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The disposal of Virgin Radio in mid-2008 clouds comparisons at Scottish TV broadcaster STV, but on a like-for-like basis revenues declined 17 per cent last year due to the advertising downturn which led to broadcast income falling 13 per cent to £77.8m. Operating profit on continuing operations fell from £13m to £9m with both national and regional airtime revenues suffering double digit declines.
Advertising
However, there have been some more encouraging trends since the year-end with the broadcaster performing ahead of the market in the first quarter of 2010. In fact, STV reports 13 per cent average growth in national airtime revenues against 5 per cent growth in the market. And the company's STV Player is proving a big success since it was launched last year, attracting 1.5m unique users in the final quarter and STV is targeting 1.7m unique users by the end of this year. There was also positive news on its non-core loss-making Pearl & Dean cinema business which has seen first quarter sales rise 12 per cent year-on-year.
Analyst Steve Liechti of Investec Securities is expecting 2010 pre-tax profits of £7.4m and EPS of 15.8p (2009: £5.5m/13.7p), placing the shares on a prospective PE ratio of 3. However, it's worth noting that STV is carrying almost £50m of borrowings, almost three times its market value.
STV GROUP (STVG) |
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|---|---|---|---|---|
| ORD PRICE: | 51p | MARKET VALUE: | £ 18.7m | |
| TOUCH: | 50.25-51.25p | 12-MONTH HIGH: | 107p | LOW: 39.75p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 4 | |
| NET ASSET VALUE: | * | NET DEBT: | £49.4m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p)** | Dividend per share (p)** |
|---|---|---|---|---|
| 2005 | 159 | 17.4 | 84.0 | 58.0 |
| 2006 | 126 | -1.7 | 8.0 | 24.0 |
| 2007 | 120 | -22.7 | -119.5 | nil |
| 2008 | 111 | 4.9 | 3.6 | nil |
| 2009 | 90 | 6.1 | 12.3 | nil |
| % change | -19 | +24 | +242 | - |
*Negative shareholders funds of £31.9m ** adjusted for 20-for-one share consolidation in 2008 |
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Guide to the terms used in IC results tables.
More analysis of company results
More articles and share data on STV
STV and ITV remained embroiled in legal challenges over new media rights and airtime ad-share agreements, and this clouds the operational progress the company has been making. The shares are worth keeping an eye on, but until these issues are sorted a rerating is not on the cards. Fairly priced.
The last IC view on STV was high enough, 210p, 4 April 2008
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