Press Release 0700 hours, 11 March 2025

STV Group plc Full Year Results to 31 December 2024

Strong performance in challenging markets

Highlights

·    Results demonstrate the benefits of diversification against a challenging market backdrop

o  Group revenue growth of 12% to £188.0m, driven by acquisition-related growth in Studios and Euros-related advertising

o  Studios revenue up 26% to £84.1m and adjusted operating profit up 18% to £6.1m

o  Digital sales (before commission) up 8% to £21.8m (net of commission -4%); year 1 of commission drives lower adjusted operating profit of £8.4m as expected

o  Total Advertising Revenue (TAR) up 5% before commission; STV-controlled advertising up 5%

o  Group adjusted operating profit up 3% to £20.6m; statutory operating profit more than doubles to £13.2m

o  Group adjusted operating margin of 11.0% slightly down, as expected and reflecting strong growth in Studios

·    Cost savings achieved of £1.9m vs target of £1.5m; on track to deliver £5m p.a. by end FY26

·    Operating cash conversion strong at 134% (2023: 169%)

·    Net debt (excluding non-recourse production financing) at £28.8m (2023: £29.0m)

·    In Feb-25, new revolving credit facility of £70m secured at favourable rates, for at least 3 years

·    Board proposes final dividend of 7.4p (full year 11.3p), in line with 2023

·    New CEO Rufus Radcliffe to outline strategy refresh in May 2025

Rufus Radcliffe, Chief Executive, said:

"I've been with STV for 4 months and it's clear that the foundations of the business are strong.  STV is a much more balanced Group following the scaling of our Studios and Digital businesses, with good growth potential.

2024 was a good year for STV. We delivered a strong performance against a challenging economic backdrop, with results in line with expectations.  We are controlling those elements we can, in line with our strategy, and are very much on track to ensure that STV is in the best possible shape when the market recovers.

We're seeing continued growth in our Studios business, with 51 commissions won in 2024 for more customers than ever before.  Across our 21 labels we have secured future revenue of £76m, with strong development pipelines across all genres. 

STV continues to be Scotland's pre-eminent marketing platform, reaching 3.3m people per month. The Euros provided a welcome boost to viewing and advertising in H1 2024, winning us a 48% audience share across the tournament, and delivering record audiences for live viewing on STV Player.

I'm working closely with the leadership team on a strategy refresh taking us to 2030.  This will build on the strengths of our existing strategy and take it to the next stage of development and growth.  I look forward to updating on this in May 2025." 

Strategic progress:

Content

·    STV Studios continues to build momentum in a difficult market, with strong performances from recent acquisitions:

o  Two Cities' first contribution to Group results is revenue of £31.5m and adjusted operating profit of £2.7m driven by Amadeus (Sky) and Blue Lights (BBC)

o  Hello Halo and Rumpus, which the Group moved to majority stakes in during H2, contributed a combined £5.5m in revenue and £1.1m in adjusted operating profit

·    Studios adjusted operating margin was 7.2% (2023: 7.7%), the slight reduction a product of genre mix in programmes delivered and margin pressure from commissioners

o  Building blocks of future margin growth remain: 37 returning series produced in year and strong secondary sales revenue £7.7m (2023: £7.0m)

·    Division currently in production on four drama series, all delivering in 2025

·    51 new commissions and recommissions in 2024

·    Orderbook healthy at end-February 2025 at £76m, down relative to end-October 2024 (of £92m) following revenue recognition of £21m and commissions won of £5m

o  Includes high value recommissions of Criminal Record S2 (AppleTV+), Blue Lights S3&4 (BBC) and The Fortune Hotel S2 (ITV)

Audience

·    STV & STV Player combined still the clear number 1 for commercial audiences in Scotland

o  19% share of total peak commercial audience in 2024 (vs Netflix 13%, Sky 10% and C4 6%)

·    STV was the most watched commercial channel in Scotland on 363 of 366 days in 2024

·    In 2024, STV aired the best-watched quiz show (The 1% Club), drama (Mr Bates vs The Post Office), and soap (Coronation Street) across all channels in Scotland

·    STV Player continues to deliver:

o  Reach as percentage of total STV reach strong at 38% (FY26 target of 50%)

o  Monthly active users 1m (FY26 target of 1.5m)

o  Online streams down 1%; consumption on owned and operated platforms up 8%

·    Acquired titles for the Player represented 36% of consumption, with key titles including Brookside (3.7m hours in 2024; 8.5m hours since launch in Feb-23) and Red Rock (2.8m hours since launch to end 2024)

·    Media Bill now enshrined in law; Ofcom tasked with ensuring prominence is given to Public Service Media (PSM) VoD services across platforms to protect discoverability for viewers

Monetisation

·    STV-controlled advertising revenues +5%, comprising:

o  SME advertising +12%

o  Scottish Government advertising -39%

o  Scottish VOD revenue +6%, with c.60% of brands combining linear and VOD

·    97% of top 500 commercial audiences were on STV in 2024

·    New advertisers on STV in 2024 totalled 124, with a re-booking rate of c.55%

·    Registrations to subscription service, STV Player+, up 36% to 22,000

·    New multi-year partnership with Premier Sports announced in February 2025, providing unique deal in market and increasing attractiveness of STV Player to younger, male skewing audiences

Organisation

·    Strong progress made towards £5m p.a. cost saving target by end of FY26 with £1.9m realised in 2024

·    Targeting at least £1.7m incremental savings in 2025

·    Defined benefit pension scheme triennial valuation agreed in October 2024, with committed cash contributions slightly lower going forward, and contingent cash mechanism paused until at least 2028

·    Group's main banking facility refinanced in February 2025 on favourable terms:

o  £70m facility for 3+1+1 years, with £20m accordion

o  Leverage ratchet removed with flat margin, at lower level, now payable

o  Key financial covenants remain in place - leverage <3x and interest cover >4x

Outlook

·    STV is a more diversified business with growing momentum in content creation and a strong audience proposition highly valued by advertisers

·    Our focus continues to be growth in Studios, monetisation of our audience and a drive in cost savings and operational efficiency

·    In the short term, the macroeconomic backdrop will continue to impact commissioner and advertiser budgets, but STV is well placed for when conditions improve

·    Advertising: Late Easter has phasing effect on yoy comps for Q1 - outlook for Jan-Apr is:

o  Total advertising revenue (TAR) expected to be slightly down

o  National linear expected to be down c.5%

o  Regional linear expected to be slightly up

o  Total VOD continuing to show growth up c.6%

·    Studios: forward orderbook at end Feb-25 of £76m, majority confirmed for 2025 delivery

·    Cost saving programme on track with additional £1.7m targeted in FY25; incremental employers' NI costs material to the Group at £0.5m in FY25

Dividend

·    The Board proposes a final dividend 7.4 pence per share, after considering all relevant factors including the ongoing macroeconomic uncertainty

·    The Board remains committed to a balanced approach to capital allocation across investing for growth, fulfilling our pension obligations, and paying a sustainable dividend to shareholders.

There will be a presentation for analysts on STV's Full Year Results for 2024 today, Tuesday 11 March, at 12.30pm via Spark Live. Should you wish to attend this presentation, please email Angela Wilson at angela.wilson@stv.tv.

Enquiries:

STV Group plc:                 Kirstin Stevenson, Head of Communications                  Tel: 07803 970 106

Camarco:                          Geoffrey Pelham-Lane, Director                                        Tel: 07733 124 226

                                           Ben Woodford, Director                                                      Tel: 07790 653 341

GROUP OVERVIEW

Total revenue grew by 12% to £188.0m (2023: £168.4m). This primarily related to growth in Studios revenue which reached £84.1m in the year, up from £66.8m in 2023, and benefitted from a number of drama productions across all scripted labels in the portfolio, including a strong first contribution from Two Cities Television (moved to majority stake in January 2024).

Total advertising revenue (TAR) for the year was £102.0m pre-commission (2023: £97.3m), an increase of 5% on the 2023 performance, with advertising revenues boosted by the Euros tournament in the summer but followed by a more difficult trading environment in H2 with the UK Government election and subsequent Autumn Budget causing uncertainty in the marketplace. Both national and regional advertising revenues were up 4% on the prior year. 

Adjusted operating profit of £20.6m was up 3% on 2023, equivalent to an adjusted operating margin of 11.0% (2023: 11.9%).  The reduction in margin was anticipated as we continued to grow our Studios business, with the impact of inflationary cost pressures also felt, in common with many UK corporates during the year. On a statutory basis, operating profit was £13.2m (2023: £6.4m). 

At the start of the year, the Group announced a multi-year cost saving programme with an annual target run rate of £5m by the end of FY26, and a target of £1.5m set for 2024.  Permanent savings of £1.9m were realised during the year with savings across broadcast operations, synergies associated with the Greenbird integration, and several support teams within the business and in our property portfolio.  Costs associated with the savings programme that have been recognised as adjusting items during the year were £1.0m (2023: £nil).

Profit before tax was £10.4m (2023: £nil) after charging finance costs of £7.6m (2023: £6.2m).  The components of finance costs were (i) interest on the Group's borrowings £3.4m (2023: £2.4m); (ii) non-cash interest on lease liabilities £0.5m in both years; (iii) net gain on foreign exchange contracts of £0.4m (2023: £nil); (iv) net interest on the net deficit in the Group's defined benefit pension schemes £2.4m (2023: £2.8m); and (v) unwinding of the discount on put option liabilities recognised in relation to business combinations £1.7m (2023: £0.5m).  Items (iv) and (v) are recognised by the Group as adjusting items.

Other gains of £4.8m (2023: £nil) were recognised during the year (within adjusting items) in relation to accounting for acquisitions achieved in stages and revaluation to fair value of put option liabilities.

The Group recognised a tax credit of £2.7m in the year (2023: £5.3m), principally driven by high-end television tax credits receivable of £3.9m (2023: £7.7m) in relation to scripted programme production underway or delivered during the year.  Resultant profit for the year was £13.1m (2023: £5.3m) with basic EPS of 23.5p (2023: 9.7p).  On an adjusted basis, basic EPS was 29.0p (2023: 28.2p).

At year end, the Group had net debt under its revolving credit facility ('RCF') of £28.8m (2023: £29.0m).  In addition, certain subsidiaries were party to separate production financing facilities, which are non-recourse to STV, in relation to specific programmes in production.  Of the total production financing facilities available of £15.8m, amounts drawn at the end of the year were £9.9m.  Amounts drawn under similar facilities at the end of 2023 of £3.3m were fully repaid during the year, on delivery of the finished programme.

Operating cash conversion was strong in the year at 134% (2023: 169%) given tight working capital management and Studios' ability to secure cash flow financing from commissioners.

The Group's RCF that was in place throughout the year was due to mature in early March 2026 and was refinanced over Q4 2024 with a new facility agreed and in place from mid-February 2025.  The new facility is a £70m RCF with £20m accordion (uncommitted), for a term of at least 3 years (two 1-year extension options are available).  The key financial covenants of leverage (the ratio of net debt to EBITDA) and interest cover, which must be less than 3 times and more than 4 times respectively, are the same as the previous facility.  Interest will be payable under the new facility at a flat margin over SONIA, regardless of the leverage of the Group.

At the end of the year, the Group's leverage (excluding amounts drawn under non-recourse production facilities) was 1.1 times and interest cover was 8.5 times, both metrics well within the covenant limits.

The IAS 19 accounting deficit of the Group's defined benefit pension schemes fell during the year to £48.3m at 31 December 2024 (2023: £54.8m). The decrease in the liability is primarily driven by an increase in discount rate due to an increase in corporate bond yields and reflecting the updated triennial valuation results. In October 2024, the Group announced that it had agreed the December 2023 funding triennial valuation with the trustees, on a basis that saw the Group pay slightly lower total contributions going forward, a pause in the contingent cash payments until at least 2028, and the recovery plan period held at October 2030.

OPERATIONAL HIGHLIGHTS

STV STUDIOS

2024 was a good year for our Studios division against a very challenging market backdrop. We delivered creative and commercial momentum, with our family of production labels winning 51 new commissions or recommissions in the UK and internationally. The business has scaled rapidly and profitably over the last few years and is moving ever closer to its objective of becoming the UK's number 1 nations and regions producer - currently holding the number 2 spot on our estimates.

Our strategy of acquiring stakes in high potential production companies continues to deliver for the business. In H1, STV Studios increased its stakes in Northern Ireland based drama producers, Two Cities Television (moving to a majority of 51%), and unscripted specialists, Tuesday's Child and Crackit Productions (both already majority holdings). We also increased to majority stakes in Glasgow-based Hello Halo Productions, and Rumpus Media.

New commissions included our first series for Netflix, The Witness by STV Studios Drama. In Unscripted, Brighton-based Hello Mary won a two-part reality special for E4, My Big Fat Geordie Wedding which aired in the autumn, and Hello Halo was commissioned by Channel 4 to produce a brand new high stakes knitting competition, The Game of Wool. Crackit TV announced a three-part documentary series for Channel 5, Prime Suspect: Hunting the Predators as well as a 10 x 60-minute format for Channel 4, Crime Scene Cleaners.

Returning series commissions include a second series of crime thriller, Criminal Record for AppleTV+ and a third and fourth series of Blue Lights. Warner Bros Discovery UK & Ireland ordered a further 40 episodes of The Yorkshire Auction House franchise, ITV ordered a second series of The Fortune Hotel, and the BBC ordered a third series of The Travelling Auctioneers, a 29^th series of Antiques Road Trip and a 13^th series of Celebrity Antiques Road Trip.

We now have over 4,500 hours of programming in our distribution portfolio, delivering a valuable income stream for the business. Highlights for 2024 include LEGO Masters which continues to travel the world with exciting new spin off Out of The Box coming to the Netherlands, Finland and Poland; a Spanish version of The Hit List for TV Canaria; and a major deal with Sony's Game Show Network for a US version of Bridge of Lies, which saw us co-produce 100 episodes in Los Angeles.

At the end of February 2025, our forward order book was healthy at £76m, lower than earlier in the year as scripted programmes have been delivered.  The rate of commission wins is slower in the current market than previously, but our labels continue to win and have momentum to carry forward.

DIGITAL

STV Player's strong content offering makes it a digital destination for viewers in Scotland and across the UK. A catalogue of high-quality network shows, original drama box sets, attractive acquisitions from across the world, and popular archive material, ensures we provide a rich and varied selection of on-demand shows. We have built strong connections with our audience through our content alongside a continuously improving user experience and wide availability across all major platforms.

STV Player continues its growth trajectory, with key events like the Euros delivering record streaming numbers to the platform, and new titles driving audiences. In 2024, we expanded distribution on four new live platforms further supporting the migration of viewers from linear to digital and ensuring mass availability of our service. We saw a significant boost in live viewing at c.20m hours, up 18% compared with 2023.

The UEFA Euro 2024 tournament delivered record breaking streaming numbers for the business, becoming STV Player's most-watched sporting event ever, up 61% compared with Euro 2020, and achieving 2.3m total viewing hours across the tournament. The semi-final between the Netherlands and England broke streaming records for a single match, generating 617k streams across the game. The Euros also delivered a new record month for live viewing in June 2024, at 2.8m hours.

Other key highlights from the network schedule delivering more than 1m hours of online viewing each include premium network dramas Mr Bates and the Post Office, After the Flood, Red Eye, and series two of Trigger Point; as well as the latest series of I'm A Celebrity… Get Me Out of Here!, which was streamed 4.8m times including 1.5m live streams, the latter up 40% year on year, suggesting this remains appointment to view television for many on both linear and digital.

Testament to the success of our digital acquisition strategy, third-party content comprised 36% of Video on Demand hours in 2024, with three of these titles featuring in the 2024 top ten most watched. These include soap Brookside (which has delivered over 8.8m hours of viewing since launch so far and helped us engage more viewers outside Scotland), Irish police procedural Red Rock, and US legal drama Betrayal, the latter part of a package of high-end scripted titles licensed from Disney.

We are now two years into our commercial partnership with ITV, who are our exclusive agent for all national VOD and simulcast advertising inventory on STV Player, allowing STV to benefit from ITV's scale in the UK market. 2024 was the first year in which commission became payable to ITV on our national VOD sales and so this had an impact on financial performance. Total sales (before commission) were £21.8m, up 8% on the prior year, with the revenues including commission of £19.5m, down 4% on the prior year.  VOD revenue (before commission) grew by 9% year on year. This year 1 impact of commission lowered the profitability of the division, which generated adjusted operating profit of £8.4m 2024 (2023: £9.9m).  With commission now reflected in the baseline, we expect the division to return to revenue and profit growth in FY25.

In Q1 2025, we announced an exciting new partnership with Premier Sports through which we offer viewers an exclusive and competitively priced package of Scottish, UK and international sports plus ad-free access to the full STV Player programme library, making this a highly competitive deal driving viewers directly to our platform.

BROADCAST

STV is the dominant commercial channel in Scotland, with 18 of the top 20 shows on commercial channels airing on STV. It also has a higher average audience across the day than Netflix, Prime, Disney+, Apple TV or YouTube in Scotland. This success is largely down to a strong connection with our viewers and our high-quality content offering across all genres.

STV viewers watch the channel for an average of 1 hour 42 minutes per day (1 hour 47 minutes in 2023), longer than any other Public Service Broadcaster in Scotland and higher than the UK average. 'Event' television - shows that bring the nation together - and valued public service broadcasting are key to this, and there are strong examples of this throughout 2024.

Across the year, STV aired the best-watched quiz show (The 1% Club), drama (Mr Bates vs The Post Office), and soap (Coronation Street) across all channels in Scotland.

The opening match of the UEFA Euros 2024 between Germany and Scotland gave the channel its best watched programme in 2024, peaking at 1.38m viewers. The overall reach of the tournament on STV was 3.1m, with a 48% viewing share across our matches, tracking 3 share points higher than the ITV network. The tournament also helped drive audience growth across harder-to-reach commercial audiences with ABC1 men and ABC1 U45's showing growth of +18% and +9% respectively (H1 2024 v H1 2023).

Top ten shows of the year included four-part series Mr Bates v the Post Office, which was STV's biggest new drama since 2021 and the most watched drama across all channels (including pre-TX viewing, linear launch and 28 day catch up) in Scotland in 2024. It had a considerable societal impact, further emphasising the importance and potential of well-funded public service media.  Other top ten shows included the 13^th series of crime drama Vera, flight thriller Red Eye, and true crime drama Until I Kill You. I'm A Celebrity… Get Me Out Of Here! won every 9pm time slot and ranked as STV's third most-watched programme of the year.

Our flagship programme, STV News at Six, is the most-watched news programme in Scotland for the 6^th year running, with an average audience of 324k and a 30% share. Looking ahead to 2025, we will make significant investment in technology and in our Glasgow and Aberdeen live studios, relaunching the programmes with an exciting new look in the first half of the year. STV News is available on 13 online platforms including TikTok, Instagram, Facebook, WhatsApp, Apple News, YouTube and Google.

STV has unrivalled reach across commercial television in Scotland and delivers mass impact, reaching 70% of Scots per month. The STV Growth Fund makes advertising affordable and accessible for SMEs in Scotland and means that local brands are seen in ad breaks with the same prominence as national brands. Since launch in 2018, the STV Growth Fund has provided over £35m funding to Scottish SMEs, with 54% of growth fund members in 2024 being existing members from 2023.  We also continue to support sustainable and diverse businesses in their TV marketing journey via our Green and Inclusion Funds.

The financial performance of the division in 2024 benefitted from the Euros-driven advertising growth year on year, with both national and regional linear advertising growing by 4%. Total Broadcast revenues were £84.4m for the year (2023: £81.4m) with the operating leverage of the division, combined with tight cost control that broadly offset inflationary cost increases, returning an operating profit of £10.9m (2023: £9.8m).

REGULATORY

In 2024, we were pleased to renew STV's Channel 3 licences for a further 10 years to 2034, securing the provision of Public Service Broadcasting (PSB) in the north and central regions of Scotland.

The UK Government Media Act was also enshrined in law, guaranteeing prominence for STV Player on all major digital platforms, ensuring our PSB content is easy for viewers to find. Going forward, it is important that Ofcom, which is now consulting on the implementation of the Act through 2025, has the power to ensure this requirement is duly enforced.

New statutory restrictions on advertising and sponsorship for 'Less Healthy' food and drink products that are high in fat, salt or sugar (HFSS) will apply to broadcast and on demand programme services from 1 October 2025. Alongside a number of other media companies, we have concerns that the legislation will have a negative impact on investment and growth for our sector and are engaging with the UK Government on this as a matter of urgency.

Consolidated income statement

Year ended 31 December 2024

A reconciliation of the statutory results to the adjusted results is included at note 6. The above consolidated income statement should be read in conjunction with the accompanying notes.

Consolidated statement of comprehensive income

Year ended 31 December 2024

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

Consolidated balance sheet

At 31 December 2024

The above consolidated balance sheet should be read in conjunction with the accompanying notes.