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ITV litigation chips into STV

ITV litigation settlements have chipped into what would have been solid profit growth at STV
February 24, 2012

Scottish TV broadcaster STV slumped to a reported loss last year after paying £18m to settle a dispute with ITV. However, strip out exceptional charges of £14.9m and adjusted pre-tax profits rose 12 per cent to £14m, helped by a repositioning of the business to drive non-broadcast revenues.

IC TIP: Buy at 108p

Chief executive Rob Woodward notes the business is successfully driving up digital revenues, which increased 69 per cent to £7.1m last year, reflecting a growing online audience and, more importantly, STV being able to monitise it. This growth partially offset contractions in national and regional airtime revenues, although revenue in the consumer segment still declined by 3 per cent to £93.6m.

Production revenues also suffered, falling 14 per cent to £8.4m, as a result of the loss of the contract to produce Taggart. However, Mr Woodward says the unit is "in the midst of being reinvented" into a multi-genre production outfit and expects an improved performance next year. This is underpinned by shows like Antiques Roadshow, which has secured a two-year deal with the BBC.

Peel Hunt is expecting 2012 adjusted pre-tax profits of £15.6m and EPS of 42.3p (£14m and 36.3p in 2011).

STV GROUP (STVG)

ORD PRICE:108pMARKET VALUE:£42.0m
TOUCH:107-109p12-MONTH HIGH:184pLOW: 76.25p
DIVIDEND YIELD:nilPE RATIO:67
NET ASSET VALUE:*NET DEBT:£54.5m

Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2007120-22.7-120.0nil
20081114.93.6nil
2009906.112.3nil
20101053.914.6nil
2011102-0.91.6nil
% change-3---

*Negative shareholders fund of £29.7m