Slide 1: STV strategy delivers strong growth
STV strategy delivers strong growth STV Interim Results – 3 September 2024 The Fortune Hotel, Tuesday’s Child for ITV 1
Slide 2: Agenda
Agenda Introduction Paul Reynolds Overview Simon Pitts Finance review Lindsay Dixon Strategic update & outlook Simon Pitts Q&A 2
Slide 3: Strategy delivers strong growth
Strategy delivers strong growth Revenue and profit growth; successful Studios investment strategy continues • Total revenue +20% and adjusted operating profit +33% • Growth strategy continues to deliver: • Studios revenue +38% with improved forward order book of £101m • Digital pre-commission sales
Slide 4: Finance Review
Finance Review Lindsay Dixon 4
Slide 5: H1 2024 key financials
H1 2024 key financials Total National Regional Total Digital Advertising Advertising Advertising Revenue Revenue* Revenue* Revenue Revenue £90.4m £51.9m £34.1m £7.4m £11.5m 2023 +20% 2023 +13% 2023 +16% 2023 +1% 2023 +14% Adjusted Adjusted Studios Adjusted Net Operating Operating Revenue EPS Debt Pr
Slide 6: Group Results
H1 2024 H1 2023 Group Results £m £m Change Strong performance in tough markets Revenue - Broadcast 42.6 38.0 +12% - Digital 10.3 10.1 +2% - Studios 37.5 27.2 +38% • Revenue includes six months from the 90.4 75.3 +20% Greenbird entities and a first contribution Adjusted operating profit* 10.6 8.0 +33
Slide 7: Total Advertising Revenue
Total Advertising Revenue Growth across all advertising revenue streams as market improves, boosted by Euro 2024 Total advertising revenue 2024 v 2023 Jan-22 to Jun-24 Q1 Q2 H1 £15.0m National +3% +30% +16% £12.0m Regional -4% +6% +1% £9.0m VOD (before commission) +13% +11% +12% £6.0m TAR (before co
Slide 8: Advertising outlook
Advertising outlook Q3 TAR expected to be up, boosted by July; year on year performance over H2 will be impacted by tough comparators including RWC 23 Advertising revenue • National linear expected to grow in Q3 Quarterly trends Q1-23 to Q3-24 • Strong growth in July partially offset by £25.0m decli
Slide 9: Adjusted operating profit
Adjusted operating profit Positive contribution from growth areas and cost savings, in line with strategy 1.4 0.8 10.6 2.1 0.1 (1.2) (0.6) 8.0 9
Slide 10: STV 3-year cost savings programme on track
STV 3-year cost savings programme on track • Savings of £0.7m delivered in H1 across: • Greenbird integration • London property • In-sourcing post production; and • Reduced freelancer costs • On course to at least meet cost saving target of £1.5m for FY24 • Actions already being taken to secure savi
Slide 11: Studios
Studios Drama commissions in acquired companies drive YOY revenue growth H1 2024 H1 2023 £m £m Change • Key programme deliveries include Blue Lights S2 (BBC), The Fortune Hotel S1 Revenue 37.5 27.2 +38% (ITV), A&E After Dark S3 (C5), The Hit List S7 (BBC) and Goes Horribly Wrong S12 Operating costs
Slide 12: Acquisitions update
Acquisitions update Greenbird and Two Cities delivering in line with acquisition business cases GREENBIRD TWO CITIES £m £m Total cash payment 2023 21.9 Consideration paid previously (25% holding) 1.5 H1 2024 payments: Consideration payable to move to majority: - earnout 1 0.8 - Paid January 2024 1.7
Slide 13: Digital
Digital Strong revenue growth offsets impact of national sales commission; high margin maintained H1 2024 H1 2023 £m £m Change Revenue (gross) 11.5 10.1 +14% • VOD advertising revenue c.75% of net total Revenue (net) 10.3 10.1 +2% • VOD revenue (pre commission) +12% Operating costs (5.3) (5.1) +4% •
Slide 14: Broadcast
Broadcast Improved profitability as linear advertising revenues bounce back, and cost savings are delivered H1 2024 H1 2023 £m £m Change Revenue • Revenue growth across all major categories, - National advertising 34.1 29.5 +16% boosted by Euros - Regional advertising 7.4 7.3 +1% • Largest single op
Slide 15: Group's net debt now comprises core RCF and ring-fenced production financing
Group’s net debt now comprises core RCF and ring-fenced production financing Underlying operating cash conversion >100% in first half Non- Ring- recourse fenced Total RCF Prod fin Cash net debt At 1 January 2024 29.0 3.3 - 32.3 Production cash advances - - (9.7) (9.7) Net drawdown/(repayment) 7.2 (1
Slide 16: Pensions
Pensions Accounting deficit reduces by 17% over first half H1 2024 FY 2023 H1 2023 Assets (£m) 284.0 295.4 276.3 • Deficit reduction a result of increase to discount rate and contributions paid Liabilities (£m) (329.4) (350.2) (331.3) • Strong engagement between Company Deficit (£m) (45.4) (54.8) (5
Slide 17: Strategic update & outlook
Strategic update & outlook Simon Pitts 17
Slide 18: We have laid strong foundations for the next phase of STV's growth
We have laid strong foundations for the next phase of STV’s growth Reinvigorating the core business and building strong growth pillars 7 years in a row as Consistent Step-change in STV Studios now Scotland’s biggest outperformance in streaming one of the UK’s peaktime channel, Scottish capability th
Slide 19: Phase 2 of STV's transformation is about accelerating growth
Phase 2 of STV’s transformation is about accelerating growth Our new strategic objectives reflect our evolving business model 1. CONTENT 2. AUDIENCE 3. MONETISATION Accelerate UK & Drive streaming Maintain advertising international growth and maximise leadership and grow Studios growth total STV vie
Slide 20: Early days but on track to hit our stretching new financial targets
Early days but on track to hit our stretching new financial targets By 2026: an even more balanced, profitable and internationally-focused business • We will double Studios revenues to £140m with a ON STUDIOS target to achieve a 10% margin ✓ TRACK • We will grow our digital revenues to £30m at a ON
Slide 21: Good progress against our new KPIs aligned to the strategy
Good progress against our new KPIs aligned to the strategy CONTENT AUDIENCE MONETISATION H1 2026 ON 2026 ON H1 2026 ON KPI KPI H1 2024 KPI 2024 TARGET TRACK? TARGET TRACK? 2024 TARGET TRACK? Commercial # Stay audience No. 1 % of large returning 34 45 No.1 share commercial series 99% 90%+ audiences S
Slide 22: We continue to see huge growth potential for STV Studios
CONTENT We continue to see huge growth potential for STV Studios We have a growing reputation in the key market segments RETURNABLE PREMIUM UNSCRIPTED & INTERNATIONAL SCRIPTED FORMATS A world class producer for the biggest networks and global streamers STV VISION The UK’s #1 nations & regions produc
Slide 23: Our latest Studios investment is immediately earnings-enhancing
CONTENT Our latest Studios investment is immediately earnings-enhancing We have taken a majority stake in award-winning unscripted producer Hello Halo • STV Studios stake in Glasgow-based Hello Halo increased from 30% to 51% • Successful formats creator, run by Wendy Rattray, focused on factual, chi
Slide 24: We have reviewed our creative labels to focus on those with the highest potential
CONTENT We have reviewed our creative labels to focus on those with the highest potential Stakes increased in 5 labels in last 6 months, with 4 others exited ORIGINAL MAJORITY- STAKES REMAINING LABELS OWNED LABELS INCREASED MINORITIES EXITED (51%) (63%) (100%) (99%) * (51%) *Profit-sharing agreement
Slide 25: We continue to secure high value series commissions and recommissions
CONTENT We continue to secure high value series commissions and recommissions 36 new commissions in 2024, showing benefits of scale in a challenging market DRAMA ENTERTAINMENT FACT ENT Mortimer & Whitehouse Criminal Record 2 The Fortune Hotel 2 Gone Fishing 8 The Yorkshire Amadeus Bridge of Lies Auc
Slide 26: Our Studios forward order book has strengthened significantly so far in 2024
CONTENT Our Studios forward order book has strengthened significantly so far in 2024 We have added a further £34m of commissions since June, with £19m of deliveries Secured future Studios revenue Sep-24 £101m Jun-24 £86m Mar-24 £87m Mar-23 £53m Mar-22 £27m Mar-21 £26m Mar-20 £9m 0 20 40 60 80 100 12
Slide 27: Broadcasters & BVODs still dominate TV video viewing
AUDIENCE Broadcasters & BVODs still dominate TV video viewing Key broadcast players like STV expected to retain scale for the long term 66% of all TV set viewing still to Broadcasters forecast to remain broadcasters in H1 2024 (+2% on 2023) dominant to 2030 Breakdown of TV viewing, UK individuals 4+
Slide 28: STV continues to strengthen its audience position in Scotland
AUDIENCE STV continues to strengthen its audience position in Scotland STV still the biggest peaktime TV channel STV News still the most-watched news programme All major news bulletins across the day 267k STV News at Six 374k 237k ITV Evening News 280k Reporting Scotland 272k BBC News at Six 241k BB
Slide 29: Combined impact of STV & STV Player maintains market leadership
AUDIENCE Combined impact of STV & STV Player maintains market leadership STV the clear No.1 for commercial audience STV Player now 39% of STV’s total share in Scotland, with lead increasing yoy reach and growing 21% 12% 8% 8% 3.36m 39% 6% STV & STV Player of our total 5% total monthly reach monthly
Slide 30: STV Player has started well in 2024, with the highest ever streams for H1
AUDIENCE STV Player has started well in 2024, with the highest ever streams for H1 More Watching For More people more longer success Active reg. users 73m 34m Digital revenue 1.6m, +33% streams hours £11.5m, +14% VIP users Digital profit +4% -5% +19% £5m, flat 30
Slide 31: Changing digital audience mix in H1'24, skewing younger and more male
AUDIENCE Changing digital audience mix in H1’24, skewing younger and more male Sport & entertainment hours up, drama hours down so far in 2024 Top 10 shows H1'24 Time spent (hrs) Live viewing Coronation Street 2.8m +33% Emmerdale 2.7m Brookside 2.0m Sports viewing trebles UEFA Euro 2024 1.6m in H1 A
Slide 32: We continue to broaden our streaming offer through smart content acquisitions
We continue to broaden our streaming offer through smart content acquisitions New 2-year Disney deal has already delivered 3.2m streams BETRAYAL 13 eps 712,000 hrs • 10 high quality Disney dramas secured for STV Player THE FIX 10 eps 504,000 hrs • First 3 available now, 7 to come • High volume serie
Slide 33: Plenty more stellar content to come in 2024
The Tower S3 Joan 4x eps, Sep 2nd 6x eps, Sep 29th PLENTY MORE STELLAR CONTENT TO COME IN 2024 Romesh Ranganathan's UEFA Nations League Parents Evening My Mum, Your Dad S2 Sept-Nov 3x eps, Nov 2nd 10x eps, Sep 16th 33 33
Slide 34: STV has a market-leading commercial offer for advertisers
MONETISATION STV has a market-leading commercial offer for advertisers We delivered 99% of the top commercial NATIONAL audiences in H1 2024 in Scotland Unrivalled mass simultaneous reach for brands 495 of top 500 commercial audiences were LOCAL on STV in H1 A uniquely powerful platform for Scotland’
Slide 35: EURO 2024 was a major audience and commercial success for STV
EURO 2024 was a major audience and commercial success for STV 48% +350k lapsed STV Player users avg viewing share, reactivated +3% on ITV 1.2m +80% Germany V Scotland was June national advertising the best watched match +61% +82% time spent streaming Local brand count v Euro 2020 Unique C’mon Scotla
Slide 36: H1 national advertising was strong across linear and VOD
MONETISATION H1 national advertising was strong across linear and VOD National spend by category, linear & VOD, H1 2024 CATEGORY H1 GROWTH Retail +11% National linear Airlines, Travel and Holidays +3% Publishing and Broadcasting -5% advertising +16% Entertainment & Leisure +24% Finance -2% National
Slide 37: Scottish advertising also grew in H1, with SME growth particularly strong
MONETISATION Scottish advertising also grew in H1, with SME growth particularly strong Scottish spend by category, H1 2024 CATEGORY H1 GROWTH Total Scottish advertising Rail Travel +110% +1% in H1 Windows Double Glazing +6% Legal Services -6% SME advertising +12%, Energy Services +42% Scottish Govt.
Slide 38: Outlook
Outlook • Advertising market showing good growth so far in 2024 • Strong H1 TAR +13% • Q3 TAR expected to be up low single digits • Q4 includes part of RWC 2023 as comparator • Studios forward order book stronger than ever • £101m secured revenue as at August 2024, with £34m of new commissions since
Slide 39: Summary
Summary STV well placed to accelerate growth • STV now a much stronger company – strategically, creatively & commercially • Key growth areas of Digital and Studios continue to flourish; Broadcast resilient • H1 performance shows good momentum at both revenue and profit level • Strong foundations set
Slide 40: Appendix
Appendix Blue Lights, Two Cities for BBC 40
Slide 41: Strong operating cash conversion drives reduction in net debt
H1 2024 H1 2023 Strong operating cash conversion £m £m drives reduction in net debt Adjusted operating profit Adjusting items 8.3 (1.8) 2.8 (2.8) Depreciation and amortisation 3.1 2.2 • 2024 working capital inflow reflects stage payments received ahead of costs incurred in relation to drama EBITDA 9