Scottish broadcaster STV Group PLC (LON:STV) has boosted its 2016 dividends by 50% despite reporting a slip in earnings after a de-risking of its business through a long-term airtime sales time agreement with Britain’s biggest commercial TV firm, ITV PLC (LON:ITV).
STV saw its underlying earnings (EBITDA) fall by 3% to £22.1mln, down from £22.8mln in 2015, although revenues rose by 3% to £120.4mln.
The group highlighted continued profitable digital growth, with digital revenues up 20% at £7.9mln and digital margins continuing to grow above target level at 52%
STV said margins at its Consumer Division hit 11 year highs at 18.5%, despite a 4% decline in national revenues.
The group is paying a full year dividend of 15.0p per share, up 50% on the 10p paid a year earlier.
STV noted: “Acceleration of progressive dividend policy reflecting the Board's confidence in the underlying financial strength of the Company, resilience of the core business and clarity of growth objectives.”
Robust performance …
Rob Woodward, STV’s chief executive officer, said: "Today's strong results demonstrate robust and resilient performance in our core business and growth in STV Productions and our highly profitable digital activities.
He added: “We are continuing to de-risk the core business placing the company in a strong position to deal with any weakness in the advertising market in the short to mid-term whilst relentlessly pursuing our growth objectives”
In early trading STV shares were up 3.4%, or 12.5p at 378.0p.
Buy repeated …
In a note to clients, broker Peel Hunt reiterated a ‘buy’ rating and 460p price target for STV shares.
Analyst Malcolm Morgan said: “A 50% increase in the dividend from 10p to 15p reflects the confidence in trading conditions and the funding needs of the company post the agreement with the pension trustees.“
He added: “Weak Q1 ad markets are as anticipated (and trailed by ITV) are consistent with existing broadcast forecasts.
“The potential for H2 to see negotiations begin on retransmission fees is an exciting development.“