Resilient performance; increased returns to shareholders - Full year results 2017 - STV Group plc
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Full year results 2017 Resilient performance; increased returns to shareholders
Revenue
Reflecting advertising market and strong digital growth
2017 2016
Change
£m £m
Consumer
National Airtime 74.3 79.9 -7%
Regional Airtime 11.0 11.2 -2%
Digital 8.4 7.4 +14%
Sponsorship 5.7 5.4 +6%
STV2 1.7 1.2 +42%
Other 2.0 2.1 -5%
103.1 107.2 -4%
Internal supply (2.9) (1.3) n/a
100.2 105.9 -5%
STV Productions 10.4 12.7 -18%
External Lottery Manager (ELM) 6.4 1.8 +256%
Total 117.0 120.4 -3%
2018 Q1 Outlook
Improving ad market and commissions increasing
Q1 2018
National Airtime +1%
Regional Airtime 20% to 25%
Digital 20% to 25%
STV Productions commissioned titles revenues up 25% on 2017 full year
Financial Results
(excluding exceptional items and IAS19)
Resilient performance in challenging market
2017 2016 Change
EBITDA £21.5m £22.4m -4%
Operating Profit £19.0m £19.7m -4%
PBT £18.0m £18.5m -3%
EPS 39.6p 39.7p -
Resilience of business model
2017 2016
2017 2016
£m £m
Consumer 18.7 19.6 18.7% 18.5%
STV Productions 0.3 0.1 2.9% 0.8%
ELM - - - -
Total 19.0 19.7 16.2% 16.3%
Other
Digital (includes cost
2016 NAA/ASA profit 2017
savings)
£m offset increase Productions
19.7 0.7 19.0
0.8 0.2
3.2
5.6
Channel 3
revenue
decreaseFirst period of expanded STV2
STV2 P&L
2017 2016
£m £m
Revenue 1.7 1.2
Costs (2.5) (2.0)
Total (0.8) (0.8)Strong digital growth
Digital P&L
2017 2016
Change
£m £m
Revenue 8.4 7.4 +14%
Costs (3.8) (3.6) +5%
Total 4.6 3.8 +21%
Margin 55% 52%ELM/Scottish Children’s Lottery
On track to breakeven
Over 130,000 new customer sign ups with rich data
New customer sign ups growing strongly
Over 75% to investment/funding recoupment point by February (170k entries per week)
£9.0m debtor balance as at 31 December 2017
More than £1m raised for good causes by end 2017
170
Weekly lottery draw sales (000’s)
130
107
78
66
39
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Projected Cash breakeven
(mid 2018) targetCashflow and Net Debt
Target range net debt: EBITDA achieved
2017 2016
£m £m
Operating Profit 19.0 19.7
Non-cash Items 2.5 2.7
EBITDA 21.5 22.4
Working Capital Movements
- NAA/ASA timing (3.7) -
- Other (2.2) (1.1)
Capex (3.4) (3.2)
Operating Cashflow 12.2 18.1
Conversion 64% 92%
Pension deficit payments (7.9) (7.8)
Interest paid (1.0) (1.2)
Tax paid (0.3) -
Dividends paid (6.2) (4.3)
SCL funding (3.9) (5.4)
Share purchases (2.0) -
Investments - (0.1)
(9.1) (0.7)
Net Debt £35.5m £26.4m
Net Debt: EBITDA ratio (covenant basis) 1.41x 1.01x
Interest cover 32.0x 26.2xPensions
Dec 2017 Jun 2017 Dec 2016
£m £m £m
Assets 369 358 359
Liabilities (440) (442) (448)
(Deficit)/Surplus - gross (71) (84) (89)
- net (59) (69) (73)
Discount rate 2.55% 2.75% 2.80%
Inflation (RPI) 3.20% 3.20% 3.30%
Triennial valuation settlement (as at 1 January 2015) announced in December 2016
Deficit funding recovery plan of 11 years agreed for pre-tax deficit of £130m, at 31/11/16 comprising
- base contribution of £8.6m pa, paid monthly, increasing by 2% pa, plus
- 20% contingent funding of any outperformance over an agreed cash generation target
- cash generation target is stated after all funding needs of the business (eg capex, tax, interest, loyalty and
incentive plan awards, working capital) and prior to pension funding payments and shareholder returns
Next valuation (as at 1 January 2018) commenced and conclusion expected in Q1 20192017 KPI Update
The Key Performance Indicators (KPIs) will be reviewed through the strategic review
currently being undertaken
KPI 2017 Actual 2018 Target Performance
Group
1 Non broadcast EBIT share 28% 30% On track
Consumer
2 Peak time audience ITV Network +0.6 share points To exceed network On track
3 Consumer division margin 18.7% 20.0% Trending below
Consumer reach
- STV 3.5m 3.5m On track
4
- STV2 1.0m 1.3m On track
- STV Player 0.7m 1.3m On track
- STV.TV 3.7m 4.4m on track2017 KPI Update
The Key Performance Indicators (KPIs) will be reviewed through the strategic review
currently being undertaken
KPI 2017 Actual 2018 Target Performance
5 Consumer engagement
- STV 39 mins per day 41 mins per day On track
- STV2 1 min per day 10 mins per day Trending below
- STV Player 43 mins per day 60 mins per day Trending below
- STV.TV 3 mins per day 6 mins per day Trending below
Consumer
6 Consumer insights 2.5m 2.6m On track
7 Digital revenues £8.4m £11.4m On track
8 Digital margin 55% 55% On track
STV Productions
9 Production revenue £10.4m £20.0m Trending below
10 Production margin 3% 6% Trending belowDividend Policy
Increasing returns to shareholders
+6%
+13%
+50% 12.5p
12p
11p
+25%
+400%
7p Interim Final
6p
Return to
dividend 5p 5.5p
4p
3p
2p 2p
2013 2014 2015 2016 2017 2018
2017 proposed final dividend increased to 17p per share in line with previous guidance
2017 proposed total dividend up 13% year on year
Progressive dividend policy will continue, targeted at 60% - 80% of cash generated
after pension funding arrangementsTV has a bright future
TV has a bright future, despite the challenges
TV still dominates
Changing viewing habits
video viewing
Uncertain economic outlook TV advertising is robust and
and structural pressure getting more effective
Rise of digital advertising
VoD makes TV bigger and better
platforms
More buyers of TV programmes,
Growing influence of
local content more important
global media players
than everSTV has a number of strengths and areas of competitive advantage
Strong, trusted brand
Unrivalled connection with
Talented people Scottish viewers and
advertisers
Robust balance sheet and
Scotland’s most powerful
growing returns to
marketing platform
shareholders
A production business well
Profitable, growing digital
placed to benefit from ‘out of
business
London’ push
Settled relationship
with ITVHowever, we have some important strategic
questions to address:
How do we build a distinctive, cost effective news organisation?
How do we broaden our programme offer beyond news?
What is our optimal line up of TV channels?
How can we deepen our relationships with advertisers?However, we have some important strategic
questions to address:
How do we position our production business to deliver more returning series?
Can we make more of our producer - broadcaster advantage?
How can we accelerate digital growth?
Are there things we should stop doing?We began a strategic review in January and
will provide an update in Q2
STV is a television business - that won’t change
News review commenced to deliver a future-facing news organisation
Review of TV channels underway in light of proposed BBC Scotland channel
STV Productions and digital also areas of strategic focusPositive outlook for 2018 in key growth areas
Channels STV Productions Digital
National and regional Strong start to the year Record VoD views
airtime both expected to pointing to double digit
be positive in H1 Double digit revenue and revenue growth
profit growth expectedIn summary Resilient performance in 2017 with shareholder returns increasing Strong growth prospects building on STV’s core strengths Positive start to 2018 Update on future plans in Q2
And finally… the STV Player now brings you boxsets
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