2023
Annual Report and Accounts
Committed to great content,
connected to our communities
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STV Zero is an ambitious and wide-reaching sustainability strategy
to become net zero carbon by 2030; and to encourage viewers,
colleagues and partners to help create a more sustainable
society, as together we tackle humanity’s greatest challenge.
Our programme of activities and related targets to reduce the
carbon impact of the business covers five key areas:
• energy consumption
• waste reduction
• programme making
• promoting sustainability using STV’s reach
• achieving a sustainable supply chain
Visit stvplc.tv/social-impact/sustainability
STV Group plc
Pacific Quay
Glasgow G51 1PQ
Tel: 0141 300 3000
www.stv.tv
Company Registration Number SC203873
Six Four
STV and STV Player
Contents
Overview
2023 financial highlights
2023 financial highlights
01
02 Introducing STV
03
STV strategy and targets dashboard
Strategic Report
The STV investor proposition
STV business model
Engaging with our stakeholders (S.172 statement)
04 Chairman’s statement
06 Chief Executive’s report
08
10
12
14 Operating review: Studios
22 Operating review: Digital
28 Operating review: Broadcast
34 Finance review
37 Risk management
46
ESG report
Governance
65 Introduction to governance
66 Board of Directors
70 STV Management Board
71 Corporate governance report
79
88 Remuneration report
106 Directors’ report
Governance Committee reports
Financial Statements
109 Independent auditors’ report to the members of STV Group plc
116 Consolidated income statement
116 Consolidated statement of comprehensive income
117 Consolidated and parent company balance sheets
118 Consolidated and parent company statements of changes in equity
119 Consolidated and parent company statements of cash flows
120 Notes to the financial statements
Additional Information
147 Corporate advisers
148 Shareholder services
Financial performance resilient as
macroeconomic effects are partly
offset by growth in Studios and Digital
Revenue
Total advertising revenue
Adjusted operating profit 1
£168.4m
2022 £137.8m
£97.3m
2022 £110.0m
£20.1m
2022 £25.8m
Adjusted operating margin 1
Profit for the year
Adjusted EPS1
11.9%
2022 18.7%
£5.3m
2022 £17.3m
28.2p
2022 42.3p
Dividend per share
Non-broadcast profit 1,2
11.3p
2022 11.3p
75%
2022 38%
View our Annual Report and Accounts and
other information about STV at stvplc.tv
1 See note 7 to the financial statements.
2 Proportion of Group adjusted operating profit derived from Digital and Studios.
STV Annual Report and Accounts 2023 01
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview
Introducing STV
The Bay
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 – Studios, Digital
and Broadcast – all supported by a central enabling function.
The Group’s award-winning production business, STV Studios, is Scotland’s
largest production company, creating and producing world class content
for a range of UK and international broadcasters and streamers, including
BBC One and Two, ITV, Channel 4, Channel 5, AppleTV+, Discovery and Sky.
STV Studios is a family of over 20 leading production labels across every
genre, from quiz to documentary, factual, entertainment and drama. It is
an unrivalled network of senior creative leaders across the UK nations and
regions, with a significantly expanded pipeline of new programme ideas,
over 30 established returning series and a rich programme archive of c.5,000
hours. Shows include Antiques Road Trip (BBC), Screw (Channel 4), Elizabeth
is Missing (BBC) Criminal Record (AppleTV+), Bridge of Lies (BBC), Celebrity
Catchphrase (ITV), LEGO Masters (Channel 4), Trucking Hell (Channel 5), Blue
Lights (BBC) and Yorkshire Auction House (Really). STV Studios was named
Production Group of the Year at the Edinburgh TV Awards in August 2023.
STV’s rapidly growing free streaming service, STV Player, features an
ever-growing library of premium content including UK original and
international drama box-sets, sport and factual entertainment – much
of which isn’t available to stream on any other platform in the UK.
STV Player is pre-installed in three quarters of the UK’s connected TV homes
and is available on all major platforms, including Sky, NOW, Virgin Media,
Amazon Fire TV, Freesat, YouView and Freeview Play.
Show highlights include true crime thriller, The Long Shadow; Irvine
Welsh’s Crime; much-loved police drama, Taggart; and key acquisition,
iconic soap Brookside.
Viewers can also watch STV Player content ad-free and download shows
by subscribing to STV Player+.
Broadcasting since 1957, STV operates the Channel 3 licences across central
and north Scotland, is free-to-air on all the main TV platforms in Scotland, and
is the best-watched peak time channel in Scotland. STV reaches 2.8 million
adults each month, making it an unrivalled marketing platform in our home
market for advertisers. A Public Service Broadcaster, STV brings viewers a
strong schedule of network programming alongside locally produced news,
current affairs and factual entertainment shows.
STV is home to some of the most popular shows on television, including iconic
soaps Coronation Street and Emmerdale; entertainment hits like The Masked
Singer and I’m A Celebrity… Get Me Out Of Here!; gripping dramas including
Trigger Point and Mr Bates vs The Post Office; top class free-to air sport like
the Rugby Six Nations and the FIFA World Cup; and a range of home-grown
productions including flagship news programme STV News at Six, the most
watched news programme in Scotland.
Studios
Scotland’s largest, and one of the
UK’s leading, production groups
Digital
Pan-UK streaming service
Broadcast
Scotland’s number 1 peak time TV station
02 STV Annual Report and Accounts 2023
Tuned-in to our viewers
Day in and day out, we entertain audiences
with a wide range of original and returning
series on our own digital and linear channels
and for other UK and international networks
and streamers too.
Read on to share in our 2023 screen highlights >>
The Firm
STV Studios Factual
for BBC Scotland
Bridge of Lies
STV Studios Entertainment
for BBC One
What’s on Scotland
STV and STV Player
Screw
STV Studios Drama
for Channel 4
Mary Kills People
STV Player
Without Sin
STV and STV Player
The Bay
STV and STV Player
STV strategy and targets dashboard
Our strategic priorities are focused on
the diversification of our business towards
digital streaming and IP ownership.
Group
Studios
Strategy
Enhanced diversification
2023 target
More than 50%
operating profit from
outside traditional
broadcasting
Strategy
Build word-class studios
2023 result
75%
Achieved
2023 target
Quadruple revenue
to £40m
2023 result
£66.8m
Achieved
Digital
Strategy
Drive digital
2023 targets
Double revenue to £20m
Double registered
users to 5m
2023 result
£20.2m
5.7m
Achieved
Broadcast
Strategy
Maximise broadcast
2023 target
Grow STV controlled
revenue to £20m
2023 result
£17.2m
Not
achieved
STV Annual Report and Accounts 2023 03
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Chairman’s statement
Paul Reynolds
Chairman
Despite the macro economic uncertainty in 2023, our strong
focus on executing our diversification strategy has enabled
STV to build growth businesses in digital and television
production that have set the company up for long-term
success in a rapidly changing media market.
2023 was very challenging for the media
sector, with high inflation and interest rates and
widespread macro uncertainty contributing to the
most difficult advertising market for many years,
with many advertisers reining-in their spend.
The uncertainty also impacted programme
commissioners who reduced spend and
increasingly relied on tried and tested returning
series with established audiences, which reduced
the number of new commissions. Despite this
backdrop, strong execution of our diversification
strategy combined with good cost control and
the hard work, commitment and creativity of our
colleagues ensured that we delivered a resilient
financial performance in 2023, creating firm
foundations for future success.
Performance
Revenue for the year was £168.4m with adjusted
operating profit of £20.1m. Within this result, our
new acquisition of Greenbird Media group recorded
revenue of £15m and operating profit of £3.2m,
in line with the business case underpinning the
investment. More details are included in the
Finance Review on pages 34 to 36.
Dividend
Recognising the vital importance of shareholder
returns, in light of the Group’s financial performance
for the year and considering all relevant factors
including the ongoing macroeconomic uncertainty
the Board proposes a final ordinary dividend of
7.4p per share, which, when added to the interim
dividend, provides a total dividend for the year of
11.3p per share in line with 2022. This will be paid,
subject to shareholder approval at our AGM on
1 May 2024, to shareholders on the register at
close of business on 19 April 2024.
Strategy
Terrestrial television continues to have enduring
strength and relevance, as the recent seismic
impact of STV drama Mr Bates vs The Post Office has
proved beyond doubt. Nevertheless, our long-term
strategy is designed to ensure that we have a
business model that is resilient in the face of
fast-changing consumer habits and challenging
economic periods such as we are seeing. The pace
of change in our sector continues to quicken, and
in response we accelerated our own transition in
2023, from a company reliant on linear broadcast
advertising to one led by content creation and
digital streaming that can access not just local but
international markets. During the year, we delivered
75% of our earnings from outside traditional
broadcasting, comfortably exceeding the 50%
target we set ourselves for the end of 2023.
It has been a transformative year for STV Studios
with the acquisition of Greenbird Media in July
2023 which was materially earnings-enhancing
from day one and was funded from the Group’s
existing financial resources. The deal boosts the
number of labels within STV Studios from nine to
over 20, our portfolio of all-important returning
series to over 30, and establishes a strong network
of senior creative leaders across STV, representing
a major step towards our goal of becoming the
UK’s #1 nations and regions production company.
It was a notable accolade for STV Studios to be
named Production Group of the Year at the
prestigious Edinburgh TV Awards in August 2023.
Our streaming service STV Player continues to
grow strongly and profitably with streams up
28% last year, boosted by the availability of new
original and premiere content, including through
our long-term digital deal with ITV which makes
new ITVX content exclusively available in
Scotland. Scottish advertisers also benefit from
a ‘one stop shop’ for access to mass audiences
across linear, VOD and programmatic, and the
best in data-driven targeting.
Environmental, Social and Governance
Recognising the importance to all stakeholders of
the Company’s approach to ESG (environmental,
social and governance), we established a dedicated
Board ESG Committee during the year to ensure
appropriate leadership of these issues. The ESG
Committee supports the Board in ensuring the
Group delivers a positive social impact to promote
long-term shareholder and stakeholder value.
The new Committee, chaired by Independent
Non-Executive Director David Bergg, held its
inaugural meeting in October 2023 and reports
to shareholders for the first time in this report
on pages 86 and 87.
This is the first year the Company is required to
disclose in the Annual Report its compliance with
the Companies (Strategic Report) (Climate-related
Financial Disclosure) Regulations 2022 (SI 2022/31).
The disclosures are included in the Climate-related
Financial Disclosures report on pages 58 to 63.
As a Board and Management Team, it is critical
we engage frequently with all of our stakeholder
groups. We want to ensure that the Company’s
strategy and the way we operate is clearly
understood, and to identify if there are any gaps
in our approach that need to be addressed. Pages
12 and 13 say more about this, showing how we
are working with and delivering for Customers,
Colleagues, Suppliers, Investors, Communities
and Environment, as well as for Government
and Regulators.
Looking to the future
The Board is very proud that STV has evolved
so purposefully and quickly to reflect the media
opportunities of a new and more volatile time.
We are now a far more resilient business and with
a track record of meeting our promises. We have
successfully transitioned to new exciting growth
areas and, having laid strong foundations, I remain
confident that we have the platform to deliver
profitable growth for shareholders in the years
ahead. I’d like to thank CEO Simon Pitts, CFO
Lindsay Dixon, the Management Board and
everyone who works at STV for their talents in
making this happen.
Finally, I’d like to thank my colleagues around
the Board table for their commitment, insight
and support.
Paul Reynolds
Chairman
As Scotland’s commercial Public Service
Broadcaster, we continue to have unrivalled reach
in Scotland with STV the most popular peak time
TV channel for the fifth year in a row. Therefore
by some margin we are the most effective
medium for advertisers in Scotland. In March
2024, we accepted terms from Ofcom to renew
our Channel 3 licences for a further ten-year
period from January 2025, providing further
long-term certainty to our core business. The
importance of the draft Media Bill to ensure that
Public Service Media is as prominent on digital
platforms as they are today on traditional
broadcast cannot be underestimated. We
welcome the Government’s recognition that
the legislation is urgently required in this area.
Culture
STV’s people are at the heart of everything we do.
There is an open, cohesive culture throughout
the organisation and our people take huge pride
in what STV represents to viewers, advertisers,
partners and communities alike. Our role as a
Board is to make sure this positive workplace
culture is nurtured and maintained as we continue
to grow and change the balance of the Group to
meet the demands of the evolving strategy and
an ever-changing market.
Governance and Board operations
Effective corporate governance and integrity
remain paramount and are never more necessary
than in times of challenge and change. As your
Chair, one of my key responsibilities is to ensure
good governance, and I continue to be well
supported by my fellow Board members.
During the year, we welcomed Naomi Climer
CBE as an independent Non-Executive Director
and Chair of the Remuneration Committee, and
member of the newly constituted Environmental,
Social and Governance (ESG) Committee. As well
as a successful career in broadcast media,
engineering and technology, Naomi brings
significant plc experience as an Independent
Non-Executive Director and Chair of Remuneration
Committee for both music and audio products
group, Focusrite plc, and smart sensing software
and hardware developers, Oxford Metrics plc.
Ian Steele, Independent Non-Executive Director
and Chair of the Audit & Risk Committee, will be
stepping down from the Board at the conclusion
of our AGM on 1 May 2024 after more than eight
years’ service. On behalf of the Board, I would
like to extend my thanks to Ian for his financial
expertise, constructive challenge and unstinting
support, all of which have been invaluable to STV,
and he leaves with our very best wishes for the
future. A formal search is in progress to recruit
Ian’s successor and we hope to announce the
appointment in due course. However, ever mindful
of costs and effectiveness, we aim to run with
a somewhat smaller Board going forward.
04 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 05
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Chief Executive’s report
Simon Pitts
Chief Executive
Throughout 2023, we have been focused on accelerating
our diversification strategy by expanding our Studios and
Digital businesses so that together they make up more
than 50% of our operating profit1, and I’m delighted to say
that we have now exceeded this vital target that we set
ourselves for 2023, thereby significantly strengthening
our business and our growth prospects for the long term
in a rapidly changing media market.
Like all businesses, 2023 saw us operating against
a very challenging macro-economic backdrop
with high inflation and interest rates resulting in
low levels of consumer and business confidence.
Our Broadcast division, fuelled by advertising, has
clearly felt the impact at both the national and
regional level, although local Scottish advertising
has proved more resilient than national due to the
ongoing success of our advertising Growth Fund
with SMEs. In a difficult market we have also
continued to bear down on costs and this will
remain a key focus moving forward.
With viewing habits constantly changing we
have moved quickly to embrace digital streaming
and build a world class production business, and
this strategic change must continue apace over
the coming years. Linear broadcast advertising
faces structural pressures, but we do expect it
to improve as the UK economy strengthens –
as it has consistently done following previous
economic shocks – and when that happens we
are well-placed to capitalise as the market leader
in Scotland, offering a compelling combination of
brand-building and highly targeted, data-driven
advertising solutions.
We remain excited about the future of STV.
With the first phase of our digital transformation
now behind us, we’re focused on accelerating the
profitable growth of our streaming and Studios
businesses while continuing to modernise and
maximise the impact of our Broadcast business.
At the heart of this will be ongoing Studios growth
both locally and internationally, expansion of
our streaming offering in the UK and further
afield, and a focus on expanding and growing
revenues from our core Scottish market. We’ll
confirm full details of the next phase of our
growth plan later in 2024.
2023: A transformational year
STV Studios has had an exceptional year even in
a challenging commissioning market. The division
was already on a strong growth trajectory, with
multiple series in production for broadcasters and
streamers such as BBC, Apple TV+, Discovery and
Channel 4, and the acquisition of Greenbird Media
in July 2023 has been transformational for the
business. The STV Studios family now comprises
over 20 production labels, giving us scale and
considerable creative firepower in a competitive
commissioning space.
STV Player has had another record-breaking year,
delivering significant audience growth across a
mix of shows including high-end drama, great
entertainment and live sport, and not to forget
iconic soap, Brookside, which proved a very canny
acquisition for our streaming service. We’ve also
now seen one full year of our new digital deal with
ITV, which enables us to premiere new, original
drama box sets exclusively in Scotland, and these
are driving considerable viewing numbers. The
deal also saw ITV become our digital sales agent,
which has more than doubled the level of targeted
advertising on STV Player and has allowed us to
take advantage of ITV’s unrivalled scale and
advertising capability in the UK.
In terms of divisional performances against our
KPIs: STV Studios was already on track to exceed
its targets for 2023 but due to the strategic
acquisition of Greenbird Media, the division
significantly outperformed its goal to quadruple
revenue to £40m, delivering £67m revenue by
year end. The digital division achieved its targets
of doubling revenues to £20m (£20.2m) and more
than doubled the number of registered users
to 5m (5.7m). As expected due to the difficult
economic backdrop, the broadcast division did not
achieve its target to grow STV controlled revenues
to £20m, with final revenues for 2023 at £17.2m.
1 Adjusted operating profit (note 7).
06 STV Annual Report and Accounts 2023
As anticipated, our overall Group operating profit
was down for the year, significantly impacted by
the weak commissioning and advertising markets.
However, the growth in our Studios and Digital
businesses helped off-set the challenging economic
conditions and, against this backdrop, STV Group
over-achieved on its overall diversification target
by some 25%, delivering 75% of our operating
profit from outside of traditional advertising by
the end of 2023.
Close audience connection
One of the things I’m most proud of at STV is the
close connection we enjoy with our audiences
and communities across Scotland. As Scotland’s
commercial Public Service Broadcaster, with
unrivalled reach, we’re in a privileged position
and can make a strong social impact, and we
continue to work hard to use television to make
a positive difference.
Our charity, the STV Children’s Appeal, has raised
over £30m since launch in 2011 for children
impacted by poverty in Scotland, thanks to the
support of viewers, businesses and the Scottish
Government. Our special Appeal programming
shines a light on the work of charities and those
they help, and this year’s shows inspired incredible
generosity. We work with charities in every part
of the country, where help is needed more than
ever during the cost-of-living crisis, and this year’s
activities helped to raise more than £2.2m.
We’re ever mindful of our impact on the
environment and the potential we have to
inform our audience in accessible ways about
how to minimise their carbon footprint. To this
end, we launched Sustainable Scotland Week in the
summer, featuring special programming with our
weather presenter, Sean Batty, dedicated stories
on our news and current affairs shows, a ‘green
hub’ on STV Player, and promos throughout the
week, all encouraging little changes to make a big
difference. We also walk the walk in the workplace,
ensuring our productions are albert certified, that
energy-efficient practices are encouraged and
that TV studio sets are sustainable.
Our commitment to Diversity and Inclusion, both
on and off-screen, is unwavering. We work closely
with industry partners such as the TV Access
Project and PACT and we are making good
progress in our efforts to ensure the STV team
reflects the audience we serve. We also continued
our successful bursary scheme with RTS, providing
a further 10 bursaries to students in Scotland from
lower income backgrounds for the duration of their
university or college career, alongside invaluable
networking and mentoring opportunities. We have
now sponsored 47 students across Scotland since
launching the scheme.
We welcomed the news from the Secretary of
State in March 2023 that the Channel 3 licences
for north and central Scotland could be renewed
for a further ten-year period from January 2025.
This confirmation secures the provision of public
service obligations for our viewers, including the
country’s highest performing news and current
affairs programmes.
How the Greenbird acquisition
contributes to the STV strategy
This acquisition brings Greenbird’s network of 15 independent production
companies into the STV Studios family, creating a network of over 20
production labels and an unrivalled network of senior creative leaders,
an increased presence across the nations and regions and a significantly
expanded forward pipeline of new programme ideas, several of which have
already been greenlit for 2024.
Greenbird has built an archive of 2,000+ hours of content. This year,
companies within the Greenbird network produced almost 300 hours of
new programming across returning series including LEGO Masters (Tuesday’s
Child for Channel 4/FOX) and The Hit List (Tuesday’s Child for BBC One); A&E
After Dark (Crackit Productions for Channel 5); Trucking Hell (Crackit Productions
for Channel 5); BAFTA-winning The Misadventures of Romesh Ranganathan
(Rumpus Media for BBC Two) and Late Night Lycett (Rumpus Media for Channel
4); NTA-winning Kate Garraway: Caring for Derek (Flicker Productions for ITV1);
and Mortimer and Whitehouse: Gone Fishing (Owl Power for BBC Two).
For more on this see pages 14 to 21.
We were pleased to see the publication of the
UK draft Media Bill in 2023. The inclusion of the
requirement for digital prominence for public service
broadcasters is critical to ensure that streaming
services such as STV Player – with all its UK and
Scottish programming – are accessible and
prominently positioned on the new digital platforms
often operated by global players. We continue
to press for swift passage of the Bill through
parliament before the next General Election.
A resilient business continuing to deliver
In 2023 we made some exceptional television,
achieved strong viewing performances and
commercial revenues in challenging circumstances,
and delivered a transformative acquisition for our
Studios business in Greenbird, all while continuing
to make a positive social impact with our audiences
and communities. I’m incredibly proud of my STV
colleagues, the beating heart of our business,
and I’d like to thank them all for their hard work,
passion, creativity and resilience this past year.
I’d also like to thank our Chairman and Board,
whose counsel continues to be invaluable to the
business, with particular thanks going to Ian Steele
who is stepping down this year after nearly nine
years on the Board, and whose commitment,
leadership and support has been greatly valued.
Through focused and consistent delivery of our
growth strategy we have built a strong foundation
for the future and all of us at STV are excited
about what comes next for audiences, partners
and investors alike.
Simon Pitts
Chief Executive, STV Group plc
STV Annual Report and Accounts 2023 07
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview The STV investor proposition
STV has a clear strategy to transform the company into
a digital streaming and IP-led media business. We are
successfully growing our Digital and Studios divisions to
take advantage of the accelerating market in global video,
while maximising the value of our linear Broadcast channel
and the market-leading platform for advertisers it represents.
We have developed a leading digital platform and growing
library of programme IP that can be monetised, both of
which will endure through the changing habits of viewers
and increased digitisation.
This clearly focused diversification strategy –
which is understood and embedded across the
organisation – will drive a higher quality of
earnings and is key to generating sustainable
value for our shareholders.
Over the last six years we have successfully
rebalanced our business, investing in content and
selling non-core assets, and now generate more
than 50% of our operating profit1 from Digital and
Studios. Looking forward to the next three years,
we will continue to focus on these core areas as the
engine rooms of growth and value generation, with
particular focus on profitable revenue growth and
margin enhancement, particularly internationally,
and cost control in our core Broadcast business
and central functions.
STV’s market position – strongly positioned
for long-term sustainable growth
We have a strong market position:
• Our Broadcast USP is the consistent delivery of
mass audiences to a high-quality TV schedule
of network and Scottish content. The largest
marketing platform in Scotland, STV is the most
popular peak time TV channel, reaching more
than two in three Scottish adults every month
(2.8m) and attracting nearly four times the
audience of its nearest commercial competitor.
This makes us – by some margin – the most
effective medium for advertisers in Scotland.
• Fast-growing, free streaming service, STV Player,
is complementary to our linear channel and
offers an extensive catalogue of high-quality
content, including exclusive Scottish rights for
ITVX premiere programmes. Our streamer
offering widens the demographics of our
viewership and further enhances the reach
for advertisers.
• The recently expanded STV Studios is the
largest production company in Scotland and
a significant UK player, with bases in Glasgow,
Belfast, Manchester, Cardiff, London and
Brighton. Our increased scale makes us uniquely
placed to take advantage of the growing
investment in nations and regions production
across the UK and a ‘go to’ production company
for commissioners of quality content for UK
broadcasters and global streamers alike.
High margin digital business
Our streaming service, STV Player, is available on all
major UK platforms, has grown ahead of the market
and continues to scale rapidly. It is capturing the
viewing shift from linear to digital, offering a rich
mix of exclusive, original and acquired content.
We are now one year into a strategic partnership
for content sharing and advertising sales with ITV,
which creates incremental digital value for our
business. The long-term agreement sees STV Player
take exclusive Scottish rights for an exciting range
of ITVX original content over the coming years;
and sees ITV’s market-leading sales team sell
our national VOD and simulcast advertising,
allowing us to benefit from their scale and market
leadership. VOD advertising revenues trade at
a premium over their traditional linear equivalent.
Our content acquisition is a careful blend of licence
and revenue share, allowing us to minimise risk
and upfront payments.
Studios business increasing in scale
Our Studios business is strongly positioned to
take advantage of increasing demand for quality
content in a UK production market worth more
than £3.9bn 2, as well as growing international
opportunities. In July 2023, we announced the
acquisition of Greenbird Media boosting the number
of labels within STV Studios from nine to over 20,
making shows across all genres for a wide range of
networks and streamers. STV Studios now has an
expanded presence across the UK, strengthening
our ability to take advantage of the continuing
growth of production in the nations and regions.
We have an ever-growing library of content, which
we sell in secondary markets at a higher margin,
and have an increased international presence
achieved via global streaming commissions and
format sales. STV Studios revenues and profits
have trebled in 2023, demonstrating its growth
and considerable potential.
Capacity to invest as a result
of strong cash generation
We have a Revolving Credit Facility in place for
£70m with an accordion facility of £10m attached,
maturing in March 2026. At the end of the year our
net debt was £32.3m demonstrating significant
liquidity headroom, even after our acquisition of
Greenbird Media, and scope to continue to invest
in the business and make continued distributions
to shareholders.
Over the last 3 years we have successfully executed
a £30m investment programme to drive growth in
Studios and Digital, in addition to the Greenbird
acquisition, and have the scope to continue
investment – both in terms of investment capital
and working capital over the coming years. The
pension deficit is well managed with core deficit
recovery contributions remaining constant.
Operating cash conversion in 2023 was 169%
(2022: 45%) with working capital associated
with Studios dependent on activity levels and
the proportion of work being cash-flowed by
commissioners. Over a 3-year period, operating
cash conversion was 107%. We believe this good
cash generation will continue and will enable us
to fully execute our investment programme.
Operational progress
We have a strong track record of delivering
efficiencies across our operations. This can be
seen in the recent modernisation of the STV
newsroom; our approach to deals on digital
content; our low-risk strategy of taking minority
stakes in production companies which we
consolidate in success in our Studios business;
and astute cost control across the business. This
approach has delivered cost savings/avoidance of
c.£3m in 2022 and c.£2.5m in 2023. This focus on
cost management will remain a key element of
our management of the business going forward.
Our focus on sustainability continues to accelerate,
with significant progress on 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
ensured all programmes produced at STV now
meet industry standards for carbon neutrality and
continue to set intermediate milestones on the road
to becoming a net zero carbon business by the end
of 2030. We are proud members of Project albert
and a co-signatory to their Climate Content Pledge.
We are making good progress on diversity across
the organisation. We set ourselves specific targets
for representation from minority groups and full
details of how this is going and our plans for 2024
and beyond can be found in the ESG report.
Shareholder returns
We recognise the importance of a regular,
progressive dividend. Our approach to setting
dividends is to balance the needs of the business
(for reinvestment), with those of our defined
The market for global video
The market for global video is growing rapidly, representing a huge
opportunity which both our digital and production businesses are well placed
to capitalise on, as they demonstrate continued momentum and growth.
The global video streaming market size was valued at $106bn in 2023 and
is expected to expand significantly to 2030. 3
Just as the transition of viewers from linear to digital will continue to
increase, the offering and functionality on STV Player will constantly be
strengthened via an ever-improving rich catalogue of original, premiere,
high-quality PSB content alongside strategic acquisitions, from the UK and
globally, and popular archive material. Our favourable new partnership with
ITV also significantly strengthens our digital strategy in terms of both content
and advertising revenue.
Additionally, international streamers are important customers for STV Studios,
as we expand our customer base in the UK and internationally in a bid to
become a world class producer for the biggest networks and streamers.
We continue to cultivate relationships with the likes of Netflix, YouTube and
Discovery+, and see real potential for future high value commissions, similar
to our recent co-production, Criminal Record for Apple TV+.
benefit pension schemes and other stakeholders,
and in setting the level of dividend proposed we
consider the proportion of free cash flow post
pensions that it represents. We are committed
to maintaining a balance between shareholder
return and investment in our business to continue
to deliver the growth strategy. Since 2019, we
have increased our dividend by 80%.
Core values
Our values are central to everything we do and
define how we work to support our colleagues
and deliver for our audiences, advertisers,
partners, and communities. We’re committed
to business integrity and professionalism across
all our activities.
Whether we’re making, sharing, watching or
celebrating it, we’re passionate about content.
Along with our people, compelling content is at
the heart of STV. We’re locally focused and proud
of our Scottish roots, but our international
ambition knows no bounds.
We’re commercially driven, and we work hard to
innovate, create and get deals done. But always
with respect, and it’s important that STV is a fun
place to work.
We use the power of TV to make a difference.
Whether that’s via our STV Children’s Appeal, our
Advertising Inclusion Fund or our sustainability
programming – we support and connect with our
partners, audiences and communities, and we
believe we can make a difference.
1 Adjusted operating profit (note 7).
2 PACT Census 2023.
3 Source: Grand View Research.
08 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 09
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview 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 four principle
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 brand
STV is a trusted brand continuing to play an important role
in creating value for its stakeholders: as a trusted news and
current affairs partner with a high quality source of affordable
entertainment; supporting its communities through the STV
Children’s Appeal; and helping to grow Scotland’s creative sector.
Our platforms
We operate the leading marketing platform in Scotland (STV,
channel 3) and 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 business, which is also
a meaningful player in the UK production sector following the
acquisition in July 2023 of Greenbird Media. With bases across
Scotland, England, Wales and Northern Ireland, we are uniquely
placed to take advantage of broadcasters’ increased commitments
to nations and regions production in the UK, as well as win
commissions from international buyers.
Our intellectual property
We own, or have access to, the rights of a diverse portfolio of
programmes that are popular across the UK and internationally.
Our relationships
We have strong relationships with our viewers, advertisers,
commissioners and communities to deliver value and boost
the economy.
Financial capital
We have strong financial discipline and significant liquidity
and covenant headroom that provide us with the capital
to invest in medium to long-term growth initiatives as well
as continue to meet our pension obligations and make
distributions to shareholders.
Advertising revenue
Commercial partnerships
Programme production
and distribution
Direct to customer
1
2
3
4
Supported by
• Creative and inclusive culture that values
honesty, transparency and fairness
• Effective risk management and internal
control frameworks
• Strong principles of corporate governance
• STV Zero, our sustainability strategy embedded
into our business practices
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 for the fifth year running, and with
an increasing number of exclusive premieres and other content
available to watch on demand via STV Player.
Advertisers
Through our unique scale and reach, boosted by the £30m
STV Growth Fund (incorporating the Green Fund and Inclusion
Fund) which is aimed at attracting new advertisers to TV.
Our people
By developing a supportive, open, inclusive, creative and
collaborative culture; prioritising the wellbeing (mind, body,
lifestyle) of our people and providing training, development
and mentoring for our people.
Communities
By providing trusted news, facts and information through a
comprehensive local news and current affairs service across
Scotland; improving on and off screen diversity to reflect the
true face of modern Scotland; raising much needed funds for
families and young people in poverty in Scotland through the
STV Children’s Appeal; driving the local economy through job
creation; supporting Scottish business through the Growth
Fund (making advertising affordable); and championing
climate action through STV Zero, our sustainability strategy.
Investors
Accelerating the growth of Digital and Studios to rebalance the
Group towards digital streaming and IP-ownership to deliver
sustainable growth and maintain a progressive dividend.
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, including consultation responses on the Media
Bill which would give prominence for PSBs in the digital age.
We offer bespoke spot advertising and
sponsorship solutions on our linear television
channel, STV, and addressable Video on
Demand (VOD) advertising through Planet V
on our UK-wide streaming service, STV Player.
We work with multiple 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.
We produce original content for broadcasters
and platform owners in the UK and
internationally from our production bases
across the UK. We also own the rights to
a library of content that we sell and licence
to buyers across the world.
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.
• Organisation structure built to enable
accountability and autonomy
• Vibrant internal communications programme
to keep our people motivated and aligned
on key strategic goals
• Frequent, transparent and meaningful
engagement with external stakeholders
10 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 11
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Engaging with our stakeholders
S.172 statement
In the decisions taken during 2023,
the Directors consider 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
• interests of the Company’s employees
• need to foster the Company’s business
relationships with suppliers, customers
and others
• impact of the Company’s operations on
the community and the environment
• desirability of the Company maintaining
a reputation for high standards of business
conduct; and
• need to act fairly, as between members
of the Company
STV’s success depends on building and nurturing
positive relationships with its stakeholders that have
an interest in the business and may be impacted by
the decisions taken. STV wants to be a business that
provides positive outcomes for its stakeholders,
identified through its strategic planning process
as being employees, customers, shareholders,
suppliers, communities and the environment,
Government, and regulatory bodies. These
stakeholders are at the heart of STV’s business
model, strategic priorities, values, and culture.
Our extensive engagement efforts help to
ensure that the Board can understand, consider
and balance broad, and sometimes conflicting,
stakeholder interests when making decisions and
retain focus on delivering long-term sustainable
value. Stakeholder engagement and analysis is
also key to STV’s approach to risk management.
While the Board will engage directly with
stakeholders on certain issues, stakeholder
engagement will often take place at an operational
level with the Board receiving regular updates on
stakeholder views from the Executive Directors
and senior management.
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.
Stakeholder group
What matters to the stakeholder
How we engage with them
Key topics this year
How the Board responded
Colleagues
Our colleagues are integral to the
success of STV and so nurturing
them is essential
• Knowing their voice is heard
• Ensuring everyone is treated fairly
• No compromises on safety and wellbeing,
including mental health
• Regular ‘check in’ opportunities for all
colleagues
• Development and career progression
• Alignment between personal and
Company values
Customers
Our viewers, subscribers,
advertisers, and commissioners
are the cornerstone of STV’s
continued success
• Variety of programming both broadcast
and produced
• Availability, cost-effectiveness and
reach of linear and digital channels
• A trusted and impartial news service
• Awareness of key social and topical issues
Suppliers
Continuity and sustainability
of our supply chain is critical
for our long-term success
• Timely payment practices
• Open and transparent negotiations
• Collaborative relationships
• Compliance with laws and regulations
Shareholders
Shareholders play a vital role in
the success and growth of STV
through provision of funds
• Strategy and execution
• Prospects for future growth
• Investment plans and expected returns
• Returns via dividends and capital appreciation
• Strong ESG practices
• Transparency and openness
Community and
environment
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
Government
and regulators
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
• Availability of trusted news, facts and insight
• Supporting local causes and community
projects
• Driving the local economy through job
creation and supporting local businesses
through access to our marketing platforms
in a cost-effective way
• Reducing our environmental impact
• Representation through programming,
on screen and online
• 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
• Participation of the designated Employee
Director, the Senior Independent Director,
in meetings of the Employee Forum
• The ‘Minute Live’, a weekly all-Company
informal discussion led by the CEO
• Ongoing employee engagement and
wellbeing surveys
• ‘Wellbeing from STV’ programme of
activities including active inclusion networks
• Training and development programmes,
and mentoring
• Dedicated Viewer Enquiries team
• Customer surveys via ScotPulse
• STV Growth Fund, incorporating the Green
Fund and Inclusion Fund, STV Self Service
and the Growth Academy
• Social media and STV News website
• Market insight
• Integration of Greenbird Media
into STV Group
• Inclusion, diversity and equality
• Wellbeing (mind, body and
lifestyle)
• Continuous prioritisation of wellbeing (mind, body,
lifestyle) with the ‘Wellbeing from STV’ programme
being enhanced through the launch of a wellbeing
app and other resources
• Succession planning for key roles with roll-out of
• Succession planning
Women in Digital programme
• Data and insights
• Sustainable supply chains
• Pricing
• Collaboration and partnerships
• Engagement with colleagues across all offices
through rolling programme of visits and events
• Flexible approach to salary reviews and other
bonus and/or one-off payments
• Board visit to Greenbird offices
• Investment in Market Voices, STV Business Spot
and Expert Voices
• Continued support for STV Growth Fund
• Agreement with ITV which brings original content
exclusively to Scotland via extended preview
windows, available on STV Player
• Investment in new creative labels with the
acquisition of Greenbird Media Group, expanding
a forward pipeline of new programme ideas for
commission and improving choice for viewers
• Technology roadmap for STV Player reflecting
customer feedback
• ITV/STV Council
• Face to face meetings with suppliers
• Contract performance reviews
• Management and control
of inflationary pressures
• Sustainability of supply chain
• Security of invoicing and
payment arrangements
• Development of sustainable supply chain approach
• Strategic oversight of relationship with ITV
– introductory meeting of Chairs
• Commitment to fair treatment for all suppliers
• Ongoing training on information security to
enhance key controls around payment processes
• Annual General Meeting
• Capital Markets Days
• Presentations to the retail investor
community at Shares Conference and
Investor Meet
• Visits to Company operating premises
• One to one meetings
• Dedicated Investor section of the
corporate website
• Strategic priorities and
• Accelerated growth in Studios through acquisition
investment case
of Greenbird Media
• Market conditions, economic
and geopolitical environment
• Delivered £2.5m cost saving plan
• In-person meetings with Executive and
• Management of pension
Non-Executive Directors
obligations
• Cost strategy, margins and
returns
• Sustainability and ESG
• Regular communication of performance
• Provision of guidance where appropriate
• Achievement of 2023 STV Zero sustainability
targets, including improved rating in CDP climate
survey to B
• News and current affairs programming
aligned with key current social issues
• Sustainability and climate risks
• Supporting the local creative
• Online portal, STV Self Service
• STV Growth Fund incorporating an
Inclusion Fund and Green Fund, and
STV Growth Academy
• STV Children’s Appeal
sector
• Cost of living crisis
• Launch of Sustainable Scotland Week (a cross
platform campaign to raise awareness and inspire
behaviour change)
• RTS Bursary scheme
• Distribution of £2.2m to local charities supporting
children living in poverty across Scotland, via STV
Children’s Appeal
• Participation in a range of consultations
affecting our industry and business
• Channel 3 licence renewal
• Draft Media Bill, specifically
• RTS Bursary scheme
• Consultation responses to industry matters
• Direct engagement with policy makers,
e.g. The Department for Culture, Media
and Sport, Scottish Government, Ofcom
• Holyrood reception hosted by Fiona Hyslop
• Westminster lunch hosted by Brendan O’Hara
prominence for PSBs in a digital
streaming environment
including the Media Bill
• Investment in independent production companies
• Providing direct employment for c.600 people,
and supporting Scotland and the UK’s freelancer
community
• Joint training initiative between STV News and
Women In Journalism Scotland
12 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 13
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Operating review
David Mortimer
Managing Director
Celebrity Catchphrase
STV Studios Entertainment
for ITV
Studios
58 new series commissioned
or recommissioned
68 series produced
34 returning series
Seven antique show formats
£5.2m operating profit1
1 Adjusted operating profit (note 7).
14 STV Annual Report and Accounts 2023
2023 has been a standout year for STV Studios.
Our production business continues its strong growth
trajectory, with revenues almost trebling year on year
and profit growing nearly fourfold. We are scaling rapidly
and profitably, strengthening our position as the biggest
production company in Scotland and moving ever closer
towards our core strategic objective of becoming the
UK’s number 1 nations and regions producer.
Over the past four years a key part of our expansion
plan, alongside organic growth, has been to invest in
new production partners. In July 2023, we executed
this strategy through the acquisition of Greenbird
Media, significantly increasing the number of
production labels under the STV Studios umbrella,
more than trebling our portfolio of returning series
and significantly expanding our forward pipeline of
new programme ideas. Our Studios business was
already on track to exceed our 2023 target of £40m
of revenue, but this transformative acquisition has
added significant scale and creative firepower to the
group and accelerated STV’s overall diversification
strategy in terms of both revenue and profit.
Strong performance
For 2023, STV Studios revenue has almost trebled to
£67m, comfortably ahead of target, with adjusted
operating profit of £3.2m. Within this, Greenbird
contributed £15.0m of revenue and £3.2m of
operating profit since acquisition at the start of H2.
STV Studios – including the Greenbird labels – has
produced a record 68 shows this year while securing
over 50 new commissions and recommissions.
This is a very strong performance set against a
difficult global commissioning backdrop, with
many UK broadcasters slowing their rate of new
programme commissions, and actions by global
streaming services to cut costs impacting the rate
and number of new commissions awarded.
We move into 2024 mindful of the ongoing
uncertainty in the market. However, not only do
we have a strong stable of returning series – the
holy grail for any production company – we have
a compelling pipeline of new programme ideas
across the expanded STV Studios, and we’re
excited about the year ahead for our newly
enlarged creative powerhouse.
Testament to the tenacity, talent and creativity
of our people, STV Studios was also named
Production Group of the Year at the prestigious
Edinburgh TV Awards in August 2023.
Key performance indicators
New commissions
2023 58
2022 30
2021 16
New, returnable series
2023 8
2022 10
2021 12
Returning series
2023 34
2022 11
2021 7
Criminal Record
Tod Productions and
STV Studios for Apple TV+
STV Annual Report and Accounts 2023 15
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Operating review
We’re proud to be a nations
and regions producer, with
an HQ in Glasgow and bases
right across the UK.
Blue Lights
Two Cities Television
for BBC One
Compelling commissions
As a multi-genre production business, we produce
a wide range of unscripted and scripted shows for
a variety of channels and streamers – and 2023
has seen a plethora of STV Studios shows air
across the UK and beyond. We’re proud to be a
nations and regions producer, with an HQ in
Glasgow and bases across the country including
Belfast, Manchester, Brighton, Cardiff and London,
and a significant amount of production coming
out of Scotland.
BBC One commissioned two new series of hit
gameshow Bridge of Lies with Ross Kemp: a further
eight episodes of the celebrity version for primetime
and a third series of the regular version (25 episodes)
for BBC Daytime. The wider appeal of this format
was demonstrated by its first major international
format sale to Spanish public broadcaster
Televisión Espanola’s free to air channel, La1;
and we will shortly announce a 100 episode
deal with a US network.
Following the success of the first series, BBC One
confirmed a second six-part series of Belfast-based
police drama, Blue Lights. Co-produced by STV
Studios production label, Two Cities, series 1 aired in
March to five-star reviews. One of the BBC’s biggest
new dramas of the year, it delivered an average
audience of 5.7m (consolidated), reaching 12.5m
across all episodes, and series 2 is due to air this
year. Excitingly, the BBC confirmed commissioning
of a further two series in February 2024.
Another major drama for us this year was the
second series of prison drama, Screw, which aired
on Channel 4 in the autumn, reaching over 4 million
adults across the UK. We also delivered thriller
Criminal Record, a co-production with our exclusive
partner, Tod Productions, which launched globally in
January 2024 on Apple TV+ to a raft of rave reviews.
The Guardian called it ‘classy and engrossing
from the start’, whilst the Daily Mail praised the
‘towering cast, superb script and shimmering
cinematography’.
Production was ongoing throughout the year
on reliable returning series favourites such as
Antiques Road Trip and its celebrity sister series,
and a new series of The Travelling Auctioneers
for the BBC, enabling us to provide consistent
opportunities for freelancers and income for the
business. We also filmed brand new observational
documentary, The Firm, for the BBC Scotland
channel. An access-all-areas delve into the
running of one of Scotland’s most high-profile
law firms, the series has attracted a high level
of press attention and is being repeated on BBC
One Scotland and across the UK on iPlayer.
Primal Media completed production of innovative
new reality format The Underdog: Josh Must Win for
Channel 4, due to transmit in Q1 2024. The format
sees a cast of conventionally popular contestants
with big existing online followings compete in a
popularity contest but, in an unexpected flip to the
usual format, a group of celebrities must figure out
how to make the underdog, an ordinary guy with
zero followers, win. In November, we announced
a series development deal with US media group,
NBCUniversal, to potentially create a US version
of this format.
Our antiques content continues to be a ratings
winner for Discovery-owned channel, Really, in
particular The Yorkshire Auction House, which
is their most-watched programme of the year.
STV Studios programmes (Antiques Road Trip,
The Yorkshire Auction House, Celebrity Yorkshire
Auction House and The Edinburgh Auction
House) accounted for 84% of Really’s top
100 transmissions in 2023.
Following our acquisition of Greenbird Media in
July, the new labels continue to win commissions
across unscripted, with a strong pipeline into 2024.
Key series include brand new entertainment
format The Fortune Hotel (Tuesday’s Child) for
ITV/STV. Also coming is hit Korean format Battle
in the Box (Interstellar) for comedy entertainment
channel Dave. The series will see pairs of comics
and celebrities battle it out for pride, prizes and
floorspace in a comedy entertainment and reality
hybrid. Alongside these new shows, we’ve seen
recommissions for numerous long-running shows
and formats including BBC Saturday night triumph
The Hit List (Tuesday’s Child) for BBC, now in its
7th season, and a third series of A&E After Dark
(Crackit Productions for Channel 5).
Celebrity Yorkshire
Auction House
STV Studios Factual
for Really
The Hit List
Tuesday’s Child for BBC One
Behind the scenes with STV
Unlocking potential:
Drama training initiative
Following a successful training initiative for Screw
series 1, our Channel 4 prison drama, the series 2
team were committed to building on this important
work. They hired a training manager and identified
skills gaps in our industry, and then launched an
ambitious and inclusive training programme.
The result was a deliberately diverse and
comprehensive programme completed by
23 trainees, including some people with lived
experience of the criminal justice system, across
various departments including sound, camera,
make up and graphics.
Many trainees have since secured their next roles
or gone on to other training programmes. After
some of our trainees were supported to step up
to more senior roles, a number of new HODs have
been added to the pool of Scottish crew.
Our production was all the richer for working with
this diverse, ambitious and talented group of
trainees, and is a strong example of STV Studios’
commitment to expanding and diversifying
Scotland’s creative community.
The scheme was funded by STV Studios, Channel
4 Skills Fund, Screen Scotland and ScreenSkills
High-End TV Skills Fund (‘HETV Skills Fund’).
16 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 17
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Operating review
Greenbird Media acquisition
This acquisition of Greenbird Media
is a game-changer for STV Studios,
significantly expanding our family
of production labels, creative talent
and financial potential.
Announced in July 2023, this major deal brought
Greenbird’s network of independent production
companies into the STV Studios family for an
initial cash consideration of £21.4m.
The deal boosted the number of creative labels
within STV Studios from nine to over 20, creating
an unrivalled network of senior creative leaders
and a significantly expanded forward pipeline of
new programme ideas – several of which were
already greenlit for 2024.
As a result of the acquisition, STV Studios now
has expanded bases in Glasgow and London,
as well as offices in Cardiff, Belfast, Brighton and
Manchester, strengthening our ability to take
advantage of the continuing growth of production
in the nations and regions.
Since its formation in 2012, Greenbird has built
the largest independently owned network of
high-quality producers in the UK, with an archive
of 2,000+ hours of content. In 2023, companies
within the Greenbird network produced almost
300 hours of new programming.
The newly combined business is now pursuing
an international growth strategy, working with
producers to generate maximum value from their
shows outside the UK, for example building on
Tuesday’s Child’s continued international success
with LEGO Masters (20 territories including UK and
US) and STV Studios’ success with Bridge of Lies
(including UK, Spain and US).
Greenbird founders, Jamie Munro and Stuart
Mullin, are now part of the STV Studios Board in
the roles of Chief Commercial Officer and Finance
and Integration Director respectively, working
alongside Chief Operating Officer, Paul Sheehan,
and under the leadership of MD, David Mortimer.
The acquisition was materially earnings-enhancing
from day one and was funded from STV Group’s
existing financial resources.
We’re delighted to partner with Greenbird and
welcome their incredibly talented network of
creative leaders to the STV family as we jointly
aim to grow our production base in the UK and
internationally.
18 STV Annual Report and Accounts 2023
Some of the hit shows made
by our new labels include:
• LEGO Masters
(Tuesday’s Child for Channel 4/FOX)
• The Hit List
(Tuesday’s Child for BBC One)
• BAFTA-winning
The Misadventures of Romesh Ranganathan
(Rumpus Media for BBC Two)
• Late Night Lycett
(Rumpus Media for Channel 4)
• NTA-winning
Kate Garraway: Caring for Derek
(Flicker Productions for ITV1)
• Mortimer and Whitehouse: Gone Fishing
(Owl Power for BBC Two)
• Question Team
(Interstellar for Dave)
• Emergency Nurses: A+E Stories
(Crackit Productions for ITVBe)
• Trucking Hell
(Crackit Productions for Channel 5)
Late Night Lycett
Rumpus Media for Channel 4
Emergency Nurses:
A+E Stories
Crackit Productions for ITVBe
Question Team
Interstellar for Dave
The Fortune Hotel
Tuesday’s Child for ITV
Out of Order
Rumpus Media for Channel 4
STV Annual Report and Accounts 2023 19
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview
Operating review
International Sales
As in 2022, tape sales of our extensive programme
catalogue remain very strong, proving to be a
reliable and valuable income stream for the
business. Following the acquisition of Greenbird
Media, we now have thousands of episodes in
our distribution portfolio. We remain distributor
neutral, inviting competitive tenders for newly
commissioned programmes, enabling us to
select the best sales partner for each new title.
Key programme sales for 2023 include Antiques
Road Trip and Celebrity Antiques Road Trip, which
continue to sell well worldwide as a combined
franchise, with over 1,000 hours of the STV Studios
hit series in global distribution. The UK version
continues to delight viewers across the world,
notably in the US, Australia and the Nordic territories.
The Travelling Auctioneers has sold internationally
to territories such as New Zealand and the US.
Bridge of Lies has been successfully sold in 17
territories as a combination of tape and format
sales, including to La 1 in Spain. A US version of
Primal Media’s The Underdog: Josh Must Win,
entitled The Underdog, is currently in development
with NBCUniversal.
Post our Greenbird acquisition, the business also
benefits from international sales across our new
labels. These include shows such as LEGO Masters
from Tuesday’s Child, which is now in 20 territories
worldwide and 2024 sees Fox Network move into
its 5th primetime season for US audiences.
Tuesday’s Child’s BBC1 juggernaut The Hit List
continues its growth across Europe with a Spanish
version for TV Canarias hot on the heels of last
year’s French adaptation.
Crackit’s catalogue now sits at well over 1,000 hours
– largely comprised of popular factual and factual
entertainment programming across multiple
returning series. Top selling titles internationally
continue to be Social Media Murders (ITV), A&E
After Dark, Police After Dark, Trucking Hell and
Casualty 24/7 (all for Channel 5).
Our rich archive material continues to be a
source of international income, including Celebrity
Catchphrase; our more recent prison drama,
Screw; crime titles, Taggart and Rebus; and
classic medical drama, Dr Finlay’s Casebook.
The Underdog
Primal Media format
for NBCUniversal
The Travelling Auctioneers
STV Studios Factual
for BBC One
Bridge of Lies
STV Studios Entertainment
format sold to La1
Antiques Road Trip
STV Studios Factual
for BBC One
Post our Greenbird acquisition,
the business benefits from
international sales across
our new labels.
Celebrity Antiques Road Trip
STV Studios Factual
for BBC Two
20 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 21
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Operating review
Richard Williams
Managing Director
I’m A Celebrity…
Get Me Out Of Here!
STV and STV Player
Digital
Record breaking year for STV Player
Viewing hours up 25% year on year
Streams up 28% at 149m
Revenue up 6% year on year
STV Player continued on its strong growth trajectory
in 2023. A winning combination of appealing and exclusive
content, multiplatform availability and a continuously
improving user experience ensured that our streamer
is increasingly becoming a digital destination for viewers
both in Scotland and across the UK.
Nolly
STV and STV Player
We marked our biggest ever month and quarter
in terms of viewing hours, all contributing to a
record-breaking year for STV Player. An incredibly
strong content line-up, including STV Player
exclusives like dramas Crime, Six Four and STV
premieres such as The Long Shadow, alongside
appealing acquired shows, such as Brookside and
Suspects, helped make this our biggest year ever
for Video on Demand (VOD).
Delivering growth
The migration of audiences from linear to VOD
continues and we’re ensuring that our platform
has a rich mix of high-quality content to attract
viewers and keep them on the Player. Viewing
hours were up 25% at 71m compared with 2022,
and streams increased by 28% at 149m. We’ve
seen growth across both viewing hours and
streams in every quarter of the year.
Total active registered users – individuals who have
signed up to the service, provided their details and
viewed content – were up 300,000 to 1.8m across
full year 2023, with 1m MAUs (monthly active
users) across all STV Player platforms.
STV Player VIP sees users opting to receive email
marketing and benefit from fewer ads, winning
prizes, and getting personalised recommendations
for our best shows. VIP users continued to grow,
with new VIPs up by two thirds year on year –
that’s 570,000 opted-in users by the end of 2023.
Mass availability
Our addressable audience is significant, with STV
Player available on all major platforms across the
UK, including Freeview, YouView, Virgin Media,
Samsung, Freesat and Sky.
In April, the STV Player app launched on Sky Q.
This was an important step in our long-term
partnership with Sky, making our service easy
to find verbally via remote control or on the
Sky Q apps rail. Although STV Player content
Key performance indicators
Monthly active users
2023 -9%
2022 +10%
2021 +54%
Online streams
2023 +28%
2022 +1.5%
2021 +63%
Player-exclusive streams
2023 +104%
2022 -20%
2021 +137%
22 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 23
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Operating review
The Twelve
STV Player
We’re ensuring our platform
has a rich mix of high quality
content to attract viewers
and keep them on STV Player.
Planet V
An important contributor to the growth of our
digital business in 2023 has been our new commercial
deal with ITV, which has now seen a full active year
of operation.
In addition to access to exclusive Network content in Scotland, this
important deal sees ITV’s market leading sales team take on exclusive
responsibility for selling all national VOD and simulcast advertising
inventory on STV Player from 2023, allowing STV to benefit from
ITV’s unrivalled scale in the UK market. We joined ITV’s addressable
advertising platform, Planet V, allowing advertisers to access STV’s
inventory alongside ITV’s combination of mass simultaneous reach
and data-driven, targeted advertising. Planet V is already used by
all the major advertising agencies.
This has seen the level of targeted, programmatic advertising on our
streaming service increase from 40% to 90% across the year, with our
digital brand count increasing by 25% across the year, and the STV
average price (cost per thousand) also increasing. This partnership
has also created a genuine one-stop-shop for Scottish advertising
across linear, VOD and programmatic, with the aim of attracting
new, digital-only advertisers who haven’t advertised on TV before.
Commercial VOD delivery grew across the year with total inventory
up 9% year on year.
90%
increase in targeted,
programmatic advertising
24 STV Annual Report and Accounts 2023
has featured throughout Sky Q’s user interface
across the UK since January 2021, this is the
first time the dedicated app has been available,
enabling customers to enjoy a direct relationship
with STV, easily browsing our extensive catalogue
of content, accessing our ad-free tier and
becoming STV Player VIP members.
We’ve also integrated with Amazon Search on
Fire TV and with the Apple TV app, Siri, allowing
audiences to discover STV Player’s programmes
straight from their service. In November 2023,
we launched on the Google TV platform, offering
users access to VOD and live linear viewing.
As we look ahead to 2024, we aim to introduce
more live viewing capability on more platforms
including Sky Q, Sky Glass and Virgin, in time for
the Euro 2024 kick off. Not only does this offer
IP-only homes a new way to watch STV, it will
also allow broadcast viewers to access live
restart functionality.
A rich mix of content
Top performing shows on STV Player are a mix
of new STV exclusive network content, acquired
series from across the world, and archive material,
demonstrating that our strategy of offering a rich
mix of programmes is delivering for our viewers
and the business.
Following an agreement with ITV in December
2022, STV Player has secured exclusive rights
to a range of original and premiere content in
Scotland, encompassing at least 100 hours of
brand new and exclusive box sets per year. 58
new series have premiered in 2023 under this new
deal, driving 28% of VOD viewing. Four of these
titles are in the top 15 best-watched VOD shows,
including Irvine Welsh drama Crime starring
Dougray Scott; crime thriller, Payback, along
with Six Four and Malpractice.
With new exclusive titles launching regularly, this
is an important deal for us and one that ensures
we will continue to deliver exclusive, high quality,
in-demand and first-run content for our audience.
In terms of network programming, soap favourites
Emmerdale and Coronation Street are our strongest
performing Player shows, each attracting over
4.4m of viewing hours across the year and
winning the top two network spots once again.
Entertainment juggernaut, I’m A Celebrity…Get Me
Out Of Here! remained popular at position number
5. Drama remains a big driver of digital viewing,
with almost four in ten STV drama hours viewed
via STV Player across 2023.
Across all VOD programming, STV third-party
acquired material features strongly in our top 20,
with Brookside at number two, Suspects at nine and
Wild at Heart at twelve. Our archive also continues
to deliver for us, with iconic police series Taggart
at the number 11 slot and Take The High Road
driving enough views to win the number 14 spot.
Behind the scenes with STV
STV Player+
STV Player+ is our subscription service which
allows viewers to watch ad-free wherever they’re
logged in to our service, and it’s now available
across all platforms. Over the past year, we’ve
been adding support for promo codes, meaning
we’re now able to amplify our marketing by
running discount campaigns and encourage
sign-ups. In 2023, subscriptions increased by
nearly 50% – and we expect this to rise across
2024 as we continue to market its availability.
50%
increase in STV Player+
subscriptions in 2023
Top 10 VOD programmes
by volume and episode
Position
Programme name
Time spent
(hours)
Total streams
1
2
3
4
5
6
7
8
9
Coronation Street
Brookside
Emmerdale
Crime
I’m A Celebrity… Get Me Out Of Here!
The Long Shadow
Payback
The Bay
Suspects
10
Unforgotten
4.8m
4.6m
4.4m
2.4m
1.5m
1.4m
1.2m
1.0m
1.0m
1.0m
9.2m
13.3m
11.9m
3.9m
2.6m
2.3m
1.9m
1.8m
1.6m
1.7m
STV Annual Report and Accounts 2023 25
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Operating review
Unforgotten
STV and STV Player
Our content acquisition
strategy helps us build
our audience in Scotland
and across the UK.
Crime
STV and STV Player
Redemption
STV and STV Player
Acquisition strategy
In addition to high quality network content,
we continue with our digital content acquisition
strategy – a proven approach which helps us build
our audience base both in Scotland and across
the UK, providing access to a wide range of
high-quality content from around the world.
Acquired titles include shows such as Irish crime
thriller Redemption; The Escape Artist starring David
Tennant and Ashley Jensen; reality paranormal
series, Most Haunted; US medical thriller, Mary Kills
People; and Australian police procedural, Rush.
A key acquisition for 2023 was iconic soap,
Brookside, achieving 1m streams in its first week
and becoming the fastest show ever on STV Player
to hit this milestone. The drama has also helped
significantly raise the profile of STV Player across
the UK. Brookside is our highest streaming VOD
programme in 2023, with c.13m streams, of which
69% came from outside Scotland.
Deals this year were completed with international
players including All3Media International, Fremantle
Media, Lionsgate, Abacus Media Rights, ReelOne
Entertainment and DCD Rights among many
others, and boosting our already significant
library by a further 850 hours.
We’re proud to be working with a wide range of
Scottish talent and in 2023 signed a number of
deals to celebrate local films and programmes.
These included comedy series, Dirty Water;
Glasgow-set drama, The Difference Between Us;
environmental film, Scotland Ocean Nation;
paralympic sports documentary, No Easy Path;
and period drama movie, Stella. STV Player also
sponsors the RTS Scotland Student TV Awards,
with all winning shorts debuting on our service.
STV Player technical improvements
Our focused team is constantly monitoring and
improving our service, to ensure the best possible
user journey for our growing audience.
This year, we’ve invested in our content delivery
pipeline, which reduces the time it takes for our
VOD content to appear on Sky from a few hours
to a few minutes.
We’ve also introduced an Experian integration,
which enables us to gather enriched customer data
and in turn, better profile our audience. This is a
vital first step in enabling us to recommend more
relevant programming to our users, as well as
allowing adverts to be more targeted and useful.
Brookside
In February, STV Player brought
legendary soap Brookside back
to screens from the very start,
20 years after it finished on Channel 4,
reacquainting us with those famous,
sometimes controversial and often
trail-blazing storylines.
Via a major deal with distributor, All3Media
International, this canny acquisition saw some
of TV’s most memorable faces – such as Anna
Friel, Ricky Tomlinson, Amanda Burton and Claire
Sweeney – appear on our streamer in a move
that was celebrated by fans and media alike.
Using the very latest technology to restore the
40-year-old episodes, we dropped the first 10
episodes to launch the show, followed by five new
episodes per week. The iconic drama has proved
to be a hit, becoming the fastest show to reach
1m viewers on STV Player. By the end of 2023, the
series had amassed over 13m streams; and it’s
also helped expand our viewership further afield,
with 69% of all Brookside streams to date coming
from outside of Scotland.
With some exciting, prolific storylines coming
up in 2024 we have high hopes for the ongoing
popularity of this long-running series on STV Player.
“ What’s striking, though, is how picking up a classic soap quickly
helped STV Player to achieve one of its main aims. Since early 2020,
the player has been trying to rebrand itself as a standalone,
UK-wide streaming service, rather than something only available
in Scotland…. In early February, 65% of all Brookside streams had
come from outside the Scotland broadcast region – so job done.
New fans will have also seen the other shows that the service has
to offer when logging on to watch Brookside – a bit like the 2023
version of soaps boosting the rest of a TV schedule.”
“ With the news that Merseyside soap, Brookside, is returning to TV,
fans have been buzzing with excitement.”
“ The nation is hooked on Brookside once again!”
26 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 27
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Operating review
Bobby Hain
Managing Director
STV is Scotland’s commercial Public Service Broadcaster
(PSB) and we’re proud to hold the licences for the north and
central regions of the country, where we deliver a top-quality
schedule of network and regional programmes.
The Masked Singer
STV and STV Player
Broadcast
STV reaches 2.8m adults each month
Scotland’s most popular peak time
TV channel
STV’s all time audience higher than
next seven commercial channels
combined
For the fifth consecutive year, STV is the most
watched peak time channel in Scotland, with
our viewing share considerably ahead of BBC
One. We’re also the only PSB in Scotland to
outperform its UK Network equivalent, tracking
ahead of ITV1 in terms of viewing share across
all time (1.4 percentage points) and peak time
(2.3 percentage points) in 2023.
STV viewers watch the channel on average for
1 hour 47 minutes per day (1 hour 48 in 2022),
longer than any other PSB in Scotland.
This strong performance is due to the content on
offer, which is popular and performs well against
our competitors. STV delivered 97% of the top 500
commercial programme audiences last year and
was the most watched commercial channel on
361 days in 2023.
Ratings winners
Soap giants Coronation Street and Emmerdale
continue to be schedule favourites with loyal
viewers. Other programme highlights for 2023
included new dramas The Long Shadow, Nolly,
A Spy Among Friends and The Hunt for Raoul Moat;
returning dramas, Unforgotten and Vera; and
entertainment shows The Masked Singer, Deal
or No Deal, My Mum Your Dad and The Chase.
Harry: The Interview, which saw Prince Harry and
Meghan Markle speak with Oprah Winfrey, was
exclusive to STV in Scotland, and attracted a linear
audience of over 500k. Entertainment juggernaut,
I’m A Celebrity… Get Me Out Of Here! again proved
our most popular show, with the top rating
episode attracting over 800k viewers, and was
the most-watched programme of the year for
16-34 year olds on any channel.
Key performance indicators
STV viewing share
2023 18.7%
2022 19.3%
2021 19.6%
STV outperformance versus ITV
2023 +8%
2022 +8%
2021 +11%
New advertisers
2023 110
2022 112
2021 85
Coronation Street
STV and STV Player
28 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 29
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Operating review
Our audience was boosted significantly by large
scale sporting events in 2023 such as the Women’s
Football World Cup and the Rugby Six Nations
Championship. In the autumn STV’s Rugby World
Cup coverage reached 2.5m Scots (53%) and
attracted some of the highest audiences of the
year. Viewing of the England vs Scotland Calcutta
Cup match during the Six Nations peaked at 900k
– our biggest audience of 2023. 1.3m Scots tuned
in to watch the FIFA Women’s World Cup, two
thirds of whom were men.
A unique commercial proposition
STV reaches 2.8m adults each month, more than
any other commercial channel, making STV a
unique commercial proposition for advertisers. STV
also has a higher daily, weekly and monthly reach
than any of the subscription streaming services.
Like all businesses, 2023 saw us operating against
a very challenging macro-economic backdrop as
a result of high inflation and rising interest rates.
This inevitably impacted both the Scotland regional
and national linear advertising performance,
albeit regional outperformed National by seven
percentage points.
STV’s Growth Fund, a £30m investment fund that
makes advertising more affordable and accessible
for SMEs in Scotland, continues to go from strength
to strength. Since the launch in 2018, we have
allocated almost £28m across more than 1,220
deals with Scottish businesses. 245 deals were
secured in 2023 and importantly, over 65% of
advertisers have returned from 2022, with
businesses seeing the positive impact that TV
advertising can have on their brand awareness.
Within the fund we have ring-fenced £1m for
businesses who support diverse and inclusive
practices. In 2023, we launched our second
Inclusion Awards, inviting businesses to apply
for gifted membership of the Inclusion Fund.
This Spring saw four SMEs awarded £25k of
commercial airtime from the fund, including
Scotland’s first friendship and dating agency
run by and for adults with learning disabilities;
a manufacturer of powered wheelchairs;
a manufacturer and retailer of ethical and
sustainable underwear and swimwear; and
a provider of innovative financial programmes
offering tailored programmes that help migrants
and ethnic minorities to improve their financial
wellbeing. £1m is also ring-fenced for our Green
Fund for businesses with a strong commitment to
sustainability, such as Edinburgh based furniture
store, Richard F Mackay, who joined in 2023.
Vera
STV and STV Player
Harry: The Interview
STV and STV Player
STV reaches 2.8m adults per
month, making it a unique
commercial proposition.
ScotPulse
Our Broadcast division is home to Scotland’s
biggest research panel, ScotPulse.
With a panel of over 45,000 individuals, ScotPulse is commissioned
to conduct research by a wide range of companies and agencies
across Scotland and is a positive source of income for the business.
Key Scottish and UK-wide clients for 2023 include the Scottish Government,
Bank of Scotland, TUI, Irn Bru, Macsween, Belhaven, Specsavers,
Trading Standards Scotland, Edinburgh Airport and Oxo.
45,000
ScotPulse panel members
Top 10 performing linear programmes
Programme name
7 days
Average
audience
Share
Reach
I'm A Celebrity… Get Me Out Of Here!
664k
43%
1.8m
Six Nations: England vs Scotland 1
585k
50%
1.1m
Harry: The Interview
520k
35%
708k
The Masked Singer
498k
35%
1.5m
Vera
Coronation Street
Unforgotten
467k
27%
1.2m
436k
31%
2.0m
434k
19%
817k
Rugby World Cup: Ireland vs Scotland 1
432k
30%
900k
Emmerdale
420k
32%
2.2m
Ant & Dec’s Saturday Night Takeaway
418k
32%
1.4m
Our audience was
boosted significantly
by large scale
sporting events
in 2023.
Source: Barb Jan-Dec 2023 (09:30-24:00), individuals, 3+ mins
continuous reach, excluding repeats and party political
broadcasts. Pre-TX viewing is included where applicable.
1 Full broadcast. Table includes top Six Nations and Rugby
World Cup matches only.
Behind the scenes with STV
Expert Voices
In 2023, we celebrated two years since the launch
of STV Expert Voices, our media workshop initiative
designed to increase diversity of contributors in our
news and current affairs programmes. Created to
expand our network of expert contributors, our
news team has now trained more than 1000
individuals from under-represented groups, with
around 10% already appearing on air using their
skills. We have worked in partnership to expand
our networks and enjoy relationships with
organisations such as Women In Journalism,
Pass the Mic and SportScotland. 2023 also saw the
launch of a dedicated database for our news and
current affairs teams, ensuring that spokespeople
who are comfortable participating in our
programmes can be found quickly and easily.
As part of a company-wide approach to improving
the diversity of our business, Expert Voices is
positively impacting our on-air representation, for
which we have clear targets in news and current
affairs. In 2023, 10% of our news contributors were
from ethnically diverse backgrounds (target 8%);
and 52% were female (target 50%). Scotland
Tonight hit both its diversity targets in 2023:
women made up 50% of contributors (on target)
and 13% of contributors came from an ethnically
diverse background (12% target).
30 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 31
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Operating review
STV Zero
STV is committed to improving sustainability across
all areas of our business and increasing awareness of
climate change amongst our audiences. This company
wide campaign is called STV Zero.
In summer 2023, a key part of this campaign was the launch of our first
ever Sustainable Scotland Week, which saw us using our privileged position
to convey accurate climate-related information to our viewers in an
accessible way. This seven-day, cross-platform mission – including specially
commissioned research, programming and promos – saw STV raising
awareness of how climate change is impacting Scotland’s communities
and inspiring viewers to live more sustainably.
Here’s how we did this:
• STV News at Six covered stories on climate change from
across Scotland each evening;
• Scotland Tonight aired a special on sustainability issues
facing the country in peak time;
• Sean Batty presented a special one-hour documentary
Sean’s Scotland SOS on how the climate crisis is impacting
the country and what people are doing to help;
• STV Player ran a dedicated Green Hub of sustainability
themed programming;
• Special eye-catching promos ran across the schedule
highlighting Sustainable Scotland Week with little tips
for viewers to help make a difference.
Our dedicated TV content reached 1.5m viewers. ScotPulse research was
commissioned to measure the impact of our activity and this revealed
that 3 in 5 Scots think TV broadcasters should make more programmes on
climate change and sustainability; and 72% of those who saw Sustainable
Scotland Week programming said it made them more likely to make
more environmentally conscious choices.
All STV productions are albert certified and we have adopted
compulsory measures – such as no single use plastics on sets and clear
sustainable travel policies – all of which have quickly become the norm.
This commitment to sustainability, both on and off-air, will strengthen
and intensify throughout 2024.
32 STV Annual Report and Accounts 2023
STV News and current affairs
STV News at Six has retained its position as the
most-watched news programme in Scotland,
tracking seven share points ahead of Reporting
Scotland (its highest ever share lead). We produce
two programmes which air at 6pm each weeknight
and their success is down to the inclusive and
engaging story-telling of our journalism, the
friendly professionalism and familiarity of our
presenters and the talent of our wider production
and reporting teams, as well as the unique
regional split of stories making each show highly
relevant to our viewers. The programme for the
central region contains a section with a split of
stories for the east and west of the country;
whilst the programme in the north region provides
a split for the north and south of that region.
The consistently high ratings reflect the trust our
viewers have in our content and the 2023 Ofcom
News Consumption Survey confirmed that STV
remains the most-used source for accessing
news about Scotland by people in Scotland.1
Our current affairs programme, Scotland Tonight,
continues to provide debate and analysis four times
a week, including one evening in peak to reach the
largest possible audience. The programme attracts
high calibre contributors and commentators as well
as top politicians from across the country to debate
the hot topics of the day. The team also produces
Scotland Tonight ‘specials’, featuring in-depth
investigations into subjects such as cosmetic
surgery, deafness in children and heart transplants
in Scotland, alongside lighter subjects such as the
40th anniversary of iconic drama Taggart.
2023 saw a change of First Minister with the SNP
appointing a new leader. STV was the first channel
to broadcast a live leadership debate with Political
Editor Colin Mackay putting candidates through
their paces. The one hour special attracted the
highest audience of all the leadership debates to
air that month, which is testament to the skill and
professionalism of our highly experienced team.
The STV News website has also had a strong year,
with 3.1m unique visitors to the site on average per
month. Page and video views totalled an average
29.6m each month, 10% ahead of target. 2023
saw the site’s most-read story ever, with 1.1m
page views about former First Minister Nicola
Sturgeon’s arrest in June. News is now also
delivered via multiple social sites including TikTok,
Instagram and YouTube, as we seek to expand and
diversify our audience. The STV News TikTok has
shown particularly strong growth, from 45k video
views in January to 3.8m by the end of the year.
1 News Consumption Survey 2023: Scotland (ofcom.org.uk).
Sean’s Scotland SOS
STV and STV Player
Regional production
In addition to news, we produce a range of regional
programming which is distinct and relevant for
our Scottish audience. 2023 highlights include
dedicated shows for the STV Children’s Appeal to
raise awareness of the issue of poverty impacting
young people and families across Scotland. These
included a fundraising show with Lorraine Kelly
and Sean Batty, which was filmed at one of the
charities we support (Refuweegee) and shined a
light on the range of work being carried out by
many of our partners; and a documentary hosted
by Jean Johansson, exploring the importance of
sport in supporting young people affected by
poverty and featuring the work of four charities.
Our Friday night peak time programme, What’s
on Scotland, brings viewers news of events,
theatre, cinema and concerts across the country.
With access to the biggest celebrities and
productions, the team interviewed stars such
as Lewis Capaldi, Harrison Ford, Deacon Blue
and Phoebe Waller-Bridge.
We also produced a special look back at 2023 for
Hogmanay called Bringing in the Bells and delivered
dedicated programming around sustainability,
which you can read more about in the spotlight
on STV Zero.
More than 3m Scots tuned into STV’s regional
programmes across the year.
Regulatory update
In March, we welcomed the announcement from
the Secretary of State that Channel 3 licences can
be renewed for a further ten-year period from
January 2025, securing the future provision of
commercial public service broadcasting in Scotland,
including the country’s highest performing news
and current affairs programmes.
STV also welcomed the introduction of a Media Bill
at Westminster and its subsequent parliamentary
progress. This new legislation is urgently required
to make Public Service Media as prominent on
digital platforms as they are today on broadcast
platforms, and ensuring STV remains easily
available and discoverable for viewers. It’s vital
that the Bill now makes its way swiftly through
Parliament into law.
STV News at Six
STV and STV Player
Scotland’s Next First
Minister: The STV Debate
STV and STV Player
Bringing in the Bells
STV and STV Player
More than 3m Scots
tuned into STV’s regional
programmes across the year.
All major news programmes
Good Morning Britain
53k
BBC Breakfast
96k
BBC News (BBC Two)
21k
ITV Lunchtime News
48k
BBC News at One
5 News at 5
22k
BBC News at Six
STV News at Six
Reporting Scotland
ITV Evening News
224k
246k
357k
283k
276k
Channel 4 News
46k
The Nine (BBC Scotland)
10k
BBC News at Ten
180k
ITV News at Ten
104k
Source: Barb Jan-Dec 2023 (Mon-Fri),
full length programmes, individuals
STV Annual Report and Accounts 2023 33
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Finance review
For the year ended 31 December 2023
Lindsay Dixon
Chief Financial Officer
The Group has delivered a resilient financial performance
in 2023 with growth in Studios and Digital, combined with
cost savings, mitigating the impact of the decline in linear
advertising brought on by the macroeconomic backdrop.
Trading overview
Total revenue grew by 22% to £168.4m (2022:
£137.8m). This was primarily related to growth in
Studios revenue, which reached £66.8m in the year,
up from £23.7m in 2022, with a contribution of
£15.0m from Greenbird Media Limited (‘Greenbird’)
in the period since acquisition. Digital revenues
also continued to grow and were up 6% on the
prior year.
Total advertising revenue (TAR) for the year was
£97.3m (2022: £110.0m), a decrease of 12% on
the 2022 performance, with linear advertising
revenues being heavily impacted by the
challenging macro-economic environment. Within
this, national advertising revenue was down 16%
with regional continuing to out-perform at -9%
year on year. Across the year, after a first half
performance of TAR down 14%, the second half
was down 9% showing a slight improvement.
On a statutory basis, operating profit was £6.4m
(2022: £25.3m), the decline a result of (i) the profit
impact of lower, high margin linear advertising
revenue, and (ii) higher one-off costs in the year
relating to finalisation of the new agreement with
ITV and the acquisition and subsequent integration
work on Greenbird. Adjusted operating profit of
£20.1m was down 22% on the record set in 2022
of £25.8m, equivalent to an adjusted operating
margin of 11.9% (2022: 18.7%). The proportion
of Group adjusted operating profit derived from
non-broadcast earnings was 75%, compared to
38% achieved in 2022. This marked increase is in
part due to the absolute quantum of Digital and
Studios adjusted operating profit increasing year
on year (by £5.2m or 53%) but it is also impacted
by the declines in high margin linear advertising
revenues that have resulted in a 53% reduction
in Broadcast operating profit year on year.
A key contributor to the Studios performance is
the acquisition of Greenbird on 6 July 2023, which
contributed £3.2m operating profit in the period
post acquisition. The margin achieved by Greenbird
over this period is higher than anticipated because
of additional secondary sales revenue receivable.
On a proforma basis, the FY23 results of the
Greenbird group were revenue of £27.4m and
operating profit of £3.2m giving an operating
margin of 11%. The Studios division also realised
organic growth across the year driven by a number
of programme deliveries. These included Criminal
Record (AppleTV+), a co-production with Tod
Productions Limited, Screw series 2 (Channel 4),
and The Underdog: Josh Must Win (Channel 4)
from Primal Media. The overall divisional margin
improved from 5.9% to 7.7% in FY23 which we
expect to improve again in FY24 as the synergy
benefits associated with the Greenbird integration
are realised.
The Digital division generated operating profit of
£9.9m (2022: £8.5m), an increase of 16% on 2022,
driven by VOD revenue growth of 7% and tight
control of costs. We continued investment in
our third party content strategy, following the
agreement reached with ITV in December 2022
to secure exclusive access to original, premiere
content in Scotland for the STV Player. Our
increasingly strong relationships with platform
partners, combined with a growing library of
quality content, has delivered an increase in
consumption (71m hours, up 25% year on year)
and active registered users up 20% year on year.
The Broadcast division generated an operating
profit of £9.8m (2022: £20.7m). This result was
driven by the decline observed nationally in the
linear advertising market and to a lesser extent in
regional linear advertising. Our arrangement with
ITV meant that our contribution to the national
programme budget decreased by the same
percentage as national advertising revenue,
protecting the level of decline in the division’s
operating profit margin, and representing a cost
saving of c.£6m in the year.
The Group set a cost saving target of £2.5m for the
year, which was achieved through a combination
of permanent and temporary savings and was a
mix of year-on-year savings and cost avoidance.
Savings were made across pension admin costs,
ad serving and central costs amongst other areas.
As expected, the year-on-year savings offset
broadly half of the cost inflation seen in the
business, coming through salary inflation and
energy costs in the main. As we look forward to
the next three years, an important part of driving
profitable growth will be simplifying the business
for a digital-first world and continuing to focus
on operating efficiency. We are therefore setting
a cost saving target to reach a full year run rate
of £5m by the end of FY26.
Interest costs on the Group’s borrowing facilities
totalled £2.4m for the year, compared to £1.1m
in 2022. This increase reflects the higher SONIA
rate applicable in 2023 combined with the higher
average net debt of the business. A total tax credit
of £5.3m has been recognised in the year (2022:
charge of £4.9m), principally driven by HETV tax
credits receivable of £7.7m (2022: £nil). Profit for
the year was £5.3m (2022: £17.3m), of which
£0.8m was attributable to minority shareholders in
certain subsidiary companies (2022: loss of £0.2m).
Adjusted earnings per share (EPS) at 28.2p was
down 33% on the prior year driven by lower
operating profit and higher interest costs. On
a statutory basis EPS was 9.7p (2022: 38.3p).
Cash flow and net debt
The Group has in place a £70m revolving credit
facility, with £10m accordion, maturing in March
2026. The key financial covenants under this facility
are leverage (the ratio of net debt to Adjusted
EBITDA) and interest cover, which must be less
than 3 times and more than 4 times respectively.
The Group also has a £7.1m production financing
facility relating to commissioned programme
production, of which £3.3m was drawn at the
end of the year. This facility will mature when the
programme is delivered to the commissioner in
H1 2024. The production financing facility of £3m
made available to Two Cities Television at the prior
year end and was fully drawn at that time, has
been repaid in full in 2023.
At the balance sheet date, the Group had net
debt of £32.3m compared to £15.1m at the start
of the year. The increase is principally driven by the
acquisition of Greenbird Media, which was a net
cash outflow of £15m on acquisition. Initial cash
consideration of £21.4m was paid on completion
with a further £0.5m paid in December as surplus
cash was dividended to Greenbird from one of its
subsidiaries. Operating cash conversion in the year
improved on 2022, as expected, and was 169%
(2022: 45%).
Results summary
Adjusted results1
Advertising revenue (£m)
Total revenue (£m)
Operating profit (£m)
Operating margin
Profit for the year (£m)
Earnings per share (p)
Statutory results
Total revenue (£m)
Operating profit (£m)
Profit for the year (£m)
Earnings per share (p)
2023
2022
97.3
168.4
20.1
11.9%
13.8
28.2
168.4
6.4
5.3
9.7
110.0
137.8
25.8
18.7%
19.1
42.3
137.8
25.3
17.3
38.3
1 Refer to note 7 in the Notes to the financial statements.
At the end of the year, the Group’s leverage
(calculated on a covenant basis) was 1.2 times
(2022: 0.5 times) and interest cover was 12.9 times
(2022: 42.8 times), both metrics well within the
covenant limits.
Non-statutory measures
This Annual Report includes both statutory and
non-statutory (or adjusted) performance measures,
the latter intended to exclude significant and/or
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 adjusts
for (i) items that are unusual by virtue of their
nature, size and/or infrequency and are
considered to be one-off and not necessarily
directly related to the underlying trading of
the Group; (ii) IAS 19 non-cash finance costs
in relation to legacy defined benefit pension
schemes; (iii) High-End Television (HETV) tax
credits; (iv) amortisation of acquisition intangible
assets; (v) the finance cost associated with the
unwind of discount on the liability in relation to
put options recognised over shares in subsidiary
companies; and (vi) the tax charge or credit
associated with each.
34 STV Annual Report and Accounts 2023
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Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Finance review
For the year ended 31 December 2023
Risk management
Adjustments in relation to HETV tax credits
receivable recognise the income in a manner
that reflects how the business is managed on
a day-to-day basis, namely that these funding
amounts are contributions to the cost of
production rather than tax income. With effect
from 1 January 2024, the HETV tax credit regime
has been replaced by the introduction of Audio
Visual Expenditure Credits (AVEC) with the
presentation of AVEC aligned to the adjusted
results currently presented by the Group. Therefore,
from 1 January 2024 our statutory presentation
will align to the current adjusted approach and
the requirement to adjust will fall away.
Lastly, we have presented adjusted results to
exclude two amounts that have arisen following
the acquisition of Greenbird: the amortisation of
acquisition intangibles, which are recognised under
accounting for business combinations; and the
unwind of discount on the liability associated with
put options. The first is a product of the purchase
price allocation work done to identify the
provisional fair values of separately identifiable
intangible assets and the second is a non-cash
financing cost not related to underlying trade.
In the current year we have recognised one-off
costs in relation to agreement of the new
arrangements with ITV for digital sales and
exclusive content (£3.1m, 2022: £0.5m) and
acquisition and integration costs associated with
the Greenbird investment (£2.4m, 2022: £nil).
The amount in relation to Greenbird includes an
accrual of £0.9m for the first earn-out payable to
the founders based on FY23 financial performance.
Pensions
The Group has two legacy defined benefit pension
schemes, both of which are closed to new entrants
and only one of which has a small number of active
employees. From an accounting perspective, the
IAS 19 accounting deficit across both schemes
fell during the year to £54.8m at the balance
sheet date (2022: £63.1m). The decrease in the
liability is primarily driven by updated mortality
assumptions that reduce life expectancies.
The schemes’ next triennial valuation is due at
31 December 2023 and work has started with
the trustees. We expect to conclude on the
outcome of the valuation in H2 2024.
Dividends
The Board is recommending a final dividend of
7.4p per share resulting in a total dividend of 11.3p
for the year, in line with that paid in respect of
2022. If approved at the Annual General Meeting
on 1 May 2024, the final cash dividend will be paid
on 31 May 2024 to shareholders on the register
as at 19 April 2024.
Lindsay Dixon
Chief Financial Officer
Effective risk management is fundamental to
STV’s achievement of our strategic objectives,
and we look to ensure our risk management
framework is dynamic and flexible to match
the evolving environment we operate in.
The Board determines its appetite for risk across several key
risk areas and assesses the relative level of risk that the Group
is prepared to accept in the pursuit of our strategic objectives.
A risk management framework is in place which underpins our
approach for the identification, assessment, and management
of risks, and for their continual monitoring and review. This is
formally documented in the form of a Group risk management
policy, which also provides clarity for where the responsibility
for risk management sits within our governance structures.
This policy is shared with all colleagues at STV and is a key
building block of the culture of risk management that has
been embedded throughout the organisation.
Responsibility for risk
The key roles and responsibilities for risk management comprise
three layers. Each role within the Group is well-defined with
clear responsibilities and a transparent reporting structure.
The first line of defence is comprised mainly of our divisional
management teams and central function heads who are
responsible for identifying and managing risk as part of their
accountability for achieving strategic objectives. Taken together,
they have the necessary knowledge, skills, information, and
authority to operate the relevant policies and procedures of risk
control and ensure compliance with Group policies and standards
throughout their division/function. This is underpinned by an
understanding of the Company, its objectives, the environment
in which it operates, and the risks it faces.
Our second line of defence comprises the range of functions
that oversee and/or specialise in compliance and management
of risk, including Group Finance, IT, Compliance, Legal, and
specialist teams in relation to information security (including
GDPR) and regulatory compliance. These functions report
directly to members of the Management Board which has
overall responsibility for managing the Group to ensure it meets
its strategic objectives. The second line of defence provides the
policies, frameworks, tools, techniques, and support to enable
risk and compliance to be managed in the first line, conducts
monitoring to assess how effectively it is being carried out, and
helps ensure consistency of definitions and measurement of risk.
The third line of defence comprises Internal Audit, the principal
function providing independent assurance to the Group. Sitting
outside the risk management processes of the first two lines
of defence, its main roles are to ensure that the first two lines are
operating effectively and advise on how they could be improved.
The Internal Audit plan is set by the Audit & Risk Committee and
provides an evaluation of the effectiveness of governance, risk
management and internal control. A full description of the scope
of Internal Audit in 2023 and engagement with the Audit & Risk
Committee is given in the Report of the Audit & Risk Committee
on pages 82 to 86. In addition to the work of Internal Audit, there
are other independent third parties from which the Group seeks
assurance in specialist areas, including carbon emissions
reporting and energy contract negotiation.
The Audit & Risk Committee reviews the Company’s internal
control and risk management systems (including internal
financial controls) annually, as delegated by the Board, and
reports to the Board on how it has discharged its responsibilities.
The Board undertakes an annual review of the Risk Appetite
Statement, which is shared across the organisation and forms
a key part of the risk management process.
Risk assessment process
STV’s approach to risk assessment combines a top-down strategic
view supported by a bottom-up operational risk assessment.
The strategic view, led by the Board, involves an assessment
of the external environment in which the Group operates to
evaluate both the current and emerging risks the Group faces in
pursuit of its strategic objectives, and to reflect on any changes
to those risks previously identified as principal risks. Through
its annual agenda of activities, the Board undertakes a robust
assessment of new and emerging risks, which includes the
following: (i) detailed discussion with each of the divisional
management teams as to the risks surrounding operational
matters and achievement of longer-term goals and objectives;
(ii) review and consideration of wider viewing, audience and
technology trends beyond the Company’s market sector,
supported by insights from third parties; (iii) regular updates
from the Company’s pension advisers on evolving practice and
regulation in relation to defined benefit pension schemes; (iv)
regular legal and regulatory reports from in-house Legal and
Compliance teams; and (v) engagement with brokers, the
internal and external auditors, and other advisers as appropriate.
The bottom-up approach, led by the divisional and central
function management teams, involves the identification,
management, and monitoring of risks in their respective area
of the business on a continual basis and is formally documented
in a risk register. The Group operates individual risk registers for
each of its operating divisions, the central functions/corporate
matters, climate-related matters, information security
(including data) and technology operations.
For each risk identified, standardised grading is used to support
the measurement of impact and likelihood, which together
provide a quantitative view of the gross risk. This scoring matrix,
which considers risk by reference to both quantitative and
qualitative attributes and the probability of occurrence, allows
for comparability and consistency of risk measurement across
the Group. Risks are then re-assessed based on the strength and
effectiveness of existing mitigating controls and an appropriate
net risk response is determined in line with the Group’s risk
appetite. Each risk is assigned to a risk owner who is responsible
for ensuring associated mitigating controls are operating
effectively and for monitoring that the net risk continues to be
within the tolerance levels of the Board-agreed risk appetite.
Risk registers are live documents and are continuously reviewed
and updated as appropriate. Divisional registers are formally
tabled for discussion at divisional board meetings at least
quarterly, usually aligned with the quarterly financial forecast
process. Central function risk registers are reviewed by the
Head of the associated central function at least quarterly.
Risks deemed to be the most significant in the context of their
potential to impact achievement of the Group’s strategic goals
are reflected in the Group risk register and reported to the Board.
36 STV Annual Report and Accounts 2023
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Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Risk management
The Group risk register is a combination of operational and
emerging risks identified through the divisional and central
function risk registers and new and emerging strategic
risks identified by the Board through its ongoing evaluation
of the external environment that the Group operates in
(as described above).
The Audit & Risk Committee has delegated authority from
the Board to review the effectiveness of the Group’s risk
management and internal control systems, which it does
at least annually. It performs an annual assessment of the
effectiveness of the risk management and internal control
frameworks through review of the Group risk management
policy and how it has been implemented during the year,
and evaluation of reports from the internal and external
auditors and reports to the Board on the outcome of the
work performed.
Risk governance structure
Board
• Sets strategic objectives
• Evaluates and monitors identified principal risks and uncertainties, including potential impact on achieving agreed strategic objectives
• Horizon scan for emerging principal risks
• Determines risk management policy, including risk appetite
Audit & Risk Committee
• Evaluates and monitors key risks (those on the Group risk register), including potential impact on achieving agreed strategic objectives
• Advises the Board on principal risks and mitigations
• Sets internal audit plan to gain independent assurance over the effectiveness of key risks and mitigations
• Reviews internal audit reports and management responses to identified action points
• Details of the reviews undertaken by the Audit & Risk Committee during the year are disclosed in the Governance section of this
report on pages 82 to 86
Internal audit
• Provides independent assurance on risk
areas set out in the internal audit plan,
to assess operating effectiveness of
mitigating controls and suggest
remediation activities
Management Board
• Reviews divisional and central function risk registers quarterly and documents
the most significant risks in the Group risk register
• Considers whether there are any other risks that need to be captured in the
risk registers
• Challenges risk scoring and effectiveness of controls and monitors compliance
with risk appetite thresholds
• Bi-annual reporting on principal risks and related mitigations to the Audit &
Risk Committee
• Regular reporting on implementation of action points raised by internal audit
Divisional Board
• Identifies risks and associated
controls specific to division
• Quantifies gross and net risk
scoring and allocates a risk owner
for continuous monitoring
• Reviews operating effectiveness
of mitigating controls
Central and specialist functions
• Identifies risks and associated
controls relating to central
functions, information security
and technology, and compliance
• Quantifies gross and net risk
scoring and allocates a risk owner
for continuous monitoring
• Reviews operating effectiveness
of mitigating controls
Risk appetite
Appetite for risk is considered by the Board across several key risk areas that are business critical and could materially impact upon
the Group’s ability to achieve its strategic goals if a disproportionate level of risk to expected reward is taken. The Group uses four
categories in determining risk appetite based on a quantitative measurement of likelihood and impact.
Key
Averse
Avoidance of risk and
uncertainty is a key
organisational objective.
Cautious
Preference for options that
have a low degree of inherent
risk and may only have limited
potential for reward.
Open
Actively seeking
Willing to consider all options and
choose the one that is most likely to
result in success while also proving
an acceptable level of reward.
Eager to pursue options
that provide the greatest level
of reward, despite the higher
level of inherent risk.
These are applied across the following key categories:
Risk and opportunities
Averse
Cautious Open
Actively
seeking
Reputation
Strength of brand is vitally important in the markets that STV operates in. The Group places great
importance on upholding its reputation and therefore has a low appetite for risk in engaging in any
activity that could lead to undue adverse publicity or could lead to a loss of confidence by the Scottish
and UK political establishments, regulatory bodies or by its shareholders and other stakeholders.
Legal and Regulatory
The Group is a compliant organisation and will not tolerate breaches of regulations in pursuit of its
objectives. Existing legal and compliance frameworks are rigorously respected and explicitly followed.
Information Security & Cyber
The Group has no tolerance for material cyber security incidents which impact our ability to operate
as a business, damage our reputation or lead to financial penalties.
People & Culture
The inability to recruit, develop and retain talent with the appropriate skills, knowledge and
experience would compromise our ability to deliver our strategic plans. The Group 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. It considers equality, diversity, dignity and
respect to be of paramount importance, together with employee development and the health
and safety of employees. It has no appetite for any deviation from its standards in these areas.
Returns & profitability
The Group aims to deliver strong growth through the strategic options it identifies, ensuring
that these are for 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. Returns from all potential investments are compared to the Group’s WACC rate to
ensure they are incremental to the Group’s cost of capital within a reasonable timeframe. 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.
Liquidity
The Group is prepared to use leverage in pursuit of achieving its strategic objectives and will
utilise the funds available to the Group from its revolving credit facility, subject to maintenance
of significant headroom in the associated financial covenants and sufficient capacity to meet
defined benefit pension obligations.
Strategic partnerships
The Group will actively pursue merger & acquisition, joint venture or other collaboration
opportunities that are aligned with its strategic direction towards creating sustainable value,
subject to meeting its investment criteria.
Technology & innovation
The Group will actively pursue opportunities to invest in its broadcast technology and
development of its digital platform with a view to enhancing reliability and the viewer
experience and maintaining relevance compared to other market participants.
Operational
The Group has a low appetite for taking risks that may lead to significant disruption of our
operations. We seek to minimise the risks from unforeseen operational failures in our business
but acknowledge that some are outwith our control.
Corporate sustainability
The Group considers the impact its operations have on the environment and actively pursues
opportunities to reduce its carbon footprint in order to become a net zero carbon business by
2030. The Group has a low appetite to engage in any activities that could impact progress
towards this strategic goal.
38 STV Annual Report and Accounts 2023
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Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview
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. The Board
takes seriously its responsibility to ensure the systems and
processes in place are robust, effective and take account of such
risks, but acknowledges that they cannot eliminate all risks.
The risk management framework and underlying processes
in operation throughout the year have been described in the
Risk Management report on pages 37 to 39. These processes
underpin the identification and assessment of principal risks
as set down on the following pages.
The Directors confirm they have carried out a robust assessment
of the company’s emerging and principal risks facing the
Company and that 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.
Regulatory environment
Risk category: Legal and regulatory
Risk trend: No change
Link to strategy: Maximise Broadcast
Risk description and potential impact
STV’s linear broadcast business is operated under Channel 3
licences that are regulated by Ofcom and 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 including, in the most extreme circumstances, financial
penalties or revocation of licences. Separate 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) licences, our business model and/or the
cost of operations.
PSB regulation is currently being updated with a Media Bill intended
to modernise the regulatory landscape to reflect the importance of
digital distribution. This Bill will modernise the regulatory landscape
to reflect the importance of digital distribution alongside traditional
broadcast. It includes the right for PSB services including STV to
prominence for our VOD services on digital platforms and smart
TVs. Commercial agreements for PSBs to secure carriage on these
new services and devices will be subject to dispute resolution by
Ofcom where terms cannot be agreed. PSBs will also be able to
deliver some of their licence obligations by making programmes
available online instead of/in addition to on TV, though this does
not apply to news or regional programmes which will remain on
linear broadcast.
Although the Bill has wide cross party support and as of February
2024 has moved to the House of Lords for scrutiny, there remains
a risk that it will not achieve royal assent.
How we manage it
As licensee, it is STV’s responsibility to ensure that the terms of
our licences are adhered to, and internal measures are in place to
ensure this happens. There is a dedicated compliance function with
regular staff training undertaken, and frequent contact with the
regulator to ensure awareness and understanding of any updates
or changes to the codes/rules so we can adequately prepare.
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. Specifically, all PSBs have
collaborated around engagement on the terms and parliamentary
progress of the Media Bill.
Governance and oversight
The Broadcast board meets monthly and is chaired by Bobby Hain,
MD of Broadcast. It is attended by members of the Management
Board as well as representatives from News, Legal, 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 Information Security Group and the
Management Board. The STV Board is provided with regular Legal
and Regulatory updates which regularly includes developments in
the licence renewal process. During the year, representatives from
the Board and management team met with Ministers and MPs,
and participated in events in Westminster with the aim of
ensuring that matters surrounding the Media Bill and licence
renewal that are important to the Company, were explained to
decision-makers and influencers. This included the importance
of regionalisation in discussions around prominence and fair
value in the Media Bill.
Reliance on ITV
Risk category: Returns and profitability
Risk trend: No change
Link to strategy: Maximise Broadcast/Drive Digital
Risk description and 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 linear and VOD advertising sales agent is a
significant factor that affects the financial performance of the
Group. Appointing ITV as sales agent for VOD advertising aligns
STV with a significant market player with considerable scale and
reach, in a market that is increasingly mature and seeing new
entrants in the form of the global streamers as they develop their
AVOD propositions. The risk trend has been assessed to be the
same year on year as reliance on ITV in this fast evolving market
is considered to lower STV’s overall returns and profitably risk
associated with VOD advertising, particularly at this point in
ITV’s own growth trajectory for its digital business.
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. There are
increasing touchpoints across both digital businesses following
the new arrangements between the two companies in relation
to digital content.
Contracts are in place for all network functions performed
by ITV with agreed consultation processes for any changes
to arrangements. The long form contract in relation to digital
content was formalised and agreed during the year.
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
contractual profit protection for STV in relation to national linear
sales 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.
VOD content costs are managed through a series of revenue share
arrangements with no up-front licence payments due.
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.
Market volatility and impact
on revenue generation
Risk category: Returns and profitability
Risk trend: No change
Link to strategy: Maximise Broadcast/Drive Digital/
Build world class Studios
Risk description and 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; conditions specific
to commissioning markets, both domestic and abroad; trends in
sales, capital expenditure and other costs; and the introduction
of new services and products by STV or its competitors.
The challenges in the UK economy and resultant low levels of
consumer and investor confidence persisted throughout 2023
with policy makers taking several actions to manage and reduce
the high levels of inflation. The resulting uncertainty continued
to negatively impact the advertising market as participants
remained cautious, with the commissioning market also impacted
as commercially-funded broadcasters reduced the number of
commissions awarded and sought to reduce programme budgets.
The recent relative improvements in interest rates and inflation
have resulted in us assessing the risk trend as ‘no change’
following an assessment of ‘increasing’ in the prior year.
How we manage it
STV’s national linear and VoD 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 and trends.
STV’s regional Scottish advertising (for both linear and VOD) and
sponsorship are sold by a dedicated team who pursue a range
of initiatives to ensure the effectiveness of our sell, driven by the
STV Growth Fund through which we provide support to enable
businesses to grow their brands.
In July 2023, STV acquired Greenbird Media, which strengthened
our existing rights catalogue and future creative pipeline. Post
year end, STV increased its investment in Two Cities Television to
51%. In recent years, STV Studios has diversified its customer base
through wins with SVOD whose business model isn’t underpinned
by advertising revenue. All these developments serve to broaden
the creative pipeline and customer base of STV Studios, making
it more resilient in challenging times.
Governance and oversight
Weekly advertising revenue reports are circulated to the
Management Board, highlighting movements in forecast and other
relevant information. There is a full discussion and challenge at
each Broadcast and Digital board meeting when STV’s Commercial
Director provides a report on sales and the outlook for the market.
Both the CEO and the CFO report on the advertising market in
their respective reports at each Board meeting.
In Studios, the governance structure of the divisional board was
enhanced post-acquisition of Greenbird through the appointment
of a Chief Commercial Officer and a Finance & Integration Director.
The commissioning status is reported on monthly by STV Studios
Managing Director at each Studios board meeting and includes
discussion around progress of live productions, development slate
activity and the status of any ongoing pitches, on a genre-basis
across the portfolio.
40 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 41
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Risk management
Changing viewing habits
Risk category: Returns and profitability
Risk trend: Increasing
Link to strategy: Maximise Broadcast/Drive Digital
Risk description and 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 having an abundance of choice through access to content
from numerous VOD platforms that is available to them when they
want rather than being tied to a traditional programme schedule.
In a market where traditional broadcast viewing is in slow-run
decline, there is a risk to STV of not being able to convert viewers
from linear to digital efficiently, or being unable to attract new
users to its BVoD service through not having the right content to
service its audience.
In the current recessionary environment with linear advertising
revenue significantly reduced, we have assessed the risk of
changing viewing habits to be increasing.
How we manage it
STV delivers strong audience performance both in linear and
digital, and the shift to digital viewing is 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. STV
Player is building strong connections with its growing audience
by adding new high quality content – both network and acquired.
This includes premium extended preview content exclusive to STV
Player in Scotland, through the new arrangement with ITV. This
combined with acquired, third party content from around the
world is intended to give the Player a strong combination of ‘big
shows’ with ‘big names’ that will attract new and existing users,
that is supplemented by a strong library of other content. Our
rewards programme, STV Player VIP, enables us to build even
stronger connections with our audience.
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.
Twice each year, the senior leadership team has presentations
from a third party on viewing trends, and at least annually
representatives from the same third party provide an update to
the Board. 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 at the ITV/
STV Council meetings.
Cyber attack or data
breach incident
Risk category: Information security and cyber
Risk trend: Increasing
Link to strategy: Maximise Broadcast/Drive Digital/
Build world class Studios
Risk description and potential impact
Cyber risk commonly refers to any disruptive activity arising from
issues with the confidentiality, integrity or availability of company
information, services or operations through technology and
information systems. STV is dependent on technology and
information systems for the smooth running of its business, and
as a result a cyber-security incident could lead to a disruption to
operations, reputational impact, loss of commercially sensitive
data, or data exploitation attempts, i.e., fraud. With STV’s unique
position as a public service broadcaster and having one of the most
recognisable brands in Scotland, we are potentially at greater risk
of an attack. Accordingly, this risk has been assessed as increasing.
How we manage it
The STV Risk Management Framework applies to all matters of cyber
and data risk, with relevant aspects led by the Information Security
Group, Information Security Manager and Data Governance
Manager. Our framework guides the application of management,
digital and physical controls relating to the safeguarding of
information and technology systems. Additionally, governance
documentation is in place to cover core aspects of information
and system control, including Information Security & Acceptable
Use, Data Protection, Data Retention, and Incident Reporting.
Our core technology infrastructure and information systems
are protected using an industry standard security stack, utilising
technologies such as firewalls, intrusion detection/prevention
systems, segmentation and filtering. Access to information and
information systems follows a least-privilege approach with
role-based access controls (RBAC) employed. Regular internal and
external network penetration tests are performed by a third-party
with remediation items swiftly actioned.
Business continuity and operational resilience are addressed
as part of the Information Security Group remit, with strict
dependency validation and risk escalation taking place. Plans are
tested at regular intervals relevant to their respective criticality.
Governance and oversight
The Information Security Group (ISG) meets monthly and
maintains responsibility for the implementation of security risk
reduction and overall progression actions, including activities
relating to governance, risk and compliance. The ISG is supported
by the Technology Leadership Group (TLG).
The ISG provides reports to the Audit & Risk Committee, while
additionally reporting to the board on major projects, internal
controls, and risk management.
Defined benefit pensions scheme
shortfalls resulting in increasing
employer contributions
Risk category: Liquidity
Risk trend: No change
Link to strategy: Maximise Broadcast/Drive Digital/
Build world class Studios
Risk description and 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. The schemes
are well hedged against inflation and interest rates and following
the gilt crisis in 2022, the schemes are much smaller with lower
quantum of liabilities. The Pension Regulator confirmed in 2023
that the new Funding Code will only apply for valuations with
effective dates on or after 22 September 2024. This means that it
will not apply to the triennial valuation of the Company’s schemes
until their valuation at 31 December 2026.
How we manage it
STV 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
STV, 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. Work has continued in line
with the Memorandum of Understanding between STV and the
Trustees as we continue to work 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
by the Audit & Risk Committee and the Board. During the course
of 2023, the CFO presented a number of updates to the Board in
relation to pensions, covering topics that included covenant
assessment in relation to the Greenbird acquisition, investment
performance and the collateral and headroom underpinning the
scheme’s LDI portfolio, and the Funding Code proposals. This work
was supplemented by detailed papers, presented to the Board in
April and 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, and
insight into the investment strategies adopted by the Trustees
and potential alternatives, including risks and opportunities.
Recruitment and retention
of people
Risk category: People and culture
Risk trend: Reducing
Link to strategy: Maximise Broadcast/Drive Digital/
Build world class Studios
Risk description and potential impact
The market for talent is highly competitive, particularly in Studios
where demand for the best creative minds is always high, even
in a challenging commissioning environment. Recruiting and
retaining the best individuals is vital to STV successfully executing
its growth strategy. The cost of hiring staff is also at a higher
base level than observed previously due to the impact of salary
inflation over the past year and there is also added pressure on
securing diversity through the recruitment process to attain STV’s
diversity targets. Furthermore, as the tenures of incumbent
management board personnel lengthens, and with the inherent
limitations to succession plans for these roles in a relatively small
organisation, there is the risk of unexpected turnover that could
not be replaced readily by in-house resource.
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. 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 has increased.
Succession plans are in place for key members of the leadership
team, and these are reviewed at least annually by the Board and
Nomination Committee (for Executive Directors). Market-tested
remuneration packages are in place for each individual at the
point they join the organisation and are reviewed annually as
part of wider resource planning and reward strategy processes.
In the current climate, the Group has sought to focus on
employee wellbeing in the widest sense and has broadened the
benefits available to its people, as well as making proportionately
higher salary increases to those employees who are most
impacted by the increased cost of living.
Governance and oversight
Succession planning and talent management are discussed
regularly at both the Board and Nomination Committee meetings
as well as at the Studios and Digital divisional board meetings.
The salary negotiation process is discussed in detail with Board,
with the Board paying particular attention to the suite of benefits
available to teams in the current climate.
42 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 43
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Risk management
Viability statement
In accordance with the UK Corporate Governance
Code 2018, 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.
The period taken into consideration for this year’s viability
assessment is three years, consistent with that applied
previously, as the Directors continue to deem this the most
appropriate time frame for assessing the Group’s longer-term
viability. This decision reflects the following factors:
• Visibility over the broadcast advertising business is relatively
short term; advertising remains cyclical and closely linked
to UK economic growth;
Defined benefit pension schemes
e) The triennial valuation at 31 December 2023 results in
higher contributions from the Company with an impact on
liquidity headroom and the ability to invest in the business
for future growth.
In terms of those principal risks which the Board consider do
not present a risk to the viability of the Group over the period
under review, the following is worthy of note:
• Regulatory environment – the renewal of our Channel 3
licences has recently been agreed by the Secretary of State
and Ofcom is in the process of issuing them to us. The
proposed new Media Bill addresses areas that we had
identified as key for the future sustainability of public service
broadcasting and while not yet passed by Westminster has
wide cross party support and has recently passed to the
House of Lords.
• The programme development lifecycle tends to be more
• Reliance on ITV – our commercial arrangements with ITV
see us aligned with one of the largest advertising agencies in
the market with considerable scale and reach. Furthermore,
the newer arrangement for exclusive, premiere content
for STV Player in Scotland, is a revenue share deal which
means we do not make any up-front licence payments for
content and therefore have a variable content cost that
moves with revenue.
• Changing viewing habits – the impact on profitability and
returns under this principal risk is likely to manifest in the same
way as Market volatility and impact on revenue generation
and is therefore inherently covered in the scenario analysis
performed in that regard.
• Cyber attack or data breach incident – whilst a cyber attack
could impact the business, there are robust controls and a
continued focus in this area to mitigate.
• Recruitment and retention of people – succession plans
for key roles and the Management Board are in place and
reviewed regularly with interim, immediate and future
successors identified. The Board considers the leadership
team to be strong, with a clearly defined growth strategy
that has successfully delivered over the last 6 years, and
with strength and depth in its ranks.
The Board also considered whether there were any climate-
related risks identified that could result in an impact on the
viability of the business. An overview of the climate-related
risks identified is included in our Climate-related Financial
Disclosures report on page 61. Those most relevant to the
viability assessment relate to (i) failure to maintain albert
accreditation for programmes produced by STV Studios; and
(ii) adverse impact of government policy decision preventing
advertising by high carbon businesses. The potential financial
impact of both these risks has been incorporated implicitly in
the modelling of the advertising and commissioning markets
as described below.
In terms of the specific factors identified that may have a
material impact over the period of this viability assessment
(as set out to the left), the Board does not consider any of
them to individually threaten the viability of the business
and therefore the viability assessment focused on a range
of potential scenarios in which all potential risks crystallised
simultaneously. These scenarios included a severe but plausible
downside scenario, and more extreme scenarios in which the
Group would breach borrowing and/or covenant limits.
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
deficit recovery 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 2024
to 31 December 2026.
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 2024-2026 Strategic Plan
which was prepared over Q4 2023 and approved by the Board
in February 2024. 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, cash flow,
debt and covenant forecasts. They reflect the current economic
environment and management’s best estimate of the likely
duration and impact of the current recession on the linear
advertising market and the UK and international commissioning
markets, as well as mitigating actions that are available.
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. Whilst all principal risks
(as presented on pages 40 to 43) could have an impact on the
Group’s performance, those most likely to have the potential to
impact the Group’s business model and long term viability are:
Market volatility and impact on revenue generation
a) The performance of the national and regional linear
advertising markets is significantly adverse to forecast;
b) The projected growth in digital advertising is significantly
adverse to forecast, or the forecast level of growth requires
incremental investment over and above that assumed in
the Strategic Plan;
c) The projected momentum in programme commissions
and therefore revenue and gross margin in STV Studios is
significantly adverse to forecasts, and is insufficient to fully
leverage the fixed cost base; and
d) There is implementation risk associated with delivery of
cost savings required to right-size the business for the next
stage of growth.
44 STV Annual Report and Accounts 2023
The hypothetical, severe but plausible downside scenario
modelled assumed a combination of:
i)
reductions in linear advertising revenues over the entire
period of the viability assessment, meaning no recovery
from the cyclical downturn experienced in 2023, the latter
driving national advertising revenue down 16% (vs 2022).
Performance in 2022 was also a declining picture. The main
viability assumption was a national advertising revenue
decline of up to 8% in each of the three years.
ii) lower levels of VOD revenue and Digital profitability driven
by underperformance of sales contracts and higher costs of
content and marketing than planned. National VOD revenue
assumptions were a halving of expected growth in year 1
with a one-third reduction in each of the next 2 years.
iii) a reduction in anticipated commissions within Studios,
across all genres and all commissioners, reducing production
revenues by £50m across the viability period.
iv) higher levels of contributions required to meet our
obligations under our defined benefit pension schemes
from 2025. The current Schedule of Contributions requires
payments of c.£10m pa.
Even in these severe but plausible circumstances, the Group
would remain within its banking facility and comply with all
financial covenants, albeit headroom would be much reduced.
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.
As part of this viability assessment, the Board also considered
availability of funding in light of the maturity of the Group’s
Revolving Credit Facility (RCF) in March 2026 but do not consider
this to be a likely threat to the Group’s viability. The Group has
strong relationships with its banks and has received ongoing
support from them as it has executed the growth strategy.
Part of this support has been approval of the two one-year
extensions available as part of our facility. The Group has an
open and transparent relationship with its banks and a history
of covenant compliance and clear headroom. On this basis,
we have assumed that the Group’s RCF is available throughout
the period and successfully refinanced on existing terms.
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.
STV Annual Report and Accounts 2023 45
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview The ESG Committee
Community
We established the Board’s ESG Committee during the year
underlining the importance of these activities and to ensure
appropriate, dedicated discussion across the year.
The ESG Committee supports the Board in ensuring the
Group delivers a positive social impact to promote long-term
shareholder and stakeholder value. The new Committee is
chaired by David Bergg and held its inaugural meeting in
October 2023. Further details of the ESG Committee are
set out on pages 86 and 87.
ESG report
Summary of ESG activity
2023 has been a year of continued progress
and delivery of key targets across our ESG
activities. The establishment of a dedicated
Board committee with responsibility for ESG
underscores the Group’s commitment to deliver
a positive social impact to promote long-term
shareholder and stakeholder value.
Through our ESG activities we have continued to engage
with our commercial partners, supporting Scotland’s business
community through the STV Growth Fund. The STV Children’s
Appeal uses our platform to raise awareness of the many ways
that child poverty affects people, showcasing the efforts of
charities and fundraising to support projects across Scotland.
Delivery of diversity targets set to support us in building a more
inclusive and diverse culture and improving representation
of all the communities we serve on-screen marked a major
milestone in 2023.
With a clear pathway to become a net zero carbon business
by 2030, we are reducing our environmental impact and using
the unique opportunity of our reach across our TV and digital
platforms, building audience awareness and supporting action
through our content.
This report details progress and achievements in 2023 across
the three key areas of our strategy: community, people and
sustainability, and sets out the areas of our focus and our
targets for 2024 and beyond.
Community
People
Sustainability
We continued to use our
platform as a force for good
to shine a spotlight on the
causes we support through
the STV Children’s Appeal
and the STV Growth Fund.
Over £2.2m raised by STV Children’s
Appeal in 2023
STV Growth Fund providing over
£25m funding to Scottish SMEs
£1m Inclusion Fund for Scottish
businesses championing diversity
We supported the mental,
physical and financial wellbeing
of our people and continued
to build an inclusive culture
with equality of opportunity.
8 of 9 diversity targets achieved
62% increase in women in top
25% of roles since 2017
47 bursary scholars supported
on STV/RTS Bursary Scheme
since launch
We achieved our targets
across all areas of activity,
continuing to make energy and
carbon savings and inspiring
our audiences to make more
sustainable lifestyle choices.
100% of STV Studios and STV
produced programmes albert certified
‘Sustainable Scotland Week’ reached
1.5m viewers
Carbon Disclosure Project ‘B’ rating
STV Children’s Appeal
Families across Scotland faced another difficult year, dealing
with the fallout from the pandemic and the adverse effects of
an ongoing cost-of-living crisis that has pushed people deeper
into poverty. The STV Children’s Appeal is committed to helping
children and families affected by poverty by funding projects
that provide essential support around material need, education
and employability, wellbeing, and community capacity building.
From December 2022 to March of this year, the STV Children’s
Appeal distributed £500,000 of funding to local and national
charities to help families struggling with poverty benefit from
direct assistance around food, clothing, and energy costs.
Scotland-wide funding beneficiary Aberlour said:
“Aberlour has seen unprecedented levels of applications to our
Urgent Assistance Fund due to the cost-of-living crisis; a crisis
that has been catastrophic for families across Scotland already
struggling to make ends meet. This grant enabled us to help
families feed and clothe their children, heat and light their
homes and even provide beds for many children.”
Fundraising activity
2023 saw the return of established events and the introduction
of some new events that all played their part to increase the
fundraising total for the year, as well as raise awareness of the
STV Children’s Appeal and its mission.
Hundreds of people took on the Kiltwalk for the STV Children’s
Appeal across all four events in Glasgow, Edinburgh, Dundee
and Aberdeen, raising thousands of pounds. The funds were
used to support local projects in each city; AR26 in Glasgow,
Togs for Tots in Dundee, Russell Anderson Foundation in
Aberdeen, and Scran Academy in Edinburgh.
June saw the return of the STV Appeal Cup, which entered its
second year. The tournament was hosted from Glasgow, with
companies such as Dell, Santander, Glasgow Airport and KPMG
battling it out for the winning trophy. The event was supported
by Appeal partner Tunnock’s.
The Big Scottish Breakfast took place during a week in September,
with groups, businesses and schools hosting their own events
from regions across Scotland. Kellogg’s sponsored the campaign,
which naturally aligned with their own objective of alleviating
school hunger through their free breakfast clubs. Over 100
events took place across Scotland, with some creative and fun
ideas to get people moving, particularly in the school events.
This year launched the STV Appeal Golf Day; an interactive
virtual golf tournament hosted from TopGolf Glasgow for
friendly rivalry and fun between competing companies. The
event was sponsored by Huws Gray, who joined Jackson Boyd,
Kellogg’s and Bounty Competitions in coming on board to
support an Appeal event.
Programming
As Scotland’s commercial Public Service Broadcaster, STV is
committed to increasing awareness of the many ways that child
poverty affects people, showcasing the efforts of charities across
Scotland fighting to break barriers and provide children with the
best start in life, as well as showing viewers the difference that
their support and fundraising can make. This year, a number of
Appeal-supported charities were given the platform, including
AberNecessities, Citadel Youth Centre and MsMissMrs.
The STV Children’s Appeal campaign culminated with two key
programmes shown in November. This year, the focus of the
documentary was on sport and its transformative ability to
change lives. Scotland’s Stories: A Sporting Chance was hosted
by Jean Johansson who visited four charities; AR26, Russell
Anderson Foundation, Street Soccer Scotland and Achieve
More Scotland, committed to breaking down barriers and
giving children the chance to thrive through sport.
The STV Children’s Appeal 2023 was an inspiring hour-long show
hosted by Lorraine Kelly and Sean Batty, celebrating another year
of fundraising efforts from ambassadors, community heroes,
and businesses such as Lidl, Tunnock’s and Beatson’s Building
Supplies. The show highlighted the compelling stories of charities
who worked to support children and families affected by poverty
in Scotland. Hosted from charity Refuweegee, the Appeal show
was a blend of entertainment and storytelling that captured
the hearts of viewers. Celebrities lined up to support a channel
‘takeover’ on STV to encourage viewers to donate. Across the
day, STV reached 1.03m viewers.
STV Children’s Appeal events took place throughout the year
STV colleagues taking part in the Aberdeen Kiltwalk
46 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 47
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview ESG report
Supporting Scottish business
STV’s unrivalled reach as the most popular peak time TV
channel makes it a highly effective medium for advertisers in
Scotland. Our commitment to ensuring advertising is accessible
and affordable to Scottish SMEs saw the launch of the £30m
STV Growth Fund in 2018. Since launch, we have allocated
almost £28m of funding across more than 1,220 deals enabling
Scottish businesses to advertise on the channel, build their
brand and grow.
Within the fund – and to help support two key components
of STV’s wider corporate Social Impact strategy – we have
ringfenced £1m for Scottish SMEs championing sustainability;
plus our £1m STV Inclusion Fund, now in its second year,
welcomes applications from businesses who support diverse
and inclusive practices to access funding to advertise on STV.
People
As a talent-based organisation, the creativity of our people is
the driving force of the business. We are committed to providing
an inclusive culture with equality of opportunity and ensuring
everyone’s voice can be heard and their contribution recognised.
Engaging with our people
Through a range of internal communication channels we provide
opportunities for all colleagues to keep informed, provide feedback,
access support and establish connections across the organisation.
Our employee opinion survey, Have your say, enables us to track
engagement on an ongoing basis on a range of topics. Typical
response rates are high at over 80% with participation open to
all colleagues, including those engaged on a freelance basis.
In 2023, the survey was used to increase understanding and
deepen awareness of our sustainability strategy, STV Zero.
A survey on commuting to work provided information that
has informed our employee benefits strategy and provided
important information to further improve our monitoring
of emissions. In 2024 we will conduct surveys on wellbeing
support and the effectiveness of our engagement activities.
Daily News, our daily email news update, continues to be read
by over 80% of colleagues. Providing information from across
the business including programme releases, performance stats,
corporate developments, social events and industry updates.
It is also a key tool in raising awareness and participation in
our diversity and inclusion activities and STV Zero.
Our weekly all-colleague virtual town hall session hosted by the
CEO is regularly attended by over 60% of colleagues. Featuring
different areas and highlights from across the business every
week, the session connects colleagues and provides an
opportunity to build understanding about the wider business.
Connections between the Board and colleagues across the
business are supported through Senior Independent Director’s
role as ‘Employee Director’. The Engagement Forum comprises
colleagues from every area and location of the Company and
meets with the Employee Director on a regular basis to hear
updates from the Board and to provide feedback for the Board
to assess. The Employee Director undertakes a programme of
site visits across locations.
Rewarding our people
Reward and remuneration are determined with reference to
the market and with the aim of attracting and retaining the
best talent. A company-wide grading structure, benchmarked
against a UK-wide peer group through our participation in
Willis Towers Watson’s annual media remuneration survey,
provides transparency and ensures reward and benefits are
market competitive.
In January 2023, an across-the-board salary increase of
£2,000 was awarded to all colleagues, irrespective of the level
of seniority or role. This approach ensures that the increase
to our salary budget is focused primarily on supporting our
lowest paid colleagues, with over two thirds receiving increases
of at least 5% with an increase of almost 10% to those on the
lowest salaries.
This award was combined with a benchmarking review of the
salary and grading structure to ensure competitiveness with the
wider market. This process highlighted the significant demand
driven pressures influencing salary levels of roles in areas with
skills shortages, including digital and software development,
production roles in STV Studios and STV News and editorial roles
in STV News. Through this review 20% of colleagues received an
increase to base salary in excess of the £2,000 across-the-board
award. Overall, the average of these additional salary increases,
received by one-fifth of colleagues, was 12.8%.
The 2024 salary award delivers an increase of at least inflation
to over half of colleagues and, like the 2023 award, has been
structured to deliver a higher increase to colleagues on lower
salary levels.
Getting involved in the Company’s performance outcomes and
providing opportunities to share in its success are the aims of
the reward strategy. An all-colleague bonus plan, linked to
exceeding key financial targets, will operate in 2024. Subject
to shareholder approval, a new Save As You Earn scheme will
be granted in 2024 promoting share ownership and a savings
opportunity for colleagues.
Wellbeing and support
Our wellbeing programme, Wellbeing from STV, was extended
in 2023 to include financial wellbeing recognising the impact of
increases in the cost of living on our colleagues. ‘Wellbeing from
STV’ takes a holistic approach to supporting our colleagues
offering support with mental, physical and financial wellbeing.
We continue to develop the support our freelance colleagues
can access while engaged on our productions, including the
Company’s employee assistance programme (EAP) and
occupational health resources and training for our production
teams to ensure we provide a safe, inclusive and mentally
healthy environment to everyone who is part of our STV
Studios team.
CheckIn, our performance management process, has been
refreshed placing increased importance on taking time out
to talk about wellbeing and support, as well as setting clear
objectives to measure performance and delivery.
Diversity and inclusion
Our focus on diversity and inclusion is changing our
culture, increasing the diversity of our business, improving
representation and introducing new voices on screen.
Focused on our people, our audiences and our partners; our
approach defines four broad priorities to drive change and
become a more inclusive organisation and to represent and
accurately portray our audience in our on-screen content.
Our people
Our audiences
Our partners
Create an inclusive
culture
Build diverse internal
and external talent
networks
Produce
representative
and accessible
programme and
advertising content
Develop partnerships
to increase inclusion
across the industry,
including a focus on
the TV Access Project
(TAP) and via the STV
Inclusion Fund
Delivery of our targets
To improve organisational focus and accelerate progress
in fulfilling the aims of our diversity and inclusion strategy,
in 2020 we set nine targets for delivery in 2023. All but one
of these stretching targets have been achieved or exceeded,
demonstrating positive change through the creation of a more
inclusive organisational culture and improved on-screen
representation and portrayal.
Four of five of the targets designed to increase diversity within
the organisation were met or exceeded. We were disappointed
not to meet the target for ethnic diversity in our London based
team which was missed as opportunities for recruitment through
which we can build a more diverse team have reduced as the
£30m STV Growth Fund
STV Studios picks up Production Group of the Year Award
Wellbeing from STV focuses on body, mind and lifestyle
Celebrating two years of STV Expert Voices
48 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 49
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Gender
Ethnically diverse
Disability
LGBTQ+
Socio-economic1
On screen: our audiences
2024 diversity targets
ESG report
2023 diversity targets
Our people
Target
50:50
top 25% of roles
by earnings
Scotland
8%
London
33%
12%
4%
2023 outcome
F50%
Achieved
8%
Achieved
13%
Not met
12%
Achieved
10%
Achieved
31%
For monitoring only,
no target set
(2020)
F45%
4%
15%
7%
7%
On screen
Target
2023 outcome
Gender
STV News at Six
50:50
F52%
Exceeded
Scotland Tonight
50:50
F50%
Achieved
Ethnically diverse
STV News at Six
8%
10%
Exceeded
Scotland Tonight
12%
13%
Exceeded
commissioning market has slowed down over the past 18
months. An action programme to support accelerated progress
in this area is a priority for 2024. Our other targets relating to
gender balance in senior roles, ethnic diversity across our
Scottish based teams, disability, and gender identity were
achieved, demonstrating the extent of the change that has
been driven since targets were set in 2020.
All of the targets designed to improve on-screen representation
in our news and current affairs programming were met or
exceeded. In 2023, 10% of our news contributors were from
ethnically diverse backgrounds (target 8%); and 52% were
female (target 50%). Scotland Tonight hit both its diversity
targets in 2023; women made up 50% of contributors (on target)
and 13% of contributors came from an ethnically diverse
background (12% target).
We are committed to building on our progress and driving
deeper changes to our organisation and on-screen. Having
critically evaluated our progress to date, we have set a new
framework of targets for 2024. Longer term targets will be set
once full data from the 2022 Scottish census, which will provide
important reference information, is published (publication
expected in late 2024).
In addition to census data, other key reference points in
determining our targets are our industry peer group and Ofcom’s
annual report on equity, diversity and inclusion in broadcasting.
Taking account of these sources, we have set targets for 2024.
In evaluating our progress, we have decided to reduce the target
aimed at increasing ethnic diversity in our London based team
from 33% of colleagues to a more modest level of 15% taking
account of our current position (13%) and in anticipation of the
continuing low level of opportunities or recruitment in 2024.
Our activities to build more diverse talent networks and provide
opportunities for work experience will be prioritised in 2024 to
support a more ambitious target beyond 2024.
1 No target set. Tracked for information only. Criteria
as defined in Ofcom 2023 diversity data collection.
50 STV Annual Report and Accounts 2023
Creating an inclusive culture
The next phase of our programme to create an inclusive culture
and increase cultural competence across the organisation was
delivered to all colleagues by the Company’s D&I Advisor, Femi
Otitoju. All managers completed the ‘Inclusive Leadership’
programme with a follow up programme, ’Everyday Inclusion’,
rolled out to all colleagues.
The topics covered included menopause in the workplace;
gender identity to support the introduction of the Company’s
Transitioning at Work Policy; and providing appropriate support
for neurodivergent people. Training planned for 2024 will be
targeted at colleagues in STV News and STV Studios to support
them in ensuring authentic portrayal in the content they create.
In June 2023, STV was recognised as Champion of Diversity,
Equality and Inclusion at the Marketing Society Star Awards
in respect of work underway across the business to support
inclusion, both on and off screen.
Supporting a diverse talent pipeline and succession planning
Trainee positions and industry insights programmes have
created opportunities for talent from under-represented groups
with over 55 opportunities provided in 2023. These have ranged
from production training schemes and accelerator programmes
to our successful bursary programme with the Royal Television
Society through which 47 scholars from lower socio-economic
backgrounds have received a bursary and invaluable work
experience and networking opportunities. Other programmes
delivered in 2023 include Unlocked, an internship programme
providing experience in marketing; Breaking Barriers, delivered
in partnership with ENABLE Scotland, supporting people with
disabilities and learning difficulties; and graduate trainee
opportunities in science, technology, engineering and maths
(STEM) related roles within our transmission and news technical
teams. Through our long-standing association with the Social
Mobility Business Partnership, which connects students from
low-income backgrounds to employers, we have delivered
networking opportunities and industry insights.
STV Drama’s production, Screw, supported an innovative
programme to encourage career conversion to the TV industry
to support increased employability. Three-quarters of trainees
on the programme were ethnically diverse, deaf, disabled and/
or neurodivergent, and/or ex-offending. Opportunities in roles
that have traditionally attracted a higher number of male
applicants were offered to women, providing training in camera
work and sound dubbing. Also on the production of Screw, our
Stepping Up training programme provided career development
Workforce: Our people
STV News at Six
Scotland Tonight
Gender
50:50 balance across top 25% of roles by earnings and a
balanced gender profile across the rest of the organisation
Ethnic diversity
8% of colleagues based in Scotland
15% of colleagues based in London
Disability
LGBTQ+
F45%
12% of all colleagues
4% of all colleagues
50:50
12%
50:50
8%
No target set
No target set
opportunities for eight colleagues to strengthen our succession
to roles in scripted production. Training was provided for heads
of department and supervisors to support the success of the
programme and ensure there was mentoring and structured
support. Through the programme we have increased the
number of experienced heads of department in our talent
network, including in roles where there are skills shortages.
In support of our commitment to increase diversity in senior
STEM roles, six female colleagues have undertaken our digital
accelerator programme, completing a three-month external
development programme with Empowering You, delivered in
association with the Scottish Digital Academy, Scottish
Government and ScotlandIS.
Since undertaking the programme, 50% of participants have
assumed a new or promoted role progressing our aim to improve
gender balance in STEM roles and in roles in the upper earnings
quartile. In addition to advancing the professional development
of participants, they are encouraged to be proactive in
becoming role models within the Digital business and in
external professional networks to increase the visibility
of women in careers in STEM.
43% of opportunities delivered in 2023 were provided to
trainees from lower socio-economic backgrounds; 14% to
ethnically diverse trainees; and 33% to trainees with a disability.
In 2024, we will continue to develop our network of partners
with an increased focus on improving access and opportunities
for people with a disability.
STV Inclusion Fund
Celebrating and rewarding the efforts of progressive businesses
committed to diversity and inclusion is the aim of the STV
Inclusion Fund. Through a competitive process, over 30 SMEs
applied for funding in the form of gifted airtime and support with
the development of a marketing campaign. Four businesses
were selected and have received on-air marketing support
and increased profile to accelerate their growth.
Our partners: Working with partners and stakeholders
to increase inclusion across the industry
We continue to work with a network of partners and industry
stakeholders to support the ongoing development of the
inclusion strategy, support representation of diverse talent
across the TV industry to create inclusive working environments.
In 2023, STV joined the Television Access Project, TAP, an
alliance of ten of the UK’s broadcasters and streamers who
have pledged to work together to create substantive and
permanent structural change across the industry to ensure full
inclusion for deaf, disabled and neurodivergent talent by 2030.
STV has provided direct support in key areas of TAP’s strategy:
funding for workplace adjustments to support improved access
to work for freelancers with a disability and identifying the
requirements and training to develop new roles to support
improved access. This has included training for the new role
of Access Co-ordinators on productions and coaching of Access
Champions, to provide allyship and support culture change.
Our audiences
STV Expert Voices, our media training and networking initiative,
continues to expand our network of expert contributors and
has supported all our on-screen representation targets being
achieved or exceeded in 2023. 10% of our news contributors
were from ethnically diverse backgrounds and 52% were
female (target 50%). Scotland Tonight hit both its diversity
targets in 2023 with gender balance of contributors and 13%
of contributors from an ethnically diverse background.
By late 2023, the STV News team has trained more than
1,000 individuals from under-represented groups, with around
10% already appearing on air using their newly developed
presentation skills. The expansion of this network is developing
with a growing number of partners including Women In
Journalism, Pass the Mic and SportScotland. Also in 2023,
a dedicated database for our news and current affairs teams
was launched to ensure they can readily identify contributors
who are comfortable participating in our programmes.
Priorities for 2024
In addition to our ongoing programme of training and
support to build an inclusive culture, a key area of focus
in 2024 will be to maintain the progress achieved against
our targets, including developing longer-term targets once
latest census data is available. In conjunction with our
industry peers and through our involvement in the TAP, we
will develop and implement STV’s action plan to improve
access and inclusion for disabled talent, setting a long-term
plan to deliver structural change by 2030.
STV Annual Report and Accounts 2023 51
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview ESG report
Gender pay profile
2023 gender balance target achieved
The Company’s gender pay gap has reduced year on year as
we continue to achieve a balanced gender profile across all
roles (53% women: 47% men). Importantly in 2023, we met our
long-term target – set in 2018 – to achieve gender balance across
the top 25% of roles as defined by earnings, with half of these
roles now held by women. This compares to only 30% of roles
at this senior level when we first reported on gender pay in 2017.
This demonstrates the positive impact of measures implemented
across the business to support female colleagues to progress
through the organisation into senior roles. These actions have
included annual succession planning to assess and strengthen
our talent pipeline, and targeted career development and talent
acceleration programmes. In 2023, 53% of promotions were
secured by women. At Board level (plc and Management
Board), 29% of roles were held by women.
At 11.7%, the Company’s mean gender pay gap continues to
reduce year on year (2022: 15.6%) and over the long-term, since
reporting began in 2017, this is down by 49%, from 22.8% in
2017. In the upper earnings quartile where the target was set
to achieve gender balance, the mean pay gap is down at 10.9%
(2022: 14.1%). If roles in the Management Board are removed
from this group, there is a reverse, or negative, pay gap of
-2.4%, with female colleagues averaging slightly higher pay
than male colleagues in this group. In the remaining 75% of
roles across the Company the mean pay gap is 5.9%.
The median gender pay gap, which reflects the difference in
the midpoints of the hourly rates of pay for men and women
has also reduced year on year to 9.3% (2022: 9.7%), and over
the long-term, since reporting began in 2017, this is down by
46%, from 17.3% in 2017.
Gender balance and mean pay gap by pay quartile 2023
The mean gender pay gap has reduced again to 11.7% (2022: 15.6%). Across 75%
of roles (excluding the upper pay quartile) the mean gender pay gap is only 5.9%.
Lower
Lower middle
-1.1%
40% Male
60% Female
3.0%
46% Male
54% Female
Upper middle
Upper
2.5%
51% Male
49% Female
10.9%
50% Male
50% Female
-2.4% excl. Management Board
Closing the gender pay gap
Since reporting began in 2017 the mean gender pay gap has reduced from 22.8% to 11.7%.
22.8
17.3
21.0
21.0
18.5
15.6
14.6
15.3
15.6
11.9
8.3
9.7
8.6
11.7
9.3
5.0
2017
2018
2019
2020
2021
2022
2023
Mean pay gap %
Median pay gap %
Mean pay gap excl. Management Board %
Gender bonus pay gap
The mean and median gender bonus pay gaps have
remained broadly consistent year on year at 51% and
-2% respectively (2022: 50.5% and 0%). Excluding the
Management Board, the mean and median 2023 gender
bonus gap figures are 19% and -14% respectively.
Gender pay gap reporting is prone to volatility when
making year on year comparisons due to a number of
factors that impact bonus payments, such as the payment
of one-off discretionary bonuses and the variable timing
of payment of bonuses from one year to the next.
Gender bonus gap 2023
Relates to bonuses paid over the period April 2022 to March 2023
51%
mean
2022: 50.5%
2%
median
2022: 0%
People receiving a bonus 2023
Relates to bonuses paid over the period April 2022 to March 2023
18%
men receiving bonus pay
21%
women receiving bonus pay
2022: 93% 1
2022: 95% 1
1 In 2022 an one-off discretionary bonus payment was made to all colleagues to
provide support with the increased cost of living. This accounts for the significant
reduction in the percentage of people receiving a bonus year on year.
Achieving our diversity targets
To achieve our target for gender balance in the top 25% of roles*, a comprehensive programme
was implemented to increase retention of female colleagues and support them in progressing
to the most senior roles.
* Defined by earnings.
Talent acceleration
• Regular succession and career development has strengthened our talent pipeline for senior roles
• STV Digital Accelerator programme has supported six senior women in the Digital business with
team with personal & career development
• Development programmes including Pathway are focused on developing potential and providing
skills to support a future career path in the business
• All career development programmes strive to achieve 50:50 gender profile in each cohort
Culture
• Training and awareness programmes support managers and colleagues in building an
inclusive culture
• Inclusive hiring training continues to be rolled out to all managers across the business
• Our Balance peer group provides a forum for open conversation around culture and development
opportunities for women across the organisation
Work-life balance
• Our Returners programme supports primary carers in achieving a smooth return to work from
maternity, shared parental or adoption leave, including the offer of a mentor and access to a peer
support network
• Continued partnerships with Take Two and Share My Telly Job to promote job sharing opportunities
•
across production-based roles in STV Studios
Our menopause peer group has been established to support women who are experiencing menopause
in the workplace
• All managers receive training to support them in delivering our commitments within our family
friendly policies
Diverse talent pipeline
• Successful partnership with STEM Returners to support women in STEM related roles to re-enter
the workplace
• ‘Hack’ events held at a divisional level to expand talent networks and pipelines
• STV Expert Voices develops female contributor talent for STV News & Current Affairs programming
offering media and studio familiarisation training and networking opportunities
• The STV/RTS Bursary Scheme has supported 47 scholars from lower socio-economic backgrounds
with financial and career development support
52 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 53
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview
ESG report
Sustainability
STV Zero
Our path to become a net zero business by 2030 requires change
across all areas of the business and clear priorities and targets
are essential to assess the effectiveness of our actions and
demonstrate that we are making a positive impact. Stretching
targets set for 2023 have been delivered and new commitments
building on this progress have been introduced to ensure further
progress in 2024.
Continued delivery of targets – towards net zero carbon by 2030
Target
Progress
Continue to increase disclosure
and transparency
Sustainability at the heart of
the business
• Continued review of sustainability-related risks through the Group’s risk management framework
• Introduction of Scope 1 and Scope 2 emissions reductions target to achieve reduction of 72% by end of 2025
• Completion of measurement and data analysis of Scope 3 emissions to enable emission reduction
target to be set. Data collection completed for STV activities; however, further analysis is now required
to incorporate activities of Greenbird Media and Two Cities Television into targets for 2024 and beyond
• Project albert certification achieved on 100% of programming Studios in 2023 and all programming
produced by STV News
Reduce energy consumption
• Office temperature and lighting control measures implemented
• Completion of phase 1 assessment of digital carbon impact via DIMPACT
• Cost benefit analysis of installation of solar power at PQ initiated with landlord
Waste reduction
• 100% waste recycled at all locations under the Company’s control1
• Achieved 21% reduction in paper waste v 2022
Using STV’s reach to promote
sustainability
• Launch of Sustainable Scotland Week delivered specially commissioned research, programming and
promos to raise audience awareness of sustainability and climate issues
• Delivery of dedicated sustainability series on STV during Sustainable Scotland Week reached 1.5m viewers
Achieve a sustainable supply
chain by 2030
• Segmentation of supplier base into three tiers and launch of engagement programme with largest,
Tier 1, suppliers in addition to continued collaboration with industry peers via Project albert
• Improved CDP rating of B in 2023
• Continued collaboration across entire supplier base
Our culture
• ‘Be an STV Zero hero’ behaviour change campaign continued to engage colleagues to raise awareness
of STV Zero priorities and support adoption of sustainable working practices and lifestyle choices
• All-colleague travel survey to inform action programme to support sustainable commuting and
reduction of Scope 3 emissions
1 Pacific Quay; Aberdeen; Balmore storage site.
Improving measurement and disclosure
to increase transparency
Demonstrating the impact of STV Zero in reducing the climate
footprint of the business, underpinned by a science-based
approach, is of the highest importance to provide assurance and
clear evidence of progress to all stakeholders. Accreditation from
the Science Based Targets Initiative (SBTi) provided a baseline
from which we have continued to improve our approach to
measurement and analysis of all data sources that enable
quantification of the carbon impact of the business.
Areas of progress during 2023 have included a significant data
collection project to accurately measure and monitor Scope 3
emissions, and a collaboration between our technology and
digital engineering teams in conjunction with DIMPACT to
obtain an initial assessment of the carbon impact of STV Player.
The activity to measure Scope 3 emissions was extended in Q4
of 2023 to incorporate the activities of Greenbird Media in order
that emissions reduction targets cover all areas of the business.
Measuring how effectively we are using the reach of our
platforms to increase awareness of sustainability amongst
our audiences will be supported through the introduction of
sustainability content tracking across our news and current
affairs programming in 2024.
Looking to 2024, a key aim is to reset targets integrating recent
acquisitions (Greenbird Media and Two Cities Television) to
enable measurement of emissions across all of the activities
of those entities.
The sustainability governance structure (refer to page 59)
defines clear accountability and a structured method to ensure
consistency of approach to evaluate progress against targets.
Sustainability at the heart of the business
Achieving Project albert on 100% of programmes produced
by the STV Studios1 in 2023 is a significant milestone and
demonstrates the extent that sustainable practices are
embedded in our ways of working. This was achieved on
18 programmes/series in STV Studios and additionally on
10 programme titles in STV News. All news and current affairs
programming produced by STV News has received albert
certification for a second consecutive year.
1 Excludes Greenbird Media programming which will be included
in the 2024 target.
Our Creative team – responsible for commercial production
to support our advertisers – was a founding member of Ad Net
Zero and the team has begun to introduce the Ad Green Carbon
Calculator into the campaigns they develop and deliver to
measure their carbon impact and support action planning
towards net zero by 2030.
Placing STV Zero at the heart of our organisation and
embedding the strategy into our culture is a key lever to deliver
change. Our internal comms campaign – Be an STV Zero Hero
– continued during 2023 with events for colleagues, including
celebrating Sustainable Scotland Week, information sessions
with external speakers and sustainability activists, litter picking
to improve the environment in the locale of our office locations
and the establishment of the STV Garden Gang at Pacific Quay,
a group of volunteers committed to enhancing the green
spaces around the office building.
Reducing our energy consumption
With over 95% of energy already secured from renewable
sources, the priority is to seek to reduce overall consumption.
During 2023 an ongoing programme of energy reduction
initiatives has led to the introduction of office temperature and
lighting control measures. A cost benefit analysis of measures
requiring more significant levels of investment has commenced,
including assessing the feasibility of the installation of solar
power at the Company’s Pacific Quay Headquarters.
Waste reduction
In 2023 we recycled 100% of waste from all locations under
the Company’s control. A campaign to encourage colleagues to
reduce paper waste achieved a reduction of 21% year on year.
Identifying partnerships that can accelerate the impact of
our activities is a key objective. We worked with Glasgow
Wood Recycling who repurposed wood and upcycled old
items from our storage areas contributing to a circular
approach to waste reduction.
Scotland Tonight Climate Special, STV and STV Player
Sean’s Scotland SOS, STV and STV Player
Sustainable Scotland Week litter pick
STV Zero Heroes in action
54 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 55
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview ESG report
Setting clear targets towards net zero by 2030 – 2024 and beyond
Using STV’s reach to promote sustainability
STV Zero: Aligning with external initiatives and benchmarks
Objective
Target
Continue to increase disclosure
and transparency
Compliance with additional reporting requirements
arising from the International Sustainability
Standards Board in 2023 Annual Report and Accounts
Undertake assessment of the Company’s impact
on biodiversity and development of a policy, as
appropriate, to support becoming a nature positive
business
Continued review of sustainability-related risks
through the Group’s risk management framework
Timescale for delivery
2024 and ongoing
H1 2024
Ongoing activity to mitigate risk during 2024
Sustainability at the heart of the
business
Introduce emissions reductions targets:
Target set for end of 2025
• Scope 1 and Scope 2 on a market-based approach:
Reduce by 72% by 2025 (from 2022 as base year)
During 2024, introduce a quarterly tracker
of Scope 1 & Scope 2 emissions
• Scope 3 emissions reduction target to be defined
H1 2024
Introduce climate content target in STV News
programming to increase sustainability focused
editorial across all platforms
Target expected to be achievement of a 5%
increase v 2023 output across broadcast and
digital content
Reduce energy consumption
Waste reduction
Maintain Project albert certification on 100% of
UK-produced programming from STV Studios by end
of 2024 and all programming produced by STV News
Ongoing
Continued energy reduction measures to be
identified
Continued engagement with DIMPACT to progress
analysis of data collected to date
Introduce refreshed Business Travel Policy
Maintain 100% recycled waste at locations under
the Company’s control1 in 2024
Ongoing throughout 2024
Ongoing throughout 2024
Q1 2024
Ongoing
Using STV’s reach to promote
sustainability
Delivery of dedicated sustainability series on STV
during 2024
Ongoing development of content via STV and
STV Player to educate and inform to influence
positive lifestyle changes
Achieve a sustainable supply
chain by 2030
Our culture
Complete introduction of sustainability criteria for
all Tier 1 suppliers with continued collaboration
across entire supplier base
Ongoing
Participate in Climate Disclosure Project (CDP) in 2024
July 2024
‘STV Zero hero’ behaviour change campaign to
continue as key theme of internal communications
throughout 2024, including progressing sustainable
commuting following 2023 all-colleague travel
survey
Ongoing
1 Pacific Quay; Aberdeen; Balmore storage site.
Broadcaster collaboration through the Climate Content Pledge
All STV colleagues receive a sustainable travel mug during their induction
Our privileged position as a public service broadcaster enables us
to use storytelling to inspire viewers to adopt more sustainable
lifestyles. Our dedicated campaign, Sustainable Scotland Week,
reached over 1.5m viewers, increasing awareness and inspiring
our audience to make more sustainable lifestyle choices.
The campaign included specially commissioned research,
programming and promotions. STV News at Six delivered
increased editorial coverage of stories highlighting the impact
of climate change on communities across Scotland; a special
one-hour peak time documentary Sean’s Scotland SOS highlighted
how the climate crisis is impacting the country and what people
are doing to help; current affairs programme Scotland Tonight
aired a special on sustainability issues facing the country, and
a dedicated Green Hub of sustainability themed programming
ran on STV Player. Drawing all of this together, specially produced
promos ran across the schedule highlighting Sustainable Scotland
Week and providing tips for viewers to help make a difference.
Research was commissioned through ScotPulse to measure the
impact of the campaign. This revealed that 3 in 5 Scots think
TV broadcasters should make more programmes on climate
change and sustainability and 72% of those who saw
Sustainable Scotland Week activity said it made them more
likely to make more environmentally conscious choices.
Working in collaboration with our broadcasting peers, Simon
Pitts, joined the CEOs of the BBC, Channel 4, ITV, Paramount
and Sky to convene a unique event to highlight the power of
storytelling to inspire climate action. Following the commitments
made by these organisations in the Climate Content Pledge at
COP26, working in collaboration with Chatham House over 80
CEOs from the food, energy, FMCG, broadcasting and transport
sectors met to discuss how climate-related stories can inspire
climate and systems change at scale. The event also involved
Bill Gates, Co-Chair of the Bill & Melinda Gates Foundation and
Founder of Breakthrough Energy.
Achieve a sustainable supply chain by 2030
This long-term aim has been progressed through a targeted
approach which has segmented our supplier base into three
tiers. An engagement programme with our largest – Tier 1 –
suppliers has clarified a number of actions to be addressed as
we widen the scope and seek to engage a larger number of
smaller scale suppliers. These second and third tier suppliers
will have a less developed approach to sustainability and
will require longer lead times to change their processes.
Our approach is based on partnership and providing support
to encourage suppliers to make changes to improve their
sustainability credentials and we recognise this will require
a long-term commitment with many of our current suppliers.
Our second submission to the Carbon Disclosure Project (CDP)
secured an improved rating, scoring B (2022 submission: D).
Through CDP, STV is benchmarked against companies globally
assessing environmental practices with a focus on supply chain
and emissions monitoring. The rating of B recognises that the
environment impacts of the business have been addressed and
that there is good evidence of environmental management.
Net zero by 2030
Maintaining momentum and increasing opportunities
to involve more colleagues on our journey to 2030 are
priorities for 2024. New targets have been set for 2024
and beyond, and incorporated into the corporate objectives
cascaded through the organisation for tracking and
reporting during 2024.
We have reported our climate disclosures in line with the Task
Force on Climate-related Disclosures (TCFD) since 2021 and in
2023 have extended this to meet the requirements of the
Climate-related Financial Disclosure (CFD).
Project albert is the leading screen industry organisation for
environmental sustainability. Albert supports the film and TV
industry to reduce the environmental impacts of production
and to create content that supports a vision for a sustainable
future. STV is a consortium member of Project albert working in
collaboration with industry peers to share, learn and act for a
sustainable industry future. In 2023, all programmes produced
by STV Studios in the UK achieved albert certification.
The Carbon Disclosure Project runs the global disclosure system
for investors, companies, cities, states and regions to manage
their environmental impacts and is recognised as the gold
standard of environment reporting with the most comprehensive
dataset on corporate and city sustainability-related action. We
made our first disclosure to CDP in 2022, receiving a ‘D’ rating,
and in 2023 our disclosure was rated ‘B’ demonstrating the
progress being delivered through STV Zero.
DIMPACT is a collaborative initiative between leading media,
entertainment and technology companies and world-class
researchers established to measure, understand and ultimately
reduce the emissions of serving digital media and entertainment
products. As STV’s digital business continues to grow, an action
plan to reduce the carbon impact of STV Player will form an
important part activities to achieve net zero by 2030.
Other external initiatives and benchmarks we engaged
with during 2023 include:
Science-Based Targets Initiative,
accredited by SBTi in December 2022
STV is a FTSE4Good Constituent of the FTSE4Good Index
Supporter and Member of Ad Net Zero since 2022
56 STV Annual Report and Accounts 2023
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ESG report
Climate-related Financial
Disclosures report
Compliance Statement
STV Group plc has complied with the requirements of LR 9.8.6(8)R
by including climate-related financial disclosures consistent
with the TCFD recommendations and recommended disclosures
except for recommended disclosure (b) under the Strategy pillar
where work on quantification of climate-related risks and
opportunities remains ongoing.
The climate-related financial disclosures made by STV Group plc
comply with the requirements of the Companies Act 2006 as
amended by the Companies (Strategic Report) (Climate-related
Financial Disclosure) Regulations 2022.
Governance
Our reporting in this section relates to the two recommended
disclosures of the TCFD framework under the ‘governance’
pillar and the requirements of the Companies Act 2006,
section 414CB, subsection 2A part (a).
The Company’s governance structure in relation to climate-
related matters is set out below. This structure identifies the
key responsibilities at all levels in the organisation and clarifies
accountability for governance.
During the year, a new Board committee – the ESG Committee
– was constituted to ensure sufficient, dedicated time was set
aside for consideration of environmental, social and governance
matters given the increasing focus across these areas by
stakeholders and in recognition of the additional reporting
and regulatory requirements that the Board must seek to
comply with. This committee meets at least 3 times each
year and the Chair of the Committee is required to report to the
Board on its activities after each committee meeting and make
recommendations for approval by the Board on any aspect
of its remit, including approval of the governance framework
relating to climate-related matters and the identification or
climate-related risks and opportunities. The initial report of
the ESG Committee is shown on pages 86 and 87.
As part of its annual Board evaluation process, which
included an assessment of the effectiveness of each of the
Board Committees, this structure is considered to enhance
the prior structure and is considered to be appropriate and
operating effectively.
In providing its annual approval of the sustainability
governance structure, the Board has continued to consider
its own expertise and experience in this area. Directors are
comfortable that there is sufficient experience among existing
members of the ESG Committee, and Board, for the short to
medium term. Notwithstanding this, it forms part of the normal
succession planning undertaken for Non-Executive Directors
to consider the developing skills and experience of the Board
against an evolving landscape, of which climate-related
experience is one factor.
The Board and/or ESG Committee has received three reports
over the course of 2023 covering a wide range of matters
in relation to sustainability and climate-related risks and
opportunities, including (i) progress against operational targets
set for 2023 that underpin the ultimate goal of being a net zero
carbon business by 2030; (ii) the Group’s governance structure;
and (iii) identification and assessment of emerging and existing
climate-related risks and opportunities. The Group’s Risk Impact
Heat Map – the framework against which the significance and
likelihood of each identified risk must be scored – includes
specific criteria for sustainability risks.
Across the organisation, managers have sustainability targets
incorporated into their personal objectives for bonus purposes.
The Remuneration Committee is responsible for approving the
strategic and personal objectives of the Executive Directors, on
which an element of variable pay is dependent, and which ESG
matters more broadly, and sustainability specifically, are a key
component. 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.
Reports on sustainability related issues, including progress
against targets, have been delivered and discussed at divisional
board meetings, and at meetings of the Management Board.
Strategy
Our reporting in this section relates to the three recommended
disclosures of the TCFD framework under the ‘strategy’ pillar
and the requirements of the Companies Act 2006, section
414CB, subsection 2A parts (d), (e) and (f).
The Group has identified several climate-related risks and
opportunities over the short, medium and long term. In
assessing the significance of each it has defined ‘materiality’
as an impact on the business that limits our ability to carry out
our operations, and/or requires a change to our business model,
and/or has a significant impact on our liquidity thereby limiting
our ability to invest or meet our obligations as they fall due.
STV: Sustainability governance structure
PLC Board – meets at least 7 times each year
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
Environmental, Social and Governance (ESG) Committee
– meets at least 3 times each year
Responsible for:
Audit & Risk Committee – meets at least 3 times each year
Responsible for:
• Supporting the Board in its responsibilities for sustainability,
• Making recommendations to the Board on all aspects of the
including:
sustainability strategy, STV Zero
• Oversight of the establishment of sustainability-related
policies and codes of practice and their implementation
• Reviewing external assurance of sustainability matters
• Reviewing the challenging objectives, targets and key
performance indicators relating to STV Zero
• Ensuring the Group continues to deliver a positive social impact
to support long-term shareholder and stakeholder values
– (Shared with the ESG Committee) Overseeing compliance
with, and progress on, sustainability reporting
– Overseeing the Company’s environmental data and
its accuracy and completeness
– Ensuring sufficient, appropriate assurance is obtained
in relation to numerical sustainability reporting
Management Board – meets weekly
Responsible for:
• Reviewing and monitoring climate-related risks and related mitigating actions on a bi-annual basis, as part of routine risk reviews,
and determining whether the net risk is within Board-approved risk appetite
• Ensuring appropriate action is being taken to achieve the STV Zero strategy, through review of quarterly reporting on climate-related
issues, including metrics and targets
Divisional Boards – meet monthly
Responsible for:
• Identifying all climate-related risks and opportunities and developing appropriate mitigation strategies
• Monitoring progress against divisional emissions reduction plans and identification of remedial actions required should sufficient
progress not be achieved
• Studios and Broadcast – tracking Project albert carbon action plans to ensure achievement of accreditation for all STV-produced
programming
Sustainability Group – meets monthly
Responsible for:
• Promoting and championing sustainable behaviours across the Group
• Embedding a positive climate culture across the Group
58 STV Annual Report and Accounts 2023
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In terms of the risk assessment, transition and physical
risks were considered – transition risks being those that are
associated with the transition to a low carbon economy, and
physical risks being those that are associated with the physical
impacts of a changing climate. In carrying out this assessment,
we considered three time periods: the short term, being the
next financial year (2024); the medium term, being the period
of our Group 3 Year Plan (through to the end of 2026); and the
long term, from 2027 to 2030 (with 2030 being our target date
for becoming a net zero carbon business). These time periods
were considered relevant in the context of the Company’s
business planning cycle, investment plan, financing facility and
its strategy to transition to a net zero carbon business by 2030.
In terms of physical climate-related risks, our operations are based
in the UK with limited physical presence elsewhere. Therefore, we
consider the risk of severe weather events and their impact on
our properties to be low risk. We have informed this conclusion
through completion of a flood risk assessment, undertaken for
insurance purposes at our Pacific Quay offices in Glasgow which
are on the banks of the River Clyde, that determined that a
1-in-200 year event of flood waters reaching 1m would have
a limited impact on the building due to the level of the interiors
being further above the external ground level. Flood levels of
1.5m would need to be reached for the building’s defences to
be breached, which is the equivalent of a 1-in-1,000 year event.
In terms of transition risks and opportunities, we identified
a number that have been assessed as being of minor concern
as they are either unlikely to materialize or they are of low
materiality for our business. The risks identified below are those
we consider to be most significant, and we have assessed
them on a division-by-division basis. As the Group operates
predominantly in the UK, a breakdown by geography is not
considered material or relevant. The risk scores in the table
below are on a gross risk basis only – as we continue to develop
and refine our related risk management activities we will look
to expand our disclosure to include net risk scores. We will
continue to keep these risks under review, and to evaluate
market trends over time and by division, where appropriate.
Time horizon
Short
term
Medium
term
Long
term
L
L
L
L
L
+
L
M
L
M
M
+
L
M
L
+
M
+
Potential impact
Division
How we manage risks
Failure to maintain albert
accreditation for STV News
Failure to maintain albert
accreditation for programme
production for third parties
Energy price inflation, particularly
electricity, remains elevated
B
S
G
• Proportion of programmes that qualify is tracked
• Review of progress at News Leadership meetings
• Process and controls embedded in day-to-day operations
• Proportion of programmes that qualify is tracked and
reported at divisional board meetings
• Roll-out of training by albert
• Third party energy consultant used to provide advice on
optimal contractual arrangements for the Group to
maximise climate credentials and manage cost
Government policy decision
prevents advertising by high carbon
products or services
B, D
• Engage with UK and Scottish governments on regular basis
to put forward STV perspective on potential policy decisions
• STV Green Fund introduced to offer match-funding to
Failure to maintain momentum in
embedding sustainable behaviours
across the business results in inability
to achieve net zero carbon by 2030
G
businesses with ‘green’ credentials
• Active engagement with the Sustainability Group
• Regular events to encourage employee engagement
• STV Zero targets shared group-wide, sponsored by the CEO
Using STV’s position as a public
service broadcaster to raise
awareness
B, S
• Specific programming including current affairs on climate-
related matters
• STV Green Fund to make advertising on TV affordable to
‘green’ businesses
• Signatory of the Climate Content Pledge with other UK PSBs
Key:
L = low risk; M = medium risk; H = high risk (being those that would be material as defined)
+ = opportunity
B = Broadcast; D = Digital; S = Studios; G = Group-wide
Having identified the most potentially significant climate-related
risks for our business, we have considered ways in which we
might quantify them but due to the complexity involved and the
significant unknowns associated with the potential risks, we have
not been able to make that assessment. As part of our ongoing
review of climate-related risks and opportunities, we will look for
ways in which we can undertake this assessment in the future.
STV’s plans for transitioning to a net zero carbon business are
centred around our sustainability strategy, STV Zero. How it is
being adopted across the Group and embedded in our strategy,
operations, and culture, is included in the narrative on pages
54 to 57.
Resilience
Against this backdrop of climate-related risks and opportunities,
and under a Paris agreement aligned scenario, we consider the
organisation’s strategy, business model and cash generation
to be resilient. Our sustainability strategy, STV Zero, which is
targeting net zero carbon by 2030, means that we would be
protected from significant carbon taxes that may be introduced.
More generally, our business model (as set down on pages 10
and 11) is centred around provision of advertising services and
IP creation/acquisition, none of which involve global, physical
supply chains.
Alongside our assessment of climate-related risks and
opportunities, we have undertaken an exercise to understand
the related actual and potential financial impacts of climate
change on our business. This is continually reassessed to ensure
it reflects emerging risks and opportunities, and the wider
markets in which we operate. Our conclusion remains 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:
• Maintaining carbon neutrality is supported by sourcing
renewable electricity at sites where we control supply
contracts, and reducing business travel.
• There are no items of property, plant and equipment (PPE)
that are impaired as a result of changes to the way we work
to reflect transition to a more environmentally sustainable
operation with no impairment charges recognised.
• Our investment programme that supports our growth
strategy focuses on Digital and Studios and the nature of this
investment has not changed as a result of our work to achieve
STV Zero targets and priorities, nor has there been any impact
on the capital available to invest. 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. The high energy prices over
the last 12-18 months have been UK-wide and not climate-
related. We do not expect any future climate-related impact
to be material, and there may be opportunity to offset any
cost impacts through additional advertising revenue from
brands seeking to promote the sustainability of their
products and services.
• We continue to engage with the trustees of the Group’s defined
benefit pension schemes to understand their approach to
the climate crisis from an investment perspective. Based on
discussions to date we have not identified any significant risks
or incremental costs to the Group but continue engagement
with them 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,
which matures in March 2026, has no such linkage.
Risk management
Our reporting in this section relates to the three recommended
disclosures of the TCFD framework under the ‘risk management’
pillar and the requirements of the Companies Act 2006, section
414CB, subsection 2A parts (b) and (c).
The identification, assessment and management of climate-
related risks and opportunities is undertaken throughout
the business, with subsidiary/divisional management teams
responsible for these activities in their own business and then
the Management Board and Board of Directors (and its Board
Committees as per the governance structure presented
previously) taking a Group-wide perspective.
The identification, assessment and management of climate-
related risks has been embedded into the Company’s risk
management and internal control processes and forms part of
the routine risk reviews and Board/Committee reporting in place
across the business. A Risk Impact Heat Map with specific criteria
for sustainability risks is used by those charged with governance
to ensure potential risks are considered and measured in a way
consistent with other identified risks across the Group.
Detailed reporting on the Group’s risk management framework
has been included in the Risk Management report on pages
37 to 45.
The Management Board is actively engaged in climate-related
risk management activities, with regular discussions on the
status of achievement of targets (including scope 3 GHG
reduction targets for business travel and achievement of
Project albert certification for all programming produced by
STV Studios and the Broadcast division) and identification of
follow-up actions required. Divisional action plans have been
developed to drive accountability for making the changes
necessary to achieve our short-term and long-term targets, and
to ensure we are managing the potential impact of climate-
related risks and opportunities in a timely and effective manner.
Each divisional action plan has specific targets that relate to
the activities of the division. Designed to increase focus on
adopting new ways of working to reduce the Company’s carbon
impact, targets include training and sustainability awareness;
measurement of business travel; and incorporating a carbon
calculation into production processes.
Metrics and targets
Our reporting in this section relates to the three recommended
disclosures of the TCFD framework under the ‘metrics and
targets’ pillar and the requirements of the Companies Act
2006, section 414CB, subsection 2A parts (g) and (h).
The fourth pillar of the TCFD Framework (recommended
disclosure (b)) requires disclosure of Scope 1, Scope 2 and Scope 3
Greenhouse Gas (GHG) emissions, and related risks. The Group’s
Streamlined Energy and Carbon Reporting (SECR) forms the last
section of this report and can be found on pages 62 and 63. This
shows the Group’s Scope 1 and Scope 2 GHG emissions for the
current and prior year, and several of the 15 categories of Scope
3 GHG emissions (noting that five are not applicable to STV),
where data can be obtained and measured reliably. There is only
one category of relevant scope 3 emissions that we have not
reported on in 2023 and we do not consider this to be material
under the definition of TCFD. In FY22, we set medium term
carbon reduction targets for Scope 1 and Scope 2 for the period
to the end of 2025 and further details are included in the SECR
report, along with a summary of risks to achieving those targets.
The Group has achieved carbon neutrality for each year since FY21.
The metrics and targets that we use to assess our progress
towards achieving net zero carbon are targets aimed at
reducing our carbon impact in the five key areas identified in
STV Zero: energy consumption; waste reduction; programme
making; promoting sustainability using STV’s reach; and
achieving a sustainable supply chain. In turn, these targets
will only be achieved if we successfully embed a sustainability
culture into the business. We have included an update on the
STV Zero targets that we set ourselves for 2023 on page 54,
along with an overview of the new targets we are working
towards in 2024 on page 56. This section also includes details
of the KPIs that we measure to assess progress towards
achievement of targets.
A summary of the Group’s reporting against TCFD’s cross-
industry metrics reporting categories is provided below. Where
the Group is not yet tracking against a metric or target, an
explanation is provided on its intentions going forward.
60 STV Annual Report and Accounts 2023
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Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview ESG report
GHG emissions
Transition
Physical
Climate-related
opportunities
Metric
Target
STV reports its GHG inventory breakdown
as well as its emissions intensity – see
narrative above and SECR below
STV Zero sets out our emissions reductions targets –
see SECR below and pages 54 to 63
For an overview of metrics and targets in relation to our net zero carbon strategy, STV Zero, refer to pages
54 to 63
Specifically in relation to the climate-related risks and opportunities identified in the ‘Strategy’ section of
this report, we measure the number of programmes produced by STV News and STV Studios (separately)
that achieve albert accreditation. Out target is to achieve 100%
In FY23, we achieved 100% of all programming from both STV News and STV Studios, with 100% and 79%
being achieved, respectively, in FY22
As outlined in our TCFD strategy section, we
currently have no material physical risks
We will continue to monitor feedback from our insurers
and will develop metrics if appropriate
The main opportunities for the Group are in relation to bringing new advertisers with ‘green’ businesses to
television to promote their brands. We monitor the number of businesses who receive matched funding
from our STV Green Fund, but we don’t have a metric or target in relation to the number of ‘green’
businesses booking campaigns with STV as the scale of most local advertisers is below the threshold
for climate-related reporting
Capital deployment
Not currently reported
Will be further developed if deemed material and relevant
Internal carbon prices
Not currently reported
Will be further developed if deemed material and relevant
Remuneration
See TCFD Governance disclosures on page
58 and the Directors’ Remuneration Report
(pages 88 to 105)
See TCFD Governance disclosures on page 58 and the
Directors’ Remuneration Report (pages 88 to 105)
goods (cat 2); upstream transportation and distribution (cat 4);
employee commuting (cat 7); upstream leased assets (cat 8);
and investments (cat 15).
This means that there is one remaining Scope 3 category we
have not yet reported on – use of sold products (cat 11), which
measures the emissions of serving digital media. As noted above,
our focus for 2024 is to fully integrate the energy and carbon
emission data collation, management and reporting for Greenbird
into the wider STV Group and our intention is to do that without
seeking to expand the categories of emissions against which
we report. We would expect to include the last of the relevant
Scope 3 emissions categories into our reporting from 2025
onwards and will provide an update in our 2024 annual report.
During 2023, we continued to focus on our programming being
certified by the industry-wide albert scheme and achieved our
key objective of having all programming delivered certified by
albert. This included our STV News output produced by STV
Central Limited and STV North Limited together with all
programming delivered by STV Studios.
Combined Scope 1 and Scope 2 consumption was broadly flat year
on year, increasing by only 0.1%, although emissions increased by
3.3% on a market-based approach due to year on year changes
in conversion rates. Scope 1 consumption increased by 3.9% and
emissions increased by 3.2% during the year due to boiler issues
in the Pacific Quay, Glasgow office which have now been resolved.
Scope 2 consumption reduced by 2.0% and emissions increased
by 4.7% on a market-based approach. Energy efficient measures
introduced in the year included on-line driver training to STV
staff which included modules on eco driving and environmental
awareness, and an alert system was installed in the Dundee
office which provides notification of excess energy usage.
Streamlined Energy and Carbon
Reporting (SECR) – based on data for
the year ended 31 December 2023
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 Scope2 emissions are set out in the table below.
STV acquired Greenbird Media Limited on 6 July 2023. The data
presented in this SECR statement does not include the emissions
from the acquired businesses as the process of integration has
focused on other areas of our enlarged operations up to now.
However, there is a process underway to collate historic
emissions data for 2023 and a new, ongoing process is being
implemented to track and record emissions for 2024 onwards.
The impact of Greenbird on the energy and carbon usage and
reporting of the Group will be consolidated into the STV Group
reported data in the 2024 annual report.
A dual reporting approach to emissions associated with the
Company’s grid electricity consumption (Scope 2) has been used
to disclose both a location-based and market-based figure.
During 2022, we performed an initial assessment of the
relevance of each of the fifteen Scope 3 emissions categories to
the business and concluded that nine of them were relevant to
the Company. We reported against three of those nine relevant
categories in our 2022 SECR statement, being fuel and energy
related activities (cat 3), waste generated in operations (cat 5)
and business travel (cat 6).
In 2023, we have undertaken further detailed work on the
collection and analysis of data and have brought one of the
previously eliminated categories of emissions into scope, being
investments (cat 15). We have also extended our processes to
enable us to report on a further six Scope 3 emissions categories
in 2023, being: purchased goods and services (cat 1); capital
62 STV Annual Report and Accounts 2023
Scope
1
2
Location
based
Market
based
1 & 2
Location
based
Market
based
Total revenue
Emissions from gas, refrigerants and owned vehicles
Electricity emissions using geographical location
Electricity emissions using purchased electricity factor
Electricity emissions using geographical location
Electricity emissions using purchased electricity factor
Unit
tCO2e
kWh
tCO2e
kWh
tCO2e
kWh
tCO2e
kWh
tCO2e
kWh
£m
Total Scope 1 & 2 intensity ratio (location based)
Total Scope 1 & 2 intensity ratio (market based)
tCO2e per £m
tCO2e per £m
3 (1)
3 (2)
3 (3)
3 (4)
3 (5)
3 (6)
3 (7)
3 (8)
3 (15)
3
Purchased goods and services
Capital goods
Fuel and energy related activities
Upstream transportation and distribution
Waste generated in operations
Business travel
Employee commuting
Investments
Total Scope 3 emissions
Total Scope 1, 2 and 3 (market based)
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
2023
356.94
2022
345.83
1,854,992
1,785,859
625.80
596.63
YoY
3.2%
3.9%
4.9%
3,022,106
3,085,247
(2.0%)
14.20
13.56
4.7%
3,022,106
3,085,247
(2.0%)
982.74
942.45
4,877,098
4,871,107
371.14
359.39
4,877,098
4,871,107
4.3%
0.1%
3.3%
0.1%
153.5
6.40
2.42
12,325.16
246.16
273.76
100.25
6.02
144.74
275.79
0.01
10.26
137.8
6.84
2.61
–
–
260.61
5.0%
–
1.57
144.6%
110.89
11.9%
–
–
–
13,382.15
13,753.29
373.07
732.46
Methodology
The methodology used to calculate the 2023 emissions is the
GHG Protocol Corporate Standard. In addition, the 2019 HM
Government Environmental Reporting Guidelines: Including
SECR guidance and the 2022 UK Government’s Conversion
Factors for Company Reporting have been used.
For Scope 1 emissions, the only estimated emissions data is
for one month for the office in Pacific Quay, Glasgow, where an
average has been used based on previous consumption, and for
6 months of the Balmore property where we are working with our
energy supplier to resolve the issue of meter readings differing
from amounts billed. The total estimated Scope 1 emissions
amount to 7.09% of the total reported Scope 1 emissions (or
2.6% of the total reported Scope 1 and Scope 2 emissions).
For Scope 2 emissions, the only estimated emissions data is for
electrical energy consumed in the Group’s offices in Inverness
and London. For both Inverness and London, the estimated
consumption is based on square footage of these locations
which is used for the same purpose as our other office
premises. The total estimated Scope 2 energy emissions
amount to 1.3% of our total reported Scope 2 emissions (or
0.8% of the total reported Scope 1 and Scope 2 emissions).
The calculations for Scope 3 emissions for categories 1, 2,
4, 8 and 15 are based on spend data with the corresponding
emission factor sourced from the UK Footprint Results (1990 –
2020 Dataset), which provides conversion factors by SIC
(Standard Industrial Classification) code. For Scope 3 waste
generated in operations, we have been able to expand the
number of properties where we can compute our waste from
two in 2022 to five in 2023. The additional three properties
are multi-use offices and an estimate has been calculated as
a percentage of STV office space against the total office space.
For Scope 3 employee commuting, a questionnaire was issued
group-wide to interrogate modes of travel to/from the office,
distance from the office and days working from home, which
had a 75% response rate. Emissions were computed using the
UK Government’s Conversion factors.
Emissions targets
Medium term targets to 2025 for combined Scope 1 and Scope
2 emissions were set in 2022 using 2019 as a baseline. In 2023
we achieved a reduction of 70% (equivalent to 835 tCO2e) driven
by the business transitioning to renewable energy, which has
been achieved at all offices where we control supply. This is
broadly in line with our forecast. Our target for the end of 2025
is to reduce our emissions across Scope 1 and Scope 2 by a
further 30 tCO2e which would be the equivalent of a 72%
reduction on 2019 levels. This reduction is mainly driven by the
conversion of part of our news fleet vehicles to electric from
the start of 2025. There is a risk that lead times for appropriate
vehicles may delay the conversion of the fleet to electric
(equivalent to 19 tCO2e). Further boiler issues in Pacific Quay,
Glasgow office may materialise which would result in higher
gas consumption (equivalent to 11 tCO2e).
STV Annual Report and Accounts 2023 63
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview ESG report
Non-financial and sustainability information statement
The table below sets out where stakeholders can find information in our Strategic Report that relates to non-financial and
sustainability matters as detailed under section 414CB of the Companies Act 2006.
Reporting requirement
Environmental matters
Some of our relevant policies
which govern our approach
• STV Zero, our sustainability strategy
• Travel Policy
• Equity, Diversity and Inclusion Policy
• Flexible Working Policy
• Business Ethics Policy
• Respect & Dignity at Work
• Health & Safety Policy
• Carers Policy
• Maternity Policy
• Menopause Policy
• Parental Leave & Policy
• Transitioning at Work Policy
• Adoption Policy
• Diversity and Inclusion Strategy
• STV Children’s Appeal
• Modern Slavery Statement
• Data Protection Policy
• Supplier Payment Policy
• Information Security Policies
• Social Media Policy
• Business Ethics Policy (includes Anti-bribery)
• Whistleblowing Policy
• Gifts and Hospitality Policy
• Share Dealing Code
Employees
Social matters
Respect for human rights
Anti-bribery and
anti-corruption
Business model
Principal risks
Non-financial KPIs
Where to read more in this Strategic Report
about our impact, including the principal
risks relating to these matters
• ESG report
• Climate-related Financial Disclosures report
• Risk management
• Engaging with our stakeholders (S.172 report)
• ESG report
• Risk management
• Governance
• Engaging with our stakeholders (S.172 report)
Pages
46 to 64
58 to 63
37 to 45
12 and 13
46 to 64
37 to 45
65 to 105
12 and 13
• Engaging with our stakeholders (S.172 report)
• ESG report
• Governance
• Operating reviews
• Engaging with our stakeholders (S.172 report)
• ESG report
• Risk management
• Governance
• Business model
• Risk management
• Operating reviews
• ESG report
12 and 13
46 to 64
65 to 105
15 to 33
12 and 13
46 to 64
37 to 45
65 to 105
10 and 11
37 to 45
15 to 33
46 to 64
58 to 63
37 to 45
88 to 105
Climate-related
financial disclosures
• STV Zero
• Climate-related Financial Disclosures report
• Risk management
• Remuneration report
The Strategic report was approved by the Board and signed on its behalf by:
Simon Pitts
Chief Executive
5 March 2023
Introduction to governance
On behalf of the Board, I am pleased to present
the Corporate Governance report for the financial
year ended 31 December 2023.
Year in review
In my Chairman’s statement, I make reference to the
challenging macroeconomic background in 2023. With that as
a backdrop, our commitment to effective corporate governance
practices has become even more important and has continued
to underpin our strategic delivery and operations and ensure
we constantly challenge our assumptions and approach to risk.
Strategy
The role of the Board is to provide effective and entrepreneurial
leadership of the Group for the purposes of promoting long-
term sustainable success, generating value for shareholders
and contributing to wider society. This requires the Board to
take high-quality strategic decisions.
To accelerate STV’s diversification strategy the Board approved
the acquisition of Greenbird Media in July 2023 and has overseen
the programme to bring together the legacy STV Studios and
Greenbird Media businesses.
During the year, the Board has also been working closely with the
Executive Directors and Management Board to shape the next
phase of the Group’s strategy, building on our core capabilities
and the broadening of our operations achieved over recent years.
The Board has spent considerable time engaging on the strategic
planning process and provided challenge and input across a
series of extended Board meetings, continuing into 2024.
Board changes
During the year, we welcomed Naomi Climer CBE as an
independent Non-Executive Director and Chair of the
Remuneration Committee. Details on the process undertaken
for her recruitment and induction and are set out on page 76.
Ian Steele, Independent Non-Executive Director and Chair of the
Audit & Risk Committee, after more than eight years’ service will
be stepping down from the Board at the conclusion of the 2024
AGM. On behalf of the Board, I would like to extend my thanks
to Ian for his wisdom, financial expertise, constructive challenge
and unstinting support, all of which have been invaluable to STV,
and he leaves with our very best wishes for the future. A formal
search is in progress to recruit Ian’s successor and we hope to
announce an appointment in due course.
Environmental, Social and Governance (ESG) Committee
The Board continues to prioritise STV’s Social Impact Strategy.
We therefore established the Board’s ESG Committee during the
year to underline the importance of these matters and ensure
appropriate, dedicated discussion across the year. The ESG
Committee supports the Board in ensuring the Group delivers
a positive social impact to promote long-term shareholder and
stakeholder value. The new Committee is chaired by David Bergg
and held its inaugural meeting in October 2023. It reports to
shareholders for the first time in this report on pages 86 and 87.
Remuneration
This year and in line with the requirement for a triennial review
of our Remuneration Policy, we undertook a comprehensive
review of STV’s executive remuneration framework, with the
proposed new Directors’ remuneration policy detailed on
pages 91 to 95. The Remuneration Committee and the Board
have spent significant time rigorously reviewing the policy and
its implementation to ensure it is fit for purpose. This review
considered the next phase of STV’s growth strategy, the recent
performance of the business, and the views of our advisers
and expectations of our shareholders and other stakeholders.
I believe the proposed policy is the best way to continue to
drive a strong pay-for-performance culture to incentivise
and retain our Executives and reflects the UK governance
environment and the views of our shareholders.
Board evaluation
Having completed an externally-facilitated Board performance
evaluation exercise in 2022, an internal evaluation was
conducted in 2023. An overview of how we have responded to
the findings of the 2022 evaluation and the results of the 2023
evaluation are shown on page 77. The conclusion drawn from
both exercises was that the Board and its Committees continue
to operate effectively.
UK Corporate Governance Code 2018
and Section 172 Reporting
This report demonstrates how we have applied the principles and
complied with the provisions of the UK Corporate Governance
Code 2018 (the ‘Code’) during the year. Our Code compliance
statement can be found on page 71. Details of how the Board
discharged its duty under section 172 of the Companies Act
2006 can be found on pages 12 and 13.
During the year the Board and the Audit & Risk Committee
monitored developments in the UK Government’s proposed
governance and audit reforms, and particularly considered
the Financial Reporting Council’s (FRC) consultation on the
proposed changes to the Code. The FRC published the UK
Corporate Governance Code 2024 in January 2024 which will
be a key consideration in continuing to evolve the Group’s
corporate governance framework, particularly in relation
to internal controls.
Looking ahead
I am convinced that the Board’s commitment to high standards
of corporate governance help us continue to build on the
progress we have made to date, and to contribute to the
long-term sustainable success of the Group.
Paul Reynolds
Chairman
5 March 2024
64 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 65
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Board of Directors
As at 31 December 2023
Photos left to right
Paul Reynolds
Chairman
Simon Pitts
Chief Executive
Lindsay Dixon
Chief Financial Officer
Simon Miller
Senior Independent Director
Naomi Climer CBE
Non-Executive Director
David Bergg
Non-Executive Director
Ian Steele
Non-Executive Director
Aki Mandhar
Non-Executive Director
66 STV Annual Report and Accounts 2023
Paul Reynolds
Chairman
Appointed: February 2021
Committees: Nomination (Chair); ESG
Paul has over 30 years international public-company experience
as a chairman, non-executive director and senior executive,
including tenures as Chief Executive of BT Wholesale, Executive
Director of BT Group plc and Chief Executive of Telecom New
Zealand Ltd. He is currently Chairman at Computershare
(Australia) Ltd in Melbourne and a Non-Executive Director of
TalkTalk (Holdings) Limited, the holding company of TalkTalk
Telecom Group. He has held previous roles as Chairman of data
analytics fintech, 9 Spokes Ltd and as Non-Executive Director
at Eircom Ireland Limited, XConnect Global Networks Ltd and
Japan-based telecommunications company, eAccess Ltd.
Paul is Chairman of the STV Children’s Appeal.
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. Lindsay qualified with Deloitte in 2002.
Naomi Climer CBE
Non-Executive Director
Appointed: May 2023
Committees: Remuneration (Chair); ESG
Naomi has had a successful career in broadcast, media,
engineering, and technology and was Vice President of Sony’s
European Professional Services division. Her career began at
the BBC, where she trained as an engineer and later became
Controller of Technology at BBC News. Before joining Sony in
2002, Naomi was Director of Technical Operations at ITV Digital.
She was appointed Commander of the Order of the British
Empire (CBE) for services to the engineering profession in
the 2018 Birthday Honours List. Naomi brings significant plc
Board experience as a Non-Executive Director and Chair of the
Remuneration Committee for both Focusrite plc and Oxford
Metrics plc. She also serves as a Non-Executive Board Member
at Sony UK Technology Centre, is a Trustee of The Institute
for the Future of Work and formerly a member of the UK
Government’s Science and Technology Awards Committee.
Ian Steele
Non-Executive Director
Appointed: November 2015
Committees: Audit & Risk (Chair); Nomination; Remuneration
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. Ian is currently
a Non-Executive Director of Continuum Advisory Partners and
was formerly Chairman of Iomart Group plc. Ian is a member
of the Constitutional Panel of ICAS.
Simon Pitts
Chief Executive
Appointed: January 2018
In 2018 Simon set out a growth strategy to transform STV into
a digital streaming and content-led media business. After a
period of consistent growth and diversification, STV exceeded its
long-term target to generate more than half of its operating profit
from outside linear advertising in 2023. Previously, Simon was
on ITV’s executive board as Managing Director, Online, Pay TV,
Interactive & Technology. Over a 17-year career, he held a range
of senior roles and, as Director of Strategy, was one of the main
architects of the company’s strategic transformation under Archie
Norman and Adam Crozier. Simon was 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 trustee of
STV Children’s Appeal and literary charity Oscar’s Book Prize.
Simon Miller
Senior Independent Director
Appointed: December 2016
Committees: Audit & Risk; Nomination; Remuneration
Simon is an experienced non-executive director and chairman
with exposure to a wide range of financial, commercial and
manufacturing businesses. Simon is Chairman of Hampden & Co,
private bankers, and Bankers Investment Trust. Simon was
formerly Chairman of Blackrock Sustainable American Income
Trust and 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.
David Bergg
Non-Executive Director
Appointed: May 2018
Committees: Audit & Risk; Remuneration; ESG (Chair)
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 working in several 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 broadcast
and programme production sectors in the UK and USA.
Aki Mandhar
Non-Executive Director
Appointed: February 2021
Committees: Audit & Risk; ESG
Aki has built a successful executive career across the advertising,
marketing and digital media sectors and is General Manager,
International of the sports media company, The Athletic, which
was successfully acquired by The New York Times in 2022. 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.
Eileen Malcolmson
Company Secretary
STV Annual Report and Accounts 2023 67
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Board of Directors
As at 31 December 2023
Board at a glance
Board and Committee composition and attendance at scheduled meetings from 1 January 2023 to 31 December 20231
Board and Executive Management diversity
Reporting table on gender identity or sex as at 31 December 2023
Board member
Attendance
Paul Reynolds (Board Chairman)
Executive Directors
Simon Pitts
Lindsay Dixon
Non-Executive Directors
Simon Miller
Anne Marie Cannon 2
Naomi Climer CBE 3
Ian Steele
David Bergg
Aki Mandhar
Board Audit & Risk Committee Remuneration Committee Nomination Committee ESG Committee
7/7
7/7
7/7
7/7
3/3
4/4
7/7
7/7
7/7
3/3
2/2
3/3
3/3
2/2
2/2
2/2
3/3
1/1
3/3
3/3
3/3
3/3
2/2
1/1
3/3
3/3
1 Data is based on scheduled meetings from 1 January 2023 to 31 December 2023 only. Additional ad hoc meetings of the Board and its Committees also took
place during the year.
2 Anne Marie Cannon stepped down from the Board at the conclusion of the AGM on 27 April 2023.
3 Naomi Climer CBE was appointed as a Director on 30 May 2023.
STV’s Board skills matrix
Board member
Paul Reynolds (Chair)
Simon Pitts (CEO)
Lindsay Dixon (CFO)
Simon Miller (SID)
Aki Mandhar (NED)
David Bergg (NED)
Ian Steele (NED)
Naomi Climer CBE (NED)
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M
Men
Women
Other categories
Not specified/prefer not to say
Number of
Board members
Percentage
of the Board
Number of senior
positions on the Board
(CEO, CFO, SID and Chair)
Number in
Executive
Management¹
Percentage
of Executive
Management
5
3
–
–
62.5%
37.5%
–
–
3
1
–
–
6
3
–
–
66.7%
33.3%
–
–
Reporting table on ethnic background as at 31 December 2023
Number of
Board members
Percentage
of the Board
Number of senior
positions on the Board
(CEO, CFO, SID and Chair)
Number in
Executive
Management¹
Percentage
of Executive
Management
White British or other White
(including minority-white groups)
Mixed/Multiple Ethnic Groups
Asian/Asian British
Black/African/Caribbean/Black British
Other ethnic groups, including Arab
Not specified/prefer not to say
7
–
1
–
–
–
87.5%
–
12.5%
–
–
–
4
–
–
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9
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100%
–
–
–
–
–
1 As prescribed by LR9.8.6R(10) for the purposes of this disclosure, the Executive Management is the members of the Management Board and the
Company Secretary.
2 Board members and the Executive Management were requested to disclosure their gender identity and ethnicity data individually. The data in respect
of the two Executive Directors who are members of the Board and the Management Board has been included in both the Board data and in the Executive
Management data in the tables above.
Board Committees: A = Audit & Risk Committee; N = Nomination Committee; R = Remuneration Committee; E = ESG Committee
Board of Directors composition
Tenure of Non-Executive Directors and Chairman
12.5% Chairman
25.0% Executive Directors
62.5% Non-Executive Directors
33.3% More than 6 years
16.7% 4-6 years
33.3% 2-4 years
0% 1-2 years
16.7% Less than 1 year
68 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 69
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview
STV Management Board
Corporate governance report
Compliance with the Code
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. The Annual Report and Accounts for the year ended 31 December 2023 has been
prepared in accordance with the provisions of the UK Corporate Governance Code 2018 (the ‘Code’), available at www.frc.org.uk
and the Board’s view is that it has complied with all relevant provisions of the Code.
Responsibilities of the Board
The role of the Board is to provide effective and entrepreneurial leadership of the Group for the purposes of promoting long-term
sustainable success, generating value for shareholders, and contributing to wider society. This requires the Board to take high-quality
strategic decisions, promote the desired culture and ensure there is a robust system of internal controls and risk management whilst
monitoring the financial and operational performance of the business and overseeing performance against our ESG ambitions and
targets. The Board ensures that the necessary funding and talent are available to the business to meet its objectives and measure
performance against them, and that effective succession planning processes, remuneration policies, governance arrangements
and a framework of sound business ethics are in place.
The Board recognises that engaging with, and acting on the needs of, the Group’s stakeholders is key to achieving the strategy and
long-term objectives of the Company. Read more about how the Board engages with stakeholders and the Directors’ statement
of compliance with their duties under section 172 of the Companies Act 2006 on pages 12 and 13.
At the date of this report, the Board comprises the Chairman, two Executive Directors and five Independent Non-Executive Directors.
The names of the Directors together with their biographies, including their skills and experience, are on pages 66 to 69.
Board governance framework
The components of the Board governance framework, being principal Committees of the Board, the Executives and Management
Board are described in the diagram below.
Board of Directors
Responsible for the overall leadership of the Group.
Nomination Committee
Responsible for reviewing
Board composition and
diversity, proposing new
Board appointments, and
monitoring the Board’s
succession needs.
Remuneration Committee
Responsible for remuneration
policy, performance linked
pay schemes and share-
based incentive plans.
Determines the remuneration
packages for Executive
Directors and certain other
senior Group employees
and reviews workforce
remuneration and related
policies, including alignment
with the Company’s culture.
Audit & Risk Committee
ESG Committee
Responsible for monitoring
the integrity of the Group’s
financial reporting and
disclosures, reviews the
Group’s risk management
framework and internal
controls, reviews the
activities and performance
of internal audit and the
external auditor, and
monitors the Group’s
whistleblowing procedure.
Responsible for the Group
continuing to deliver a
positive social impact
to support long-term
shareholder and stakeholder
value including oversight of
STV’s Diversity & Inclusion
Strategy, Sustainability
through its STV Zero
strategy and community
engagement.
Responsible for executing strategy and day-to-day management.
Chief Executive
Management Board
Responsible for assisting the Chief Executive in discharging his responsibilities ensuring alignment on business
priorities, investments and actions, supported by divisional boards for each of Broadcast, Digital and Studios.
Management committees
Underlying this governance framework, 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 Information Security Group each of which bring together colleagues from across
the business to support the Management Board with execution of their day-to-day responsibilities.
Photos top left to right
Simon Pitts
Chief Executive
Lindsay Dixon
Chief Financial Officer
Bobby Hain
Managing Director, Broadcast
Richard Williams
Managing Director, Digital
David Mortimer
Managing Director, Studios
Peter Reilly
Commercial Director
George Harris
Director of Operations and Delivery
Suzanne Burns
HR and Communications Director
70 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 71
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Corporate governance report
The Board discharges some of its responsibilities directly and delegates others through the Board governance framework.
This enables the Board to spend a greater proportion of its time on strategic, forward-looking matters.
The Board is supported by its Committees, which make decisions and recommendations on matters delegated to them. Following
the constitution of a new Environmental, Social & Governance (ESG) Committee in 2023 in response to the increasing regulation
and evolving landscape in these areas, the Board has four main committees: the Nomination Committee, Remuneration
Committee, Audit & Risk Committee and ESG Committee.
From time to time, the Board may also establish special purpose Committees to assist it in overseeing specific areas and usually such
Committees operate only for a defined period – for instance, a Committee was constituted to support decision-making and analysis
underpinning the acquisition of Greenbird Media. Although a wide range of the Board’s powers and authorities are delegated to the
Executive Directors and Management Board, the Board retains ultimate responsibility and authority for their exercise.
The Board governance framework facilitates responsive and effective decision-making, ensuring that the Board and its Committees,
the Executives and Management Board can collaborate proactively, consider issues and respond.
ESG climate-related matters are a core part of our broader Group strategy and sustainability is embedded into our Board governance
framework. Details of STV’s sustainability governance setting out responsibilities of the Board and Committees (ESG Committee
and Audit & Risk Committee), Management Board and Divisional Boards are detailed on page 59 of the ESG report.
The division of responsibilities of the Directors
The Board comprises Executive and Non-Executive Directors, which ensures that no individual or small group of individuals dominates
the Board’s decision-making. All Non-Executive Directors, except for the Chair of the Board, are considered to be independent in
character and judgement. The Chair of the Board was considered to be independent on appointment. The role 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 roles and responsibilities of Board members are detailed below and demonstrate a clear division between the roles and
responsibilities of the Board and Executive management.
Chairman
Leading the Board and ensuring
its overall effectiveness in
discharging its duties
Chief Executive
Leading the implementation
of the Group’s strategy set by
the Board
Executive Director –
Chief Financial Officer
Supporting the Chief Executive
in the implementation of the
Group’s strategy set by the
Board
Independent Non-Executive
Director
Ensuring that no individual
or small group of individuals
can dominate the Board’s
decision-making
Paul Reynolds leads the Board and is responsible for its overall effectiveness. He is expected to
demonstrate objective judgement, to promote a culture of openness and constructive challenge and
debate between all Directors, and to promote high standards of corporate governance. The Chairman
sets the Board’s agenda and ensures the Board receive accurate, clear and timely information, and
are given adequate time for discussion. He also leads Board succession planning, ensures that Board
induction, evaluation and development are a priority, and seeks to ensure effective communication
with shareholders.
The Chairman meets regularly with the Senior Independent Director and Non-Executive Directors
separately outside the formal meetings during the year.
As Chairman, Paul also leads the Nomination Committee.
The Chief Executive, Simon Pitts, has delegated responsibility from the Board for the day-to-day running
of the business and, supported by the Management Board, is responsible for ensuring the overall
operations and resources of the Group are managed effectively and for leading the implementation
of the Group’s strategy.
The Chief Financial Officer, Lindsay Dixon, is an Executive Director and member of the Board as well
as the Management Board and supports the Chief Executive by providing financial leadership in the
implementation of the strategic business plan and its alignment with financial objectives.
The Independent Non-Executive Directors Naomi Climer CBE, David Bergg, Ian Steele, and Aki Mandhar,
and the Senior Independent Non-Executive Director, Simon Miller, comprise more than half of the Board
membership. They bring diverse business and commercial experience, objective judgement and
specialist advice which inform Board discussions and decision making and are a major contributing
factor towards the proper functioning of the Board and its Committees, ensuring that all matters are
debated, and that no individual or group dominates the Board’s decision-making process. They provide
constructive challenge, giving strategic guidance, offering specialist advice and hold executive
management to account. Led by the Nomination Committee they are responsible for the appointment
and removal of Executive Directors and determine the remuneration of Executive Directors through the
Remuneration Committee.
Senior Independent Director
Providing a sounding board
for the Chairman of the Board
and serving as an intermediary
for other Directors and
shareholders
Designated Non-Executive
Director for workforce
engagement
Providing an effective
engagement mechanism for
the Board to understand the
views of the workforce
The Senior Independent Director, Simon Miller, provides a sounding board for the Chairman and, if necessary,
acts as an intermediary for the other Non-Executive Directors. He is also available to shareholders to discuss
any concerns that have not been addressed through the normal engagement channels. He leads on the
ongoing monitoring and annual evaluation of the Board Chairman’s performance.
As part of his role, he meets with the Non-Executive Directors without the Board Chairman at least annually.
Simon Miller, the Senior Independent Director, is also STV’s Employee Director and in this capacity,
he attends meetings of the employee forum which comprises representatives from every team and
location. He also 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. He brings
the views and experiences of the workforce into the boardroom and enables the Board to consider the
views of the workforce in its discussions and decision-making.
Board and Committee operations
The structure of each Board and Committee meeting seeks to facilitate open discussion and debate and ensure adequate time
for Directors to consider all agenda items and related proposals.
Meetings are held through a combination of virtual attendance and in person with the latter rotating around the main offices
occupied by the Group. The Board held seven scheduled meetings during the year, of longer duration than previous years, and
attendance is set out on page 68. In addition, there were four additional meetings convened during the year, to approve interim
and final results, a trading update, and to approve the acquisition of Greenbird Media.
All Directors are expected to attend all meetings of the Board and the meetings of the Committees on which they serve, and
the AGM. 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 provide feedback on the matters under consideration via the Chair
of the relevant body in advance.
Non-Executive Directors, including the Chairman, are informed of the minimum time commitment required prior to their
appointment and they are required to devote sufficient time to the Company to effectively discharge their responsibilities.
The Board therefore monitors the extent of Directors’ other interests and the time commitment required to fulfil those interests
to ensure that the effectiveness of the Board is not compromised. A Director’s preparation for, and attendance at, Board and
Board Committee meetings is therefore only part of their role as they are expected to devote such time to the affairs of the Group
as is necessary to enable them to perform their duties as Directors. The Board is satisfied that the Chairman and each of the
Non-Executive Directors devote sufficient time to their duties.
Each Director has a duty under the Companies Act 2006 to avoid a situation in which they have, or might have, a direct interest
that conflicts, or possibly may conflict, with the interests of the Company. This duty is in addition to the obligation owed to the
Company to disclose to the Board an interest in any transaction or arrangement being considered by the Company. The Company’s
articles of association authorise the Directors to approve such situations and to comply and to apply other provisions to allow
conflicts of interest to be dealt with. There were no actual or potential conflicts of interest during the financial year 2023.
The Board has adopted a schedule of matters reserved for its decision and a rolling annual plan of items for discussion. There are
terms of reference for the Board Committees and these can be found on our website at www.stvplc.tv.
The Board schedule of reserved matters and the principal matters set down 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 of conditions of Non-Executive and Executive Directors;
• The Company’s long term objectives and commercial strategy; annual operating and capital expenditure budgets and 3 Year Plan;
• Material contracts and significant variations in the 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 Whistleblowing Policy, Equality, Diversity and
Inclusion Policy and STV Zero Strategy.
2023 strategy delivery
The implementation of strategy is monitored and evaluated on an ongoing basis. The Board’s work in this area includes an
assessment of the changing landscape the business is operating in and the need to adjust and reprioritise strategic actions
accordingly.
During the year, the Board discussed many matters relating to the implementation of strategy across a series of agenda topics
at several meetings throughout the year. A key focus of the Board has been to consider the next stage of the Group’s strategy,
including external communication, as current published targets are for the 3 years to the end of 2023.
In line with the process followed in 2022, the Board received presentations from the Executive Directors, the Divisional Managing
Directors and certain of their team members, and where appropriate external advisors, to consider and challenge specific proposals
for delivery of the respective strategies of each division. High quality briefing papers were provided to the Board for each of those
meetings with updates provided between meetings to keep the Board informed of progress.
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Key matters in which the Board performed a pivotal role in the implementation of the growth strategy included:
Board activities in 2023
• approval of the acquisition of Greenbird Media, a portfolio of production companies, to accelerate the growth of the Studios
business and further extend the revenue and profit base of the Group outside traditional linear broadcasting
• approval of the Long-Form Agreement with ITV which makes new ITVX content exclusively available in Scotland and creates a
‘one stop shop’ for Scottish advertisers, giving them access to mass audiences across linear, VOD and programmatic advertising
• approval of the application to renew the Group’s two Channel 3 PSB licences for a further ten-year period from January 2025 to
provide further long-term certainty to our core business
As a result of the strategic actions taken by the Board, executed by the Executive Directors and Management Board, we delivered 75%
of our earnings from outside traditional broadcasting, comfortably exceeding the 50% target we set ourselves for the end of 2023.
Being a responsible business and delivering on ESG has been high on the Board’s agenda this year, demonstrated by the
constitution of a new ESG Committee. One of the first matters of business of the new Committee was to recommend to the Board
the approval of the 2024 sustainability targets proposed to support continued progression of STV Zero, and other governance
matters including the assessment of climate-related risks and opportunities and an update of the sustainability governance
framework. Further details can be found in the report of the ESG Committee on pages 86 and 87 and the ESG report is on pages
46 to 64. Further details of the Diversity & Inclusion Strategy in relation to the composition of the Board can be found in the report
of the Nomination committee on pages 80 to 82. The Board concluded that the Diversity and Inclusion strategy and STV Zero
strategy were increasingly embedded and integrated into the business throughout 2023, and it would continue to drive and
oversee the progress in these areas through the Board’s ESG Committee in 2024.
The Board’s engagement in the strategic planning process for the next phase of the Group’s strategy
With the current phase of our Group’s diversification strategy concluding at the end of 2023, in the second half of the year, the
Board worked closely with the Executive Directors, Management Board and external advisors where appropriate to shape the next
phase of the Group’s strategy. The Board decided to hold a series of strategy sessions and extended the length of scheduled Board
meetings to accommodate this. Each session was designed to cover specific topics and the Board was provided with briefing
materials in advance, ensuring that the time Board members spent together was discussion focused with plenty of time for points
of challenge, debate and questions. The close engagement between the Board, Executive Directors and Management Board
throughout the process ensured the continual evolution of the 3 Year Strategic Plan building on feedback from each session,
and this continued into early 2024.
The updated 3 Year Strategic Plan for 2024 to 2026 was presented to the Board in February 2024 and was duly approved.
The refreshed strategy is focused on accelerating the profitable growth of our streaming and Studios businesses while continuing
to maximise the benefits of our market-leading Broadcast business. At the heart of this will be ongoing Studios growth both locally
and internationally; expansion of our streaming offering in the UK and further afield; and a focus on diversifying and growing
revenues from our core Scottish market.
Workforce engagement
Board meetings are held across the main offices of the Group and so the Directors were able to spend time on-site meeting with
management and other employees. The Employee Director, Simon Miller, also visited each of the Group’s offices outside the Board
schedule and participated in the Employee Engagement Forum to discuss matters ranging from culture, engagement, career
development and reward and remuneration. David Bergg joined a meeting of colleagues in the Digital team to discuss how
emerging technologies are aiding discovery of content of STV Player and Aki Mandhar met with STV’s Women in Digital group to
discuss her career as well as offering insights into customer acquisition and retention as part of the growing importance of STV
Player+. Naomi Climer CBE joined a ‘Minute Live’ weekly staff event and David and Naomi also attended an induction course for
new hires on STV Zero. These activities, as well as Board papers providing updates on workforce engagement, provide the Board
with valuable insights into the operation and culture of the business and have a positive impact on the quality of discussions at
Board meetings and decision-making generally.
Succession
During the year, in addition to the succession planning for the Board and Committee composition and specific succession planning
arrangements for Executive Directors discussed at the Nomination Committee (see page 80), the Board considered a paper on
succession planning for the Management Board, senior management roles (direct reports to the Management Board) and other key
operational roles across the Group. As part of this, the Board considered the depth and quality of the succession pipeline, the skills
and capabilities required to ensure successful delivery of the Group’s strategy, retention and succession planning risks, and personal
development plans for high potential individuals, as well as diversity targets and the work undertaken to close the gender pay gap.
The Board executed its responsibilities across the full suite of core activities during the year, with the focus set out below:
Strategy
• Considered the Group’s growth strategy in light of viewing and competitive trends, emerging technology (including Artificial
Intelligence), the broader macroenvironment and evolution of the media sector
• Discussions to shape the next phase of the Group’s strategy, including consideration of organisation design, cost base,
and potential new revenue streams
• Reviewed the growth plans for each business area
• Approved the application to renew our Channel 3 PSB licences for a further ten-year period from January 2025
• Approved the acquisition by STV Studios of Greenbird Media in July 2023
• Approved the Long-Form Agreement in December 2023 for the long-term digital deal agreed with ITV in December 2022
• Reviewed progress in the delivery of the STV’s Diversity & Inclusion Strategy
• Approved 2024 Sustainability targets to support continued progression of STV Zero
• Approved sustainability and climate-related risks reflected all principal and emerging sustainability-related risks and
opportunities facing the Group
• Discussion of various regulatory and legislative issues, including the new Media Bill
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 cashflow and assessment
of balance sheet and net debt
• Approval of the Annual Report & Accounts, including assessment of the going concern basis of preparation and Viability Statement
• Approval of the Interim Financial Accounts including assessment of the going concern basis
• Approval of trading updates
• Approval and declaration of interim and full year dividends
• Review, challenge and monitoring of progress against the integration plan for the Greenbird Media acquisition, including
consideration of synergies identified and the plans in place to realise them
Risk management
• Approvals of the Group’s Risk Appetite Statement and Risk Management Policy
• Assessment of the Group’s principal and emerging risks
• Review of the Group risk register and identified mitigating controls
• Monitored Cyber and data security practices and outcomes
• Presentations and training from the Company’s pension adviser on evolving defined benefit pension legislation, and more
broadly the funding position and potential actions associated with the Group’s defined benefit schemes
• Updates on Corporate Governance developments and their applicability to the Company
Investor Relations
• Review of institutional investor feedback following meetings with the Chairman, Executive Directors and/or Chair of the
Remuneration Committee
• 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,
the Greenbird Media acquisition and trading update in November 2023
• Monitored the private investor engagement programme
Culture
• Succession planning review for members of the Management Board and Senior Leadership Team
• Engagement with staff via our Employee Engagement Forum
• Approval of the introduction of an all-employee performance plan for 2023
• Approval of the 2023 Modern Slavery and Human Trafficking Statement
• Oversight of the communication and culture elements of the Greenbird Media integration process, including visit to Greenbird
Media offices post completion of the transaction
Governance
• Annual Performance Evaluation FY22 Board Action outcomes
• Approval of the 2023 Board agenda
• Internally facilitated effectiveness review of the Board, its Committees and each of the Directors for FY23
• Approval of AGM notice and arrangements
• Noting the resignation letter from Ms Anne Marie Cannon, and approving the appointment of Naomi Climer CBE as independent
Non-Executive Director and Chair of the Remuneration Committee
• Approval of maintaining the current fees to be paid to Non-Executive Directors and annual minimum time commitment
• Approval of the constitution of an Environmental, Social and Governance Committee (ESG) and its Terms of Reference,
appointment and fee of its Chair, and appointment of its members, and an updated sustainability governance framework
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Board support and the role of the Company Secretary
The role of the Company Secretary is to support the Chairman of the Board and ensure the Directors have access to the information
they need to carry out their roles. She provides a channel for Board and Committee communications and is a link between the
Board and management. The Company Secretary must ensure that all Board and Committee procedures are complied with and
advise on corporate governance and related regulatory compliance. She facilitates Director induction, professional development
and Board evaluations overseen by the Board Chairman.
The Company Secretary is also responsible for ensuring that the Board and Committees receive accurate, clear, and up-to-date
information in sufficient time for them to review it before each meeting and are provided with sufficient resources to discharge
their respective duties. In addition, and separate to the support provided by the Company Secretary, the Directors have access
to independent professional advice at the Group’s expense.
Induction
All Directors who join the Board receive a comprehensive bespoke induction programme that is guided by the Chairman and
supported by the Company Secretary. Every programme builds on the skill set, attributes, and background of the joining Director,
their interests in the Board or Committee roles, and the Company’s recommendations.
In addition to background information on the Company, every induction covers a range of topics including Board procedures,
recent operational performance and strategic direction of the Company, key areas of the business, as well as Directors’ duties and
responsibilities. The Directors also cover various governance-related issues and their legal obligations including procedures for dealing
in STV’s shares. Any new or serving Director joining a Board Committee is also provided with an induction tailored to that Committee.
Each induction typically includes a series of meetings with the members of the Board, Management Board and external advisers,
brokers, and other senior management. Directors receive a walk through of the business from members of the Management Board
and a briefing on STV’s investor relations programme. A newly appointed Director will have met some, if not all, fellow Board
members as part of the original search and appointment process but additional meetings may nevertheless occur with the
same Board members as part of their induction.
Induction for Naomi Climer
Naomi Climer CBE joined the Board and was appointed Chair of the Remuneration Committee and a member of the ESG Committee
on 30 May 2023. As part of her onboarding programme, Naomi’s induction included the following:
Orientation pack
• Information about Board operations and administration including meeting dates and logistics
• Key Company policies including share dealing
• Directors’ duties and responsibilities for a listed Company
Reading material
• Access to the Board portal containing Board and Board Committee papers, minutes and resource materials
• Key Company governance documentation including Matters reserved for the Board and Remuneration
Committee Terms of Reference
Meetings
• One-to-one meetings with the members of the Board and Company Secretary
• Introductory meeting with the Senior Internal Auditor and External Auditor, external Remuneration
Consultant and brokers
• Deep dive sessions with members of the Management Board focusing on matters within their areas
of responsibility
Training & development
All Directors training and development is an ongoing process. Throughout their period in office the Directors are regularly updated
at Board meetings on the Company’s business, the macro and competitive environments in which the Company operates and any
other significant factors 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 Board to pick up on specific points as they arise.
Board and Committee evaluations
The effective functioning of the Board is key to the success of the Company. STV recognises that an annual Board effectiveness
review is a valuable feedback mechanism for the Board in driving its performance, optimising the strengths of individual Directors,
and highlighting areas for further development.
As an externally facilitated evaluation of the Board was carried out last year in accordance with the Code’s triennial requirement,
the Board evaluation process this year was internally led. This involved the completion of a questionnaire agreed between the
Chairman and the Company Secretary, which built upon the previous year’s evaluation, focused on the core responsibilities of
the Board and Committees feedback on recent changes, and its approach to 2023 key activities. Individual responses to the
questionnaires were collated by the Company Secretary, who prepared anonymised summaries. These anonymised summaries
were discussed with the Chairman (except the performance evaluation of the Chairman, which was reviewed by the Senior
Independent Director). A summary of the feedback was then presented to the Board and an action plan agreed. The evaluation
concluded that the Board and its Committees continued to be effective and that each of the Directors continued to contribute
effectively to Board and Committee meetings.
As a result of the evaluation, several actions were agreed for the Board in the year ahead and are detailed below. These actions,
together with the regular work of the Board, will inform the Board’s agenda for the coming year and the outcomes will be reported
on in the 2024 Annual Report.
There were no recommended actions arising for the Committees from the 2023 evaluation process.
The Senior Independent Director took input from the members of the Board on the performance of the Chairman and shared the
feedback with the Chair. The Senior Independent Director was able to confirm that there was unanimous agreement that the Chair
leads the Board in an effective manner. The Directors agreed that he demonstrates objective judgement, promotes a culture of
openness and debate and facilitates constructive Board relations and effective contribution of all Non-Executive Directors.
2023 Internal evaluation outcomes and actions
Areas of focus
To optimise the Board’s time – A review of Board packs’ structure and size and a review of the frequency of meetings.
Reflecting the uncertainty and volatility of the market – Add another horizon-scanning exercise to the Board’s agenda in the year.
In regard to the main recommendations identified through the externally facilitated evaluation by Ceradas Ltd in 2022, the Board
has directly overseen the implementation of those actions.
Progress against 2022 actions
Areas of focus identified
Outcome
Details of the Board’s approach to shape the new phase of the Group’s strategy is detailed on page 74.
External disclosure processes either directly to the Chair of the Audit & Risk Committee or via an
independent whistleblowing support service, Safecall, have been added to the Whistleblowing processes
and in 2023 there was a re-launch of an awareness campaign of whistleblowing procedures to all groups
of the workforce.
The Board discussed ways to regularly and informally engage with various groups of stakeholders and
agreed this would continually evolve. In 2023 the Independent Non-Executive Directors each identified
ways to engage further with the wider workforce, details of which are included in the section on
workforce engagement on page 74 within this report.
The Board has discussed and agreed options through which Non-Executive Directors could be involved in
mentoring programmes already in place within the Group. Work is underway to implement agreed actions.
Consider ways in which the
Board’s review of strategy
should evolve over the coming
years as the Group approaches
the next stage of its growth.
Review the whistleblowing
processes and channels to
the Board and re-launch an
awareness campaign of
whistleblowing procedures
to all groups of the workforce.
Identify ways in which the
Board could more regularly,
and informally, engage with
various groups of stakeholders,
including shareholders and
the wider workforce.
Develop a mentoring
programme between potential
future leaders in the Group
and Board members.
Shareholder engagement
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
participation of all shareholders at the Company’s Annual General Meeting.
In addition, STV undertakes a comprehensive programme of meetings and events for institutional investors, retail investors,
research analysts and the financial press throughout the year.
The Chairman, the Senior independent Director and other Non-Executive Directors are available to meet with shareholders to
discuss governance, strategy and operational delivery, Directors’ remuneration and develop a balanced understanding of their
issues and concerns. Various meetings have taken place with shareholders during the year. Discussions at these meetings are
conveyed to all Directors in order that each can develop an understanding of major shareholders’ views on the Company.
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Governance Committee reports
Minority voting
At the Annual General Meeting of STV Group plc held on 27 April 2023 all resolutions were passed with the requisite majority of
votes with only one exception, Resolution 15 (to authorise the Directors to disapply statutory pre-emption rights in respect of 5%
of the Company’s issued share capital). Resolution 15 was a special resolution requiring the support of 75% of those voting and
received slightly below this threshold with 74.245% votes cast in favour.
Four Resolutions were passed with the requisite majority but had more than 20% votes cast against. The four Resolutions are set
out below:
• Resolution 2, to approve the Directors’ Annual Report on Remuneration for the year ended 31 December 2022 (approved by
74.841% of votes cast)
• Resolution 4, to approve the re-election of Paul Reynolds as a Director (approved by 76.026% of votes cast)
• Resolution 13, to authorise the Company to make political donations and incur political expenditure (approved by 73.529%
of votes cast)
• Resolution 14, Directors’ authority to allot shares (approved by 76.595% of votes cast)
In accordance with Provision 4 of the Corporate Governance Code, the Company provided an update to the Investment Association
on the views received from shareholders, the Company’s response and actions taken as a result of the votes cast. This can be found
on the Investment Association’s public register of shareholder dissent or on our website at www.stvplc.tv.
The Company has continued to actively engage with shareholders and their respective bodies on remuneration and other
governance matters throughout the year on each of these matters.
Committee activities
The principal activities undertaken by the Board Committees during 2023 included:
Month
January
February
Committee
Activity
Remuneration
• Approval of 2022 incentive outcomes
• Discussion of 2023 incentive target setting
Nomination
• Composition of the Board and Committees and
• Recommended to the Board all
succession planning
• Approval of the Report of the Nomination Committee
in the Annual Report
• Time commitments and External appointments
of Non-Executive Directors
Non-Executive Directors to be put
forward for re-election at the AGM
• Independence of Non-Executive Directors
February
Remuneration
• Finalisation of 2023 incentive target setting
• Approval of Directors’ Remuneration Report
March
March
Nomination
• Succession planning
Audit & Risk
• Review of Year End Results
• Review of External Audit report on Year End Results
• Review of Annual Report
• Risk Review and assessment, and internal control
effectiveness
• Review of Internal Audit Reports
• Review of independence of external
auditors
• Annual review of the effectiveness of the
audit process and the External Auditor
performance
May
Nomination
• Non-Executive Director recruitment – the appointment
• Appointment of the Chair and members
of Naomi Climer CBE
• Succession planning for the Board
of a proposed new ESG Committee
August
Audit & Risk
• Review of Half Year Results
• Review of external auditors’ report on Half Year
• Internal Audit Report
• Review of risk management and internal
Results
controls
• Corporate Governance updates
• Information security update
October
Remuneration
• Review of the outcome of shareholder meetings
October
October
Audit & Risk
Nomination
• Succession planning for the Executive Directors
• Review of External Audit Plan for 2023
• Approval of Internal Audit Plan for FY24
• Internal Audit progress report
• Risk management and updates on internal controls
• Established the structure of meetings
• Review of the talent pipeline and succession
planning, and inclusive culture training
October
ESG
December
Remuneration
• Assessment of Remuneration policy options under
consideration in light of shareholder feedback
• Assessment of Remuneration policy
options and other context inputs
• Information security update
• Corporate Governance updates
• Diversity & Inclusion Strategy: progress
report against 2023 targets and an update
on progress to set diversity targets for
2024 and beyond
• Discussion of 2023 incentive outcomes
• Update on the proposed 2024 salary
award for all colleagues
December
ESG
• STV Zero – progress report against 2023 targets
for carbon emissions and proposed 2024 targets
• Updated climate-related risk register and related
mitigating controls
• Review of an updated sustainability
governance framework
• Review of the 2023 Modern Slavery
and Human Trafficking Statement
Report of the Remuneration Committee
The members of the Committee, comprising four independent Non-Executive Directors, were:
Anne Marie Cannon (Chair, retired 27 April 2023)
Naomi Climer CBE (Chair, appointed 30 May 2023)
Ian Steele
David Bergg
Simon Miller
The role and activities of the Remuneration Committee are described within the Directors’ Remuneration Report which can be
found on pages 88 to 105.
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Report of the Nomination Committee
The members of the Committee, comprising two independent Non-Executive Directors and the Chairman of the Board
(independent on appointment), were:
Paul Reynolds (Chair)
Simon Miller
Ian Steele
During the year, three scheduled meetings were held and there was one additional meeting to consider progress in succession
arrangements for Anne Marie Cannon, Independent Non-Executive Director and Chair of the Remuneration Committee, who
stepped down from the Board at the conclusion of the 2023 AGM. At the invitation of the Committee, meetings are attended
by the HR & Communications Director and the Chief Executive.
The principal activities undertaken by the Committee during 2023 have been summarised below.
Composition of the Board
The Board is structured to ensure it has an appropriate combination of skills, experience, knowledge, and diversity required for
its effectiveness and is fully equipped to support the Group to drive its growth strategy. The Board skills and experience matrix
on page 68 demonstrates this belief.
Board changes
During Q4 2022 the Committee initiated a formal search process to recruit a successor to Anne Marie Cannon, who had indicated
her intention to step down from the Board at the conclusion of the 2023 AGM. This process completed in 2023 with the appointment
of Naomi Climer CBE on 30 May 2023.
The Committee agreed the specification and set the criteria for the appointment having regard to a range of factors. These
included the skills, experience, knowledge and characteristics required of the role of an Independent Non-Executive Director and
Chair of the Remuneration Committee of a listed company, taking into account stakeholder expectations and keeping in mind the
composition of skills, experience and diversity required of the Board as a whole.
The Committee engaged FWB Park Brown, following a competitive tender, to help define the role profile and identify suitable
candidates. They do not have any other connection with the Company nor individual Directors, except where they may have
liaised with them as prospective candidates for other board positions.
The Committee discussed the long list based on core role criteria and broader attributes, together with an assessment of the time
commitment expected, and created a shortlist. First interviews were held for the shortlisted candidates and following feedback
the list of potential candidates was narrowed down to two individuals who were selected for a second round of interviews. The
interview process involved the Chairman and Nomination Committee members and the CEO and CFO.
The Committee discussed feedback from all interviews and agreed Naomi Climer CBE as the preferred candidate recommending
her appointment to the Board, as Chair of the Remuneration Committee and as a member of the newly constituted ESG Committee.
The Board agreed with the Committee’s view that Naomi’s successful career in broadcast, media, engineering and technology
and significant plc Board experience as an Independent Non-Executive Director and Chair of the Remuneration Committee would
complement the current skills and experience of the existing Directors. In approving her appointment, the Board also assessed
whether Naomi would be considered an independent Non-Executive Director having regard to the circumstances set out in the
Code and that at least half of the Board should be independent Non-Executive Directors. The Board concluded that there were
no circumstances likely to impair, or could appear to impair, her independence.
Following the announcement in May 2023 that Ian Steele, Independent Non-Executive Director and Chair of the Audit & Risk
Committee, would not be seeking re-election at the 2024 AGM having served more than eight years, the Committee has initiated
a formal search process to appoint his successor and hopes to announce an appointment in due course.
ESG Committee Chair and members
In advance of the Board’s approval of the constitution of an ESG Committee, the Committee considered and recommended to
the Board the appointment of the Chair and members of the ESG Committee. The Nomination Committee considered it was
appropriate that the ESG Committee comprise Non-Executive Directors, and considered the appropriate combination of skills,
experience, knowledge, diversity and time commitment required for these roles and duties to be fulfilled. As a result, the
Committee recommended to the Board, which then approved, that David Bergg be appointed as Chair of the Committee
and Paul Reynolds, Aki Mandhar and Naomi Climer CBE as its members.
Succession planning
During the year, the Committee continued to review plans for the orderly succession of appointments to the Board building on the
work previously undertaken. The Committee reviewed the development plans and succession planning for the Executive Directors
with all the Non-Executive Directors present as recommended as an action by the externally-facilitated Board performance
evaluation exercise in 2022. This was combined with the Board’s review of development plans and succession planning for the
Management Board, senior leaders (direct reports to the Management Board) and other key operational roles across the Company
which was formally scheduled as a standing Board item. Further information can be found on page 74 of the Governance Report.
Diversity and Inclusion
The Committee recognises the strategic importance of a diverse and inclusive Board and its Committees. We believe that Board
diversity makes us a better and more sustainable business, contributing to high performance and enhanced commercial results.
As well as a diverse Board, we promote an open and inclusive culture in Board and Committee meetings, where all Directors are
encouraged to share their views and all views are taken into account without bias or discrimination.
The FCA published amendments to its Listing Rules to be introduced for financial periods beginning on or after 1 April 2022 and so
the Company’s 2023 Annual Report and Accounts is the first year these new requirements apply. These require that STV includes
a ‘comply or explain’ statement in its annual report as to whether it has achieved Board and ethnic diversity targets, and that STV
disclose certain numerical data relating to the gender and ethnic background of the Board and Executive Management members,
together with an explanation of STV’s approach to data collection for the purposes of making the required disclosures. The diversity
data in the format prescribed by LR9.8.6R(10) is provided on page 69.
Performance against these targets as at 31 December 2023 is set out below, with statements of compliance given accordingly.
FCA Listing Rule
Gender diversity target
• the proportion of women on the Board is at least 40%
• at least one of the following senior Board positions
is held by a woman: Chair, Chief Executive, Senior
Independent Director or Chief Financial Officer
Performance as at 31 December 2023
37.5% of Directors are women. This falls slightly short of the FCA target, but as
we continue to develop our Board succession planning, this Committee and the
Board will remain focused on meeting the new diversity target recognising that
an effective board with broad strategic perspectives requires diversity. Ultimately
the Board appoints candidates based on merit and assesses potential Directors
against measurable, and objective criteria, defined for each role individually.
This target has been met through having a woman in the role of Chief
Financial Officer.
Ethnic diversity target
This target has been met.
• at least one individual on its Board is from a minority
ethnic background
The Board recognises that due to its relatively small size the appointment or departure of an individual Director can have
a significant impact on the achievement of these targets and therefore it is acknowledged that in periods of board change
there may be times when these targets are not met.
The Committee will continue to keep Board and Board Committee composition under review during 2024 as part of its
succession planning.
The Committee is also mindful of the voluntary target recommended by the FTSE Women Leaders Review of 40% female
representation for Management teams and their direct reports by the end of 2025. As at 31 December 2023, female representation
amongst the Management Board and their direct reports was at 54% and so exceeded the suggested minimum. We will continue
to ensure the Group has a diverse pipeline for Management Board succession and this will be an annual agenda item for the Board
and its Committees where appropriate.
At a Group level, the Board, together with management, remains focussed on building a supportive and inclusive culture that
ensures equal opportunity for all and driving measurable progress. In 2023 the responsibility for the topic was delegated to the
new ESG Committee to ensure sufficient, dedicated time was set aside for consideration of these important topics. Further
information can be found in the report of the ESG Committee.
Independence, election, and re-election of Directors
A formal review of the independence of the five Independent Non-Executive Directors was undertaken by the Committee, which in each
case considered relevant issues, including the skills and experience, number and nature of external appointments, potential conflicts of
interest (of which none were identified in 2023), and their length of service. The individual circumstances were also assessed against
independence criteria, including those set out in the Code. The outcome of the review was that the Committee recommended to the
Board that each Non-Executive Director was considered to be independent in character and judgement. Therefore, the Board continued
to satisfy the requirement for at least half of its members, excluding the Chairman, to be Independent Non-Executive Directors.
During the year, the Committee kept under review the number of external directorships held by each Director, in order to assess
any potential risks of ‘overboarding’. The Committee considered the limits on the number of directorships included in the related
guidelines of shareholder bodies. Following the Committee’s recommendation, the Board is satisfied that there are no Directors
whose time commitment causes concern and that all Directors have been able to devote sufficient time to the Company.
In accordance with the Code and recommendation of the Committee to the Board, Naomi Climer CBE will seek election at the 2024
AGM and all the continuing Directors of the Company will seek re-election at the next AGM. Further information in support of their
election or re-election will be set out in the Notice of Meeting. As previously noted, Ian Steele will step down from the Board at the
conclusion of the 2024 AGM. The Board is of the view that each Director it has recommended to shareholders for election or
re-election at the 2024 AGM continues to be effective and contribute to the Company’s long-term sustainable success.
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Committee evaluation
The Committee undertakes an annual evaluation process to review its performance and effectiveness as part of the wider Board
evaluations. The 2023 internal evaluation and 2022 external evaluation assessed the Nomination Committee as being effective
and operating well overall relative to its areas of responsibility.
There were no recommended actions arising from the 2023 evaluation process.
The progress against 2022 actions are as follows:
Areas of focus identified
Our follow up actions
To consider creating a forum for the Non-Executive Directors to
specifically focus on the succession plans for Executive Directors
whereby all the Non-Executive Directors attend.
Achieved – details contained within the Succession Planning section
on page 80 of this report.
Report of the Audit & Risk Committee
The members of the Committee, all of whom were independent during the year, were:
Ian Steele (Chair)
Anne Marie Cannon (retired 27 April 2023)
David Bergg
Simon Miller
Aki Mandhar
The Audit & Risk Committee is chaired by Ian Steele who has 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 experience 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 Team as required. Naomi Climer CBE, Independent Non-Executive Director, has a standing invite
as an attendee to all meetings. 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 2023 and once since the year end. The Chair of the Committee reports on the main points
of discussion to the Board following each meeting and conveys any recommendations for the Board’s own decision making.
The papers considered by the Committee are available to any Director who is not a member, should they wish to receive them.
The principal activities undertaken by the Committee during 2023 focussed on the four areas of financial reporting, internal control
and risk management, internal audit, and external audit.
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. The Committee is required to
ensure that appropriate rigour has been applied to the Group’s financial statements, including the content of the Interim Financial
Report, the Annual Report and Accounts, related results announcements, and supporting analyst presentations, and therefore that
the critical accounting policies have been applied appropriately and the disclosures presented are transparent and sufficient. Based
on the work of the Committee, a recommendation is also made to the Board in relation to the application of the going concern
principle, and approval of the Group’s financial statements taken as a whole. The Committee has a particular focus on:
• critical accounting policies, disclosure obligations and practices (including any changes during the period) and the Group’s
use and explanation of alternative performance measures (APMs);
• 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;
• the oversight of the processes and controls in place to compile and report on the numerical elements of the Group’s climate-
related financial reporting , including any external assurance sought and the statement of compliance;
• 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 & 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 financial report (in August 2023) and the Annual Report (in February 2024).
The Committee has identified several areas of focus on which it received reporting from management and the external auditors.
Within these areas of focus, the Committee considers that the significant risks from a financial reporting perspective in 2023 were
the valuation of the Group’s defined benefit pension liabilities as they can be materially affected by the assumptions used, the
accounting for the Greenbird Media acquisition as it was a material transaction during the period requiring fair value accounting
and specific disclosures, and the carrying value of investment in subsidiaries in the parent company given the challenging
macroenvironment the business is operating in.
In terms of pensions, the Committee challenged management on the key assumptions underpinning the valuation, specifically the
discount rate, inflation rates, and the mortality assumptions reflecting the latest CMI tables, with particular focus on any adjustment
to reflect the long-term impact of the Covid pandemic. The Committee also sought assurances from the external auditors that the
assumptions made by management fell within Deloitte’s acceptable ranges, and was satisfied with all responses received. In terms of
disclosure, the Committee reviewed the revised pension asset breakdown in the financial statements and agreed with management
that it represented a more granular and transparent approach and was therefore a positive development in the Group’s disclosures.
On the basis of work performed, the Committee concluded that it was satisfied that the assumptions underpinning the valuation of
pension liabilities were appropriate and the disclosures were transparent and complied with the relevant accounting standard.
In relation to the acquisition of Greenbird Media, the Committee received reporting from Management on the assessment of
provisional fair values associated with the transaction, including the purchase price allocation (PPA) work to assess separately
identifiable intangible assets and the value of goodwill on acquisition. This work had been supported by a report from valuation
experts at KPMG given the complexity of the acquired entity and the underlying assumptions and modelling required. The
determination of consideration was reviewed by the Committee, including the assessment by management that the earn-out
(deferred payments) to the founders of Greenbird Media should be accounted for as remuneration rather than consideration.
The Committee also sought assurance from Deloitte that the assumptions supporting the assessment of provisional fair values
of assets and liabilities were reasonable, and that they agreed with management’s assessment that earn-out payments were
remuneration and had been calculated accurately. On the basis of work performed, the Committee concluded that it was satisfied
that appropriate assumptions had been made and that the disclosure of the provisional fair values of the acquired business was
complete and accurate and complied with the relevant accounting standard.
The assessment of the carrying value of subsidiaries in the Company balance sheet was identified as a significant risk by the
Committee for the first time in 2023 due to the increased risk profile of the trading environment (by virtue of the economic backdrop
of high inflation adversely impacting the national linear advertising market in particular) and the increased cost of capital (driven by
higher interest rates throughout the year). Management appointed KPMG to perform an independent assessment of the Group’s
weighted average cost of capital (WACC rate) and shared a summary of their work with the Committee. The Committee found this
to be a high-quality piece of work and were satisfied with the assumptions made and therefore the assessed WACC rate of 10.3%
was appropriate. The Committee also received reporting on the cash flow forecasts underpinning the impairment assessment and
found them to be robust and consistent with those presented in relation to other matters under review. Given these factors, combined
with the headroom assessed and sensitivity analysis presented, the Committee agreed that no impairment had been identified.
The other areas of focus for the Committee (none of which was considered a significant risk) that it received reporting on from
management and the external auditors, were development stock and deferred production stock in the Studios division, adjusting
items and adjusted performance measures, and taxation. The Committee reviews the work in these areas given the judgement
involved by management in the underlying assumptions and the need for transparent disclosures. Having reviewed reporting on
each matter, the Committee was content with management’s treatment and disclosure across all areas.
Going concern and long-term viability
The Committee reviewed and challenged the appropriateness of adopting the going concern basis of accounting in preparing the
full year financial statements and assessed whether the business was viable in accordance with the requirements of the Code.
The assessment included a review of the principal risks facing the Group, their financial impact, how they were managed, the
availability of finance and covenant compliance together with a discussion as to the appropriate period for assessment. In 2023,
particular focus as part of the viability assessment was given to the period of availability of the Group’s existing Revolving Credit
Facility (RCF), which matures on 5 March 2026, and the potential risk that credit may not be available to the business at similar cost
thereafter. Following this review, the Committee was satisfied that management had conducted robust viability and going concern
assessments and recommended the approval of the viability and going concern statements to the Board. The Viability Statement
of the Group is on pages 44 and 45.
Assessment of fair, balanced and understandable reporting
As part of the Committee’s work on assessing whether the Annual Report and Accounts, when taken as a whole, is fair, balanced
and understandable, the Committee received reports from management setting down the process undertaken, and the factors
considered when making the assessment. The Committee reviewed this report and determined that the controls underlying the
production of the Annual Report and Accounts were appropriate. The Chief Financial Officer manages the production of the Annual
Report and Accounts, with ownership of each section lying with individuals with recent, relevant experience and knowledge of the
detailed content, supported by external advisors as appropriate. A robust review process of inputs by contributors from across the
business was conducted to ensure disclosures were balanced, accurate and verified, and further comprehensive reviews were
conducted by senior management. The Committee then formally reviewed the draft Annual Report and Accounts and fed back
comments and questions to management, and was satisfied that all comments and questions were responded to satisfactorily.
The Committee also receive reporting from management and review the disclosures on the use of Alternative Performance
Measures (APMs) used in the Annual Report and Accounts to ensure they are transparent and fully explained, as well as clearly
reconciled, and given no more than equal prominence, to the relevant statutory measures. The Committee concluded that the
narrative on APMs included in the Finance Review (on page 35) and in note 7 to the financial statements met this objective.
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As a result of their work, the Committee has determined the document to be fair, balanced and understandable and recommended
it to the Board for approval.
Sustainability-related reporting
The Group’s climate-related financial disclosures continue to be the subject of evolving reporting requirements.
During the year the Committee considered and provided oversight of the Group’s climate-related financial reporting disclosures
in accordance with the new requirements under the CFD Regulations, compliance with Listing Rule 9.8.6(8)R disclosures against
the TCFD recommendations, and SECR reporting.
The Committee received reporting from Internal Audit on key controls within the processes underpinning analysis and reporting
of numerical sustainability reporting in 2022, and management confirmed recommended actions had all been implemented.
Furthermore, management provided reporting on the involvement of third party specialists engaged to support work in this area.
The Committee reviewed the assurance obtained by management in relation to numerical sustainability reporting to ensure it was
sufficient and appropriate. On the basis of work undertaken the Committee was satisfied that the Group’s climate-related reporting
continues to be accurate and consistent.
Internal control and risk management
The Board has delegated responsibility to the Committee for monitoring and reviewing the Group’s risk management and internal
control framework relating to operating, financial, and compliance internal controls on an ongoing basis and to carry out a review
of their effectiveness. During the year, the Committee reported its findings to the Board.
The internal control framework is designed to facilitate effective and efficient operations, ensure a high quality of internal and
external reporting, and ensure compliance with applicable laws and regulations. This work is supported by reporting from internal
audit on the results of the programme of work completed and the overall assessment of the internal control environment and any
reporting, either verbal or written, from senior management covering any investigations or suspected fraudulent activities. Such
a system can only provide reasonable and not absolute assurance against material misstatement or loss, acknowledging that no
system can eliminate the risk of failure to achieve the Group’s strategic priorities entirely.
During the year, the following key controls across the Group were in place:
• The Committee supports the Board in assessing the effectiveness of the framework in respect of controls over the financial
reporting process, with its operation delegated to management. The preparation of financial statements and the wider financial
reporting process and control system is monitored by the adoption of an internal control framework to address principal
financial reporting risks. The key financial controls in place across the Group were as follows:
– a comprehensive financial review cycle, including 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
– regular reviews of key performance indicators and business risks with consequent steps to manage any matters arising
– procedures for the approval of capital expenditure
– key financial reporting controls including balance sheet reconciliations, payment controls, payroll approval controls and third
party specialist advice relating to inputs for critical accounting judgments and estimates and corporation tax disclosures
– general regulatory and other compliance controls.
• As part of an annual review, the Board approved an updated Risk Appetite Statement for the Group and reconfirmed it’s approval
of the Group’s risk management policy having taken into account the strategic objectives and business model of the Group as
well as the changing environment in which it operates. The Committee supported the Board in a robust assessment of emerging
risks, as well as principal risks and how they are being managed or mitigated. Risk management on pages 37 to 45 details how
these requirements were addressed.
• The Committee reviewed the integration of reporting and underpinning requirements of the CFD Regulations with the pre-existing
TCFD framework, with a particular focus on the impact of potential climate-related risks and opportunities on the Group.
• The Committee and Board reviewed update reports on information security and data privacy and any related material incidents.
• The Corporate governance report on pages 71 and 72 provides details of a clearly defined management structure and delegation
of authority to Committees of the Board, subsidiary boards and divisional board.
• The Non-financial and sustainability information statement on page 64 provides details of the internal operating controls.
• There were also high recruitment standards and formal career development and training to ensure the integrity and
competence of staff and controls around the engagement of freelancers and other contract staff.
• The Group promotes a culture of openness with its employees and where there are concerns, encourages them to utilise various
means available to speak up. The Group recognises that employees may not feel comfortable reporting their concerns through
an internal disclosure process and therefore the matter can be raised by using an independent confidential whistleblowing
service, Safecall, or directly to the Chair of the Audit & Risk Committee as the Group’s Whistleblowing Champion. There is a
whistleblowing policy in place. All matters raised are investigated and outcomes reported to the Committee. During the year,
there was one matter raised via Safecall and this was reported to the Committee along with the action taken and the outcome.
• The Committee reviewed plans to enhance the internal control environment ahead of expected regulatory and legislative changes.
Internal audit
The Group’s internal auditor is KPMG. The primary focus of the internal audit programme is to, on a rotational basis, provide assurance
over key revenue streams and operating costs, as well as over the Group’s enterprise risk management frameworks and mitigating
controls in place to manage emerging and existing 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 application of the Group Risk Management Policy and related processes.
During the year, KPMG provided regular reporting to the Committee that included: (i) status updates on the performance of audits
against the internal audit plan (for FY23); (ii) detailed reports on internal audits completed during the year, including findings and
recommendations for improvement; and (iii) a proposed audit plan for FY24. In addition, the internal audit partner shared insight
and updates on the status of broader activities underway in relation to corporate governance reform with updates on The Draft
Companies (Strategic Report and Directors’ Report) (Amendment) Regulations 2023, the consultation and proposals being taken
forward on proposed changes by the FRC to the Code and The Economic Crime and Corporate Transparency Act.
Internal audits completed during the year and to the date of this report, were on Compliance (GDPR), Internal Financial Controls
(Test of Design), Advertising Revenue Recognition and Management of VAT Processes. In addition, the internal audit team revisited
their work done in relation to the Group’s Enterprise Risk Management framework in Q4 2021 to assess progress made against
recommendations identified, concluding that good progress had been made to enhance the frameworks in place.
For each audit, a detailed report was provided to the Committee that summarised the scope of the audit, areas of good practice that
had been identified, and any findings and recommended remediation activities. These reports 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 an independent, 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
management and control frameworks. These reports also allow the Committee to monitor the role and effectiveness of the internal
audit function whilst ensuring it is sufficiently resourced and skilled to provide the assurance required.
Each report was discussed in detail between the Committee, internal auditor and management and, in relation to those audits listed
above, it was agreed that no high priority findings had been identified although there were a number of actions proposed that would
be implemented by management with a view to enhancing existing processes. At each Committee meeting, management tables a
report that tracks each internal audit finding and related recommended mitigating actions to provide the Committee with comfort
that responses are being addressed adequately and in a timely manner. The internal audit team also track and test completion of
findings on an on-going basis, their first exercise in this area being conducted over Q1 2024. At the date of this report, the majority
of Internal Audit’s work in this area had been completed with no matters raised to the Committee’s attention.
The Committee approved the internal audit plan for FY24 at its meeting in October 2023. The audits confirmed for completion
in 2024 are Internal Financial Control (Test of Operating Effectiveness), Integrated Assurance Framework, IT Service and System
Resilience, Payroll, and Systems Infrastructure/Integration (as it relates to the Greenbird Media acquisition).
Based on the work of the Committee and reports received from management and internal audit, it is recommended to the Board
that the Group’s risk management and internal controls processes were operating effectively throughout the year.
External audit
The Committee oversees the relationship with the external auditor and is responsible for assessing its effectiveness, approving
its terms of engagement, setting audit fees, and monitoring the auditors’ independence and objectivity.
The audit partner and senior manager attend all Committee meetings to ensure full communication of matters relating to the
external audit.
The Committee closely monitored the transition process from the previous external auditor, PwC, to the newly appointed external
auditor, Deloitte, for Deloitte’s first audit being that for FY23 and were satisfied there was a smooth transition.
During the year, the Committee approved the annual external audit plan and received updates on the progress of the audit.
The Committee reviewed: the external auditor engagement letter and agreed the auditors’ remuneration (the Committee was
authorised by shareholders at the 2023 AGM to agree the remuneration of the external auditors); the findings of the external audit
including key judgements and the level of challenge provided by the external auditor; and management’s responses to control
findings, non-compliance and any other findings identified by the external auditor.
The external auditor has 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.
External auditor effectiveness
As part of its responsibility for assessing the effectiveness of the external audit process and the external auditors’ performance,
the Committee sought feedback from its members, the Chief Financial Officer as well as STV’s finance team and the wider
management team, to the extent they were involved in the process. This feedback covered 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 Committee and relayed to the auditors and to management. Following completion of this
assessment for the 2023 year end, the Committee concluded that it was satisfied with the external auditors’ performance
and the effectiveness of the external audit process.
Independence policy and non-audit fees
Both the Board and the external auditor have safeguards in place to protect the independence and objectivity of the external
auditor, which are detailed in the External Auditor Independence Policy. The Committee is responsible for approving, in advance, any
non-audit work undertaken by the external auditor. Under that policy, the Chief Financial Officer must obtain the approval of either
the Chair of the 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 the proposed non-audit services. A case-by-case decision is therefore
necessary, and the auditor cannot be engaged for non-audit work without reference to the Committee. In certain cases, the external
auditor may be selected over another service provider due to their detailed knowledge and understanding of the Group’s operations.
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Deloitte also has an internal process whereby pre-engagement approval of all non-audit services is required to be given by the
Audit Partner.
There is also a policy to regulate the appointment of former audit colleagues to senior finance positions in the Group.
The external 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 Deloitte 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 all
safeguards that are in place to mitigate the risks to independence.
During the year under review, the non-audit work carried out by Deloitte 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 8% of the audit fee, and the
Committee was comfortable that Deloitte was the most suitable supplier for these services.
Statutory Audit Services Compliance
The Committee confirms that the Group has complied during financial year 2023 and to the date of this report with The Statutory
Audit Services for Large Companies Market Investigation (Mandatory Use of Competitive Tender Processes and Audit Committee
Responsibilities) Order 2014, which relates to the frequency and governance for the appointment of the external auditor and the
setting of a policy on the provision of non-audit services.
Committee evaluation
The Committee undertakes an annual evaluation process to review its performance and effectiveness as part of the wider Board
evaluations. The 2023 internal evaluation and 2022 external evaluation assessed the Audit & Risk Committee as being effective
and operating well overall relative to its areas of responsibility.
There were no recommended actions arising from the 2023 evaluation process.
The progress against 2022 actions are as follows:
Areas of focus identified
Our follow up actions
Consider the programme of meetings should be extended from
three to four meetings a year.
This will be considered when the successor for the current Chair
of the Committee is appointed.
Consider amending the Terms of Reference to incorporate more
specifically the responsibilities of the Committee in relation to
the monitoring of environmental and climate-related targets
and performance.
This has been included in the Terms of Reference for the ESG
Committee.
Report of the Environmental, Social and Governance (ESG) Committee
The members of the Committee, comprising three independent Non-Executive Directors and the Chairman of the Board
(independent on appointment), were:
David Bergg (Chair)
Naomi Climer CBE
Aki Mandhar
Paul Reynolds
The Board announced in May 2023 the constitution of an ESG Committee and formally approved its Terms of Reference in June
2023 to prioritise our social purpose/ESG agenda as a primary objective within our growth strategy, positioned alongside our
key strategic growth activities. Since that time, two scheduled meetings were held in 2023. At the invitation of the Committee,
meetings are attended by the HR & Communications Director, the Chief Executive and the Chief Financial Officer.
The principal activities undertaken by the Committee during 2023 have been summarised below:
Establishment of the structure of meetings
In recognition of the broad ranging nature of STV’s ESG agenda, the Committee agreed the structure of its initial meetings during
2023. This was to establish a structure for meetings that would ensure progress against key areas is tracked and measured; that
evolving areas of relevant activity are brought into the scope of the Committee; and that matters of relevance are brought to the
attention of the Board. At the first meeting in October the Committee was therefore provided with an overview of key activities
since the previous update to the Board covering the areas of sustainability (STV Zero); people (diversity and inclusion; wellbeing;
engagement); and communities (including the STV Children’s Appeal). Similar to the Board’s operating rhythm of previous years,
the Committee agreed to receive a ‘deep dive’ into each of the Group’s strategies and progress on Sustainability: STV Zero Strategy
and Diversity & Inclusion on a rotational basis.
Environment
STV Zero Strategy
In 2023, the Committee received reports from management on progress against targets set down in STV Zero, as well as broader
activities across the Group intended to ensure that sustainability was at the forefront of decision-making and operations as much
as possible. The Committee reviewed updates on progress against 2023 targets for carbon emission reduction. In addition to these
operational updates, the Committee formally reviewed and recommended to the Board approval of the proposed 2024 STV Zero
targets which included new reporting disclosure requirements and integrating the activities of Greenbird Media into future targets.
In addition it considered and recommended to the Board the updated climate-related risk register and related mitigating controls.
Further details can be found in the ESG Report on pages 46 to 64.
Social
Diversity & Inclusion Strategy
In support of the continued focus of the Board and management on building a supportive and inclusive culture that ensures
equality of opportunity for all and driving measurable progress, the Committee discussed the activities in this area that focused
on STV’s Open Access Charter. This Open Access Charter captures the commitments that have been identified to improve diversity
and inclusion for employees and extends to the Group’s audiences and partners.
The Committee reviewed progress against the challenging targets set for the end of 2023 and received an update on the process
to set diversity targets for 2024 and beyond. It reviewed , within the talent pipeline and succession planning, where opportunities
lay for talent from under-represented groups and considered the delivery of the third phase of the Company’s inclusive culture
training programme. It acknowledged STV’s continuing commitment to using its privileged position as an employer, Public Service
Broadcaster, and producer to address the longstanding systemic issue of under-represented groups both on and off screen.
Further details of consideration of the Diversity and Inclusion Strategy in relation to the composition of the Board and Executive
Management and their direct reports can be found in the report of the Nomination Committee on page 81.
ESG Governance and policies
Our Environmental and Social pillars are underpinned by robust governance, a strong culture and effective policies. In this regard
the Committee reviewed and recommended to the Board its approval of the sustainability governance framework, updated to
reflect the ESG Committee as noted on page 59, and the Company’s 2023 Modern Slavery and Human Trafficking Statement.
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Committee evaluation
The Committee undertakes an annual evaluation process to review its performance and effectiveness, in line with the other
Board Committees and as part of the wider Board evaluations. The 2023 internal evaluation assessed the ESG Committee
as being effective and operating well overall relative to its areas of responsibility.
There were no recommended actions arising from the 2023 evaluation process.
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Remuneration report
Annual Statement
I am pleased to introduce the Directors’ Remuneration Report for 2023.
During the year, I succeeded Anne Marie Cannon as Chair of the Remuneration Committee. I would like to thank my predecessor
for her leadership and stewardship of the Committee over the past nine years.
Overview of 2023 performance
2023 marked a key milestone in determining the success of the long-term diversification strategy. The key strategic target – to
achieve 50% of earnings from non-broadcast activities by the end of 2023 – was exceeded with 75% of earnings derived from the
growth businesses/outside of broadcast.
This strategy, launched in 2018, set the Company on a path to transition the earnings base from one based on linear broadcasting
advertising to one based on digital streaming and content production. The objective was to build a more resilient business aligned to
growth opportunities in the global content creation market and to the changes in digital content consumption as viewing habits evolve.
The macro-economic conditions that characterised 2023 for so many businesses have presented a challenging trading
environment for the Company, with lower levels of consumer confidence severely impacting the linear advertising revenue market.
However, with a strong foundation for growth established in Digital and STV Studios, continued progress has been achieved in the
face of this challenging trading environment.
The profitable digital business delivered a 6% growth in revenue to £20.2m with profit up 16% at £9.9m. 2023 was another
record-breaking year for STV Player, with growth in viewing hours and streams in every quarter of the year. Viewing hours
increased by 25%, streams increased by 28%, and the target of 1m monthly active users was achieved.
The distribution of STV Player continued to expand across all major platforms with the new app launching on Sky Q; Amazon
Search; Apple TV services; and Google TV.
Despite a global slowdown in the programme commissioning market which affected many producers, STV Studios revenue was
ahead of target, almost trebling to £67m. Adjusted operating profit was over £5m.
The completion of the acquisition of Greenbird Media during the year was a significant strategic development towards the goal
of becoming the UK’s largest Nations and Regions production business. The deal accelerated the growth of STV Studios, delivering
scale and strengthening the creative pipeline. With the number of labels increasing from nine to over 20, almost 70 series were
produced and over 50 new commissions and recommissions secured.
The challenging economic backdrop that prevailed throughout the year impacted the turnover of the Broadcast business; however,
the unrivalled reach of the core channel, STV, was undiminished. Maintaining its position as Scotland’s most popular peak time
television channel for the sixth consecutive year, STV delivered 97% of the top 500 commercial programme audiences, entertaining
viewers with a rich schedule of Network and Regional productions and providing advertisers with the biggest and most impactful
marketing platform in Scotland.
The process to secure a long-term extension of the two Public Service Broadcast licences within a reformed regulatory regime
continued. The extension of the licences was confirmed by the Government early in the year and the regulatory environment in which
these licences will operate is being reformed through a Media Bill which is now at an advanced state in the parliamentary process.
This public service purpose is at the core of the Company’s developing ESG strategy, which defines our priorities relating to our
people, sustainability and climate action, and supporting the communities we serve. The priorities in this area are reflected in the
personal objectives defined for the Executive Directors and Management Board and cascaded to all colleagues. The importance
the Board places on delivery of these targets was underscored during 2023 through the formation of a dedicated ESG Board
Committee whose remit includes assessing delivery and performance against targets.
Remuneration outcomes for 2023
The annual bonus plan was based on a balanced set of financial targets (operating profit and cash generation), as well as personal
objectives linked to strategic delivery.
The Group’s Adjusted Operating Profit for the full year was £20.1m. The Committee carefully considered how to reflect the contribution
from Greenbird Media, noting the significant incremental value delivered during the second half as a result of the management team’s
exceptional efforts in integrating the business post acquisition. However to ensure a wholly consistent assessment against the annual
bonus targets set at the start of the year, the contribution from Greenbird Media was fully excluded. This resulted in an outcome
(for bonus calculation purposes) of £16.9m which fell below the stretching threshold set for this metric. The cash flow outcome of
£23.9m, which was not impacted by the acquisition of Greenbird Media and therefore has not been adjusted, was just below target.
Both Executive Directors performed highly effectively against their personal objectives with delivery against the long-term strategic
objective to drive profitable growth in the Digital business and STV Studios – supported by the transformational acquisition of
Greenbird Media, achieving regulatory outcomes to secure extension of the PSB licences, and continued management of the
Company’s defined benefit pensions liabilities. Additionally, as mentioned above, delivery of key ESG targets enhanced the
Company’s positive social impact, including achievement of long-term diversity targets and continued progress to reduce the
carbon impact of the business. Reflecting on these significant achievements, the Committee therefore determined that the
personal objectives element of the bonus would pay-out at 95% for both Executive Directors.
This overall performance resulted in a final bonus outcome for 2023 of 35.25% of maximum for the Chief Executive and Chief
Financial Officer. In line with the Remuneration Policy, 20% of the bonus will be deferred into STV Group shares, which will vest
after three years. Further detail on the bonus targets and the performance delivered is set out on page 98.
The 2021 Long Term Incentive Plan (LTIP) award vested by reference to performance over the three-year period to 31 December
2023. This award was based on EPS growth, non-broadcast earnings and total shareholder return (TSR) performance. In light of
the very challenging market conditions over the period, EPS and TSR performance fell below the threshold target, resulting in no
vesting for those elements. Non-broadcast earnings of £11.9m (as adjusted downwards to remove any contribution from Greenbird
Media), represented over 70% of the Group’s overall earnings having almost doubled in size over the performance period in line
with our strategic diversification objective. This resulted in a vesting of 51% of this element when assessed against the stretching
target range originally set by the Committee. Overall, this translated into a total vesting for the 2021 LTIP award of 15.2% of
maximum. Further detail on the targets and outcome is set out on pages 99 and 100. Following vesting in March 2024, this award
will then be subject to a two year post-vesting holding period in line with the Remuneration Policy.
The Committee reviewed the formulaic outturn of both the annual bonus and the LTIP against a broader assessment of underlying
performance for our stakeholders over the respective performance periods. The Committee noted the exceptional performance of
the business and Management Board in successfully delivering on our diversification strategy, both over the long-term and most
recently via the execution of the transformative Greenbird Media acquisition completed during the year. The Committee also took
into account the robust financial performance of the business through a sustained period of exceptionally challenging market
conditions, but also considered the wider remuneration outcomes for staff across the business and recognised the impact of
the market conditions on the share price. Overall, the Committee concluded that the bonus and LTIP outcomes described above,
both of which were below those received last year, were an appropriate reflection of these factors.
Company-wide remuneration
The Committee has continued to have oversight of remuneration and related policies across the organisation and gives due
consideration to these when determining pay for Executive Directors.
In 2023, an across-the-board salary increase of £2,000 was awarded to all colleagues, irrespective of the level of seniority or role,
ensuring that the increase to our salary budget was focused primarily on supporting our lowest paid colleagues. Over two thirds
of colleagues received increases of at least 5%, with around 20% of colleagues receiving an average increase of 12.8%. As a result
of this approach, for more senior roles the percentage increase was significantly lower.
In addition, as detailed in last year’s report, in 2023 we also introduced a new all-employee annual incentive arrangement linked
to the operating profit target, providing all colleagues with the opportunity to participate in the performance of the business during
the year. Unfortunately, as a result of the trading conditions described above, consistent with the annual bonus plan for executives,
the performance threshold for operating profit was not achieved and no payments will be delivered under this plan.
For 2024, we continued our approach of providing higher levels of salary increase to our lowest paid colleagues. Over 70% of
colleagues received an increase of £1,500, delivering an inflation-linked increase to two-thirds of this group; 20% received an
increase of £1,250; while management roles received increases of £1,000. The average increase across all employees is around 3%.
Remuneration Policy review – no material changes proposed to overall structure
In line with the normal three-year cycle, we will be seeking shareholder approval for a new Directors’ Remuneration Policy,
as set out on pages 91 to 95, at the 2024 AGM. In advance of this, the Committee undertook a comprehensive review, including
a multi-phased programme of engagement with our major shareholders.
In summary, we are not proposing to make any material changes and will retain the existing executive remuneration framework
which has been in place since 2015. That is, an annual bonus (with an element deferred into shares) and an LTIP. The Committee
believes this continues to provide the appropriate framework with which to secure executive talent, reward performance and the
delivery of our strategy, and align with the interests of our shareholders. Additionally, this framework is fully consistent with
well-established market practice and best practice guidance for UK-listed companies.
Maximum award levels will remain unchanged (at 150% and 125% of salary for the CEO and CFO respectively under the annual
bonus and 100% of salary for the LTIP).
In order to fully align the terms of our share awards with very latest best practice, the LTIP will be updated to include a provision
that, if following cessation as a ‘good leaver’ the individual agrees to start employment with another employer before the vesting
date, the Committee may determine that the retained awards will lapse.
Consideration of diverse views in our shareholder base
We have consistently received strong support for our approach to executive remuneration from the vast majority of our register,
including most of our largest shareholders. However, as discussed further below, in recent years there has been a minority vote
against our remuneration-related resolutions, and we therefore used this engagement exercise with our key shareholders to
further supplement our existing understanding of the range of views. In total, we engaged with nine of our largest shareholders,
holding around 65% of our share register. We also engaged with investor bodies and voting agencies.
The Committee’s objective in this current Remuneration Policy review was to develop an approach which all major shareholders
could support, and, through this process, a range of potential alternatives to the current nil cost option (LTIP) structure were
evaluated. For example, we considered long-term incentive structures based solely on share price performance (such as share
options or a ‘value creation plan’) and also those which would remove all long-term performance assessment (such as a ‘single
incentive plan’). After full consideration, the Committee concluded that none of these were as well suited to STV’s strategy as
the current structure, and also noted that each would bring a number of challenges which – based on shareholder discussions
and professional advice – may have risked the support of some shareholders and/or investor bodies.
On behalf of the Committee, I would like to thank those shareholders who engaged in the process and confirm our intention
to continue an open and ongoing dialogue going forward.
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Share plan renewal
At the 2024 AGM, we will also be seeking shareholder approval for a renewal of our LTIP rules, which are due to expire next year.
The rules are consistent with the terms of the Policy, and therefore no major changes are required. One refinement to the previous
rules is that we will be including the 5% dilution limit in respect of the executive share plans, in line with best practice. Full details
of the plan are set out in the Notice of AGM.
We will also be renewing our all-employee Sharesave Scheme, which provides the opportunity for all colleagues to participate
in equity and share in the growth we deliver for shareholders.
Implementation of Policy for 2024
Consistent with the Company-wide framework for salary increases described above, with effect from 1 January 2024, both
Executive Directors received a salary increase of £1,000, equating to increases of 0.2% and 0.4% for the Chief Executive and Chief
Financial Officer, respectively. This is significantly below the average increase for all employees of 3%. Our approach this year
provides further evidence of the Committee’s continued commitment to a restrained and responsible approach to executive
salaries, having increased Executive Directors significantly below the employee average last year, in line with employees in 2022
(at 3%), with no increases in 2021 and a voluntary salary reduction in place for five months of 2020.
Executive Directors will participate in the annual bonus and LTIP, with award opportunities aligned to the Policy and unchanged
from 2023. During the Policy review, we reviewed the performance measures in our incentive plans to ensure they remained
optimally aligned with our evolving strategy and the expectations of our shareholders.
For the annual bonus, we propose to retain the existing framework based on Operating Profit (50%), Cash Flow (25%) and
stretching Personal objectives (25%) linked to key strategic and operational goals. Personal objectives will continue to relate
to key success factors in progressing strategic delivery including launching the next phase of the strategy beyond 2023; delivery
of efficiency and cost savings targets; and continued progression of all aspects of the ESG strategy.
For the LTIP, the majority will continue to be based on EPS and TSR performance, suitably reflecting both ‘bottom line’ financial
performance and shareholder value creation. However, we propose to replace the Non-Broadcast Earnings metric, which has supported
the successful delivery of our diversification strategy over the past six years, with two new metrics. These are introduced to ensure
continued alignment of incentives with shareholders interests and our newly defined strategic targets. The new metrics are:
• a Group margin metric, to demonstrate profitable growth of the Digital business and STV Studios and profit maximisation of the
mature Broadcast business, and successful execution of a multi-year cost saving programme we will implement in 2024; and
• a growth metric for our Digital and Studios businesses to drive and reward the continued scaling up of these key areas.
The Committee has set stretching performance target ranges for all LTIP metrics, aligned to the challenging long-term plan agreed
by the Board and taking into account external expectations for performance. For EPS, maximum vesting will require double digit
annualised growth over the period to FY26, which is expected to be challenging to deliver in the context of the current trading and
market outlook. For Operating Margin, the target range of 8% to 13% reflects the anticipated trajectory in that metric as the quality
of earnings evolves in step with our continued diversification. The target range for Revenue in the Digital and Studios businesses of
15%-25% is exceptionally stretching and reflective of our ambition to drive growth in these key areas. Further details on the LTIP
targets are set out on page 96. The Committee has discussed that when determining performance outcomes against the new
metrics they will ensure these outcomes are appropriately supported by underlying profitability.
No changes will be made to the fees for the Chairman and Non-Executive Directors for 2024.
Voting outcome at the 2023 AGM
The Committee noted that last year’s remuneration report had more than 20% votes cast against at the 2023 AGM. This reflects
a pattern of votes cast in recent years, dating back to the adoption of the previous Remuneration Policy at the 2021 AGM. Over this
period, we have regularly engaged with major shareholders and have consistently received strong support from the vast majority
of our register, including most of our major shareholders. Through our ongoing dialogue with the shareholder who has voted
against, previously and during our recent engagement exercise, the Committee understands and acknowledges their concern
around one specific element of our Policy, the use of nil-cost options in the LTIP. As described above, this feedback was taken
into account, alongside that of our other shareholders, in developing the final proposals.
In conclusion
Once again, I would like to thank shareholders for their engagement and support during this initial period of my tenure as
Committee Chair. Our Directors’ Remuneration Policy will be subject to a binding shareholder vote at our 2024 AGM and the
Annual Report on Remuneration, including this Annual Statement, will be subject to an advisory vote. I look forward to your
continued support and would be happy to answer any questions you may have on our executive remuneration arrangements.
Naomi Climer
Chair of the Remuneration Committee
Directors’ Remuneration Policy
The Directors’ Remuneration Policy (‘the Policy’), determined by the Group’s Remuneration Committee (‘the Committee’)
and presented below, will be effective following shareholder approval at the 2024 Annual General Meeting.
As referred to in the Chair’s introductory statement, the Committee undertook a comprehensive review of the Policy and
determined that overall the current executive remuneration framework continues to support the delivery of our key strategic
objectives while aligning the interests of Executive Directors with those of our shareholders.
In developing this Policy, the Committee also undertook an extensive, multi-phased engagement with major shareholders,
and took into account the provisions of the UK Corporate Governance Code and evolving best practice. Input was sought from
management, whilst ensuring that conflicts of interest were suitably managed.
Following this review, and reflecting the input of our shareholders, no major changes are proposed to the Policy.
The key principles which underpin our remuneration framework continue to apply. These are:
• Closely aligning rewards with the delivery of Company strategy;
• Ensuring a significant proportion of the awards are based on long-term success criteria;
• Reflecting changes in best practice and governance;
• Simplifying and streamlining the framework for clarity and effectiveness;
• Ensuring market competitiveness.
Policy table for Executive Directors
Objective and link to strategy Operation
Maximum opportunity
Performance
conditions
Base salary
The Committee sets
salaries as a retainer for
the Executive Directors
to recognise status and
responsibility to deliver
the strategy.
When determining the salary of the Executive Directors,
the Committee takes into consideration a number of
factors including:
• the scale and complexity of the Company
• the scope and responsibilities of the role
• the skills, experience and performance of the individual
• the Committee’s assessment of the competitive
environment including consideration of similar positions
in organisations of broadly similar size and complexity,
including companies within the media sector
• pay and conditions throughout the Company.
Salaries are normally reviewed annually, with any
changes effective from 1 January in the financial year.
Salary reviews may also take place during the year, if
required as a result of any of the factors above.
There is no prescribed maximum
salary.
None
In general, any salary increase for
Executive Directors will be in line
with other employees in the Group.
The Committee retains discretion
to award larger increases where
considered appropriate to reflect
the factors described in this table.
Salaries with effect from 1 January
2024 are set out on page 96.
Benefits
To provide competitive
levels of employment
benefits consistent with
role.
Executives are entitled to receive a taxable cash allowance
in lieu of benefits in kind, including car and private medical
insurance. This cash allowance is excluded from the
calculation of any other benefit provided by the Company.
The maximum cash allowance paid
to Executive Directors in lieu of
benefits in kind is £25,000 per
annum.
None
Other reasonable benefits may be granted to Executive
Directors at the discretion of the Remuneration Committee.
The Executive Directors are eligible to participate in the
Company’s all employee share plans, as offered from
time to time, on the same terms as all employees.
Participation in all employee share
plans is subject to HMRC plan rules
and limits.
Pension
To provide competitive
levels of retirement
benefit.
The Group operates a defined benefit (DB) scheme (closed
to new members), a defined contribution (DC) scheme
and a Group personal pension plan.
Executive Directors have the option to receive a taxable
cash allowance in lieu of pension benefits.
Neither the Chief Executive nor the Chief Financial Officer
are members of the DB scheme.
None
The maximum pension
contribution or taxable cash
allowance in lieu of pension is set
in line with the wider workforce,
currently 7% of base salary.
This is in line with provision 38
of the Code.
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Objective and
link to strategy
Annual bonus
Aligns reward to the
delivery of annual
financial and strategic
performance measures.
Deferral creates long
term alignment with
shareholders.
LTIP
Aligns reward to the
delivery of long-term
financial performance
delivered for
shareholders.
Operation
Maximum
opportunity
Performance conditions
Provides an opportunity for
additional reward (up to a
maximum specified as a %
of salary) based on annual
performance against targets
set and assessed by the
Committee.
A proportion of any bonus
(normally 20%) is deferred
into Company shares under
the terms of the STV Deferred
Bonus Plan (DBP) and will
normally vest over three
years, subject to continued
employment.
Recovery and dividend
equivalent provisions apply
(see explanatory notes).
Awards are made under the
terms of the STV Long Term
Incentive Plan.
Awards are normally in the
form of a right to acquire
shares in the Company for
a zero or nominal amount.
Awards vest over a period of
at least three years, subject
to the satisfaction of
performance conditions.
A post-vesting holding
period of two years will
normally apply.
Recovery and dividend
equivalent provisions apply
(see explanatory notes).
Annual maximum
bonus opportunity
is:
Payment is determined by reference to performance
assessed over one financial year based on a range of
financial and strategic performance measures.
• 150% of salary
for the Chief
Executive
• 125% of salary
for other
Executive
Directors
The maximum
award in respect
of a financial year
is normally 100%
of salary.
For 2024, these measures are:
• operating profit
• cash flow
• personal objectives
As well as determining the measures and targets, the
Committee will also determine the weighting of the various
measures, which will normally be weighted towards the
financial measures.
At threshold and target performance 10% and 50%
of maximum, respectively, is currently payable.
The Committee has discretion to use different or additional
measures, weightings or payout schedules to ensure that
the bonus framework appropriately supports the business
strategy and objectives for the relevant year.
The Committee has 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.
The Committee has the discretion to adjust targets for
any exceptional events that may occur during the year.
Vesting is determined by reference to performance assessed
over a period of at least three years, based on performance
measures which the Committee consider to be aligned with
the delivery of strategy and long term shareholder value.
The measures for the 2024 award are:
• Annualised growth in Group Earnings per Share (EPS)
• Adjusted Group Operating Margin
• Annualised growth in the combined revenues of the
Digital business and STV Studios
• Relative Total Shareholder Return (TSR)
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 threshold for vesting is no higher than 25% of the
maximum award.
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. This would include consideration of
whether the outcomes for the Margin and Revenue based
metrics are appropriately supported by underlying profitability.
The Committee has the discretion to adjust targets for any
exceptional events that occur during the period.
Shareholding requirement
To strengthen long term
alignment with
shareholders.
Executive Directors are
required to hold shares
equivalent to 150% of
their annual salary.
The required level
of holding is 150%
of salary.
None
Executive Directors will,
on leaving the Board, be
required to maintain their
in-employment shareholding
guideline (or their actual
shareholding if lower) for
a period of two years.
Notes to the Policy table
Recovery provisions
Awards of variable remuneration made under the Policy for Executive Directors are subject to recovery provisions which allow
the Committee to reduce or cancel unvested DBP/LTIP awards, or seek to reclaim paid or deferred cash or DBP/LTIP awards,
in certain circumstances.
The recovery provisions for the annual bonus apply for three years from the date of payment of the bonus/grant of deferred shares,
and two years from the date of vesting under the LTIP. The circumstances which may trigger the recovery provisions are as follows:
• a material misstatement of the Company’s (or any Group members) audited financial results
• misconduct on the part of the participant
• an error in assessing a performance condition
• action by a participant or participants which resulted in a material breach and subsequent loss of the Company’s Channel 3 licence(s)
• serious reputational damage
• corporate failure.
Dividend equivalents
The Committee may determine that the number of shares to which a participant’s DBP or LTIP award relates shall increase to take
account of dividends that would have been paid on vested shares on such terms as it determines, or that an equivalent amount
should be paid in cash.
Performance measures and targets
The Committee selects performance measures for the annual bonus which appropriately support the business strategy and
objectives for the relevant year. The financial metrics used (such as operating profit and cash flow) are the key metrics used by
the Directors to oversee the operation and performance of the business. Personal measures allow the Committee to reward the
delivery of key strategic objectives. The performance measures for the LTIP are aligned with the delivery of strategy and long term
shareholder value. The performance targets are determined annually by the Committee, and are set at an appropriately stretching
level taking into account relevant business forecasts at that time.
Discretion
The Committee has discretion in several areas of policy as set out in this report. The Committee may also exercise operational
and administrative discretions under relevant plan rules approved by shareholders as set out in those rules.
The Committee reserves the right to make any remuneration payments and/or payments for loss of office (including exercising
any discretions available to it in connection with such payments) notwithstanding that they are not in line with the Policy where
the terms of the payment were agreed (i) before the Policy set out above came into effect, provided that the terms of the payment
were consistent with the shareholder-approved Directors’ remuneration policy in force at the time they were agreed; or (ii) at a
time when the relevant individual was not a Director of the Company and, in the opinion of the Committee, the payment was not
in consideration for the individual becoming a Director of the Company. For these purposes ‘payments’ includes the Committee
satisfying awards of variable remuneration and, in relation to an award over shares, the terms of the payment are ‘agreed’ at the
time the award is granted.
The Committee may make minor amendments to the Policy (for regulatory, exchange control, tax or administrative purposes or
to take account of a change in legislation) without obtaining shareholder approval.
Differences in remuneration policy for all employees
All employees are entitled to base salary, pension and benefits. Bonus plan participation is dependent on the role and seniority and
responsibility of the role. Long-term incentive awards are only available to the management board and key senior staff by invitation.
Policy table for Non-Executive Directors
The table below sets out the key elements of the policy for Non-Executive Directors.
Objective and link to strategy Operation
To attract Non-Executive
Directors with the requisite
skills and experience.
The fees of the Non-Executive Directors are determined by the Board
based upon recommendations from the Chairman and Chief Executive
(or, in the case of the Chairman, based on recommendations from the
Senior Independent Non-Executive Director and the Chief Executive).
The fee for Non-Executive Directors encompasses a basic fee and
may also include supplementary fees for committee or other duties.
The Chairman receives a single fee for all duties.
Fees are normally reviewed annually with changes effective from
1 January.
Fees are paid in cash.
The Chairman and Non-Executive Directors do not participate
in any bonus or share incentive scheme, nor do they participate
in any pension arrangements.
Non-Executive Directors are required to build holdings of 20,000 shares
for the Chairman and 5,000 shares for other Non-Executive Directors.
Maximum opportunity
Fees are set at a level which reflects
skills, experience, time commitment
and appropriate market data.
Fees are set within the limits set
by the Articles of Association.
Fees with effect from 1 January 2024
are set out on page 97.
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Illustrations of application of remuneration policy
The graphs below seek to demonstrate how pay varies with performance for the Executive Directors based on the Policy
for Executive Directors.
Chief Executive
Chief Financial Officer
£2,000k
£1,800k
£1,600k
£1,400k
£1,200k
£1,000k
£800k
£600k
£400k
£200k
£0k
£1,577k
28%
£1,794k
12%
24%
41%
36%
£925k
12%
35%
£490k
100%
53%
31%
27%
£1,200k
£1,000k
£800k
£600k
£400k
£200k
£0k
£834k
£956k
13%
29%
26%
37%
32%
£496k
12%
31%
£281k
100%
57%
34%
29%
Minimum
Target
Maximum
Maximum (plus
share price
growth)
Minimum
Target
Maximum
Maximum (plus
share price
growth)
Fixed
Bonus
LTIP
Share price growth
Assumptions used in determining the level of pay-out under given scenarios are as follows:
• Minimum – reflects fixed pay only (base salary as at 1 January 2024, benefits allowance, and cash in lieu of pension contributions).
• Target – reflects fixed pay, target bonus (50% of maximum) and LTIP awards vesting at threshold performance (25% of maximum).
• Maximum – reflects maximum bonus (150% of salary for the Chief Executive and 125% of salary for the Chief Financial Officer)
and LTIP awards vesting in full (100% of salary).
• Maximum plus share price growth – reflects maximum bonus and LTIP awards vesting in full plus share price growth of 50%
on those LTIP awards.
Recruitment remuneration policy
The Committee’s approach to recruitment remuneration is to pay no more than it considers necessary to secure appropriate
candidates to the role.
The structure of the remuneration package would normally include the components, and be subject to relevant maxima, as set
out in the Policy Table for Executive Directors. Salaries would typically be set at an appropriately competitive level to reflect skills
and experience. They may be set at a level to allow future salary progression to reflect performance in role. The Executive Director
would be eligible to participate in the annual bonus and LTIP subject to a maximum level in line with the Policy Table above.
Where an individual forfeits remuneration with a previous employer as a result of appointment to the Company, the Committee
may make compensatory payments or awards to facilitate recruitment. In determining the structure of these commitments,
the Committee will normally seek to replicate, as far as practicable, the timing and performance requirements of remuneration
foregone. Such payments or awards could include cash (where cash-based remuneration is forfeited) as well as share awards.
There is no limit on the value of such compensatory awards, but the Committee’s intention is that the value awarded would be
no more generous than the broadly equivalent economic value of the forfeited remuneration.
In instances where the new Executive Director relocates from one work location to another, the Company may provide
compensation to reflect the cost of relocation. The level of relocation package will be assessed on a case by case basis but will
take into consideration any cost of living differences, housing allowance and schooling in accordance with the Company’s normal
relocation package for employees.
Where an existing employee is promoted to the Board, the Executive Director Remuneration Policy would apply from the date of
promotion but there would be no retrospective application of the Policy in relation to subsisting incentive awards or remuneration
arrangements. Accordingly, existing elements of the remuneration package of the employee would be honoured and form part
of the ongoing remuneration for the person concerned.
Service contracts
When setting notice periods, the Committee has regard to market practice and corporate governance best practice. The Company’s
policy is for Executive Directors to have service agreements with no fixed term, but which may be terminated by the Company with
no more than 12 months’ notice. The service contracts for the current Executive Directors may be terminated by the Company
upon 12 months’ notice and by the Executive Director upon six months’ notice.
Non-Executive Directors’ letters of appointment are for an initial three year term followed by annual re-election at the Company’s
AGM and are subject to a one month notice period by the Company or Non-Executive Director.
Policy on payment for loss of office
When determining any loss of office payment the Committee will always seek to minimise cost to the Company whilst seeking to
reflect the circumstances in place at the time.
In the event of termination by the Company due to misconduct or normal resignation, there will be no compensation for loss of office.
In other circumstances Executive Directors may be entitled to receive payment in lieu of notice which may be paid monthly in respect
of any unexpired portion of the notice period. Such payments will be equivalent to the monthly salary that the Executive would have
received if still in employment with the Company. Executive Directors will be expected to mitigate their loss during this period.
The treatment of incentive awards would be determined by the relevant plan rules. If the individual is a ‘good leaver’, the treatment
of awards will be as set out in the table below (which also describes the Committee’s areas of discretion). The ‘good leaver’
circumstances are death, ill-health, injury, disability, the sale of the business or entity that employs the participant out of the Group,
or for any other reason at the Committee’s discretion. If the individual is not a good leaver, unvested awards will lapse in full.
Treatment of awards for a ‘good leaver’
Annual bonus
The Committee has discretion to make a payment under the annual bonus in respect of the year of cessation. This
would reflect performance in the year and be pro-rated to reflect the period worked in that year. The Committee
retains discretion to deliver any such bonus solely in cash and to pay it at the normal date.
DBP
LTIP
Unvested DBP awards will usually continue, unless the Committee determines that the award should vest as soon
as reasonably practicable following the date of cessation.
An award will normally vest in full but the Committee retains discretion to determine the extent to which it vests,
taking account of the period of time that has elapsed since the award was granted until the date on which the
participant ceases to hold office or employment with the Group.
LTIP awards will usually continue until their normal release date, unless the Committee determines that the award
should be released as soon as reasonably practicable following the date of cessation (or on such other date as
determined by the Committee).
The Committee will decide the extent to which an award vests in these circumstances, taking into account the extent
to which any performance condition is satisfied and, unless the Committee in its discretion determines otherwise,
the period of time that has elapsed since the award was granted until the date of cessation.
If following cessation as a good leaver the individual agrees to start employment with another employer before the
vesting date, the Committee may determine that the award will lapse.
The Committee reserves the right to make any other payments in connection with a Director’s cessation of office or employment
where the payments are made in good faith in discharge of an existing legal obligation (or by way of damages for breach of such
an obligation) or by way of settlement of any claim arising in connection with the cessation of a Director’s office or employment.
Any such payments may include but are not limited to paying any fees for outplacement assistance and/or the Director’s legal
and/or professional advice fees in connection with his cessation of office or employment. Incidental expenses may also be payable
where appropriate.
Treatment of awards on a change of control
DBP
LTIP
An award will normally vest in full but the Committee retains discretion to determine the extent to which it vests,
taking account of the period of time that has elapsed since the award was granted until the date on which the
participant ceases to hold office or employment with the Group.
Awards will vest, taking into account the extent that any performance condition has been satisfied, and, unless the
Committee determines otherwise, the period of time which has elapsed between the grant date and the relevant
event. Alternatively, the Committee may permit participants to exchange awards for equivalent awards which relate to
shares in a different company.
Consideration of employment conditions elsewhere in the Company
In making annual pay decisions the Committee gives consideration to pay and employment conditions in the rest of the Company.
The Committee is provided with data on the remuneration structure for the management board, and uses this information to work
with the HR team to ensure consistency of approach throughout the Company.
To appraise itself of conditions elsewhere in the Company, the Committee invites the HR & Communications Director to present on
the proposals for salary increases for the employee population generally, and on any other changes to remuneration policy within
the Company.
The Committee actively considers the relationship between general changes to employees pay and conditions and any proposed
changes in the remuneration packages for Executive Directors to ensure it can be sufficiently robust in its determinations in light
of the position of the Company as a whole.
Although the Committee takes into account the pay and conditions of other employees, the Company did not consult with
employees when developing the Policy. There are however a number of different mechanisms in place to gather feedback from
employees, including on remuneration. Relevant feedback is presented to the Board to help to inform decision-making.
Consideration of shareholder views
The views of the Company’s shareholders are very important and the Committee welcomes constructive feedback with respect to the
remuneration policies and/or structure. In developing this Policy, the Committee Chair engaged extensively with major shareholders
outlining proposals and the rationale for these. Feedback received was taken on board when finalising our arrangements.
94 STV Annual Report and Accounts 2023
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Remuneration report
Annual Report on Remuneration
This section of the report sets out how the Policy will be implemented in 2024 and how it was implemented during 2023.
Some sections of this report, where indicated, have been audited.
Statement of implementation for 2024
Executive Directors
Salaries
For 2024, we continued our approach of providing higher levels of salary increase to our lowest paid colleagues. Over 70% of
colleagues received an increase of £1,500, delivering an inflation-linked increase to two-thirds of this group; 20% received an increase
of £1,250; while management roles received increases of £1,000. Consistent with this Company-wide framework, with effect from
1 January 2024, both Executive Directors received a salary increase of £1,000, equating to increases of 0.2% and 0.4% for the Chief
Executive and Chief Financial Officer, respectively. This is significantly below the average increase for all employees of 3%.
Executive Director
2024 salary (£)
2023 salary (£)
Increase (£)
Increase (%)
S Pitts
L Dixon
434,797
245,426
433,797
244,426
£1,000
£1,000
0.2%
0.4%
Our approach provides further evidence of the Committee’s continued commitment to a restrained and responsible approach to
executive salaries, having increased Executive Directors significantly below the employee average last year, in line with employees
in 2022 (at 3%), with no increases in 2021 and a voluntary salary reduction in place for five months of 2020.
Benefits and pension
In line with the Policy, the Executive Directors will receive a taxable cash allowance in lieu of benefits-in-kind of £25,000 and a
pension contribution (or cash allowance) aligned to the wider workforce rate of 7% of salary.
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 2024, the bonus will be based on stretching targets set for the performance measures in the table below.
Performance measure
Weighting (% of max)
Adjusted operating profit
Cash flow
Personal objectives
50%
25%
25%
Personal objectives for 2024 will relate to key success factors in progressing and delivering the strategy and long-term plan, including:
• Successful launch of the next phase of the Group’s growth strategy and related equity story for 2024-2026
• Implementation of a multi-year cost savings programme to underpin achievement of growth and margin targets
• Accelerated growth of STV Studios to secure the position as the UK largest Nations and Regions producer by 2025
• Driving the profitability and growth of STV Digital, including the development of new revenue opportunities
• Securing renewal of the Company’s two Public Service Broadcast licences by the end of 2024
• Continued management of the Group’s legacy defined benefit pension schemes, including delivery of the 2023 triennial valuation
• Progressing the Company’s positive impact through achievement of ESG aims and targets
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 2024, 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.
During the Policy review, the Committee agreed some changes to the LTIP performance measures for 2024 to ensure optimal
alignment to strategy. The majority will continue to be based on EPS and TSR performance, suitably reflecting both ‘bottom line’
financial performance and shareholder value creation. However, the Non-Broadcast Earnings metric, which has supported the
successful delivery of our diversification strategy over the past five years, will be replaced with two new metrics which will more
closely align with our future strategic priorities and shareholders’ interests: (i) a Group margin metric, to demonstrate profitable
growth of the Digital business and STV Studios, profit maximisation of the mature Broadcast business, successful execution of
a multi-year cost saving programme; and (ii) a growth metric for our Digital and Studios businesses to drive and reward the
continued scaling up of these key areas. The performance targets for the award are as follows:
Performance
measure
EPS
Calibration of targets
Compound Annual Growth Rate in Adjusted EPS over the
three year period to FY26
Group margin
Adjusted Group Operating Margin in FY26
Digital and STV
Studios revenue
growth
Relative TSR
Compound Annual Growth Rate in Revenue from Digital
and STV Studios over the three year period to FY26
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) 1
Maximum vesting
(100% of maximum) 1
40%
20%
20%
4%
8%
15%
10%
13%
25%
20%
Median
Upper quartile
1 There is no vesting for performance below threshold, and straight-line vesting between threshold and maximum.
The Committee has set stretching performance target ranges for all metrics, aligned to the challenging long-term plan agreed
by the Board and taking into account external expectations for performance. For EPS, the target range is based on the Board’s
long-term strategic plan and will be challenging to deliver in the context of the current trading and market outlook. For the new
target of Group Margin, the range reflects the forecast trajectory as the quality of earnings evolve in line with the continued
diversification of the business. The range for the second new target of Revenue growth in Digital and STV Studios is also stretching
and reflects the ambition to drive growth in these key areas. When determining performance outcomes against the new metrics,
the Committee will use its discretion to ensure these outcomes are appropriately supported by underlying profitability.
Non-Executive Directors
The fees paid to Non-Executive Directors are a matter for the Chairman and Chief Executive, and in the case of the Chairman’s fee,
decided by the Senior Independent Director and Chief Executive.
In recognition of the continued need for restraint in remuneration, the Non-Executive Directors have agreed that no increase will
be applied to their fee structure in 2024. Therefore, the level of the basic fees paid to the Chairman and Non-Executive Directors
and the fees for additional Board or Committee duties remain unchanged.
Non-Executive Director
Chairman fee
Basic Non-Executive Director fee
Additional fees: Senior Independent Director
Additional fees: Chair of the Audit & Risk/Remuneration/ESG Committees
2024 fees (£)
2023 fees (£)
Increase (£)
Increase (%)
152,000
152,000
46,000
13,100
7,500
46,000
13,100
7,500
0
0
0
0
0%
0%
0%
0%
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 2023 and 2022 financial years.
Executive Director
S Pitts
L Dixon
Salary
£000
Taxable
benefits
£000
Pension
£000
Total fixed
£000
Annual
bonus
£000
Long-term
incentives
£000
Total
variable
£000
2023
2022
2023
2022
434
432
244
242
25
25
25
22
14
86
14
14
473
543
283
278
229
304
108
144
36
102
20
57
265
406
128
201
Total
£000
738
949
411
479
Notes to the single figure table
Taxable Benefits – represents a taxable cash allowance in lieu of benefits-in-kind, as set out in the Remuneration Policy.
Pension – Simon Pitts receives a taxable cash allowance in lieu of pension and life assurance. For 2023, this was set at 7% of salary
in line with the wider workforce. 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 £205,200.
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 2023 amount represents the value of the 2021 LTIP award which vests in March 2024 based on performance
over the three-year period to 31 December 2023. As described below, performance targets have been met in part, resulting in a vesting
outcome of 15.2% of maximum. For the purposes of the table above, the award has been valued based on the average share price
during the three-month period to 31 December 2023, of 188.2 pence. The 2021 LTIP awards were originally granted based on a share
price of 330.0 pence and therefore, of the vested amount, none relates to share price appreciation over the performance period. The
2022 row represents a value for the 2020 LTIP award which vested on 16 December 2023 based on performance over the three-year
period to 31 December 2022. The value has been restated from that shown last year based on the share price on the date of vesting
of 195.5 pence. No dividend equivalents are receivable on the vested shares for either of these awards.
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Annual bonus (audited)
The maximum annual bonus opportunity for 2023 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 2023 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. 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 assessment of performance against the targets has been made against the original targets set at the start of the 2023 and
prior to the successful completion of the acquisition of Greenbird Media during the year. In relation to the Adjusted Operating Profit
target, the bonus outcome has been determined against the original target of £19.9m with the contribution from Greenbird Media
excluded from the outcome of £16.9m, which is below the threshold for payment of this element of bonus.
Cash generated by operations has not been impacted, positively or adversely, by the acquisition of Greenbird Media as the cash
position of Greenbird has been consistent over H2 and therefore the assessment of performance of this element of bonus has been
made against the original target of £24.3m set at the start of 2023. The cash flow outcome was £23.9m resulting in payment of
46% of this element.
Payment for achievement of personal objectives is close to maximum levels as exceptional progress was delivered by both Executive
Directors against key longer-term strategic targets, in particular delivery of the key diversification target to deliver over half of the
Group’s earnings from non-broadcast activities by 2023 which was exceeded with 70% of earnings derived from these activities.
The table below sets out the targets and performance achieved against these for the year ended 31 December 2023. For the 2023
bonus, 20% will be deferred for three years and paid in shares for both executives.
Performance condition
Weighting
Adjusted operating profit
Cash flow 2
Personal objectives
Total (% max)
Total (£)
50%
25%
25%
100%
Performance targets
Actual performance
Threshold
(10% of max)
Target
(50% of max)
Maximum
(100%)
(% of max)
(£m)
S Pitts
L Dixon
£18.6m
£19.4m
£19.9m
£22.2m
£16.9m1
£24.3m
£29.2m
£23.9m
Not met
11.5%
See below
–
23.75%
35.25%
23.75%
35.25%
£229,370
£107,700
1 This figure was adjusted from the £20.1m Group Adjusted Operating Profit reported elsewhere in this report to remove the impact of the acquisition
of Greenbird Media during the year.
2 Cash generated by operations.
A full assessment of performance against personal objectives is set out below for both Simon Pitts and Lindsay Dixon.
Simon Pitts, Chief Executive
Delivery of strategic goals
Delivery of diversification strategy
and drive next stage of growth
strategy
STV Studios
Continue to grow towards 2025 goal
to become UK’s largest Nations &
Regions production company
Digital
Drive STV Player growth and
profitability
• Key diversification target exceeded with 75% of earnings in 2023 generated by Digital and
STV Studios
• Target to double Digital business revenue to £20.0m by end of 2023 achieved
• Target to quadruple STV Studios revenue to £40m by end of 2023 exceeded
• Trebling of revenue and operating profit year on year and on track to secure next phase strategic
target of turnover in excess of £100m/10% margin by 2025
• Successful completion of significant value accretive acquisition with Greenbird Media adding
£15.0m revenue and £3.2m profit since acquisition with integration plan and delivery of target
synergies on track
• Strong creative pipeline secured with over 50 new commissions and recommissions despite soft
commissioning market
• Increase in number of returning series secured
• Development of international business with Bridge of Lies commissioned in US and Spain
• Successful integration and operation of new digital content and ad sales deal with ITV
• Growth in all key performance metrics: active (annual) users increased ahead of target to 1.8m;
consumption growth of 25%, ahead of target of 9%; and stream growth increased by 28%, against
target of 11%
• Delivery of programme of platform enhancements to improve user experience
• Growth in addressable audience through continued expansion of distribution of STV Player on all
major platforms
• Subscription income growing with STV Player+ successfully implemented on all platforms
Broadcast
Maximise the value and reach of the
Broadcast business and secure
positive regulatory outcomes
• STV maintained position as Scotland’s most watched peak time channel; viewing share
outperformed Network across all-time and peak time viewing; and delivered 97% of top 500
commercial programme
• Long-term (10 year) extension of Channel 3 licences secured on favourable terms
• Media Bill reflecting STV’s priorities and future requirements, including appropriate prominence
for STV Player in Scotland, at advanced stage of parliamentary process
ESG
Continue to grow the Company’s
positive impact through delivery
of ESG priorities
• STV Zero: all 2023 targets achieved including successful on-air audience awareness campaign,
Sustainable Scotland Week, reaching 1.5m viewers; achievement of Project albert certification on
100% of UK-produced programmes from STV Studios; continued improvements in tracking, reporting
and governance remaining; continuing on track to achieve 2025 emissions reduction targets
• Diversity & inclusion: Eight of nine long-term diversity targets (set in 2020 for delivery in 2023)
achieved or exceeded
Based on the above assessment of performance, the Committee determined for the personal element an award of 95%
of maximum for Simon Pitts.
Lindsay Dixon, Chief Financial Officer
Investment proposition
Continue to improve the STV
equity story
Delivery of strategic goals
Support CEO in delivery of
diversification strategy
• In conjunction with brokers, delivered review of corporate strategy to underpin next phase
growth plan
• Improved liquidity across the year despite challenging market for small cap stocks
• Successful delivery of key diversification target to achieve at least 50% of earnings from
non-broadcast activities by end of 2023
• Completion of acquisition of Greenbird Media
• Development of next phase strategy and 3-year plan for 2024-2026
Cost savings
Deliver Group costs savings target
• Target savings of £2.5m achieved
• Delivery of improved margin in STV Studios in 2023
• Led development of multi-year cost savings programme for implementation in 2024-2026
Pensions
Initiate 2023 triennial valuation of
the Group’s defined benefit pension
schemes
ESG
Continue to grow the Company’s
positive impact through delivery
of ESG priorities
• Proactive engagement with scheme trustees to prepare for 2023 triennial valuation, including
addressing investment and hedging strategy, management of costs, and contingent cash
mechanism
• STV Zero: all 2023 targets achieved including successful on-air audience awareness campaign,
Sustainable Scotland Week, reaching 1.5m viewers; achievement of Project albert certification on
100% of UK-produced programmes from STV Studios; continued improvements in tracking, reporting
and governance; continuing on track to achieve 2025 emissions reduction targets; CDP score of B
demonstrating clear improvement on prior year
• Diversity & inclusion: Eight of nine long-term diversity targets (set in 2020 for delivery in 2023)
achieved or exceeded
Governance
Continue to increase resilience
in relation to cyber risk
• Successful delivery of Phase 1 of network segmentation project
• All internal audit recommendations implemented and approved by Audit & Risk Committee
• Development of information security framework and baseline targeted at compliance with
ISO27001
• Up-rating of the Group’s Enterprise Risk Maturity Score
Based on the above assessment of performance, the Committee determined for the personal element an award of 95%
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. In view of the Group’s strong financial performance and continued positive progress in delivering the strategic
plan, with continued profitable digital growth and a record number of commissions secured by STV Studios, both of which accelerated
the diversification strategy with nearly 40% of earnings generated by non-broadcast activities, the Committee concluded that the
formulaic outcomes of the annual bonus assessment were justified, and no discretion was applied.
Long-term Incentive Plan vesting (audited)
The table below sets out the performance achieved for the 2021 LTIP award, which was subject to performance over the three-year
period from 1 January 2021 to 31 December 2023.
Performance condition
Weighting
Threshold vesting
(25% of maximum)
Maximum vesting
(100% of maximum)
Actual
outcome
Percentage vesting
(% of maximum)
Compound Annual Growth Rate
in Adjusted EPS
Non-broadcast operating profit
Relative TSR
50%
30%
20%
100%
4%
13%
-5.3%
£9.5m
Median
£16.5m
£11.9m
Upper quartile
Below median
Overall vesting
0%
15.2%
0%
15.2%
The Committee reviewed this outcome against a broader assessment of performance over the period including, in line with
shareholder guidance, considering whether any ‘windfall gain’ had occurred. The Committee concluded that the outcome was
appropriate and reflected the stretching nature of the underlying targets, and therefore these awards will vest at 15.2% of
maximum in March 2024. Shares vesting will then be subject to an additional two-year holding period.
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Scheme interests awarded in the 2023 financial year (audited)
The table below shows awards made to the Executive Directors during 2023 under the LTIP.
Executive
Director
S Pitts
L Dixon
Award type
Date of grant
Basis of award
Number of shares
awarded1
Face value
of award
Threshold vesting
Performance period
LTIP
LTIP
17/03/23
100% of salary
172,142
£434k
25% of maximum
01/01/23-31/12/25
17/03/23
100% of salary
96,994
£244k
25% of maximum
01/01/23-31/12/25
1 Calculated using the closing share price of 252 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
Compound Annual Growth Rate
in Adjusted EPS in FY25
Adjusted operating profit for non-broadcast
activities in FY25
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)1
Maximum vesting
(100% of maximum)1
50%
30%
20%
37p
44p
£15.0m
£19.5m
Median
Upper quartile
1 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
£
P Reynolds
S Miller
A M Cannon1
I Steele
D Bergg
A Mandhar
N Climer2
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
152,000
150,000
46,000
44,000
15,333
44,000
46,000
44,000
46,000
44,000
46,000
44,000
26,833
–
–
–
13,100
13,100
2,500
7,500
7,500
7,500
4,375
–
–
–
4,375
–
1 Stepped down from the Board on 30 April 2023.
2 Appointed as Non-Executive Director on 30 May 2023.
Total fees
£
152,000
150,000
59,100
57,100
17,833
51,500
53,500
51,500
50,375
44,000
46,000
44,000
31,208
–
Statement of Directors’ shareholding and share interests at 31 December 2023 (audited)
Under the Remuneration 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
P Reynolds
S Miller
A M Cannon
I Steele
D Bergg
A Mandhar
N Climer
Number of
beneficially owned
shares at 31/12/231
Number of unvested
deferred awards2
Number of unvested
LTIP awards at
31/12/23
Current
shareholding
(% salary)
Shareholding
requirements
Requirement
met at
31/12/23
164,689
8,785
25,000
7,577
11,167
9,616
12,489
6,381
5,000
170,897
90,497
434,115
244,075
75%
150% of salary
7%
150% of salary
n/a3
n/a3
n/a
n/a
n/a
n/a
n/a
n/a
n/a
20,000 shares
5,000 shares
5,000 shares
5,000 shares
5,000 shares
5,000 shares
5,000 shares
Y
Y
Y
Y
Y
Y
Y
1 Beneficial interests include shares held directly or indirectly by connected persons and are stated at the year end or, for a Director who stepped down during
the year, as at the date of stepping down.
2 For both Executive Directors this relates to the deferred portion of their 2021 and 2022 annual bonus plans. Additionally, as shown above, both hold unvested
LTIP awards which are in excess of the shareholding guidance of 150% of salary.
3 The shareholding requirement is on track to be met by Simon Pitts and Lindsay Dixon in the near future as vested awards with holding periods and deferred
awards are released.
There were no changes to the shareholdings above between the year end and the date of this report.
The following table provides further detail on the share awards held by the Executive Directors.
Executive
Award
Granted
Held at
31/12/22
Granted
in year
Released
in year
Lapsed
in year
Held at
31/12/23
Vesting dates 1
S Pitts
L Dixon
2020 LTIP
2021 LTIP
2022 LTIP
2023 LTIP
2021 DBP
2022 DBP
2020 LTIP
2021 LTIP
2022 LTIP
2023 LTIP
2021 DBP
2022 DBP
16/12/20
147,095
24/03/21
127,036
11/03/22
134,937
17/03/23
172,142
11/03/22
10/03/22
–
–
16/12/20
82,584
24/03/21
11/03/22
71,323
75,758
17/03/23
96,994
11/03/22
10/03/23
–
–
–
–
–
–
24,160
–
–
–
–
-
11,424
52,0712
95,024
–
–
–
–
–
–
–
–
–
–
–
127,036
134,937
172,142
37,828
24,160
29,2342
53,350
–
–
–
–
–
–
–
–
–
–
–
71,323
75,758
96,994
17,928
11,424
16/12/23
24/03/24
11/03/25
17/03/26
11/03/24
10/03/25
16/12/23
24/03/24
11/03/25
17/03/26
11/03/24
10/03/25
1 LTIP awards are subject to an additional two-year holding period following vesting.
2 As disclosed in last year’s report, the 2020 LTIP vested at 35.4% of the maximum based on performance over the three year period to 31 December 2022.
Vested nil-cost options can be exercised for a period of up to ten years from the date of grant.
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
6.30
0.39
(0.39)
(0.49)
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Performance graph and table
Percentage change in remuneration
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
to 31 December 2023, 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).
£250
£200
£150
£100
£50
£0
Dec
2013
Dec
2014
Dec
2015
Dec
2016
Dec
2017
Dec
2018
Dec
2019
Dec
2020
Dec
2021
Dec
2022
Dec
2023
STV Group
FTSE Small Cap
FTSE All Share Media
CEO Single figure of total remuneration
The information in the table below shows the total remuneration for the Chief Executive over the same period.
Chief Executive
Single figure of total
remuneration
(£000)
Bonus pay-out
(% maximum
opportunity)
Long-term
incentive vesting
(% maximum
opportunity)
S Pitts
S Pitts
S Pitts
S Pitts
S Pitts
S Pitts
R Woodward
R Woodward
R Woodward
R Woodward
738
949
1,337
467
1,050
1,7121
697
807
2,269
661
35
47
96
–
87
72
32
29
49
46
15
35
50
–
18
–
14
–
100
–
Year
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
1 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.
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, 2020 to 2021, 2021 to 2022, and 2022 to 2023.
All employees
S Pitts
L Dixon
P Reynolds 4
S Miller
A M Cannon
I Steele
D Bergg
A Mandhar 4
N Climer
Salary/fees 2
Taxable benefits1
Annual bonus1
2023
2022
2021
2020
2023
2022
2021
2020
2023
2022
2021
4.4%
0.4%
0.8%
1.3%
3.5%
n/a
3.9%
14.4%
4.5%
n/a
3%
3%
3%
0%
7%
14%
14%
10%
10%
n/a
0%
2%
n/a1
15%2
15%2
n/a
15%
15%
15%
15%
n/a
n/a
(9)% (84)%
(9)%
n/a
(9)%
(9)%
(9)%
(9)%
n/a
n/a
0%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a1
0%
39%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a1
62%
16%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a1
n/a1
n/a1
0% (25)% (50)%
0% (25)% (50)%
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
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a1
n/a3
n/a3
n/a
n/a
n/a
n/a
n/a
n/a
n/a
2020
n/a1
(100)%
(100)%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
1 These benefits are not available to all employees.
2 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.
3 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.
4 Appointed on 1 February 2021.
Chief Executive pay ratio
The table below discloses the ratio of the Chief Executive’s pay for 2023, using the single total figure of remuneration (as disclosed
on page 97), to the comparable earnings of employees at the 25th, 50th and 75th percentiles.
Year
2023
2022
2021
2020
2019
Method
Option B
Option B
Option B
Option B
Option B
25th percentile
(P25) pay ratio
Median (P50)
pay ratio
75th percentile
(P75) pay ratio
27:1
37:1
54:1
20:1
41:1
21:1
29:1
39:1
14:1
30:1
14:1
21:1
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 2023 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 97. 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 2023 by employees at the 25th, 50th and 75th percentiles and used in the above
analysis is as follows:
2023 salary £
2023 total remuneration £
26,163
27,276
34,000
35,348
44,000
53,956
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 decreased, as a result of the reduction in bonus and LTIP outcomes for the Chief Executive, reflecting this
principle of higher proportion of variable remuneration.
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.
102 STV Annual Report and Accounts 2023
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Workforce pay
The Committee has oversight of remuneration and related policies across the organization 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 appropriate 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 engaging with colleagues on remuneration, building on existing mechanisms
in place to gather feedback from colleagues, including regular ‘Have your say’ engagement surveys and engagement with trade
union representatives in relation to the roles within the business covered by a collective bargaining arrangement which covers
pay and benefits.
Relative importance of spend on pay
The table below sets out the relative importance of spend on pay in the 2023 and 2022 financial years. These were the most
significant outgoings for the Company in the last financial year. Overall spend on pay increased by 18% with 8% of this increase
due to the inclusion of Greenbird Media for the period post acquisition.
Significant distributions
Overall spend on pay
Dividend or share buy back
£5.2m
£5.1m
2023
2022
% change
£34.2m
£29.1m1
18%
2%
1 The 2022 figure has been restated as explained in note 6 in the Notes to the financial statements on page 128.
Consideration by the Directors of matters relating to Directors’ remuneration
Members of the Committee
During the year, the Committee comprised the following Non-Executive Directors: Naomi Climer (member and Chair from 30 May
2023), Anne Marie Cannon (member and Chair until 30 April 2023); Simon Miller; 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.
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 objectives.
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 2023, the Committee received advice from Alvarez & Marsal (‘A&M’). The total fees paid to A&M for the provision of advice
to the Committee in 2023 were £51,000, charged on a time and materials basis. A&M provided no other services to the Company
during the year. A&M is a member of the Remuneration Consultants’ Group and has signed up to their Code of Conduct on
executive remuneration consulting. The Committee is satisfied that the advice received from A&M 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 (2023 AGM) and Remuneration Policy
(2021 AGM).
2022 Remuneration Report (2023 AGM)
29,954,115
74.84
10,069,446
25.16
40,024,495
Remuneration Policy (2021 AGM)
25,095,568
74.94
8,390,031
25.06
33,485,599
934
4,063
Votes for
% Votes against
%
Total votes cast
Votes withheld*
1 A vote withheld is not a vote in law and counts neither for nor against a resolution.
The Committee noted that last year’s remuneration report had more than 20% votes cast against at the 2023 AGM.
As shown in the table above, with around three quarters of votes cast in favour, shareholders approved last year’s Remuneration
Report by a clear majority. This reflects a pattern of votes cast in recent years, dating back to the adoption of the previous
Remuneration Policy at the 2021 AGM. Over this period, we have regularly engaged with major shareholders and have consistently
received strong support from the vast majority of our register, including most of our major shareholders. Through our ongoing
dialogue with the shareholder who has voted against, previously and during our recent engagement exercise, the Committee
understands and acknowledges their concern around one specific element of our Policy, the use of nil-cost options in the LTIP. As
described above, this feedback was taken into account, alongside that of our other shareholders, in developing the final proposals.
Naomi Climer
Chair of the Remuneration Committee
5 March 2024
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The Directors present their report for the year ended 31 December 2023. The Directors’ report comprises pages 106 to 108
and the sections of the annual report incorporated by reference, as set out below:
Directors during 2023 financial year – See pages 66 and 67
Risk management – See pages 37 to 45
Streamlined Energy and Carbon Reporting (SECR) – See pages 62 and 63 See pages 48 and 49
Climate-related Financial Disclosures report – See pages 58 to 63
Corporate governance report – See pages 65 to 105
Stakeholder engagement (S.172) – See pages 12 and 13
Employee diversity and inclusion – See pages 49 to 53
Employee involvement and engagement –
Principal risks and uncertainties – See pages 40 to 43
Disability reporting – See pages 50 and 51
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.
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 2023.
Donations
The Group made no political donations or any contributions to any political party during the year (2022: £nil).
Management Report
Post balance sheet events
The Directors’ report, together with the Strategic Report, set out on pages 4 to 64, form part of the Management Report for the
purposes of DTR 4.1.5R.
On 31 January 2024, STV Studios increased its stake from 25% to 51% in high-end drama producer Two Cities Television Limited. This is
the only material post balance sheet event as at the date of this report, and further details are in note 29 to the financial statements.
Company number
STV Group plc is registered in Scotland under company number SC203873.
Dividends
A final cash dividend of 7.4p per share has been declared for 2023 which, subject to approval at the AGM in May 2024, will be paid
on 31 May 2024, to shareholders on the register at 19 April 2024. The interim dividend for 2023 was 3.9p per share. The proposed
total dividend for 2023 is therefore 11.3p per share.
Share capital and substantial shareholders
On 5 March 2024 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 101.
As at 5 March 2024, 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
Schroder Investment Management
Chelverton Asset Mgt
Columbia Threadneedle Investments
Janus Henderson Investors
Unicorn Asset Mgt
Royal London Asset Mgt
Annual General Meeting (AGM)
Shares held
9,352,691
4,848,857
3,573,817
2,637,121
2,559,451
1,998,612
1,962,286
1,850,000
1,547,872
%
20.02
10.38
7.65
5.64
5.48
4.28
4.20
3.96
3.31
Details of the 2024 AGM, together with the resolutions being put to shareholders, can be found in the separate Notice of AGM.
Directors
The Directors of the Company as at 31 December 2023 and their profiles are detailed on pages 66 and 67.
Voting rights and restrictions on transfer of shares
None of the ordinary shares carry any special rights with regard to control of the Company. There are no restrictions on transfers of
shares other than certain restrictions which may from time to time be imposed by laws or regulations. 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 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.
Going concern
The going concern statement is set out on page 121. The statement is incorporated by reference and deemed to form part of this report.
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 regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required
to prepare the Group financial statements in accordance with United Kingdom adopted international accounting standards.
The Directors have also chosen to prepare the parent company financial statements under United Kingdom adopted international
accounting standards. Under company law the Directors must not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period.
Changes to the composition of the Board since 1 January 2023 up to the date of this report are shown in the table below:
In preparing these financial statements, International Accounting Standard 1 requires that Directors:
Name
Role
Date of appointment Date of resignation
Anne Marie Cannon
Independent Non-Executive Director
27 April 2023
Naomi Climer CBE
Independent Non-Executive Director
30 May 2023
Details of Directors’ interests are on page 101 of the Remuneration Report.
The Company’s Articles of Association require Naomi Climer CBE to seek election at the 2024 AGM. In accordance with the Code
all other Directors will put themselves forward for re-election at the 2024 AGM, except for Ian Steele who will step down from
the Board at the conclusion of the 2024 AGM, having served more than eight years as a Non-Executive of the Company.
• properly select and apply accounting policies;
• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable
information;
• provide additional disclosures when compliance with the specific requirements of the financial reporting framework are
insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity’s
financial position and financial performance; and
• make an assessment of the company’s ability to continue as a going concern.
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Directors’ report
Independent auditors’ report to the members of STV Group plc
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure
that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Responsibility statement
We confirm that to the best of our knowledge:
• the financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken
as a whole;
• the strategic report includes a fair review of the development and performance of the business and the position of the Company
and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and
uncertainties that they face; and
• the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the
information necessary for shareholders to assess the Company’s position and performance, business model and strategy.
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.
The Directors’ report was approved by the Board and signed on its behalf by:
Paul Reynolds
Chairman
5 March 2024
Report on the audit of the financial statements
1. Opinion
In our opinion:
• the financial statements of STV Group plc (the ‘parent company’) and its subsidiaries (the ‘Group’) give a true and fair view
of the state of the Group’s and of the parent company’s affairs as at 31 December 2023 and of the Group’s profit for the year
then ended;
• the Group financial statements have been properly prepared in accordance with United Kingdom adopted international
accounting standards;
• the parent company financial statements have been properly prepared in accordance with United Kingdom adopted
international accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
• the consolidated income statement;
• the consolidated statement of comprehensive income;
• the consolidated and parent company balance sheets;
• the consolidated and parent company statements of changes in equity;
• the consolidated and parent company statements of cash flows; and
• the related notes 1 to 29.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom adopted
international accounting standards and, as regards the parent company financial statements, as applied in accordance with
the provisions of the Companies Act 2006.
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial
statements section of our report.
We are independent of the Group and the parent company in accordance with the ethical requirements that are relevant to our audit
of the financial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public
interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services
provided to the Group and parent company for the year are disclosed in note 5 to the financial statements. We confirm that we
have not provided any non-audit services prohibited by the FRC’s Ethical Standard to the Group or the parent company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
3. Summary of our audit approach
Key audit matters
The key audit matters that we identified in the current year were:
• Manual adjustments to revenue at period end;
• Recognition of production revenue;
• Acquisition of Greenbird Media – valuation of acquired intangible assets; and
• Carrying value of parent company investment in subsidiaries.
Materiality
Scoping
The materiality that we used for the Group financial statements was £710,000 which was determined on the
basis of 5% of profit before tax before adjusting items but after IAS 19 net finance costs.
Our full scope and specified audit procedures covered 95% of the Group’s revenue, 84% of the Group’s net assets
and 98% of the Group’s adjusted profit before tax.
This is the first year of our appointment as auditor.
This is the first year of our appointment as auditor.
4. Conclusions relating to going concern
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.
Our evaluation of the Directors’ assessment of the Group’s and parent company’s ability to continue to adopt the going concern
basis of accounting included:
• Obtaining management’s going concern assessment, understanding the process undertaken by management to evaluate the
operational and economic impacts of economic uncertainty on the assumptions, and understanding of the relevant controls
relating to the going concern assessment;
• Assessing the integrity of the model used to prepare the forecasts, testing the clerical accuracy of those forecasts, and
considering the historical accuracy of the forecasts prepared by management;
• Assessing headroom in the forecasts (liquidity and covenants);
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• Evaluating the financing facilities that are in place during the forecast period including the repayment terms and covenants,
5.3 Acquisition of Greenbird Media – valuation of acquired intangible assets
and assessing whether these have been appropriately reflected in the model;
• Assessing the reasonableness of the downside scenarios and sensitivities performed by management; and
• Assessing the appropriateness of the going concern disclosures in the financial statements.
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 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 relation to the reporting on how the Group has 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.
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our 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) that we identified. These matters included 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 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.
5.1 Manual adjustments to revenue at period end
Key audit matter
description
The Group recognises revenue from advertising and sponsorship contracts, including ones where ITV acts as a
national agent for the Group. These require a number of manual adjustments in order to appropriately recognise
revenue in the year as a result of the contractual arrangements in place.
How the scope of our
audit responded to the
key audit matter
Given the manual nature of these adjustments, and the potential risk of manipulation, we have identified the
completeness and accuracy of these adjustments as a key audit matter.
Further details in relation to revenue are included in notes 2 and 4 to the financial statements.
We have performed the following procedures:
• Obtained an understanding of the relevant controls relating to the manual adjustments to revenue;
• Obtained the relevant revenue agreements in place and reviewed for evidence of the need for adjustments;
• Considered the wider revenue process for indications that further adjustments to revenue are required;
• Obtained direct confirmation from ITV regarding certain contract terms; and
• Tested the supporting calculations for adjustments made.
Key observations
Based on our procedures we have not identified evidence of inappropriate revenue recognition through the
posting of manual adjustments.
5.2 Recognition of production revenue
Key audit matter
description
How the scope of our
audit responded to the
key audit matter
Within Studios revenue of £66.8m (2022: £23.7m), the Group recognises revenue from third party programme
commissions. 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.
There is a risk that production revenue, which is often received in advance in order to cover the cost of
production, is recognised too early and before the performance obligation has been met. The key judgement
made by management is the point at which the performance obligation has been met and the revenue can
be recognised. This is particularly in respect of productions which span the year end.
Further details in relation to revenue are included in notes 2 and 4 to the financial statements.
We performed the following procedures:
• Obtained an understanding of the relevant controls over the production revenue recognition process;
• Obtained an understanding of the productions ongoing in the year, including by speaking to personnel
outside the finance function, and identified the productions which spanned the year end;
• Tested the recognition of revenue relating to a sample of productions by obtaining the commissioning and
other related agreements, assessed whether the performance obligation has been met; and
• Obtained contractual and other related agreements for productions that were open at year end and assessed
whether the performance obligations had been met for the revenue recognised prior to year end.
Key observations
Based on our procedures we have not identified evidence of inappropriate revenue recognition relating to
production revenue.
Key audit matter
description
How the scope of our
audit responded to the
key audit matter
The Group acquired the Greenbird Media Group in July 2023. Under IFRS 3, upon acquisition of a business,
identifiable assets and liabilities acquired are measured at their fair value. Upon acquisition, the Group
recognised £10.0m of intellectual properties and goodwill of £14.5m. The determination of the fair value of
the acquired intangible assets relies on certain assumptions and estimates of future trading performance,
which include revenue and costs. In deriving the valuation, management engaged an external valuer.
We identified the valuation of the acquired intangible assets arising from the Greenbird Media acquisition
as a key audit matter due to the judgements involved in determining the value of intangibles.
Further details in relation to the acquisition and the valuation of acquired intangible assets are included
within notes 2 and 14 to the financial statements.
We have performed the following procedures:
• Obtained an understanding of relevant controls over the purchase price allocation, in particular the
identification and measurement of acquired intangible assets;
• Reviewed relevant share purchase agreements to assess whether acquisitions have been accounted
for appropriately in the financial statements;
• Assessed the objectivity, competence and capability of management’s valuer;
• Assessed management’s methodology and assumptions used in the valuation of the intangible assets
with the involvement of our valuation specialists and benchmarked against external market sources;
• Assessed management’s assessment of the presence of further intangible assets not identified; and
• Assessed the disclosures made in the financial statements.
Key observations
Based on our procedures performed, we conclude that the valuation and allocation of acquired intangibles
is appropriate.
5.4 Carrying value of parent company investment in subsidiaries
Key audit matter
description
How the scope of our
audit responded to the
key audit matter
The carrying value of direct and indirect investments held by the parent company was £121.8m as at 31 December
2023 (2022: £121.8m). As required by IAS 36 Impairment of Assets, management performs an impairment review
over investments where there is an indication of impairment. Management’s conclusion is that the investment’s
recoverable amount is greater than its carrying value and consequently no impairment is considered necessary.
The impairment assessment involves significant management judgement in the application of valuation models
and assumptions. We identified a key audit matter relating to the most sensitive and judgmental assumptions,
being the forecast cash flows and discount rate used in management’s assessment.
Further details are included within critical accounting judgements and estimates within note 2 and note 15
to the financial statements.
We have performed the following procedures:
• Obtained an understanding of the relevant controls over the impairment review of parent company investments;
• Assessed management’s assessment of the future cash flows and the long-term growth rates within
management’s cash flow forecasts for reasonableness;
• With the involvement of our valuation specialists, assessed management’s methodology and assumptions
used to derive the discount rate used in the cash flow forecasts; and
• Assessed the disclosures made in the financial statements.
Key observations
Based on our procedures performed, we conclude that the carrying value of investments is appropriate and
there is no impairment of these assets in the year.
6. Our application of materiality
6.2 Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope
of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Materiality
£710,000
£355,000
Group financial statements
Parent company financial statements
Basis for determining
materiality
5% of profit before tax before adjusting items but after IAS 19
net finance costs.
Rationale for the
benchmark applied
We have used adjusted profit before tax (before the deduction
of IAS 19 net finance costs, given their recurring nature) as the
benchmark for our determination of materiality as we consider
this to be a critical performance measure for the Group on the
basis that it is a key metric to analysts and investors and has equal
prominence in the Annual Report. The adjusting items in the year
are summarised within note 7 to the financial statements.
Parent company materiality was based
on 1% of net assets, but capped at 50%
of Group materiality.
We consider that net assets is the most
appropriate measure given the company
is an investment holding company with
no revenue.
110 STV Annual Report and Accounts 2023
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Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Independent auditors’ report to the members of STV Group plc
Adjusted PBT less IAS
19 net finance costs
£14,200k
Group materiality £710k
Component materiality range £355k to £497k
Audit Committee reporting threshold £35.5k
Adjusted PBT less IAS
19 net finance costs
Group materiality
6.3 Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and
undetected misstatements exceed the materiality for the financial statements as a whole.
Performance
materiality
Basis and rationale
for determining
performance
materiality
Group financial statements
60% of Group materiality
Parent company financial statements
60% of company materiality
In determining performance materiality, we considered the following factors:
• The fact that this is our first reporting period as auditor of the Group;
• Our risk assessment, including our assessment of the Group’s overall control environment; and
• The nature of any misstatements identified in prior periods.
Error reporting threshold
We agreed with the Audit & Risk Committee that we would report to the Committee all audit differences in excess of £35,500, as
well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit
& Risk Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.
7. An overview of the scope of our audit
7.1 Identification and scoping of components
The Group operates throughout the UK and is organised into three operating divisions namely broadcast, digital and studios.
Our Group audit was scoped by obtaining an understanding of the Group and its environment through discussions with finance,
IT and commercial teams and performing walkthroughs of processes across these areas, including Group wide controls, and
assessing the risks of material misstatements at a Group level.
For components deemed significant to the Group, full scope audit procedures were performed to materiality levels applicable
to each component, which was lower than the Group materiality level and ranged from £355k to £497k.
The key broadcast operations across the regions of Scotland and the key studios and production businesses based on their
contribution to the Group have been subject to a full scope audit. Other components were subject to specified audit procedures
based on the materiality of individual balances. The remaining non-significant components were subject to analytical review
procedures. At the Group level, we also tested the consolidation process. All the work on the significant components and the
consolidation process was performed by the Group engagement team.
Revenue
Adjusted profit before tax
Net assets
90% Full audit scope
5% Specified audit
procedures
5% Review at Group
level
86% Full audit scope
12% Specified audit
procedures
2% Review at Group
level
71% Full audit scope
13% Specified audit
procedures
16% Review at Group
level
7.2 Our consideration of the control environment
With the involvement of our IT specialists we obtained an understanding of the relevant IT environment and tested relevant
general IT controls. We obtained an understanding of the processes and relevant controls over the key business cycles, being
the revenue and financial reporting cycle.
7.3 Our consideration of climate-related risks
In planning our audit, we have considered the potential impact of climate change on the Group’s business and its financial
statements. The Group has assessed the risk and opportunities relevant to climate change as highlighted in the Climate-related
Financial Disclosures Report.
As a part of our audit, we have obtained management’s climate-related risk assessment and held discussions with those charged
with governance to understand the process of identifying climate-related risks, the determination of mitigating actions and to
evaluate the impact on the Group’s financial statements. We have involved our climate specialists in our assessment to consider
broader industry and market-wide practice.
Our procedures included reading disclosures included in the Strategic Report to consider whether they are materially consistent
with the financial statements and our knowledge obtained in the audit. We also assessed the Directors’ considerations of climate
change in their assessment of going concern and viability, along with the associated disclosures.
8. Other information
The other information comprises the information included in the annual report, other than the financial statements and
our auditor’s report thereon. The Directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon.
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 course of the audit, or otherwise appears to
be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives
rise to a material misstatement in the financial statements themselves. 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 in this regard.
9. Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors 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.
10. Auditor’s 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 auditor’s 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.
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 auditor’s report.
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
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.
11.1 Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance
with laws and regulations, we considered the following:
• the nature of the industry and sector, control environment and business performance including the design of the Group’s
remuneration policies, key drivers for Directors’ remuneration, bonus levels and performance targets;
• results of our enquiries of management, internal audit, the Directors and the Audit & Risk Committee about their own
identification and assessment of the risks of irregularities, including those that are specific to the Group’s sector;
• any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures relating to:
– identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
– detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
– the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
• the matters discussed among the audit engagement team and relevant internal specialists, including tax, valuations, pensions
and IT specialists regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud
and identified the greatest potential for fraud in the following areas: manual adjustments to revenue and the recognition of
production revenue. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond
to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the Group operates in, focusing on provisions
of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial
statements. The key laws and regulations we considered in this context included the UK Companies Act, Listing Rules, pensions
legislation and tax legislation.
112 STV Annual Report and Accounts 2023
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Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview
Independent auditors’ report to the members of STV Group plc
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements
but compliance with which may be fundamental to the Group’s ability to operate or to avoid a material penalty. These included
the Group’s Channel 3 operating licences that are regulated by Ofcom.
11.2 Audit response to risks identified
As a result of performing the above, we identified completeness and accuracy of manual adjustments to revenue at period end,
and recognition of production revenue as key audit matters related to the potential risk of fraud. The key audit matters section of
our report explains the matters in more detail and also describes the specific procedures we performed in response to those key
audit matters.
14. Matters on which we are required to report by exception
14.1 Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been
received from branches not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns.
In addition to the above, procedures to respond to risks identified included the following:
We have nothing to report in respect of these matters.
• reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions
of relevant laws and regulations described as having a direct effect on the financial statements;
• enquiring of management, the Audit & Risk committee and in-house legal counsel concerning actual and potential litigation
and claims;
• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material
misstatement due to fraud;
• reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing correspondence
with HMRC and Ofcom;
• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and
other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias;
and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members
including internal specialists, and remained alert to any indications of fraud or non-compliance with laws and regulations
throughout the audit.
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the Directors’ report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
• the strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent company and their environment obtained in
the course of the audit, we have not identified any material misstatements in the strategic report or the Directors’ report.
13. Corporate Governance Statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of
the Corporate Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate Governance Code
specified for our review.
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 with regards to the appropriateness of adopting the going concern basis of accounting and any
material uncertainties identified set out on page 121;
• the Directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why the
period is appropriate set out on page 44;
• the Directors’ statement on fair, balanced and understandable set out on page 83;
• the Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 40 to 43;
• the section of the annual report that describes the review of effectiveness of risk management and internal control systems
set out on page 84; and
• the section describing the work of the Audit & Risk Committee set out on pages 82 to 86.
14.2 Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of Directors’ remuneration have
not been made or the part of the Directors’ remuneration report to be audited is not in agreement with the accounting records
and returns.
We have nothing to report in respect of these matters.
15. Other matters which we are required to address
15.1 Auditor tenure
Following the recommendation of the Audit & Risk Committee, we were appointed by the members on 27 April 2023 to audit the
financial statements for the year ending 31 December 2023 and subsequent financial periods. The period of total uninterrupted
engagement including previous renewals and reappointments of the firm is one year, covering the year ending 31 December 2023.
15.2 Consistency of the audit report with the additional report to the Audit & Risk Committee
Our audit opinion is consistent with the additional report to the Audit & Risk Committee we are required to provide in accordance
with ISAs (UK).
16. Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for
the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.15R – DTR 4.1.18R, these
financial statements will form part of the Electronic Format Annual Financial Report filed on the National Storage Mechanism of
the FCA in accordance with DTR 4.1.15R – DTR 4.1.18R. This auditor’s report provides no assurance over whether the Electronic
Format Annual Financial Report has been prepared in compliance with DTR 4.1.15R – DTR 4.1.18R.
David Mitchell CA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Glasgow, United Kingdom
5 March 2024
114 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 115
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview
Consolidated income statement
Year ended 31 December 2023
Consolidated and parent company balance sheets
At 31 December 2023
Continuing operations
Revenue
Operating expenses
Operating profit
Finance costs
– borrowings
– defined benefit pension schemes
– lease interest
– other finance costs
Total finance costs
Share of loss in associates
Profit before tax
Tax credit/(charge)
Profit for the year
Attributable to:
Equity holders of the Company
Non-controlling interests
Earnings per share
Basic
Diluted
2023
Adjusting
items
(note 7)
£m
–
(6.0)
(6.0)
–
(2.8)
–
(0.5)
(3.3)
–
(9.3)
0.8
(8.5)
(8.5)
–
(8.5)
Note
4
5
Adjusted
results
£m
168.4
(156.0)
12.4
(2.4)
–
(0.5)
–
(2.9)
(0.2)
9.3
4.5
13.8
13.0
0.8
13.8
28.2p
27.2p
8
9
Statutory
results
£m
168.4
(162.0)
Adjusted
results
£m
137.8
(112.0)
6.4
25.8
(2.4)
(2.8)
(0.5)
(0.5)
(6.2)
(0.2)
–
5.3
5.3
4.5
0.8
5.3
(1.1)
–
(0.5)
–
(1.6)
(0.1)
24.1
(5.0)
19.1
19.3
(0.2)
19.1
9.7p
9.4p
42.3p
40.4p
The above consolidated income statement should be read in conjunction with the accompanying notes.
Consolidated statement of comprehensive income
Year ended 31 December 2023
Profit for the year from continuing operations
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of defined benefit pension schemes
Deferred tax charge
Revaluation loss on listed investments to market value
Other comprehensive income – net of tax
Total comprehensive income for the year
Attributable to:
Owners of the parent
Non-controlling interests
Note
24
21
15
2022
Adjusting
items
(note 7)
£m
–
(0.5)
(0.5)
–
(1.4)
–
–
(1.4)
–
(1.9)
0.1
(1.8)
(1.8)
–
(1.8)
2023
£m
5.3
2.0
(0.5)
–
1.5
6.8
6.0
0.8
6.8
Statutory
results
£m
137.8
(112.5)
25.3
(1.1)
(1.4)
(0.5)
–
(3.0)
(0.1)
22.2
(4.9)
17.3
17.5
(0.2)
17.3
38.3p
36.6p
2022
£m
17.3
6.5
(1.5)
(0.3)
4.7
22.0
22.2
(0.2)
22.0
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
Group
Company
31 December
2023
£m
31 December
2022*
£m
1 January
2022*
£m
31 December
2023
£m
31 December
2022*
£m
1 January
2022*
£m
Note
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Investments
Deferred tax assets
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
Deferred tax liabilities
Trade and other payables
Current liabilities
Borrowings
Trade and other payables
Lease liabilities
Total liabilities
Total equity and liabilities
11
12
13
15
21
17
16
17
22
22
19
20
24
21
18
19
18
20
25.0
8.9
17.9
4.1
19.8
1.0
76.7
24.4
38.9
13.9
77.2
1.2
10.6
18.6
2.5
21.9
0.7
55.5
47.0
39.8
18.3
105.1
1.6
9.8
19.9
1.9
26.5
–
59.7
17.7
29.6
14.7
62.0
–
–
–
121.8
6.4
125.4
253.6
–
0.6
–
0.6
–
–
–
121.8
7.3
138.5
267.6
–
1.2
–
1.2
–
–
–
122.1
9.0
136.4
267.5
–
1.8
0.3
2.1
153.9
160.6
121.7
254.2
268.8
269.6
23.3
115.1
0.2
173.4
2.4
(321.9)
(7.5)
(5.1)
(12.6)
41.6
17.9
54.8
2.6
5.9
23.3
115.1
0.2
173.4
1.8
(322.7)
(8.9)
(0.3)
(9.2)
26.4
18.7
63.1
–
–
23.3
115.1
0.2
173.4
1.4
(340.1)
(26.7)
(0.1)
(26.8)
14.4
19.7
79.4
–
–
122.8
108.2
113.5
4.6
37.9
1.2
43.7
166.5
153.9
7.0
53.7
0.9
61.6
–
33.8
1.2
35.0
169.8
148.5
160.6
121.7
32.5
254.2
23.3
115.1
0.2
–
2.4
80.7
221.7
–
221.7
–
–
25.5
–
–
25.5
3.2
3.8
–
7.0
23.3
115.1
0.2
–
1.8
87.8
228.2
–
228.2
–
–
29 .0
–
–
29.0
5.4
6.2
–
11.6
40.6
23.3
115.1
0.2
–
1.1
92.6
232.3
–
232.3
–
–
35.9
–
–
35.9
–
1.4
–
1.4
37.3
268.8
269.6
* Details of restatements are disclosed in note 2.
The above consolidated and Company balance sheets 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 £3.0m
(2022: loss of £2.6m).
The consolidated financial statements on pages 116 to 146 were approved by the Board on 5 March 2024 and were signed on
its behalf by:
Simon Pitts
Chief Executive Officer
Lindsay Dixon
Chief Financial Officer
Company registration number SC203873
116 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 117
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Consolidated and parent company statements
of changes in equity
Year ended 31 December 2023
Consolidated and parent company statements of cash flows
Year ended 31 December 2023
Share
capital
£m
Share
premium
£m
Capital
redemption
reserve
£m
Merger
reserve
£m
Other
reserve
£m
Restated*
Accumulated
(losses)/profit
£m
Attributable
to owners of
the parent
£m
Non-
controlling
interest
£m
Total
equity
£m
23.3
115.1
0.2 173.4
1.8
(322.7)
(8.9)
(0.3)
(9.2)
Group
At 1 January 2023
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Net share based compensation
Dividends paid (note 10)
Changes in non-controlling interest (note 14)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
At 31 December 2023
23.3
115.1
0.2 173.4
At 1 January 2022 – restated*
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
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
At 31 December 2022 – restated*
23.3
115.1
0.2 173.4
Company
At 1 January 2023
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
Net share based compensation
Dividends paid (note 10)
At 31 December 2023
At 1 January 2022
Loss for the year
Other comprehensive expense
Total comprehensive loss for the year
Net share based compensation
Dividends paid (note 10)
23.3
115.1
0.2
–
–
–
–
–
–
–
–
–
–
23.3
115.1
23.3
115.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.2
0.2
–
–
–
–
–
At 31 December 2022
23.3
115.1
0.2
* Details of restatements are disclosed in note 2.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.6
–
–
2.4
1.4
–
–
–
0.4
–
1.8
1.8
–
–
–
0.6
–
2.4
1.1
–
–
–
0.7
–
1.8
4.5
1.5
6.0
–
(5.2)
–
(321.9)
4.5
1.5
6.0
0.6
(5.2)
–
(7.5)
0.8
–
0.8
–
(0.2)
(5.4)
5.3
1.5
6.8
0.6
(5.4)
(5.4)
(5.1) (12.6)
(340.1)
(26.7)
(0.1) (26.8)
(0.2) 17.3
4.7
–
(0.2) 22.0
–
–
0.7
(5.1)
(0.3)
(9.2)
17.5
4.7
22.2
0.3
(5.1)
(322.7)
87.8
(3.0)
1.1
(1.9)
–
(5.2)
80.7
92.6
(2.6)
2.6
–
0.3
(5.1)
87.8
17.5
4.7
22.2
0.7
(5.1)
(8.9)
228.2
(3.0)
1.1
(1.9)
0.6
(5.2)
221.7
232.3
(2.6)
2.6
–
1.0
(5.1)
228.2
Operating activities
Cash generated by operations
Interest and fees paid in relation to banking facilities
Corporation tax received/(paid)
Pension deficit funding – recovery plan payment
Contingent cash payment to pension schemes
Net cash generated by/(used in) operating activities
Investing activities
Acquisition of subsidiary undertakings, net of cash acquired
Purchase of investment in associate
Production finance provided to associate
Production finance repaid from associate
Purchase of intangible assets
Purchase of property, plant and equipment
Net cash used in investing activities
Financing activities
Payment of obligations under leases
Borrowings drawn
Borrowings repaid
Dividends paid to non-controlling interests
Dividends paid to equity holders
Net cash generated by/(used in) financing activities
Net (decrease)/increase in cash and cash equivalents
Net cash and cash equivalents, including overdraft balances,
at beginning of year
Net cash and cash equivalents, including overdraft balances,
at end of year
Note
23
14
Group
2023
£m
10.8
(2.3)
5.0
(9.7)
–
3.8
(15.0)
(0.3)
(0.4)
3.0
(0.4)
(0.8)
(13.9)
(1.8)
36.3
(21.0)
(0.2)
(5.2)
8.1
(2.0)
2022
£m
11.5
(1.1)
0.2
(9.5)
(2.4)
(1.3)
–
(0.9)
(2.4)
–
(0.5)
(3.4)
(7.2)
(1.8)
38.0
(26.0)
–
(5.1)
5.1
(3.4)
Company
2023
£m
11.0
–
–
(3.6)
–
7.4
–
–
–
–
–
–
–
–
–
–
–
(5.2)
(5.2)
2.2
2022
£m
4.5
–
(1.0)
(3.6)
(0.5)
(0.6)
–
–
–
–
–
–
–
–
–
–
–
(5.1)
(5.1)
(5.7)
11.3
14.7
(5.4)
0.3
9.3
11.3
(3.2)
(5.4)
118 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 119
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Notes to the financial statements
For the year ended 31 December 2023
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 2023 were approved and authorised for issue in accordance with a resolution of the Directors on 5 March
2024. The comparative information is presented for the year ended 31 December 2022.
STV Group plc is a public limited company, limited by shares, incorporated in Scotland, United Kingdom, 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.
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 and in accordance
with the UK adopted international accounting standards and with the requirements of the Companies Act 2006 as applicable
to companies reporting under those standards.
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.
Prior year adjustments
Parent (presentation of intercompany receivables)
The Company previously presented intercompany balances receivable within current assets, as amounts due are repayable on
demand. These have been presented as non-current in the year ended 31 December 2023. The balance sheets at 31 December
2022 and 1 January 2022 have been updated to disclose the full balance as non-current, of £138.5m and £136.4m respectively
(note 17).
Group and parent (presentation of cash and cash equivalents and overdrafts)
The Group and Company balance sheets previously presented cash balances and overdrafts held with the same counterparty on a
net basis due to there being a legal right to offset, with overdraft balances cleared down in line with trading requirements. However,
as the accounts that are used to settle the overdrafts are normal trading accounts with routine activities processing through them,
the overdrafts should be disclosed within current liabilities. The impact on the Group balance sheet at 31 December 2022 is to
increase cash and cash equivalents from £11.3m to £18.3m and recognise a current liability of £7.0m. In the 31 December 2022
Parent Company balance sheet, the £5.4m overdraft has been restated within current liabilities. There are no adjustments to
the balance sheet at 1 January 2022 (note 19).
Group (historical overstatement of trade and other receivables)
The Group identified an historic error of £0.9m relating to an over accrual of music revenue expected to be collected on its
behalf by a third party. The over accrual relates to prior periods not presented in these financial statements so the correcting
adjustment was disclosed as a restatement of the 1 January 2022 trade and other receivables balance, which is split between
current assets (balance at 1 January 2022 of £30.1m restated to £29.6m) and non-current assets (balance at 1 January 2022
of £0.4m restated to £nil), with a corresponding adjustment to retained earnings (balance at 1 January 2022 of £(339.2)m
restated to £(340.1)m). The 31 December 2022 balance sheet has also been restated for the same impact: non-current trade
and other receivables restated from £1.5m to £0.7m, current trade and other receivables restated from £39.9m to £39.8m,
and retained earnings restated from £(321.8)m to £(322.7)m (note 17).
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 IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies
– effective date 1 January 2023
• Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates
– effective date 1 January 2023
• Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction
– effective date 1 January 2023
• Amendments to IAS 12 Income Taxes: International Tax Reform – Pillar Two Model Rules – effective date 1 January 2023
• IFRS 17 Insurance Contracts – effective date 1 January 2023
• Amendments to IFRS 17 Insurance contracts: Initial Application of IFRS 17 and IFRS 9 – Comparative Information policies
– effective date 1 January 2023
Standards and amendments to standards that have been issued but are not effective for 2023 and have not been early
adopted are:
• Amendments to IAS 1 Presentation of Financial Statements:
– Classification of Liabilities as Current or Non-current – effective date 1 January 2024
– Non-current Liabilities with Covenants – effective date 1 January 2024
• Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback – effective date 1 January 2024
The above standards and amendments issued but not yet effective will be adopted in accordance with their effective dates.
Management do not expect any material impact from the implementation of the above standards when they become effective.
Going concern
At 31 December 2023, the Group was in a net debt position (excluding lease liabilities) of £32.3m comprising drawdowns under
its banking facility of £39m, amounts drawn under a separate third party production financing facility of £3.3m, partially offset
by net cash balances, including overdrafts, of £9.3m.
The Group has in place a £70m revolving credit facility, with £10m accordion, that matures in March 2026. In July 2023, the
Group accessed £10m of its then £20m accordion to provide additional liquidity headroom following acquisition of Greenbird
Media Limited and against the backdrop of a difficult macroeconomic environment impacting linear advertising in particular.
To date, we have not accessed this incremental headroom. Our covenant package includes the key financial covenants of net
debt to EBITDA (leverage), which must be less than 3 times, and interest cover, which must be greater than 4 times.
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. It has undrawn facilities under its main banking facility of £31m, with a further £10m
available through accessing the accordion.
As part of the regular forecasting and budgeting processes, the Group considers the outlook for the UK advertising market and
the UK and global commissioning markets and uses them to inform the assumptions underpinning the business’s own financial
forecasts. As well as defining a ‘base case’ set of assumptions, the Group considers a range of alternative outcomes – on the
upside and the downside – and assesses liquidity headroom and covenant compliance under all scenarios. The Group’s forecasts
and projections for both profitability and cash generation/debt levels, 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.
The Directors performed a full review of principal risks and uncertainties during the year and approved the Group’s updated
three-year plan covering the period to 31 December 2026 in February 2024. As part of this process, the Board gave specific
consideration and challenge to the first year of this plan and approved it as the budget for FY2024.
A severe but plausible downside scenario was identified against the base case assumptions in that budget that reflected
crystallisation of a number of risks, principally in relation to advertising revenues and the number and scale of programme
commissions won and delivered in the year. Under this alternative scenario, the Group modelled a reduction of more than
40% in the budgeted revenue of the Studios division combined with a continued recession in the UK advertising market.
Even under this scenario, the Group generated sufficient cash to enable it to continue in operation and remain within covenant
levels under the Group banking arrangements. Therefore, the Board concluded that the Group’s forecasts and projections,
taking account of reasonably possible changes in trading performance, show it will be able to operate within the level of its
current available funding and covenant levels.
After making enquiries, 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.
120 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 121
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview
Notes to the financial statements
For the year ended 31 December 2023
2. Significant accounting policies continued
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 licencing 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).
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.
Adjusting items
Adjusting 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
Consolidated Income Statement in a column before statutory results.
Adjusting 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; amortisation of fair value
adjustments in regard to intangible assets recognised in a business combination; IAS 19 finance costs; and other items due to
their significance, size or nature. Details of specific adjusting items are included within note 7.
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.
Intangible assets
Intangible assets, other than goodwill, are held at cost less accumulated amortisation and any provision for impairment.
Included within intangible assets are:
Web development – assets in the course of construction which comprise web development projects including directly
attributable costs to bring the assets into use and may include capitalised borrowing costs.
Intellectual property – fair value of intangible assets recognised on acquisition of subsidiaries, which comprise production
intellectual property and distribution intellectual property. Production intellectual property relates to the rights owned by
acquired subsidiary companies to established profitable formats that are likely to be re-commissioned in future periods.
Distribution intellectual property relates to the value attributable to existing and expected renewal of distribution agreements
of back-catalogue productions in secondary markets.
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
Intellectual property
between 20% and 33%
between 7% and 13%
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 being brought into use or to the date of disposal.
Any impairment in value is charged to the income statement.
Depreciation and amortisation are both presented within operating expenses in the consolidated 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.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.
122 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 123
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Notes to the financial statements
For the year ended 31 December 2023
2. Significant accounting policies continued
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 predominantly in relation
to leasehold properties.
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. Net realisable value represents the estimated selling price
less estimated costs of completion and the estimated selling costs.
The Group has the following items included in inventory:
• 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. Costs
incurred in the development of creative ideas and the programme slate are recognised as inventory at the lower of cost and
net realisable value and are reviewed at least annually. Provision is made where appropriate.
• 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
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 Video on Demand
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.
ii) Investments
Investments are classified as fair value through other comprehensive income (FVOCI) with subsequent gains or losses arising
from changes in fair value 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
Financial liabilities in regard to put option contracts which require the Group to purchase its own equity instruments for cash
or another financial asset are recognised at the present value of the estimated put option exercise price, with a corresponding
charge included within non-controlling interest. Any subsequent remeasurement of the put option liability is recognised within
other finance income or cost.
viii) Production financing facilities
Separate production financing facilities are entered into with third parties for individual programme production activities. These
short-term facilities are available for the duration of programme production activity, and are used in circumstances when the
Group is cash-flowing the production (with the commissioner paying in full on delivery of the final programme). These facilities
are initially recorded at fair value being the amounts drawn down, net of direct issue costs. They are subsequently measured at
amortised cost using the effective interest rate method.
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. The other reserve within equity relates to
share based payments.
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.
124 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 125
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview
Notes to the financial statements
For the year ended 31 December 2023
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 effect 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:
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 assumptions are estimating the likely future revenues for which associated programme costs are
expensed in line with, and the discount rate applied. A detailed forecast of future secondary sales is prepared by management
based on historic experience and expected future trends. The estimation process is complex due to the inherent risks and
uncertainties associated with long-term forecasting. A different estimate of the projected future cash flows, or a different
discount rate, could result in a material adjustment to the projected value of the cash flows of the asset, and as a consequence
result in a material adjustment to the carrying value of the asset in the next financial year. £2.1m was expensed through the
income statement in the year (2022: £1.4m).
Additional information is disclosed in note 16.
Group and Company
Pension obligations
The present value of the pension obligations depends on several 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. These assumptions are reviewed and updated at least bi-annually. A small change in these assumptions could
materially impact the carrying amount of pension obligations in the next financial year.
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 24.
Company
Carrying value of parent company investments
At the end of each reporting period, the Company assesses whether there has been any internal or external indication that an
asset may be impaired (i.e. its carrying amount may be higher than its recoverable amount). The market capitalisation of the
Parent company was less than its net assets and therefore the recoverable amount of the investment in subsidiary companies
has been calculated. In determining the recoverable amount, key assumptions are made regarding future performance of
subsidiary undertakings, growth rates and discount rate. A different estimate of the projected future cash flows, or a different
growth rate or discount rate, could result in a material adjustment to the projected value of the cash flows of the asset, and
as a consequence result in a material adjustment to the carrying value of the asset in the next financial year. Based on the
assumptions applied in the current year, the investments’ recoverable amount is greater than its carrying value and
consequently no impairment is considered necessary. Additional information is disclosed in note 15.
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.
Continuing operations
Sales
Inter-segment sales
Segment revenue
Segment result
Adjusted operating profit
Unallocated corporate expenses
Adjusted operating profit
Adjusting items in operating profit (note 7)
Other adjusting items (note 7)
HETV tax credits (note 7)
Finance costs
Share of loss in associates
Profit before tax
Tax credit/(charge)
Profit for the year
Broadcast
Digital
Studios
Total
2023
£m
90.4
(9.0)
81.4
2022
£m
107.6
(12.5)
95.1
2023
£m
20.2
–
20.2
2022
£m
19.0
–
19.0
2023
£m
67.2
(0.4)
66.8
2022
£m
23.9
(0.2)
23.7
2023
£m
177.8
(9.4)
168.4
2022
£m
150.5
(12.7)
137.8
9.8
20.7
9.9
8.5
5.2
1.4
24.9
(4.8)
20.1
(6.0)
(0.5)
(7.7)
(5.7)
(0.2)
–
5.3
5.3
30.6
(4.8)
25.8
(0.5)
–
–
(3.0)
(0.1)
22.2
(4.9)
17.3
Adjusted operating profit (as shown above) is the statutory operating profit before adjusting items, amortisation of the fair value of
intangible assets acquired in a business combination and includes High-End Television (HETV) tax credits receivable. The HETV tax
credits, amortisation of intangible assets acquired in a business combination and finance cost in relation to the put options, relate
solely to the Studios operating segment. £7.7m HETV tax credits were claimed in the current year (2022: £nil), £0.5m of amortisation
on the fair value of intangible assets has been incurred since acquiring Greenbird Media Limited and £0.5m of finance costs in
relation to the put options has been recognised (please refer to note 7). This results in a statutory operating loss of £3.5m in
Studios (2022: profit of £1.4m). The consolidated results of Greenbird Media Limited and subsidiary undertakings have been
allocated to the Studios operating segment. There were no adjusting items disclosed within Broadcast or Digital operating profit.
Revenue includes £2.0m from sources outside the UK (2022: £1.7m). Operating profit includes £1.3m arising outside the UK
(2022: £1.0m).
Broadcast
Digital
Studios
Total
Segment assets and liabilities
Assets
Liabilities
Segment total
Unallocated corporate assets
Unallocated corporate liabilities
Consolidated
2023
£m
36.0
(18.0)
18.0
2022
£m
40.2
(17.6)
22.6
2023
£m
2.2
–
2.2
2022
£m
2.3
–
2.3
2023
£m
97.9
(31.3)
66.6
2022
£m
70.1
(36.4)
33.7
2023
£m
2022
£m
136.1
(49.3)
86.8
17.8
(117.2)
(12.6)
112.6
(54.0)
58.6
48.0
(115.8)
(9.2)
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 in regard to 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.
The increase in Studios assets primarily relates to the acquisition of Greenbird Media Limited.
All the net assets in 2022 and 2023 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
2023
£m
0.6
1.8
2022
£m
2.3
1.9
2023
£m
0.4
0.6
2022
£m
0.5
0.9
2023
£m
10.9
0.8
2022
£m
–
–
2023
£m
0.2
2.0
2022
£m
1.1
2.0
2023
£m
12.1
5.2
2022
£m
3.9
4.8
126 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 127
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Notes to the financial statements
For the year ended 31 December 2023
5. Operating expenses
Programming costs
Production costs
Staff costs (note 6)
Other operational costs
Depreciation and amortisation
Adjusting 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 £10,000 (2022: £6,000) paid in respect of the parent company.
6. Staff
Group
Aggregate remuneration
Wages and salaries
Share based payments
Social security costs
Other pension costs
Total aggregate remuneration
Less: staff costs allocated to productions, adjusted items or capitalised
Aggregate remuneration within operating expenses
Average monthly number of employees (including Executive Directors)
Studios
Broadcast
Digital
Group/Corporate
Total average number of employees
2023
£m
29.8
62.3
33.4
25.7
4.8
156.0
6.0
162.0
2022
£m
35.8
20.2
28.8
22.4
4.8
112.0
0.5
112.5
2023
£000
2022
£000
252
65
27
344
2023
£m
34.2
0.6
3.6
1.0
39.4
(6.0)
33.4
250
45
35
330
2022*
£m
29.1
0.8
3.5
0.9
34.3
(5.5)
28.8
2023
Number
2022
Number
147
329
61
61
598
106
335
52
58
551
7. Adjusting items and 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 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.
The table below sets out a reconciliation of the statutory results to the adjusted results:
Statutory results
Material contract implementation costs (i)
Acquisition and integration costs(ii)
Amortisation of intangible assets (iii)
IAS 19 net finance costs (iv)
Other finance costs (v)
High-end television tax credits (vi)
Adjusted results
Basic EPS
pence
9.7p
2023
Operating
profit
£m
Profit
before tax
£m
6.4
3.1
2.4
0.5
–
–
7.7
–
3.1
2.4
0.5
2.8
0.5
7.7
20.1
17.0
28.2p
Operating
profit
£m
2022
Profit
before tax
£m
25.3
0.5
–
–
–
–
–
25.8
22.2
0.5
–
–
1.4
–
–
24.1
Basic EPS
pence
38.3p
42.3p
i)
On 8 December 2022, the Group announced an extended partnership with ITV for digital content and advertising sales.
The agreement was effective from 1 January 2023 and one-off costs associated with the negotiation and implementation
of the agreement were £3.1m (2022: £0.5m).
ii) On 6 July 2023, the Group acquired the independent production network of companies headed by Greenbird Media Limited
for total amounts payable of £24.2m (note 14). The associated attributable costs, totalling £2.4m, have been expensed as
incurred in the year. This includes legal and advisory fees, amounts attributable to earns outs payable to founding
members, and restructuring costs.
iii) Following the acquisition of Greenbird Media Limited in July 2023, the Group has undertaken a provisional fair value
assessment of the assets acquired and liabilities assumed. The provisional fair value attributable to intellectual property
acquired was £10.0m, with an associated amortisation charge of £0.5m incurred since acquisition. Amortisation of assets
acquired through business combinations and investments are included within adjusted results. As these costs are acquisition
related, and in line with our treatment of other acquisition related costs, we consider that they do not reflect the underlying
trading performance of the Group.
iv) IAS 19 related items, principally the net finance cost included in the consolidated income statement, are excluded from
non-statutory measures as they are non-cash items that relate to legacy defined benefit pension schemes.
v) The Group recognised liabilities of £9.6m payable to minority shareholders under put options already in force at the date
of acquisition of Greenbird Media Limited, which was estimated based on discounted profit forecasts. Since the date of
acquisition, £0.5m has been recognised as a finance cost in relation to the unwinding of the associated discount.
vi) 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. Post year end, HETV
tax credits are being replaced by ‘above the line’ Audio-Visual Expenditure credits and will be accounted for in a similar way to
the alternative performance measure presented above.
* The presentation of the remuneration note has been updated for year ended 31 December 2023 to split out costs allocated to productions, adjusted items
or that have been capitalised. The 2022 comparatives have been updated to reflect the same presentation.
8. Tax credit/(charge)
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 88 to 105.
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 £0.6m (2022: £0.8m). No Director received any other remuneration from the Company
during the year (2022: £nil). The emoluments of the Directors are paid by another Group company which makes no recharge to
the parent company.
Corporation tax
Current year charge
High-end television tax credit
Deferred tax (note 21)
Tax credit/(charge) for the year
2023
£m
(0.8)
7.7
6.9
(1.6)
5.3
2022
£m
(1.8)
–
(1.8)
(3.1)
(4.9)
128 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 129
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview
Notes to the financial statements
For the year ended 31 December 2023
8. Tax credit/(charge) continued
The credit/(charge) for the year can be reconciled to the profit per the income statement as follows:
Profit before tax
Tax at the UK corporation tax rate of 23.5% (2022: 19%)
Tax effects of:
Other expenses not deductible for tax purposes
Losses not recognised
High-end television tax credits
Impact of changes in tax rates
Changes in estimates related to prior years
Tax credit/(charge) for the year
2023
£m
–
–
(0.8)
(1.2)
7.7
(0.1)
(0.3)
5.3
2022
£m
22.2
(4.2)
–
–
–
(0.7)
–
(4.9)
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 detailed in note 7 and presented below net of the related tax
effect. Adjusted earnings per share have 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
Adjusted basic earnings per share
Adjusted diluted earnings per share
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
Adjusting items in operating profit (net of tax)
IAS 19 net financing cost
Other finance costs
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
2023
pence
9.7p
9.4p
28.2p
27.2p
2023
£m
4.5
5.2
2.8
0.5
13.0
2022
pence
38.3p
36.6p
42.3p
40.4p
2022
£m
17.5
0.4
1.4
–
19.3
2023
million
2022
million
45.8
1.6
47.4
45.6
2.2
47.8
Ref
(i)
(ii)
(iii)
Details of the adjustments to earnings are as follows:
i) Adjusting items in operating profit (net of tax) £5.2m (2022: £0.4m)
Charge of £6.0m (2022: £0.5m), net of related tax credit of £0.8m (2022: £0.1m). See note 7 for more details.
ii) Adjustment for IAS 19 financing cost £2.8m (2022: £1.4m)
The IAS 19 financing cost is adjusted as it is a non-cash item that relates to historical defined benefit pension schemes;
there is no tax associated with this amount as it is non-deductible for corporation tax purposes.
iii) Adjustment for other finance costs £0.5m (2022: £nil)
Other finance costs relate to put options acquired in a business combination.
10. Dividends
Dividends on equity ordinary shares
Paid final dividend
Paid interim dividend
Dividends paid
2023
per share
2022
per share
2023
£m
7.4p
3.9p
11.3p
7.3p
3.9p
11.2p
3.4
1.8
5.2
2022
£m
3.3
1.8
5.1
A final dividend of 7.4p per share (2022: 7.4p per share) has been proposed by the Board of Directors and is subject to approval by
shareholders at the 2024 AGM scheduled for 1 May 2024. The proposed dividend would be payable on 31 May 2024 to shareholders
who are on the register at 19 April 2024. The ex-dividend date is 18 April 2024. This final dividend, amounting to £3.4m has not
been recognised as a liability in these financial statements.
11. Intangible assets
Cost
At 1 January 2022
Additions
At 1 January 2023
Additions
Acquisitions (note 14)
Disposals
At 31 December 2023
Accumulated amortisation and impairment
At 1 January 2022
Amortisation
At 1 January 2023
Amortisation
Disposals
At 31 December 2023
Net book value at 31 December 2023
Net book value at 31 December 2022
Goodwill
£m
Intellectual
property
£m
Web
development
£m
–
–
–
–
14.5
–
14.5
–
–
–
–
–
–
14.5
–
–
–
–
–
10.0
–
10.0
–
–
–
0.5
–
0.5
9.5
–
6.1
0.5
6.6
0.4
–
(0.3)
6.7
4.5
0.9
5.4
0.6
(0.3)
5.7
1.0
1.2
Total
£m
6.1
0.5
6.6
0.4
24.5
(0.3)
31.2
4.5
0.9
5.4
1.1
(0.3)
6.2
25.0
1.2
In 2023, acquisitions of £24.5m related to the acquisition of Greenbird Media Limited on 6 July 2023, as outlined in note 14.
Intellectual property relates to production intellectual property and distribution intellectual property acquired which each had
a net book value of £4.7m and £4.8m respectively at the balance sheet date. The remaining average useful life of production
intellectual property and distribution intellectual property is 7.6 years and 14.5 years respectively.
Web development primarily relates to the development of STV Player, which is STV’s online streaming platform.
Impairment review
The Group recognised goodwill of £14.5m in relation to the acquisition of Greenbird Media Limited in July 2023. The full value
has been attributed to the STV Studios cash-generating unit (CGU). The recoverable amount of the CGU has been determined by
calculating its value in use. This is based on five-year cash flow projections, which are grounded in the three-year plan for the
Studios CGU, prepared by the Divisional leadership team and subsequently approved by the Board of STV Group plc. Consideration
has also been given to the severe but plausible downside scenario identified in the viability modelling as it relates to the Studios CGU.
The key assumptions on which the forecasts are based include revenue generation (including growth in new commissions and
returning series), production and operating margin achievable, and the discount rate. These assumptions have been determined
by using a combination of extrapolation of historical trends within the business, internal and industry estimates, and long-term
growth rates in the primary markets in which the CGU operates. A long-term growth rate of 2.0% has been applied.
A discount rate of 10.3% has been used in discounting the projected cashflows. No reasonably possible change in assumptions
or discount rate would lead to an impairment.
130 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 131
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Notes to the financial statements
For the year ended 31 December 2023
12. Property, plant and equipment
Cost
At 1 January 2022
Additions
Transfers
At 1 January 2023
Additions
Acquisitions (note 14)
Transfers
Disposals
At 31 December 2023
Accumulated depreciation and impairment
At 1 January 2022
Charge for year
At 1 January 2023
Charge for year
Disposals
At 31 December 2023
Net book value at 31 December 2023
Net book value at 31 December 2022
Leasehold
improvements
£m
Plant,
technical
equipment
and other
£m
Assets under
construction
£m
0.4
–
–
0.4
–
0.1
–
(0.1)
0.4
0.2
–
0.2
0.1
(0.1)
0.2
0.2
0.2
33.8
–
2.3
36.1
0.4
0.1
2.0
(13.7)
24.9
25.0
2.6
27.6
2.6
(13.7)
16.5
8.4
8.5
0.8
3.4
(2.3)
1.9
0.4
–
(2.0)
–
0.3
–
–
–
–
–
–
0.3
1.9
Total
£m
35.0
3.4
–
38.4
0.8
0.2
–
(13.8)
25.6
25.2
2.6
27.8
2.7
(13.8)
16.7
8.9
10.6
The Group and Company did not have any capital commitments at 31 December 2023 (2022: £nil).
In 2023, acquisitions of £0.2m related to the acquisition of Greenbird Media Limited on 6 July 2023, as outlined in note 14.
13. Right-of-use assets
The balance sheet shows the following amounts relating to leases:
Cost
At 1 January 2022 and 31 December 2022
Acquisitions (note 14)
At 31 December 2023
Depreciation
At 1 January 2022
Charge for the year
At 1 January 2023
Charge for the year
At 31 December 2023
Net book value at 31 December 2023
Net book value at 31 December 2022
Property
£m
Vehicles
£m
Total
£m
24.9
0.7
25.6
5.1
1.3
6.4
1.3
7.7
17.9
18.5
0.3
–
0.3
0.2
–
0.2
0.1
0.3
–
0.1
25.2
0.7
25.9
5.3
1.3
6.6
1.4
8.0
17.9
18.6
In 2023, acquisitions of £0.7m related to the acquisition of Greenbird Media Limited on 6 July 2023, as outlined in note 14.
14. Business combinations
On 6 July 2023, the Group acquired 100% of the issued share capital of unscripted television production group Greenbird Media
Limited (‘Greenbird’) for total cash amounts payable of £24.2m, of which £21.4m was paid on completion. The initial payment
made was allocated £9.9m for the acquisition of shares and £11.5m invested to settle convertible loan instruments provided
by the previous majority shareholder.
Deferred consideration of £1.2m relates to surplus cash balances held by the majority subsidiary companies acquired at
completion with £0.5m paid in December 2023, leaving a balance of £0.7m payable in the future.
Deferred earn-out payments, estimated to be c£1.6m, are payable to the founders based on agreed EBITDA targets over the
two years ending 31 December 2024. These payments are linked to the founders’ ongoing employment with the Group and
will therefore be accounted for as an expense. At 31 December 2023, £0.9m has been accrued in respect of the first earn-out
payable in Q2 2024. This has been recognised as an adjusting item in the consolidated income statement (note 7).
The Group has completed the majority of its work in relation to assessing the fair values of identifiable assets and liabilities
acquired with only a small number of minor points to be finalised. Therefore, we have presented the fair values as provisional
in the table below but do not anticipate any material changes between the provisional and final position, which will be finalised
within 12 months from the date of acquisition, as required by the relevant accounting standard.
Provisional fair value of identifiable assets and liabilities of Greenbird Media Limited and subsidiary companies
Intangible assets
Property, plant and equipment
Right of use assets
Investments
Inventory
Trade and other receivables
Contract assets
Cash and cash equivalents
Deferred tax liabilities
Trade and other payables
Lease liabilities
Contract liabilities
Fair value of net identifiable assets
Non-controlling interest measured at proportionate share of identifiable net assets
Adjustments to non-controlling interest regarding derivative put options
Goodwill
Consideration
Total net cash outflow relating to acquisition of Greenbird Media Limited and subsidiary companies
Cash consideration paid for equity shares
Additional cash invested to settle convertible loan instruments
Deferred consideration paid
Consideration paid
Cash and cash equivalents acquired
Total cash outflow
Present value of the expected liability on put options
2023
£m
10.0
0.2
0.7
1.5
1.8
2.0
1.9
6.9
(2.6)
(15.4)
(0.8)
(3.5)
2.7
(4.2)
9.6
14.5
22.6
£m
9.9
11.5
0.5
21.9
(6.9)
15.0
£m
9.6
The goodwill of £14.5m represents the value placed on the opportunity to materially enhance the future growth prospects
of STV Studios creatively, commercially, and internationally. This has been calculated as the fair value of the consideration
transferred, plus the amount of non-controlling interest adjusted for derivative put options relating to subsidiaries acquired,
less the net of the fair value of the identifiable assets acquired and liabilities assumed.
From the date of acquisition, Greenbird Media Limited and subsidiary undertakings contributed £15.0m of revenue and £3.2m
of operating profit to the Group’s results.
132 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 133
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Notes to the financial statements
For the year ended 31 December 2023
15. Investments
Group
Associates
Other
Associates
At 1 January
Additions
Share of loss
At 31 December
2023
£m
3.9
0.2
4.1
2023
£m
2.4
1.7
(0.2)
3.9
2022
£m
2.4
0.1
2.5
2022
£m
1.5
1.0
(0.1)
2.4
The investments in associates are initially recognised at cost and have subsequently been updated to reflect the Group’s
share of post-acquisition profits or losses in accordance with the equity method of accounting.
The additions in associates during 2023 relates to the acquisition of a further 15% stake in quiz show producer, Mighty
Productions Limited, for a total consideration of £0.3m in July 2023, taking the total investment held by the Group to 40%.
As part of the acquisition in Greenbird Media Limited (as detailed in note 14), the Group acquired six associates for total
consideration of £1.4m, ranging from an ownership stake of 25% to 40%.
The Group also owns a 25% shareholding in the unscripted production company, Hello Mary, and a 25% stake in Two Cities
Television. Refer to note 29 for subsequent events relating to Two Cities Television.
No dividends have been received from any associate undertaking. The class of shares held in associates are all ordinary.
The Group also holds shares in Mirriad Advertising plc which has a nominal fair value at the balance sheet date. This investment
is measured at fair value through the Consolidated Statement of Comprehensive Income.
Company
Share in Group undertakings
2023
£m
2022
£m
121.8
121.8
121.8
121.8
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, which is then 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 five year cash flow projections which are grounded
in the three year plan, prepared by the Management Board and subsequently approved by the Board. Overall, the forecast
demonstrated strong revenue and profit growth in Studios and Digital in particular, albeit offset in the early part of the period
by declines in advertising as a result of an anticipated recession in the UK. A terminal value was determined thereafter based
on growth of 2.0% (2022: 2.0%). The resulting valuation provided headroom against the investment carrying value.
Further sensitivities were modelled to provide management with comfort that no impairment would be required, namely
a +/- 1% change in discount rate and also an operating profit reduction of 10% for all years included in the forecast. Both
scenarios still left the Group with headroom. The post-tax discount rate applied was 10.3% (2022: 8.8%).
Based on the above the Directors consider that the investments’ recoverable amount is greater than their carrying value
and consequently no impairment is considered necessary.
Subsidiary undertakings
A full list of subsidiary undertakings as at 31 December 2023 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%)
Greenbird Media Limited†
Teal Media Limited†
Crackit Productions Limited (75%)†
Tuesday’s Child Television Limited (50.8%)†
Interstellar Television Limited (25.9%)†
Show Me The Honey Limited (25.9%)†
KPL Craft Party Limited (50.8%)†
Master or Servant Limited (50.8%)†
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.com Limited
The Ginger Media Group Limited
* Directly held.
† Acquired in the year.
Investment holding undertaking
Investment holding undertaking
Television broadcasting
Television broadcasting
Programme production
Programme production
Programme production
Programme production
Programme production
Programme production
Investment holding undertaking
Advertising inventory trading
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
(1)
(1)
(1)
(1)
(2)
(2)
(2)
(2)
(3)
(2)
(1)
(1)
(1)
The registered address for all companies (except where noted) is Pacific Quay, Glasgow, G51 1PQ.
(1) 6th Floor, 236 Grays Inn Road, London, United Kingdom, WC1X 8HB
(2) 71 Queen Victoria Street, London, England, EC4V 4BE
(3) Lincoln House, 296-302 High Holborn, London, England, WC1V 7JH
The investments are stated in the balance sheet at cost less amounts written off for impairment in value. All the above
investments are 100% shareholdings except where stated. All subsidiary undertakings are incorporated in the United Kingdom.
All shares held are classed as ordinary shares.
All subsidiary undertakings have a financial year end of 31 December 2023 except for STV Drama Productions 3 Limited and
STV TOD Productions Limited, which have a year end of 31 July 2023 and 31 August 2023, respectively. The reason that the
financial years are non-coterminous with the Group is due to the timing of production commissions and deliveries.
134 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 135
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview
Notes to the financial statements
For the year ended 31 December 2023
16. Inventories
Deferred programme production
Programme production work in progress
Recorded programmes
Group
2023
£m
12.7
11.1
0.6
24.4
2022
£m
12.0
34.7
0.3
47.0
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 £1.3m (2022: £1.1m) is likely to be realised within 12 months.
At 31 December 2023, 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 £14.4m (2022: £15.1m), with the net book value of £12.7m (2022: £12.0m).
A discount rate of 10.3% (2022: 8.8%) was applied. Revenues in 2024 are expected to be £2.3m.
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 £0.1m
Increase/decrease by £0.2m
Increase/decrease by £1.5m
17. Trade and other receivables
Group
Trade receivables
Prepayments
Contract assets
Other receivables
Income tax recoverable
1 Restated, refer to note 2.
Parent
Trade receivables
Amounts owed by Group undertakings
Prepayments
Contract assets
Other receivables
Income tax recoverable
* Restated, refer to note 2.
Current
Non-current
31 December
2023
£m
31 December
2022*
£m
1 January
2022*
£m
31 December
2023
£m
31 December
2022*
£m
1 January
2022*
£m
13.9
8.2
12.9
1.8
2.1
38.9
22.6
4.1
8.6
4.0
0.5
39.8
18.6
1.7
5.8
1.0
2.5
29.6
–
–
–
1.0
–
1.0
–
–
–
0.7
–
0.7
–
–
–
–
–
–
Current
Non-current
31 December
2023
£m
31 December
2022*
£m
1 January
2022*
£m
31 December
2023
£m
31 December
2022*
£m
1 January
2022*
£m
–
–
–
–
0.6
–
0.6
–
–
–
–
1.2
–
1.2
–
–
0.1
–
1.1
0.6
1.8
–
125.4
–
–
–
–
125.4
–
138.5
–
–
–
–
138.5
–
136.4
–
–
-
–
136.4
A reconciliation of the contract assets balance is included in note 18.
The Amounts owed by Group undertakings are unsecured with no interest chargeable.
Group
At 31 December, the ageing analysis of the trade receivables, net of any provisions for impairment, is as follows:
Not past due
Up to 30 days overdue
Between 30 and 90 days overdue
Over 90 days overdue
2023
£m
10.7
2.5
0.4
0.3
13.9
2022
£m
18.6
3.2
0.4
0.4
22.6
The Group engages in a number of contra deals whereby advertising is provided in exchange for goods and services instead
of cash consideration.
The Group applies the simplified approach to measuring expected credit losses, and so uses a lifetime expected loss allowance.
At 31 December 2023, trade receivables with an initial carrying value of £nil (2022: £0.1m) 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
2023
£m
0.1
–
(0.1)
–
–
2022
£m
0.1
0.1
(0.1)
–
0.1
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.
Company
The expected credit losses on the Amounts due from subsidiary undertakings is not material to the financial statements.
All 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 as they are repayable on demand.
18. Trade and other payables
Trade and other payables
Accrued expenses
Contract liabilities
Amounts owed to Group undertakings (payable on demand)
Social security and other taxes
Group
Current
Non-current
Company
2023
£m
14.7
14.0
6.0
–
3.2
37.9
2022
£m
8.1
11.3
31.1
–
3.2
53.7
2023
£m
2022
£m
2023
£m
2022
£m
5.9
–
–
–
–
5.9
–
–
–
–
–
–
–
–
–
3.8
–
3.8
–
–
–
6.2
–
6.2
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.
The Amounts owed to Group undertakings are unsecured with no interest chargeable.
136 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 137
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview
Notes to the financial statements
For the year ended 31 December 2023
18. Trade and other payables continued
Maturity analysis
Balance at 1 January
Acquisitions
Decrease due to balance transferred to trade receivables
Increases as a result of the changes in the measure of progress
Decreases due to revenue recognised in the period
Increase due to cash received
Balance at 31 December
2023
2022
Contract
assets
£m
Contract
liabilities
£m
Contract
assets
£m
Contract
liabilities
£m
8.6
1.9
(8.6)
11.0
–
–
12.9
(31.1)
(3.5)
–
–
33.6
(5.0)
(6.0)
5.8
–
(4.0)
6.8
–
–
8.6
(2.4)
–
–
–
2.3
(31.0)
(31.1)
The contract liabilities balance will all be recognised within one year of the balance sheet date.
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
21. Deferred tax
The analysis of the deferred tax balance is as follows:
19. Borrowings
Non-current liabilities
Bank loans
Group
2023
£m
41.6
2022
£m
26.4
Deferred tax assets
Deferred tax liabilities
Net deferred tax assets
Minimum payments
Present value
of payments
2023
£m
1.7
5.7
16.4
23.8
(4.7)
19.1
2022
£m
1.4
5.6
17.7
24.7
(5.1)
19.6
2023
£m
1.2
4.1
13.8
19.1
Group
Company
2023
£m
19.8
(2.6)
17.2
2022
£m
21.9
–
21.9
2023
£m
6.4
–
6.4
2022
£m
0.9
4.0
14.7
19.6
2022
£m
7.3
–
7.3
At the balance sheet date, the Group had a £70m revolving credit facility (RCF) in place, with a £10m accordion, maturing in
March 2026. The principle financial covenants are the ratio of net debt to EBITDA (which must be below 3 times) and interest
cover (which must be higher than 4 times). The facility was increased by £10m to £70m (through accessing its accordion) in July
2023, to provide additional liquidity headroom on completion of the Greenbird acquisition. There has been no requirement to
call on this additional debt in the subsequent period.
The Group has a £7.1m loan facility relating to production financing of which £3.3m was drawn down at the balance sheet date.
The commissioned programme to which the facility relates is expected to deliver in April 2024 with all amounts drawn down
settled. The interest rate charged on the facility is 2.1% margin on the Bank of England base rate.
The effective interest rate was:
2023
%
6.6
2022
%
3.7
Group
Company
31 December
2023
£m
31 December
2022*
£m
1 January
2022*
£m
31 December
2023
£m
31 December
2022*
£m
1 January
2022*
£m
4.6
7.0
–
3.2
5.4
–
Bank loans (floating)
Current liabilities
Bank overdraft
* Restated, refer to note 2.
20. Lease liabilities
Current
Non-current
Group
2023
£m
1.2
17.9
19.1
Group
2023
£m
0.5
2022
£m
0.9
18.7
19.6
2022
£m
0.5
The income statement shows the following amounts relating to leases:
Interest expense (included in finance costs)
138 STV Annual Report and Accounts 2023
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 2022
Credit/(charge) to income
Credit/(charge) to equity/OCI
At 1 January 2023
Credit/(charge) to income
Credit/(charge) to equity/OCI
Liability recognised on acquisition (note 14)
At 31 December 2023
Company
At 1 January 2022
Charge to income
Charge to equity/OCI
At 1 January 2023
Charge to income
Charge to equity/OCI
At 31 December 2023
Tax trading
losses
£m
Other
temporary
differences
£m
Accelerated
tax
depreciation
£m
Retirement
benefit
obligations
£m
5.4
–
–
5.4
0.2
–
–
5.6
–
–
–
–
–
–
–
0.5
0.1
0.1
0.7
–
–
(2.6)
(1.9)
–
–
–
–
–
–
–
0.8
(0.7)
–
0.1
(0.3)
–
–
(0.2)
–
–
–
–
–
–
–
19.8
(2.5)
(1.6)
15.7
(1.5)
(0.5)
–
13.7
9.0
(0.8)
(0.9)
7.3
(0.5)
(0.4)
6.4
Total
£m
26.5
(3.1)
(1.5)
21.9
(1.6)
(0.5)
(2.6)
17.2
9.0
(0.8)
(0.9)
7.3
(0.5)
(0.4)
6.4
Changes to the UK corporation tax rates were substantively enacted as part of Finance Bill 2021 on 10 June 2021. These
included an increase in the UK corporation tax rate to 25% effective from 1 April 2023. The Finance Act 2023 which received
Royal Assent on 10 January 2023, had no impact on the corporation tax figures. The deferred tax balances at 31 December
2023 have been stated at a rate of 25% (2022: 25%), which is the rate at which the temporary differences are expected to
unwind. 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 £14.8m has not been recognised (2022: £13.5m), calculated with reference to the headline rate of 25%.
There are no associated expiry dates applicable.
STV Annual Report and Accounts 2023 139
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview
Notes to the financial statements
For the year ended 31 December 2023
21. Deferred tax continued
Company
Loss category
STV Group plc
STV News Services Ltd
STV Central Ltd
STV TOD Productions Limited
STV Television Ltd
Capital
Non-trade loan relationships
Trading
Trading
Management expenses
22. Ordinary shares and share premium
Group and Company
At 1 January and 31 December 2023
Gross
amount
£m
Deferred tax
asset not
recognised
£m
42.7
8.7
1.8
5.1
0.7
10.7
2.2
0.4
1.3
0.2
Number
of shares
(thousands)
Ordinary
shares
£m
Share
premium
£m
Total
£m
46,723
23.3
115.1
138.4
The total authorised number of ordinary shares is 63 million shares (2022: 63 million shares) with a par value of £0.50 per share
(2022: £0.50 per share). All issued shares are fully paid.
23. 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
Decrease/(increase) in inventories
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Decrease in intra Group balances
Cash generated by operations
Non-cash investing and financing activities
Right-of-use assets of £0.7m (2022: £nil) were acquired during the year.
Net debt reconciliation
Group
Company
2023
£m
6.4
5.2
0.6
24.3
3.4
(29.1)
–
10.8
2022
£m
25.3
4.8
0.8
(29.3)
(10.6)
20.5
–
11.5
2023
£m
(1.2)
–
0.6
–
–
0.3
11.3
11.0
2022
£m
(1.2)
–
0.8
–
–
0.4
4.5
4.5
At 1 January 2022
Cash flows
Non-cash flows*
At 31 December 2022
Cash flows
Non-cash movements*
At 31 December 2023
Net cash
and cash
equivalents,
including
overdrafts
£m
Long-term
borrowings
£m
Net (debt)/
cash
£m
Lease
liabilities
£m
(14.4)
(11.8)
(0.2)
(26.4)
(15.0)
(0.2)
(41.6)
14.7
(3.4)
–
11.3
(2.0)
–
9.3
0.3
(15.2)
(0.2)
(15.1)
(17.0)
(0.2)
(32.3)
(20.9)
1.8
(0.5)
(19.6)
1.8
(1.3)
(19.1)
Adjusted
net debt
including
lease
liabilities
£m
(20.6)
(13.4)
(0.7)
(34.7)
(15.2)
(1.5)
(51.4)
* Non-cash movements relate to the amortisation of borrowing costs (for long-term borrowings), the acquisition of right-of-use assets and lease interest.
24. 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 £1.0m (2022: £0.9m).
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. Details on the principal risk
identified in relation to defined benefit pension scheme liabilities is on page 43.
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
2023
£m
(350.2)
295.4
(54.8)
2022
£m
(352.9)
289.8
(63.1)
Company
2023
£m
(137.3)
111.8
(25.5)
2022
£m
(139.0)
110.0
(29.0)
A related, offsetting deferred tax asset for the Group of £13.7m (2022: £15.7m) and the Company of £6.4m (2022: £7.3m)
is included within non-current assets. Therefore, the pension scheme deficit net of deferred tax for the Group was £41.1m
at 31 December 2023 (2022: £47.4m) and the Company was £19.1m (2022: £21.7m).
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:
Group and Company
Rate of increase in salaries
Rate of increase of pensions in payment
Discount rate
Rate of price inflation (RPI)
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
2023
Years
20.5
22.7
21.7
24.0
2022
Years
20.9
23.1
22.1
24.4
2023
%
nil
3.15
4.50
3.15
Company
2023
Years
20.0
22.3
21.5
23.7
2022
%
nil
3.45
4.85
3.45
2022
Years
20.4
22.7
21.9
24.1
140 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 141
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Notes to the financial statements
For the year ended 31 December 2023
24. 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
Decrease/increase by 3%
Increase/decrease by 1%
Decrease by 5%
Increase/decrease by 0.25%
Increase/decrease by 0.25%
Decrease by 1 year
Decrease/increase by 2%
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
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
2023
£m
289.8
13.7
7.2
10.0
(0.9)
(24.4)
295.4
2022
£m
440.0
8.2
(146.1)
12.5
(1.3)
(23.5)
289.8
2023
£m
110.0
5.2
3.4
3.8
(0.5)
(10.1)
111.8
2022
£m
166.1
3.1
(52.8)
4.4
(0.7)
(10.1)
110.0
At 31 December 2023, the assets were invested in a diversified portfolio that consisted primarily of investment funds and debt
instruments. One of the schemes also holds insurance policies that pay an income into the scheme. The corresponding assets
are included within the fair value of the scheme assets. The fair value of the Scheme’s assets is shown below:
At 31 December 2023
At 31 December 2022*
Group
Equity and equity options
Alternative return seeking
Cashflow matching credit
LDI and cash
Currency hedge
Annuity policies
Company
Equity and equity options
Alternative return seeking
Cashflow matching credit
LDI and cash
Currency hedge
Quoted
£m
Unquoted
£m
Quoted
£m
Unquoted
£m
15.4
20.9
1.8
119.6
–
–
152.2
65.7
41.9
53.1
(37.0)
1.0
13.0
Total
£m
81.1
62.8
54.9
82.6
1.0
13.0
–
25.5
–
151.4
–
–
176.9
70.7
33.5
49.1
(57.2)
2.1
14.7
Total
£m
70.7
59.0
49.1
94.2
2.1
14.7
143.2
295.4
112.9
289.8
At 31 December 2023
At 31 December 2022*
Quoted
£m
Unquoted
£m
6.0
8.0
0.7
48.8
–
61.3
26.2
16.8
21.6
(16.7)
0.4
50.5
Total
£m
32.2
24.8
22.3
32.1
0.4
111.8
Quoted
£m
Unquoted
£m
–
10.6
–
62.3
–
72.9
28.6
13.3
19.4
(25.1)
0.9
37.1
Total
£m
28.6
23.9
19.4
37.2
0.9
110.0
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
Interest cost
Remeasurement loss/(gain)
Benefits paid from the schemes
Defined benefit obligation at 31 December
Group
Company
2023
£m
352.9
2.8
16.5
2.4
(24.4)
350.2
2022
£m
519.4
10.9
9.6
(163.5)
(23.5)
352.9
2023
£m
139.0
0.9
6.5
1.0
(10.1)
137.3
The defined benefit obligation at 31 December 2023 includes an amount of £13.0m 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 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 on liabilities arising from change in:
– demographic assumptions
– financial assumptions
– experience adjustments
Total recognised in the consolidated statement of comprehensive income
2023
£m
(0.9)
(2.8)
(3.7)
2023
£m
7.2
6.5
(8.9)
(2.8)
2.0
2022
£m
202.0
3.5
3.7
(60.1)
(10.1)
139.0
2022
£m
(1.3)
(1.4)
(2.7)
2022
£m
(146.1)
11.0
152.5
(10.9)
6.5
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 with work currently
ongoing between the Group and the trustees.
Deficit recovery plans, which end on 31 October 2030, have been agreed with aggregate monthly payments unchanged from the
previous recovery plans. The 2023 deficit recovery payments totalled £9.7m, with annual payments then increasing at the rate
of 2% per annum over the term of the recovery plans. A contingent cash mechanism is also in place, which triggers contingent
funding payments equivalent to 20% of any outperformance above a benchmark of available cash to 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.
The Group is aware of a case involving Virgin Media and NTL Pension Trustee, which could potentially lead to additional liabilities
for some pension schemes and sponsors, including (if applicable) the Group. This case is subject to appeal and the impact
(if any) is not known and will be assessed as relevant in the future.
* The prior year comparative has been updated to bring the presentation in line with the categories of assets that have been identified for year end
31 December 2023, which gives greater transparency.
142 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 143
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Notes to the financial statements
For the year ended 31 December 2023
25. 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 £0.6m (2022: £0.8m).
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 2023 LTIP valuation are:
Risk-free interest rate expected
Dividend yield expected share
Price volatility
%
3.3
2.5
40.5
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
2015 LTIP
2016 LTIP
2017 LTIP
2019 LTIP
2020 LTIP
2021 LTIP
2022 LTIP
2023 LTIP
Market price
on grant date
£
2023
Number
2022
Number
4.25
3.67
3.65
3.55
2.85
3.30
3.20
2.52
1,607
3,755
7,118
209,565
192,285
468,448
471,267
609,473
1,607
3,755
7,118
209,565
542,413
468,448
471,267
–
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 2 employee share plans outstanding and the
exercise prices for options under these plans range from £2.47 to £2.72. At 31 December 2023 there were 306,319 (2022:
537,320) options outstanding under the plans. The employee share plans are valued using the Black-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 2023 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
of long term service milestones (Loyalty awards):
Scheme
Loyalty releases
Shares held at
1 January 2023
Number of shares
(released)/purchased
1,182,032
(8,110)
Nominal
value
£
591,016
31 December 2023
1,173,922
586,961
The total number of shares held by the EBT at 31 December 2023 represents 2.5% (2022: 2.5%) of STV’s issued share capital.
The market value of own shares held at 31 December 2023 is £2.3m (2022: £3.2m). The weighted average exercise price of
share options outstanding was £3.02 (2022: £3.16).
26. Financial risk management
Capital management
The Group’s objectives when managing capital are to safeguard its 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 19, 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 2023 and 2022 were as follows:
Total borrowings (note 19)
Overdraft
Cash and cash equivalents
Net debt
Total equity
Total capital
2023
£m
41.6
4.6
(13.9)
32.3
(12.6)
19.7
2022
£m
26.4
7.0
(18.3)
15.1
(9.2)
5.9
164%
256%
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 adjusting) 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.
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.
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 2023 the Group had no forward foreign
currency contracts in place (2022: £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 2021 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.
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 19)
and net 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.
144 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 145
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview Notes to the financial statements
For the year ended 31 December 2023
26. Financial risk management continued
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 2023, a movement
of 1.00% in interest rates would change the level of interest paid in the year by +/- £0.3m (2022: £0.3m). 1.00% is considered
a reasonably possible change from significant increase in the bank of England base rate already incurred in the year.
27. 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 88 to 105 for details.
2023
£m
1.6
2022
£m
1.8
Other related party transactions
As disclosed in the prior year, the Group provided programme production financing of £3.0m to Two Cities Television Limited
to cash flow the production of Blue Lights, a drama series commissioned by the BBC. A working capital loan of £0.2m was also
provided to the associate in 2022. All amounts have been fully repaid in the year.
The Group provided advertising with an estimated fair value of £0.6m (2022: £0.5m) for nil consideration to the charity
organisation STV Appeal. The charity purchased advertising from the Group for a total of £0.1m (2022: £0.2m).
Amounts paid to the Group’s retirement benefit plans are set out in note 24.
£0.2m of a dividend was paid to the managing Director and minority shareholder of subsidiary company Crackit Productions
Limited during the period since acquisition.
28. Contingent liabilities and other commitments
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 2023, the Value Added Tax payable by other members of the
group registration amounted to £1.5m (2022: £2.3m).
29. Post balance sheet events
Group
On 31 January 2024, the Group announced it had increased its stake in the high-end drama production company, Two Cities
Television to a majority holding of 51% (from 25%). STV acquired a minority stake in Two Cities in January 2020, with an option
to increase its initial stake to a majority position upon Two Cities becoming profitable. Following the initial investment, the
Belfast-based company has made significant progress, producing two series of the critically acclaimed police drama Blue Lights
for BBC One, with the second series due to air in 2024.
Due to the recent timing of the acquisition, the Group is in the early stages of its fair value assessment of the assets acquired
and liabilities assumed and has not yet finalised the accounting for the business combination, but expects to complete its
assessment in the second half of 2024.
The carrying value of the net assets acquired at the date of acquisition was £0.2m. Goodwill represents the value placed on
the opportunity to materially enhance the future growth prospects of STV Studios drama division. This will be calculated as
the fair value of the consideration transferred, plus the amount of non-controlling interest, less the net of the fair value of the
identifiable assets acquired and liabilities assumed. The value of goodwill will be adjusted by a corresponding amount for the
value of intangible assets identified and the difference between the market and book values of the assets and liabilities.
Corporate advisers
Registrars
Link Group
Central Square
29 Wellington Street
Leeds LS1 4DL
Tel: +44 (0)371 664 0300*
Email: shareholderenquiries@linkgroup.co.uk
Shareholder Portal: www.signalshares.com
Independent auditors
Deloitte LLP
Chartered Accountants and Statutory Auditors
110 Queen Street
Glasgow G1 3BX
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
Eileen Malcolmson
STV Group plc
Pacific Quay
Glasgow G51 1PQ
Tel: 0141 300 3000
Email: eileen.malcolmson@stv.tv
Company registration number
SC203873
Annual Report on internet
The 2023 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.
146 STV Annual Report and Accounts 2023
STV Annual Report and Accounts 2023 147
Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview 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, Central Square, 29 Wellington Street,
Leeds, LS1 4DL; email: shareholderenquiries@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.linkgroup.eu/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.
148 STV Annual Report and Accounts 2023
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