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Share Name Share Symbol Market Type Share ISIN Share Description
Stv Group Plc NEX:STVG.GB NEX Ordinary Share GB00B3CX3644
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.0% 272.50 0.00 0.00 280.00 272.50 280.00 0.00 10:22:16
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
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STV Group PLC Trading Update

26/03/2020 10:10am

UK Regulatory (RNS & others)


Stv (NEX:STVG.GB)
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1 Month : From Feb 2020 to Mar 2020

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RNS Number : 7004H

STV Group PLC

26 March 2020

26 March 2020

STV Group plc Trading Update

   -- Continued strong viewing performance on TV and online in Q1, with spike in younger audiences; 
 
   -- Decisive action taken on costs, cash flow, and dividends to mitigate anticipated advertising decline and ensure 
      STV growth strategy stays on track; 
 
   -- New initiatives to support local communities and boost local advertising market. 

As STV continues to closely monitor the rapidly evolving situation with COVID-19, we today provide a trading update covering a number of areas of the business and the steps being taken to ensure STV remains financially resilient and can continue to execute its successful growth strategy in the future.

Our people and our viewers

-- Our main priority remains to protect our people and we will continue to follow all government advice. We have implemented contingency plans to ensure that we continue to offer a high quality schedule of new drama, entertainment and factual programmes over the coming months, and in particular to sustain our public service news output which provides the most popular local news service in Scotland, and is of critical and increasing importance to our viewers in these uncertain times.

Liquidity, cash and costs

   -- STV has good ongoing access to liquidity through its GBP60m overdraft and revolving credit facility.  Net debt 
      was GBP37.5m at the end of 2019 and is expected to be c.GBP38m at the end of March 2020, comprising cash balances 
      of GBP10m and GBP48m of drawn down facility.  The unutilised portion of the facility is GBP12m and this is 
      accessible under the terms of the agreement. 
 
   -- We are very focused on cash and have already taken steps to reduce costs and cash commitments. National 
      programming costs will reduce in line with any reduction in revenues (thanks to our unique variable cost model) 
      and we have identified a further GBP2m of other cost savings across the business for 2020, along with c.GBP2.5m 
      of cash savings from delayed capital expenditure. 
 
   -- As an additional measure to ensure maximum flexibility, it is also confirmed that our Board is no longer 
      recommending a final dividend of 14.7p per share (financial year ended 31 December 2019) and this will no longer 
      be paid, conserving a further GBP5.5m. We recognise how important the dividend is to our shareholders and the 
      Board will revisit the position for future dividends once there is greater clarity on the impact of COVID-19 on 
      the business. 
 
   -- Taken together these actions will ensure that at least an additional GBP10m of cash (over and above current cash 
      balances) is retained within the business in the short to medium term. 

Simon Pitts, STV Chief Executive, said:

"Over the last 2 years STV has demonstrated its resilience and ability to grow the business in the face of challenging market conditions. These are now extraordinary times and our immediate focus must be on protecting our brilliant people and fulfilling our public service role to keep our viewers informed and entertained in the most trying of circumstances.

We have implemented contingency plans to keep our programmes on air, especially our news coverage, have taken decisive steps to reduce costs, manage our cashflow and make funding available to support the local businesses and charities in Scotland who now need it most, and we remain committed to our successful growth strategy for the long term."

Updates by division

Broadcast

   -- Our broadcast channel continues to perform very strongly, with STV's peaktime and all time share of viewing up a 
      further 9% and 6% for Q1 year to date respectively, 9% ahead of the ITV Network. 
 
   -- Last week (16th - 22nd March) STV's peaktime audience was up 45%, with 16-34s up 20%, while daytime was up 22% 
      (+13% for 16-34s). Audiences for STV News were up 48%. 
 
   -- The new restrictions implemented by Government are, however, having an increasing impact on our advertising 
      revenues across a range of categories, both nationally and regionally, and national forecasts have deteriorated 
      for March and April.  In our preliminary results announcement on 10th March we guided to single digit revenue 
      growth in regional advertising for 2020 and this now looks challenging. 
 
   -- Offsetting this it is important to note that STV's broadcast cost base is uniquely variable, as programming costs 
      (60% of our cost base) vary in line with national advertising revenues under our long term arrangements with ITV. 
      Therefore, if national advertising is down 10%, our programming costs also reduce by 10%, protecting our 
      broadcast profit margins. 
 
   -- STV's Growth Fund uses our broadcast strength to reduce the cost of local airtime for Scottish advertisers. Last 
      week we announced a doubling of the fund to GBP20m to help local businesses maintain engagement with their 
      customers through these difficult times. 
 
   -- We will launch a new Growth Fund initiative, STV Local Lifeline, which will initially use GBP1m of the increased 
      fund to provide free advertising across STV to local charities and small local businesses who are working 
      tirelessly to get people through the current crisis. 

Digital

   -- Our digital business grew strongly in 2019, well ahead of expectations, and this growth accelerated in Q1. Online 
      viewing is up 80% in Q1 year to date, with over 8 million hours of STV Player viewing so far. 
 
   -- Within that, long-form Player streams are up 72%, comprising an 84% growth in on demand streams and a 21% 
      increase in live streams. 
 
   -- White House Farm became STV's best watched on demand drama ever with over 1.2m streams. Flesh and Blood is also 
      performing strongly and there is much to come including Liar, Belgravia and Quiz. 
 
   -- Encouragingly STV's Player-only content accounted for 21% of streams in Q1 (up from 6% a year ago), driven by 
      exclusive drama box sets like Janet King, Rake and The Slap. In total we now have over 50 boxsets available to 
      enjoy on the Player, with more coming soon. 
 
   -- However, our digital revenues are not immune from the wider market uncertainty at present and our full year 
      guidance of strong double digital growth will likely come under some pressure in the coming weeks, though the 
      continued strong performance of the STV Player should help mitigate this impact. 

Production

   -- The increased restrictions on working practices are having a significant impact on the whole TV production sector 
      and we have paused filming on Antiques Road Trip and Celebrity Antiques Road Trip, as well as new factual 
      entertainment series Clear Out Cash In. 
 
   -- However, STV Productions' relatively small scale and largely variable cost base mean that the profit impact on 
      STV is likely to be limited for the full year, albeit achieving profit growth in line with previous guidance will 
      be increasingly difficult the longer the current situation persists. We are, however, already benefitting from 
      increased demand for high margin library sales and we expect this to continue. 
 
   -- Our creative pipeline is stronger than ever with over 50 drama projects in development together with an exciting 
      and diverse range of unscripted projects across the genres. The next few weeks will allow our creative teams to 
      hone their slates further and focus on the development of scripts in order that production can be ramped up 
      quickly when we are able. 

This announcement constitutes inside information for the purposes of article 7 of the Market Abuse Regulation (EU) No 596/2014.

ENDS

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

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 contact rns@lseg.com or visit www.rns.com.

END

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March 26, 2020 06:10 ET (10:10 GMT)

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