Last checked at 26 Jun 2009 07:00
26 June 2009
STV Group plc Pre-close Trading Update
Ahead of publication of its interim results on 27 August 2009 and entering a close period, STV Group plc is issuing the following trading update.
The national advertising market continues to be challenging, however, we are encouraged by regional advertising revenues which have improved significantly since the first Quarter and are in line with expectations at -12% for the second quarter and -19% for the first half. This compares with the ITV Network performance of -19% in both Q2 and H1, with STV's national revenues broadly in line with this performance. Despite the challenging market, we continue to grow our share of the Scottish market in line with our growth KPI targets. We remain focused on delivering cost efficiencies throughout the business to help mitigate the effects of the economic downturn and maintain our focus on growth opportunities. Our strategy of increased peak time programme opt-outs from the ITV network schedule is simultaneously delivering further savings whilst at the same time boosting our Scottish audience.
As we continue to expand our content business, targeting a range of broadcasters for future commissions, we are delighted that STV Productions has won its first ever series commission from the BBC. The BBC has commissioned STV Productions to produce a 20-part daytime series for early peak time on BBC Two, entitled Antiques Road Trip, and production is already underway.
We are delighted to be working with the Corporation, especially following our recent announcement confirming our wide ranging partnership agreement with the BBC, which will see us potentially sharing facilities, training, pictures, technology and archive programmes.
We are currently awaiting confirmation of a Taggart commission for 2009. Given the strong performance of the show and the strong ROI it produces for the ITV Network we are confident about the future of the series.
Our website - www.stv.tv - has continued to develop in line with expectations and now has over 100,000 registered users. We have recently launched our dedicated city sites and by late summer we will have dedicated sites for all of Scotland's main towns and cities enabling us to participate in the local classified markets. Although only launched in February, stvjobs.com, our classified recruitment website, continues to build its position in the Scottish classified market.
We will provide a full update on our KPI progress at our interim results in August.
We are pleased to announce that we have renegotiated certain elements of our bank facility to increase covenant headroom. The new limits allow for the reduction in cinema earnings we are experiencing in the current trading environment and a potential £3.0m approximate reduction in earnings in the event that Taggart is not commissioned in 2009 and beyond. There will be an approximate 100bps increase in the average margin paid on the facility and an arrangement fee of 100bps. The £75m facility runs to 31 December 2012.
We are encouraged by the proposals contained within the Digital Britain report for future funding of regional news services and are delighted that Scotland will host one of three funded news pilot schemes commencing in 2010. We are also pleased that the Government has recommended that STV Productions be granted the same benefits as independent producers. The benefits of this will be complemented by the Government's recommendation that the BBC exceeds its 2012 Scottish commissioning target.
We note the placing into administration of Setanta's UK business. Our potential bad debt exposure is limited to £0.2m and we are engaged with various parties to identify future opportunities.
Rob Woodward, Chief Executive Officer of STV Group plc said: "STV continues to take control of its destiny and we have maintained positive momentum through 2009. We have secured a significant new commission from the BBC and have a healthy pipeline of other key projects in development. On screen we continue to take greater control of our own schedule, producing more home-grown programming and our online business continues to grow in line with expectations. Whilst we continue to operate in a very challenging economic climate, our efficiency improvements and cost reduction activities are helping to mitigate the worst effects of the economic downturn."
Enquiries:
STV Group plc
George Watt, Chief Financial Officer
Kirstin Stevenson, PR Manager 0141 300 3670
Brunswick Group
Simon Sporborg, Tom Batchelar 020 7404 5959