TIDMSTVG
RNS Number : 1085E
STV Group PLC
09 March 2022
Press Release 0700 hours, 9 March 2022
STV Group plc Full Year Results to 31 December 2021
Record financial performance and continued growth momentum
Highlights
-- Highest revenue (+35% on 2020) and adj. operating profit (+39% on 2020) on record
-- Strong growth on 2019 pre-Covid results (revenue +17%; adj. operating profit +12%)
-- Diversification plan building momentum, with 36% of adj.
operating profit now from Digital and Studios
-- On track to hit 3-year growth targets in 2023; investment guidance remains unchanged
-- Strong audience performance, with best all-time viewing share since 2008
-- High margin digital business continues to accelerate, with streams +63%
-- Highest ever full year total advertising revenues, +24% on 2020 and +11% on 2019
-- STV Studios revenue trebled to almost GBP27m, with future
profit trajectory supported by new creative partnerships confirmed
today
-- Strong start to 2022, with Q1 total advertising forecast to
be up around 20% and new large-scale Studios commissions
secured
-- Good progress on social purpose strategy, including successful launch of STV Zero
-- Board proposes final dividend of 7.3p, bringing full year to 11p (+22% on 2020)
Financial Summary 2021 2020 2019 vs 2020 vs 2019
-------------------- ------------------- ------------------ ------------------- ------------------- ---------
Revenue GBP144.5m GBP107.1m GBP123.8m +35% +17%
-------------------- ------------------- ------------------ ------------------- ------------------- ---------
Adjusted operating
profit* GBP25.2m GBP18.2m GBP22.6m +39% +12%
-------------------- ------------------- ------------------ ------------------- ------------------- ---------
Adjusted operating
margin* 17.5% 17.0% 18.2% +50bps -70bps
-------------------- ------------------- ------------------ ------------------- ------------------- ---------
Adjusted PBT** GBP23.6m GBP16.6m GBP20.9m +42% +13%
-------------------- ------------------- ------------------ ------------------- ------------------- ---------
Profit before tax GBP20.1m GBP6.7m GBP18.4m +202% +10%
-------------------- ------------------- ------------------ ------------------- ------------------- ---------
Adjusted basic
EPS*** 45.6p 34.5p 38.7p +32% +18%
-------------------- ------------------- ------------------ ------------------- ------------------- ---------
Statutory basic EPS 42.7p 18.2p 41.7p +135% +2%
-------------------- ------------------- ------------------ ------------------- ------------------- ---------
Cash generated by
operations GBP34.8m GBP22.4m GBP25.6m +55% +36%
-------------------- ------------------- ------------------ ------------------- ------------------- ---------
Net cash/(debt) (+) GBP0.3m GBP(17.5)m GBP(37.5)m +GBP17.8m +GBP37.8m
-------------------- ------------------- ------------------ ------------------- ------------------- ---------
Dividend per share
(full year) 11.0p 9.0p 6.3p +22% +75%
-------------------- ------------------- ------------------ ------------------- ------------------- ---------
* Before exceptional items and inclusive of High-End Television tax credits (note
19)
** Before exceptional items, IAS19 interest and inclusive of High-End Television tax
credits
(note 19)
*** Before exceptional items and IAS19 interest, and assuming weighted average number
of shares
consistent with 2021 (note 19)
(+) Excluding lease liabilities
Financial highlights
-- Total revenue of GBP144.5m, +35% on 2020 and +17% on 2019,
reflecting continued momentum in Studios and a resurgent
advertising market
-- Adjusted operating profit of GBP25.2m, +39% on 2020 and +12% on 2019
-- STV-controlled advertising continued to deliver strong
growth, with video on demand (VOD) advertising on the STV Player
+38% (+54% on 2019) and regional advertising +22% (+16% on
2019)
-- Studios revenue trebled year on year, to almost GBP27m (2020: GBP8.7m; 2019: GBP13.7m)
-- Adjusted operating margin, up 50 basis points on 2020 at
17.5%, reflects benefits of economic recovery and close management
of costs. The decrease of 70 basis points on 2019 reflects the
investment in Digital in line with our growth investment plan
-- Continued strong cash generation improves balance sheet
position providing additional headroom to accelerate investment in
growth, with Group in net cash position for first time
Another year of strong audience performance
-- STV's all-time viewing share at 19.6% (2020: 19.2%), the highest since 2008:
o STV still the most watched peaktime channel in Scotland, with
a share of 22.2%
o Highest viewing share gain of any commercial channel in the
UK, +2%, despite tough lockdown comparators of 2020
o 98% of all commercial audiences over 500k viewers in Scotland
on STV in 2021
o STV News at Six Scotland's number 1 news programme for the
3(rd) year in a row, with an average audience of 468k viewers
-- Total online streams on STV Player up 63%, still the fastest
growing UK broadcaster VOD service:
o Online viewing up 42%
o Monthly active users up 54%
o Registered users up 16% to 4.3m
o STV Player now highest rated streaming app across the major
app stores
Continued growth momentum
-- Scottish advertising : The STV Growth Fund attracted a
further 85 new advertisers to television in 2021, taking the total
to over 320 since launch, with the fund boosted to GBP30m for 2022
to support Scotland's economic recovery
-- Digital : STV Player growth continues to build:
o Content offer scaling up, with 1000 hours of new and acquired
drama added in 2021
o 31 new content deals delivered 173 new titles and 49 new
Player-only drama boxsets
o Player-only content streams up 93% in 2021 and now represent
42% of all VOD streams (compared to 6% in 2019 )
o Player outside Scotland now over 20% of VOD streams and
users
o New Sony deal announced last month, bringing 7 new
international dramas to STV Player including the UK premiere of The
Commons starring Joanne Froggatt
-- Studios : STV Studios delivered its most successful year yet:
o 16 new commissions, 12 returnable series and now 7 returning
series
o First major streaming commission secured, Zodiac Island, for
Discovery+
o 9(th) creative label added through a minority investment in
entertainment and quiz specialist Mighty Productions, founded by
the creator and exec producer of Tipping Point and the exec
producer of The Weakest Link, Hugh Rycroft and Lynn Sutcliffe
o Exclusive partnership with drama producer TOD Productions
extended for a further 3 years
-- Targets : On track to hit STV's 3-year growth targets in 2023 to:
o Double digital viewing, users and revenue (to GBP20m)
o Quadruple Studios revenue (to GBP40m)
o Achieve at least 50% of operating profit from outside
traditional broadcasting
Positive outlook
-- Strongest ever content line-up in 2022 on TV and online
o Over 150 hours of new network drama, +40% on 2021
o In total over 1000 hours of drama boxsets on STV Player in
2022
-- Content cost guidance unchanged
o Previously announced 3-year GBP30m investment plan will fund
Digital & Studios growth
o National programming costs linked to advertising revenues
under long-term agreement
-- Advertising off to a very strong start in 2022:
o Q1 total advertising revenue (TAR) expected to be around +20%,
with January +21%, February +26% and March +10-15%
o April TAR expected to be up +10-15% with comparators getting
tougher from Q2
-- Studios maintaining positive momentum into 2022:
o 11 new commissions already
o Good visibility of 2022 revenue with over GBP15m already
secured
Dividend
-- The Board proposes a final dividend of 7.3p per share for
2021, giving a full year dividend of 11p per share, +22% on
2020
-- There are a number of factors that the Board takes into
consideration when setting the level of dividend proposed, in
particular the pay-out ratio of free cash flow post pensions and
any known or potential future capital commitments in support of our
growth investment programme. The Board is also mindful of the
economic uncertainty caused by the pandemic and the ongoing
political situation
-- The Board remains committed to a balanced approach to capital
allocation across investing for growth, fulfilling our pension
obligations, and paying a sustainable, progressive dividend to
shareholders
Simon Pitts, Chief Executive Officer, said:
"2021 was an exceptional year of growth for STV which saw us
deliver the highest revenue, operating profit and lowest net debt
on record. We continue to support our people, partners and
communities as we emerge from the pandemic with momentum and
confidence.
We are taking full advantage of the growth in video viewing,
with STV recording its highest viewing share since 2008 and our
streaming service STV Player growing streams by 63%, thanks to huge
audiences for new dramas and Euro 2020. This viewing success
propelled us to our highest ever advertising revenues, +24% on 2020
and 11% ahead of 2019, with growth continuing into 2022.
Our strategy of creating a more diversified media business
through a relentless focus on digital streaming and production
growth is delivering, with these new areas now making up 36% of our
total profit. We added 1000 hours of drama boxsets to STV Player
and grew active users by 54%, with over a fifth of VOD streams now
coming from outside Scotland. STV Studios enjoyed its best-ever
creative and financial performance in 2021, winning 16 new
programme commissions across the genres, with plenty more to come
as we aim to become the UK's leading nations and regions
producer.
Our social purpose agenda is now embedded right across the
business, with the STV Children's Appeal distributing GBP4.4m to
families and young people living in poverty in 2021, and our new
Expert Voices campaign offering media training to over 400 people
from under-represented groups in Scotland, with more than 40
already appearing on air. I was also proud of the leading role we
played at COP26, as we continue to promote climate action through
our sustainability strategy, STV Zero.
2022 has started well with a strong advertising performance in
the first quarter, and we also have particularly good revenue
visibility in Studios. 2022 will be our biggest year yet in terms
of content, with over 150 hours of new, original drama, 40% more
than 2020, including the Ipcress File and Our House starring Martin
Compston, followed by extensive coverage of the FIFA World Cup in
Qatar later this year."
With an improved financial position, the Board has proposed a
final dividend of 7.3p per share, giving a full year dividend of
11p, +22% on 2020.
These are clearly very unsettling times with the war in Ukraine,
and any business implications obviously pale into insignificance
against the humanitarian cost. STV has no exposure to trading with
Russia and that will remain the case."
There will be a presentation for analysts today, 9 March 2022,
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
Financial and operating review
Group overview
Total revenue for the year increased by 35% to GBP144.5m (2020:
GBP107.1m) as a result of a record performance in advertising
revenue and significant growth in the Studios division. Total
advertising revenue was GBP112.6m (2020: GBP90.9m), an increase of
24% on 2020 and up 11% on 2019, which was a record year
pre-pandemic. The increase was largely a result of the continued
growth in the Digital division coupled with a strong recovery of
the linear TV advertising market. On a like-for-like basis,
excluding STV ELM Ltd which was sold in August 2021, Group revenue
was up 39% on the prior year and up 21% on 2019.
Adjusted operating profit increased by 39% to GBP25.2m (2020:
GBP18.2m), equivalent to an operating margin of 17.5% (2020: 17%).
On a statutory basis, operating profit increased by 22% to GBP21.6m
(2020: GBP17.7m).
Adjusted profit before tax was GBP23.6m (2020: GBP16.6m), after
charging finance costs of GBP1.5m (2020: GBP1.5m). These comprised
interest on the Group's borrowings of GBP1.2m (2020: GBP1.2m) 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 (2021:
GBP0.8m; 2020: GBP1.2m) and include High-End Television (HETV) tax
credits receivable (2021: GBP1.9m; 2020: nil). Statutory profit
before tax for the year was GBP20.1m, an increase of GBP13.4m on
2020 of GBP6.7m.
A total tax charge of GBP0.7m has been recognised in the year
(2020: credit of GBP1.0m), representing an effective tax rate of
3.5% (2020: -14.9%). This is lower than the UK standard rate of
corporation tax, principally due to GBP1.9m of HETV tax credits
receivable from HMRC regarding current year qualifying productions,
and the rate at which deferred tax assets have been measured
following the Government's announcement to increase the standard
rate of corporation tax to 25% from April 2023. Statutory profit
after tax for the year was GBP19.4m (2020: GBP7.7m).
Adjusted EPS (excluding IAS19 net interest) at 45.6p was 32% up
on the prior year, driven by the increased profit generation of the
Group. On a statutory basis, EPS at 42.7p was up 135% due to the
increased profit generated and lower level of net exceptional items
in the current year.
The Group closed the year with net cash of GBP0.3m (2020: net
debt of GBP17.5m), a first for the business. This positive position
was driven by strong cash conversion of the higher operating
profit, supplemented by proceeds from the sale of non-core
investments. Operating cash conversion was 161% for the year (2020:
128%).
In March 2021, the Group refinanced its bank facilities,
agreeing a new GBP60m revolving credit facility, with GBP20m
accordion, for a minimum tenor of 3 years with two one-year
extension options. The first extension option was agreed in
February 2022 on commercial terms in line with the existing
facility. The covenant package is in line with the Group's previous
facility; leverage (net debt : EBITDA) and interest cover. At the
end of the year, the Group's leverage was nil (2020: 0.7 times) due
to the marginal net cash position and interest cover was 49.4 times
(2020: 28.3 times), both metrics comfortably within the covenant
limits of 3 times (maximum) and 4 times (minimum) respectively.
Pensions
Agreement of the triennial valuations for the Group's defined
benefit schemes was reached in October, based on a combined scheme
funding deficit of GBP116m and a recovery plan running to October
2030. The Schedule of Contributions remains at the same level as
the previous settlement with the contingent cash mechanism also in
place.
The IAS 19 accounting deficit across the schemes was GBP79.4m
(2020: GBP70.3m). The increase in the liability is primarily driven
by an update to the mortality assumptions used, as well as
reflecting the latest membership data following completion of the
triennial valuation. These increases were partially offset by the
gain derived from the higher discount rate and the benefit of
contributions paid by the Group.
Dividend policy
Following the return to dividend payments at the 2021 half year,
the Board recommends a final dividend of 7.3 pence per share,
resulting in a total dividend of 11.0 pence per share for the year,
an increase of 22% on 2020.
Broadcast
An outstanding performance was delivered by the Broadcast
division in 2021 with STV's position in Scotland remaining
unrivalled, significantly ahead of any other commercial channel and
reaching 80% of adults per month, making the platform a unique and
compelling proposition for advertising partners.
Viewing figures for STV soared during the pandemic and this
strong performance was largely sustained in 2021. STV's share of
commercial channels at 28.5%, was the highest it has been since
2008 and year-on-year growth of 1 share point was higher than any
channel in Scotland or across the UK. STV remained the best watched
peak-time channel in Scotland. Daytime, peak and all-time share
reached a 12-year high, and 2021 saw the strongest all-time share
performance versus the ITV Network ever (19.6% v 17.7%).
This viewing success was driven by a strong schedule of drama,
entertainment, factual and sports output, including Six Nations
Rugby and Euro 2020, the latter capturing the attention of a nation
of football fans. The much-anticipated England v Scotland match saw
STV's highest ever peak audience at 1.94m, becoming our most
watched programme of the last decade and best watched football
match ever.
Scottish news sits at the heart of our public service
broadcaster offering and the team continued its exceptional run
from 2020 into 2021. For the third year in a row, STV News at Six
was the best-watched news programme in Scotland, with the overall
service watched by more than 54% of the Scottish population each
month. 2021 saw us successfully complete a multimillion-pound
project to upgrade all six broadcast centres to High
Definition.
2.2m people access our news across our digital platforms every
month, and 2021 saw us sign licensing deals with Facebook and
Google for STV News content to feature on Facebook News and Google
Showcase, creating new revenue streams and visibility on these
important services.
The speed and scale of the advertising recovery in 2021 far
exceeded our expectations and underlines the enduring power and
relevance of high-quality television advertising, as we delivered
our highest advertising revenues in STV's history.
We continue to work closely with the Scottish business
community, ensuring that advertising is affordable and accessible
via our innovative STV Growth Fund. Since launch in 2018, the
Growth Fund has allocated c.GBP16.5m to over 320 businesses who
have accessed TV advertising for the first time, with 85 of these
businesses joining in 2021. Forming part of the overall fund, the
GBP1m Green Fund for sustainable businesses, and a
gifted-membership initiative as part of our GBP1m Inclusion Fund
for businesses promoting diversity, were both launched in 2021. We
also launched STV Self Service, enabling our advertisers to design
and book their own campaigns online, providing ease of access to
our leading marketing platform for SMEs.
Overall, the Broadcast division generated an operating profit of
GBP21.8m (2020: GBP15.5m), an increase of 41% on the prior year and
up almost 10% on 2019.
Digital
Viewing on STV Player in terms of total streams was up 63% in
2021 at 114.6m (2020: 70.5m). The total amount of time spent on STV
Player also increased, by 42% to 50.8m hours (2020: 35.7m hours).
In 2018 we delivered 35.0m streams compared with 114.6m in 2021,
representing a more than trebling across this three-year
period.
STV Player is now available on all major platforms including
Sky, Freeview, Virgin Media, Freesat, Apple TV, Fire TV and Sky
Glass. Strong digital audience growth and commercial innovation
around advertising opportunities meant VOD advertising on STV
Player was up 38% year on year, with advertising impressions up
43%. 4.3m adults are now registered users on STV Player, with
monthly active users growing by 54%.
Through our expansion into the rest of the UK, 22% of VOD
streams are now coming from outside of Scotland (2020: 2%),
presenting a significant opportunity for future growth.
A strong offering of sport, soaps and drama drove viewing with
network drama the key driver of traffic. The second series of The
Bay was among our best watched titles in 2021, attracting 2.9m
views, alongside Marcella (1.8m), Finding Alice (1.4m) and
Unforgotten (1.2m).
We continue to accelerate our content acquisition strategy,
developing strong relationships with distributors, and with a
growing focus on scripted content. We worked with 27 partners in
2021, agreed 31 new content deals and added a plethora of drama,
true crime, factual and entertainment programmes to our service,
complementing the network material. These agreements added an
additional 1,859 hours of Player-only content (including 867 hours
of scripted), representing 173 new titles to our ever-expanding
catalogue.
12 out of the top 20 programmes on STV Player were non-network,
Player-only content, highlighting the growing success of our
strategy. These include the US version of The Bridge, The Firm,
Rogue and Gracepoint, alongside archive favourites Taggart and Take
the High Road. In total, 42% of VOD streams came from Player-only
content in 2021 (2020: 32%).
In June we became the first broadcaster VOD service to launch a
VIP rewards scheme to build better connections with our viewers and
further drive streams. STV Player VIP brings members a range of
benefits, as well as a reduced advertising load, and we will
constantly be refining and improving this offer.
Overall, operating profit generated by the Digital division
increased by 21% year on year to GBP7.9m (2020: GBP6.5m).
STV Studios
2021 has been a record year for STV Studios. Despite the ongoing
impact of Covid restrictions, 16 programme commissions were won,
for eight TV networks, and the business delivered its best-ever
financial performance, with full year revenue of GBP26.6m (2020:
GBP8.7m). The division returned an adjusted operating profit of
GBP1.3m, including the HETV tax credit receivable, compared to a
GBP0.3m loss in 2020.
Commissioning highlights include new entertainment format Bridge
of Lies (25 episodes, BBC One) which airs next week; a recommission
for a further three series of The Yorkshire Auction House for
Discovery-owned, Really; a re-commission of ratings winner
Celebrity Catchphrase (13 episodes, ITV); innovative, genre bending
series, Murder Island (6 episodes, Channel 4); and a further three
series of Antiques Road Trip and its celebrity sister series (BBC).
Finally, STV Drama spent much of 2021 in production with high-end
six-part returnable drama for Channel 4, Screw. Broadcast in early
2022 to widespread critical acclaim, Screw was Channel 4's best
launch to a drama series since It's A Sin.
Our growing suite of labels has also achieved commissioning
success. Highlights include a significant win in March 2021 for
Belfast-based Two Cities Television for an original returnable
peak-time police drama, Blue Lights (6 episodes, BBC One), is
currently in production. Primal Media's ground-breaking series
Landmark (8 episodes, Sky Arts) launched in September 2021 and
Primal are in advanced funded development with other major
channels, including a new reality show in the UK as well as a
dating format for a US broadcaster. Entertainment label Barefaced
TV has recently been commissioned by Discovery+ for a large-scale,
high-stakes, young-skewing format Zodiac Island (working title) to
be delivered in Autumn 2022. We are excited about future prospects
with the talented team at high-end drama producer, Tod Productions,
who have a strong, advanced development slate.
In September 2021, we acquired a 25% stake in unscripted
producer, Hello Mary, and the team has already run 8-part series
Trapped Underground for Discovery as well as two
soon-to-be-announced new series. Excitingly, today we have
announced the addition of quiz format specialists, Mighty
Productions, to our family of labels. Mighty have already won 4
series commissions, including new C4 quiz 1 & 6 Zeros, which
airs from next week.
We delivered a strong year of catalogue tape sales across our
full catalogue of programmes and format relicensing with sales of
GBP3.4m (2020: GBP3.7m). A distributor neutral position drives our
successful strategy of working with multiple parties to match the
most appropriate sales agent to our content, securing the best
deals with businesses such as Britbox, Acorn TV, Discovery and PBS
(US).
Social purpose
STV's social purpose priorities remain integral to our growth
strategy, and we made significant progress in 2021, including:
-- Sustainability strategy STV Zero launched, with a concerted
programme of climate action successfully delivered on and off
screen in 2021, including at COP26 in Glasgow
-- Diverse contributors to STV News doubled from 4% to 8% as a
result of STV's diversity & inclusion strategy, with over 400
people from diverse backgrounds given media training to become
expert contributors
-- GBP4.4m distributed by the STV Children's Appeal to families
and young people in poverty in Scotland
Consolidated income statement
Year ended 31 December 2021
2021 2020
Before Exceptional Before Exceptional
exceptional items Results exceptional items Results
items (note for year items (note for year
6) 6)
Note GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 5 144.5 - 144.5 107.1 - 107.1
Net operating expenses (121.2) (1.7) (122.9) (88.9) (0.5) (89.4)
------------- ------------ ----------- ------------- ------------ -----------
Operating profit 23.3 (1.7) 21.6 18.2 (0.5) 17.7
Finance costs
* borrowings (1.2) - (1.2) (1.2) - (1.2)
- defined benefit pension
schemes (0.8) - (0.8) (1.2) - (1.2)
* lease interest (0.3) - (0.3) (0.3) - (0.3)
Provision for impairment
losses - ELM debtor - 0.3 0.3 - (8.2) (8.2)
------------- ------------ ----------- ------------- ------------ -----------
Total finance costs (2.3) 0.3 (2.0) (2.7) (8.2) (10.9)
------------- ------------ ----------- ------------- ------------ -----------
Share of loss of
an associate (0.1) - (0.1) (0.1) - (0.1)
Gain on sale of non-current
asset - 0.6 0.6 - - -
------------- ------------ ----------- ------------- ------------ -----------
Profit before tax 20.9 (0.8) 20.1 15.4 (8.7) 6.7
Tax (charge)/credit 7 (1.0) 0.3 (0.7) (0.6) 1.6 1.0
------------- ------------ ----------- ------------- ------------ -----------
Profit for the year 19.9 (0.5) 19.4 14.8 (7.1) 7.7
------------ -----------
Attributable to:
Owners of the parent 19.9 (0.5) 19.4 14.7 (7.1) 7.6
Non-controlling
interests - - - 0.1 - 0.1
------------- ------------ ----------- ------------- ------------ -----------
19.9 (0.5) 19.4 14.8 (7.1) 7.7
------------- ------------ ----------- ------------- ------------ -----------
Earnings per share
Basic 8 43.8p 42.7p 35.2p 18.2p
Diluted 8 42.1p 41.0p 33.8p 17.5p
A reconciliation of the statutory results to the adjusted
results is included at note 19. The above consolidated income
statement should be read in conjunction with the accompanying
notes.
Consolidated statement of comprehensive income
Year ended 31 December 2021
2021 2020
GBPm GBPm
Profit for the year 19.4 7.7
Items that will not be reclassified subsequently
to profit or loss:
Remeasurement of defined benefit pension schemes (17.2) (15.3)
Deferred tax credit 8.5 3.2
Revaluation (loss)/gain on listed investment
to market value (2.3) 5.9
Other comprehensive expense - net of tax (11.0) (6.2)
Total comprehensive income for the year 8.4 1.5
------ ------
Attributable to:
Owners of the parent 8.4 1.4
Non-controlling interests - 0.1
------ ------
8.4 1.5
------ ------
The above consolidated statement of comprehensive income should
be read in conjunction with the accompanying notes.
Consolidated balance sheet
At 31 December 2021
2021 2020
Note GBPm GBPm
Non-current assets
Intangible assets 10 1.6 2.3
Property, plant and equipment 11 9.8 9.9
Right-of-use assets 12 19.9 10.4
Investments 13 1.9 6.7
Deferred tax asset 14 26.5 19.9
Trade and other receivables 0.4 0.9
------- -------
60.1 50.1
------- -------
Current assets
Inventories 17.7 15.4
Trade and other receivables 30.1 25.6
Cash and cash equivalents 14.7 5.2
62.5 46.2
------- -------
Total assets 122.6 96.3
------- -------
Equity
Ordinary shares 16 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 1.4 1.0
Accumulated losses (339.2) (342.8)
------- -------
Shareholders' equity (25.8) (29.8)
Non-controlling interests (0.1) (0.1)
------- -------
Total equity (25.9) (29.9)
------- -------
Non-current liabilities
Borrowings 15 14.4 22.7
Lease liabilities 19.7 9.1
Retirement benefit obligations 18 79.4 70.3
113.5 102.1
------- -------
Current liabilities
Trade and other payables 33.8 22.4
Lease liabilities 1.2 1.7
35.0 24.1
------- -------
Total liabilities 148.5 126.2
------- -------
Total equity and liabilities 122.6 96.3
------- -------
The above consolidated balance sheet should be read in
conjunction with the accompanying notes.
Consolidated statement of changes in equity
Year ended 31 December 2021
Capital Attributable
Share Share redemption Merger Accumulated to owners Non-controlling
capital premium reserve reserve Other losses of the interest Total
reserve parent equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January
2021 23.3 115.1 0.2 173.4 1.0 (342.8) (29.8) (0.1) (29.9)
--------- --------- ----------- --------- --------- ------------- ------------- ----------------- --------
Profit for the
year - - - - - 19.4 19.4 - 19.4
Other
comprehensive
expense - - - - - (11.0) (11.0) - (11.0)
--------- --------- ----------- --------- --------- ------------- ------------- ----------------- --------
Total
comprehensive
income for
the year - - - - - 8.4 8.4 - 8.4
--------- --------- ----------- --------- --------- ------------- ------------- ----------------- --------
Net share
based
compensation - - - - 0.4 (0.4) - - -
Dividends paid
(note
9) - - - - - (4.4) (4.4) - (4.4)
--------- --------- ----------- --------- --------- ------------- ------------- ----------------- --------
At 31 December
2021 23.3 115.1 0.2 173.4 1.4 (339.2) (25.8) (0.1) (25.9)
--------- --------- ----------- --------- --------- ------------- ------------- ----------------- --------
At 1 January 2020 19.6 102.0 0.2 173.4 0.9 (343.2) (47.1) (0.2) (47.3)
----- ------ ---- ------ ------ -------- ------- ------ -------
Profit for the
year - - - - - 7.6 7.6 0.1 7.7
Other comprehensive
expense - - - - - (6.2) (6.2) - (6.2)
----- ------ ---- ------ ------ -------- ------- ------ -------
Total comprehensive
income for the
year - - - - - 1.4 1.4 0.1 1.5
----- ------ ---- ------ ------ -------- ------- ------ -------
Issue of ordinary
shares 3.5 12.0 - - - - 15.5 - 15.5
Share based compensation - - - - 0.2 - 0.2 - 0.2
Shares acquired
by EBT - - - - (0.1) 0.3 0.2 - 0.2
Dividends paid
in shares 0.2 1.1 - - - (1.3) - - -
At 31 December
2020 23.3 115.1 0.2 173.4 1.0 (342.8) (29.8) (0.1) (29.9)
----- ------ ---- ------ ------ -------- ------- ------ -------
The above consolidated statement of changes in equity should be
read in conjunction with the accompanying notes.
Consolidated statement of cash flows
Year ended 31 December 2021
2021 2020
Note GBPm GBPm
Operating activities
Cash generated by operations 17 34.8 22.4
Interest and fees paid in relation to
banking facilities (1.4) (1.9)
Corporation tax paid (1.2) (0.4)
Pension deficit funding - recovery plan
payment (9.3) (9.1)
Contingent cash payment to pension schemes (0.3) (1.4)
Net cash generated by operating activities 22.6 9.6
------ ------
Investing activities
Proceeds from sale of investments 4.7 -
Proceeds from disposal of subsidiary 0.6 -
Purchase of investment in associate (0.6) (1.1)
Loan notes provided to associate (0.4) -
Production finance provided to associate (0.6) -
Purchase of intangible assets (0.4) (0.7)
Purchase of property, plant and equipment (2.5) (1.4)
Net cash generated by/(used in) investing
activities 0.8 (3.2)
------ ------
Financing activities
Payment of obligations under leases (1.5) (1.9)
Issue of ordinary shares - 15.5
Borrowings drawn 3.1 19.0
Borrowings repaid (11.1) (40.0)
Dividends paid (4.4) -
Net cash used in financing activities (13.9) (7.4)
------ ------
Net increase/(decrease) in cash and cash
equivalents 9.5 (1.0)
Cash and cash equivalents at beginning
of year 5.2 6.2
------ ------
Cash and cash equivalents at end of year 14.7 5.2
------ ------
Notes to the preliminary announcement
Year ended 31 December 2021
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. Up to its sale on 20
August 2021, the Group also operated a non-core 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 2021 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 2021.
Statutory financial statements for the year ended 31 December
2020, 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
2020 and for the year ended 31 December 2021 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 2021 will be delivered to the Registrar of
Companies and made available to all shareholders in due course.
Going concern
At 31 December 2021, the Group was in a small cash position with
a gross cash balance of GBP14.7m. 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.
In March 2021, the Group refinanced its bank facilities,
agreeing a new GBP60m revolving credit facility, with GBP20m
accordion, for a minimum tenor of 3 years (two one-year extension
options are available, with the first being exercised in February
2022). The covenant package is in line with the Group's previous
facility, namely net debt to EBITDA (leverage) must be less than 3
times, and interest cover must be greater than 4 times. At 31
December 2021, the Group's leverage was nil (2020: 0.7 times) and
interest cover was 49.4 times (2020: 28.3 times), both comfortably
within covenant limits.
As part of the going concern review, the Group considers
forecasts of the advertising market, from which the Group generates
the majority of its cash inflows, as well as its prospects in the
programme production 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 financial covenants.
The directors performed a full review of principal risks and
uncertainties during the year and as part of its process to review
and approve the three-year plan covering the period to 31 December
2024. A severe but plausible downside scenario was identified that
reflected crystallisation of a number of risks, including a
downturn in advertising markets and a hiatus in programme
production activity. Under this downside scenario, the Group
generated sufficient cash to enable it to continue in operation,
pay its obligations as they fall due and remain within its covenant
levels.
After completion of these activities and making enquiries of
management, 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 2020.
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. The trade of STV ELM is included
within 'Other' up to the date of disposal in August 2021.
Broadcast Digital Studios Other Total
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Sales 108.8 94.8 17.8 13.7 27.0 9.1 1.0 3.5 154.6 121.1
Inter-segment
sales (9.7) (13.6) - - (0.4) (0.4) - - (10.1) (14.0)
------- ------- ------ ------ ------ -------- ----- ----- ------- -------
Segment revenue 99.1 81.2 17.8 13.7 26.6 8.7 1.0 3.5 144.5 107.1
------- ------- ------ ------ ------ -------- ----- ----- ------- -------
Segment result
Adjusted operating
profit 21.8 15.5 7.9 6.5 1.3 (0.3) - - 31.0 21.7
------- ------- ------ ------ ------ -------- ----- -----
Unallocated corporate
expenses (5.8) (3.5)
------- -------
Adjusted operating profit 25.2 18.2
Exceptional items
(note 6) (0.8) (8.7)
HETV tax credits (1.9) -
Finance costs (2.3) (2.7)
Share of loss of an associate (0.1) (0.1)
------- -------
Profit before tax 20.1 6.7
Tax (charge)/credit (0.7) 1.0
------- -------
Profit for the year 19.4 7.7
------- -------
Adjusted operating profit above is the statutory operating
profit before exceptional items and includes high-end television
(HETV) tax credits receivable. The HETV tax credits relate solely
to the Studios operating segment; GBP1.9m was receivable in the
current year (2020: nil) resulting in a statutory operating loss of
GBP0.6m in Studios (2020: loss of GBP0.3m). There were no adjusting
items disclosed within Broadcast or Digital operating profit.
There has been no significant change in total assets from the
amount disclosed in the last annual financial statements.
6. Exceptional items
In order to provide the users of the consolidated financial
statements with a transparent view of significant and/or
non-recurring items and their impact on the underlying trading of
the Group, the Group presents items recognised in profit or loss
for each year analysed between:
I. Profit before exceptional items; and
II. The effect of exceptional items
The table below analyses the exceptional items in the current
financial year and their impact on key financial statement lines in
the consolidated income statement.
2021 2021 2021 2020 2020 2020
Before Exceptional Results Before Exceptional Results
exceptional items for the exceptional items for
items GBPm year items GBPm the
GBPm GBPm GBPm year
GBPm
Operating profit (i) 23.3 (1.7) 21.6 18.2 (0.5) 17.7
------------ ------------ -------- ------------ ------------ --------
Finance costs (ii) (2.3) 0.3 (2.0) (2.7) (8.2) (10.9)
Share of loss of an
associate (0.1) - (0.1) (0.1) - (0.1)
Gain on sale of non-current
asset (iii) - 0.6 0.6 - - -
------------ ------------ -------- ------------ ------------ --------
Profit before tax 20.9 (0.8) 20.1 15.4 (8.7) 6.7
Tax (charge)/credit
(iv) (1.0) 0.3 (0.7) (0.6) 1.6 1.0
------------ ------------ -------- ------------ ------------ --------
Profit for the year 19.9 (0.5) 19.4 14.8 (7.1) 7.7
------------ ------------ -------- ------------ ------------ --------
Earnings per share
Basic 43.8p 42.7p 35.2p 18.2p
Diluted 42.1p 41.0p 33.8p 17.5p
(i) Operating profit
The exceptional item of GBP1.7m (2020: nil) relates to the
repayment of furlough monies received in the prior year. During
2020, and principally over the second quarter, the Group applied
for grants under the Government's Coronavirus Job Retention Scheme
('CJRS') totalling GBP1.6m (GBP0.1m was also received in Q1 2021).
These monies were received at a time when the business was
operating under the tightest of lockdown restrictions, with total
advertising revenue down 38% year on year, no programme production
activity possible, and visibility over key markets very limited.
The amounts received under the CJRS were allocated against payroll
within operating costs in 2020. Over the second half of 2020 and
into 2021, the Group's trading improved significantly, despite
further lockdown measures in Q1 2021, demonstrating the resilience
of its Broadcast business and the successful execution of strategy
in Digital in particular. In March 2021, the Board announced its
intention to resume payment of a cash dividend to shareholders.
Although there was no obligation on the Group to repay furlough
grants, the Board decided that CJRS monies received would be repaid
in full prior to re-commencing payment of a cash dividend. As the
repayment of furlough grants does not relate to the current period
of trading, nor was it required under any law or regulation, the
Group has presented the cost as exceptional so as not to distort
the underlying trading results of the business.
In 2020, the GBP0.5m exceptional charge related to the accrual
of costs expected to be incurred in relation to the disposal of STV
ELM Ltd.
(ii) Finance costs
An exceptional credit of GBP0.3m has been recognised relating to
amounts recovered from the Scottish Children's Lottery (SCL) in
excess of the expected credit loss provided for in the prior
year.
In 2020, an exceptional cost of GBP8.8m was recognised, being
full provision of amounts due from the SCL as at 31 December 2020.
Partially offsetting this amount was an exceptional credit of
GBP0.6m, being the VAT recoverable on amounts written off.
(iii) Gain on sale of non-current asset
An exceptional gain of GBP0.6m has been recognised in 2021,
being net proceeds received on disposal of STV ELM Ltd.
(iv) Tax (charge)/credit
Tax adjustments are the tax effects of the exceptional items
recognised in both years.
7. Tax
2021 2020
GBPm GBPm
The charge/(credit) for taxation
is as follows:
Charge for the year before exceptional
items 1.0 0.6
Tax effect on exceptional items (0.3) (1.6)
--------------- ---------------
Charge/(credit) for the
year 0.7 (1.0)
--------------- ---------------
The Government announced in the Budget on 3 March 2021 that the
main rate of corporation tax for the financial year beginning 1
April 2023 will increase to 25% from the current rate of 19%
previously legislated. The 25% rate was substantively enacted on 24
May 2021 when the Budget Provisional Collection of Taxes Act
resolution was passed. The Finance Act 2020 included this amendment
and set the main rate at 25% for the financial year beginning 1
April 2023. Therefore, the Group has remeasured the deferred tax
balances to be carried at the 25% rate.
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
operating and non-operating exceptional items and the IAS 19 net
financing cost, as well as 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 2021 2020
Pence Pence
Basic earnings per ordinary share 42.7p 18.2p
Diluted earnings per ordinary share 41.0p 17.5p
Basic earnings per ordinary share (before
exceptional items) 43.8p 35.2p
Diluted earnings per ordinary share (before
exceptional items) 42.1p 33.8p
Adjusted basic earnings per share 45.6p 37.5p
Adjusted diluted earnings per share 43.8p 36.1p
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 19.4 7.6
Exceptional items (net of tax) 0.5 7.1
Profit for the year (before exceptional items) 19.9 14.7
Excluding IAS 19 financing cost 0.8 1.0
------- -------
Adjusted profit 20.7 15.7
------- -------
Number of shares Million Million
Weighted average number of ordinary shares
in issue 45.5 41.7
Dilution due to share options 1.8 1.7
------- -------
Total weighted average number of ordinary
shares in issue 47.3 43.4
------- -------
9. Dividends
2021 2020 2021 2020
per share per share GBPm GBPm
Dividends on equity ordinary
shares
Paid final dividend 6.0p - 2.7 -
Paid interim dividend 3.7p 3.0p 1.7 1.3
---------- ----------
Dividends paid 9.7p 3.0p 4.4 1.3
---------- ---------- ----- -----
A final dividend of 7.3p per share (2020: 6.0p per share) has
been proposed and is subject to approval by the Board of Directors.
It is payable on 27 May 2022 to shareholders who are on the
register at 15 April 2022. The ex-dividend date is 14 April 2022.
This final dividend, amounting to GBP3.3m has not been recognised
as a liability in these financial statements.
10. Intangible assets
Web development
GBPm
Cost
At 1 January 2021 5.7
Additions 0.4
At 31 December 2021 6.1
----
Accumulated amortisation and impairment
At 1 January 2021 3.4
Amortisation 1.1
At 31 December 2021 4.5
----
Net book value at 31 December 2021 1.6
----
Net book value at 31 December 2020 2.3
----
11. Property, plant and equipment
Plant,
technical
Leasehold equipment Assets under
buildings and other construction Total
GBPm GBPm GBPm GBPm
Cost
At 1 January 2021 0.4 30.8 1.3 32.5
Additions - - 2.5 2.5
Transfers - 3.0 (3.0) -
At 31 December 2021 0.4 33.8 0.8 35.0
------------ ----------- --------------- --------
Accumulated depreciation
and impairment
At 1 January 2021 0.1 22.5 - 22.6
Charge for year 0.1 2.5 - 2.6
At 31 December 2021 0.2 25.0 - 25.2
------------ ----------- --------------- --------
Net book value at 31 December
2021 0.2 8.8 0.8 9.8
------------ ----------- --------------- --------
Net book value at 31 December
2020 0.3 8.3 1.3 9.9
------------ ----------- --------------- --------
12. Right of use assets
Property Vehicles Total
GBPm GBPm GBPm
Cost
At 1 January 2021 13.9 0.3 14.2
Additions 11.0 0.1 11.1
Derecognition of right-of-use assets - (0.1) (0.1)
At 31 December 2021 24.9 0.3 25.2
-------- -------- ------
Accumulated depreciation
At 1 January 2021 3.6 0.2 3.8
Disposal - (0.1) (0.1)
Depreciation charge for the year 1.5 0.1 1.6
At 31 December 2021 5.1 0.2 5.3
-------- -------- ------
Net book value at 31 December 2021 19.8 0.1 19.9
-------- -------- ------
Net book value at 31 December 2020 10.3 0.1 10.4
-------- -------- ------
The addition in the current year relates to the lease extension
of the Group Head office building at Pacific Quay, Glasgow.
13. Investments
2021 2020
GBPm GBPm
Listed 0.3 5.6
Associates 1.5 1.0
Other 0.1 0.1
---- ----
1.9 6.7
---- ----
Listed investments comprise of shares held in Mirriad
Advertising plc and are measured at fair value through the
Consolidated Statement of Comprehensive Income.
On 18 September 2019, the Group (along with all other
shareholders) sold its investment in deltaDNA Ltd to Unity Software
Inc for a net consideration of GBP2.5m. 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) was deferred for 2 years. The Group
disposed of its full investment in Unity Software Inc during the
year for net consideration of GBP4.4m and received GBP0.3m in cash
that was previously held in escrow.
The movement in investments in associates during 2021 relates to
acquisition of a 25% shareholding in the unscripted production
company, Hello Mary, for consideration of GBP0.6m in September
2021. The investment was initially recognised at cost and has
subsequently been updated to reflect the Group's share of
post-acquisition losses (less than GBP0.1m) in accordance with the
equity method of accounting. The Group acquired a 25% stake in Two
Cities Television in 2020 for consideration of GBP1.1m with
subsequent recognition of the Group's accumulated share of the loss
of GBP0.2m. No dividends have been received from either
company.
14. Deferred tax asset
At 31 December 2021, total deferred tax assets of GBP26.5m were
recognised on the balance sheet (31 December 2020: GBP19.9m). Of
this, GBP19.8m relates to the deficit on the Group's defined
benefit pension schemes (31 December 2020: GBP13.3m) and the
balance of GBP6.7m relates to tax losses, accelerated capital
allowances and short-term timing differences (31 December 2020:
GBP6.6m).
15. Borrowings
In March 2021, the Group refinanced its bank facilities,
agreeing a new GBP60m revolving credit facility, with GBP20m
accordion, for a minimum tenor of 3 years. Two one-year extension
options are available. The first extension option was agreed in
February 2022 on commercial terms in line with the existing
facility. The covenant package is in line with the Group's previous
facility, namely net debt to EBITDA must be less than 3 times, and
interest cover must be greater than 4 times.
16. Share capital
Number of Ordinary Share
shares (thousands) shares premium Total
GBPm GBPm GBPm
At 1 January 2021 and 31
December 2021 46,723 23.3 115.1 138.4
-------------------- --------- --------- --------
The total authorised number of ordinary shares is 63 million
shares (2020: 63 million shares) with a par value of GBP0.50 per
share (2020: GBP0.50 per share). All issued shares are fully
paid.
17. Notes to the consolidated statement of cash flows
2021 2020
GBPm GBPm
Operating profit 21.6 17.7
Adjustments for:
Depreciation and amortisation 5.3 5.1
Share based payments 0.5 0.5
Increase in inventories (2.3) (2.2)
(Increase)/decrease in trade and other receivables
(excluding STV ELM Ltd) (2.3) 1.1
Increase/(decrease) in trade and other payables
(excluding STV ELM Ltd) 11.2 1.1
Net decrease/(increase) in STV ELM Ltd working
capital 0.8 (0.9)
Cash generated by operations 34.8 22.4
----- -----
Net debt reconciliation
Net (debt)/cash
including
Cash and Net (debt)/cash lease liabilities
Long-term cash equivalents Lease
borrowings liabilities
GBPm GBPm GBPm GBPm GBPm
At 1 January 2021 (22.7) 5.2 (17.5) (10.8) (28.3)
Cash flows 8.8 9.5 18.3 1.5 19.8
Non-cash flows (i) (0.5) - (0.5) (11.6) (12.1)
At 30 December 2021 (14.4) 14.7 0.3 (20.9) (20.6)
------------- ------------------- ------------------ -------------- -------------------
(i) Non-cash changes for long-term borrowings relate to the capitalisation and amortisation of
borrowing costs, and for lease liabilities the acquisition of
right-of-use assets.
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.
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 GBP116m on a pre-tax basis at 30 September 2021 compared
to GBP127.0m 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.
Deficit recovery plans, which end on 31 October 2030, have been
agreed with aggregate monthly payments unchanged from the previous
recovery plans. The 2021 deficit recovery payments will total
GBP9.3m, with annual payments then increasing at the rate of 2% per
annum over the term of the recovery plans, in line with the
previous agreement. A contingent cash mechanism remains in place.
As previously, contingent funding payments equivalent to 20% of any
outperformance above a benchmark of available cash will 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:
2021 2020
% %
Rate of increase in salaries nil nil
Rate of increase of pensions in payment 3.55 3.00
Discount rate 1.90 1.25
Rate of price inflation (RPI) 3.55 3.00
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).
2021 2020
Retiring at balance sheet date:
Male 21.0 19.6
Female 23.2 21.9
Retiring in 25 years
Male 22.3 21.5
Female 24.6 23.5
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 2021 At 31 December 2020
Quoted Unquoted Total Quoted Unquoted Total
GBPm GBPm GBPm GBPm GBPm GBPm
Investment funds 9.1 156.6 165.7 8.7 213.7 222.4
Debt instruments 201.9 26.5 228.4 133.1 36.6 169.7
Cash and cash equivalents 21.7 5.0 26.7 24.4 (1.3) 23.1
Derivatives - (0.4) (0.4) - 1.4 1.4
Annuity policies - 19.6 19.6 - 20.6 20.6
-------- --------- ----------- -------- --------- ----------
Fair value of schemes' assets 232.7 207.3 440.0 166.2 271.0 437.2
-------- --------- ----------- -------- --------- ----------
Present value of defined benefit obligations (519.4)( (507.5)
Deficit in the schemes (79.4) (70.3)
----------- ----------
A related, offsetting deferred tax asset for the Group of
GBP19.8m (2020: GBP13.3m) is included within non-current assets.
Therefore, the pension scheme deficit net of deferred tax for the
Group was GBP59.6m at 31 December 2021 (2020: GBP57.0m).
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 to exclude the effects of exceptional items and adjust for
other 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.
Below sets out a reconciliation of the statutory results to the
adjusted results:
2021 2020
Operating Profit Basic Operating Profit Basic
profit before earnings profit before earnings
GBPm tax GBPm per share GBPm tax GBPm per share
Pence Pence
Statutory result 21.6 20.1 42.7p 17.7 6.7 18.2p
Exceptional items
(note 6) 1.7 0.8 1.1p 0.5 8.7 17.0p
----------- ----------- ----------- ----------- ----------- -----------
Result for the
year before exceptional
items 23.3 20.9 43.8p 18.2 15.4 35.2p
IAS 19 net finance
costs - 0.8 1.8p - 1.2 2.3p
High-End Television
tax credit 1.9 1.9 - - - -
----------- ----------- ----------- ----------- ----------- -----------
Adjusted result 25.2 23.6 45.6p 18.2 16.6 37.5p
----------- ----------- ----------- ----------- ----------- -----------
IAS 19 related items, principally the net interest expense
included in the income statement, are excluded from non-statutory
measures as they are non-cash items that relate to historical
defined benefit pension schemes.
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.
20. Post balance sheet events
On 9 March 2022, the Group announced it had acquired a 25% stake
in quiz show producer, Mighty Productions, and extended its
existing co-development and co-production agreement with Tod
Productions for a further 3 years.
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