TIDMSTVG
RNS Number : 5073F
STV Group PLC
10 March 2020
Press Release
0700 hours, 10 March 2020
STV Group plc Full Year Results for 2019
Adjusted operating profit up 13% with positive outlook
Strong financial performance
-- Double digit growth in adjusted operating profit up 13% to
GBP22.6m (2018: GBP20.1m), the highest level in over a decade
-- Adjusted earnings per share (EPS) also up 13%, to 46.4p per share (2018: 41.1p per share)
-- Adjusted operating margin improved by 230 bps to 18.2% (2018: 15.9%)
-- Increase in total advertising revenue, up 2% to GBP101.6m
(2018: GBP100.0m), driven by strong digital revenue growth and an
11% increase in regional advertising
-- Digital revenues up 37% to GBP13.0m (2018: GBP9.6m) with digital operating margin up to 56%
-- On track to deliver diversification target of one third of
profit from outside traditional television advertising by end of
2020, with non-broadcast earnings 28% of the total in 2019 (2018:
24%)
-- Further increase in returns to shareholders with final
ordinary dividend of 14.7p per share, giving a full year dividend
of 21.0p per share, up 5% year on year
Financial Highlights
2019 2018 Change
============================== ======================== ======================= ================
Revenue GBP123.8m GBP125.9m (2%)
============================== ======================== ======================= ================
EBITDA* GBP27.7m GBP24.6m 13%
============================== ======================== ======================= ================
Adjusted operating profit** GBP22.6m GBP20.1m 13%
============================== ======================== ======================= ================
Adjusted operating margin** 18.2% 15.9% 230bps
============================== ======================== ======================= ================
Adjusted profit before
tax*** GBP21.0m GBP19.0m 11%
============================== ======================== ======================= ================
Profit before tax GBP19.0m GBP1.9m 853%
============================== ======================== ======================= ================
Adjusted basic EPS*** 46.4p 41.1p 13%
============================== ======================== ======================= ================
Statutory basic EPS 42.2p 4.2p 905%
============================== ======================== ======================= ================
Net debt GBP37.5m GBP36.3m (3%)
============================== ======================== ======================= ================
Dividend per share 21.0p 20.0p 5%
============================== ======================== ======================= ================
* Earnings before interest, tax, depreciation & amortisation,
with 2018 adjusted to reflect new standard for leases (as
reported of GBP22.8m with lease charge of GBP1.8m added back)
** Before exceptional items
*** Before exceptional items and IAS19 interest
Continued excellent viewing performance on screen and online
-- All time viewing share maintained at 10-year high of 17.7%, 3 points up on ITV Network
-- STV now the best watched peaktime channel in Scotland,
beating BBC One for first time since 2013
-- 98% of commercial audiences over 500,000 in Scotland delivered by STV
-- Biggest TV channel in Scotland for young people, reaching 92% of 16-34 year olds in 2019
-- STV News at Six now the most watched news programme in
Scotland with STV identified as the number one source of news for
Scotland by Ofcom
-- Online viewing up 23%, with VOD stream starts up 37%, driving
a 44% increase in ad impressions
-- Total STV Player registrations up 17% at 3.5m, representing 80% of Scottish adults
-- Strong viewing performance driven by entertainment hits like
I'm a Celebrity and The Chase, new dramas Manhunt, The Bay, Cheat
and Deep Water, which broke all STV streaming records, the Rugby
World Cup and the STV News at Six
STV strategic plan continues to deliver at pace
-- STV Growth Fund driving regional advertising growth, with
GBP10m allocated, attracting over 160 new advertisers to STV since
launch
-- STV Player now universally available, with successful Sky launch boosting streams by 30%
-- Over 1,000 hours of additional Player-only content available,
now delivering 15-20% of total digital viewing
-- Significant potential for future digital growth, driven by
new exclusive content, new product features and new platforms like
Apple TV where STV Player launched last week
-- STV Productions now has a broader slate of new and returning shows:
-- Biggest recommission to date of Antiques Road Trip and Celebrity Antiques Road Trip
(140 episodes, 2-year deal for BBC), plus recommissions for
Celebrity Catchphrase
(further 9 episodes for ITV), Inside Central Station (6 episodes
for BBC Scotland) and Jerk
(4 episodes for BBC3)
-- New commissions include two new factual entertainment series,
Clear Out Cash In (10 episodes for Discovery-owned lifestyle
channel, Really) and a further unannounced series, both for
delivery this year, and two new commissions for Primal Media,
including Home Free for C4
-- Successful return to drama production for first time in a
decade with two critically acclaimed productions for BBC One: The
Victim and Elizabeth is Missing
-- Acquisition of Primal Media and investment in Two Cities
Television significantly enhances STV's creative pipeline in
unscripted and drama
-- Process underway to investigate partnership or divestment of
the Scottish Children's Lottery to enable STV to focus fully on
progressing successful growth of broadcast, digital and production
businesses
Positive outlook
-- Strong start to 2020
-- STV viewing share up
-- STV Player viewing accelerating
-- Total advertising revenue expected to be up in Q1, and down 5% in April
-- Across the full year we would currently expect:
-- Single digit growth in regional advertising
-- Strong double digit growth in digital
-- STV Productions to move into profitability, with deliveries weighted to H2
-- Implications of the Coronavirus unclear at this stage, but we continue to monitor closely
-- Strategy on track and delivering
Simon Pitts, Chief Executive Officer, said: "An operating profit
increase of 13% when national advertising revenues are down
illustrates our growing resilience and the exciting growth
potential of our regional, digital and production businesses. In
2019 STV was the most popular peaktime channel in Scotland, ahead
of BBC One for the first time in 6 years; our Growth Fund has now
welcomed over 160 new advertisers to TV since launch, underpinning
strong growth in regional revenues; and our digital streaming
service STV Player launched on Sky and became universally available
for the first time, helping to drive 37% growth in both streams and
revenue. These factors contributed to a strong full year
performance, with EPS also up 13% and operating margin up over 230
basis points to 18%.
"We continue to make excellent progress with our strategic
growth plan and have laid solid foundations for future growth,
including in STV Productions where 2019 saw a return to high-end
drama for the first time in a decade with the critically acclaimed
The Victim and Elizabeth is Missing for BBC One. We also made two
exciting investments in entertainment and drama companies to
significantly strengthen our creative pipeline. 2020 has started
with a range of new commissions and recommissions, including the
biggest ever order for Antiques Road Trip and a new 10 part series
for Discovery.
"Despite uncertainty following the UK's exit from the EU and the
Coronavirus, we are positive about the outlook for 2020. We have
made a strong start to the year on screen and online, in line with
our expectations, and have an exciting programming line-up to look
forward to, with the return of Saturday Night Takeaway, Britain's
Got Talent and new dramas like Liar and Quiz all helping to drive
viewing on STV and the STV Player."
There will be a presentation for analysts at the offices of
Panmure Gordon, One New Change, London EC4M 9AF today, 10 March
2020, at 12.30 pm. 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 970106
Camarco: Geoffrey Pelham-Lane, Partner Tel: 020 3757 4985
Ben Woodford, Partner Tel: 020 3781 8333
Financial performance review
Against a national advertising market that fell 4% year on year,
total revenue decreased only 2% to GBP123.8m (2018: GBP125.9m).
Within this, total advertising revenue grew by 2% to GBP101.6m
(2018: GBP100.0m) with gains in regional and digital offsetting the
national market decline brought about by the political and economic
uncertainty that defined 2019.
Reflecting the national advertising market, broadcast division
revenues were down 2% at GBP92.3m (2018: GBP94.5m). Digital
division revenue growth was strong, up 37%, to GBP13.0m (2018:
GBP9.6m).
The increase in total advertising revenue was offset by lower
revenues in STV Productions of GBP13.7m (2018: GBP16.3m) as the
business was re-positioned under a new management team for future
growth and a return to profitability.
Adjusted operating profit (before exceptional items) was
GBP22.6m, an increase of 13%, the highest level for over a decade
(2018: GBP20.1m) as declining national revenues were more than
offset by more profitable regional and digital revenue growth.
The biggest contributor to the GBP2.5m increase in Group
adjusted operating profit year on year was the digital division,
which delivered an additional GBP2.1m profit. The broadcast
division reported an increase of GBP0.5m. Following a year of
transition, investment and significant change in the creative
leadership team, STV Productions reported a marginal loss of
GBP0.1m, a reduction of GBP0.6m on the prior year, which was offset
at a Group level by GBP0.5m savings in corporate costs.
During the year, the basis of allocation of central/corporate
costs to the divisions was changed to better reflect the underlying
trading of those businesses. Previously, all such costs were
allocated across the divisions with none held centrally. Now, those
costs incurred centrally that relate to the Group's operation as a
PLC, as well as the remuneration of the Directors, are held
centrally as a corporate division. All the metrics in this
narrative are on the basis of this new methodology and a
reconciliation for 2018 is included in note 5 to the financial
information.
Net operating exceptional items in 2019 were nil (2018:
GBP11.1m). The two significant offsetting items in the current year
were the gain on sale of the Group's minority shareholding in
non-core asset, deltaDNA, of GBP2.0m, and the write down of
development costs in STV Productions of GBP1.9m. The deltaDNA
transaction completed in September 2019. The total consideration
receivable was GBP2.5m, in a mix of cash and shares in the new
parent company, with 20% deferred for two years. The write down of
development costs was a result of a full review undertaken in the
second half of the year by the new management team of STV
Productions. In 2018, the operating exceptional items related to
restructuring, the cost of equalising guaranteed minimum pensions
and the loss on disposal of STV2. In addition, in 2018, there was
an exceptional finance cost of GBP4.2m related to an increase in
the provision for the receivable due from the Scottish Children's
Lottery.
Revenue from the STV External Lottery Manager (ELM) in 2019 was
down to GBP4.8m (2018: GBP5.5m), reflecting further cost savings
made by that operation.
Total finance costs were GBP3.6m (2018: GBP2.9m before
exceptional items). Cash finance costs on the Group's borrowings
totalled GBP1.3m (2018: GBP1.1m) with the balance being non-cash
costs in relation to the Group's defined benefit pension schemes
(GBP2.0m; 2018: GBP1.8m) and interest on the lease liability of
GBP0.3m following adoption of the new accounting standard at the
start of the year.
The statutory result for the year was a profit before tax of
GBP19.0m (2018: GBP1.9m). The effective tax rate for the year was
17% (2018: 16%), lower than the UK standard rate primarily due to
tax deductions on pension contributions. The profit after tax for
the year was GBP15.9m (2018: GBP1.6m).
Adjusted earnings per share (before exceptional items and IAS19
interest) was up 13% to 46.4p per share (2018: 41.1p per share)
reflecting the growth in operating profit. On a statutory basis,
earnings per share was 42.2p per share (2018: 4.2p per share) with
the prior year impacted by the significantly higher level of
exceptional items.
The net debt: EBITDA ratio at the end of the year was 1.29 times
(2018: 1.36 times), within the Group's target range of 1.0 - 1.5
times and well within the covenant maximum of 3 times. Net debt
increased slightly on the prior year, by GBP1.2m to GBP37.5m albeit
operating cash conversion was strong at 92%.
The main non-operating cash outflows were pension deficit
payments of GBP10.3m, net dividend payments of GBP7.6m, share
purchases of GBP2.1m and reorganisation costs of GBP1.0m in
relation to the restructure implemented in 2018.
Across the Group's two defined benefit pension schemes, the
accounting deficit before tax reduced to GBP64.0m at the end of
2019 (2018: GBP78.5m) due to contributions invested and improved
investment returns more than offsetting the impact of a lower
discount rate. The latest triennial valuation, as at 31 December
2017, was concluded in April 2019 with no changes to the schedule
of contributions agreed at the previous triennial valuation (31
December 2014).
Shareholder returns
The Board remains committed to the delivery of increased returns
to shareholders whilst ensuring there is financial flexibility to
enable strategic investments in support of the growth strategy. A
final dividend of 14.7p per share, resulting in a total dividend of
21.0p per share for 2019 is recommended, an increase of 5% on 2018.
Future increases in shareholder returns will continue to be aligned
with earnings growth.
Operational review
Broadcast
The strategy to maximise the value of the profitable broadcast
business through delivery of high quality, cost-effective news and
entertainment was successfully fulfilled in 2019 with an excellent
viewing performance on STV. All-time viewing share was maintained
at a 10-year high of 17.7%, 3 share points ahead of the ITV
Network, demonstrating the resilience and enduring appeal of the
channel.
In premium peaktime, STV outperformed every other channel,
including BBC One, securing the position of best watched channel in
Scotland. This 'best watched' position includes the key 16-34 year
old audience. STV was watched by 92% of Scots in this age group,
representing a reach three times bigger than youth-focused ITV2.
With an average peaktime audience bigger than the top 10 commercial
channels in Scotland combined, STV r eached 4 out of 5 Scots every
month in 2019 and delivered 98% of large commercial audiences over
500,000 viewers.
The growing success of our news and current affairs programming
and highly popular bespoke Scottish content bolstered the strong
ratings performance delivered by the Network schedule. Following a
successful change programme to invest in and modernise STV News and
current affairs in 2018, flagship programme STV News at Six was the
most watched news programme in Scotland in 2019. We have also
relaunched STV's digital news service on all platforms and are now
the leading source of news video in Scotland.
In addition, the STV News team produced 17 hours of regional
programming across 2019. This included three new series, broadcast
in peak time, which were highly popular, regularly achieving an
audience share in excess of the Network. This included Sean's
Scotland which secured a 28% share in STV peaktime.
Weakness in the national advertising market, which was down 4%,
was partially offset by regional advertising growth of 11%. This
resulted in a slight decline in broadcast advertising revenues,
down 2% to GBP92.3m (2018: GBP94.5m). Our regional advertising
performance bucked the trend across the wider UK advertising
market, positively impacted by the STV Growth Fund for the second
year in succession which has allocated almost GBP10.0m across
nearly 400 deals and secured over 160 new advertisers. Since
launch, the Growth Fund has been a key factor in strengthening
STV's leading position in the regional market, growing market share
and driving revenue.
Operating profit increased by 3% to GBP19.9m (2018: GBP19.4m)
and the division's operating margin increased by 1% to 21.6%.
Digital
The aim of the digital business is to drive growth by creating
an STV for everyone with the STV Player becoming Scotland's content
destination of choice. The success of this strategy in 2019 has
delivered significant growth in revenue and profit, ahead of
expectations.
Revenue increased by 37% to GBP13.0m (2018: GBP9.6m), driven by
the 37% increase in VoD streams. Operating profit increased by 40%
to GBP7.3m (2018: GBP5.2m) and the margin performance of this
highly profitable division again increased year on year, up to 56%
(2018: 55%).
The growth plan for STV Player is underpinned by three strategic
priorities: increased digital distribution; an expanded range of
content to provide something for everyone; and improved product
functionality, all designed to secure more people, watching more
often and staying for longer. This strategy has delivered
exceptional growth in 2019 with total time spent watching the STV
Player up 23% year on year. Across the year, monthly active VoD
users increased by 15%. Half a million more users signed up taking
the total number of registered users to 3.5m, the equivalent of 4
out of 5 Scottish adults.
VoD stream starts were up by 37%, driven in part by the addition
of over 1,000 hours of Player-only content, including 110 hours of
drama boxsets and the addition of two live sports channels. This
Player-only content now represents 15-20% of viewing, with drama
titles from this catalogue regularly featuring in the top ten best
watched titles.
An important advancement in 2019 was achieving universal
availability of the STV Player in Scotland, in all homes and on all
platforms, as strategic partnerships with Virgin Media and Sky were
implemented. As a measure of success, 88% of Virgin Media's users
in Scotland accessed the STV Player in 2019.
Although only launched on Sky in late October, already c30% of
VoD streams are from this platform, delivering a 15-20% increase in
ad impressions as the STV Player becomes available in Scottish
homes that subscribe to Sky. Ad-server integration on the Sky
platform has been designed to maximise the commercial impact and
profitability for STV with 90% of advertising revenues retained.
Managed by STV, this is being achieved through a partnership with
ad-tech company, FreeWheel. Additionally, the Sky partnership also
positioned STV as the first UK PSB to broadcast all of its regional
variants in HD on satellite.
New and innovative features designed to increase time spent
viewing through an enhanced user experience and improved
functionality have been introduced throughout 2019. 'End of play'
was introduced across all platforms providing users with automatic
recommendations for what to watch next when their selected
programme concludes. Across the second half, 7.5m end of play
recommendations were displayed with more than half acted upon,
driving a significant increase in time spent enjoying content on
the STV Player.
Launched in time for the Rugby World Cup 2019, 'picture in
picture' enables users to continue watching their favourite shows
while using other apps, and supported a significant uplift on
typical usage during matches.
This innovative approach to improving functionality of the
Player is also being applied to ad serving on the platform with 30%
of digital inventory being sold programmatically across six
platforms, maximising the commercial impact for STV. Additionally,
we continue to add new commercial products for our advertisers and
commercial partners. In December 2019, STV was the first UK
commercial broadcaster to launch the 'green button' broadcast
restart capability on FreeView.
STV Player+, the ad-free subscription service launched in early
2019, continues to perform in line with expectations and will be
rolled out to all major platforms during 2020.
STV Productions
The aim for STV Productions is to build a world class production
business with a multi-genre slate of returning series. 2019 was a
year of creative and organisational change, putting in place the
foundations to deliver profitable growth. The new creative team has
overhauled the development slate and the pipeline across all genres
is strong. This is beginning to convert to commissions, including a
new series, Clear Out Cash In, co-commissioned by Discovery-owned
lifestyle channel, Really (10 episodes) and STV (8 episodes) and a
further unannounced factual entertainment series, both for delivery
in 2020. Additionally, Primal Media has secured two new
commissions, including Home Free for C4. Across the year, the team
delivered 17 shows, for 8 channels, amounting to 120 hours.
A key aim is to increase the number of returning series. In
2019, five returning series were delivered. These were Celebrity
Catchphrase (series 3 and 4) for ITV; Antiques Road Trip (series 18
and 19) and Celebrity Antiques Road Trip (series 8 and 9), both for
the BBC; Britain's Biggest Warship: Goes to Sea (series 2) for
BBC2; and Inside Central Station (series 2) along with a one-off
Christmas special of this ratings success for new channel, BBC
Scotland.
This run of success is continuing in early 2020. Four new series
(100 episodes) of the popular long running show Antiques Road Trip
have been commissioned by BBC One, along with two series (40
episodes) of the celebrity version, for BBC Two, making this the
largest ever order the BBC has placed for these shows.
S ignificantly, 2019 marked STV's return to drama for the first
time in a decade. The team produced two of the most successful and
critically acclaimed dramas of the year. The Victim (BBC One),
delivered an average audience across the series of 6.5m and broke
records, achieving the highest catch-up viewing figure of 73% since
catch-up viewing records began in 2002.
TV film, Elizabeth is Missing, saw Glenda Jackson in the lead
role and making her return to screen for the first time in 28
years. Tipped to perform well in the forthcoming awards season, it
has received widespread plaudits and many five star reviews,
reinforcing the creative credentials of our drama team.
Investments in new creative and financial partnerships designed
to accelerate growth were also successfully progressed during this
formative year for the business. In July, we acquired a majority
stake in innovative unscripted production company, Primal Media.
STV Productions will realise full value from Primal Media's current
and future programming slate and has a path to full ownership in
success.
A second investment, of an initial minority stake in high-end
drama producer Two Cities Television (Two Cities), was completed in
early 2020. With an exciting pipeline of projects at an advanced
stage of development, the deal is structured to enable STV to take
a majority holding once Two Cities reaches profitability.
Strategically, this deal is aligned with STV's nations and regions
strategy; with a base in Belfast, Two Cities is well positioned to
benefit from increased investment outside London, augmenting STV
Productions' position with its substantive base in Glasgow.
Total revenues generated by STV Productions were GBP13.7m (2018:
GBP16.3m) and despite the placing of strategic investments in
future growth, the business was broadly breakeven with an operating
loss of GBP0.1m, (2018: profit of GBP0.5m), delivering an operating
margin of -1%.
Good progress was made in 2019 with an international strategy to
maximise existing IP, using the successful secondary sales business
as the launch pad to increase this source of revenue and build
profile for STV Productions.
STV External Lottery Manager (ELM)
The STV ELM has continued to operate on a breakeven basis, with
the costs it incurs in providing external lottery management
services to the Scottish Children's Lottery (SCL) being recharged
in full and at nil mark-up.
Ticket sales exceeded GBP4m during 2019. The roll-out of the
retail proposition was progressed, reaching the target number of
outlets by the end of the year, albeit at a slower rate than
initially planned and end-loaded into Q4. As a result, the cash
generation of the SCL did not cover its operating costs and so the
amounts due from the lottery to the ELM increased from gross
amounts of GBP11.4m at the end of 2018, to GBP12.4m at the end of
2019.
The provision of GBP5.0m in place at the start of the year has
reduced slightly to GBP4.7m as a result of forgiveness of GBP0.3m
of debt agreed with the trustees of the SCL as part of an overall
package of changes implemented at the start of the year to reduce
the cost base of the ELM.
Notwithstanding the net cash consumption of the lottery during
the year, the prospects for the lottery are one of cash generation
and no increase to the provision has been recognised on that basis.
The resultant net debtor due from the lottery to the ELM at the end
of the year was GBP7.7m (2018: GBP6.4m).
Concurrently with the continued operation of the ELM, a
strategic review of that operation was conducted during Q4 2019 to
consider options for its future. This review concluded that STV is
not the best long term owner of the lottery, and a process is
therefore underway to investigate a partnership or divestment of
the ELM to enable STV to focus fully on the execution of its growth
strategy.
Board changes
In accordance with Listing Rule 9.6.11, it is announced that
Christian Woolfenden resigned as a non-executive director on 9
March 2020 having served on the Board since June 2014. The Board
would like to thank Christian for his contribution to the Company
over this time.
Simon Pitts
Chief Executive Officer, STV Group plc
Consolidated income statement
Year ended 31 December 2019
2019 2018
Before Exceptional Before Exceptional
exceptional items Results exceptional items Results
items (note for period items (note for period
6) 6)
Note GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 5 123.8 - 123.8 125.9 - 125.9
Net operating expenses (101.2) (2.0) (103.2) (105.8) (11.1) (116.9)
Other income - 2.0 2.0 - - -
------------- ------------ ------------- ------------- ------------ -------------
Operating profit 22.6 - 22.6 20.1 (11.1) 9.0
Finance costs
* borrowings (1.3) - (1.3) (1.1) - (1.1)
- defined benefit pension
schemes (2.0) - (2.0) (1.8) - (1.8)
* lease interest (0.3) - (0.3) - - -
Provision for
impairment
losses - ELM debtor - - - - (4.2) (4.2)
------------- ------------ ------------- ------------- ------------ -------------
(3.6) - (3.6) (2.9) (4.2) (7.1)
------------- ------------ ------------- ------------- ------------ -------------
Profit before tax 19.0 - 19.0 17.2 (15.3) 1.9
Tax (charge)/credit 7 (3.2) 0.1 (3.1) (2.9) 2.6 (0.3)
------------- ------------ ------------- ------------- ------------ -------------
Profit for the year 15.8 0.1 15.9 14.3 (12.7) 1.6
------------ -------------
Attributable to:
Owners of the parent 15.9 0.1 16.0 14.3 (12.7) 1.6
Non-controlling
interests (0.1) - (0.1) - - -
------------- ------------ ------------- ------------- ------------ -------------
15.8 0.1 15.9 14.3 (12.7) 1.6
------------- ------------ ------------- ------------- ------------ -------------
Earnings per share
Basic 8 42.0p 42.2p 37.2p 4.2p
Diluted 8 40.6p 40.8p 36.5p 4.1p
A reconciliation of the statutory results to the adjusted
results is included at note 19.
Consolidated statement of comprehensive income
Year ended 31 December 2019
2019 2018
GBPm GBPm
Profit for the year 15.9 1.6
Items that will not be reclassified to profit
or loss:
Re-measurement of defined benefit pension
schemes 6.2 (13.3)
Deferred tax (charge)/credit (0.9) 2.0
Write down of listed investment to market
value - (0.5)
Other comprehensive income/(expense) 5.3 (11.8)
Total comprehensive income/(expense) for
the year 21.2 (10.2)
----- ------
Attributable to:
Owners of the parent 21.3 (10.2)
Non-controlling interests (0.1) -
----- ------
21.2 (10.2)
----- ------
Consolidated balance sheet
At 31 December 2019
2019 2018
Note GBPm GBPm
Non-current assets
Intangible assets 10 2.6 1.9
Property, plant and equipment 11 10.7 9.8
Right-of-use assets 12 12.2 -
Investments 14 0.9 0.7
Deferred tax asset 16.1 19.5
Trade and other receivables 15 9.5 8.2
------- -------
52.0 40.1
------- -------
Current assets
Inventories 13.2 14.4
Trade and other receivables 21.6 22.7
Cash and cash equivalents 6.2 6.3
41.0 43.4
------- -------
Total assets 93.0 83.5
------- -------
Equity
Ordinary shares 16 19.6 19.6
Share premium 16 102.0 101.9
Capital redemption reserve 0.2 0.2
Merger reserve 173.4 173.4
Other reserve 0.9 0.8
Accumulated losses (343.2) (355.0)
------- -------
Shareholders' equity (47.1) (59.1)
Non-controlling interests (0.2) -
------- -------
Total equity (47.3) (59.1)
------- -------
Non-current liabilities
Borrowings 43.7 42.6
Lease liabilities 12 10.6 -
Retirement benefit obligations 18 64.0 78.5
118.3 121.1
------- -------
Current liabilities
Trade and other payables 19.9 20.4
Lease liabilities 12 1.8 -
Current tax liabilities 0.3 -
Provisions - 1.1
------- -------
22.0 21.5
------- -------
Total liabilities 140.3 142.6
------- -------
Total equity and liabilities 93.0 83.5
------- -------
Consolidated statement of changes in equity
Year ended 31 December 2019
Capital Accumul-ated Attributable Non-controlling
Share Share redemption Merger Other losses to owners interest Total
capital premium reserve reserve reserve of the equity
parent
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 December
2018 19.6 101.9 0.2 173.4 0.8 (355.0) (59.1) - (59.1)
Implementation
of IFRS 16 (note
3) - - - - - (0.1) (0.1) - (0.1)
--------- --------- ----------- --------- --------- ------------- ------------- ---------------- ---------
At 1 January
2019 19.6 101.9 0.2 173.4 0.8 (355.1) (59.2) - (59.2)
--------- --------- ----------- --------- --------- ------------- ------------- ---------------- ---------
Profit/(loss)
for the year - - - - - 16.0 16.0 (0.1) 15.9
Other
comprehensive
income - - - - - 5.3 5.3 - 5.3
--------- --------- ----------- --------- --------- ------------- ------------- ---------------- ---------
Total
comprehensive
income/(expense)
for the year - - - - - 21.3 21.3 (0.1) 21.2
--------- --------- ----------- --------- --------- ------------- ------------- ---------------- ---------
Acquisition of
treasury shares - 0.1 - - (0.2) (2.0) (2.1) - (2.1)
Share based
compensation - - - - 0.3 - 0.3 - 0.3
Tax credit on
share based
compensation - - - - - 0.2 0.2 - 0.2
Acquisition of
subsidiary - - - - - - - (0.1) (0.1)
Dividends paid - - - - - (7.7) (7.7) - (7.7)
Unclaimed
dividends
received - - - - - 0.1 0.1 - 0.1
At 31 December
2019 19.6 102.0 0.2 173.4 0.9 (343.2) (47.1) (0.2) (47.3)
--------- --------- ----------- --------- --------- ------------- ------------- ---------------- ---------
At 1 January
2018 19.7 101.9 0.1 173.4 0.7 (334.1) (38.3) - (38.3)
--------- --------- ----------- --------- --------- ------------- ------------- ---------------- ---------
Profit for the
year - - - - - 1.6 1.6 - 1.6
Other
comprehensive
expense - - - - - (11.8) (11.8) - (11.8)
--------- --------- ----------- --------- --------- ------------- ------------- ---------------- ---------
Total
comprehensive
expense for the
year - - - - - (10.2) (10.2) - (10.2)
--------- --------- ----------- --------- --------- ------------- ------------- ---------------- ---------
Acquisition of
treasury shares - - - - (0.2) (3.4) (3.6) - (3.6)
Share based
compensation - - - - 0.3 - 0.3 - 0.3
Shares bought
back on-market
and cancelled (0.1) - 0.1 - - (0.2) (0.2) - (0.2)
Deferred tax
charge on share
based
compensation - - - - - (0.2) (0.2) - (0.2)
Dividends paid - - - - - (6.9) (6.9) - (6.9)
At 31 December
2018 19.6 101.9 0.2 173.4 0.8 (355.0) (59.1) - (59.1)
--------- --------- ----------- --------- --------- ------------- ------------- ---------------- ---------
Statement of consolidated cash flows
Year ended 31 December 2019
2019 2018
Note GBPm GBPm
Operating activities
Cash generated by operations 17 25.6 26.1
Interest paid (1.1) (0.9)
Refinancing fees paid - (0.2)
Net taxes received/(paid) 0.1 (0.7)
Pension deficit
funding - recovery plan payment (10.3) (8.8)
Exceptional reorganisation costs (1.0) (2.4)
Net cash generated by operating activities 13.3 13.1
------ ------
Investing activities
Proceeds from sale of investment 1.3 0.2
Cash acquired on purchase of subsidiary 0.4 -
Proceeds from sale of STV2 - 0.3
Purchase of intangible assets (1.6) (0.4)
Purchase of property, plant and equipment (2.9) (3.0)
------ ------
Net cash used in investing activities (2.8) (2.9)
------ ------
Financing activities
Acquisition of treasury shares (2.1) (3.5)
Payment of obligations under leases (1.9) -
Share buyback - (0.6)
Borrowings drawn 20.0 14.0
Borrowings repaid (19.0) (13.0)
Net dividends paid (7.6) (6.9)
Net cash used in financing activities (10.6) (10.0)
------ ------
Net (decrease)/increase in cash and cash
equivalents (0.1) 0.2
Cash and cash equivalents at beginning
of year 6.3 6.1
------ ------
Cash and cash equivalents at end of year 6.2 6.3
------ ------
Notes to the preliminary announcement
Year ended 31 December 2019
1. General information
STV Group plc ("the Company") and its subsidiaries (together
"the Group") is listed on the London Stock Exchange 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. Outside the core
business, the Group also operates an external lottery management
company.
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 2019 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 2019.
Statutory financial statements for the year ended 31 December
2018, 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
2018 and for the year ended 31 December 2019 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 2019 will be delivered to the Registrar of
Companies and made available to all shareholders in due course.
Going concern basis
At 31 December 2019, the Group was in a financial net debt
position with a positive gross cash balance. 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.
As part of the going concern review, the Group considers
forecasts of the total advertising market to determine the impact
on liquidity. The Group's forecasts and projections, 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 covenant levels.
As set out in the Group's strategy in 2018, the Group continues
to focus on diversification of operations to drive a greater
proportion of the Group's results from non-broadcast earnings.
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
Except as described below, the accounting policies applied are
consistent with those of the annual financial statements for the
year ended 31 December 2018.
Apart from the adoption of IFRS 16 described below, other
changes to accounting standards in the current year had no material
impact.
The Group adopted IFRS16 on 1 January 2019. The standard has
resulted in many current operating leases being recognised on the
balance sheet, as the distinction between operating and finance
leases is removed. The Group has applied the modified retrospective
transition method, and consequently comparative information is not
restated.
Within opening balances as at 1 January 2019, the Group has
recognised GBP13.7m of right-of-use assets and an equal,
corresponding IFRS 16 lease liability, the latter representing the
obligation to make lease payments. The lease liabilities were
measured at the present value of the remaining lease payments,
discounted using the Group's incremental borrowing rate as at 1
January 2019, which was 2.3%. In addition on transition, a property
lease accrual of GBP0.1m has been written off and adjusted through
retained earnings.
For each lease, the lease term has been calculated as the
non-cancellable period of the lease contract, except where the
Group is reasonably certain that it will exercise contractual
extension options.
In adopting IFRS 16, the Group has elected not to recognise
right-of-use assets and lease liabilities for short-term leases or
low-value assets. The amounts relating to these leases are not
material.
The reconciliation from operating commitments disclosed under
IAS 17 to the lease liability recognised on the balance sheet at 1
January 2019 is as follows:
GBPm
Operating lease commitment at 31 December as disclosed
in the Group's consolidated financial statements 13.8
Impact of IFRS 16 data review* 1.1
-------
Operating lease commitments at 31 December 2018 14.9
Sub-lease property rentals netted against commitment 0.4
Discounted using the incremental borrowing rate
at 1 January 2019 (1.6)
-------
Lease liabilities reported at 1 January 2019 13.7
-------
Of which are: GBPm
Current lease liabilities 3.0
Non-current lease liabilities 10.7
-----
13.7
-----
*As part of the transition to IFRS 16, a detailed review of
leases identified a small number of commitments not included in the
2018 Annual Report operating lease commitment disclosure.
There is also a change in presentation of cash flows for leases
previously accounted for as operating leases, which are now
presented as cash flows from financing activities rather than cash
flows from operating activities.
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. Derivative financial
instruments, which are measured at fair value, comprise interest
rate swaps with a principal value of GBP15.0m categorised as level
2. The fair value of interest rate swaps is calculated as the
present value of the estimated future cash flows using market
interest rates. The valuation techniques employed are consistent
with the year end annual report.
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, which
remain the same as the prior year, are Broadcast, Digital,
Productions, and the STV ELM.
During 2019, a review of reportable segments was undertaken,
which concluded that the reportable segments of the Group are
Broadcast, Digital and Productions. The STV ELM, previously
reported separately, doesn't meet the criteria for separate
disclosure under any of the revenue, profit or asset tests (in 2019
or 2018) and will no longer be disclosed as such.
Also in 2019, the Group has changed the method of allocation of
central/corporate costs to the reportable segments. Previously the
entirety of this cost was allocated across the segments (excluding
the STV ELM). Going forward, those costs that relate directly to
the running of the Board and the Group's responsibilities as a
listed company will be held centrally as 'unallocated corporate
expenses'. This will ensure that the results of the reportable
segments are more directly comparable to other businesses operating
in their sector.
There is no change to the disclosure of segmental revenues year
on year, other than the column in the table below headed 'other'
would previously have been reported as 'STV ELM'. With regard to
the disclosure of segment result, the 2018 comparators have been
restated to reflect the new method of allocation. A separate
reconciliation of the impact of this change on the 2018 reported
results is also provided.
Broadcast Digital Productions Other Total
2019 2018 2019 2018 2019 2018 2019 2018 2019 2018
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue
Sales 105.7 104.7 13.0 9.9 14.6 16.7 4.8 5.5 138.1 136.8
Inter-segment
sales (13.4) (10.2) - (0.3) (0.9) (0.4) - - (14.3) (10.9)
------- ------- ----- ------ ------ ------ ----- ----- ------- -------
Segment revenue 92.3 94.5 13.0 9.6 13.7 16.3 4.8 5.5 123.8 125.9
------- ------- ----- ------ ------ ------ ----- ----- ------- -------
Segment result
Operating
profit 19.9 19.4 7.3 5.2 (0.1) 0.5 - - 27.1 25.1
------- ------- ----- ------ ------ ------ ----- -----
Unallocated corporate
expenses (4.5) (5.0)
------- -------
Adjusted operating profit 22.6 20.1
Exceptional
items - (15.3)
Finance costs (3.6) (2.9)
------- -------
Profit before
tax 19.0 1.9
Tax charge (3.1) (0.3)
------- -------
Profit for the year 15.9 1.6
------- -------
Reconciliation of 2018 segment
result
As reported Reallocation As restated
2018 2018 2018 2019
GBPm GBPm GBPm GBPm
Broadcast 15.3 4.1 19.4 19.9
Digital 4.7 0.5 5.2 7.3
Productions 0.1 0.4 0.5 (0.1)
Unallocated corporate
expenses - (5.0) (5.0) (4.5)
------------- ------------- ------------ ------
Operating profit (pre-exceptionals) 20.1 - 20.1 22.6
------------- ------------- ------------ ------
Revenue includes GBP1.0m from sources outside the UK (2018:
GBP0.5m). Operating profit includes GBP0.6m arising outside the UK
(2018: GBP0.3m).
6. Exceptional items
Gain on sale of investment
The disposal of the deltaDNA investment to Unity Technologies
Inc in September 2019 resulted in a gain on sale of GBP2.0m. See
note 14 for more information.
Acquisition costs
Costs of GBP0.1m were incurred in the acquisition of Primal
Media Limited on 1 July 2019. See note 13 for more information.
Development costs written off
A write off of development costs of GBP1.9m has been recognised
during the year. A full review of the development costs previously
capitalised was undertaken in the second half of the year by the
new management team of STV Productions, and those costs relating to
creative ideas and investments that are not aligned to the new
strategic direction of the division have been written off.
2018 exceptionals
The Group recognised exceptional costs totalling GBP15.3m. These
related to a provision for the restructuring of the business
(GBP8.7m), the loss on sale of STV2 (GBP0.8m), a past service cost
for GMP equalisation (GBP1.6m) and recognition of a provision in
relation to the ELM debtor (GBP4.2m).
7. Tax charge
2019 2018
GBPm GBPm
The charge for taxation is as follows:
Charge for the year before exceptional
items 3.2 2.9
Tax effect on exceptional items (0.1) (2.6)
Charge for the year 3.1 0.3
--------------- ---------------
The effective tax rate for the Group excluding exceptional items
is 17% (2018: 17%). The tax charge is lower than the standard rate
of 19% due to deductions in relation to pension contributions.
Changes to the UK corporation tax rates were substantively
enacted as part of the Finance Act 2016 on 6 September 2016. These
included a reduction to the main rate to reduce it to 17% from 1
April 2020, from the previous rate of 18% under the Finance Bill
2015 (no.2). Deferred taxes at the balance sheet date have been
measured using these latest substantively enacted tax rates and
reflected in these financial statements.
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 as treasury shares.
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 have also been
calculated based on earnings before adjusting items that are
significant in nature and/or quantum and are considered to be
distortive. The adjusting items include the impact of operating and
non-operating exceptional items and the IAS 19 net financing cost;
as well as the related tax adjustments. Adjusted earnings per share
have been presented to provide shareholders with an additional
measure of the Group's year-on-year performance.
Earnings per share 2019 2018
Pence Pence
Basic earnings per ordinary share 42.2p 4.2p
Diluted earnings per ordinary share 40.8p 4.1p
Earnings per ordinary share (before exceptional
items) 42.0p 37.2p
Diluted earnings per ordinary share (before
exceptional items) 40.6p 36.5p
Adjusted basic earnings per share (see note
19) 46.4p 41.1p
Adjusted diluted earnings per share (see note
19) 44.9p 40.3p
The following reflects the earnings and share data used in the
calculation of earnings per share:
Earnings GBPm GBPm
Profit for the year attributable to equity
shareholders 16.0 1.6
Exceptional items (net of tax) (0.1) 9.2
Exceptional impairment losses (net of tax) - 3.5
------- -------
Profit for the year before exceptional items 15.9 14.3
------- -------
Number of shares Million Million
Weighted average number of ordinary shares
in issue 37.9 38.4
Dilution due to share options 1.3 0.8
------- -------
Total weighted average number of ordinary
shares in issue 39.2 39.2
------- -------
9. Dividends
2019 2018 2019 2018
per share per share GBPm GBPm
Dividends on equity ordinary
shares
Paid final dividend 14.0p 12.0p 5.3 4.6
Paid interim dividend 6.3p 6.0p 2.4 2.3
---------- ----------
Dividends paid 20.3p 18.0p 7.7 6.9
---------- ---------- ----- -----
A final dividend of 14.7p per share (2018: 14.0p per share) has
been proposed and is subject to approval by the Board of Directors.
It is payable on 29 May 2020 to shareholders who are on the
register at 14 April 2020. The ex-dividend date is 9 April 2020.
This final dividend, amounting to GBP5.6m has not been recognised
as a liability in these financial statements.
10. Intangible assets
Web development
and branding
GBPm
Cost
At 1 January 2019 3.4
Additions 1.6
At 31 December 2019 5.0
----
Accumulated amortisation and impairment
At 1 January 2019 1.5
Amortisation 0.9
At 31 December 2019 2.4
----
Net book value at 31 December 2019 2.6
----
Net book value at 31 December 2018 1.9
----
11. Property, plant and equipment
Plant,
technical
Leasehold equipment Assets under
buildings and other construction Total
GBPm GBPm GBPm GBPm
Cost
At 1 January 2019 0.4 25.7 2.1 28.2
Additions - - 2.9 2.9
Transfers - 4.7 (4.7) -
At 31 December 2019 0.4 30.4 0.3 31.1
------------ ----------- --------------- --------
Accumulated depreciation
and impairment
At 1 January 2019 0.1 18.3 - 18.4
Charge for year - 2.0 - 2.0
At 31 December 2019 0.1 20.3 - 20.4
------------ ----------- --------------- --------
Net book value at 31 December
2019 0.3 10.1 0.3 10.7
------------ ----------- --------------- --------
Net book value at 31 December
2018 0.3 7.4 2.1 9.8
------------ ----------- --------------- --------
12. Leases
The balance sheet shows the following amount relating to
leases:
2019 2018
GBPm GBPm
Right-of-use assets
Property 12.0 -
Vehicles 0.2 -
---- ----
12.2 -
---- ----
Lease liabilities
Current 1.8 -
Non-current 10.6 -
12.4 -
---- ----
Additions to the right-of-use assets in 2019 were GBP0.3m.
The income statement shows the following amounts relating to
leases:
2019 2018
GBPm GBPm
Depreciation on right-of-use assets
Property 1.8 -
Vehicles 0.1 -
---- ----
1.9 -
---- ----
Interest expense (included in finance costs) 0.3 -
---- ----
13. Acquisition of subsidiary
On 1 July 2019, the Group acquired 52% of the issued share
capital of Primal Media Limited ("Primal"), an award winning
unscripted producer, for a nominal consideration.
The provisional fair values of the assets and liabilities of
Primal as at the date of acquisition are as follows:
Fair value
GBPm
Cash and cash equivalents 0.4
Deferred production costs 0.5
Deferred production income (0.6)
Accruals (0.1)
Loan liabilities (0.3)
Fair value of net liabilities (0.1)
Less : Non-controlling interests 0.1
-
----------
Net cash
Cash consideration -
Cash and cash equivalents acquired 0.4
Loan liabilities * (0.3)
----------
0.1
----------
Acquisition related costs of GBP0.1m are included in exceptional
items in the income statement.
* Post acquisition, and in line with the terms of the Sale and
Purchase agreement, the Group repaid half of the loan.
14. Investments
2019 2018
GBPm GBPm
Listed 0.1 0.1
Other 0.8 0.6
---- ----
0.9 0.7
---- ----
On 18 September 2019, the Group (along with all other
shareholders) sold its investment in deltaDNA Ltd to Unity
Technologies Inc for a net consideration of GBP2.5m (total
consideration GBP2.6m less transaction costs GBP0.1m) which
resulted in a gain on sale of GBP2.0m (net book value of investment
at completion was GBP0.5m).
The net consideration comprised an element payable in cash
(62.5%) and the balance in shares in Unity (37.5%). Consideration
of GBP0.5m (GBP0.2m in shares and GBP0.3m in cash) has been
deferred for 2 years and has been recognised as deferred
consideration within other receivables in non-current assets.
15. Trade and other receivables
Non-current other receivables of GBP9.5m (2018: GBP8.2m) relate
primarily to amounts due to the STV ELM (the external lottery
management company) from the Scottish Children's Lottery of GBP7.7m
(2018: GBP6.4m). This debtor has been presented net of an expected
credit loss impairment of GBP4.7m (2018: GBP5.0m). In line with
IFRS 9, management have performed a whole of life probability
weighted impairment review resulting in no change to the provision
being required.
16. Ordinary shares and share premium
Number of Ordinary Share
shares (thousands) shares premium Total
GBPm GBPm GBPm
At 1 January 2019 39,192 19.6 101.9 121.5
Sharesave exercises - - 0.1 0.1
At 31 December 2019 39,192 19.6 102.0 121.6
-------------------- --------- --------- --------
17. Notes to the consolidated statement of cash flows
2019 2018
GBPm GBPm
Operating profit 22.6 9.0
Add back : exceptionals - 11.1
----- -----
Adjusted operating profit 22.6 20.1
Adjustments for:
Depreciation and amortisation 4.8 2.4
Share based payments 0.3 0.3
----- -----
Adjusted EBITDA 27.7 22.8
(Increase)/decrease in inventories (0.7) 0.7
Decrease in trade and other receivables (excluding
ELM) 1.5 2.2
(Decrease)/increase in trade and other payables
(excluding ELM) (1.1) 3.1
Increase in ELM trade and other receivables (1.3) (2.6)
Decrease in ELM trade and other payables (0.5) (0.1)
----- -----
Cash generated by operations 25.6 26.1
----- -----
Net debt reconciliation
At 31 On adoption At 1 Cash Non-cash At 31 December
December of IFRS January flows changes 2019
2018 16 2019 (i) (ii)
GBPm GBPm GBPm GBPm GBPm GBPm
Long term borrowings (42.6) - (42.6) (1.0) (0.1) (43.7)
Cash and cash equivalents 6.3 - 6.3 (0.1) - 6.2
---------- ------------ --------- ------- --------- ---------------
Net debt (36.3) - (36.3) (1.1) (0.1) (37.5)
Lease liabilities - (13.7) (13.7) 1.9 (0.6) (12.4)
Net debt including
lease liabilities (36.3) (13.7) (50.0) 0.8 (0.7) (49.9)
---------- ------------ --------- ------- --------- ---------------
i) Cash flows includes an amount of cash acquired on acquisition of subsidiary.
ii) Non-cash changes for long-term borrowings relates to the
amortisation of borrowing costs and for lease liabilities, the
acquisition of right-of-use assets.
At 31 December 2019, the Group had revolving credit and
overdraft facilities in place totalling GBP60.0m (2018: GBP60.0m),
of which GBP44.0m was drawn down (2018: GBP43.0m). The balance
sheet value of GBP43.7m (2018: GBP42.6m), reported as non-current
and expiring within 2 to 5 years from the balance sheet date at the
end of both the current and prior periods, is presented net of
GBP0.3m of unamortised borrowing costs (2018: GBP0.4m).
The bank facilities have a maturity date of June 2022 and
security is provided to the lenders by way of cross guarantees and
a share pledge.
18. 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.
A full actuarial valuation of the schemes was carried out at 31
December 2017 and resulted in an actuarial deficit to be funded by
the Group of GBP127.0m on a pre-tax basis at 28 February 2019,
compared to GBP130.0m on a pre-tax basis at the previous settlement
date of 30 November 2016. The next triennial valuation will take
place as at 31 December 2020.
A recovery plan period of 12 years was agreed with the first
annual contributions of GBP9.0m in line with the current recovery
plan. Annual contributions will increase at the rate of 2% per
annum over the term of the plan, the first such increase being on 1
January 2020. These payments are tax deductible.
The significant actuarial assumptions used for accounting
purposes reflect prevailing market conditions in the UK and are as
follows:
At 31 December At 31 December
2019 2018
% %
Rate of increase in salaries Nil Nil
Rate of increase of pensions in
payment 3.00 3.30
Discount rate 2.00 2.75
Rate of price inflation (RPI) 3.00 3.30
Assumptions regarding future mortality experience are set based
on advice, published statistics and experience in each scheme.
The average life expectancy in years of a pensioner retiring at
age 65 is as follows:
At 31 December At 31 December
2019 2018
Years Years
Retiring at balance sheet date:
Male 19.3 19.4
Female 21.5 21.6
Retiring in 25 years:
Male 21.2 21.4
Female 23.1 23.1
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 2019 At 31 December 2018
Quoted Unquoted Total Quoted Unquoted Total
GBPm GBPm GBPm GBPm GBPm GBPm
Debt instruments 193.6 - 193.6 184.0 - 184.0
Investment funds 66.2 115.3 181.5 36.1 110.4 146.5
Cash and cash equivalents 5.1 - 5.1 13.1 - 13.1
Derivatives - 1.7 1.7 - (0.2) (0.2)
-------- --------- ---------- -------- --------- ----------
Fair value of schemes' assets 264.9 117.0 381.9 233.2 110.2 343.4
-------- --------- ---------- -------- --------- ----------
Present value of defined benefit obligations (445.9) (421.9)
Deficit in the schemes (64.0) (78.5)
---------- ----------
A related, offsetting deferred tax asset of GBP10.9m (2018:
GBP13.2m) is included within non-current assets. Therefore, the
pension scheme deficit net of deferred tax was GBP53.1m at 31
December 2019 (2018: GBP65.3m).
19. Reconciliation of statutory results to adjusted results
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 in order to provide a more meaningful comparison of how
the business is managed and measured on a day-to-day basis.
Below sets out a reconciliation of the statutory results to the
adjusted results:
2019 2018
Profit Basic Diluted Profit Basic Diluted
before tax EPS EPS before tax EPS EPS
GBPm pence pence GBPm pence pence
Post-exceptional 19.0 42.2p 40.8p 1.9 4.2p 4.1p
Add back: exceptionals - (0.2p) (0.2p) 15.3 33.0p 32.4p
Pre-exceptional 19.0 42.0p 40.6p 17.2 37.2p 36.5p
Add back: IAS 19 2.0 4.4p 4.3p 1.8 3.9p 3.8p
Adjusted results 21.0 46.4p 44.9p 19.0 41.1p 40.3p
------------ ------- -------- ------------ ------ --------
20. Post balance sheet event
On 8 January 2020, the Group acquired a minority investment in
drama producer Two Cities Television for an initial consideration
of GBP1.1m. In addition, convertible loan notes to the value of
GBP0.4m have been issued.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
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END
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