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Commercially focused
Creatively led
Annual Report
and Accounts 2015
STV is Scotland’s leading
digital media brand
01 2015 Financial highlights
Strategic Report
02 The STV Family
04 Chairman’s statement
06 Chief Executive’s review
– Group
– Consumer
– Productions
20 Performance review
– Viability statement
Governance
36 Board of Directors
38 Corporate governance report
50 Remuneration report
70 Directors’ report
Financial Statements
74
STV Group plc
consolidated financial
statements – Independent
Auditors’ report
22 Principal risks and uncertainties
24 Risk management
28 Corporate responsibility
80 Consolidated income statement
Consolidated statement
80
of comprehensive income
81
82
83
Consolidated and parent
company balance sheets
Consolidated and parent
company statement
of changes in equity
Consolidated and parent
company statement
of cash flows
Notes to the financial statements
84
109 Five year summary
Additional Information
110 Shareholder information
112 Notice of Annual
General Meeting
17.1
18.0
19.5
20.3
19.1
17.3
15.2
13.1
0101
2012
2013
2014
2015
2012
2013
2014
2015
Operating profit
(£ millions)*
Pre-tax profit
(£ millions)*
+4%
34.4
36.3
39.9
29.5
+10%
10.0
8.0
2.0
–
2012*
2013*
2014**
2015*
2012
2013
2014
2015
EPS
(pence)
Dividends per share
(pence)
+10%
+25%
* Pre-exceptionals and IAS 19
** Pre-exceptionals, pre IAS 19 and a normalised
tax rate of 20% (see note 12)
2015
FINANCIAL
HIGHLIGHTS
STV Annual Report and Accounts 2015 The STV Family
PROVIDING
CHOICE
SERVING
CONTENT
The STV Family of consumer services showcases
our commitment to ensure STV’s content can
be accessed free of charge anywhere,
anytime – on air, on demand and online.
On air
Audience share
continues to track
above network
Strategic Report On demand
Enhanced Player offers content
free of charge, anywhere, anytime
03
Online
Building audiences by
integrating with social media
stv.tv
STV Annual Report and Accounts 2015
STV Annual Report and Accounts 2015 Chairman’s statement
Baroness Margaret Ford
Chairman
At the beginning of 2015
we updated our strategic
aims setting out our ambitions
for the next phase of our
growth strategy: to deliver
a compound annual growth
rate of 10% in pre-exceptional
EPS during the period 2014
to 2017, underscoring our
commitment to continue
to create enhanced value
and deliver returns to
our shareholders.
Delivering on our strategic priorities
Supported by the KPI targets, good progress has been
achieved against our strategic aims; building sustainable
growth; creating further value for shareholders and
strengthening the business to ensure we are well
positioned to deliver organic growth and realise
opportunities presented in the future.
The diversification of the business through the growth
of non-broadcast activities, less subject to the volatility
of cyclical trends of airtime advertising, continues to
contribute to a more balanced earnings portfolio. In 2015,
over one-fifth of earnings derived from non-broadcast
activities representing significant progress over the past
four years when these activities represented only one
tenth of earnings. This is behind our target but reflects
a stronger and more resilient core business than was
forecast. Diversification to rebalance the business remains
at the heart of our growth strategy.
The growth of the non-broadcast business has been
driven primarily by the continued development of the
digital business. This has now evolved into a core area
of activity, delivering significant growth in revenues,
up 25% year on year, in excess of target levels.
Stable platform for growth through strong
financial performance
The robust financial performance delivered in 2015
combined with stability provided through a strong
balance sheet have secured a backdrop of financial
flexibility to pursue growth plans whilst creating
investment certainty.
Our commitment to ensuring openness and transparency
with all stakeholders is demonstrated through the use
of our KPIs, providing a transparent and measureable
yardstick of progress. The performance driven culture that
prevails across the company has instilled a strong sense
of discipline and a relentless focus on delivery of these
KPI targets. Four of the eleven targets have been met
or exceeded with a further two key consumer business
targets relating to reach and engagement on track
to meet targets set for the end of 2016.
Strong capital discipline has delivered a further reduction
in net debt, down 13% to £25.7m (2014: £29.4m), resulting
in a net debt:EBITDA ratio of less than one times, within
key covenant targets.
Selective investment has been made in key growth areas.
In the consumer business, this approach has supported
the enhancement of existing digital services, including
the STV Player, and the establishment of new services,
specifically the start-up of City TV.
Strategic Report 05
up 25% on last year. It is proposed this final dividend will
be paid on 20 May 2016 to shareholders on the register
at close of business on 15 April 2016.
Board changes
There were two changes to the Board during 2015.
In April, Jamie Matheson retired from the board after
eight years during which he made a very significant
contribution to the turnaround of the Group. We are very
grateful to him. In October, I was delighted to announce
the appointment of Ian Steele as Non-Executive Director.
Making a positive contribution
As an iconic brand at the heart of Scottish life we are
uniquely positioned to use our multi-platform reach and
the strong connections held with consumers to make a
positive impact in the communities in which we serve.
Through the STV Children’s Appeal, our consumers and
staff from all areas of the company, raised a record sum
of £2.9m in 2015, with £11m raised since launch in 2011.
Working in partnership with The Hunter Foundation
and an increasing number of corporate partners, these
funds have been invested in projects across Scotland,
targeted at improving the lives and prospects of children.
As chair of the trustees of the STV Children’s Appeal, it
is a privilege to support this cause and I am extremely
proud of this achievement and committed to building
on this success in the year ahead.
Conclusion
Looking to 2016, the company is firmly positioned to
realise its ambitious growth strategy; continuing to
enhance shareholder value through our progressive
dividend policy whilst maintaining capital discipline
and a focus on growth.
On behalf of the Board, I would like to thank all
shareholders for their continued support. I would also
like to take this opportunity to thank Rob Woodward
and the leadership team for their continued contribution
to a successful year for STV and recognise the
commitment and talent of all staff across the business.
Their engagement and efforts are continuing to build
a leading media company well positioned with further
growth potential in 2016 and beyond.
Baroness Margaret Ford
Chairman
The triennial valuation of the company’s two defined
benefits pension schemes is due to be settled during
2016 and the company continues to progress a proactive
programme of measures aimed at reducing the liabilities
and costs of the schemes.
Consumer
Through the STV Family of consumer services, the
company’s unrivalled and growing position in the
Scottish marketplace has been strengthened during
2015. Increased reach and deeper engagement
across these multiple, complimentary, free to consume,
branded services have enabled our share of the
Scottish advertising market to grow.
The second of the City TV services, STV Edinburgh,
was launched at the beginning of 2015 and along with
its sister service STV Glasgow, they are building reach
whilst providing a platform to develop creative talent
for the future.
This investment in the creation of City TV has made
STV accessible to a wider base of advertisers, significantly
growing the range of commercial partners who are
reaching their target markets through STV.
The services within the STV Family are future proofing
the business as it develops an effective response to
changes in demand patterns of consumers, as they seek
increased accessibility to content anywhere and anytime.
STV Productions
STV Productions has expanded its customer base,
securing commissions with new customers in the UK
market, whilst continuing to deliver returnable series in
daytime and entertainment. Despite this progress, fewer
commissions and lower deliveries than forecast have
resulted in the growth targets for the business not
being met.
A significant strategic development partnership with
GroupM Entertainment, announced in August 2015, will
provide STV Productions with scale to enter new markets
and recognises the capabilities and potential of the highly
talented team who are focused on delivering growth
and continuing to build a leading content production
business of scale.
Dividend
Following the reinstatement of dividends in 2014
the Board has committed to grow shareholder returns
through the implementation of a progressive dividend
policy, I am pleased to recommend a final ordinary
dividend of 7.0 pence per share, in line with previous
guidance. This will result in a total dividend for the year
of 10.0 pence per share, (2014: 8.0 pence per share)
STV Annual Report and Accounts 2015 Chief Executive’s review – Group
COMMERCIALLY
FOCUSED
CREATIVELY
LED
“ Our strategy to deliver
sustainable organic growth
underpinned by our continuing
and relentless focus on our
growth KPIs is delivering value
for shareholders.”
Rob Woodward Chief Executive Officer
2015 – a year of achievements
January
City TV channel STV
Edinburgh launch
March
STV awarded City TV
licences for Aberdeen,
Ayr and Dundee
February
Digital revenues up 23%
£5.3m
STV confirms extensive
General Election
programming
May
Enhanced version of
the Player launches
June
STV Glasgow
celebrates 1st birthday
First commission for Sky1:
Prison: First & Last 24 Hours
July
Transmission of documentary
to mark 10th anniversary of
the London bombings for ITV
Safeword on ITV2 hits screens
and hits the headlines
Strategic Report 07
Non-Broadcast Earnings Share
(%)
Why it’s important
Our strategy is to diversify the Group’s earnings
from being over 90% driven by broadcast to a
more broadly balanced base.
How we measure it
It is calculated as non-broadcast operating profit
(digital and productions) divided by total operating
profit and expressed as a percentage.
21%
22%
19%
2013
Actual
2014
Actual
2015
Actual
Strategic growth aims to 2017
Aim to achieve an EPS*
CAGR of 10% across 2014
to 2017 underpinned
by 11 KPI growth targets
*excludes exceptionals IAS 19 and normalised for tax
In 2015, STV strengthened its position as the leading
digital media business in Scotland.
Our strategy to deliver sustainable organic growth
underpinned by our continuing and relentless focus
on our KPIs was set out in early 2015.
Diversification of earnings continues to be a key strategic
priority. Due to the strength and resilience of the core
broadcast business our target of one third of earnings
from non-broadcasting activities has yet to be met
but the percentage of earnings generated from these
growth activities has doubled since 2011.
At the beginning of 2015, we announced a new
strategic growth aim to deliver a CAGR of 10% in EPS
from 2014 to 2017. This rate of growth in EPS* has
been achieved in 2015.
August
STV City TV channels’
Edinburgh Festival
coverage reaches
800,000
viewers
September
STV broadcasts Rugby
World Cup 2015 reaching
3.3
million Scots
STV becomes first
broadcaster to televise
a Scottish court hearing
live and in full
October
STV Children’s Appeal
raises record
£2.9m
Australia’s Nine
Network finalises
format deal for Prison:
First & Last 24 Hours
November
ITV commissions new
series of Catchphrase
Celebrity Antiques Road
Trip returns to BBC Two
December
Antiques Road Trip
returns to BBC One
for new series
STV Annual Report and Accounts 2015
Strategic Report
Chief Executive’s review – Consumer
EXTENDING
REACH AND
ENGAGEMENT
Through our STV Family of
consumer services we are
successfully extending our
reach and engagement.
On air
In 2015, our core channel’s peak time audience exceeded
that of the ITV network for the sixth consecutive year
and aired 44 of the 50 most watched programmes on
commercial television in Scotland (source: BARB 2015).
Alongside popular content including Coronation Street,
The X-Factor, Britain’s Got Talent and the final series of
Downton Abbey, the highlight of the sporting calendar
for STV was the channel’s coverage of the 2015 Rugby
World Cup.
STV’s coverage of the tournament reached a total
of 3.3 million Scots, a 32% increase on coverage of
the 2011 Rugby World Cup. The Scotland rugby team
secured a place in the quarter-finals and the resultant
match coverage saw the STV television audience peak
at 1.1 million viewers, making it the most watched
rugby match in the country over the last 10 years.
“ The City TV channels offer a place
where STV can be more experimental
with formats and create a destination
where archive content can be
accessed by new audiences.”
09
STV aired a number of strong home-grown productions.
A new series, Stopping Scotland’s Scammers, sponsored
by The Royal Bank of Scotland, brought together people’s
experiences and expert opinion to educate viewers on
how to guard against fraud. Stopping Scotland’s Scammers
was the best watched consumer affairs programme in
Scotland across the whole of 2015 with an audience
56% greater than the time slot average. Based on this
success a second series has been commissioned and
will air in 2016.
Paul and Nick’s American Food Trip followed top celebrity
chefs Paul Rankin and Nick Nairn on a culinary road trip
along the east coast of America. This eight part series
produced for STV and UTV by Waddell was the best
watched food show on STV in 2015.
In January 2015, STV launched a new City TV channel,
STV Edinburgh, which joined its sister service, STV Glasgow,
to create an average reach of 0.8 million viewers across
Scotland per month. As a result of the introduction of
this second service, revenues generated from City TV
increased by 67%.
Ofcom awarded three further licences for Aberdeen,
Ayr and Dundee presenting an opportunity to expand
the reach of our city service. Advertising clients have
responded positively to this opportunity to reach
their target markets through on air sponsorship
and advertising.
Throughout 2015, STV Glasgow and STV Edinburgh
brought consumers the best of local features,
cooking, history and guests with magazine shows
The Riverside Show in Glasgow and The Fountainbridge
Show in Edinburgh.
In August the city channels joined forces to bring the
Edinburgh Festival to our consumers. Edinburgh Festival
2015 broadcast interviews and acts live every weekday
during the month of August offering a unique insight
into the iconic arts festivals providing arts and culture
programming beyond the network schedule. The show’s
reach was extended as the programming was acquired
by eleven other local television network channels across
the UK.
The City TV channels offer a place where STV can be
more experimental with formats and create a destination
where archive content can be accessed by new audiences.
Peak time audience
(v ITV Network)
Why it’s important
Our programme strategy results in more Scottish
based content appearing on screen and it is
important that an audience share is delivered at
least equivalent to that of the ITV Network.
How we measure it
Peak audience (18:00-22.30) for all adults
is compared to the ITV Network.
+1.5pts
share
points
+1.3pts
share
points
+0.3pts
share
points
2012
Actual
2013
Actual
2014
Actual
+0.2pts
share
points
2015
Actual
STV Annual Report and Accounts 2015
Strategic Report
The market for STV Consumer services
3 Scotland has a population of 5.3 million people
3 People in Scotland spend an average
3 hours 59 minutes per day watching TV
3 19% of TV households have a Smart TV
3 Six in ten adults in Scotland own a smartphone
3 Half of the adults in Scotland have a tablet
in the household, a 10% increase since 2014
SCOTLAND
FILLED WITH
POTENTIAL
Page headingStrategic Report 11
3 1 in 3 adults in Scotland are now registered
with STV
3 Every month STV reaches over 90% of Scots
via its broadcast channel
3 56% of Scots engage with at least three
STV services every month
3 The re-launched STV Player is used by
1 million Scots every month for an average
of 53 minutes per day per user
3 Long form video streams increased by 14% in 2015
STV
ENGAGING WITH
OUR AUDIENCE
Monetising Consumer engagement
The STV
business
model
STV Consumer
Delivers unique, high quality content to
attract mass audiences which are sold to
advertisers to generate revenues.
This content is delivered across multiple
platforms. The business aims to use its
unique content to create communities of
interest and to engage consumers.
Measurement
The key corporate KPIs are used to monitor
and measure the progress of each division
in fulfilling its strategy.
STV Annual Report and Accounts 2015
STV Annual Report and Accounts 2015 Chief Executive’s review – Consumer
Consumer engagement by product
(mins per day per user)
Why it’s important
These measures indicate the depth of the consumer
base of each of the services in the STV Family.
How we measure it
It is the average minutes per day that consumers spend
on each service sourced from BARB and Adobe Analytics.
STV Audience
41 mins 41 mins 40 mins
41 mins
2013
Actual
2014
Actual
2015
Actual
2016
Target
City TV
10 mins
n/a
2013
Actual
2 mins
2 mins
2014
Actual
2015
Actual
2016
Target
STV Player
56 mins
46 mins
37 mins
41 mins
2013
Actual
2014
Actual
2015
Actual
2016
Target
STV.tv
6 mins
3 mins
2 mins
2 mins
2013
Actual
2014
Actual
2015
Actual
2016
Target
On demand
The STV Player, STV’s catch up and live TV service, is
available online, on tablet and on smartphone and has
now been enhanced making it more robust than ever,
offering consumers the reliability they expect, so that
they can watch STV content anytime, anywhere.
The range of devices and platforms from which the STV
Player can be accessed continues to increase and includes
iPhones and iPads, Android tablets and smartphones,
Windows 8, Windows Phone, Samsung Smart TVs,
YouView set-top boxes, Xbox 360 consoles, Amazon Fire
TV, Amazon Fire tablets, Freeview Play devices and
via player.stv.tv.
In 2015, access to quality content including Broadchurch,
Britain’s Got Talent, X Factor and the 2015 Rugby World Cup
supported an increase in the number of registered users.
In addition to strong broadcast viewing figures, the
Rugby World Cup drove a more diverse profile of
consumers to the STV Family of services with nearly half
of registrations under the age of 35. The Player attracts
a higher ABC1 audience and younger consumer profile
than the traditional STV audience.
Across the 2015 Rugby World Cup, the STV Player delivered
543,000 live streams – more than the total streams
during the 2014 FIFA World Cup Brazil. A further 110,000
catch up and short form streams of Rugby World Cup
content were also provided by the STV Player.
Long form video streams
(millions)
Why it’s important
Video streams are a key advertising currency
and are directly related to generating advertising
revenues.
How we measure it
Using analytical tools, the number of video
streams across all platforms can be identified and
collated and this is the annual total in millions.
21m
18m
16m
14m
11m
5m
2012
Actual
2013
Actual
2014
Actual
2015
Actual
2015
Target
2016
Target
Strategic Report This enabled the achievement of the KPI target of
1.6 million consumer registrations; an increase of 60%
year on year. Our consumer data strategy continues
to develop apace and one in three adults in Scotland
are now registered with STV.
Whilst long form streams grew by 14% delivering
16 million streams over the year, this was short of
our KPI target of 18 million streams.
Additional programme content has been made available
via the STV Player through the live streaming of STV and
STV’s City channels and the STV Player app, for use on
hand held devices, has seen a 33% increase in downloads
during the year.
During 2015, consumer insights enabled our commercial
team to offer targeted video on demand advertising
for a broad base of clients. Further segmentation of
the user base will be developed to be rolled out in 2016.
Consumer insights
(millions)
Why it’s important
Understanding the demographics, tastes and
preferences of our consumers is key to developing
successful consumer services.
How we measure it
It is the number (in millions) of unique consumer
records held on our consumer database.
2.4m
1.6m
1.6m
1.0m
0.6m
2013
Actual
2014
Actual
2015
Actual
2015
Target
2016
Target
0.5m
2012
Actual
13
Consumer reach by product
(monthly average millions)
Why it’s important
These measures indicate the breadth of the
consumer base of each service in the STV Family.
How we measure it
It is the monthly average audience in millions from
sources including BARB and Adobe Analytics.
STV Audience
3.6m
3.6m
3.6m
3.6m
2013
Actual
2014
Actual
2015
Actual
2016
Target
City TV
0.6m
1.0m
0.8m
n/a
2013
Actual
2014
Actual
2015
Actual
2016
Target
STV Player
1.0m
0.7m
0.6m
0.5m
2013
Actual
2014
Actual
2015
Actual
2016
Target
STV.tv
3.0m
4.2m
3.6m
3.6m
2013
Actual
2014
Actual
2015
Actual
2016
Target
STV Annual Report and Accounts 2015 Chief Executive’s review – Consumer
Consumer division margin
(%)
Why it’s important
Margin improvement across the period provides
evidence of profitable growth.
How we measure it
It is calculated as underlying operating profit
divided by turnover and expressed as a percentage.
18.3%
17.8%
17.8%
18.4%
17.5%
18.0%
2012
Actual
2013
Actual
2014
Actual
2015
Actual
2015
Target
2016
Target
Digital margin
(%)
Why it’s important
Margin improvement across the period provides
evidence of profitable growth.
How we measure it
It is calculated as operating profit divided by
turnover and expressed as a percentage.
48%
45%
50%
30%
32%
23%
2012
Actual
2013
Actual
2014
Actual
2015
Actual
2015
Target
2016
Target
Online
A key focus for STV is the growth of our digital business.
In 2015 the average number of unique browsers on
stv.tv increased by 17% to 4.2 million. Our consumer
engagement strategy continues to develop with
increased engagement across the STV Family and our
product development strategy is structured to address
the changes in consumer patterns. Key to achieving our
targets is interaction with consumers accessing STV’s
trusted content via social media sites including Twitter
and Facebook.
Two thirds of the Scottish population engage with STV
digitally with STV News increasing its Twitter following by
42% year on year and Facebook likes by 87% year on year.
This is set to rise significantly with the introduction of our
enhanced digital news offering in early 2016.
As the largest Scottish commercial news provider online,
the number of users of our news platforms has increased
by 42% year on year with 2.5m unique browsers each
month. 83% of our consumers now engage with
stv.tv/news on mobile devices, a growth of 9%, while
STV’s share of news traffic via social media has grown
to 57%, up 22% on 2014.
While the digital revenue KPI target of £7.7m was
not met, the underlying profitability of the business
continues to grow. The digital margin KPI target of
45% was exceeded, reaching 48%.
Digital revenues
(£ millions)
Why it’s important
Digital revenue growth is a key strategic objective
and this measure tracks its delivery.
How we measure it
It is the value of digital revenues generated from
the STV Family of services.
10.0m
7.7m
6.6m
5.3m
4.3m
3.5m
2012
Actual
2013
Actual
2014
Actual
2015
Actual
2015
Target
2016
Target
Strategic Report 15
STV News – local trusted news
STV’s television news has long had a reputation for
providing its consumers with locally focused, relevant,
high quality news programming. Public Service
Broadcasting (PSB) is at the heart of what we deliver
to our consumers.
In a UK television first, STV televised a court hearing
live and in full. The transmission via special remote
controlled cameras in court was an innovative way to
provide consumers with an insight into the case and
the dynamics of the courtroom, with coverage and
expert analysis provided on air and online.
Across a month, an average of 2.9 million people watch
STV News with seven bulletins on the core channel and
eight local bulletins on our city channels.
The audience for the main bulletin, STV News at Six,
was up year on year in 2015 and is one of the most
watched regional news broadcasts across the UK – the
audience for STV News at Six is 10 share points higher
than regional news on ITV London.
Our flagship current affairs programme Scotland Tonight,
provides viewers with a mix of studio debate, big name
interviews and filmed reports. As well as covering politics
and news stories, the programme also features
personalities and issues in the world of sport, the arts
and entertainment. Across 2015, the average audience
for Scotland Tonight was double that of other channels
in this slot.
Consumer research conducted in 2015 reaffirmed the
strong identity of STV News at the core of our brand.
This firm commitment to high quality public service
content resulted in strengthening our focus on current
affairs. By growing our political team in 2015 with
new recruits, STV News continues to deliver relevant
coverage for our consumers. Our city channels also
air a weekly digest of the week’s key debates in the
Scottish Parliament.
Our coverage of the 2015 UK General Election typifies
our multi-platform approach as we seek to galvanise
our position as the ‘voice of Scotland’. STV secured the
first Scottish leaders TV debate in front of a live studio
audience, aired feature programmes on each of the
UK party leaders, and provided a live overnight results
programme with coverage from counts across Scotland.
STV has a sound track record of delivering for audiences
on air and online which is the result of our firm
commitment to our PSB output and a growth strategy
embracing technological changes and innovation.
The effectiveness of this model is demonstrated in
the large audiences STV News consistently delivers.
This success was noted by Ofcom in its statement
concluding its third PSB review which reported that
audience satisfaction with news delivery by STV has
increased significantly since the regulator’s last PSB
review published in 2008.
In 2016, STV will build upon this model with the launch
of an enhanced online news service which will combine
international, national and local news and up to the
minute weather reports with the personality, quality
and reliability of our existing services and will help us
to achieve our continued aim to be a leading consumer
focused company.
“ STV has a sound track record of
delivering for audiences on air and
online which is the result of our firm
commitment to our PSB output
and a growth strategy embracing
technological changes and innovation.”
STV Annual Report and Accounts 2015 Chief Executive’s review – Productions
BUILDING
A LEADING
CREATIVE
CENTRE
The productions business
continues to secure returning
formats and is developing
a strong pipeline of new
commissions based on a
strategy of diversity of genres.
Growing our client base
STV Productions continues to secure returning formats
and to deliver new commissions.
In 2015, STV Productions business delivered revenues
of £8.3 million, short of the KPI of £20.0 million, reflecting
a shortfall in deliveries against target.
Production revenue
(£ millions)
Why it’s important
Increasing production revenues is a key strategic
aim which increases the diversification of the
Group’s revenue sources.
How we measure it
It is the value of revenues generated from external
commissions and secondary sales.
23.0m
20.0m
13.5m 13.3m
10.2m
8.3m
2012
Actual
2013
Actual
2014
Actual
2015
Actual
2015
Target
2016
Target
Strategic Report 17
Strategic partners
In August, a strategic development partnership with
international media company GroupM Entertainment was
announced. Together the two companies are working to
co-invest, co-develop and co-produce production ideas
over a broad range of genres including entertainment,
factual entertainment, daytime and popular factual and
drama. The projects are targeted at major broadcasters
in the UK and internationally.
The innovative deal has involved substantial development
investment from both companies and has been shaped
to capitalise on the strengths of each business with both
committed to extending their financial support into 2016.
The non-exclusive partnership has allowed both STV
Productions and GroupM Entertainment to continue working
with other channels, distributors and content creators.
Production margin
(%)
Why it’s important
Margin improvement across the period provides
evidence of profitable growth.
How we measure it
It is calculated as underlying operating profit
divided by turnover and expressed as a percentage.
7%
6%
5%
3%
3%
2%
2012
Actual
2013
Actual
2014
Actual
2015
Actual
2015
Target
2016
Target
New and returning formats
In April, the business partnered with Red Arrow
Entertainment Group to produce a brand new format
The Lost Supper. The series saw celebrities go in search
of forgotten family recipes, working with renowned
chefs to recreate their culinary experience.
Returning format commissions secured were a fifth
series of Catchphrase, a twelfth series of Antiques Road
Trip and a fifth series of Celebrity Antiques Road Trip.
2015 also saw STV Productions bring celebrity roast
panel show Safeword to ITV2 which delivered good
ratings and caused a substantial buzz in the print press
and also among thousands of social media followers.
As a result of this success, a second series has been
recommissioned for delivery in 2016.
Purchasing from STV Productions for the first time,
Sky1 commissioned the eight part documentary Prison:
First & Last 24 Hours which revealed an unprecedented
insight into Scotland’s prisons and performed strongly
in Sky 1’s 10pm time slot. STV has now sold the show
format to Australian broadcaster Nine Network.
In 2015, the number of hours produced totalled
125 (2014: 138) with a range of commissions and
returning series.
STV Productions delivered Secrets of the Scammers,
a three part series sponsored by NatWest which
was the best performing programme in Channel 5’s
Wednesday 7pm time slot across the whole year.
The format was built upon the previously successful
Stopping Scotland’s Scammers which had premiered
on STV earlier in the year.
Documentaries
Two successful specialist factual documentaries
aired on ITV and BBC One Scotland/BBC Four.
The 7/7 Bombing: Survivors Stories marked the tenth
anniversary of the London terrorist attacks building
on STV Productions reputation for providing quality,
poignant documentary.
Rollermania: Britain’s Biggest Boy Band aired
on BBC One Scotland and on BBC Four.
STV Annual Report and Accounts 2015
Strategic Report
The market for STV Productions
3 The estimated revenue for UK TV programmes
and associated activities is £1.2bn*
3 STV Productions and GroupM Entertainment have a
partnership to co-invest, co-develop and co-produce
ideas across a broad range of TV production genres
3 In 2015, Nine Network bought jointly produced
format Prison: First & Last 24 Hours to make an eight
part series for Australia
3 STV Productions and IPCN announced a deal to create
a new factual entertainment format for China called
Journey to the Precious based on Antiques Road Trip
STV
A WORLD OF
POSSIBILITIES
19
Returning series
Returning series are a key part of
STV Productions’ business with BBC and
ITV ordering new episodes of content
that has proved popular with audiences
Catchphrase
Safeword
Antiques Road Trip
Celebrity Antiques Road Trip
Monetising Productions output
STV Productions
Creates and produces high quality content
for broadcast networks in the UK and overseas.
Profit is made on initial sale and on the
exploitation of back end rights in the
UK secondary and overseas markets.
Measurement
The key corporate KPIs are used to monitor
and measure the progress of each division
in fulfilling its strategy.
The STV
business
model
* Source: PACT UK Television Exports FY 2014/2015
http://www.thecreativeindustries.co.uk/media/311154/tv-exports-survey-fy-14-15.pdf
STV Annual Report and Accounts 2015
STV Annual Report and Accounts 2015 Performance review
The Group delivered another
year of strong growth in pre-
exceptional profit before tax,
earnings per share and cash
generation. We have continued
to invest in key growth areas
such as our digital products
and STV Productions as well
as absorbing the losses from
the launch phase of our
City TV channels.
Revenue
Total revenue was down 3% at £116.5m (2014: £120.4m)
with lower STV Production revenue, partly offset by strong
growth in digital revenues and City TV.
Consumer division revenues were up 1% at £108.2m
(2014: £107.1m) with national airtime revenues up 1%,
behind the broader television market, and regional
airtime revenue up 6%, with a particularly strong second
half performance.
Digital revenues were up 25% at £6.6m (2014: £5.3m),
below their KPI target, with strong growth in STV Player
revenues partly offset by reduced transaction revenues.
Production division revenues amounted to £8.3m
(2014: £13.3m) reflecting fewer commissions and
lower deliveries.
Operating profit
Operating profit, before exceptional items, increased
by 4% to £20.3m (2014: £19.5m). This performance was
due to the Consumer division which increased operating
profit, before exceptional items, to £19.9m (2014: £19.1m)
and again delivered margins ahead of the KPI target
and last year at 18.4% (2014: 17.8%). This result is after
absorbing the initial start up losses of City TV which
amounted to £1.0m (2014: £0.1m) but which will reduce
in 2016 as the City TV business moves to break even
in 2017. A major factor in growing the division’s margin,
despite the City TV losses, has been the expansion of
the digital margin from 32% to an above target 48%,
driven by high margin STV Player growth.
Productions operating profit was flat at £0.4m
(2014: £0.4m) despite the revenue decline.
Strategic Report 21
Balance Sheet
The principal movements on the Group’s balance sheet
were the reduction in goodwill and net debt noted
above, the reduction in the IAS19 pension deficit and
movements in deferred tax.
Viability statement
The Group has a strategic plan for the next three financial
years which the Directors review at least annually. The
three year plan reflects the Group’s strategy as set out
on pages 6 to 19. The plan also includes a number of
important assumptions about the necessary capital
investments to implement the strategy and models the
expected cash flows including dividends as well as other
key financial and performance indicators over the period.
The Directors have used this planning period as the basis
to assess the ongoing viability of the Group over the next
three years, although the Group’s business model is
open-ended and there is no known threat to its viability
beyond that period.
In making the viability statement the Directors have also
considered the resilience of the Group to a number of
severe but plausible scenarios. These scenarios took into
account the aspects of the principal risks disclosed on
pages 22 and 23.
This sensitivity analysis on the scenarios considered
the potential impacts of these matters on the Group’s
businesses, future performance, solvency and liquidity
over the planning period and the effectiveness of any
mitigating actions that the Directors could take.
Based on this assessment, the Directors confirm that they
have a reasonable expectation that the Group will be able
to continue in operation and meet its liabilities as they fall
due over the three year planning period.
Exceptional items
There were four non-recurring events which have been
classified as exceptional items in 2015 (2014: none).
These included the goodwill writedown on STV Productions
(£5.1m), the writedown of the Group’s investment in
Mirriad (£1.0m), a write-off of fixed assets related to
City online services and redundant STV Player platforms
(£1.0m) and costs related to management incentive plans
(£1.7m). The combined tax impact from the latter three
items was a credit of £0.2m. This was in part offset by
the recognition of a deferred tax asset reflecting greater
certainty over the use of the Group’s available tax losses
from prior years (£5.1m).
Finance costs
Net finance costs reduced again in 2015 to £1.2m (2014:
£2.2m) due to a reduction in cash interest costs as net
debt fell and the lower interest margin from the 2014
amendment and extension of the Group’s bank facility
impacted for a full year. The IAS 19 non cash pension
finance charge amounted to £0.5m (2014: £nil).
Statutory result
The statutory result for the year after tax, exceptional
items and IAS 19 interest was a profit of £11.4m
(2014: £14.7m). The Group’s effective tax rate increased
to the standard rate of 20% (2014: 15%) and corporation
tax payments are expected to resume in 2016.
Earnings Per Share (EPS)
EPS before exceptional items and IAS 19 interest
increased by 10% to 39.9p (2014: 36.3p), on an equivalent
tax rate of 20%. On a statutory basis EPS amounted
to 29.8p (2014: 38.7p). (See Note 12 in the Notes to the
Financial Statements).
Cashflow and net debt
Net debt fell by a further 13% to £25.7m (2014: £29.4m)
with the key net debt EBITDA ratio target of below 1.0x
on a covenant basis at the year end being met. The
Group’s measure of operating profit converted to free
cashflow improved as anticipated in 2015 to 86%
(2014: 79%), slightly below the ongoing 90% target
due to working capital phasing.
Capital expenditure at £2.3m (2014: £5.0m) reduced
to more normal levels in 2015 following significant
investment in news equipment in the previous year.
The debt reduction is also after higher pension deficit
funding payments (£7.8m) and increased dividend
payments (£3.4m).
STV Annual Report and Accounts 2015 Principal risks and uncertainties
Like most businesses, STV Group
plc is exposed to a number
of risks which could have an
impact on our operating results,
financial condition and prospects
and there are rigorous internal
systems to identify, monitor and
manage any risks to the business.
STV’s risk register sets out the key risks that have been
identified, allocating an owner to each, together with
the risk impact and likelihood. These are scored both on
a gross and, after the current mitigating controls have
been taken into account, a net basis. The effectiveness
of the current mitigating controls is graded as strong,
adequate or weak and any additional controls required
are also noted. The register is reviewed and updated on
an ongoing basis both at an operational level and on a
biannual basis by the Board, with the Audit Committee
conducting an in-depth annual review.
The directors confirm they have carried out a robust
assessment of the principal risks facing the Company.
All of the risks identified have been fully evaluated and
taken into account in preparing the budgets and forecasts
which support going concern, viability statement and
impairment assessments. There have been no changes
to the principal risks from 2014. The risks have also been
reviewed and agreed with the internal auditors.
Regulatory environment
Our television business is operated under licences which
are regulated by Ofcom and the key Channel 3 licences
have been renewed for a further 10 year term through
to the end of 2024. These Channel 3 licences contain
conditions around contribution to public service
broadcasting, programme production and compliance
with Ofcom’s codes. As licensees it is STV’s responsibility
to ensure that the terms of these licences are adhered to
and measures have been put in place internally to ensure
that this occurs. In the event of any serious or repeated
breaches, Ofcom has powers to impose sanctions on
licensees including, in the most extreme circumstances,
financial penalties or revocation of licences.
Dependence on advertising
STV’s sales, expenses and operating results could vary
from period to period as a result of a variety of factors,
some of which are outside STV’s control. These factors
include general economic conditions; conditions specific
to general advertising markets including the commercial
television market; trends in sales, capital expenditure
and other costs, and the introduction of new services
and products by us or our competitors. In response
to an ever-changing operating and competitive
environment, STV may elect from time to time to make
certain pricing, service or marketing decisions that could
have a material adverse effect on sales, results of
operations and financial conditions.
Strategic Report 23
Risk management is carried out under policies approved
by the Board with financial risks being identified,
evaluated and hedged in close co-operation with the
operating divisions. The Board provides written principles
for overall risk management, as well as written policies
covering specific areas, such as foreign exchange risk,
interest rate risk, credit risk, use of financial instruments
and investing excess liquidity.
a) Currency risk
STV operates almost wholly within the UK and is exposed
to minimal currency risk. The Group’s borrowings are
denominated in Sterling which is also the Group’s intra-UK
net currency flow. Currency risk arises primarily with
respect to the Euro and US dollar and from future
commercial transactions and trade assets and liabilities
in foreign currencies.
b) Credit risk
STV has no significant concentration of credit risk.
It has policies in place to ensure that sales are made
to customers with an appropriate credit history. Derivative
transaction counterparties are limited to high-credit
quality financial institutions.
c) Liquidity risk
Prudent liquidity management implies maintaining
sufficient cash and marketable securities, the availability
of funding through an adequate amount of committed
credit facilities and the ability to close out market
positions. Due to the nature of the underlying business,
the aim is to maintain flexibility in funding by keeping
committed credit lines available.
d) Cash flow interest rate risk
STV has no significant interest bearing assets and
its income and operating cash flows are substantially
independent of changes in market interest rates.
Performance of the ITV Network
The majority of STV’s programming content is provided
by the ITV Network. Therefore, its ability to attract
and retain audiences and the advertising airtime sales
performance of ITV’s sales house – which is responsible
for the sale of STV’s UK national airtime to advertisers –
are factors that affect performance. This relationship is
managed closely, with regular updates on programme
and schedule developments being provided and through
STV’s Commercial Director who manages the sales
relationship with ITV.
Pension scheme shortfalls
We believe that the STV pension schemes are relatively
strong, and the investment strategy is calculated to
reduce any market movement impacts. However, it is
possible that the Group may be required to increase its
contributions to cover an increase in the cost of funding
future pension benefits or to cover funding shortfalls
which could have an adverse impact on results and cash
flow. This position is kept under regular review by the
Board. During 2015 various exercises were carried out
with the aim of reducing both risk and the liabilities of
the defined benefit pension schemes.
Financial
The overall financial position of STV may be constrained
by the Group’s leverage and other debt arrangements.
An increase in LIBOR interest rates could have an
adverse impact on the financial position and business
results. STV is exposed to a variety of financial risks
that arise from and apply to its activities: currency risk,
credit risk, liquidity risk and cash flow interest rate risk.
The Group’s borrowings are denominated in Sterling
which is also the Group’s intra-UK net currency flow.
The Group’s overall risk management programme
focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on
financial performance.
STV uses derivative financial instruments to hedge
certain risk exposures.
STV Annual Report and Accounts 2015 Risk management
Risk management and internal control
Identify risks
Measure, control
and monitor
Assess and
analyse risks
Implement risk
management actions
Develop risk
management plan
The Board considers risk management to be a key
business discipline designed to balance risk and reward
and to protect the Group against uncertainties that could
threaten the achievement of business objectives. It is
inherent in the Company’s business and activities and
the review of risk and risk management is embedded
throughout the Company. The ability to identify, assess,
monitor and manage each type of risk to which the
Company is exposed is an important factor in its financial
soundness, performance, reputation and future success.
The management of risk is considered to be of vital
importance and as such, it is a matter for the full Board
and not delegated to a committee. Accordingly, the
Directors have overall responsibility for establishing
and maintaining an adequate system of internal controls
and risk management policies and also for reviewing
the effectiveness of each. This is communicated to the
Leadership Team and each member is accountable for
all risks assumed in their respective areas of responsibility
and for the execution of appropriate risk management
discipline.
During the year a thorough review of STV’s risk register
was carried out, facilitated by Deloitte. The process
involved one on one structured interviews with senior
management and a half day workshop with the
Leadership Team.
This was designed to challenge and update the current
STV risk profile through:
(i)
(ii)
identifying any new or emerging risks to STV’s
objectives reflecting the current environment and
strategic priorities
assessing and prioritising the impact and likelihood
of the most significant risks
(iii) considering the presence and operating effectiveness
of key controls.
This has ensured that the risk register continues
to be a current and relevant document allowing:
• the key risks facing STV to be easily identified
and summarised
• actions taken to improve controls to be tracked
• changes to the risk portfolio to be monitored.
A formal risk management policy, approved by the Board,
was put in place, which defines the objectives of and
commitment to risk management. The policy sets out
the Group’s risk appetite together with how identified
risks are managed and monitored as well as detailing
how risk management is embedded within the Group.
During 2015, the following reviews were carried out by the
internal auditors: (i) broadcasting licence compliance;
(ii) data protection compliance; and (iii) digital revenue
assurance.
The system is designed to manage rather than eliminate
risk and internal control can only provide reasonable
and not absolute assurance against material
misstatement or loss. All points raised by the internal
auditor were addressed and executive management
believes that the control environment has been
strengthened further by the actions taken. During the
year a follow up review of all recommendations made
by the internal auditor over the past 18 months was
carried out. This involved liaising with those employees
across the business who had been allocated the
responsibility of executing the recommendations raised
to ensure that these had been acted upon.
Strategic Report
25
In addition to both the external and the internal audit,
the following key controls are in place:
The Board is satisfied that these responsibilities are met
through applying the following procedures which are
supported by the Group’s system of internal control:
• a comprehensive financial review cycle, which includes
a detailed budgeting process where business units
prepare budgets for approval by the Board, monthly
reporting of trading results for review and, where
necessary, corrective action as well as detailed and
regular re-forecasting
• clearly defined management structure and delegation
of authority to committees of the Board, subsidiary
boards an d associated business units
• high recruitment standards and formal career
development and training to ensure the integrity and
competence of staff
• regular reviews of key performance indicators and
business risks and consequent steps to manage any
matters arising
• procedures for the approval of capital expenditure
• monthly monitoring and re-forecasting of results
against budget, with major variances followed up and
management action taken where appropriate
• ongoing procedures to identify, evaluate and manage
significant risks faced by the business and procedures
to monitor the control systems in place to reduce these
risks to an acceptable level
• using an appropriate system of accounting records,
capable of operating with reasonable accuracy to be
compliant with financial and legal reporting
requirements. The basis used to prepare STV’s financial
statements is the International Financial Reporting
Standards (IFRS) as adopted by the European Union.
The Company financial statements and Directors’
Remuneration Report are prepared in accordance with
applicable law and United Kingdom Generally Accepted
Accounting Practice
• using IFRS to ensure a true and fair view of the state
of affairs of the Group, including the profit or loss for
the period
• applying appropriate accounting policies within
the framework of IFRS and ensuring these are
consistently applied
• making judgements and preparing estimates that
are reasonable and prudent
• operating within the guidelines of all the disclosure
advice provided by UK statute
• considering whether adoption of the going concern
basis is appropriate
• provision to the Board and management of relevant,
• maintaining robust assurance processes and controls
accurate and timely information based on
comprehensive management information systems,
which are continually being improved and updated.
over financial reporting procedures
• extending these principles to half-yearly reports and
other reports in the public domain.
A highly detailed review process conducted on a multi-
level basis ensures that the consolidated group accounts
are prepared having taken into account the internal
control procedures and risk management strategies
outlined above.
The Company has a strong internal control and risk
management system in place in relation both to the
financial reporting process and the process for preparing
the consolidated accounts. The purpose of these is to
ensure that the internal and external financial statements
are presented in accordance with the relevant reporting
standards and the disclosure requirements for listed
companies, as well as to ensure that the financial
statements give a true and fair view, free from material
misstatement.
Identified risks are mitigated through unambiguous
business processes with integrated risk management
activities, segregation of duties and appropriate
delegation of authority. Each role within the Company
is well-defined with clear responsibilities and a
transparent reporting structure. The Company’s business
processes include financial controls regarding the
approval and accounting of business transactions and
the financial reporting process has controls regarding
recognition, measurement and disclosure. These include
the application of critical accounting policies and
estimates, in individual subsidiaries as well as in the
consolidated accounts.
STV Annual Report and Accounts 2015 Risk management
Regular review is vital to ensure that the risk culture
continues to be embedded throughout the Company
and that the risk framework is operating effectively.
It also provides the Board and the Audit Committee with
an overall view of the Company’s risk profile, identifying
any major exposures and mitigating actions.
The Company has in place a Whistleblowing Policy
through which staff can, in confidence, raise concerns
about possible improprieties either in the conduct of
others in the business or in the way the business is run.
Concerns can relate to actual or potential breaches of law
or Company policy, including those relating to accounting,
risk issues, internal controls, auditing issues and related
matters. All matters raised will be investigated and
reported to the Audit Committee. No such concerns
were raised by staff during the year.
The risk management framework and internal controls
system across the Company, which are subject to
continuous development, provides the basis on which
the Company has complied with the Code provisions
on internal control. These have been put in place in
order that the Board can satisfy itself that management
has understood the risks and has implemented and
monitored appropriate policies and controls, enabling
the Board to be provided with timely information so that
it can discharge its own responsibilities.
Risk appetite
STV’s risk appetite can best be demonstrated through
the following table:
Unacceptable to take risks
Higher willingness to take risks
Risk category
Reputation
Compliance & regulatory
Financial
Technology
Opportunities
TV Market
Operational
Pensions
People & culture
<
<
<
<
<
1
2
3
4
5
6
7
8
9
10
>
<
<
<
>
>
>
>
>
<
>
>
>
Reputation
STV places great importance on upholding its high
reputation and therfore has a low appetite for risk in
conducting any activities that puts its reputation in
jeopardy, could lead to undue adverse publicity or could
lead to loss of confidence by the Scottish and UK political
establishments or by its shareholders and stakeholders.
Compliance and regulatory
It is critical that STV conducts itself in a compliant manner
at all times, particularly in relation to its broadcasting
licences and it has no appetite for any breaches of statute
or regulation.
Financial
STV aims to maintain its long term financial viability
and overall financial strength although recognises that
sometimes taking a small amount of risk is necessary.
However, STV is comfortable in accepting this risk
provided always that the potential benefits and risks
are fully understood before developments are authorised
and sensible measures to mitigate risk are established.
The above statements take priority over
the statements made below
Technology
STV is reliant upon various forms of technology for
the transmission of its programmes and the successful
operation of its business and has a low appetite for risk
in these areas.
Opportunities
New opportunities, projects, collaborations, joint ventures,
mergers and acquisitions are periodically considered by
STV as means of growing its business and these inevitably
involve some element of risk. STV has a strong appetite for
the development of such opportunities provided always
that the potential benefits and risks are fully understood
and that appropriate mitigation measures are in place.
Strategic Report 27
TV Market
Various aspects of the tv market are, to an extent,
outwith the control of STV, such as advertising revenue;
Video on Demand (VoD); and pay tv but are vital to STV’s
success. Accordingly, STV has a modest appetite for risk
in activities within this area.
Operational
STV faces various operational risks (inadequate or failed
procedures, systems or policies) in the running of its
business and accepts a medium level of risk around such
areas provided that potential benefits and risks are fully
understood and sensible measures are put in place to
mitigate these.
Pensions
There are shortfalls in STV’s two defined benefit pension
schemes and while the investment strategy is calculated
to reduce any material market movement impacts,
various measures are being taken to reduce the deficit.
STV has a low risk appetite in respect of its pension deficits.
People and culture
STV’s directors and staff are the driving force behind
its progress and achievements to date and accordingly
it aims to employ the right people for the right job while
developing the full potential of all staff. In this regard
it considers equality, diversity, dignity and respect to
be of paramount importance together with employee
development and the health and safety of employees.
It has a low appetite for any deviation from its standards
in these areas.
STV Annual Report and Accounts 2015 Corporate responsibility
Rob Woodward
Chief Executive
Our people
As a creative, talent based business, the skills, capabilities
and endeavour of our people are the key determinants
of the company’s success.
We recognise our people are the company’s greatest
asset and support them in fulfilling their potential by
creating a clear sense of purpose and establishing a
common set of values, defined as The STV Way: to be
bold; stand together; and strive to surprise.
The STV Way underpins the company’s people strategy
providing a cultural framework for staff as they progress
their goals and objectives. Activities delivered through
The STV Way during 2015 include learning and
development initiatives; opportunities to share and
increase knowledge about the media and technology
sectors; employee engagement and opinion surveys;
business improvement discussion forums; activities to
support staff in achieving ‘Healthy Working Lives’; and
reward and recognition programmes.
STV Learning
In addition to individual learning and development
requirements identified through the annual employee
performance and development process; a broad
programme of learning opportunities has been delivered
for staff during 2015 through STV Learning.
This broad programme ranges from a leadership
development programme to informal staff drop in
sessions where an insight can be gained into other
areas of the business.
Throughout the year the activities of different areas of the
business are highlighted through ‘Spotlight on’ sessions
where a programme of activities are hosted to provide
staff with an understanding of processes and priorities
in other areas to build awareness and understanding of
different challenges across the business and encourage
greater collaboration.
A programme of internal work experience placements,
designed to provide staff with an immersion experience
of working in a different area of the business, has been
introduced. ‘Job drop’ opportunities which provide short
duration experiences have been developed by all
operational areas.
A key aim of the STV Learning programme during 2015
has been technical skills development aligned to
production and delivery requirements, particulary in
camera skills, editing, writing skills, data protection,
media law and music licensing, as well as a number
of supported online learning opportunities, including
financial awarenesss, coding development for mobile
and desktop products.
Our ‘Tomorrow’s World’ programme provides focus on
media trends shaping and changing the industry with
a series of speakers providing insights on topical issues
exploring the future landscape. In late 2015, the company
held its inaugural ‘Hack Day’ enabling staff from across
the business to collaborate to identify solutions to address
a range of product related and wider business challenges.
A key element of the company’s programme to build
capacity and strengthen the talent pipeline is the
investment in and commitment to a leadership
development programme. During 2015, 36 staff from
across the company were invited to participate in this
modular programme delivered in conjunction with an
external executive coach and the University of Edinburgh
Business School. The programme will continue for
participants during 2016.
Developing the Young Workforce
and investing in skills
The company continues to develop close relationships
across secondary, further and higher education
to support the development of future talent to the
creative industry and to support the company’s future
resourcing requirements.
Strategic Report 29
Base salary levels increased by an average of 3.1% in
2015 with awards in a range from 2% to 5% depending
on each employee’s position in their salary grade relative
to the market rate. This approach represents a long term
commitment made by the company three years ago
to address the proportion of staff positioned on salary
bands below the market rate for their role, a situation
exacerbated by a previous phase of salary restraint
during the economic downturn.
The company remains confident that the remuneration
structure in place is achieving its goals of delivering
market competitiveness, supporting retention and
enabling employees to share in successful business
performance. The company is accredited as a Living
Wage employer and during 2015 signed up to the
Scottish Business Pledge, having met the criteria for
all nine components of this.
As the company’s growth strategy has progressed during
2015, external recruitment has continued to build
capacity in key growth areas of activity. During 2015,
there has been an increase of 5% in permanent staff,
the calibre of new recruits has tested the market
competitiveness of the company’s salary and benefits
structure. Retention levels have been maintained during
the year also supported by a planned programme of
internal development moves.
Employee engagement
STV Pulse, the company’s employee engagement tool
has been used to conduct four engagement surveys
during 2015 on a range of topics including employee
rewards and benefits; working environment; and learning
and development at STV. Engagement levels have
averaged around 70%, which is in line with target levels
and above benchmarks for the sector.
This ‘pulse’ style employee opinion survey is designed
to provide staff with regular opportunities to express
their views and opinions whilst providing the company
with a tracking and measurement tool.
The STV Pulse also tracks employee perceptions of the
extent to which the employee values: to be bold; stand
together and strive to surprise, are being applied.
A broad programme of sessions involving secondary
schools and aimed at providing an insight to the world
of work has been delivered. As part of the company’s
commitment to the Developing the Young Workforce
in Scotland, a formal partnership has been established
with a secondary school in Glasgow as part of an initiative
to partner every secondary school in the city with an
employer organisation. This has enabled staff to volunteer
to make a contribution to develop links between STV and
school pupils to provide them with a greater appreciation
of career opportunities within the creative industries
and more generally, to support the development of
employability skills. During 2016, this programme will
be extended to other STV locations.
A strategic partnership between two leading Scottish
universities, Glasgow Caledonian University and Edinburgh
Napier University, and the City TV services in Glasgow and
Edinburgh respectively, has been extended during 2015
providing over 380 work experience opportunities for
students. Through these partnerships, students are being
provided with opportunities to develop their skills in a live
broadcast and production environment and engaging
with consumers, particularly through social media.
The company is a significant employer of freelance talent
providing employment opportunities that contribute
towards building a skills base of scale. An average of
70 freelance employment opportunities per month have
been created across STV Productions, STV Creative and
supporting STV news and current affairs output each
month during 2015. This is continuing to contribute
to creating more stable employment opportunities
for freelance staff working in television production in
Scotland, supporting a larger talent pool and making
a positive impact to the creative economy of Scotland.
A number of programmes supporting alternative entry
routes to the industry have been provided, including
apprenticeships in Digital Journalism and Engineering
(in partnership with BBC), and a Year in Industry (YINI)
scheme for Digital Design in conjunction with Glasgow
City of Science and Engineering Development Trust.
Rewarding success
Remuneration is benchmarked and determined against
a UK-wide media industry peer group. This approach has
provided a transparent grading and remuneration
banding framework against which all roles are evaluated
relative to a peer group within STV and across the wider
industry sector.
STV Annual Report and Accounts 2015
Corporate responsibility
Regular staff briefings are held by the leadership team
to promote increased understanding and awareness of
the wider business amongst staff and provide further
opportunities for staff to have their say. Our senior
leadership management forum, comprising the staff
responsible for key growth and revenue targets, meets on
a monthly basis to encourage collaborative working and
facilitate the acquisition of knowledge of future trends
impacting the sector.
The Chief Executive Officer conducts regular all staff
sessions to provide updates on business performance,
strategy and developments affecting the business, and
to obtain feedback and suggestions on the development
and growth of the business.
The partnership relationship with the trade unions
recognised by the company for the purposes of collective
bargaining has continued to develop and progress during
2015. This is maintained through the encouragement and
facilitation of regular briefing on business priorities and
progress.
Equal opportunities and diversity
The company is committed to a culture where everyone
is treated with dignity and respect and has the
opportunity to deliver their full potential. Policies to
ensure that the company engages effectively with
audiences and consumers and attracts a diverse pool
of creative talent are monitored on an ongoing basis.
The aim of these policies is to ensure that all employees
and potential employees are treated in a fair and
equitable manner regardless of their age, disability,
marital status, family responsibility, race, colour, ethnic
background, nationality, religion or belief, gender, gender
identity or sexual orientation.
A diverse workforce enables the company to respond
better to and reflect our audiences and consumers in
all their diversity and it is important that a working
environment is created which enables our employees
to thrive and achieve their full potential.
A number of registered disabled persons are employed,
all of whom have had equivalent access to training and
career development opportunities as their able-bodied
colleagues. No employees became disabled during the
course of their employment in 2015.
The company is fully committed to fostering talent and
supporting people from all backgrounds who wish to
progress, however, appointments and promotions are and
will continue to be made based on merit and in line with
the skills and attributes identified for each post, including
those identified by the Nomination Committee for the
Board. Overall, the company is committed to appointing
the best available person to a role, regardless of gender.
The overarching aim in making any new appointments
to the Board must always be to select the best candidate
to enhance functionality and to improve decision
making as the primary focus is the strength of the Board.
All appointments will continue to be based on merit,
measured against objective criteria and the skills and
experience the individual offers.
STV has chosen not to target a specific number or
percentage of women for its Board, but to concentrate
its efforts on encouraging more women to remain within
the Company and progress through the ranks to senior
positions. Three of the 10 members of the leadership
team are female as is the Company Secretary and as
at 31 December 2015, 47% of STV’s staff were female,
the same percentage as the previous year.
2015
2014
Male
Female
Male
Female
67%
70%
33%
30%
67%
70%
33%
30%
Directors
Leadership
Team
Employees
53%
47%
53%
47%
%
change
–
–
–
Health and Safety
STV is committed to compliance with all workplace
health and safety laws and regulations, to provide
a safe and healthy working environment. Employee
health and accidents are monitored closely and health
promotion programmes designed to reduce health
risk and enhance employee well-being are regularly
undertaken. A proactive approach to improve the
Company’s management documentation systems, to
provide suitable and sufficient information, instruction,
training and supervision is in place.
First Aid training refreshers are carried out on a rolling
basis and we have a full complement of 53 first aiders
located throughout STV sites. There are defibrilators
on site at Pacific Quay and Craigshaw and 12 of
our staff are trained in their use.
Strategic Report
31
STV has a proactive and responsible attitude towards
occupational road risk management with clear
procedures in place that are reviewed regularly so that
they remain appropriate and to a high standard. Driving
standards and rules are communicated to staff through
STV’s Drivers Manual and this helps maintain the
Company’s low accident rates.
We have continued to place our News and Creative Teams
and our new STV Glasgow and STV Edinburgh channel
teams on safety training with a Chartered Health and
Safety Consultant who specialises in media safety
training. A total of 18 staff this year have completed the
safety training.
Total Vehicle accidents
Number attributable
to driver error
Percentage attributable
to driver error
2015
2014
2013
13
8
11
6
29
24
62%
54%
83%
Health and Safety performance in 2015
STV reports work-related accidents, diseases and
dangerous occurrences in compliance with the Reporting
of Injuries, Diseases and Dangerous Occurrences
Regulation 1995 (RIDDOR). Analysis of the causes of
accidents provides valuable information for implementing
improvements, if and when required, in working practices
and procedures.
The Facilities Manager is the designated senior manager
responsible for health and safety matters.
Our environment
STV recognises that its day-to-day activities can, and
do, have an effect on the environment. The Company’s
environmental policy is aimed at reducing impacts on the
environment and is part of the culture of the business.
The Company is committed to the continuous
improvement of its environmental performance and
the reduction of pollution and is a member of The
Prince’s May Day Network, a collaboration of businesses
addressing climate change which was founded by
HRH The Prince of Wales.
Throughout 2015 we have again been able to recycle
100% of our waste (with the introduction of Refuse
Derived Fuel via our waste management contractor),
resulting in no waste being diverted to landfill.
STV’s Green Travel Plan at the Glasgow headquarters
encourages staff to use more sustainable means of
transport to commute. To promote cycling, shower
facilities, cycle parking and lockers are provided for
employees. A car sharing initiative, matching up
employees living in the same area, enabling them to
travel to work together is managed. There are currently
38 members of staff taking part in this initiative. STV
also took part in National Bike Week and had our own
STV Cycle to Work Day on 19th June with approximately
25 staff participating.
STV continued recycling old mobile phones via SHP, who
uplift all redundant mobiles, recycle them and then send
us a cheque which was donated to the STV Children’s
Appeal. A total of 41 handsets were recycled in 2015.
During 2015 we have:
2015
2014
2013
• installed electric car charging bays to encourage
Seven-day
reportable accidents
Total of all accidents
0
11
1
7
0
5
the use of electric vehicles
• enlisted the assistance and guidance from ESOS
(Energy Savings Opportunity Scheme) and have taken
on many of their recommendations to lower our
CO2 emissions
• reviewed pool and leased vehicles and agreed that
new vehicles will be of a lower CO2 rating.
STV Annual Report and Accounts 2015 Corporate responsibility
Reporting greenhouse gas emissions
Assessment parameters
Boundary summary
All entities and all facilities either owned or under operational control were included
Materiality threshold
Materiality was set at 5%
Intensity ratio
Emissions per £m of revenue
FY2015
FY2014
Greenhouse
gas emission source
Scope 1*
Scope 2**
Statutory total (Scope 1 & 2)
(tCO2e)
454.43
2,105.27
2,559.70
(tCO2e/£m
revenue)
3.90
18.07
21.97
(tCO2e)
(tCO2e/£m revenue)
486.51
2,095.94
2,582.45
4.04
17.40
21.45
* Scope 1: emissions from activities and sources we own and control e.g. cars.
** Scope 2: emissions associated with our consumption of purchased electricity, heat, steam, and cooling, heating offices etc.
Explanations
SCOPE 1 Travel
Decrease in the travel emissions due to:
• less production travel and less international travel
during 2015 (compared to 2014).
SCOPE 2 Energy
• gas usage has increased – previous gas invoices have
been estimates for our Balmore site, actual readings
meant a large invoice and exact usage figures issued.
• electricity usage has decreased due to older kit in
the Aberdeen office being upgraded to more energy
efficient kit. The temperature in the data room
has also been increased resulting in reduced
cooling requirement
• more lighting has been replaced with LED lights (rather
than halogen) resulting in lower energy consumption.
The BMS programming has been refined to minimise
the use of electricity.
Waste
Biffa recycle 100% of any of our waste via RDF (refuse
derived fuel), so no waste is going to landfill;
GHG emissions statement
STV has reported on all of the emission sources required
under the Companies Act 2006 (Strategic Report and
Directors’ Reports) Regulations 2013.
These regulations require us to state the annual
emissions in tonnes of carbon dioxide:
i) from activities for which we are responsible, including
the combustion of fuel and the operation of our
facilities; and
ii) resulting from the purchase of electricity, heat, steam
or cooling by us for our own use.
There is no prescribed methodology under the
regulations, but the independent standard we have
chosen to use in order to ensure effective emissions
management and transparency in reporting, is the
UK Government’s Environmental Reporting Guidance
(2013 version).
STV must also express its emissions by way of an intensity
ratio to allow the comparison of our Performance over
time and also with other similar types of organisations.
GHG emissions are to be reported as a gross figure in
tonnes of CO2e and the intensity ration we have chosen
is CO2e per million pounds of revenue.
Rob Woodward
Chief Executive Officer
Strategic Report
33
STV staff are great ambassadors for the Appeal and
demonstrate this each year by donating their time
and energy to fundraising. From holding bake sales, bag
packs and quizzes to volunteering at fundraising events,
staff are involved throughout the year and are able to
visit the projects supported by the Appeal to distribute
the awards, where they can see the difference their
fundraising makes. A key event for staff this year was
a three day challenge, set by the chief executive, involving
an abseil, followed by a canoe trip and ending with a
team of 60 staff, friends and family participating in Pedal
for Scotland. Over the course of 2015, staff raised around
£50,000 which was match funded pound for pound by
the company.
The STV Children’s Appeal is partnered with a number
of mass participation events throughout the year.
This year’s Pedal for Scotland saw over 10,000 cyclists
across Scotland get on their bikes, many of whom raised
money for the Appeal. Pedal for Scotland was one of
the fundraising activities and celebrity challenges
which featured in one series of STV Children’s Appeal
programmes. STV Weatherman Sean Batty completed
a Coast-to-Coast cycling challenge, and Lorraine Kelly
donned her kilt to ceilidh across Scotland before
hosting the Big Live show where the final total for
2015 was revealed.
Through its unique position, The STV Children’s Appeal
is able to use multi platform media channels to create
partnerships, engage with the community and raise
awareness to support Scotland’s children.
STV
APPEAL
2015
STV Children’s Appeal
The STV Children’s Appeal is a charity committed
to supporting Scotland’s young people. Launched in
2011 by STV and The Hunter Foundation, the Appeal
gained additional support from The Wood Foundation
for projects in the North East in 2013. In 2015, the charity
completed a rebrand to build on a successful first four
years and to increase public awareness that Scotland’s
children remain at the forefront of everything we do.
In five years since launch, the STV Children’s Appeal
has raised £11m and made 476 big and small awards for
projects across all 32 local authority areas in Scotland,
providing much needed support to over 59,000 children.
A fundamental principal of the STV Children’s Appeal is
that every single penny raised is invested in Scotland and
100% of donations are spent on the children who need
it most. All overheads are met by STV and The Hunter
Foundation and in 2015, the Scottish Government once
again committed to match fund the first £1.0m raised.
In a recent survey† it was established that awareness
of the Appeal has doubled since launch in 2011, and
nine out of ten people believe it is important that the
money raised by the Appeal stays in Scotland. Tapping
into this public support and awareness has been a key
feature of the 2015 fundraising campaign. This increased
focus on community engagement has led to partnerships
being established with fundraisers across the country
with the Appeal benefitting from comedy shows through
to music events, and many schools, individuals and
groups have shown their support by raising money for
children in poverty. New and existing corporate partners
such as Arcadia, Royal Bank of Scotland, Lidl, Standard
Life and Optical Express also continued to show their
support by encouraging their staff and customers to
donate money to support Scotland’s young people.
† ScotPulse surveyed 954 adults, with results weighted to Scottish population by gender and age
STV Annual Report and Accounts 2015 Strategic Report
Strategic report
Corporate responsibility
RECORD
£2.9M RAISED!
Strategic Report 35
35
STV Annual Report and Accounts 2015
STV Annual Report and Accounts 2015 Board of Directors
Margaret Ford
Chairman
Appointed: June 2013
Committees: Nomination (Chair)
Margaret Ford has over 20 years
experience as a non-executive Director
and Chairman of private and listed
companies and extensive experience of
working with Government. She is currently
a non-executive director of Taylor Wimpey
plc, Segro plc and Chairman of Grainger
plc and is the former Chairman of
Barchester Healthcare Limited, the private
healthcare provider. From 2009 to 2012,
she was a member of the Olympic Board
and Chairman of the Olympic Park Legacy
Company. She was appointed to the
House of Lords in 2006 and sits as an
Independent Peer. Margaret is Chairman
of the STV Children’s Appeal and in March
2015, was elected a Fellow of the Royal
Society of Edinburgh.
Rob Woodward
Chief Executive Officer
Appointed: February 2007
Previously, Rob was Commercial Director
of Channel 4 Television Corporation
and on the main board. He achieved a
dramatic turnaround of legacy businesses
and built a set of successful new media
and digital businesses. Rob was previously
an MD of UBS Warburg and global COO
of corporate finance in Media and
Communications. Prior to this he was
Managing Partner of Deloitte’s European
Telecoms Media and Technology business
and UK strategy consulting practice.
Rob is a trustee of the STV Children’s
Appeal. He was appointed Pro-Chancellor
and Chair of the Council of City University
London in February 2012, is a Trustee
of Nesta and a non-executive director
of Regenersis plc. In November 2014
Rob was appointed Chairman of the
Developing the Young Workforce National
Group, which is leading work to support
employer involvement in developing
Scotland’s young workforce.
George Watt
Chief Financial Officer
Appointed: February 2001
Appointed to the Board in February 2001
as Group Finance Director. George is a
member of the Institute of Chartered
Accountants in Scotland. He joined the
Company in 1998 as Group Financial
Controller and Treasurer and prior to this
worked with KPMG’s audit and assurance
services practice in the UK and also in
the US. George is a non-executive director
of DeltaDNA Limited and SpaceandPeople
plc. George is also an executive
committee member of the Scottish
Council for Development and Industry
and a trustee of the STV Children’s Appeal.
David Shearer
Senior Independent Director
Appointed: February 2007
Committees: Audit (Chair); Nomination
David is an experienced non-executive
director, corporate financier and
turnaround specialist and was previously
senior partner for Scotland & Northern
Ireland and a UK Executive Board member
of Deloitte LLP. He is Chairman of Liberty
Living Group, Aberdeen New Dawn
Investment Trust plc and the Scottish
Edge Fund and a director of Mithras
Investment Trust plc. He was previously
the Co-Chairman of Martin Currie (Holdings)
Limited, Chairman of Mouchel Group and
Crest Nicholson plc and a non-executive
director of City Inn Limited in each case
standing down after completing the
successful restructuring of these
businesses. He was also a non-executive
director of Renold plc, Superglass Holdings
plc and Scottish Financial Enterprise and
a Governor of The Glasgow School of Art.
Michael Jackson
Non-Executive Director
Appointed: May 2009
Committees: Remuneration
Michael is an advisor, investor and director
for digital and television businesses in the
US and UK. Previously he was President
of Programming at InterActiveCorp,
the internet conglomerate, where he
was responsible for overseeing the
development, acquisition and distribution
of content based websites. Prior to this
Michael was Chairman of Universal
Television Group, in charge of the creative
and strategic direction of the television
business. He served four years as Chief
Executive Officer of Channel 4 Television,
where, in addition to commissioning
programmes, he refocused the channel
to exploit digital opportunities and
launched two new channels, FilmFour and
E4. Before joining Channel 4, Michael worked
as Controller of BBC One and Director of
Television, and as Controller of BBC Two.
Governance 37
Dowds and Deloitte. Ian recently retired
as Senior Partner for Deloitte in Scotland
and Northern Ireland. Prior to retiring, he
had been on the UK Board of Deloitte LLP
for over eight years. Ian was a Corporate
Finance Advisory Partner with Deloitte
and was Head of Global Advisory for some
three years and has recently joined the
Council of The Institute of Chartered
Accountants of Scotland. Ian was
appointed a non-executive director of
Killinchy Aerospace Holdings Limited,
the principal trading subsidiary of which
is Martin-Baker Aircraft Company Limited,
in January 2016.
left to right by row, from top left
Margaret Ford
Rob Woodward
George Watt
Genevieve Shore
Anne Marie Cannon
David Shearer
Michael Jackson
Christian Woolfenden
Ian Steele
He was previously a non-executive director
of EMI Group plc. Michael is a non-executive
director of Nutopia, an independent TV
production company based in the UK
and USA and of Peters, Fraser & Dunlop,
the UK literary agency. As a producer,
he is responsible for the BBC’s forthcoming
television history of art “Civilisations.”
Genevieve Shore
Non-Executive Director
Appointed: March 2012
Committees: Remuneration (Chair);
Nomination
Genevieve is a non-executive Director of
Santander UK Plc, Moneysupermarket Plc
and Next Fifteen Communications Group Plc.
She is a member of the Audit, Risk and
Remuneration Committees for these
companies, chairing the Remuneration
Committee at Next Fifteen Communications
Group Plc. Genevieve is also an advisory
board member for Lego Education, Great
Fridays, a digital design services company
in San Francisco and of the education
technology companies, Scoot & Doodle, the
Education Appstore and Edukey. Previously
Genevieve has held leadership roles with
Pearson Group Plc including CIO, CPMO,
Global Digital Director, and Group Sales
Director, Penguin.
Christian Woolfenden
Non-Executive Director
Appointed: June 2014
Committees: Audit
Christian has extensive operational,
consumer marketing and digital
experience. He is Chief Marketing Officer
for Lyst.com, the online fashion retailer.
Previously Christian was Managing
Director for Paddy Power, the betting
and gaming operator and prior to that
he was Global Brand Director for Bacardi,
responsible for marketing and product
innovation in over 20 markets worldwide.
Christian began his career at Procter
& Gamble working in both finance and
marketing roles across key European
businesses.
Anne Marie Cannon
Non-Executive Director
Appointed: November 2014
Committees: Audit; Remuneration
Anne Marie has over 30 years experience
in the energy industry and investment
banking. For the past 14 years Anne Marie
was a senior advisor at Morgan Stanley
specialising in international upstream
mergers and acquisitions. Anne Marie has
previously held financial and commercial
roles with Shell UK, J Henry Schroder
Wagg and Thomson North Sea and was
an executive director on the boards of
Hardy Oil and Gas and British Borneo.
She is currently a non-executive director
with Premier Oil and Aker ASA and Deputy
Chair of Det norske oljeselskap.
Ian Steele
Non-Executive Director
Appointed: November 2015
Committees: Audit; Remuneration
Ian qualified as a CA in 1980 with Arthur
Young McClelland Moores. His subsequent
career involved time with The British Linen
Bank, Touche Ross, Rutherford Manson
STV Annual Report and Accounts 2015
Corporate governance report
Principles statement
STV Group plc is fully committed to the highest standards of corporate governance, believing that such
standards are vital to overall business integrity and performance and considers it crucial that it conducts
itself honestly, transparently and responsibly.
The Board has a critical role to play in shaping business performance while creating and delivering long term
return for shareholders. This requires it to determine business strategy and the Company’s appetite for risk;
to monitor management’s performance in delivering against that strategy and ensure that the risk
management measures and internal controls put in place are appropriate and effective. The Board must
ensure that the funding and talent available to the business will support it in the longer term and must remain
aware of the Company’s obligations to its shareholders and other stakeholders, responding to their needs
with transparent reporting and active engagement.
Statement of compliance
The Board considers that, in respect to the financial year ended 31 December 2015, the Company has complied
fully with the UK Corporate Governance Code 2014 (the Code) and this section, together with the report by
the Directors on remuneration, set out on pages 50 to 69, describes in greater detail how the principles and
provisions of the Code have been complied with. The Code is published by the Financial Reporting Council
from whom paper and downloadable versions can be obtained via its website: www.frc.org.uk.
Risk management and internal control
Risk is inherent in the Company’s business and activities and the review of risk and risk management is embedded
throughout the Company. Further information can be found on the Risk Management section of the Strategic
Report on pages 24 to 27.
Board of Directors
The membership of the Board throughout the year and up to the date of signing the financial statements
was as follows:
Chairman
Baroness Margaret Ford
Chief Executive Officer
Rob Woodward
Chief Financial Officer
George Watt
Non-Executive Directors
David Shearer (Senior Independent Director)
Jamie Matheson (retired 30 April 2015)
Michael Jackson
Genevieve Shore
Christian Woolfenden
Anne Marie Cannon
Ian Steele (appointed 1 November 2015)
The powers of the Directors (including in relation to the issue or buy back of shares) are exercisable in
accordance with the Companies Act and the Company’s Articles of Association. Any amendments to the
Company’s Articles of Association require a special resolution in accordance with the Companies Act 2006.
BOARD OF DIRECTORS
11% Chairman
22% Executive Directors
67% Non-Executive Directors
Governance 39
Board appointment, balance and independence
The Board has considered the independence of the Non-Executive Directors and regards all of the current
Directors to be of independent character and judgement.
The Non-Executives mix of skills and wide-ranging business experience is a major contribution to the proper
functioning of the Board and its committees, ensuring that matters are debated and that no individual
or group dominates the Board’s decision-making processes. Non-Executive Directors have a particular
responsibility for ensuring that the business strategies proposed are fully discussed and critically reviewed
and their collective experience and broad range of skills gained through a range of sectors means they can
constructively challenge management in relation both to the development of strategy and performance
against the goals set by the Board.
The Non-Executive Directors do not participate in any share option or pension scheme of the Company.
All Directors have access to the advice and services of the Company Secretary and, at the Company’s expense,
the Company’s legal advisors. The Company Secretary is an employee of the Company and attends all meetings
of the Board and its committees. She is responsible for making sure that all Board procedures are observed and
for advising the Board on corporate governance matters. She also has responsibility for ensuring the flow of
information within the Board, its committees and between senior management and Non-Executive Directors.
Board responsibilities
There is a well-established division of authority and responsibility within the Company through the separation
of the roles of Chairman and Chief Executive which is set out in writing and has been approved by the Board.
The Chairman is responsible for leadership of the Board, ensuring its effectiveness and that Directors receive
accurate, timely and clear information, as well as setting the agenda. She provides a conduit for communication
to and from shareholders and facilitates the contribution of the Non-Executive Directors while ensuring
constructive relations between the Executive and Non-Executive Directors.
The Board has responsibility for making all key strategic, management and commercial decisions which are
necessary for the conduct of the Company’s business as a whole, including the approval of corporate strategy,
annual budgets, interim and full year financial statements and reports, dividends, accounting policies and
all significant capital projects, acquisitions and disposals. The Chief Executive and his management team are
responsible for developing the appropriate business strategy and, once approved by the Board, for ensuring
that the strategy is effectively implemented in accordance with the approved operating plan and within a
sound system of internal controls to achieve the agreed objectives. He creates a framework of strategy, values,
organisation and objectives to ensure the successful delivery of results, and allocates decision making and
responsibilities accordingly. Compliance with policies and achievement against objectives is monitored by
the Board through monthly and quarterly performance reporting and budget updates.
STV Annual Report and Accounts 2015 Corporate governance report
It is the duty of all Directors to promote the success of the Company for the benefit of its members as a whole,
and in doing so, to have regard, amongst other matters, to the:
• likely long term-consequences of any decision
• interests of the Company’s employees
• need to foster the Company’s business relationships
• impact of the Company’s operations on the community and the environment
• desirability of maintaining a reputation for high standards of business conduct
• need to act fairly as between members of the Company.
The Senior Independent Director is available to shareholders should they request a meeting or have concerns
which they have been unable to resolve through normal channels or when such channels would be
inappropriate. He provides a communication conduit between the Chairman and the Non-Executive Directors
and is responsible for leading the Non-Executives discussion on the Chairman’s performance at the annual
performance review.
The Board recognises that it is accountable to the Company’s shareholders for good governance to ensure
efficient and effective management in order to deliver shareholder value over the long-term.
Board meetings
Attendance of Board members at Board and Committee meetings held in 2015 is set out below:
Board
Audit
Committee
Remuneration
Committee
Nomination
Committee
Number of meetings held:
Attendance:
Margaret Ford
David Shearer
Rob Woodward
George Watt
Michael Jackson
Genevieve Shore
Christian Woolfenden
Anne Marie Cannon
Jamie Matheson (retired 30 April 2015)
Ian Steele (appointed 1 November 2015)
8
8
8
8
8
8
8
8
8
3
1
3
2*
3
3*
3*
3
1**
1
3
2*
1*
1*
1*
3
3
1*
1**
2
1*
3
3
3
1*
3
* Attended at the invitation of the respective Chairman.
** Appointed to Remuneration and Audit Committees on 24 August
The Board meets regularly, at least eight times a year with additional meetings taking place as and when
required. The Board has adopted a schedule of matters reserved for its decision which can be found on
the Company’s website at www.stvplc.tv, the principal matters being approval of:
• financial statements and shareholder circulars; dividend policy; significant changes in accounting
policies or practices
• Board and committee appointments and terms of reference; terms and conditions of
Non-Executive and Executive Directors
• the Company’s long-term objectives and commercial strategy; annual operating and capital
expenditure budgets
• material contracts and significant variations in terms of the Company’s borrowing facilities
• corporate activity, which is subject to the City Code on Takeovers and Mergers or of a material nature
• major changes to the Company’s pension schemes, share schemes and treasury policy
• risk management, internal control policies and corporate governance arrangements.
Governance 41
All Directors attended the 2015 annual Strategy Day and agreed it was an extremely useful forum
at which to discuss in detail STV’s goals and objectives and its overall strategic direction.
When a Director is unable to attend or dial in to a Board or Committee meeting, he or she receives
the papers for consideration at that meeting and has the opportunity to discuss any issues or make
any comments in advance and, if necessary, follow up with the Chairman of the relevant meeting.
Board focus
The main areas of Board focus during 2015 included:
Operational and financial performance, including monitoring
• receipt of operational and financial updates at each Board meeting
• review of monthly finance reports, including details of performance against
budget and the Company’s financial position
• approval of the Annual Report and the full and half-year financial results
• approval and declaration of dividend
• approval of the 2016 Budget
• approval of two executive share schemes.
Strategy
• presentations on initiatives to grow revenue
• presentations on proposed new projects
• approval of the Company’s strategy
• discussion on various regulatory issues.
Corporate development
• agreement of STV’s corporate objectives and values for 2015.
Governance and risk
• consideration of the appropriateness of the financial statements being
prepared on a going concern basis
• approval of the revised Risk Register
• consideration of the group’s risk appetite and approval of a Risk Management
Policy and Framework document
• approval of the internal audit plan for 2016
• approval of the 2016 AGM Resolutions
• approval of the appointment of Ian Steele
• performance evaluation
• review of the triennial pension scheme valuation process
• approval of revised Terms of Reference for the Audit Committee.
Investor relations
• review of institutional feedback following meetings between the Company’s
broker and shareholders after both the full and half year results
• review of the draft analysts’ results presentations, when reviewing the
Company’s full and half-year financial results.
Corporate Social Responsibility
• involvement in the STV Children’s Appeal 2015.
STV Annual Report and Accounts 2015 Corporate governance report
Board committees
The Board is supported by the Audit, Remuneration and Nomination Committees.
Chairman
Board of
Directors
Audit
Committee
Remuneration
Committee
Nomination
Committee
Leadership
Team
Senior Management
Team
Nomination Committee
• Reviews the structure, size
and composition of the Board
• Reviews succession plans
and makes recommendations
to the Board
• Identifies and nominates
candidates for approval
of the Board
• Recommends to the
Board membership of the
Board Committees
Leadership
Board of Directors
• Determines long-term direction and strategic aims
• Sets framework of appropriate and robust controls
• Ensures efficient and effective operation of the business
• Engages with shareholders and stakeholders
Audit Committee
• Monitors the integrity of the
published financial statements
• Reviews the effectiveness of
internal financial controls
• Reviews the operation of the risk
management process
• Discusses with the Company’s
auditors, matters arising
from their work
• Reviews the scope of work
and reports produced by the
internal auditors
• Monitors and reviews the
effectiveness of the internal
audit function and the
external auditors
Remuneration Committee
• Determines and agrees with
the Board the framework for
the remuneration policy
• Reviews the ongoing
appropriateness and relevance
of the remuneration policy
• Approves the design of,
targets for, and payments
from any performance related
pay schemes
• Reviews the design of all share
incentive plans
• Determines the remuneration
packages for Executive Directors
and other senior executives
• Reviews and notes annually
the remuneration trends across
the Company
Page 43
Page 50
Page 43
Audit Committee Report
Remuneration Committee Report
Nomination Committee Report
Governance
43
Each of these Committees held an evaluation of their work and effectiveness during the year, the results of
which were reported to the Board by the respective Committee Chairman. The reviews concluded that each
Committee was operating in an effective manner and carrying out its respective delegated duties efficiently.
The Board and its Committees will continue to review critically their procedures, effectiveness and
development throughout the year ahead with any concerns or observations raised with the Chairman.
Remuneration Committee
The members of the Committee during the year were:
Genevieve Shore (Chairman)
Michael Jackson
Jamie Matheson (retired 30 April 2015)
Anne Marie Cannon (appointed 25 August 2015)
The activities of the Remuneration Committee are described within the report by the Directors on remuneration
which can be found on pages 50 to 69. The terms of reference of the Remuneration Committee are available on
request and on the Company’s website www.stvplc.tv
Report from the Nomination Committee
The members of the Committee during the year were:
Baroness Margaret Ford (Chairman)
David Shearer
Genevieve Shore
The Nomination Committee has written terms of reference which are available on request and on the
Company’s website www.stvplc.tv
At the start of the year, the Nomination Committee, having discussed succession in detail and with the
assistance of the Chief Executive, recommended and the Board subsequently agreed, that an additional
Non-Executive Director be sought to ensure progressive refreshing of the Board.
A candidate identified from the previous search process for Non-Executive Directors, Ian Steele, was
approached. This previous process had been conducted by Bird & Co who has no other connection with STV.
Ian Steele’s appointment was recommended to the Board. This was unanimously agreed and he joined the
Board on 1 November 2015.
Report from the Audit Committee
The members of the Committee during the year were:
David Shearer (Chairman)
Christian Woolfenden
Jamie Matheson (retired 30 April 2015)
Anne Marie Cannon (appointed 25 August 2015)
Ian Steele (appointed 17 December 2015)
The Audit Committee, chaired by David Shearer, who has recent and relevant financial experience,
is authorised by the Board to investigate any activity within its terms of reference and to seek any information
it requires from any employee. All employees are directed to co-operate with any request made by the
Committee. The Audit Committee has written terms of reference and these were revised and updated during
the year to better reflect the 2014 UK Corporate Governance Code. These now incorporate specific reference to
the Committee’s obligations to review the group’s procedures for detecting fraud and review the systems and
controls for the prevention of bribery. These terms of reference are available on request and on the Company’s
website www.stvplc.tv
STV Annual Report and Accounts 2015 Corporate governance report
At the invitation of the Committee, meetings are attended by the Chairman, Chief Executive Officer, Chief
Financial Officer and the Group Financial Controller. Representatives from both the external and the internal
auditors also attend each meeting and the Committee meets separately with senior management and the
external auditors.
The Chairman of the Audit Committee reports to the subsequent meeting of the Board on the Committee’s
work and the Board receives a copy of the minutes of each meeting. The papers considered by the Committee
are available to any Director who is not a member, should they wish to receive them. The Committee’s
effectiveness is reviewed annually as part of the Board evaluation process.
The Audit Committee and the Board place great emphasis on the objectivity of the Company’s auditors
PricewaterhouseCoopers LLP (PwC) in their reporting. PwC were appointed auditor in 2013 following a tender
process. The audit partner and manager attend all Audit Committee meetings to ensure full communication of
matters relating to the audit. The auditors have confirmed to the Committee that in relation to their services to
the Company they comply with UK regulatory and professional requirements, including Ethical Standards issued
by the Auditing Practices Board and that their objectivity is not compromised.
The auditors are required each year to confirm in writing to the Committee that they have complied with the
independence rules of their profession and regulations governing independence having taken into consideration
matters such as the individual independence of members of the engagement team and the firm as whole
and the nature of any non-audit work undertaken. Before PwC takes on any engagement for other services
from the Company, careful consideration is given as to whether the project could conflict with its role as auditor
or impair its independence. This includes consideration of the safeguards which are in place to mitigate the
risks to independence.
In general, the auditor may not provide a service which:
a) creates a mutuality of interest
b) places the auditor in a position to audit their own work
c) results in the auditor acting as a manager or employee of STV
d) puts the auditor in the role of advocate for STV.
During the year the Committee reviewed the Company’s interim and full year results prior to publication as well
as its risk management procedures and the revised risk register, incorporating relevant, social, ethical and
environmental risks.
Significant issues considered by the Audit Committee in relation to the 2015 financial statements included
the following:
Deferred production stock
Deferred production stock forms part of inventory and is stated in the accounts at the lower of cost and net
realisable value. Programme costs are expensed in line with expected future revenues which are a judgemental
area. A detailed forecast of future secondary sales is prepared by management based on historic experience
and expected future trends Management’s treatment and disclosures in relation to deferred production stock
were considered to be appropriate.
Pensions
The assumptions in relation to discount rate, salary increases, RPI and CPI were reviewed and were all within
a range that management considered appropriate as well as being consistent with assumptions being used
by other companies. Although the assumptions in relation to mortality had historically been higher than
were typically used by other companies, STV’s figures were supported by an independent report obtained
by management and were unchanged from 31 December 2014. Management’s treatment and disclosures
in relation to IAS19 were considered to be appropriate.
Governance 45
Goodwill
At least annually management undertakes a detailed formal impairment review of goodwill. The most
significant judgements are in setting the assumptions underpinning the calculation of the value in use of the
cash generating unit, specifically the achievability of the short term financial budget assumptions underlying
the valuation process. Specific focus is also given to the long term growth rate and discount rate. Business Plans
and budgets are Board approved and underpin the cash flow forecasts. During the year, a £5.1m provision for
impairment has been recognised against the carrying value of goodwill to reflect the historic trading
performance in Productions.
Independence of the external auditor
The Audit Committee is responsible for approving non-audit work and in order to preserve auditor’s objectivity
and independence, the Company has a policy regulating the provision of non-audit services by the auditors.
The Chief Financial Officer must obtain the approval of either the Chairman of the Audit Committee or another
Committee member if the preference is to use the auditors and must provide an explanation as to why the
auditors are the most suitable supplier of services. A case by case decision is therefore necessary and the
auditors cannot be engaged for non-audit work without reference to the Audit Committee. It is felt that this
process ensures shareholders receive value for money and the Audit Committee keeps this policy under review.
PwC also has an internal process whereby pre-engagement approval of all non-audit services is required to be
given by the Audit Partner.
During the year under review, the non-audit work carried out by PwC consisted mainly of advice in relation
to tax developments and tax compliance. Given that much of the information was derived from the audited
financial records, the Audit Committee agreed that PwC was the most suitable supplier. There will always
be projects for which the external auditor is best placed to perform the work to the extent that its skills
and experience along with its knowledge of the Company makes it the most appropriate provider. While it
is important that the independent role of external auditors in reporting to shareholders is not compromised,
it is equally important that the Company is not deprived of expertise when and where it is needed.
External audit effectiveness
With regard to the requirement for the Audit Committee to assess the effectiveness of the external audit
process, feedback is sought from the Audit Committee, the Chief Financial Officer as well as STV’s finance
team. This covers various aspects of the external audit process, including the audit team; how the audit
is both planned and executed; the role of management; and communication. Comments are considered
by the Audit Committee and relayed to the auditors and to management. Following this process, the Audit
Committee concluded that the external audit process operated effectively and efficiently.
Internal audit
Deloitte LLP (Deloitte) are the Company’s internal auditors and the primary focus of its comprehensive
internal audit programme is to provide assurance over key revenue streams and operating costs. Deloitte
review systems and processes and ensure that the Company is operating effectively, efficiently and
economically and in accordance with legislative requirements and professional standards. Its work is
designed to provide insights into the internal control environment and efficiencies of key processes, as well
as providing feedback on the effectiveness of interfaces between the business and enabling functions.
Deloitte attends all meetings of the Audit Committee and provides update reports on which specific areas have
been reviewed in terms of the planned internal audit for the year, together with an evaluation of the current
controls and the key findings and recommendations.
The Board reviews the internal control process and its effectiveness on an ongoing basis to ensure it remains
robust and to identify any control weaknesses and can confirm that no significant failings or weaknesses were
identified in relation to the review.
STV Annual Report and Accounts 2015 Corporate governance report
Committee activities
The principal activities undertaken by the Board Committees during 2015 included:
Committee
Nomination
Activity
Succession Planning
Remuneration
Proposed Remuneration Framework
Audit
Review of Year End Results
Review of Auditor report on Year End Results
Review of Prelim Announcement
Review of Annual Report
Review of Independence of Auditors
Review of external audit/non-audit fees
Approval of Internal Audit Plan for the year
Review of internal controls/risk management
Approval of Updated Terms of Reference
Remuneration
Approval of Remuneration Policy and Report
Month
January
January
February
February
August
August
October
October
Audit
Nomination
Audit
Nomination
December
Remuneration
Review of Half Year Results
Review of Auditor report on Half Year Results
Internal Audit update
Review of internal controls/risk management
Succession Planning
In depth Business Risk Review Internal Audit Update
Performance Evaluation
Succession Planning – Ian Steele
Performance Evaluation
Review of Remuneration Policy
Performance Evaluation
Approval of Executive Directors’:
– Bonuses
– Salary and bonus for 2016
– Bonus Plan targets
–
LTIP Targets
Leadership team
The Leadership Team comprises the Executive Directors; Director of Channels; Deputy Director of Channels;
Director of Content; Commercial Director; Director of Corporate Development; HR & Communications Director;
Chief Technology and Platforms Officer; and the Head of Legal and Regulatory Affairs. The purpose of the team
is to drive the implementation of the Company’s strategic priorities while addressing critical business issues
and opportunities. The team meets weekly and is focused on group-wide performance with the emphasis on
collaboration and teamwork and ensures that there are clear lines of accountability.
Senior Management Team
The Senior Management Team is made up of approximately 35 managers from around the Group who meet
monthly to discuss strategy, share knowledge and address specific issues.
Governance
47
Diversity
STV takes the concept of diversity seriously and further details can be found on page 30.
Achieving the right mix of talent, skills and experience on the Board is critical for business and STV’s aim is to
have an appropriate level of diversity in the Boardroom to support the achievement of its strategic objectives.
Diversity of perspective is vital and having Directors from different backgrounds and with different skill sets
ensures that decisions are challenged in a credible manner and ‘group think’ is avoided. Each person is
different and diversity is about recognising, respecting and valuing these differences.
BOARD
LEADERSHIP TEAM
STAFF
33% Women
67% Men
30% Women
70% Men
47% Women
53% Men
STV has chosen not to target a specific number or percentage of women for its Board, although one third
of its Directors is female, but to concentrate its efforts on encouraging more women to remain within the
Company and progress through the ranks to senior positions. 47% of staff are female.
Training and development
All Directors are given a comprehensive introduction to the Company’s business and continuing development
is provided through briefing sessions in the course of regular Board meetings covering business specific and
broader regulatory issues and including presentations from members of senior management. Directors are
also provided with and encouraged to take up opportunities to meet major shareholders.
Development and training of Directors is an ongoing process. Throughout their period in office the Directors
are regularly updated on the Company’s business; legal matters concerning their role and duties; the
competitive environments in which the Company operates; and any other significant changes affecting the
Company and the market sector of which it is a part. In addition, the Board regularly receives presentations
from senior managers within the Company to ensure that Directors’ knowledge, skills and familiarity with the
Company’s businesses and people are updated and maintained. Board training and development is considered
as part of the annual performance evaluation exercise and during the year the Chairman confirmed with each
Director that they were content with the level of training and development given.
Performance evaluation
The effective functioning of the Board is key to the success of the Company and STV recognises that Board
evaluation is extremely valuable in contributing to Board effectiveness: a formal appraisal encourages all
Directors to reflect on what the Board has accomplished, as well as on what it should be doing, how it
operates and whether any improvements can be made.
Accordingly, each year evaluation is undertaken in order to assess the Board, its committees, the Directors
and the Chairman. The process aims to enhance effectiveness and also provides an opportunity for the
Non-Executive Directors – through their exposure on other Company boards – to draw on their experience
and to suggest areas of best practice. As in previous years, this is an internal exercise led by the Chairman
and the Board considers this to be a sufficiently rigorous process.
The evaluation is conducted using a detailed questionnaire which canvasses the opinions of the directors on
a wide range of matters including Board composition, Board meetings and processes, Board performance,
the performance of individual Directors as well as the Board’s communication both with external stakeholders
and the Company’s senior management. The performance evaluation questionnaire is followed by meetings
STV Annual Report and Accounts 2015 Corporate governance report
of the full Board, the Chairman with the Non-Executive Directors only, and Non-Executive Directors without
the Chairman present. The Non-Executive Directors, led by the Senior Independent Director, are responsible
for evaluating the performance of the Chairman, taking into account the views of the executive directors.
On completion of the 2015 performance evaluation during which open and frank discussions were held, the
performance of each director was found to be effective and following the appointment of Ian Steele, the mix
of skills and experience on the Board was felt to be appropriate.
Measured against the principal duties expected of it, and building upon the progress of previous years, the
Board continued to operate effectively and to meet in full its obligations to support management, to monitor
performance across a wide area, and to maintain its strategic oversight. Accordingly, the process concluded
that the Board provides the effective leadership and control required for a listed company. It was recognised
that there was open dialogue between all directors enabling issues to be raised and dealt with as they
occurred rather than waiting for the next formal evaluation process and it was agreed that the stability and
cohesiveness of the Board had been vital to the Board’s continued effectiveness. There were already in place
appropriate Board processes, papers and agendas and there was good communication and interaction
between the Board and the Leadership Team.
The evaluation process further concluded that the Board was made up of strong and independent minded
Non-Executive Directors each of whom made a significant contribution to the overall success of the Company
and who demonstrated full commitment in their respective roles. All were able to allocate sufficient time
to the Company enabling them to discharge their responsibilities effectively.
The Chairman reported the results of the evaluations at the Board meeting held on 22 February 2016.
The Nominations Committee confirmed to the Board that the contributions made by the directors offering
themselves for re-election at the AGM in April 2016 continue to be effective and that the Company should
support their re-election.
Re-election
Directors stand for election by shareholders at the first Annual General Meeting following their appointment
and thereafter for re-election at intervals of no more than three years. At each AGM, at least one third of the
Directors are required to retire. Copies of the Non-Executives’ letters of appointment are available for inspection
at the Company’s registered office and will be available at the Annual General Meeting.
The Chairman and other members of the Board recommend that the Directors retiring be re-elected and
their biographies can be found on pages 36 and 37. The Chairman has confirmed that the Directors retiring and
seeking re-election have been subject to performance evaluation, apart from Ian Steele who joined the Board
on 1 November 2015, and as part of this evaluation the Chairman confirms that they continue to demonstrate
commitment to their role and continue to fulfil their functions responsibly.
In accordance with the Code, Mr Shearer is subject to annual re-election as he has served more than nine years
on the Board. The Nomination Committee, having reviewed his performance as a director and his contribution
to the operation of the Company, concluded that the Company benefitted from his services and his
performance continued to be effective and demonstrated commitment to the role. The Committee has
therefore recommended that a resolution be put to shareholders for his re-election as a Non-Executive Director.
TENURE OF NON-EXECUTIVE DIRECTORS AND CHAIRMAN
29% more than 6 years
N/A 4-6 years
29% 2-4 years
29% 1-2 years
13% 0-1 year
Governance 49
Relations with shareholders
STV believes that open and regular dialogue with investors is the basis for a trusted relationship. Its corporate
website (www.stvplc.tv) has information for institutional and private shareholders alike and shareholders
seeking information may contact the Company directly throughout the year. In addition, STV has an electronic
communication facility to allow shareholders to receive information more quickly and in a manner more
convenient for them.
The Board recognises the importance of having continual engagement with its shareholders and fully
supports the principles of the Code which encourage open dialogue between companies and their
shareholders. The Board welcomes and encourages the participation of all shareholders at the Company’s
Annual General Meeting at which the Chief Executive provides a detailed presentation on the activities
and performance of the Group over the preceding year. All Directors attend the AGM so shareholders have
the opportunity to meet with them to discuss particular areas of focus and ask any questions.
SHAREHOLDERS BY TYPE
97% Institutionals
2% Board of Directors
1% Other individuals
(excl. Directors)
Institutional shareholders
STV undertakes a comprehensive programme of meetings and events for institutional investors and research
analysts throughout the year and the Board are kept fully informed of feedback given to the Chief Executive and
Chief Financial Officer in the course of their extensive round of investor meetings. The Board routinely receives
updates on significant movements on the share register, analysts’ consensus forecasts and market sentiment.
The Chairman, the Senior Independent Director and other Non-Executive Directors are available to meet
with shareholders to discuss governance and strategy, and develop a balanced understanding of their issues
and concerns and various meetings have taken place with shareholders during the year. Discussions at these
meetings are conveyed to all Directors in order that each can develop an understanding of major shareholders’
views on the Company.
Communication with major shareholders, analysts and the financial press is maintained throughout the
year and feedback from major shareholders is regularly sought and reviewed by the Board. Copies of analysts’
research relating to the Company are circulated to all Directors upon publication and a brief analysis of
the shareholder register is prepared for each Board meeting.
Detailed reviews of the Company’s performance and financial position are included in the Chairman’s
statement, the Chief Executive’s review and the Performance Review, which the Board uses to present
a balanced and comprehensive assessment of the Company’s position and prospects. Such communication
is designed to establish a mutual understanding of objectives.
Private shareholders
We are always pleased to hear the views of our private shareholders and to answer queries by telephone
or in writing through emailing our Company Secretary jane.tames@stv.tv. We encourage shareholders to
make maximum use of our website to access Company reports, notices of meetings and general shareholder
information. Shareholders can also check their shareholding at any time by visiting the Registrar’s website
at www.capitashareportal.com
STV Annual Report and Accounts 2015
Remuneration report
Genevieve Shore
Chairman of the Remuneration Committee
Annual Statement
On behalf of the Board, I am pleased to introduce the Directors’ Remuneration Report for the year ended
31 December 2015.
Last year the Committee undertook a comprehensive review of the executive remuneration structure resulting
in the implementation of a new Remuneration Policy, which was approved by shareholders at the 2015 AGM.
The Committee reconfirmed the key principles which should underpin the executive remuneration framework as:
• closely aligning rewards with the delivery of Company strategy
• ensuring a significant proportion of awards are based upon long term success criteria
• reflecting changes in best practice and governance
• simplifying and streamlining the framework for clarity and effectiveness
• ensuring market competitiveness.
Aligning remuneration to our strategy
As set out earlier in this report, the Board has a clear strategic vision to achieve growth and create shareholder
value. As we diversify earnings through our digital and production businesses, we will also continue to focus
upon growing our share of the core business and advertising revenues.
Following the changes approved by shareholders at our AGM last year, we operate a simple and transparent
remuneration framework aligned with our strategy and the interests of our shareholders as summarised below:
Salary/ Benefits/Pension
Annual bonus
LTIP
– Market competitive fixed pay
– Salary increases of 2% for 2016
– Fixed benefits allowance (£16k)
and cash pension allowance
(20% of salary)
– Maximum: 125% of salary
– 20% of any bonus deferred for
three years
– Linked to challenging performance
targets (currently operating profit,
cash flow and personal objectives)
– Maximum: 100% of salary
– Shares vest after three years based on
the delivery of stretching performance
target ranges
– 50% EPS growth
– 30% Non-broadcast operating profit
– 20% relative TSR vs FTSE Small Cap
Recovery provisions – apply to bonus and LTIP awards
Shareholding guidelines – Executive Directors to build holding of 100% of salary
Governance
51
With this revised framework in place and aligned to our strategic objectives, the Committee expects
the new Policy to remain in place for the time being until a further Policy vote is required in 2018.
In reviewing the Policy last year, the Committee considered the time horizons in the incentive framework
in the context of the stated views of some investors. The Committee concluded that a vesting/performance
period of three years remains appropriate for the Company in the context of our business model, talent
markets, shareholding requirements and the current shareholdings of our Executive Directors. The Committee
will keep this area under review.
The Executive Directors received salary increases of 2% with effect from 1 January 2016. The average salary
award to staff was 3.1%.
2015 Bonus plan outcomes
Payments have been triggered under the Bonus Plan for 2015 as a result of performance against operating
profit, PBT and personal objectives targets. The Executive Directors received bonus payments of 61% of salary
(49% of bonus potential maximum). The performance achieved and the plan targets are set out in the table
on page 56.
Vesting of the 2013 Value Creation Plan (VCP)
The VCP was a one-off long-term incentive awarded during 2013 aimed at driving the transformation
of business performance by allowing executives to share in the value created for shareholders over a fixed
three year performance period which ended on 31 December 2015. At the start of the VCP performance
period, the STV share price was £1.00. Under the plan participants would receive their allocated share of
5% of the aggregate value created above a threshold price of £1.50 and 7.5% of the value above £2.00.
Over the life of the VCP, the Company has delivered outstanding business performance, which has translated
into exceptional above-market returns for our shareholders, culminating in an average share price during
December 2015 (the period used to determine vesting) of £4.60, significantly in excess· of the VCP thresholds.
This represents the creation of over £140 million of shareholder value over the period, representing around 70%
compound annualised total shareholder return.
As a result of the exceptional share price performance, the initial application of the formula in the VCP indicated
payouts of approximately £2.9m and £1.5m for the CEO and CFO, respectively. However, vesting was subject to
an aggregate cap on the number of shares contained in the plan rules and therefore the value to be delivered
(as shown in the single figure of remuneration table on page 63) is £1.5m and £0.8m, respectively.
No further awards have been or will be made under the VCP and we have now transitioned to the more
conventional framework described above. The Committee believes the VCP served the business and
shareholders well in terms of driving the exceptional performance and value delivered over the period.
STV Group plc –Share price performance January 2013-December 2015
600p
500p
400p
300p
200p
100p
0p
January 2013
December 2015
STV Annual Report and Accounts 2015 Remuneration report
Correcting an error in our Remuneration Policy
Under the LTIP, the level of threshold vesting is 25% of the maximum. This was determined by the Committee
based on market practice and was disclosed during the extensive shareholder consultation and in the Directors’
Remuneration Report. Unfortunately, due to a typographical error, it was incorrectly stated as 20% in the
Remuneration Policy which was approved by shareholders at the 2015 AGM. Given the binding nature of the
Policy, it is important that it accurately captures the detail of our Policy and therefore this year we will utilise
the provision in the regulations to seek your approval for a ‘revision’ to the Policy which will correct the error. For
the avoidance of doubt, there are no changes to the Policy and this does not represent an increase in threshold
vesting, but the correction of an error. The Policy will continue to expire in 2018.
The Annual Report on Remuneration provides additional detail on the payments and awards made to the
Directors in the year and on our intentions for 2016. The Annual Report on Remuneration together with this
Annual Statement is subject to an advisory shareholder vote at the AGM on 26 April 2016.
At last year’s AGM we received over 98% support for both remuneration related resolutions. I look forward
to receiving your continued support at our 2016 AGM.
Genevieve Shore
Chairman of the Remuneration Committee
Governance 53
Directors’ Remuneration Policy
The Directors’ Remuneration Policy was approved at the AGM held on 30 April 2015 and applied from that date.
As described in the Annual Statement on page 52, due to a typographical error the level of threshold vesting
under the LTIP was incorrectly stated in the ‘Policy Table for Executive Directors’ as 20% of the maximum.
Therefore, at the AGM to be held on 26 April 2016 shareholders will be asked to approve a revision to the Policy
in accordance with Section 439A of the Companies Act 2006 in order to effect the correction of the Policy.
The revised Directors’ Remuneration Policy (including the corrected level of threshold vesting in the table on
page 55) is set out below. For the avoidance of doubt, there are no other changes to the Policy and the Policy
will continue to expire in 2018.
The Committee reserves the right to make any remuneration payments and payments for loss of office
(including exercising any discretions available to it in connection with such payments) notwithstanding that
they are not in line with this Policy where the terms of the payment were agreed (i) before the Policy came into
effect or (ii) at a time when the relevant individual was not a Director of the Company and, in the opinion of
the Committee, the payment was not in consideration for the individual becoming a Director of the Company.
For these purposes ‘payments’ includes the Committee satisfying awards of variable remuneration and, in
relation to an award over shares, the terms of the payment are ‘agreed’ at the time the award is granted.
The Committee may make minor amendments to the Policy (for regulatory, exchange control, tax or
administrative purposes or to take account of a change in legislation) without obtaining shareholder approval.
Policy table for Executive Directors
Operation
Maximum
opportunity
Objective and
link to strategy
Base salary
The Committee
sets salaries as
a retainer for the
Executive Directors
to recognise status
and responsibility
to deliver the
strategy
Benefits
To provide
competitive levels
of employment
benefits consistent
with role
When determining the salary of the
Executive Directors, the Committee
takes into consideration a number of
factors including:
• the scale and complexity of the
Company and the scope and
responsibilities of the role
• the skills, experience and performance
of the individual
• the Committee’s assessment of the
competitive environment including
consideration of similar positions in
organisations of broadly similar size
and complexity, in particular companies
within the media sector
• pay and conditions throughout the
Company. Salaries are normally
reviewed annually, with any changes
effective from 1 January in the
financial year
Executives are entitled to receive
a taxable cash allowance in lieu of
benefits in kind, including car and
private medical insurance. This cash
benefits allowance is excluded from
the calculation of any other benefit
provided by the Company
The Executive Directors are eligible to
participate in the Company’s all employee
share plans, as offered from time to time,
on the same terms as all employees
Performance
conditions
None
There is no prescribed maximum salary
In general, any salary increase for
Executive Directors will be in line with
other employees in the Group
The Committee retains discretion to
award larger increases where considered
appropriate to reflect the factors
described in this table
Salaries with effect from 1 January 2016
are set out on page 62
Benefit values vary year-on-year,
depending on premiums, and the
maximum potential value is the cost
of the provision of the benefits outlined
Participation in all employee share plans
is subject to HMRC plan rules and limits
None
STV Annual Report and Accounts 2015 Remuneration report
Objective and
link to strategy
Pension
To provide
competitive
levels of
retirement
benefit
Objective and
link to strategy
Annual bonus
Aligns reward to
the delivery of
annual financial
and strategic
performance
measures. Deferral
creates long term
alignment with
shareholders
Operation
Maximum
opportunity
Performance
conditions
The maximum pension contribution
or taxable cash allowance in lieu
of pension is 20% of salary
None
The Group operates a defined benefit
(DB) scheme (closed to new members),
a defined contribution (DC) scheme
and a group personal pension plan
Executive Directors have the option
to receive a taxable cash allowance
in lieu of pension benefits
George Watt was a participating member
of the Scottish and Grampian Television
Retirement Benefits Scheme, which is an
approved defined benefits occupational
pension scheme, until 31 March 2010,
when he became a deferred member.
No benefits accrued under this scheme
during 2015
Operation
Maximum
opportunity
Performance conditions
and assessment
125%
of salary
This framework will apply with effect
from the 2016 financial year (the
Bonus Plan described on page 56
applied in 2015)
Provides an opportunity for additional
reward (up to a maximum specified
as a % of salary) based on annual
performance against targets set
and assessed by the Committee
A proportion of any bonus (20%) is
deferred into Company shares under
the terms of the STV Deferred Bonus Plan
(DBP) and normally vest over three years,
subject to continued employment
Recovery and dividend equivalent
provisions apply (see explanatory notes)
Payment is determined by reference
to performance assessed over one financial
year based on a range of financial and
strategic performance measures
These measures currently include:
• operating profit
• cash flow
• personal objectives
As well as determining the measures and
targets, the Committee will also determine
the weighting of the various measures,
which will normally be weighted towards
the financial measures
At threshold and target performance
12.5% and 50% of base salary, respectively,
is currently payable
The Committee has discretion to use
different or additional measures, weightings
or payout schedules to ensure that the
bonus framework appropriately supports
the business strategy and objectives for
the relevant year
The Committee has the discretion to adjust
targets for any exceptional events that may
occur during the year
Governance 55
Objective and
link to strategy
Long Term
Incentive Plan
Aligns reward
to the delivery
of long-term
financial
performance
delivered for
shareholders
Operation
Maximum
opportunity
Performance conditions
and assessment
The maximum
award in
respect of
a financial
year is 100%
of salary
Awards are made under the terms
of the STV Long Term Incentive Plan
Awards are normally in the form of a
right to acquire shares in the Company
for a zero or nominal amount
Awards vest over a period of at least
three years, subject to the satisfaction
of performance conditions
A post-vesting holding period may apply
Recovery and dividend equivalent
provisions apply (see explanatory notes)
Vesting is determined by reference to
performance assessed over a period of at
least three years, based on performance
measures which the Committee consider
to be aligned with the delivery of strategy
and long term shareholder value
The measures for the 2015 plan were:
• earnings per share (EPS) 50%
• non-broadcast operating profit 30%
• relative total shareholder return 20%
The Committee has discretion to use
different or additional measures or
weightings to ensure that the LTIP remains
appropriately aligned to the business
strategy and objectives
The Committee has the discretion to adjust
targets for any exceptional events that
occur during the year
The threshold for vesting is 25% of the
maximum award
Shareholding
requirement
To strengthen
long term
alignment with
shareholders
Executive Directors are required
to hold shares equivalent to 100%
of their annual salary
The
required
level of
holding
is 100%
of salary
Notes to the Policy table
Changes to remuneration policy from previous policy
The following changes have been made to the previous Policy:
• introduction of a new bonus framework to replace the Bonus Plan with effect from 2016.
This includes an element of deferral under the Deferred Bonus Plan
• introduction of a new LTIP to replace the VCP
• introduction of recovery provisions.
Recovery provisions
Awards of variable remuneration made under the Policy Table for Executive Directors are subject to recovery
provisions which allow the Committee to reduce or cancel unvested DBP/LTIP awards, or seek to reclaim paid or
deferred cash or DBP/LTIP awards, in certain circumstances.
The recovery provisions for the annual bonus apply for three years from the date of payment of the bonus/grant
of deferred shares, and two years from the date of vesting under the LTIP. The circumstances which may trigger
the recovery provisions are as follows:
• a material misstatement of the Company’s (or any Group members) audited financial results
• misconduct on the part of the participant
• an error in assessing a performance condition
• action by a participant or participants which resulted in a material breach and
subsequent loss of the Company’s Channel 3 licence(s).
STV Annual Report and Accounts 2015
Remuneration report
Dividend equivalents
The Committee may determine that the number of shares to which a participant’s DBP or LTIP award relates
shall increase to take account of dividends that would have been paid on vested shares on such terms as it
determines, or that an equivalent amount should be paid in cash.
Performance measures and targets
The Committee selects performance measures for the annual bonus which appropriately support the business
strategy and objectives for the relevant year. The financial metrics used (such as operating profit) are the key
metrics used by the Directors to oversee the operation and performance of the business. Personal measures
allow the Committee to reward the delivery of key strategic objectives. The performance measures for the
LTIP are aligned with the delivery of strategy and long term shareholder value. The performance targets are
determined annually by the Committee, and are set at an appropriately stretching level taking into account
relevant business forecasts.
Discretion
The Committee has discretion in several areas of policy as set out in this report. The Committee may also
exercise operational and administrative discretions under relevant plan rules approved by shareholders
as set out in those rules.
Differences in remuneration policy for all employees
All employees of STV are entitled to base salary, pension and benefits. The maximum opportunity available
is based on the seniority and responsibility of the role. Long-term incentive awards are only available to the
leadership team and key senior staff by invitation.
Legacy incentive plans
The table below summarises the terms of the incentive plans approved by shareholders at the AGM on
24 April 2013 (and contained in the Remuneration Policy approved by shareholders at the AGM on 23 April
2014). These arrangements are due to expire based on performance up to the end of 2015 and no further
awards will be made under these plans.
Objective and
link to strategy
Bonus Plan
The Bonus
Plan aligns
reward to key
strategic objectives
over the short-
medium term
Operation
Maximum opportunity
The Maximum Annual Contribution is 125% of
salary for all Executive Directors
At threshold performance bonus payable is
equivalent to 12.5% of base salary and at target
performance, bonus payable is equivalent to 50%
of base salary
The Bonus Plan operates in respect of three
Plan Years (2013, 2014 and 2015)
Contributions to each participant’s Bonus Plan
account are made following the publication
of the audited financial statements, based on
the satisfaction of the performance targets
Following the end of each of the three Plan Years,
50% of the balance in the account is paid out.
The remaining 50% is deferred as shares
The balance of the account pays out in the
fourth year (payable upon confirmation of 2016
full year results)
A forfeiture provision applies such that 50% of
the account balance is forfeited if a minimum
threshold target is not met in any financial year
Governance Objective and
link to strategy
Value
Creation Plan
The Value
Creation Plan
(VCP) was
implemented
to align the
interests of
the Executive
Directors with
those of
shareholders
by focusing
on delivering
superior returns
to shareholders
57
Operation
Maximum
opportunity
Performance conditions
and assessment
Performance Units were
granted to Executive Directors
on 11 March 2013
These Performance Units will
convert into a Nil-Cost Option
over sufficient shares to deliver
the participant’s share of the
Maximum Incentive Value
The Nil-Cost Option may
be exercised until the tenth
anniversary of the date of
grant of the Performance
Units
The number of Performance
Units allocated to Executive
Directors was:
R Woodward
G Watt
330,000
170,000
The aggregate number of
Performance Units under
option as a result of the
VCP is limited to one million
The Maximum Incentive Value for
all participants will be conditional
upon achieving an average share
price of £1.50 or higher over the
last 30 days of the three year
performance period (the
Measurement Price)
The share price at date of grant
on 1 January 2013 was £1.00.
Provided the Measurement
Price is above £1.50, a percentage
of the additional value created
is used to create a pool (the
Incentive Value) in line with the
table below:
Measurement
price
Below £1.50
£1.50-£2.00
Above £2.00
Contribution
percentage1
0%
5%
7.5%
1 The contribution percentage is
the proportion of the value created
allocated to participants
The Incentive Value, calculated
in accordance with the table
above will be multiplied by the
number of shares in issue at the
Measurement Date to determine
the Maximum Incentive Value
for all participants
STV Annual Report and Accounts 2015
Remuneration report
Non-Executive Directors
The table below sets out the key elements of the policy for non-Executive Directors:
Objective and
link to strategy
To attract
Non-Executive
Directors with
the requisite skills
and experience
Operation
The fees of the Non-Executive Directors are determined
by the Board based upon recommendations from the
Chairman and Chief Executive Officer (or, in the case of
the Chairman, based on recommendations from the
Senior Independent Non-Executive Director and the Chief
Executive Officer)
The fee for Non-Executive Directors encompasses a basic
fee and may also include supplementary fees for committee
or other duties
The Chairman receives a single fee for all duties
Fees are normally reviewed annually with changes effective
from 1 January
Fees are paid in cash
The Chairman and Non-Executive Directors do not participate
in any bonus or share incentive scheme, nor do they
participate in any pension arrangements
Maximum
opportunity
Fees are set at a level which
reflects skills, experience, time
commitment and appropriate
market data
Fees are set within the
limits set by the Articles
of Association
Fees with effect from
1 January 2016 are set out
on page 63
Illustrations of application of remuneration policy
The graphs below seek to demonstrate how pay varies with performance for the Executive Directors based
on the Policy Table for Executive Directors.
Rob Woodward
£000
£487
100%
£1,376
28%
36%
36%
£833
11%
30%
59%
George Watt
£000
£476
11%
30%
59%
£281
100%
£783
28%
36%
36%
Minimum
On Target
Maximum
Minimum
On Target
Maximum
LTIP
Annual bonus
Fixed pay (salary, benefits, pension)
LTIP
Annual bonus
Fixed pay (salary, benefits, pension)
Assumptions used in determining the level of pay-out under given scenarios are as follows:
• Minimum – reflects fixed pay only (base salary as at 1 January 2015,
benefits, and cash in lieu of pension contributions at 20% of salary)
• Target – reflects fixed pay, target bonus (62.5% of salary) and LTIP awards
(100% of salary) vesting at threshold performance (25% of maximum)
• Maximum – reflects, maximum bonus (125% of salary) and LTIP awards
vesting in full (100% of salary).
Governance
59
Recruitment remuneration policy
The Committee’s approach to recruitment remuneration is to pay no more than it considers necessary
to secure appropriate candidates to the role.
The principle is that the pay of any new recruit would be assessed following the same principles as for the
Executive Directors. The structure of the remuneration package would therefore normally include the
components, and be subject to relevant maxima, as set out in the Policy Table for Executive Directors. Salaries
would typically be set at an appropriately competitive level to reflect skills and experience. They may be set at
a level to allow future salary progression to reflect performance in role. The Executive Director would be eligible
to participate in the annual bonus and LTIP for the year subject to a maximum level of variable remuneration
which may be awarded (excluding any compensatory awards referred to below) at 225% of salary.
Where an individual forfeits remuneration with a previous employer as a result of appointment to the Company,
the Committee may make compensatory payments or awards to facilitate recruitment. In determining the
structure of these commitments, the Committee will normally seek to replicate, as far as practicable, the timing
and performance requirements of remuneration foregone. Such payments or awards could include cash (where
cash-based remuneration is forfeited) as well as share awards. There is no limit on the value of such
compensatory awards, but the Committee’s intention is that the value awarded would be no more generous
than a broadly equivalent economic value of the forfeited remuneration.
In instances where the new Executive Director relocates from one workbase to another, the Company may
provide compensation to reflect the cost of relocation. The level of relocation package will be assessed on
a case by case basis but will take into consideration any cost of living differences, housing allowance and
schooling in accordance with the Company’s normal relocation package for employees.
Where an existing employee is promoted to the Board, the policy would apply from the date of promotion
but there would be no retrospective application of the policy in relation to subsisting incentive awards or
remuneration arrangements. Accordingly, existing elements of the remuneration package of the employee
would be honoured and form part of the ongoing remuneration for the person concerned.
Service contracts
When setting notice periods the Committee has regard to market practice and corporate governance best
practice. Notice periods will not be greater than 12 months.
Director
Executive
R Woodward
G Watt
Director
Non-Executive
Baroness Ford
D Shearer
M Jackson
G Shore
C Woolfenden
A M Cannon
I Steele
Date of contract/
letter of appointment
28 February 2007
27 February 2001
Unexpired term
Rolling contract
Rolling contract
Notice period by
Company or Director
12 months
12 months
Date of contract/
letter of appointment
Date(s) of
(re)appointment
Unexpired as at
March 2016
1 June 2013
28 February 2007
1 May 2009
1 March 2012
1 June 2014
1 November 2014
1 November 2015
23 April 2014
23 April 2014
30 April 2015
30 April 2015
30 April 2015
30 April 2015
1 year 1 month
1 year 1 month
2 years 1 month
2 years 1 month
2 years 1 month
2 years 1 month
–
2 years 8 months
STV Annual Report and Accounts 2015 Remuneration report
Policy on payment for loss of office
When determining any loss of office payment the Committee will always seek to minimise cost to the Company
whilst seeking to reflect the circumstances in place at the time.
In the event of termination by the Company, there will be no compensation for loss of office due to misconduct
or normal resignation. In other circumstances Executive Directors may be entitled to receive compensation
for loss of office which will be paid monthly for a maximum of twelve months. Such payments will be equivalent
to the monthly salary, pension supplements, and benefits that the Executive would have received if still in
employment with the Company. Executive Directors will be expected to mitigate their loss within a 12 month
period of their departure from the Company.
The treatment of incentive awards would be determined by the relevant plan rules. If the individual is a ‘good
leaver’, the treatment of awards will be as set out in the table below (which also describes the Committee’s
areas of discretion). The ‘good leaver’ circumstances are death, ill-health, injury, disability, the sale of the
business or entity that employs the participant out of the Group, or for any other reason at the Committee’s
discretion (redundancy, and retirement by agreement with the Company are also ‘good leaver’ terms under
the Bonus Plan and VCP). If the individual is not a good leaver, unvested awards will lapse in full. It is the
Committee’s policy to only apply its discretion to determine an individual is a ‘good leaver’ where the
circumstances at the time are, in its opinion, sufficiently exceptional, and to provide a full explanation
to shareholders where discretion is exercised.
Treatment of awards for a ‘good leaver’
Annual bonus
The Committee has discretion to make a payment under the annual bonus in respect of the year of
cessation. This would reflect performance in the year and be pro-rated to reflect the period worked
in that year.
DBP
LTIP
Unvested DBP awards will usually continue, unless the Committee determines that the award should
vest as soon as reasonably practicable following the date of cessation.
An award will normally vest in full but the Committee retains discretion to determine the extent to
which it vests, taking account of the period of time that has elapsed since the award was granted
until the date on which the participant ceases to hold office or employment with the Group.
Unvested LTIP awards will usually continue, unless the Committee determines that the award
should be released as soon as reasonably practicable following the date of cessation. The Committee
will decide the extent to which an unvested award vests in these circumstances, taking into account
the extent to which any performance condition is satisfied and, unless the Committee in its discretion
determines otherwise, the period of time that has elapsed since the award was granted until the date
of cessation.
Governance
61
There is no contractual provision agreed prior to 27 June 2012 that could impact the quantum of payment.
The Committee reserves the right to make additional payments where such payments are made in good faith
in discharge of an existing legal obligation (or by way of damages for breach of such obligation); or by way of
settlement or compromise of any claim arising in connection with the termination of an Executive Director’s
discharge of office or employment.
Change of control
DBP
LTIP
An award will normally vest in full but the Committee retains discretion to determine the extent to
which it vests, taking account of the period of time that has elapsed since the award was granted
until the date on which the participant ceases to hold office or employment with the Group.
Awards will vest, taking into account the extent that any performance condition has been satisfied, and,
unless the Committee determines otherwise, the period of time which has elapsed between the grant
date and the relevant event. Alternatively, the Committee may permit participants to exchange awards
for equivalent awards which relate to shares in a different company.
Consideration of employment conditions elsewhere in the Company
In making annual pay decisions the Committee gives consideration to pay and employment conditions in the
rest of the Company. The Committee is provided with data on the remuneration structure for the Executive
leadership team, and uses this information to work with the HR team to ensure consistency of approach
throughout the Company.
To appraise itself of conditions elsewhere in the Company, the Committee invites the HR & Communications
Director to present on the proposals for salary increases for the employee population generally, and on any
other changes to remuneration policy within the Company.
The Committee actively considers the relationship between general changes to employees pay and conditions
and any proposed changes in the remuneration packages for Executive Directors to ensure it can be sufficiently
robust in its determinations in light of the position of the Company as a whole.
Although the Committee takes into account the pay and conditions of other employees, the Company did not
consult with employees when developing the Policy. No comparison metrics were used by the Committee.
Consideration of shareholder views
The views of the Company’s shareholders are very important and the Committee welcomes constructive
feedback with respect to the remuneration policies or structure which we take on board to formulate
our arrangements.
STV Annual Report and Accounts 2015 Remuneration report
Annual Report on remuneration
This section of the report sets out how the Policy will be implemented in 2016 and how it was implemented
during 2015. Some sections of this report, where indicated, have been audited.
Statement of implementation of remuneration policy for 2016
Executive Directors
The salaries for 2016 are set out below:
Executive Director
R Woodward
G Watt
2015 Salary
£000
2016 Salary
£000
%
increase
388
218
395
223
2%
2%
Salary levels of employees throughout the Company were increased by an average of 3.1% in 2016.
Benefits and pension will be provided for as set out in the Policy Table for Executive Directors.
For 2016, the Executive Directors will participate in the annual bonus framework as described in the Policy
Table for Executive Directors on page 53. The bonus will be based on stretching targets set for the performance
measures in the table below. The Committee is of the opinion that the performance targets for the Bonus
Plan are commercially sensitive, and that it would be detrimental to the interests of the Company and its
shareholders to disclose them at this time. It is the Committee’s intention to disclose the targets after the
end of the financial year if the Committee is satisfied they are no longer commercially sensitive.
Performance
measure
Operating profit
Cash flow
Personal objectives
Totals
Weighting
50%
25%
25%
Threshold
bonus
contribution
(% of salary)
Maximum
bonus
contribution
(% of salary)
6.25%
3.125%
3.125%
12.5%
62.5%
31.25%
31.25%
125%
Governance 63
In 2016, the Executive Directors will receive awards under the LTIP approved by shareholders at the 2015 AGM
and described in the policy table on page 53. The awards made to Executive Directors will be made at the level
of 100% of salary and will vest after three years subject to the following performance targets.
Performance
measure
EPS*
Non-broadcast
operating profit
Relative TSR
*pre-exceptional
Calibration of targets
Annualised growth in adjusted EPS from FY15 to FY18
Operating profit for non-broadcast activities in FY18
Ranked position of the Company’s total shareholder
return (TSR) against the constituents of the FTSE Small
Cap Index (using 3 month averaging)
Weighting
Threshold vesting
(25% of maximum)
Maximum
vesting
50%
30%
20%
7%
£4.0m
Median
12%
£9.0m
Upper
quartile
There is no vesting for below threshold performance and straight-line vesting between threshold
and maximum.
Non-Executive Directors
The fees for the Chairman and Non-Executive Directors will remain unchanged
from 2015, effective at 1 January 2016:
Non-executive Director
Chairman fee
Basic NXD fee
Additional fees:
Senior Independent Director
Sitting on the Company’s Audit and/or Remuneration Committees
Chairing the Audit or Remuneration Committee
£
95,000
32,500
12,500
5,000
2,500
Single total figure of remuneration
Executive Directors (audited)
The table below sets out the single total figure of remuneration for each Executive Director
for the 2015 financial year. Comparative figures for 2014 are also shown.
Executive Director
R Woodward
G Watt
Salary
(£000)
388
380
218
214
Taxable
benefits
(£000)
Annual
bonus
(£000)
Long-term
incentives
(£000)
Pension
(£000)
16
16
16
16
237
189
134
106
1,552
n/a
799
n/a
76
76
43
43
Total
(£000)
2,269
661
1,210
379
2015
2014
2015
2014
Notes
Taxable Benefits – Includes a taxable cash allowance in lieu of benefits-in-kind, including car and private medical insurance.
Annual Bonus – this includes the value of bonus earned in respect of the relevant financial year (including any amount deferred
under the Bonus Plan and re-valued in accordance with the plan rules).
Long-term incentives – value of the VCP vested with respect to performance over the period 31 December 2015.
Pension – Both Executive Directors receive a taxable cash allowance in lieu of pension. George Watt is a deferred member
of the defined benefits scheme and as such no additional value was accrued by him under this plan during the year.
External appointments
During 2015, Rob Woodward received £41,000 as a non-executive director of Regenersis plc and George Watt
received £20,000 as a non-executive director of SpaceandPeople plc. In accordance with STV’s policy, each
was entitled to retain their respective fees.
STV Annual Report and Accounts 2015 Remuneration report
Non-Executive Directors (audited)
The table below sets out the single total figure of remuneration for each non-Executive Director. Non-Executive
Directors do not participate in any of the Company’s incentive arrangements nor do they receive any benefits.
Non-Executive Director
Financial year
Basic fees
£
Additional fees1
£
Total fees
£
Baroness Ford
D Shearer
J Matheson2
M Jackson
G Shore
C Woolfenden3
A M Cannon3,4
I Steele5
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
95,000
95,000
45,000
43,333
10,833
31,667
32,500
31,667
32,500
31,667
32,500
15,958
32,500
5,417
5,417
–
–
–
7,500
7,500
1,667
5,000
5,000
5,000
7,500
5,000
5,000
3,000
1,763
–
628
–
95,000
95,000
52,500
50,833
12,500
36,667
37,500
36,667
40,000
36,667
37,500
18,958
34,263
5,417
6,045
–
Notes
1 Additional fees relate to a fee of £5,000 per annum for sitting on one or more of the Company’s Audit and Remuneration Committees
and an additional fee of £2,500 per annum to reflect the additional duties involved in chairing the Audit and Remuneration Committees.
2 Jamie Matheson retired by rotation in April 2015
3 Christian Woolfenden was appointed to the Board on 1 June 2014 and Anne Marie Cannon on 1 November 2014
4 Anne Marie Cannon was appointed to both the Audit and Remuneration Committees on 24 August 2015
5 Ian Steele was appointed on 1 November 2015
Annual bonus (audited)
The table below sets out the targets and achieved performance against the performance targets for the Bonus Plan
for the year ended 31 December 2015.
Annual contribution
(% salary)
Performance
targets
Weighting Threshold Maximum Threshold Maximum
Contribution
to Plan
account
for 2015
(% salary)
Actual
performance
outcome
Contribution
to Plan
account
for 2015
(£000)
R Woodward
G Watt
25% 3.125% 31.25% £18.5m £23.6m
£20.3m
14%
25% 3.125% 31.25% £17.2m £21.9m
25% 3.125% 31.25% £11.9m £15.2m
£19.1m
£11.4m
25% 3.125% 31.25%
See
below
100%
12.5%
125%
–
–
–
16%
Target Not Met
31%
61%
121
237
55
61
31
34
68
133
Performance
condition
Operating
Profit*
Group
PBT*
Cash flow
Personal
objectives
Total
*pre-exceptional
Governance 65
The personal objectives were set at the start of the year by the Committee. These targets related to key
strategic business targets; reduction of key strategic risks to increase financial stability and investment
certainty and progress against KPIs. The Committee assessed performance against these targets and
concluded that they had been fully satisfied at the end of the financial year, resulting in a bonus payment
equal to 31% of salary to each Executive Director. The Committee considers that the actual performance
targets and outcomes relating to the personal objectives are commercially sensitive at this current time
and are therefore not disclosed.
Bonus deferred under the Bonus Plan (audited)
Under the Bonus Plan, the earned bonus for the year is added to each individual Executive Director’s plan
account. Half of the balance on the plan account at the end of the financial year is released and 50% deferred
in accordance with the terms of the plan (see page 55). The deferred balances on each Executive Director’s
plan account are set out below.
A
B
C
D
E
F
G
H
Plan
account
brought
forward
(shares)
51,705
29,145
Executive
Director
R Woodward
G Watt
Plan
account
brought
forward
£
Contribution
into plan
account
for 2015
£
Plan account
balance
following
contribution
for 20151
£
Amount
released
following
contribution
for 2015
£
Amount
released
from plan
account
for 2015
(50% of
Column D)
£
Plan
account
carried
forward
£
188,726
236,879
503,164
266,285
251,582
251,582
106,383
133,524
283,626
150,102
141,813
141,813
Plan
account
carried
forward
(shares)
48,850
27,536
1 Plan account balance following contribution for 2015 includes revaluation of plan account brought forward (b) as per plan rules.
The plan account balance carried forward is subject to an annual performance condition related to the
Forfeiture Threshold. Where the Forfeiture Threshold is not achieved in the following Bonus Plan year, 50% of
the balance of the plan account earned in respect of previous Bonus Plan years but not paid will be forfeited.
The Committee considered the Forfeiture Threshold and determined that none of the plan account should lapse.
2015 was the final year of operation of the Bonus Plan described above. The amount shown under each plan
account will be deferred for a further year and then released to the participants (ie in early 2017). From 2016
onwards, the executive directors will participate in the more conventional annual bonus and deferred bonus plan.
Vesting of the 2013 VCP
The VCP granted performance units which would convert into nil-cost options over sufficient shares to deliver
the participants’ share of the ‘Incentive Value’. This was based on the extent to which the average share price
during December 2015 (the ‘Measurement Price’) exceeded certain thresholds. The VCP included a cap such
that nil cost options could not be granted over more than one million shares. The CEO and the CFO were
granted 330,000 and 170,000 performance units, respectively from a total grant of one million performance
units. The Committee confirmed that the Measurement Price was £4.60 and as the number of shares required
(1,843,629) was in excess of the cap, the maximum number of nil-cost options which could be granted was
limited to one million. The Executive Directors will receive nil-cost options equal to their proportionate share
of the maximum, as shown in the table opposite.
STV Annual Report and Accounts 2015 Remuneration report
Measurement price
Percentage accruing to Incentive Value
Amount accruing to Incentive Value
based on Measurement Price of £4.60
£1.50 - £2.00
Above £2.00
5%
7.5%
TOTAL
STV shares required to deliver
value using Measurement price
Executive Director
R Woodward
G Watt
Number of Performance
Units
Share of aggregate
Performance Units
Number of nil-cost
options to be granted
(Share of Performance
Units x one million cap)
330,000
170,000
33%
17%
336,735
173,470
£982,456
£7,685,752
£8,668,207
1,843,629
(i.e. £8,668,207/£4.60)
Value
(number of nil-cost
options x
Measurement price)
£000
1,552
799
Under the rules of the VCP, the nil-cost options will be exercisable until the tenth anniversary of the original grant of
the performance units and have no further performance conditions. It is anticipated that the nil-cost options will be
granted during March 2016 and will be disclosed in next year’s report.
The table below shows awards made to the Executive Directors during 2015 under the LTIP:
Executive Director
R Woodward Executive
G Watt
Award
type
LTIP
LTIP
Basis
of award
100%
of salary
100%
of salary
Face value
of award*
Amount vesting
at threshold
Performance
period
£388k
£218k
25%
of maximum
25%
of maximum
1 January 2015-
31 December 2017
1 January 2015-
31 December 2017
*calculated using the closing share price (£4.25) on the date prior to the date of award (10 June 2015)
The awards are subject to the following performance conditions:
Performance
measure
EPS
Non-broadcast
operating profit*
Relative TSR
*pre-exceptional
Calibration of targets
Annualised growth in adjusted EPS from FY15 to FY18
Operating profit for non-broadcast activities in FY18
Ranked position of the Company’s total shareholder
return (TSR) against the constituents of the FTSE Small
Cap Index (using 3 month averaging)
Weighting
Threshold vesting
(25% of maximum)
Maximum
vesting
50%
30%
20%
7%
£4.0m
Median
12%
£9.0m
Upper
quartile
Scheme interests awarded in 2015 financial year (audited)
No scheme interests were awarded to the Executive Directors during 2015.
Payments to past Directors (audited)
No payments to past Directors were made during the year.
Payments for loss of office (audited)
No payments for loss of office were made during the year.
Governance 67
All employee share plans
A new three year Savings Related Share Option Plan (SAYE) was launched in November 2015 at a price of 402p.
Rob Woodward was granted 2,238 options. George Watt was already fully subscribed under the 2014 SAYE
scheme so did not participate in the 2015 plan.
Statement of Directors’ shareholding and share interests (audited)
Executive Directors are required to build up a shareholding equal to 100% of salary. The table below
summarises the Directors’ interests in shares and the extent to which the shareholding requirements have
been achieved. A policy was put in place in February 2016 whereby Non-Executive Directors are required to
hold shares equivalent to 100% of their annual fee and are given a period of three years in which to do this.
Number of
beneficially
owned
shares1
Number of
deferred
Bonus Plan
shares
subject to
conditions
Number of
SAYE
options
subject to
conditions
Number
of unvested
LTIP awards
at 31/12/15
Total
interests
held at
31/12/15
Monetary
value of
shares at
31/12/152
Shareholding
requirements
(% salary)
Current
shareholding
(% salary)
Requirement
met
Director
Executive
R Woodward
G Watt
265,769
27,536
419,322
48,850
4,900
5,325
91,200
419,322 £2,159,508
51,408
265,769 £1,368,710
100%
100%
557%
628%
Non-Executive
Baroness Ford
D Shearer
M Jackson
G Shore
C Woolfenden
A M Cannon
I Steele
25,958
100,000
–
16,063
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
25,958
£133,684
100,000
£515,000
–
–
16,063
£82,724
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Notes
1 Beneficial interests include shares held directly or indirectly by connected persons.
2 Based on shares beneficially held.
Dilution
The following table sets out the current level of dilution against the limits in the Bonus Plan
and VCP and sets out the commitments to issue shares made during the financial year reported:
Maximum
10% dilution in ten years
5% dilution in ten years
Current dilution
Additional dilution during
the year in question
7.09
4.36
1.02
0.07
The DBP and LTIP are subject to a limit of 10% in ten years.
Yes
Yes
n/a
n/a
n/a
n/a
n/a
n/a
n/a
STV Annual Report and Accounts 2015 Remuneration report
Performance graph and table
The graph below shows the Company’s performance, measured by total shareholder return (TSR), compared
with the performance of the FTSE Small Cap and FTSE Small Cap Media indices. The FTSE Small Cap index will
be used for performance measurement under the new LTI plan and the FTSE Small Cap Media index provides
a comparison of performance in the media sector.
700
600
500
400
300
200
100
0
2008
2009
2010
2011
2012
2013
2014
2015
FTSE Small Cap index
FTSE Small Cap Media index £
STV Group plc
The table below shows the Chief Executive Officer’s remuneration over the past six years:
Year
2015
2014
2013
2012
2011
2010
Single figure of total
remuneration
(£000)
R Woodward
Bonus pay-out
(as % maximum
opportunity)1
Long-term incentive
vesting rates
(as % maximum
opportunity)
2,269
661
601
696
958
472
49
46
54
31
15
90
100%
–
–
100%
–
–
Notes
1 Maximum potential bonus opportunity has varied in the period between 2010 and 2015 and therefore this is not a like-for-like comparison.
Percentage change in Chief Executive Officer’s remuneration
The table below shows the percentage increase in the salary, benefits and annual bonus of
the Chief Executive Officer and all employees (on a per capita basis) between 2014 and 2015:
Chief Executive Officer
All employees
Salary
2%
3.1%
Taxable
benefits
0%
0%
Bonus
49%
n/a
Governance
69
Relative importance of spend on pay
The table below sets out the relative importance of spend on pay in the 2014 and 2015 financial years.
These were the most significant outgoings for the Company in the last financial year:
Significant distributions
Overall spend on pay
Dividend or share buyback
2015
£19.6m
£3.5m
2014
% change
£19.4m
£1.6m
1%
119%
Consideration by the Directors’ of matters relating to Director’s remuneration
Members of the Committee
During the year, the Committee comprised of the following Independent Non-Executive Directors: Genevieve
Shore (Chairman), Michael Jackson, Jamie Matheson (retired 30 April 2015), Anne Marie Cannon (appointed
25 August 2015) and Ian Steele (appointed 1 November 2015). The Committee met three times during the year.
The Committee is responsible for recommending to the Board the remuneration policy for Executive
Directors and senior management and for setting the remuneration packages for each Executive Director.
The Committee also has oversight of the remuneration policy and packages for other senior members of staff.
The Committee has formal terms of reference which describes its full remit and which can be downloaded
from the STV website.
Advisors to the Committee
The Committee seeks independent advice to assist in considering executive remuneration. This includes
updating the Committee on trends in compensation and governance matters and advising the Committee
in connection with the design and operation of the Company’s incentive arrangements.
During the year, the Committee received advice from Deloitte LLP. Deloitte LLP is a member of the
Remuneration Consultants’ Group and has signed up to that Group’s Code of Conduct on executive
remuneration consulting. On that basis, the Committee is satisfied that the advice received was objective
and independent. Deloitte LLP was also the Company’s internal auditor during the period. The Committee
reviewed the nature of the services provided and was satisfied that no conflict of interest existed in the
provision of these services, and that the advice provided was objective and independent. The total fees paid
to Deloitte LLP during the year for advice to the Committee were £33,000.
In the course of its deliberations during the period under review, the Committee sought the assistance of
the Chairman and Chief Executive Officer on matters relating to Directors’ performance and remuneration.
The Chairman, Chief Executive Officer and the HR & Communications Director attend meetings by invitation
except when their individual remuneration arrangements are discussed.
Statement of voting at general meeting
The table below shows the remuneration related votes at the AGM held on 30 April 2015.
2014 Remuneration Report
2014 Remuneration Policy
29,492,885
27,047,231
99.30
98.47
208,321
421,063
0.70
1.53
29,702,735
1,529
29,702,735
2,234,441
Votes for
%
Votes against
% Total votes cast
Votes withheld*
* A vote withheld is not a vote in law and counts neither for nor against a resolution.
Genevieve Shore
Remuneration Committee Chairman
14 March 2016
STV Annual Report and Accounts 2015
Directors’ report
The Directors present the Directors’ report, together with the audited accounts for the year ended
31 December 2015. The Directors’ report comprises pages 70 to 72 and the sections of the annual
report incorporated by reference are set out below:
Directors during 2015 financial year – See page 38
Greenhouse gas emissions – See page 32
Employee equality and diversity – See page 30
Principal risks – See pages 22 and 23
Corporate governance report – See pages 38 to 49
Employee involvement – See pages 28 to 30
Dividends
The proposed total dividend for 2015 is 10.0p per share – an increase of 25% on 2014 (8.0p). During 2015 the
final 2014 dividend of 6.0p per share was paid together with the interim dividend for 2015 of 3.0p per share.
A final dividend of 7.0p per share has been declared which, subject to approval at the AGM in April, will be paid
on 20 May 2016, to shareholders on the register at 15 April 2016.
Share capital
On 14 March 2016, there were 39,298,231 ordinary shares of 50p each in issue, each with one vote. There were
no shares held in treasury at that date. The rights and obligations to the Company’s shares are set out in its
Articles of Association.
As at 14 March 2016, the Group had been notified of the following interests of 3% or more in its shares:
Shareholders
UBS Global Asset Mgt
Crystal Amber Asset Mgt
Miton Group plc
JP Morgan Asset Mgt
Odey Asset Mgt
Artemis Fund Managers Ltd
Columbia Threadneedle Asset Mgt
AXA Investment Mgt
Slater Investments
Cavendish Asset Mgt
Blackrock Inv Mgt
Shares
3,229,274
2,827,996
2,683,701
2,600,664
2,467,000
2,311,434
1,984,001
1,867,940
1,814,436
1,786,640
1,406,035
%
8.22
7.20
6.83
6.62
6.28
5.88
5.05
4.75
4.62
4.55
3.58
Principal Activities
The principal activities of the Group are the production and distribution of content across multiple devices and
platforms, including television broadcasting, and the sale of advertising airtime and space in these media. The
Group continues to focus on its television and digital media businesses and is also involved in charitable activities.
Compliance
Part of the information that fulfils the Companies Act requirements of the Directors’ Report can be found in the
Performance Review on pages 20 and 21. The Group’s subsidiaries are listed in note 17 of the Company financial
statements and details of the principal risks and uncertainties facing the Group can be found on pages 22 and 23.
Directors and officers of the Company and its subsidiaries have the benefit of a Directors’ and Officers’ liability
insurance policy. The Company’s Articles of Association also provide that every Director and other officer of
the Company is to be indemnified out of the assets of the Company against any liability he or she incurs in
defending any proceedings brought against them (provided that judgement is not given against them).
Governance
71
Directors have a statutory duty to avoid situations where they have or can have, any interest that conflicts
or possibly may conflict with the interests of the Company. A Director will not be in breach of that duty if
the relevant matter has been authorised in accordance with the Articles of Association by the other Directors.
The Directors confirm that there have been no such conflicts during the year to 31 December 2015.
Annual General Meeting
Details of the 2016 AGM, together with the Notice of AGM can be found on pages 112 to 120.
Directors
The Directors of the Company and their profiles are detailed on pages 36 and 37. All of these Directors served
throughout the year under review with the exception of Jamie Matheson, who retired on 20 April 2015, and
Ian Steele who was appointed to the Board on 1 November 2015. The Articles of Association of the Company
require Directors to submit themselves for re-election every three years. In addition all Directors are subject
to election at the first opportunity after their appointment to the Board.
Donations
The Group made no political donations (2014: £nil) during the year.
Share capital
On 31 December 2015 there was a single class of 39,298,231 ordinary shares of 50p in issue, each with one vote.
There were no shares held in treasury at that date. Details of Directors’ interests in shares can be found on page 67.
Voting rights and restrictions on transfer of shares
None of the ordinary shares carry any special rights with regard to control of the Company. There are no
restrictions on transfers of shares other than certain restrictions which may from time to time be imposed by
laws or regulations such as those relating to insider dealing and pursuant to the Company’s share dealing code,
whereby the Directors and designated employees require approval to deal in the Company’s shares.
The Company is not aware of any arrangements between shareholders that may result in restrictions on the
transfer of securities or voting rights. Further details of the rights, restrictions and obligations attaching to the
share capital of the Company, including voting rights, are contained in the Company’s Articles of Association.
The Articles may only be amended by special resolution at a general meeting of shareholders. Copies are
available by writing to the Company Secretary and are also open to inspection at Companies House.
The STV Group plc Employee Benefit Trust, which is used to acquire and hold shares in the Company for the
benefit of employees, waives its right to vote and to dividends on the shares it holds which are unallocated.
Change of control
All of the Company’s employee share plans contain provisions relating to a change of control. On a change
of control, options and awards granted to employees under the Company’s share plans may vest and become
exercisable, subject to the satisfaction of any applicable performance conditions at that time. Certain of the
Company’s credit facilities and banking arrangements contain change of control clauses under which lenders
may cancel their commitments and declare all outstanding amounts immediately due and payable.
The Channel 3 broadcasting licences require STV, as the license holder, to notify Ofcom on a change of control.
Ofcom would thereafter require to determine that any proposed new license holder was a fit and proper person
to hold the licence. There are no other significant agreements that would take effect, alter or terminate upon
a change of control following a takeover bid.
Statement of Directors’ Responsibilities
The directors are responsible for preparing the Annual Report, the Directors’ Remuneration Report
and the financial statements in accordance with applicable law and regulations.
STV Annual Report and Accounts 2015 Directors’ report
Company law requires the directors to prepare the financial statements for each financial year. Under that law
the directors have prepared the Group and Company financial statements in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the directors
must not approve the financial statements unless they are satisfied that they give a true and fair view of the
state of the affairs of the Group and Company and the profit and loss of the Group and Company for that period.
In preparing these financial statements the directors are required to:
• select suitable accounting policies and then apply them consistently
• make judgements and estimates that are reasonable and prudent
• state whether applicable IFRSs as adopted by the European Union and applicable
UK Accounting Standards have been followed subject to any material departures disclosed
and explained in the Group and parent company financial statements respectively
• prepare the financial statements on the going concern basis unless it is inappropriate
to presume that the Group will continue in business.
The directors consider that the annual report and accounts for the year ending 31 December 2015, when
taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders
to assess the Company’s position and performance, business model and strategy.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the
Company and the Group and enable them to ensure that the financial statements and the Directors’
Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial statements,
Article 4 of the IAS Regulation.
They are also responsible for safeguarding the assets of the Company and the Group and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
Independent Auditors and Disclosure of Information
So far as the directors are aware there is no relevant audit information (that is information needed by the
Group’s auditors in connection with preparing their report) of which the Group’s auditors are not aware. Each
director has taken all steps that he or she ought to have taken as a director in order to make him or herself
aware of any relevant audit information and to establish that the Group’s auditor is aware of that information.
Directors’ Statement pursuant to the Disclosure and Transparency Rules
Each of the directors, whose names and functions are listed on pages 36 and 37 confirm that, to the best
of his or her knowledge and belief:
• the Group financial statements which have been prepared in accordance with IFRSs as adopted by
the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and
• the Strategic Report includes a fair review of the development and performance of the business and
the position of the Group, together with a description of the principal risks and uncertainties that it faces.
The directors are responsible for the maintenance and integrity of the Group’s website and legislation in
the United Kingdom governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
By order of the Board
Rob Woodward
Chief Executive Officer
14 March 2016
Governance 7373
Financial Statements
74
STV Group plc
consolidated financial
statements – Independent
Auditors’ report
81
82
80 Consolidated income statement
Consolidated statement
80
of comprehensive income
Consolidated and parent
company balance sheets
Consolidated and parent
company statement
of changes in equity
Consolidated and parent
company statement
of cash flows
Notes to the financial statements
84
109 Five year summary
83
Additional Information
110 Shareholder information
112 Notice of Annual
General Meeting
STV Annual Report and Accounts 2015 STV Group consolidated financial statements
Independent Auditors’ report to the Members of STV Group plc
Report on the financial statements
Our opinion
In our opinion:
• STV Group plc’s group financial statements and
company financial statements (the ‘financial
statements’) give a true and fair view of the state
of the group’s and of the company’s affairs as at
31 December 2015 and of the group’s profit and
the group’s and the company’s cash flows for the
year then ended;
• the group and company financial statements
have been properly prepared in accordance with
International Financial Reporting Standards (‘IFRSs’)
as adopted by the European Union; and
• the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006 and, as regards the group financial
statements, Article 4 of the IAS Regulation.
What we have audited
The financial statements, included within the Annual
Report and Accounts (the ‘Annual Report’), comprise:
• the Consolidated and Parent Company Balance Sheet
as at 31 December 2015;
• the Consolidated Income Statement and the
Consolidated Statement of Comprehensive Income
for the year then ended;
• the Consolidated and Parent Company Statement
of Cash Flows for the year then ended;
• the Consolidated and Parent Company Statement
of Changes in Equity for the year then ended; and
• the notes to the financial statements, which include
a summary of significant accounting policies and
other explanatory information.
Certain required disclosures have been presented
elsewhere in the Annual Report, rather than in the
notes to the financial statements. These are cross-
referenced from the financial statements and are
identified as audited.
The financial reporting framework that has been
applied in the preparation of the group and company
financial statements is applicable law and IFRSs
as adopted by the European Union.
Our audit approach
Overview
• Overall group materiality: £914,848
which represents 5% of profit before
tax and exceptional items (as noted
on page 80).
• We performed audit work over
both segments of the business.
• Taken together, the segments and
functions where we performed our
audit work accounted for 100% of
group revenues and 100% of group
profit before tax.
• Retirement benefit obligations.
• Productions inventory carrying value.
• Goodwill impairment assessment.
The scope of our audit and our areas of focus
We conducted our audit in accordance with
International Standards on Auditing (UK and Ireland)
(‘ISAs (UK & Ireland)’).
We designed our audit by determining materiality and
assessing the risks of material misstatement in the
financial statements. In particular, we looked at where
the directors made subjective judgements, for example
in respect of significant accounting estimates that
involved making assumptions and considering future
events that are inherently uncertain. As in all of our audits
we also addressed the risk of management override of
internal controls, including evaluating whether there was
evidence of bias by the directors that represented a risk
of material misstatement due to fraud.
The risks of material misstatement that had the greatest
effect on our audit, including the allocation of our
resources and effort, are identified as ‘areas of focus’
in the table below. We have also set out how we tailored
our audit to address these specific areas in order to
provide an opinion on the financial statements as a
whole, and any comments we make on the results of
our procedures should be read in this context. This is not
a complete list of all risks identified by our audit.
Financial StatementsMaterialityAudit scopeArea of focus
75
Area of focus
How our audit addressed the area of focus
Retirement benefit obligations
(refer to page 43 (Audit Committee Report),
page 84 (Accounting Policies) and page 106
(Notes).
The group has a net retirement benefit obligation
of £7.6m (2014: £14.9m). This balance is significant
in the context of the group balance sheet and
is dependent on key judgemental assumptions,
including discount rate, inflation rate and
mortality rates adopted by the directors in
the actuarial valuation. Given the judgements
involved and that slight movements in these
assumptions can have a significant impact on
the overall obligation this was an area of signifi-
cant focus in our audit. In particular, the mortality
assumption was outside the range that we
would typically expect to see and hence
additional focus was placed on the consideration
of this assumption.
Productions inventory carrying value
(refer to page 43 (Audit Committee Report),
page 84 (Accounting Policies) and page 100
(Notes).
Productions inventory of £14.7m (2014: £14.7m)
relates to associated costs incurred in the
production of programming which is deferred
on the Balance Sheet at the point of initial sale
and charged to the income statement in line
with the associated forecast future revenue.
This is an area of focus because the charge to
the income statement, and the carrying value
of the deferred production inventory are based
on judgements made by the Directors of
associated future revenue.
Goodwill impairment assessment
(refer to page 43 (Audit Committee Report),
page 84 (Accounting Policies) and page 97
(Notes).
The Group goodwill balance of £2.8m at the
year-end (2014: £7.9m) relating to the Productions
business is assessed for impairment on an annual
basis or where there is an impairment trigger as
required by IAS36. Goodwill has been tested for
impairment by the Directors, as a result of the
poor financial performance in 2015. This requires
the Directors to prepare a value-in-use calculation
that incorporates a number of significant
judgements about the future profitability of
the Productions business. The audit risk that
we focussed on is that the goodwill balance
may be overstated and that an impairment
charge may be required.
We considered the reasonableness of the key assumptions used in
the actuarial valuation, being the discount rate, inflation rate (based
on the Retail Price Index and the Consumer Price Index) and mortality
rates, assessing if they were a range acceptable by specialists.
All actuarial assumptions, with the exception of the mortality assump-
tions, fell within our expected range based on our knowledge and expe-
rience. For the mortality assumptions, which fell outside of the range
we would typically see, we used our specialist knowledge and
experience to challenge the Directors on their rationale and what
evidence they had to support it. Taking into account factors caused by
the specific industry and location of the business, which the Directors
evidenced through mortality studies they had commissioned, we
agreed that the judgements made by the Directors was reasonable.
We analysed the Directors’ assessment of each production in the
catalogue to determine, based on the past history of sales and licence
periods, the appropriateness of their projected future revenues for
each production individually, which are expected to be generated
through associated sales in the UK and overseas, including digital sales.
We considered the actual sales in 2015 against last year’s forecast
to establish the level of accuracy in management’s forecasting, and
also reviewed management’s calculations of forecast revenues to
arrive at a net present value.
We also performed sensitivities on the key assumptions about future
associated sales to determine how much they would need to change
before a further impairment was indicated. We consider any such
changes to be unlikely. We concluded that the assumptions were
appropriate and there was sufficient headroom, with the carrying value
of inventory not greater than its net realisable value.
From the testing performed, we consider that the judgements
exercised by the Directors are reasonable and supportable, and
that the carrying value of deferred production inventory is not
materially misstated.
We evaluated the Directors’ future cash flow forecasts for
the Productions business and their underlying assumptions,
including comparing them to the latest budgets, and testing
the underlying calculations.
We challenged the discount rate by assessing the cost of capital
for the company and comparable organisations and found it to
be in line with our expectations of long term inflation.
We also considered the long term growth rate of 2% beyond the
three year cash flows as being in line with our expectations.
When assessing the projected future cash flows of the Productions
business it was determined by management that there was insufficient
evidence, when comparing to historic trading to support the carrying
value of goodwill. An impairment charge of £5.1m has been booked,
which based on the audit procedures highlighted above, we agree
is reasonable.
Based on our evaluation of the evidence obtained, we considered the
remaining goodwill balance of £2.8m, to be sufficiently supported.
STV Annual Report and Accounts 2015 STV Group consolidated financial statements
Independent Auditors’ Report to the Members of STV Group plc continued
How we tailored the audit scope
We tailored the scope of our audit to ensure that we
performed enough work to be able to give an opinion
on the financial statements as a whole, taking into
account the geographic structure of the group, the
accounting processes and controls, and the industry
in which the group operates.
We performed audit work over both the Consumer
and Productions segments of the business.
Taken together, the segments and functions where we
performed our audit work accounted for 100% of group
revenues and 100% of group profit before tax.
Materiality
The scope of our audit was influenced by our application
of materiality. We set certain quantitative thresholds
for materiality. These, together with qualitative
considerations, helped us to determine the scope of
our audit and the nature, timing and extent of our audit
procedures on the individual financial statement line
items and disclosures and in evaluating the effect of
misstatements, both individually and on the financial
statements as a whole.
Based on our professional judgement, we determined
materiality for the financial statements as a whole
as follows:
Overall group materiality
£914,848 (2014: £864,946).
How we determined it
Rationale for
benchmark applied
5% of profit before tax and
exceptional items (as disclosed
on page 80).
We believe that profit before
tax is the primary measure
used by the shareholders in
assessing the performance of
the group, and is a generally
accepted auditing benchmark.
We agreed with the Audit Committee that we would
report to them misstatements identified during our audit
above £45,742 (2014: £43,247) as well as misstatements
below that amount that, in our view, warranted reporting
for qualitative reasons.
Going concern
Under the Listing Rules we are required to review the
directors’ statement, set out on page 84, in relation
to going concern. We have nothing to report having
performed our review.
Under ISAs (UK & Ireland) we are required to report to you
if we have anything material to add or to draw attention
to in relation to the directors’ statement about whether
they considered it appropriate to adopt the going concern
basis in preparing the financial statements. We have
nothing material to add or to draw attention to.
As noted in the directors’ statement, the directors have
concluded that it is appropriate to adopt the going
concern basis in preparing the financial statements.
The going concern basis presumes that the group and
company have adequate resources to remain in
operation, and that the directors intend them to do so,
for at least one year from the date the financial
statements were signed. As part of our audit we have
concluded that the directors’ use of the going concern
basis is appropriate. However, because not all future
events or conditions can be predicted, these statements
are not a guarantee as to the group’s and company’s
ability to continue as a going concern.
Other required reporting
Consistency of other information
Companies Act 2006 opinions
In our opinion:
• the information given in the Strategic Report and the
Directors’ Report for the financial year for which the
financial statements are prepared is consistent with
the financial statements; and
• the information given in the Corporate Governance
Statement set out on pages 38 to 49 with respect to
internal control and risk management systems and
about share capital structures is consistent with the
financial statements.
Financial Statements ISAs (UK & Ireland) reporting
Under ISAs (UK & Ireland) we are required to report to you if, in
our opinion:
• information in the Annual Report is:
– materially inconsistent with
the information in the audited
financial statements; or
We have
no exceptions
to report.
– apparently materially incorrect
based on, or materially
inconsistent with, our knowledge
of the group and company
acquired in the course of
performing our audit; or
– otherwise misleading.
• the statement given by the directors
on page 72, in accordance with
provision C.1.1 of the UK Corporate
Governance Code (the ‘Code’), that
they consider the Annual Report
taken as a whole to be fair, balanced
and understandable and provides
the information necessary for
members to assess the group’s
and company’s position and
performance, business model
and strategy is materially
inconsistent with our knowledge
of the group and company acquired
in the course of performing
our audit.
• the section of the Annual Report
on page 44, as required by provision
C.3.8 of the Code, describing the
work of the Audit Committee does
not appropriately address matters
communicated by us to the
Audit Committee.
77
The directors’ assessment of the prospects of the
group and of the principal risks that would threaten
the solvency or liquidity of the group
Under ISAs (UK & Ireland) we are required to report to you
if we have anything material to add or to draw attention to
in relation to:
• the directors’ confirmation on
page 22 of the Annual Report, in
accordance with provision C.2.1
of the Code, that they have carried
out a robust assessment of the
principal risks facing the group,
including those that would threaten
its business model, future
performance, solvency or liquidity.
We have nothing
material to add
or to draw
attention to.
We have
no exceptions
to report.
• the disclosures in the Annual Report
that describe those risks and explain
how they are being managed or
mitigated.
We have nothing
material to add
or to draw
attention to.
We have
no exceptions
to report.
We have nothing
material to add
or to draw
attention to.
• the directors’ explanation on page 21
of the Annual Report, in accordance
with provision C.2.2 of the Code, as
to how they have assessed the
prospects of the group, over what
period they have done so and why
they consider that period to be
appropriate, and their statement as
to whether they have a reasonable
expectation that the group will be
able to continue in operation and
meet its liabilities as they fall due
over the period of their assessment,
including any related disclosures
drawing attention to any necessary
qualifications or assumptions.
Under the Listing Rules we are required to review the
directors’ statement that they have carried out a robust
assessment of the principal risks facing the group and the
directors’ statement in relation to the longer-term
viability of the group. Our review was substantially less in
scope than an audit and only consisted of making
inquiries and considering the directors’ process supporting
their statements; checking that the statements are in
alignment with the relevant provisions of the Code; and
considering whether the statements are consistent with
the knowledge acquired by us in the course of performing
our audit. We have nothing to report having performed
our review.
STV Annual Report and Accounts 2015
STV Group consolidated financial statements
Independent Auditors’ Report to the Members of STV Group plc continued
Adequacy of accounting records and information
and explanations received
Under the Companies Act 2006 we are required to
report to you if, in our opinion:
• we have not received all the information and
explanations we require for our audit; or
• adequate accounting records have not been kept by
the company, or returns adequate for our audit have
not been received from branches not visited by us; or
• the company financial statements and the part of the
Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns.
We have no exceptions to report arising from this
responsibility.
Directors’ remuneration
Directors’ remuneration report – Companies Act
2006 opinion
In our opinion, the part of the Directors’ Remuneration
Report to be audited has been properly prepared in
accordance with the Companies Act 2006.
Other Companies Act 2006 reporting
Under the Companies Act 2006 we are required to report
to you if, in our opinion, certain disclosures of directors’
remuneration specified by law are not made. We have no
exceptions to report arising from this responsibility.
Corporate governance statement
Under the Companies Act 2006 we are required to
report to you if, in our opinion, a corporate governance
statement has not been prepared by the company.
We have no exceptions to report arising from
this responsibility.
Under the Listing Rules we are required to review the part
of the Corporate Governance Statement relating to ten
further provisions of the Code. We have nothing to report
having performed our review.
Responsibilities for the financial statements
and the audit
Our responsibilities and those of the directors
As explained more fully in the Statement of Directors’
Responsibilities set out on page 71, the directors
are responsible for the preparation of the financial
statements and for being satisfied that they give a
true and fair view.
Our responsibility is to audit and express an opinion on
the financial statements in accordance with applicable
law and ISAs (UK & Ireland). Those standards require us
to comply with the Auditing Practices Board’s Ethical
Standards for Auditors.
This report, including the opinions, has been prepared
for and only for the company’s members as a body in
accordance with Chapter 3 of Part 16 of the Companies
Act 2006 and for no other purpose. We do not, in giving
these opinions, accept or assume responsibility for any
other purpose or to any other person to whom this report
is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
What an audit of financial statements involves
An audit involves obtaining evidence about the amounts
and disclosures in the financial statements sufficient to
give reasonable assurance that the financial statements
are free from material misstatement, whether caused by
fraud or error. This includes an assessment of:
• whether the accounting policies are appropriate to the
group’s and the company’s circumstances and have
been consistently applied and adequately disclosed;
• the reasonableness of significant accounting estimates
made by the directors; and
• the overall presentation of the financial statements.
We primarily focus our work in these areas by assessing
the directors’ judgements against available evidence,
forming our own judgements, and evaluating the
disclosures in the financial statements.
Financial Statements 79
We test and examine information, using sampling and
other auditing techniques, to the extent we consider
necessary to provide a reasonable basis for us to draw
conclusions. We obtain audit evidence through testing the
effectiveness of controls, substantive procedures or a
combination of both.
In addition, we read all the financial and non-financial
information in the Annual Report to identify material
inconsistencies with the audited financial statements and
to identify any information that is apparently materially
incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing the
audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the
implications for our report.
Kenneth Wilson (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Glasgow
March 2016
•
•
The maintenance and integrity of the STV Group plc website is
the responsibility of the directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the financial statements since they
were initially presented on the website.
Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
STV Annual Report and Accounts 2015 Financial Statements
Consolidated income statement
Year ended 31 December 2015
Revenue
Net operating expenses
Operating profit
Analysed as:
Operating profit before exceptional items
Exceptional items
Operating profit
Finance costs – borrowings
– IAS 19 pension
Profit before tax
Tax credit/(charge)
Profit for the year
Earnings per share
Basic
Diluted
Note
2015
£m
2014
£m
6
7
9
10
10
11
12
12
116.5
120.4
(105.0)
(100.9)
11.5
19.5
20.3
(8.8)
11.5
(1.2)
(0.5)
(1.7)
9.8
1.6
19.5
–
19.5
(2.2)
–
(2.2)
17.3
(2.6)
11.4
14.7
29.8p
29.0p
38.7p
37.6p
The above consolidated income statement should be read in conjunction with the accompanying notes.
Consolidated statement of comprehensive income
Year ended 31 December 2015
Profit for the year
Items that will not be reclassified to profit or loss:
Remeasurement of defined benefit pension schemes
Deferred tax (charge)/credit thereon
Other comprehensive expense
Total comprehensive income/(expense) for the year
Note
2015
£m
2014
£m
29
23
11.4
14.7
(0.6)
(0.2)
(0.8)
(22.1)
4.4
(17.7)
10.6
(3.0)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
The company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the
parent company profit and loss account or statement of comprehensive income. The profit for the parent company
for the year was £87.7m (2014: £9.4m).
Consolidated and parent company balance sheets
at 31 December 2015
81
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Investments
Deferred tax asset
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Equity attributable to owners of the parent
Ordinary shares
Share premium
Merger reserve
Other reserve
Accumulated (losses)/profit
Total equity
Non-current liabilities
Borrowings
Derivative financial instruments
Retirement benefit obligations
Provisions
Current liabilities
Trade and other payables
Provisions
Group
Company
Note
2015
£m
2014
£m
2015
£m
2014
£m
14
15
16
17
23
18
19
20
25
25
22
21
29
24
21
24
2.8
1.7
7.5
0.7
9.6
22.3
19.2
22.1
13.7
55.0
7.9
1.6
8.8
1.2
7.4
26.9
18.3
23.1
19.8
61.2
–
–
–
47.9
1.4
49.3
–
–
–
48.4
1.9
50.3
–
214.1
–
214.1
–
152.8
–
152.8
77.3
88.1
263.4
203.1
19.6
101.8
173.4
0.9
(284.8)
10.9
19.6
101.8
173.4
0.6
(291.9)
3.5
19.6
101.8
–
0.9
108.4
230.7
19.6
101.8
–
0.6
25.0
147.0
39.4
0.1
7.8
0.5
47.8
18.3
0.3
18.6
49.2
0.2
14.9
0.6
64.9
19.3
0.4
19.7
–
–
–
–
–
–
–
–
–
–
32.7
–
32.7
56.1
–
56.1
Total liabilities
66.4
84.6
32.7
56.1
Total equity and liabilities
77.3
88.1
263.4
203.1
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
The consolidated financial statements on pages 80 to 108 were approved by the Board on 14 March 2016
and were signed on its behalf by:
Rob Woodward
Chief Executive
George Watt
Chief Financial Officer
STV Annual Report and Accounts 2015
Consolidated and parent company
statement of changes in equity
Year ended 31 December 2015
Group
Balance at 1 January 2015
Profit for the year
Other comprehensive expense
Total comprehensive income for the year
Own shares acquired
Equity-settled share-based payments
Deferred tax credit on other
post employment benefits
Dividends
Ordinary
shares
£m
Equity attributable to owners of the parent
Share
premium
£m
Merger
reserve
£m
Other
reserve
£m
Accumulated
(losses)/profit
£m
Total
Equity
£m
19.6
101.8
173.4
0.6
(291.9)
3.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.3
–
–
11.4
(0.8)
10.6
(0.9)
–
0.8
(3.4)
11.4
(0.8)
10.6
(0.9)
0.3
0.8
(3.4)
10.9
Balance at 31 December 2015
19.6
101.8
173.4
0.9
(284.8)
Balance at 1 January 2014
19.5
112.0
173.4
0.3
(297.6)
7.6
Profit for the year
Other comprehensive expense
Total comprehensive expense for the year
Share premium reduction
Issue of share capital
Own shares acquired
Value of employee services
Equity-settled share-based payments
Dividends
–
–
–
–
0.1
–
–
–
–
–
–
–
(11.0)
0.8
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 31 December 2014
19.6
101.8
173.4
Company
Balance at 1 January 2015
Profit for the year
Total comprehensive income for the year
Own shares acquired
Equity-settled share-based payments
Dividends
19.6
101.8
–
–
–
–
–
–
–
–
–
–
Balance at 31 December 2015
19.6
101.8
Balance at 1 January 2014
19.5
112.0
Profit for the year
Total comprehensive income for the year
Share premium reduction
Issue of share capital
Own shares acquired
Value of employee services
Equity-settled share-based payments
Dividends
–
–
–
0.1
–
–
–
–
–
–
(11.0)
0.8
–
–
–
–
Balance at 31 December 2014
19.6
101.8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.3
–
0.6
14.7
(17.7)
(3.0)
11.0
–
(0.9)
0.2
–
(1.6)
(291.9)
14.7
(17.7)
(3.0)
–
0.9
(0.9)
0.2
0.3
(1.6)
3.5
0.6
25.0
147.0
–
–
–
0.3
–
0.9
0.3
–
–
–
–
–
–
0.3
–
0.6
87.7
87.7
(0.9)
–
(3.4)
87.7
87.7
(0.9)
0.3
(3.4)
108.4
230.7
6.9
138.7
9.4
9.4
11.0
–
(0.9)
0.2
–
(1.6)
25.0
9.4
9.4
–
0.9
(0.9)
0.2
0.3
(1.6)
147.0
Financial Statements Consolidated and parent company
statement of cash flows
Year ended 31 December 2015
83
Operating activities
Cash generated by operations
Interest paid
Pension deficit funding – recovery plan payment
Net cash generated by operating activities
Investing activities
Purchase of investment
Capitalised web development spend
Purchase of property, plant and equipment
Note
26
Group
Company
2015
£m
2014
£m
2015
£m
2014
£m
20.0
(1.2)
(7.8)
20.9
(1.8)
(5.5)
11.0
13.6
(0.5)
(1.2)
(1.1)
(0.3)
(1.0)
(4.0)
0.2
–
–
0.2
(0.5)
–
–
3.7
(1.8)
–
1.9
(0.3)
–
–
Net cash used in investing activities
(2.8)
(5.3)
(0.5)
(0.3)
Financing activities
Purchase of treasury shares
Borrowings (repaid)/drawn
Dividends paid
(0.9)
(10.0)
(3.4)
–
4.3
(1.6)
(0.9)
–
(3.4)
Net cash (used by)/generated from financing activities
(14.3)
2.7
(4.3)
Net (decrease)/increase in cash and cash equivalents
(6.1)
11.0
(4.6)
Cash and cash equivalents at beginning of year
19.8
8.8
–
Cash and cash equivalents at end of year
26
13.7
19.8
(4.6)
–
–
(1.6)
(1.6)
–
–
–
Although not required under IFRS the Directors have provided the following reconciliation of net debt for further
clarity. Net debt represents Group borrowings less cash and cash equivalents.
Reconciliation of movement in net debt
Year ended 31 December 2015
Opening net debt
Net (decrease)/increase in cash and cash equivalents
Movement in debt financing
Closing net debt
Note
Group
2015
£m
(29.4)
(6.1)
9.8
2014
£m
(35.7)
11.0
(4.7)
26
(25.7)
(29.4)
STV Annual Report and Accounts 2015 Notes to the financial statements
for the year ended 31 December 2015
1. General information
STV Group plc (‘the Company’) and its subsidiaries (together, ‘the Group’) is listed on the London Stock Exchange
and incorporated and domiciled in the UK. The address of the registered office is Pacific Quay, Glasgow, G51 1PQ.
The principal activities of the Group are the production and broadcasting of television programmes, internet
services and the sale of advertising airtime and space in these media.
2. Adoption of new and revised standards
There are no new IFRS or IFRICs that are effective for the first time this year that have a material effect
on the Group.
New standards, amendments and interpretations issued but not effective for the financial year beginning
1 January 2015 and not early adopted: IFRS 15, “Revenue from contracts with customers”; IFRS 9, “Financial
instruments”; and IFRS 16, “Leases”.
There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have
a material impact on the Group.
3. Significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements
are set out below. These policies have been consistently applied to all the years presented.
Basis of preparation
The consolidated financial statements have been prepared in accordance with IFRS and IFRS Interpretations
Committee (IFRS IC) interpretations, as adopted by the European Union and the Companies Act 2006 applicable
to companies reporting under IFRS. The consolidated financial statements have been prepared on a going
concern basis and under the historical cost convention. The Group adopted IFRS for the preparation of the
parent company financial statements for the first time during the year. The transition to IFRS did not result
in any changes to previously reported results.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Group’s
accounting policies. The areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated financial statements are disclosed in note 5.
Going concern
The Group continues to review forecasts to determine the impact of both the short term and long term liquidity
position. After making appropriate enquiries the Group considers it appropriate to adopt the going concern basis
in preparing its consolidated financial statements.
Consolidation
The financial statements comprise a consolidation of the financial statements of the Company and all its
subsidiaries up to 31 December each year. Subsidiaries are entities over which the Company has control.
The Company controls an entity when the Company has existing rights that give it the current ability to direct
the activities that affect the Company’s returns and exposure or rights to variable returns from the entity.
Subsidiaries are included in the consolidated financial statements of the Company from the date control of
the subsidiary commences until the date that control ceases. Intra-group balances and any unrealised gains
and losses or income and expenses arising from intra-group transactions are eliminated in preparing the
consolidated financial statements.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources
and assessing performance of the operating segments, has been identified as the Group’s Chief Executive.
Foreign currency translation
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing
on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at
the balance sheet date are reported at the rates of exchange prevailing at that date.
Financial Statements
85
Property, plant and equipment
The Group’s policy is to state property, plant and equipment at cost less accumulated depreciation and any
recognised impairment loss. Cost includes the original purchase price of the asset and the costs attributable
to bringing the asset to its working condition for its intended use.
Depreciation is provided to write off the cost of tangible non-current assets, less estimated residual values,
by equal annual instalments as follows:
Leasehold buildings
between 5% and 10%
Plant, technical equipment and other
between 10% and 20%
Residual values and useful economic lives are reviewed annually. Depreciation is charged on all additions to,
or disposals of, depreciating assets in the year of purchase or disposal.
Any impairment in value is charged to the income statement.
Intangible assets
Goodwill
Goodwill arising on consolidation represents the excess of the consideration transferred and the amount of
any non-controlling interest in the acquiree over the fair value of the identifiable assets and liabilities (including
intangible assets) of the acquired entity at the date of acquisition. Goodwill is recognised as an asset and
assessed for impairment annually or more frequently as triggering events occur. Any impairment is recognised
immediately in the income statement.
Goodwill arising on acquisitions before the date of transition to IFRS has been retained at the previous UK GAAP
amounts subject to being tested for impairment. Goodwill written off to reserves under UK GAAP prior to 1998
has not been restated and is not included in determining any subsequent profit or loss on disposal.
Other intangible assets
Other intangible assets are held at cost less accumulated amortisation and any provision for impairment. Included
within intangible assets are assets in the course of construction which comprise primarily web development
projects including directly attributable costs to bring the assets into use and may include capitalised borrowing
costs. Amortisation is provided at the following rates per annum to write off the costs of other intangible assets,
less residual value, on a straight line basis from the date on which they are brought into use:
Internally generated software
between 10% and 25%
Impairment
Assets that have an indefinite useful life are not subject to amortisation and are tested at least annually or
whenever there is an indicator of impairment. Assets that are subject to amortisation or depreciation are
reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognised in the income statement for the amount by which the
asset’s carrying value exceeds its recoverable amount. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).
The recoverable amount is the higher of an asset’s fair value less costs to sell and value-in-use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset.
STV Annual Report and Accounts 2015
Notes to the financial statements
continued
Inventories
Inventories are stated at the lower of cost or net realisable value. Cost comprises direct materials, and where
applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their
present location and condition. Net realisable value represents the estimated selling price less estimated costs
of completion and the estimated selling costs.
Recorded programmes and films
Recorded programmes are valued at direct cost including labour and overheads, less appropriate provisions,
and are written off after the first transmission or sale. Programming made for third parties is valued at cost,
less appropriate provisions, and is charged to the income statement against related income.
The carrying value of inventory is assessed each year at the balance sheet date.
Financial assets and liabilities
Financial assets and financial liabilities are recognised in the Group’s balance sheet when the Group becomes
a party to the contractual provisions of the instrument.
i) Trade receivables
Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate
allowances for estimated irrecoverable amounts. A provision is established for trade receivables if there is
objective evidence that the Group will not be able to collect all amounts due according to the original terms
of the receivables.
ii) Investments
Investments are measured at cost, less, where approprirate allowances for impairment. The investments
is measured at cost because the fair value cannot be reliably measured.
iii) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid
investments that are readily convertible to a known amount of cash and are subject to an insignificant risk
of changes in value.
iv) Bank borrowings
Interest-bearing bank loans and overdrafts are initially recorded at fair value being the proceeds received,
net of direct issue costs. They are subsequently measured at amortised cost using the effective interest rate.
Finance costs, including premiums payable on settlement or redemption and direct issue costs, are accounted
for on an accruals basis to the income statement and are added to the carrying amount of the instrument
to the extent that they are not settled in the period in which they arise.
v) Trade payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method.
vi) Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
vii) Derivative financial instruments and hedge accounting
The Group uses derivative financial instruments to hedge its exposure to fluctuations in interest. Instruments
accounted for as hedges are designated as a hedge at the inception of contracts.
In order to qualify for hedge accounting, the Group is required to document in advance the relationship between
the item being hedged and the hedging instrument. The Group is also required to document and demonstrate
an assessment of the relationship between the hedged item and the hedging instrument, which shows that the
hedge will be highly effective on an ongoing basis. This effectiveness testing is re-performed at the end of each
quarter end to ensure that the hedge remains highly effective.
Financial Statements
87
The fair value of interest rate swaps is based on the market price (LIBOR) of comparable instruments at the
measurement date.
The fair value of the interest rate swap contracts are calculated on a discounted cash flow basis using market
forward rates. Gains or losses arising from the movement to fair value are taken to the income statement.
Taxation
Taxation expense comprises current and deferred tax. Tax is recognised in the income statement, except to
the extent it relates to items recognised in other comprehensive income or directly in equity, in which case the
related tax is also recognised in other comprehensive income or directly in equity.
Current tax is based on taxable profits for the financial period using tax rates that are in force during the period.
Taxable profit differs from net profit as reported in the income statement because it excludes items of income
or expense that are taxable or deductible in other financial years and it further excludes items that are never
taxable or deductible.
Deferred tax is the tax expected to be payable or recoverable on temporary differences between the carrying
amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the
computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax is
calculated using tax rates that have been enacted or substantially enacted at the balance sheet date and are
expected to apply when the related deferred income tax asset is realised or the deferred tax liability settled.
Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax liabilites are
recognised for taxable temporary differences arising on investments in subsidiaries, except where the reversal
of the temporary difference can be controlled by the Group and it is probable that the difference will not reverse
in the foreseeable future.
Deferred tax assets are recognised to the extent it is probable that taxable profits will be available against which
the deductible temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at
each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits
will be available to allow all or part of the asset to be recovered.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income
taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there
is an intention to settle the balances on a net basis.
Pensions
For defined benefit pension schemes, the difference between the fair value of the assets and the present value
of the defined benefit obligation is recognised as an asset or liability in the balance sheet. The defined benefit
obligation is actuarially calculated using the projected unit credit method.
The defined benefit cost is made up of three categories:
i) The service cost of providing retirement benefits to employees during the year, together with the cost of any
benefits relating to past service, is charged to operating profit in the year.
ii) The net interest expense or income is recognised within finance costs. Net interest expense includes a credit
representing the expected return on the assets of the retirement benefit schemes and a charge representing
the expected increase in the liabilities of the retirement benefit schemes during the year.
iii) Actuarial gains and losses are recognised immediately in the statement of comprehensive income.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
STV Annual Report and Accounts 2015
Notes to the financial statements
continued
Share-based payments
The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based
payments are measured at fair value of the equity instruments at the grant date. The fair value excludes the
effect of non market-based vesting conditions.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group’s estimate of equity instruments that will
eventually vest. At each balance sheet date, the Group revises its estimate of the number of equity instruments
expected to vest as a result of the effect of non market-based vesting conditions. The impact of the revision of
the original estimates, if any, is recognised in profit and loss such that the cumulative expense reflects the
revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.
Fair value is measured by use of the Black & Scholes model or Monte Carlo model as relevant. The expected lives
used in the model have been adjusted, based on management’s best estimate, for the effects of non-
transferability, exercise restrictions and behavioural considerations.
Provisions
Onerous contracts
Provisions for onerous contracts are recognised when the Group has a detailed forecast of future losses from
the contract.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts
receivable for goods and services provided in the normal course of business, net of discounts and VAT. Revenue
from the sale of goods is recognised when the Group has transferred the significant risks and rewards of
ownership and control of the goods sold and the amount of revenue can be measured reliably. Key classes
of revenue are recognised on the following basis:
Airtime revenue
Sponsorship
on transmission
evenly over the life of the contract
Programme production
on delivery
Revenue on barter transactions is recognised only when the goods or services being exchanged are
of a dissimilar nature.
Dividend income
Dividend income is recognised when the right to receive payment is established.
Leasing
All leases are operating leases and the costs in respect of operating leases are charged on a straight-line basis
over the lease term. The value of any lease incentive received to take on an operating lease (for example, a rent
free period) is recognised as deferred income and is released over the life of the lease.
Dividend distribution
Final dividends are recorded in the financial statements in the period in which they are approved by the
Company’s shareholders. Interim dividends are recorded in the period in which they are approved and paid.
Exceptional items
Exceptional items are items that are unusual because of their size, nature or incidence and which the Directors
consider should be disclosed separately to enable a full understanding of the Group’s results.
Financial Statements
89
4. Financial risk management
Capital management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an
optimal capital structure to reduce the cost of capital.
The capital structure of the Company consists of debt, which includes the bank loans disclosed in note 22,
cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued share
capital, reserves and retained earnings.
The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total
capital. Net debt is calculated as total borrowings less cash and cash equivalents. Total capital is calculated as
‘equity’ as shown in the consolidated balance sheet plus net debt. The gearing ratios at 31 December 2015
and 2014 were as follows:
Total borrowings (note 22)
Cash and cash equivalents (note 20)
Net Debt
Total equity
Total capital
Covenants
2015
£m
39.4
(13.7)
25.7
10.9
36.6
2014
£m
49.2
(19.8)
29.4
3.5
32.9
70%
89%
The Group is subject to two financial covenants in respect of its committed borrowing facilities at the balance
sheet date. The terms of the Facility Agreement contain the following covenants (i) the ratio of average net debt
to adjusted earnings (pre exceptional) before interest, tax, depreciation and amortisation (EBITDA) and (ii) the
ratio of adjusted EBITDA to cash interest, both of which are tested quarterly. The Group complied with all the
covenants in each of the test periods to the balance sheet date.
Derivative financial instruments
The Group’s policy is to minimise the exposure to interest rates by ensuring an appropriate balance of floating
and fixed rates. The Group’s primary funding is at floating rates through its bank facilities. In order to manage
its associated interest rate risk, the Group uses interest rate swaps to vary the mix of fixed and floating rates.
Interest rate swap contracts of £15.0m (2014: £15.0m) were entered into on 9 July 2014 and expire in July 2016.
Fair value is based on the market price of these instruments at the balance sheet date. In accordance with IFRS
7, the interest rate swaps are considered to be level 2 with the fair value being calculated at the present value
of the estimated future cash flows using market interest rates.
Financial risk management objectives
The Group’s activities expose it to a variety of financial risks: currency risk, credit risk, liquidity risk and cash flow
interest rate risk. The Group’s overall risk management programme focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the Group’s financial performance. The Group uses
derivative financial instruments to hedge certain risk exposures.
Risk management is carried out under policies approved by the Board with financial risks being identified,
evaluated and hedged in close co-operation with the Group’s operating divisions. The Board provides written
principles for overall risk management, as well as written policies covering specific areas, such as currency risk,
interest rate risk, credit risk, use of financial instruments and investing excess liquidity.
STV Annual Report and Accounts 2015
Notes to the financial statements
continued
i) Currency risk
The Group operates almost wholly within the UK and is exposed to minimal currency risk. The Group’s
borrowings are denominated in Sterling which is also the Group’s intra-UK net currency flow. Currency risk arises
primarily with respect to the Euro and the US dollar and from future commercial transactions and trade assets
and liabilities in foreign currencies. No further active management of currency risk is required.
The Group has minimal exposure to currency risk and it is Group policy to ensure that all material payments or
receipts are fully hedged. At 31 December 2015 the Group had no forward foreign currency contracts in place
(2014: £nil).
ii) Credit risk
Credit risk is the risk of losses due to the failure of the Group’s customers to meet their payment obligations
towards the Group. The Group has no significant concentration of credit risk. It has policies in place to ensure
that sales are made to customers with an appropriate credit history. Independent credit ratings are sought for
all potential customers and based on the outcome of the feedback from the ratings agency a judgement is
made on the appropriate level of credit to be given. Derivative transaction counterparties are limited to high-
credit/quality financial institutions.
iii) Liquidity risk
Liquidity risk is the risk that the Group will be unable to meet its payment obligations. Prudent liquidity
management implies maintaining sufficient cash and marketable securities, the availability of funding through an
adequate amount of committed credit facilities and the ability to close out market positions. Due to the nature of
the underlying business, the aim is to maintain flexibility in funding by keeping committed credit lines available.
Management monitors rolling forecasts of the Group’s liquidity reserve (comprises of the undrawn borrowing
facility (note 22) and cash and cash equivalents (note 20)) on the basis of expected cash flow. This is generally
carried out at a group level. In addition, the Group’s liquidity management policy includes projecting cash flows
and considering the level of liquid assets necessary to meet these: monitoring balance sheet liquidity ratios
against internal targets and bank facility requirements; and maintaining debt financing plans.
iv) Cash flow interest rate risk
As the Group has no significant interest bearing assets, the Group’s income and operating cash flows are
substantially independent of changes in market interest rates.
The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at short-term floating rates
expose the Group to cash flow interest rate risk. Group policy is to maintain between 30% and 50% of its core
borrowings in hedged instruments.
A monthly sensitivity analysis is carried out, and on the level of borrowings of the Group at 31 December 2015,
a movement of 0.25% in interest rates would change the level of interest paid in the year by +/- £0.1m
(2014: £0.1m). 0.25% is considered a reasonably possible change.
The Group manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Such interest
rate swaps have the economic effect of converting borrowing from floating rates to fixed rates. Generally, the
Group raises long-term borrowings at floating rates and swaps them into fixed rates that are lower than those
available if the Group borrowed at fixed rate directly. Under the interest rate swaps, the Group agrees with other
parties to exchange, at specific intervals (mainly quarterly), the difference between fixed contract rates and
floating rate interest amounts calculated by reference to the agreed notional principal amounts. An interest
rate swap was entered into on 9 July 2014 and expires in July 2016.
Financial Statements
91
5. Critical accounting estimates and judgements
In the application of the Group’s accounting policies, which are described in note 3, management are required to
make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and judgements are continually evaluated and are based on
historical experience and other factors, including expectations of future events that are believed to be reasonable
under the circumstances. Actual results may differ from these estimates.
The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet
date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year, are discussed below.
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value-in-use of the cash-generating units
to which the goodwill has been allocated. The value-in-use calculation requires the entity to estimate the future
cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate the
present value. Details of the impairment testing are set out in note 14.
Pension benefits
The present value of the pension obligations depends on a number of factors that are determined on an actuarial
basis using a number of assumptions. The assumptions used in determining the net cost (income) for pensions
include the discount rate. Any changes in these assumptions will impact the carrying amount of pension
obligations. In the event of the pension liability becoming a surplus, the company legally has an unconditional
right to that surplus and this has been agreed with the scheme trustees.
The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should
be used to determine the present value of estimated future cash outflows expected to be required to settle the
pension obligations. In determining the appropriate discount rate, the Group considers the interest rates of
high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that
have terms to maturity approximating the terms of the related pension liability.
Other key assumptions for pension obligations are based in part on current market conditions. Additional
information is disclosed in note 29.
Inventory
Deferred production stock forms part of inventory and is stated in the accounts at the lower of cost or net
realisable value. Programme costs are expensed in line with expected future revenues which are a judgemental
area. A detailed forecast of future secondary sales is prepared by management based on historic experience and
expected future trends. £2.3m was expensed through the income statement in the year (2014: £2.5m).
Deferred tax asset recognition
Deferred tax assets are recognised if sufficient future taxable profit is available. Management evaluates the
recoverability of deferred tax assets based on projected future taxable profits and as future developments are
uncertain and partly beyond management’s control, assumptions are necessary to estimate future taxable profits
as well as the period in which deferred tax assets will recover. £5.1m was recognised during the year (2014: £nil)
in respect of tax losses previously unrecognised.
STV Annual Report and Accounts 2015
Notes to the financial statements
continued
6. Business segments
The Group’s Chief Executive, the chief operating decision maker, considers the business primarily from a product
perspective. Under IFRS 8, the reportable segments are therefore Consumer and Productions.
The performance of the segments is assessed based on a measure of adjusted operating profit.
Segment revenues
Consumer
Productions
Revenue in 2015 includes £0.9m of revenues from sources outside the UK (2014: £0.8m).
Segment result
Consumer
Productions
Exceptional fixed/intangible asset write off attributable to Consumer
Exceptional goodwill impairment attributable to Productions
Other exceptional items attributable to Group:
Investment write-down
Management incentive plan
Operating profit
Financing
Profit before tax
Tax charge
Profit attributable to owners of the parent
Operating profit in 2015 includes £0.4m arising outside the UK (2014: £0.4m).
External revenue
2015
£m
108.2
8.3
116.5
2015
£m
19.9
0.4
20.3
(1.0)
(5.1)
(1.0)
(1.7)
11.5
(1.7)
9.8
1.6
11.4
2014
£m
107.1
13.3
120.4
2014
£m
19.1
0.4
19.5
–
–
–
–
19.5
(2.2)
17.3
(2.6)
14.7
Segment assets and liabilities
Consumer
Productions
Total of all segments
Unallocated corporate
Consolidated
Assets
Liabilities
2015
£m
38.8
29.1
67.9
2014
£m
39.2
32.5
71.7
2015
£m
13.4
2.0
15.4
2014
£m
13.5
3.9
17.4
9.4
16.4
51.0
67.2
77.3
88.1
66.4
84.6
Financial Statements
93
Consumer
Productions
2015
£m
2.3
2.5
2014
£m
5.0
2.0
2015
£m
2014
£m
–
–
–
–
Other segment information
Capital additions
Depreciation and amortisation
Segment assets consist primarily of goodwill, property, plant and equipment, inventories and trade and other
receivables and cash and bank deposits.
Segment liabilities comprise operating liabilities including trade and other payables and provisions. They exclude
Group borrowings, retirement benefit obligations, tax liabilities and other non-current liabilities.
All the net assets in 2014 and 2015 were held in the UK and therefore operate in a single geographical segment.
7. Operating expenses by nature
Programming costs
Staff costs
Other external charges
Depreciation and amortisation
Operating lease charges
Other operating charges
Exceptional items
Services provided by the Group’s auditors
During the year the Group obtained the following services from the Company’s auditors:
Group
Fees payable to Company auditors for the audit of parent company
and consolidated financial statements
Fees payable to the Company’s auditors and it’s associates for other services:
– The audit of Company’s subsidiaries pursuant to legislation
– Audit-related assurance services
– Tax advisory services
– Tax compliance services
– Other services
2015
£m
51.0
24.4
15.8
2.5
2.4
0.1
96.2
8.8
105.0
2014
£m
55.0
23.2
18.4
2.0
2.1
0.2
100.9
–
100.9
82
21
24
69
33
8
77
21
24
91
41
51
237
305
Included in the audit fees payable is £5,000 (2014: £5,000) paid in respect of the parent company.
Other services comprise employee benefit advisory services.
Fees in respect of STV Group plc pension schemes
Audit
2015
£000
21
2014
£000
21
STV Annual Report and Accounts 2015
Notes to the financial statements
continued
8. Staff
The average monthly number of employees (including executive directors) was:
Consumer and Productions
Established
Contract
Contract staff numbers consist of employees on fixed-term contracts.
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Other pension costs
2015
Number
2014
Number
451
45
496
411
34
445
2015
£m
19.6
1.8
3.0
24.4
2014
£m
19.4
1.8
2.0
23.2
Details of directors’ remuneration is provided in the Remuneration Report on pages 50 to 69.
9. Exceptional items
The tax effect on exceptional items during the year was £0.2m credit (2014: £nil).
Goodwill impairment
During the year a provision for impairment of £5.1m has been recognised against the carrying value of goodwill
to reflect the historic trading performance in Productions.
Investment write-down
A provision of £1.0m has been made against the carrying value of the Group’s investment in MirriAd Limited.
MirriAd failed to complete a strategically important fundraising round in April and required immediate funding
to continue trading. The Group supported a rescue of the business with £0.5m of new investment as part of two
funding packages totalling £10.6m. However, the price of that investment fully recognised the parlous state of
MirriAd and resulted in the existing investment being impaired.
Fixed/intangible asset write off
£1.0m of fixed and intangible assets has been written off during the year. The write off is in relation to City
Online services and redundant STV Player platforms.
Management incentive plan
A provision of £1.7m for costs in relation to one off discretionary management incentive plan payments and
related national insurance has been made during the year.
Financial Statements
10. Finance costs
Bank borrowings
Pension finance charge
11. Tax charge
Current tax:
Current year
Adjustments in respect of prior years
Deferred tax (see note 23)
Tax (credit)/charge for the year
The (credit)/charge for the year can be reconciled to the profit per the income statement as follows:
Profit before tax
Tax at the UK corporation tax rate of 20.25% (2014: 21.5%)
Tax effects of:
Other expenses not deductible for tax purposes
Movement in losses not recognised
Impact of changes in tax rates
Adjustments in respect of prior years
Tax (credit)/charge for the year
2015
£m
9.8
2.0
1.5
(5.1)
–
–
(1.6)
95
2014
£m
2.2
–
2.2
2015
£m
1.2
0.5
1.7
2015
£m
2014
£m
–
–
–
(1.6)
(1.6)
–
–
–
2.6
2.6
2014
£m
17.3
3.7
0.1
–
(0.2)
(1.0)
2.6
STV Annual Report and Accounts 2015 Notes to the financial statements
continued
12. Earnings per share
Basic earnings per share (EPS), is calculated by dividing the profit attributable to equity shareholders by the
weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased by
the Company and held as treasury shares.
In order to calculate diluted EPS, the weighted average number of ordinary shares in issue is adjusted to assume
conversion of all dilutive potential ordinary shares. The Company has one type of dilutive potential ordinary
shares namely share options granted to employees.
2015
Weighted
average
number of
shares
(m)
Earnings
£m
2014
Weighted
average
number of
shares
(m)
Per share
Pence
Per share
Pence
Earnings
£m
EPS (pre-exceptional items):
Earnings attributable to ordinary
shareholders
20.0
38.3
52.2p
14.7
38.0
38.7p
Basic EPS
20.0
38.3
52.2p
14.7
38.0
38.7p
Potential dilutive shares
1.0
1.1
Diluted EPS
20.0
39.3
50.9p
14.7
39.1
37.6p
EPS (including exceptional items):
Earnings attributable to ordinary
shareholders (including exceptional items)
11.4
38.3
29.8p
14.7
38.0
38.7p
Basic EPS
11.4
38.3
29.8p
14.7
38.0
38.7p
Potential dilutive shares
1.0
1.1
Diluted EPS
11.4
39.3
29.0p
14.7
39.1
37.6p
EPS (pre-exceptional items and deferred
tax, pre-IAS 19 and normalised tax rate):
Earnings attributable to ordinary
shareholders (pre-exceptional items)
Add back: IAS 19 (net of tax)
Deduct: one off recognition of
deferred tax asset
Adjust to equivalent tax rate of 20%
20.0
0.4
(5.1)
–
38.3
52.2p
1.0p
(13.3p)
–
14.7
–
–
(0.9)
38.0
38.7p
–
–
(2.4p)
Basic EPS
15.3
38.3
39.9p
13.8
38.0
36.3p
Potential dilutive shares
1.0
1.1
Diluted EPS
15.3
39.3
38.9p
13.8
39.1
35.3p
The adjusted result represents a like for like comparison with the statutory result adjusted for material one off
items and an adjustment to the prior year result to reflect an equivalent year on year tax rate of 20%.
Financial Statements
13. Dividends
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2014 of 6.0p (2013: 2.0p) per share
Interim dividend for the year ended 31 December 2015 of 3.0p (2014: 2.0p) per share
2015
£m
2.3
1.1
3.4
A final dividend of 7.0p per share (2014: 6.0p per share) has been proposed and is subject to approval
by shareholders. It is payable on 20 May 2016 to shareholders who are on the register at 15 April 2016.
The ex dividend date is 14 April 2016. This final dividend, amounting to £2.8m (2014: £2.4m), has not
been recognised as a liability in these financial statements.
14. Goodwill
Cost
At 1 January 2015 and 31 December 2015
Provisions for impairment
At 1 January 2015
Impairment write-down
At 31 December 2015
Net book value at 31 December 2015
Net book value at 31 December 2014
97
2014
£m
0.8
0.8
1.6
£m
10.6
2.7
5.1
7.8
2.8
7.9
Goodwill comprises capitalised goodwill on acquisitions completed since 1 January 1998. Goodwill is allocated
to the Group’s cash-generating units (CGUs) identified according to operating segment. All goodwill recognised
at the year end and previous year end relates to Productions.
The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill
might be impaired. During the year a £5.1m provision for impairment has been recognised against the carrying
value of goodwill to reflect the historic trading performance in Productions.
The recoverable amount of a CGU is determined based on value-in-use calculations. The key assumptions used
for value-in-use calculations are as follows:
Revenue and margin growth (short term)
Based on three year financial forecasts
Growth rate (long term)
Discount rate
2%
10%
These calculations use pre-tax cash flow projections based on after tax cash flows of £0.8m, £1.3m and £1.5m
for the next three years respectively. A terminal value is calculated for cash flows beyond the three year period.
The growth rate is not considered to exceed the long-term average growth rate for the media business
in which the CGU operates.
The Group has conducted a sensitivity analysis on the impairment test of the CGU’s carrying value. A 1%
movement in the discount rate would result in a write-down of £2.1m to the carrying value of goodwill.
Management determined Net Cash Flow based on past performance and its expectations of market development.
STV Annual Report and Accounts 2015
Notes to the financial statements
continued
15. Other intangible assets
Cost
At 1 January 2014
Additions
At 1 January 2015
Additions
Write offs
At 31 December 2015
Accumulated amortisation and impairment
At 1 January 2014
Amortisation
At 1 January 2015
Amortisation
Write offs
At 31 December 2015
Net book value at 31 December 2015
Net book value at 31 December 2014
16. Property, plant and equipment
Cost
At 1 January 2014
Additions
Write offs
At 1 January 2015
Additions
Write offs
At 31 December 2015
Accumulated depreciation and impairment
At 1 January 2014
Charge for year
Disposals
At 1 January 2015
Charge for year
Write offs
At 31 December 2015
Net book value at 31 December 2015
Net book value at 31 December 2014
Web
development
and branding
£m
0.7
1.0
1.7
1.2
(1.1)
1.8
–
0.1
0.1
0.3
(0.3)
0.1
1.7
1.6
Total
£m
24.9
4.0
(1.6)
27.3
1.1
(0.3)
28.1
18.2
1.9
(1.6)
18.5
2.2
(0.1)
20.6
7.5
8.8
Plant,
technical
equipment
and other
£m
Leasehold
buildings
£m
0.1
–
–
0.1
–
–
0.1
0.1
–
–
0.1
–
–
0.1
–
–
24.8
4.0
(1.6)
27.2
1.1
(0.3)
28.0
18.1
1.9
(1.6)
18.4
2.2
(0.1)
20.5
7.5
8.8
Financial Statements 17. Investments
Group
Cost
At 1 January 2015
Additions
At 31 December 2015
Provisions for impairment
At 1 January 2015
Impairment write-down
At 31 December 2015
Net book value at 31 December 2015
Net book value at 31 December 2014
Company
Cost
At 1 January 2015
Additions
At 31 December 2015
Provisions for impairment
At 1 January 2015
Impairment write-down
At 31 December 2015
Net book value at 31 December 2015
Net book value at 31 December 2014
99
£m
1.2
0.5
1.7
–
1.0
1.0
0.7
1.2
Subsidiaries
£m
Other
£m
Total
£m
47.3
–
47.3
–
–
–
47.3
47.3
1.1
0.5
1.6
–
1.0
1.0
0.6
1.1
48.4
0.5
48.9
–
1.0
1.0
47.9
48.4
STV Annual Report and Accounts 2015
Notes to the financial statements
continued
17. Investments continued
Subsidiary undertakings
A full list of subsidiary undertakings as at 31 December 2015 is as follows::
Undertaking
STV News Services Limited *
STV Television Limited
STV Central Limited
STV North Limited
STV Productions Limited
Ginger Television Productions Limited
SKA Ginger Productions Limited (50%)
STV Glasgow Limited
STV Edinburgh Limited
Altissimo Music Limited
stv.tv Limited
Solutions.tv Limited
STV Aberdeen Limited
STV Dundee Limited
STV Ayr Limited
Grampian Television Limited
STV Services Limited *
Scottish News Network Limited
STV SIP Trustees Limited
Rise & Shine (Television) Limited *
STV Publishing Limited
STV Out of Home Limited
Peopleschampion Limited
Scottish Media Group (Jersey) Limited
The Ginger Media Group Limited
STV Appeal *
STV Appeal Trading Company Limited
STV Elm Limited *
*directly held
Country of
incorporation
or registration
and operation
England
Scotland
Scotland
Scotland
Scotland
England
England
Scotland
Scotland
Scotland
Scotland
Scotland
Scotland
Scotland
Scotland
Scotland
Scotland
Scotland
Scotland
Scotland
Scotland
Scotland
Scotland
Jersey
England
Scotland
Scotland
Scotland
Principal activity
Investment holding undertaking
Investment holding undertaking
Television broadcasting
Television broadcasting
Programme production
Programme production
Programme production
Television broadcasting
Television broadcasting
Music rights
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Group services undertaking
Dormant
Dormant
Investment holding undertaking
Dormant
Dormant
Dormant
Dormant
Dormant
Holding undertaking for charity
Trading undertaking for charity
Group services undertaking
The directors believe that the carrying value of the investments is supported by their underlying net assets.
The investments are stated in the balance sheet at cost less amounts written off for impairment in value.
All shares are ordinary shares. All of the above investments are 100% shareholdings within the Group except
where stated.
18. Inventories
Recorded programmes and films
2015
£m
2014
£m
19.2
18.3
Financial Statements
19. Trade and other receivables
Current
Trade receivables
Amounts owed by group undertakings
Prepayments and accrued income
Other receivables
101
Group
2015
£m
2014
£m
Company
2015
£m
2014
£m
12.3
–
8.1
1.7
22.1
14.0
–
8.4
0.7
23.1
–
213.3
0.8
–
214.1
–
151.8
1.0
–
152.8
As of 31 December 2015, trade receivables of £0.8m (2014: £1.5m) are past due. These are net of a provision for
bad debts of £nil (2014: £nil). Trade receivables relate to a number of independent customers for whom there is
no recent history of default.
The ageing analysis of the trade receivables is as follows:
2015
Gross
£m
Provision
£m
2014
Gross
£m
Provision
£m
Up to 3 months
12.3
–
14.0
–
The directors consider that the carrying amount of trade and other receivables approximates their fair value.
All receivables are expected to be recovered.
Amounts owed by group undertakings of £141.0m (2014: £129.4m) fall due after more than one year.
A loan to a subsidiary undertaking of £80.0m (2014: £80.0m) is included within this amount.
All remaining amounts owed by group undertakings are unsecured, interest free and have no fixed date
of repayment.
STV Annual Report and Accounts 2015
Notes to the financial statements
continued
20. Cash and cash equivalents
Cash and cash equivalents
21. Trade and other payables
Current
Trade payables
Accrued expenses
Amounts owed to group undertakings
Bank overdraft
Social security and other taxes
Other payables
Non-current
Derivative financial instruments (note 4)
2015
£m
2014
£m
13.7
19.8
Group
2015
£m
2014
£m
5.1
9.9
–
–
3.3
–
18.3
2.9
12.2
–
–
4.0
0.2
19.3
Company
2015
£m
–
0.1
28.0
4.6
–
–
32.7
2014
£m
–
–
56.1
–
–
–
56.1
0.1
0.2
–
–
The directors consider that the carrying amount of trade and other payables approximates their fair value.
22. Borrowings
Bank loans
The borrowings are repayable as follows:
Expiring in 2 to 5 years
2015
£m
39.4
2014
£m
49.2
39.4
49.2
All undrawn committed borrowing facilities are repayable within 2 to 5 years (2014: 2 to 5 years).
The amount of bank loans is net of £0.6m unamortised borrowing costs (2014: £0.8m).
The effective interest rates were as follows:
Bank loans (floating)
2015
%
2.0
2014
%
3.4
At 31 December 2015, the Group had revolving credit and overdraft bank facilities in place totalling £60.0m
(£60.0m at 31 December 2014). At 31 December 2015, £40.0m of the facility was drawn down.
The £60.0m revolving credit and overdraft facility has a maturity date of June 2019. Security is provided to
the debt providers by way of cross guarantees and a share pledge.
The Group has hedged its exposure to fluctuations in interest rates with interest rate swaps of £15.0m
(2014: £15.0m). The notional principal amount of the outstanding interest rate swap contracts at
31 December 2015 was £15.0m (2014: £15.0m). A fair value on the interest rate swaps of £0.1m (2014: £0.2m)
has been recognised at 31 December 2015.
Financial Statements
103
23. Deferred tax
The analysis of the current deferred tax balances is as follows:
Deferred tax asset:
Deferred tax to be recovered after more than one year
Deferred tax to be recovered within one year
Group
Company
2015
£m
(8.2)
(1.4)
(9.6)
2014
£m
2015
£m
(4.7)
(2.7)
(7.4)
(1.4)
–
(1.4)
2014
£m
–
(1.9)
(1.9)
Net deferred tax asset
(9.6)
(7.4)
(1.4)
(1.9)
Deferred tax asset not recognised
(2.2)
(8.1)
–
(1.4)
A deferred tax asset has been recognised in respect of these temporary differences as it is probable that
the Group will generate sufficient taxable profits in the future against which these temporary differences
can be offset.
The deferred tax asset of £2.2m (2014: £8.1m) which has not been recognised relates to a combination
of trading tax losses and non-trade debits.
The movement in deferred tax assets and liabilities during the year, taking into consideration the offsetting
of balances within the same tax jurisdiction, is as follows:
Tax trading
losses
£m
Other
temporary
differences
£m
Group
Accelerated
tax
depreciation
£m
Retirement
benefit
obligations
£m
At 1 January 2015
(Credit)/charge to income
(Credit)/charge to equity
(2.6)
(2.8)
–
(0.2)
(0.4)
(0.8)
(1.5)
0.2
–
(3.1)
1.4
0.2
Total
£m
(7.4)
(1.6)
(0.6)
At 31 December 2015
(5.4)
(1.4)
(1.3)
(1.5)
(9.6)
Company
Tax trading
losses
£m
(1.9)
0.5
–
(1.4)
Changes to the UK corporation tax rates were substantively enacted as part of Finance Bill 2015 on
26 October 2015. These include reductions to the main rate to reduce the rate to 19% from 1 April 2017
and to 18% from 1 April 2020. Deferred taxes at the balance sheet date have been measured using these
enacted tax rates and reflected in these financial statements.
24. Provisions
At 1 January
Utilised during the year
At 31 December
The provisions are expected to be utilised:
Within one year
Greater than one year
Onerous lease provisions
2014
£m
2015
£m
1.0
(0.2)
0.8
0.3
0.5
0.8
1.4
(0.4)
1.0
0.4
0.6
1.0
STV Annual Report and Accounts 2015
Notes to the financial statements
continued
25. Share capital and premium
Number of
shares
(thousands)
Ordinary
shares
£m
Share
premium
£m
Total
£m
At 1 January 2015 and 31 December 2015
39,298
19.6
101.8
121.4
The total authorised number of ordinary shares is 63 million shares (2014: 63 million shares) with a par value of
£0.50 per share (2014: £0.50 per share). All issued shares are fully paid.
26. Notes to the consolidated statement of cash flows
Operating profit/(loss)
Adjustments for:
Depreciation (note 16)
Amortisation (note 15)
Goodwill impairment charge (note 14)
Investment write-down (note 17)
Fixed/intangible asset write down (notes 15,16)
Past service cost – pension
Share based payment
Management incentive plan
Increase in inventories
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Increase in intra group balances
Cash generated by operations
Group analysis of movements in net debt
Cash and cash equivalents (note 20)
Bank borrowings (note 22)
Net debt
Group
2015
£m
2014
£m
Company
2015
£m
2014
£m
11.5
19.5
(1.6)
(0.5)
2.2
0.3
5.1
1.0
1.0
(0.7)
0.3
1.7
1.9
0.1
–
–
–
–
0.3
–
–
–
–
1.0
–
–
0.3
–
–
–
–
–
–
–
0.3
–
22.4
21.8
(0.3)
(0.2)
(0.9)
1.0
(2.5)
–
20.0
(0.7)
(1.7)
1.5
–
20.9
–
0.2
0.1
0.2
0.2
–
(0.2)
–
4.1
3.7
At
1 January
2015
£m
Cash
flow
£m
Non-cash
movements
£m
At 31
December
2015
£m
19.8
(49.2)
(29.4)
(6.1)
10.0
3.9
–
(0.2)
(0.2)
13.7
(39.4)
(25.7)
Non-cash movements relate to the amortisation of borrowing costs.
Financial Statements
105
27. Operating lease commitments
At 31 December the Group had minimum commitments in respect of non-cancellable operating leases
for leasehold buildings payable as follows:
Within one year
Between two and five years
After five years
2015
£m
1.7
5.9
6.3
13.9
2014
£m
1.7
6.1
7.8
15.6
28. Transactions with related parties
During the year £1,700 (2014: £16,000) income was received from related parties and a balance of £1,110
was owed by related parties at 31 December 2015 (31 December 2014: £2,400). These amounts relate to
fees received from the Group’s investment companies.
Key management personnel are deemed to be the executive and non-executive directors of the Group,
as they have authority and responsibility for controlling the Group’s activities.
Key management remuneration is detailed as follows:
Short-term employee benefits*
*See Remuneration Report page 50 to 69 for details.
2015
£m
2014
£m
1.3
1.3
There have been no other transactions with key management personnel as defined under IAS 24.
STV Annual Report and Accounts 2015
Notes to the financial statements
continued
29. Retirement benefit schemes
Defined contribution schemes
The Group operates two money purchase schemes, the STV Pension Scheme and the Pearl & Dean Cinemas
Pension Scheme, for which the pension cost charge for the year amounted to £1.1m (2014: £0.9m).
Defined benefit schemes
The Group operates two defined benefit pension schemes. The schemes are trustee administered and the
schemes’ assets are held independently of the Group’s finances. Pension costs are assessed in accordance
with the advice of an independent professionally qualified actuary.
The schemes are the Scottish and Grampian Television Retirement Benefit Scheme and the Caledonian
Publishing Pension Scheme. They are closed schemes to new entrants and therefore under the projected
unit method the current service cost will increase as the members of the scheme approach retirement.
A full actuarial valuation of the schemes was carried out at 1 January 2012 and resulted in an actuarial deficit
to be funded by the Group of £83.0m as at 31 March 2014. A recovery plan period of 11 years was agreed with
payments of £5.5m in 2014 and between £7.0m and £7.75m from 2015 to 2025 inclusive. These payments are
tax deductible.
The 1 January 2012 valuation has been updated to 31 December 2015 by a qualified independent actuary.
The major assumptions used by the actuary were:
Key assumptions
Rate of increase in salaries
Rate of increase of pensions in payment
Discount rate
Rate of price inflation (RPI)
2015
2014
nil%
2.90%
3.90%
2.90%
1.00%
2.90%
3.60%
2.90%
Mortality assumptions:
Assumptions regarding future mortality experience are set based on advice, published statistics and experience
in each scheme.
The average life expectancy in years of a pensioner retiring at age 65 is as follows:
Retiring at balance sheet date:
Male
Female
Retiring in 25 years:
Male
Female
2015
Years
15.5
18.1
18.7
21.5
2014
Years
15.5
18.0
18.6
21.4
Financial Statements
107
Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate,
expected salary increase and mortality. The sensitivity analysis below has been determined based on
reasonably possible changes of the assumptions occurring at the end of the reporting period assuming that
all other assumptions are held constant:
Assumption
Discount rate
Rate of price inflation (RPI)
Rate of mortality
Change in assumption
Increase/decrease by 0.25%
Increase/decrease by 0.25%
Decrease by 1 year
Impact on scheme liabilities
Decrease/increase by 3%
Increase/decrease by 1%
Increase by 4%
Amounts recognised in the income statement in respect of these defined benefit schemes is as follows:
Current service cost – defined benefit
Past service cost – defined benefit
Net interest expense
2015
£m
(2.1)
0.7
(0.5)
(1.9)
2014
£m
(1.1)
–
–
(1.1)
Of the total charge £1.4m (2014: £1.1m) has been included in operating expenses and £0.5m (2014: £nil charge)
has been included in finance costs (see note 10).
The £0.7m net past service gain is made up of a gain of £1.7m in the Scottish and Grampian Television
Retirement Benefits Scheme relating to the introduction of benefit changes and £1.0m loss (£0.4m relating
to the Scottish and Grampian Television Retirement Benefits Scheme and £0.6m relating to the Caledonian
Publishing Pension Scheme) relating to pension incentive exercises in both schemes.
Amounts recognised in the statement of comprehensive income are as follows:
Actuarial losses arising from changes in financial assumptions
The amounts recognised in the balance sheet were as follows:
Present value of defined benefit obligations
Fair value of schemes’ assets
Deficit in the schemes
2015
£m
2014
£m
(0.6)
(22.1)
2015
£m
2014
£m
(320.9)
313.1
(7.8)
(336.2)
321.3
(14.9)
A related offsetting deferred tax credit of £1.5m (2014: £3.1m) is included under non-current assets. Therefore
the net pension scheme deficit amounts to £6.3m at 31 December 2015 (£11.8m at 31 December 2014).
STV Annual Report and Accounts 2015
Notes to the financial statements
continued
29. Retirement benefit schemes continued
The movement in the defined benefit obligation over the year is as follows:
At 1 January
Current service cost
Past service cost
Interest cost
Contributions from plan participants
Remeasurement (gains)/losses:
Actuarial gains and losses arising from changes in financial assumptions
Actuarial gains and losses arising from changes in demographic assumptions
Actuarial gains and losses arising from experience adjustments
Benefits paid from plan
At 31 December
The movement in the fair value of the schemes’ assets during the year is as follows:
At 1 January
Interest income
Remeasurement (loss)/gain:
Return on plan assets (excluding interest income)
Contributions from the employer
Administrative expenses paid from plan assets
Contributions from plan participants
Benefits paid from plan
At 31 December
Plan assets comprised the following:
Equities
Debt instruments and cash
30. Share-based payments
2015
£m
2014
£m
336.2
0.4
(0.7)
11.7
0.1
(11.3)
4.8
–
(20.3)
320.9
295.7
0.3
–
13.1
0.1
28.3
15.9
(0.2)
(17.0)
336.2
2015
£m
2014
£m
321.3
11.4
297.0
13.1
(7.0)
9.3
(1.7)
0.1
(20.3)
21.9
7.0
(0.8)
0.1
(17.0)
313.1
321.3
2015
2014
£m
%
£m
%
155.0
158.1
313.1
49
51
100
154.8
166.5
321.3
48
52
100
Long-term incentive plans
The long-term incentive plans are for executive directors and other senior executives. The performance criteria
for these schemes are based on a combination of earnings growth and total shareholder return and as such
have been valued using a Monte Carlo model.
Value creation plan
The value creation plan is for executive directors and other senior executives and was granted in 2013.
The performance criteria for this scheme is based on achieving an average share price of £1.50 or higher over
the last 30 days of the three year performance period and as such has been valued using a Monte Carlo model.
Employee share plans
The employee share plans are open to all employees. They provide for a grant price approximately equal to
80% of the middle market quotion of a share on the dealing day last preceding the relevant date of invitation
as derived from the London Stock Exchange daily office list and can be purchased once a year. There are
currently 3 employee share plans outstanding and the exercise prices for options under these plans range from
£1.84 to £4.02. At 31 December 2015 there were 512,899 (2014: 460,609) options outstanding under the plans.
The employee share plans are valued using the Black and Scholes model.
Financial Statements
Five year summary
For the year ended 31 December 2015
109
Results
Revenue
IFRS
2011
£m
Restated*
2012
£m
2013
£m
2014
£m
2015
£m
102.0
102.7
112.1
120.4
116.5
Profit from operations before exceptional items
15.0
17.1
18.0
19.5
20.3
Profit on ordinary activities before taxation
and exceptional items
14.0
11.7
14.3
17.3
18.6
Assets
Non-current assets
Current assets
Total assets
Equity and liabilities
Current liabilities
Non-current liabilities
Equity
Total equity and liabilities
Key statistics
Earnings per ordinary share* – basic
– diluted
32.9
53.8
86.7
82.3
34.1
(29.7)
86.7
28.2
41.9
70.1
22.5
68.5
(20.9)
70.1
22.6
47.8
70.4
62.0
0.8
7.6
70.4
26.9
61.2
88.1
19.7
64.9
3.5
88.1
22.3
55.0
77.3
18.6
47.8
10.9
77.3
38.0p
36.1p
13.0p
12.5p
32.2p
31.2p
38.7p
37.6p
29.8p
29.0p
Dividends per ordinary share
* The 2012 results have been restated to disclose amendments resulting in applying updated IAS19 and also for investments previously
held in current assets.
8.0p
2.0p
–
–
10.0p
STV Annual Report and Accounts 2015
Shareholder information
Registrars
Capita Asset Services
The Registry, 34 Beckenham Road
Beckenham, Kent BR3 4TU
Tel: 0871 664 0300*
Tel: (overseas) +44 20 8639 3399
Fax: +44 (0) 1484 601 512
Email: shareholderenquiries@capita.co.uk
Website: www.capitashareportal.com
Independent auditors
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
141 Bothwell Street
Glasgow G2 7EQ
Solicitors
Herbert Smith Freehills LLP
Exchange House
Primrose Street
London EC2A 2HS
Burness Paull LLP
120 Bothwell Street
Glasgow G2 7JL
Principal bankers
Santander UK plc
2 Triton Square
Regent’s Place
London NW1 3AN
Stockbrokers
Peel Hunt
Moor House
120 London Wall
London EC2Y 5ET
Secretary and registered office
Jane E A Tames
STV Group plc
Pacific Quay
Glasgow G51 1PQ
Tel: 0141 300 3074
Email: jane.tames@stv.tv
Company registration number
SC203873
Annual Report on internet
The 2015 Annual Report of STV Group plc including the financial statements is available at: www.stvplc.tv
Additional Information 111
Amalgamation of accounts
Shareholders who receive duplicate sets of Company mailings because they have multiple accounts
should write to the Registrars to have the accounts amalgamated.
Investor relations
For investor enquiries please contact:
Eleanor Marshall
PR Manager
STV Group plc
Pacific Quay
Glasgow G51 1PQ
Tel: 0141 300 3670
Email: eleanor.marshall@stv.tv
Share price information
The share price of STV Group plc is published in most newspapers and the current price of the Company’s
shares (delayed by up to 15 minutes) can be obtained from the Company’s website www.stvplc.tv
Individual Savings Accounts (ISAs)
The Company has Maxi and Mini ISAs which offer United Kingdom resident shareholders a simple, low-cost
and tax efficient way to invest in the Company’s shares. Full details and an application form are available
from Stocktrade, a division of Brewin Dolphin Securities Limited, on: 0131 240 0441.
Dividend Reinvestment Plan
STV Group plc operates a Dividend Reinvestment Plan to provide United Kingdom shareholders with a facility
to invest cash dividends by purchasing further STV Group plc shares. Further details are available from the
Registrar on: 0371 664 0381.**
Your shareholding
You can check your shareholding at any time by visiting the Registrar’s website at: www.capitashareportal.com
Capita share dealing services
Capita offer a quick and easy share dealing service to buy or sell STV Group plc shares. An online telephone
dealing facility is available providing STV Group plc shareholders with an easy to access and simple to use
service. There is no need to pre-register and there are no complicated forms to fill in. The online and telephone
dealing services allow you to trade ‘real time’ at a known price which will be given to you at the time you
give your instruction. For further information on this service, or to buy and sell shares, please contact:
www.capitadeal.com (online dealing); 0871 664 0445*** (telephone dealing).
*
**
***
Calls cost 12p per minute plus your phone company’s access charge. Calls outside the UK will be charged at the applicable
international rate. Lines are open between 9am-5:30pm, Monday to Friday excluding public holidays in England and Wales.
Calls are charged at the standard geographic rate and will vary by provider. Calls outside the UK will be charged at the applicable
international rate. Lines are open between 9am-5:30pm, Monday to Friday excluding public holidays in England and Wales.
Calls are charged at the standard geographic rate and will vary by provider. Calls outside the UK will be charged at the applicable
international rate. Lines are open between 8am-4:30pm, Monday tp Friday excluding public holidays in England and Wales.
STV Annual Report and Accounts 2015 THIS INFORMATION IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.
If you are in any doubt as to the action you should take, you should seek your own advice from a
stockbroker, bank manager, solicitor, accountant or other independent professional adviser authorised
under the Financial Services and Markets Act 2000.
If you have sold or transferred all of your shares in STV Group plc (the ‘Company’), please pass this
document, together with the accompanying documents to the purchaser or transferee or to the person who
arranged the sale or transfer so they can pass these documents to the person who now holds the shares.
The Annual General Meeting is an important opportunity for all shareholders to express their views by asking
questions of the Directors and voting on the resolutions.
The Directors consider that each of the proposals detailed in the Notice of Annual General Meeting will be
of benefit to and are in the best interests of the Company and the shareholders as a whole. The Directors
therefore unanimously recommend that shareholders vote in favour of the Resolutions, as the Directors intend
to do in respect of their own holdings of shares in the Company.
Notice is hereby given that the Annual General Meeting of the Company will be held at Pacific Quay, Glasgow
G51 1PQ on Tuesday 26 April 2016 at 11 am for the purpose of considering and, if thought fit, passing the
resolutions below.
Resolutions 1 to 11 (inclusive) will be proposed as ordinary resolutions and Resolutions 12 to 14 (inclusive)
shall be proposed as special resolutions.
Ordinary resolutions
1.
To receive the annual accounts of the Company for the financial year ended 31 December 2015 which
includes the reports of the Directors and the report by the auditors on the annual accounts and the
auditable part of the Directors’ remuneration report.
2.
To approve the Directors’ remuneration report in the form set out on pages 50 to 69 of the Annual Report
and Accounts for the financial year ended 31 December 2015.
As required by the Directors’ Remuneration Report Regulations 2002, the Company’s auditors,
PricewaterhouseCoopers LLP, have audited those parts of the Directors’ remuneration report capable
of being audited.
3.
To approve a revision to the remuneration policy. The current remuneration policy was approved by
shareholders at the Annual General Meeting held on 30 April 2015 and applied from that date. However,
due to a typographical error, the level of threshold vesting under the LTIP was incorrectly stated in the
‘Policy table for Executive Directors’ as 20% of the maximum whereas it ought to have been 25% to reflect
the rules of the LTIP. Shareholders are accordingly being asked to approve this revision to the policy in
accordance with Section 439A of the Companies Act 2006. For the avoidance of doubt, there are no
changes to the policy or the rules of the LTIP and this does not represent an increase in threshold vesting,
but the correction of an error. The policy will continue to expire in 2018.
4. To declare a final dividend of 7.0p per ordinary share for the year ended 31 December 2015.
The Board proposes a final dividend of 7.0p per ordinary share for the year ended 31 December 2015
which, if approved, will be paid on 20 May 2016 to all holders of ordinary shares who are on the register
of members of the Company at close of business on the record date of 15 April 2016.
Notice of Annual General MeetingAdditional Information
113
5.
To elect Ian Steele as a Director of the Company, having been appointed since the last Annual General Meeting.
Ian Steele is standing for election following his appointment as a Non-Executive Director on 1 November
2015. The Articles of Association require that a Director appointed by the Board since the last Annual
General Meeting should retire at the next Annual General Meeting and stand for election to the Board
in order to give shareholders a chance to confirm the appointment.
Biographical details of Ian Steele can be found on page 37 and the Board confirms that he meets the
independence criteria as set out in B.1.1 of the UK Corporate Governance Code.
Resolutions 6 to 8
The Articles of Association require that every year a proportion of our Directors retire and that all Directors
have to stand for re-election on the third anniversary of their election or re-election. This gives you the chance
to confirm their appointments. In the case of David Shearer, due to his length of tenure as a Director, he will be
submitting himself for annual re-election.
6. To re-elect Baroness Margaret Ford as a Director of the Company.
Biographical details of Baroness Ford can be found on page 36 and the Board confirms that she meets
the independence criteria as set out in B.1.1 of the UK Corporate Governance Code.
Following formal performance evaluation, Baroness Ford’s performance continues to be effective
and to demonstrate commitment to the role.
7. To re-elect George Watt as a Director of the Company.
Biographical details of George Watt can be found on page 36 and following formal performance
evaluation, Mr Watt’s performance continues to be effective and to demonstrate commitment
to the role.
8. To re-elect David Shearer as a Director of the Company.
Biographical details of David Shearer can be found on page 36.
Following formal performance evaluation, Mr Shearer’s performance continues to be effective
and to demonstrate commitment to the role.
9.
To re-appoint PricewaterhouseCoopers LLP as the auditors of the Company to hold office until
the conclusion of the next general meeting at which accounts are laid.
10. To authorise the Audit Committee to fix the remuneration of the auditors of the Company.
STV Annual Report and Accounts 2015
11. That for the purpose of Section 551 of the Companies Act 2006, the Directors be and are hereby generally
and unconditionally authorised to exercise all the powers of the Company to allot equity securities (within
the meaning of Section 560 of that Act):
(a) up to an aggregate nominal amount of £6,549,705; and
(b) up to an aggregate nominal amount of £6,549,705 in connection with a rights issue in favour of the
ordinary shareholders of the Company where the equity securities respectively attributable to the
interests of all ordinary shareholders are proportionate (as nearly as may be) to the respective number
of ordinary shares held by them in the Company, or in favour of the holders of other equity securities
as required by the rights of those securities, subject in both cases to such exclusions or other
arrangements as the Directors may deem necessary or expedient to deal with treasury shares,
fractional entitlements or legal or practical problems arising under the laws of any overseas territory
or the requirements of any regulatory body or stock exchange or by virtue of shares being represented
by depositary receipts or any other matters, provided that this authority shall expire on the date of the
next Annual General Meeting of the Company after the passing of the resolution, but so that the
Directors may at any time prior to such expiry make an offer or agreement which would or might
require equity securities to be allotted after such expiry and the Directors may allot equity securities
pursuant to any such offer or agreement as if the authority conferred by this resolution had not
expired; and all unexercised authorities previously granted to the Directors to allot equity securities
are revoked.
The Directors require the authority of shareholders to allot the Company’s shares and the first part of this
resolution extends for a further year the general authority for the Directors to allot a limited number of
ordinary shares (13,099,410 being shares representing one third of the ordinary issued share capital of the
Company as at 14 March 2016, excluding treasury shares, none of which are held by the Company) to
provide the flexibility to take advantage of business opportunities as they arise. The second part of this
resolution allows the Directors to allot a limited number of ordinary shares (13,099,410 being shares
representing one third of the ordinary issued share capital of the Company as at 14 March 2016, excluding
treasury shares, none of which are held by the Company) pursuant to a fully pre-emptive rights issue of the
Company. The authority will terminate at the next Annual General Meeting of the Company, which must be
held no later than 30 June 2017. The Directors do not have any present intention of exercising this authority
except to satisfy awards of shares under the Company’s employee share schemes and no issue of ordinary
shares will be made which would effectively alter control of the Company without the prior approval of the
Company in general meeting.
Special resolutions
12. That subject to the passing of Resolution 11, the Directors be and are hereby empowered, pursuant to
Section 570 of the Companies Act 2006 to allot equity securities (within the meaning of Section 560 of that
Act) for cash either pursuant to the authority conferred by Resolution 11 or by way of a sale of treasury
shares as if Section 561 of that Act did not apply to any such allotment, provided that this power shall be
limited to:
(a)
the allotment of equity securities in connection with an offer of securities (but in the case of the
authority granted under paragraph (b) of Resolution 11 by way of rights issue only) in favour of
ordinary shareholders of the Company and other persons entitled to participate therein where the
equity securities respectively attributable to the interest of all such holders are proportionate (as
nearly as may be practicable) to the respective numbers of ordinary shares held or deemed to be held
by them, subject to such exclusions or other arrangements as the Directors may deem necessary or
expedient to deal with treasury shares, fractional entitlements or legal or practical problems arising
under the laws of any overseas territory or the requirements of any regulatory body or any stock
exchange or by virtue of shares being represented by depositary receipts or any other matter.
Notice of Annual General MeetingAdditional Information
115
(b)
the allotment of equity securities (otherwise than pursuant to paragraph (a) above) having a nominal
value not exceeding in the aggregate £982,455,
and shall expire on the conclusion of the next Annual General Meeting of the Company after the passing of
this resolution, save that the Company may before such expiry make offers or agreements which would or
might require equity securities to be allotted after such expiry and the Directors may allot equity securities
pursuant to any such offer or agreement as if the authority conferred by this resolution had not expired.
When ordinary shares are issued for cash, they normally have to be offered, in the first instance, to existing
holders of ordinary shares in proportion to their respective shareholdings. This resolution renews (although
in different terms, as described below) a similar power granted at last year’s annual general meeting to
grant authority to the Directors to allot a limited number of ordinary shares other than to existing
shareholders in proportion to their existing shareholdings.
In previous years this power has been limited (other than in connection with a rights issue or similar
pre-emptive issue) to the allotment of ordinary shares representing 5% of the Company’s issued share
capital. However, in March 2015 The Pre-Emption Group issued a revised Statement of Principles (the
‘Statement’) which, among other things, refers to the grant of a power in relation to shares representing up
to an additional 5% of the Company’s issued share capital, provided that such shares are to be allotted only
in connection with an acquisition or specified capital investment which is announced contemporaneously
with the issue of the relevant shares or which has taken place within the preceding six month period.
The power to be granted by this resolution will therefore be limited, otherwise than in connection with
a rights issue or similar pre-emptive issue, to 3,929,823 ordinary shares, representing 10% of the ordinary
issued share capital of the Company as at 14 March 2016 and the Board confirms that ordinary shares in
excess of an amount equivalent to 5% of the Company’s issued share capital will not be allotted for cash
on a non pre-emptive basis pursuant to this power other than in connection with an acquisition or specified
capital investment of the type referred to in the Statement
It also allows the Directors to allot shares up to a nominal amount of £13,099,410 (representing two
thirds of the Company’s issued share capital) on an offer to existing shareholders on a pre-emptive basis.
However, unless the shares are allotted pursuant to a rights issue, the Directors may only allot shares up to
a nominal value of £6,549,705 (representing one third of the Company’s issued share capital). The authority
will terminate at the next Annual General Meeting, which must be held no later than 30 June 2017. No
issue of ordinary shares will be made which would effectively alter control of the Company without the
prior approval of the Company in general meeting. The Board also confirms that no more than 7.5% of the
issued share capital would be issued on a non pre-emptive basis in any three-year period.
13. That the Company be and is hereby generally and unconditionally authorised pursuant to Section 701
of the Companies Act 2006 to make market purchases (as defined in Section 693(4) of that Act) of ordinary
shares of 50p each in the capital of the Company (‘Shares’) and the Directors be and are hereby generally
and unconditionally authorised to exercise all the powers of the Company to purchase the Shares,
provided that:
(a)
the maximum number of Shares acquired pursuant to this authority shall not exceed 3,929,823
Shares, the aggregate nominal value of which is £1,964,911.
(b)
the minimum price (excluding expenses) which may be paid by the Company for a Share purchased
pursuant to this authority shall be 50p.
(c) the maximum price (excluding expenses) which may be paid by the Company for a Share purchased
pursuant to this authority shall not be more than the higher of: (i) 5% above the average of the middle
market quotations for a Share derived from the London Stock Exchange Daily Official List for the five
business days immediately preceding the day on which such Share is purchased; and (ii) the price
stipulated by Article 5(1) of the Buy–Back and Stabilisation Regulation (EC2273/2003).
STV Annual Report and Accounts 2015
(d)
unless renewed, the authority conferred by this resolution shall expire on the earlier of the conclusion
of the next Annual General Meeting of the Company after the passing of this resolution and the expiry
of 12 months from the date of passing this resolution, save that the Company may before such expiry
make a contract to purchase which will or may be executed wholly or partly after the expiry of such
authority and the Company may make a purchase of such Shares after such expiry pursuant to such
contract.
This resolution seeks the authority of shareholders to allow the Company to purchase its own shares.
The authority sought extends to 3,929,823 Shares, representing 10% of the ordinary share capital of the
Company in issue as at 14 March 2016. The maximum price, which may be paid per Share, amounts to not
more than 5% above the average of the middle market quotations of the Company’s shares for the five
business days immediately preceding the date of purchase. The power will only be used if the Board is
satisfied that it will be in the best interests of the shareholders generally.
In exercising the authority to purchase the Company’s shares, the Directors intend to cancel any shares
purchased but may, however, treat the shares that have been bought back as held in treasury and to the
extent that any such shares are held in treasury, earnings per share will only be increased on a temporary
basis, until such time as the shares are resold out of treasury stock.
As at 14 March 2016 warrants and options to subscribe for 981,860 ordinary shares in the capital of
the Company were outstanding, representing 2.50% of the Company’s issued ordinary share capital as
at 14 March 2016 (excluding treasury shares held by the Company). If the authority to purchase the
Company’s ordinary shares was exercised in full, these warrants and options would represent 2.78%
of the issued ordinary share capital of the Company (excluding treasury shares held by the Company).
14. That the Company be entitled to hold general meetings of the shareholders of the Company (with the
exception of annual general meetings) on the provision of 14 clear days’ notice to the Company’s shareholders.
The Companies Act 2006 (following the implementation of the EU Shareholder Rights Directive) permits
the holding of general meetings on 14 clear days’ notice provided a special resolution is passed at the
Company’s Annual General Meeting approving this notice period. The shorter notice period would not be
used as a matter of routine for such meetings but only where this was merited by the nature or urgency
of the business of the meeting and was thought to be to the advantage of shareholders as a whole.
By order of the Board
Jane E A Tames
Company Secretary
STV Group plc
Pacific Quay
Glasgow G51 1PQ
14 March 2016
Notice of Annual General MeetingAdditional Information
117
Notes
1.
Information regarding the meeting, including the contents of this notice, details of the total number of
shares in respect of which members are entitled to exercise voting rights at the meeting, details of the
totals of the voting rights that members are entitled to exercise at the meeting and, if applicable, any
members’ statements, members’ resolutions or members’ matters of business received by the Company
after the date of this notice, is available from the Investor Centre at www.stvplc.tv
2.
3.
4.
5.
6.
7.
8.
Members are entitled to appoint a proxy to exercise all or any of their rights to attend and to speak and
vote on their behalf at the meeting. A shareholder may appoint more than one proxy in relation to the
Annual General Meeting provided that each proxy is appointed to exercise the rights attached to a different
share or shares held by that shareholder.
A proxy need not be a shareholder of the Company but must attend the meeting to represent you.
Your proxy could be the Chairman or other person who has agreed to attend to represent you. Your proxy
will vote as you instruct and must attend the meeting for your vote to be counted. Details of how to
appoint the Chairman or another person as your proxy using the proxy form are set out in the notes to
the proxy form.
A proxy form which may be used to make such appointment and give proxy instructions accompanies this
notice. If you do not have a proxy form and believe that you should have one, or if you require additional
forms, please contact Capita Asset Services on 0871 664 0300 or shareholderenquiries@capita.co.uk
(Calls cost 12p per minute plus your phone company’s access charge. Calls outside the UK will be
charged at the applicable international rate. Lines are open between 9am-5:30pm, Monday to Friday
excluding public holidays in England and Wales). Alternatively, you may appoint a proxy electronically
at www.capitashareportal.com. Please see the notes to the form of proxy for further details.
To be valid any proxy form or other instrument appointing a proxy must be received by post or online or
(during normal business hours only) by hand at Capita Asset Services, The Registry, 34 Beckenham Road,
Beckenham, Kent, BR3 4ZF no later than 11.00am on 24 April 2016 or 48 hours before the time of any
adjournment of the meeting.
The return of a completed proxy form, in writing or online or any CREST Proxy Instruction (as described
in paragraph 11 below) will not prevent a shareholder attending the Annual General Meeting and voting
in person if he/she wishes to do so.
A copy of this notice has been sent for information only to persons who have been nominated by a
member to enjoy information rights under Section 146 of the Companies Act 2006 (a ‘Nominated Person’).
The right to appoint a proxy cannot be exercised by a Nominated Person. However, a Nominated Person
may, under an agreement between him/her and the shareholder by whom he/she was nominated, have a
right to be appointed (or to have someone else appointed) as a proxy for the Annual General Meeting. If a
Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may, under
any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights.
To be entitled to attend and vote at the Annual General Meeting (and for the purpose of the determination
by the Company of the votes they may cast), Shareholders must be registered in the Register of Members
of the Company at 6pm on 24 April 2016 (or, in the event of any adjournment, at 6pm on the date which
is two days before the time of the adjourned meeting). Changes to the Register of Members after the
relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the
meeting or the adjourned meeting.
9.
As at 14 March 2016 (being the last business day prior to the publication of this Notice) the Company’s
issued share capital consists of 39,298,231 ordinary shares of 50p each, carrying one vote each. The
Company does not hold any ordinary shares in the capital of the Company in treasury. Therefore, the total
voting rights in the Company as at 14 March 2016 are 39,298,231.
STV Annual Report and Accounts 2015 10. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment
service may do so by using the procedures described in the CREST Manual on the Euroclear website (www.
euroclear.com). CREST Personal Members or other CREST sponsored members, and those CREST members
who have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s),
who will be able to take the appropriate action on their behalf.
11. In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message
(‘a CREST Proxy Instruction’) must be properly authenticated in accordance with Euroclear UK & Ireland
Limited’s (‘EUI’) specifications, and must contain the information required for such instructions, as
described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a
proxy or is an amendment to the instruction given to a previously appointed proxy must, in order to be
valid, be transmitted so as to be received by the Company’s registrars, Capita Asset Services (IDRA10) by
11.00am on 24 April 2016 or 48 hours before the time of any adjournment of the meeting. For this purpose,
the time of receipt will be taken to be the time (as determined by the timestamp applied to the message
by the CREST Application Host) from which the issuer’s agent is able to retrieve the message by enquiry to
CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed
through CREST should be communicated to the appointee through other means.
12. CREST members and, where applicable, their CREST sponsors, or voting service providers should note that
EUI does not make available special procedures in CREST for any particular message. Normal system
timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the
responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal
member, or sponsored member, or has appointed a voting service provider, to procure that his CREST
sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is
transmitted by means of the CREST system by any particular time. In this connection, CREST members and,
where applicable, their CREST sponsors or voting system providers are referred, in particular, to those
sections of the CREST Manual concerning practical limitations of the CREST system and timings.
13. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation
35(5)(a) of the Uncertificated Securities Regulations 2001.
14. To change your proxy instructions simply submit a new proxy appointment using the methods set out
above. Note that the cut-off time for receipt of proxy appointments (see above) also apply in relation to
amended instructions; any amended proxy appointment received after the relevant cut-off time will be
disregarded. Where you have appointed a proxy using the hard-copy proxy form and would like to change
the instructions using another hard-copy proxy form, please contact Capita Asset Services on 0871 664
0300 or shareholderenquiries@capita.co.uk (Calls cost 12p per minute plus your phone company’s access
charge. Calls outside the UK will be charged at the applicable international rate. Lines are open between
9am-5:30pm, Monday to Friday excluding public holidays in England and Wales). If you submit more than
one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies
will take precedence.
15. In order to revoke a proxy instruction you will need to inform the Company using one of the following methods:
• by sending a signed hard copy notice clearly stating your intention to revoke your proxy appointment to
Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4ZF. In the case of a
member which is a company, the revocation notice must be executed under its common seal or signed
on its behalf by an officer of the company or an attorney for the company. Any power of attorney or any
other authority under which the revocation notice is signed (or a duly certified copy of such power or
authority) must be included with the revocation notice
• by sending an e-mail to shareholderenquiries@capita.co.uk
Notice of Annual General MeetingAdditional Information
119
In either case, the revocation notice must be received by Capita Asset Services no later than 8am on
26 April 2016 or 3 hours before the time of any adjourned meeting thereof. If you attempt to revoke your
proxy appointment but the revocation is received after the time specified then, subject to the paragraph
directly below, your proxy appointment will remain valid. Appointment of a proxy does not preclude you
from attending the Annual General Meeting and voting in person. If you have appointed a proxy and
attend the Annual General Meeting in person, your proxy appointment will automatically be terminated.
16. The Company must answer any question asked which relates to the business being dealt with
at the meeting unless:
(i)
answering the question would interfere unduly with the preparation for the meeting or involve
the disclosure of confidential information;
(ii)
the answer has already been given on a website in the form of an answer to a question; or
(iii) it is undesirable in the interests of the Company or the good order of the meeting that the question
be answered.
17. Shareholders should note that it is possible that, pursuant to requests made by shareholders of the
Company under Section 527 of the Companies Act 2006, the Company may be required to publish on
a website a statement setting out any matter relating to:
(i)
the audit of the Company’s accounts (including the auditor’s report and the conduct of the audit)
that are to be laid before the Annual General Meeting; or
(ii)
any circumstance connected with an auditor of the Company ceasing to hold office since the
previous meeting at which annual accounts and reports were laid in accordance with Section 437
of the Companies Act 2006.
The Company cannot require the shareholders requesting any such website publication to pay its expenses.
Where the Company is required to place a statement on a website under Section 527 of the Companies
Act 2006, it must forward the statement to the Company’s auditors not later than the time when it makes
the statement available on the website. The business which may be dealt with at the Annual General
Meeting includes any statement that the Company has been required under Section 527 of the Companies
Act 2006 to publish on a website.
18. Members satisfying the thresholds in Section 338 of the Companies Act 2006 may require the Company
to give, to members of the Company entitled to receive notice of the Annual General Meeting, notice
of a resolution which those members intend to move (and which may properly be moved) at the Annual
General Meeting. A resolution may properly be moved at the Annual General Meeting unless it:
(i)
would, if passed, be ineffective (whether by reason of any inconsistency with any enactment
or the Company’s constitution or otherwise);
(ii)
is defamatory of any person; or
(iii) is frivolous or vexatious.
The business which may be dealt with at the Annual General Meeting includes a resolution circulated
pursuant to this right. A request made pursuant to this right may be in hard copy or electronic form, must
identify the resolution of which notice is to be given, must be authenticated by the person(s) making it and
must be received by the Company not later than 6 weeks before the date of the Annual General Meeting.
STV Annual Report and Accounts 2015
19. Members satisfying the thresholds in Section 338A of the Companies Act 2006 may request the
Company to include in the business to be dealt with at the Annual General Meeting any matter (other
than a proposed resolution) which may properly be included in the business at the Annual General Meeting.
A matter may properly be included in the business at the Annual General Meeting unless it:
(i)
is defamatory of any person or
(ii)
is frivolous or vexatious.
A request made pursuant to this right may be in hard copy or electronic form, must identify the matter to
be included in the business, must be accompanied by a statement setting out the grounds for the request,
must be authenticated by the person(s) making it and must be received by the Company not later than
6 weeks before the date of the Annual General Meeting.
20. A corporation which is a member can appoint one or more corporate representatives who may exercise,
on its behalf, all its powers as a member provided that no more than one corporate representative
exercises powers over the same share.
21. Copies of Executive Directors’ service agreements and copies of the letters of appointment of
Non-Executive Directors are available for inspection at the Company’s registered office during normal
business hours from the date of this notice until the close of the Annual General Meeting (Saturdays,
Sundays and public holidays excepted) and will be available for inspection at the place of the meeting
for at least 15 minutes prior to and during the meeting.
22. Except as provided above, members who have general queries about the Annual General Meeting should
call our shareholder helpline on 0871 664 0300 (calls cost 12p per minute plus your phone company’s
access charge. Calls outside the UK will be charged at the applicable international rate. Lines are open
between 9am-5:30pm, Monday to Friday excluding public holidays in England and Wales).
You may not use any electronic address provided either:
• in this notice of Annual General Meeting
• any related document (including the chairman’s letter and proxy form), to communicate
with the Company for any purposes other than those expressly stated.
Notice of Annual General MeetingAdditional Information
Designed and produced by Tayburn
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The STV Appeal 2016 is here
Visit www.stv.tv/appeal to see how you can help.
STV Group plc
Pacific Quay
Glasgow G51 1PQ
Tel: 0141 300 3000
www.stv.tv
Company Registration Number SC203873