ANNUAL REPORT AND
ACCOUNTS 2021
Connected to our viewers,
communities and partners
Big shows,
big names,
big audiences
2021 saw us showcase and produce a diverse
range of series and new commissions, with
big names and broad appeal, both on our
own linear and digital channels and for other
UK networks. Brilliant content drives big
audiences, and we have both in spades –
with so much more to come.
Overview
01
02
2021 finance and
operating highlights
Introducing STV
Strategic Report
The STV investor proposition
STV business model
04 Chairman’s statement
06 STV 2021: A year of growth
08
10
12 Operating review: Broadcast
18 Operating review: Digital
24 Operating review: Studios
30 Finance review
34 S.172 statement
36 Risk management
45
Taskforce on Climate-related
Financial Disclosures (TCFD) report
50 Social impact
Governance
Introduction to governance
57
58 Board of Directors
60 Corporate governance report
Modern slavery and human
71
trafficking statement
73 Remuneration report
88 Directors’ report
Financial Statements
91
97
97
Independent auditors’ report to
the members of STV Group plc
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated and parent company
balance sheets
Consolidated and parent company
statements of changes in equity
100 Consolidated and parent company
99
98
statements of cash flows
101 Notes to the financial statements
126 Five year summary
Additional Info
127 Corporate advisers
128 Shareholder services
View our Annual Report and Accounts and
other information about STV at STVPLC.TV
Fronted by presenter
Sean Batty this
dedicated three-part
peak-time sustainability
series reached half a
million Scots.
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STV’s wide-ranging
Holyrood Election
coverage included Leader
interviews and debate,
expert analysis and daily
reporting on the key issues
facing the electorate.
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Antiques Road Trip and
its Celebrity sister series
continue to be a staple
ratings winner for the BBC
and a strong returner for
STV Studios.
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Primal Media’s eight-part
series for Sky Arts saw
artists and local
communities across the
UK join forces in a quest
to create the next great
British landmark.
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Genre bending six-part series
Murder Island saw members of the
public take on the role of detective
and lead their own investigation
into a murder plot written and
developed by Ian Rankin.
For the third year in
a row, STV News at Six
was the best watched
news programme in
Scotland.
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STV Player’s content library
has grown to over 150
drama box sets, including
US thriller The Bridge.
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500,000 year in year out.V
Vera was a top five
drama on STV in 2021.
The drama is a perennial
top performing programme
on the channel, with an
average audience well over
In 2021, a record £4.4 million
was raised by STV Children’s
Appeal to help the 1 in 4 children
in communities across Scotland
affected by poverty.
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Acquired Player-only
title, Thorne, starring
David Morrissey is a
top ten performer
on STV Player.
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The popular Network
series generated over 1m
streams, making it the best
performing entertainment
show on STV Player in 2021.
Long form streams grew
by 63% driven by strong
Network dramas, and
growth in STV Player-only
content in Scotland and
across the rest of the UK.
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STV Studios won a
13-episode commission
for ITV’s ratings winner
Celebrity Catchphrase –
its biggest commission
since launch in 2013.
STV Annual Report and Accounts 2021 01
2021 finance and operating highlights
2021 finance and operating highlights
Record financial
performance and
continued growth
momentum
Revenue
Total advertising revenue
£144.5m
£112.6m
2020: £107.1m 2019: £123.8m
2020: £90.9m 2019: £101.6m
Adjusted operating profit1
Profit before tax
£25.2m
£20.1m
2020: £18.2m 2019: £22.6m
2020: £6.7m 2019: £19.0m
Adjusted EPS2
45.6p
Dividend per share
11.0p
2020: 34.5p 2019: 38.7p
2020: 9.0p 2019: 6.3p
Non-broadcast profit (%)1
36%
2020: 34% 2019: 28%
2.5m
Scottish adults watch
STV each week
16
£4.4m
funds raised by the
STV Children’s Appeal
+63%
commissions won
in streams on STV Player
1 Before exceptional items and inclusive of High-End Television tax credits (note 27).
2
Before exceptional items and IAS 19 finance costs (note 9). 2020 and 2019 have been restated
to reflect the weighted average number of ordinary shares in 2021 for comparability.
Throughout this Annual Report, where we state record financial performance, it is made by reference
to 2010 when the final disposal was made and the Group as we know it today remained.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 02 STV Annual Report and Accounts 2021
Introducing STV
Scotland’s
home of news,
entertainment
and drama
STV Group plc serves audiences with quality
content on air, online and on demand.
The business is organised into three dynamic
operating divisions, all supported by a
central enabling function:
Our Channel 3 broadcast channel, STV, is accessible free-to-air on all the
main TV platforms in Scotland and reaches 3.2 million adults each month.
STV’s rapidly growing, free streaming service, STV Player is available across the
UK on all major platforms, including Sky Q, NOW, Virgin Media, Amazon Fire TV,
Freesat, Youview and Freeview Play.
The Group’s award-winning production business, STV Studios, is Scotland’s
biggest production company, creating and producing world class content
for a range of UK and international broadcast networks and streamers.
Our vision towards 2023
Our strategic vision is to transform STV into a digital streaming and content-led
media company. We are growing our Digital and Studios businesses to provide
viewers with access to high-quality content, whenever they want it and wherever
they are. We aim to diversify our business to the point where 50% of our
adjusted operating profit comes from these new growth areas by 2023.
Broadcast
Our Broadcast division runs commercial Public
Service Broadcaster, STV, which operates
the Channel 3 licences across central and
north Scotland. STV brings viewers a strong
network schedule of programming alongside
our own locally produced news, current affairs
and factual entertainment programming.
STV is the best-watched peak-time channel
in Scotland and is home to some of the most
popular shows on television, including iconic
soaps Coronation Street and Emmerdale;
entertainment hits The Masked Singer and
I’m a Celebrity… Get Me Out of Here!; gripping
9pm dramas; and a wide-ranging selection
of home-grown productions. Flagship news
programme STV News at Six is the most
watched news programme in Scotland.
STV is advertiser funded and our reach as
a marketing platform is unrivalled in our
home market. National sales of linear spot
advertising and sponsorship are managed
by our national sales agent, ITV, and our
Scottish clients are serviced by our dedicated
Scotland sales team. We offer a ‘one stop
shop’ to regional clients, helping them
with advert creation and design, campaign
structure, and post campaign research.
The £30m STV Growth Fund enables
businesses new to TV advertising to build
their brand by reaching a mass audience
efficiently and cost effectively, principally
through matched funding.
Our Broadcast division remains the engine
room of STV, allowing us to engage with
mass audiences, creating Scotland’s
largest marketing ‘shop window’ for
advertisers, and providing a platform to
promote our streaming service STV Player
to millions of Scots.
19.6%
All time viewing share
2.3 share points
Outperformance of network
in peak time
80%
% of Scottish adults who
watch each month
STV Annual Report and Accounts 2021 03
Digital
Studios
STV’s fast growing broadcaster streaming
service, STV Player, gives viewers in Scotland
the opportunity to watch STV shows on
their terms, live or on demand. Across the
UK, the free service offers viewers an
extensive catalogue of content from the
UK and around the world, including over
3,000 hours of high-quality drama, sport
and factual entertainment. Much of this
rich library of owned and acquired content
is not available to stream from any other
platform in the UK.
STV Player is now pre-installed in three
quarters of the UK’s connected TV homes
and is available on all major platforms,
including Sky Q, NOW, Virgin Media, Amazon
Fire TV, Freesat, Youview and Freeview Play.
STV Player’s content library has grown to
over 150 drama box sets, including US thriller
The Bridge, Irish legal drama Striking Out
and British crime drama, Thorne. Viewers
can upgrade to STV Player+, a subscription
service which offers the opportunity to
watch Player content advert-free and
download shows for offline viewing.
STV Player offers a more targeted
advertising proposition than the broadcast
channel, along with a programmatic
advertising sell, with all inventory and
sponsorship sold by our specialist Digital
sales team based in London.
STV Player VIP is a rewards scheme which
enables us to build better connections
with our viewers and further drive streams,
by bringing members a range of benefits
including prizes and reduced advertising
load as well as being the first to hear
about the brilliant new shows arriving
on the platform.
4.3m
Total registrations
114.6m
Total longform streams
4,000+hrs
Total content including
Ch3 and 3rd party
STV Studios is one of the UK’s leading content
businesses and Scotland’s biggest production
company. It has an impressive track-record
across genres, with commissions for
broadcasters and streamers such as BBC
One and Two, ITV, Channel 4, Channel 5,
discovery+ and Sky.
STV Studios is a family of nine creative
labels. Our in-house labels are STV Drama,
STV Entertainment and STV Factual. We
own a majority stake in award-winning
unscripted producer, Primal Media, and a
minority stake in Northern Ireland based
drama producer, Two Cities Television, who
are currently in production with a police
drama for BBC One. We own the younger-
skewing entertainment label, Barefaced TV,
who were commissioned by global streamer,
discovery+ in February 2022; and we have
a co-production agreement with scripted
specialists, Tod Productions. Our most
recent additions are unscripted producers
Hello Mary, based in Brighton, and Mighty
Productions based in Glasgow and London.
Following a period of organisational
and creative reinvention, we are building
momentum across all genres, winning
19 commissions in 2020 and a further 16
commissions in 2021. 2021 was the division’s
most successful year in terms of revenue
and profit, with a strong pipeline into 2022.
Recent productions include prison drama,
Screw, and genre-bending series, Murder
Island, for Channel 4; quiz Bridge of Lies
for BBC One; and The Yorkshire Auction
House for Really.
STV Studios also successfully licences its back
catalogue globally, delivering considerable
income for the division on an ongoing basis.
9
Labels
16
New commissions
168 hours
Programming delivered
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 04 STV Annual Report and Accounts 2021
Chairman’s statement
As a Scot who grew up watching STV I am honoured
and delighted to have been appointed to the Chair of this
iconic Company. I bring to the role a broad, international
track record in public-company executive management
and governance as well as a long professional
involvement in digital media.
Paul Reynolds
Chairman
Viewing figures for STV remain strong and we
continue to be the best watched peak-time channel
in Scotland. We have unrivalled commercial reach
in Scotland – 3.2m Scottish adults every month –
and this enables significant social impact and
provides businesses with the ability to connect with
more customers through our credible and trusted
media. We are immensely proud of our viewing
share, our voice and being the face of Scottish
news. STV News bulletins are watched by over
half of the Scottish population each month and
STV News at Six is Scotland’s most watched news
programme for the third year in a row, with an
average audience of 468,000.
The presence of COP26 Glasgow on our doorstep
in November 2021 served to re-emphasise the
importance of the Company’s sustainability
strategy, STV Zero. Investors increasingly require
companies to show credible sustainability plans and
we have made significant strides in ensuring we take
account of the impact on the climate in everything
we do. STV holds a unique position with an ability
to work with partners, programme-makers, and
viewers to raise awareness of environmental issues
and to support the businesses it works with to effect
long lasting change. And of course we also have an
important role to play ourselves to achieve our goal
of becoming a net zero carbon business by the end
of the decade; we are very focused on the actions
that need to be taken. Our first target was to be
carbon neutral in 2021, which we have achieved.
Delivering the changes required to meet our
workforce diversity targets is a continuing priority
for the Board. STV’s diversity and inclusion strategy
contains strategic priorities for delivery by 2023:
to create an inclusive culture that enables equality
of opportunity for all, to reflect the communities
we serve both on and off-screen, and to deliver
long-lasting change in all parts of the Company.
Our staff have shown considerable dedication in
driving STV’s agenda while adapting to the challenges
of the pandemic and they are developing the
Company’s ESG credentials with enthusiasm. This
helps make STV a great place to work which is so
important in a world where talented people are
increasingly exercising their choice.
I am indebted to my predecessor, Baroness
Margaret Ford, for her hard work and leadership
over the past eight years and for leaving your
Company in a strong position.
Covid remained a huge, complicating influence
during 2021, but STV managed to achieve
pre-pandemic levels of growth and profitability,
thanks to the strength of our programming,
the success of our diversification strategy and
the commitment and creativity of our people.
The media environment continues to evolve
apace and our strategy of creating a more resilient,
diversified business through balancing the success
of broadcast with growth in digital and studios, is
proving successful and delivering results. The growth
of STV Player, in terms of streams and revenues, has
outstripped other UK PSBs over the past three years
and it is now present on many more digital platforms
across the UK. The Player-only content strategy has
been a success, resulting in more deals, more titles
and more streams.
STV Studios enjoyed a very strong 2021, winning 16
programme commissions and boosting its portfolio
of labels to eight as we added the unscripted
production company Hello Mary with an initial 25%
stake. This followed the acquisition of Barefaced TV
and a minority stake in high-end drama company,
Two Cities, in 2020. Despite the obstructive effects
on production of the Covid pandemic, 2021 saw
Studios deliver its best ever performance in terms
of revenue and profit. Its sharp focus on returns has
delivered a welcome contribution to profitability.
STV Annual Report and Accounts 2021 05
The STV Children’s Appeal has been a rallying
point for our people and the people of Scotland
and, having celebrated its 10th birthday, has raised
almost £29m since its formation. We are delighted
to use our unique ability to get the message into
the homes of the people of Scotland to support so
many worthwhile causes, and especially pleased
that the Scottish Government has again pledged
to match-fund £1 million of the final total raised –
all of which emphasises and strengthens the
relevance of STV to Scotland.
We closed the 2021 financial year with the
Company in good health and showing good
strategic progress, which has delivered profit
growth and a favourable cash position. The Board’s
dividend policy reflects our commitment to strike
a balance between capital allocation for continued
investment in growth and diversity of earnings,
fulfil our pension obligations and pay a sustainable,
progressive dividend to shareholders. We have the
flexibility to strike an appropriate balance between
these competing needs:
• On growth, we have already identified an
investment programme of £30m by 2023 to drive
Digital and Studios performance, with the target
of delivering at least 50% of operating profit from
outside traditional broadcasting by 2023.
• On pensions, the Company’s defined benefit
pension obligations remain a significant part of
our financial profile and so we were pleased, in
October 2021, to reach early agreement with the
trustees for the triennial funding valuation with
the same schedule of contributions as previously,
which brings certainty for members, trustees
and Company alike.
• On dividends, the Board remains ever mindful
of its importance to our shareholders and we
are pleased to propose a full year dividend of
11p per share, up 22% on last year.
STV Children’s Appeal
Fronted by Lorraine Kelly,
STV Children’s Appeal has
raised almost £29m since
its formation.
Scotland Tonight
Current affairs
programme, Scotland
Tonight celebrated its
tenth anniversary in 2021.
In closing, I am particularly proud to have
witnessed in my first year at STV the dedication,
professionalism, and resilience of our management
team. Simon, Lindsay and colleagues throughout
the business have been tireless in their efforts and
fellow Directors have given very generously of their
time and experience to advise and assist. I look
forward to working with all concerned to realise
STV’s potential and future growth.
Paul Reynolds
Chairman
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 06 STV Annual Report and Accounts 2021
STV 2021: A year of growth
Simon Pitts
Chief Executive
2021 was an outstanding year of growth for STV Group,
which saw us exceed our targets and set ambitious
new goals as part of a refreshed three-year vision
while continuing to support our people, partners
and communities as we emerge from the pandemic
with momentum and confidence.
It is exciting to see real momentum building
in our Studios business, which delivered its
best-ever financial performance in 2021, despite
the continued challenging conditions. We are now
starting to see the fruits of the restructure of the
division, having invested in our people and our
creative pipeline, and complemented our talented
team with a series of investments in new
companies and partnerships. STV Studios is now a
family of nine creative labels, targeting different
parts of the growing international production
market, all of whom have already secured
substantial new commissions. In 2021 we produced
more new series than ever, right across the genres,
from drama, Screw, to factual entertainment event
Murder Island, to arts competition Landmark, and
there is much more to come.
The growth of our streaming service, STV Player,
continues to accelerate and it’s now home to
more high quality programming than ever. 2021
saw our digital streams leap by 63% and we
recorded our biggest digital audiences ever
during the delayed UEFA Euro 2020 football
finals, including huge ratings for Scotland’s group
games. Alongside our first run network content
we also now have over 3,000 hours of Player-only
programming available, including around 100
drama box sets. This digital-only programming
now constitutes over 42% of our total streams and
is available across the UK after STV Player launched
outside Scotland for the first time. Nearly a quarter
of our streams came from outside Scotland in 2021,
up from only 2% in 2020.
Within Scotland, STV remains the most popular
peaktime TV channel. STV grew its viewing share
in 2021 to a 13 year high, a testament to the
connection we have with our audience and
the strength of our programming including the
Six Nations Rugby, Euro 2020 and dramas like
The Bay and The Pembrokeshire Murders.
At the very heart of our business are our brilliant
people, of course, who I feel privileged to work
alongside. We have continued to operate within
strict Covid guidelines and as a result, most of our
teams continued to work from home last year, as
they did in 2020. Our tireless news teams have
remained on the ground, providing our viewers
with trusted news, facts and insight throughout
the pandemic, and covering countless other major
news stories. And our production teams have
shown incredible creativity and commitment in
In 2021 we delivered our highest revenue,
highest adjusted operating profit and lowest
net debt on record.
There were two key contributing forces to this
success: our ability to continue to grow our audience
share on STV and STV Player in tandem with the
strong recovery of the TV advertising market; and the
performance of our Digital and Studios businesses,
which now represent more than one third of our
earnings, evidence of the ongoing success of the
diversification strategy we launched in 2018.
The speed and scale of the advertising recovery
in 2021 exceeded our expectations and underlines
the enduring power and relevance of high-quality
video advertising. We delivered our highest ever
advertising revenue, with brands choosing
broadcast advertising to fuel their post-Covid
recovery due to its unrivalled levels of trust,
brand safety and value.
Our advertising revenue performance was
particularly strong in Scotland, driven by the
effectiveness of the STV Growth Fund. Our
investment in this growth initiative, which makes
advertising accessible and affordable for SMEs in
Scotland, has been increased to £30m for 2022 with
£16m allocated to date, and sees us working closely
with the Scottish business community. We are in no
doubt about the contribution STV’s extensive reach
and appeal for advertisers can make to supporting
businesses with their post-pandemic economic
recovery, and we’re proud that the fund has
welcomed over 320 Scottish businesses to TV
advertising for the first time since launching in 2018,
including over 150 since the start of the pandemic.
STV Annual Report and Accounts 2021 07
delivering outstanding programmes in the face
of multiple restrictions – not least taking a crew
of 140 to a Scottish island with a population of 160 for
a three week shoot, and delivering a six-part drama
in a custom-built prison set in the heart of Glasgow.
The wellbeing of our people is, and always will be,
paramount. Their resilience, commitment and good
humour has been instrumental in making 2021 a
record year for the Group and for that I offer my
sincere thanks.
Our commitment to sustainability has been a key
theme for the business in 2021, and remains a
priority. We launched our strategy, STV Zero, and are
making wide-ranging changes across our business
to ensure we become net carbon zero by 2030. In
an industry first, I was proud to stand on a Glasgow
COP26 stage alongside my fellow UK public service
broadcasters and sign up to the Climate Content
Pledge, a joint commitment to use our broadcast
platforms to help inform viewers about sustainability
issues and promote climate action. We’re proud
members of Project albert, the home of sustainability
for film and TV in the UK, and are committed to
sustainable productions and using our reach to
promote sustainability. As an example, our regional
series, Don’t Waste Scotland, together with our first
ever on-air sustainability campaign, included stories
and tips to encourage a more sustainable lifestyle
while delivering strong audiences. We have plans
to use our creative skills and reach across Scotland
to help make a meaningful positive impact in this
area, and we take this responsibility seriously.
Our connection with Scottish communities is the
lifeblood of STV, running through everything we do.
We are proud to produce Scotland’s most popular
news programme, the STV News at Six, watched by
almost half a million people every weeknight, as
well as Scotland’s only regular current affairs show,
Scotland Tonight. We also reach millions with our
dedicated series’ for Scotland, and we connect and
partner with people and communities on the ground
by working with hundreds of local charities through
the STV Children’s Appeal. 2021 was the tenth
birthday of the Appeal, which has now raised almost
£29m since launch and made a positive difference
to the lives and prospects of thousands of children
and young people across Scotland. Our commitment
to ensure STV reflects the true diversity of modern
Scotland has also strengthened significantly, with
clear targets for on and off-screen representation
now embedded and tracked across the Company.
We are proud to be Scotland’s public service
broadcaster and are contributing fully to Ofcom
and the UK Government’s thinking as they consider
the long-term future of public service media. Ofcom
recognises that there must be a radical overhaul of
the current regulatory framework to ensure public
service media survives and thrives in the digital
age and we welcome recognition of the value
local audiences place on UK original programming,
particularly nations and regions news. As we pursue
our ambitious digital growth strategy through STV
Player, it is clear that new legislation is urgently
needed to ensure public service content is readily
accessible and prominent on global digital
platforms. In addition, there must be an
overarching objective to support the UK’s creative
economy to drive local production and economic
benefits across the nations and regions, including
in Scotland. This debate will continue in 2022 as
Government and Ofcom consider the future of our
broadcast licences and we will be at the heart of it
to secure outcomes that serve the best interests
of our audiences, colleagues and shareholders.
As we emerge from the pandemic we are optimistic
for the future and ambitious for our own growth
prospects. 2022 has started brightly and we have set
out a clear vision for the next stage of STV’s growth,
targeting significant expansion in our Digital and
Studios businesses, both organically and through
acquisition, to the point where these new areas
deliver at least 50% of our profits by the end of 2023.
I’m confident we have the right plan, people and
partners to deliver on our potential – backed by a
strong and supportive Board under the excellent
Chairmanship of Paul Reynolds – and the
management team and I are excited about
the road ahead.
Simon Pitts
Chief Executive Officer
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 08 STV Annual Report and Accounts 2021
The STV investor proposition
STV has a clear strategy to transform the Company
into a digital streaming and content-led media business,
maximising the value of our linear Broadcast channel while
growing our Digital and Studios divisions to take advantage
of the accelerating market in global video.
This diversification strategy is key to generating sustainable
value for our shareholders, as it will provide us with a leading
digital platform and library of programme IP that can be
monetised, both of which will endure through the changing
habits of viewers and increased digitisation.
We have set the target of achieving at least half of our
adjusted operating profit from non-broadcast earnings
by the end of 2023 (from 24% in 2018).
STV’s market position
We have an increasingly strong market position
across all divisions. STV’s rapidly growing, free
streaming service, STV Player is available across
the UK on all major platforms. STV Studios is the
largest production company in Scotland and
uniquely placed to take advantage of the growing
investment in nations and regions production
across the UK. Our Broadcast USP is the consistent
delivery of mass audiences to a high-quality TV
schedule of network and Scottish content. STV is
the most popular peak time TV channel in Scotland,
reaches four out of five Scottish adults every month,
and attracts nearly four times the audience of its
nearest commercial competitor, Channel 4. This
makes us by some margin the most effective
medium for advertisers in Scotland.
High margin digital business
STV Player has seen rapid growth over the last three
years, driven by significant improvements in the user
interface and reliability of our streaming service;
distribution expansion on all major platforms across
the UK; and a growing programme offering which
combines first run original content from Channel 3
with more than 3,000 hours of acquired third party
content and rich STV archive. Registered users have
grown from 3.0m to 4.3m over the last three years,
with an ambitious target set to reach 5m by the end
of 2023, coinciding with the aim of doubling digital
revenues to £20m from a 2020 baseline.
Studios gathering momentum
Following a period of organisational and creative
reinvention, the Studios business is strongly
positioned to take advantage of increasing demand
for quality content in a UK production market worth
more than £3.3bn, as well as growing international
opportunities. With a total of nine creative labels
now under the STV Studios umbrella, all of which
have won commissions in the last 12 months, there
is real momentum and 2021 saw the division deliver
its best creative and commercial performance ever.
The development pipeline is stronger than ever, with
a target of quadrupling revenue to £40m from a
2020 baseline by the end of 2023 within our sights.
Regional advertising underpinned by the £30m
STV Growth Fund
Launched in 2018, the STV Growth Fund is a highly
effective tool to bring new advertisers to television
by making it affordable and accessible, mainly by
match funding advertising campaigns. Since launch
we have allocated over £16.5m of funding across
800+ deals, attracting over 320 new advertisers
to television for the first time. We also provide
additional support to local businesses through
our STV Growth Academy, which provides training
and mentoring across a range of topics, including
social media, brand management and marketing.
Robust balance sheet supports investment
for growth
Following a year of strong growth and cash
generation, the Group is now in a net cash
position at the end of 2021, underpinned by a
£60m revolving credit facility (recently extended
to 5 March 2025, and with a further one-year
extension option available) providing significant
headroom and financial flexibility. We announced
a £30m investment programme in March 2021, of
which 75% is aimed at driving the growth in Studios
and Digital. The pension deficit is well managed
with core deficit recovery contributions constant for
the last three triennial valuation cycles (the most
recent being at 31 December 2020).
Strong cash generation
Our business has been very resilient through the
pandemic and has remained highly cash generative
with operating cash conversion of 108% in 2020 and
161% in 2021. We believe this strong cash generation
will continue and will enable us to fully execute our
investment programme.
Shareholder returns
As a business, STV has navigated its way through
the pandemic confidently and we were able to
reintroduce a cash dividend in May 2021. We believe
that pivoting our business towards Digital and Studios
will drive long-term value for shareholders, but we
also recognise the importance of a regular, growing
dividend. Our approach to setting dividends is to
balance the needs of the business (for reinvestment),
with those of the pension scheme, and other
stakeholders. We are committed to maintaining
this balance while delivering a sustainable,
progressive dividend to shareholders.
Core values
STV is committed to business integrity, high ethical
values and professionalism in all our activities, and
our social purpose priorities remains an integral
part of our strategy. We are making progress on
diversity across the organisation, driven by our
Diversity and Inclusion Steering Committee and
network of peer groups. We have set ourselves
specific targets for representation from minority
groups and are working towards gender balance
in the top 25% of roles by 2023. Our focus on
sustainability has accelerated in 2021 with the
launch of our STV Zero strategy, setting down our
commitment to reduce our environmental impact
and promote climate action in an accessible way
to our viewers. We have achieved carbon neutrality
in 2021 and have set new intermediate milestones
on the road to becoming net zero carbon by the end
of 2030. We are proud members of Project albert
and a co-signatory to their Climate Content Pledge.
STV Annual Report and Accounts 2021 09
Audience reach:
3.2m per month
Growth fund:
£30m
Third party
content on Player:
3,000+ hours
Commitment
to sustainability
Non-broadcast earnings*
%
50
40
30
20
10
0
50%
36%
34%
28%
24%
2018
2019
2020
2021
2023
* Adjusted
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 10 STV Annual Report and Accounts 2021
STV business model
Our strategic vision is to transform STV into a digital streaming and
content-led media company, maximising the value of our linear
Broadcast channel while growing our Digital and Studios divisions
to take advantage of the accelerating market in global video.
Our business model sees us combine our strategic assets across
three interconnected business divisions to create sustainable,
long-term value for all our stakeholders.
Our strategic assets
What we do
We want to deliver high quality outcomes
for all our stakeholders, and to achieve that
we rely on a number of key strategic assets.
We operate an increasingly diverse business,
generating value from a number of
different revenue streams:
Our people
People are at the heart of everything we do at
STV. Their creativity, commitment, skills, passion
and diversity are key to our success.
Our culture
We have a strong, creative culture that puts the
values of honesty, transparency and fairness at
the core of everything we do.
Our platforms
We operate the leading marketing platform
in Scotland (STV, channel 3) and fast growing
broadcaster Video on Demand platform, STV
Player. These combine to give us unique scale
and reach across all demographics, enabling us
to offer bespoke competitive commercial deals
to advertisers and agencies.
Our location
We run Scotland’s largest production company
with bases across Scotland as well as a presence
in Northern Ireland and London and are uniquely
well placed to take advantage of broadcasters’
increased commitments to nations and regions
production in the UK.
Our intellectual property
We own, or have access to, the rights of a
diverse portfolio of programmes that are
popular across the UK.
Our relationships
We have strong relationships with our viewers,
advertisers, commissioners and communities
to deliver value and boost the economy.
Financial capital
We have a strong balance sheet and financial
discipline, which provide us with the capital to
invest in medium to long-term growth initiatives.
STV Annual Report and Accounts 2021 11
STV on track to hit 50%
from non-broadcast earnings*
by 2023 (36% in 2021)
* Adjusted
Advertising revenue
We offer bespoke spot advertising and
sponsorship solutions on our linear television
channel, STV, and addressable and
programmatic Video on Demand advertising
on our VoD service, the STV Player.
Commercial partnerships
We work with TV platforms under a series
of long-term partnerships, as well as with
advertisers to provide a ‘one stop shop’ for
advertising services, extending beyond the
sale of advertising to creative design, post
campaign analysis and related activities.
Programme production
and distribution
We produce original content for broadcasters
and platform owners in the UK and
internationally from our production bases
across the UK. We own the rights to a library
of programmes that we sell and license
to broadcasters and platform owners
internationally.
Direct to consumer
We directly monetise audiences through
on-air competitions and a paid-for VoD
service, STV Player+, which provides the
option to stream our content without adverts.
Delivering value for our stakeholders
We respond to the changing needs of all our
stakeholders and create value for them through
efficient delivery of our business operations.
Audiences
Through a high-quality TV schedule providing the largest
peak time audiences in Scotland – the highest since 2008.
Advertisers
Through our unique scale and reach, boosted by the
£30m STV Growth Fund which is aimed at attracting
new advertisers to TV.
Our people
By developing a supportive, open, creative and collaborative
culture; prioritising the safety, mental health and wellbeing
of our people.
Communities
By providing trusted news, facts and information through
the most comprehensive local news and current affairs
service in Scotland; improving on and off screen diversity to
reflect the true face of modern Scotland; raising £4.4m for
families and young people in poverty in Scotland through
the STV Children’s Appeal; supporting Scottish business to
recover from Covid through the STV Growth Fund; and
championing climate action through STV Zero.
Investors
Continuing to deliver on a growth strategy that generated
the highest adjusted operating profit on record in 2021
together with a return to a cash dividend for shareholders.
Platforms and partners
Through a range of successful, long-term relationships with
platforms, fellow broadcasters, distributors and suppliers,
through which they share in our success.
Government and regulators
STV delivers on its public service obligations and is working
with stakeholders to create a sustainable future model for
public service media. STV also repaid all furlough monies
in full to Government when it became clear that the
advertising market was recovering successfully.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info
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12 STV Annual Report and Accounts 2021
2021 was an excellent year for our Broadcast division,
with viewers continuing to turn to linear TV for trusted
news and high-quality entertainment.
Our connection with our viewers has strengthened
further, underlining the importance of Public Service
Media to audiences across the country, especially
during challenging times like the Covid-19 pandemic.
Our reach in Scotland remains unrivalled and
our audiences are strong; STV has a higher daily,
weekly and monthly reach than any other
commercial channel. On average, we reach
3.2 million adults in Scotland per month, and we
reach more 16-34 adults than any commercial
channel, making our platform an attractive and
unique proposition for commercial partners.
Exceptional viewing performance
Viewing figures for STV soared during the height
of the pandemic in 2020, and we have sustained
this strong performance through 2021, ensuring it
wasn’t just a lockdown phenomenon. Our share of
commercial channels (28.5%) is the highest it has
been since 2008; and our year-on-year growth of
one share point is higher than any channel in
Scotland or across the UK. Our commercial share
is bigger than the next seven largest commercial
channels combined.
STV remains the best watched peak-time channel
in Scotland. Our daytime, peak and all-time share
are all at a 12 year high, and 2021 saw our strongest
ever all time share performance versus the ITV
Network (19.6% v 17.7%).
Bobby Hain
Managing Director
STV News – Euro 2020
Raman Bhardwaj and
Sheelagh McLaren fronted
STV coverage of Euro 2020.
Scotland’s clash against the
Auld Enemy was the best
watched broadcast across
all channels in Scotland.
STV Annual Report and Accounts 2021 13
STV is the only PSB channel that outperformed its
UK Network equivalent, with BBC1, BBC2, Channel 4
and Channel 5 all having a lower share in Scotland
than they have across the UK in 2021.
STV had the most watched news programme,
daytime programme, soap, documentary, sports
broadcast and entertainment programme across all
channels in 2021. This viewing success was driven by
a strong schedule of drama, entertainment, factual
and sport output, including Six Nations Rugby and in
particular, Euro 2020, which captured the attention
of a nation of football fans. The much-anticipated
England v Scotland match, for which we produced
our own presentation, saw STV’s highest ever peak
audience at 1.94m, becoming our most watched
programme of the last decade and best watched
football match ever. Across the whole tournament,
3.6m Scots tuned into our coverage.
Other schedule highlights included entertainment
juggernauts The Masked Singer and Ant and Dec’s
Saturday Night Takeaway; crime dramas The
Pembrokeshire Murders, Manhunt and Grace; and
Oprah’s interview with Meghan and Harry, which
was watched by 1.2m Scots. I’m a Celebrity… Get Me
Out of Here! reached 1.8m Scots across the series
and remains a perennial top 10 show.
STV broadcast 98% of programmes with over half
a million viewers on commercial television.
Alongside network content, we produced and aired
a range of dedicated regional productions for 2021
including sustainability focused series, Don’t Waste
Scotland; Hogmanay show, Bringing in the Bells; a
half-hour special to whet fans’ appetite for the Euros
with documentary, Scotland: We Can Boogie; and our
dedicated STV Children’s Appeal content, which this
year included a documentary highlighting the issues
surrounding young people’s mental health during
the pandemic and our big tele-fundraiser with
Content
STV broadcast 44 of
the 50 best watched
programmes on
commercial TV in
Scotland
Share
All time share at
a 13 year high
Revenue
Highest ever total
advertising revenue:
£112.6m
STV peak time audience (thousands)
335
319
STV
BBC 1
Channel 4
BBC 2
Channel 5
ITV 3
E4
BBC Scotland
ITV2
Sky Sports Main Event
Drama
CBS Reality
Film4
More4
Dave
93
90
72
33
29
29
27
23
20
19
18
17
15
Source: BARB, Jan-Dec 2021, peak time (18.00-22.30), individuals
The Masked Singer
Schedule highlight The
Masked Singer is a top
15 programme on STV.
The Chase
The Chase remains the
most watched regular
daytime series in Scotland
– every new episode in
2021 won its timeslot.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 14 STV Annual Report and Accounts 2021
Manhunt
STV is the only commercial
channel in Scotland to
achieve drama audiences
over half a million in 2021.
Promoting sustainability
Climate correspondent,
Laura Piper and the wider
STV News team provided
comprehensive coverage of
COP26 – making high-level
politics relevant and
accessible to our audience.
Lorraine Kelly. The Appeal raised £4.4m for children
living in poverty in Scotland in its 10th birthday year,
bringing the total the charity has raised since 2011
to almost £29m.
Our current affairs programme, Scotland Tonight,
had an exceptionally busy year whilst at the same
time celebrating its 10th anniversary. With
dedicated Scottish Parliament Election coverage,
including one-to-one interviews with party leaders,
comprehensive stories from COP26 and a wide
range of current affairs impacting the country,
Scotland Tonight led the agenda and frequently
saw its stories picked up in the daily news titles.
We continue to air four episodes a week, including
one in peak to make it more accessible for viewers.
Since moving to a peak-time slot in 2020, Scotland
Tonight’s Thursday audience is at an all-time high,
having grown to 207,000. The programme is now
well established as the nation’s number one
Scottish-focused current affairs programme.
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Highest ever advertising revenues
Our broadcast channel remains the engine room
of STV, with strong cash generation fuelling the
investment in key growth areas. The speed and scale
of the advertising recovery in 2021 far exceeded our
expectations and underlines the enduring power
and relevance of high-quality television advertising.
Our strong content offering, and the unrivalled
reach of the channel, helped drive total advertising
revenue growth of 24% for the full year which,
encouragingly, is 11% up on pre-Covid 2019. Our
relationship with the business community has
continued to strengthen, with brands increasingly
choosing our channel to build awareness and drive
post-Covid recovery. A key to this success has been
continued evolution of the STV Growth Fund, which
now sits at £30m of which over £16.5m has been
allocated since inception.
Promoting sustainability
As we all face the scale of the global climate crisis,
STV holds a unique position as a public service
broadcaster and pre-eminent marketing platform
to work with partners, programme makers and
viewers to raise awareness of environmental issues
and to support the businesses we work with to
effect lasting change.
As a business, we have committed to being net
zero carbon by 2030 and we are keenly aware of
our responsibility to use our platform to reach large
audiences with clear messaging around climate
change. Our first promotional campaign featured
our much-loved weather presenters transformed
into older versions of themselves and delivering
‘weather forecasts’ from the future. The purpose
of the campaign – and our three-part series Don’t
Waste Scotland – was to highlight the importance
of making small changes in our everyday lives to
help improve the outlook for the environment.
Alongside the many changes we have made as a
business and across our productions, this on-air
campaign is only the beginning, as we seek to
continue to raise awareness of climate change
in an accessible way on our platform. This
commitment was solidified as we signed up to
Project albert’s Climate Content Pledge with all
other UK major broadcasters, collectively promising
to weave sustainability messaging through our
editorial content.
STV Annual Report and Accounts 2021 15
Spotlight
STV Growth Fund
We continue to work closely with the
Scottish business community, ensuring
that advertising is both affordable and
accessible via our innovative STV Growth
Fund. This initiative is more important
than ever as we work hard to help boost
economic recovery post pandemic. In
November 2021, we announced that we
would increase the fund to £30m in 2022 to
help drive Scotland’s economic recovery.
Since launch in 2018, and to the end of
2021, we have allocated over £16.5m
across more than 800 deals with Scottish
SMEs. The fund has enabled over 320
businesses to access TV advertising for the
first time, including around 150 since the
start of the pandemic. From a travelling
restaurant and a sustainable gift hamper
company to a teething-bib scale-up and
a green boiler business, we are proud to be
a key part of these regional SMEs’ growth
journeys and delivering them real results.
In March, we launched a £1m Green
Fund* aimed at Scottish businesses
providing sustainable products and
services. The new fund is already helping
these businesses connect with consumers
via their eco credentials and is open to
SMEs with a ‘green’ objective, product or
message, helping them extend their reach
and encourage Scots to reduce their own
carbon footprint.
In July, we launched a gifted membership
initiative as part of our £1m Inclusion Fund*,
which supports businesses committed to
diversity and inclusion. £100k of gifted
memberships was made available, with
an esteemed judging panel meeting with
interested businesses to hear about how
they champion diversity through their
brands. Four successful businesses from
across Scotland were awarded membership
to help fund new campaigns.
The recent launch of STV Self Service was
targeted to increase access to the Growth
Fund for businesses apprehensive about
marketing. The initiative enables our
advertisers to design and book their own
campaigns online and provides ease of
access to our leading marketing platform.
* Ringfenced within the overall Growth Fund
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 16 STV Annual Report and Accounts 2021
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Expert Voices
More than 400 women
have taken part in Expert
Voices media training.
Holyrood Election coverage
Political editor Colin Mackay
and the wider news and
current affairs team
provided comprehensive
and wide-ranging
coverage of the Scottish
Parliament elections.
Average audience for all major news
programmes (thousands)
Good Morning Britain
BBC Breakfast
ITV Lunchtime News
BBC News at One
5 News at 5
BBC News at Six
STV News at Six
Reporting Scotland
ITV Evening News
Channel 4 News
The Nine (BBC Scotland)
ITV News at Ten
BBC News at Ten
Sky News Channel*
BBC News Channel*
GB News*
71
120
85
28
280
340
468
424
369
133
242
53
16
6
11
2
* Average audience across a day (09.30-24.00)
Source: BARB, 2021 (Mon-Fri), individuals
STV Annual Report and Accounts 2021 17
Spotlight
STV News
STV News is the jewel in our regional
crown and our tireless team continued
its exceptional run from 2020 into 2021.
For the third year in a row, STV News at Six is
the best watched news programme in Scotland,
with an average audience of 468k; and is the
most-used source for accessing news about
Scotland by people in Scotland (Ofcom News
Consumption Survey 2021). Our talented and
dedicated journalists and production crews
brought viewers across the country the
much-needed facts and information around the
biggest news to hit Scotland on the nightly STV
News at Six and in regular bulletins, alongside
our comprehensive digital news service.
Our reputation for providing trusted, high-quality,
relevant news was cemented further with
comprehensive stories around big Scottish events
including the Scottish Parliamentary Elections,
new developments in the pandemic and COP26,
when the eyes of the world were on Glasgow.
The service is watched by over 2.4m (54%) of
the Scottish population each month, across all
STV News bulletins with 2.2m accessing our
news across our digital platforms every month.
Digital
2021 was a year of partnership and renewal for
STV News digital publishing. Licensing deals with
Facebook and Google for STV News content to
feature on Facebook News and Google Showcase
created meaningful revenue streams and
visibility on these important new services.
New apps were successfully launched for iOS
and Android mobile devices to offer users a
modern, reliable and accessible experience.
The STV News website has also benefited from
significant updates as part of an ongoing
improvement programme. This has enhanced
performance and created foundations for
future editorial initiatives.
Our continued focus on social distribution
delivered strong engagement on Facebook,
particularly in relation to video content. We will
build on this in 2022 and deploy new tools to
deliver greater value from our social posts. We
will also invest in audience development on
Instagram after promising trials. This initiative
will leverage the significant volumes of video
content produced by our newsrooms.
Editorial strategy is providing timely and
trusted news that is relevant and engaging
to a broad and diverse audience. Priorities in
2022 include enhancing our regional output;
better showcasing our journalists online
and improving our sports offering.
On-screen diversity
Our editorial strategy is to provide timely and
trusted news that is relevant to a broad and
diverse audience and strong progress is being
made. For news, we have an on-screen ethnic
diversity target of 8% (double the population
profile); and a 50:50 target for gender
representation. We measure progress against
these monthly and regularly exceed our targets
but there is still work to be done to ensure we
consistently hit these targets across the year.
More than 400 women have taken part in our
STV Expert Voices media training workshops,
as we seek to increase representation of
female experts and women of colour on
screen. Through this work we have developed
strong partnerships with Women in Journalism
and Pass the Mic, and we are pleased to say
that dozens of the women who have taken
part in our workshops have now used these
skills to participate in broadcast interviews
with confidence.
Investing in news
In September 2021, we completed the
multimillion-pound, three-year project to
upgrade all six of our news broadcast centres
across Scotland to High Definition. This project
included two studios with full production
galleries, alongside all our cameras and
editing workstations.
The project began in STV North in 2019 with
full HD upgrades to our Aberdeen, Dundee
and Inverness studios and has now completed
across STV Central. After an unavoidable hiatus
during lockdown, work to refit the Glasgow
operations was completed in June, our Scottish
Parliament studio facilities in March and the
final work in our Edinburgh studio and gallery
was completed in September. All studios and
galleries now fully support HD end to end –
from camera capture to studio playout.
The refit represents a significant investment
in our news operation and the team are to be
applauded on completing the transition as
seamlessly as possible.
News sits at the heart of our public service
broadcasting contribution and we are proud
to be investing to continue to deliver the high
quality, trusted, relevant service that hundreds
of thousands of Scots rely on each day. We are
committed to protecting regions and nations
news for Scotland and ensuring that it remains
of the highest quality and accessible to all.
Behind the scenes
A multi-million pound
project to upgrade all
news broadcast centres
was completed in 2021.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 18 STV Annual Report and Accounts 2021
The acceleration of Digital has continued during 2021, with an
exceptional performance and rapid growth of our broadcaster
streaming service. Building strong connections with our
growing audience is critical. We do this by regularly adding
high-quality content, working closely with platforms, and
enhancing the user experience via regular product updates.
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Richard Williams
Managing Director
The Bay
Along with the soaps,
the second series of British
crime thriller The Bay made
up the top three dramas
on STV Player in 2021.
There is strong evidence of the progression
of our strategy to significantly increase our
addressable audience via UK wide rollout whilst
expanding our high-quality content offering.
Total streams on the STV Player in 2021 were
up 63% year on year, with on demand viewing
up 49% and live simulcast more than doubling
(up 109%). Importantly, the amount of time spent
on STV Player has increased by 42% year on year,
from 35.7m hours in 2020 to 50.8m in 2021.
The growth of STV Player, in terms of streams and
revenues, has outstripped the other PSBs over the
past three years. In 2018 we delivered 35m streams,
with this more than trebling to 115m in 2021.
STV Player is available on all major platforms
including Sky, Freeview, Virgin Media, Freesat,
Apple TV and Fire TV. In October, we were pleased
to confirm our inclusion on Sky’s new service – Sky
Glass – appearing in the line-up alongside all the
other major streaming services and taking our
partnership with Sky to the next level. We delivered
a fully regionalised Sky Glass STV Player service at
launch, which means that users in Scotland can
enjoy all four regionalised STV streams and access
the entirety of the STV Player catalogue.
STV Annual Report and Accounts 2021 19
STV Player and UK-wide strategy
STV is available on all major platforms.
More than 1 in 5 of all VoD streams now
come from outside of Scotland.
Content
Total registrations:
4.3m
Audience
Growth in
streams: 63%
Revenue
Total digital
revenue: £17.8m
Users of the service across the rest of the UK
can access our extensive Player-only content.
4.3m adults are now registered for STV Player. Our
expansion into the rest of the UK means that 22%
of VoD streams are now coming from outside of
Scotland (up from 2% in 2020), with a significant
opportunity for future growth.
Growth of STV Player (in streams)
114.6m
70.5m
28.2m
34.9m
20.6m
42.7m
2016
2017
2018
2019
2020
2021
Growth of STV Player in terms of streams (as shown)
and revenues has outstripped other PSBs
Accused
One of 84 drama box sets
available on STV Player –
49 of which were brand
new to the service in 2021.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 20 STV Annual Report and Accounts 2021
Must-stream TV
Nothing drives traffic like sport, soaps and drama
and 2021 provided a feast of all three.
Euro 2020 saw STV Player repeatedly breaking
records as the competition progressed, with
football fans watching in their millions. The day of
the France v Switzerland and Croatia v Spain clashes
saw STV Player deliver its best performing day ever,
with more than 1m streams. The much-anticipated
Denmark v England semi-final quickly became STV
Player’s most-watched live event, drawing in almost
half a million streams for this game alone. Total
streams across the tournament were an impressive
3.9m. The platform proved to be a reliable,
user-friendly, high quality and attractive proposition
at a time of the highest demand, making Euro
2020 a roaring success for STV.
Soaps and drama dominated the top 50 most
watched titles on STV Player, with Coronation Street
and Emmerdale topping the chart. During the Euros,
the soaps were displaced by live matches, so we
dropped a box set of the week’s episodes for both
soaps each Monday. Across the month, we saw
a significant increase in streams for both titles –
Coronation Street was up 46% and Emmerdale was
up 81% – opening up the Player to dedicated and
new visitors alike.
Network drama remains a key driver of traffic, with
major titles for 2021 boosting our audiences and
encouraging ‘binge’ viewing via box set drops. The Bay
was our third best watched title in 2021, attracting
2.9m views, alongside Marcella (1.8m), Finding Alice
(1.4m) and Unforgotten (1.2m). Importantly, our
acquired dramas are competing well with our
network scripted content in terms of volume of
hours consumed, though the network dramas
are still more popular on a ‘per episode’ basis.
The Thirteenth Tale
STV Player’s biggest
content deal to date with
Banijay Rights brings new
programming – and big
names such as Olivia
Coleman – to the free
streaming service.
Emmerdale
Soaps are the biggest
shows on STV Player –
with Emmerdale streams
up 52% in 2021.
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The Commander
An acquisition from
distributor All3Media,
The Commander has had
more than one million
streams on STV Player.
© Dayday films LLP
STV Annual Report and Accounts 2021 21
Spotlight
Player-only content
We continue to accelerate our
acquisitions strategy by developing
strong relationships with distributors,
with a growing focus on scripted content.
We worked with 17 partners in 2021,
agreed 31 new content deals and added a
plethora of drama, true crime, factual and
entertainment programmes to our service,
complementing the network material. These
agreements added an additional c.1,900
hours of Player-only content including more
than 850 hours of scripted, representing 173
new titles to our ever-expanding catalogue.
In July, we secured our biggest ever content
deal to date, partnering with Banijay Rights
to bring 1,250 hours of new programming to
the service. We’ll provide regular content drops
into 2022, constantly refreshing our offering.
Drama (both Channel 3 Network and
acquired) and soaps dominate STV Player’s
top 20 shows and, in response to the
popularity of this material we decided to
upload new Player-only dramas each week.
In 2021, we hosted 84 drama box sets on
the service.
12 out of the top 20 programmes on
STV Player were non-network, Player-only
content, highlighting the growing success of
our strategy. These include the US version of
The Bridge, The Firm, Rogue and Gracepoint,
alongside archive favourites Taggart and
Take the High Road.
All our Player-only dramas are available
as full series to binge watch but from the
beginning of 2021 in line with ITV we
began dropping box sets for our network
dramas too, to power the inevitable
migration of viewers to VoD in line with
continued changes in viewing behaviour.
The network soaps remain a valuable part
of our offering, always in prime position on
our streaming chart, but we are pleased
to note that our reliance on these titles
is reducing. Whilst traffic to the soaps
continues to grow, they now constitute less
than 30% of our overall streams, down from
70% three years ago. This is down to our
ever-increasing catalogue of Player-only
content, helping us develop a more holistic
and wide-ranging service for our users.
Traffic is of course the most important
metric, and we are pleased to note that
42% of our VoD streams came from our
Player-only content in 2021, up from 32%
in 2020.
Top 20 chart by volume and episode
(STV Player-only content highlighted)
Total streams Avg. per episode
Coronation Street
Emmerdale
The Bay (S1 & S2)
The Bridge
Take the High Road
Marcella
Thorne
Taggart
Finding Alice
The Firm
Rogue
Detective McLean
Unforgotten
The Commander
Gracepoint
I’m a Celebrity… Get Me Out of Here!
Angela Black
Striking Out
The Client List
Janet King
Source: Adobe Analytics Jan-Dec 2021, FreeWheel Jan-Dec 2021
12.0m
9.3m
2.9m
2.7m
2.2m
1.8m
1.5m
1.4m
1.4m
1.4m
1.3m
1.2m
1.2m
1.1m
1.1m
1.0m
910k
870k
860k
750k
46k
32k
244k
102k
5k
229k
253k
13k
231k
63k
25k
119k
195k
65k
107k
53k
152k
87k
34k
31k
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 22 STV Annual Report and Accounts 2021
VoD advertising
We’re incredibly proud of our high-quality network
content which offers new material to viewers, entices
them on to the Player and keeps us distinctive.
However, as an AVoD, we require volume to make
the service a stronger commercial proposition, and
the addition of our Player-only content has been
incredibly successful at bringing in new users to the
service whilst providing existing users with a greater
breadth and depth of content. The wider recovery of
the advertising market was reflected in our digital
business, and commercial innovation has allowed
us to design new opportunities for revenue growth,
including sponsored genre carousels, themed
content collections and programmatic deals.
As such, VoD advertising on STV Player was up 38%
compared with 2020, with ad impressions +43%.
One important development for 2021 was the
successful launch of mid-roll ads on drama box
sets on the Sky platform, which enabled us to fully
monetise our UK-wide expansion. Working with Sky
and FreeWheel, these mid-rolls give us more scope
to serve further advertising and promos and enable
us to monetise every stream on Sky set top boxes.
This development gives us additional flexibility to
promote other Player content within a stream and
brought Sky in line with our other apps, which all
include mid-rolls, giving our viewers a consistent
STV Player experience.
Building a loyal audience
In June, we became the first broadcaster VoD
service to launch a VIP rewards scheme to build
better connections with our viewers and further
drive streams. STV Player VIP brings members a
range of benefits including personalised email
recommendations, opportunities to win prizes
each month, including TVs and tickets to must-see
events like Euro 2020, as well as no pre-roll adverts,
and we will constantly be refining and improving
this offer.
In autumn 2021, we trialled ‘STV Player Presents’
which saw us make the most of our broadcast
window to introduce linear viewers to our acquired
drama box sets and raise awareness of our Player-
only content to a new audience. For the pilot, we
aired the first episode of three of our most popular
acquired dramas – Thorne, Rake and Striking Out –
over the course of three Saturday nights, each time
encouraging viewers to head to STV Player to watch
the rest of the series. We are trialling ‘STV Player
Presents’ again in Q1 2022 but this time will air them
in a prime-time weeknight slot (9pm, Tuesdays)
to drive increased viewing figures and migration
from linear to VoD.
In the autumn, we were thrilled to be nominated
for the ‘best on demand service’ at the prestigious
Edinburgh TV Awards. Whilst we didn’t win, our
shortlisting alongside the calibre of NOW, Disney+
and All4 is a win in itself – and there’s always
next year!
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STV Player on
connected TV
STV Player gives
viewers in Scotland the
opportunity to watch
STV shows on their terms,
live or on demand.
In 2021, VoD advertising
on STV Player was up 38%
compared with 2020, with
ad impressions +43%.
Detective McLean
Just one of the drama
box sets available on
STV Player.
Striking Out
STV Player Presents
saw the first episodes
of acquired titles such
as Striking Out feature
on STV’s linear channel.
STV Annual Report and Accounts 2021 23
Spotlight
Product updates
STV Player enjoys a level of functionality,
stability and app store ratings that have
significantly improved over the last
three years.
The team has continually improved the
user experience across platforms with
technical upgrades a priority, ensuring that
the service is reliable and intuitive for users.
From design tweaks to personalisation and
tailored recommendations, everything
our team does encourages greater
consumption of our content.
The introduction of the ability to rate the
Player in-app on iOS and Android, was an
important development to help boost our
ranking in searches. We’re delighted that
the app is receiving four and five-star
ratings across iOS, Apple TV and Android,
boosting our rankings and visibility; and
we are now the highest rated PSB app
(compared with ITV Hub, All 4 and My5)
across the main app stores.
We successfully launched Red Button
functionality on YouView and Freeview
Play, making it possible for linear viewers
to easily launch the STV Player app on their
device. The feature worked well during the
Euros, to point viewers to the displaced
soap drops; and it also enables us to
promote specific Player content.
We also updated the STV Player website,
which has always been at the heart of the
Player experience. As one of the original
platforms, it’s important for us to ensure
it keeps evolving to meet users’ needs,
supports the other platforms and
showcases all our content. Improvements
in 2021 included personalisation on the
homepage, an overhaul of our carousels
and new links to provide quick access to
link STV Player to connected TVs.
One important development was the roll
out of Digital Rights Management (DRM)
capability across all platforms in 2021. This
means that all viewers can now enjoy ‘DRM
protected’ content, allowing them access to
more of our programming – thus expanding
our available audience. In addition, this
enhanced level of security has unlocked
deals with premium content partners.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 24 STV Annual Report and Accounts 2021
2021 has been a record year for STV Studios. We successfully
won 16 commissions for seven different networks and have
delivered our best-ever financial performance, with full year
revenue of £27m and adjusted operating profit of £1.3m.
We’ve also built an incredibly exciting pipeline of shows
for 2022. Creatively and commercially, the Studios
business is stronger than ever.
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I’m incredibly proud of the team, who have shown
resilience, dedication, and creativity through what
continues to be a challenging time for the industry.
STV Studios entered 2021 with a number of
commissions which were developed and won in
the height of the pandemic. We had deliberately
made the decision to hold our nerve and continue
to develop big, bold and potentially transformative
projects, even at a time when all production had
been halted.
These productions were successfully delivered,
despite the ongoing impact of restrictions, and
new commissions have been secured regularly
throughout the year – all contributing to an
outstanding 12 months for the division.
Importantly, we are creating returning and
returnable series, which are particularly valuable to
the business – the result of a clear strategic decision
to move away from developing one-off projects
and non-returnable ideas. Highlights include:
a significant entertainment commission called
Bridge of Lies, a hugely ambitious game show
which shot in Q4 and will air on BBC One in Q1 2022;
a recommission of The Yorkshire Auction House for
Discovery including two series of 10 episodes and
David Mortimer
Managing Director
Screw
STV Studios drama Screw
was filmed in Glasgow’s
Kelvin Hall, with a three
storey prison set created
in the iconic building.
Content
Commissions
in 2021: 16
Audience
35 million people
watched STV
Studios content
Revenue
Full year revenue:
£26.6m
The Travelling Auctioneers
BBC One commissioned
new daytime series from
STV Studios fronted by
Antiques Road Trip expert
Christina Trevanion and
restoration maestro Will Kirk.
Bridge of Lies
Ross Kemp will host
new BBC quiz show
Bridge of Lies which is
set to air in Spring 2022.
STV Annual Report and Accounts 2021 25
a further five-episode celebrity version; and a
13-episode commission for ITV’s ratings winner
Celebrity Catchphrase, its biggest commission since
launch in 2013.
We have strong and developing relationships with
the key PSBs, international networks and global
streamers; and with production bases in Glasgow,
Northern Ireland and Brighton, are well placed to
take advantage of the increased commitments to
nations and regions productions from the UK PSBs.
Factual
Our Factual team under the direction of Creative
Director, Craig Hunter, had an excellent year with
multiple commissions and shows on air.
A key win was the innovative series, Murder
Island, for Channel 4. We were the first production
company to secure a commission from Channel 4’s
Contestable Fund, and the series captured the
imagination of the UK public, which had a total
series reach of 9.8m. With world renowned writer,
Ian Rankin, secured as writer and three of the UK’s
most experienced homicide detectives on board,
this genre busting cross between drama, factual
and a competition between four pairs of amateur
sleuths trying to ‘solve a murder’, made a real
impact on TV schedules in 2021.
2021 also saw us secure our first factual series for
UKTV, six-part comedy travelogue British As Folk,
featuring three comedians travelling the country
and interrogating the stereotypes around the make
up of British life today. We also delivered a four-part
series for Channel 5 called Our Family Farm Rescue,
fronted by Adam Henson and reaching 4.2m across
the UK.
Antiques Road Trip and its Celebrity sister series
continue to be a staple ratings winner for the BBC
and a strong returner for STV Studios. In 2021, we
delivered two series of Antiques Road Trip and a
further series of twenty episodes of the Celebrity
series, and a further three series were commissioned
for next year (series 25 and 26 of Antiques Road Trip
and series 11 of Celebrity Antiques Road Trip).
New format, The Yorkshire Auction House, for
Discovery-owned channel, Really, saw Angus
Ashworth visit people’s homes across the UK and
unearth their hidden gems for sale at auction.
Launching in March, it became the channel’s most
watched programme of the year and the most
watched series since 2012. It was recommissioned
with two series of 10 episodes plus a spinoff
celebrity series.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 26 STV Annual Report and Accounts 2021
the show deliver its highest ever viewing figures.
The most-watched series of the show ever, it
achieved an average audience of 4.8m viewers
across its ten-week run, peaking at a brilliant 7.5m.
The team also won a significant commission for
a new series for BBC One, Bridge of Lies, presented
by Ross Kemp. The show was commissioned by
BBC Daytime and Early Peak as part of a highly
competitive initiative to find new quiz formats made
in Scotland and, as such, is a real coup for the team.
Promising high drama and even higher stakes, the
25 x 45' part series was filmed in Glasgow and will
air on weekday afternoons in the spring of 2022.
Drama
Our drama team is headed up by Sarah Brown, who
spent much of the last year in production with our
high-end six-part returnable drama for Channel 4,
Screw – one of our biggest drama productions to
date. Filming was completed in Glasgow’s historic
Kelvin Hall in the summer. The first production to
film in the city’s new creative hub, we are thrilled to
be a key contributor to the local creative economy
and skills development via this high-end series.
Starring Nina Sosanya (His Dark Materials) and
Jamie-Lee O’Donnell (Derry Girls), Screw introduces
us to the C Wing of a busy men’s prison, a place
that’s bursting at the seams with humour,
emotional high stakes and danger for prisoners
and officers alike.
Screw has delivered strong ratings and was Channel
4’s best launch to a drama series since It’s A Sin.
Episode 1’s overnight was double the slot average
for individual share and volume. In January 2022,
Screw was the most watched title on All4. Following
the broadcast of episode six, the series had reached
6.8 m viewers, with huge potential for future growth.
Looking ahead, the drama team has a strong
pipeline and are in funded development on a
number of key projects for 2022.
Our brand-new auction format, The Travelling
Auctioneers, sees restoration maestro, Will Kirk (The
Repair Shop) and auction supremo Christina Trevanion
(Antiques Road Trip) take to the road with their auction
house and workshop, unearthing some fantastic
vintage pieces. Running for 15 x 45' episodes, this
original format will air on BBC One Daytime in 2022.
The Factual team’s commissioning streak saw them
close the year with an order from Channel 4 for an
extraordinary TV event and critical investigation
into the most arresting victims of our climate
emergency, the whales that wash up on the UK’s
shores in ever increasing numbers. What Killed the
Whale? (working title) is an event piece for Channel 4
and will air later this year.
Entertainment
Headed up by Gary Chippington, our Entertainment
team secured further commissions for a key
returner for the business; and triumphed at a
major industry-wide competitive pitch.
The enduring appeal of entertainment stalwart,
Celebrity Catchphrase, continues and is a key fixture
in ITV’s Saturday night entertainment line-up.
We have now produced seven series of Celebrity
Catchphrase, with the most recent completing
production in Q4 and airing in Q1 2022. Series 5
of Celebrity Catchphrase aired in 2021 and saw
Screw has been lauded by media critics:
“ A warm, witty, welcome to hell…”
The Guardian
“ If you fancy some gripping drama teamed with a
whole load of laughs, Screw will certainly fit the bill.”
Metro
“Fast-moving and deftly drawn prison drama”
Daily Mail
“ Screw is proving a real must-see. Bold, sharp, and
vibrant with brilliant writing and a great ensemble
cast it is unlike anything else on TV right now”
The Sun
“Rob Williams’ excellent prison drama”
The Times
“…a thoroughly engrossing and addictive pleasure…”
The Mail on Sunday
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Six-part STV Studios
drama for Channel 4
STV Annual Report and Accounts 2021 27
Spotlight
Creative partnerships
The new creative labels within our production
family (totalling nine creative units) are all
making encouraging progress. Our strategy
of investing in small/growing production
companies who share our values, ambition
and enthusiasm for original new formats
allows us to spread our creative bets and work
with some of the best minds in our industry.
The journey from development to commission
can be a slow one, but progress through 2020/21
assures us that we are investing in the right
businesses and that our strategy is really
starting to pay off.
Our six independent creative labels all have
exciting stories to tell:
Belfast-based, Two Cities, announced a
significant win in March this year with an
original returnable police drama, Blue Lights,
for BBC One – its first commission as part of the
STV Studios family. Created by the writers of
The Salisbury Poisonings, Blue Lights is a 6 x 60'
fast-paced series about rookie police officers
working in contemporary Belfast and facing the
pressures and dangers of frontline response
and will air in 2022.
Primal Media – their ground-breaking series
for Sky Arts, Landmark, launched in September
2021 and the team are in discussions with the
channel around future projects. Landmark was
simulcast on Sky Arts and Sky Showcase and
across the series it pulled in an average audience
of 81,000 and reached 941,000 people across
the UK. Primal are in advanced funded
development with other major channels,
including a new reality show in the UK as well
as a dating format for a US broadcaster.
Factual Entertainment label Barefaced TV have
a strong reputation for original and surprising
content. They have recently been commissioned
by Discovery+ for a large-scale, high-stakes,
young-skewing format Zodiac Island (working
title) to be delivered in Autumn 2022.
We are excited about future prospects with
the talented team at high-end drama producer,
Tod Productions, who have a strong, advanced
development slate.
We took a 25% stake in unscripted producer,
Hello Mary, in September 2021, headed up by
Steve Regan whose previous projects as both
a commissioner and producer include Geordie
Shores, Big Brother, Ex on the Beach and Lip Sync
Battle. The team recently won a paranormal
series commission for the Really channel, and
have an exciting slate of projects.
Mighty Productions based in Glasgow and
London joined STV Studios in early 2022. Our
creative and commercial strategy to build a suite
of labels is relatively low risk and beginning to
pay off, with solid progress delivered across all
through 2021, fully complementing STV Studios’
in-house Drama, Factual and Entertainment
slates. We remain the largest production
company in Scotland and look forward to
a busy and productive 2022.
We are investing in the right
businesses and our strategy
is really starting to pay off.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 28 STV Annual Report and Accounts 2021
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British as Folk
6 hours (6 x 60' for Dave)
Bridge of Lies
18.75 hours (25 x 45' for BBC One)
Yorkshire Auction House
20 hours (20 x 60' for Really – two series)
Celebrity Yorkshire Auction House
5 hours (5 x 60' for Really)
The Travelling Auctioneers
11.25 hours (15 x 45' for BBC One)
What Killed the Whale
1.5 hours (1 x 90' for Channel 4)
Antiques Road Trip
37.5 hours (50 x 45' for BBC One – two series)
STV Studios commissions in 2021
Celebrity Catchphrase
23 hours (23 x 60' for ITV – two series)
Celebrity Antiques Road Trip
20 hours (20 x 60' for BBC Two)
What Killed the Whale
A significant and timely
investigation for Channel 4.
Murder Island
6 hours (6 x 60' for Channel 4)
Blue Lights
6 hours (6 x 60' for BBC One)
STV Children’s Appeal
1 hour (1 x 60' for STV)
Trapped Underground
8 hours (8 x 60' for Really)
STV Annual Report and Accounts 2021 29
Spotlight
International sales
We delivered a particularly strong year of
catalogue tape sales in 2020, fuelled by
the demand for shows at the onset of the
pandemic and providing a reliable source of
income for the business. The positive news
is that this exceptional sales level has been
sustained in 2021 across our full catalogue
of programmes and format relicensing.
A distributor neutral position drives our
successful strategy of working with multiple
distributors to match the most appropriate
sales agent to our content, securing the
best deals with businesses such as Britbox,
Acorn TV, Discovery and PBS (US).
Key titles that have delivered for us in
2021 include:
• Our award-winning TV film, Elizabeth is
Missing, which as well as being critically
acclaimed, is one of our significant sellers
to key territories around the world, with
over £1m of sales achieved to date.
• We completed a high-volume sale of
Taggart to UKTV.
• Antiques Road Trip continues to sell well
both domestically (to Discovery) and
internationally, including a new deal
with PBS in the US, including both linear
and VoD.
Elizabeth is Missing
Award-winning TV film
starring Glenda Jackson.
Antiques Road Trip
This popular STV Studios
returning series sells
well both domestically
and internationally.
Images clockwise
from top left
British as Folk
Murder Island
The Yorkshire Auction House
Celebrity Catchphrase
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 30 STV Annual Report and Accounts 2021
Finance review
For the year ended 31 December 2021
Our record results in 2021 are testament to the
creativity of our people, the resilience of our business,
and the growth momentum across our operations.
We have delivered our highest revenues and adjusted
operating profit ever, and our disciplined approach
to costs and cash has delivered a net cash position
at the end of the year.
Lindsay Dixon
Chief Financial Officer
Results summary
Adjusted results*
Advertising revenue (£m)
Total revenue (£m)
Operating profit (£m)
Operating margin
Profit before tax (£m)
Earnings per share (p)
Statutory results
Total revenue (£m)
Operating profit (£m)
Profit before tax (£m)
Profit after tax (£m)
Effective tax rate
Earnings per share (p)
2021
2020
112.6
144.5
25.2
17.5%
23.6
45.6
144.5
21.6
20.1
19.4
3.5%
42.7
90.9
107.1
18.2
17.0%
16.6
37.5
107.1
17.7
6.7
7.7
(14.9%)
18.2
* Refer to note 27 in the Notes to the financial statements on page 125.
Throughout this Annual Report, where we state record financial
performance, it is made by reference to 2010 when the final disposal
was made and the group as we know it today remained.
Trading overview
Total advertising revenue for the year was £113m
(2020: £91m), an increase of 24% on 2020 and,
more crucially, up 11% on 2019, which was itself a
record year pre-pandemic. This increase was largely
a result of the continued growth in our Digital
division coupled with a strong recovery of the TV
advertising market. Total Group revenue increased
by 35% to £145m (2020: £107m), with significant
growth in our Studios division adding to the record
performance in advertising revenue. On a like for
like basis, excluding STV ELM Ltd which was sold in
August 2021, Group revenue was up 39% on the
prior year and up 21% on 2019.
Adjusted operating profit increased by 39% to
£25.2m (2020: £18.2m), equivalent to an operating
margin of 17.5% (2020: 17.0%). On a statutory basis,
operating profit increased by 22% to £21.6m
(2020: £17.7m).
The Broadcast division generated an operating profit
of £21.8m (2020: £15.5m), an increase of 41% on the
prior year and up almost 10% on 2019. This result
was largely driven by the recovery of the national
TV advertising market and through leveraging STV’s
unique offerings in the regional marketplace with
initiatives such as the STV Growth Fund, including
the STV Green Fund. Our arrangement with ITV
meant that our contribution to the national
programme budget only increased by the same
percentage as national advertising revenue.
The Digital division generated operating profit of
£7.9m (2020: £6.5m), an increase of 21% on 2020
and up 8% on 2019. STV Player’s growth and the
increase in addressable audience was driven by
the UK wide rollout and continued investment
in high-quality content. These were enablers for
the division to capitalise on the opportunities
presented by the wider recovery in the ad market.
2021 was a landmark year for STV Studios with
the division generating revenues of £26.6m (2020:
£8.7m), beating our guidance of £20-25m, thanks
to shows like Screw (for Channel 4), Landmark (for
Sky Arts) and returning stalwarts including Antiques
Road Trip (for BBC) and Celebrity Catchphrase (ITV).
The division returned an adjusted operating profit
of £1.3m (2020: loss of £0.3m) marking a significant
milestone in the division’s transformation journey
and providing a springboard for further success.
STV Annual Report and Accounts 2021 31
Adjusted profit before tax was £23.6m (2020:
£16.6m), after charging finance costs of £1.5m
(2020: £1.5m). These comprised interest on the
Group’s borrowings of £1.2m (2020: £1.2m) with
the balance being non-cash costs in relation to
the Group’s lease liabilities. These adjusted results
are before finance costs in relation to the Group’s
defined benefit pension schemes and inclusive of
High-End Television (HETV) tax credits receivable.
Statutory profit for the year was £19.4m, an
increase of £11.7m on 2020 (£7.7m).
Cash flow and net cash
At the balance sheet date, the Group had net cash
of £0.3m (2020: net debt of £17.5m), a first for the
business. The higher operating profit, combined
with the timing of receipts on productions, proceeds
received from disposal of minority investments, and
a working capital benefit, in part associated with
the timing of payments to ITV, all contributed to
this net cash position. Operating cash conversion
was 161% for the year (2020: 127%).
In March 2021, the Group refinanced its bank
facilities, agreeing a new £60m revolving credit
facility, with £20m accordion, for a minimum tenor
of 3 years with two one-year extension options. The
first extension option was agreed in February 2022
on commercial terms in line with the existing facility,
with the RCF now running to March 2025.
The covenant package is in line with the Group’s
previous facility: leverage (net debt : EBITDA) and
interest cover. At the end of the year, the Group’s
leverage was nil (2020: 0.7 times) due to the
marginal net cash position and interest cover was
49.4 times (2020: 28.3 times), both metrics well
within the covenant limits of 3 times (maximum)
and 4 times (minimum) respectively.
Update on £30m investment plan
In March 2021, we announced the next 3-year
phase of our strategy, which included a £30m
investment programme targeted principally at
driving growth in Digital and Studios. We have
invested £8.5m in 2021 across content and
marketing in Digital, pipeline development and
investments in Studios, and capital projects
in Broadcast to upgrade core infrastructure
and technology.
Our investment in Studios was split across the
in-house labels and making new investments in
other independent producers. During the year,
we acquired a 25% minority stake in Hello Mary
for £0.6m and we also paid £0.4m in respect
Reconciliation of net debt to net cash
1 January 2021
EBITDA
Working capital incl. leases
Capital expenditure
Interest and corporation tax
Defined benefit pension schemes
Proceeds from disposal of STV ELM Ltd
Proceeds from disposal of minority holding in
Unity Software Inc
Production finance to associates
Investment in associates
Dividends paid
31 December 2021
£m
(17.5)
27.4
5.9
(2.9)
(2.3)
(9.6)
0.6
4.7
(0.6)
(1.0)
(4.4)
0.3
of convertible loan notes to Two Cities Television
(who we acquired a 25% shareholding in, in January
2020), in line with the terms of our agreement.
Our closing net cash position coupled with our
renewed banking arrangements mean that we are
in a strong position, with headroom and flexibility to
consider options to accelerate our growth strategy
further, should opportunities arise.
Non-statutory measures
This Annual Report includes both statutory
and non-statutory (or adjusted) performance
measures, the latter intended to exclude significant,
non-recurring items from the results for a period,
and enable the users of the financial statements to
compare performance across financial years on a like
for like basis. The combination of these statutory and
adjusted measures is useful to investors as it provides
them with a basis for measuring our operational
performance. The non-statutory measures should
not be considered in isolation from, or as a substitute
for, financial information in compliance with GAAP,
and the non-statutory measures used in this Annual
Report may not be directly comparable with similarly
named amounts reported by other companies.
In calculating the adjusted measures of operating
profit, profit before tax and EPS, the Group excludes
exceptional items (as well as the tax charge or
credit on those amounts) and IAS19 finance costs,
and reflects HETV tax credits as contributions to
operating costs.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 32 STV Annual Report and Accounts 2021
Finance review
For the year ended 31 December 2021
Exceptional items are items of income or expense
which, because of the nature, size and/or infrequency
of the events giving rise to them, are considered to
be one-off and do not necessarily directly relate to
the underlying trading of the Group.
HETV tax credits receivable relate to premium
programme production activity (see below).
These items are included to reflect performance
in a consistent manner and in line with how the
business is managed on a day-to-day basis. IAS
19 finance costs are excluded from non-statutory
measures as they are non-cash items that relate
to historic defined benefit pension schemes.
Exceptional items
Total pre-tax exceptional items for the year is a
net charge of £0.8m, being repayment of furlough
monies (of £1.7m) and a net credit of £0.9m in
relation to completion of the divestment of the
STV ELM.
In March, the Board took the decision to repay
all monies received through the Government’s
Coronavirus Job Retention Scheme (‘CJRS’) in
advance of returning to payment of cash dividends
in May. The repayment of CJRS monies has been
recorded as an exceptional charge during the year,
as it was a voluntary repayment and does not
relate to trading performance in the period.
In August 2021, the Group completed its divestment
of the non-core STV ELM Ltd for a total consideration
of £0.6m (resulting in a gain on sale of the same
amount). Full provision had been made for the
expected credit loss in relation to debts due from
the Scottish Children’s Lottery in the prior year,
with the actual write-off being £0.3m lower than
the provision.
HETV tax credits
The Group meets the eligibility criteria to claim
HETV tax relief through the production of certain
dramas created in its Studios division. This incentive
was introduced in the UK to support the creative
industries and is a critical factor when assessing the
viability of investment decisions in the production of
high-end drama programmes. These production tax
credits are reported within the total tax charge in
the Consolidated Income Statement in accordance
with IAS 12. However, we consider the HETV tax
credits to be a contribution to production costs and
therefore more aligned to working capital in nature.
Accordingly, HETV tax credits are excluded from the
adjusted tax charge and instead disclosed within
adjusted operating profit in the notes to the accounts.
The Group was due £1.9m (2020: nil) from HMRC
for HETV tax credits claimed in the year.
Corporation tax
A total tax charge of £0.7m has been recognised
in the year (2020: credit of £1.0m). This comprises
a tax charge on profits before adjusting items of
£2.9m (2020: £0.6m), a tax credit on exceptional
items of £0.3m (2020: £1.6m) and £1.9m receivable
for HETV tax credits (2020: nil). The total tax charge
of £0.7m on profit before tax of £20.1m represents
an effective tax rate (ETR) of 3.5%. The ETR in 2020
was -14.9%.
The tax charge on profits for the year is lower than
the standard rate of tax principally because of the
amounts due in relation to HETV tax credits and the
change to the rate at which deferred tax has been
recognised at the year end. This follows the decision
by the UK Government to increase the rate of
corporation tax to 25% from April 2023. As the
Group has deferred tax assets (in relation to pension
scheme deficits and losses), the increase to the rate
results in a tax credit of £2.0m being recognised in
the year. The Group paid £1.2m in corporation tax
in 2021 (2020: £0.4m).
Earnings per share (EPS)
Adjusted basic EPS at 45.6p was 22% up on the prior
year, driven by the increased profit generation of
the Group. On a statutory basis, EPS was up 24.5p
to 42.7p due to the significantly lower level of net
exceptional items in the current year. A reconciliation
of the two measures is shown in note 9 to the
financial statements.
Pensions
The Group has two defined benefit pension
schemes, both of which are closed to new
entrants and only one of which has a small
number of active employees.
STV Annual Report and Accounts 2021 33
The latest triennial valuations for the schemes
were due as at 31 December 2020, and we reached
agreement with the Trustees in early October 2021.
The Schedule of Contributions agreed is on the
same basis as previously, with the contingent
cash mechanism continuing to be in force. These
documents were agreed against the backdrop of
slightly more prudent assumptions underpinning
the valuation, which was appropriate given the
maturity of the schemes. The funding deficit was
agreed as £116m, with the recovery plan running
to October 2030. The agreement of the funding
valuations in an efficient manner has created
capacity for both Company and Trustees to work
together on journey planning with a view to making
progress against the recovery plans, and work is
already underway.
The IAS 19 accounting deficit across both schemes
was £79.4m at the end of the year (2020: £70.3m).
The increase in the liability is primarily driven by an
update to the mortality assumption used as well
as reflecting the latest membership data following
completion of the triennial valuation. Partially
offsetting these increases was the gain derived
from the higher discount rate and the benefit of
contributions paid by the Group.
Dividends
The Board is recommending a final dividend of 7.3p
per share resulting in a total dividend of 11.0p for
the year, an increase of 22% on 2020. If approved
at the Annual General Meeting on 21 April 2022,
the final cash dividend will be paid on 27 May 2022
to shareholders on the register as at 19 April 2022.
Lindsay Dixon
Chief Financial Officer
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 34 STV Annual Report and Accounts 2021
S.172 statement
Engaging with our stakeholders
In the decisions taken during 2021, the Directors consider that
they have acted in the way most likely to promote the success
of STV for the benefit of its members as a whole, having regard
to the stakeholders and matters set out in S.172 of the
Companies Act 2006.
The Directors, in line with their duties under S.172 of the
Companies Act 2006, act individually and collectively in the way
they consider, in good faith, would be most likely to promote the
success of the Company for the benefit of its members. In doing
so each Director has regard, amongst other matters, to:
• the likely consequences of any decision in the long term
• the interests of the Company’s employees
• the need to foster the Company’s business relationships
with suppliers, customers and others
• the impact of the Company’s operations on the community
and the environment
• the desirability of the Company maintaining a reputation
for high standards of business conduct; and
• the need to act fairly, as between members of the Company
STV’s success depends on creating and nurturing positive
relationships with the people, communities and organisations
that have an interest in the business and may be impacted by
the decisions taken. These stakeholders are at the heart of the
framework that sets out our purpose, business model, strategic
priorities, values and culture. STV wants to be a business that
provides positive outcomes for its employees, customers,
shareholders, suppliers, communities, environment, government
and regulatory bodies.
STV identifies its key stakeholders through its strategic planning
process, which is focused on delivering long-term sustainable
value. Stakeholder engagement and analysis is also key to STV’s
approach to risk management. Across the Group, we engage with
stakeholders through direct discussion, participation in surveys,
and consultations with government and other regulatory bodies.
The Directors are supported in the discharge of their duties by
agenda planning for Board and Committee meetings to ensure
there is sufficient time for the consideration and discussion on key
matters and by processes which ensure the Board is provided with
timely management information from all STV’s business areas.
The following table provides some insight into how the Board
discharges its duties under S.172 across each of the key identified
stakeholder groups.
Colleagues
Why it’s important to us?
• Our colleagues are integral to the success of STV and
so nurturing them is essential
Key priorities of the stakeholder group
• Knowing their voice is heard
• Ensuring everyone is treated fairly
• No compromises on safety and wellbeing, including
mental health
• Development and career progression
• Alignment between personal and Company values
Engagement with stakeholder group
• Designated employee Director who is STV’s Senior Independent
Director
• The ‘Minute Live’, a weekly, all Company informal discussion
led by the CEO
• Annual employee surveys
• ‘Wellbeing from STV’ programme of activities
• Broad range of benefits
Board response
• Commitment to building a truly inclusive culture
• Continuous prioritisation of health and wellbeing
• Succession planning for key roles
• Engagement with colleagues across all offices
Customers
Why it’s important to us?
• Our viewers, subscribers, advertisers and commissioners
are the cornerstone of STV’s continued success
Key priorities of the stakeholder group
• Variety of programming both broadcast and produced
• Availability and reach of linear and digital channels
• A trusted and impartial news service
• Awareness of key social and topical issues
Engagement with stakeholder group
• Dedicated Viewer Enquiries team
• Customer surveys via Scotpulse
• STV Growth Fund, incorporating the Green Fund, Inclusion
Fund, Self Service and the Growth Academy
• Rich variety of content
• Social media
• Market insight into viewing habits
Board response
• Increase in STV Growth Fund to £30m
• Investment in Player-only content
• Investment in new creative labels to fill genre gaps
• Technology roadmap for STV Player reflecting customer
feedback
STV Annual Report and Accounts 2021 35
Suppliers
Community and environment
Why it’s important to us?
• Continuity and sustainability of our supply chain is critical
for our long term success
Key priorities of the stakeholder group
• Timely payment practices
• Open and transparent negotiations
• Compliance with laws, regulations and industry regulators
Engagement with stakeholder group
• ITV/STV Council
• Face to face meetings with suppliers
• Contract performance reviews
Board response
• Strategic oversight of relationship with ITV
• Commitment to fair treatment for all suppliers
Investors
Why it’s important to us?
• Investors play a vital role in the success and growth of STV
through provision of funds
Key priorities of the stakeholder group
• Strategy and execution
• Prospects for future growth
• Investment plans
• Returns via dividends and capital appreciation
• Strong environmental practices
• Transparency and openness
Engagement with stakeholder group
• Annual General Meeting
• Capital Markets Days
• Visits to Company operating premises
• One to one meetings
• Dedicated Investor section of the corporate website
Board response
• Regular communication of performance
• Provision of guidance where appropriate
• Robust business model and medium-term targets
• Sustainability and diversity strategies and targets
Why it’s important to us?
• In order to remain relevant to our viewers and advertisers,
we must reflect the communities we serve both on-screen
and off-screen and use our public service broadcaster status
to share important topical social and environmental issues
Key priorities of the stakeholder group
• Availability of trusted news, facts and insight
• Support for local causes and community projects
• Supporting local business and high streets
• Alignment between corporate and broader social objectives,
including climate action and diversity and inclusion
• Representation through programming, on screen and on line
Engagement with stakeholder group
• News and current affairs programming aligned with key
social issues
• Established online portal, STV Self Service
• Extension of the STV Growth Fund to the Inclusion Fund
and Green Fund
• STV Growth Academy
• STV Children’s Appeal
Board response
• Increase in STV Growth Fund from £20m to £30m
• Launch of STV Zero, STV’s sustainability strategy
• Appointment of Femi Otitoju as STV’s Diversity and
Inclusion advisor
• Commitment under the Climate Content Pledge with
other broadcasters
Government and regulators
Why it’s important to us?
• Active engagement provides STV the opportunity to input
on matters relating to our industry and our business, to
ensure that our voice as Scotland’s leading public service
broadcaster is heard
Key priorities of the stakeholder group
• Compliance with laws and regulations
• Ethical operations and practices
• Creating and sustaining employment
• Investing in the creative industry, providing training and
development opportunities
• Environmental, Social and Governance practices
Engagement with stakeholder group
• Participation in a range of consultations affecting our
industry and business
• Direct engagement with policy makers, e.g. Department
of Digital, Culture, Media & Sport (DCMS), Scottish
Government, Ofcom
• RTS Bursary scheme
Board response
• Consultation responses to industry matters
• Investment in independent production companies
• Providing direct employment for c.500 people, and
supporting UK freelancer community
• Joint training initiative between STV News and Women
In Journalism Scotland
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 36 STV Annual Report and Accounts 2021
Risk management
Risk management and internal control
The system seeks to avoid incidents and enhance business
outcomes through allowing us to:
Risk management cycle
Identify
the risk
Monitor, assure
and report
Quantify the
gross risk
Determine
whether further
risk management
actions are
required
Identify existing
mitigations and
risk management
plan
Quantify the
net risk
Risk management process
STV’s management systems, organisational structures, processes,
policies and behaviours together form a system of internal control
that governs how its business is conducted and the associated
risks are managed. Risk is inherent in the Company’s business and
activities and the ability to effectively identify and manage risk is
a vital element of business success. Risk management takes place
across many different processes and operations throughout the
Company and the Board considers this to be a fundamental
business discipline, designed to balance risk and reward and to
protect the Group against the potential impact of uncertainties
that could threaten the achievement of its business objectives.
The Board has approved a formal risk management policy, 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.
STV’s risk management process is designed to identify, assess,
respond to, report on and monitor the risks that threaten the
Company’s ability to achieve its business strategy and objectives,
within its agreed risk appetite. It is an important factor in the
Company’s financial soundness, performance, reputation and
future success which is why the review of risk and risk management
has been embedded throughout the Company. The process
provides a consistent and clear framework for managing and
reporting risks from the Group’s operations to management and
to the Board. It is a fundamental part of the culture in STV and
while all employees are responsible for risk management, the
Directors have overall responsibility for monitoring and reviewing
the effectiveness of the risk management activities from a
strategic, financial and operational perspective. They must satisfy
themselves that the Company’s risk management policies and
procedures are consistent with its strategy and risk appetite.
• understand the risk environment, identify the specific risks
and assess the potential exposure for STV
• determine how best to deal with these risks to manage
overall potential exposure
• manage the identified risks in appropriate ways
• monitor and seek assurance of the effectiveness of the
management of these risks and intervene for improvement
where necessary
• report through the management hierarchy and to the Board
on a periodic basis on how significant risks are being managed,
monitored, assured and the improvements that are being made.
While the Board has overall responsibility for risk management,
each divisional managing Director has day-to-day ownership
of the risks relevant to their respective areas of responsibility.
In conjunction with their team, they ensure that identified
mitigating actions and controls are being operated effectively.
They also continually assess the risk landscape to determine
changes in likelihood or significance of identified risks and the
emergence of any new risks.
Roles and responsibilities
The key roles and responsibilities for risk management comprise
three layers. Each role within the Company is well-defined with
clear responsibilities and a transparent reporting structure.
The first line of defence is our divisional management teams who
are responsible for managing their area of the business to ensure
divisional strategic objectives are achieved and that there is
compliance with Group policies and standards throughout their
division. Issues are escalated via the Divisional Board structure
to the Management Board as required. Divisional management
teams are supported by specialist groups in relation to cyber,
GDPR and regulatory compliance.
Our second line of defence is the Management Board with overall
responsibility for managing the Group to ensure it meets its
strategic objectives. It is responsible for managing the risks that
may have the potential to impact the delivery of the Group’s
strategic objectives, monitoring business performance, taking
strategic decisions in accordance with the authority delegated
to it by the Board and escalating issues to the Board as required.
The third line of defence comprises Internal Audit, the Audit & Risk
Committee and then the Board. The Audit & Risk Committee has
delegated authority from the Board to review the effectiveness of
the Group’s risk and internal control frameworks. It performs an
annual assessment of the effectiveness of the risk management
and internal control frameworks, reviews reports from the
internal and external auditors and reports to the Board on
the outcome of the work performed.
The Board has overall responsibility for the Group’s risk
management and internal control frameworks and the strategic
decisions within the Group. It undertakes an annual review and
ongoing monitoring of the effectiveness of the risk management
and internal control frameworks as well as an annual review of
the Risk Appetite Statement. All Directors receive the minutes
of Audit & Risk Committee meetings and at the Board meeting
following each Audit & Risk Committee meeting, the Committee
Chairman provides a comprehensive and detailed verbal update
on discussions that have taken place.
STV Annual Report and Accounts 2021 37
Risk agenda
The Board has reviewed the effectiveness of the systems of
risk management and internal control, and the principal risks
affecting the Group in line with its Risk Appetite Statement. These
activities meet the Board’s responsibilities in connection with Risk
Management and Internal Control as set out in the UK Corporate
Governance Code.
The aim of the Risk Appetite Statement is to highlight the risks
that we should be willing to take, as well as those which we would
not. The statement includes a series of risk assertions that are
aligned to our strategy, together with the risk parameters within
which we expect our people to work. Compliance with the Risk
Appetite Statement is monitored through the Group’s functional
and front line controls including oversight and reporting
mechanisms and the Statement is reviewed annually.
The Report from the Audit & Risk Committee includes further
detail on the work undertaken during the year to review the
internal control and risk management systems of the Group.
Risk management activities in 2021
The Board’s focus on risk is wide; Directors consider their role
in mitigating the impact of risks, including climate related risks,
on a broad set of stakeholders including employees, customers,
viewers, shareholders, government and regulatory bodies,
community and broader society.
The Board considers that policies and procedures bring uniformity
to the Company’s operations, establish guidelines and best practice
for acceptable behaviour within STV and that their use is vital to
reducing the risk of unwanted events. During 2021, the Schedule
of Matters Reserved to the Board was reviewed, updated and
approved as were the Terms of Reference for each of the Board
Committees. A new policy was adopted by the Board dealing
with the employment of former employees of the external
auditor and a revised Share Dealing Code, compliant with UK
MAR, was also adopted.
In terms of climate related risks, the Board has undertaken
a process to identify, assess and agree strategies to manage
these – in accordance with the requirements of Task Force on
Climate-Related Financial Disclosures (TCFD). In addition to the
Board, the Audit & Risk Committee, Management Board, divisional
boards and the Sustainability Group all have their respective parts
to play in the sustainability governance structure. Our TCFD
disclosures can be found on pages 45 to 49.
The Board has considered both viewing trends and competitive
trends in the industry, following presentations on each of these
subjects received from members of the leadership team and
industry experts. There has also been significant engagement
with the Government and Regulators on the various consultations
during 2021, including the s.229 report as part of the Channel 3
broadcast licence renewal.
The Company’s 2021 Modern Slavery Statement was discussed and
approved at the December meeting and the full statement can be
found on pages 71 and 72. An updated Gift and Hospitality policy
was approved by the Board and this now extends to gifts and
hospitality which have been offered to third parties, even where
not accepted. Management did a review of the limits in place and
were supported by the Board in their decision to reduce them in
order to capture a greater proportion of the activity in this area.
The Board spent considerable time during 2021 discussing the
Company’s sustainability strategy, STV Zero, and it was agreed
that the frequency of reporting on progress of delivery of this
vital strategy should be increased. There will now be three
reports prepared for Directors’ consideration each year and this
increased focus reflects the need to further embed sustainability
considerations into Board processes and instil a proactive
approach to risk management in this area.
Three contract tenders were carried out during 2021: for the Group’s
insurance broker; the auditors of the Group’s pension schemes
and for the internal auditor function. In each case, consideration
was given as to who should be asked to participate, with
recommendations sought both internally and from other external
advisors. A formal and detailed Invitation To Tender document was
issued and following receipt of a signed non-disclosure agreement,
participants were provided with relevant information and
documents and given the opportunity to meet with the tender
panel to ask questions or seek clarification on any issues. Thereafter,
tender documents were submitted before presentations were made
to the panel. STV considers its tender process to be thorough, highly
valuable and insightful, ensuring that the strongest and most
capable candidates are selected with fees in a reasonable range.
Several actions were taken by the business in 2021, and formally
reported to the Board for discussion, including:
• Annual report, update and approval of all GDPR policies by the
Data Security Group, covering a range of topics including Data
Protection, Data Retention and Destruction, IT Acceptable Use and
Mobile Device Policy. These have been rolled out across the Group
with each individual requested to read and accept their terms;
• Annual, Company-wide GDPR training;
• Annual GDPR refresher training, comprising e-modules and a
test, is in the process of being rolled out across the Group; and
• Commencement of a Group-wide cyber awareness training
programme which combines monthly videos covering a range
of key topics with regular phishing exercises, replacing the
annual exercise which used to be undertaken.
Our new insurance broker, Marsh, has a dedicated cyber risk
management team who have been engaged as part of the overall
insurance service agreement to provide external support and
insight. A process is currently underway and involves benchmarking
our cyber security maturity as well as assessing and modelling
cyber risk scenarios in terms of brand, reputational, regulatory
and financial implications to assist with identifying transferable
risks. One of the key outputs will be a refreshed cyber risk register,
enhanced by assessment of the quantification of potential loss for
each risk, which will be used by Marsh to ascertain which of those
is transferable to an insurer. The refreshed register will also provide
a strong input to the Cyber Security Group and Internal Audit and
will be used to identify areas of focus for future activities.
In advance of the COP26 Climate Conference which took place
close to our offices in Glasgow, a full disaster recovery exercise
for broadcast transmission was enacted. This was successful in
proving that the processes and functionality in place under the
DR plan operated as anticipated.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info Internal controls
The system of internal control is designed to manage rather than
eliminate risk and can only provide reasonable and not absolute
assurance against material misstatement or loss. By further
developing and operating an annual and ongoing risk
management process to identify, analyse, report and manage
significant risks, the Board seeks to provide a reasonable
assurance against material misstatement or loss.
The following key controls across the Group are in place:
• 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
and divisional boards
• 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 with consequent steps to manage any matters arising
• procedures for the approval of capital expenditure
• payment controls
• 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
• provision to the Board and management of detailed, accurate
and timely information based on comprehensive management
information systems, which are continually being improved
and updated
• controls around the engagement of freelancers and other
contract staff.
Regular review is vital to ensure that the risk culture continues to
be embedded throughout the Group and that the risk framework
is operating effectively. It also provides the Board and the Audit
& Risk Committee with an overall view of the Group’s risk profile,
identifying any major exposures and mitigating actions.
38 STV Annual Report and Accounts 2021
Risk management
Risk management and internal control continued
Fault Injection Testing/Chaos Engineering is carried out on an
ad-hoc basis by the digital team. While there is not a set schedule
for these types of tests, they are performed when gearing up for
a significant event, such as COP26 and particularly peak-traffic
events such as the Euros. These tests involve faults or failures
being intentionally caused in parts of the system, often without
prior warning, to ensure that:
• automated recovery or failover kicks in when expected
• monitoring and alarms fire as expected and are recording
enough data to aid diagnosis of the fault
• staff understand incident response procedure and runbooks
• how systems are likely to fail can be identified in a controlled
manner
Risk register
A risk register formalises the consideration of risks and
opportunities in a way that enables wider consideration
and discussion within management and at a Board level and
is the culmination of a bottom-up assessment by operational
management and a top-down assessment by the Board. It helps
to ensure that all significant risks have been suitably identified
and assessed and are being actively managed.
Although a risk register tends to focus on negative risks it can also
address the opportunities that face the business and assist both
management and the Board in ensuring that their risk policies
are appropriate. Not all risks are controllable or foreseeable, for
example, natural disasters. Our response to such risks is having
controls which lessen the impact to our business should they occur,
including active business continuity and disaster recovery plans.
For each risk identified, the gross risk is quantified by considering
the potential impact and likelihood of occurrence (each on a scale
of 1 to 5). Then, incorporating the impact of the existing mitigating
actions and controls, the net risk is assessed. If the net risk is
not acceptable and is not in line with our risk appetite, further
mitigating actions and controls are identified as necessary. All
risks are assigned to an appropriate risk owner and the Board is
provided with risk updates as part of the normal process by which
the Audit & Risk Committee provides reporting on its activities.
The structure of STV’s risk register mirrors the divisional structure
of the Group with each division and the central functions (taken
together) having their own individual risk register, owned by the
divisional managing Director (or the Chief Financial Officer in the
case of the central functions). A separate cyber risk register is also
in place which is owned by the Group’s Cyber Security Committee.
These registers are reviewed and the consideration of risk and risk
management plans are executed through the divisional board
governance structure. All five registers: Broadcast, Digital, Studios,
Central and Cyber are considered each year by the Audit & Risk
Committee with updates provided to the Board thereafter.
Each of the divisional managing Directors presented a strategy
proposal for their respective area of the business to the Board
during the year, which included a narrative on the key business
risks and opportunities. This provided the Non-Executive Directors
with the opportunity to ask detailed questions and enhance their
understanding of the risks facing each division.
The Group risk register, which captures those risks from the five
registers which have a gross risk rating (i.e. before mitigating
actions) of 12 or more, is reviewed by the Board each year, with
a focus on internal control and to ensure that all risks have been
captured and areas of emerging risk considered. A paper covering
significant updates to other risks not included on the Group
register is also prepared for the Board. The Chair of the Audit
& Risk Committee provides an update to the Board on the work
of the Committee in this area.
STV Annual Report and Accounts 2021 39
Risk appetite
STV’s risk appetite can best be demonstrated through the following table:
Risk category
Reputation
Unacceptable to take risks
Higher willingness to take risks
1
2
3
4
5
6
7
8
9
10
Compliance and regulatory
Returns and profitability
Technology
Opportunities
TV market
Operational
Pensions
People and culture
Corporate sustainability
Reputation
Operational
STV places great importance on upholding its reputation and
therefore has a low appetite for risk in conducting any activities
that put its reputation in jeopardy, could lead to undue adverse
publicity or could lead to loss of confidence by the Scottish and UK
political establishments, regulatory bodies or by its shareholders
and other 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.
Returns and profitability
STV aims to deliver strong, sustainable growth through the strategic
options it identifies, ensuring that these deliver appropriate returns,
with a focus on market median margins (as a minimum target),
clear return on investment and good working capital management
together with cash generation. While opportunities may be taken
that result in some dilution to the operating margin in the short
term, these would be expected to generate margin enhancing
results within the 3 year plan period.
Technology
STV is reliant upon various forms of technology for the transmission
of its programmes and for the operation of the STV Player and
has a low appetite for risk in these areas.
Opportunities
New opportunities, projects, collaborations, joint ventures,
and mergers and acquisitions are periodically considered, as
is technology innovation, if they are aligned with our strategic
direction towards creating sustainable value. These inevitably
involve an 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.
TV market
Various aspects of the TV market are, to an extent, beyond
the control of STV, such as national airtime advertising revenue
and the increasing number of SVoD services now available to
consumers, but are vital to STV’s success. Accordingly, STV has
a modest appetite for risk in activities within this area.
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 funding deficits in STV’s two defined benefit pension
schemes and while the investment strategy is determined to
reduce the impact of material market movements and thereby
protect members’ benefits, various measures are being taken
to reduce the deficit. STV has a low risk appetite in respect of
its pension obligations.
People and culture
STV’s Directors and staff are the driving force behind its progress
and prospects and accordingly it aims to build a diverse workforce
with a focus on developing the full potential of all staff. STV is
committed to building a diverse and inclusive culture and through
its Open Access Charter, has a strategy in place to ensure it
represents the communities it serves. STV considers equality,
diversity, dignity and respect to be of paramount importance,
together with employee development and the health and safety
of employees. It has no appetite for any deviation from its
standards in these areas.
Corporate sustainability
STV is striving to become a sustainable business, creating
long-term value by taking into consideration how it operates in the
ecological, social and economic environment. It has integrated
sustainability into its business and operations and at the start of
2021 launched its sustainability strategy, STV Zero, with regular
and formal reporting to the Board. Using its current carbon
footprint as a backdrop, a series of targets have been established
in order to become a net zero carbon business by 2030, and its
short term target of becoming carbon neutral by 2021 has been
achieved. STV has a low appetite for risk in this area.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 40 STV Annual Report and Accounts 2021
Risk management
Principal risks and uncertainties
As in any business, there are risks and uncertainties that could
have an impact on the Group’s operating results, financial
condition and prospects. The Group’s risk management and
assurance framework is designed to make this less likely by
clearly identifying and seeking to mitigate key risks.
While there is still some uncertainty associated with Covid-19,
the suite of measures taken by the Group during 2020 has stood
it in good stead. There are now more embedded remote ways
of working with new technology acquired to facilitate video
conferenced meetings in offices allowing participants to join from
home. On the operational side, the advertising market has shown
strength and resilience and programme production activity has
now been in continuous operation since Summer 2020 with 2021
proving to be the best ever year in terms of revenue and profits.
The Board and management will continue to monitor the
Covid-19 position, and any emerging macro risks.
The risk assessment process evaluates the probability of risks
materialising and the financial or strategic impact of that risk.
The Group risk register sets out the key risks which have been
identified across the business with the impact and likelihood
of each risk considered. Each risk is scored on a gross and, after
mitigating controls have been taken into account, a net basis.
The assessment and reporting criteria are designed to provide
the Board with a consistent, Group-wide perspective of the key
risks. The register is reviewed and updated biannually both at an
operational and at a Board level with the Audit & Risk Committee
conducting an in-depth review annually which is thereafter
reported to the Board.
The Board has oversight over the principal risks while the Audit
& Risk Committee provides oversight and reassurance to the
Board on the procedures for the identification, assessment and
reporting of risk. Management is responsible for considering and
executing the appropriate action to mitigate these risks whenever
possible. It is not possible to identify every risk that could affect
our business, and the actions taken to mitigate the risks
described below cannot provide absolute assurance that a
risk will not materialise and/or adversely affect our business
or financial performance.
In terms of emerging risk, there is a developing agenda on ESG
matters and we are currently reviewing our internal processes for
managing any associated emerging risks and are incorporating this
into our broader risk management practices. Further information
on our governance framework in support of identifying, managing
and mitigating climate-related risks and opportunities can be
found in our TCFD report on pages 45 to 49.
The Directors confirm they have carried out a robust assessment
of the principal risks facing the Company and the risks identified
have been fully evaluated and taken into account in preparing the
budgets and forecasts which support going concern, the viability
statement and impairment assessments. The principal risks and
uncertainties set out below are those believed to have the
greatest potential to impact our ability to achieve the Group’s
strategic objectives, or which have the greatest potential impact
on the Group’s solvency or liquidity.
The Directors will continue to monitor these but believe the Group
is in a strong position to continue to drive its growth strategy.
Regulatory environment
Risk category: Compliance and regulatory
Risk trend: No change
Potential impact:
STV’s linear broadcast business is operated under licences that are
regulated by Ofcom, and the key Channel 3 licences have a term
that runs 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. 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.
Separately from compliance, changes to policy and regulation or
a failure by the UK government to regulate may have a negative
impact on the future of our public service broadcast (PSB)
licence, our business model and/or the cost of operations.
PSB regulation needs reform to respond to changes in viewer
behaviours and the increasing scale of digital media companies,
accelerated by the Covid-19 pandemic. The outcomes of the
ongoing PSB regime review may have a significant impact on
our business model and operations, in particular in the event
of a reluctance by government to intervene on key issues (such
as fair value, prominence, and the influence of digital players).
The Channel 3 licence renewal process has started and is running
concurrently (although independently) with Ofcom’s Public
Service Media review.
How we manage it:
As licensee, 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 this happens. There is a dedicated
compliance function, and a compliance mentality has been
embedded across all relevant areas of the business, with regular
staff training undertaken. There is frequent contact with the
regulator to ensure awareness and understanding of any
updates or changes to the codes/rules and that appropriate
changes to internal processes are implemented as required.
STV makes formal submissions to the Regulator in response to
all open consultations to ensure matters of the most significance
to the Group are presented to policy makers. We also collaborate
with other organisations in our industry, where appropriate and
where individual objectives are aligned.
Governance and oversight:
The Broadcast board meets monthly and is chaired by Bobby
Hain, MD of Broadcast. It is attended by both Executive
Directors, the Group Commercial Director, Legal Director, HR
and Communications Director, Company Secretary as well as
representatives from News, Marketing and Finance. The regulatory
landscape is a regular standing agenda item, with the licence
renewal process currently discussed in detail at each meeting.
Compliance reports are received by the Management Board
at least twice a year, and the annual plan is approved by both
the Data Security Group and the Management Board.
The STV Board is provided with regular Legal and Regulatory
updates as part of the CEO’s report which have more recently
included an update on the licence renewal process. At the
November meeting, Bobby Hain attended and presented his
strategy to Directors which included detailed information on the
renewal process. The Board also had the opportunity to review
and comment on the draft responses to open consultations
during the year.
Risk trend key
No change
Increasing
Reduced
STV Annual Report and Accounts 2021 41
Market volatility and advertising spend
Reliance on ITV
Risk category: TV market
Risk trend: No change
Risk category: Returns and profitability
Risk trend: No change
Potential impact:
The majority of STV’s Channel 3 programming content is provided
by the ITV Network. Therefore, its ability to attract and retain
audiences is dependent on the quality, variety and diversity of
programming available, which, in turn, impacts the ability of STV
to attract regional advertisers. In addition, the performance of
ITV as STV’s national advertising sales agent is a significant
factor that affects the financial performance of the Group.
How we manage it:
This relationship is managed closely, with regular updates on
programme and schedule developments being provided through
STV’s Head of Consumer Insights with STV’s Commercial Director
having responsibility for the sales relationship with ITV. Contracts
are in place for all network functions performed by ITV with
agreed consultation processes for any changes to arrangements.
Regular dialogue includes formal quarterly ITV Council meetings
with minutes provided to Ofcom.
Regarding ITV acting as the Group’s national sales agent, there
are regular meetings between the Commercial Directors of both
businesses to discuss latest forecasts, booking trends and similar
factors. In addition, there is profit protection for STV by virtue of
the contractual arrangement in place with ITV, whereby STV’s
contribution to the national programme budget is pegged to
national advertising revenues, with the cost only increasing in
the same proportion as any increase in revenues.
Governance and oversight:
The Managing Director of Broadcast and the CEO attend the ITV/
STV Council, along with other members of the senior management
team. At these meetings programme strategy and performance
is discussed as well as relevant regulatory issues, marketing
plans and operational issues relating to the relationship between
the two. The CEO provides a comprehensive report to the Board
at each meeting which covers all aspects of STV’s relationship
with ITV, including meetings held and issues discussed.
Potential impact:
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 STV or its 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/or financial conditions. Having
experienced significant uncertainty in the early months of the
Covid-19 pandemic, 2021 has seen the Group return to pre-Covid
trading levels. While there is still uncertainty, the risk level has
been assessed as consistent with last year.
How we manage it:
STV’s national advertising is sold by ITV and the contract requires
ITV, as agent, to maximise revenue through ‘best endeavours’.
ITV provide a weekly performance report, and regular meetings
are held between the senior commercial management from
both companies to understand current forecasts, trends, and
other related matters. STV’s London-based marketing team is
responsible for monitoring the digital advertising market and
selling VoD advertising on the STV Player to customers across
the UK. STV aims to create greater value for advertisers through
focusing on targeted opportunities and new ways to engage
with consumers. STV’s regional Scottish advertising is sold by
a separate, dedicated team who pursue a range of initiatives
designed to ensure the effectiveness of our sell, driven by the
STV Growth Fund through which we provide matched-funding
and other support to make TV advertising affordable and enable
businesses to grow their brand awareness. The strength of the
relationships that the commercial teams have with their clients
is crucial in selling advertising services, and in maintaining those
sales levels during periods of uncertainty.
Our clients are already aware of the benefits of advertising on STV
and we have an array of marketing and advertising opportunities
across STV and STV Player to help existing and new businesses
reach Scottish consumers and grow their business, including the
STV Growth Fund and STV Self Service. The economic environment
and regulatory landscape are closely monitored for emerging
trends or risks that could potentially have an adverse effect on
our advertising revenue.
Governance and oversight:
This is discussed at each Broadcast board meeting when STV’s
Commercial Director provides a report on national and regional
sales and the general outlook for the market. VoD revenue sales,
and related impressions delivered, are reported to the Digital
board. Weekly advertising revenue reports, by category, are
circulated to the Management Board, highlighting movements
in forecast, key market/customer changes and other relevant
information.
Both the CEO and the CFO report on the advertising market in
their respective reports at each Board meeting with the latter
providing rolling forecast information on each of national,
regional and VoD revenues. The Group’s Commercial Director
attended the November meeting at which time he provided an
update on driving the Scottish economy as part of the advertising
strategy and three year plan.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info
42 STV Annual Report and Accounts 2021
Risk management
Principal risks and uncertainties continued
Changing viewing habits
Cyber attack or data breach incident
Risk category: TV market
Risk trend: New principal risk
Risk category: Technology/operational
Risk trend: No change
Potential impact:
Previously, television was broadcast to a mass audience through a
small number of channels and followed a set schedule. However,
advances in technology and improved connectivity have resulted
in viewers being able to access content through VoD services and
this could have an impact on STV’s reach and the resultant level
of advertising revenue we can generate.
How we manage it:
While STV remains the best watched peak-time channel in
Scotland, with daytime, peak and all-time share at a 12 year
high, the potential shift to digital viewing is very much a focus for
both the Broadcast and Digital teams. The strategy of the digital
business is to provide viewers with the opportunity to decide what
they want to watch and where and when they want to watch it.
The Player is building strong connections with its growing
audience by adding new high quality content – both network and
acquired – and considerable investment was made during 2021 in
Player-only content. STV Player is available on all major platforms
including Sky Glass and the UK-wide rollout of the service, which
will significantly increase the addressable audience, is progressing
well. A rewards programme, STV Player VIP, was launched in
2021 to build an even stronger connection with viewers.
Governance and oversight:
Consumer insights are discussed at each Board meeting with
detailed information on the schedule performance provided
including percentage viewing share, the year on year change in
this and the year on year changes in audience volumes. At the
October meeting, presentations on both viewing trends and
competitive trends were given by third party specialists in those
areas. At the Broadcast and Digital divisional board meetings
audience and viewing figures for both linear television and VoD
services are discussed. This matter is also discussed with ITV
at the ITV/STV Council meetings.
Risk trend key
No change
Increasing
Reduced
Potential impact:
Cyber risk commonly refers to any risk of financial loss, disruption
to operations or damage to a company’s reputation resulting
from the failure of its information technology systems. STV is
dependent on technology for the smooth running of its business
and a cyber-security incident could lead to a loss of commercially
sensitive data, a loss of data integrity within systems, a loss of
financial assets through fraud, or a disruption that prevents
efficient running of our operations. Remote working and changes
to operating procedures, brought about by the Covid-19
pandemic, increased this risk in the prior year. We have
concluded no change in the trend over 2021.
How we manage it:
We have implemented a data and cyber security risk
management framework, with relevant elements led by the
Data Security Group, Cyber Security Group and the Group’s
Compliance Manager. Our framework combines a number
of technical measures, designed to both prevent and detect
incidents, as well as a range of policies for staff to follow, and
an on-going programme of training to ensure awareness of
Group practices and emerging risks. The policies in place cover
information security, data retention and data incident reporting.
The IT infrastructure is protected by firewalls and software
restricting use to authorised persons only. Regular internal
and external network penetration tests are performed by
a third-party specialist to ensure the level of protection is
maintained. We also have an on-going programme of hardware
and software upgrades to ensure current security protections
are in place, and the business is able to operate efficiently.
Several cyber related risk management activities were carried
out in 2021, including the commencement of a detailed project
led by our insurance broker (for more details refer to page 67). In
advance of the COP26 Climate Conference event taking place just
along from STV’s main office, a full disaster recovery exercise for
broadcast transmission was enacted. This was successful in
proving that the processes and functionality in place under
the DR plan operated as anticipated.
Fault Injection Testing/Chaos Engineering is carried out on a
periodic, unannounced basis by the Digital team to ensure that
recovery protocols and controls operate effectively and as
intended, to ensure that:
•
•
•
•
automated recovery or failover reacts when expected
monitoring and alarms trigger as expected and are recording
enough data to aid diagnosis of the fault
staff understand incident response procedure and runbooks
how systems are likely to fail can be identified in a controlled
manner
Governance and oversight:
Monthly meetings and on-going schedules of activity of both the
Data Security Group and the Cyber Security Group, with regular
reporting to the Audit & Risk Committee.
Review and challenge of capital and other major projects by
divisional boards, supplemented by reporting on disaster
recovery tests and chaos engineering in Digital.
Regular reports to the Board on major projects, internal controls
and risk management, supplemented by reports from the Chair
of the Audit & Risk Committee on work undertaken in relation
to cyber risk register reviews.
STV Annual Report and Accounts 2021 43
Defined benefit pension scheme shortfalls
Recruitment and retention of people
Risk category: Pensions
Risk trend: Reduced
Risk category: Operational
Risk trend: New principal risk
Potential impact:
The market for talent is incredibly competitive, particularly for
both Studios and Digital and recruiting and retaining the best
creative and technological people is vital to successfully grow
STV’s business. The costs of hiring staff is also increasing and
there is added pressure on securing diversity through the
recruitment process in order to attain STV’s diversity targets.
How we manage it:
Having a clear strategic direction provides an attractive backdrop
to working at STV and the HR team ensures that all employees
receive at least the market rate in terms of compensation.
Salaries are regularly reviewed and there are a wide range of
benefits available to employees. The new hybrid working
arrangements mean there is no longer a requirement for
employees to be permanently office based so the pool of
available candidates for roles, particularly in the Digital division,
has increased. Having appointed Femi Otitoju as STV’s Diversity
and Inclusion Advisor, she is helping to shape, accelerate and
support the delivery of STV’s inclusion strategy.
Governance and oversight:
Succession planning and talent management is discussed regularly
at both the Board and Nominations Committee meetings as well
as at the Studios and Digital divisional board meetings.
Potential impact:
The STV defined benefit pension schemes’ investment strategy
is aimed at reducing any market movement impacts. However,
it is possible that a macro-economic change could impact the
value of scheme investments and liabilities and increase the
deficit, requiring the Group to increase its contributions.
Following agreement being reached on the 2020 triennial
valuation, using a more prudent set of assumptions and with
a schedule of contributions in line with that agreed previously,
this risk has decreased.
How we manage it:
The Company is invited to attend all Investment Sub-Committee
meetings, and also certain agenda items of the Actuarial/
Valuation Sub-Committee and the full Trustee Board. This
meeting participation is supplemented by certain papers being
shared with the Company, specifically on performance of the
scheme’s investments and hedging reports, which enable an
on-going and active dialogue in relation to the investment
portfolio. Following agreement on the 2020 triennial valuation,
a Memorandum of Understanding between the Company and
the Trustees was put in place, which sets out each other’s
commitment to working together towards agreement (and
delivery) of a long term journey plan.
Governance and oversight:
Managing STV’s defined benefit pension schemes has been
identified as a key risk for several years and is discussed regularly
and in detail by the Board. During the course of 2021, the CFO
has presented a number of papers in relation to the triennial
valuation, key underlying assumptions, and broader progress
towards building a stronger and more collaborative relationship
with the Trustees. This work was supplemented by a detailed
paper, presented to the Board in October by the Company’s
pension advisers, LCP, which covered an overview of the Group’s
schemes, changes in the regulatory landscape, and their
potential impact on STV.
Changes to principal risks
‘Post Brexit uncertainty’ has been removed as a principal risk
following the signing of the UK-EU Trade and Cooperation
Agreement in December 2020 which eliminated the doubt
around a no-deal Brexit. ‘Group funding’ has also been removed
as a principal risk now that STV has completed its refinancing
which consists of a new £60m facility with a £20m accordion
and two 1 year extensions. At the year end the Company was
in a net cash position.
’Changing viewing habits’ and ‘Recruitment and retention of
people’ have been included as principal risks for the first time.
The risk trend is increasing for both these risks and additional
focus is now being given to these areas through our internal
control and risk management framework.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info
The Board does not consider any of these factors to individually
threaten the viability of the business and therefore the viability
assessment focused on a range of potential scenarios in which
there was a compounding effect from all factors crystallising
simultaneously. These scenarios included a severe but plausible
downside scenario, and more extreme scenarios in which the
Group would breach borrowing and/or covenant levels. The Group
reflected on its experiences in Q2 2020 (during the first Covid
lockdown) when considering severe but plausible outcomes,
given advertising revenue declines during that time were the
most significant seen by the business in its history.
The severe downside scenario modelled assumed a combination
of (i) significant reductions in linear advertising revenues over a 12
month period with a relatively slow return to more normal levels;
(ii) flat Digital profitability as a result of incremental investment
required to grow the STV Player outside Scotland; and (iii) a
reduction in anticipated commissions within Studios, particularly
in the drama genre and from global streamers. Even in these
extreme circumstances, the Group would remain within its
banking facility (without exercising the £20m accordion facility)
and comply with all financial covenants.
In evaluating these models, the Directors took into account a
number of the available mitigating actions that the business
would reasonably take to manage the impact, specifically in
relation to cost reduction, management of working capital,
capital investment and returns to shareholders.
Having conducted the above exercise and taken into account
the business model, strategic aims, risk appetite, and principal
risks and uncertainties, along with the Group’s current financial
position, the Directors are satisfied that the Group will be able to
continue in operation and meet its liabilities as they fall due over
the three year period under review.
44 STV Annual Report and Accounts 2021
Risk management
Viability statement
In accordance with the UK Corporate Governance Code 2016,
the Directors are required to perform an assessment of the
Group’s viability over a period longer than the twelve months
required for the going concern statement.
This year’s viability assessment covers a three-year period, a
duration that has not changed since the requirement for this
viability reporting was introduced. The Directors consider that
three years continues to be the most appropriate time frame for
assessing the Group’s longer-term viability, after consideration
of the following factors:
• Visibility over the broadcast advertising business is relatively
short term; advertising remains cyclical and closely linked to
UK economic growth;
• The programme development lifecycle for programmes tends
to be more medium term, however over time there is less
visibility due to changes in viewer demand;
• The speed of innovation in the digital landscape continues
to drive changing viewer and consumer habits, with limited
visibility beyond the short-term;
• One of the Group’s key funding obligations is payment of
contributions to its defined benefit pension schemes, which
are dependent on funding valuations undertaken every three
years; and
• Capital expenditure requirements do not require consideration
over a period beyond three years.
This year’s assessment covers the period from 1 January 2022
to 31 December 2024.
The viability assessment evaluates the potential financial impact
of the principal risks and uncertainties that are faced by the
Group, to assess its ability to withstand them. The analysis takes
as its starting point the Group’s 2022-2024 Strategic Plan which
was prepared over November and December 2021, and approved
by the Board in January 2022. These plans are the result of
detailed consideration of all areas of the business including the
business model, opportunities, potential risks and uncertainties
faced over that timeframe, and include profit and loss and cash
flow forecasts.
In assessing the viability of the business, the Board considered
several factors that may have a material impact over the period
covered by its assessment, principally falling under the risks of
‘Market volatility and advertising spend’ and ‘Changing viewing
habits’. Consideration was also given to the identification of any
medium term impacts on the business of the Covid-19 pandemic.
The main factors identified were:
a) The performance of the national and regional advertising
markets is significantly adverse to forecast;
b) The projected growth in digital advertising is significantly
adverse to forecast, including the impact of being unable
to grow the STV Player outside Scotland, or for that growth
to require incremental investment over and above the level
assumed in the Strategic Plan; and
c) The projected growth in programme commissions and
therefore revenue in STV Studios is significantly adverse
to forecasts, and is insufficient to leverage fully the fixed
cost base.
STV Annual Report and Accounts 2021 45
Taskforce on Climate-related Financial Disclosures (TCFD) report
Compliance Statement
This is the Group’s first report in accordance with the Taskforce on
Climate-Related Disclosures (TCFD), the Listing Rules having been
amended such that all premium listed companies must report on
a ‘comply or explain’ basis with the TCFD Framework for periods
beginning on or after 1 January 2021.
As required by Listing Rule 9.8.6(8)R, this report sets out how
we have responded to the four pillars, and 11 recommended
disclosures, of the TCFD Framework and narrative disclosure
has been provided on all aspects. This report constitutes our
full disclosure in this area with no separate reporting provided
elsewhere, either on our corporate website or in other documents.
Our internal processes have evolved over the course of 2021 and
will continue to do so over the coming months and years, and so
there are two recommendations within the TCFD Framework that
we are not yet fully consistent with. These are:
• The recommendation under the Strategy pillar to describe the
resilience of our strategy, taking into consideration different
climate-related scenarios, including a 2° Celsius or lower
scenario; and
• The recommendation under the Metrics & Targets pillar to
disclose Scope 3 Greenhouse Gas emissions and related risks.
With regard to the Metrics & Targets pillar, the metrics and
targets we have disclosed are those which relate to successful
execution of our sustainability strategy as we have not identified
any material climate-related risks against which to report.
In the relevant subsequent sections of this report, we have
provided additional information explaining our progress towards
compliance with these recommendations and an anticipated
timescale for full compliance.
Introduction
Through STV Zero, our sustainability strategy, we are committed
to mitigating STV’s environmental impact and improving the
long-term sustainability of all aspects of our business in response
to the climate crisis. The transition to becoming a net zero carbon
business by 2030 will require some changes in the way our
business operates, which will be achieved through delivery of
the framework of targets set out in our strategy. There are also
potential opportunities for the business to support advertisers
promoting sustainable goods and services and to connect with our
audiences and support them to make more sustainable choices.
During 2021, the potential risks and opportunities that the
climate crisis presents to the business have been considered and
the outcomes from this process have enabled an assessment of
actual and potential financial impacts on the business arising
from climate change.
This assessment forms the basis of disclosures against the TCFD
framework and, as we progress towards our goal of net zero by
2030, we will undertake further analysis to inform this assessment
and develop our disclosures in future.
Governance
An early priority following the launch of STV Zero has been to
ensure a clear understanding of our strategy, its purpose and
aims, and that the issues, risks and opportunities presented by
climate change are understood across the business. Assigning
and communicating clear responsibilities across the organisation,
including the oversight responsibilities held by the Board, will be
key to supporting the implementation of STV Zero and ensuring
effective ongoing assessment and management of climate-
related risks and opportunities.
The Company’s sustainability governance structure is set out
below. This structure identifies the key responsibilities at different
levels of the organisation and clarifies accountability for
governance. This will be reviewed at least annually by the Board as
part of the Group’s wider risk management and review processes.
In approving this sustainability governance structure, the Board
has given consideration to its own expertise and experience in
this area, and specifically included a section on this topic in the
recent Board evaluation process. Directors are comfortable that
there is sufficient experience among existing members for the
short to medium term, with a number of Directors receiving
training through involvement in other roles. Notwithstanding this,
further consideration will be given to this through the normal
succession planning undertaken for Non-Executive Directors,
against an evolving backdrop. The Audit & Risk Committee has
also asked the Internal Auditors (KPMG) to undertake an audit
of the Group’s sustainability processes, activity, targets, and
reporting in 2022, to supplement the work of the management
team, and obtain insight and assurance from KPMG’s specialists.
STV: Sustainability governance structure
PLC Board
Responsible for:
• Ensuring the effective delivery of STV Zero targets
• Reviewing key climate-related risks and opportunities and
overseeing mitigation strategies as part of the regular review
of principal and emerging risks
• Considering sustainability as part of stakeholder engagement
• (Remuneration Committee) Setting sustainability-related
targets in executive incentive arrangements
Audit & Risk Committee
Responsible for:
• Supporting the PLC Board in its responsibilities for sustainability,
including:
– Overseeing compliance with, and progress on, sustainability
reporting
– Overseeing the Company’s environmental data and its
accuracy and completeness, the Company’s annual
sustainability targets, and the governance and planned
roadmap to enable the targets to be achieved
– Ensuring sufficient, appropriate assurance is obtained
in relation to sustainability reporting
Management Board
Responsible for:
• Identifying all climate-related risks and opportunities and
developing appropriate mitigation strategies
• Reviewing and monitoring climate-related risks on a bi-annual
basis as part of the routine risk reviews and establishing
effective mitigation and controls to manage risks
• Ensuring appropriate action is being taken to achieve the
STV Zero strategy, through review of quarterly reporting on
climate-related issues, including targets and metrics
Divisional Boards
Responsible for:
• Monitoring divisional progress against divisional emissions
reduction plan
Sustainability Group
Responsible for:
• Promoting and championing sustainable behaviours across
the Company
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 46 STV Annual Report and Accounts 2021
Taskforce on Climate-related Financial Disclosures (TCFD) report
Following the Board’s approval of the sustainability strategy in
December 2020, a triannual Board reporting schedule has been
implemented to provide information about climate-related
issues; to undertake regular assessment of climate-related risks
and opportunities and mitigation strategies; to enable monitoring
of the progress of delivery of STV Zero targets; and to consider
related stakeholder issues. As was the case in 2021, consideration
of climate-related risks and opportunities will be incorporated
into broader strategy and investment discussions at each of the
Divisional Board, Management Board and PLC Board levels, as
often as required.
More broadly across the organisation, managers have
sustainability targets incorporated into their personal objectives.
The Remuneration Committee is responsible for approving the
objectives of the Executive Directors, on which an element of
variable pay is dependent. On a quarterly basis, and as part of
routine risk reviews, managers are responsible for assessing and
managing climate-related risks and opportunities within their
business area. Additionally, managers are responsible for
ensuring appropriate action is being taken to deliver the STV Zero
strategy as it relates to their business and areas within their
control. Four times a year, reports on sustainability related issues,
including progress against targets, will be delivered at divisional
board meetings.
The STV Sustainability Group comprises representatives from
every business area who are responsible for promoting and
championing sustainable behaviours across the Company and
participating in the development and implementation of
sustainability initiatives. Its members have played an important
role as ambassadors for STV Zero as this has been introduced
to the business.
Strategy
An initial assessment of climate-related risks and opportunities
was undertaken over the second half of 2021, led by the Director
of Operations & Delivery and involving the Head of HR & Comms,
the CFO, the STV Sustainability Group, Management Board and
PLC Board. The overarching conclusion of this process was that
none of the risks identified gave rise to any material exposures
to the Group. This process also concluded that none of the risks
represent a significant threat to the Company’s strategy and
growth plan, its cash generation, long-term viability, or ability to
operate. In this context, we defined ‘materiality’ as an impact on
the business that limited our ability to carry out our operations,
and/or required a change to our business model, and/or had a
significant impact on our liquidity thereby limiting our ability
to invest or meet our obligations.
Although the TCFD Framework only requires disclosure of actual
and potential impacts of climate-related risks and opportunities
on our business, strategy and financial planning where those
impacts are material, as this is our first report under the new
obligations, we have provided some detail behind the process
we undertook, and the main risks and opportunities identified.
It is principally because our initial risk and impact assessment has
not identified any material impacts that we are still developing
our response to the recommendation to consider broad resilience
across a range of different climate-related scenarios. With a
quarterly review of climate-related risks and opportunities
established, this process will be developed during 2022 to assess
the resilience of the Company’s strategy in a wider range of
scenarios, including higher and lower carbon contexts and
situations involving increased physical climate-related risks.
In terms of the risk assessment, transition and physical risks were
considered – transition risks being those that arise from transition
to a low carbon economy, and physical risks being those that
arise from the physical impacts of a changing climate. In carrying
out this assessment, we considered three time periods: the short
term to the end of the current financial year, 2022; the medium
term, from 2023 to end of 2025; and the long term, from 2026 to
2030. These time periods were considered relevant in the context
of the Company’s business planning cycle; investment plan; and
its strategy to transition to a net zero carbon business by 2030.
The most significant – but not material – potential climate-related
risks identified are (with the relevant area of the business and
anticipated time period indicated in brackets):
• Failure to embed sustainability in the culture of the business
(Company-wide and short term).
• Failure to achieve Project albert accreditation which could
impact the ability of STV Studios to secure new commissions
(STV Studios and medium term).
• Failure to deliver our sustainability targets which could impact
the attractiveness of the Company’s investment proposition
(Company-wide and medium term).
There were no significant risks identified in the long-term.
Opportunities were identified in the short and medium term
to attract advertisers wishing to promote the sustainability of
their products and services, as evidenced through the positive
experience of attracting new advertising clients since the launch
of the STV Green Fund. The STV Green Fund, introduced at the
level of £1m, has not all been awarded yet and so we don’t
believe these opportunities will be material in the short to
medium term. Using STV’s position as a trusted public service
broadcaster to promote sustainable lifestyles and behaviours
presents an opportunity for audience engagement.
Alongside our initial assessment of climate-related risks and
opportunities, we have undertaken an exercise to understand the
related actual and potential financial impacts on our business. This
will be revisited on a regular basis to ensure it reflects emerging
risks and opportunities, and the wider markets in which we
operate. Our initial conclusion is that there is no significant financial
impact in terms of operating costs, capital investment or balance
sheet valuations arising from the risks and actions required to
achieve the headline sustainability target of becoming net zero
by 2030. Details behind this assessment are set out below:
• Achieving carbon neutrality in 2021 was driven by several
actions, the most individually significant of which were
switching to renewable electricity in our sites where we have
control of the electricity supply contracts (97% of total usage)
and reducing levels of business travel. The cost of carbon offset
credits in 2021 was minimal.
• We have reviewed our property, plant and equipment (PPE) to
identify any items that are impaired as a result of changes to
the way we work to reflect transition to a more environmentally
sustainable operation. Most of our PPE is broadcast technical
infrastructure, other items of IT infrastructure in support of
the STV Player and core support functions (email, networks,
etc) and multi-media kits used by our journalists and news
operation. There have been no impairment charges identified
through this review.
STV Annual Report and Accounts 2021 47
Divisional action plans are being developed to embed a culture
of sustainability into the business, the failure to do so having
been identified as one of the most significant climate-related
risks the Group faces. These divisional plans cover a range of
actions, including:
• Targets to reduce carbon emissions through less business
travel;
• A requirement to update disaster recovery plans to include
contingency measures to support business continuity and
manage service disruption in the event of climate-related
impacts;
• Ensuring team members have undertaken sustainability
training relevant to their role;
• Where measurable, recycling of consumables related to kit
and operating equipment.
Metrics and targets
The fourth pillar of the TCFD Framework requires disclosure of
the metrics and targets used to assess and manage relevant
climate-related risks and opportunities, where they are material.
Since the launch of STV Zero in early 2021, the Company has
committed to become a net zero carbon business by 2030 – the
key target which has defined the other metrics we have set to
manage climate-related risks and opportunities. Becoming a net
zero carbon business by 2030 is underpinned by targets aimed at
reducing our carbon impact in five key areas: energy consumption;
waste reduction; programme making; promoting sustainability
using STV’s reach; and achieving a sustainable supply chain. In
turn, the achievement of these targets will only be achieved if we
successfully embed a sustainability culture into the business.
The metrics and targets within our STV Zero strategy were set
following an audit and analysis of the Company’s carbon impact
using 2019 (pre-pandemic) as a baseline.
At the start of 2021 we set an initial target to be a carbon neutral
business by the end of the year. This has been achieved by
offsetting all emissions from our business operations (Scope 1)
and energy use (Scope 2). We have offset these emissions (412
tonnes CO2e) by investing in nature-based solutions using
industry-recognised Project albert’s ‘Creative Offsets’, provided
in partnership with Natural Capital Partners. Details of the
Company’s Scope 1 and 2 emissions are set out in the Streamlined
Energy and Carbon Reporting table on page 49.
Our energy usage target to obtain 100% of electrical energy from
renewable sources directly procured by the Company by 2022 has
been achieved. In 2022 we will identify suppliers to support a
transition to renewable gas.
A training programme was delivered to all colleagues during
2021 to provide everyone with an understanding of climate
fundamentals and provide context for the importance of STV
Zero. Further training will be provided during 2022.
All programmes produced by STV Studios and STV in 2021 were
Project albert certified and we are on track to achieve Project
albert accreditation for all programming by the end of 2022.
With progress of the implementation of the STV Zero strategy
on track, we identified additional interim targets designed to
build momentum and further embed sustainability across the
business, as well as bridge the gap between now and 2030.
• In March 2021, we set out a £30m investment programme
over 3 years to accelerate growth in our Digital and Studios
businesses. In Digital, this investment focuses on the licencing
of third party content for the STV Player, and marketing thereof,
and further development of the STV Player user interface. In
Studios, it is placing more creative bets either through enhancing
our in-house development teams or continuing to invest in
external creative labels. We do not expect the nature of this
investment to materially change as a result of our work to
achieve our STV Zero targets and priorities, nor do we expect the
financial quantum to change. Lastly, we do not anticipate any
change to the priority we attach to each area of investment.
• It is possible that certain costs of operation may increase as
we transition to lower carbon operations, for example heat,
light and power, and insurance. We do not expect these to
be material, and there may be opportunity to offset these
manageable cost impacts through additional advertising
revenue from brands seeking to promote the sustainability
of their products and services.
• We have held initial discussions with the trustees of the Group’s
defined benefit pension schemes to understand their approach
to the climate crisis from an investment perspective. The
trustees are at an early stage of their own journey and have
engaged their investment managers for advice. Based on
discussions to date we have not identified any significant risks
or incremental costs to the Group but have undertaken to
continue engagement with the trustees as they develop their
thinking and look to implement potential actions in this area.
• Lenders and equity investors are placing increasing significance
and importance on our sustainability credentials, and we
actively engage with them on STV Zero and our targets. We
anticipate that, at some point in the future, lenders may seek
to embed climate-related clauses in our facility agreement and
thereby directly link the cost of funds with successful delivery of
our sustainability targets. Our current debt facility, with a 3-year
term, was agreed in March 2021 and has no such linkage. We
have recently exercised the first of our one-year extension
options with no climate-related conditions being applied.
Risk management
Following the Board’s approval of STV Zero, the identification,
assessment and management of climate-related risks has been
further embedded into the Company’s risk management and
internal control processes during 2021.
The initial review to identify climate-related risks was led by
the Chief Financial Officer, Head of HR & Comms and Director of
Operations & Delivery and involved the Management Board and
representatives from across the business. This was facilitated
through a series of brainstorming sessions, the output of which
was a climate-related risk register that identified transition and
physical risks, by division, across each of the time frames
explained above. Those climate-related risks identified have
been assessed within the context of the existing risk register
for each business area to determine their relative significance
and likelihood. None of the climate-related risks identified are
deemed to be principal risks from a Group perspective or give rise
to material exposures. This initial climate-related risk register was
discussed in detail at a Board meeting in Q4 2021, when the
Board concluded it was complete and appropriately reflected
significance and likelihood in the context of the wider Group.
All climate-related risks have been assessed as emerging risks
and quarterly assessment and monitoring has been put in place
for 2022 onwards that will provide an appropriate control process
as understanding and corporate knowledge is developed,
informing decisions about mitigation or control. This process will
be conducted through divisional board meetings and through
triannual updates to the Board.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 48 STV Annual Report and Accounts 2021
Taskforce on Climate-related Financial Disclosures (TCFD) report
The table below summarises those targets; the majority are
intentionally short-term to provide improved indicators of
progress and to support the growing focus and understanding
of the Company’s sustainability aims. Divisional actions plans
have been developed to further embed our targets into each
area of the business.
We have identified the changes required to our current business
processes, to the decision-making criteria we use and to the way
we work to support achievement of these targets. In early 2022,
we introduced divisional emission reduction action plans, providing
each business area with a target to reduce their Scope 1 and 2
emissions, and emissions from business travel (which falls under
Scope 3). We are not yet able to assess the carbon emissions of our
supply chain beyond business travel, but targets in this area will be
set when the sources of Scope 3 emissions have been identified.
Progress will be reviewed on a quarterly basis at divisional board
meetings with updates incorporated into the sustainability
governance structure.
We recognise the importance of setting science-based emissions
targets and made a submission to the Science Based Targets
initiative (SBTi) to obtain this accreditation for our strategy and
targets in early 2022.
Additional targets and measures
Implementation
Embedding sustainability into the business:
Secure SBTi approval during 2022
Obtain verification of our carbon reduction targets using the Science
Based Targets initiative (SBTi)
Embedding sustainability into the business:
Implement in Q1 2022, with quarterly review process
Development of divisional emissions reduction plans to integrate
sustainability into all areas of the business
Embedding sustainability into the business:
Implemented during Q1 2022
Introduction of sustainability targets in all management incentive plans
to support increased accountability for delivery of sustainability targets
Energy consumption:
Foreshorten target achievement date from 2025 to end of 2022
Accelerate reduction in business travel and amend target to achieve
a 50% reduction (from 2019 levels) by 2022 – initial target was set for
achievement date of end of 2025
Waste reduction:
Undertake audit to quantify gross tonnage of waste and identify
interim targets to support becoming a zero-waste business by 2030
Audit during H1 2022
Interim targets introduced H2 2022
Promoting sustainability on-screen using STV’s reach:
Deliver by end of 2022
Commit proportion of regional programming to sustainability focused
programming on STV
Sustainable supply chain:
Complete audit of supply chain and identify interim targets to enable
achievement of a sustainable supply chain by 2030
Audit during H1 2022
Interim targets introduced H2 2022
Our culture:
Achieve by end of 2022
Extend sustainability training to delivery ‘Ad Net Zero Essentials’
training to Commercial creative team
Streamlined Energy and Carbon Reporting (SECR) –
based on data for year ended 31 December 2021
In line with the GHG Protocol Corporate Standard, the Company’s
SECR is based on the disclosure of emissions from operations
over which it has direct financial and operational control. As the
Company is registered in the UK with no operations overseas,
all emissions derive from UK-based activities. These Scope 1
and Scope 2 emissions are set out in the table below.
A dual reporting approach to the emissions associated with the
Company’s grid electricity consumption (Scope 2) has been used
to disclose both a location-based and market-based figure.
We continue to monitor Scope 3 emissions, including business
travel and energy consumption data arising from the activities
of STV Studios which are outside the scope of the SECR. During
2022 as we undertake planned activity to audit our supplier
base in support of achievement of our target of having a
sustainable supply chain, we will review our disclosure of
emissions in this category.
During 2021, Scope 1 emissions increased as all areas of the
business resumed operations following the disruptive impact of
Covid-19 in 2020. Despite this increase in Scope 1 emissions, total
Scope 1 and Scope 2 emissions decreased against the prior year
as a result of achieving the target to source electrical energy that
the Company procures directly from renewable sources.
A range of energy efficiency measures and sustainability
improvements have been implemented in 2021. These include
the continued installation of LED lighting in the Company’s Pacific
Quay headquarters; the completion of the conversion to electrical
energy from renewable sources at locations where energy supply
contracts are within the Company’s direct control; a technology
investment programme to provide all colleagues with laptops and
the upgrade of meeting technology in the Company’s offices to
support a more sustainable way of working with the introduction
of hybrid work patterns; and the installation of smart photocopiers
to drive reduction in wastepaper. Additionally, all colleagues have
completed environmental sustainability training, delivered by
BAFTA/Project albert.
Scope
Description
1
2
Emissions from gas, refrigerants and owned vehicles
Location based
Electricity emissions using geographical location
Market based
Electricity emissions using purchased electricity factor
Total 1 & 2 SECR Minimum
Total Scope 1&2 intensity ratio (location based)
Total Scope 1&2 intensity ratio (market based)
STV Annual Report and Accounts 2021 49
Unit
tCO2e
kWh
tCO2e
kWh
tCO2e
kWh
2021
411.88
2020
396.31
2,147,726.31
2,057,373.09
672.92
731.02
3,169,218.47
3,135,556.33
–
3,169,218.47
–
–
tCO2e
1,084.80
1,127.34
kWh
5,316,944.78
5,192,929.42
tCO2e per £m
sales revenue
tCO2e per £m
sales revenue
7.51
2.85
10.54
–
Methodology
The methodology used to calculate 2021 emissions is the GHG Protocol Corporate Standard. In addition, the 2019 HM Government
Environmental Reporting Guidelines: Including SECR guidance and the 2021 UK Government’s Conversion Factors for Company
Reporting have been used.
The only estimated emissions data is for electrical energy consumed in the Company’s office premises in Dundee, Inverness and
London. The estimated consumption is based on the square footage of these locations which are used for the same purpose as our
other office premises. This amounts to 2.5% of our total Scope 1 and Scope 2 emissions.
The 2021 intensity ratio has been calculated by dividing total Scope 1 and Scope 2 GHG emissions (location based and market based
methods) in tonnes by total sales revenue for the 2021 financial year.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 50 STV Annual Report and Accounts 2021
Social impact
STV is committed to making a positive social impact which is
integral to the delivery of our growth strategy. As a responsible
business we provide an inclusive and positive working environment
for our people, and use our powerful platform as a force for good.
Implementing new ways of working to increase flexibility has been
a key organisational objective during 2021. A hybrid pattern has
been established as the norm for the majority of roles, supported
by an extensive programme of changes to the physical environment
of our office spaces and investment in new technology.
Keeping colleagues connected and informed of business
progress has continued to be supported by our range of internal
communication channels. These include a daily all-colleague
e-newsletter, weekly all-colleague video conference briefings
hosted by the CEO and a variety of informal engagement
sessions structured to facilitate cross-business communications.
Additionally, a programme of social events, held over video
platforms, has continued during 2021.
Our employee opinion survey, Have Your Say, provides
measurement of engagement and the survey is open to all staff
and freelancers. In 2021, the survey was focused on monitoring
wellbeing and engaging colleagues about future ways of working.
Engagement levels remain high at over 80%.
Our people
We are committed to providing an environment that attracts
the best creative talent, enables creativity to flourish, ensures
equality of opportunity, and is fun and supportive.
Our priorities in 2021 were the continued support for the
wellbeing of colleagues whilst planning for a more flexible
way of working in future.
Promoting wellbeing and encouraging colleagues to talk about
feelings of isolation and concerns arising from the pandemic
were the key themes of our internal communications. A bespoke
training programme for managers – Wellbeing & Resilience –
was delivered by our partners, SAMH, designed to ensure our
managers feel equipped to provide support and tools to improve
their mental wellbeing and the wellbeing of their teams.
We extended our network of Mental Health First Aiders as more
colleagues sought training to enable them to manage their
wellbeing and provide support to colleagues, families and friends.
Improving the support available to our freelance colleagues,
whose contribution is key to the success of STV Studios, remains
is a key aim of our wellbeing strategy. A new framework to ensure
our productions provide an inclusive, safe and mentally healthy
production environment was developed and introduced. This
includes mandatory training covering respect and dignity at work
and wellbeing; the appointment of dedicated mental first aiders
and safeguarding contacts on every production; and the
introduction of exit interviews for freelancers.
Our Gold Award status from the Scottish Government’s
‘Healthy Working Lives’ standard has been retained, providing
a benchmark to measure the effectiveness and impact of our
programme of wellbeing activities.
Wellbeing from STV provides
resources and activities to promote
general wellbeing, including mental
health awareness to staff.
Our network of five peer
groups are empowered
to effect positive change
across the business.
STV Annual Report and Accounts 2021 51
Diversity and inclusion
Our people
During 2021 we have continued to broaden our recruitment
channels, improve accessibility and create new access paths for
current and future talent. To support achievement of our targets,
we have introduced changes to our recruitment processes. This
includes pausing the selection process if required to ensure every
shortlist include candidates from under-represented groups. 27%
of appointments in 2021 came from under-represented groups.
Our highly sought-after placement opportunities are a key entry
route to the industry and we have committed to at least 25% of
these being secured by ethnically diverse candidates; at least
25% to candidates living with a disability and 33% to candidates
from lower socio-economic backgrounds.
Embedding inclusive leadership and developing cultural
competence are the key aims of the next phase of our
programme of diversity and inclusion training, delivered by Femi
Otitoju. New and developing policies will also be covered, including
the Company’s Menopause Policy, launched in October 2021,
and the introduction of a policy to support trans colleagues. To
support an on-air campaign in October 2021 highlighting invisible
disabilities, we supported 15 colleagues to complete ‘Introduction
to BSL’ training with further programmes arranged for 2022. In
addition to training, we continue to provide opportunities for
Company-wide discussions involving guest speakers. Topics have
included improving equality and visibility for disabled people in
the television industry and off-screen and discussions to mark
Black History Month.
Our aim is to create an inclusive culture that enables equality
of opportunity for all; to reflect the communities we serve both
on and off-screen and to drive sustainable change in all areas
of the Company.
Achieving diversity in all areas and at every level of the Company
through attracting and retaining people from the widest range
of backgrounds is vital to our commercial and creative success.
On-screen we are committed to ensuring the content we produce
authentically portrays and reflects the diversity of our audiences.
These aims are underpinned by targets, set for delivery in 2023.
Six strategic priorities, to support achievement of our ambitious
targets, were identified for delivery in 2021 and 2022:
• Increase diversity at all levels, with a particular focus on senior
editorial, production, and leadership roles
• Increase representation and portrayal of diverse voices in the
content that STV produces, commissions, and acquires for STV
and the STV Player
• Develop cultural competence and learning for all to support
an inclusive culture
• Diversify our talent networks and pipeline
• Improve access, retention and representation of diverse talent
in STV Studios
• Improve diversity and authentic portrayal in the advertising
content we produce
The STV Diversity and Inclusion Steering Committee (DISCo)
comprises representatives from all areas of the Company and
has oversight and a remit to challenge delivery of our D&I strategic
priorities. Our D&I advisor, Femi Otitoju, who was appointed in early
2021 and reports to the Chief Executive, also sits on the DISCo,
providing insight and a wider industry perspective. To drive
delivery of our priorities and targets in 2022, all managers have
been assigned targets relating to delivery of our D&I aims.
A strong network of five peer groups has become successfully
established as a driving force for positive change across the
Company. Each group is sponsored by a member of the
Management Board and the groups are responsible for the
development of action plans and play a key role in building an
inclusive culture. The groups also consider social mobility across
their respective agendas, as well as the intersectional and
multi-faceted nature of diversity, including the potential impacts
on the mental health of people in under-represented groups who
feel isolated or socially excluded.
Our targets
Workforce: Our people
On screen contributors: Our audiences
Gender
50:50 balance across top 25% of roles by
earnings and a balanced gender profile
across the rest of the organisation
STV News at Six
News only
Sport only
Scotland Tonight
50:50
50:50
50:50
50:50
Ethnically diverse 8% of colleagues based in Scotland
33% of colleagues based in London
8%
8%
8%
12%
Disability
12% of all colleagues
Target to be confirmed following a review of existing representation levels.
Through STV Expert Voices we are working to broaden our network of contributors
to increase representation of disabled people across news and current affairs output.
LGBTQ+
4% of all colleagues
No target set
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 52 STV Annual Report and Accounts 2021
Social impact
Diversity and inclusion continued
On-screen
The STV News team aim to reflect the lives of all the communities
that we serve and ensure they are authentically represented.
On-screen representation of ethnicity and gender is monitored on
a monthly basis against targets and in 2022 this will be extended
to include disability monitoring.
Across 2021, targets to increase the number of ethnically diverse
contributors on STV News at Six (from 4% to 8%) and Scotland
Tonight (12%) were achieved. Targets have also been set to
achieve a gender balance of contributors on both programmes.
‘STV Expert Voices’ was launched to broaden our network of
on-screen contributors and increase representation of diverse
views and voices across our news and current affairs output.
Through partnerships with equality organisations, including
Equate Scotland’s Pass the Mic project, Women in Journalism,
Inclusion Scotland and Enable Scotland, we are working to
increase the number of female contributors and also to increase
representation of programme contributors from ethnically diverse
backgrounds or those living with a disability. ‘STV Expert Voices’
delivered five virtual training sessions on media interview skills to
over 400 people from under-represented groups working in
healthcare, business, academia, and the third sector, who are
experts in their subject matter. These popular sessions have
been followed up with one-to-one coaching for new broadcast
and digital contributors who have been engaged to support
development of digital news articles, long form interviews
or recorded pieces related to their experience.
The STV Inclusion Fund was launched in 2021, providing Scottish
businesses demonstrating a commitment to inclusive growth and
championing diversity access to advertising to support their growth.
Through a competition process, four businesses have received
awards from the fund: Social Stories Club; Daisy Tree Baby
Boutique; Deaf Action; and Women’s Enterprise Scotland (WES).
On STV Player, we have partnered with the Digital Accessibility
Centre, to audit user accessibility. This has identified
improvements for implementation by our in-house software
development team whilst providing the team with insights to
inform future platform development activities. During 2022,
the audit will review access service provision, including the
availability of subtitles, audio description and signed content.
Our gender pay profile*
Lower
Lower Middle
Upper Middle
Upper
0.4%
2.8%
3.9%
13.3%
0.3% excl. management board
43.5% Men
56.5% Women
46% Men
54% Women
52% Men
48% Women
55% Men
45% Women
The mean gender pay gap is 5.7% across 75% of all roles (2020: 7.7%).
* Figures are based on all permanent and fixed term STV employees
Gender pay gap
The mean gender pay gap continued to reduce at 15.3%, with
the median at 8.3%. The mean and median gender bonus pay
gap increased in 2021 to 66.0% and 80.0% respectively as a
result of several factors. Gender bonus pay gap reporting is
prone to volatility when making year on year comparisons due
to various factors that impact bonus payments, including bonus
payment dates. This impacted the 2021 bonus pay gap. One of
a number of adjustments made to remuneration in response to
the financial implications arising from Covid-19 was the deferral
of bonuses earned by the management board in 2019 which fell
into the 2021 gender bonus pay reporting period. Excluding the
deferred bonuses awarded at management board level, the
mean and median 2021 gender bonus gap figures were 23.6%
and 68.4% respectively.
Gender balance
Overall, across the Company our gender profile is balanced,
51% women: 49% men. We have set a target to achieve gender
balance at all levels of the organisation, with a particular focus
on closing the gap across roles in the upper earnings quartile.
We continue to make progress with 45% of roles in this quartile
held by women, an increase from 30% in 2017. At board level
(PLC and management board), 33% of roles are held by women.
We are seeing evidence of the impact of measures to support
women to progress through the organisation into senior roles –
including regular succession planning to assess and strengthen
our talent pipeline for senior roles and development programmes
to support career progression – with 71% of promotions in
2020/21 secured by women. Our internal career development
programmes have a target to achieve a 50:50 gender balance
of participants.
As a result of these measures, the Company’s gender pay gap
continues to narrow year on year, reducing by 33% over four
years since 2017 when reporting started.
Gender pay gap 2021*
15.3%
mean
2020: 15.6%
8.3%
median
2020: 14.6%
66.0%
mean bonus pay median bonus pay
80.0%
2020: 44.6%
2020: 46.4%
* Based on the Gender Pay Reporting date of 5 April 2021
STV Annual Report and Accounts 2021 53
Sustainability
Aims
• Net zero carbon by 2030
• Zero waste business by 2030
• Sustainable supply chain by 2030
• All STV and STV Studios programming carbon neutral by 2022
• Use STV’s reach to promote sustainability
Since the launch of our sustainability strategy, STV Zero, in
early 2021, we are making progress towards our long-term
aim of becoming a net zero carbon business by 2030.
We have a wide-ranging framework of targets to reduce our
carbon impact and use STV’s audience reach and pre-eminent
marketing platform to promote sustainability by raising
awareness of environmental issues and positively influencing
consumer behaviour.
We achieved all targets set for delivery in 2021, including
becoming a carbon neutral business. A total of 412 tCO2e has
been offset from our business operations (Scope 1) and energy
use (Scope 2). A further 1,221 tCO2e incurred through programme
making activities and other business travel has been offset by
our production teams as they have secured industry-recognised
Project albert environmental certification.
In June we became consortium members of Project albert,
providing access to an industry network, insights and advice and
support with training. STV Creative, our successful commercial
production business, joined Ad Net Zero, the advertising industry’s
response to the climate crisis, and is working in partnership to
implement a carbon impact calculator for use on all
advertisements and promotions we produce.
As STV’s home city of Glasgow hosted COP26 in late 2021,
we collaborated with our industry peers and participated in an
exciting programme of events co-ordinated by BAFTA to highlight
the unique role of the television industry in response to the
climate crisis. Along with other UK broadcasters and streaming
services, we signed the Climate Content Pledge, committing to
using our content to help audiences understand solutions to
tackle climate change.
Encouraging colleagues to adopt more sustainable behaviours
and lifestyles has been supported through the roll-out of a
training programme, Climate Fundamentals, delivered by the
Project albert team. We will build on this with the further
sustainability training during 2022.
A new governance structure has been introduced to embed STV
Zero into all areas of the business, setting clear responsibilities
and enabling fuller disclosure of our performance against our
targets in future. For further details, refer to our report under
the TCFD Framework on pages 45 to 49. With all targets set to
date achieved, new interim targets have been agreed for 2022.
These have been introduced to maintain momentum and further
embed sustainability across the business, creating a visible
roadmap to support achievement of our long-term goals.
Additionally, emission reduction action plans are being introduced
into all divisions and will be monitored and reported on a regular
basis through divisional boards.
We have committed to ensuring our targets are science based
and in early 2022, applied to the Science Based Targets initiative
(SBTi) for verification of our targets to evidence the impact of our
strategy in reducing the Company’s carbon impact.
Our targets
Energy consumption
• Net zero by 2030
•
100% of directly procured electrical energy
from renewable sources
• Halve business travel by end of 2022
Becoming a carbon neutral business by the end of 2021 is the first
significant milestone toward net zero.
Ahead of target, we secured all electrical energy from renewable
source in our office locations where we control the energy supply
contracts. These locations represent 97% of our total consumption
of electrical energy.
Further energy efficiency measures were introduced including
continued installation of LED lighting and the implementation
of new technology and IT equipment to support colleagues to
work in a more flexible and sustainable way in future.
In 2022, we will begin to move to renewable gas at our sites
where our gas supply contracts are under our control.
The transition to move our vehicle fleet and all leased cars
to hybrid has also been completed in 2021.
STV Zero targets.
SUPPLY CHAIN
Our supply chain will be 100%
sustainable by 2030
PROGRAMME
MAKING
STV will commit to albert
certification for all of its
programming, including news
and current affairs, by 2022
N
CA R BO
O
T Z E R
E
N
Achieve net zero carbon emissions on all
programming, including commercial production,
produced by STV and STV Studios by 2030
ENERGY
CONSUMPTION
Achieve 100%
of electrical
energy used
from renewable
sources by the
end of 2022
Reduce
business travel
by 50% by the end of 2022
CARBON
NEUTRAL
SINCE
2021
CARBON NET ZERO
BUSINESS BY 2030
PROMOTING
SUSTAINABILITY
FOR ADVERTISERS:
launch of £1m STV
Green Fund in 2021 to
support advertisers
Use promotional
airtime to celebrate
STV’s commitment to
environmental
sustainability and
encourage positive
behavioural change
from our viewers
and advertisers
FOR VIEWERS:
Ensure environmental
sustainability is represented
in the editorial content of
our programming
WASTE REDUCTION
STV will become a zero waste
business by 2030 via a
programme of avoid,
re-use and recycle and
the removal of single
use plastics
.
E
L
C
Y
C
E
R
.
E
S
U
E
R
.
E
C
U
D
E
R
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info
54 STV Annual Report and Accounts 2021
Social impact
Focussed on the environment continued
Business travel generates a significant proportion of our carbon
impact. Recognising the opportunities for more sustainable ways
of working that have been proven to be effective during the
pandemic, we have brought forward the target date to
significantly reduce business travel, aiming to halve this by the
end of 2022, an accelerated target date from the original plan
to achieve this by 2025.
Waste reduction
• Zero waste business by 2030
The first target set as part of our zero waste strategy was the
immediate removal of single use plastics from the Company’s
catering suppliers from early 2021. This was extended to hired
catering used on all of the Company’s productions as carbon
impact measurement was introduced on all programming. The
removal of single use plastics from all operations and our supply
chain is a long term aim and will be a priority as we work with
our suppliers.
As colleagues return to the office in early 2022, a behaviour change
campaign has been introduced to encourage all colleagues to
‘reduce, reuse, recycle’ and become a ‘STV Zero Hero’. As we have
prepared our offices to enable more flexible working, we have
taken the opportunity to make changes in support of our
sustainability goals. Wastepaper bins have been removed from
desk areas and we have invested in new printing equipment
designed to encourage a reduction in paper consumption.
Programme making
• All programmes produced by STV and STV Studios to receive
Project albert certification by the end of 2022
•
All STV and STV Studios’ productions to be carbon neutral
by the end of 2022
During 2021, all STV Studios’ programming was registered with
Project albert and four productions were albert certified, including
drama series, Screw; Celebrity Catchphrase; Inside Central Station
and British as Folk.
STV Zero activity touches
all areas of the business.
All STV (non-news) programming is registered with Project albert,
with three-part mini-series, Don’t Waste Scotland, and the STV
Leaders’ Debate awarded albert certification.
Sustainable supply chain
• 100% sustainable supply chain by 2030
Achieving a sustainable supply chain is our primary route to reduce
the Company’s Scope 3 GHG emissions. Preliminary work has
identified that approximately 80% of our supplier base (by value
of procured goods and services) have sustainability commitments
consistent with the achievement of our long-term aim. During
2022, an audit of the remaining constituent of our supplier base
will be undertaken to identify opportunities to work with our
suppliers towards increased sustainability.
Improving our understanding of the carbon impact of the
distribution of our content has been identified as a priority for
2022 and we will engage with our peers in the industry on the
development of measurement tools.
On screen – audience and advertisers
• Using STV’s reach to promote sustainability
STV’s close and trusted relationship with the audience and
our position as the biggest channel in Scotland presents an
opportunity to bring the complex to life in an accessible,
practical and uplifting way. In the run-up to COP26 in October we
broadcast our first dedicated sustainability focused programme.
Peak-time three-part series, Don’t Waste Scotland, was specially
commissioned to coincide with COP26 and outperformed several
national environmental programmes in terms of audience share.
This coincided with the launch of an on-air campaign, Small
Changes Big Differences, featuring STV’s weather team which
also generated a positive audience and media reaction. The team
were aged by 40 years and delivered weather forecasts from the
future, highlighting the importance of making small changes
everyday to live more sustainably.
The STV Player has also featured environmentally friendly focused
shows on the ‘Green Hub’, which was sponsored by Smart Meters.
Through the STV Green fund we are supporting Scottish
businesses in becoming more sustainable. This £1m investment
fund, launched in March 2021, offers match funded advertising
support for Scottish businesses who provide or promote
sustainable products and services. The launch partner was the
Edinburgh Boiler Company, who committed to plant a tree for
every boiler they installed, offsetting an estimated 450 tonnes
of carbon emissions in 2021.
FTSE Russell
FTSE Russell (the trading name of FTSE International Limited
and Frank Russell Company) confirms that STV Group has been
independently assessed according to the FTSE4Good criteria and
has satisfied the requirements to become a constituent of the
FTSE4Good Index Series.
Children performing at
Centrestage during this
year’s annual telefundraiser.
STV stars jumping for joy
at the prospect of starting
the Virtual Kiltwalk.
STV Annual Report and Accounts 2021 55
Contributing to our communities
The STV Children’s Appeal was launched in 2011 and uses
the power of STV to shine a light on the issue of child poverty,
raise funds and drive positive change.
STV Children’s Appeal in 2021
With new lockdown measures brought back into force, Scotland’s
most vulnerable and disadvantaged children, young people and
families began 2021 with renewed pressures. Once again, the STV
Children’s Appeal was well placed to provide urgent and timely
support to those who needed it most.
A record breaking year
In 2021, a record £4.4 million was raised to help the 1 in 4 children
in communities across Scotland affected by poverty. This brings
the total amount raised by the STV Children’s Appeal since its
formation to almost £29 million.
Fundraising campaigns
Our longstanding relationship with Scottish Government enabled
us to distribute £1.6m of additional Government funding to help
vulnerable families cope with the effects of winter. Funds were used
to help people pay for food, heating, warm clothing and shelter.
Between December 2020 and March 2021, 317 grants were
made to 327 community groups and voluntary organisations
in every local authority area of Scotland. In total, 7,516 families
and 11,844 children received funding and support.
STV uses its platform as Scotland’s commercial public service
broadcaster to shine a light on the issues faced by so many
people across Scotland. In support of the STV Children’s Appeal,
it seeks to shine a light on the issues faced by children and their
families who are affected by poverty, encourage donations from
viewers, and enable young people to tell their stories to the
widest possible audience to drive positive change.
By Spring, our focus concentrated on the mental health impact
Covid-19 was having on young people. Starting in May, the STV
Children’s Appeal ran regular adverts on STV’s broadcast channel
and social media platforms to highlight the impact of a year of
lockdowns on our young people’s mental health, to encourage
donations from viewers to support the recovery phase. The
campaign received celebrity backing from a number of famous
Scots, including actor James McAvoy, TV personality Gail Porter
and author Douglas Stuart.
The proceeds of this campaign were distributed to 50 projects
across Scotland to improve young people’s mental health though
initiatives such as counselling sessions, peer support groups and
leisure activities.
In addition to our Mental Health campaign, large scale community
and corporate fundraising initiatives took place during 2021. To
mark the Appeal’s 10th birthday, fundraisers were asked to take
part in the 10xChallenge: use the number 10 to create an engaging
fundraising event such as walking 10 miles, running 10k’s or cycling
for 10 days. The campaign was generously sponsored by long-term
supporter Tunnock’s.
Meanwhile the successful Kiltwalk event returned in 2021 in two
formats – a virtual event in Spring and a live event in Autumn –
with hundreds of people taking part.
In addition, scores of dedicated individuals, community
groups, corporates and schools have undertaken their own
fundraising events or made donations for which we are
extremely grateful. Without this support, the work of the
Appeal simply could not happen.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info© Daily Record 56 STV Annual Report and Accounts 2021
Social impact
Contributing to our communities continued
Employee engagement
STV employees continued to be great ambassadors for the Appeal
in 2021 by organising and taking part in fundraising activities,
raffles, quizzes, the 10xChallenge and Kiltwalk events. The total
raised was match-funded by STV to ensure even more children
and young people can be helped.
Programming
A special documentary was commissioned to examine the impact
of Covid on young people’s mental health. Where’s Your Head At?
enabled several young people to tell their stories, their struggles,
and how support from Appeal-funded projects has helped them
through this difficult period.
The main telethon programme hosted by Lorraine Kelly aired
in October and featured an exciting blend of entertainment
and powerful case studies of children and families affected
by poverty. The programme reached 1.7 million Scots.
Some of the famous faces
who supported this year’s mental
health fundraising campaign.
Spotlight
Marking 10 years of
STV Children’s Appeal
The STV Children’s Appeal celebrated its 10th birthday
in 2021 and marked a decade of supporting young
people affected by poverty in Scotland. But despite
raising over £24 million in the previous nine years,
the Appeal’s vital work continued apace in 2021,
with a major new fundraiser being launched to help
raise funds at a time when support was needed more
than ever.
STV’s Weatherman Sean Batty and journalist Sophie
Wallace were joined by a group of 10-year-olds for a joint
birthday celebration and to announce the 10xChallenge,
with each party-goer vowing to take on their own
fundraising challenge to support the charity.
The 10xChallenge gave the nation one simple mission:
to take part in their own challenge or event inspired by
the number ‘10’ across a ten-day period in September.
And just as they had continually wowed us with their
creativity and generosity in previous years, the Scottish
public pulled it out the bag yet again.
One Glasgow schoolboy swam ten 200m lengths of
his local pool in one session, whilst a daredevil from
Stirling took on a 10,000ft skydive. Even world record-
holding cyclist Mark Beaumont got involved, switching
sports to set himself a running challenge alongside
daughter Harriet.
Continuing the 10-year celebrations, the Appeal’s annual
telefundraiser was broadcast, for the first time, from one
of the charities that has benefited from its support over
the last 10 years. Kilmarnock-based performing arts
charity CentreStage welcomed Lorraine Kelly for an
evening of music, fun and important real-life stories –
showing viewers at home why the work of the Appeal
to tackle child poverty continues to be so crucial.
The incredible response from the public throughout the
Appeal’s milestone birthday year resulted in £4.4 million
being raised, pushing the total amount raised since 2011
to almost £29 million, and setting the Appeal up for
another decade of critical fundraising for the children
and young people in Scotland who need it most.
Andrea Brymer hosts a
special documentary on the
impact of Covid on young
people’s mental health.
STV Children’s Appeal 10th
birthday celebrations.
Introduction to governance
Corporate governance at STV
At STV, we strive to maintain the highest standards of corporate
governance and have created a working culture where honesty,
openness and fairness are valued. The Board of Directors’ remit
is to provide direction to help shape STV’s strategy and ensure
that it is being executed effectively within a structure that is well
controlled, mitigates risk and is compliant with corporate and
social responsibility. Good governance comes from an effective
Board which provides strong leadership and engages well with
both management and stakeholders. The Non-Executive
Directors bring a range of different experiences and backgrounds
and provide constructive challenge to the Executives, which is
vital to create accountability and drive performance. This in
turn creates an environment that generates and preserves
value for stakeholders.
As Directors, we are mindful of our statutory duty to act in the
way each of us considers, in good faith, would be most likely
to promote the success of STV for the benefit of its members
as a whole, as set out in S.172 of the Companies Act 2006, and
further details of how we have achieved this can be found on
pages 34 and 35.
Risk
g
a
n
a
M
d
ement
Identify, evaluate
d prioritise the
risks faced by STV
then mitigate an
monitor them
an
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t
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r
e
R esponsible
L e adership
Safeguard the
independence of
the Board and the
effectiveness of
management
Communicate
frequently with those
who have an interest
in or are affected
by our actions
Relationshi p w i
Stakeholde r s
t h
I
n
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r
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,
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all necessary laws
Comply with
d regulations
an
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c
n
Complia
Board effectiveness
Under the Code, the Board is required to undertake a formal and
rigorous annual evaluation of its own performance and that of its
Committees and individual Directors. In January 2022 the Board
conducted an internally facilitated evaluation and details of the
process and its outcome are covered in the Corporate Governance
report. Following this, I am satisfied that the Board and its
Committees are carrying out their duties efficiently and that there
is an appropriate balance of skills, experience, knowledge and
independence on the Board.
Sustainability
Since the announcement of our ambitious sustainability
strategy – STV Zero – in March last year, sustainability has been a
significant focus for the Board. Both the Company and the Board
place great importance on the reduction of our environmental
impact and to improving the sustainability of all our business
activities and the input from our Non-Executive Directors has
been invaluable in these discussions. Ms Cannon, in particular,
has brought her knowledge, from within the oil and gas industry,
of advising companies on energy transition and reducing carbon
intensity. I have had considerable Board level involvement in
other companies, on policy and target setting across various
STV Annual Report and Accounts 2021 57
aspects of climate change, which enabled me to lead the
discussions on this topic as part of the wider risk management
and strategy activities of the Board.
The expectations of investors, regulators and other stakeholder
groups to obtain information on our approach to considering
sustainability matters are ever increasing and more formally
mandated through the UK’s regulatory framework including
Streamlined Energy and Carbon Reporting and our reporting,
for the first time this year, against the recommendations of the
Taskforce on Climate-related Financial Disclosures (pages 45 to 49).
Diversity and inclusion
Diversity and inclusion has also been a regular Board discussion
topic particularly since the appointment of Femi Otitoju as STV’s
Diversity and Inclusion advisor in February 2021 and it was a
key consideration for the two appointments made during 2021.
Ms Otitoju presented to the Board in June, outlining the current
challenges and noting that the role of Board members was
paramount in influencing how well people believed the message
and would thereafter get involved, developing an insight and
understanding of what STV wanted to achieve. Directors found
her presentation informative and several Directors thereafter
arranged a separate session with Ms Otitoju to discuss various
points in more detail.
Once again our Non-Executives’ contributions to these
discussions has been valuable with Ms Mandhar sharing her
approach to building a diverse workforce at The Athletic through
continually looking at ways to be inclusive and putting in place
relevant and appropriate training programmes. Mr Miller has also
been able to bring his experiences with other organisations, one
of which is a member of the 30% Club, established with the goal
of increasing ethnic diversity on boards and in senior teams.
Achieving the changes required to meet our workforce diversity
targets is a continuing priority and the subject of discussions
across the business as we strive to improve representation and
build an inclusive culture. Further details of progress made in this
area can be found on pages 51 to 52.
Relationship with shareholders
During 2021, despite the various Covid-19 restrictions in place, we
have had increased engagement with shareholders, particularly
on ESG matters, whether through written submissions to them on
activities in certain areas, or meetings with investors which have
involved the Senior Independent Director, the Chairman of the
Audit & Risk Committee and myself. Our first ‘in person’ Annual
General Meeting in three years is being held on 21 April 2022 at
Pacific Quay and we look forward to meeting the shareholders who
are able to attend and answering any questions they may have.
Compliance with the UK Corporate Governance Code
The Board considers that, in respect of the financial year ended
31 December 2021, the Company has complied fully with the UK
Corporate Governance Code 2018 (the Code) and this section,
together with the Directors’ Remuneration Report, set out on
pages 79 to 87, 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 and can be accessed
via its website, www.frc.org.uk.
Paul Reynolds
Chairman
9 March 2022
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info
58 STV Annual Report and Accounts 2021
Board of Directors
At 9 March 2022
Paul Reynolds Chairman
Appointed: February 2021
Committees: Nomination (Chair)
Paul has over 30 years international public-company
experience as a Chair, non-executive Director and
senior executive, including tenures as Chief Executive
of BT Wholesale and Executive Director of BT Group plc
and Chief Executive of Telecom New Zealand Ltd. He
is currently a non-executive Director of Tosca IOM Ltd,
the holding company of TalkTalk Telecom Group. Paul
is also active in financial services, as a non-executive
director at Computershare Ltd in Melbourne and Chair
of data-analytics fintech, 9Spokes Ltd. He has held
previous roles as a non-executive Director at Eircom
Ireland Limited, XConnect Global Networks Ltd and
Japan-based telecommunications company, eAccess
Ltd. Paul is Chair of the STV Children’s Appeal.
Simon Pitts Chief Executive
Appointed: January 2018
Previously, Simon was a member of the executive
board of ITV plc, holding the position of Managing
Director, Online, Pay TV, Interactive & Technology.
Over a 17 year career there, he held a range of senior
roles and, as Director of Strategy, was one of the
main architects of the company’s transformation
under Archie Norman and Adam Crozier and also
oversaw strong growth in ITV’s digital businesses.
Simon was also on the board of ITN for eight years
and prior to ITV, worked in the European Parliament.
He is Vice Chair of the Royal Television Society and
a trustee of the STV Children’s Appeal and literary
charity Oscar’s Book Prize.
Lindsay Dixon Chief Financial Officer
Appointed: May 2019
Lindsay is a Chartered Accountant with extensive
commercial experience gained across a range of
sectors covering the FTSE 100, 250 and large private
companies. Previously, Lindsay held the role of Group
Financial Controller at William Grant & Sons Limited
and prior to that was Group Financial Controller of
The Weir Group plc. In addition to her core financial
responsibilities she has wide ranging M&A, investor
relations and international experience. After
qualifying at Deloitte, she held senior finance
roles with Johnston Press plc.
Simon Miller Senior Independent Director
Appointed: December 2016
Committees: Audit & Risk, Remuneration, Nomination
Simon is an experienced non-executive director and
chairman and has had exposure to a wide range of
financial, commercial and manufacturing businesses.
Simon is Chairman of Hampden & Co, private bankers
and of Bankers Investment Trust. He is also chairman
of Blackrock Sustainable American Income Trust
although will step down from this role over the
summer. Simon was formerly chairman of Brewin
Dolphin Holdings PLC and a non-executive director
of Scottish Friendly Assurance Limited. Simon read
Law at Cambridge and is a Barrister at Law.
STV Annual Report and Accounts 2021 59
Anne Marie Cannon Non-Executive Director
Appointed: November 2014
Committees: Remuneration (Chair); Audit & Risk
David Bergg Non-Executive Director
Appointed: May 2018
Committees: Remuneration; Audit & Risk
Anne Marie has over 40 years’ experience in the
energy industry and investment banking and is
an experienced director, holding executive and
non-executive roles. She is currently Deputy Chair
at Aker BP ASA, and a non-executive director on the
boards of Harbour Energy plc and the privately owned
Aker Energy AS. In addition, she is a Senior Advisor in
the Strategic Advisory business at PJT Partners. Anne
Marie was previously a Senior Advisor at Morgan
Stanley and has also held financial and commercial
roles at Shell UK, Schroder Wagg and Thomson North
Sea, as well as executive director positions on the
boards of Hardy Oil and Gas and British Borneo.
David has worked in the broadcasting industry for
over 30 years at ITV, the BBC, Sky, TV-am and Channel
Five. He started his career in a number of ITV regional
audience research teams (including Grampian
Television), before moving into marketing and
programme acquisition roles and then embarking on
a succession of senior scheduling positions. David was
Director of Programme Strategy at ITV for 20 years
from 1997 to 2017 and retains extensive contacts
at senior levels in the broadcasting and programme
production sectors in the UK and USA.
Ian Steele Non-Executive Director
Appointed: November 2015
Committees: Audit & Risk (Chair); Remuneration;
Nomination
Ian qualified as a Chartered Accountant in 1980 with
Arthur Young McClelland Moores. His subsequent
career involved time with The British Linen Bank,
Touche Ross, Rutherford Manson Dowds and Deloitte.
Ian retired as Senior Partner for Deloitte in Scotland
and Northern Ireland in 2015 and prior to retiring, 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
three years. He is on the Advisory Board of Visible
Capital and is Chairman of Iomart Group plc.
Aki Mandhar Non-Executive Director
Appointed: February 2021
Committees: Audit & Risk
Aki has built a successful executive career across the
advertising, marketing and digital media sectors and
is currently UK General Manager of subscription-based
sports news website, The Athletic. Prior to joining The
Athletic in early 2020, she was Chief Operating Officer
of Telegraph Media Group, responsible for delivery
of the strategy to transform the business from a
traditional publisher model into a successful,
sustainable subscription-based business. Aki was UK
Managing Director of Omnicom Group Agency, OMD
from 2015 until 2017 and prior to this held executive
roles within MediaCom over a period of nine years.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 60 STV Annual Report and Accounts 2021
Corporate governance report
Governance structure
External auditors
Elected at the AGM. Review the financial
statements to ensure they provide a true and
fair view of past financial performance and
current financial position.
D
Audit & Risk Committee
Monitors the integrity of the financial
statements through review of critical
accounting policies and key judgements and
estimates, and reviews internal financial
controls, risk management and compliance.
D
D
Internal Audit
Provides independent assurance that risk
management, governance and internal control
processes are operating effectively.
Shareholders in general meetings
The Company’s highest decision-making body.
Exercise their authority via voting on resolutions
tabled in these meetings.
D
The Board
Elected by shareholders, the Board, led by the
Chairman, is responsible for managing the Group, which
includes agreeing the strategy, setting the culture and
values of the business, overseeing long-term sustainable
success, and overseeing performance while discharging
various governance and legal responsibilities.
D
Executive Directors
Manage the Company’s operations within the
framework of rules established by the Board.
D
Management Board
Drives the implementation of the Company’s
strategic priorities while addressing critical business
issues and opportunities, supported by divisional
boards for each of Broadcast, Digital and Studios.
Nomination Committee
Ensures the Board has the appropriate
balance of skills, knowledge,
experience, independence
and diversity.
Remuneration Committee
Agrees the remuneration framework
for the Executive Directors.
STV has established various committees and groups which focus on specific aspects of the Group’s ESG practices including the Diversity
and Inclusion Steering Committee, the Sustainability Group and the Data Champions each of which brings together colleagues from
various areas of the business to support the Management Board with execution of their responsibilities day-to-day.
Principles statement
STV and its Board of Directors are fully committed to upholding the highest standards of corporate governance as these are crucial
to overall business integrity and performance. During the financial year ended 31 December 2021, the Company was subject to the
provisions of the UK Corporate Governance Code 2018 (the ‘Code’), available at www.frc.org.uk/directors/corporate-governance-and-
stewardship/uk-corporate-governance-code and the Board’s view is that it has complied with all relevant provisions of the Code.
The Board has a critical role to play in shaping business performance while creating and delivering long term, sustainable returns
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 the risk management frameworks and internal controls in place are
appropriate and operating effectively. 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.
Board of Directors
The membership of the Board throughout the year and up to the date of signing the financial statements, unless otherwise stated,
was as follows:
Chairman
Paul Reynolds (appointed a Non-Executive Director on
1 February 2021 and appointed Chairman on 29 April 2021)
Baroness Margaret Ford OBE (retired 29 April 2021)
Chief Executive Officer
Simon Pitts
Chief Financial Officer
Lindsay Dixon
Non-Executive Directors
Simon Miller (Senior Independent Director)
Anne Marie Cannon
Ian Steele
David Bergg
Aki Mandhar (appointed 1 February 2021)
STV Annual Report and Accounts 2021 61
Board of Directors
12.5% Chairman
25.0% Executive Directors
62.5% Non-Executive Directors
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-Executive Directors’ mix of skills and wide-ranging business experience is a major contributing factor towards 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 from across a variety of
sectors means they can constructively challenge management in relation 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 plan 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 the
Non-Executive Directors.
Board responsibilities
The roles of Chairman and Chief Executive are separate with a clear division of responsibility that is set out in writing and approved
by the Board. The Board delegates responsibility for the day to day running of the business through the Chief Executive to executive
management, while the Board provides the constructive challenge to management that is necessary to create accountability and
drive performance. This results in an environment that creates and preserves value for shareholders.
The Chairman is responsible for the leadership of the Board, setting the highest standards of governance, ensuring its effectiveness
(including the timely dissemination to Directors of clear and accurate information), as well as setting the agenda. He 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 that 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, capital allocation (covering dividends, significant capital projects, and acquisitions and disposals) and key
accounting policies. 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 implemented effectively 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 delegates decision making and responsibilities accordingly.
Compliance with policies and achievement against objectives is monitored by the Board through monthly performance reporting and
budget updates, as well as updates on strategic progress across all business areas.
S.172 of the Companies Act 2006 states that it is the duty of all Directors to promote the success of the Company for the benefit
of its members as a whole, and pages 34 and 35 of the Strategic Report set out how the Directors have engaged with colleagues,
customers, suppliers and other stakeholders and how they have had regard to their duties in doing so.
The Senior Independent Director is available to shareholders should they request a meeting or have concerns that 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-Executive Directors’ discussion on the
Chairman’s performance in the annual performance review. The Senior Independent Director is also STV’s Employee Director and in
this capacity, he attends meetings of the employee forum, which meets quarterly and comprises representatives from every team and
location, and makes site visits to the Company’s offices to meet and talk to a wider group of colleagues. Simon Miller also meets on a
bi-monthly basis with the HR & Communications Director to discuss employee engagement activities and plans, including the
employee opinion survey.
The Board is accountable to shareholders for the efficient and effective management of the Company’s operations and for the
adherence to corporate governance standards in accordance with the strategy. Furthermore, the Board is held to account in regard to
the maximisation of shareholder value over the long term, within a framework of sound business ethics and while taking into account
all stakeholder groups.
Each Director is able to devote the time necessary to discharge their respective responsibilities effectively.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 62 STV Annual Report and Accounts 2021
Corporate governance report
Board
Audit & Risk
Committee
Remuneration
Committee
Nomination
Committee
Number of meetings held in 2021:
Attendance:
Paul Reynolds1 (appointed 1 February 2021)
Simon Pitts
Lindsay Dixon
Simon Miller
Anne Marie Cannon
Ian Steele
David Bergg
Aki Mandhar1 (appointed 1 February 2021)
Baroness Margaret Ford OBE (retired 29 April 2021)
* Attended at the invitation of the respective Chairman.
1 Has attended all meetings since appointment.
8
7
8
8
8
8
8
8
7
3
3
2*
3*
3*
3
3
3
3
2
1*
4
2*
3*
–
–
4
4
4
–
–
2
2
–
–
2
–
2
–
–
1
The Board meets regularly, usually at least eight times a year, with additional meetings taking place as and when required. With the
continuing restrictions on travel and gatherings throughout the majority of the year, the Board decided that meetings should continue
to be held by audio-video conference and accordingly all meetings, bar the October meeting which took place in London, were held
virtually. The October meeting held in person was in line with the Government guidelines at the time and provided a key opportunity
for the Directors appointed during the year to meet their Board colleagues for the first time.
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.
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.
This document was reviewed, updated and approved by the Board in June 2021, with the changes made to take into account current
practice, whilst maintaining compliance with the UK Corporate Governance Code 2018. The updates made to the Policy focused on
providing more detail in various sections including Strategy & Management, Internal Control & Risk Management and Corporate
Governance & Policies.
The principal matters set down in the Policy are 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 and the 3 Year Plan;
• 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 policy and strategy, including the risk appetite statement and internal control policies; and
• Corporate governance arrangements including the approval of the Company’s Sustainability Policy and its Diversity & Inclusion Policy.
Rather than having a stand-alone Board Strategy Day during 2021, it was agreed that each of the Divisional Managing Directors would
present to Directors on the overall strategy for their area of the business, their proposed three year plan and the risks and opportunities
facing their division. This would allow the Non Executives, particularly those new to the Board, to build on their knowledge of STV’s
business while providing them with the chance to ask any questions of the divisional heads. The Group Commercial Director joined
both the Broadcast and Digital sessions given the importance of advertising revenues in those areas.
The November and December Board meetings were extended in length to accommodate these strategy discussions in addition
to the regular agenda; the Broadcast discussion was held in November with the Digital and Studios discussions in December.
Board focus during 2021
The Board executed its responsibilities across the full suite of core activities with the main focus set out below:
Operational and financial performance, including monitoring
• operational and financial updates for each business area at each Board meeting, including major project summaries and Legal
and Compliance reporting
• monthly finance reports, including details of performance against budget/latest forecast, review of cash flow and assessment
of balance sheet and net debt
• approval of the Annual Report & Accounts, including assessment of the going concern basis of preparation and approval of the
Viability Statement
• approval of budget and three year plan
• approval and declaration of interim and full year dividends
• monitoring of share trading and liquidity
STV Annual Report and Accounts 2021 63
Strategy
• discussion on growth plans for each business, including strategy presentations from each of the Divisional Managing Directors
• discussion on the continuing Covid-19 measures in place across the business and related risk management activities
• consideration of investment opportunities and approval of divestment of the external lottery management company
• approval of the Company’s strategy
• discussion on various regulatory issues
• approval of the Group’s Sustainability Strategy, STV Zero, and related long-term targets, supported by regular reporting on progress
• regular reporting and discussion on diversity and inclusion, including assessment of progress towards targets
Governance and risk
• approval of the 2022 AGM Resolutions
• approval of revised suite of governance documents, including terms of reference for all three Board Committees, Schedule of Matters
Reserved for the Board, and specific policies relating to the external auditors
• approval of revised MAR compliant STV Share Dealing Code, and updated Modern Slavery Statement
• discussion on the Board’s annual performance evaluation
• discussion on viewing and competitive trends
• discussion on defined benefit pensions, led by the Company’s pension advisors, focused on triennial valuation, journey plan and
future priorities and regulatory changes as relevant to the Company
• approval of the Group’s risk appetite and discussion on risk management processes
Investor relations
• review of institutional feedback following meetings between the Company’s broker and shareholders after both the full and
half year results
• regular reporting from brokers on markets, trading and activity in STV shares
• 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 2021
• involvement in COP26
Board committees
The Board is supported by the Audit & Risk, Remuneration and Nomination 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 & Risk 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
• considers the Group’s risk appetite
Remuneration Committee
• determines and agrees with the
Board the framework for the
Remuneration Policy
Nomination Committee
• reviews the structure, size and
composition of the Board
• reviews succession plans and makes
• reviews the ongoing appropriateness
recommendations to the Board
and relevance of the Remuneration Policy
• identifies and nominates candidates
• approves the design of, targets for,
and payments from any performance
related pay schemes
for approval of the Board taking
diversity into account
• recommends to the Board membership
• reviews the design of all share
of the Board Committees
incentive plans
• determines the remuneration packages
for Executive Directors
• reviews and notes annually the
remuneration trends across the Company
• reviews workforce remuneration and
related policies, including alignment
with the Company’s culture
Page 65
Audit & Risk Committee Report
Page 64
Remuneration Committee Report
Page 64
Nomination Committee Report
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info
64 STV Annual Report and Accounts 2021
Corporate governance report
Each Committee has formal, approved Terms of Reference, which are available from the Company’s website, www.stvplc.tv. As part of
the Board’s ongoing commitment to governance, the Terms of Reference for all Board Committees were reviewed and updated during
the year, to reflect best practice and include additional detail in certain areas. In respect of the Remuneration Committee, the Terms
of Reference were also updated to reflect the Remuneration Policy, as approved at the 2021 Annual General Meeting.
Report from the Remuneration Committee
The members of the Committee during the year were:
Anne Marie Cannon (Chair)
Ian Steele
David Bergg
Simon Miller (appointed 4 March 2021)
The activities of the Remuneration Committee are described within the Directors’ Remuneration Report which can be found on pages
79 to 87. The written terms of reference of the Remuneration Committee set out various considerations that must be made when
determining the Company’s Remuneration Policy and further details can be found in that section of the Annual Report.
Report from the Nomination Committee
The members of the Committee during the year were:
Baroness Margaret Ford OBE (Chairman, retired 29 April 2021)
Paul Reynolds (Chairman, appointed 29 April 2021)
Simon Miller
Ian Steele
The committee met twice during the year. At its meeting in March 2021, members agreed that Mr Miller become a member of both the
Audit & Risk and the Remuneration Committees, and Ms Mandhar would join the Audit & Risk Committee. It was also agreed that the
Chairman attend Audit & Risk and Remuneration Committee meetings.
At the February 2022 meeting it was noted that no issues had been raised through the 2021 performance evaluation and the Committee
agreed that all Non-Executive Directors were spending sufficient time to fulfil their duties and should therefore be put forward for
re-election at the 2022 AGM.
Diversity is essential and STV is committed to building an inclusive culture that ensures equality of opportunity for all. Activities in
this area are focused on our Open Access Charter which captures the commitments that have been identified to improve diversity
and inclusion for employees, and also extends to our audiences and partners. While the Committee reviewed diversity during 2021,
the topic is now formally scheduled triannually as a standing Board agenda item. STV has also confirmed a renewed commitment to
using its privileged position as an employer, public service broadcaster and producer to address the longstanding and systemic issue
of racism and improve the representation of Black, Asian and Minority Ethnic people both on and off screen. The Board has met the
target of the 2016 Parker Report.
One of the Committee’s most important responsibilities is to ensure that succession is being appropriately considered and any
challenges or risks addressed. Accordingly, STV’s HR & Communications Director attended the December meeting to discuss talent
management and succession planning for the Board, the Management Board and their direct reports.
She advised that the succession review had been undertaken (i) to assess organisational resilience and succession strength to senior
roles and other key operational roles across the business; (ii) where successors were identified, to assess their development needs;
and (iii) to review progress towards achievement of targets to improve representation, specifically to achieve gender balance across
senior roles.
The plan was discussed and it was agreed that the paper dealt with succession in the majority of the business well with appropriate
plans in place and further consideration would be given to succession at senior management level. A bespoke development programme
was being put in place for several individuals which would be reviewed by the Committee in due course and tailored remuneration
arrangements around bonus payments were also operating for these people.
Board
Management Board
Staff
37.5% Female
62.5% Male
33.3% Female
66.7% Male
51.5% Female
48.5% Male
STV Annual Report and Accounts 2021 65
Report from the Audit & Risk Committee
The members of the Committee, all of whom were independent, during the year were:
Ian Steele (Chair)
Anne Marie Cannon
David Bergg
Simon Miller (appointed 4 March 2021)
Aki Mandhar (appointed 4 March 2021)
The Audit & Risk Committee is chaired by Ian Steele who has recent and relevant financial experience. The Committee members have,
through their other business activities, significant experience in financial and risk management matters. They have been selected with
the aim of providing the wide range of financial and commercial expertise necessary to fulfil the Committee’s responsibilities.
At the invitation of the Committee, meetings are attended by the Chairman, Chief Executive, Chief Financial Officer and senior members
of the Group Finance function, as required. Representatives from both the external and internal auditors also participate in each meeting
and the Committee meets separately with each of senior management and the external and internal auditors at least once during the
year. These separate meetings with the internal and external auditors provide the Committee with the opportunity for any issues to be
raised by, or with, the auditors.
The Committee met three times during 2021 and once since the year end with the Chair providing a full verbal report on the Committee’s
activities at each subsequent Board meeting. The Board receives a copy of the minutes of each meeting and the papers considered by
the Committee are available to any Director who is not a member, should they wish to receive them.
The Committee is authorised by the Board to investigate any activity within its terms of reference and to seek any information it requires
from any employee, with employees directed to co-operate with any request made by the Committee. No such requests were made in 2021.
The Audit & Risk Committee expanded certain areas of its written terms of reference following review during the year, to align that
document with the activities of the Committee. Specifically, in the Financial Reporting section, the responsibility of the Committee
to provide review and challenge in the following areas was drawn out:
the findings of the external auditor;
the appropriateness of adoption of the going concern basis of accounting;
(i)
(ii)
(iii) the appropriateness of the modelling/testing/assumptions underpinning the viability statement; and
(iv) compliance with reporting standards and governance.
The Internal Controls and Risk Management Systems section was also extended and now clarifies that the duties the Committee
carries out in relation to internal control and risk management systems are done so on behalf of the Board, which retains overall
responsibility for this area. This section now also specifically obliges the Committee to report to the Board that it has assessed the
systems/processes through which the Group’s principal risks/related mitigating controls are reviewed, updated, managed and/or
mitigated and requires the Committee, when monitoring the Group’s financial controls, reporting and risk management, to consider
the work undertaken by both the external and internal auditor.
The section on External Audit has been expanded to include reference to a policy concerning the employment of former employees
of the external auditor which was formally adopted in 2021.
The Committee’s effectiveness is reviewed annually as part of the Board evaluation process.
The work of the Audit & Risk Committee focuses on the four areas of (i) financial reporting; (ii) internal control and risk management;
(iii) internal audit; and (iv) external audit.
(i) Financial reporting
The Committee’s principal responsibility in this area is to review and challenge the judgements and estimates taken by management in
applying the critical accounting policies that underpin the interim and annual financial statements. Based on the work of the Committee,
a recommendation is also made to the Board in relation to application of the going concern principle, and approval of the financial
statements taken as a whole. The Committee has a particular focus on:
• critical accounting policies and practices (including any changes during the period);
• decisions requiring significant judgements, areas of significant estimate, or where there has been discussion with the external auditor;
• the existence of any errors, adjusted or unadjusted, arising from the audit;
• the clarity and compliance of disclosures with accounting standards and relevant reporting requirements;
• assessment of the going concern basis of preparation and review of the process and financial modelling underpinning the Viability
Statement; and
• the processes surrounding compilation of the Annual Report and Accounts, from the perspective of presenting a fair, balanced
and understandable assessment of the Group’s position and prospects.
Formal reports were received from the Chief Financial Officer and the external auditor during the year, summarising the main
discussion points relevant to the interim report (in September 2021) and the Annual Report (in March 2022). In the prior year, the
significant risks from a financial reporting perspective identified by the Committee were recoverability of the debtor due from the
Scottish Children’s Lottery (by STV ELM Ltd), and the valuation of the Group’s defined benefit pension schemes. These items continued
to be the significant risks given focus by the Committee in 2021. Following the agreement in principle and then the subsequent sale of
STV ELM over the period from February to August 2021, the focus of the Committee has been on the accounting for, and disclosure of,
the disposal of that business. This report of the Committee will be the last one in which the disposal of the STV ELM is considered, with
the risk of recoverability of the debtor now dealt with as part of the disposal. Based on enquiries of management and the external
auditors, the Committee is comfortable with the accounting for the disposal of the STV ELM, and with the narrative disclosure
included in the financial statements.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 66 STV Annual Report and Accounts 2021
Corporate governance report
The valuation of pension liabilities can be materially affected by the assumptions used and the Committee challenged management
on the key assumptions underpinning the valuation, specifically the discount rate, the RPI and CPI inflation rates, and the mortality
assumptions. The triennial valuation as at 31 December 2020 was completed during the year and so focus was given to alignment of
the accounting assumptions with those agreed with the trustees as part of that funding valuation process. In prior years, the mortality
assumption underpinning the IAS19 valuation used, in part, a medically underwritten study undertaken previously. In the current year,
the mortality assumption underpinning the IAS19 valuation has been aligned to the current mortality base tables used by the scheme
actuary, with the impact of increasing the accounting deficit on the schemes. The Committee questioned and challenged both
management and the external auditors on this point, and the basis of the other assumptions used in the valuation, and was satisfied
with their basis and the wider pension disclosures.
Although not considered significant risks, the Committee also received reporting from management on the accounting for deferred
production stock, impairment of investments and taxation. The Committee reviews the work in these areas given the judgement
involved by management in the underlying assumptions. Having reviewed them, the Committee was content with management’s
treatment across all areas.
(ii) Internal control and risk management
Overall responsibility for the Group’s risk management and internal control frameworks rests with the Board. The Committee’s role
regarding risk management has been delegated by the Board and is to review the effectiveness of the Group’s risk and internal control
frameworks. This work is supported by reporting from Internal Audit on the results of the programme of internal audits completed, the
overall assessment of the internal control environment and any reporting, either verbal or written, from senior management covering
any investigations into known or suspected fraudulent activities.
The Committee tendered the Internal Audit service provision during the year with KPMG appointed in August 2021. During the period where
no internal auditor was in post (the incumbent, Deloitte LLP, having stepped down at the end of 2020 to enable their participation in the
upcoming external audit tender), the Committee received formal reporting, as well as verbal updates, from the Chief Financial Officer on
key aspects of the risk control framework. These included updates made to the risk register, the tender of insurance broker services, a full
update on GDPR compliance activities and cyber training, the revised Gift & Hospitality Policy and progress of the external audit tender.
The Audit & Risk Committee also receives reporting on the process through which the Group financial statements are prepared, to
ensure completeness, balance of content, and compliance with various reporting regulations. The purpose of these processes 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 and are free
from material misstatement.
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 are investigated and reported to the Audit & Risk Committee. No matters were raised during 2021.
(iii) Internal audit
The primary focus of the internal audit programme is to provide assurance over key revenue streams and operating costs, as well
as over the mitigating controls implemented to manage the Group’s principal risks. The internal auditor’s work is designed to provide
insights into the internal control environment and assess the operating efficiency of key processes and controls, as well as providing
broader feedback on the effectiveness of the enterprise risk management systems in place across the Group.
As indicated in last year’s annual report, and noted above, a tender for internal audit services was undertaken in Q2 2021, as part of a
programme of good governance. The focus of the tender was to identify a firm with the capabilities to provide a quality internal audit
service and be able to advise and work with the Company and the Committee on readiness activities for corporate governance reform.
The identification of participants to the internal audit tender process was carefully managed to ensure sufficient quality and choice
of candidate across both this process and the pre-qualification process for the external audit tender that took place across November
and December 2021. The Invitation To Tender was issued to four firms with KPMG being appointed in August.
At the November Committee meeting KPMG presented their internal audit plan for Q4 2021 and the financial year 2022, which included
a risk map they had developed to ensure key risk areas were targeted. Furthermore, the plan included a maturity assessment of the
Group’s Enterprise Risk Management activities, as well as an initial assessment of key financial processes and related internal controls
(incorporating general IT computer controls). The plan had been devised through understanding STV’s strategy and objectives, its risk
profile, and has considered input from management and the Committee as well as specific requests extending to readiness activities
for adoption of the many recommendations anticipated from the BEIS white paper on corporate governance reform. The plan was
discussed at length by the Committee and thereafter approved.
KPMG’s first internal audit looked at all risk management processes across STV and using their Global Risk Maturity framework,
assessed how effective and embedded our approach to risk management was across seven key pillars: Risk Governance, Risk Strategy
& Appetite, Risk Culture, Risk Assessment and Measurement, Risk Management and Monitoring, Risk Reporting and Insights, and Use
of Data and Technology.
KPMG found that risk management was regularly discussed throughout STV, and mitigating controls implemented and monitored
across the organisation, with the key components of ERM in place and operating effectively. The report provided a small number of
recommendations that would support business growth and reduce reliance on the Management Board, which the management team
were supportive of and had committed to implementing.
STV Annual Report and Accounts 2021 67
Their second audit was an Internal Financial Controls risk and readiness assessment to identify potential in-scope processes as they
relate to current proposals for the intended reform of internal controls, namely the adoption of a UK-equivalent of Sarbanes-Oxley.
The Committee received reporting in March 2022 on the scoping and risk assessment aspects of the internal audit, which had been
completed, and noted the next stage of the process was to undertake detailed walkthroughs and testing to identify potential gaps,
or areas where there are opportunities to enhance existing controls.
Other internal audits KPMG propose to carry out during 2022 are in relation to cyber maturity, ESG/sustainability and general IT controls.
The work on cyber will be supported by an exercise currently being conducted by the Group’s new insurance broker, Marsh, which is
looking to map the causes and impact of the most significant potential losses due to cyber incident against the Group’s insurance
programme, in order to identify the responsiveness of the insurance policies currently in place.
A full report on each internal audit undertaken is shared with the Committee and discussed in detail. Focus tends to be given to
high priority findings, recurring items and management responses to address these areas, although the full reports of findings and
recommendations are shared. These reports and discussions are designed to give the Committee a detailed insight into the work of
Internal Audit, the outcomes, and therefore the strength and operating effectiveness of the Group’s risk management activities and
internal controls. In turn, this work provides a critical component of the broader assurance sought by the Committee when reporting to
the Board its determination of the assessment of the effectiveness of the Group’s risk and control frameworks. These reports also allow
the Committee to review and assess the effectiveness of the Internal Audit function.
Based on the work of the Committee and reports received from management and Internal Audit, it recommended to the Board that
the Group’s risk management and internal financial controls were operating effectively.
(iv) External audit
The Audit & Risk Committee and the Board place great emphasis on the quality and objectivity of the Company’s auditor PwC LLP in
their reporting. PwC was appointed auditor on 20 June 2013 with mandatory rotation of audit firm required from 1 January 2023. The
audit partner who has been on the engagement for the past five years will cease as partner, concurrent with the change in audit firm as
required. To that end, and to enable an orderly transition, a tender process was initiated in Q4 2021 with completion of a pre-qualification
process. This pre-qualification process was designed by the Committee to identify a short-list of candidates following a series of
discussions and meetings covering the following criteria: (i) independence of the audit firm; (ii) credentials of the firm, proposed audit
partner and senior manager, with specific focus on public listed companies and sector experience; and (iii) indicative fee range. The
Committee Chair, Chief Financial Officer and Group Statutory Reporting & Tax Compliance Manager held meetings with each firm and
unanimously agreed to take three forward to the main tender process, expected to take place over Q2 2022.
The audit partner and senior manager attend all Audit & Risk 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
independence and objectivity is not compromised.
Auditor effectiveness
The Audit & Risk Committee is responsible for assessing the effectiveness of the external audit process, and feedback is sought from
its members, the Chief Financial Officer as well as STV’s finance team and the wider management team to the extent they have been
involved in the process. This feedback 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 & Risk Committee
and relayed to the auditors and to management. Following completion of this assessment for the 2021 year end, the Audit & Risk
Committee concluded that the external audit process operated effectively and efficiently.
Independence policy and non-audit services
The Audit & Risk Committee is responsible for approving, in advance, any non-audit work undertaken by the external auditor, in line with
the formal policy in place. Under that policy the Chief Financial Officer must obtain the approval of either the Chairman of the Audit &
Risk Committee or another Committee member if the preference is to use the auditor and must provide an explanation as to why the
auditor is the most suitable supplier of services. A case by case decision is therefore necessary and the auditor cannot be engaged for
non-audit work without reference to the Audit & Risk Committee. The Audit & Risk Committee keeps this 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 2021 a policy dealing with the recruitment of staff from the external auditor was approved by the Board, representing a further
strengthening of independence.
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.
The auditor is required each year to confirm in writing to the Committee that it has complied with the independence rules of its
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 a 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 or infringe audit rules. This includes consideration of the safeguards that are in place to
mitigate the risks to independence.
During the year under review, the non-audit work carried out by PwC consisted of the interim review and covenant reporting for the
purpose of compliance with the Group’s bank facility agreement. The fees for these were 14% of the audit fee, and the Audit & Risk
Committee agreed that PwC was the most suitable supplier.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 68 STV Annual Report and Accounts 2021
Corporate governance report
Committee activities
The principal activities undertaken by the Board Committees during 2021 included:
Month
Committee
Activity
February
Audit & Risk
• Review of Year End Results
• Review of Independence of Auditors
• Review of External Audit report on Year End Results
• Review of internal controls/risk management
• Review of Prelim Announcement
• Committee Performance Evaluation
• Review of Annual Report
• Review of Internal Audit reports
February
Remuneration
• Remuneration Policy update
• Committee Performance Evaluation
• Approval of Remuneration Report
• Consideration of vesting targets for LTIP
March
Nomination
• Committee Performance Evaluation
• Approval for all employee share award
• Agreed all Non-Executive Directors be put
forward for re-election at the AGM
March
March
Remuneration
• Approval of Remuneration Report and Policy
Remuneration
• 2021 Incentive Target setting
August
Audit & Risk
• Review of Half Year Results
• Risk management update
• Review of External Audit report on Half Year Results
• Review tender process for Internal Audit
December
Nomination
• Succession and talent management
November
Audit & Risk
• Revised Gift & Hospitality Policy approved
• Approval of Internal Audit Plan for Q4 2021
• Review of external audit plan for 2021
and FY 2022
December
Remuneration
• Remuneration update
Performance evaluation
The effective functioning of the Board is key to the success of the Company and STV recognises that performance evaluation is valuable
in contributing to the effectiveness of the Board, both as a collective unit and for each individual Board member. The evaluation has
been designed to encourage Directors to optimise their contribution to the success of STV and add value beyond their statutory
requirements by building on existing strengths, agreeing on the challenges ahead and preparing for the future. It 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. The 2021 evaluation was an internal exercise led by the Chairman; in accordance with the Code,
an externally facilitated evaluation will be carried out every three years with the next one proposed for 2022.
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. Separate questionnaires are
prepared for each of the three Board Committees with responses sought from committee members. The 2021 evaluation
questionnaire was expanded to include questions on diversity and inclusion and sustainability.
All Directors completed the questionnaire and returned it to the Company Secretary who collated and anonymised the results before
providing a detailed report to the Chairman. The report covered comments and suggestions made, together with the rating allocated
to each question by Directors. The Senior Independent Director engaged with each Director individually to evaluate the Chairman’s
performance. The Chairman reported the results of the evaluations at the Board meeting held on 3 March 2022.
There were many positive comments that resulted from this exercise: Directors agreed the Board had responded well to all issues which
had arisen during the year and noted there was good discussion at meetings with debate encouraged and a clarity and rigour around
decision-making. There were several presentations made to the Board during the year from various members of the Management team
and the Non-Executive Directors in particular, appreciated being able to question senior management on aspects of their area of the
business, providing them with a more detailed understanding of the Group. The Executives were praised for their efforts in keeping the
Board informed of significant developments in operational and project developments between meetings.
The performance of the Board, its Committees, the Chairman and each of the Directors continued to be effective and all Directors
demonstrated commitment to their roles. All Non-Executive Directors were considered to be independent with there being no factors
likely to impair this, and all exercised judgement and voiced their respective opinions.
Measured against the principal duties expected of it and building upon the progress of previous years, the Board continues to operate
effectively and to meet in full its obligations to support management, monitor performance in the widest sense and maintain its strategic
oversight. Accordingly, the process concluded that the Board provides the effective leadership and control required for a listed Company.
In terms of specific points made, while it was agreed there was a good mix of skills, experience and knowledge on the Board already,
which had been further strengthened with the addition of both Aki Mandhar and Paul Reynolds, it was suggested that ESG and further
strengthening STV’s media experience could prove useful. This would be considered in light of the retirals of Anne Marie Cannon and
Ian Steele over the next year or so and a process for appointing their replacements would be put in place.
STV Annual Report and Accounts 2021 69
There were many presentations made to the Board last year, both from STV colleagues and external advisors, which constituted ongoing
training, however Directors were asked to consider whether there was any additional training they felt they would benefit from. Finally,
Directors felt that STV had made good progress with its diversity and inclusion plans and that tracking progress in this area would be useful.
Training and development
All Directors are given a comprehensive introduction to the Company’s business and their development and training is an ongoing
process. Throughout their period in office the Directors are regularly updated at Board meetings on the Company’s business, the
competitive environment 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 and from
Company advisors to ensure that Directors’ knowledge, skills and familiarity with the Company’s businesses are maintained. Directors
are also provided with, and encouraged to take up, opportunities to meet major shareholders. These activities are supplemented with
separate conversations between individual Non-Executive Directors and members of the management team to pick up on specific
points as they arise.
Paul Reynolds and Aki Mandhar joined the STV Board in February 2021 and both undertook a general induction programme to make
introductions across the Company and with external stakeholders as appropriate. As this was her first Non-Executive Directorship,
Ms Mandhar completed a training course facilitated by the Institute of Directors.
Board training and development is considered as part of the annual performance evaluation exercise and no issues were raised during
the 2021 process.
Re-election
All Directors are subject to election by shareholders at the first Annual General Meeting following their appointment and annual
re-election at each subsequent AGM. Copies of the Non-Executive Directors’ terms and conditions of appointment are available for
inspection at the Company’s registered office.
The Nomination Committee confirmed to the Board that the contributions made by the Directors offering themselves for re-election
at the AGM in April 2022 continue to be effective and that the Company should support their re-election.
The biographies and experience of all Board members can be found on pages 58 and 59, enabling shareholders to make an informed
decision regarding Directors’ re-elections. Following the formal evaluation, the Chairman confirms that each Director continues to
contribute effectively and is important to the Company’s long-term sustainable success.
Tenure of Non-Executive Directors and Chairman
33.3% More than 6 years
16.7% 4-6 years
16.7% 2-4 years
33.3% 1-2 years
0%
Less than 1 year
Relations with shareholders
STV believes that open and regular dialogue with investors is the basis of 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 convenient for them.
The Board recognises the importance of having continual engagement with its shareholders and fully supports the principles of the Code
that 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
96.0% Institutionals
0.3%
3.7% Other individuals (excl. Directors)
Board of Directors
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 70 STV Annual Report and Accounts 2021
Corporate governance report
Institutional shareholders
STV undertakes a comprehensive programme of meetings and events for institutional investors, research analysts and the financial
press throughout the year and the Board is kept fully informed of feedback given to the Chief Executive and Chief Financial Officer over
the course of those meetings. The Board regularly receives updates on movements in 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. While various meetings have taken place
with shareholders during the year, these were conducted online due to Covid-19 restrictions being in place, but it is hoped that face to
face meetings can re-commence soon, once it is appropriate and safe to do so. Discussions at these meetings are conveyed to all
Directors in order that each can develop an understanding of major shareholders’ views on the Company.
Other matters
The powers of the Directors (including in relation to the issue or buy back of shares) are exercisable in accordance with the Companies
Act 2006 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.
STV Annual Report and Accounts 2021 71
Modern slavery and human trafficking statement
Introduction
STV is fully committed to business integrity, holds strong ethical values and displays a high degree of professionalism in all its activities
and considers it crucial to conduct itself honestly, transparently and responsibly while complying with all relevant legislation, including
the Modern Slavery Act 2015. It is accountable to its stakeholders not only for ensuring that governance processes are in place, but that
these are operating effectively.
STV recognises that it has a responsibility to take a robust approach to slavery and human trafficking and is committed to
implementing and enforcing effective systems and controls to ensure that any form of slavery is not taking place in its business or
supply chains. STV is committed to creating and ensuring a non-discriminatory and respectful working environment for all its staff and
to improving its practices to combat slavery and human trafficking as these are recognised to be real yet hidden issues in society. STV
will not enter into business with any organisation which knowingly supports or is found to be involved in slavery or compulsory labour.
STV employs around 500 people in the UK across offices in Glasgow, Edinburgh, Aberdeen, Dundee, Inverness and London and as well
as these employees, at any given time there will be freelancers and short term contractors engaged to support production activity
principally undertaken by STV Studios but also by other areas of the business.
There is one central purchase ledger for the Group’s suppliers which is operated and maintained by a dedicated purchase ledger and
treasury team. New suppliers are approved by the respective business area with the aim of engaging only with reputable companies.
Of our total suppliers, 97% (by number) are based in either the UK or the USA, two of the lower risk jurisdictions and none of our
suppliers are operating in countries identified as being of the highest risk by the Global Slavery 2018 index.
STV’s biggest supplier is ITV plc, which accounts for c.40% of the Group’s cost base, with staff costs (of a UK-based workforce)
constituting a further 22%. The Group operates stringent equal opportunities policies for all employees and considers itself to be
transparent and fair in all dealings with colleagues. STV reviews ITV’s annual Modern Slavery statement to seek assurance that the
appropriate safeguards and policies are in place, and there is regular dialogue between members of the senior management teams at
both organisations, through the ITV/STV Council and other forums, at which specific issues in this area would be expected to be raised.
STV’s supply chains include the following:
Broadcast: Ad-serving technology; IT support; transmission; and technology operations.
Within Broadcast, many of the suppliers are large companies, such as Vidispine and BT, which publish Modern Slavery statements
and STV regularly reviews the annual Modern Slavery statement for the division’s biggest supplier, ITV.
Digital: technology development; third party content providers; and ad-serving technology.
The vast majority of companies that Digital works with are international brands including Amazon, FreeWheel and YoSpace, all of
which publish Modern Slavery statements, as do third party content providers Sony and EntertainmentOne. There are a few smaller
distribution houses that Digital has contact with, and our intention is to introduce the topic of modern slavery into negotiations with
future partners to seek assurances that they have appropriate policies and practices in place to ensure a robust approach in this area.
Studios: clothing, equipment, props, set construction materials, vehicles, cleaning, security, construction etc.
There are many suppliers which Studios engages with and several are smaller companies. As these may be considered higher risk
for modern slavery and labour exploitation, STV is looking to improve its understanding of the extent of the risks in this area.
Relevant policies
The following policies are designed to ensure there are no instances of slavery or human trafficking across the Company’s operations
and sets out the steps to be taken to prevent these occurring. These policies are available to all staff on STV’s intranet. Where STV
has either direct control of, or a majority stake in, a production company, they are required to adopt STV’s policies and procedures.
• Whistleblowing policy: all employees are encouraged to report any concerns they may have about the conduct of others in the
business or the way in which the business is run. This includes any circumstances that may give rise to an enhanced risk of slavery
or human trafficking. The Company’s whistleblowing policy is designed to make it easy for employees to raise their concerns without
fear of victimisation or detriment.
• Business Ethics policy: this policy sets out STV’s charter for ethical conduct, promoting a culture of ethical behaviour throughout
the organisation and protecting the integrity of the business.
• Equality, Diversity and Inclusion policy: the purpose of this policy is to provide the framework which enables fair treatment in the
workplace for all employees.
• Respect & Dignity at Work policy: this policy applies to all employees, fixed term employees, temporary contractors, contractors
and freelancers within STV and covers bullying and harassment in the workplace and in any other work-related setting outside the
workplace, e.g. business trips and work-related social events.
• Disciplinary policy/code of conduct: this code makes clear to employees the actions and behaviour expected of them when
representing the organisation. The Company strives to maintain the highest standards of employee conduct and ethical behaviour
when operating and managing its supply chain.
• Producers’ Handbook: as an affiliate of ITV1, STV has adopted ITV’s policy and this detailed and comprehensive handbook sets
out editorial and compliance standards, taking into account Ofcom’s Broadcasting Code.
Supplier on-boarding policies are currently being reviewed as work continues to ensure that STV’s supply chain is sustainable by
2030 and this review will also consider modern slavery. Training will be rolled out across the business in 2022.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 72 STV Annual Report and Accounts 2021
Modern slavery and human trafficking statement
Due diligence processes
Effective systems and controls are implemented and enforced to ensure to every extent possible, that human trafficking and slavery do
not take place within the business or across any of its supply chains. Due to the nature of its business, STV is not exposed to significant
risk and has assessed itself to have a low risk of modern slavery in its operations and supply chains. However, STV is not complacent
and will continue to reflect on and enhance its controls and to monitor and review its supply chains.
STV would not enter into business with any organisation, in the UK or abroad, which knowingly supports or is found to be involved in
slavery, servitude, or forced or compulsory behaviour. Through undertaking due diligence in its activities, STV seeks to ensure that it
does not inadvertently support modern slavery.
STV’s recruitment and people management processes are designed to ensure that all prospective employees are legally entitled to
work in the UK and to safeguard employees from any abuse or coercion. When engaging talent, only reputable employment agencies
are used and pre-employment checks are made, including requests for ‘right to work’ documents where appropriate.
STV’s approach to eliminating slavery is interlinked with its sustainability strategy and a review is underway with initial supporting
activities including:
• the development of environmental sustainability criteria for all suppliers;
• undertaking a review of sourcing and procurement processes to ensure that sustainability and ethical criteria can be incorporated
into supply chains in the long term; and
• performing a supplier database cleanse to remove old companies and focus on those suppliers who are actively engaged with STV
at present.
Risk assessment and management
The Company regularly reviews its policies and operating processes to ensure these provide:
• protection against discrimination;
• a fair working environment; and
• fair trading conditions that do not violate human rights.
With the introduction of IR35, a full review of STV’s contracting processes was carried out with training delivered to managers who had
authority to recruit as well as the purchase ledger team, to ensure that everyone was engaged under the appropriate contract and
with the appropriate status.
There is a rigorous process to identify, monitor and manage the principal risks that have been identified through the business and its
supply chains. Each of the three business divisions has its own risk register and is responsible for risks in its area, supported by various
Group functions including Compliance and Human Resources. The Group risk register is made up from the highest rated risks in these
three registers together with the highest rated risks in both the central and cyber risk registers and all are reviewed regularly with
reporting to the Audit & Risk Committee and the Board.
Measuring our performance
Each year STV issues its gender pay report that demonstrates the progress being made towards its targets in this area and is a
demonstration of the Group’s approach to fairness of remuneration across the employee base. On an ongoing basis throughout the
year, the Group’s Head of HR and CFO meet to review and discuss new appointments with a specific line of sight to equality of salary
bandings compared to existing roles and equality of treatment across permanent and fixed term contract employees. Separately,
and at least annually, the salary bands for each role within STV are reviewed to ensure that they reflect market movements and that
people are paid fairly.
There are regular employee engagement surveys, which have been carried out more frequently since the pandemic started, and
employees are encouraged to raise any issues or concerns either with their line manager, a member of the Management Board or
Human Resources.
Training
Ongoing training is delivered to staff to ensure that responsibility to achieve compliance with the Company’s policies is understood and
fulfilled. During 2019, staff with responsibility for procurement undertook training designed to raise awareness of human trafficking and
slavery risks and during 2020 and 2021, diversity and inclusion training took place. In early 2021, STV appointed Femi Otitoju as its Diversity
and Inclusion advisor who is helping to shape, accelerate and support the delivery of STV’s wide-reaching inclusion strategy. Her role
touches on all areas of STV’s business, providing training, guidance and new insight to STV’s people, its Diversity and Inclusion Steering
Committee and network of peer groups, which are empowered to effect positive change across the business. All of the Non-Executive
Directors were offered a one to one meeting with the Diversity and Inclusion advisor, an opportunity which several took up.
As part of STV’s work to achieve a sustainable supply chain by 2030, during 2022 awareness training will be given to those colleagues
with authority to procure goods and services on behalf of STV.
STV Annual Report and Accounts 2021 73
Remuneration report
Annual Statement
I am pleased to introduce the Directors’ Remuneration Report for 2021.
During 2021, we operated under the Remuneration Policy approved by shareholders at the 2021 AGM. The Remuneration Committee
remains satisfied that the current executive remuneration framework is aligned with delivery of the Company’s ambitious growth
plan and targets and the creation of long-term shareholder value. We will continue to closely monitor developments in shareholder
guidance to ensure that our approach meets shareholders’ expectations.
Overview of 2021 performance
An excellent financial performance and highly effective execution of the growth plan has been achieved in 2021 as a result of the
Executive Directors’ relentless focus on our targets; underpinned by tight fiscal discipline in an unpredictable trading environment.
Despite the challenges and uncertainties that defined 2021, a strong recovery of the advertising revenue market saw the Group’s
financial performance propelled beyond pre-pandemic levels of revenue and profit, driven by continued audience share growth on
STV and STV Player and the success of the diversification strategy introduced in 2018. In 2021, STV recorded the highest total revenue,
advertising revenue and adjusted operating profit, and the lowest net debt for over a decade. Advertising revenue was over 11% higher
than pre-pandemic levels as audience growth continued. In the regional advertising market, the positive impact of the Company’s
investment strategy to stimulate regional advertising through the STV Growth Fund continued to drive growth with revenue 17%
ahead of 2019 levels. Overall, advertising revenues in 2021 were the Group’s highest ever at £112.6m.
Diversification of the Group’s earnings profile is the key aim of the strategic growth plan. The growth of the high margin digital business
continued as STV Player streams were up 63% year on year and VoD revenues were over 50% ahead of pre-pandemic levels achieved
in 2019.
The growth rate of STV Studios accelerated during 2021 and the business achieved a record financial performance. Sixteen new
commissions were secured, with the division delivering 12 returnable series, providing a stable base to support future growth. The
strengthening of the creative pipeline through a low-risk, targeted acquisition strategy also led to the addition of a ninth label joining
the business, progressing our strategy to invest in growing companies who share our values, ambitions and enthusiasm for original
new formats.
Overall, 36% of the Group’s earnings were generated by the Digital and Studios businesses. This is up from 34% in 2020 and only 18%
when the diversification strategy was introduced.
The divestment of the STV ELM (external lottery management company) was completed in August, in line with the agreement in
principle that had been reached earlier in the year. The sale of this non-core business has enabled increased strategic focus on the
key growth activities that will deliver the strategy and growth plan in the future.
Finally, consistent with the strong sense of purpose and responsibility that arises from the Company’s role as a public service
broadcaster, delivering a positive social impact is a primary objective and is embedded in the personal performance objectives of the
Executive Directors and cascaded to managers across the business. Following the Board’s approval at the close of 2020 of STV Zero,
the Company’s environmental sustainability strategy to become a net zero carbon business by 2030, encouraging progress has been
made across a range of targets to cut STV’s level of emissions. The Board has been presented with regular progress updates on delivery
of the Company’s ESG targets throughout 2021, including the diversity and inclusion strategy, STV Zero, and the ongoing work of the
STV Children’s Appeal. Further details of this progress are set out on pages 50 to 56.
Incentive outcomes for 2021
Following the suspension of the annual bonus plan in 2020, one of a series of measures implemented in response to the challenges
and financial uncertainties presented by the impact of Covid-19, the plan was re-instated in 2021.
The plan was based on a balanced set of financial targets (operating profit and cash generation), as well as personal objectives linked to
strategic delivery. Reflective of the excellent financial performance in the year, both financial targets within the bonus plan were exceeded.
Adjusted operating profit of £25.2m, in excess of pre-pandemic levels, represents the highest level ever delivered by the Group. Strong
operating cash conversion resulted in cash generated by operations of £34.8m, positioning the Group in a small net cash position at the
end of the year, providing financial flexibility to invest in future growth.
Both Executive Directors also performed exceptionally against their personal objectives, achieving significant progress towards
fulfilment of the strategic objectives to deliver profitable growth as set out in our growth plan. This included the launch of the next
3-year growth strategy, including a £30m investment plan and the re-instatement of a cash dividend; acceleration of the Company’s
Digital and Studios strategies; progress across all areas of the Company’s ESG priorities including the launch of the Company’s
sustainability strategy and a clear plan to become a net zero carbon business by 2030; the agreement of a new deficit funding recovery
plan for the Company’s defined benefit pension schemes; and the divestment of the external lottery management company, clearing
the way for the Executive Directors to focus exclusively on delivery of the strategy and growth plan. Full details of performance against
personal objectives are set out on pages 81 and 82.
This strong overall performance resulted in an outcome of 96.25% and 97.5% of the maximum payment of the annual bonus for the
Chief Executive and Chief Financial Officer respectively in 2021.
In line with the Remuneration Policy, 20% of bonus awards will be deferred into shares, which will vest after three years. Further detail
on the bonus targets and outcomes is set out on pages 81 to 83.
The 2019 Long Term Incentive Plan (LTIP) award vested by reference to performance over the three-year period to 31 December 2021.
This award was based on EPS growth, non-broadcast earnings and total shareholder return (TSR) performance.
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Remuneration report
Annual Statement continued
The performance period of this LTIP coincided with the implementation of the first phase of the strategic growth plan introduced
in 2018. Despite the impact of the pandemic, this growth plan has improved the underlying profitability of the business, delivering
annualised growth in EPS of 7.5% over this period to the end of 2021. This strong growth in EPS coupled with the stretching targets
set resulted in a vesting outcome of 71.9% of this element of the LTIP, weighted at 50%.
With 36% of the Group’s earnings derived from non-broadcast activities in 2021, the key strategic target to diversify the earnings base
of the business has been successfully progressed. Non-broadcast earnings in 2021 amounted to £9.2m, resulting in vesting of 47.5%
of this element of the LTIP which was weighted at 30%. The threshold target for TSR was not met. Therefore, overall, this award vested
at 50.2% of the maximum.
The Committee believes these incentive outcomes appropriately reflect the performance delivered for our shareholders over the
respective periods.
Approval of Remuneration Policy
The current Remuneration Policy was approved by shareholders at the 2021 AGM. I would like to thank shareholders for their
engagement and support in the development and approval of the Policy.
With around three quarters of votes cast in favour, shareholders approved the Directors’ Remuneration Policy by a clear majority. The
Committee noted that one shareholder with a significant holding voted against the resolution. While this shareholder was supportive of the
other remuneration-related resolutions and is broadly supportive of the Company’s overall approach to executive remuneration, they have
expressed reservations regarding one specific element of the Policy. Having further considered the matter and given the support of the
majority of shareholders, the Company does not propose to take any further action at this time. The Committee remains dedicated to
ongoing engagement with shareholders on the issue of executive remuneration and will continue to engage as appropriate going forward.
Implementation of Policy for 2022
The Committee is not proposing any material changes to the application of the Policy for 2022. Executive Directors will receive an
increase to base salary levels of 3%, in line with the increase awarded to all employees, effective from 1 January 2022. Base salary levels
for Executive Directors have not increased since January 2020 as no increases were applied in 2021 as the Company responded to the
financial challenges presented by the pandemic. In addition, a voluntary salary reduction of 25% was in force for 5 months of 2020.
The Chief Executive will receive a pension contribution of 20% of base salary, which will reduce to 7% of salary, in line with the wider
workforce, at the end of 2022. The CFO will receive a pension contribution of 7% of salary. Executive Directors will also continue to
participate in the annual bonus and LTIP on a similar basis as for 2021, in line with the Remuneration Policy.
The performance measures applying to both incentive schemes relate to continued delivery of the growth plan and are aligned with
shareholders’ interests. The annual bonus will continue to be based on a combination of operating profit, cash flow and personal
objectives, with ambitious performance targets for each. Personal objectives will relate to key success factors in progressing and
delivering growth, including advancing the Company’s ESG activities. Further details of the objectives are set out on page 79.
The performance measures for the 2022 LTIP of EPS, non-broadcast earnings and relative TSR, are also unchanged, relating as these
do to delivery of the strategy and the creation of shareholder value. The Board recognises that delivery of the long-term growth plan,
covering the period from 2022 to the end of 2024, will be challenging and delivery of the plan targets will require a sustained level of
high performance from the Executive Directors and senior team.
In this context, the Committee has set stretching targets for all metrics. The target range for annualised growth in EPS has been set at 4% to
10%, requiring double digit growth in EPS, a level above that targeted pre-pandemic, to achieve full vesting. This is a narrower range than the
2021 LTIP where the EPS range was broadened in response to the uncertainty caused by the Covid-19 pandemic on trading and the market
outlook when targets were set. Whilst market uncertainty continues to prevail, given the strength of the financial performance delivered in
2021 and the continued strategic progress that has been achieved, the proposed EPS range is deemed more appropriate for the 2022 LTIP.
The target range for non-broadcast earnings has been increased to £15m to £19.5m. At full vesting this would represent more than
double the earnings derived from these activities in 2021, reflecting the commitment to continue the successful diversification strategy.
Company-wide remuneration
The Committee has oversight of remuneration and related policies across the organisation and gives due consideration to these when
determining pay for Executive Directors.
Wellbeing and employee engagement have been given heightened priority during 2021 to ensure all colleagues are supported as they
have responded to the unprecedented disruption the pandemic has caused in their personal and professional lives. Recognising the
exceptional effort and contribution from colleagues, we granted a one-off all-employee share award in March 2021, linked to the
achievement of 2021 profit targets. The award, with a face value on grant of £1,000, vests in full in March this year. Although no across
the board salary increase was applied in 2021, unlike many companies over that period who enforced absolute salary restraint, the
Company awarded salary progression to over 15% of colleagues during the year in recognition of role progression or promotion to
support recognition, enhance engagement and aid retention.
In conclusion
The Annual Report on Remuneration, including this Annual Statement, will be subject to an advisory vote at our 2022 AGM. I look forward
to your support and would be happy to answer any questions you may have on our executive remuneration arrangements.
Anne Marie Cannon
Chair of the Remuneration Committee
9 March 2022
STV Annual Report and Accounts 2021 75
Summary of the Directors’ Remuneration Policy
The Directors’ Remuneration Policy (‘the Policy’), determined by the Company’s Remuneration Committee (‘the Committee’), was
approved by shareholders at the 2021 Annual General Meeting and is available in full on the Company’s website: www.stvplc.tv or from
the Company Secretary. When developing the Policy, the Committee confirmed the key principles it believes should underpin the
remuneration framework. These are:
• Closely align rewards with the delivery of Company strategy;
• Ensure a significant proportion of the awards are based on long-term success criteria;
• Reflect changes in best practice and governance;
• Simplify and streamline the framework for clarity and effectiveness; and
• Ensure market competitiveness.
The section below provides a summary of the key elements of our executive remuneration framework.
Base salary – the Committee sets salaries as a retainer for the Executive Directors to recognise status and responsibility
to deliver the strategy
• Set taking into consideration several factors including the scope and responsibilities of the role, the skills, experience and
performance of the individual, and other external and internal reference points.
• Normally reviewed on an annual basis.
• In general, any salary increase for Executive Directors will be in line with other employees in the Group.
Benefits – to provide competitive levels of employment benefits consistent with the role
• Executives are entitled to receive a taxable cash allowance in lieu of benefits in kind, including car and private medical insurance,
currently £25,000 p.a. for the Chief Executive and £18,000 p.a. for the Chief Financial Officer.
• Executive Directors are eligible to participate in the Company’s all employee share plans on the same terms as all employees.
Pension – to provide competitive levels of retirement benefit
• The Group operates a number of different pension arrangements. Executive Directors have the option to receive a taxable cash
allowance in lieu of pension benefits.
• The maximum pension contribution or taxable cash allowance in lieu of pension is set in line with arrangements for colleagues
across the business.
• The Chief Executive receives a pension allowance of 20% of base salary, which will be reduced at the end of 2022 to a level in line
with arrangements for colleagues across the business.
Annual bonus – aligns reward to the delivery of annual financial and strategic performance measures; deferral creates
long-term alignment with shareholders
• Maximum annual opportunity of 150% of salary for the Chief Executive and 125% of salary for the Chief Financial Officer.
• Payment is determined by reference to performance assessed over one financial year based on a range of financial and
strategic measures.
• The Committee has discretion to adjust the formulaic outcome if it considers that this is inconsistent with overall Group
performance, taking into account any factors it considers appropriate.
• A proportion of any bonus (20%) is deferred, and normally vests over three years.
• Recovery provisions apply.
Long Term Incentive Plan – aligns reward to the delivery of long-term financial performance delivered for shareholders
• Maximum award in respect of a financial year is normally 100% of salary.
• Vesting is determined by reference to performance assessed over a period of at least three years, based on performance measures
that the Committee consider to be aligned to the delivery of strategy and creation of long-term shareholder value.
• The Committee has discretion to adjust the formulaic outcome if it considers that this is inconsistent with overall Group
performance, taking into account any factors it considers appropriate.
• A post-vesting holding period of two years applies.
• Recovery provisions apply, including expanded malus and clawback provisions implemented through the 2021 policy review.
Shareholding requirement – to strengthen long term alignment with shareholders
• Executive Directors are required to hold shares equivalent to 150% of their annual salary.
• On leaving the Board, Executive Directors are required to maintain their in-employment shareholding guideline (or their actual
shareholding if lower) for a period of two years.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 76 STV Annual Report and Accounts 2021
Remuneration report
Summary of the Directors’ Remuneration Policy continued
The Committee considers that the current Policy and its implementation appropriately address the following factors,
as set out in the 2018 UK Corporate Governance Code.
Clarity
Simplicity
Risk
Predictability
Proportionality
The Committee is committed to providing open and transparent disclosures with regards
to executive remuneration arrangements. In formulating the Policy, the Committee Chair
wrote to major shareholders outlining the proposed changes and rationale for these.
At each year’s AGM, shareholders have the opportunity to ask any questions they may
have on matters relating to executive remuneration.
Our executive remuneration arrangements, which consist of fixed remuneration, an annual
bonus and LTIP, are simple in nature, aligned to UK market practice, and well-understood
by participants.
The Committee considers that the structure of incentive arrangements does not
encourage inappropriate risk-taking. Annual bonus deferral, the LTIP holding period and
in-employment and post-employment shareholding guidelines ensure that Executive
Directors are exposed to the long-term performance of the Company and are therefore
incentivised to deliver our strategic ambitions within the Company’s risk appetite.
Recovery provisions also apply for both the annual bonus and LTIP.
For each component of pay, the Policy outlines the maximum opportunity levels for
Executive Directors. Actual incentive outcomes vary dependent on the level of performance
achieved against specific measures.
Our remuneration framework does not reward poor performance. Payment of the annual
bonus and LTIP is subject to the achievement of stretching performance targets, which
are determined by the Committee annually to take account of business expectations and
strategic priorities at the time.
Alignment to culture
The metrics used to measure performance under both the annual bonus and LTIP are
closely aligned to the delivery of the Company’s strategy and growth plan and targets.
STV Annual Report and Accounts 2021 77
Remuneration at a glance
Performance highlights
Strategic
momentum with
36% of earnings
from non-broadcast
activities
Exceptional financial
performance with
record adjusted
operating profit
and the business
strongly cash
generative
Audience share
growth and record
advertising revenues
on STV and STV
Player
STV Studios delivers
strongest revenue
performance and
highest profit ever
Creation of
shareholder value
with the return to
a cash dividend
ESG priorities
supporting the
growth plan
Summary of remuneration outcome for 2021
Single total figure of remuneration
S Pitts
L Dixon
Fixed pay
Annual bonus
LTIP
£0k
£200k
£400k
£600k
£800k
£1,000k
£1,200k
£1,400k
Incentive outcomes – Annual bonus
Incentive outcomes – Long-term incentive
S Pitts
L Dixon
72%
48%
0%
EPS
Non-broadcast earnings
Relative TSR
Overall outcome –
50.2% of maximum
100% Operating profit
100% Cash flow
85%
Personal objectives
100% Operating profit
100% Cash flow
90%
Personal objectives
Overall outcome –
96.25% of maximum
Overall outcome –
97.5% of maximum
Shareholding requirements
S Pitts
L Dixon
Shareholding guideline: 150% of salary
Simon Pitts and Lindsay Dixon both have a right to receive shares in respect of the deferred portion of previous
annual bonuses and, as stated in the table on page 84, hold unvested LTIP awards. As a result, Simon Pitts will
meet the shareholding requirement in 2022 and Lindsay Dixon is on track to meet this in the near future.
Current shareholding:
138% of salary
Current shareholding:
13% of salary
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info
78 STV Annual Report and Accounts 2021
Remuneration report
Remuneration at a glance continued
Summary of how our Policy will be implemented in 2022
Pay element
Approach
Fixed pay
Base salary
Fixed pay set at competitive levels with
role-appropriate benefits arrangements.
Pension
Benefits
allowance
Implementation in 2022
Simon Pitts,
Chief Executive
£431,797
Lindsay Dixon,
Chief Financial Officer
£242,426
Increase of 3% in line with
all colleagues rate
Increase of 3% in line with
all colleagues rate
20% of salary*
£25,000
7% of salary
£18,000
Pay linked to
performance
Annual bonus
Incentive linked to shorter-term targets,
including business performance and
growth, and ESG measures. 20% of
award is deferred in shares.
Maximum opportunity –
150% of salary
Maximum opportunity –
125% of salary
Subject to operating profit, cash flow and personal targets
LTIP
Incentive linked to long-term priorities.
Maximum opportunity – 100% of salary
Subject to EPS, non-broadcast operating profit
and relative TSR targets
Shareholding requirements
To align the interests of executives with
shareholders.
150% of salary, to be maintained for two years
post-cessation of employment
* Will reduce to 7% at the end of 2022 in line with arrangements for colleagues across the business.
How we measure performance and link to strategy
Performance measure
Bonus
LTIP
Rationale and link to strategy
Operating profit
Cash flow
EPS
Measures profitability of our operating activity
Measures operational gearing
Measures earnings growth driven by continued operational excellence
Non-broadcast operating profit
Aligns to strategic objective to diversify earnings
Personal objectives
Focuses executives on the delivery of strategic goals linked to key business priorities,
including growth and ESG targets
Relative TSR
Measures the delivery of long-term sustainable value growth for shareholders
STV Annual Report and Accounts 2021 79
Annual Report on Remuneration
This section of the report sets out how the Policy will be implemented in 2022 and how it was implemented during 2021. Some sections
of this report, where indicated, have been audited.
Statement of implementation for 2022
Executive Directors
Salaries
For 2022, the Executive Directors’ salaries will be increased by 3%, in line with the increase applied to all colleagues. Salaries for 2022
are therefore as follows:
Executive Director
S Pitts
L Dixon
2022 salary
£000
2021 salary
£000
% increase
432
242
419
235
3
3
Benefits and pension
In line with the Policy, the Executive Directors are entitled to receive a taxable cash allowance in lieu of benefits-in-kind. For 2022, the value
of this taxable allowance will remain unchanged at £25,000 and £18,000 for the Chief Executive and Chief Financial Officer, respectively.
Pension contributions will operate in line with the Policy. For 2022, contribution levels will be 20% of salary and 7% of salary for the
Chief Executive and Chief Financial Officer, respectively. The pension contribution for the Chief Executive will be reduced to 7% of salary
at the end of 2022, in line with the wider workforce.
Annual bonus
The annual bonus will operate in line with the Policy. The maximum bonus opportunity is 150% of salary for the Chief Executive and
125% of salary for the Chief Financial Officer.
For 2022, the bonus will be based on stretching targets set for the performance measures in the table below.
Performance measure
Operating profit*
Cash flow**
Personal objectives
* Adjusted operating profit
** Cash generated by operations
Weighting
(% of max)
50%
25%
25%
Personal objectives for 2022 will relate to key success factors in progressing and delivering the strategy and growth plan, including:
• Progression of the diversification strategy by continuing to build the scale and reputation of STV Studios and increasing the reach
of STV Player through improved content, marketing and user experience;
• Maintaining STV’s leading position in the Scottish advertising market;
• Achieving significant progress towards securing new 10-year PSB licences on favourable terms for STV;
• Growing the Company’s positive social impact through the delivery of our ESG priorities, including delivery of our 2022 STV Zero
objectives and the acceleration of the diversity and inclusion strategy to achieve targets set for 2023.
The Committee believes that the annual bonus performance targets are commercially sensitive, and that it would be detrimental
to the interests of the Company and its shareholders to disclose them fully at this time. It is the Committee’s intention to disclose
the targets, and performance against them, in the next Annual Report on Remuneration if the Committee is satisfied that the targets
are no longer sensitive.
In line with the Policy, 20% of any bonus received will be deferred in shares for a period of three years.
Long-term Incentive Plan
In 2022, the Executive Directors will receive awards under the LTIP at the level of 100% of salary. Awards will vest after three years
and will be subject to a two-year holding period post-vesting. The performance targets for the award are as follows:
Performance measure
Calibration of targets
EPS**
Annualised growth in adjusted EPS from FY21 to FY24
Non-broadcast
operating profit
Relative TSR
Adjusted operating profit for non-broadcast activities
in FY24
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
(100% of maximum)*
50%
30%
20%
4%
£15.0m
10%
£19.5m
Median
Upper quartile
* There is no vesting for performance below threshold, and straight-line vesting between threshold and maximum.
** Consistent with the approach taken in previous years, measurement of EPS for the purposes of assessing performance against this metric will assume
a constant rate of UK corporation tax to enable a like for like measurement across the performance period.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 80 STV Annual Report and Accounts 2021
Remuneration report
Annual Report on Remuneration continued
Performance targets have been set in the context of the Group’s long-term business strategy. The Board recognises that delivery of this
long-term strategy, covering the period from 2022 to the end of 2024, will be challenging and delivery of the plan targets will require a
sustained level of high performance from the Executive Directors and senior team.
The target range for annualised growth in EPS has been set at 4% to 10%, requiring double digit growth in EPS, a level above that
targeted pre-pandemic, to achieve full vesting. This is a narrower range than the 2021 LTIP where the EPS range was broadened in
response to the uncertainty caused by the Covid-19 pandemic on trading and the market outlook when targets were set. Whilst market
uncertainty continues to prevail, given the strength of the financial performance delivered in 2021 and the continued strategic progress
that has been achieved, a narrower range is deemed appropriate for the 2022 LTIP. The target range for non-broadcast earnings has
been increased to £15m to £19.5m, reflecting the commitment to continue the successful diversification strategy.
The Committee considers these targets to be stretching, particularly considering the ongoing uncertainty of the external climate,
whilst at the same time feasible in the context of the Group’s strategy and growth plan.
Non-Executive Directors
The fees paid to the Non-Executive Directors are a matter for the Chairman and Chief Executive, and in the case of the Chairman’s fee
is decided by the Senior Independent Director and Chief Executive.
In early 2022 a review of the current fee structure was undertaken. This was done to ensure fees remain competitive and in view of
the statutory retirement provisions for Non-Executive Directors, which will require the composite of the Board to change significantly
over the next three years.
As a result, a number of fee increases were proposed with effect from January 2022. The Board believes the revised fee structure,
which is now aligned with the lower quartile of FTSE companies, will ensure the Company can continue to attract Non-Executive
Directors of the calibre required and that fees reflect the time commitment of the roles.
• The basis fee has been increased from £39,900 per annum to £44,000 per annum, an increase of 10%; and
• The additional fee paid for chairing the Audit & Risk and Remuneration Committees has increased from £5,250 per annum to £7,500
per annum.
The Chairman decided that no increase should be applied to his fee, and this will remain at the 2021 level. The fee paid to the Senior
Independent Director will also remain unchanged.
Non-Executive Director
Chairman fee
Basic Non-Executive Director fee
Additional fees: Senior Independent Director
2022 fees
2021 fees
£150,000
£150,000
£44,000
£39,900
£13,000
£13,000
Additional fees: Chair of the Audit & Risk and Remuneration Committees
£7,500
£5,250
Single total figure of remuneration
Executive Directors (audited)
The table below sets out the single total figure of remuneration for the Executive Directors for the 2021 and 2020 financial years.
Executive Director
S Pitts
L Dixon
Salary
£000
Taxable
benefits
£000
Pension
£000
419
376
235
211
25
16
18
16
84
75
12
12
Total
fixed
£000
528
467
265
239
Annual
bonus
£000
Long-term
incentives
£000
Total
variable
£000
605
–
287
–
201
–
112
–
809
–
402
–
Total
£000
1,334
467
664
239
2021
2020
2021
2020
Notes to the single figure table
Salary – In 2020, in light of the COVID-19 pandemic, the Executive Directors volunteered a 25% cut in salary, which was applicable for
a five-month period from 1 April to 31 August 2020. This is reflected in the table above.
Taxable Benefits – Includes a taxable cash allowance in lieu of benefits-in-kind, including car and private medical insurance. Prior to the
2020 Policy review, the benefit allowance had remained unchanged for ten years. Following the review, the annual benefit allowance
for the Chief Executive and Chief Financial Officer was increased to £25,000 and £18,000 respectively.
Pension – Simon Pitts receives a taxable cash allowance in lieu of pension and life assurance. For 2021, this was set at 20% of salary.
Lindsay Dixon is a member of the Company’s defined contribution scheme. The scheme has an employer contribution of 7% of salary
up to the pension cap £170,400.
Annual Bonus – This includes the value of bonus earned in respect of the relevant financial year. 20% of the annual bonus will be
deferred for three years and paid in shares.
Long-term Incentives – The 2019 LTIP award granted is due to vest in May 2022 based on performance over the three-year period to
31 December 2021. Performance targets have been met in part, resulting in a vesting outcome of 50.2% of maximum. For the purposes
of the single figure table, the award has been valued based on the average share price during the three-month period to 31 December
STV Annual Report and Accounts 2021 81
2021 of 352 pence. The 2019 LTIP awards were originally granted based on a share price on 363 pence. Therefore, of the vested amount,
none relates to share price appreciation over the performance period.
Annual bonus (audited)
The maximum annual bonus opportunity for 2021 was 150% of salary and 125% of salary for the Chief Executive and Chief Financial
Officer respectively. The bonus was based predominantly on financial performance (50% Operating Profit and 25% Cash Flow), with
the remaining 25% based on stretching personal targets linked to strategic delivery. The performance targets for the 2021 bonus were
set by the Committee at the start of the year, and by reference to the annual budget, which itself is set in the context of the Board’s
long-term strategy and growth plan. The target ranges are set to be appropriately stretching by requiring significant outperformance of
expectations for maximum pay-out, whilst at the same time being considered feasible in the context of the budget and strategic plan.
The outstanding financial performance achieved in 2021, with levels of growth and profitability exceeding pre-pandemic levels and the
business in a net cash position providing increased financial flexibility to accelerate investment in future growth, has resulted in bonus
payments at maximum levels against the financial performance metrics. Payment for achievement of personal objectives is close to
maximum levels as tangible progress against key strategic targets was delivered by both Executive Directors.
The table below sets out the targets and performance achieved against these for the year ended 31 December 2021. For the 2021
bonus, 20% will be deferred for three years and paid in shares for both executives.
Performance condition
Weighting
Threshold
(10% of max)
Target
(50% of max)
Maximum
(100%)
(% of max)
(£m)
S Pitts
L Dixon
S Pitts
L Dixon
Performance targets
Actual performance
Outcomes
Operating profit*
Cash flow**
Personal objectives
Total
50%
25%
25%
100%
* Adjusted operating profit.
** Cash generated by operations.
£18.6m
£20.2m
£20.7m
£22.7m
£25.2m
£22.5m
£24.7m
£34.8m
100%
100%
See below
85%
90%
96.25%
97.5%
£315k
£157k
£133k
£605k
£147k
£74k
£66k
£287k
A full assessment of performance against personal objectives is set out below for both Simon Pitts and Lindsay Dixon.
Simon Pitts, Chief Executive
Strategy and growth plan
• Refreshed three-year plan approved in February 2021 and new targets for delivery by end of 2023 announced
Agree and launch new
three-year strategic plan to
deliver next phase of growth
and value to shareholders
in March 2021 to positive investor reaction.
• £30m investment plan targeted at driving growth in Digital and Studios agreed and implemented.
• Delivery of shareholder value with review of dividend policy and cash dividend re-instated.
ESG
• Successful launch of STV Zero, STV’s sustainability strategy to become a net zero carbon business by 2030.
Maximise STV’s social impact
by embedding ESG priorities
into the way STV is run
• Achievement of all 2021 sustainability targets (carbon neutral by end of 2021; all programming produced by
STV and STV Studio’s registered with Project albert; 100% of electrical energy procured directly sourced from
renewable sources; launch of STV Green Fund; audience engagement with on-air campaign and commission
of mini-series) and Board approval of new interim milestone targets for delivery in 2022 and beyond.
• Diversity and inclusion strategy embedded across the business and continued progress to deliver 2023 targets.
• On-screen diversity targets for STV News at Six and Scotland Tonight achieved and off-screen, 31% of new
appointments were candidates from under-represented groups.
STV Studios
• Strongest financial performance ever delivered by STV Studios.
Build on Studios momentum
and reputation by focusing
on more ambitious, valuable
projects
• 16 new commissions secured including new returnable series commissions across drama, entertainment
and factual.
• Successful acquisition strategy advanced with a ninth label added to strengthen the creative pipeline,
and commissioning success for Primal Media and Two Cities Television.
Profitable digital growth
• Revenue: VoD advertising revenue up 38% and ad impressions up 43% year on year.
Continue to grow STV Player
and deliver successful
consumer and commercial
launch of STV Player UK-wide
• Monthly active users: Year on year increase of over 50%.
• Content strategy: Total of 31 new content deals and 1,900 hours of third-party content added during 2021,
including 900 hours of drama content. Player-only viewing up over 100% year on year, accounting for 42%
of all streams.
• Successful launch of STV Player UK-wide with key revenue target achieved.
Broadcast
• Strong recovery in the advertising market delivered highest ever advertising revenues and growth against
Maximise the value of
the Broadcast business
and make progress
towards securing renewal
of STV’s PSB licences on
favourable terms
pre-pandemic levels.
• STV’s all-time share of 19.6% is highest since 2008.
• Strong outperformance against the Network of 1.9 share points.
• Secured STV’s leading position in the Scottish advertising market with further growth delivered in regional
advertising revenues, all supported by continued investment in the STV Growth Fund.
• Positive early-stage progress to secure renewal of PSB licences.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 82 STV Annual Report and Accounts 2021
Remuneration report
Annual Report on Remuneration continued
Based on the above assessment of performance, the Committee determined for the personal element an award of 85% of maximum
for Simon Pitts.
Lindsay Dixon, Chief Financial Officer
Support delivery of
the three-year plan
• Capital allocation strategy to enable delivery of strategic investment plan agreed with Board and
communicated to the market to positive investor response.
Deliver budgeted
cost savings
Deliver the 2020 defined
benefit pension scheme
triennial valuation
Complete divestment
of the external lottery
management company
• Dividend policy agreed with Board and return to cash dividend delivered in 2021.
• Budgeted costs savings delivered across all areas of the business providing financial flexibility to mitigate
impact of Covid-19.
• Triennial valuation completed well within statutory timeframe.
• Renewed contingent cash mechanism proposed to and accepted by scheme trustees.
• Review of administration costs of both schemes and delivery of saving.
• Completion of divestment in August 2021.
• Successful management of all stakeholders throughout the sale process.
• Long-term advertising contract secured as part of transaction.
Based on the above assessment of performance, the Committee determined for the personal element an award of 90% of maximum
for Lindsay Dixon.
Consideration of formulaic outcomes
The Committee considered the formulaic outcomes of the annual bonus assessment in the context of the current external environment,
wider Company and individual performance, the shareholder experience, and the treatment of employees throughout the rest of the
Group. The following factors were taken into account:
• Ahead of expectations, STV has returned to pre-pandemic levels of growth and profitability, driven by strong viewing performance
on STV and STV Player and the success of the diversification strategy;
• The Committee considered colleagues across the business and the wider stakeholder context. This year STV did not benefit from
the Coronavirus Job Retention Scheme, with voluntary repayment of all monies received in May 2021 (in advance of returning to
payment of cash dividends);
• Management have made strong progress against the strategic growth plan, with continued profitable digital growth and the most
successful year to date for STV Studios, both of which progressed the diversification strategy with 36% of earnings generated by
non-broadcast activities.
In view of the Group’s excellent financial performance and strategic progress, the Committee concluded that the formulaic outcomes
of the annual bonus assessment were justified, and no discretion was applied.
Long-term Incentive Plan (audited)
The table below sets out the performance achieved for the 2019 LTIP award, which was subject to performance over the three-year
period from 1 January 2019 to 31 December 2021.
Performance condition
EPS
Non-broadcast operating profit
Relative TSR
Weighting
Threshold vesting
(25% of maximum)
Maximum vesting
(100% of maximum)
Actual
outcome
Percentage vesting
(% of maximum)
50%
30%
20%
100%
5%
£8.0m
Median
9%
£12.0m
7.5%
£9.2m
Upper quartile
Below median
Overall vesting
71.9%
47.5%
0%
50.2%
Simon Pitts and Lindsay Dixon hold LTIP awards which vest based on the outcome of the performance conditions above. The Remuneration
Committee considered the formulaic outcome to be appropriate, and therefore these awards will vest at 50.2% of maximum in May 2022.
Shares vesting will be subject to an additional two-year holding period.
STV Annual Report and Accounts 2021 83
Scheme interests awarded in the 2021 financial year (audited)
The table below shows awards made to the Executive Directors during 2021 under the LTIP.
Executive
Director
S Pitts
L Dixon
Award type
Date of grant
Basis of award
Number of
shares awarded*
Face value
of award
Threshold vesting
Performance period
LTIP
LTIP
24/03/21
100% of salary
127,036
£419k
25% of maximum
01/01/21-31/12/23
24/03/21
100% of salary
71,323
£235k
25% of maximum
01/01/21-31/12/23
* Calculated using the closing share price of 330 pence on the date prior to the date of award.
These awards will vest after three years, subject to the performance targets set out in the table below. An additional two-year holding
period will apply to any shares vesting.
Performance measure
Calibration of targets
EPS
Non-broadcast operating profit
Relative TSR
Annualised growth in adjusted EPS from FY20
to FY23
Operating profit for non-broadcast activities in
FY23
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
(100% of maximum)*
50%
30%
20%
4%
13%
£9.5m
£16.5m
Median
Upper quartile
* There is no vesting for performance below threshold, and straight-line vesting between threshold and maximum.
Payments for loss of office (audited)
No payments for loss of office were made during the year, or the prior year.
Payments to past Directors (audited)
No payments were made to past Directors during the year or the prior year.
External appointments
Neither of the Executive Directors held any external appointments during the year.
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 fees
£
Total fees
£
Baroness Ford*
P Reynolds**
S Miller
A M Cannon
I Steele
D Bergg
A Mandhar***
2021
2020
2021
2021
2020
2021
2020
2021
2020
2021
2020
2021
43,700
117,350
137,500
40,100
35,900
40,100
35,900
40,100
35,900
40,100
35,900
36,700
–
–
–
13,400
12,000
5,200
4,560
5,200
4,650
–
–
–
43,700
117,350
137,500
53,500
47,900
45,300
40,550
45,300
40,550
40,100
35,900
36,700
* Stepped down on 29 April 2021.
** Appointed as Non-Executive Director and Chair Elect on 1 February 2021. Assumed position of Chair on 29 April 2021.
*** Appointed as Non-Executive Director on 1 February 2021.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 84 STV Annual Report and Accounts 2021
Remuneration report
Annual Report on Remuneration continued
Statement of Directors’ shareholding and share interests at 31 December 2021 (audited)
Under the Policy, Executive Directors are required to build up a shareholding equal to 150% of salary. Executive Directors will also,
on leaving the Board, be required to maintain this in-employment shareholding guideline (or their actual shareholding if lower)
for a period of two years.
The shareholding requirement for Non-Executive Directors is set at the level of 20,000 shares for the Chairman and 5,000 shares
for other Non-Executive Directors.
Director
S Pitts
L Dixon
Baroness Ford***
P Reynolds
S Miller
A M Cannon
I Steele
D Bergg
A Mandhar
Number of
beneficially
owned
shares at
31/12/21*
164,689
8,785
31,202
0
7,577
11,167
9,698
12,489
0
Number of
unvested
deferred
awards**
Number of
SAYE options
subject to
conditions
Number of
unvested
LTIP awards
at 31/12/21
Current
shareholding
(% salary/
base fee)
Shareholding
requirements
Requirement
met at
31/12/21
–
–
–
–
387,354
217,474
138%
150% of salary
13%
150% of salary
n/a
n/a
n/a
n/a
n/a
n/a
n/a
20,000 shares
20,000 shares
5,000 shares
5,000 shares
5,000 shares
5,000 shares
5,000 shares
n/a****
n/a****
Y
N*****
Y
Y
Y
Y
N
*
**
***
****
Beneficial interests include shares held directly or indirectly by connected persons.
Simon Pitts and Lindsay Dixon also have a right to receive a certain number of shares in respect of the deferred portion of previous annual bonuses.
For Simon Pitts this relates to the deferred portion of his 2018 and 2019 annual bonus, and for Lindsay Dixon for the deferred portion of her 2019
annual bonus.
Data shown as at date of stepping down from the Board.
At 138% of base salary, the shareholding requirement is on track to be met by Simon Pitts in the near future. Lindsay Dixon’s shareholding is also
expected to continue to build as she receives shares through participation in the annual bonus and LTIP. The Committee is confident that both
executives retain a strong interest in the Group.
***** At the date of preparation of the Directors’ Remuneration Report, Paul Reynolds holds 25,000 shares following the purchase of shares in January
and February 2022.
The following table provides further detail on the share awards held by the Executive Directors.
Executive
Award
Granted
Held at
31/12/20
Granted
in year
Released
in year
Lapsed
in year
Held at
31/12/21
S Pitts
Buy-out – deferred shares
25/01/18
30,372
30,372
–
–
–
–
–
11/12/18
123,839
29/05/19
113,223
16/12/20
147,095
24/03/21
–
127,036
29/05/19
63,567
16/12/20
82,584
–
–
24/03/21
–
71,323
123,839
–
–
–
–
–
–
–
–
113,223
147,095
127,036
63,567
82,584
71,323
–
–
–
–
–
–
–
Vesting dates
24,196 in March 2019
75,228 in March 2020
30,372 in March 2021
11/12/21*
29/05/22*
16/12/23*
24/03/24*
29/05/22*
16/12/23*
24/03/24*
2018 LTIP
2019 LTIP
2020 LTIP
2021 LTIP
2019 LTIP
2020 LTIP
2021 LTIP
L Dixon
* Subject to an additional two-year holding period following vesting.
Dilution
The following table sets out the current level of dilution against the limits in the bonus and long-term incentive plan and sets out the
commitments to issue shares made during the financial year reported:
Maximum
Current dilution
Additional dilution during the year in question
10% dilution in ten years
5% dilution in ten years
7.07
1.35
0.99
1.06
STV Annual Report and Accounts 2021 85
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 All Share Media indices. The FTSE Small Cap index is used as a performance measure under the LTIP,
and the FTSE All Share Media index provides a comparison of performance against companies in the media sector.
The chart illustrates the performance of a hypothetical investment of £100 in ordinary shares of STV Group plc over the ten-year
period 1 January 2012 to 31 December 2021, compared to a similar investment in the FTSE Small Cap or FTSE All Share Media indices.
TSR data is based on Returns Index data, calculated on a daily share price growth plus re-invested dividends (as measured at the
ex-dividend rates).
£700
£600
£500
£400
£300
£200
£100
£0
Dec
2011
Dec
2012
Dec
2013
Dec
2014
Dec
2015
Dec
2016
Dec
2017
Dec
2018
Dec
2019
Dec
2020
Dec
2021
STV
FTSE Small Cap
FTSE All Share Media
Single figure of total remuneration
The information in the table below shows the total remuneration for the Chief Executive over the same period.
Year
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
Chief Executive
S Pitts
S Pitts
S Pitts
S Pitts
R Woodward
R Woodward
R Woodward
R Woodward
R Woodward
R Woodward
Single figure of total
remuneration
(£000)
Bonus pay-out
(as % maximum
opportunity)
Long-term incentive
vesting
(as % maximum
opportunity)
1,334
467
1,050
1,712*
697
807
2,269
661
601
696
96
–
87
72
32
29
49
46
54
31
50
–
18
–
14
–
100
–
–
100
* Simon Pitts’ single figure for 2018 includes an amount of £857,000 in respect of his buy-out package paid to compensate for forfeited remuneration
from his previous employer. His single figure excluding this amount would have been £855,000.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info
86 STV Annual Report and Accounts 2021
Remuneration report
Annual Report on Remuneration continued
Percentage change in remuneration
The table below shows the percentage change in the salary/fees, benefits and annual bonus of all Directors of the Company compared
to all employees from 2019 to 2020, and from 2020 to 2021.
All employees
Executive Directors
S Pitts
L Dixon
Non-Executive Directors
Baroness Ford****
P Reynolds*****
S Miller
A M Cannon
I Steele
D Bergg
A Mandhar*****
Salary/fees**
Taxable benefits*
Annual bonus*
2021
2020
0%
2%
11%**
11%**
n/a
n/a
12%
12%
12%
12%
n/a
(9)%
(9)%
(9)%
n/a
(9)%
(9)%
(9)%
(9)%
n/a
2021
n/a*
62%
16%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
2020
n/a*
2021
n/a*
2020
n/a*
0%
0%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a***
(100)%
n/a***
(100)%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
*
**
***
These benefits are not available to all employees.
All Executive and Non-Executive Directors volunteered a 25% cut in base salary/fees from 1 April to 31 August 2020, in response to Covid-19,
and so the increase in salary/fees in 2021 reflects reinstatement to full pay and is not a real increase.
Following suspension of the annual bonus plan in 2020, it was re-instated in 2021 with an outcome of 96.25% and 97.5% of the maximum
for the Chief Executive and Chief Financial Officer respectively.
**** Stepped down on 29 April 2021.
***** Appointed on 1 February 2021.
Chief Executive pay ratio
The table below discloses the ratio of the Chief Executive’s pay for 2021, using the single total figure of remuneration (as disclosed
on page 80), to the comparable earnings of employees at the 25th, 50th and 75th percentiles.
Year
2021
2020
2019
Method
Option B
Option B
Option B
25th percentile
(P25) pay ratio
Median (P50)
pay ratio
75th percentile
(P75) pay ratio
54:1
20:1
41:1
39:1
14:1
30:1
32:1
11:1
22:1
The ratios were calculated using Option B in the disclosure regulations, with the employees at the 25th, 50th and 75th percentiles
determined based on the Group’s gender pay data. Total remuneration for 2021 for these employees was then calculated using
a valuation methodology consistent with that used for the Chief Executive in the single figure table on page 85. Whilst the gender
pay gap legislation and CEO pay ratio legislation employ different calculations, the Committee considers that the three identified
employees are reasonably representative of the respective percentiles. The calculation is undertaken on a full-time equivalent basis.
The salary and total remuneration received during 2021 by employees at the 25th, 50th and 75th percentiles and used in the above
analysis is as follows:
2021 salary £
2021 total remuneration £
23,895
24,552
31,777
34,001
40,290
41,312
25th percentile (P25)
Median (P50)
75th percentile (P75)
A significant proportion of the Chief Executive’s total remuneration is delivered in variable remuneration, the value of which is linked
to stretching performance targets and, in the case of LTIP awards, share price performance. As a result, the pay ratio is driven largely
by the outcome of these awards hence the significant fluctuations on a year-to-year basis.
In comparison to last year, the pay ratio has increased. This is a direct result of the strong financial performance achieved in 2021 resulting
in annual bonus payments close to maximum and the 2019 LTIP vesting at 50.2% due largely to the success of the diversification strategy
implemented in 2018. In contrast, the Chief Executive’s total remuneration for 2020 did not include any annual bonus or LTIP vesting
and also included a voluntary 25% reduction in salary for a period of 5 months, as one of the measures taken to mitigate the impact
of the pandemic on the business.
The Committee considers the median pay ratio to be consistent with the pay, reward and progression policies for STV’s employees, the
majority of whom receive fixed remuneration only. Only colleagues in the Commercial team or in senior management roles are eligible
to participate in a bonus plan.
STV Annual Report and Accounts 2021 87
Company-wide remuneration
The Committee has oversight of remuneration and related policies across the organisation and gives them due consideration when
determining pay for Executive Directors. All roles across the Company are graded with reference to a compensation and benefits
survey of companies in the UK media and technology sectors undertaken by Willis Towers Watson. The Company’s policy is to ensure
pay and benefits provided are positioned fairly; are market competitive in the context of the relevant talent market; and reflect market
data and other relevant benchmarks for each role. Pay ratios are also considered as one of several reference points when making
decisions on remuneration.
The Company continues to develop its approach to employee engagement on executive remuneration, building on the various
mechanisms in place to gather feedback from colleagues, including engagement with trade union representatives which includes
a collective bargaining agreement that covers pay determination for certain members of staff. Relevant feedback is considered by
the Board, via the Senior Independent Director in his role as Employee Director, and through regular updates to the Board on the
organisation, people and culture.
Relative importance of spend on pay
The table below sets out the relative importance of spend on pay in the 2021 and 2020 financial years. These were the most significant
outgoings for the Company in the last financial year.
Significant distributions
2021
2020 % change
Overall spend on pay
£25.0m
£20.6m
Dividend or share buy back
£4.4m
£1.3m
21
238
Consideration by the Directors of matters relating to Directors’ remuneration
Members of the Committee
During the year, the Committee comprised of the following Non-Executive Directors: Anne Marie Cannon (Chair); Ian Steele; and David
Bergg. The Committee met four times during the year.
The Committee is responsible for recommending to the Board the Remuneration Policy for Executive Directors. The Committee also
has oversight of remuneration and related policies for the wider workforce as this pertains to determining the remuneration of the
Executive Directors. The Committee has formal terms of reference which describe its full remit and can be downloaded from the
Company’s website, www.stvplc.tv.
Advisors to the Committee
The Committee seeks independent advice to assist in its consideration of executive remuneration. This includes updating the
Committee on compensation trends and governance matters and advising the Committee in connection with the design and
operations of the Company’s incentive arrangements.
During the year, the Committee received advice from Deloitte LLP. Deloitte LLP is a founding member of the Remuneration Consultants’
Group and has signed up to their Code of Conduct on executive remuneration consulting. The total fees paid to Deloitte LLP for the
provision of independent advice to the Committee in 2021 were £21,250, charged on a time and materials basis. Deloitte LLP provided
no other services to the Company during the year. The Committee reviewed the nature of the other services provided and was satisfied
that no conflict of interest existed in the provision of these services. The Committee is satisfied that the advice received by Deloitte LLP
in its role as Remuneration Committee advisors is objective and independent.
In the course of its deliberations during the period under review, the Committee sought the assistance of the Chairman on matters
relating to the Directors’ performance and remuneration. The Chairman, Chief Executive and the HR & Communications Director
attended Committee meetings by invitation.
Statement of voting at general meeting
The table below shows the voting outcomes on the most recent Remuneration Report (2021 AGM) and Remuneration Policy (2021 AGM).
2020 Remuneration Report (2021 AGM)
32,843,803
98.08
641,796
1.92
33,485,599
Remuneration Policy (2021 AGM)
25,095,568
74.94
8,390,031
25.06
33,485,599
4,063
4,063
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.
As shown in the table above, with 74.9% of votes cast in favour, shareholders approved the Directors’ Remuneration Policy by a clear
majority. The voting outcome was primarily a result of one shareholder with a significant holding voting against the resolution. While
this shareholder was supportive of the other remuneration-related resolutions and is broadly supportive of the Company’s overall
approach to executive remuneration, they have expressed reservations regarding one specific element of the Policy.
Having further considered the matter, given the support of the majority of shareholders, the Company does not propose to take any
further action at this time. The Committee remains dedicated to ongoing engagement with shareholders on the issue of executive
remuneration and will continue to engage as appropriate going forward.
Anne Marie Cannon
Chair of the Remuneration Committee
9 March 2022
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 88 STV Annual Report and Accounts 2021
Directors’ report
The Directors present their report for the year ended 31 December 2021. The Directors’ report comprises pages 88 to 90 and
the sections of the annual report incorporated by reference, as set out below:
Directors during 2021 financial year – See page 60
Risk management – See pages 36 to 39
Streamlined Energy and Carbon Reporting (SECR) – See pages 48 and 49
TCFD report – See pages 45 to 48
Corporate governance report – See pages 60 to 70
Employee diversity and inclusion – See pages 51 and 52
Employee involvement and engagement – See page 55
Principal risks and uncertainties – See pages 40 to 43
Disability reporting – See page 51
Post balance sheet events – See page 125
This Annual Report has been prepared for, and only for, the members of the Company, as a body, and for no other persons. The Company,
its Directors, employees, agents and advisers, do not accept or assume responsibility to any other person to whom this document is
shown or into whose hands it may come, and any such responsibility or liability is expressly disclaimed.
Management Report
The Directors’ Report, together with the Strategic Report, set out on pages 4 to 56, form part of the Management Report for the
purposes of DTR 4.1.5R.
Company number
STV Group plc is registered in Scotland under company number SC203873.
Dividends
A final cash dividend of 7.3p per share has been declared for 2021 which, subject to approval at the AGM in April, will be paid on 27 May
2022, to shareholders on the register at 19 April 2022. The interim dividend for 2021 was 3.7p per share. The proposed total dividend for
2021 is therefore 11.0p per share.
Share capital and substantial shareholders
On 9 March 2022 there were 46,722,499 ordinary shares of 50p each in issue, each with one vote attached. There were no shares held
in treasury. The rights and obligations to the Company’s shares are set out in its Articles of Association. Details of Directors’ interests in
shares can be found on page 84.
As at 9 March 2022, the following information had been received, in accordance with DTR5, from holders of notifiable interests in STV’s
issued share capital:
Shareholders
Slater Investments
Aberforth Partners
M&G Investments
AXA Investment Mgrs (London)
Columbia Threadneedle Investments
Chelverton Asset Mgt
Schroder Investment Mgt
Tellworth Investments
Octopus Investments
Canaccord Genuity Wealth Mgt
Janus Henderson Investors
Royal London Asset Mgt
Annual General Meeting (AGM)
Shares held
8,539,501
5,005,036
3,476,295
3,136,872
2,551,138
2,222,821
2,087,121
1,982,650
1,892,737
1,511,524
1,427,420
1,417,872
%
18.27
10.71
7.44
6.71
5.46
4.76
4.47
4.24
4.05
3.24
3.06
3.03
Details of the 2022 AGM, together with the resolutions being put to shareholders, can be found in the separate Notice of AGM document.
Directors
The Directors of the Company and their profiles are detailed on pages 58 and 59. All of these Directors served throughout the year
under review, unless otherwise stated. Paul Reynolds and Aki Mandhar were appointed as Non-Executive Directors on 1 February 2021.
In accordance with the Code, at the 2022 AGM each Director will stand for re-election.
STV Annual Report and Accounts 2021 89
Directors’ indemnities
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 from the assets
of the Company against any liability he or she incurs in defending any proceedings brought against them in connection with the execution
of their powers, duties and responsibilities as Directors (provided that judgement is not given against them).
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 ended
31 December 2021.
Donations
The Group made no political donations or any contributions to any political party during the year (2020: £nil).
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. These include 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 receive cash dividends on those shares it holds that 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 licence holder, to notify Ofcom on a change of control. Ofcom would thereafter
be required to determine that any proposed new licence 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 in respect of the financial statements
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and
regulation.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared
the Group and the parent company financial statements in accordance with UK-adopted international accounting standards.
Under company law, Directors must not approve the financial statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Group and parent company and of the profit or loss of the Group for that period. In preparing the financial
statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• state whether applicable UK-adopted international accounting standards have been followed, subject to any material departures
disclosed and explained in the financial statements;
• make judgements and accounting estimates that are reasonable and prudent; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and parent
company will continue in business.
The Directors are responsible for safeguarding the assets of the Group and parent company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
The Directors are also responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and parent
company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and parent company and
enable them to ensure that the financial statements and the Directors’ Remuneration Report comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity of the parent company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 90 STV Annual Report and Accounts 2021
Directors’ report
Directors’ confirmations
The Directors consider that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Group’s and parent company’s position and performance, business model
and strategy.
Each of the Directors, whose names and functions are listed on pages 58 and 59 confirm that, to the best of their knowledge:
• the Group and parent company financial statements, which have been prepared in accordance with UK-adopted international
accounting standards, give a true and fair view of the assets, liabilities and financial position of the Group and parent company,
and of the 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
and parent company, together with a description of the principal risks and uncertainties that it faces.
In the case of each Director in office at the date the Directors’ report is approved:
• so far as the Director is aware, there is no relevant audit information of which the Group’s and parent company’s auditors are
unaware; and
• they have taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit
information and to establish that the Group’s and parent company’s auditors are aware of that information.
By order of the Board
Paul Reynolds
Chairman
9 March 2022
STV Annual Report and Accounts 2021 91
Independent auditors’ report to the members of STV Group plc
Report on the audit of the financial statements
Opinion
In our opinion, STV Group plc’s Group financial statements and Parent company financial statements (the ‘financial statements’):
• give a true and fair view of the state of the Group’s and of the Parent company’s affairs as at 31 December 2021 and of the Group’s
profit and the Group’s and Parent company’s cash flows for the year then ended;
• have been properly prepared in accordance with UK-adopted international accounting standards; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Accounts (the ‘Annual Report’), which comprise:
the Consolidated and parent company balance sheets as at 31 December 2021; the Consolidated income statement, Consolidated
statement of comprehensive income, Consolidated and parent company statements of changes in equity, and Consolidated and
parent company statements of cash flows for the year then ended; and the notes to the financial statements, which include a
description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit & Risk Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (‘ISAs (UK)’) and applicable law. Our responsibilities
under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided.
Other than those disclosed in the Corporate governance report and the Notes to the financial statements, we have provided no
non-audit services to the parent company or its controlled undertakings in the period under audit.
Our audit approach
Context
The context for our audit was that the Group financial performance had recovered significantly from the impact of the Covid-19
pandemic in 2020, which combined with the Group’s strategy of growing the non-broadcast businesses of Digital and STV Studios,
resulted in the Group’s highest revenues and earnings since 2010. As at the year end, the Group was in a small net cash position,
although they continue to have a very significant retirement benefit obligation relative to the size of the Group. This was also the year
in which the Group launched their STV Zero sustainability strategy and is the first year in which the Group is required to comply with
the requirements of the Task Force on Climate-related Financial Disclosures (TCFD).
Overview
Audit scope
• Taken together, the components where we performed our audit work accounted for 100% of Group consolidated revenue and 99%
of Group consolidated profit before tax.
Key audit matters
• Retirement benefit obligations (Group and Parent)
• Deferred programme production stock (DPS) (Group)
Materiality
• Overall Group materiality: £1,045,000 based on 5% of profit before tax and exceptional items.
• Overall Parent company materiality: £2,696,000 based on 1% of total assets.
• Performance materiality: £783,000 (Group) and £2,022,000 (Parent company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not
due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of
resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results
of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
The impact of Covid-19, which was a Key audit matter last year, is no longer included because it is no longer considered to be a significant
area of uncertainty which could affect the Group or Parent company. Otherwise, the Key audit matters below are consistent with last year.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 92 STV Annual Report and Accounts 2021
Independent auditors’ report to the members of STV Group plc
Key audit matter
How our audit addressed the key audit matter
Retirement benefit obligations (Group and Parent)
(Refer to page 105 (Significant accounting policies) and note 23
(Retirement benefit schemes))
In assessing whether the key assumptions of discount rate, inflation
rates and mortality were within our acceptable ranges, we undertook
the following work;
The Group has a net pension deficit at 31 December 2021 of £79.4m
(2020: £70.3m) and the Parent company a net pension deficit of
£35.9m (2020: £36.2m).
The gross defined benefit scheme obligations of the Group and Parent
company are £519.4m (2020: £507.5m) and £202.0m (2020: £202.4m)
respectively.
These balances are significant in the context of the Consolidated and
parent company balance sheets and are dependent on certain key
assumptions, including the discount rate, inflation rates and mortality
assumptions adopted by the Directors in the actuarial valuations.
Given the judgements involved and the fact that small changes to
these assumptions can have a material impact on the overall valuation
of the obligation, this was an area of significant risk in our audit.
Although not an area of significant risk in our audit, given the material
value of the related pension scheme assets at a Group level of £440.0m
(2020: £437.2m) and Parent company level of £166.1m (2020: £166.2m),
we did undertake substantial procedures with regards to the existence
and valuation of these assets.
• We assessed the competence and objectivity of our own and
Management’s Actuarial experts (who had determined the key
assumptions and calculated the value of the benefit scheme
obligations).
• Together with our experts, we discussed the methodology and
assumptions used in calculating the obligation with Management’s
experts and challenged the approaches they had taken to ensure
they were appropriate.
• Our work included understanding and assessing the proposed
assumptions at 31 December 2021, testing of internal consistency
and reasonableness of 2021 data, and assessing the appropriateness
of the method used to calculate the 31 December 2021 defined
benefit obligation, including the roll forward from the latest triennial
valuation for each scheme.
• We considered the methods by which the assumptions were derived
and how the assumptions sit within our acceptable ranges at the year
end, and year-on-year. This allowed us to challenge if there was any
indication of management bias in the setting of assumptions.
We did not identify any issues in this regard. All of the discount rate,
inflation and mortality actuarial assumptions fell within our acceptable
ranges based on the nature of the schemes and scheme experience.
In respect of the related pension scheme assets, we obtained 3rd party
confirmation for existence of assets with the exception of annuity
policies which are matched with a pension liability. In respect of
valuation, where possible, we independently repriced the asset,
and for the remainder obtained other corroborating evidence.
As a result of our audit work, there were no matters arising which
would indicate that the gross and net defined benefit scheme
obligations were materially misstated, and the associated disclosures
contain the required information.
Deferred programme production stock (‘DPS’) (Group)
(Refer to page 104 (Significant accounting policies) and note 15
(Inventories))
We obtained the sales forecast and related net present value
calculations performed by management to support the carrying
value of DPS and undertook the following work:
DPS of £11.3m (2020: £10.3m) relates to costs incurred in the
production of programming which is deferred on the Consolidated
balance sheet at the point of initial sale and charged to the income
statement in line with the associated forecast future revenue.
In prior periods, we considered this to be an area of significant audit
risk. Due to the reducing balance, we concluded in 2020 that the audit
risk was normal, which is consistent with our audit risk assessment
for 2021.
However, it remains an area of audit focus because the support for
the carrying value and the charge to the income statement are based
on judgements made by management in respect of related future
revenues.
• We verified that they were mathematically accurate and the method
of calculation was appropriate and consistent with prior years.
• We challenged management’s forecast for each significant
production by comparison with the actual sales history and prior
forecasting accuracy.
• Where relevant we obtained and reviewed new contracts which had
been signed in 2021 and supported future forecasts.
• We also performed sensitivities on the key assumptions underpinning
the net present value of DPS, being future sales, discount rates and
the time period over which sales could be achieved. We did this by
reference to independently determined benchmarks.
There were no matters arising from the audit work performed, and
we did not identify any indicators that the carrying value of DPS was
not recoverable.
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 structure of the Group and the Parent company, the accounting processes and controls, and the
industry in which they operate.
All transactions and balances within the scope of the Group audit are in the UK, recorded on a single accounting system and managed
by a central accounting team. Accordingly, all of the audit work in respect of the Group, Parent company and subsidiary statutory
audits is carried out by a single audit team.
As part of our planning procedures, utilising our knowledge of the Group gained in previous audits, we reviewed management’s
Sustainability strategy, assessment of the risks of Climate Change and Governance with regards to the potential impacts of Climate
Change. We formed our own view in concluding that climate risk is not considered to result in a significant audit risk in the context
of the Group and Parent company audits for the current year.
STV Annual Report and Accounts 2021 93
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 in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements – Group
Financial statements – Parent company
Overall materiality
£1,045,000.
£2,696,000.
How we determined it
5% of profit before tax and exceptional items
1% of total assets
Rationale for benchmark
applied
We have applied this benchmark because we consider
the measure of profit before tax and exceptionals is the
measure most commonly used by the shareholders to
measure the performance of the Group.
We considered the most appropriate benchmark
for the Parent company to be total assets as it is
a holding company.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The
range of materiality allocated across components was £68,667-£1,000,000. Certain components were audited to a local statutory
audit materiality that was also less than our overall group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our
audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining
sample sizes. Our performance materiality was 75% of overall materiality, amounting to £783,000 for the Group financial statements
and £2,022,000 for the Parent company financial statements.
In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment and
aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range was appropriate.
We agreed with the Audit & Risk Committee that we would report to them misstatements identified during our audit above £57,170
(Group audit) and £134,800 (Parent company audit) as well as misstatements below those amounts that, in our view, warranted
reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the Group’s and the Parent company’s ability to continue to adopt the going concern
basis of accounting included:
• Checking management’s base case and downside models for mathematical accuracy;
• Validating the appropriateness of key assumptions inherent in the cash flow models and agreeing the opening cash/net debt position;
• Confirming that downside scenarios were sufficiently severe but plausible in the context of the STV business and plans;
• Confirming the availability of facilities included in management’s going concern model; and
• Considering compliance with the terms and covenants applicable to the lending facilities in both the base case and downside cases.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group’s and the Parent company’s ability to continue as a going concern for a period
of at least twelve months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group’s and the
Parent company’s ability to continue as a going concern.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to
add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered
it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections
of this report.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 94 STV Annual Report and Accounts 2021
Independent auditors’ report to the members of STV Group plc
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’
report thereon. The directors are responsible for the other information, which includes reporting based on the Task Force on Climate-
related Financial Disclosures (TCFD) recommendations. Our opinion on the financial statements does not cover the other information
and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of
assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are
required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material
misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Strategic Report and Directors’ report, we also considered whether the disclosures required by the UK Companies
Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and
matters as described below.
Strategic Report and Directors’ report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors’
report for the year ended 31 December 2021 is consistent with the financial statements and has been prepared in accordance with
applicable legal requirements.
In light of the knowledge and understanding of the Group and Parent company and their environment obtained in the course of the
audit, we did not identify any material misstatements in the Strategic Report and Directors’ report.
Directors’ Remuneration
In our opinion, the part of the Remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of the
corporate governance statement relating to the Parent company’s compliance with the provisions of the UK Corporate Governance
Code specified for our review. Our additional responsibilities with respect to the corporate governance statement as other information
are described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance
statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we have nothing
material to add or draw attention to in relation to:
• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and
an explanation of how these are being managed or mitigated;
• The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis
of accounting in preparing them, and their identification of any material uncertainties to the Group’s and Parent company’s ability
to continue to do so over a period of at least twelve months from the date of approval of the financial statements;
• The directors’ explanation as to their assessment of the Group’s and Parent company’s prospects, the period this assessment covers
and why the period is appropriate; and
• The directors’ statement as to whether they have a reasonable expectation that the Parent company will be able to continue
in operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the Group was substantially less in scope than an audit
and only consisted of making inquiries and considering the directors’ process supporting their statement; checking that the statement
is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent
with the financial statements and our knowledge and understanding of the Group and Parent company and their environment obtained
in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial statements and our knowledge obtained during the audit:
• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides
the information necessary for the members to assess the Group’s and Parent company's position, performance, business model
and strategy;
• The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and
• The section of the Annual Report describing the work of the Audit & Risk Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the Parent company’s
compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing
Rules for review by the auditors.
STV Annual Report and Accounts 2021 95
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors' responsibilities in respect of the financial statements, the directors are
responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that
they give a true and fair view. The directors are also responsible for such internal control as they determine is necessary to enable
the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Parent company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and
regulations related to the Listing Rules, UK tax legislation and compliance with industry regulation (OFCOM), and we considered
the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and
regulations that have a direct impact on the financial statements such as the Companies Act 2006. We evaluated management’s
incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and
determined that the principal risks were related to management bias in accounting estimates and posting inappropriate journal
entries to manipulate revenue or divisional profit allocations. Audit procedures performed by the engagement team included:
• Discussions with management, reading reports from internal audit and consideration of any known or suspected instances
of non-compliance with laws and regulations and fraud or matters reported on the Group’s whistleblowing helpline;
• Evaluation of management’s controls designed to prevent and detect irregularities;
• Reviewing Board minutes;
• Challenging assumptions and judgements made by management in areas involving significant accounting estimates; and
• Identifying and testing journal entries, in particular any journal entries posted by senior management and/or with unusual
account combinations or that resulted in a reallocation of profits between divisions.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance
with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk
of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may
involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations.
We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit
sampling to enable us to draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the parent 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.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 96 STV Annual Report and Accounts 2021
Independent auditors’ report to the members of STV Group plc
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Parent company, or returns adequate for our audit have not been received
from branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• the Parent company financial statements and the part of the 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.
Appointment
Following the recommendation of the Audit & Risk Committee, we were appointed by the directors on 4 March 2004 to audit the
financial statements for the year ended 31 December 2004 and subsequent financial periods. The period of total uninterrupted
engagement is 18 years, covering the years ended 31 December 2004 to 31 December 2021.
Other matter
In due course, as required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial
statements will form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial
Conduct Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance
over whether the annual financial report will be prepared using the single electronic format specified in the ESEF RTS.
Michael Timar (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Glasgow
9 March 2022
Consolidated income statement
Year ended 31 December 2021
STV Annual Report and Accounts 2021 97
2021
2020
Before
exceptional
items
£m
Exceptional
items
(note 7)
£m
Results for
the year
£m
Before
exceptional
items
£m
Exceptional
items
(note 7)
£m
Results for
the year
£m
Revenue
Net operating expenses
Operating profit
Finance costs
– borrowings
– defined benefit pension schemes
– lease interest
Provision for impairment losses – ELM debtor
Total finance costs
Share of loss of an associate
Gain on sale of non-current asset
Profit before tax
Tax (charge)/credit
Profit for the year
Attributable to:
Equity holders of the Company
Non-controlling interests
Earnings per share
Basic
Diluted
Note
4
5
8
9
144.5
(121.2)
23.3
(1.2)
(0.8)
(0.3)
–
(2.3)
(0.1)
–
20.9
(1.0)
19.9
19.9
–
19.9
–
(1.7)
(1.7)
–
–
–
0.3
0.3
–
0.6
(0.8)
0.3
(0.5)
(0.5)
–
(0.5)
144.5
(122.9)
21.6
107.1
(88.9)
18.2
(1.2)
(0.8)
(0.3)
0.3
(2.0)
(0.1)
0.6
20.1
(0.7)
19.4
19.4
–
19.4
(1.2)
(1.2)
(0.3)
–
(2.7)
(0.1)
–
15.4
(0.6)
14.8
14.7
0.1
14.8
43.8p
42.1p
42.7p
41.0p
35.2p
33.8p
The above consolidated income statement should be read in conjunction with the accompanying notes.
Consolidated statement of comprehensive income
Year ended 31 December 2021
Profit for the year
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of defined benefit pension schemes
Deferred tax credit
Revaluation (loss)/gain on listed investments to market value
Other comprehensive expense – net of tax
Total comprehensive income for the year
Attributable to:
Owners of the parent
Non-controlling interests
Note
23
20
14
–
(0.5)
(0.5)
–
–
–
(8.2)
(8.2)
–
–
(8.7)
1.6
(7.1)
(7.1)
–
(7.1)
2021
£m
19.4
(17.2)
8.5
(2.3)
(11.0)
8.4
8.4
–
8.4
107.1
(89.4)
17.7
(1.2)
(1.2)
(0.3)
(8.2)
(10.9)
(0.1)
–
6.7
1.0
7.7
7.6
0.1
7.7
18.2p
17.5p
2020
£m
7.7
(15.3)
3.2
5.9
(6.2)
1.5
1.4
0.1
1.5
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info
98 STV Annual Report and Accounts 2021
Consolidated and parent company balance sheets
At 31 December 2021
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Investments
Deferred tax asset
Trade and other receivables
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Equity
Ordinary shares
Share premium
Capital redemption reserve
Merger reserve
Other reserve
Accumulated (losses)/profit
Shareholders’ equity
Non-controlling interests
Total equity
Non-current liabilities
Borrowings
Lease liabilities
Retirement benefit obligations
Current liabilities
Trade and other payables
Lease liabilities
Total liabilities
Total equity and liabilities
Group
2021
£m
Company
2020
£m
2021
£m
2020
£m
Note
11
12
13
14
20
16
15
16
21
21
18
19
23
17
19
1.6
9.8
19.9
1.9
26.5
0.4
60.1
17.7
30.1
14.7
62.5
122.6
23.3
115.1
0.2
173.4
1.4
(339.2)
(25.8)
(0.1)
(25.9)
14.4
19.7
79.4
113.5
33.8
1.2
35.0
148.5
122.6
2.3
9.9
10.4
6.7
19.9
0.9
50.1
15.4
25.6
5.2
46.2
96.3
23.3
115.1
0.2
173.4
1.0
(342.8)
(29.8)
(0.1)
(29.9)
22.7
9.1
70.3
102.1
22.4
1.7
24.1
–
–
–
122.1
9.0
–
131.1
–
138.2
0.3
138.5
269.6
23.3
115.1
0.2
–
1.1
92.6
232.3
–
232.3
–
–
35.9
35.9
1.4
–
1.4
126.2
37.3
–
–
–
52.9
6.9
217.0
276.8
–
117.2
–
117.2
394.0
23.3
115.1
0.2
–
1.0
102.9
242.5
–
242.5
–
–
36.2
36.2
115.3
–
115.3
151.5
96.3
269.6
394.0
The above consolidated balance sheet 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 income
statement or statement of comprehensive income. The loss for the parent company for the year was £3.5m (2020: profit of £16.2m).
The consolidated financial statements on pages 97 to 126 were approved by the Board on 9 March 2022 and were signed on its behalf by:
Simon Pitts
Chief Executive Officer
Lindsay Dixon
Chief Financial Officer
STV Annual Report and Accounts 2021 99
Consolidated and parent company statements of changes in equity
Year ended 31 December 2021
Share
capital
£m
Share
premium
£m
Capital
redemption
reserve
£m
Merger
reserve
£m
Other
reserve
£m
Accumulated
(losses)/profit
£m
Attributable
to owners of
the parent
£m
Non-
controlling
interest
£m
Total
equity
£m
Group
At 1 January 2021
Profit for the year
Other comprehensive expense
Total comprehensive income for the year
Net share based compensation
Dividends paid (note 10)
23.3
115.1
0.2
173.4
1.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
At 31 December 2021
23.3
115.1
0.2
173.4
At 1 January 2020
Profit for the year
Other comprehensive expense
Total comprehensive income for the year
Issue of ordinary shares
Share based compensation
Shares acquired by EBT
Dividends paid in shares
19.6
102.0
0.2
173.4
–
–
–
3.5
–
–
0.2
–
–
–
12.0
–
–
1.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
At 31 December 2020
23.3
115.1
0.2
173.4
–
–
–
0.4
–
1.4
0.9
–
–
–
–
0.2
(0.1)
–
1.0
(342.8)
19.4
(11.0)
8.4
(0.4)
(4.4)
(29.8)
19.4
(11.0)
8.4
–
(4.4)
(0.1)
(29.9)
–
–
–
–
–
19.4
(11.0)
8.4
–
(4.4)
(339.2)
(25.8)
(0.1)
(25.9)
(343.2)
7.6
(6.2)
1.4
–
–
0.3
(1.3)
(47.1)
7.6
(6.2)
1.4
15.5
0.2
0.2
–
(0.2)
(47.3)
0.1
–
0.1
–
–
–
–
7.7
(6.2)
1.5
15.5
0.2
0.2
–
(342.8)
(29.8)
(0.1)
(29.9)
Company
At 1 January 2021
Loss for the year
Other comprehensive expense
Total comprehensive expense for the year
Net share based compensation
Dividends paid (note 10)
At 31 December 2021
At 1 January 2020
Profit for the year
Other comprehensive expense
Total comprehensive income for the year
Issue of ordinary shares
Share based compensation
Shares acquired by EBT
Dividends paid in shares
23.3
115.1
0.2
–
–
–
–
–
–
–
–
–
–
23.3
115.1
19.6
102.0
–
–
–
3.5
–
–
0.2
–
–
–
12.0
–
–
1.1
–
–
–
–
–
0.2
0.2
–
–
–
–
–
–
–
At 31 December 2020
23.3
115.1
0.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.0
102.9
242.5
–
–
–
0.1
–
1.1
0.9
–
–
–
–
0.2
(0.1)
–
1.0
(3.5)
(2.4)
(5.9)
–
(4.4)
(3.5)
(2.4)
(5.9)
0.1
(4.4)
92.6
232.3
88.0
16.2
(0.3)
15.9
–
–
0.3
(1.3)
210.7
16.2
(0.3)
15.9
15.5
0.2
0.2
–
102.9
242.5
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 100 STV Annual Report and Accounts 2021
Consolidated and parent company statements of cash flows
Year ended 31 December 2021
Operating activities
Cash generated by/(used in) operations
Interest and fees paid in relation to banking facilities paid
Corporation tax paid
Pension deficit funding – recovery plan payment
Contingent cash payment to pension schemes
Net cash generated by/(used in) operating activities
Investing activities
Proceeds from sale of investments
Proceeds from disposal of subsidiary
Purchase of investment in associate
Loan notes provided to associate
Production finance provided to associate
Purchase of intangible assets
Purchase of property, plant and equipment
Net cash generated by/(used in) investing activities
Financing activities
Payment of obligations under leases
Issue of ordinary shares
Borrowings drawn
Borrowings repaid
Dividends paid
Net cash (used in)/generated by financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Note
22
Group
2021
£m
34.8
(1.4)
(1.2)
(9.3)
(0.3)
22.6
4.7
0.6
(0.6)
(0.4)
(0.6)
(0.4)
(2.5)
0.8
(1.5)
–
3.1
(11.1)
(4.4)
(13.9)
9.5
5.2
14.7
2020
£m
22.4
(1.9)
(0.4)
(9.1)
(1.4)
9.6
–
–
(1.1)
–
–
(0.7)
(1.4)
(3.2)
(1.9)
15.5
19.0
(40.0)
–
(7.4)
(1.0)
6.2
5.2
Company
2021
£m
2020
£m
8.0
–
(1.2)
(3.9)
(0.1)
2.8
4.7
0.6
–
–
–
–
–
5.3
–
–
–
–
(4.4)
(4.4)
3.7
(3.4)
0.3
(8.6)
–
–
(3.7)
(0.6)
(12.9)
–
–
(1.1)
–
–
–
–
(1.1)
–
15.5
–
–
–
15.5
1.5
(4.9)
(3.4)
STV Annual Report and Accounts 2021 101
Notes to the financial statements
For the year ended 31 December 2021
1. General information
The consolidated financial statements of STV Group plc (the ‘Company’) and its subsidiaries (together the ‘Group’) for the year
ended 31 December 2021 were approved and authorised for issue in accordance with a resolution of the Directors on 9 March 2022.
The comparative information is presented for the year ended 31 December 2020.
STV Group plc is a public limited company incorporated in Scotland and is listed on the London Stock Exchange.
The principal activities of the Group are the production and broadcasting of television programmes, provision of internet services
and the sale of advertising airtime and space in these media. Up to its sale on 20 August 2021, the Group also operated a non-core
external lottery management company.
2. 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 financial statements are prepared in accordance with IFRS as adopted by the UK Endorsement Board. This change in basis
of preparation is required by UK company law for the purposes of financial reporting as a result of the UK’s exit from the EU on
31 January 2020 and the cessation of the transition period on 31 December 2020. This change does not constitute a change
in accounting policy but rather a change in framework which is required to ground the use of IFRS in company law. There is no
impact on recognition, measurement or disclosure between the two frameworks in the period reported.
These financial statements are presented in Sterling, which is the currency of the primary economic environment in which the
Group and Company operates and rounded to the nearest 0.1 million pounds (£m) except where otherwise indicated. They have
been prepared under the historical cost convention and where other bases are applied these are identified in the relevant
accounting policy below.
Basis of consolidation
The Group financial statements incorporate the financial statements of STV Group plc and all its subsidiaries up to 31 December
each year, using consistent accounting policies.
Subsidiaries are entities over which the Company has control. Control is achieved when the Company has the power over the
subsidiary, is exposed, or has rights to, variable returns from its involvement with the subsidiary, and has the ability to use its
power to affect its returns. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and
ceases when the Company loses control of the subsidiary. Subsidiary undertakings acquired during the year are recorded using
the acquisition method of accounting and their results are included from the date of acquisition.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated on
consolidation.
An associate is an entity, other than a subsidiary or joint venture, over which the Group has significant influence. Significant
influence is the power to participate in, but not control or jointly control, the financial and operating decisions of an entity.
These investments are also accounted for using the equity method.
Non-controlling interests represent the portion of profit or loss and net assets/(liabilities) in subsidiaries that are not held by the
Group and are presented within equity in the consolidated balance sheet, separately from the Company shareholders’ equity.
Adoption of new and revised standards
In the current year, the Group has adopted the following new amendments with no material impact:
• Amendments to IFRS 9, IAS 39 and IFRS 7: Interest Rate Benchmark Reform – Phase 2 – effective date 1 January 2021
• Amendments to IFRS 16 Leases: Covid-19-Related Rent Concessions beyond 30 June 2021 – effective date 1 April 2021
Standards and amendments to standards that have been issued but are not effective for 2021 and have not been early adopted are:
• Amendments to IFRS 3 Business Combinations; IAS 16 Property, Plant and Equipment; IAS 37 Provisions, Contingent Liabilities
and Contingent Assets; and Annual Improvements 2018-2020 – effective date 1 January 2022
• IFRS 17 Insurance Contracts – effective date 1 January 2023
• Amendments to IFRS 4 Insurance Contracts – deferral of IFRS 9 – effective date 1 January 2023
The above standards and amendments issued but not yet effective will be adopted in accordance with their effective dates.
Going concern
At 31 December 2021, the Group was in a small cash position with a gross cash balance of £14.7m. The Group is in a net current asset
position and generates cash from operations that enables the Group to meet its liabilities as they fall due, and other obligations.
In March 2021, the Group refinanced its bank facilities, agreeing a new £60m revolving credit facility, with £20m accordion, for
a minimum tenor of 3 years (two one-year extension options are available, with the first being exercised in February 2022). The
covenant package is in line with the Group’s previous facility, namely net debt to EBITDA (leverage) must be less than 3 times,
and interest cover must be greater than 4 times. At 31 December 2021, the Group’s leverage was nil (2020: 0.7 times) and interest
cover was 49.4 times (2020: 28.3 times), both comfortably within covenant limits.
As part of the going concern review, the Group considers forecasts of the advertising market, from which the Group generates the
majority of its cash inflows, as well as its prospects in the programme production market, to determine the impact on liquidity.
The Group’s forecasts and projections, taking account of reasonably possible changes in trading performance, show that the
Group will be able to operate within the level of its current available funding and financial covenants.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info
102 STV Annual Report and Accounts 2021
Notes to the financial statements
For the year ended 31 December 2021
2. Significant accounting policies continued
The Directors performed a full review of principal risks and uncertainties during the year and as part of its process to review and
approve the three-year plan covering the period to 31 December 2024. A severe but plausible downside scenario was identified
that reflected crystallisation of a number of risks, including a downturn in advertising markets and a hiatus in programme
production activity. Under this downside scenario, the Group generated sufficient cash to enable it to continue in operation,
pay its obligations as they fall due and remain within its covenant levels.
After completion of these activities and making enquiries of management, the Directors have a reasonable expectation that the
Group has adequate resources to continue in operation for at least 12 months from the date of this report. Accordingly, the Group
continues to adopt the going concern basis in preparing its consolidated financial statements.
Revenue recognition
Under IFRS 15, the performance obligations promised in contracts with customers are identified and revenue recognition is
based on an assessment of when control of the good or service promised in the contract is transferred to the customer. Revenue
is recognised when the performance obligation in the contract is satisfied which is either at a ‘point in time’ or ‘over time’
depending on when or as control of the good or service is transferred to the customer.
Key classes of revenue are recognised on the following bases:
i) Advertising and sponsorship revenues
Revenues are stated net of advertising agency commissions.
Television advertising revenue and online advertising revenue are recognised at the point of transmission of the advertisement.
Revenue from sponsorship of the Group’s programmes is recognised on a straight-line basis over the period of the transmission
schedule for each sponsorship campaign.
ii) Programme production revenues
Revenue from third party commissions is recognised on delivery of the finished programme to the commissioning broadcaster
as at that point the performance obligations are delivered and control passes to the broadcaster for the period of their licence.
Revenues from the licensing of programmes to overseas broadcasters or in the UK secondary market (usually digital channels) is
recognised on the licence commencement date. An element of the original cost of production is deferred and recognised against
the future revenue stream expected to be generated in the secondary and overseas sales markets. The amount to be deferred
varies by programme based on future overseas and secondary sales potential and involves significant estimate (see note 3).
iii) Lottery service revenues
Up to the date of disposal in August 2021, revenue was recognised for lottery operating costs recharged to the Scottish Children’s
Lottery at the point when the lottery draw to which the service related had taken place.
Dividend income
Dividend income is recognised when the right to receive payment is established.
Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached
conditions will be complied with. When the grant relates to an expense item, it is deducted from the related expense. When
the grant relates to an asset, it is deducted from the asset’s carrying value.
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 the amount of tax payable or recoverable in respect of the taxable profit or loss for the year, 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 substantively enacted at
the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability settled.
Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax liabilities 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 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 tax 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.
STV Annual Report and Accounts 2021 103
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. They are presented on the face of the Income
Statement, in the column headed ‘Exceptional items’, so as to present a transparent view of the trading of the Group both
excluding and including these items.
Exceptional items may include but are not restricted to: profits or losses arising on disposal or closure of a business; the cost
of significant business restructuring; significant impairments of intangible or tangible assets; significant gains or losses on sale
of investments, intangible or tangible assets; adjustments to the fair value of acquisition-related items; other items deemed
exceptional due to their significance, size or nature; and the related exceptional taxation.
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. Currency translation differences are recognised in the consolidated income statement.
Business combinations
Business combinations are accounted for using the acquisition method of accounting. The consideration transferred in a business
combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of assets transferred,
liabilities incurred, and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs
are recognised in the income statement as incurred.
At the acquisition date, the identifiable assets acquired and liabilities assumed are recognised at their fair value.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the
acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date
amounts of the identifiable assets acquired and the liabilities assumed. If the net of the acquisition-date amounts of the identifiable
assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling
interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognised
immediately in the income statement as a bargain purchase gain (or loss if the liabilities assumed exceed the identifiable assets).
Goodwill in respect of an acquired business is recognised as an intangible asset. Goodwill is carried at cost less any recognised
impairment losses and is tested at least annually or where there are indicators of impairment.
Intangible assets
Intangible assets, other than goodwill, 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 intangible assets, less residual value, on a straight line basis
from the date they are brought into use:
Web development
between 10% and 25%
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 the assets, less estimated residual values, in equal annual instalments as follows:
Leasehold improvements
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, from the date of addition or to the date of disposal.
Any impairment in value is charged to the income statement.
Leases
The Group assesses whether a contract is or contains a lease at inception of the contract. The Group recognises a right-of-use
asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term
leases (defined as leases with a term of 12 months or less) and leases of low value assets. For these leases, the Group recognises
the lease payments as an operating expense on a straight-line basis over the term of the lease.
Lease liability
The lease liability is initially measured as the present value of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or the Group’s incremental borrowing rate where not readily available.
Lease payments included in the measurement of the lease liability comprise:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable
• variable lease payments that are based on an index or rate, initially measured using the index or rate as at the commencement date
• amounts expected to be payable by the Group under residual value guarantees
• the exercise price of purchase options, if the Group is reasonably certain to exercise those options; and
• payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info
104 STV Annual Report and Accounts 2021
Notes to the financial statements
For the year ended 31 December 2021
2. Significant accounting policies continued
Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which
is generally the case for leases in the Group, the Group’s incremental borrowing rate is used, being the rate that the individual
lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar
economic environment with similar terms, security and conditions.
Lease payments are allocated between principal and finance cost. The finance cost element is charged to the income statement
over the lease period in order to produce a constant periodic rate of interest on the remaining balance of the liability for each
period.
Right-of-use assets
Right-of-use assets comprise the initial measurement of the corresponding lease liability, any lease payments made at or before
the commencement date, less any lease incentives received and any initial direct costs. They are subsequently measured at cost
less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated over the shorter of the lease term and the useful life of the underlying asset. If the lease
transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a
purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts
at the commencement date of the lease.
Impairment of non-financial assets
The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication
exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An
asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (‘CGU’s’) fair value less costs of disposal and its
value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds
its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset.
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.
• Programme production work in progress
Programme production work in progress for programmes being made for third parties is recorded at cost less any provision
for impairment. When the programme production has been completed, and at the point of delivery to the commissioner,
the inventory value is charged to the income statement to match the cost of production with the revenue recognised. Certain
costs incurred in the development of creative ideas and the programme slate are recognised as inventory and amortised to
the income statement over a period of up to 4 years. This period is deemed to be the average life of a creative concept from
initiation to commissioning.
• Deferred programme production
Deferred programme production stock represents original costs of production that are deferred and recognised against future
revenue streams expected to be generated in the secondary sales markets, or from advertising revenue generated on the
STV Player. This is to ensure that revenue and costs are matched as closely as possible. The amount to be deferred varies by
programme based on future secondary sales potential. The estimate of future sales and deferred programme production
stock is referred to in the critical accounting judgements and estimates section (note 3).
• Recorded programmes
Recorded programmes are programmes which the Group purchases for transmission on its broadcast and VoD platforms. They
are valued at direct cost including labour and overheads less appropriate provisions and are charged to the income statement
after the first transmission or sale.
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.
Financial instruments
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. Financial assets are recorded at amortised cost with the exception of equity investments
which are recognised at fair value through other comprehensive income (FVOCI) and derivative financial instruments which are
recognised at fair value through profit and loss (FVPL). Financial liabilities are measured at amortised cost.
i) Trade receivables
Trade receivables do not carry any interest and are stated at amortised cost as reduced by appropriate allowances for estimated
irrecoverable amounts. The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a
lifetime expected loss allowance for all trade receivables and contract assets.
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 trade.
STV Annual Report and Accounts 2021 105
ii) Investments
Investments are classified as fair value through other comprehensive income (FVOCI) with subsequent gains or losses arising
from changes in fair value are recognised in other comprehensive income. There is no subsequent reclassification of fair value
gains and losses to profit and loss following the derecognition of the investment.
Equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured by
other means are held at cost unless the Group is deemed to hold significant influence. Investments, whereby the Group is deemed
to hold significant influence, are initially recognised at cost and adjusted thereafter for the post-acquisition change in the net assets
of the investment. A share of the profit or loss, based on equity holding, is recognised in the income statement for the period.
iii) Classification of financial liabilities and equity
Financial liabilities and equity instruments are classified according to the contractual arrangements entered into. An equity
instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.
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. Finance costs, including premiums payable on settlement or
redemption and direct issue costs, are accounted for using an effective interest rate method 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
From time-to-time the Group uses derivative financial instruments to hedge its exposure to fluctuations in interest rates.
The Group does not qualify for hedge accounting under IFRS 9 therefore any gains or losses arising from the movement in fair
value are taken to the income statement.
The fair value of the interest rate swap contracts is calculated every six months on a discounted cash flow basis using market
forward rates.
Pensions
For defined benefit pension schemes, the annual service cost is calculated using the projected unit credit method and is
recognised over the future service lives of participating employees, in accordance with the advice of qualified actuaries.
Current service cost and administration expenses are recognised in operating costs and net interest on the net pension liability
is recognised in finance costs.
The finance cost recognised in the consolidated income statement reflects the net interest on the net pension liability. This
represents the change in the net pension liability resulting from the passage of time, and is determined by applying the discount
rate to the opening net liability, taking into account employer contributions paid into the scheme, and hence reducing the net
liability during the year.
Past service costs resulting from enhanced benefits are recognised immediately in the consolidated income statement. Actuarial
gains and losses, which represent the difference between interest on scheme assets, experience on the defined benefit obligation
and the effect of changes in actuarial assumptions, are recognised in full in the consolidated statement of comprehensive
income in the year in which they occur.
The retirement benefit obligation recognised in the consolidated balance sheet comprises the net total for each scheme of the
present value of the benefit obligation, using a discount rate based on yields at the balance sheet date on appropriate high-quality
corporate bonds that have maturity dates approximating the terms of the Group’s obligations and are denominated in sterling,
minus the fair value of the scheme assets at the balance sheet date.
Payments to defined contribution schemes are charged to the income statement as an expense as they fall due.
Share-based payments
The Group issues equity-settled share-based payments to certain employees. A fair value for the equity-settled share awards
is measured at the date of grant. The Group measures the fair value of each award using an appropriate option pricing model.
The fair value of each award is recognised as an expense over the vesting period on a straight-line basis, after allowing for an
estimate of the share awards that will eventually vest. The level of vesting is reviewed at each reporting period and the charge
is adjusted, where appropriate, to reflect actual and estimated levels of vesting.
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.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info
106 STV Annual Report and Accounts 2021
Notes to the financial statements
For the year ended 31 December 2021
3. Critical accounting judgements and estimates
The preparation of the consolidated and Company financial statements, in conformity with IFRS, requires management to make
judgements that affect the application of accounting policies and the use of estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting year. Management bases these judgements and estimates on a combination of past experience,
professional expert advice and other evidence that is relevant to each individual circumstance. Actual results may differ from
these judgements and the resulting estimates and are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the year in which the estimate is revised. Significant judgements in the current year and on a recurring basis are
presented to the Audit & Risk Committee.
Judgements
In the course of preparing the financial statements, no judgements have been made in applying the Group’s accounting policies
that have had a significant affect on the amounts recognised in the consolidated Group or parent company financial statements,
other than those involving estimation below.
Estimates
The Directors consider the following to be the key estimates applicable to the financial statements, which have a significant risk
of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year or in the long
term:
Group
Inventory
Deferred programme production stock forms part of inventory and is stated in the financial statements at the lower of cost
or net realisable value. The key assumption is estimating the likely future revenues for which associated programme costs are
expensed in line with. A detailed forecast of future secondary sales is prepared by management based on historic experience
and expected future trends. £1.5m was expensed through the income statement in the year (2020: £1.1m). Additional
information is disclosed in note 15.
Pension obligations
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
and mortality rate. Any changes in these assumptions will impact the carrying amount of pension obligations.
The Group determines the appropriate discount rate at the end of each year. This is the 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.
Regarding mortality, the base tables used are updated every three years (to coincide with triennial valuations) or more
frequently when there is evidence of a change in experience. The CMI tables relating to future improvements in mortality
are updated when new information is available, usually annually.
Other key assumptions for pension obligations are based in part on current market conditions. Additional information, along
with details of sensitivities, is disclosed in note 23.
Company
Carrying value of parent company investments
The Company’s policy is to carry out annual reviews of the carrying value of investments. In determining the recoverable
amount, key assumptions are made regarding future performance, growth rates and discount rate. Based on operating results
for the subsidiary undertakings and forecast cash flows, the Directors consider that the investments’ recoverable amount is
greater than its carrying value and consequently no impairment is considered necessary. Additional information is disclosed
in note 14.
STV Annual Report and Accounts 2021 107
4. Business segments
Information reported to the Group’s Chief Executive for the purposes of resource allocation and assessment of segment
performance is by product. The Group’s operating segments are Broadcast, Digital and Studios. The trade of STV ELM is included
within ‘Other’ up to the date of disposal in August 2021.
Sales
Inter-segment sales
Segment revenue
Segment result
Adjusted operating profit
Broadcast
Digital
Studios
Other
Total
2021
£m
108.8
(9.7)
99.1
2020
£m
94.8
(13.6)
81.2
2021
£m
17.8
–
17.8
2020
£m
13.7
–
13.7
2021
£m
27.0
(0.4)
26.6
2020
£m
9.1
(0.4)
8.7
2021
£m
1.0
–
1.0
2020
£m
3.5
–
3.5
2021
£m
154.6
(10.1)
144.5
2020
£m
121.1
(14.0)
107.1
21.8
15.5
7.9
6.5
1.3
(0.3)
–
–
31.0
21.7
Unallocated corporate expenses
Adjusted operating profit
Exceptional items (note 7)
HETV tax credits (note 27)
Finance costs
Share of loss in associate
Profit before tax
Tax (charge)/credit
Profit for the year
(5.8)
(3.5)
25.2
(0.8)
(1.9)
(2.3)
(0.1)
20.1
(0.7)
19.4
18.2
(8.7)
–
(2.7)
(0.1)
6.7
1.0
7.7
Adjusted operating profit above is the statutory operating profit before exceptional items and includes High-End Television
(HETV) tax credits receivable (refer to note 27 for further information on HETV tax credits). The HETV tax credits relate solely
to the Studios operating segment. £1.9m was receivable in the current year (2020: nil) resulting in a statutory operating loss
of £0.6m in Studios (2020: loss of £0.3m). There were no adjusting items disclosed within Broadcast or Digital operating profit.
Revenue includes £1.1m from sources outside the UK (2020: £1.0m). Operating profit includes £0.7m arising outside the UK
(2020: £0.6m).
Broadcast
Digital
Studios
Other
Total
Segment assets
and liabilities
Assets
Liabilities
Segment total
2021
£m
29.6
(22.3)
7.3
2020
£m
33.0
(18.6)
14.4
2021
£m
1.9
–
1.9
2020
£m
2.8
(0.5)
2.3
2021
£m
33.0
(7.7)
25.3
2020
£m
21.7
(4.8)
16.9
2021
£m
–
–
–
2020
£m
0.4
–
0.4
Unallocated corporate assets
Unallocated corporate liabilities
Consolidated
2021
£m
64.5
(30.0)
34.5
2020
£m
57.9
(23.9)
34.0
58.1
(118.5)
(25.9)
38.4
(102.3)
(29.9)
Segment assets consist primarily of property, plant and equipment, certain leased assets, inventories, trade and other
receivables and cash and bank deposits. Amounts due from HMRC for HETV tax relief is disclosed within Studios. All other
corporation tax balances are disclosed within Corporate.
Segment liabilities comprise operating liabilities including trade and other payables and provisions and certain lease liabilities.
They exclude Group borrowings, retirement benefit obligations, tax liabilities and other non-current liabilities, including the
remaining lease liabilities.
All the net assets in 2020 and 2021 were held in the UK and therefore operate in a single geographical segment.
Other segment
information
Capital additions
Depreciation and
amortisation
Broadcast
Digital
Studios
Other
Total
2021
£m
2.0
2.0
2020
£m
1.0
2.4
2021
£m
0.4
1.0
2020
£m
0.6
0.1
2021
£m
2020
£m
–
–
–
–
2021
£m
0.5
2.3
2020
£m
0.7
2.6
2021
£m
2.9
5.3
2020
£m
2.3
5.1
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info
108 STV Annual Report and Accounts 2021
Notes to the financial statements
For the year ended 31 December 2021
5. Net operating expenses
Programming and production costs
Staff costs (note 6)
Other operational costs
Depreciation and amortisation
Exceptional items (note 7)
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 the parent company and consolidated
financial statements
Fees payable to the Company’s auditors and their associates for other services:
– The audit of the Company’s subsidiaries pursuant to legislation
– Audit-related assurance services
Included in the audit fees payable is £5,000 (2020: £5,000) paid in respect of the parent company.
6. Staff
Group
Aggregate remuneration
Wages and salaries
IFRS 2 expense
Social security costs
Other pension costs
Total aggregate remuneration
The prior year comparative has been updated to include the expense incurred in regard to share based payments.
Average monthly number of employees (including Executive Directors)
Permanent
Contract
Total average number of employees
2021
£m
62.6
28.7
24.6
5.3
121.2
1.7
122.9
2020
£m
36.9
22.8
24.1
5.1
88.9
0.5
89.4
2021
£000
2020
£000
207
38
35
280
2021
£m
25.0
0.5
2.4
0.8
28.7
175
25
30
230
2020
£m
19.2
0.5
2.3
1.3
23.3
2021
Number
2020
Number
441
22
463
441
19
460
Contract staff numbers consist of employees on fixed-term contracts and does not include those on freelance contracts.
Details of Directors’ remuneration is provided in the Remuneration Report on pages 73 to 87.
Company
The Company had no employees during the current or preceding year.
The only element of Director remuneration recognised in the Company Income statement in the year is the estimated charge
associated with share-based payments of £0.2m (2020: £0.2m). No Director received any other remuneration from the Company
during the year (2020: £nil). Emoluments of the Directors are paid by another Group company which makes no recharge to the
parent company.
STV Annual Report and Accounts 2021 109
7. Exceptional items
In order to provide the users of the consolidated financial statements with a transparent view of significant and/or non-recurring
items and their impact on the underlying trading of the Group, the Group presents items recognised in profit or loss for each year
analysed between:
i) Profit before exceptional items; and
ii) The effect of exceptional items
The table below analyses the exceptional items in the current financial year and their impact on key financial statement lines
in the consolidated income statement.
2021
2020
Before
exceptional
items
£m
Exceptional
items
£m
Results for
the year
£m
Before
exceptional
items
£m
Exceptional
items
£m
Results for
the year
£m
23.3
(2.3)
(0.1)
–
20.9
(1.0)
19.9
43.8p
42.1p
(1.7)
0.3
–
0.6
(0.8)
0.3
(0.5)
21.6
(2.0)
(0.1)
0.6
20.1
(0.7)
19.4
18.2
(2.7)
(0.1)
–
15.4
(0.6)
14.8
(0.5)
(8.2)
–
–
(8.7)
1.6
(7.1)
42.7p
41.0p
35.2p
33.8p
17.7
(10.9)
(0.1)
–
6.7
1.0
7.7
18.2p
17.5p
Operating profit (i)
Finance costs (ii)
Share of loss of an associate
Gain on sale of non-current asset (iii)
Profit before tax
Tax (charge)/credit (iv)
Profit for the year
Earnings per share
Basic
Diluted
i) Operating profit
The exceptional item of £1.7m (2020: nil) relates to the repayment of furlough monies received in the prior year. During 2020,
and principally over the second quarter, the Group applied for grants under the Government’s Coronavirus Job Retention
Scheme (‘CJRS’) totalling £1.6m (£0.1m was also received in Q1 2021). These monies were received at a time when the
business was operating under the tightest of lockdown restrictions, with total advertising revenue down 38% year on year, no
programme production activity possible, and visibility over key markets very limited. The amounts received under the CJRS
were allocated against payroll within operating costs in 2020. Over the second half of 2020 and into 2021, the Group’s trading
improved significantly, despite further lockdown measures in Q1 2021, demonstrating the resilience of its Broadcast business
and the successful execution of strategy in Digital in particular. In March 2021, the Board announced its intention to resume
payment of a cash dividend to shareholders. Although there was no obligation on the Group to repay furlough grants, the
Board decided that CJRS monies received would be repaid in full prior to re-commencing payment of a cash dividend. As the
repayment of furlough grants does not relate to the current period of trading, nor was it required under any law or regulation,
the Group has presented the cost as exceptional so as not to distort the underlying trading results of the business.
In 2020, the £0.5m exceptional charge related to the accrual of costs expected to be incurred in relation to the disposal of
STV ELM Ltd.
ii) Finance costs
An exceptional credit of £0.3m has been recognised relating to amounts recovered from the Scottish Children’s Lottery (SCL)
in excess of the expected credit loss provided for in the prior year.
In 2020, an exceptional cost of £8.8m was recognised, being full provision of amounts due from the SCL as at 31 December
2020. Partially offsetting this amount was an exceptional credit of £0.6m, being the VAT recoverable on amounts written off.
iii) Gain on sale of non-current asset
An exceptional gain of £0.6m has been recognised in 2021, being net proceeds received on disposal of STV ELM Ltd.
iv) Tax (charge)/credit
Tax adjustments are the tax effects of the exceptional items recognised in both years.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info
110 STV Annual Report and Accounts 2021
Notes to the financial statements
For the year ended 31 December 2021
8. Tax charge/(credit)
Corporation tax
Current year charge
High-End Television tax credits
Adjustments in respect of prior years
Deferred tax (note 20)
Tax charge/(credit) for the year
The charge/(credit) 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 19% (2020: 19%)
Tax effects of:
Other expenses not deductible for tax purposes
High-End Television tax credits
Impact of changes in tax rates
Changes in estimates related to prior years
Tax charge/(credit) for the year
2021
£m
2020
£m
0.9
(1.9)
(0.2)
(1.2)
1.9
0.7
2021
£m
20.1
3.8
0.4
(1.9)
(1.4)
(0.2)
0.7
–
–
(0.4)
(0.4)
(0.6)
(1.0)
2020
£m
6.7
1.3
0.1
–
(1.4)
(1.0)
(1.0)
9. Earnings per share
The calculation of earnings per share is based on earnings after tax and the weighted average number of ordinary shares in
issue during the year, excluding ordinary shares purchased by the Company and held for use by the STV Employee Benefit Trust.
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all
dilutive potential ordinary shares. The Group has one type of dilutive potential ordinary shares namely share options granted
to employees.
The adjusted earnings per share figures that have also been calculated are based on earnings before adjusting items that are
significant in nature and/or quantum and not expected to recur every year and are therefore considered to be distortive. The
adjusting items recognised in the current and prior years are operating and non-operating exceptional items and the IAS 19 net
financing cost, as well as the related tax effect. Adjusted earnings per share has been presented to provide shareholders with
an additional measure of the Group’s year on year performance.
Earnings per share
Basic earnings per share
Diluted earnings per share
Basic earnings per share (before exceptional items)
Diluted earnings per share (before exceptional items)
Adjusted basic earnings per share
Adjusted diluted earnings per share
2021
pence
42.7p
41.0p
43.8p
42.1p
45.6p
43.8p
2020
pence
18.2p
17.5p
35.2p
33.8p
37.5p
36.1p
STV Annual Report and Accounts 2021 111
The following reflects the earnings and share data used in the calculation of earnings per share:
Earnings
Profit for the year attributable to equity shareholders
Exceptional items (net of tax) (i)
Profit for the year (before exceptional items)
Excluding IAS 19 net financing cost (ii)
Adjusted profit
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings per share
Dilution due to share options
Weighted average number of ordinary shares for the purposes of diluted earnings per share
2021
£m
19.4
0.5
19.9
0.8
20.7
2020
£m
7.6
7.1
14.7
1.0
15.7
2021
million
2020
million
45.5
1.8
47.3
41.7
1.7
43.4
Details of the adjustments to earnings are as follows:
i) Exceptional items (net of tax) £0.5m charge (2020: £7.1m charge)
Exceptional charge of £0.8m (2020: £8.7m), net of related tax credit of £0.3m (2020: £1.2m). See note 7 for more details.
ii) Adjustment for IAS 19 financing cost (net of tax) £0.8m (2020: £1.0m)
An adjustment for the IAS 19 financing cost of £0.8m (2020: £1.2m), net of a related tax credit of nil (2020: £0.2m). The IAS 19
financing cost is adjusted as it is a non-cash item that relates to historical defined benefit pension schemes.
10. Dividends
Dividends on equity ordinary shares
Paid final dividend
Paid interim dividend
Dividends paid
2021
per share
2020
per share
2021
£m
2020
£m
6.0p
3.7p
9.7p
–
3.0p
3.0p
2.7
1.7
4.4
–
1.3
1.3
A final dividend of 7.3p per share (2020: 6.0p per share) has been proposed and is subject to approval by the Board of Directors.
It is payable on 27 May 2022 to shareholders who are on the register at 19 April 2022. The ex-dividend date is 14 April 2022.
This final dividend, amounting to £3.3m has not been recognised as a liability in these financial statements.
11. Intangible assets
Cost
At 1 January 2020
Additions
At 1 January 2021
Additions
At 31 December 2021
Accumulated amortisations and impairment
At 1 January 2020
Amortisation
At 1 January 2021
Amortisation
At 31 December 2021
Net book value at 31 December 2021
Net book value at 31 December 2020
Web
development
£m
5.0
0.7
5.7
0.4
6.1
2.4
1.0
3.4
1.1
4.5
1.6
2.3
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info
112 STV Annual Report and Accounts 2021
Notes to the financial statements
For the year ended 31 December 2021
12. Property, plant and equipment
Cost
At 1 January 2020
Additions
Transfers
At 1 January 2021
Additions
Transfers
At 31 December 2021
Accumulated depreciation and impairment
At 1 January 2020
Charge for year
At 1 January 2021
Charge for year
At 31 December 2021
Net book value at 31 December 2021
Net book value at 31 December 2020
Plant,
technical
equipment
and other
£m
Assets
under
construction
£m
Leasehold
buildings
£m
0.4
–
–
0.4
–
–
0.4
0.1
–
0.1
0.1
0.2
0.2
0.3
30.4
–
0.4
30.8
–
3.0
33.8
20.3
2.2
22.5
2.5
25.0
8.8
8.3
0.3
1.4
(0.4)
1.3
2.5
(3.0)
0.8
–
–
–
–
–
0.8
1.3
Total
£m
31.1
1.4
–
32.5
2.5
–
35.0
20.4
2.2
22.6
2.6
25.2
9.8
9.9
The Group did not have any capital commitments at 31 December 2021 (2020: nil).
13. Right-of-use assets
The balance sheet shows the following amounts relating to leases:
Cost
At 1 January 2020
Additions
Derecognition of assets
At 1 January 2021
Additions
Derecognition of assets
At 31 December 2021
Depreciation
At 1 January 2020
Charge for the year
At 1 January 2021
Disposals
Charge for the year
At 31 December 2021
Net book value at 31 December 2021
Net book value at 31 December 2020
Property
£m
Vehicles
£m
Total
£m
13.8
0.2
(0.1)
13.9
11.0
–
24.9
1.8
1.8
3.6
–
1.5
5.1
19.8
10.3
0.3
–
–
0.3
0.1
(0.1)
0.3
0.1
0.1
0.2
(0.1)
0.1
0.2
0.1
0.1
14.1
0.2
(0.1)
14.2
11.1
(0.1)
25.2
1.9
1.9
3.8
(0.1)
1.6
5.3
19.9
10.4
The addition in the current year relates to the lease extension of the Group Head office building at Pacific Quay, Glasgow.
14. Investments
Group
Listed
Associates
Other
STV Annual Report and Accounts 2021 113
2021
£m
2020
£m
0.3
1.5
0.1
1.9
5.6
1.0
0.1
6.7
Listed investments remaining at the balance sheet date are shares held in Mirriad Advertising plc, measured at fair value through
the Consolidated Statement of Comprehensive Income.
On 18 September 2019, the Group (along with all other shareholders) sold its investment in deltaDNA Ltd to Unity Software Inc
for a net consideration of £2.5m. The net consideration comprised an element payable in cash (62.5%) and the balance in shares
in Unity (37.5%). Consideration of £0.5m (£0.2m in shares and £0.3m in cash) was deferred for 2 years. The Group disposed of
its full investment in Unity Software Inc during the year for net consideration of £4.4m and received £0.3m in cash that was
previously held in escrow.
The movement in investments in associates during 2021 relates to acquisition of a 25% shareholding in the unscripted production
company, Hello Mary, for consideration of £0.6m in September 2021. The investment was initially recognised at cost and has
subsequently been updated to reflect the Group’s share of post-acquisition losses (less than £0.1m) in accordance with the equity
method of accounting. The Group acquired a 25% stake in Two Cities Television in 2020 for consideration of £1.1m with subsequent
recognition of the Group’s accumulated share of the loss of £0.2m. No dividends have been received from either company.
Company
Share in Group undertakings
Other investments
Listed
2021
£m
2020
£m
121.8
47.3
0.3
122.1
5.6
52.9
The movement in the share of Group undertakings relates to a capital contribution in the directly owned subsidiary, STV News
Services Limited, as part of a wider exercise to clear down and repay intercompany balances. See note 16 for further detail.
Impairment of investments in subsidiary undertakings
At the end of each reporting period the Company assesses whether there is any indication that its investments in subsidiary
undertakings may be impaired. Where such indications exist, the recoverable amount of the associated investment is calculated
by determining the higher of its fair value less cost of disposal and value in use and compared to the carrying value of the
investment. Where the fair value less cost of disposal cannot be determined, the value in use is deemed to be the recoverable
amount. The value in use is calculated based on the cash flow projections in the three year plan prepared by the Management
Board in November 2021. This supported moderate growth in the Group through the period from 2022 to 2024 and a terminal
value thereafter based on growth of 1.5% (2020: 3%). The resulting valuation provided significant headroom against the
investment carrying value.
Further sensitivities were modelled to provide management with sufficient comfort that no impairment would be required,
namely a +/- 1% change in discount rate and also an operating profit fall in 2022 of 10% followed by flat growth. Both scenarios
still left the Group with significant headroom. The pre-tax discount rate applied was 7.3% (2020: 10.6%).
Based on the above the Directors consider that the investments’ recoverable amount is greater than its carrying value and
consequently no impairment is considered necessary.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info
114 STV Annual Report and Accounts 2021
Notes to the financial statements
For the year ended 31 December 2021
14. Investments continued
Subsidiary undertakings
A full list of subsidiary undertakings as at 31 December 2021 is as follows:
Undertaking
Principal activity
Registered address
STV News Services Limited*
STV Television Limited
STV Central Limited
STV North Limited
STV Studios Limited
STV Drama Productions Limited
STV Drama Productions 2 Limited
STV Drama Productions 3 Limited
STV Tod Productions Limited
Primal Media Limited (52%)
Ginger Television Productions Limited
SKA Ginger Productions Limited (50%)
Altissimo Music Limited
stv.tv Limited
Solutions.tv Limited
Grampian Television Limited
STV Services Limited*
Scottish News Network Limited
Rise & Shine (Television) Limited*
Peoples champion Limited
Scottish Media Group (Jersey) Limited
The Ginger Media Group Limited
* directly held
Investment holding undertaking
Investment holding undertaking
Television broadcasting
Television broadcasting
Programme production
Programme production
Programme production
Programme production
Programme production
Programme production
Dormant
Dormant
Music rights
Dormant
Dormant
Dormant
Group services undertaking
Dormant
Dormant
Dormant
Dormant
Dormant
(1)
(1)
(1)
(1)
(2)
(1)
The registered address for all companies (except where noted) is Pacific Quay, Glasgow, G51 1PQ.
(1) 9 Savoy Street, London, WC2E 7EG
(2) IFC, St Helier, Jersey, Channel Islands, JE1 1ST
The investments are stated in the balance sheet at cost less amounts written off for impairment in value. All of the above
investments are 100% shareholdings except where stated.
15. Inventories
Deferred programme production
Programme production work in progress
Recorded programmes
Group
2021
£m
11.3
5.9
0.5
17.7
2020
£m
10.3
4.4
0.7
15.4
Deferred programme production stock represents costs of original production which are deferred and recognised against future
revenue streams expected to be generated in the secondary sales market. This asset is classified as current, even though it will
be realised into cash over several years, due to the homogeneous nature of the inventory which would result in an arbitrary split
between the current and non-current categories, and to be consistent with normal industry practice. It is anticipated that £1.0m
(2020: £0.9m) is likely to be realised within 12 months.
At 31 December 2021, the net present value (NPV) of the future sales, estimated over a maximum period of 15 years for drama
and 10 years for other genres of programming, was £17.8m (2020: £21.0m), with the net book value of £11.3m (2020: £10.3m)
representing 36% (2020: 39%) of the future sales gross of discounting. A discount rate of 7.3% (2020: 6.7%) was applied. Revenues
in 2022 are expected to be £1.8m.
STV Annual Report and Accounts 2021 115
The sensitivities regarding the principal assumptions used to support the carrying value of the deferred programme production
stock are set out below:
Assumption
Change in assumption
Impact on NPV
Discount rate
Rate of price inflation (RPI)
Sales
Increase/decrease by 0.25%
Increase/decrease by 0.25%
Increase/decrease by 10.0%
Decrease/increase by £0.3m
Increase/decrease by £0.2m
Increase/decrease by £2.1m
16. Trade and other receivables
Group
Company
Current
Non-current
Current
Non-current
Trade receivables
Amounts owed by Group undertakings
Prepayments
Contract assets
Other receivables
Income tax recoverable
2021
£m
18.6
–
1.7
6.3
1.0
2.5
30.1
2020
£m
13.7
–
6.2
3.8
1.6
0.3
25.6
2021
£m
2020
£m
2021
£m
–
–
–
–
0.4
–
0.4
–
–
–
–
0.9
–
0.9
–
136.4
0.1
–
1.1
0.6
138.2
2020
£m
–
113.7
0.1
0.1
3.0
0.3
117.2
2021
£m
–
–
–
–
–
–
–
Group
At 31 December, the ageing analysis of the trade receivables, net of any provisions for impairment, are as follows:
Not past due
Up to 30 days overdue
Between 30 and 90 days overdue
Over 90 days overdue
2021
£m
16.5
1.4
0.4
0.3
18.6
2020
£m
–
217.0
–
–
–
–
217.0
2020
£m
12.9
0.6
0.2
–
13.7
The Group engages in a number of contra deals whereby advertising is provided in exchange for goods and services instead
of cash consideration. Balances 90 days overdue relates to the proportion of contra deals not yet utilised by the Group.
The Group applies the simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance.
At 31 December 2021, trade receivables with an initial carrying value of £0.1m (2020: £0.3m) were impaired and fully provided for.
The movements in the provision were as follows:
At 1 January
Charge for the year
Amounts utilised
Unused amounts reversed
2021
£m
0.3
–
(0.1)
(0.1)
0.1
2020
£m
–
0.3
–
–
0.3
The Directors consider that the carrying amount of trade and other receivables approximates their fair value. Except for those
trade receivables that have been provided for, all trade receivables are expected to be recovered.
Contract assets (accrued income) primarily relate to the Group’s right to consideration for work completed but not billed at
the reporting date.
Deferred consideration of £nil (2020: £1.3m) is included in other receivables of the Group and the Company. The prior year
amounts relate to the sale of the Group’s investment in Unity Software Inc (note 14), which were held in escrow and have
been received and sold in the current year.
Company
Amounts owed by Group undertakings are considered to have low credit risk and the loss allowance recognised during the
year was therefore limited to 12 months expected credit losses. The amounts were not material.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info
116 STV Annual Report and Accounts 2021
Notes to the financial statements
For the year ended 31 December 2021
16. Trade and other receivables continued
The non-current amounts owed by Group undertakings in the prior year of £217.0m comprised a loan of £80.0m plus accrued
interest in accordance with the terms specified in the loan contract. The full balance has been settled in the current year, and
the loan terminated, with part of the balance being converted to an additional investment in the subsidiary and the remainder
satisfied through the novation of intercompany debt due from another Group company. All remaining amounts owed by Group
undertakings are unsecured, interest free and have no fixed date of repayment. These are trade related and disclosed within
current receivables are they are repayable on demand.
17. Trade and other payables
Current
Trade payables
Accrued expenses
Contract liabilities
Amounts owed to group undertakings (payable on demand)
Bank overdraft
Social security and other taxes
Group
2021
£m
4.2
21.4
2.4
–
–
5.8
33.8
2020
£m
5.0
9.9
2.2
–
–
5.3
22.4
Company
2021
£m
2020
£m
–
0.1
–
1.3
–
–
1.4
–
0.1
–
111.8
3.4
–
115.3
The Directors consider that the carrying amount of trade and other payables approximates their fair value.
Contract liabilities (deferred income) primarily relate to the consideration received from customers in advance of transferring
a good or service.
18. Borrowings
Bank loans
Group
2021
£m
14.4
2020
£m
22.7
In March 2021, the Group refinanced its bank facilities, agreeing a new £60m revolving credit facility, with £20m accordion, for a
minimum tenor of 3 years. Two one-year extension options are available. The first extension option was agreed in February 2022
on commercial terms in line with the existing facility. The covenant package is in line with the Group’s previous facility, namely
net debt to EBITDA must be less than 3 times, and interest cover must be greater than 4 times.
The effective interest rate was:
Bank loans (floating)
19. Lease liabilities
Current
Non-current
2021
%
1.8
Group
2021
£m
1.2
19.7
20.9
2020
%
1.8
2020
£m
1.7
9.1
10.8
The increase in lease liabilities relates to the renegotiated lease for the Group Head office building at Pacific Quay, Glasgow.
The income statement shows the following amounts relating to leases:
Interest expense (included in finance costs)
Group
2021
£m
0.3
2020
£m
0.3
Maturity analysis
Not later than 1 year
Later than 1 year but not later than 5 years
Later than 5 years
Less: Future finance charges
Present value of lease obligations
20. Deferred tax asset
The analysis of the current deferred tax balances is as follows:
Deferred tax asset to be recovered after more than one year
STV Annual Report and Accounts 2021 117
Minimum payments
Present value
of payments
2021
£m
1.6
6.0
18.9
26.5
(5.6)
20.9
2020
£m
2.0
7.8
2.1
11.9
(1.1)
10.8
2021
£m
1.2
4.1
15.6
20.9
2020
£m
1.7
7.3
1.8
10.8
Group
2021
£m
2020
£m
(26.5)
(19.9)
Company
2021
£m
(9.0)
2020
£m
(6.9)
A deferred tax asset has been recognised in respect of certain 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.
A deferred tax asset of £3.4m (2020: £2.0m) has not been recognised and 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:
Group
At 1 January 2020
(Credit)/charge to income
Charge/(credit) to equity/OCI
At 1 January 2021
(Credit)/charge to income
Credit to equity/OCI
At 31 December 2021
Company
At 1 January 2020
Charge to income
Credit to equity/OCI
At 1 January 2021
Charge to income
Credit to equity/OCI
At 31 December 2021
Tax
trading
losses
£m
Other
temporary
differences
£m
Accelerated
tax
depreciation
£m
Retirement
benefit
obligations
£m
(3.8)
(1.5)
–
(5.3)
(0.1)
–
(5.4)
–
–
–
–
–
–
–
(0.5)
(0.1)
0.1
(0.5)
–
–
(0.5)
–
–
–
–
–
–
–
(0.9)
0.1
–
(0.8)
–
–
(0.8)
–
–
–
–
–
–
–
(10.9)
0.9
(3.3)
(13.3)
2.0
(8.5)
(19.8)
(5.5)
0.3
(1.7)
(6.9)
0.8
(2.9)
(9.0)
Total
£m
(16.1)
(0.6)
(3.2)
(19.9)
1.9
(8.5)
(26.5)
(5.5)
0.3
(1.7)
(6.9)
0.8
(2.9)
(9.0)
On 3 March 2021, the UK Government announced a change in the UK corporation tax rate from 19% to 25% with effect from
1 April 2023. The 25% rate was substantively enacted on 10 June 2021. The deferred tax assets at 31 December 2021 have been
measured using the rates that apply in the periods when the underlying timing differences, on which deferred tax is recognised,
are expected to unwind.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info
118 STV Annual Report and Accounts 2021
Notes to the financial statements
For the year ended 31 December 2021
21. Ordinary shares and share premium
Group and Company
At 1 January 2020
Issue of ordinary shares
Bonus issue of ordinary shares
At 1 January and 31 December 2021
Number of
shares
(thousands)
Ordinary
shares
£m
Share
premium
£m
39,192
7,051
480
46,723
19.6
3.5
0.2
23.3
102.0
12.0
1.1
115.1
Total
£m
121.6
15.5
1.3
138.4
The total authorised number of ordinary shares is 63 million shares (2020: 63 million shares) with a par value of £0.50 per share
(2020: £0.50 per share). All issued shares are fully paid.
22. Notes to the consolidated and parent statement of cash flows
Operating profit/(loss) for the year
Adjustments for:
Depreciation and amortisation (note 5)
Share based payments
Increase in inventories
(Increase)/decrease in trade and other receivables (excluding STV ELM Ltd)
Increase/(decrease) in trade and other payables (excluding STV ELM Ltd)
Net decrease/(increase) in STV ELM Ltd working capital
Decrease/(increase) in intra Group balances
Cash generated by/(used in) operations
Group
Company
2021
£m
21.6
5.3
0.5
(2.3)
(2.3)
11.2
0.8
–
34.8
2020
£m
17.7
5.1
0.5
(2.2)
1.1
1.1
(0.9)
–
22.4
2021
£m
(2.9)
–
0.2
–
0.3
0.1
–
10.3
8.0
2020
£m
(0.7)
–
0.5
–
(0.1)
(0.3)
–
(8.0)
(8.6)
Non-cash investing and financing activities
Right-of-use assets of £11.1m (2020: £0.2m) were acquired during the year. Refer to note 13 for further detail.
Net debt reconciliation
At 1 January 2020
Cash flows
Non-cash flows (i)
At 1 January 2021
Cash flows
Non-cash flows (i)
At 31 December 2021
Long-term
borrowings
£m
Cash
and cash
equivalents
£m
Net (debt)/
cash
£m
Lease
liabilities
£m
(43.7)
21.0
–
(22.7)
8.8
(0.5)
(14.4)
6.2
(1.0)
–
5.2
9.5
–
14.7
(37.5)
20.0
–
(17.5)
18.3
(0.5)
0.3
(12.4)
1.7
(0.1)
(10.8)
1.5
(11.6)
(20.9)
Net debt
including
lease
liabilities
£m
(49.9)
21.7
(0.1)
(28.3)
19.8
(12.1)
(20.6)
(i) Non-cash movements relate to the amortisation of borrowing costs (for long-term borrowings) and the acquisition of right-of-use assets and
corresponding lease liabilities.
STV Annual Report and Accounts 2021 119
23. Retirement benefit schemes
Defined contribution schemes
The Group operates two money purchase schemes, the STV Pension Scheme and the Pearl & Dean Cinemas Pension Scheme.
Total employer contributions expensed by the Group in the year was £0.8m (2020: £0.8m).
Defined benefit schemes
The Group operates two defined benefit pension schemes, the benefits of which are related to service and final salary. The
schemes are trustee administered and the schemes’ assets are held independently from those of the Group. 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. Both are closed schemes and accounted for under the projected unit method.
The net deficit of the schemes is recognised in the consolidated balance sheet, with the deficit of the Caledonian Publishing
Pension Scheme recognised in the Company balance sheet, as STV Group plc is the sponsoring employer. In both the Group
and Company balance sheets, the net deficits are presented within non-current liabilities, as follows:
Defined benefit scheme obligations
Defined benefit scheme assets
Net pension deficit
Group
Company
2021
£m
(519.4)
440.0
(79.4)
2020
£m
(507.5)
437.2
(70.3)
2021
£m
(202.0)
166.1
(35.9)
2020
£m
(202.4)
166.2
(36.2)
A related, offsetting deferred tax asset for the Group of £19.8m (2020: £13.3m) and the Company of £9.0m (2020: £6.9m)
is included within non-current assets. Therefore, the pension scheme deficit net of deferred tax for the Group was £59.6m
at 31 December 2021 (2020: £57.0m) and the Company was £26.9m (2020: £29.3m).
Assumptions used to estimate the scheme obligations
The significant actuarial assumptions used for accounting purposes reflect prevailing market conditions in the UK and are
as follows:
Rate of increase in salaries
Rate of increase of pensions in payment
Discount rate
Rate of price inflation (RPI)
Group and Company
2021
%
nil
3.55
1.90
3.55
2020
%
nil
3.00
1.25
3.00
Assumptions regarding future mortality experience are set based on advice, published statistics and experience in each scheme
and are reflected in the table below (average life expectations of a pensioner retiring at age 65).
Retiring at balance sheet date:
Male
Female
Retiring in 25 years:
Male
Female
Group
Company
2021
Years
2020
Years
2021
Years
2020
Years
21.0
23.2
22.3
24.6
19.6
21.9
21.5
23.5
20.6
22.8
22.1
24.3
19.2
21.6
21.0
23.7
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info
120 STV Annual Report and Accounts 2021
Notes to the financial statements
For the year ended 31 December 2021
23. Retirement benefit schemes continued
The sensitivities regarding the principal assumptions used to measure the defined benefit obligation are set out below:
Assumption
Change in assumption
Impact on scheme liabilities
Group
Discount rate
Rate of price inflation (RPI)
Rate of mortality
Company
Discount rate
Rate of price inflation (RPI)
Rate of mortality
Increase/decrease by 0.25%
Increase/decrease by 0.25%
Decrease by 1 year
Increase/decrease by 3%
Increase/decrease by 2%
Decrease by 5%
Increase/decrease by 0.25%
Increase/decrease by 0.25%
Decrease by 1 year
Increase/decrease by 3%
Increase/decrease by 1%
Decrease by 6%
These sensitivities have been calculated to show the movement in the defined benefit obligations in isolation, and assuming
no other changes in market conditions at the balance sheet date.
Defined benefit scheme assets
The movement in the fair value of the defined benefit scheme’s assets is analysed below:
Fair value of scheme assets at 1 January
Interest income
Inclusion of insurance policy assets
Return on plan assets excluding interest income
Contributions from the employer
Administrative expenses paid from plan assets
Benefits paid from plan
Fair value of scheme assets at 31 December
Group
Company
2021
£m
437.2
5.4
–
12.7
11.0
(2.0)
(24.3)
440.0
2020
£m
381.9
7.5
20.6
38.2
12.0
(1.7)
(21.3)
437.2
2021
£m
166.2
2.0
–
3.9
4.6
(0.8)
(9.8)
166.1
2020
£m
154.6
3.0
–
14.2
4.8
(0.7)
(9.7)
166.2
One of the schemes also holds insurance policies that pay an income into the scheme. At 31 December 2021 the assets were
included within the fair value of the scheme assets.
At 31 December 2021, the assets were invested in a diversified portfolio that consisted primarily of investment funds and debt
instruments. The fair value of the Scheme’s assets are shown below:
Group
Investment funds
Debt instruments
Cash and cash equivalents
Derivatives
Annuity policies
Company
Investment funds
Debt instruments
Cash and cash equivalents
Derivatives
At 31 December 2021
At 31 December 2020
Quoted
£m
Unquoted
£m
Total
£m
Quoted
£m
Unquoted
£m
9.1
201.9
21.7
–
–
232.7
156.6
26.5
5.0
(0.4)
19.6
207.3
165.7
228.4
26.7
(0.4)
19.6
440.0
8.7
133.1
24.4
–
–
166.2
213.7
36.6
(1.3)
1.4
20.6
271.0
At 31 December 2021
At 31 December 2020
Quoted
£m
Unquoted
£m
3.4
81.4
8.1
–
92.9
62.5
9.0
1.9
(0.2)
73.2
Total
£m
65.9
90.4
10.0
(0.2)
166.1
Quoted
£m
Unquoted
£m
3.4
53.4
9.9
–
66.7
85.4
14.1
(0.5)
0.5
99.5
Total
£m
222.4
169.7
23.1
1.4
20.6
437.2
Total
£m
88.8
67.5
9.4
0.5
166.2
STV Annual Report and Accounts 2021 121
Defined benefit scheme obligations
The movement in the present value of the defined benefit obligation is analysed below:
Defined benefit obligation at 1 January
Experience loss/(gain)
Interest cost
Remeasurement losses
Benefits paid from the schemes
Defined benefit obligation at 31 December
Group
Company
2021
£m
507.5
16.3
6.2
13.7
(24.3)
519.4
2020
£m
445.9
(2.2)
8.7
76.4
(21.3)
507.5
2021
£m
202.4
1.4
2.4
5.6
(9.8)
202.0
2020
£m
186.7
(0.8)
3.6
22.6
(9.7)
202.4
The defined benefit obligation at 31 December 2021 includes an amount of £19.6m relating to the benefits payable to the holders
of the annuity contracts.
Amounts recognised through the income statement:
Amounts recognised through the consolidated income statement are as follows:
Amount charged to net operating expenses:
Administration expenses
Amount charged to finance costs:
Net interest expense
Total charged in the consolidated income statement
Amounts recognised through the statement of comprehensive income:
The amounts recognised in the consolidated statement of comprehensive income are:
Return on plan assets excluding interest income
Actuarial (losses)/gains on liabilities arising from change in:
– demographic assumptions
– financial assumptions
– experience adjustments
Total recognised in the consolidated statement of comprehensive income
2021
£m
2020
£m
(2.0)
(0.8)
(2.8)
2021
£m
12.8
(42.5)
28.8
(16.3)
(17.2)
(1.7)
(1.2)
(2.9)
2020
£m
38.2
(5.5)
(50.2)
2.2
(15.3)
Funding arrangements
Contribution rates to the scheme are determined by a qualified independent actuary on the basis of a triennial valuation using
the projected unit method. The most recent triennial valuation was carried out as at 31 December 2020. This valuation resulted
in a deficit of £116m on a pre-tax basis at 30 September 2021 compared to £127.0m on a pre-tax basis at the previous settlement
date of 28 February 2019. The next triennial valuation will take place as at 31 December 2023.
Deficit recovery plans, which end on 31 October 2030, have been agreed with aggregate monthly payments unchanged from
the previous recovery plans. The 2021 deficit recovery payments will total £9.3m, with annual payments then increasing at the
rate of 2% per annum over the term of the recovery plans, in line with the previous agreement. A contingent cash mechanism
remains in place. As previously, contingent funding payments equivalent to 20% of any outperformance above a benchmark
of available cash will be paid to the schemes.
The recovery plans are designed to enable the schemes to reach a fully funded position, using prudent assumptions about the
future, by 2030.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info
122 STV Annual Report and Accounts 2021
Notes to the financial statements
For the year ended 31 December 2021
24. Share-based compensation
The purpose of the share-based compensation plans is to align the interests of management and employees with those
of shareholders by providing incentives to improve the Company’s performance on a long-term basis, thereby increasing
shareholder value.
The Company has the following plans currently operating:
i) Long-term incentive plans
ii) Employee share plans
Total share-based compensation costs were £0.5m (2020: £0.2m).
i) Long-term incentive plans (LTIP)
The Group has a long-term incentive plan for Executive Directors and other senior executives. Awards are normally granted 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.
The performance measures are agreed by the Remuneration Committee based on what they consider to be aligned with the
delivery of strategy and creation of long term shareholder value. 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
performance measures are based on a combination of earnings growth and total shareholder return and are valued based
on an appropriate option pricing model.
The assumptions used for the 2021 LTIP valuation are:
Risk-free interest rate expected
Dividend yield expected share
Price volatility
%
0.8
3.1
43.9
Awards granted under the Company’s long term incentive plan that were outstanding at the end of the year had the following
market prices at the date of award:
Year awarded
2014 LTIP
2015 LTIP
2016 LTIP
2017 LTIP
2018 LTIP
2018 LTIP – Chief Executive
2019 LTIP
2020 LTIP
2021 LTIP
Market price
on grant date
£
2021
Number
2020
Number
3.40
4.25
3.67
3.65
3.23
3.10
3.55
2.85
3.30
1,873
1,607
3,755
7,118
–
–
417,461
542,413
468,448
1,873
1,607
3,755
16,318
348,025
172,025
417,461
542,413
–
ii) Employee share plans
The employee share plans are open to all employees. They provide for a grant price approximately equal to 90% of the middle
market quotation 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 £2.72 to £3.60. At 31 December 2021 there were 439,369 (2020: 591,769)
options outstanding under the plans. The employee share plans are valued using the Black and Scholes model.
Employee Benefits Trust
The Group has investments in its own shares as a result of shares purchased by the STV Employees’ Benefit Trust (‘EBT’).
Transactions with the Group-sponsored EBT are included in these financial statements and consist of the EBT’s purchases of
shares in STV plc, which is accounted for as a reduction to retained earnings. The table below shows the number of STV plc
shares held in the EBT at 31 December 2021 and the purchases/(releases) from the EBT made in the year to satisfy awards under
the Group’s share schemes disclosed above and in relation to shares awarded to certain employees for the achievement long
term service milestones (Loyalty awards):
STV Annual Report and Accounts 2021 123
Nominal
value
£m
636,824
Shares held at
Number of shares
(released)/purchased
1 January 2021
1,273,648
(9,200)
(30,372)
(1,031)
(4,403)
21,659
31 December 2021
1,250,301
625,150
Scheme
LTIP releases
Deferred share releases
SAYE releases
Loyalty releases
Shares purchased
The total number of shares held by the EBT at 31 December 2021 represents 2.67% (2020: 3.25%) of STV’s issued share capital.
The market value of own shares held at 31 December 2021 is £4.3m (2020: £3.8m).
25. Financial risk management
Capital management
The Group’s objectives when managing capital are to safeguard it’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 18, 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 2021 and 2020 were as follows:
Total borrowings (note 18)
Cash and cash equivalents
Net (cash)/debt
Total equity
Total capital
2021
£m
14.4
(14.7)
(0.3)
(25.9)
(26.2)
2020
£m
22.7
(5.2)
17.5
(29.9)
(12.4)
1%
(141%)
Covenants
The Group is subject to two financial covenants in respect of its committed borrowing facilities. 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. The Group has previously used interest rate swaps
to vary the mix of fixed and floating rates. Interest rate swap contracts with a principal value of £nil (2020: £15.0m) were held in
the year. The contracts matured on 9 July 2020 and were not replaced. In accordance with IFRS 13, 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. The fair value is based on the market price of these instruments at the balance sheet date.
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.
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.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info
124 STV Annual Report and Accounts 2021
Notes to the financial statements
For the year ended 31 December 2021
25. Financial risk management continued
a. 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 2021 the Group had no forward foreign currency
contracts in place (2020: £nil).
b. 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.
In prior years, the only significant concentration of credit risk related to monies due from the Scottish Children’s Lottery. The Group
disposed of its lottery operation in the current year and therefore is no longer exposed to this risk. The Group 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.
c. 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 (comprising the undrawn borrowing facility (note 18)
and cash and cash equivalents) 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.
d. 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.
Regular sensitivity analysis is carried out, and on the level of borrowings of the Group at 31 December 2021, a movement of 0.25%
in interest rates would change the level of interest paid in the year by +/- £0.1m (2020: £0.1m). 0.25% is considered a reasonably
possible change.
26. Transactions with related parties
Key management compensation
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 the Directors’ Remuneration Report on pages 73 to 87 for details.
2021
£m
2.1
2020
£m
1.0
Other related party transactions
During the year the Group acquired loan notes of £0.4m (2020: nil) from Two Cities Television Limited, an associate company,
which will convert to equity when the company reaches profitability and the Group increases its shareholding to be a majority
stake. At the balance sheet date nil (2020: nil) was outstanding. In addition, the Group has agreed to provide programme
production financing to Two Cities for the production of Blue Lights, a drama series commissioned by the BBC and scheduled
for delivery in 2022. £0.6m was drawn down at the balance sheet date, with the facility maturing at the end of September 2022
by which time all monies will be repaid.
The Group provided advertising with an estimated fair value of £0.8m (2020: £0.6m) for nil consideration to the charity
organisation STV Appeal.
Amounts paid to the Group’s retirement benefit plans are set out in note 23.
STV Annual Report and Accounts 2021 125
27. Reconciliation of statutory results to adjusted results
In reporting financial information, the Group presents alternative performance measures (APMs) which are not defined or
specified under the requirements of IFRS. The Group believes that these APMs, which are not considered to be a substitute for
or superior to IFRS measures, provide stakeholders with additional helpful information on the performance of the business.
The Group makes certain adjustments to the statutory profit measures to exclude the effects of exceptional items and adjust for
other material amounts that it believes are distortive to the underlying trading performance of the Group. By presenting these
alternative performance measures, the Group believes it is providing additional insight into the performance of the business that
may be useful to stakeholders.
Below sets out a reconciliation of the statutory results to the adjusted results:
Statutory result
Exceptional items (note 7)
Result for the year before exceptional items
IAS 19 net finance costs
High-End Television tax credits
Adjusted result
2021
2020
Operating
profit
£m
Profit
before tax
£m
Basic
earnings
per share
Pence
Operating
profit
£m
Profit
before tax
£m
Basic
earnings
per share
Pence
21.6
1.7
23.3
–
1.9
25.2
20.1
0.8
20.9
0.8
1.9
23.6
42.7p
1.1p
43.8p
1.8p
–
45.6p
17.7
0.5
18.2
–
–
18.2
6.7
8.7
15.4
1.2
–
16.6
18.2p
17.0p
35.2p
2.3p
–
37.5p
IAS 19 related items, principally the net interest expense included in the income statement, are excluded from non-statutory
measures as they are non-cash items that relate to historical defined benefit pension schemes.
The Group meets the eligibility criteria to claim HETV tax relief through the production of certain dramas created in its Studios
division. This incentive was introduced in the UK to support the creative industries and is a critical factor when assessing the
viability of investment decisions in the production of high-end drama programmes. These production tax credits are reported
within the total tax charge in the Consolidated Income Statement in accordance with IAS 12. However, STV considers the HETV
tax credits to be a contribution to production costs and therefore more aligned to working capital in nature. Therefore, the
adjusted results for the Group reflect these credits as a contribution to operating cost and not a tax item.
28. Contingent liabilities
Company
Under a group registration for Value Added Tax, the companies within the Group are jointly and severally liable for Value Added
Tax due by any member of the group registration. At 31 December 2021, the Value Added Tax payable by other members of the
group registration amounted to £5.0m (2020: £5.2m).
29. Post balance sheet events
On 9 March 2022, the Group announced it had acquired a 25% stake in quiz show producer, Mighty Productions, and extended
its existing co-development and co-production agreement with Tod Productions for a further 3 years.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info
126 STV Annual Report and Accounts 2021
Five year summary
For the year ended 31 December 2021
Results
Revenue
Profit from operations before exceptional items
Profit on ordinary activities before taxation and exceptional items
Assets
Non-current assets
Current assets
Total assets
Equity and liabilities
Current liabilities
Non-current liabilities
Equity attributable to the owners
Non-controlling interests
Total equity and liabilities
Key statistics
Earnings per ordinary share – basic
– diluted
Dividends per ordinary share
2017
£m
2018
£m
2019
£m
2020
£m
2021
£m
117.0
125.9
123.8
107.1
144.5
19.0
15.5
39.2
53.4
92.6
18.6
112.3
(38.3)
–
92.6
30.1p
29.6p
17.0p
20.1
17.2
40.1
43.4
83.5
21.5
121.1
(59.1)
–
83.5
4.2p
4.1p
20.0p
22.6
19.0
52.0
41.0
93.0
22.0
118.3
(47.1)
(0.2)
93.0
41.7p
40.3p
6.3p
18.2
15.4
50.1
46.2
96.3
24.1
102.1
(29.8)
(0.1)
96.3
18.2p
17.5p
9.0p
23.3
20.9
60.1
62.5
122.6
35.0
113.5
(25.8)
(0.1)
122.6
42.7p
41.0p
11.0p
STV Annual Report and Accounts 2021 127
Corporate advisers
Registrars
Link Group
10th Floor, Central Square
29 Wellington Street
Leeds LS1 4DL
Tel: +44 (0)371 664 0300*
Email: enquiries@linkgroup.co.uk
Shareholder Portal: www.signalshares.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
Joint corporate brokers
Panmure Gordon & Co
One New Change
London EC4M 9AF
Shore Capital Markets
Cassini House
57 St James’s Street
London SW1A 1LD
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 2021 Annual Report of STV Group plc including the financial statements is available at: www.stvplc.tv
Investor relations
For investor enquiries please contact:
Kirstin Stevenson
Head of Communications
STV Group plc
Pacific Quay
Glasgow G51 1PQ
Tel: 0141 300 3886
Email: kirstin.stevenson@stv.tv
* 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.
OverviewStrategic ReportGovernanceFinancial StatementsAdditional Info 128 STV Annual Report and Accounts 2021
Shareholder services
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.
Shareholder queries
If you have any questions in relation to your shareholding, please contact Link Group, 10th Floor, Central Square, 29 Wellington Street,
Leeds, LS1 4DL; email: enquiries@linkgroup.co.uk; telephone +44 (0) 371 664 0300*.
Shareholder portal
You can register online to view your holdings using the Shareholder Portal, a service offered by Link Group at www.signalshares.com.
The Shareholder Portal is an online service enabling you to quickly and easily access and maintain your shareholding online – reducing
the need for paperwork and providing 24 hour access for your convenience. Through the Shareholder Portal you may:
• Cast your proxy vote online
• View your holding balance and get an indicative valuation
• View movements on your holding
• View the dividend payments you have received
• Update your address
• Register and change bank mandate instructions so that dividends can be paid directly to your bank account
• Elect to receive shareholder communications electronically
• Access a wide range of shareholder information including the ability to download shareholder forms
Dividend payment options
UK shareholders: STV normally pays dividends twice each year and we would like to encourage you to elect to have your dividends
paid directly into your bank account. This is a more secure method of payment and avoids delays or cheques being lost. You can sign
up for this service on the Shareholder Portal www.signalshares.com. This will allow you to receive all future dividends direct to your
chosen account.
Non-UK shareholders: If you are resident outside the UK you can have any dividends in excess of £10 paid into your bank
account directly via Link Group international payments service. Details and terms and conditions may be viewed at
https://ww2.linkassetservices.com/ips
* 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.
Designed and produced by Thunderbolt Projects
STV Group plc
Pacific Quay
Glasgow G51 1PQ
Tel: 0141 300 3000
www.stv.tv
Company Registration Number SC203873