Long-suffering shareholders enjoyed a 10% uplift to 142p yesterday, and have now seen the shares rise 40% this year, as STV unveiled positive trends across its business in the first year after the upheaval which saw it become a Channel 3 networking ‘affiliate’. The Glasgow-based group claimed it was now “firmly established as a profitable and progressive business”.
Underlying pre-tax profits were up from £14m to £14.4m, after the previous year’s jump from £12.5m. Operating profits rose 14% to £17.1m and net (EBITDA) earnings were up 13% at £19.5m.
STV Productions said it had a “strong pipeline” of commissions and yesterday announced the commissioning by the BBC of a third series of Celebrity Antiques Road Trip, which has featured the likes of Mylene Klass and John Barrowman, adding to last week’s landing of a Jo Brand show for UKTV Gold. Productions lifted revenues by £2.8m to £10.2m, a 21% rise and the main driver of STV group revenues which were up by only £700,000 at £102.7m, though the division’s target had been £12m, and its margin fell from 10% to 2%. Rob Woodward, chief executive, commented: “That fell because of the investment in the team around Alan Clements, we have recruited an absolutely first-class team of producers in there to drive the growth we expect to see.”
He added: “They are a stretching set of targets, but we maintain the transparency in terms of what we hit and what we don’t hit.” The only other notable miss was digital revenues at £6.5m, well shy of the £9.1m target.
But Mr Woodward stressed they were up 84% in the “growth categories” of VOD, display and classified advertising, and another 35% in the first quarter, whilst margins at 26% were up by 42% on 2011.
The non-growth categories, largely premium rate telephony services such as voting lines, still account for 54% of digital revenues and just over half the £1.7m profits.
Mr Woodward added: “What we are showing is we can produce high-margin businesses that are digitally-based, that is the important strategic question.”
On improved perceptions in the City, he said: “We are a highly cash-generative business and we will employ that cash to continue to pay down debt.” The 17% reduction to £45.3m put STV on the right trajectory to reduce it to below two times net earnings over the next two years.
Mr Woodward said the maximum 10-year licence renewal and the two local TV franchises awarded to STV were also important landmarks.
The consumer division continued to exceed its ITV network audience share in 2012, tracking 1.3 share points ahead, and reaching over 4.2m viewers per month. Its margins are up 80% since 2009, “demonstrating the underlying profitability of the consumer business and the positive impact of continued cost savings and cost control”.
The group said ‘Scotland Tonight’ had become the most popular current affairs programme in Scotland, reaching over three million viewers and would “will play a key role in our content engagement strategy as STV becomes the centre stage for the political debate for the referendum on Scotland's constitutional future in 2014”.