Strongly Positioned to Resume Successful Growth Strategy 2020 Interim Results – 1St September 2020

Strongly positioned to resume successful growth strategy 2020 Interim Results – 1st September 2020

Landmark, from Primal Media for Sky in 2021 Agenda

Overview Simon

Financial Review Lindsay

Covid-19 Response & Strategic Update Simon

Q&A

2 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 H1 2020 key financials

Total Regional Total Digital Studios Advertising Advertising Revenue Revenue Revenue Revenue Revenue £44.7m £39.1m £6.0m £5.9m £1.6m +5% -19% -20% -18% VOD +13% -17%

Operating Adjusted Operating Interim Net Debt Profit EPS Cashflow Dividend

£5.2m 10.8p £33.5m £10.5m 3p

-52% -50% Dec‘19: £37.5m 2019: £8.4m 2019: 6.3p

4 Financial Review Lindsay Dixon

Elizabeth is Missing, STV Studios for BBC1 5 Group Results Almost half of the Covid-19 revenue impact mitigated at a profit level

H1 2020 H1 2019 • Revenue down 19%, a result of lower linear TV £m £m Change advertising and limited programme deliveries Revenue - Broadcast 35.0 45.0 (22%) • Total advertising revenue down 20%: - Digital 5.9 5.6 5% o Digital posted revenue increase as strong - Productions 1.6 2.0 (17%) Q1 more than offset Covid-hit Q2 - ELM 2.2 2.3 (5%) o Regional advertising severely impacted in 44.7 54.9 (19%) Q2 but helped by increased Scottish Total advertising revenue 39.1 48.8 (20%) Government spending throughout lockdown Operating profit 5.2 11.0 (52%) • Flow through of revenue reduction to operating Finance costs (1.4) (1.9) profit mitigated by ITV variable cost model and management actions PBT pre-exceptionals 3.8 9.1 Exceptional finance cost (8.7) - • Net receivable due from the lottery fully provided (Loss)/profit before tax (4.9) 9.1 for at the end of the period, resulting in an exceptional finance charge of £8.7m Adjusted EPS (pence) 10.8 21.8 (50%) 6 Operating profit waterfall shows benefit of STV variable cost model and other cost savings implemented

£m

7 Decisive steps taken to retain cash and strengthen the balance sheet

• 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

8 Strong operating cash conversion reducing net debt by £8.5m on last half year H1 2020 H1 2019 £m £m Operating profit 5.2 11.0 Depreciation/amortisation – owned assets 1.7 1.4 • Operating cash conversion of 202% driven by Depreciation/amortisation – leased assets 0.9 0.9 working capital cash inflow Share based payments 0.2 0.1 EBITDA 8.0 13.4 Working capital 4.9 (1.7) • Limited capital expenditure beyond Q1 Lease payments (1.0) (0.9) Capital expenditure (1.4) (2.4) • Pension deficit payments reflect agreement with Operating cash flow 10.5 8.4 trustees to defer Q2 contributions to December Cash conversion 202% 76% 2020 Pension deficit payments (3.0) (5.9) Interest and refinancing fees (0.8) (0.5) • Tax payments higher than 2019 due to non- Tax (0.9) 0.2 repeat of refund in respect of a prior year Re-organisation costs - (0.8)

Dividends - (5.3) SCL funding (0.7) (0.9) • Investment in Two Cities made in January 2020; Share purchases - (0.9) funded from proceeds received on disposal of Investment in Two Cities Television (1.1) - minority investment in September 2019 4.0 (5.7) Net debt 33.5 42.0 9 Net debt and covenants H1 leverage of 1.47x slightly lower than last half year and remains within self- imposed target range

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

• 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

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

H1 2020 H1 2019 £m £m Change Revenue - National advertising 28.0 36.6 (23%) - Regional advertising 6.0 7.4 (18%) • Benefit of £3.5m to the cost base as a result of - Other 1.0 1.0 (13%) the variable cost arrangement with ITV 35.0 45.0 (22%) • Other cost savings identified have been delivered in line with plan Operating costs (29.6) (34.0) 13%

Operating profit 5.4 11.0 (50%)

Operating margin 15.5% 24.3%

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

H1 2020 H1 2019 £m £m Change Revenue 5.9 5.6 5%

Operating costs (3.1) (2.5) (24%) • Strong performance in Q1 drives revenue growth for the first half Operating profit 2.8 3.1 (11%) Operating margin 47.4% 55.8% • 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 Studios Improved bottom line despite production hiatus and absorption of Primal costs

Programme H1 2019 Primal deliveries Cost savings H1 2020 H1 2020 H1 2019 0 £m £m Change -0.5 Revenue 1.6 2.0 (17%) -1 Operating costs (3.1) (3.6) 11% -1.5

Operating loss (1.5) (1.6) 4% -2

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

• 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

13 Pensions Constructive engagement with trustees

Accounting valuation H1 2020 H1 2019 FY 2019

Assets (£m) 402.9 375.9 381.9 Liabilities (£m) (479.8) (450.3) (445.9) • Swift agreement to postpone Q2 contributions Deficit (£m) (76.9) (74.4) (64.0) • Overall position benefitted from hedging strategies in place Key assumptions: o Asset values increased over H1 Discount rate 1.4% 2.2% 2.0% • Risk weighting of investment portfolio RPI 2.9% 3.3% 3.0% 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

14 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 Covid-19 response and strategic update Simon Pitts

Catchphrase, STV Studios for ITV 16 Our focus is on accelerating our successful strategy, not changing it

Maximise value of • Maintain viewing dominance Broadcast • Reinforce leadership in ad market 1 • Use marketing power to boost rest of STV

• Strengthen content offer Drive Digital growth • Aggressively drive UK expansion 2 • Continuous product upgrades

• Grow drama business Build world class • Convert pipeline of returnable formats Production 3 • More talent partnerships

17 BROADCAST STV’s broadcast dominance grows, enhanced by lockdown

Record audiences in H1 and still the biggest peaktime channel, with gap widening LOCKDOWN STATS

• 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%

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

Highest all time Total audience 97% of all large 6/10 most popular H1 viewing share new dramas and audience share volume +12%, commercial 11% higher than 9/10 most popular since 2008 at highest growth audiences in ITV, largest gap entertainment 19.2% ever Scotland on STV in 18 years shows 18 BROADCAST Not just a lockdown phenomenon STV’s audience was growing before lockdown, and has grown since

Peaktime lead over BBC1 growing Month by month audience growth on STV in 2020 vs 2019

Jan Feb Mar Apr May Jun Jul H1’20 Source: Barb : Jan-Jun 1800- 2230 Source: BARB : Jan-Jun’2020 ; 0930-2400 STV News’ audience continues to grow strongly H1 viewing share ‘Unmatched’ STV News viewing like 26% Live TV and Netflix & BBC Reporting Scotland 74% OF TV broadcast Youtube SET VIEWING VOD WAS STILL TO BROADCAST TV IN H1 74%

Source: BARB Jan-Jun 2020, individuals, total Source: Barb – Jan-Jun 2017-2020, Weekdays 1800-1900 TV/unmatched/non-linear, average mins per day

In July, STV beat BBC1 across all time, peak time and daytime for the first time ever 19 BROADCAST We are seeing advertisers return to TV as lockdown eases Brand count and revenue are increasing again in the regional spot market

80 REGIONAL BRAND COUNT

Average of c.100 Revenue supported Steady Regional spot back STV still attracted brands per month by strong Scottish improvement in to year on year 55 new clients from in normal times, Government spend, June/July/August revenue growth in April-Sept, which reduced to over 20 different driven by both July and incentivised by 32 at lowest point campaigns across household goods, August Growth Fund in May H1 tourism and retail 2020 BROADCAST Our focus has been on reinforcing STV’s position as the advertising market leader

STV Growth Fund now No.1 choice for Scottish Big marketing push to doubled to £20m brands highlight TV’s cost-effectiveness

“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, £10.3m 448 190 Director of Marketing & Digital, VisitScotland allocated deals new so far advertisers New TV campaign launches across STV this month

21 This crisis has also reinforced STV’s strong sense of social purpose as Scotland’s public service broadcaster

HEALTH & DRIVING THE DIVERSITY & CHARITABLE WELLBEING LOCAL ECONOMY INCLUSION GIVING • Online campaigns • £1m campaign to • On screen Black • STV has distributed targeting mental health, celebrate local business Voices campaign in over £1.5m to 300+ exercise, healthy eating and charity heroes response to BLM Scottish charities and public health • Range of new Growth • New target to double • “Pause for applause” Fund partnerships to BAME colleagues by for the NHS every boost local economy 2023 plus on screen Thursday at 8pm representation targets

• £1m ring-fenced for diverse ad campaigns

• Part of wider diversity and inclusion commitment

We are creating a lasting social impact in our communities by using the power of TV to do good and effect change 22 DIGITAL STV Player continues to accelerate strongly, well ahead of the competition

More people Watching more For longer

Monthly active VOD stream Total online users starts viewing +16% +72% +86%

Creating more And more inventory revenue Ad impressions VOD revenue +37% +13%

The Bridge, exclusive to 23 DIGITAL After a very strong start to 2020, VOD revenue didn’t fall as sharply as linear in Q2, and is now building back

VOD REVENUE +57% IN Q1

VOD REVENUE 100 -23% IN Q2

VOD BRAND 80 COUNT 64

Revenue impact not July/August gradual as immediate as May/June the most Agency deals also recovery driven by linear as pre-booked severe period given starting to ramp back FMCG, motors and national brands fulfil full lockdown up travel their deals 24 DIGITAL STV’s digital content strategy is working, with our 1500+ hours of Player-exclusive content making up 30% of viewing in H1

TOP 10 DIGITAL PROGRAMMES SO CH3 Content STV Player Exclusive FAR IN 2020 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: Abode Analytics/ FreeWheel Jan-Jul’20 Source: Adobe Analytics, FreeWheel Jan-Jul 2020 In June there were more streams for Player- 5 of the top 10 shows were Player-exclusive exclusive content than channel 3 content

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

87 hours of new entertainment

Des The Singapore Grip 40 hours of Network drama

Soaps back to full strength from early September

More new Player-exclusive

content 26 DIGITAL UK-wide distribution offers another big growth opportunity for STV Player

• Launched UK-wide July • Launched UK-wide August 2020 2020 • 3 million additional devices • 10 million additional devices • Prominently positioned in • Prominently positioned in app section app section • STV controls and sells all • STV controls and sells all ad inventory ad inventory

Big screen is where the growth is % of STV Player usage by platform now pre-installed on around half F Y 2 0 1 9 31% 11% 58% of the UK’s 42m connected devices, with

H 1 2 0 2 0 22% 7% 71% potential for further growth

Mobile Web Connected TV Source: Adobe Analytics Jan-Jun 2020, Jan-Dec 2019 27 STUDIOS TV production has resumed, with all STV shows back filming

Catchphrase was the first UK entertainment show to STV joined forces with other broadcasters to adopt resume filming in June Covid safety guidelines

Antiques Road Trip back out on the road in July for A Government-backed insurance scheme will series 22 support high-end drama 28 STUDIOS Our strong creative pipeline is translating into significant new commissions

Drama

• Screw, new returnable 6x60 drama series for • Ambitious 8x60 series for Sky Channel 4 • Artists and communities create the next great • Set in a prison British landmark

• For delivery in 2021 • For delivery in 2021

• Funding/international distribution already in place • Created by Primal Media

• From the writer of The Victim, Rob Williams, and • STV acquired majority stake in Primal in 2019 STV Drama team behind BAFTA – winning Elizabeth is Missing and The Victim 29 We’re currently in production on shows for 9 different networks, our STUDIOS busiest period ever RETURNING RETURNING RETURNING RETURNING

Inside 6x60 Catchphrase 10x60 Jerk 4x60 ART/CART 140x45/60 Central Station NEW NEW NEW

Royals vs 4x60 The Yorkshire 10x60 Catchphrase 3x60 The Tabloids Auction House Catchiest Moments NEW NEW

It Pays To Behave 1x60 Is Covid Racist? 1x60 30 STUDIOS A new creative partnership, with Barefaced TV , targets younger – skewing factual entertainment formats

Now 7 creative labels under one roof

Drama Entertainment • Founded by well-respected producers Rosie Bray and Lucy Golding Factual • 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

31 STUDIOS STV Studios’ creative pipeline is stronger than ever and we have already secured £15-20m of commissions for 2021 SCRIPTED UNSCRIPTED Across 3 drama Across Entertainment, Factual & companies Primal Media

68 projects in active 75 projects in active development development

35 in funded 50 priority development projects

15 in 39 advanced scripts discussions

32 Priorities at STV in H2 2020

• Consolidate ratings lead with strong H2 schedule 1. Broadcast • Partner with advertisers to lead recovery • Progress PSB regulatory settlement

• Continue to strengthen content offer 2. Digital • Further increase UK distribution • More personalisation

• Continued safe resumption of production 3. Studios • Convert more of scripted and unscripted pipeline • More talent partnerships

• Continued focus on cash and costs 4. Corporate • Complete lottery process • Pension triennial review

33 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.