Strongly positioned to resume successful growth strategy

2020 Interim Results – 1st September 2020

Landmark, from Primal Media for Sky in 2021

2 2

Agenda

Overview Simon

Financial Review Lindsay

Covid-19 Response & Strategic Update Simon

Q&A

2

3 3

STV strongly positioned to resume successful growth strategy

• Proactive steps taken to strengthen balance sheet and support STV colleagues and

partners

• Significant impact from Covid-19, but clear signs of recovery with total advertising -7% in

July and +1% in August, and all STV shows now back in production

• Crisis has reinforced fundamentals of STV’s diversification strategy, with delivery

accelerating:

o Continued record audience growth on TV and online

o Clear market leadership in Scottish advertising

o Digital business going from strength to strength

o Tangible progress in production with pipeline converting into significant new

commissions and talent deals

• Board proposes interim 2020 dividend of 3p per share to be satisfied by way of bonus share

issue, with intention to restore cash dividend at earliest opportunity.

3

4 4

Total

Revenue

Total

Advertising

Revenue

Regional

Advertising

Revenue

Digital

Revenue

Studios

Revenue

Operating

Profit

Adjusted

EPS Net Debt

Operating

Cashflow Interim

Dividend

4

£44.7m

-19%

£39.1m

-20%

£6.0m

-18%

£5.9m

+5% VOD +13%

£5.2m

-52%

£33.5m

Dec‘19: £37.5m

£1.6m

-17%

£10.5m

2019: £8.4m

10.8p

-50%

3p

2019: 6.3p

H1 2020 key financials

5

Financial Review Lindsay Dixon

Elizabeth is Missing, STV Studios for BBC1

6 6

Revenue

- Broadcast 35.0 45.0 (22%)

- Digital 5.9 5.6 5%

- Productions 1.6 2.0 (17%)

- ELM 2.2 2.3 (5%)

44.7 54.9 (19%)

Total advertising revenue 39.1 48.8 (20%)

Operating profit 5.2 11.0 (52%)

(1.4) (1.9) Finance costs

3.8 9.1 PBT pre-exceptionals

Exceptional finance cost (8.7) -

(Loss)/profit before tax (4.9) 9.1

Adjusted EPS (pence) 10.8 21.8 (50%)

H1 2020

£m

H1 2019

£m Change

Group Results

Almost half of the Covid-19 revenue impact mitigated at a profit level

• Revenue down 19%, a result of lower linear TV

advertising and limited programme deliveries

• Total advertising revenue down 20%:

o Digital posted revenue increase as strong

Q1 more than offset Covid-hit Q2

o Regional advertising severely impacted in

Q2 but helped by increased Scottish

Government spending throughout

lockdown

• Flow through of revenue reduction to operating

profit mitigated by ITV variable cost model and

management actions

• Net receivable due from the lottery fully provided

for at the end of the period, resulting in an

exceptional finance charge of £8.7m 6

7 7

Operating profit waterfall shows benefit of STV variable cost model and

other cost savings implemented

7

£m

8 8

Decisive steps taken to retain cash and strengthen the balance sheet

8

• FY19 final dividend cancelled and FY20 interim dividend to be paid via bonus share

issue

• Pension contributions in respect of April, May and June, plus the contingent cash

payment, all deferred to December 2020

• Capital expenditure plans delayed to FY21 (subject to reassessment over H2)

• VAT payable in Q2 2020 deferred to Q1 2021 under government scheme

• Bank facilities extended to £80m (from £60m), maturing in June 2022

• Equity placing completed on 7 July with 7m new ordinary shares admitted to trading,

realising net proceeds of £15.5m

9 9

H1 2020 H1 2019

£m £m

Strong operating cash conversion reducing net debt by £8.5m on last half year

• Operating cash conversion of 202% driven by

working capital cash inflow

• Limited capital expenditure beyond Q1

• Pension deficit payments reflect agreement with

trustees to defer Q2 contributions to December

2020

• Tax payments higher than 2019 due to non-

repeat of refund in respect of a prior year

• Investment in Two Cities made in January 2020;

funded from proceeds received on disposal of

minority investment in September 2019

Operating profit 5.2 11.0

Depreciation/amortisation – owned assets 1.7 1.4

Depreciation/amortisation – leased assets 0.9 0.9

Share based payments 0.2 0.1

EBITDA 8.0 13.4

Working capital 4.9 (1.7)

Lease payments (1.0) (0.9)

Capital expenditure (1.4) (2.4)

Operating cash flow 10.5 8.4

Cash conversion 202% 76%

Pension deficit payments (3.0) (5.9)

Interest and refinancing fees (0.8) (0.5)

Tax (0.9) 0.2

Re-organisation costs - (0.8)

Dividends - (5.3)

SCL funding (0.7) (0.9)

Share purchases - (0.9)

Investment in Two Cities Television (1.1) -

4.0 (5.7)

Net debt 33.5 42.0 9

10 10

Jun-20 Dec-19 Jun-19 Dec-18 Jun-18

Net debt (£m) 33.5 37.5 42.0 36.3 37.8

Leverage covenant 1.47x 1.28x 1.49x 1.36x 1.46x

Maximum n/a 3x 3x 3x 3x

Interest cover 20.2x 25.1x 23.5x 26.7x 32.4x

Minimum 4x 4x 4x 4x 4x

Net debt and covenants H1 leverage of 1.47x slightly lower than last half year and remains within self-

imposed target range

• Measures taken to maximise cash retention more than offset upward pressure on net debt from

reduced trading

• Covenants relaxed following agreement with lenders: in the event leverage exceeds 3x then that

covenant falls away and is replaced by a minimum liquidity threshold test

10

11 11

• Benefit of £3.5m to the cost base as a result of

the variable cost arrangement with ITV

• Other cost savings identified have been

delivered in line with plan

Broadcast

Benefit of variable cost base mitigates profit flow through of reduced revenues

11

Revenue

- National advertising 28.0 36.6 (23%)

- Regional advertising 6.0 7.4 (18%)

- Other 1.0 1.0 (13%)

35.0 45.0 (22%)

Operating costs (29.6) (34.0) 13%

Operating profit 5.4 11.0 (50%)

Operating margin 15.5% 24.3%

H1 2020

£m

H1 2019

£m Change

12 12

• Strong performance in Q1 drives revenue growth

for the first half

• Investment continued during H1 despite market

conditions with resultant impact on margins

• Cost base also reflects higher depreciation than

in the prior year following a period of intense

development activity

12

Digital

Revenues rise despite Covid; cost base reflects continued investment in growth

Revenue 5.9 5.6 5%

Operating costs (3.1) (2.5) (24%)

Operating profit 2.8 3.1 (11%)

Operating margin 47.4% 55.8%

H1 2020

£m

H1 2019

£m Change

13 13 13

Studios

Improved bottom line despite production hiatus and absorption of Primal costs

• Strong secondary sales performance (over £1m in the 6 months) at good margins

• Primal costs absorbed in H1 2020

• Cost savings across all major categories of discretionary and staff spend

H1 2020

£m

H1 2019

£m Change

Revenue 1.6 2.0 (17%)

Operating costs (3.1) (3.6) 11%

Operating loss (1.5) (1.6) 4%

Operating margin (94.4%) (80.9%) -2.5

-2

-1.5

-1

-0.5

0

H1 2019 Primal Programme deliveries Cost savings H1 2020

14 14

Accounting valuation H1 2020 H1 2019 FY 2019

14

Pensions

Assets (£m) 402.9 375.9 381.9

Liabilities (£m) (479.8) (450.3) (445.9)

Deficit (£m) (76.9) (74.4) (64.0)

Key assumptions:

Discount rate 1.4% 2.2% 2.0%

RPI 2.9% 3.3% 3.0%

Constructive engagement with trustees

• Swift agreement to postpone Q2 contributions

• Overall position benefitted from hedging

strategies in place

o Asset values increased over H1

• Risk weighting of investment portfolio

rebalanced to increase proportion allocated to

return-seeking asset classes

• Planning well underway for 2020 triennial

• Increase in accounting deficit reflects:

o Lower discount rate as a result of fall in

corporate bond yields

o Postponement of contributions

15 15

Scottish Children’s Lottery (ELM)

• Divestment process ongoing with timing impacted by Covid

• Focus is on sale of the business, rather than other investment or

partnership options

• Online ticket sales have held up well during lockdown, although retail sales

have inevitably been impacted

• Net debtor now fully provided for – exceptional finance charge of £8.7m

before tax

15

16

Covid-19 response and strategic update Simon Pitts

Catchphrase, STV Studios for ITV

17 17

Our focus is on accelerating our successful strategy, not changing it

Maximise value of

Broadcast

Drive Digital growth

Build world class

Production

• Maintain viewing dominance

• Reinforce leadership in ad market

• Use marketing power to boost rest of STV

• Strengthen content offer

• Aggressively drive UK expansion

• Continuous product upgrades

• Grow drama business

• Convert pipeline of returnable formats

• More talent partnerships

17

1

2

3

18 18

STV’s broadcast dominance grows, enhanced by lockdown

BROADCAST

18

Highest all time

audience share

since 2008 at

19.2%

Total audience

volume +12%,

highest growth

ever

97% of all large

commercial

audiences in

Scotland on STV

6/10 most popular

new dramas and

9/10 most popular

entertainment

shows

H1 viewing share

11% higher than

ITV, largest gap

in 18 years

Record audiences in H1 and still the biggest peaktime

channel, with gap widening

• 5 hours 46 mins TV viewing

per day in April +25% on 2019

• 90% of Scots watched STV

• STV News audience +40%

• STV daytime audience +48%

LOCKDOWN STATS

H1 Highlights Source: BARB, Jan-Jun 2020, peak time (18:00-22:30),individuals

19 19 In July, STV beat BBC1 across all time, peak time and daytime for the first time ever

Not just a lockdown phenomenon

STV’s audience was growing before lockdown, and has grown since

BROADCAST

19

Peaktime lead over BBC1 growing

Jan Feb Mar Apr May Jun Jul H1’20

Month by month audience growth on STV in 2020 vs 2019

STV News’ audience continues to grow strongly H1 viewing share

74% OF TV

SET VIEWING

WAS STILL TO

BROADCAST

TV IN H1

Live TV and

broadcast

VOD

‘Unmatched’

viewing like

Netflix &

Youtube

26%

74%

STV News

BBC Reporting Scotland

Source: BARB Jan-Jun 2020, individuals, total

TV/unmatched/non-linear, average mins per day

Source: Barb : Jan-Jun 1800- 2230 Source: BARB : Jan-Jun’2020 ; 0930-2400

Source: Barb – Jan-Jun 2017-2020, Weekdays 1800-1900

20 20

STV still attracted

55 new clients from

April-Sept,

incentivised by

Growth Fund

Regional spot back

to year on year

revenue growth in

both July and

August

We are seeing advertisers return to TV as lockdown eases

Brand count and revenue are increasing again in the regional spot market

20

BROADCAST

Average of c.100

brands per month

in normal times,

which reduced to

32 at lowest point

in May

Revenue supported

by strong Scottish

Government spend,

over 20 different

campaigns across

H1

REGIONAL

BRAND

COUNT

Steady

improvement in

June/July/August

driven by

household goods,

tourism and retail

96

32

80

21 21

190 new

advertisers

Our focus has been on reinforcing STV’s position as the advertising

market leader

21

BROADCAST

STV Growth Fund now

doubled to £20m

“STV was the obvious choice

for us in terms of the profile

and reach, trusted brand and

flexibility in approach as we

try to recover from this

pandemic.” Vicki Miller, Director of Marketing & Digital, VisitScotland

No.1 choice for Scottish

brands

Big marketing push to

highlight TV’s

cost-effectiveness

£10.3m allocated

so far

448 deals

New TV campaign launches

across STV this month

22 22

This crisis has also reinforced STV’s strong sense of social purpose as

Scotland’s public service broadcaster

HEALTH &

WELLBEING

DRIVING THE

LOCAL ECONOMY

DIVERSITY &

INCLUSION

CHARITABLE

GIVING

• On screen Black

Voices campaign in

response to BLM

• New target to double

BAME colleagues by

2023 plus on screen

representation targets

• £1m ring-fenced for

diverse ad campaigns

• Part of wider diversity

and inclusion

commitment

22

• Online campaigns

targeting mental health,

exercise, healthy eating

and public health

• £1m campaign to

celebrate local business

and charity heroes

• Range of new Growth

Fund partnerships to

boost local economy

• STV has distributed

over £1.5m to 300+

Scottish charities

• “Pause for applause”

for the NHS every

Thursday at 8pm

We are creating a lasting social impact in our communities by using the power of TV to do

good and effect change

23 23 The Bridge, exclusive to

STV Player continues to accelerate strongly, well ahead of the competition

DIGITAL

More people Watching more For longer

And more

revenue

Creating more

inventory

Monthly active

users

+16%

VOD stream

starts

+72%

Total online

viewing

+86%

Ad impressions

+37% VOD revenue

+13% 23

24 24

After a very strong start to 2020, VOD revenue didn’t fall as

sharply as linear in Q2, and is now building back

DIGITAL

24

VOD

BRAND

COUNT

Revenue impact not

as immediate as

linear as pre-booked

national brands fulfil

their deals

May/June the most

severe period given

full lockdown

July/August gradual

recovery driven by

FMCG, motors and

travel

Agency deals also

starting to ramp back

up

100

80

64

VOD REVENUE

+57% IN Q1

VOD REVENUE

-23% IN Q2

25 25

TOP 10 DIGITAL PROGRAMMES SO

FAR IN 2020

5 of the top 10 shows were Player-exclusive

STV’s digital content strategy is working, with our 1500+ hours of

Player-exclusive content making up 30% of viewing in H1

DIGITAL

25

In June there were more streams for Player-

exclusive content than channel 3 content

1. Coronation Street

2. Emmerdale

3. White House Farm

4. The Bridge

5. Liar

6. The Slap

7. Janet King

8. Acceptable Risk

9. Take the High Road

10. Flesh and Blood

Source: Adobe Analytics, FreeWheel Jan-Jul 2020 Source: Abode Analytics/ FreeWheel Jan-Jul’20

CH3 Content STV Player Exclusive

26 26

The Singapore Grip

87 hours of new

entertainment

More new Player-exclusive

content

Soaps back to full strength

from early September

The H2 Player content line-up will be its strongest ever DIGITAL

40 hours of Network drama

26

Des

27 27

Source: Adobe Analytics Jan-Jun 2020, Jan-Dec 2019

now pre-installed on around half

of the UK’s 42m connected devices, with

potential for further growth

UK-wide distribution offers another big growth opportunity for STV Player

DIGITAL

27

22%

31%

7%

11%

71%

58%

H 1 2 0 2 0

F Y 2 0 1 9

Mobile Web Connected TV

Big screen is where the growth is % of STV Player usage by platform

• Launched UK-wide July

2020

• 3 million additional devices

• Prominently positioned in

app section

• STV controls and sells all

ad inventory

• Launched UK-wide August

2020

• 10 million additional devices

• Prominently positioned in

app section

• STV controls and sells all

ad inventory

28 28

STV joined forces with other broadcasters to adopt

Covid safety guidelines

Catchphrase was the first UK entertainment show to

resume filming in June

TV production has resumed, with all STV shows back filming STUDIOS

28

Antiques Road Trip back out on the road in July for

series 22

A Government-backed insurance scheme will

support high-end drama

29 29

• Screw, new returnable 6x60 drama series for

Channel 4

• Set in a prison

• For delivery in 2021

• Funding/international distribution already in place

• From the writer of The Victim, Rob Williams, and

STV Drama team behind BAFTA – winning

Elizabeth is Missing and The Victim

Our strong creative pipeline is translating into significant new commissions

29

• Ambitious 8x60 series for Sky

• Artists and communities create the next great

British landmark

• For delivery in 2021

• Created by Primal Media

• STV acquired majority stake in Primal in 2019

Drama

STUDIOS

30 30

ART/CART 140x45/60

Catchphrase 3x60

Catchiest Moments

We’re currently in production on shows for 9 different networks, our

busiest period ever

Catchphrase 10x60 Inside 6x60

Central Station Jerk 4x60

Royals vs 4x60

The Tabloids The Yorkshire 10x60

Auction House

Is Covid Racist? 1x60 It Pays To Behave 1x60 30

STUDIOS

RETURNING

NEW

RETURNING RETURNING RETURNING

NEW NEW

NEW NEW

31 31

A new creative partnership, with Barefaced TV , targets younger – skewing

factual entertainment formats

31

• Founded by well-respected producers Rosie Bray

and Lucy Golding

• Formerly at BBC, ITV, Endemol, NBC

• Co-created younger skewing formats like Snog,

Marry, Avoid? (BBC3), Naked Beach (C4)

• Barefaced will be a wholly-owned label within STV

Studios from 1st September

STV Productions rebranded

to reflect status as home of a

range of creative labels

Now 7 creative labels under one roof

Drama Entertainment

Factual

STUDIOS

32 32

STV Studios’ creative pipeline is stronger than ever and we have already

secured £15-20m of commissions for 2021

32

35 in funded

development

68 projects in active

development

39

scripts

SCRIPTED Across 3 drama

companies

UNSCRIPTED Across Entertainment, Factual &

Primal Media

75 projects in active

development

50 priority

projects

15 in

advanced

discussions

STUDIOS

33 33

Priorities at STV in H2 2020

1. Broadcast

2. Digital

3. Studios

4. Corporate

33

• Consolidate ratings lead with strong H2 schedule

• Partner with advertisers to lead recovery

• Progress PSB regulatory settlement

• Continue to strengthen content offer

• Further increase UK distribution

• More personalisation

• Continued safe resumption of production

• Convert more of scripted and unscripted pipeline

• More talent partnerships

• Continued focus on cash and costs

• Complete lottery process

• Pension triennial review

34 34

Outlook

• Having taken proactive steps to strengthen the business and support our people, the focus is now on

accelerating our successful strategy to grow and diversify STV

• Given the continued market uncertainty, it is not possible to provide firm guidance for H2

• However, the fundamentals of our business are strong and improving:

o STV’s viewing performance remains excellent, with a strong H2 schedule to come

o Our digital business is expected to continue to grow strongly

o Advertising trends have improved materially in July and August, with August back in positive

territory

o Production hiatus will impact revenue rather than profitability in 2020, with £15-20m of

commissions already secured for 2021

• We will continue to manage cash and costs carefully, with our variable broadcast cost base offering

ongoing protection

• Board proposes interim 2020 dividend of 3p per share to be satisfied by way of bonus share

issue, with intention to restore cash dividend at earliest opportunity.