STV : Annual Report and Accounts 2022

Annual Report and Accounts 2022

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Contents

Overview

01 2022 financial highlights

02 Introducing STV

03 STV strategy, targets and progress to date

Strategic Report

04 Chairman's statement

06 Chief Executive's report

08 The STV investor proposition

10 STV business model

12 Engaging with our stakeholders

(S.172 statement)

14 Operating review: Broadcast

20 Operating review: Digital

24 Operating review: Studios

30 Finance review

34 Risk management

42 Taskforce on Climate-related Financial Disclosure (TCFD) report

46 Non-financial information statement

47 Social impact

Governance

55 Introduction to governance

56 Board of Directors

59 STV Management Board

60 Corporate governance report

67 Governance Committee reports

72 Remuneration report

88 Directors' report

Financial Statements

91 Independent auditors' report to the members of STV Group plc

97 Consolidated income statement

97 Consolidated statement of comprehensive income

98 Consolidated and parent company balance sheets

99 Consolidated and parent company statements of changes in equity

100 Consolidated and parent company statements of cash flows

101 Notes to the financial statements

124 Five year summary

Additional Info

125 Corporate advisers

126 Shareholder services

STV Annual Report and Accounts 2022 01

2022 financial highlights

Strong financial performance despite macroeconomic uncertainty

Revenue		Total advertising revenue
£137.8m		£110.0m
2021	£144.5m	2021	£112.6m
Adjusted operating profit1		Adjusted operating margin1
£25.8m		18.7%
2021	£25.2m	2021	17.5%
Profit before tax		Adjusted EPS2
£22.2m		42.3p
2021	£20.1m	2021	45.6p
Dividend per share		Non-broadcast profit (%)1
11.3p		38%
2021	11.0p	2021	36%

1

Before exceptional items and inclusive of High-End Television tax credits

(2021 only) (note 27).

2

Before exceptional items and IAS 19 finance costs (note 9).

Throughout this Annual Report, where we state record financial performance, it is made by reference to 2010 when the final disposal was made and the Group as we know it today remained.

Overview

Strategic Report

Governance

Financial Statements

Additional Info

02 STV Annual Report and Accounts 2022

Introducing STV

Scotland's home of news, entertainment and drama

Broadcast

Our broadcast channel, STV, is accessible free-to-air on all the main TV platforms in Scotland and reaches 3 million adults each month.

STV Group plc serves audiences with quality content on air, online and on demand.

The business is organised into three dynamic operating divisions, all supported by a central enabling function.

Our Broadcast division runs commercial Public Service Broadcaster, STV, which operates the Channel 3 licences across central and north Scotland. STV brings viewers a strong network schedule of programming alongside our own locally produced news, current affairs and factual entertainment programming.

STV is the most-watched peak time channel in Scotland and is home to some of the most popular shows on television, including iconic soaps Coronation Street and Emmerdale; entertainment hits The Masked Singer and I'm a Celebrity… Get Me Out of Here!; gripping 9pm dramas; and a wide-ranging selection of home-grown productions. Flagship news programme STV News at Six is the most watched news programme in Scotland.

STV is advertiser funded and our reach as a marketing platform is unrivalled in our home market. National sales of linear spot and sponsorship, and VOD advertising on STV Player, are managed by our national sales agent, ITV, and our Scottish clients are serviced by our dedicated Scotland sales team. We offer a 'one stop shop' to regional clients, helping them with advert creation and design, campaign structure, and post campaign research.

Digital

STV's rapidly growing, free streaming service, STV Player is available across the UK on all major platforms, and features an ever-expanding library of premium content.

Studios

The Group's award-winning production business, STV Studios, is Scotland's

biggest production company, creating and producing world class content for a range of UK and international broadcast networks and streamers.

STV Player gives viewers in Scotland the opportunity to watch STV shows on their terms, live or on demand. The service offers viewers an extensive catalogue of content from the UK and around the world, including 167 must-watch drama box sets such as dystopian drama, The Commons, Irish crime thriller, Blood, and Australian family drama, McLeod's Daughters; a wide range of factual entertainment shows and popular archive material, like Taggart. Much of this rich library of owned and acquired content is not available to stream on any other platform in the UK.

STV Player is now pre-installed in three quarters of the UK's connected TV homes and is available on all major platforms, including Sky Q, NOW, Virgin Media, Amazon Fire TV, Freesat, Youview and Freeview Play.

Viewers can upgrade to STV Player+, a subscription service which offers the opportunity to watch Player content advert-free and download shows for offline viewing.

STV Studios has an impressive track-record across genres, with commissions for broadcasters and streamers such as BBC One and Two, ITV, Channel 4, Channel 5, Discovery+, AppleTV+, Really and Sky.

STV Studios is a family of nine creative labels. Our in-house labels are STV Drama, STV Entertainment and STV Factual. We own a majority stake in award-winning unscripted producer, Primal Media, and a minority stake in Northern Ireland based drama producer, Two Cities Television. We own the younger-skewing entertainment label, Barefaced TV, who's first major commission was with global streamer, Discovery+, for Written in the Stars; and we have a co-production agreement with scripted specialists, Tod Productions, with whom we are co-producing a major drama for AppleTV+. Our most recent additions are unscripted producers Hello Mary, who are based in Brighton and joined in 2021 and Mighty Productions based in Glasgow and London who joined in 2022.

STV Studios continues to be on a promising growth trajectory, delivering a record-breaking 30 programme commissions in 2022, with a strong pipeline for future production.

2022 saw us showcase and produce a diverse range of series and new commissions, with big names and broad appeal, both on our own linear and digital channels and for other UK networks.

Brilliant content drives big audiences, and we have both in spades - with so much more to come.