Scottish TV broadcaster and producer STV is delivering on many of the strategic goals it has set itself but, as suggested by the miserly valuation attributed to its shares, the balance sheet remains a major concern.
During the first half the company won a number of commissions to make new TV programmes, but perhaps most encouraging was a peak-time drama with ITV for an adaptation of The Poison Tree. The contract win, along with STV's recent attainment of Channel 3 Network Affiliate status, suggests there isn't any bad blood from its long-term dispute with ITV, which cost it £18m to settle - the majority of which has now been paid.
Production wins along with strong growth in digital media is helping the business move towards its goal of generating a third of sales from non-broadcast activities by 2015 and these revenues increased by 13 per in the first half. Meanwhile, the outlook for TV advertising is broadly stable, although broker Peel Hunt trimmed its full-year adjusted EPS forecast by 6 per cent to 36p (38p in 2011) due to the advertising outlook. Moreover, despite a 3 per cent fall in net debt over the last year and January's refinancing, the financial situation still looks precarious. The £23m pension deficit adds to concerns although the business is making progress in a direction that could ultimately allay these worries.
| STV (STVG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 88p | MARKET VALUE: | £34m | |
| TOUCH: | 86-90p | 12-MONTH HIGH: | 121p | LOW: 74p |
| DIVIDEND YIELD: | nil | PE RATIO: | 1 | |
| NET ASSET VALUE: | * | NET DEBT: | £55.9m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 47.2 | -6.50 | -17.7 | nil |
| 2012 | 47.6 | 2.10 | 5.3 | nil |
| % change | +1 | - | - | - |
*Negative shareholders' funds | ||||
