David Shearer Senior Independent Non-Executive Director
Strategic progress and strong results Recommendation for 10 year licence renewal New affiliate arrangements and Channel 3 working relationship performing effectively Strong financial performance Net debt reduced Strong progress towards strategic aims Increasing reach of STV services
George Watt Chief Financial Officer
Financial results pre exceptionals 102.7m 102.0m +1% EBITDA 19.5m 17.3m +13% Operating profit 17.1m 15.0m +14% Interest Cost 2.7m 1.0m +170% Pre-tax profit 14.4m 14.0m +3% 32.5p 38.0p -14% 15% 0% 32.5p 32.3p +1% 45.3m 54.5m -17% Turnover EPS Tax Rate EPS equivalent tax rate Net Debt
Turnover STV continuing m Consumer - National Airtime 67.4 67.9-1% - Regional Airtime 13.1 12.9 +2% - growth* 3.5 1.9 +84% - ex growth* 3.0 5.2-42% - Sponsorship 3.8 3.8 - - Other 1.7 1.9-11% 92.5 93.6-1% 10.2 8.4 +21% 102.7 102.0 +1% - Digital Productions Total *Growth areas include VoD, classified, local and transactional revenues. Ex growth areas are PRTS and music income
Operating profit pre-exceptionals Operating profit Consumer Productions Total Operating margins m m 16.9 14.5 18.3% 15.5% 0.2 0.5 1.9% 6.0% 17.1 15.0 16.6% 14.7%
Digital Profit and Loss Account Growth Areas m Turnover Costs Operating Profit Margin % > > > > Growth areas 3.5 1.9 (2.7) 0.8 23% Non Growth Areas 84% 3.0 5.2 (3.4) -21% (2.1) (1.5) n/a 0.9 Total -42% 6.5 7.1 (2.5) -16% (4.8) 2.7-67% 1.7 30% VOD display Ex growth areas Local Transactional Classified Strong performance in growth areas Ex growth areas revenues now stabilising Investment in STV Local continues 26% Music income PRTS -8% (5.9) -19% 1.2 42%
Exceptional items m - 4.0 1.2 9.5-1.4 1.2 14.9 Non cash new ITV arrangements stock impact 4.1 - Pre Tax total 5.3 14.9 - (1.5) 5.3 13.4 Cash litigation costs settlement impact cost of change Tax Post Tax total
Cashflow m Operating Profit Non-cash Items EBITDA Working Capital Movements Capex Operating Cashflow Litigation settlement & costs Cost of change Pension deficit payments Interest paid Primesight Loan note receipt Cinema 17.1 2.4 19.5 2.0 (1.0) 20.5 (9.2) (1.2) (4.3) (1.6) 5.0 9.2 45.3 15.0 2.3 17.3 0.5 (1.6) 16.2 (11.2) (1.8) (4.2) (2.8) 1.5 (2.3) 54.4 120% 108% Net Debt Operating profit conversion Key covenant ratios Actual Covenant 2013 full year covenant - Net Debt: EBITDA (max) 2.30x 3.25x 2.50x - Interest Cover (min) 6.00x 4.00x 4.00x 62.5m Bank facility to 31/12/14, extendable to 31/03/16, amortising by 5.0m at 31/12/13
Pensions - Overview m Dec June Dec Liabilities 303 297 295 Assets 280 267 264 Deficit - gross 23 30 31 - net 18 23 23 Discount Rate Inflation December 4.35% 3.1% June 4.85% 2.8% December 4.95% 3.3% > > > Pension deficit payment due under existing valuation of 4.2m was paid in January 2013 Actuarial valuation as at 1 January is underway IAS19R impact - 1.3m credit on existing basis - 1.5m debit on restated basis - 2013 1.1m debit estimated
Consumer KPIs 1. Peak time audience v ITV Network aim to exceed in all years Actual Actual 2. EXCEEDED +1.30pts +0.85 pts Consumer division margin (%) EXCEEDED 18.3 15.5 15.5 17.0 16.5 16.0 14.1 10.1 2009 3. 2010 2013 2014 Consumer insights million 2015 2.4 1.8 1.2 0.7 0.5 0.3 2013 2014 2015 NOT MET 55% growth on prior year
Consumer KPIs 4. Monthly unique users (Q4 ave) million 3.0 3.2 3.3 3.5 3.6 3.7 NOT MET 7% growth on prior year 2.2 1.3 2009 5. 2010 2013 2014 2015 Monthly page impressions (Q4 ave) million 24.0 20.4 20.0 EXCEEDED 25.5 22.0 17.0 11.0 4.8 2009 6. 2010 2013 2014 2015 Monthly video streams (Q4 ave) million 5.0 4.4 3.8 2.9 3.1 3.3 2.0 0.7 2009 2010 2013 2014 2015 NOT MET 7% growth on prior year
Consumer KPIs 7. Digital revenue ( m) 17.0 14.1 11.3 NOT MET increased by 84% on prior year in growth categories 9.1 7.1 6.5 4.2 2.8 2009 8. 2010 2013 Digital margin 2014 35 26 2015 35 25 20 17 16 nil 2009 2010 2013 2014 2015 EXCEEDED
Production KPIs 9. Grow produced hours EXCEEDED 170 160 150 141 140 113 121 90 2009 10. 2010 2013 2014 2015 Production revenues 22.0 18.0 15.0 NOT MET 21% growth on prior year 12.0 9.8 8.1 2009 11. 2010 10.2 8.4 2013 2014 2015 Productions margin exceed 10% minimum in all years Actual 2% Actual 6% NOT MET
Rob Woodward Chief Executive Officer
A strategy for growth and value creation Building engagement with consumers Connecting Scotland s communities Driven by content and creativity
Building engagement with consumers STV on air Recommendation for licence renewal to 2024 Reach 94% of Scotland each month Affiliate status secures network content plus additional Scottish content Peak time share in excess of Network for 4th consecutive year Average peak time audience is more than treble Channel 4 and four times more than Channel 5
Building engagement with consumers STV Anywhere Anytime 3.2m unique users per month equivalent to 75% of on air audience Mobile first strategy 56% of visits from mobile devices Digital growth revenues up 84% in and expected 35% uplift in Q1 2013 Digital operating profit up 42% year on year
Building engagement with consumers STV Local Local products being redefined for launch in late Q2 2013 Mobile first approach Future focus on Metro areas Metro model is attractive to advertisers with conversion to other STV platforms
Building engagement with consumers Local TV licences Will serve 50% + of Scottish population Commercially sustainable based on an annual cost of c 1m Provides new platform to further enhance consumer experience Partnership with leading Scottish universities
Building engagement with consumers STV has Scotland covered
Connecting Scotland s communities through public service content Operating costs reduced by 40% over 2 years and news ratings reach 10-year record high Investment in technology and new programming Integrated cross platform news service
Connecting Scotland s communities Eyes of world on Scotland in 2014 Referendum provides opportunity to engage new and wider audience Cross platform content strategy places STV at the heart of the debate
Connecting advertisers with Scotland s communities Enabling brands to reach target markets Innovative advertising and brand promotion solutions across platforms Bank of Scotland campaign: > Ad funded programme > One minute short form programmes > Digital and mobile adverts > Researched through Scotpulse
Driven by content and creativity
Content and creativity Increase in produced hours and revenues up 21% on year Delivered series for and BBC1, BBC2 and ITV2 Growth across all genres Fake Reaction - 8 episodes for ITV2 TX: January & February 2013
Country Show Cook Off - 20 episodes for BBC2 Content and creativity TX: March - April 2013 Recent series commissions announced: Country Show Cook Off Celebrity Antiques Road Trip Jo Brand s Great Wall of Comedy Catchphrase Strong pipeline: 70% of 2013 produced hours target now commissioned
Series commission for ITV1
Our strategic aims By 2015: Grow non-broadcast earnings to represent 33% of Group earnings: To double STV Productions revenues Be the most used digital service in Scotland Launch two new market-leading digital consumer propositions Maintain our position as the voice of Scotland
Strong positive momentum, underlying risks addressed, ambitious plan for sustainable growth Strong track record of delivery Growth in digital and productions businesses Clear path to create shareholder value A PROFITABLE GROWTH COMPANY