Rob Woodward may have presented his last set of results as chief executive of STV (STVG) with an air of confidence – which is mirrored by a 25 per cent hike in the dividend – but the numbers tell a different story. Weakness in the UK’s TV advertising market has left the Scottish broadcaster nursing a 10 per cent fall in advertising revenue, a decline which is expected to continue until at least the end of September.
That negative outlook is not surprising given the difficulties recently reported by ITV, which sells all of the advertising space on STV’s main channel. Even so, broker Numis has trimmed its revenue forecasts for both the current financial year and next. However, pre-tax profit and EPS in the year to December 2017 are expected to be flat at £18.5m and 39p, respectively.
Outside of the core broadcasting operations, the outlook is slightly brighter. In April, STV launched its second channel which is already attracting over 900,000 monthly viewers. Since its launch, advertising revenue on the channel – which STV sells itself – has risen fourfold. Revenue at the production arm is also expected to tick up in the second half after four new commissions from the BBC in the reported period. Meanwhile, demand for online ads sent group digital revenue up 14 per cent to £4m.
| STV (STVG) | ||||
| ORD PRICE: | 380p | MARKET VALUE: | £150m | |
| TOUCH: | 380-385p | 12-MONTH HIGH: | 440p | LOW: 348p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 14 | |
| NET ASSET VALUE: | * | NET DEBT: | £34m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 56.2 | 10.2 | 21.2 | 4.0 |
| 2017 | 54.6 | 7.5 | 16.2 | 5.0 |
| % change | -3 | -26 | -24 | +25 |
| Ex-div: | 28 Sep | |||
| Payment: | 27 Oct | |||
| *Negative shareholders' funds | ||||
