7
|
At 31 December 2023
|
25.6
|
0.3
|
25.9
|
|
|
|
|
Accumulated depreciation
|
|
|
|
At 1 January 2023
|
6.4
|
0.2
|
6.6
|
Depreciation charge for the
year
|
1.3
|
0.1
|
1.4
|
At 31 December 2023
|
7.7
|
0.3
|
8.0
|
Net book value at 31 December 2023
|
17.9
|
-
|
17.9
|
Net book value at 31 December
2022
|
18.5
|
0.1
|
18.6
|
|
|
|
| |
13. Business combinations
On 6 July 2023, the Group acquired
100% of the issued share capital of unscripted television
production group Greenbird Media Limited ('Greenbird') for a total
amounts payable of £24.2m, of which £21.4m was paid on completion.
The initial payment made was allocated £9.9m for the acquisition of
shares and £11.5m invested to settle convertible loan instruments
provided by the previous majority shareholder.
Deferred consideration of £1.2m
relates to surplus cash balances held by the majority subsidiary
companies acquired at completion with £0.5m paid in December 2023,
leaving a balance of £0.7m payable in the future.
Deferred earn-out payments,
estimated to be c£1.6m, are payable to the founders based on agreed
EBITDA targets over the two years ending 31 December 2024. These
payments are linked to the founders' ongoing employment with the
Group and will therefore be accounted for as an expense. At 31
December 2023, £0.9m has been accrued in respect of the first
earn-out payable in Q2 2024. This has been recognised as an
adjusting item in the consolidated income statement. Please refer
to note 6 for further details.
The Group has completed the
majority of its work in relation to assessing the fair values of
identifiable assets and liabilities acquired with only a small
number of minor points to be finalised. Therefore, we have
presented the fair values as provisional in the table below but do
not anticipate any material changes between the provisional and
final position, which will be finalised within 12 months from the
date of acquisition, as required by the relevant accounting
standard.
Provisional fair value of identifiable assets and liabilities
of Greenbird Media Limited and subsidiary
companies
|
2023
£m
|
Intangible assets
|
10.0
|
Property, plant and
equipment
|
0.2
|
Right of use assets
|
0.7
|
Investments
|
1.5
|
Inventory
|
1.8
|
Trade and other
receivables
|
2.0
|
Contract assets
|
1.9
|
Cash and cash
equivalents
|
6.9
|
Deferred tax
liabilities
|
(2.6)
|
Trade and other
payables
|
(15.4)
|
Lease liabilities
|
(0.8)
|
Contract liabilities
|
(3.5)
|
Fair value of net identifiable
assets
|
2.7
|
Non-controlling interest measured
at proportionate share of identifiable net assets
|
(4.2)
|
Adjustments to non-controlling
interest regarding derivative put options
|
9.6
|
Goodwill
|
14.5
|
Consideration
|
22.6
|
|
|
Total net cash outflow relating to acquisition of Greenbird
Media Limited and subsidiary companies
|
£m
|
Cash consideration paid for equity
shares
|
9.9
|
Additional cash invested to settle
convertible loan instruments
|
11.5
|
Deferred consideration
paid
|
0.5
|
Consideration paid
|
21.9
|
Cash and cash equivalents
acquired
|
(6.9)
|
Total cash outflow
|
(15.0)
|
|
|
|
£m
|
Present value of the expected
liability on put options
|
9.6
|
The goodwill of £14.5m represents
the value placed on the opportunity to materially enhance the
future growth prospects of STV Studios creatively, commercially,
and internationally. This has been calculated as the fair value of
the consideration transferred, plus the amount of non-controlling
interest adjusted for derivative put options relating to
subsidiaries acquired, less the net of the fair value of the
identifiable assets acquired and liabilities assumed.
From the date of acquisition,
Greenbird Media Limited and subsidiary undertakings contributed
£15.0m of revenue and £3.2m of operating profit to the Group's
results.
14. Investments
|
2023
|
2022
|
|
£m
|
£m
|
|
|
|
|
Associates
|
3.9
|
2.4
|
|
Other
|
0.2
|
0.1
|
|
|
4.1
|
2.5
|
|
|
2023
|
2022
|
|
£m
|
£m
|
Associates
|
|
|
|
At 1 January
|
2.4
|
1.5
|
|
Additions
|
1.7
|
1.0
|
|
Share of loss
|
(0.2)
|
(0.1)
|
|
At 31 December
|
3.9
|
2.4
|
|
The additions in associates during
2023 relates to the acquisition of a further 15% stake in quiz show
producer, Mighty Productions Limited, for a total consideration of
£0.3m in July 2023, taking the total investment held by the Group
to 40%. As part of the acquisition in Greenbird Media Limited (as
detailed in note 13), the Group acquired six associates for total
consideration of £1.4m, ranging from an ownership stake of 25% to
40%. The Group also owns a 25% shareholding in the unscripted
production company, Hello Mary, and a 25% stake in Two Cities
Television. Refer to note 20 for subsequent events relating to Two
Cities Television. No dividends have been received from any
associate undertaking.
The Group also holds shares in
Mirriad Advertising plc which has a nominal fair value at the
balance sheet date. This investment is measured at fair value
through the Consolidated Statement of Comprehensive
Income.
15. Deferred tax asset
At 31 December 2023, total
deferred tax assets of £19.8m were recognised on the balance sheet
(31 December 2022: £21.9m) and a deferred tax liability of £2.6m
(2022: £nil) was acquired through business combinations, resulting
in a net deferred tax asset of £17.2m (2022: £21.9m). Of this,
£13.7m relates to the deficit on the Group's defined benefit
pension schemes (31 December 2022: £15.7m) and the balance of £3.5m
relates to tax losses, accelerated capital allowances and
short-term timing differences (31 December 2022: £6.2m).
16. Borrowings
At the balance sheet date, the
Group had a £70m revolving credit facility (RCF) in place, with a
£10m accordion, maturing in March 2026. £41.6m was drawn down at
the balance sheet date (2022: £26.4m). The principle financial
covenants are the ratio of net debt to EBITDA (which must be below
3 times) and interest cover (which must be higher than 4 times).
The facility was increased by £10m to £70m (through accessing its
accordion) in July 2023, to provide additional liquidity headroom
on completion of the Greenbird acquisition. There has been no
requirement to call on this additional debt in the subsequent
period.
The Group also has a £7.1m loan
facility relating to production financing of which £3.3m was drawn
down at the balance sheet date (2022: £nil) and a bank overdraft
within current liabilities of £4.6m (2022: £7.0m).
17. Share capital
|
Number of shares
(thousands)
|
Ordinary
shares
£m
|
Share
premium
£m
|
Total
£m
|
|
|
|
|
|
At 1 January 2023 and 31 December
2023
|
46,723
|
23.3
|
115.1
|
138.4
|
The total authorised number of
ordinary shares is 63 million shares (2022: 63 million shares) with
a par value of £0.50 per share (2022: £0.50 per share). All issued
shares are fully paid.
18. Notes to the consolidated statement of cash
flows
|
2023
|
2022
|
|
£m
|
£m
|
|
|
|
Operating profit
|
6.4
|
25.3
|
Adjustments for:
|
|
|
Depreciation and
amortisation
|
5.2
|
4.8
|
Share based payments
|
0.6
|
0.8
|
Decrease/(increase) in
inventories
|
24.3
|
(29.3)
|
Decrease/(increase) in trade and
other receivables
|
3.4
|
(10.6)
|
(Decrease)/increase in trade
and other payables
|
(29.1)
|
20.5
|
Cash generated by operations
|
10.8
|
11.5
|
Net debt reconciliation
|
Long-term
borrowings
|
Net cash and cash
equivalents, including overdrafts
|
Net debt
|
Lease
liabilities
|
Adjusted net debt including
lease liabilities
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
At 1 January 2023
|
(26.4)
|
11.3
|
(15.1)
|
(19.6)
|
(34.7)
|
Cash flows
|
(15.0)
|
(2.0)
|
(17.0)
|
1.8
|
(15.2)
|
Non-cash flows (i)
|
(0.2)
|
-
|
(0.2)
|
(1.3)
|
(1.5)
|
At 31 December 2023
|
(41.6)
|
9.3
|
(32.3)
|
(19.1)
|
(51.4)
|
(i) Non-cash movements
relate to the amortisation of borrowing costs (for long-term
borrowings), the acquisition of right-of-use assets and
corresponding lease liabilities and lease interest.
Operating cash conversion,
calculated as cash generated by operations divided by operating
profit and expressed as percentage was 169% (2022: 45%).
19. Retirement benefit schemes
The Group operates two defined
benefit pension schemes. The schemes are trustee administered and
the schemes' assets are held independently from those of the Group.
Pension costs are assessed in accordance with the advice of an
independent professionally qualified actuary.
The schemes are the Scottish and
Grampian Television Retirement Benefit Scheme and the Caledonian
Publishing Pension Scheme. Both are closed schemes and
accounted for under the projected unit method.
Contribution rates to the scheme
are determined by a qualified independent actuary on the basis of a
triennial valuation using the projected unit method. The most
recent triennial valuation was carried out as at 31 December 2020.
This valuation resulted in a deficit of £116m on a pre-tax basis at
30 September 2021 compared to £127.0m on a pre-tax basis at the
previous settlement date of 28 February 2019. The next triennial
valuation will take place as at 31 December 2023 with work
currently ongoing between the Group and the trustees.
Deficit recovery plans, which end
on 31 October 2030, have been agreed with aggregate monthly
payments unchanged from the previous recovery plans. The 2023
deficit recovery payments totalled £9.7m, with annual payments then
increasing at the rate of 2% per annum over the term of the
recovery plans. A contingent cash mechanism is also in place, which
triggers contingent funding payments equivalent to 20% of any
outperformance above a benchmark of available cash to be paid to
the schemes.
The recovery plans are designed to
enable the schemes to reach a fully funded position, using prudent
assumptions about the future, by 2030.
The fair value of the assets and
the present value of the liabilities in the Group's defined benefit
pension schemes at each balance sheet date was:
Assumptions used to estimate the scheme
obligations
The significant actuarial
assumptions used for accounting purposes reflect prevailing market
conditions in the UK and are as follows:
|
|
|
|
2023
|
2022
|
|
%
|
%
|
|
|
|
Rate of increase in
salaries
|
nil
|
nil
|
Rate of increase of pensions in
payment
|
3.15
|
3.45
|
Discount rate
|
4.50
|
4.85
|
Rate of price inflation
(RPI)
|
3.15
|
3.45
|
Assumptions regarding future
mortality experience are set based on advice, published statistics
and experience in each scheme and are reflected in the table below
(average life expectations of a pensioner retiring at age
65).
|
|
|
|
2023
|
2022
|
Retiring at balance sheet date:
|
|
|
Male
|
20.5
|
20.9
|
Female
|
22.7
|
23.1
|
Retiring in 25 years
|
|
|
Male
|
21.7
|
22.1
|
Female
|
24.0
|
24.4
|
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 31 December
2023
|
At 31
December 2022
|
|
Quoted
|
Unquoted
|
Total
|
Quoted
|
Unquoted
|
Total
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
Equity and equity options
|
11.0
|
70.1
|
81.1
|
-
|
70.7
|
70.7
|
Alternative return
seeking
|
19.8
|
43.0
|
62.8
|
25.5
|
33.5
|
59.0
|
Cashflow matching credit
|
1.8
|
53.1
|
54.9
|
-
|
49.1
|
49.1
|
LDI and cash
|
119.6
|
(37.0)
|
82.6
|
151.4
|
(57.2)
|
94.2
|
Currency hedge
|
-
|
1.0
|
1.0
|
-
|
2.1
|
2.1
|
Annuity policies
|
-
|
13.0
|
13.0
|
-
|
14.7
|
14.7
|
Fair value of schemes'
assets
|
152.2
|
143.2
|
295.4
|
176.9
|
112.9
|
289.8
|
|
|
|
|
|
|
|
Present value of defined benefit
obligations
|
|
|
(350.2)
|
|
|
(352.9)
|
|
|
|
|
|
|
|
Deficit in the schemes
|
|
|
(54.8)
|
|
|
(63.1)
|
A related, offsetting deferred tax
asset for the Group of £13.7m (2022: £15.7m) is included within
non-current assets. Therefore, the pension scheme deficit net of
deferred tax for the Group was £41.1m at 31 December 2023 (2022:
£47.4m).
20. Post balance sheet events
On 31 January 2024, the Group
announced it had increased its stake in the high-end drama
production company, Two Cities Television to a majority holding of
51% (from 25%).
Due to the recent timing of the
acquisition, the Group is in the early stages of its fair value
assessment of the assets acquired and liabilities assumed and has
not yet finalised the accounting for the business combination, but
expects to complete its assessment in the second half of
2024.
The carrying value of the net
assets acquired at the date of acquisition was £0.2m. Goodwill
represents the value placed on the opportunity to materially
enhance the future growth prospects of STV Studios drama. This will
be calculated as the fair value of the consideration transferred,
plus the amount of non-controlling interest, less the net of the
fair value of the identifiable assets acquired and liabilities
assumed. The value of goodwill will be adjusted by a corresponding
amount for the value of intangible assets identified and the
difference between the market and book values of the assets and
liabilities.