STV Group (STVG) H2 2023 earnings summary

Executive summary

• FY23 revenue rose 22% to £168.4m, with Studios and Digital growth more than offsetting lower linear advertising revenue.

• Adjusted operating profit was £20.1m, down 22% YoY, reflecting advertising declines and cost inflation; 75% came from outside broadcasting, ahead of the 50% target.

• Studios and Digital revenue exceeded 50% of Group revenue for the first time; diversification targets were achieved or exceeded apart from controlled broadcast revenue.

• Stronger advertising trends, an expanded Studios order book and a new three-year growth plan support the outlook.

Financial highlights

• Total revenue £168.4m, +22% YoY; excluding Greenbird, revenue grew 11% despite a difficult linear advertising market.

• Total advertising revenue fell 12% to £97.3m; national advertising declined 16% and regional advertising 9%.

• Adjusted operating profit £20.1m, down 22%; adjusted operating margin 11.9%, down 6.8 percentage points YoY.

• Statutory operating profit was £6.4m versus £17.0m in 2022; adjusted EPS was 28.2p, down 33% YoY.

• Targeted cost savings of £2.5m were achieved, offsetting around half of 2023 inflationary cost increases.

Outlook and guidance

• Q1 2024 total advertising revenue expected to rise around 5% before commission; including commission, expected growth is around 2%.

• Q1 VOD advertising expected to grow around 12%; national linear advertising expected up around 2%, while Scottish regional advertising is forecast down around 4%.

• By 2026, Studios revenue target is £140m with a 10% margin; Digital revenue target is £30m with a margin of at least 40%.

• Three-year targets include international revenue of at least 15% of Group and 25% of Studios revenue, plus a further £5m annual cost saving by 2026.

• Studios secured revenue was £87m at March 2024, over £30m ahead of a year earlier; £1.5m of savings identified for 2024.