Report & Accounts 2014

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Report & Accounts 2014 UTV Media plc Report & Accounts 2014

Contents

Summary of Results 2 Chairman’s Statement 3 Who We Are 5 Radio GB 6 Radio Ireland 8 Television 10 Strategic Report 12

Board of Directors 26 Corporate Governance 29 Corporate Social Responsibility 42 Report of the Board on Directors’ Remuneration 48 Report of the Directors 62 Statement of Directors’ Responsibilities in relation to the Group Financial Statements 66 Directors’ Statement of Responsibility under the Disclosure and Transparency Rules 66

Report of the Auditors on the Group Financial Statements 67 Group Income Statement 72 Group Statement of Comprehensive Income 73 Group Balance Sheet 74 Group Cash Flow Statement 75 Group Statement of Changes in Equity 76 Notes to the Group Financial Statements 77

Statement of Directors’ Responsibilities in relation to the Parent Company Financial Statements 123 Company Balance Sheet 124 Notes to the Company Financial Statements 125

Registered Ofﬁce and Advisers 128

1 UTV Media plc Report & Accounts 2014 Summary of Results

Financial highlights on continuing operations* • Group revenue of £116.0m (2013 restated: £107.2m) • Pre-tax profits of £17.2m (2013 restated: £17.0m) • Group operating profit of £19.7m (2013: £20.1m) – 2014 includes UTV Ireland start-up costs of £3.0m • Net debt £46.2m (2013: £49.6m) • Diluted adjusted earnings per share from continuing operations of 14.56p (2013 restated: 14.32p) • Proposed final dividend of 5.43p giving a full year dividend of 7.25p (2013: 7.00p)

* As appropriate, references to proﬁt include income from associates and joint ventures but exclude discontinued operations

Operational highlights • Improving macroeconomic environment in the UK and Ireland • Strong audience performances across Radio and Television • talkSPORT revenues of £29.7m (2013: £24.3m) boosted by World Cup • Strategic focus on radio and television – UTV Connect, PropertyPal, UTV Drive and Recruit NI now divested • UTV Ireland launched successfully on 1 January 2015

Prospects highlights • Radio Ireland revenue (local currency) flat (down 10% after adjusting for foreign exchange), Radio GB revenue flat against strong 2014 comparison and Television revenue (excluding UTV Ireland) up 4% • UTV Ireland performance impacted by delays to EPG positions, agency negotiations and slower than expected audience build. Losses for year now anticipated to be in the region of £6.0m • Foreign exchange headwinds impacting profitability in Ireland

Key dates • 14 May 2015 – Annual General Meeting & Interim Management Statement • 29 May 2015 – Record date for payment of dividends • 15 July 2015 – Payment of dividends • 28 August 2015 – Interim Results Announcement

2 UTV Media plc Report & Accounts 2014 Chairman’s Statement

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Richard Huntingford Chairman

Overview positions in radio in Ireland and in television in Northern Ireland, is already well known, as is its achievement in significantly increasing Your company made considerable progress during 2014, with the audience to talkSPORT. turnover growing to £116.0M (2013: £107.2M) and pre-tax profits increasing to £17.2M (2013: £17.0M) even after absorbing pre- In a statement to the market on 9 January 2015, we confirmed operational losses of £3.0M (2013: £0.1M) on our new television that a review of our strategic options in respect of our GB local station, UTV Ireland, which successfully launched on 1 January radio stations was under way and advised that it may, or may not, 2015. Profit growth of 45% in our GB radio division was particularly lead to the disposal of some, or all, of our GB local radio stations. strong and it was pleasing to record a return to profit growth in our We also advised that any disposal would not include talkSPORT, Irish radio division. Despite the investment in UTV Ireland, which Sport Magazine, talkSPORT International and any of our Irish radio included a lower than budgeted capital expenditure of £5.6M, group stations. net debt reduced by £3.4M. Our Irish radio stations continued to deliver impressive audience Results and dividends for the year* performances, occupying the number one slot in each of the major Group operating profit of £19.7M (2013: £20.1M) was after urban areas in which we operate, including Dublin. This strong accounting for pre-operational losses on UTV Ireland of £3.0M audience delivery mitigated the worst effects of the extremely deep (2013: £0.1M). After charging lower net interest costs of £2.4M advertising recession which Ireland experienced over the past few (2013: £2.9M) and foreign exchange losses of £0.1M (2013: £0.2M), years. More importantly, it provides firm foundations for growth group profit before taxation was £17.2 M (2013: £17.0M). Group net as the Irish advertising market recovers. This recovery started to debt was lower at £46.2M (2013: £49.6M). appear as we moved through 2014, though the euro exchange rate provided some headwind to growth. Dividends amounting to £6.8M (2013: £6.7M) were paid during the year, representing a final ordinary dividend for 2014 of 5.25p per With the tailwind of the FIFA World Cup, talkSPORT performed share and an interim ordinary dividend for 2014 of 1.82p per share strongly in 2014, both in terms of audience and financial as shown in note 12. performance. talkSPORT was the only UK broadcaster to broadcast live commentary of every single World Cup match, a total of 64 A final dividend of £5.2M representing 5.43p per share is proposed games. Audience reach achieved a record high of 3.3M weekly, for approval at the Annual General Meeting. If approved, warrants 50% greater than ten years ago and underlining the continuing in respect of it will be despatched on 15 July 2015 to shareholders popularity of good quality radio. The station’s pure sport focus on the register at the close of business on 29 May 2015. means that more than four fifths of all talkSPORT listeners are now male and over half are ABC1, underlining its unique appeal Review of activities to advertisers. With our renewed focus on broadcasting, preparations for the launch of UTV Ireland took centre stage in 2014. A licence was Our television channel in Northern Ireland maintained its long- agreed with the Broadcasting Authority of Ireland, programming standing position as market leader. Its audience success is built was acquired and commissioned, staff were recruited and trained, on the well-established formula of high quality local programming studio premises were fitted out and agreements were reached with packaged around an attractive network schedule within a strong all major platform providers. regional brand. Our share of the peaktime audience in Northern Ireland in 2014 was 24.7%, significantly higher than the ITV network Although our new channel’s licence is not that of a public service average of 21.3% and more than 4 times greater than our nearest broadcaster, the Minister for Communications, Energy and Natural commercial competitor, C4. Resources designated it as having public service characteristics which facilitated carriage on the DTT platform, thus ensuring Prospects universal coverage in Ireland, and prominence on Electronic The year has started in line with our expectations for our Programme Guides. Universal coverage and EPG prominence are established broadcasting assets. talkSPORT’s excellent audience prerequisites to achieving our ambition that UTV Ireland will be performance underpinned our initiative to seek our advertisers’ the second most watched channel, after state broadcaster RTE 1, support for improved airtime pricing. This should help us to within 2 years of launching. maintain talkSPORT’s profitability in 2015 at the levels achieved in the 2014 FIFA World Cup year. In Q1, talkSPORT’s revenues are Pre-eminent audience delivery is at the heart of our broadcasting expected to be down by 2%. strategy and the Group’s track record in delivering market leading

* As appropriate, references to operating proﬁt includes income from associates and joint ventures but excludes discontinued operations. 3 UTV Media plc Report & Accounts 2014 Chairman’s Statement

UTV Media plc Board of Directors - (L to R Front Row) – J. McCann, H. Kirkpatrick and R. Huntingford. (L to R – Back Row) S. Kirkpatrick, R. Brennan, N. McKeown, C. McConville, S. Taunton and A. Anson.

Our GB local radio stations continue to perform well, with 19% I am pleased to report that audience share is starting to grow and, growth in listening hours being recorded in the most recent RAJAR two months into the launch, UTV Ireland was the second most research. Q1 airtime revenues are expected to be up by 4%. watched channel in peaktime. Under a management team with a proven track record in delivering audience outperformance, I am The recovery in the Irish radio advertising market now seems to confident that our ambition for UTV Ireland to be the second most be under way although growth is, as yet, reasonably modest. Our watched channel after state broadcaster, RTE 1, within a two year stations over time have consistently outperformed the market due timeframe will be achieved. While it is a very early stage in the to their excellent listenership positions. In the first quarter of 2015, financial year of a start up venture, the delay referred to above we expect our Irish radio advertising revenues to be broadly flat has led to a change in assumption for the financial performance with further weakening of the euro reducing this to around 10% of the new channel. Consequently the current view is that the new down. channel will incur losses in the region of £6M in 2015.

The UK television advertising market is enjoying good growth in Q1 Conclusion 2015 and television advertising revenue derived from London to our Northern Ireland television division, UTV, is expected to be up by Our broadcast model is fairly simple to articulate: deliver 8% in the first quarter. Growth from our Dublin office to UTV is also significant audiences, sell those audiences effectively to forecast to be positive at 9% up in Q1. There continues to be some advertisers and maintain a low cost base. Broadcasters usually weakness in the Belfast marketplace where budget cuts recently find the first part of that model, audience delivery, the most introduced by the Northern Ireland Assembly are depressing difficult to accomplish but, as demonstrated in this report, it is government advertising expenditure, leading to a forecast 13% something that your company has consistently achieved and, in decline in revenue from that office. Overall, UTV Northern Ireland’s time, will bring to our new growth platform, UTV Ireland. television advertising is expected to be up by 3% in Q1. I would like to thank my colleagues on the board, the management UTV Ireland and, most importantly, our staff for their tremendous hard work and commitment to the UTV businesses over the past year. Many We were delighted that UTV Ireland met its goal of launching long hours have been spent by all those involved with getting UTV across the Republic of Ireland on 1 January 2015, which it Ireland on air, whilst their colleagues in other parts of the group achieved well within budget, in spite of a number of challenges have continued to work hard to ensure that their businesses along the critical path. It took us substantially longer than we had maintain their strong market positions and profit contributions. anticipated to receive the designation of the channel’s “public We are very fortunate to have such a wonderful team of service” character which meant that we had very little time before professional and passionate people striving to grow UTV. the launch date for engagement with our prospective audience about EPG positions and, where necessary, retuning of DTT boxes. Richard Huntingford In turn, this delayed meaningful negotiations with advertising agencies. As a consequence, our initial audience levels and Chairman advertising revenues have been lower than planned. 26 March 2015

4 UTV Media plc Report & Accounts 2014

Who we are

UTV Media plc is one of the most successful media companies based in the UK and Ireland incorporating broadcasting and digital media assets across its radio and television divisions.

Radio (GB) operates talkSPORT, the world’s biggest sports radio UTV Ireland, a dedicated new channel for viewers in the Republic station; Sport magazine, the UK’s leading sports magazine; of Ireland was launched on 1 January 2015. 13 independent radio stations (ILRs) in England and Wales as well as a number of digital radio multiplexes throughout GB. Our digital media businesses, Simply Zesty and Tibus, sit within the television division. Radio Ireland is the largest local radio operator in Ireland with seven stations broadcasting from Belfast, Cork, Limerick, Dublin With a dedicated catch up Player for both UTV and UTV Ireland and Drogheda and an advertising sales house based in Dublin. our success is built on delivering top quality content to our viewers, when they want it and wherever they are. Television operates the Channel 3 public service broadcast licence for Northern Ireland.

Where we are UK and Ireland 8790HGLDSOF+48797HOHYLVLRQ 86LPSO\=HVW\7LEXV /0)0 879,UHODQG)048795DGLR 6ROXWLRQV6LPSO\=HVW\ &RUNoV& &RUNoV)0 /LPHULFNoV/LYH)0 WDON63257WDON63257,QWHUQDWLRQDO 6SRUW0DJD]LQH 5DGLR:DYH 3XOVHDQG3XOVH -XLFH)0 :LVK)0 :LUH)0 7RZHU)0 3HDN 1 6LJQDODQG6LJQDO 6LJQDO 6ZDQVHD6RXQGDQG7KH:DYH 8 13 9 2 11 8795DGLR*%+4 10 18 12 3 14 talkSPORT broadcasts commentary

15 in multiple languages with partner 6 16 stations around the world.

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5 UTV Media plc Report & Accounts 2014

Radio GB

WDON63257SUHVHQWHUV talkSPORT based in London is the world’s biggest sports radio station and WKH 8.oV RQO\ KRXU GHGLFDWHG VSRUWV VWDWLRQ WDON63257 LV DQ RƯFLDO broadcaster of the Barclays Premier League, the FA Cup, England football internationals and the Capital One Cup.

Internationally, as global audio partner of the Premier League, Sport magazine is a high quality weekly free sporting magazine talkSPORT broadcasts Barclays Premier League, FA Cup which is the leading sports magazine in the UK and the second and Capital One Cup commentary in multiple languages with most read men’s title in the UK. It is available as a print edition partner stations around the world. The station’s exclusive and digitally on iPad, Kindle Fire and Android devices. package of audio rights has been extended, allowing talkSPORT to broadcast ofﬁcial live commentary of all 380 Barclays Our Audience Premier League matches in any language to listeners around the world outside of the UK and Republic of Ireland. • talkSPORT is listened to by over 3 million adults per week and 83% of all talkSPORT listeners are male and 56% are UTV’s 13 local radio stations each has a unique place in their ABC1. communities providing news, information and entertainment. • UTV’s 13 local stations are listened to by 1.28 million adults per week – 53% are female and 60% are aged between 15 Our stations are: and 44. • Juice FM in Liverpool, • Sport magazine has an audited weekly circulation of more • The Pulse 1 and 2 in West Yorkshire, than 300,000 and readership of almost 450,000 with 60% of • Signal 1 and 2 in Staffordshire and Cheshire, readers aged 25 to 34 and 81% categorised as ABC1. • Swansea Sound and The Wave in South Wales, • talkSPORT’s website has more than 3.2 million average monthly unique users, while our local radio stations attract • Peak 107 in North Derbyshire, over 600,000 users each month to their websites. • Radio Wave in Blackpool, • talkSPORT’s international output is expected to reach an • Tower FM in Bolton and Bury, estimated 75 million listeners around the world for its live • Wire FM in Warrington, Widnes and Runcorn, Barclays Premier League, FA Cup and Capital One Cup match commentary during the 2014/15 season. • Wish FM in Wigan and St Helens, and • Signal 107 in Wolverhampton, Shrewsbury, Oswestry, Kidderminster. Our Content As the UK’s only dedicated sports radio station, talkSPORT sets UTV also has interests in 8 local and regional DAB digital radio the sports news agenda. With award-winning broadcasters and multiplexes. sporting legends from the worlds of football, rugby and cricket, 6 UTV Media plc Report & Accounts 2014

Who we are

the station’s presenters have a wealth of sporting knowledge Several stations launched initiatives in their areas: Radio Wave and insight. in Blackpool helped tackle unemployment with a specialised campaign, while Swansea Sound launched the Hear My Voice During the 2014 FIFA World Cup, talkSPORT was the only UK campaign to raise awareness of the problem of bullying in broadcaster to bring commentary of every single match live to schools. listeners from Brazil, a total of 64 games. The station hosted a number of shows live from Rio to give listeners all the colour and atmosphere from the world’s most spectacular sporting event of 2014. talkSPORT also had a partnership with Liverpool Football Club that saw it become the ofﬁcial broadcaster of all its Champions League matches. talkSPORT’s presenters are the very best in the business and the station added considerable expertise to its output with former England Under 21 manager Stuart Pearce joining the station exclusively throughout the 2014 FIFA World Cup and Rugby World Cup winner Mike Tindall joining Colin Murray as a weekly co-host. As well as a line-up of talent including Alan Brazil, Darren Gough, Johnny Vaughan and Stan Collymore, talkSPORT attracted one of the biggest media personalities in the world to the studio as Piers Morgan co-hosted Drive alongside Adrian Durham. 3L[LH/RWWRSHQLQJ6LJQDOoVQHZVWXGLRV

Sport magazine continually interviews the biggest stars in world sport and has spoken exclusively to Usain Bolt, Rory McIlroy, Wayne Rooney and Luis Suarez.

UTV’s local stations hosted some exclusive interviews with big names from the music industry, including Calvin Harris and Olly Murs.

The stations’ talent search, together with NUA Entertainment, to ﬁnd ‘The Next Big Thing’ awarded a £100,000 record contract to Pete Gardiner from Belfast, who beat hundreds of entrants to the grand prize.

For the ﬁrst time, UTV launched the only three dedicated Christmas stations on DAB, Wave Christmas, Pulse Christmas and Signal Christmas, which operated for November and December alongside the main stations.

7 UTV Media plc Report & Accounts 2014

Radio Ireland

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UTV Radio Ireland comprises 7 market leading stations in the major urban areas in Ireland - FM104 and Q102 in Dublin, Cork’s 96FM and C103, Limerick’s Live 95FM, LMFM in Louth/Meath and U105 in the Greater Belfast area. The group also consists of a national radio sales house UTV Radio Solutions ZKLFKLVEDVHGLQ'XEOLQSURYLGLQJDVLJQLƬFDQWDGYHUWLVLQJDOWHUQDWLYHWR the national broadcasters.

(G6KHHUDQDW)0 UTV Radio Solutions also sells airtime for two client radio stations, Galway Bay FM and WLR FM in Waterford.

Our Audience

Listenership Data Weekly Market Reach Share

96FM / C103 Cork 66.0% 39.5%

Live 95FM – Limerick 61.9% 32.2%

Q102 – Dublin 17.3% 6.5%

FM104 - Dublin 30.8% 11.7%

LMFM – Louth/Meath 38.8% 31.2%

U105 – Belfast 21.0% 13.2%

Source – RAJAR Q4 2014 /JNLR / Ipsos MRBI 2014 - 4

8 UTV Media plc Report & Accounts 2014

Who we are

Our Content All 7 UTV Ireland stations continue to provide a unique mix of music, news, sport and current affairs, with a strong local/ community focus.

During 2014 Cork’s 96FM/C103 secured a new 10 year broadcast contract with the Broadcasting Authority of Ireland.

All stations continued their charitable initiatives during 2014, with the highlights being, €406,000 raised by Cork’s 96FM’s “Giving for Living” radiothon, £126,000 raised by U105’s “Operation Purple” for the NI Hospice, €86,000 raised by Live 95FM’s “95 Stop Tour for Limerick kids” and €50,000 raised by the FM104 “Help a Dublin child gig”.

All stations won awards at the PPI Radio Awards including FM104 being awarded the Music Station of the Year 2014.

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9 UTV Media plc Report & Accounts 2014

UTV Television

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UTV is the market leader in Northern Ireland delivering high quality news, FXUUHQW DƪDLUV DQG D ZLGH UDQJH DQG GHSWK RI QRQQHZV SURJUDPPLQJ backed up by the best of the ITV Network.

UTV first went on air in 1959 as part of the ITV Network and has • All local programming and news is available through digital held the Channel 3 public service broadcasting licence ever platforms including our website, mobile website and a news since. UTV was also the first commercial television operator on app for Apple and Android devices. the island of Ireland. Our Content In December 2014, the Taoiseach Enda Kenny, TD officially opened the new Dublin headquarters of UTV Ireland, a dedicated In 2014, UTV has broadcast: new UTV channel for viewers in the Republic of Ireland which • The most watched regional news – UTV Live went live on 1 January 2015. • The most watched soap – Coronation Street • The most watched drama – Downton Abbey Our digital businesses - Tibus and Simply Zesty - sit within the television division providing Group support as well as operating UTV continued its strong commitment to local programmes independently across Ireland, UK and globally for third party in 2014 to bring innovative and popular programming to our companies. audience. Our Audience • UTV is the market leader in Northern Ireland with a 24.7% peaktime share of viewing, more than four times the audience of our nearest commercial competitor Channel 4 which achieved a 5.7% share and well ahead of BBC NI’s 18.6%. (Source – Broadcasters’ Audience Research Board) • The top performing programmes in Northern Ireland were dominated by UTV which took 52 places out of 100, including 5 for UTV produced regional programmes. • UTV’s website received more than one million unique users every month since the start of 2014, with an average of 80,000 daily unique users with growth driven by increasing mobile and social media traffic throughout the year.

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Who we are

UTV Ireland brings top quality domestic content such as Rare Breed – A Farming Year and Paul and Nick’s Big American Food Trip to Irish viewers, backed up by the best of ITV Network programming including Coronation Street, Emmerdale, Ant and Dec’s Saturday Night Takeaway and Mr Selfridge.

UTV Ireland has achieved a strong start being the second most watched channel in peaktime in Ireland since launch.

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A commitment to high quality news and current affairs is at the heart of UTV’s output. UTV Live at Six is by far the most watched regional news programme in Northern Ireland. In 2014, UTV Live achieved an average share of 35.4%. These ﬁgures compare to BBC NI’s Newsline average of 29% and regionally the ITV Network News at 6.30 achieved an average share of 21.6%. $Q7DRLVHDFKRƯFLDOO\ODXQFKHV879,UHODQGoVQHZ+4

The news agenda gave extensive coverage to some of the most LQ'XEOLQ signiﬁcant developments in 2014 including the opening of the Historical Abuse Inquiry and Scottish Referendum coverage live from Edinburgh and Glasgow, while sporting highlights of the year included the Giro d’Italia, with coverage from across Ireland on its impact and the Clipper Round the World Yacht Race/ Maritime festival in Londonderry/Derry.

UTV took part in many key events across the year including the prestigious UTV Business Eye Awards, the Belfast Mela; the Spirit of Northern Ireland Awards and the Dalriada Festival.

The new UTV Player, which became available in 2014, re-invented the whole user experience with a clean, contemporary and robust design, also introducing mobile device compatibility. The ,UHODQG/LYH1HZV UTV Player app for Apple and Android devices allows users in Northern Ireland to catch up on their favourite UTV programmes Tibus for up to 30 days after broadcast. The App was downloaded more Tibus has been part of UTV since 2007 providing robust digital than 45,000 times in the four months following its launch in the infrastructure services including managed cloud hosting, summer of 2014. content delivery, streaming, high-grade connectivity and associated integration solutions to customers throughout the UK On 1 January 2015 UTV Media launched its new television channel and Ireland. for the Republic of Ireland, UTV Ireland, having secured the ITV rights for key programmes in the market.

UTV invested substantially in technical infrastructure in 2015 and Simply Zesty new facilities in support of our HD strategy and new UTV Ireland Simply Zesty is one of Ireland’s largest digital agencies with service. operations in Dublin and Belfast. Simply Zesty offers leading brands an unrivalled creative digital marketing and technology The new channel which is based in Dublin with additional service under one virtual roof with a dedicated and highly newsgathering and reporting presence in Cork, Galway, experienced team of digital professionals. Waterford and Limerick, utilises UTV’s existing winning formula of combining high quality news, current affairs, entertainment Tibus and Simply Zesty play a key role in the provision of and drama. The new channel is available on Sky, Saorview, UPC infrastructure and social media marketing services to TV and and eVision. radio divisions. 11 UTV Media plc Report & Accounts 2014 Strategic Report

Strategic Objectives UTV Media plc aims to maximise shareholder return and create value through the development of a focused and robust portfolio of market leading media assets. This is delivered through emphasis on three strategic objectives:

1. Grow audience share and drive advertising revenues through the provision of high quality content 2. Increase advertising revenues by offering multiple platforms to advertisers 3. Develop the Group’s portfolio of assets through capitalising on new opportunities, while maximising the Group’s proﬁtability

Business Model The Group is now managed across 3 key areas of business or activity – Radio GB, Radio Ireland and Television. UTV’s core business model is illustrated as follows:

Content Platforms Audience Revenue Operations High quality Focused on making Audience share is Maximising Ensuring costs and broadcast content content available driven by quality audience share investment are across multiple content delivered drives advertising appropriate for platforms over multiple revenues business needs platforms

Driven by: Radio and TV Quality content Audience share Includes: • Securing broadcasting are drives station growth is a direct • Investing in and retaining the key mediums of listener and viewer driver of the opportunities and broadcasting and content provision market share business’ advertising driving growth in programming and sponsorship new markets The growth in new The provision of revenues – both rights • Recruiting the platforms reinforces content through demand and pricing • Producing best people the absolute digital channels popular regional importance of allows the stations • Motivating and local content to reach new and them to achieve programming growing online success • Recruiting and audiences • Monitoring costs retaining key and managing talent across the resources Group • Ensuring capital • Acquisition expenditure of media is appropriate assets where to long term appropriate objectives

12 UTV Media plc Report & Accounts 2014 Strategic Report

Strategic Objective 1: Grow audience share and drive advertising revenues through the provision of high quality content

Radio GB Radio Ireland Television

A key component of the group’s The UTV Irish Radio Group remains the UTV is a recognisable brand across the broadcasting focused strategy is largest and most successful operator island of Ireland. 2014 was significant achieving continued organic growth at of independent commercial local radio for two major reasons: talkSPORT, the GB division’s flagship stations in Ireland, with seven stations, • In 2014 UTV in Northern Ireland national sports radio station. two in Dublin, two in Cork and one had its Ofcom licence renewed for a in each of Limerick, Drogheda and further 10 years. UTV has now been Strategies to maximise talkSPORT’s Belfast. the channel 3 licensee for Northern domestic listenership in 2014 included Ireland for more than 55 years the acquisition of rights to broadcast The output on each of the stations and has considerable experience every game of the 2014 FIFA World is firmly focused on the local areas catering to the local audience. The Cup, along with exclusive rights to in which they broadcast and is renewal and launch of the new Liverpool UEFA Champions League designed to meet the unique listening service are aimed to dramatically home matches. requirements of the local audiences increase both the commercial and they serve. An ability to provide audience footprints. 2014 also saw a focus on sales tailored local programming remains performance, with talkSPORT’s the cornerstone of output, resulting in • 2014 saw significant management restructured sales operations based in significant market leading positions. time devoted to growing the brand London and the North West ensuring with preparations for the launch an improved service to national media Each station is committed to of UTV Ireland, the new service agencies as well as direct clients. broadcasting local news and which launched successfully on 1 information, as well as having an January 2015 to serve the Republic In 2014 Sport Magazine provided an involvement in community events of Ireland. effective complement to talkSPORT and as a result a large affinity has in delivering cross-platform sales developed between the listeners and The quality of UTV’s television content opportunities based around events the stations. has two main components: such as the 2014 FIFA World Cup. • Through the current Network Sport enjoys a commercially appealing Individual audiences are attractive Affiliate Agreement with ITV large UK male readership centered on to local advertisers and these have (which runs through to 2024) London. been combined as an “Urban Access” the channel obtains a supply of package to give a national footprint quality programming content The 13 local radio stations in England and command significant national including popular shows such as and Wales have enjoyed strong revenues. Emmerdale, Coronation Street and commercial performance over I’m A Celebrity (Get Me Out of Here). recent years. The division’s clear UTV also benefits from long-term local positioning provides a point programme supply deals with major of difference resulting in sustained producers including ITV, All3Media advertising growth at a time when and Endermol. local print is experiencing consistent • Popular domestic programming, declines. This is coupled with an especially news and current affairs, emphasis on local sales performance, reflecting the communities UTV and achieved through strong commercial UTV Ireland serve. This is delivered leadership, effective sharing of best by ensuring the business has the practice across the group and a focus key talent, presenters and editorial on commercial KPIs for each of the and production staff with modern local radio stations teams. skills and a strong commitment to their audience.

The successful combination of these elements allows UTV to consistently outperform competitors for peak-time viewership in Northern Ireland. The model will be followed on the UTV Ireland Channel creating a distinctive mix to reﬂect a modern Ireland.

Related Non Financial KPIs Audience share including listener share, listening time and/or viewer share

Related Financial KPIs Revenue

13 UTV Media plc Report & Accounts 2014 Strategic Report

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Radio GB Radio Ireland Television

talkSPORT is capitalising on the All UTV Radio Ireland stations have In 2014 UTV made a major investment growth in internet listening through embraced new technologies and in new player technology and investment in its in-stream advertising are using these in conjunction with relaunched the UTV Player. The service platform. In common with other IP- traditional radio advertising to drive is user friendly and is designed to based advertising formats, this offers advertising revenues and fulfil the offer an improved user and advertiser increased targeting and measurement client need for engaged conversation experience on desktop and mobile compared with broadcast delivered with consumers. devices. Apps were also launched for advertising. Apple and Android operating systems. All stations have active websites This investment will be the backbone talkSPORT ended the year with more including features such as rolling local of the UTV Player in Ireland. than 1.25m Facebook Likes, up 273%, and national news, entertainment increasing Twitter followers on its news, listen live, podcasts and show In addition a new website has been primary account by 40% year on year to and presenter details. All group created for UTV Ireland, and this 674,000, with more than 5m followers websites were relaunched during 2014 new functionality will be rolled out in on Twitter across all accounts - an to make them more user friendly. UTV Northern Ireland in 2015. increase of 40%. Access to talkSPORT. Radio Ireland’s websites have over com via mobile devices increased one million page views on a monthly Website usage has grown as a result of 50% year on year, with app downloads basis. Micro sites are also developed to investment in new delivery channels. increasing by 4%. deliver new revenue streams. Online traffic has also been boosted by growing social media channels – The GB division also operates a UTV Radio Ireland’s stations have with Facebook and Twitter being core successful DAB multiplex business, an active and growing presence on components in UTV’s digital offering. which provides opportunities for third Facebook and Twitter. A defined social Programme makers and journalists parties to operate digital radio stations strategy has led to growth in all social deliver a cross-platform offering to in markets such as London and Central media platforms, with Facebook television, radio, the web (including Scotland. having over 436,000 followers and blogs), and social media. Twitter having over 129,000. Station In July 2014, UTV formed a company content has had over 5 million views on Pre-roll, MPU and home-page take- with Arqiva and Bauer Media, Sound YouTube and Instagram and Vine are overs remain popular with advertisers Digital Ltd, to apply for the UK’s second utilised where appropriate. and as traffic moves to mobile devices national commercial DAB multiplex we continue to work to monetize new licence. Each station has launched an App platforms. for mobile listening, as well as If Sound Digital’s licence application other features such as news and the UTV owned Tibus and Simply Zesty, is successful, UTV’s GB division will promotion of competitions. In response continue to offer core digital technology launch four new national radio stations. to the mobile revolution, all sites and support to Television, and other UTV These include three speech radio Apps have been optimised, by device, Media divisions. stations: talkRADIO, talkSPORT 2 and to provide the best user experience talkBUSINESS. In addition, as part of and deliver exciting commercial this licence application, UTV has teamed opportunities. up with the Virgin Group to bring Virgin Radio, one of music radio’s most iconic brands, back to the UK airwaves.

Related Non Financial KPIs Visits to digital platforms including website page views and unique users.

Related Financial KPIs Revenue

14 UTV Media plc Report & Accounts 2014 Strategic Report

Strategic Objective 3: Develop the Group’s portfolio of assets through capitalising on new RSSRUWXQLWLHVZKLOVWPD[LPLVLQJWKH*URXSoVSURƬWDELOLW\

Radio GB Radio Ireland Television

The group has successfully diversified Macro-economic conditions in Ireland In 2013 an agreement was signed with talkSPORT’s revenue streams over have improved in recent months and ITV Studios Global Entertainment, recent years. This has been achieved UTV Radio Ireland is well positioned to which gave UTV Ireland the exclusive via the complementary acquisition take advantage of the further predicted broadcasting rights for ITV Studios and integration of Sport magazine, the economic improvements throughout programmes for the Republic of development of talkSPORT’s popular 2015. Radio Ireland’s market leading Ireland audience, including popular digital platforms including its website stations continue to out-perform the soaps Coronation Street and talkSPORT.com and the launch in 2012 radio market by providing targeted Emmerdale from 2015. In February of talkSPORT International. advertising solutions to clients. 2014 a ten year television contract with the Broadcasting Authority of talkSPORT International moved into Cost management remains a priority Ireland was signed to facilitate this. profitability in 2014, with growth in and the national news operation was In December 2014 the Minister for revenues from content syndication, restructured to refocus efforts on local Communications in Ireland granted branded content and digital news, with resultant cost savings. Work UTV Ireland public service character advertising. During the year, talkSPORT is also ongoing in developing synergies status which allowed the channel International worked with partners with colleagues in UTV Ireland and access to the DTT platform and in over 87 territories, operating in 9 Simply Zesty. prominence on the Sky EPG. The different languages. On the back of this channel launched successfully on 1 performance, the station successfully The management team at UTV Radio January 2015. extended its global audio rights deal Ireland is also involved at an industry with the Barclays Premier League until level in engaging with Government, The Group’s investment in UTV Ireland 2019. the Broadcasting Authority of Ireland will position the business to drive and other radio operators, with regard growth on all platforms across the Through Radio GB’s investment in to maintaining radio’s commercial island of Ireland. the South African company, Main viability in a changing environment. Street 1035 (Pty) Limited, in April The television division continues to look 2014 talkSPORT, together with its for opportunities both in broadcasting partners, was awarded a licence by and digital media to develop the The Independent Communications business. Authority of South Africa to launch South Africa’s first dedicated sports radio station.

Related Financial KPIs Operating profit (before exceptional items) Profit before tax Cash flow Earnings per share

15 UTV Media plc Report & Accounts 2014 Strategic Report

Principal risks and uncertainties The strategic oversight of the principal risks and other major risks is considered to be an essential element of the Board’s role and the responsibility for identifying the risks and reviewing the effectiveness of the risk mitigation is a matter for full Board attention. These risks are actively monitored throughout the year by the Board and the impacts of the prevailing risks are considered and further mitigation actions are discussed and undertaken, as appropriate.

Towards the end of the year, the Board tasked the Audit Committee to act as facilitators for a comprehensive review of the Board Corporate Risk Register including the identiﬁcation and review of the principal and corporate risks that could affect the Group’s operations and achievement of objectives, and their potential impact on performance, results and liquidity of the Group businesses over the next few years. This was coupled with a robust assessment of the effectiveness of the risk mitigating activities.

Resulting from this review, the risk factors that are considered to be most signiﬁcant to the Group’s operations and achievement of its strategic objectives and how these are managed are described below. These risks do not necessarily comprise all those associated with the Group as there may be additional risks and uncertainties that are not currently known. Details of the governance arrangements by which risks and uncertainties are monitored and managed are set out in the Corporate Governance Report.

Risk description Related Potential Risk mitigation Strategic impact objectives

1 Reliance on Net Advertising Revenue 1, 2 & 3 Loss of revenue if The Group expects to address this by (NAR) revenue streams a trend of decline growing its existing share of the current The majority of the Group’s revenue stream in broadcast market using the combined strength of is sourced as advertising, thus a trend of advertising sales both its television and radio assets. materially declining demand for broadcast prevails advertising would signiﬁcantly affect the In addition, there is an ongoing focus business model. on growing non-NAR revenue streams including that from online and digital services.

2 New / emerging competitors encroach into 1, 2 & 3 Loss of revenue if The Group continually attempts to bring existing audience and advertiser share of audience volumes innovation to its audience offering, and the markets decline due to is continually moving cross-platform The rapid pace of development in the attractiveness with additional digital capabilities which media industry results in new products and of competitors’ allow the Group to reach and interact services frequently being launched into the products with greater audiences. marketplace. Additionally new competitors may enter existing Group markets, some of whom are existing dominant media entities.

3 UTV Ireland channel underperforms 1, 2 & 3 Failure to generate Strong content focus and quality of Competitive nature of the market may expected revenue if commercial management with proven result in delays or shortfalls in budgeted audience volumes track record in television broadcasting. revenue. fall below expected

4 ITV Network underperforms 1, 2 & 3 Loss of revenue if UTV has a long-standing partnership Television broadcasting activities are highly audience volumes with ITV. This is evidenced by the dependent on the performance of the decline new Network Afﬁliate Agreement ITV1 network and its supply of high quality signed in 2012, creating a strong ITV network programmes which attract large family including ITV, UTV and STV. audience volumes. Any factors that cause The performance of ITV1 remains of ITV1 network programmes to lose audience paramount importance to both ITV and share will directly impact on the local UTV. viewing audience volumes.

5 Non-renewal of sports broadcasting rights 1, 2 & 3 Loss of revenue if talkSPORT is a premium brand and is Securing exclusive and non-exclusive audience volumes attractive to the sellers of sports rights. sports rights, directly inﬂuences Talksport’s decline talkSPORT continually assesses the listenership share of the key advertising ﬁnancial return from alternative rights demographic of the male listener and its packages. attractiveness to sponsorship deals.

16 UTV Media plc Report & Accounts 2014 Strategic Report

Risk description Related Potential Risk mitigation Strategic impact objectives

6 Development of multiple audience-reach 1, 2 & 3 Loss of profit Technological developments are technology platforms if investment managed by specialist digital teams in The audiences’ expectations are to be able in technology the businesses who monitor demand to access broadcast content via multiple development and emerging platforms upon which routes on different platform technologies. does not result in to build innovative but cost conscious This is driving the need to develop technical increased audience solutions where the demand for the innovative offerings which may not provide and revenue. technology justifies such investment. significant additional audience volume or revenue and become a significant and growing cost element for the businesses.

7 Fundamental breach of broadcasting 1, 2 & 3 Loss of revenue The Group has put measures regulations if sanctions and in place to ensure that licence The television and radio businesses are fines are applied/ conditions are complied with. On highly regulated and the conditions to be imposed. an on-going basis, appropriate satisfied are extensive. The Group operates staff undergo training specific to its television and radio businesses under Dilution of assuring that there is regulation licences regulated by Ofcom and the Group brand and compliance. Communications with the Broadcasting Authority of Ireland (BAI). reputation damage regulators are given high priority and Both Ofcom and the BAI have authority if sanctions and representations are made to ensure to apply punitive fines for breaches of fines are applied/ that the regional position of UTV regulations and at the extreme either deny imposed. Media plc is considered when policy renewal of licences as they become due, or and regulatory issues are reviewed. revoke a license within its current licenced term, due to the occurrences of material and ongoing breaches of their regulations.

8 Major damaging incident / event occurs 1, 2 & 3 Loss of revenue Incident management and response An occurrence of a major incident or event if unable to air plans are in place for all businesses that terminates or signiﬁcantly disrupts advertisements with broadcasting functions to broadcast output for a sustained period of facilitate continuity of broadcasts. time. Dilution of There are regular reviews of the Group brand and essential equipment for robustness reputation damage and modernisation requirements are if unable to rectify undertaken. quickly

9 Loss of members of the Executive Board 1, 2 & 3 Reduction in There are succession plans in place team and key Divisional staff share price due for Chief ofﬁcers. There are strong Difﬁculties will occur if there is an to market worries teams below the Executive Board and unforeseen loss of personnel without over strategic Senior Management who are able to appropriate succession or coverage plans management manage the business. that can be immediately put into place.

17 UTV Media plc Report & Accounts 2014 Strategic Report

Group Performance Review & Outlook

Results and dividends for the year The Group proﬁt before exceptional items for the year, after taxation, amounted to £13.8m (2013: £13.7m) of which £13.6m (2013: £13.4m) is attributable to the members of the Company as detailed in the Group Income Statement.

Dividends amounting to £6.8m were paid during the year representing a ﬁnal ordinary dividend for 2013 of 5.25p per share and an interim ordinary dividend for 2014 of 1.82p per share as shown in note 12.

A ﬁnal dividend of £5.2m, representing 5.43p per share, is proposed for approval at the Annual General Meeting. If approved, warrants in respect of it will be despatched on 15 July 2015 to shareholders on the register at the close of business on 29 May 2015.

Developments towards a broadcasting focused strategy In 2014 management continued to make good progress in transitioning the business to be focused predominately on broadcasting, in line with the Board strategy. The aim of this was to realise the synergies within the UTV Media Group and capitalise on Group efficiencies. UTV Connect and the portals, UTV Drive, Recruit NI and PropertyPal, had previously been identified as being non-core to the future strategy of the Group and were classified as discontinued operations in 2013. The sale of the Group’s shares in PropertyPal was completed on 31 January 2014. UTV Drive ceased trading on 2 May 2014 and UTV Connect and Recruit NI sold their trade and certain assets with effect from 30 June 2014 and 14 August 2014 respectively.

Tibus and Simply Zesty, the continuing activities which previously resided within the New Media operating segment, are incorporated within the Television operating segment. In 2014, these businesses continued to integrate across the broadcasting businesses. In line with the Group strategy, the focus was on providing advertisers with greater choices for campaigns spread across multiple platforms. Increased use of digital platforms is evident in each of the divisions, based on ﬁgures provided by ‘Google Analytics’.

The more positive economic conditions in the UK and Ireland, with the stimulus of the 2014 FIFA World Cup, contributed to revenue growth of 8%. Audience shares across radio and television leave the business in a strong position for the future.

Financial Key Performance Indicators Performance from continuing operations during the year against the Group’s ﬁnancial KPIs was as follows:

2014 2013 Change (restated)* 1 Revenue £116.0m £107.2m +£8.8m 2 Operating profit £19.4m £19.9m (£0.5m) 3 Profit before tax ** £17.2m £17.0m +£0.2m 4 Free cash flow *** £15.8m £15.7m +0.1m 5 Diluted adjusted earnings per share 14.56p 14.32p 0.24p

* 2013 results have been restated to reﬂect joint ventures, previously accounted for by recognising the Group’s share of the assets, liabilities, revenue and expenses relating to the joint venture, now accounted for using the equity method.

** Includes associate and joint venture income but excludes discontinued operations and exceptional items

*** This represents the cash generated by the Group’s operational activities in the period (before ﬁnancing costs, tax, dividends, and other discretionary payments)

Financial KPI 1: Revenue Group revenue from continuing operations has increased by 8% to £116.0m (Restated 2013: £107.2m). Improving macroeconomic environment in the UK and Ireland compounded by World Cup sales resulted in signiﬁcant growth. For further information on the Group revenue from continuing operations refer to the divisional performance reviews and to the segmental analysis of Revenue in note 3.

Financial KPI 2: Operating Profit (before exceptional items) Group operating profit from continuing operations before tax, finance costs and exceptional items and including associate and joint venture income has decreased by 2.5% to £19.4m (Restated 2013: £19.9m). This reflects increased operating costs as a result of the pre-start-up costs, totalling £3.0m, of the new television station, UTV Ireland. For further information on the Group operating profit refer to the divisional performance reviews and to the segmental analysis of operating profit in note 3.

Financial KPI 3: Profit before tax Group profit before tax has increased by 1.7% to £17.2m (Restated 2013: £16.9m). This reflects the reduction in operating profit as highlighted above, foreign exchange losses of £0.1m and a decrease in net financing costs of £0.6m. The net financing cost was reduced by 20% to £2.36m (Restated 2013: £2.96m). This saving was a result of lower debt levels and lower interest rates.

18 UTV Media plc Report & Accounts 2014 Strategic Report

Financial KPI 4: Cash Flow 2014 2013 Increase / (restated) (decrease) £m £m £m

EBIT (1) 19.5 20.2 (0.7) Depreciation and amortisation 1.9 2.1 (0.2)

EBITDA 21.4 22.3 (0.9)

Capital expenditure (net) (7.6) (1.7) (5.9) Working capital movement 3.2 (1.8) 5.0 Non-cash decrease in contingent consideration (1.2) (2.9) 1.7 Exceptional costs - (0.2) 0.2

Free cash ﬂow 15.8 15.7 0.1

Net ﬁnancing costs (1.8) (2.2) 0.4 Tax (2.5) (2.5) - Dividends paid to equity shareholders (6.8) (6.7) (0.1) Dividends paid to non-controlling interests (0.2) (0.5) 0.3 Proceeds from sale of discontinued operations 0.9 - 0.9 Acquisitions - (0.2) 0.2 Acquisition of treasury shares (0.5) - (0.5) Discretionary pension payments (1.2) (1.2) - Other pension payment (1.4) (1.4) - Other cash ﬂows 0.5 (0.1) 0.6

Net cash ﬂow 2.8 0.9 1.9 Repayment of borrowings (3.9) (4.2) 0.3 Proceeds from borrowings 3.9 3.0 0.9

Net increase/(decrease) in cash 2.8 (0.3) 3.1

(1) Earnings before interest, taxation, exceptional items and including dividend income from associates and JVs.

Free cash flow from operations increased by £0.1m to £15.8m (Restated 2013: £15.7m), reflecting the positive working capital movement of £5.0m, due to increased deferred income and trading accruals, offsetting the decrease in EBITDA of £0.9m and increased capital expenditure of £5.9m, which primarily reflects the investment in UTV Ireland. The prior year comparison also benefitted from the absence of the £2.9m non-cash gain on contingent consideration which arose in 2013.

From the free cash ﬂow of £15.8m (Restated 2013: £15.7m) the Group paid £1.8m on ﬁnancing costs, £2.5m on tax and £6.8m on dividends to equity shareholders.

Note 22 Financial Liabilities includes details of the Group’s banking facilities which were reﬁnanced on 31 May 2012. Facilities totalling £59.6m have been utilised leaving unutilised facilities of £20.7m, plus overdraft facilities of £5.6m and cash reserves of £12.9m.

The banking covenant ratio requirements (which are calculated before exceptional items) are deﬁned in the facilities documentation as: (1) Net Debt to EBITDA ratio should not exceed 3.50 (2013: 3.50:1) (2) EBITDA to Net Interest Expense ratio should not be less than 3.25 (2013: 3.25:1)

The required ratios were comfortably met as follows: (1) Net Debt to EBITDA ratio of 2.15:1 (2013: 2.31:1) (2) EBITDA to Net Interest Expense ratio of 11.11:1 (2013: 9.78:1).

The banking facilities have been secured for the period to 31 May 2017. 19 UTV Media plc Report & Accounts 2014 Strategic Report

Financial KPI 5: Diluted adjusted EPS Diluted adjusted EPS of 14.56p, an increase of 0.24p or 1.7% (Restated 2013: 14.32p) reﬂecting the increase in adjusted proﬁt.

Outlook Improving market conditions in the UK and Ireland underpin these strong results. Existing long-term contracts for talkSPORT provide us with conﬁdence for revenue growth. Following the successful launch of UTV Ireland the focus now is on both audience and revenue progression. Having successfully exited non-core media activities the Group has a renewed focus on the broadcasting business.

20 UTV Media plc Report & Accounts 2014 Strategic Report

Performance Review (continued)

Radio GB Revenue in the Radio GB division was £56.4m (Restated 2013: £49.9m). Radio GB’s total operating profit, was £11.3m (Restated 2013: £7.8m). Radio GB division contributed 49% (2013: 47%) to Group revenue and 49% (2013: 35%) to Group operating profit. talkSPORT Non financial KPIs Source 2014 2013 Change Audience: Weekly reach - the number of individuals listening to a station for at Radio Joint Audience 3.2m 3.1m +0.1m least 5 consecutive minutes in an average week. Research (RAJAR) Average weekly hours RAJAR 6.7 hours 6.5 hours +0.2 hours - the number of hours spent listening to a station in an average week. Sport magazine weekly circulation Audit Bureau of 304,000 304,000 - Circulations (ABC) Digital platforms: Average monthly unique users - talkSPORT.com Google Analytics 3.3m 2.4m +0.9m +36% Average monthly page views - talkSPORT.com Google Analytics 20.4m 15.1m +5.3m +35% talkSPORT revenues were up 23% to £30.0m (2013: £24.3m). This performance was driven by the 2014 FIFA World Cup, growth in listenership contributing towards an increase in saleable inventory and a growing national radio advertising market.

The station’s average weekly audience reach climbed to 3.2m, an increase of 3% year on year. Key individual day-parts also delivered strong performances – with the Alan Brazil Sports Breakfast achieving reach figures of 1.46m (up 6% year on year); Colin Murray achieving 1.0m (up 2% year on year) and Drivetime delivering 1.3m (up 5% year on year). Listeners are also tuning in for longer, with average hours increasing during 2014 to 6.7 hours a week. talkSPORT continued to add to its live rights during 2014. As well as existing deals giving exclusive rights to 64 Premier League matches per season until 2016 and exclusive commercial radio rights in relation to England International, FA Cup and League Cup matches, talkSPORT expanded its coverage of European club matches via an exclusive agreement to cover Liverpool’s UEFA Champions League campaign. Investment in live rights contributes directly to growth in audience for the station and creates an attractive environment for sponsors. talkSPORT’s extensive coverage of the FIFA World Cup was able to draw upon a dedicated production team in Brazil working in tandem with the station’s UK-based programming resources. talkSPORT was the only UK broadcaster to provide full 90 minute commentary of every single World Cup match. The station’s live commentary spanned broadcast and digital platforms and formed part of a comprehensive schedule of coverage encompassing every part of the station’s output. talkSPORT International moved into profitability in 2014. The division provides sports radio programming for overseas based audiences, anchored by an exclusive rights deal which grants talkSPORT the status as the Premier League’s Global Audio Partner. This cross-platform rights agreement – which was successfully extended during the year until the end of the 2018/19 season – provides comprehensive digital audio and broadcast radio rights across all markets outside the UK and Ireland. talkSPORT International focuses on radio syndication, sponsorship and digital revenues. The division produces official multi-lingual coverage of Premier League matches which is then exploited under commercial agreements with international partners. During 2014, new partners were added in markets such as China, Saudi Arabia and Jamaica, joining existing partners in countries ranging from the USA to Malaysia and U.A.E. to Nigeria. talkSPORT’s on-air performance continued to be complemented throughout 2014 by strength in digital. talkSPORT.com is one of the most popular online destinations in UK radio. Users are drawn to the site not only by the opportunity to listen live or to catch- up on programming highlights, but also by the station’s investment in compelling sports news, features and video content. In turn, talkSPORT’s cross-platform sales approach assists in converting this audience scale into digital advertising, sponsorship and content revenues.

21 UTV Media plc Report & Accounts 2014 Strategic Report

talkSPORT.com achieved its highest ever numbers to the site on transfer deadline day, reﬂecting the appetite of football fans for the latest news and updates about their club. Average monthly unique users during the year exceeded 3.3 million, up 36% year on year, with 20 million monthly average page views, up 35%. talkSPORT ended the year with more than 1.25m Facebook Likes, up 273%, increasing Twitter followers on its primary account by 40% year on year to 674,000, with more than 5m followers on Twitter across all accounts - an increase of 40%. Access to talkSPORT.com via mobile devices increased 50% year on year, with app downloads increasing by 4%.

With a stable weekly print distribution of 304,000, talkSPORT’s sister brand Sport is the UK’s largest sports magazine and the second biggest consumer men’s title. Sport pioneered free magazine distribution when it was launched in 2006 and has gone on to have a signiﬁcant impact on the consumer magazine sector. As well as print distribution, Sport is also available in iPad, Android and Kindle Fire HD formats.

Sport extended its strong reputation within the sports media industry during 2014, with a breadth of sporting coverage spanning the Glasgow Commonwealth Games, the Ashes, Tour de France and Formula 1 as well as football and rugby. The magazine’s high quality features and news coverage continued to be supplemented by interviews with prominent sports personalities, including Wayne Rooney, Usain Bolt and Rory McIlroy.

Local Radio Non ﬁnancial KPIs Source: 2014 2013 Change Audience: Weekly reach RAJAR 1,232,000 1,269,000 -3% - the number of individuals listening to a station for at least 5 consecutive minutes in an average week Average weekly hours RAJAR 9.1 hours 8.3 hours +0.8 hours - the number of hours spent listening to a station in an average week. Digital platforms: Average monthly unique users - Total for all local radio station websites Google 0.6m 0.5m +0.1m analytics +20% Average monthly page views - Total for all local radio station websites Google 2.2m 1.8m +0.4m analytics +22%

Revenue across the local radio businesses increased by 2% to £20.8m (2013 restated: £20.4m), which compares to a local market up 1%.

The Radio GB division’s 13 local radio stations in England and Wales delivered a strong programming performance, with an overall increase in listening hours resulting in a direct increase in saleable inventory. Average weekly audience reach declined slightly to 1.2m, however the average hours per listener grew by 11% to 9.1 hours per week with total weekly hours growing by 9% to 11.2m. Particularly strong performances were recorded by Juice FM with a year on year increase in weekly listeners of 16%, Swansea Sound which recorded a 14% increase and Signal 2 with an increase of 8%.

Engagement with UTV’s GB local radio network via desktop and portable connected devices saw sustained growth, with an average of 0.6 million monthly unique users, up 20% year on year, and 2.2 million average monthly page views, up 22% year on year.

UTV’s GB local radio network undertook a number of successful campaigns to foster community engagement during 2014. Highlights included Juice FM’s campaign to raise awareness of knife crime on Merseyside. ‘Knives Wreck Lives’ went on to win an O2 Community Engagement Award and a Bronze Sony Radio Academy Award. The Wave & Swansea Sound campaigned against bullying in South West Wales with their ‘Hear My Voice’ campaign. This received support from the Welsh Assembly, Childline and NSPCC.

Our search for a music star was a programming and promotional highlight during the summer of 2014. The Next Big Thing attracted several thousand entries from across all stations. By partnering with an independent record company, we were able to present the winner with a £100k recording contract.

We ended 2014 by launching three Christmas DAB stations in Swansea, Stoke on Trent & Bradford. These were extremely well received with online listening alone totalling 640k sessions.

22 UTV Media plc Report & Accounts 2014 Strategic Report

Performance Review (continued)

Radio Ireland The radio market in Ireland began to show some signs of a much needed recovery in 2014. Data from agencies suggests that the Irish Radio market finished around flat to 1% growth in 2014, a significant improvement on the 2013 position of minus 10-12%. The first six months of the year was where the majority of growth was seen but this is likely down to the weakness of these months in 2013, rather than any particular trend. In 2014 revenue in Radio Ireland decreased by 1%, an increase of 3% excluding the impact of foreign exchange to £20.5m (2013: £20.8m). Operating profit in the division was up 5% year on year to £5.4m (2013: £5.1m), an increase of 10% excluding the impact of foreign exchange.

Radio Ireland division contributed 18% (2013: 19%) to Group revenue and 23% (2013: 23%) to Group operating proﬁt.

Non ﬁnancial KPI Source: 2014 2013 Change Audience: Listened yesterday - daily reach (Urban Access) JNLR 749,000 763,000* (14,000) - the number of people who listened/tuned into a station -2% yesterday (average day) Weekly reach (U105) RAJAR 189,000 195,000 (6,000) - the number of individuals listening to a station for at -3% least 5 consecutive minutes in an average week Digital platforms: Average monthly unique users – Total for all radio Google analytics 0.2m 0.2m - station websites Average monthly page views – Total for all radio station Google analytics 1.33m 1.19m +0.14m websites +12%

* like for like comparison measuring Urban Access at end of 2014 with similar station in 2013 – accounting for the introduction of WLR to the package

Despite significantly increased investment from competitors, particularly in the Dublin and Cork markets, the network of stations within the Radio Ireland division once again delivered strong audience figures, with market leadership positions in Dublin, Cork, Limerick and Louth/Meath. These strong audience figures continue to be instrumental in driving the commercial performance of the division.

In 2014 a new Urban Access package was launched, containing for the first time the market leading local station in all 7 of the major urban centres. The package delivers all UTV-owned radio stations in Ireland, along with two independent stations, Galway Bay FM and the newly introduced WLR. At the end of 2014 JNLR reports confirmed that 749,000 adults tuned into the Urban Access stations on a daily basis. The commercial success of the Urban Access package was seen with growth at well above market levels. The small change in overall delivery of numbers is accounted for by the volatility of the quarterly survey, across seven stations, and is particularly pleasing in light of the significant on air investment made by competing groups which have not attracted the desired audience numbers.

In terms of individual stations FM104 maintained the largest market share of any local station in Dublin with a 12.5% market share. More importantly, the station also remains the leader in the Dublin market amongst the 15 – 34 demographic, with a market share of 23%. Its sister channel, Q102 delivers an all adult market share of 7.1% and this increases to 8.4% in the key housekeeper with dependant market and further to 8.5% in its 25 to 44 year old target market. The real strength of the UTV offering in Dublin is seen when FM104 and Q102 are combined as they complement each other. A combined total audience package share of 26.5% of Dublin’s 25 to 44 year olds and a 26% share of 25 to 44 year old housekeepers affords the combined UTV entity a strong position in key demographics.

The JNLR report for 2014 also brought good news for the stations in the other major cities, with Cork’s 96FM/C103, Limericks Live 95fm and LMFM all recording market leading performances in their respective areas. Cork’s 96fm/ C103 delivers a primetime share of 39.5% and a weekly reach of 66%. Limericks Live 95fm delivers 32.2% market share and 62% weekly reach and LMFM delivers a share of 31.2% and a weekly reach of 39%. In the Greater Belfast area, U105’s weekly reach decreased slightly by 3% to 189,000 however U105 recorded a 13.5% market share, which is up from 12.5% the previous year.

The cornerstone of this strong listenership performance is continued focus on high quality, local output which provides listeners with programming that is uniquely tailored to their interests. Strong community engagement is at the core of operations and numerous charitable/ community initiatives complement the music, news and entertainment output.

The Radio Ireland stations continue to expand their audiences into digital and social platforms as can be seen by the station’s popularity both on the web and on social networks. The strategic objective for Radio Ireland is to grow the solid trafﬁc levels across its network of dedicated websites and to increase engagement on social platforms. The assets are designed to be brand extensions of the radio stations’ offering, giving the communities they serve the chance to interact, enter competitions, listen live, and engage via online and social media platforms. The average monthly page views across all station web-sites increased by 12% year on year, whilst average monthly unique users remained ﬂat against the prior year. Facebook and Twitter followers across the stations also increased year on year with Facebook followers growing over 11% to 443,000 and Twitter followers increasing by 7% to 134,000. 23 UTV Media plc Report & Accounts 2014 Strategic Report

Performance Review (continued)

Television Improving conditions overall led to growth in revenue of 7% in the Television division, which incorporates the digital media companies Tibus and Simply Zesty. Start-up costs in UTV Ireland of £3.0m are included in the operating proﬁt of £6.5m (2013: £9.7m). Television division contributed 34% (2013: 34%) to Group revenue and 28% (2013: 43%) to Group operating proﬁt.

Non financial KPI Source: 2014 2013 Change Audience: Audience: market share (peak-time) -To be the most Broadcasters’ Audience 24.7% 26.3% -1.6% watched channel in NI Research Board (BARB) figures Audience: market share (news) -To be the most watched BARB figures 35.4% 35.5% -0.1% news in NI Digital platforms: Average monthly unique users Google analytics 1.1m 0.8m +0.3m +37.5% Average monthly page views Google analytics 13.8m 10.4m +3.4m +32.7%

UTV continued to be the most popular television channel in Northern Ireland in 2014, with a share of peak-time viewership of 24.7%, 3.4 percentage points higher than ITV, which posted an audience share of 21.3% in 2014; 6.1 percentage points more than BBC1 Northern Ireland; and 19% more than Channel 4, the nearest commercial competitor. Once again high quality content formed the bedrock of UTV’s audience figures, with the station’s flagship news show, UTV Live, reaffirming its position as the most watched news programme in Northern Ireland, delivering an average rating of 35.4% across the year.

Beyond news and current affairs, UTV continued to produce and commission successful, quality local programming which delivered strong audience share, in most cases higher than the national network share and complementing UTV’s compelling network-driven programming schedule, with favourites such as Coronation Street, Emmerdale, X Factor, I’m a Celebrity and Downton Abbey.

The implementation of the Group strategy of developing multiple platforms to reach audiences was evident through the u.tv website, a mobile site and Apple and Android Apps. In 2014 a new UTV Player site and App for Apple and Android was launched. Approximately half of u.tv’s trafﬁc are now accessing the site via mobile devices.

As a result UTV saw unprecedented year on year growth in online trafﬁc throughout 2014. Overall the site attracted an average of 1.1m unique visitors per month in 2014, an increase of 37.5% year on year, and delivered an average of 13.8m monthly page views, an increase of 32.7% year on year.

In February 2014, UTV was re-awarded the Ofcom Channel 3 licence for Northern Ireland for a further 10 years with effect from 1 January 2015. This was warmly welcomed and is an indication of the commitment of management and staff in the television division to provide high quality local public service broadcasting.

UTV Ireland, a venture to launch a service for the Republic of Ireland was announced in November 2013. The Broadcasting Authority of Ireland awarded UTV a Contract to broadcast in February 2014 and the Department of Communications, Marine and Natural Resources awarded the channel public service character in December 2014.

Throughout 2014 work has been ongoing to develop this project. Areas such as property, programming, infrastructure, technology and recruitment have all been addressed throughout the year. Studios have been built in Dublin with additional facilities in Cork, Limerick, Galway and Belfast to service the station. More than 100 staff have been recruited, the majority in highly skilled roles. The station launched successfully on the four major platforms of Sky, UPC, Saorview and Eircom’s eVision on 1 January 2015 along with a catch up service online.

The Television division also includes a specialist digital services business and full service digital agency, Tibus and Simply Zesty. Tibus is a specialist hosting and streaming provider, serving primarily the UK and Irish markets. As well as offering services to high- proﬁle external customers, Tibus provides online broadcast and technical services for the group businesses within UTV Media plc. These include the platforms behind the UTV Player, talkSPORT digital, talkSPORT International and the www.u.tv website. Tibus will play a key role in delivering the digital offering for UTV Ireland audiences in 2015.

24 UTV Media plc Report & Accounts 2014 Strategic Report

The business launched an innovative new Cloud hosting service in 2014 aimed at the private sector Managed Cloud market. This is an extension of Tibus’ core hosting service capability and represents a significant increase in capacity available for both new and existing clients. It also completed the development of its UK Government ‘G-Cloud’ platform and was awarded its first significant UK Government hosting engagement in October 2014. Tibus has acheived the ISO 27001 certification in Information Security & Information Governance in December 2014, the gold standard for IT Security.

Increased hosting capacity and demonstrable focus on IT Security are the key elements of Tibus’ strategic proposition to the hosting market in 2015-17.

Simply Zesty is a full-service digital marketing agency. 2013 was a year of transition and consolidation for Simply Zesty and that theme continued into 2014, but by the end of Q1 the agency had returned to proﬁt and that position strengthened as the year progressed. Throughout 2014, Simply Zesty broadened its portfolio of blue chip clients with a number of key new business wins and successful account growth and development efforts. With the addition of new senior appointments Simply Zesty’s service offering has continued to expand with the capability to deliver business critical and complex web solutions through to services more traditionally provided by an advertising agency.

Information about Environmental Matters, Entity’s Employees and Social, Community And Human Rights Issues Information about environmental matters, the entity’s employees (including gender breakdown) and social, community and human rights issues relevant to the Group are included within the Group Corporate Social Responsibility report.

This strategic report was approved by the Board on 26 March 2015 and signed on its behalf by the Group Chief Executive.

John McCann Group Chief Executive 26 March 2015

25 UTV Media plc Report & Accounts 2014 Board of Directors

Non-Executive Directors Richard Huntingford Stephen Kirkpatrick Chairman Non-Executive Director Richard is a highly experienced executive in the media Stephen is an experienced banking and corporate sector and has extensive leadership expertise at plc finance professional with considerable experience board level as a Non-Executive Chairman and Director. across a broad range of commercial operations. Appointment to the board: 2012 Appointment to the board: 2012 Age: 58 Age: 51 Chair of Nomination Committee Chair of Audit Committee External Appointments External Appointments Chairman (Non-Executive), Creston plc (2011 – present) Chief Executive, Corbo Properties Limited (2010 – present) Chairman (Non-Executive), Crown Place VCT plc (2012 – present) Non-Executive Director, Mutual Energy Limited (2010 – present) Non-Executive Director, JPMorgan Mid Cap Investment Trust plc Previous Experience (2013 – present) Member of the Governing Council of Chartered Accountants Chairman, Prince’s Trust Trading Limited (2010 – present) Ireland (2009 – 2012) Governor, Radley College (2010 – present) Head of Retail Credit, Bank of Ireland Group (2009 – 2010) Previous Experience Chief Executive, Bank of Ireland Northern Ireland (2006 – 2009) Chairman, Boomerang Plus plc (2008 -2012) Regional Director, North and Midlands, Bank of Ireland (2004 – Executive Chairman, Virgin Radio (2007 – 2008) 2006) Chief Executive Officer, Chrysalis Group plc (1987 – 2007) Senior Business and Corporate Banking roles, Bank of Ireland Non-Executive Director, Virgin Mobile Holdings (UK) plc (2005-2006) (1995 – 2004) Chairman, Channel 3 News Limited (2001) Senior Corporate Banking Manager, Ulster Bank (1993 – 1995) Non-Executive Director, Radio Advertising Bureau (1996-1999) Corporate Finance Specialist, KPMG LLP (1985 – 1993) Board level advisor, KPMG (1975 – 1987) Qualifications Qualifications B.A. (Hons) Business Studies, University of Ulster Fellow of the Institute of Chartered Accountants England & Wales Fellow of Chartered Accountants Ireland

Helen Kirkpatrick MBE Andy Anson Non-Executive Director Non-Executive Director Helen has extensive leadership and financial expertise Andy has significant commercial experience in the across a broad range of businesses at plc level. media, entertainment and sports sectors. Appointment to the board: 2007 Appointment to the board: 2012 Age: 56 Age: 50 Chair of Remuneration Committee External Appointments: Chief Executive Officer, Kitbag Limited (2011 - present) External Appointments: Non-Executive Director, British Olympic Association (2011 - Non-Executive Director, Kingspan Group PLC (2007 – present) present) Director, United Dairy Farmers Limited (2014 – present) Non-Executive Director, Dale Farm Limited (2014 – present) Previous Experience: Audit Committee Member, (Co-Opted) Queen’s University, Belfast Chief Executive Officer, England 2018 (2009 - 2011) (2014 – present) Chief Executive Officer, Association of Tennis Professionals (ATP) Europe (2007 - 2009) Previous Experience: Commercial Director, Manchester United (2004 - 2007) Corporate Finance Executive, Invest Northern Ireland (2007 – 2014) Partner, OC&C (2002 - 2004) Interim Chairman, UTV Media plc (2012) Director, Emuse Technologies Limited (2002 - 2012) Director / Chairman, Crumlin Together Limited (2005 - 2012) Managing Director, Channel 4 Interactive (2000 - 2002) Chairman, CAUSE (NI) Ltd (2007) Head of Strategy, Channel 4 (1999 - 2002) Board Member, International Fund for Ireland (2000 - 2006) Director of Finance & Planning, The Walt Disney Company, Director, Enterprise Equity Venture Capital Group (2000 - 2006) California (1996 - 1999) Director, NI-CO (Northern Ireland Public Sector Enterprises Ltd) Consultant, The Kalchas Group (1994 - 1996) (2000 - 2006) Consultant, Andersen Consulting (1988 - 1993) Qualifications: Qualifications B.A. (Hons) Business Studies, University of Ulster MBA, INSEAD (1993) Fellow of Chartered Accountants Ireland BA Mathematics, Oxford University (1983 - 1986) Member of the Chartered Institute of Marketing

26 UTV Media plc Report & Accounts 2014 Board of Directors

Coline McConville Róisín Brennan Non-Executive Director Non-Executive Director Coline has extensive management, operational and Róisín has extensive experience advising public international media expertise across a range of companies on corporate finance in Ireland. commercial markets. Appointment to the board: 2014 Appointment to the board: 2012 Age: 50 Age: 50 External Appointments: External Appointments: Non-Executive Director, DCC plc (2005 - present) Non-Executive Director, TUI AG (2014 – present) Non-Executive Director, Coillte Teo (2014 - present) Non-Executive Director, Fevertree Drinks PLC (2014 – present) Previous Experience: Non-Executive Director, Inchcape plc (2014 – present) IBI Corporate Finance Ltd (1990 - 2011) - Various senior positions Non-Executive Director, Wembley National Stadium Limited (2012 including Chief Executive (2006 -2008) and Executive Chairman – present) (2008 - 2011) Previous Experience: Non-Executive Director, The Irish Takeover Panel (2000 - 2001) Media Advisor, Actis (2012 – 2014) Qualifications: Non-Executive Director, TUI Travel plc (2011 – 2014) BCL, University College Dublin (1982 - 1985) Director, Shed Media plc (2009 – 2010) Fellow of Chartered Accountants Ireland Director, HBOS plc (2000 – 2009) European Media Advisor, LBO Candidate, Apax Partners (2006 – 2007) Chief Executive, Europe, Clear Channel International Ltd (2002 – 2006) Chief Operating Officer, Clear Channel International Ltd (1998 – 2002) Group Development Director, More Group plc (1996 – 1998) Associate, Strategic Consulting, McKinsey & Co Ltd (1994 – 1996) Associate, Strategic Consulting, The L.E.K. Partnership (1989 – 1992) Qualifications: M.B.A. (Baker Scholar), Harvard Business School B.A. (Hons) Jurisprudence, University of New South Wales B.A. (Hons) Laws, University of New South Wales

27 UTV Media plc Report & Accounts 2014 Board of Directors

Executive Directors John McCann Norman McKeown Group Chief Executive Group Finance Director John took over leadership of UTV in 1999 and is Norman is a highly experienced finance professional responsible for transforming UTV into a dynamic with extensive expertise across a broad range of media group. He is a highly experienced business businesses at plc level. leader with significant management experience Appointment to the board: 2009 across media and financial sectors. Age: 57 Appointment to the board: 1992 Previous Experience Age: 61 Group Finance Director, UTV Media plc, (2008-present) Previous Experience Managing Director, Sepha Ltd, (2005-2008) Non-Executive Director, Danske Bank Ltd (2005 – 2014) Finance Director, Sepha Ltd, (2000-2005) Non-Executive Director, Business in the Community Northern Group Finance Director, Lamont Holdings plc, (1997-2000) Ireland (2010 – 2014) Divisional Finance Director, Scottish & Newcastle plc and Bass Council Member, Chartered Accountants Ireland (2010 – 2014) PLC (1984-1997) Director and General Manager, Ulster Television plc (1990 – 1999) Qualifications Financial Controller/Company Secretary, Ulster Television plc B.Sc. (Econ) Queen’s University, Belfast (1983 – 1990) Fellow of Chartered Accountants Ireland Rescue Executive, Industrial Development Board for Northern Ireland (1981-1983) Financial Appraisal Executive, Department of Commerce (1980- 1981) MEMBERSHIP OF BOARD COMMITTEES Audit Function, Ernst & Young (1974 -1980) Audit Committee Qualifications Stephen Kirkpatrick (in the Chair) B.Sc. (Econ) Queen’s University, Belfast Helen Kirkpatrick Fellow of the Chartered Accountants Ireland Andy Anson Róisín Brennan Scott Taunton Chief Operating Officer Remuneration Committee Scott is a highly experienced commercial Helen Kirkpatrick (in the Chair) professional with responsibility for generating Richard Huntingford revenue across Television and UTV Radio (GB). Stephen Kirkpatrick Appointment to the board: 2005 Coline McConville Age: 44 External Appointments Nomination Committee Director, The Digital Radio Group (London) Limited Richard Huntingford (in the Chair) Director, First Radio Sales Limited Helen Kirkpatrick Previous Experience Stephen Kirkpatrick Managing Director, UTV Radio (GB) (2005 – present) Coline McConville Group Business Development Director, UTV Media plc (2002 - Andy Anson 2005) Róisín Brennan Managing Director, UTV Internet Ltd (2000 - 2002) General Manager, DNA Limited, (1995 - 2000)

28 UTV Media plc Report & Accounts 2014 Corporate Governance

Statement from the Chairman

Dear Shareholder,

On behalf of the Board, I am pleased to present UTV Media’s Corporate Governance Report for 2014. The Board is committed to high standards of governance and behaviour through building a corporate culture that champions responsibility, integrity and accountability in all business operations.

The Board considers that in respect of the year ended 31 December 2014, it has complied with the UK Corporate Governance Code 2012 (the “Code”).

This Corporate Governance report aims to express how our commitment to high standards of governance has been demonstrated throughout the year, by describing how the main principles of the Code have been applied in the Group. This is covered in the following sections: • Communications with shareholders • About the Board • Board and Committee structure • Board responsibilities for strategy and performance • Board responsibilities for internal control and risk management • Board meetings and performance • Operation of the Committees • Audit Committee Report • Nomination Committee Report

In conclusion, I hope that this Corporate Governance Report provides shareholders with a good insight into how the Group operates to maintain its high standards of governance, with responsibility, integrity and accountability at its core.

Richard Huntingford Chairman 26 March 2015

29 UTV Media plc Report & Accounts 2014 Corporate Governance

Communications with Shareholders Communications with shareholders are given high priority and major shareholders have the opportunity to consult with the Chairman and the Chair of the Remuneration Committee, who is also the Senior Independent Director. The Chairman ensures that the views of shareholders are fully communicated to the Board as a whole to promote a shared understanding of shareholder expectations.

The Executive Directors provide regular presentations to shareholders, fund managers and analysts for the interim and final results. They also provide strategy update briefings to promote open dialogue with stakeholders and attend investor conferences. Further details of the presentations and briefings to shareholders are contained on the corporate website: www.utvmedia.com.

The Board uses the Annual General Meeting, which is attended by all Directors, to communicate with private shareholders and institutional investors alike and welcomes their participation in a question and answer session. In line with the Code, the publication of the Annual Report and ﬁnancial statements will be notiﬁed to shareholders at least 20 working days before the Annual General Meeting. Details of the resolutions to be proposed at the Annual General Meeting can be found in the AGM Notice of the meeting. Each of the resolutions will be formally proposed to the Meeting and will be decided on a show of hands. A poll will be undertaken upon receipt of a valid request from a shareholder. Shareholders who are unable to attend the meeting can vote online or by post or by returning a form of proxy. For proxy votes on each resolution, these are declared at the Annual General Meeting after the vote from the shareholders present.

The Senior Independent Director, Helen Kirkpatrick, acts as a sounding board for the Chairman and serves as an intermediary for the other Directors. She is also available to shareholders for concerns which cannot be resolved by contact with the Chairman, the Group Chief Executive or other Directors, or for which such contact may not be appropriate.

About the Board Role of the Board The Board is responsible to its shareholders and other stakeholders for the leadership, direction and management of the Group within an effective controlled framework, in order to deliver sustainable long term success for the Group. The Board has a formal schedule of matters speciﬁcally reserved to it for decision. This schedule channels the Board’s focus to matters of strategy, accountability, competitive performance and value creation, balanced with determining the nature and extent of the risks that the Board considers appropriate in the implementation of its strategy.

Tenure and election Under the Company’s Articles of Association, all new Directors must be re-appointed by shareholders at the ﬁrst Annual General Meeting following their initial appointment by the Board and every three years thereafter. However, as recommended by the Code, all Directors are subject to an annual election process by shareholders and this will be undertaken at the Annual General Meeting in May 2015.

The Non-Executive Directors work to speciﬁed terms of engagement which are available at the Group’s registered ofﬁce and at the Annual General Meeting. The Non-Executive Directors are advised of the likely time commitments to service the Board and its business at the time of their appointment.

Insurance and indemnities The Directors and officers of the Group have the benefit of a Directors’ and Officers’ liability insurance. The Group has also entered into deeds of indemnity with its Directors. Such insurance and indemnities do not apply to any proven fraudulent or dishonest actions of a Director.

Roles of Board members and senior management team The roles of the Chairman and the Group Chief Executive are separately held, deﬁned in writing with a clear division of responsibilities between them, and approved by the Board. The Chairman is responsible for the leadership of the Board ensuring its effectiveness in setting strategy, giving clear direction and leading on the Board agenda.

The Board delegates the responsibility for the management of the Group to the Group Chief Executive who is responsible for running the businesses and achieving targeted performance through the delivery of the overall strategy, as agreed by the Board. At Board level, the Group Chief Executive is supported by two Executive Board Directors, being the Chief Operating Ofﬁcer and the Group Finance Director. The Executive Directors, through the established Management Committee, have particular responsibility for the operational delivery of the Group’s strategic priorities and objectives, for the systems of control, and for risk management.

The Non-Executive Directors of the Board have a particular responsibility for bringing objective challenge, judgement and scrutiny to all matters of the Board. They fully engage in constructive and open debate ensuring that no one party or grouping can dominate discussions nor unduly steer the agenda at meetings. They critically challenge proposed strategies and current operational performance, and ask searching questions to satisfy their information requirements before Board decisions are made. The Chairman regularly holds meetings with the Non-Executive Directors without the Executive Directors being present.

30 UTV Media plc Report & Accounts 2014 Corporate Governance

Biographies of all of the Directors of the Board are contained within the section on the “Board of Directors” and these details demonstrate the range of different skills and ﬁelds of experience that each Director brings to the Board. In combination, this gives an appropriate balance, challenge and judgement on the key issues of strategy, performance and standards of conduct, which are vital to the success of the Group. The biographies also list directorships held in other companies.

Conflict of interest The Articles of Association allow the Board to authorise any actual and potential conflict of interest that may arise and to impose such limits and conditions as it thinks fit. Conflicts of interest can only be authorised by those Directors who do not have an interest in the matter being considered and, in making such a decision, the Directors must act in a way they consider, in good faith, will most likely promote the success of the Group.

The Group has established a procedure whereby any actual and potential conflict of interest is advised to the Company Secretary and then considered by the Board. Actions arising from this consideration may include the exclusion of potentially conflicted Directors from specific Board discussions and associated decision-making. The Company Secretary has advised that there have been no actual or potential conflicts of interest noted in the year.

Board and Committee structure The Board is made up of the Chairman, the Group Chief Executive, two Executive Directors and ﬁve Non-Executive Directors. The ﬁve Non-Executive Directors are independent in both judgement and character and by the terms of the Code. The composition of the Board was strengthened in June 2014 with the appointment of the new Non-Executive Director, Róisín Brennan.

The Board has established three Committees with deﬁned responsibilities that are set out in separate terms of reference which are available on the corporate website: www.utvmedia.com. The Chair of each Committee provides the Board with a full brieﬁng on the activities of their Committees and the minutes are circulated. The structure of the Board, Committees and membership at 31 December 2014 is outlined in the following diagram:

Board & Committee Structure

Board

Richard Huntingford (Chairman) Helen Kirkpatrick (SID) Andy Anson Róisín Brennan Stephen Kirkpatrick John McCann Coline McConville Norman McKeown Scott Taunton

Audit Committee Remuneration Committee Nomination Committee

Stephen Kirkpatrick (Chair) Helen Kirkpatrick (Chair) Richard Huntingford (Chair) Andy Anson Richard Huntingford Andy Anson Róisín Brennan Stephen Kirkpatrick Róisín Brennan Helen Kirkpatrick Coline McConville Helen Kirkpatrick Stephen Kirkpatrick Coline McConville

31 UTV Media plc Report & Accounts 2014 Corporate Governance

Board responsibilities for strategy and performance The Board has a formal schedule of matters speciﬁcally reserved to it for decision. The full schedule of matters is available on the corporate website: www.utvmedia.com. The matters include: • Setting and monitoring strategy • Examining new business proposals / major acquisition possibilities • Ensuring adequate funding • Approving annual budgets • Reviewing trading performance • Formulating policy on key issues • Setting dividend policy • Reviewing ﬁnancing structures • Ensuring the appropriate level of reporting to shareholders

The Board meetings are structured around these matters with a set agenda that covers: • Strategy development and associated risks • Updates on operational performance and ﬁnancial impacts • Functional updates for each of the businesses

To enable the Board to discharge its duties in relation to these areas, all Directors receive appropriate and timely information including the Group Chief Executive’s report, monthly management accounts, budget reports and regular operational reports for each Business Division containing key metrics. This information enables them to review and assess the Group and management’s performance against agreed objectives. Brieﬁng papers are distributed by the Company Secretary to all Directors in advance of Board meetings and, where considered appropriate, the management team responsible for operational decisions and the functioning of the principal activities, will present to the Board.

All Directors have access to the advice and services of the Company Secretary who is responsible for advising the Board on governance matters and for ensuring that Board procedures are followed. The Company Secretary also manages the process for the Directors to obtain independent legal or ﬁnancial advice at the Group’s expense, if required. The Company Secretary role is undertaken by Norman McKeown, the Group Finance Director, and the two roles are clearly distinguishable and have separate functions. Given the size of the Group, there are presently no plans to change the secretarial arrangements but this will be kept under review.

Board responsibilities for internal control and risk management The formal schedule of matters for Board attention also includes:

• Assessing and maintaining the effectiveness of internal control • Effectiveness of risk identiﬁcation and mitigation responses • Maintenance of corporate governance standards

Compliance with provision C.2.1 of the UK Corporate Governance Code (2012) The Board has overall responsibility for the risk management and internal controls systems operating across the Group. The Board has reviewed the risk management and internal controls systems established and operating through the year and can conﬁrm that there have been no signiﬁcant failings or weaknesses noted in the systems. Such systems are designed to manage rather than eliminate the risk of failure to achieve the Group’s objectives and can only provide reasonable but not absolute assurance against material misstatement or loss.

Based upon the work undertaken by the Board and the Audit Committee, the Board is satisﬁed that the Group complies with provision C.2.1 of the UK Corporate Governance Code and that its established procedures relating to risk management and internal controls systems are in accordance with the guidance given in “Internal Control: Revised Guidance for Directors on the Combined Code” and that these have been in operation during the year and up to the date of the Annual Report.

32 UTV Media plc Report & Accounts 2014 Corporate Governance

The Board has reached this conclusion and makes this statement after: 1. Reviewing and evaluating the control systems designed by management to manage the delivery of the Group’s objectives, to meet the expectations of the shareholders, to safeguard the Group’s assets and to ensure that accurate ﬁnancial disclosure is consistently provided. 2. Identifying the risks to the Group and its operations. Reviewing and evaluating the risk management systems designed by management to manage the delivery of the Group’s objectives within the identiﬁed risk environment. 3. Discussing the activities undertaken by the Audit Committee throughout the year and being advised by the Chair of the Audit Committee on the status of the control systems and the ongoing development of the risk management systems. 4. Monitoring the principal risk areas faced by the Group and the effectiveness of the mitigation activities and controls established by Management to manage those risks.

1 Design of the control environment and control systems The Board, having considered the control framework established by management, deems it to be effective to manage and deliver the Group’s objectives. The key elements of the control framework that operated over the period covered by the financial statements, and up to the date of signing the accounts, include: • Business planning and budget process - There is a comprehensive business planning and budget process, supported by regular financial and operational reviews of the Business Divisions which monitor the key performance metrics enabling responsive action to be taken to address variances that may arise. • Devolved management structure - The design of a devolved management structure with the delegation of authority and responsibility for controls being allocated to each Business Division, optimises effective decision-making and accountability in appropriately tailored and controlled operating environments. This in turn promotes the effective use of assets. • Financial reporting controls – The Group Finance team is responsible for preparing the Group financial statements. There are detailed controls applied to the financial reporting process to ensure the integrity of content and disclosure, ensuring that there is full compliance with legislation and accounting standards, and thus satisfying shareholder and financial market expectations. • Control environment reviews - The network of control systems established by management in each Business Division makes up the control environment for the Group, and the senior management team is expected to monitor its control systems carefully. Internal Audit review aspects of the control environment in the Business Divisions to provide an independent assessment of the strength of the reviewed systems of control and indicate where enhancements and changes are required. All significant control weaknesses are reported to the Audit Committee.

2 Risk identiﬁcation and the design and implementation of the Risk Management System The Board is responsible for identifying the major risks faced by the Group, termed principal risks and corporate risks. At the Business Divisional level, the Board expects the Divisional teams to identify their major operational risks in their business.

The Board has determined that the Executive team is responsible for the design and implementation of the risk management systems needed to address both the principal risks and the design of those systems for managing the operational risks at the Business Division level. Accordingly, management then determine the appropriate level of controls and procedures required to effectively manage, monitor and mitigate all the identiﬁed risks.

The Business Divisions are expected to carry out ongoing monitoring of the risk areas and controls, with periodic oversight by the Executive team, reporting to the Board as appropriate. In relation to the Board’s role of evaluating the effectiveness of the risk management systems, processes and reporting requirements, operating across all the Group’s businesses, the Board utilises the Audit Committee to provide assistance and guidance in this area. Further information is provided in the Audit Committee Report.

3 Work of the Audit Committee and their advice The Board monitors the effectiveness of the systems during the year through the reports and updates provided by the Audit Committee which advises the Board about the effectiveness and robustness of the risk management and internal control systems. Such advice is based upon the Audit Committee’s work during the year and its assessment of the reports and ﬁndings provided from the independent sources of Internal Audit and External Audit, and also the updates and assessments provided directly by Management to the Committee.

4 Monitoring of the Principal Risks The strategic oversight of the principal risks and other major risks is considered to be an essential element of the Board’s role and the responsibility for reviewing the effectiveness of the risk mitigation is a matter for the attention of the full Board.

These risks and their management are monitored by the Board throughout the year. Board papers prepared by Management relating to the performance of the businesses and its risks, are discussed at Board meetings and the impacts of the prevailing risks are considered, with due attention on the principal risks. Further mitigating actions are discussed and undertaken, as appropriate. This dialogue and consultation process assists the Board in their evaluation of the effectiveness of the risk management systems operated across the Group’s businesses throughout the year.

33 UTV Media plc Report & Accounts 2014 Corporate Governance

Towards the end of the year, the Board tasked the Audit Committee to act as the facilitator for a comprehensive review of the Board Corporate Risk Register. This included the identiﬁcation and review of the principal and corporate risks that could affect the Group’s operations and achievement of objectives and their potential impact on performance, results and liquidity of the Group businesses over the next few years. This was coupled with a robust assessment of the effectiveness of the risk mitigating actions. The outcomes of this review are reported in the Strategic Report section in the Annual Report relating to the principal risks.

The updated Board Corporate Risk Register will be subject to regular Board review during 2015.

Board meetings and performance Meetings The Board met six times during 2014. Attendance at the Board and Committee meetings is set out in the following table. Meetings are held at different locations and facilitated by the various Business Divisions. The locations visited included talkSPORT in London (facilitated by the Radio GB Division), FM104 and Q102 in Dublin, (facilitated by the Radio Ireland Division), and in Belfast (facilitated by the Television Division).

Year Status Directors Board Audit Remuneration Nomination Appointed Committee Committee Committee Number of meetings 6 4 4 3 Non-Executive 2012 Chairman Richard Huntingford 6 - 4 3 2007 Independent SID Helen Kirkpatrick 5 4 4 3 2012 Independent Stephen Kirkpatrick 6 4 4 3 2012 Independent Andy Anson 5 4 - 3 2012 Independent Coline McConville 6 - 4 3 2014 (June) Independent Róisín Brennan 3 3 - 1 Executive 1992 Group Chief John McCann 6 - - - Executive 2005 Executive Scott Taunton 6 - - - 2009 Executive Norman McKeown 6 - - -

The Chairman sets the style and tone of Board discussions to encourage active, constructive debate and effective decision-making founded on mutual respect and open communication between the Non-Executive and the Executive Directors.

Board strategy day Whilst strategy is a regular topic at all Board meetings, in October 2014, the members of the Board attended a strategy day concentrating on the Group’s strategic objectives into the medium-term. The Board obtained contextual information about the wider media market from a specialist advisor. The heads of each business were asked to provide a detailed analysis of their business model and operational activities, expected future trends and to identify where opportunities and growth potential may lie in their business and in the wider marketplace. This approach built upon a similar process undertaken in the previous year to inform the Board of the proposed strategic direction at Divisional level, and to critically but constructively challenge the business model, in order to identify and continue to reﬁne the strategic priorities and objectives, as detailed in the Strategic Report.

Board effectiveness evaluation The Chairman ensures that there is a formal and rigorous annual evaluation of the Board’s own performance and that of its Committees and individual Directors. Following an externally-facilitated review process in December 2013 which showed the Board to be working effectively, an internal evaluation was carried out in January 2015 to assess the performance of the Board during 2014. This confirmed that the Board and its Committees continued to have the correct balance of skills, experience, knowledge of the company, independence and diversity to operate effectively, as well as the assessment confirming that each Director continued to contribute effectively and to demonstrate commitment to the role. The Non-Executive Directors, led by the Senior Independent Director, evaluated the performance of the Chairman, taking into account the views of Executive Directors, confirming that the Chairman led the Board throughout the year in a committed, focused and highly effective manner.

34 UTV Media plc Report & Accounts 2014 Corporate Governance

Operation of the Committees

Audit Committee The Audit Committee has particular responsibility for: • Reviewing ﬁnancial judgements and reporting • Monitoring the effectiveness of internal control • Monitoring the effectiveness of the risk management framework • Reviewing the relationship and performance of the Auditors

Nomination Committee The Nomination Committee has particular responsibility for: • Composition of the Board and Committees • Diversity on the Board • Search for Non-Executive Directors • Induction process for new Directors • Continuing professional development of the Directors • Succession planning for senior executives

Remuneration Committee The Remuneration Committee has particular responsibility for: • Framework for the Remuneration Policy • Remuneration package for Executive Directors and the senior management team • Target setting for performance related remuneration schemes • Design of share incentive plans

Reports of the Committees The Chairs of both the Audit Committee and the Nomination Committee have prepared a report to outline the workings of their respective Committees during the course of 2014 and these are detailed over the following pages. The activities of the Remuneration Committee are described in a separate section of the Annual Report in the “Report of the Board on Directors’ Remuneration”. During the year, the Chair of the Remuneration Committee advised the Board on remuneration matters which were discussed at the Committee meetings.

35 UTV Media plc Report & Accounts 2014 Corporate Governance

Audit Committee Report

Dear Shareholder,

On the following pages, on behalf of the members of the Audit Committee, I present the Audit Committee Report for 2014 detailing how the Committee has complied with the various provisions of the UK Corporate Governance Code 2012 (the “Code”). The report comprises three sections: • The Audit Committee in action • The focus of our attention in 2014 • Our relationship with the Auditors

The Audit Committee, as a Committee of the Board, has four core aims which guide its activities: 1. To monitor the integrity of ﬁnancial information, ﬁnancial reporting and disclosure 2. To determine the effectiveness of the internal controls systems established by management, and compliance therewith 3. To review the quality and effectiveness of the risk management systems established and operated by management 4. Reviewing the relationship and performance of the Auditors

Through these activities, the Audit Committee assists the Board in implementing its strategy, primarily through oversight of the control and risk-responsive operations of the management team. The Audit Committee seeks assurance that there is a sufﬁciently robust and effective system of internal controls in place to support the delivery of the Board’s strategy, and ultimately, to meet with shareholders’ expectations of Group conduct and the achievement of Group objectives.

Recognising the role and position of the Audit Committee in the governance structure, the Board asked the Audit Committee to assist in relation to Code provision C.1.1 requiring a statement that “…..the Annual Report and Accounts for 2014, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the performance, strategy and business model of the company”.

In line with the Guidance on Audit Committees issued by the Financial Reporting Council (FRC) we have included detail about the key issues and challenges that the Audit Committee faced as it carried out its activities throughout an eventful and busy year. We have provided an outline of how these issues were approached, the particular work needed to address such issues and the conclusions drawn.

Finally, a signiﬁcant exercise has been undertaken in 2014 entailing a complete review of the risk management system operating in the Group. The purpose of this review is to establish a strong platform to demonstrate compliance with the requirements of the UK Corporate Governance Code 2014 and the guidance issued by the FRC updating the Turnbull guidance on internal control, “Guidance on Risk Management, Internal Control and Related Financial and Business Reporting.”, both of which will apply to the Group for the ﬁnancial year 2015.

I believe that this Audit Committee report ably demonstrates the work of the Audit Committee in 2014, and consequently, hope that this report will be viewed as engaging, informative and useful for shareholders.

Stephen Kirkpatrick Chairman of the Audit Committee 26 March 2015

36 UTV Media plc Report & Accounts 2014 Corporate Governance

The Audit Committee in action The members of the Audit Committee are all independent Non-Executive Directors. The current members are: • Stephen Kirkpatrick (Chair) • Helen Kirkpatrick • Andy Anson • Róisín Brennan

The Board has satisfied itself that all members of the Audit Committee have recent and relevant financial experience and the Chair, Stephen Kirkpatrick, Helen Kirkpatrick and Róisín Brennan are qualified accountants. Further details about the members are provided in the Board of Directors section.

The Audit Committee carries out its role by meeting at least four times a year. The Chair of the Committee invites the Board members, the Internal Auditor and the External Auditor, as appropriate to attend the meetings. The Chair also meets throughout the year with the Group Finance team, the Group Chief Executive, the Internal Auditor and the External Auditor, in order to keep updated on all issues pertinent to the Audit Committee activities that are covered over the annual cycle.

Throughout the year, the Audit Committee is responsible for reviewing a wide range of matters including: • Monitoring the integrity of the Group’s financial statements, disclosure and announcements relating to financial performance • Determining the acceptability of accounting policies and practices • Reviewing and reporting to the Board on significant financial reporting judgements relating to the financial statements • Providing advice on whether the Annual Report and Accounts is fair, balanced and understandable • Keeping under review the effectiveness of the internal control and risk management systems operated by management • Approving the Internal Audit Plan and reviewing the effectiveness of the Internal Audit function • Reviewing the quality, performance and effectiveness of the External Auditor, assessing their continuing independence and considering the appointment and remuneration of the External Auditor • Reviewing the whistleblowing arrangements by which employees may confidentially raise concerns about possible improprieties

For more information on the Audit Committee activities, its full terms of reference can be accessed on the corporate website: www.utvmedia.com.

The focus of our attention in 2014 Signiﬁcant issues we reviewed in relation to the Group’s ﬁnancial reporting, internal control and risk management included:

Matters related to financial judgements and reporting The significant areas of judgement considered by the Committee in relation to the accounts for the year ended 31 December 2014 and how these were addressed are outlined below. Each of these areas received focus from the External Auditor, Ernst & Young LLP, who provided detailed analysis and assessment of the matters in their report to the Committee. • Intangible asset impairment review The Committee considered the carrying value of the intangible assets in the 2014 financial statements through reviewing the methodology applied in the impairment review and considering the reports provided by management. They constructively challenged underlying assumptions used within the cash flow forecasts, ensured the reasonableness of the discount rates used, recognising the impact of the different discount rates used for UK and ROI business, and reviewed the robustness of sensitivity calculations. The Committee concluded the intangible assets were not impaired. • Pension accounting The assets, liabilities and costs associated with the Group’s defined benefit retirement scheme were reviewed by the Committee. The advice provided by Mercer on the underlying assumptions used to value the scheme’s assets and liabilities and how these compare to external benchmarks was considered for appropriateness by the Committee. • Revenue recognition The Committee paid considerable attention to its policies for revenue recognition, especially how major sales-based contracts for advertising, which run over a number of consecutive years, were structured and how revenue was recognised over the contract period. Assurance was sought from management that the structure and terms were robustly supported by third-party agreements.

37 UTV Media plc Report & Accounts 2014 Corporate Governance

Matters related to operations and associated risk factors The signiﬁcant issues we reviewed in relation to the Group’s operations, internal control and risk management included: • Risks associated with the UTV Ireland project • IT strategy issues and cyber security threats that might impact the continuity of broadcast and support operational activities • Planning for the proposed changes to the UK Corporate Governance Code, and their reporting in the Report and Accounts for 2015

Matters related to the effectiveness of the internal control and risk management systems One of the key duties for the Audit Committee is to assist the Board in reviewing the control and risk management systems established by management and to report their ﬁndings to the Board. The Board can then conclude on the effectiveness of the systems and report on this in the Corporate Governance statement that is contained in the Annual Report.

Internal control systems The Chair of the Audit Committee advises the Board after considering the various reports from both the Internal and External Auditors, and additionally, on any reports prepared directly by management relating to their internal controls systems operating in their Business Divisions. The External Auditors, Internal Auditor and Executive Management have not highlighted any fundamental control issues to the Audit Committee during the year. The Committee members are of the view that the control issues raised in the various Internal Audit reports have not resulted in any losses to the Group and that they have received appropriate management attention.

Risk management systems Whilst the Board is responsible for identifying the major risks faced by the Group, termed principal corporate risks, Management has responsibility for identifying the risks in each Business Division and for determining the appropriate level of controls and procedures required to effectively manage, monitor and mitigate the identiﬁed risks, on a continuous basis throughout the year. In order to ensure that there is robust management of risk at all levels in the Group, Management are required to establish a fully functioning risk management system which is expected to be operated, in a similar manner, across all the businesses in the Group.

Towards the end of 2013, the Board tasked the Audit Committee and Management to assess the established risk management system, processing and reporting protocols with a view to identifying areas where improvements could be made. Based upon this assessment, the Audit Committee requested that a new approach should be undertaken to deliver an enhanced and effective risk management system, framework and structure.

Throughout 2014, the Audit Committee sponsored a systematic review, returning to the principles of business risk identiﬁcation by the Divisional teams, in order to form the basis for undertaking a comprehensive risk assessment exercise. The outputs are that risk and control scored listings have been prepared for the majority of the businesses in the Group. This exercise is expected to continue for the remaining businesses, after which, the Executive team will determine the prioritisation criteria to be applied to the risk listings, with the outcome that each business will have a prioritised risk register.

The focus in 2015 will be on developing an overall framework and devising a practical operating structure for the risk management system, supporting its routine embedded operation. This will include determining the overview and reporting requirements, both at Divisional and Executive level, that are reﬂective of and congruent with, the decentralised business and management structure.

38 UTV Media plc Report & Accounts 2014 Corporate Governance

Our relationship with the auditors The Audit Committee invests significant time and attention throughout the year in evaluating the work of both the External and Internal Auditors, as these Auditors provide a valued and independent source of assistance to the Committee. This is in terms of their key undertakings of evaluating the integrity of the Group’s financial statements and announcements relating to financial performance, and reviewing the effectiveness of the internal control and risk management systems established and operated by Management. The Chair of the Audit Committee meets with both the External and Internal Auditors without Management being present.

Internal Audit services The Group’s Internal Audit function assists in the review of the effectiveness of the internal control and risk management systems operated by Management. The function is independent of Management and reports directly to the Audit Committee. During the year the Committee approved the Internal Audit plan and considered the ﬁndings and recommendations of the Internal Audit reports and the proposed actions to be taken by management to implement recommendations. The Committee actively monitored the progress made by Management in this respect by requiring formal updates on progress on a quarterly basis. The Committee reviewed the effectiveness and performance of the Internal Audit function.

Audit ﬁrm tenure and appointment The Group’s External Auditors are Ernst & Young LLP and they provide a professional opinion on the integrity of the Group’s ﬁnancial statements, the accounting judgements made and contents of disclosure in the Annual Report. Ernst & Young LLP has been involved with auditing the Group’s affairs for over 50 years and there are no contractual restrictions on the Group with regards to their appointment.

On an annual basis, the External Auditors are required to confirm in writing that they have complied with UK professional and regulatory standards, including Ethical Standards for Auditors issued by the Auditing Practices Board. The Committee has considered this report from Ernst & Young LLP as part of conducting its review of the performance and effectiveness of the External Auditor. The review included assessing the scope, extent and effectiveness of direction of the Auditor’s work, discussion of the Auditor’s judgements and quality of challenge in their audit process and reporting disclosure. The Committee agreed the remuneration for audit services, the nature of any non-audit work undertaken and fee level, the independence of the current engagement team and the independence of their firm as a whole. Based on the Committee’s review and assessment, the members of the Audit Committee are satisfied with the performance of Ernst & Young LLP, their independence and objectivity.

It was reported last year that the Audit Committee was planning to undertake a tender exercise for the provision of audit services relating to the financial reporting year commencing 2015. Since the report was issued, the European Union has published its revised Audit Directive and Audit Regulation with changes made to many aspects of audit regulations, due to come in to effect in June 2016. Specifically responding to the EU Regulation articles 16 and 17 that relate to mandatory audit firm rotation, as the tenure of our current audit firm is over 20 years, the Audit Committee recognises that a full tender exercise will need to be undertaken for the appointment of the auditors for its financial statements 2020, at the latest, in order to fully comply with the EU Directive and Regulations.

The Audit Committee will pay particular attention to the more deﬁnitive guidance due to be issued later in 2015 by the Department of Business, Innovation and Skills and the Financial Reporting Council. This is expected to provide greater detail on how listed companies may implement the EU regulations, and importantly in terms of auditor rotation, the transitional processes through to 2020.

After due consideration of this guidance and related legislative issues, the Audit Committee will determine the progressive steps to be undertaken and the timescales, to conﬁrm that it appropriately addresses the guidance thus ensuring that it will comply with EU Directive and Regulations.

As has been Committee practice each year, the Audit Committee will continue to formally consider if there is a need to go to tender for its audit services based on audit quality or independence reasons, and will make recommendations as appropriate. Accordingly, a resolution will therefore be put to shareholders at the AGM in May 2015, to reappoint Ernst & Young LLP as Auditors for a further year.

Audit and non-audit services To ensure that the Auditor’s independence and objectivity is preserved in relation to its statutory auditing requirements, the Audit Committee has developed a policy to monitor all non-audit services that may be provided by its External Auditors. This policy means that all non-audit engagements are notiﬁed and reviewed by the Audit Committee on a quarterly basis. There are certain types of engagement, as detailed in the policy, which will always require prior approval by the Committee. The policy sets out the strict conditions that must be met for the provision of the services by the External Auditors and lists the types of work that are allowable and those which are prohibited. The policy covers factors such as tiered approval levels dependent on the type of work to be undertaken and the fee level. Details of the work carried out by the External Auditor and fees are set out in note 5 of the Notes to the Group Financial Statements and the policy is available on the corporate website: www.utvmedia.com.

Ernst & Young LLP were engaged to provide corporate tax services and advice. The engagement was after the due consideration of the Audit Committee who had determined that the tax services would not conﬂict with the External Auditor role or impair their independence. Accordingly, the Audit Committee is satisﬁed that the non-audit services provided and the level of fees for this work have not impacted on the continued independence and objectivity of the External Auditors in 2014. 39 UTV Media plc Report & Accounts 2014 Corporate Governance

Nomination Committee Report

Dear Shareholder,

On the following pages, on behalf of the Nomination Committee members, I present the Nomination Committee Report for 2014. The report comprises two sections: • The role of the Nomination Committee • The focus of our attention in 2014

Members of the Nomination Committee are: • Richard Huntingford (Chair) • Helen Kirkpatrick • Stephen Kirkpatrick • Andy Anson • Coline McConville • Róisín Brennan

The Board welcomed the appointment of a new Non-Executive Director, Róisín Brennan, in June 2014.

Richard Huntingford Chairman of the Nomination Committee 26 March 2015

40 UTV Media plc Report & Accounts 2014 Corporate Governance

The role of the Nomination Committee The Nomination Committee is responsible for the following: • Reviewing the size, composition and diversity of the Board in terms of satisfying the principles of the UK Corporate Governance Code (the “Code”). • Reviewing the specialist skills of the current Board members and allocating Committee responsibilities to the most suitable Board members. • Identifying the keys skills required of individual Directors and for future appointments to the Board when vacancies arise. • Considering tenure issues and succession planning. • Conducting search procedures for proposed candidates for the Board. • Overseeing the induction process for new Directors. • Overseeing the continuing professional development and training of the Directors.

For more information on the Nomination Committee activities, its full terms of reference can be accessed on the corporate website: www.utvmedia.com.

The Nomination Committee considered the composition of the Board throughout 2014 and all Non-Executive Directors, including the Chairman, are deemed as being independent.

The focus of our attention in 2014 During the ﬁrst half of the year, the Nomination Committee was focused on the recruitment of a new Non-Executive Director from the Republic of Ireland. With the planned launch of a new television channel in Ireland, it was felt that the Board would be strengthened by the addition of an individual with a strong track record of proven standing in the Irish business community. The Committee undertook a search for such an individual with assistance from independent external consultants based in Dublin. After considering a number of strong candidates, the Committee recommended to the Board that Róisín Brennan be appointed and she duly joined the Board on 1 June 2014.

The third quarter of 2014 was focused on providing the new Non-Executive Director with appropriate induction and training. Róisín was given a comprehensive introduction to the Group and detailed information describing the Group’s activities, ﬁnancial information and terms of reference for the Board and its Committees. Induction visits were arranged to the various Business Divisions to learn more about operations.

Throughout the course of the year, the Nomination Committee continued to consider succession planning arrangements in the senior Executive team, including current training and development needs, which might be put in place at the appropriate time. The Chairman ensures that training and development, tailored to each Director’s individual needs, is available for Board members. During the year, the Directors have attended brieﬁng sessions provided by various professional bodies and there have been continued visits to the various Business Divisions.

The Chairman ensures that there is a formal and rigorous annual evaluation of the Board’s own performance and that of its Committees and individual Directors. Following an externally-facilitated review process in December 2013 which showed the Board to be working effectively, an internal evaluation was carried out in January 2015 to assess the performance of the Board during 2014. This confirmed that the Board and its Committees continued to have the correct balance of skills, experience, knowledge of the company, independence and diversity to operate effectively, as well as the assessment confirming that each Director continued to contribute effectively and to demonstrate commitment to the role. The Non-Executive Directors, led by the Senior Independent Director, evaluated the performance of the Chairman, taking into account the views of Executive Directors, confirming that the Chairman led the Board throughout the year in a committed, focused and highly effective manner.

With respect to diversity issues, the Board acknowledges that diversity relates to the entire Group and not just the Boardroom, hence the Board is strongly supportive of management’s objective of attracting a highly skilled and diverse workforce, that is reﬂective of society, and that attraction and recruitment is in a manner that is fair and non-discriminatory. Speciﬁcally within the Boardroom, and in line with the Code requirements relating to diversity of the Board, with respect to gender, the Nomination Committee is pleased to note that there are three women who serve on the Board as Non-Executive Directors, which represents 50% of the total number of Non-Executive Directors, and 33% representation of the total number of Board members.

There were three meetings of the Nomination Committee in 2014.

41 UTV Media plc Report & Accounts 2014 Corporate Social Responsibility

John McCann, Group Chief Executive, UTV Media plc: p7KH*URXSoV&RUSRUDWH6RFLDO5HVSRQVLELOLW\PDQGDWHLVDQLQWHJUDOSLHFHRIRXU EXVLQHVVVWUDWHJ\LQWHUOLQNLQJDOOWKDWZHGRWRHQJDJHVXSSRUWDQGUHVSHFWQRWRQO\ WKHVRFLHW\DQGHQYLURQPHQWZLWKLQZKLFKWKH*URXSRSHUDWHVEXWZLWKWKRVHZH FRPHLQFRQWDFWZLWKDVHPSOR\HHVDQGZLWKLQWKHZLGHUFRPPXQLW\q

The Group’s Corporate Social Responsibility activities demonstrate the ethical values the company upholds, fundamentally underpinning all Group operations and reinforcing stakeholder pride and loyalty in what the business does. As a Board level responsibility, Corporate Social Responsibility is actively discussed as part of the Board’s assessment of the moral integrity of the Group.

The Group’s Corporate Social Responsibility focus is in the following areas:

• Ethical considerations and behaviour • Our people • Community • Society • Suppliers • Environment

Ethical considerations and behaviour Ethical corporate behaviour continues to be a Board priority and the risk of inappropriate actions is regularly assessed by the Board as part of its work on risk management and speciﬁcally in relation to negotiations with suppliers, partners, agents and customers relating to material trading agreements and arrangements.

Accordingly, as appropriate ethical behaviour is a Board priority, ethics are awarded high prominence across all business operations and staff are expected to act responsibly, meeting legal and regulatory requirements in their dealings with fellow colleagues, suppliers, agents, partners and customers.

To ensure staff understand their ethical responsibilities, the Board has established a Code of Conduct which is issued to all staff on their initial engagement with the Group’s businesses clearly stating the principles of behaviour and conduct expected and what would be considered unacceptable.

This Code of Conduct is supported by formal policies emphasising legal responsibilities relating to conduct and relationships with third-parties in order that staff fully understand their responsibilities. There are separate policies relating to (i) Anti-Bribery and Corruption, (ii) Anti-Fraud and (iii) Gifts and Hospitality.

To further enforce the zero-tolerance to any unethical behaviour, there is a robust whistleblowing procedure in place to allow staff to report potential concerns in conﬁdence.

The following documents relating to conduct, policy and procedures can be accessed on the corporate website, http://www.utvmedia.com/pages/responsibility/corporate-responsibility

1. Business Code of Conduct 2. Anti-bribery and corruption policy 3. Anti-fraud policy 4. Hospitality and gifts policy 5. Whistleblowing procedures

42 UTV Media plc Report & Accounts 2014 Corporate Social Responsibility

Our people The Group recognises that central to its success is the recruitment, retention, development and motivation of its staff, contractors and freelancers.

The Group strives to achieve a supportive and inclusive work environment which promotes wellbeing and welfare, equality, respect and human rights. The Group has a broad range of policies, procedures and practices in place to support and inform staff and these are communicated widely to employees, both during the induction process and throughout their employment. Policies include Equal Opportunities, Health and Safety, Dignity at Work, Social Media and Business Conduct. Managers are updated and trained with regard to the content of these policies and managers and staff have support from the Human Resources department in implementing these policies.

Wellbeing The Group offers access to a 24/7 conﬁdential and independent counselling service and an occupational health service. Such initiatives are supported by health and safety measures, including display screen assessments, safe driving training and media safety training. All employees complete a pre-employment medical questionnaire so the business can identify any risks and support employees in the workplace.

Equality, diversity and respect The Group is committed to providing equality of opportunity, dignity and respect to all employees, freelancers, contractors and job applicants. All employees and job applicants are treated fairly in selection for employment, promotion and training, with assessment being based on an individual’s aptitude and ability irrespective of gender, marital/family status, religious belief, political opinion, disability, age, nationality, race, ethnic origin or sexual orientation. The Group’s policies ensure that it attracts a diverse pool of applicants and this is monitored on an ongoing basis. Staff members who have a disability are supported fully in the work environment and have equal access to training and career development opportunities.

The importance and contribution of diversity in the workplace is recognised with appropriate training provided to ensure respectful behaviour. All staff are issued with the Group’s Code of Business Conduct which addresses key areas of responsibilities to all stakeholders. The policy covers conduct towards: employees (including the Whistle Blowing Policy), suppliers, customers, business partners (including bribery and corruption), shareholders and funders and conduct in the community.

Gender breakdown chart at 31 December 2014 Male Female Total Board 6 3 9 Senior management 36 12 48 Employees 481 470 951 523 485 1,008

Development and training Through a mix of approaches including formal training, on the job experience and coaching, the Group ensures that staff have the appropriate skills, experience, knowledge, competence and conﬁdence to carry out their roles. The Group works with accredited and recognised external providers to ensure the development meets business priorities and future skills requirements.

Across 2014 development areas addressed included management development, production training, camera/edit training, engineering and operations, archiving, health and safety, dignity at work and a range of professional IT, Finance, HR and Compliance programmes/updates. In addition vacancies across the Group are advertised internally to encourage people to develop their careers, either through promotion or a change of role. Supporting and developing the leadership capabilities of new and potential managers is important to the business, both in terms of their current roles and succession planning. A signiﬁcant development programme was implemented during 2014 focused on the investment in new technology and work ﬂows to support the launch of UTV Ireland.

The Group’s businesses work with universities and Creative Skillset to support the development of future talent to the media industry, providing input into programmes and providing 243 work placements in 2014. Such initiatives provide individuals with an insight into the industry, help them gain an understanding and an appreciation of the world of work. A number of individuals have gained employment within the businesses following their placement experience.

Performance and Recognition It is critical that the Group’s reward strategy supports the company’s ability to attract and retain staff with the right skills, experience and knowledge to meet the needs of the business and to ensure that staff feel appropriately recognised and rewarded for their performance. Benchmarking activities are carried out, as appropriate, to ensure that the business offers appropriate reward, recognising the commitment and contribution of staff.

43 UTV Media plc Report & Accounts 2014 Corporate Social Responsibility

Attractive remuneration packages are offered, including both financial and non-financial benefits. Flexible working arrangements are supported where appropriate. The Group is a member of Employers for Childcare and offers a salary sacrifice childcare voucher scheme. Staff also have the opportunity to join a Share Incentive Plan. The Group is committed to the Living Wage for staff, other than those on formalised training programmes.

Communication and participation with staff The Group is committed to an open culture and collaborative working with staff. The Group seeks both formal and informal feedback and maintains an open and participative approach to ensure a shared understanding of the company’s objectives and staff’s role in this. The staff representative committee involving senior management, staff and union representatives meets to consult and discuss key strategic and operational issues.

Regular management meetings take place with briefings to staff on business performance, key developments and challenges for the business. The Group engages and consults with staff through joint working groups involving staff and senior management in areas such as health and safety, environment, information technology, operations and sports/social activities. This communication flow is also supported via team briefs, staff updates, the intranet and face to face briefings.

Health and Safety The Group recognises the importance of providing a healthy and safe environment for all staff, visitors and any persons who may be affected by its undertakings ensuring that it meets all statutory requirements and, where appropriate, strives to establish health and safety practices that exceed these requirements across all of its operations.

The Group retains the services of an external health and safety consultancy to ensure that it remains compliant with legislation and to provide regular and relevant training to management and staff in each operational location. The engaged consultant carries out annual health and safety audits, ﬁre risk assessments and local ad hoc inspections in all of its premises providing a detailed report which enables corrective and preventative measures to be put in place as necessary.

All employees receive general health and safety awareness training, DSE assessments as required and where applicable, job specific training. Each location has trained fire-wardens, first-aiders and health and safety coordinators who liaise locally with management and staff. All work for the statutory maintenance and inspection of mechanical, electrical and safety equipment is carried out by fully accredited specialist contractors or staff members who have been specifically trained for the job.

The Group has a well-established health and safety committee which meets on a monthly basis and has Group-wide representation. All accidents, incidents, near misses and other related topics are reported enabling performance to be monitored and responsive action taken if needed.

The Group continues to strengthen and formalise the governance structure for the coordinated management of health and safety with standardised documentation and reporting procedures in place, providing documentary evidence to support an annual assurance assessment report for the Board.

Human rights issues The Group is mindful of the importance of giving due consideration to human rights issues through its relations with employees and external stakeholders such as suppliers. The Group considers its commitment to responsible and ethical trading with suppliers and policies on staff development and well-being to be adequate and appropriate to address human rights issues given the nature of the Group’s operations.

The health and safety incidents for 2014 are summarised in the following table: Total Number of Accidents Reported 2014 2013 Impact of Accident Number of Fatalities 0 0 Number of Serious Incidents 2 0 Number of Minor Incidents 11 19

Those Involved in the Accident Accidents to Staff 11 19 Accidents to Public 2 0 Accidents to Contractors / other 3rd parties 0 0

Causes of Accidents Slips, Trips & Falls 8 8 Lifting & Carrying 0 0 Hit By Objects 3 4 Other 2 7 Totals 13 19 44 UTV Media plc Report & Accounts 2014 Corporate Social Responsibility

Community The Group plays an active role in the local communities where it operates. All the Divisions across the Group support the fundraising efforts of charities and community initiatives in their areas, helping to raise signiﬁcant revenue during the year for a range of vital local projects.

UTV Media plc is an active member of Business in the Community (BITC). The Group fully embraces the BITC’s membership strategy of being “committed to building a sustainable future by investing in our people, the planet and the places where we operate”.

Case Study In 2014, UTV Television partnered with Concern Worldwide in Northern Ireland, a leading international humanitarian organisation and member of the Disaster Emergency Committee (DEC), for its ﬂagship 2014 Aid Match campaign. The Hunger Stops Here Appeal focused on improving childhood nutrition in one of the poorest regions of Zambia, where every other child is stunted and chronically undernourished.

Peter Anderson, NI Director of Concerncern WWorldwideorldwide sa saidid p,oPJUDWHIXOWR879IRUWKHKXJHSDUWWKH\SOD\HGLQPDNLQJ&RQFHUQoV+XQJHU6WRSVQFHUQoV +XQJHU 6WRSV +HUH$SSHDODUHVRXQGLQJVXFFHVV7KHLULQYROYHPHQWDVDYDOXHGPHGLDSDUWQHUZDV LQVWUXPHQWDOLQXVVHFXULQJWKHPDWFKHGIXQGLQJDVSHFWRIWKHDSSHDOIURPWKH8. JRYHUQPHQWLQWKHƬUVWSODFH$QGZLWKRXWWKHLUKHOSZHZRXOGQRWKDYHUHDFKHGDV ZLGHDQDXGLHQFHDQGKDGDVELJDQLPSDFWDVZHGLGq

The UK Department for International Development’s Aid Match scheme matches public donations to charity appeals to reduce poverty in developing countries. To be eligible for the scheme, Concern had to form a partnership with an organisation which could publicise the campaign to a wide audience, providing at least 400,000 opportunities for it to be seen.

UTV Television signed up as media partner and agreed a signiﬁcant awareness campaign with Concern. UTV Television reporter Judith Hill and cameraman Tommy Hassan, travelled to Zambia, to visit a Concern project in Mumbwa, one of the poorest provinces in Zambia, where more than half of all children suffer from chronic malnutrition.

Concern Worldwide has been addressing the nutritional crisis through a project which aims to prevent child and maternal malnutrition among poor rural communities, as well as looking at how agriculture and gender equality can help address nutritional needs. The project is supporting families to diversify the food they grow in their homesteads and to rear small livestock such as goats and chickens. So far, there are 180 small model farms or homestead gardens in the Mumbwa district, with 4,500 people beneﬁtting from the scheme.

Judith Hill’s series of reports from the region were broadcast on UTV Live and UTV Live Tonight along with in-studio interviews with Concern’s Executive Director. There was also editorial coverage on the UTV website alongside a blog from the reporter. The week also included interviews, adverts and support for external fundraising activities.

Concern’s Hunger Stops Here campaign raised a total of £2.8 million, including matched funding, and provided 7.5 million opportunities to view through communications partnerships with UTV Television, U105 Radio and other external partners. This was an amazing opportunity for UTV Television to raise awareness of the important work of Concern in Zambia and through this media partnership enabled the charity to double the funds raised to assist its work going forward.

45 UTV Media plc Report & Accounts 2014 Corporate Social Responsibility

Society The Group recognises the impact that the business’ operations can have on society and so the quality and content of output is of utmost importance.

UTV Media plc is a major media group with interests in radio and television, which endeavours to grow and build the brand by operating reliably and responsibly. Group stations maintain high editorial standards and engage with industry regulators, government and the media in open and honest dialogue. As licensed broadcasters, the Group understands the regulatory standards which must be followed, as well as the importance of retaining loyalty, trust and interaction with audience through the integrity of output.

The business adheres to the stringent regulatory broadcasting codes and requirements of the media industry including those of independent regulatory body Ofcom, the Broadcasting Authority of Ireland (BAI), the Advertising Standards Authority (ASA), the Committee of Advertising Practice (CAP), the Press Complaints Commission (PCC) and the Authority for Television on Demand (ATVOD).

Suppliers The Group has a varied scope of suppliers from large multinational engineering and technology providers to major national broadcasters and small independent local companies. Central to the provision of programming and content for the Radio and Television Divisions are major broadcast suppliers such as ITV and the sporting / sponsorship bodies which sell the rights for national and international sporting event broadcasts, including football, rugby and cricket. Arqiva are the main source of transmission capabilities. A small set of specialist suppliers provide the essential technology for production and where possible, the Group’s preference is to use local, independent production companies for its television and radio output. There is an impetus on continuing open and fair trading arrangements when relying on key suppliers. Accordingly, the Group invests signiﬁcant effort in managing supplier relationships through agreed-term contracts or service expectation agreements which provide the basis for constructive working relationships. The Group expects its suppliers to trade in a responsible business manner. Choice of supplier will be inﬂuenced by their respective commitment to ethical, environmental and social responsibilities.

46 UTV Media plc Report & Accounts 2014 Corporate Social Responsibility

Environment The Group recognises that its business activities across the UK and Ireland have an impact on the environment and is committed to minimising any potential damaging effects and continually improving performance on environmental matters. The Group’s environmental policies are aimed at encouraging high standards of environmental practice across all business activities. The Group participates in the annual Business in the Community NI environmental benchmarking survey achieving consistently good results for our commitment to managing environmental issues.

In addition to their economic benefits, new projects and activities are assessed as to their potential impact on various environmental factors. The major Group project in 2014 was the build and launch of a new television channel based in Dublin. This required a significant capital outlay in terms of build, renovation costs and technical fit-out of studio and broadcast facilities. The environmental impact of the project was considered at the stages of design, procurement and construction, with the ongoing objective being to create an efficient low carbon impact environment.

Greenhouse Gas Emissions

Tonnes (tCO2e) Group-wide locations 2014 2013 Scope 1 666 734 Scope 2 2,291 2,198 Total CO2 emissions 2,957 2,932

Intensity: emissions per £m revenue 25.4 27.2 Intensity: emissions per employee 2.9 2.8

Scope 1 emissions are direct GHG emissions mainly due to fuel consumption of vehicles controlled by the Group and Natural Gas for heating. Scope 2 emissions are indirect GHG emissions due to consumption of purchased electricity.

The tonnes of CO2 emitted are calculated using the latest 2014 Department for Environment, Food and Rural Affairs (DEFRA) government conversion factors for company reporting. The DEFRA rates per MWh of GHG emissions increased from 2013 to 2014 so while the Group’s electricity usage decreased by 5.4% in 2014, compared to 2013, the GHG Scope 2 emissions went up by 4.2%.

As 77.5% of the CO2 emissions are due to consumption of purchased electricity, the Group sources suppliers who can mainly provide green power generation.

Waste production and recycling

Tonnes Northern Ireland location only 2014 2013 Waste recycled 20 (93%) 22 (69%) Waste sent to landﬁll 2 (7%) 10 (31%) Total waste 22 32

The Northern Ireland based location uses only accredited waste management companies to dispose of its waste, ensuring that it is disposed of in accordance with statutory and local regulations.

47 UTV Media plc Report & Accounts 2014 Report of the Board on Directors’ Remuneration

Information not subject to audit

Statement from the Chairman of the Remuneration Committee

Dear Shareholder

I am pleased to present the Directors’ Remuneration Report for 2014 which outlines the remuneration of the Executive Directors for the year based upon the arrangements in the three-year policy 2014 to 2016. The report has been prepared by the Remuneration Committee and is approved by the Board.

The objective of the Remuneration Policy is to encourage, motivate and reward the Executive Directors to deliver exceptional performance and enhance shareholder value ensuring alignment with the business strategy and the interest of shareholders. The Policy includes both ﬁnancial and non-ﬁnancial targets.

The Remuneration Committee have judged that the policy has been effective in motivating the executive team to achieve the strategic objectives set for 2014, including one of the key objectives for the year being the launch of UTV Ireland on 1 January 2015. The multiple strategic objectives and performance are outlined in the Strategic Report section.

Helen Kirkpatrick Chairman of the Remuneration Committee 26 March 2015

48 UTV Media plc Report & Accounts 2014 Report of the Board on Directors’ Remuneration

Policy Report

Remuneration Committee The following directors served as members of the Committee throughout the ﬁnancial year ending 31 December 2014:

Members Appointment Date Helen Kirkpatrick (Chairman) 29 August 2007 Richard Huntingford 30 July 2012 Stephen Kirkpatrick 28 September 2012 Coline McConville 21 November 2012

The Committee held four meetings during the year with full attendance by all members at each meeting.

Role of the Committee The Remuneration Committee is responsible for making recommendations to the Board on the Group’s framework of executive remuneration and its cost within agreed terms of reference. The Board approves the Remuneration Policy and puts it to the shareholders at the Annual General Meeting at least once every three years. The Committee determines the contract terms, remuneration and other beneﬁts for each of the Executive Directors, including performance-related schemes (both short and long term) and pension rights. It also considers the remuneration of senior management within the Group. In performing its role, the Committee takes consideration of the general increases for employees throughout the Group. The Board itself determines the remuneration of the Chairman and Non-Executive Directors.

The Committee is advised as required by a leading ﬁrm of independent remuneration consultants, New Bridge Street, who have no other connection to the Group. New Bridge Street was selected on the basis of expertise, particularly with regard to the directors’ remuneration report regulations issued by the United Kingdom Department for Business, Innovation and Skills. Work carried out by New Bridge Street is scoped in advance by the Remuneration Committee after considering the requirement of the Group and New Bridge Street responds to the terms of reference. The fee paid to New Bridge Street for its services in respect of the year ended 31 December 2014 was £30,000 and is on the basis of hours deployed with a fees cap agreed in advance. The Committee monitors the level of service provided and a Statement of Independence has been submitted by New Bridge Street.

Remuneration Policy The Remuneration Policy has been designed to attract and retain high quality individuals within the Group, ensure that their focus is on performance beyond the short term so as to create sustained shareholder wealth, and reward individuals in relation to their successful performance. The Policy aims to combine these factors in a manner comparable with other companies operating in the FTSE small cap sector, and at the same time, align with the expectations of investors.

The Remuneration Policy seeks to deliver a fair and balanced remuneration package for each of the Executive Directors. The package consists of a number of different components of remuneration, structured in such a way as to encourage optimal performance in accordance with the Business Strategy. This in turn is aligned with shareholder return as the strategy is translated into sustainable growth and consequently an increase in shareholder value.

The Remuneration Policy set out below obtained shareholder approval at the AGM on 15 May 2014 in accordance with Section 439A of the Companies Act 2006. The Policy has been applied to any remuneration payments from 1 January 2014 and will continue to apply to any remuneration and loss of ofﬁce payments made until reviewed by the Remuneration Committee in 2016. The Committee reserves the right to review the Policy more frequently where circumstances deem this necessary and revise where appropriate.

49 UTV Media plc Report & Accounts 2014 Report of the Board on Directors’ Remuneration

Remuneration Structure The remuneration package for the Executive Directors consists of a combination of ﬁxed and variable components, each designed to incentivise and provide reward for successful short, medium and long term performance. The package of components includes:

Element & purpose Operation Maximum opportunity and link to performance Basic salary The basic salary of the Executive In reviewing potential increases in To recognise the responsibilities, Directors is reflective of the sector the Executive Directors’ basic salary, experience and skills of the Directors in competitive rates in attracting, rewarding the Committee is guided by general this competitive and challenging market. and retaining the necessary level of increases for employees. An annual skills and experience required in the salary review is carried out for all staff media sector and FTSE small cap. They across the Group, including Executive are reviewed annually by the Committee Directors. Where an inflation based taking into account changes in roles, award is granted, this would be applied to responsibilities and specific retention the Directors, if considered appropriate. issues. Certain Directors may be considered for additional increases recognising that their experience, remit and responsibilities have substantially increased in the year and new operational activities undertaken. Annual bonus The bonus scheme is designed to reward A minimum of 25% of the bonus based on To reward Executive Directors for the executives for achieving demanding financial metrics becomes payable upon the achievement of pre-determined performance targets set at this level. meeting the set performance targets. performance targets based upon the Additionally, it is also designed to The maximum total bonus payable to an annual results for the year and linked to encourage, incentivise and recognise Executive Director is capped at 100% of the strategic plans of the Group agreed when there has been exceptional their basic salary and this becomes due by the Board. performance achieved in challenging upon attaining exceptional performance conditions. which is a pre-determined percentage The bonus will be a combination of growth. A straight line mechanism cash and share awards to align with At least 80% of the bonus will be operates for performance within these shareholder interest. based on key financial metrics with the parameters. (The targets for 2015 are balance subject to personal or strategic not disclosed as they are commercially objectives. sensitive. These will be provided in the 2015 Annual Report.) The share award element can range between 20% and 35% to be set at the One fifth of the total bonus payable is discretion of the Committee. awarded in shares. As a result of the 12 month performance period before the The performance conditions that are award may vest plus a requirement for required to be met are the same for all the Executive Director to hold the shares Executive Directors. for a further two years, this award is deferred for three years. Malus provisions apply to the annual bonus in the event of gross misconduct or a material misstatement in the Group’s financial statements. Benefits The taxable benefits comprise a car, fuel, Benefit provision is set based on the level To provide market competitive non-cash private health insurance, life insurance and requirements of the role. benefits to attract and retain high quality and necessary business equipment. individuals.

50 UTV Media plc Report & Accounts 2014 Report of the Board on Directors’ Remuneration

Element & purpose Operation Maximum opportunity and link to performance Pension The Group operates a defined benefit The future rate of pension accrual for the To enable Executive Directors to save for pension scheme which closed to new members under the UTV pension scheme their retirement through participation members in 2002. Executive Directors is in line with the rules of the scheme either in the UTV Company pension who were in employment prior to this, which are consistent for all staff within scheme or a personal pension plan. and are members of the UTV pension the scheme. scheme, accrue a pension benefit within To help attract, retain and motivate high this scheme. quality individuals. Benefits earned under the scheme which are in excess of the annual or lifetime allowances introduced by HMRC may be accrued within an unfunded arrangement.

For Executive Directors appointed after Pension allowances into personal 2002 (and not a member of the UTV pension plans are set at a level that is pension scheme) a pension allowance considered appropriate having regard to based on a percentage of basic salary market practice - currently 15%. is paid by the Company into a personal pension plan chosen by the Executive Director. Long Term Incentive Plan (LTIP) The Group has put in place a long The Executive Directors may be granted To align Executive Directors’ interests term incentive plan for certain senior awards of up to a maximum of 80% of with those of shareholders and executives, including the Executive their basic salary. further incentivise consistent, strong Directors. Under this plan, awards performance. may be payable in shares at the end These are payable in shares at the end of a three-year vesting period, and to of the three-year vesting period, and to the extent that pre-set performance the extent that the pre-set performance conditions and targets are met. conditions and targets, as outlined in each of the plans, has been met. The performance conditions are aimed All such performance criteria will be to align the Directors’ performance to independently verified by the Group’s shareholder value with at least 35% independent remuneration consultants, of the award being based on Total New Bridge Street. Shareholder Return (TSR) versus the FTSE small cap. The performance This award is deferred for five years as conditions attached to the remainder a result of the three year performance of the awards are based on earnings period before the award may vest plus a per share (EPS) growth performance requirement for the Executive Director to conditions. EPS targets are to be set hold the shares (after the settlement of on a three year compound basis with any tax liability) for a further two years. sufficiently challenging targets. The awards may be exercisable in the six month period from the date of vesting. Under the rules of the plan, the Executive Directors are also entitled to the share Malus provisions give the Committee equivalent of the dividends accrued over authority to reduce or cancel long term the three year performance period in incentive awards in the event of gross respect of any vested shares. misconduct or a material misstatement in the Group’s financial statements.

51 UTV Media plc Report & Accounts 2014 Report of the Board on Directors’ Remuneration

Element & purpose Operation Maximum opportunity and link to performance Share Incentive Plan This scheme comprises the Share Executive Directors are eligible to To motivate employees and encourage Incentive Plan under which employees participate in the Company’s all- ownership of shares in the company. allocate part of their pre-tax salary to employee share scheme on the same purchase shares in the Company in line terms as other employees. The scheme with HMRC guidelines. operates within speciﬁc tax legislation and, as is normal practice, there are no performance conditions.

The limit for this plan is set in line with government guidelines. (For 2013 a limit of £1,500 per annum or £125 each month was in place for each employee, increasing to £1,800 per annum or £150 per month from April 2014.) Shareholding guidelines The Group has a policy requiring To demonstrate the Directors’ support Executive Directors to hold the equivalent and commitment to the UTV Group and of one year’s average basic salary in UTV keep them focused on its performance Media plc shares at an average market and align their interest to those of value and can be achieved out of the shareholders. conversion of vested share awards.

Directors have a period of ﬁve years from appointment to achieve the holding.

Additional information The following points are included for ease of reference and to clarify aspects of our Remuneration Policy.

Malus and clawback The policy contains malus provisions. These conditions will be enhanced with deﬁned clawback provisions and brought forward for shareholder approval at the 2016 AGM.

Recruitment policy Recruitment buyout awards are not within the policy. However, the Committee would exercise discretion if exceptional circumstances were to arise and only if such buyout was deemed in the best interests of shareholders.

Bonus share awards The holding period for bonus shares is two years post vesting.

The Executive Directors are also entitled to the share equivalent of the dividends accrued over the two year post vesting period in respect of any vested bonus shares.

52 UTV Media plc Report & Accounts 2014 Report of the Board on Directors’ Remuneration

Pay for performance The graphs below provide estimates of the potential future reward opportunities for the Executive Directors and the potential mix between ﬁxed and variable pay under three different performance scenarios.

John McCann, Group Chief Executive

Minimum 100% £509K

On target 72% 17% 11% £701K

Maximum 36% 32% 32% £1,440K

0 20 40 60 80 100

)L[HG %DVHVDODU\EHQHƬWV SHQVLRQ %RQXV LTIP )L[HG %DVHVDODU\EHQHƬWV SHQVLRQ %RQXV )L[HG %DVHVDODU\EHQHƬWV SHQVLRQ %RQXV Scott Taunton, Chief Operating Ofﬁcer

Minimum 100% £392K

On target 75% 15% 10% £523K

Maximum 38% 31% 31% £1,033K

0 20 40 60 80 100 )L[HG %DVHVDODU\EHQHƬWV SHQVLRQ %RQXV )L[HG %DVHVDODU\EHQHƬWV SHQVLRQ %RQXV LTIP )L[HG %DVHVDODU\EHQHƬWV SHQVLRQ %RQXV

Norman McKeown, Group Finance Director

Minimum 100% £273K

On target 72% 17% 11% £407K

Maximum 36% 32% 32% £758K

0)L[HG %DVHVDODU\EHQHƬWV SHQVLRQ 20 40 60 %RQXV 80 100 )L[HG %DVHVDODU\EHQHƬWV SHQVLRQ %RQXV )L[HG %DVHVDODU\EHQHƬWV SHQVLRQ %RQXV LTIP

Policy on recruitment remuneration In setting the remuneration of each Executive Director on their appointment, the Committee will apply the policies outlined above. New Directors may be considered for an award under the LTIP on similar terms from the ﬁrst award date after the recruitment date.

The requirement for Directors to hold the equivalent of one year’s average basic salary in UTV Media plc shares can be built up within ﬁve years of being appointed to the Board and may be achieved through the retention of share awards that vest after the settlement of any tax liability.

The Remuneration Committee may make payments to cover reasonable expenses in respect of the recruitment, relocation and other miscellaneous expenses speciﬁc to the recruitment of the Director.

53 UTV Media plc Report & Accounts 2014 Report of the Board on Directors’ Remuneration

Service agreements and exit payments All Executive Directors have a rolling service contract with the Group and no notice period exceeds twelve months. The service contract for John McCann is dated 16 October 2007. Scott Taunton has a service contract dated 1 July 2006 and Norman McKeown has a service contract dated 24 November 2008.

None of the service contracts makes any provision for a pre-determined amount of compensation being due in the event of early termination except in the event of change of control of the Group when remuneration shall be paid in respect of any unexpired notice period on termination of employment by the Group.

The Remuneration Committee will consider any contractual amounts due to a good leaver in accordance with the rules applicable to each particular element of the remuneration. Typically, a good leaver would be entitled to any pro-rated annual bonus award payable after the end of the ﬁnancial year. The Remuneration Committee will consider any performance conditions applying to any unvested long term awards and the performance period which has lapsed. LTIP awards will typically vest at the normal vesting date for good leavers to the extent that the TSR and EPS performance conditions have been met, but will normally be pro-rated on the basis of actual service over the performance period.

A bad leaver will be treated in accordance with the terms of the individual’s contract and exit amounts will be limited to the minimum amount provided by the contract. LTIP awards and unvested deferred shares will lapse for those not regarded as good leavers.

Appointment letters and remuneration for the Non-Executive Directors All Non-Executive Directors have Letters of Appointment with the Group which provide for an initial period of three years subject to review and they do not include notice periods in excess of twelve months. The appointment dates for the Non-Executive Directors are detailed in the Board of Directors section. There is no provision for any pre-determined amount of compensation being due in the event of termination.

The remuneration of the Non-Executive Directors is determined by the Board based upon the recommendations of the Chairman and Chief Executive. The remuneration of the Chairman is determined by the Board as advised by the Remuneration Committee. The Non-Executive Directors are paid a cash fee and related business expenses are reimbursed. They do not participate in bonus or share incentive schemes and have no pension contribution entitlement.

There is an additional increment to a Non-Executive Director’s fee for being the Chair of a Committee of the Board but not for being a member of such a Committee. A separate fee is paid for being the Chair of the Board of a subsidiary company within the Group.

There was no increase to the Non-Executive fees in 2014.

Executive Directors’ remuneration The remuneration policies and executive packages are designed to be competitive and encourage achievement of the Group’s strategic goals. The wider economic conditions, shareholder feedback and the pay and employment conditions throughout the Group and FTSE small cap companies are all taken into consideration.

The graph below depicts the total cost of executive pay for the years ended 31 December 2014 and 2013 in relation to proﬁt attributable to equity shareholders, dividends paid and total staff costs.

Total cost of Executive pay in relation to Proﬁt attributable to Shareholders, dividends paid and staff costs

£’000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Shareholder Dividends 6WDƪFRVWV ([HFXWLYH 3URƬW paid pay

2014 2013 £’000

)L[HGSD\ 9DULDEOHSD\

%RQXV UTV Media plc Report & Accounts 2014 Report of the Board on Directors’ Remuneration

The remuneration package for the Executive Directors consists of a combination of ﬁxed and variable components each designed to incentivise and provide reward for successful short and long term performance.

The details of the remuneration package are in line with the Remuneration Policy operating throughout the year ended 31 December 2014. The current arrangements and charges in respect of pensions, together with details of the long term incentive plans that are currently in place, are outlined below.

The graph below sets out the single total figure of remuneration of John McCann, the Group Chief Executive, over the last six years. The 3.4% decline in the single total figure for 2014 compared to 2013 compares to an increase of 2.5% awarded to the Group’s employees over the same period. 6WDƪFRVWV ([HFXWLYH 3URƬW Single figure remuneration of Group Chief Executive £’000 1,200 1,064 1,000 853 810 782 800 613 600 450 6WDƪFRVWV ([HFXWLYH 400 3URƬW 200 0 2009 2010 2011 2012 2013 2014

)L[HGSD\ 9DULDEOHSD\ Pension

Fixed pay comprises base salary and taxable beneﬁts while variable pay represents any annual bonus paid plus the value of shares vested under the long term incentive plan.

The table below sets out the proportion of variable pay received by the Group Chief Executive over the last six years expressed as a percentage of the maximum bonus that could have been paid or the maximum number of shares that could have been received under the terms of the long term incentive plan.

Percentage of maximum)L[HGSD\ 9DULDEOHSD\variable awards received % 100 %RQXV 80 88% 60

40 50% 20 30% 21% 0 20% 2009 2010 2011 2012 2013 2014

%RQXV LTIPs

Shareholder views The resulting outcome of shareholder advisory vote on the 2013 Report of the Board on Directors’ Remuneration was as follows:

For 99.3% Against 0.7%

The Committee has consulted with major shareholders in respect of the remuneration policy and has welcomed and been receptive of their views. In its review of the Remuneration Policy, the Committee considers all remuneration related comments made at the Company’s AGM and feedback received during consultation with shareholders throughout the year.

55 UTV Media plc Report & Accounts 2014 Report of the Board on Directors’ Remuneration

Remuneration Policy for the year ended 31 December 2014 The details of the Directors’ Remuneration for the year ended 31 December 2014 are outlined in the section of this report headed ‘Information subject to audit’. In reviewing the remuneration profile for 2014, shareholders are encouraged to note the following characteristics of the policy and the related performance in the year: • By setting very challenging performance conditions and targets, the Remuneration Policy aims to reward the Executive Directors for their success. • The bonus achieved in 2014 reflects the Executive’s contribution to the achievement of the Group’s strategic objectives in the year, being the launch of UTV Ireland on 1 January 2015. The profit before tax growth target was not me by X%. • That the balance between the annual fixed and variable components of remuneration, based on exceptional performance being achieved, is appropriately balanced at the ratio of circa 35:65.

Performance graph This graph looks at the value, by 31 December 2014, of £100 invested in UTV on 31 December 2008 compared with that of £100 invested in the FTSE All-Share Media Index and the FTSE Small-Cap Index. The other points plotted are the values at intermediate ﬁnancial year-ends.

Total shareholder return Source: Thomson Reuters

300

250

200

150 Value (£) Value

100

0 31-Dec-08 31-Dec-09 31-Dec-10 31-Dec-11 31-Dec-12 31-Dec-13 31-Dec-14

UTV Media FTSE All Share Media FTSE Small Cap

The Media sector has been chosen as the Company is a constituent of the sector and it represents the comparator sector for long term incentive awards issued prior to 2014. The FTSE Small Cap sector has also been included as, in line with the new Remuneration Policy, it represents the comparator sector for awards in 2014 and for all new awards.

56 UTV Media plc Report & Accounts 2014 Report of the Board on Directors’ Remuneration

Information subject to audit

Annual report on remuneration Single total ﬁgure of remuneration The remuneration of the Executive Directors for the year ended 31 December 2014 is set out below:

Basic salary Bonus Taxable Pension LTIPs Total beneﬁts remuneration £ £ £ £ £ £ Executive Directors

John McCann 2014 465,750 94,300 42,988 - 179,253 782,291 2013 460,000 - 42,748 - 307,124 809,872

Scott Taunton 2014 313,850 63,540 5,085 73,485 118,658 574,618 2013 310,000 - 6,948 80,892 203,517 601,357

Norman McKeown 2014 248,000 47,000 17,089 7,875 71,527 391,491 2013 210,000 - 16,402 31,500 111,009 368,911

Non-Executive Directors

Richard Huntingford 2014 100,000 - - - - 100,000 2013 100,000 - - - - 100,000

Helen Kirkpatrick 2014 40,000 - - - - 40,000 2013 35,000 - - - - 35,000

Stephen Kirkpatrick 2014 40,000 - - - - 40,000 2013 35,000 - - - - 35,000

Andy Anson 2014 35,000 - - - - 35,000 2013 35,000 - - - - 35,000

Coline McConville 2014 35,000 - - - - 35,000 2013 35,000 - - - - 35,000

Róisín Brennan 2014 21,667 - - - - 21,667 2013 ------

The ﬁgures for Róisín Brennan reﬂect her remuneration for the period from 1 June 2014 when she was appointed to the Board of UTV Media plc plus her fee for being Chair of the Board UTV Ireland Limited from 1 October 2014.

The value attributable to the LTIPs represents the actual value of awards vesting in the year. Further details of this are included in the Long Term Incentives section of this report on page 59.

Details of the Executive Directors’ pension are included in the Pensions section of this report on page 58.

57 UTV Media plc Report & Accounts 2014 Report of the Board on Directors’ Remuneration

Pensions Of the three Executive Directors, John McCann and Scott Taunton are both members of the UTV Company pension scheme. For Norman McKeown, who is not a member of the UTV Company pension scheme, the Group made a contribution of £7,875 (2013: £31,500), equating to an annualised 15% of his basic salary, into a Personal Pension Plan. This contribution ceased from 31 March 2014 and an equivalent sum has been included in his basic salary from then.

The pension entitlements of the Directors included in the UTV Company pension scheme are as follows:

Accumulated value of pension accrued

Age at 31 Normal At 31 At 31 December retirement December December 2014 age 2014 2013 £ £ John McCann 61 60 - - Scott Taunton 43 60 57,996 51,518

The ﬁgures in the table above are prepared in line with the requirements of Schedule 8 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended).

The pension benefits payable to John McCann are based on arrangements which were established in 1989 and which were structured in a manner to reward a small number of executives who were involved in successfully renewing the channel 3 licence for a further 25 year term. The pension benefits payable to John McCann are 1/30th of final pensionable salary, as at the previous 1 July (together with an allowance for benefits in kind), for each year of pensionable service, subject to a maximum of 20 years and accordingly, he stopped accruing service in the pension scheme from April 2006. Since then his pension entitlements had been accrued and paid to an unfunded arrangement.

In May 2013, John McCann reached normal retirement age and, in line with the agreed terms of the unfunded arrangement, the full entitlement under this arrangement was settled as a cash payment. This option achieved the lowest economic cost for the Group. Accordingly, he received a gross pre-tax lump sum payment of £1,446,184 on 9 May 2013. This payment extinguished all John McCann’s entitlements under the unfunded arrangement. Consequently at 31 December 2014 an amount of £Nil (2013: £Nil) has been accrued by the Group in this respect.

The pension benefits payable to Scott Taunton are 1/50th of accrued service up to 1 June 2003 and 1/60th thereafter, subject to HMRC limits. Since 2011, he has been accruing part of his benefits in the pension scheme and part under an unfunded arrangement. As at 31 December 2014, an amount of £432,000 (2013: £269,000) has been accrued by the Group in this respect of the unfunded arrangement. In the event that early retirement was permitted, the benefits payable to Scott Taunton from the UTV Company pension scheme and the unfunded arrangement would be reduced on a cost neutral basis.

In the table above the accumulated value of the pension accrued relates to the total pension entitlement from the UTV Company pension scheme and the unfunded arrangement and is calculated after accounting for the member contributions paid during the year by Scott Taunton amounting to £28,247 (2013: £27,900).

58 UTV Media plc Report & Accounts 2014 Report of the Board on Directors’ Remuneration

Long term incentive performance plans As outlined in the Remuneration Policy, the Group has put in place a long term incentive plan for certain senior executives who may be granted awards. From 2014, awards are granted up to a maximum of 80% of the senior executives’ basic salary. Up to 2013 awards were granted at up to 100% of the senior executives’ basic salary. These awards are payable in shares at the end of the associated three-year period, and to the extent that the pre-set performance conditions and targets, as outlined in each of the plans, has been met.

The performance conditions that have been set for the 2014 award are aimed to align the Directors’ performance to shareholder value and were selected by the Remuneration Committee.

Further details of the plans and awards for the executives, from 2011 onwards, is given below and are set out in the Interests in the Long Term Incentive Plan tables.

Performance criteria The performance criteria for the grant of awards outlined in the plans awarded annually from 2011 to 2014 are based on the combined performance elements of: (i) the growth in diluted adjusted earnings per share from continuing operations (EPS) over the qualifying three-year period commencing in the financial year in which the award was first granted, and (ii) the ranking of the Group’s total shareholder return (TSR) against a comparator group, over the next three years commencing with the date on which the awards were first granted.

The balance of the two performance elements EPS and TSR, have been weighted such that 65% of the total award is based on the EPS targets being met and the remaining 35% is based on the TSR targets being achieved.

Framework for the targets set For all plans, both a minimum and a superior target are set for each of the two elements of performance that are being measured. If the minimum target set is met, then 25% of that element of the award will vest. If the superior target is achieved, the remaining 75% of that element of the award will vest. For levels of performance attained between these two parameters, the percentage of the award that will vest will be calculated on a straight line basis.

Targets The framework for the targets for EPS and TSR for the 2011 to 2014 plans is as follows: (i) The growth in diluted adjusted EPS The performance criteria is that the equivalent annual EPS growth over the qualifying three-year period is required to exceed average RPI by at least 3% per annum for the minimum target to be met. To meet the superior target, this will require growth to exceed average RPI by at least 6% per annum. For performance achieved exceeding average RPI by between 3% and 6% growth per annum, the percentage of the EPS element of the award that will vest will be calculated on a straight line basis between the minimum and maximum target.

(ii) The ranking of the Group’s TSR against a comparator group The performance criteria is that the TSR ranking to be achieved over the qualifying three-year period is a median ranking when compared to the comparator group. For the 2011 to 2013 plans, the comparator group comprises the FTSE All-Share Media sector. For the 2014 award, the comparator group is the FTSE Small Cap. To meet the superior target, this will require a ranking in the upper quartile. For rankings between the median and upper quartile, the % of the TSR element of the award that will vest will be calculated on a straight line basis.

59 UTV Media plc Report & Accounts 2014 Report of the Board on Directors’ Remuneration

Interests in the long term incentive plan The details of the awards for the executives are set out in the tables below.

Awards granted in 2011 The following Directors were granted awards under the Company’s long term incentive plan on 30 March 2011.

At 1 January Awards Awards At 31 End of Market price 2014 vested in the lapsed in the December qualifying at date of year year 2014 period award No. No. No. No. John McCann 315,322 (65,223) (250,099) - 31 Dec 13 135.10p Scott Taunton 208,734 (43,176) (165,558) - 31 Dec 13 135.10p Norman McKeown 125,833 (26,028) (99,805) - 31 Dec 13 135.10p

For the 2011 plan, the award was based on a combination of whether the EPS growth performance targets and the TSR performance ranking targets were achieved. The EPS growth targets from 2010 to 2013 were not achieved, and thus this element of the award in the 2011 plan did not vest. The TSR targets, which relates to 35% of this award, the UTV shares ranked between the median and upper quartile of the FTSE All-Share Media sector and consequently 59% of this element of the award vested. This represents 20.7% of the total 2011 award.

In addition to 20.7% of the awards granted in 2010, in line with the rules of the plan, the Executive Directors were entitled to the share equivalent of the dividends that were accrued over the three year performance period in respect of these vested shares. This resulted in an additional 8,185 shares, 5,417 shares and 3,264 shares being granted to John McCann, Scott Taunton and Norman McKeown respectively.

The market price of the UTV shares at the date of vesting (8 April 2014) was 244.19p. The equivalent cash values for the Executive Directors of the awards that vested in 2014 are included in the table above showing the ‘Aggregate emoluments for Executive Directors’.

After settlement of tax liabilities, the share awards that vested in 2014 were retained by the Directors.

Awards granted in 2012 The following Directors were granted awards under the Company’s long term incentive plan on 30 March 2012.

At 1 January Awards At 31 End of Market price 2014 granted in the December qualifying at date of year 2014 period award No. No. No. John McCann 310,928 - 310,928 31 Dec 14 143.12p Scott Taunton 209,614 - 209,614 31 Dec 14 143.12p Norman McKeown 132,756 - 132,756 31 Dec 14 143.12p

For the 2012 plan, the award was based on a combination of whether the EPS growth performance targets and the TSR performance ranking targets were achieved. The EPS growth targets from 2011 to 2014 were not achieved, and thus this element of the award in the 2012 plan will not vest. The TSR targets, which relates to 35% of this award, the UTV shares ranked between the median and upper quartile of the FTSE All-Share Media sector and consequently 64% of this element of the award will vest. This represents 22.4% of the total 2012 award.

Awards granted in 2013 The following Directors were granted awards under the Company’s long term incentive plan on 3 October 2013.

At 1 January Awards At 31 End of Market price 2014 granted in the December qualifying at date of year 2014 period award No. No. No. John McCann 245,824 - 245,824 31 Dec 15 187.13p Scott Taunton 165,664 - 165,664 31 Dec 15 187.13p Norman McKeown 112,224 - 112,224 31 Dec 15 187.13p

60 UTV Media plc Report & Accounts 2014 Report of the Board on Directors’ Remuneration

Awards granted in 2014 The following Directors were granted awards under the Company’s long term incentive plan on 3 October 2014. At 1 January Awards At 31 End of Market price 2014 granted in the December qualifying at date of year 2014 period award No. No. No. John McCann - 149,054 149,054 31 Dec 16 246.89p Scott Taunton - 100,449 100,449 31 Dec 16 246.89p Norman McKeown - 68,046 68,046 31 Dec 16 246.89p

Directors’ interests in shares The ﬁgures in the table below represent the shareholdings in the ordinary share capital of UTV Media plc beneﬁcially owned by Directors and their family interests, other than in respect of options or other rights to acquire ordinary shares:

31 31 December December 2014 2013 Executive Directors John McCann 554,524 480,162 Scott Taunton 342,020 316,770 Norman McKeown 213,274 183,028

Non-Executive Directors Richard Huntingford 25,000 25,000 Helen Kirkpatrick 20,000 7,318 Stephen Kirkpatrick 8,666 8,666 Andy Anson - - Coline McConville - - Róisín Brennan - -

No Directors have acquired or disposed of any ordinary shares in the Group during the close period from 16 January to 17 March 2015 with the exception of those shares purchased through the Share Incentive Plan (SIP).

Executive Directors are required to hold the equivalent of one year’s average basic salary in UTV Media plc shares at an average market value and can be part achieved out of the conversion of vested share awards.

Directors have a period of ﬁve years from appointment to achieve the holding. This requirement was met at 31 December 2014.

J McCann, S Taunton and N McKeown are included as potential beneficiaries under the UTV Employee Benefit Trust and are deemed to be interested in the shares held by this Trust. The beneficial interests include ordinary shares purchased under the monthly operation of the employee SIP. During the year, the Executive Directors have each acquired 954 ordinary shares through the SIP. As at 31 December 2014 196,959 ordinary shares were held by Brewin Nominees Limited for the purposes of the SIP. As with other employees, the Executive Directors are deemed to have a potential interest in those shares, being beneficiaries under the trust.

No Director had any interests in the shares of any subsidiary company.

The market price of UTV Media plc ordinary shares as at 31 December 2014 was 175.00 pence and the range during the year was 172.00 pence to 263.75 pence.

The Report of the Board on Directors’ Remuneration was approved by the Board on 26 March 2015 and signed on its behalf by Helen Kirkpatrick, Chairman of the Remuneration Committee.

Helen Kirkpatrick Chairman of the Remuneration Committee 26 March 2015

61 UTV Media plc Report & Accounts 2014 Report of the Directors

To be presented at the Annual General Meeting of the Company to be held on 14 May 2015.

1. Annual report The Directors have pleasure in presenting their Annual Report, together with the audited ﬁnancial statements of the Group for the year ended 31 December 2014.

2. Business development review A review of the business development of the Group during the year, its position at the year end, principal risks and uncertainties facing the Group, important events which have occurred since and indications of future developments in the business are provided in the Strategic Review.

3. Going concern The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Group and divisional performance reviews. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described above. In addition, Note 28 to the financial statements includes the Group’s objectives, policies and processes for managing its capital, its financial risk management objectives, details of its financial instruments and hedging activities, and its exposures to credit risk and liquidity risk.

The Group has successfully undertaken steps during the year to strengthen its position including: • generating an operating proﬁt, including income from associates and joint ventures, of £19.7m (2013: £20.1m) in challenging market conditions • continued emphasis placed on cash generation which has resulted in net debt at the year end of £46.2m (2013:£49.6m)

The Directors have reviewed the 2015 budgets and subsequent forecasts in light of current economic conditions and are satisfied that, along with the secured debt financing to 2017 and the continued profitability of the Group, adequate resources are available to continue in operational existence in the long term. Therefore, the Group continues to adopt the going concern basis in the preparation of its annual report.

4. Fair, balanced and understandable After considering matters related to ﬁnancial judgements and reporting, and matters related to strategy, operation of the business model and associated risk factors, and taking advice and guidance from both the Audit Committee and the External Auditors, the Board conﬁrms that its Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s performance, business model and strategy.

5. Employees Further information on employees including the Group’s policy on disabled employees and employee involvement can be found in the ‘Our People’ section of the Corporate Social Responsibility report.

6. Environmental practices, Greenhouse gas emissions, community and society Further information on the Group’s environmental practices, Greenhouse gas emissions and community and society can be found in the ‘Environment’ and ‘Community’ and ‘Society’ sections in the Corporate Social Responsibility report.

7. Political donations No donations were made for political purposes during the year (2013: £Nil).

8. Directors and their interests The Directors of the Company during the year were those shown in ‘Board of Directors’.

In accordance with Article 127 of the Company’s Articles of Association, Executive Directors J McCann, S Taunton and N McKeown are required to retire and offer themselves for re-election at the Annual General Meeting in 2015. However, while not mandatory, in line with the Code of FTSE350 recommendations relating to the annual election of Directors by shareholders, the Board has determined that all Directors, both Executive and Non-Executive, will be subject to an election process at the Annual General Meeting on 14 May 2015.

The Directors’ interest in the shares of the Company are disclosed in the ‘Report of the Board on Directors’ Remuneration.

62 UTV Media plc Report & Accounts 2014 Report of the Directors

9. Directors’ indemnities The Company has granted an indemnity to one or more of its Directors against liability in respect of proceedings brought by third parties, subject to the conditions set out in the Companies Act 2006. Such qualifying third party indemnity provisions remains in force as at the date of approving the ‘Report of the Directors’.

During the year, J McCann and S Taunton were trustees of the UTV Pension Scheme. The Company has granted indemnity against liability in respect of proceedings brought by third parties, subject to the conditions set out in section 235 of the Companies Act 2006. These qualifying pension schemes indemnity provisions remain in force as at the date of approving the ‘Report of the Directors’.

10. Corporate governance The information required to be disclosed under DTR7.2 is provided within the Corporate Governance section and point 13 of this report.

11. Financial instruments The Group’s ﬁnancial risk management objectives and policies and details of the Group’s exposure to credit risk, liquidity risk and cash ﬂow risk are outlined in note 28.

12. Substantial shareholdings The Company has been notiﬁed of the following interests representing 3% or more of the issued ordinary share capital of the Company as at 31 December 2014. At 31 December 2014 At 17 March 2015 Ordinary Percentage of Ordinary Percentage of Shares that class Shares that class

Fidelity Worldwide Investment 9,867,911 10.29% 9,867,911 10.29% Old Mutual Global Investors 5,502,203 5.74% 5,502,203 5.74% Blackrock 5,500,885 5.74% 5,500,885 5.74% Polar Capital 4,807,910 5.01% 4,807,910 5.01% Ameriprise Financials Inc 4,661,008 4.86% 5,028,005 5.24% Milestone Trust 4,000,000 4.17% 4,000,000 4.17% GVO Investment Management 3,844,588 4.01% 4,844,588 5.05% Invesco Perpetual 3,839,144 4.00% - - Standard Life Investments 3,172,016 3.31% 3,172,016 3.31% John McGuckian 3,097,483 3.23% 3,097,483 3.23% Shane Reihill 2,949,264 3.08% 2,949,264 3.08%

Up to 17 March 2015 except for the holdings of ordinary shares listed above, no party has notiﬁed an interest in the ordinary shares of the Company which is required to be recorded in the register under DTR5.

63 UTV Media plc Report & Accounts 2014 Report of the Directors

13. Additional information for shareholders The following provides the additional information required for shareholders as a result of the implementation of the Takeovers Directive into UK Law.

At 31 December 2014, the Company’s issued share capital comprised: Number Value Thousands £000 Ordinary shares of 5p each 95,903 4,795

The Company is not aware of any agreements between shareholders that may result in restrictions on the transfer of securities and for voting rights.

Ordinary shares On a show of hands at a general meeting of the Company every holder of ordinary shares present in person and entitled to vote shall have one vote on a poll, every member present in person or by proxy and entitled to vote shall have one vote for every ordinary share held. The notice of the general meeting (see notice of general meeting) speciﬁes deadlines for exercising voting rights either by proxy notice or present in person or by proxy in relation to resolutions to be passed at general meeting. All proxy votes are counted and the number for, against or withheld in relation to each resolution are announced at the Annual General Meeting and published on the Company’s website after the meetings. There are no restrictions on the transfer of ordinary shares in the Company other than: • certain restrictions may from time to time be imposed by laws and regulations (for example, insider trading laws and market requirements relating to close periods); and • pursuant to the Listing Rules of the Financial Services Authority whereby certain employees of the Company require the approval of the Company to deal in the Company’s securities.

The Company’s Articles of Association may only be amended by a special resolution at a general meeting of the shareholders. Directors are reappointed by ordinary resolution at a general meeting of the shareholders. The Board can appoint a Director but anyone so appointed must be elected by an ordinary resolution at the next general meeting. Any Director who has held ofﬁce for more than three years since their last appointment must offer themselves up for re-election at the Annual General Meeting. Any Non-Executive Director who at the date of the Annual General Meeting had held ofﬁce for nine years or more shall be subject to re-election at each Annual General Meeting. However, in line with the Code of FTSE350 recommendations relating to the annual election of Directors by shareholders, the Board has determined that all Directors, both Executive and Non-Executive, will be subject to an election process at the Annual General Meeting in 2015.

Signiﬁcant interests Directors’ interests in the share capital of the Company are set out in the Report of the Board on Directors’ Remuneration. Major interests (i.e., those greater than 3%) of which the Company has been notiﬁed are shown in point 12 to this report.

Directors’ powers to issue or purchase shares At the AGM resolutions are passed which allow the Directors to allot equity shares or sell treasury shares for cash or purchase its own shares. Such authority is limited to 5% of the Company’s ordinary shares in issue.

Company share schemes At 31 December 2014 the UTV Employee Beneﬁt Trust, which is a discretionary trust for the beneﬁt of employees of UTV Media plc, held 53,000 shares (2013: 56,488 shares) being 0.06% (2013: 0.06%) of the issued share capital of the Company. These shares are held to contribute towards the anticipated entitlement of senior executives to the vesting of awards in the long term incentive plans as detailed in the Directors Remuneration Report. The voting rights in relation to these shares are exercised by the trustees.

Change of control Other than disclosed above the Company is not party to any agreements which take effect, alter or terminate upon a change of control of the Company following a takeover bid. The Company is party to a number of banking agreements, which upon a change of control of the Company can be terminated by the bank upon the provision of 60 days notice. In the event of change of control of the Company the Directors’ service contracts provide that the Company shall pay remuneration in respect of any unexpired notice period on termination of employment.

64 UTV Media plc Report & Accounts 2014 Report of the Directors )RUWKHSHULRGHQGLQJ'HFHPEHU

14. Auditors Ernst & Young LLP has expressed their willingness to continue in ofﬁce as auditors and a resolution proposing their re- appointment will be submitted at the Annual General Meeting.

15. Directors’ statement as to disclosure of information to auditors The Directors who were members of the Board at the time of approving the Report of the Directors are listed in the ‘Board of Directors’. Having made enquiries of fellow Directors and of the Company’s auditors, each of these Directors conﬁrms that: • to the best of each Director’s knowledge and belief, there is no information relevant to the preparation of their report of which the Company’s auditors are unaware, and • each Director has taken all the steps a director may reasonably be expected to have taken to be aware of relevant audit information and to establish that the Company’s auditors are aware of that information.

By Order of the Board Ormeau Road Belfast BT7 1EB

Norman McKeown Company Secretary 26 March 2015

65 UTV Media plc Report & Accounts 2014 Statement of Directors’ Responsibilities in Relation to the Group Financial Statements

The Directors are responsible for preparing the Annual Report and the Group financial statements in accordance with applicable United Kingdom law and those International Financial Reporting Standards as adopted by the European Union. Under Company Law the Directors must not approve the Group financial statements unless they are satisfied that they present fairly the financial position of the Group and the financial performance and cash flows of the Group for that period. In preparing those Group financial statements, the Directors are required to: • select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently; • 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 in International Financial Reporting Standards is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group’s financial position and financial performance; • state that the Group has complied with International Financial Reporting Standards, subject to any material departures disclosed and explained in the financial statements.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and to enable them to ensure that the Group financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Directors’ Statement of Responsibility under the Disclosure and Transparency Rules

The Directors confirm to the best of their knowledge that: • the Group financial statements, which have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of UTV Media plc and the undertakings included in the consolidation taken as a whole; and • the Directors’ Report together with the Strategic Report and Corporate Social Responsibility report includes a fair review of the development and performance of the business and the position of UTV Media plc and the undertakings included in the consolidation taken as a whole together with a description of the principal risks and uncertainties that they face.

The ﬁnancial statements were approved by the Board on 26 March 2015 and the above responsibility statement was signed on its behalf by the Group Chief Executive.

John McCann Group Chief Executive 26 March 2015

66 UTV Media plc Report & Accounts 2014 Report of the Auditors RQWKH*URXS)LQDQFLDO6WDWHPHQWV

Independent auditor’s report to the members of UTV Media plc Opinion on the financial statements In our opinion: • the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2014 and of the Group’s profit for the year then ended; • the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union; • the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation.

What we have audited We have audited the Group financial statements and Parent Company financial statements (together, the ‘financial statements’) of UTV Media Group plc for the year ended 31 December 2014 which comprise: • for the Group financial statements, the Group Income Statement, the Group Statement of Comprehensive Income, the Group Balance Sheet, the Group Cash Flow Statement, the Group Statement of Changes in Equity and the related notes 1 to 30; and • for the Parent Company financial statements, the Parent Company Balance Sheet and the related notes 1 to 9.

The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been applied in the preparation of the Company financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group’s and the Parent Company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Report and Accounts to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Our application of materiality We set certain thresholds for materiality. These provide a basis for determining the nature, timing and extent of risk assessment procedures, identifying and assessing the risk of material misstatement and determining the nature, timing and extent of further audit procedures.

Based on our professional judgement, we determined materiality for the Group to be £862,000 (2013: £795,000), which is 5% of profit before tax from continuing operations (2013: 5% of profit before tax from continuing and discontinued operations). We have used profit before tax from continuing operations as we consider this measure, which is a key financial performance indicator for the Group, to be a key driver of business value and therefore a focus for shareholders. In the prior year we determined that materiality for the Group should be based upon profit before tax from continuing and discontinued operations since the presentation of certain of the Group’s operations as discontinued was a significant area of judgement considered by the Audit Committee and assessed as a risk of material misstatement that had the greatest effect on the audit strategy. However, since as noted in our assessment of risks of material misstatement this risk was no longer relevant in 2014 we considered that it was appropriate to exclude results from discontinued operations from our basis of determining materiality. The increase in materiality applied from the prior year is reflective of this change in basis.

On the basis of our risk assessments, together with our assessment of the overall control environment, our judgement is that performance materiality was 75% (2013: 75%) of our materiality, namely £646,000 (2013: £596,000). Our objective in adopting this approach was to ensure that uncorrected and undetected audit differences in all accounts did not exceed our planning materiality level.

67 UTV Media plc Report & Accounts 2014 Report of the Auditors RQWKH*URXS)LQDQFLDO6WDWHPHQWV

We agreed with the Audit Committee that we would report to the Committee all individual unadjusted audit differences and significant judgemental items which either affect the Income Statement in excess of £43,000 (2013: £40,000), as well as differences below that threshold that, in our professional judgement, warrant reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements. We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in the light of other relevant qualitative considerations.

Our assessment of risks of material misstatement Changes from prior year We no longer consider that the measurement, presentation and disclosure of restructuring transactions, including the buyout of contingent consideration and the classiﬁcation of operations as discontinued is a risk that had the greatest effect on the audit strategy, since the restructuring and buyout transactions occurred in 2013 with no material residual matters remaining and the discontinued operations were disposed of in 2014.

As a consequence of major advertising sales contracts increasingly incorporating pricing and other features related to more than one year, we have considered that a material misstatement arising from the recognition of revenues is a risk that had the greatest effect on the audit strategy.

Current year assessment We identiﬁed the following risks of material misstatement that had the greatest effect on the audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team:

Risk How the scope of our audit responded to the risk Revenue recognition Refer to page 37 (Audit committee report) and to Notes 2 and 3 to the Group ﬁnancial statements Auditing standards require that we consider the In relation to the revenue recognition risk arising from major advertising risk of fraud or management override of internal sales contracts which incorporate pricing and other features related to more controls in revenue recognition. than one year we: • reviewed the terms of these contracts to identify and understand the pricing We have evaluated that the key risks of revenue and performance obligations under these contracts; misstatement due to management override, • discussed with management the business rationale for these arrangements; fraud and error speciﬁcally relates to: • considered the appropriateness of management’s revenue recognition • the recognition of revenues from major policies in respect of those contracts in light of the requirements of IAS 18 advertising sales contracts which incorporate “Revenues” (“IAS 18”); pricing and other features related to more than one year as this involves judgement • assessed the reasonableness of the timing and amount of revenue over the amount and timing of revenues recognised in the year ended 31 December 2014 in light of these policies recognised under these contracts; and IAS 18’s requirements; and • the claw back of advertising revenues where • substantively tested a sample of revenue transactions. the pricing is based upon audience ratings as this involves judgement over the amount of We also selected a sample of other advertising and sponsorship sales any revenues to be potentially rebated; contracts across the Group’s components and performed the above procedures. • the recognition of revenues from digital services as this involves judgement over In respect of advertising revenue rating claw back risk, we reviewed future cost elements and the percentage of management’s estimates of the amount of revenues to be potentially rebated completion; and challenged the appropriateness of assumptions made by management • manual journal adjustments to revenues following the outcome of similar assumptions made at the prior year end. made as a result of overriding existing processes or controls. In relation to digital services revenue recognition risk, we reviewed management’s estimates of the percentage of completion and future costs to be incurred and challenged the appropriateness of assumptions made by management following the outcome of similar assumptions made at the prior year end.

In relation to the revenue manual journal entry risk, we selected a sample of journal entries recorded in the general ledger and other adjustments made in the preparation of the ﬁnancial statements (including those in respect of revenues) and considered the appropriateness and validity of manual journal entries posted around the year end. For transactions close to the period end we tested that cut-off procedures were appropriately applied.

68 UTV Media plc Report & Accounts 2014 Report of the Auditors RQWKH*URXS)LQDQFLDO6WDWHPHQWV

Risk How the scope of our audit responded to the risk Carrying value of goodwill and intangible assets Refer to page 37 (Audit committee report), and to Notes 14 and 15 to the Group financial statements The Group has significant goodwill and We performed audit procedures on the impairment models prepared for all intangible assets with indefinite lives (At 31 CGUs. December 2014 - £172.2m) that are required to be tested annually for impairment. We obtained and considered management’s impairment testing, considering the calculation methodology, sources for key assumptions and sensitivities We focused on this area due to both the applied. significance of the carrying value of these assets and because the recoverable value of these We challenged the key assumptions behind each impairment model assets is based on forecasting and discounting (including where relevant an assessment of the historical accuracy of future cash flows using assumptions which management’s forecasting), being discount rate, long term growth rate and are inherently judgemental and which could be revenue growth. influenced by management bias. As part of our work we utilised EY valuations specialists to assist in our The significant assumptions and their rationale assessment of management’s impairment models. are disclosed in Note 15 to the Group financial statements. We further considered management’s sensitivity analysis showing the impact of a reasonable change in impairment assumptions to determine whether an As a consequence of the recognition of an impairment charge was required. This consideration included undertaking impairment charge in respect of the Radio our own such sensitivity analysis in respect of the Group’s CGU’s, with Ireland cash generating unit (“CGU”) in 2011 increased focus on the Radio Ireland CGU, including scenarios generated and challenging market conditions within based upon external analyst reports and internal EY economic projections. the Republic of Ireland in 2012 and 2013, the carrying value of goodwill and intangible We ensured that the financial statement disclosures, particularly those assets allocated to that CGU had in recent in Note 15 to the Group financial statements, met the requirements of years closely matched its recoverable amount. accounting standards. Market conditions in the Republic of Ireland have improved in 2014 and consequently the extent to which the recoverable amount of that CGU’s goodwill and intangible asset exceeds their carrying value has increased. However, as this excess remains modest, we continue to apply an increased focus on managment’s annual impairment review in respect of that CGU. Valuation of the defined benefit pension scheme assets and liabilities Refer to page 37 (Audit committee report) and Note 29 to the financial statements We focused on this area as the determination We challenged and assessed the financial and demographic assumptions of the actuarial deficit (at 31 December 2014 - used in the pension valuations and engaged EY pensions specialists to assist £2.0m) involves the application of a number of us with this work. This work included discussions with the actuary employed judgemental assumptions, with modest changes by management to assist in setting the assumptions at 31 December in these assumptions having a significant effect 2014 in order to understand and assess the methodologies and sources of on the results and financial position of the information used to derive those assumptions. Group. We assessed the independence, competency and capabilities of the actuary The significant assumptions and their rationale employed by management to calculate the pension liability and undertook are disclosed in Note 29 to the Group financial sample testing to verify the integrity of the data they used as part of their statements. work.

We obtained independent conﬁrmation for a sample of the pension assets to conﬁrm their existence and assessed the reasonableness of the fair values of a sample of these assets by references to analytical procedures and independent sources where available.

We ensured that the ﬁnancial statement disclosures, particularly those in Note 29 to the Group ﬁnancial statements were in accordance with accounting standards.

69 UTV Media plc Report & Accounts 2014 Report of the Auditors RQWKH*URXS)LQDQFLDO6WDWHPHQWV

An overview of the scope of the audit Following our assessment of the risk of material misstatement to the Group ﬁnancial statements, we selected fourteen (2013: fourteen) components which represent the principal business units within the Group’s three reportable segments.

Of the fourteen components selected we performed an audit of the complete financial information of three components (full scope components), which were selected based on their size or risk characteristics. For the remaining eleven selected components (specific scope components) we performed audit procedures on specific accounts within the component that we considered had the potential for the greatest impact on the amounts in the Group financial statements either because of the size of these accounts or their risk profile.

These fourteen components account for 100% (2013: 100%) of revenue, 98% (2013: 98%) of proﬁt before tax from continuing operations and 99% (2013: 99%) of net assets, although for components where a speciﬁc scope audit was performed, not all balances that comprise these coverage percentages have been audited.

The audits of these components are performed at a materiality level calculated by reference to a proportion of the Group materiality appropriate to the relevant account size, risk proﬁle, changes in the business environment and other factors for the business concerned. In the current year, the range of performance materiality allocated to components was £452,000 to £43,000.

In addition, certain Group functions including those covering intangibles, taxation, pensions, long term incentive plans and the Parent Company were subject to a full scope audit by the Group audit team. In order to support our conclusion that there were no significant risks of material misstatement of the aggregated financial information of the remaining business units not subject to a full or specific scope audit, which primarily relate to associates and joint ventures, we tested the consolidation process, carried out analytical procedures and performed selected substantive procedures for any significant balance sheet items in excess of performance materiality at the Group level.

The Senior Statutory Auditor of the Group leads the audit for two components and which account for 66% of proﬁt before tax from continuing operations. The audit of the remaining twelve components is led by a partner and conducted by audit teams from the same ofﬁce as the Senior Statutory Auditor of the Group and the Group audit team. This enables the Group audit team and each component audit team to operate on an integrated basis throughout the audit process, including for example shared access to audit working papers, regular communication and discussion of issues arising during component audits including particular focus on the revenue recognition risk referred to above, attendance by component teams at Group audit meetings, and attendance by the Group Senior Statutory Auditor and Group audit team at meetings between the component audit team and component management.

Opinion of matters prescribed by the Companies Act 2006 In our opinion: • the part of the Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; • 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 Group and Parent Company financial statements; and • the information given in the Corporate Governance Statement set out on pages 29 to 41 with respect to internal control and risk management systems in relation to financial reporting processes and about share capital structures is consistent with the financial statements.

70 UTV Media plc Report & Accounts 2014 Report of the Auditors RQWKH*URXS)LQDQFLDO6WDWHPHQWV

Matters which we are required to report on by exception We have nothing to report in respect of the following:

Under the ISAs (UK and Ireland), we are required to report to you if, in our opinion, information in the annual report is: • materially inconsistent with the information in the audited ﬁnancial statements; or • apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group acquired in the course of performing our audit; or • is otherwise misleading.

In particular, we are required to consider whether we have identiﬁed any inconsistencies between our knowledge acquired during the audit and the Directors’ statement that they consider the Annual Report is fair, balanced and understandable and whether the Annual Report appropriately discloses those matters that we communicated to the Audit Committee which we consider should have been disclosed.

Under the Companies Act 2006 we are required to report to you if, in our opinion: • 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 and the part of the Remuneration Report to be audited are not in agreement with the accounting records and returns; or • certain disclosures of directors’ remuneration speciﬁed by law are not made; or • we have not received all the information and explanations we require for our audit.

Under the Listing Rules we are required to review: • the Directors’ statement, set out on page 62, in relation to going concern; and • the part of the Corporate Governance Report relating to the Company’s compliance with the nine provisions of the UK Corporate Governance Code speciﬁed for our review.

Respective responsibilities of directors and auditor As explained more fully in the Directors’ Responsibilities Statement set out on page 66, the directors are responsible for the preparation of the Group ﬁnancial statements and for being satisﬁed that they give a true and fair view.

Our responsibility is to audit and express an opinion on the Group ﬁnancial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

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.

Keith Jess (Senior Statutory Auditor) For and on behalf of Ernst & Young LLP, Statutory Auditor Belfast 27 March 2015

71 UTV Media plc Report & Accounts 2014 Group Income Statement )RUWKH\HDUHQGHG'HFHPEHU

Results Results before before Exceptional Exceptional Exceptional Exceptional Items Items Total Items Items Total Notes 2014 2014 2014 2013 2013 2013 (restated) (restated) £000 £000 £000 £000 £000 £000

Continuing operations Revenue 3 116,043 - 116,043 107,222 - 107,222 Operating costs 4 (96,680) - (96,680) (87,359) - (87,359)

Operating proﬁt from continuing operations before tax and ﬁnance costs 19,363 - 19,363 19,863 - 19,863

Share of results of associates and joint venture 314 - 314 239 - 239

Proﬁt from continuing operations before tax and ﬁnance costs 3 19,677 - 19,677 20,102 - 20,102

Finance revenue 7 50 - 50 49 - 49 Finance costs 8 (2,407) - (2,407) (3,012) - (3,012) Foreign exchange loss (75) - (75) (188) - (188)

Proﬁt from continuing operations before tax 3 17,245 - 17,245 16,951 - 16,951

Taxation 9 (3,244) - (3,244) (3,379) 1,215 (2,164)

Proﬁt from continuing operations after tax 14,001 - 14,001 13,572 1,215 14,787

Discontinued operations Proﬁt/(loss) from discontinued operations 10 (201) - (201) 111 (1,157) (1,046)

Proﬁt for the year 13,800 - 13,800 13,683 58 13,741

Attributable to: Equity holders of the parent 13,643 - 13,643 13,415 58 13,473 Non-controlling interest 157 - 157 268 - 268

13,800 - 13,800 13,683 58 13,741

Earnings per share 2014 2013 Continuing operations (restated)

Basic 11 14.44p 15.19p Diluted 11 14.37p 15.04p Adjusted 11 14.63p 14.47p Diluted adjusted 11 14.56p 14.32p

Continuing and discontinued operations Basic 11 14.23p 14.10p Diluted 11 14.16p 13.96p Adjusted 11 14.42p 14.58p Diluted adjusted 11 14.35p 14.44p

72 UTV Media plc Report & Accounts 2014 Group Statement of Comprehensive Income )RUWKH\HDUHQGHG'HFHPEHU

Notes 2014 2013 £000 £000

Proﬁt for the year 13,800 13,741

Other comprehensive income

Items that will not be reclassified subsequently to profit or loss: Actuarial gain on defined benefit pension schemes 29 360 5,111 Income tax relating to items that will not be reclassified subsequently (72) (1,325)

288 3,786

Items that may be reclassified subsequently to profit or loss: Cash flow hedges: Loss arising during the year - (4) Less transfers to the income statement - 321

Exchange (loss)/gain on translation of foreign operations (3,379) 932 Income tax relating to items that may be reclassiﬁed (32) 78

(3,411) 1,327

Other comprehensive (loss)/proﬁt for the year, net of tax 27 (3,123) 5,113

Total comprehensive proﬁt for the year, net of tax 10,677 18,854

Attributable to: Equity holders of the parent 10,520 18,586 Non-controlling interest 157 268

10,677 18,854

73 UTV Media plc Report & Accounts 2014 Group Balance Sheet $W'HFHPEHU

Notes 2014 2013 (restated) £000 £000 ASSETS Non-current assets Property, plant and equipment 13 17,360 11,874 Intangible assets 14 172,163 177,139 Investments accounted for using the equity method 16 900 847 Deferred tax asset 9 1,531 1,952

191,954 191,812

Current assets Inventories 17 2,390 1,758 Trade and other receivables 18 23,502 22,784 Financial asset 19 275 - Cash and short term deposits 20 12,886 10,185

39,053 34,727

TOTAL ASSETS 231,007 226,539

EQUITY AND LIABILITIES Equity attributable to equity holders of the parent Equity share capital 27 55,557 55,557 Capital redemption reserve 27 50 50 Treasury shares 27 (104) (123) Foreign currency reserve 27 3,571 6,950 Retained earnings 45,428 38,531

104,502 100,965 Non-controlling interest 53 106

TOTAL EQUITY 104,555 101,071

Non-current liabilities Financial liabilities 22 55,399 55,866 Pension liability 29 1,971 4,598 Provisions 24 372 411 Deferred tax liabilities 9 34,266 35,066

92,008 95,941

Current liabilities Trade and other payables 21 28,058 23,161 Financial liabilities 22 3,668 3,939 Tax payable 1,909 1,727 Provisions 24 809 700

34,444 29,527

TOTAL LIABILITIES 126,452 125,468

TOTAL EQUITY AND LIABILITIES 231,007 226,539

The ﬁnancial statements were approved by the Board of Directors and authorised for issue on 26 March 2015. They were signed on its behalf by:

John McCann Norman McKeown

74 UTV Media plc Report & Accounts 2014 Group Cash Flow Statement )RUWKH\HDUHQGHG'HFHPEHU

Notes 2014 2013 (restated) £000 £000 Operating activities Profit before tax (i) 17,044 17,062 Adjustments to reconcile profit before tax to net cash flows from operating activities Foreign exchange loss/(gain) 75 188 Net finance costs 2,357 2,963 Share of results of associates and joint ventures (272) (217) Non cash decrease in contingent consideration - (2,859) Consideration receivable from disposal of discontinued operations (1,175) - Amortisation and impairment of intangible assets - 188 Depreciation of property, plant and equipment 13 1,936 1,919 Loss from sale of property, plant and equipment 32 (4) Share based payments 303 419 Difference between pension contributions paid and amounts recognised in the income statement (2,454) (3,224) Increase in inventories (632) (115) (Increase)/decrease in trade and other receivables (1,031) 1,339 Increase/(decrease) in trade and other payables 4,783 (2,987) Increase/(decrease) in provisions 70 (60)

Cash generated from operations before exceptional costs 21,036 14,612

Exceptional costs - (227) Tax paid (2,480) (2,460)

Net cash inﬂow from operating activities 18,556 11,925

Investing activities Interest received 51 58 Proceeds on disposal of property, plant and equipment 20 16 Purchase of property, plant and equipment (7,622) (1,768) Income received from associates and joint ventures 235 229 Proceeds from the disposal of discontinued operations 900 - Outﬂow on acquisition of subsidiary undertaking - (200)

Net cash ﬂows from investing activities (6,416) (1,665)

Financing activities Borrowing costs (1,816) (1,891) Swap cost - (321) Dividends paid to equity shareholders (6,766) (6,677) Dividends paid to non-controlling interests (210) (460) Acquisition of treasury shares (506) - Repayment of borrowings (3,940) (4,216) Proceeds from borrowings 3,879 3,000

Net cash ﬂows used in ﬁnancing activities (9,359) (10,565)

Net increase/(decrease) in cash and cash equivalents 2,781 (305)

Net foreign exchange differences (80) 51 Cash and cash equivalents at 1 January 10,185 10,439

Cash and cash equivalents at 31 December 20 12,886 10,185

(i) Includes both continuing and discontinued operations. 75 UTV Media plc Report & Accounts 2014 Group Statement of Changes in Equity )RUWKH\HDUHQGHG'HFHPEHU

Equity Capital Foreign Cash ﬂow Share Non- share redemption Treasury currency hedge Retained holder controlling capital reserve shares reserve reserve earnings equity interest Total £000 £000 £000 £000 £000 £000 £000 £000

At 1 January 2013 55,557 50 (1,523) 6,018 (251) 28,680 88,531 480 89,011

Proﬁt for the year - - - - - 13,473 13,473 268 13,741

Other comprehensive (loss)/ - - - 932 251 3,930 5,113 - 5,113 income in the year [note 27]

Total net comprehensive - - - 932 251 17,403 18,586 268 18,854 (loss)/income in the year

Treasury shares issued - - 1,400 - - (1,521) (121) - (121) Share based payment - - - - - 419 419 - 419 Acquisition of non-controlling - - - - - 228 228 (228) - interests Equity dividends paid - - - - - (6,678) (6,678) (414) (7,092)

At 31 December 2013 55,557 50 (123) 6,950 - 38,531 100,965 106 101,071

Proﬁt for the year - - - - - 13,643 13,643 157 13,800

Other comprehensive (loss)/ - - - (3,379) - 256 (3,123) - (3,123) income in the year [note 27]

Total net comprehensive - - - (3,379) - 13,899 10,520 157 10,677 (loss)/income in the year

Acquisition of treasury shares - - (506) - - - (506) - (506) Treasury shares issued - - 525 - - (525) - - - Share based payment - - - - - 303 303 - 303 Equity dividends paid - - - - - (6,780) (6,780) (210) (6,990)

At 31 December 2014 55,557 50 (104) 3,571 - 45,428 104,502 53 104,555

76 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

1. Corporate information The Group’s ﬁnancial statements for the year ended 31 December 2014 were authorised for issue by the Board of the Directors on 26 March 2015 and the balance sheets were signed on the Board’s behalf by John McCann and Norman McKeown. UTV Media plc is a public limited company incorporated in Northern Ireland (NI 065086). The Company’s ordinary shares are traded on the London Stock Exchange and the Irish Stock Exchange.

The principal activities of the Group are described in the Strategic Report.

2. Summary of accounting policies Basis of preparation and statement of compliance with IFRSs The accounting policies which follow set out those policies which apply in preparing the financial statements for the year ended 31 December 2014. The Group financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union as they apply to the financial statements of the Group for the year ended 31 December 2014 and applied in accordance with the Companies Act 2006.

The Group has adopted the following new standards that are relevant for the preparation of the ﬁnancial statements for the year ended 31 December 2014: IFRS 10 “Consolidated Financial Statements”, IFRS 11 “Joint Arrangements”, IFRS 12 “Disclosure of Interests in Other Entities”, IAS 27R “Separate Financial Statements” and IAS 28R “Investments in Associates and Joint Ventures”. With the exception of new disclosures and the adoption of IFRS 11, the application of new standards effective from 1 January 2014 have not had an impact on the Group’s ﬁnancial statements.

IFRS 11 establishes a principle that applies to the accounting for all joint arrangements, whereby parties to the arrangement account for their underlying contractual rights and obligations relating to the joint arrangement. On adoption of this standard the Group’s existing joint ventures, which were previously accounted for by recognising the Group’s share of the assets, liabilities, revenue and expenses relating to the joint venture, are now accounted for using the equity method. Although a number of line items within the Group Income Statement, Group Balance Sheet and Group Cash Flow have been restated for the year ended 31 December 2013, profit for the period and total equity of the Group are unaffected. The more significant changes within the Group Income Statement relate to reductions in revenues plus operating profit before finance of £549,000 and £59,000 respectively, with increases of £50,000 and £109,000 in losses from discontinued operations and the share of results of associates and joint ventures accounted for using the equity method, respectively. Within the Group Balance Sheet the more significant changes at 31 December 2013 relate to reductions in intangibles of £437,000, trade and other receivables of £781,000, cash and short term deposits of £506,000 plus trade and other payables £1,004,000, respectively, with an increase in investments accounted for using the equity method of £733,000. There was no impact on the Group’s Statement of Comprehensive Income or the Group Statement of Changes in Equity.

In 2013 certain of the Group’s New Media businesses were identified as being non-core to the future strategy of the Group and have subsequently been disposed of or trading ceased. Consequently the Group Income Statement reflects the classification of these businesses as discontinued operations.

The Group and Company ﬁnancial statements are presented in sterling and all values are rounded to the nearest thousand (£000) except when otherwise indicated.

Basis of consolidation The Group financial statements comprise the financial statements of UTV Media plc (‘the Company’) and its subsidiaries (together, ‘the Group’). The financial statements of subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist.

A subsidiary is an entity controlled, either directly or indirectly, by the Company. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

The results of a subsidiary acquired during the period are included in the Group’s results from the effective date on which control is transferred to the Group. The results of a subsidiary sold during the period are included in the Group’s results up to the effective date on which control is transferred out of the Group. All intercompany balances and transactions, including unrealised proﬁts arising from intra-group transactions, have been eliminated in full.

77 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

2. Summary of accounting policies FRQWLQXHG Judgements and key sources of uncertainty The preparation of ﬁnancial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for the revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates.

The key judgements and estimation uncertainty that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are the measurement and impairment of indefinite life intangible assets (including goodwill) and the measurement of defined benefit pension obligations. The Group determines whether indefinite life intangible assets are impaired on an annual basis and this requires an estimation of the value in use of the cash generating units to which the intangible assets are allocated. This involves estimation of future cash flows and choosing a suitable discount rate (note 15). Measurement of defined benefit pension obligations requires estimation of future changes in salaries and inflation, as well as mortality rates and the selection of a suitable discount rate (note 29).

Foreign currency translation The ﬁnancial statements for each of the Group’s subsidiaries, joint ventures and associates are prepared using their functional currency. The functional currency is the currency of the primary economic environment in which an entity operates.

On consolidation, the results of foreign operations are translated into sterling at the average exchange rate for the period and their assets and liabilities are translated into sterling at the exchange rate ruling on the balance sheet date. Currency translation differences, including those on monetary items that form part of a net investment in foreign operations, are recognised in the currency translation reserve.

In the event that a foreign operation is sold, the gain or loss on disposal recognised in the income statement is determined after taking into account the cumulative currency translation differences that are attributable to the operation.

In the Cash Flow Statement, the cash ﬂows of foreign operations are translated into sterling at the average exchange rate for the period.

As permitted by IFRS 1, the Group elected to deem cumulative currency translation differences to be £Nil as at 1 January 2004. Accordingly, the gain or loss on disposal of a foreign operation does not include currency translation differences arising before 1 January 2004.

Investment in associate The Group’s investment in its associates is accounted for under the equity method of accounting. An associate is an entity in which the Group has significant influence and which is neither a subsidiary nor a joint venture. The financial statements of the associates for the 12 months ending 31 December are used by the Group to apply the equity method. Where necessary, adjustments are made to recognise the Group’s share of any audit adjustments recognised in the audited financial statements of the associate not previously recognised in the Group financial statements. The associates use consistent accounting policies as the Group. The investment in associate is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of the associate, less any impairment in value. The income statement reflects the share of the results of operations of the associate. Where there has been a change recognised directly in the associates’ equity, the Group recognises its share of any changes and discloses this, when applicable in the statement of comprehensive income.

Investment in joint venture The Group has a contractual arrangement with another party which represents a joint venture. This takes the form of an agreement to share control over another entity.

The Group recognises its interest in the joint venture’s assets and liabilities using the equity method of accounting. The investment in joint venture is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of the joint venture, less any impairment in value. The Group income statement reﬂects the share of the results of operations of the joint venture.

The joint venture has a financial reporting year ending 30 September. The financial statements of the joint venture for the 12 months ending 31 December are used by the Group to apply the equity method. Where necessary, adjustments are made to recognise the Group’s share of any audit adjustments recognised is the audited financial statements of the joint venture not previously recognised in the Group financial statements. The joint venture uses consistent accounting policies as the Group.

78 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

2. Summary of accounting policies FRQWLQXHG Property, plant and equipment Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in value. Cost includes borrowing costs for long term construction projects if recognition criteria are met.

Depreciation is calculated on a straight-line basis to charge the depreciable amount to the income statement over the estimated useful life of the asset at the following rates: • Freehold and long leasehold buildings: 4 - 5% • Leasehold improvements: 10 - 15% • Equipment and vehicles : 10 - 33% depending on type

The residual values are based on prices prevailing at the balance sheet date. Useful lives and residual values are reviewed annually and any adjustments applied prospectively.

No provision for depreciation is made in respect of freehold land.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount. The recoverable amount of property, plant and equipment is the greater of net selling price and value in use.

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. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs. Impairment losses are recognised in the income statement.

An item of property, plant and equipment is derecognised upon disposal or when no future economic beneﬁts are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amounts of the item) is included in the income statement in the year the item is derecognised.

Intangible assets Intangible assets acquired separately are capitalised at cost and those arising from a business acquisition are capitalised at fair value as at the date of acquisition. Following initial recognition, the cost model is applied to the class of intangible assets. The useful lives of these intangible assets are assessed to be either finite or indefinite. Where amortisation is charged on assets with finite lives, this expense is taken to the income statement.

Intangible assets created within the business are not capitalised and expenditure is charged against proﬁts in the year in which the expenditure is incurred.

Intangible assets are tested for impairment annually either individually or at the cash generating unit level.

Useful lives are also examined on an annual basis and adjustments, where applicable, are made on a prospective basis. A summary of the policies applied to the Group’s intangible assets is as follows: • Value attributable to radio licences acquired - indeﬁnite life • Customer relationships were amortised evenly over their expected useful lives of three years • Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the income statement when the asset is derecognised.

79 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

2. Summary of accounting policies FRQWLQXHG Goodwill Business combinations are accounted for using the acquisition method. The costs of an acquisition is measured as the aggregate of the consideration transferred, measured at the acquisition date fair value and the amount of any non-controlling interest in the acquiree. Acquisition costs incurred are expensed and included in operating costs.

Any contingent consideration to be transferred by the Group will be recognised at fair value at the acquisition date. Subsequent changes to the fair value will be recognised in accordance with IAS39 either within the Income Statement or in other comprehensive income.

Goodwill on acquisition is initially measured at cost being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identiﬁable assets, liabilities and contingent liabilities. Identiﬁable intangible assets, meeting either the contractual-legal or separability criterion are recognised separately from goodwill. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill in respect of an acquired subsidiary is recognised as an intangible asset. Goodwill in respect of an acquired associate or joint venture is included within investments accounted for using the equity method.

Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

Where the fair value of the interest acquired in an entity’s assets, liabilities and contingent liabilities exceeds the consideration paid, the excess is recognised immediately as a gain in the income statement.

As at the acquisition date, any goodwill acquired is allocated to each of the cash-generating units expected to beneﬁt from the combination’s synergies. Impairment is determined by assessing the recoverable amount of the cash generating unit, to which the goodwill relates. Where the recoverable amount of the cash generating unit is less than the carrying amount, an impairment loss is recognised. Where goodwill forms part of a cash generating unit and part of the operation within that unit are disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured on the basis of the relative values of the operation disposed of and the portion of the cash generating unit retained.

As permitted by IFRS 1, the Group elected not to apply IFRS ‘Business Combinations’ to business combinations that were recognised before 1 January 2004. As a result, goodwill recognised as an asset under UK GAAP as at 1 January 2004 has not been revised retrospectively to identify and extract intangible assets to be recognised separate from goodwill.

Impairment of assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash generating unit’s fair value less costs to sell and its value in use and 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 value of an asset 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. Impairment losses of continuing operations are recognised in the income statement within a separate line item before operating profit from continuing operations before tax and finance costs.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indications exist, the recoverable amount is estimated. A previously recognised impairment loss is only reversed if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in proﬁt or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

80 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

2. Summary of accounting policies FRQWLQXHG Programmes and sundry stocks Programmes completed but not transmitted and programmes in the course of production are recognised within inventories at cost. Acquired programme rights are recognised within inventories at the lower of purchase cost and net realisable value on the commencement of the period of each broadcast right. All programme costs are recognised in the income statement on a straight line basis over the period of transmission. Sundry stocks are valued at the lower of purchase cost and net realisable value. Net realisable value is the estimated selling price less applicable selling expenses.

Trade and other receivables Trade receivables, which generally have 30-90 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. Provision is made when there is objective evidence that the Group will not be able to recover balances in full. Balances are written off when the probability of recovery is assessed as being remote.

Cash and cash equivalents Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.

For the purpose of the consolidated cash ﬂow statement, cash and cash equivalents consist of cash and cash equivalents as deﬁned above, net of outstanding bank overdrafts.

Interest bearing loans and borrowings Obligations for loans and borrowings are recognised when the Group becomes party to the related contracts and are measured initially at the fair value of consideration received less directly attributable transaction costs.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.

Gains and losses are recognised in net proﬁt or loss when the liabilities are derecognised or impaired, as well as through the amortisation process.

Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are determined by the expected cash flows which, where material, are discounted at a rate which reflects current market assessments of the time value of money and the risks specific to the liability.

Pensions and other post employment benefits The Group operates a defined benefit pension scheme which requires contributions to be made to separately administered funds. The cost of providing benefits under the plan is determined using an independent actuarial valuation. This is based on the projected unit credit method and is recognised in accordance with the advice of a qualified actuary. Past service costs resulting from enhanced benefits are recognised on a straight-line basis over the vesting period or immediately if the benefits have vested.

Re-measurement gains and losses, and taxation thereon, are recognised in other comprehensive income and are not re- classiﬁed to proﬁt or loss in subsequent periods. Re-measurements comprise actuarial gains and losses, the return on plan assets (excluding amounts included in net interest) and changes in the amount of any asset restrictions. Actuarial gains and losses may result from differences between the actuarial assumptions underlying the plan liabilities and actual experience during the year or changes in the assumptions used in the valuation of the plan liabilities.

The defined benefit liability or asset recognised in the balance sheet comprises the present value of the benefit obligation using a discount rate based on appropriate high quality corporate bonds, at the balance sheet date, minus any past service costs not yet recognised, minus the fair value of the plan assets, if any, at the balance sheet date. Where the plan is in surplus, the asset recognised is limited to the amount which the Group expects to recover by way of refunds or reduction in future contributions.

The Group also operates deﬁned contribution pension schemes. Contributions are charged to the income statement as they become payable in accordance with the scheme’s rules.

Leases Leases where the lessor retains substantially all the risks and beneﬁts of ownership of the asset are classiﬁed as operating leases. Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease

81 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

2. Summary of accounting policies FRQWLQXHG Treasury shares UTV Media plc shares held by the Group are classiﬁed in shareholders’ equity as ‘treasury shares’ and are recognised at cost. Consideration received for the sale of such shares is also recognised in equity with any difference between the proceeds from sale and the original cost being taken to revenue reserves. No gain or loss is recognised in the performance statements on the purchase, sale, issue or cancellation of equity shares.

Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

Exceptional items The Group presents as exceptional items on the face of the income statement, those material items of income and expense which, because of the nature and expected infrequency of the events giving rise to them, merit separate presentation to allow shareholders to understand better the elements of ﬁnancial performance in the year, so as to facilitate comparison with prior periods and to better assess trends in ﬁnancial performance.

Revenue Revenue is recognised to the extent that it is probable that the economic beneﬁts will ﬂow to the Group and the revenue can be reliably measured. Key classes of revenue are recognised on the following basis: • Advertising and sponsorship: on transmission • Provision of internet and digital infrastructure services: on delivery • Provision of other sundry services: on delivery • Interest: as interest accrues using the effective interest method

Share based payments The Group has a long term incentive share scheme under which it makes equity-settled share-based payments to eligible employees. The cost of equity-settled share-based payments are measured at fair value at the date of grant and recognised as an expense over the vesting period, which ends on the date on which the employees become fully entitled to the reward.

Fair value is estimated using appropriate models for the particular awards under consideration. In valuing equity settled transactions, no account is taken of any vesting conditions, other than the performance conditions linked to the price of the shares of the Company (market conditions). Any other conditions which are required to be met in order for an employee to become fully entitled to an award are considered to be non-vesting conditions. These are also taken into account in determining the grant date fair value.

No expense is recognised for awards that do not ultimately vest, except for equity-settled transactions where vesting is conditional upon a market or non-vesting condition, which are treated as vesting irrespective of whether or not the market or non-vesting condition is satisﬁed, provided that all other performance and/or service conditions are satisﬁed.

At each balance sheet date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired and management’s best estimate of the number of the achievement or otherwise of non-market vesting conditions and of the number of equity instruments that will ultimately vest, or in the case of an instrument subject to a market condition, be treated as vesting. The movement in cumulative expense since the previous balance sheet date is recognised in the income statement, with a corresponding entry in equity.

Where the terms of an equity-settled payments award are modified or a new award is designated as replacing a cancelled or settled award, the cost based on the original award terms continues to be recognised over the original vesting period. In addition, an expense is recognised over the remainder of the new vesting period for the incremental fair value of the modification, based on the difference between the fair value of original award and the fair value of the modified award, both as measured at the date of modification. No reduction is recognised if this difference is negative.

Where an equity-settled award is cancelled (where non-vesting conditions within the control of either the entity or the employee are not met), it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is expensed immediately. Any compensation paid up to the fair value of the award at the cancellation or settlement date is deducted from equity, with any excess over fair value being treated as an expense in the income statement.

82 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

2. Summary of accounting policies FRQWLQXHG Taxation The tax expense represents the sum of tax currently payable or recoverable in respect of the taxable proﬁt or loss for the period plus any deferred tax charge or credit.

Current taxation Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted by the balance sheet date.

Deferred taxation Deferred tax is provided in full, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for ﬁnancial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences: • except where the deferred tax liability arises from goodwill or the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting proﬁt nor taxable proﬁt or loss; and • in respect of taxable temporary differences associated with investments in subsidiaries, associates and interest in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised: • except where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and • in respect of deductible temporary differences associated with investments in subsidiaries, associates and interest in joint venture, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the 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 proﬁt will be available to allow all or part of the deferred income tax asset to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Tax relating to items recognised directly in equity is also recognised directly in equity either in the statement of other comprehensive income or the statement of changes in equity in line with recognition of the item to which the tax relates.

Sales taxation Revenues, expenses and assets are recognised net of the amount of sales tax except: • where the sales tax incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and • receivables and payables are stated with the amount of sales tax included.

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.

83 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

2. Summary of accounting policies FRQWLQXHG Derivative financial instruments and hedging activities Historically, the Group has used derivative financial instruments such as interest rate swap contracts to hedge the risks of changes in interest rates. Such derivative financial instruments were stated at fair value. Since June 2013, the Group has not entered into any new derivative contracts, nor has it applied hedge accounting in the current period. The remainder of this policy relates to transactions undertaken only in the comparative period.

The fair value of derivative ﬁnancial instruments is based on appropriate valuation techniques which use market observable inputs such as prevailing market rates at each balance sheet date.

Changes in the fair value of derivative financial instruments which are designated as effective hedges of future cash flows are recognised directly in equity and the ineffective portion is recognised immediately in the income statement. If the cash flow hedge of a firm commitment or forecasted transaction results in the recognition of an asset or a liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in equity are included in the initial measurement of the asset or liability. For hedges that do not result in the recognition of an asset or a liability, amounts deferred in equity are recognised in the income statement in the same period in which the hedged item affects net profit or loss.

Changes in the fair value of derivative ﬁnancial instruments that do not qualify for hedge accounting are recognised in the income statement as they arise.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualiﬁes for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in equity is kept in equity until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to the income statement.

Dividends Final dividends are recorded in the Group’s accounts in the period in which they are approved by the Company’s shareholders. Interim dividends are recorded in the period in which they are paid.

84 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

2. Summary of accounting policies FRQWLQXHG New standards and interpretations not applied IASB and IFRIC have issued the following standards and interpretations which are considered as relevant to the Group with an effective date (based on European Union adoption) after the date of these ﬁnancial statements.

International Accounting Standards (IAS / IFRSs) Effective date* IFRS 9 (2013) - Financial Instruments: Classiﬁcation and Measurement 1 January 2018** IFRS 15 – Revenue from Contracts with Customers 1 January 2017* Amendment to IAS 19: Employee Contributions 1 July 2014 IFRS Improvements 2010 – 2012 Cycle 1 July 2014 IFRS Improvements 2011 – 2013 Cycle 1 July 2014 IFRS Improvements 2012 – 2014 Cycle 1 January 2016 Amendments to IAS 1: Disclosure Initiative 1 January 2016 Amendments to IAS 16 and IAS 38: Clariﬁcation of Acceptable Methods of Depreciation and Amortisation 1 January 2016 Amendments to IFRS 11: Accounting for Acquisitions of Interests in Joint Operations 1 January 2016

* For periods beginning on or after. The effective dates given above are those in the original IASB/IFRIC standards unless the standard has already been endorsed by the EU in which case the date given is the mandatory effective date for adoption in the EU.

The first phase of IFRS 9, which addressed classification and measurement of financial assets was published in November 2009, and was subsequently amended in October 2010 and November 2013, to include classification and measurement requirements of financial liabilities and hedge accounting requirements. IFRS 9 (2013) has a tentative mandatory effective date to 1 January 2018. At this time the Group continues to consider the impact of adopting IFRS 9 (2013) and will quantify the effect of adopting this standard in conjunction with the other phases, when the final standard including all phases is issued. At this time the Group does not have a significant level of financial assets other than trade receivables and has not designated liabilities using the fair value option, consequently the classification and measurement aspects of IFRS 9 (2013) are unlikely to have a significant impact on the Group if that position remains unchanged by 2018. The changes in impairment requirements required by IFRS 9 (2013) for financial assets are expected to require the Group to consider and possibly reassess its policy and the measurement of provisioning against trade receivables. Although the Group does not currently enter into any derivative financial instruments, should it do so in the future the IFRS 9 (2013) hedging model more closely aligns hedge accounting with risk management activities undertaken by the Group when hedging its financial and non-financial risk exposures.

IFRS 15 outlines the principles an entity must apply to measure and recognise revenue. The core principle is that an entity will recognise revenue at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services to a customer. The standard establishes a five-step model that will apply to revenue earned from a contract with a customer (with limited exceptions), regardless of the type of revenue transaction or the industry. The five steps relate to identifying the contract with a customer, identifying the separate performance obligations in the contract, determining the transaction price, allocating the transaction price to the separate performance obligations and recognising revenue when (or as) the entity satisfies the performance obligation under the contract. The standard also provides more detailed requirements than current IFRS, including for arrangements with multiple performance obligations, which may impact the timing of revenue recognition. The standard’s disclosure requirements are also more extensive. The standard’s requirements will also apply to the recognition and measurement of gains and losses on the sale of some non-financial assets that are not an output of the entity’s ordinary activities (e.g., sales of property, plant and equipment or intangibles). At this time the Group continues to assess the impact of adopting IFRS 15.

Although the Directors evaluation of the effect of adopting the other standards and interpretations has not yet been completed, it is not expected that their adoption will have a material impact on the Group’s ﬁnancial statements in the period of initial application.

85 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

3. Revenue and segmental analysis (a) Operating segments The tables below present revenue and segment result information regarding the Group’s operating segments for the years ended 31 December 2014 and 2013 on the basis of how the Group was managed during 2014. These business segments all operate as part of the Group’s continuing operations.

Revenue represents the amounts derived from the provision of goods and services which fall within the Group’s ordinary activities, stated net of value added tax. Revenue is principally generated from advertising and sponsorship. Transfer prices between business segments are set on an arm’s length basis in a manner similar to transactions with third parties.

As outlined in the 2013 Report and Accounts, the Group’s strategy was reﬁned to focus predominately on broadcasting and to exit from non-core activities, all of which resided within the New Media division, a fourth operating segment previously reported on within the Group. These non-core activities have been classiﬁed as discontinued operations. Tibus and Simply Zesty, the continued activities which previously resided within the New Media operating segment, have been incorporated within the Television operating segment.

The following tables present revenue, profit before tax and business segment information regarding the Group’s business segments for the years ended 31 December 2014 and 2013. The figures for the year ended 31 December 2013 have been restated to reflect the adoption of IFRS11 as outlined in note 1, together with the change in segments noted above.

Revenue Year ended 31 December 2014 Radio Radio GB Ireland Television Total £000 £000 £000 £000

Sales to third parties 56,396 20,463 39,184 116,043 Intersegmental sales 649 1,223 2,316 4,188

57,045 21,686 41,500 120,231

Year ended 31 December 2013 Radio Radio GB Ireland Television Total (restated) (restated) (restated) £000 £000 £000 £000

Sales to third parties 49,872 20,767 36,583 107,222 Intersegmental sales 541 1,219 2,783 4,543

50,413 21,986 39,366 111,765

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3. Revenue and segmental analysis (continued) (a) Operating segments (continued) Results Year ended 31 December 2014 Radio Radio GB Ireland Television Total £000 £000 £000 £000

Segment operating proﬁt 11,331 5,384 6,496 23,211

Central costs (3,848) Associate and Joint Venture income 314

Proﬁt before tax and ﬁnance costs 19,677

Net ﬁnance cost (2,357) Foreign exchange loss (75)

Proﬁt before taxation 17,245

Year ended 31 December 2013

Radio Radio GB Ireland Television Total (restated) (restated) (restated) (restated) £000 £000 £000 £000

Segment operating proﬁt 7,807 5,121 9,700 22,628

Central costs (2,765) Associate and Joint Venture income 239

Proﬁt before tax and ﬁnance costs 20,102

Net ﬁnance cost (2,963) Foreign exchange gain (188)

Proﬁt before taxation 16,951

87 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

3. Revenue and segmental analysis (continued) (a) Operating segments (continued) Other segmental information Depreciation Year ended 31 December 2014 Radio Radio GB Ireland Television Total £000 £000 £000 £000

Continuing operations 808 284 844 1,936

Discontinued operations -

1,936

Year ended 31 December 2013 Radio GB Radio Television Total Ireland (restated) (restated) £000 £000 £000 £000

Continuing operations 719 284 844 1,847

Discontinued operations 72

1,919

(b) Geographic information Turnover is generated from GB and Ireland. The following tables present revenue information regarding the Group’s geographical segments for the years ended 31 December 2014 and 2013. Revenues relating to advertising are analysed based on the geographical location of the sales agencies through which the advertising revenues are registered. It is not possible to accurately analyse advertising revenue based on customer location.

Revenue from continuing operations

Year ended 31 December 2014 Ireland GB Total £000 £000 £000

Sales to third parties 41,246 74,797 116,043

Year ended 31 December 2013 Ireland GB Total (restated) (restated) £000 £000 £000

Sales to third parties 39,782 67,440 107,222

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3. Revenue and segmental analysis (continued) (b) Geographic information (continued) The following tables present the geographical analysis of the Group’s non- current assets, excluding the deferred tax asset, for the years ended 31 December 2014 and 2013.

Year ended 31 December 2014 Ireland GB Total £000 £000 £000

Property, plant and equipment 14,536 2,824 17,360 Intangible assets 77,865 94,298 172,163 Investments - 900 900

92,401 98,022 190,423

Year ended 31 December 2013 Ireland GB Total (restated) (restated) £000 £000 £000

Property, plant and equipment 9,280 2,594 11,874 Intangible assets 82,842 94,297 177,139 Investments - 847 847

92,122 97,738 189,860

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4. Operating Costs

Continuing operations Discontinued operations Total 2014 2013 2014 2013 2014 2013 (restated) (restated) (restated) £000 £000 £000 £000 £000 £000

Purchase of programmes and 13,623 12,848 - - 13,623 12,848 programme rights Cost of inventory expensed 1,758 1,641 - - 1,758 1,641 Sales related costs 11,122 10,577 2,265 4,759 13,387 15,336 Other programme and operating costs 31,237 28,021 195 672 31,432 28,693 Staff costs (note 6) 34,788 32,950 402 1,212 35,190 34,162 Depreciation of property, plant 1,936 1,849 - 72 1,936 1,921 and equipment Amortisation of deferred costs 55 - - 187 55 187 Amortisation and impairment of - 188 - - - 188 intangibles (note 14) Licence payments 506 487 - - 506 487 Operating lease rentals - equipment & motor vehicles 473 479 - - 473 479 - land and buildings 1,331 1,369 - - 1,331 1,369 Income from sub-leases (186) (187) - - (186) (187) Write off of deferred consideration - (2,859) - - - (2,859) Loss/(proﬁt) on disposal of property, 37 (4) - - 37 (4) plant and equipment

96,680 87,359 2,862 6,902 99,542 94,261

5. Auditor’s remuneration The Group has recognised the following in respect of amounts paid or payable to its auditors in respect of the audit of the ﬁnancial statements and for other services provided to the Group.

2014 2013 £000 £000

Fees payable to the company’s auditor for the audit of the company’s annual accounts 43 42

Fees payable to the company’s auditor and its associate for other services: The audit of the company’s subsidiaries pursuant to legislation 239 237 Audit-related assurance services 28 26 Tax compliance services 14 15 Tax advisory services 84 6

365 284

Fees in respect of the UTV Pension Scheme: Audit 5 5

The Audit Committee approves all work undertaken by professional advisers, and resolved that the skills and experience of Ernst & Young LLP made it a suitable choice for the provision of these non-audit services and were satisﬁed that appropriate safeguards are in place to ensure that there is no threat to objectivity and independence in the conduct of the audit.

90 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

6WDƪFRVWV

Continuing Discontinued Total operations operations 2014 2013 2014 2013 2014 2013 (restated) (restated) £000 £000 £000 £000 £000 £000

Wages and salaries 30,275 28,473 344 1,095 30,619 29,568 Redundancy costs - 1,062 133 76 133 1,138 Social security costs 3,028 2,674 46 100 3,074 2,774 Other pension costs 1,485 741 12 17 1,497 758

34,788 32,950 535 1,288 35,323 34,238

Included within wages and salaries is a charge of £303,000 (2013: charge of £419,000) and within social security costs £34,000 (2013: £158,000) relating to the share-based payments.

The average monthly number of employees during the year was made up as follows: 2014 2013 (restated) No. No.

Radio GB 409 402 Radio Ireland 278 278 Television 300 292 Central 23 22

1,010 994

Details of Directors’ emoluments in aggregate and for each Director (including bonuses, pension entitlements, long term incentives and interest in share options) are included within the audited section of the ‘Report of the Board on Directors’ Remuneration’.

7. Finance revenue 2014 2013 £000 £000

Bank interest received and receivable 50 49

8. Finance costs 2014 2013 £000 £000

Bank loans and overdrafts 2,220 2,168 Net settlement on interest rate swap - 321 Other ﬁnance costs - pension 187 523

Total ﬁnance costs 2,407 3,012

91 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

9. Taxation (a) Tax on proﬁt on ordinary activities 2014 2013 £000 £000

Current income tax: UK corporation tax on proﬁts for the year (2,962) (2,453) Adjustments in respect of previous years 431 248

(2,531) (2,205)

Foreign tax: ROI corporation tax on proﬁts for the year (116) (346) Adjustments in respect of previous years (27) 16

(143) (330)

Total current tax (2,674) (2,535)

Deferred tax: Origination and reversal of timing differences (580) (684) Adjustments in respect of previous years 10 (160)

Tax charge in the income statement on operating activities (3,244) (3,379)

Exceptional deferred tax credit - 1,215

Total tax charge (3,244) (2,164)

The tax charge in the Income Statement is disclosed as: Tax charge on continuing operations (3,244) (2,164) Tax credit on discontinued operations --

Tax charge in the income statement (3,244) (2,164)

Tax relating to items in the Statement of Comprehensive Income Deferred tax: Actuarial gain on pension schemes (72) (1,022) Revaluation of cash ﬂow hedges - (61) Valuation of long term incentive plan (32) 139 Exceptional deferred tax charge - (303)

Tax charge in the statement of comprehensive income (104) (1,247)

92 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

9. Taxation FRQWLQXHG (b) Factors affecting the tax charge for the period The tax assessed for the period is lower than the effective standard rate of corporation tax in the UK of 21.50% (2013: 23.25%). The differences are reconciled below:

2014 2013 £000 £000

Proﬁt from continuing operations before tax 17,245 16,901 Proﬁt from discontinued operations before tax (201) 161

Proﬁt on ordinary activities 17,044 17,062

Proﬁt/(loss) on ordinary activities multiplied by effective standard rate of corporation tax in the UK of 21.50% (2013: 23.25%) (3,664) (3,967)

Effects of: Income/(expenses) not allowed for tax purposes 132 166 Utilisation of tax losses previously not recognised 175 14 Tax losses carried forward (394) - Non-qualifying depreciation/amortisation 16 6 Lower taxes on overseas earnings 77 298 Tax overprovided in previous years 414 104 Exceptional deferred tax credit/(charge) - 1,215

Tax charge for the period (3,244) (2,164)

Exceptional tax credit - 2,640 Exceptional tax charge - (1,425)

- 1,215

In 2013, the corporation tax rate in the UK was revised from 23% to 20% (effective from April 2015). Accordingly all the deferred tax assets and liabilities in respect of the reporting segments subject to UK corporation tax were restated to recognise the future gains or charges thereon at this rate. This resulted in a net credit of £2,640,000 in 2013.

In the Finance Bill published on 13 February 2013 and passed into law on 27 March 2013, the rate of corporate capital gains in the Republic of Ireland was increased from 30% to 33%. The exceptional tax charge of £1,425,000 in 2013 arises from the restatement of the relevant deferred tax assets and liabilities to reﬂect this.

(d) Unrecognised tax losses The Group has tax losses which arose in the UK of £13,703,000 (2013: £13,723,000) that are available indeﬁnitely for offset against future taxable proﬁts of the companies in which the losses arose. Deferred tax assets have not been recognised in respect of these losses.

93 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

9. Taxation FRQWLQXHG (e) Temporary differences associated with Group investments At 31 December 2014, there was no recognised deferred tax liability (2013: £Nil) for taxes that would be payable on the unremitted earnings of certain Group subsidiaries and joint ventures as the Group has determined that the undistributed proﬁts of its subsidiaries will not be distributed in the foreseeable future.

The temporary differences associated with investments in subsidiaries, associates and joint ventures, for which deferred tax liability has not been recognised aggregate to £2,024,000 (2013: £2,238,000). It is likely that the temporary timing differences would qualify for the UK dividend exemption and therefore no tax liability is expected to arise. There are no income tax consequences attaching to the payment of dividends by the Group to its shareholders.

(f) Deferred tax The deferred tax included in the balance sheet is as follows:

Deferred tax liability 2014 2013 £000 £000

Valuation of intangible assets on acquisition 33,817 34,874 Accelerated capital allowances 449 192

Deferred tax liability 34,266 35,066

2014 2013 £000 £000

Balance at 1 January 35,066 36,154 Charged to the income statement 253 30 Foreign exchange movement (1,053) 340 (Credit)/charge due to change in tax rates - (1,458)

Deferred tax liability 34,266 35,066

94 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

9. Taxation (continued) (f) Deferred tax (continued) Deferred tax asset 2014 2013 £000 £000

Pension liability 394 720 Decelerated capital allowances 333 305 Other temporary differences 778 862 Tax losses carried forward 26 65

Deferred tax asset 1,531 1,952

2014 2013 £000 £000

Balance at 1 January 1,952 4,250 Charged to the income statement (317) (808) (Charged)/credited to the statement of comprehensive income (104) (1,247) Charge due to change in UK corporation tax rate - (243)

Deferred tax asset 1,531 1,952

The deferred tax included in the Group income statement is as follows:

2014 2013 £000 £000

Accelerated capital allowances (38) (2) Tax losses carried forward (36) (30) Other temporary differences (506) (652)

Deferred income tax expense on operational activities (580) (684) Adjustment in respect of previous years 10 (160) Exceptional deferred tax (charge)/credit - 1,215

Total deferred tax (charge)/credit (570) 371

95 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

10. Discontinued operations In 2013, UTV Connect and the portals, UTV Drive, Recruit NI and PropertyPal, were identified as being non-core to the future strategy of the Group and consequently these businesses, which previously operated within the New Media division, were classified as discontinued operations in 2013. The figures for the year ended 31 December 2013 have been restated to reflect the adoption IFRS11, as outlined in note 1.

The activities have ceased or been disposed of in 2014 for a cash consideration of £1,175,000 of which £275,000 is contingent and remains outstanding at 31 December 2014, as detailed ini notes 19 and 28(b). The resultant gains or losses on disposal are recognised within discontinued operations in the Income Statement in 2014.

The results of these businesses for 2013 and 2014 are presented below: 2014 2013 (restated) £000 £000

Revenue 2,934 6,652 Operating cost (note 4) (2,862) (6,550)

Operating proﬁt 72 102 Share of results of joint venture 48 10 Net loss on disposal of discontinued operations (319) - Interest payable (2) - Foreign exchange loss - (1)

(Loss)/proﬁt before tax from discontinued operations (201) 111 Current tax charge --

(Loss)/proﬁt for the year from discontinued operations (201) 111

At 31 December 2014 the discontinued businesses had net assets of £290,000, which includes the contingent consideration receivable of £275,000 outlined in note 19.

Net loss on disposal of discontinued operations 2014

£000

Proceeds from sale 1,175 Transitional and wind-up costs (1,287) Professional fees (74) Redundancy costs (note 6) (133)

(319) Current tax charge -

Loss from disposal of discontinued operations (319)

The discontinued operations created a net cash outflow from operating cash flows of £366,000 (2013: inflow of £7,000) and a cash inflow from investing activities of £900,000 (2013: outflow of £12,000) which are included in the Group Cash Flow statement.

96 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

10. Discontinued operations (continued)

Exceptional Costs – discontinued operations 2014 2013 £000 £000

Restructuring costs - (227) Impairment of assets - (1,055)

Loss for the year from - (1,282) discontinued operations Tax credit on the above items - 125

Loss for the year from - (1,157) discontinued operations

Restructuring costs 2014 2013 £000 £000

Redundancy costs (note 6) - (76) Professional fees - (151)

- (227)

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11. Earnings per share Basic earnings per share are calculated based on the proﬁt for the ﬁnancial year attributable to equity holders of the parent and on the weighted average number of shares in issue during the year.

Adjusted earnings per share are calculated based on the profit for the financial year attributable to equity holders of the parent adjusted for the exceptional items and the impact of net finance costs under IAS 19 “Employee Benefits (Revised)”. This calculation uses the weighted average number of shares in issue during the year.

Diluted earnings per share are calculated based on profit for the financial year attributable to equity holders of the parent. Diluted adjusted earnings per share are calculated based on profit for the financial year attributable to equity holders of the parent before exceptional items and the impact of net finance costs under IAS 19 “Employee Benefits (Revised)”. In each case the weighted average number of shares is adjusted to reflect the dilutive potential of the awards expected to be vested on the Long Term Incentive Schemes.

The split of the ﬁgures for the year ended 31 December 2013 between continuing and discontinued operations has been restated to reﬂect the adoption of IFRS11 as outlined in note 1.

The following reﬂects the income and share data used in the basic, adjusted, diluted and diluted adjusted earnings per share calculations:

Net proﬁt attributable to equity holders 2014 2013 Continuing Discontinued Total Continuing Discontinued Total Operations Operations Operations Operations (restated) (restated) £000 £000 £000 £000 £000 £000

Net proﬁt/(loss) attributable 13,844 (201) 13,643 14,519 (1,046) 13,473 to equity holders Adjustments to net ﬁnancing costs 187 - 187 523 - 523 Exceptional items - - - (1,215) 1,157 (58)

Total adjusted and diluted proﬁt 14,031 (201) 13,830 13,827 111 13,938 attributable to equity holders

Weighted average number of shares 2014 2013 thousands thousands

Shares in issue 95,903 95,903 Weighted average number of (23) (325) treasury shares

Weighted average number of shares for basic and adjusted earnings per share (excluding treasury shares) 95,880 95,578

Effect of dilution of the Long Term Incentive Plan 467 959

96,347 96,537

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11. Earnings per share (continued) Earnings per share 2014 2013 (restated) From continuing operations

Basic 14.44p 15.19p

Diluted 14.37p 15.04p

Adjusted 14.63p 14.47p

Diluted adjusted 14.56p 14.32p

From continuing and discontinued operations

Basic 14.23p 14.10p

Diluted 14.16p 13.96p

Adjusted 14.42p 14.58p

Diluted adjusted 14.35p 14.44p

From discontinued operations

Basic 0.21p (1.09)p

Diluted 0.21p (1.08)p

Adjusted 0.21p 0.12p

Diluted adjusted 0.21p 0.11p

99 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

12. Dividends 2014 2013 Equity dividends on ordinary shares £000 £000 Declared and paid during the year Final for 2013: 5.25p (2012: 5.25p) 5,035 5,001 Interim for 2014: 1.82p (2013: 1.75p) 1,745 1,677

Dividends paid 6,780 6,678

Proposed for approval at Annual General Meeting (not recognised as a liability at 31 December) Final dividend for 2014: 5.43p (2013: 5.25p) 5,205 5,032

13. Property, plant and equipment Freehold land Leasehold Equipment Total and buildings improvements and vehicles £000 £000 £000 £000 Cost At 1 January 2013 (restated) 8,270 1,820 19,646 29,736 Exchange adjustment 33 18 82 133 Additions (restated) 33 25 2,016 2,074 Disposals - - (2,003) (2,003)

At 31 December 2013 (restated) 8,336 1,863 19,741 29,940 Exchange adjustment (103) (56) (267) (426) Additions 385 20 7,231 7,636 Disposals - - (192) (192)

At 31 December 2014 8,618 1,827 26,513 36,958

Depreciation and impairment At 1 January 2013 (restated) 2,756 359 14,726 17,841 Exchange adjustment 7 - 62 69 Charge for the year (restated) 3 167 1,749 1,919 Impairment - - 233 233 Disposals - - (1,996) (1,996)

At 31 December 2013 (restated) 2,766 526 14,774 18,066 Exchange adjustment (34) (22) (208) (264) Charge for the year 14 179 1,743 1,936 Disposals - - (140) (140)

At 31 December 2014 2,746 683 16,169 19,598

Net book value At 31 December 2014 5,872 1,144 10,344 17,360

At 31 December 2013 (restated) 5,570 1,337 4,967 11,874

At 1 January 2013 (restated) 5,514 1,461 4,920 11,895

At 31 December 2014 the Group had entered into Sterling contractual commitments for the acquisition of property, plant and equipment amounting to £448,000 (2013: £Nil).

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14. Intangible assets Customer Licences Goodwill Relationships Total £000 £000 £000 £000 Cost At 1 January 2013 (restated) 190,191 79,545 259 269,995 Exchange adjustment 1,030 1,452 - 2,482

At 31 December 2013 (restated) 191,221 80,997 259 272,477 Exchange adjustment (3,201) (4,733) - (7,934)

At 31 December 2014 188,020 76,264 259 264,543

Impairment and amortisation At 1 January 2013 48,400 45,372 71 93,843 Impairment - 356 188 544 Exchange adjustment - 951 - 951

At 31 December 2013 48,400 46,679 259 95,338 Exchange adjustment - (2,958) - (2,958)

At 31 December 2014 48,400 43,721 259 92,380

Net book value

At 31 December 2014 139,620 32,543 - 172,163

At 31 December 2013 (restated) 142,821 34,318 - 177,139

At 1 January 2013 (restated) 141,791 34,173 188 176,152

The licences are radio licences which are granted for minimum periods of 10 years with the option of a renewal based on the company meeting the regulatory requirements of the licence. Similar licences have been successfully renewed at insigniﬁcant cost in the past, and consequently the Group has concluded that these assets have indeﬁnite useful life but will be subject to annual impairment testing.

The recoverable value of the licences is measured using discounted cash ﬂow forecasts and the valuation model at 31 December 2014 indicated no impairment on these assets (2013: £Nil) as explained in note 15.

As part of the restructuring carried out in the Group in 2013, the UTV Connect and PropertyPal businesses were reclassiﬁed as discontinued operations and impairments totalling £356,000 were recognised against the goodwill associated with these businesses. This restructuring also saw the merger of Tibus Digital Agency with Simply Zesty to deliver as a full service digital agency under the Simply Zesty brand. The integration of these businesses resulted in a change in the management within Simply Zesty and consequently the value of customer relationships was deemed to be impaired and the remaining carrying value of £188,000 was written off in 2013.

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,PSDLUPHQWRIJRRGZLOODQGLQWDQJLEOHDVVHWVZLWKLQGHƬQLWHOLYHV Goodwill acquired with business combinations and intangibles with indeﬁnite lives have been allocated at acquisition to the cash generating units that are expected to beneﬁt from that business combination. The cash generating units under which these assets are considered are: • talkSPORT • Local Radio • Radio Ireland • Digital Services

The first two cash generating units relate to the Radio GB operating segment, while the Radio Ireland cash generating unit is also an operating segment. As indicated in note 3 the Digital Services cash generating unit is now included within the Television operating segment. These cash generating units represent the smallest identifiable group of assets that generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets.

The recoverable amount of each cash generating unit has been determined using value in use calculations. The key assumptions included in these value in use calculations relate to revenue growth, long term growth rates and the discount rates applied. The Group prepares cash flow forecasts for each cash generating unit based on the most recent 2015 budgets approved by the Board, internal forecasts of future growth over the period 2016 to 2019, with cash flows beyond this five year period extrapolated using expected long term growth rates. Further information on the assumptions used is detailed below.

These value in use calculations at 31 December 2014 indicated no impairment on the licences or goodwill (2013: £Nil) associated with continuing operations. As a result of the restructuring in 2013, an impairment of £544,000 was recognised in the prior year in respect of the intangible assets as outlined in note 14.

Carrying amount of goodwill and licences allocated to cash-generating units talkSPORT Local Radio Radio Ireland Digital Services Total

2014 2013 2014 2013* 2014 2013 2014 2013 2014 2013* £000 £000 £000 £000 £000 £000 £000 £000 £000 £000

Goodwill - - 10 10 21,412 22,909 11,121 11,399 32,543 34,318 Licences 48,024 48,024 46,263 46,263 45,333 48,534 - - 139,620 142,821

48,024 48,024 46,273 46,273 66,745 71,443 11,121 11,399 172,163 177,139

* Restated

Key assumptions used in value in use calculations The calculation of value in use is most sensitive to the following assumptions: • Discount rates • Revenue forecasts

Discount rates The pre-tax discount rates used in the calculations of the value in use for the UK and ROI cash generating units were 10.2% (2013: 9.2%) and 9.2% (2013: 9.9%), respectively. These pre-tax discount rates reﬂect management’s estimate of the Weighted Average Cost of Capital (WACC), a post-tax rate required to assess operating performance in each cash generating unit and to evaluate future capital investment proposals. Management’s estimate of the WACC required for the Group’s UK based cash generating units is 8.7% (2013: 7.7%) while that of its Republic of Ireland based cash generating unit has been estimated at 8.3% (2013: 8.8%). These WACC rates reﬂect the latest market projections for the risk-free rate in each country, equity risk premium and small company premium together with the cost of debt appropriate to the industry.

102 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

,PSDLUPHQWRIJRRGZLOODQGLQWDQJLEOHDVVHWVZLWKLQGHƬQLWHOLYHV FRQWLQXHG Revenue forecast Revenue forecasts used in the calculation of value in use are based on available market information including independent forecasts. Current results and forecasts reﬂect the present wider economic uncertainty and the recent upturn in advertising revenue in the Republic of Ireland.

In Radio GB industry forecasts are predicting that the market will be up by 2% to 4% in 2015. In Ireland, whilst there are no formal radio industry forecasts, local economists and sales agencies are indicating that for 2015 the market will show modest growth. The 2015 budgets for the radio divisions have been set based on these assumptions with each of these three cash generating units forecasting growth of 2% to 4%. Given the strength of the UTV radio offering and the consistent out-performance of the market, management believe that UTV Radio is well positioned to take advantage of growth opportunities.

From 2016 through to 2019 it is forecast Radio GB, will deliver revenue growth of between 2.0% per annum to 4.0% per annum (before accounting for any signiﬁcant enhancements as a result of major sporting events) with the higher range of growth reﬂecting the impact of developments into the international market by talkSPORT. For Radio Ireland, modest revenue growth of between 2.0% and 4.0% per annum is also forecast for the period 2016 to 2019.

Revenue from the Digital Services cash generating unit is derived from a range of internet hosting, web-design products plus digital marketing and social media services. It is expected that revenue in this cash generating unit will grow about 10% in 2015 as this business beneﬁts from the restructuring undertaken in the previous years. From 2016 through to 2019 it is forecasted to deliver ongoing revenue growth of between 5% per annum and 10% per annum reﬂecting the continuous growth in this market.

The revenue growth rate used beyond 2019 is 2.25% (2013: 2.25%) being consistent with the long term average growth rate for the industry.

Sensitivity to changes in assumptions With regard to the assessment of the recoverable amount of the cash generating units, management have considered reasonable possible changes in the above key assumptions and it is believed no reasonably possible change in any of the above key assumptions would cause the carrying value of those units to exceed their estimated recoverable amount.

103 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

16. Investments (a) Group 2014 2013 (restated) £000 £000

Investments accounted for using the equity method 900 847

This investment in the Group accounts at 31 December 2014 comprises: • a 30.2% share in Digital Radio Group (London) Limited, a commercial radio business; • a 24.9% share in French Radio London Limited, a commercial radio business; • a 25% share in Muxco North East Wales & West Cheshire Limited, a digital multiplex operator; • a 30% share of Sound Digital Limited, which has applied for a digital multiplex licence; • a 20% share in Main Street 1035 (Pty) Limited, which has been awarded a radio licence but is not yet trading and • a 50% joint venture company, First Radio Sales Limited, which is a sales company.

Main Street 1035 (Pty) Limited is incorporated in South Africa. All other companies are incorporated in England. The investments are all held by subsidiary undertakings of UTV Media plc. They are all currently, or are in the future expected to, contribute to the Group’s strategy to grow its audience and revenues through multiple platforms and markets.

At 31 December 2013, the Group also had a 50% joint venture share in PropertyPal Limited which was treated as a discontinued operation in 2012 and sold at 31 January 2014.

The following illustrates the summarised ﬁnancial information of the Group’s associate and joint venture undertakings, all of which are included within continuing operations:

Associate Undertakings 2014 2013 £000 £000

Non-current assets -- Current assets 1,346 858 Current liabilities (780) (480) Non-current liabilities (36) -

Equity 530 378

Group’s carrying amount of the investment 163 114

Net current assets includes £1,138,000 (2013: £739,000) of cash.

2014 2013 £000 £000

Revenue 1,460 1,498 Cost of sales (776) (754) Administrative expenses (218) (182) Finance costs (2) -

464 562 Income tax expense (117) (131)

Proﬁt for the year 347 431

Total comprehensive income for the year 109 130

Group’s share of proﬁt for the year 109 130

The associates had no contingent liabilities or capital commitments as at 31 December 2014 and 2013. 104 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

16. Investments FRQWLQXHG (a) Group (continued) Joint Venture 2014 2013 £000 £000

Non-current assets 7 26 Current assets 4,168 3,432 Current liabilities (3,573) (2,864) Non-current liabilities --

Equity 602 594

Group’s share of net assets in joint ventures 301 297 Goodwill recognised on consolidation 436 436

Group’s carrying amount of the investment 737 733

Net current assets includes £1,047,000 (2013: £1,013,000) of cash. 2014 2013 £000 £000

Revenue 1,894 1,616 Cost of sales (209) (96) Administrative expenses (1,274) (1,302) Finance costs (1) -

410 218 Income tax expense --

Proﬁt for the year 410 218

Total comprehensive income for the year 410 218

Group’s share of proﬁt for the year 205 109

The joint venture had no contingent liabilities or capital commitments as at 31 December 2014 and 2013. First Radio Sales Limited cannot distribute its proﬁts without the consent from the two venture partners.

105 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

16. Investments (continued) (b) Group undertakings In the opinion of the Directors, the following subsidiaries of the Company principally affected the results or ﬁnancial position of the Group at 31 December 2014 or are the holders of radio licences or principal contracts within the Group:

Country of Percentage of incorporation shares held Nature of business

UTV Limited Northern Ireland 100% Commercial Television UTV Ireland Limited Republic of Ireland * 100% Commercial Television UTV New Media Limited Northern Ireland 100% Holding company The Internet Business Limited Northern Ireland * 100% Web development Simply Zesty Limited Republic of Ireland * 100% Social Media agency UTV Radio (ROI) Limited Republic of Ireland 100% Holding company County Media Limited Republic of Ireland * 100% Holding company Radio County Sound Limited Republic of Ireland * 100% Commercial Radio Shawnee Limited Republic of Ireland * 100% Sales agency Cork Media Enterprises Limited Republic of Ireland * 100% Commercial Radio Treaty Radio Limited Republic of Ireland * 100% Commercial Radio City Broadcasting Limited Republic of Ireland * 100% Commercial Radio Independent Broadcasting Corporation Limited Republic of Ireland * 100% Commercial Radio Capital Radio Productions Limited Republic of Ireland * 100% Commercial Radio UTV Media (GB) Limited England 100% Holding company talkSPORT Limited England * 100% Commercial Radio Switchdigital (Scotland) Limited Scotland * 92% Commercial Radio Switchdigital (London) Limited England * 80.5% Commercial Radio UTV Digital (B&H) Limited England * 100% Commercial Radio UTV Digital Limited England * 100% Commercial Radio Pulse FM Limited England * 100% Non-trading Signal Radio Limited England * 100% Non-trading Swansea Sound Limited England * 100% Non-trading Radiowave (Blackpool) Limited England * 100% Non-trading Allied Radio Limited Scotland * 100% Non-trading 102.4 Wish Limited England * 100% Non-trading Wire FM (1997) Limited England * 100% Non-trading Grand Central Broadcasting Limited England * 100% Non-trading Tower 107.4 FM Limited England * 100% Non-trading Wolverhampton Area Radio Limited England * 100% Non-trading Perfecttaste Limited England * 100% Non-trading

* held by a subsidiary undertaking

The Directors have taken advantage of the exemptions conferred by section 410 (1) and (2) of the Companies Act 2006.

106 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

17. Inventories 2014 2013 £000 £000

Programme and programming rights 2,387 1,755 Sundry stocks 3 3

2,390 1,758

18. Trade and other receivables 2014 2013 (restated) £000 £000

Trade receivables 17,290 18,046 Other receivables 1,041 386 Prepayments and accrued income 5,171 4,352

23,502 22,784

Trade receivables are non-interest bearing and are generally on 30 day terms and are shown net of a provision for impairment. The amount of the provision netted against the gross trade receivables balance was £1,961,000 at 31 December 2014 (2013 restated: £2,643,000).

The ageing of net trade receivables are as follows:

Neither past ¦----Past due but not impaired----¦ due nor impaired Total 31 – 60 61 – 90 >91 days days days

£000 £000 £000 £000 £000

2014 17,290 10,674 4,630 1,679 307

2013 (restated) 18,046 10,850 4,793 1,108 1,295

Movements on the provision against trade receivables are as follows: 2014 2013 (restated) £000 £000

Opening balance 2,643 2,586 Foreign exchange 232 11 (Release)/charge for the year (838) 161 Utilised (76) (115)

Closing balance 1,961 2,643

The credit quality of trade receivables that are neither past due nor impaired is assessed by reference to external credit ratings where available otherwise historical information relating to counterparty default rates combined with current knowledge of the counterparty is used.

107 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

19. Financial asset 2014 2013 £000 £000

Contingent consideration 275 -

Contingent consideration receivable relates to amounts due in respect of the disposal of certain of the Group’s New Media businesses during the year (see note 28(b)).

20. Cash and short term deposits 2014 2013 (restated) £000 £000

Cash at bank and in hand 8,347 5,160 Short term deposits 4,539 5,025

12,886 10,185

Cash at bank and in hand earns interest rates based on daily bank deposit rates. Short term deposits are made for varying periods of between one day and three months depending on immediate cash requirements of the Group, and earn interest at the respective short term deposit rates.

21. Trade and other payables 2014 2013 (restated) £000 £000

Trade payables 9,162 7,613 Other payables 814 729 Other taxation and social security 3,680 3,957 Accruals and deferred income 14,402 10,862

28,058 23,161

22. Financial liabilities 2014 2013 £000 £000 Current Current instalments due on bank loans 3,668 3,939

Non-current Non-current instalments due on bank loans 55,399 55,866

59,067 59,805

There are three bank overdraft facilities in the Group with a cumulative limit of £4.0m in the UK and €2.0m in the ROI. These are secured by a ﬂoating charge over the Group’s assets. The borrowings at 31 December 2014 are stated net of £509,000 (2013: £730,000) of deferred ﬁnancing costs. The effective interest rate of the bank loans in 2014 is 3.04% (2013: 2.78%).

108 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

22. Financial liabilities (continued) Movements on the bank loans during the year were due to mandatory and voluntary repayments on the term loan plus a €5m draw down on the revolving credit facility. The balance at 31 December 2014 comprises of the following: 2014 2013 £000 £000

Senior facilities £65m 5 year revolving credit loan “A” 49,879 46,000 Senior facilities €25m 5 year amortising term loan 9,697 14,535

59,576 60,535 Less current instalment on bank loans (3,879) (4,153)

55,697 56,382

The Group’s banking facilities were reﬁnanced on 31 May 2012 and comprise a £65m multi-currency Revolving Credit Facility (RCF), and a €25m amortising Term Loan Facility (TLF).

The TLF is repayable by instalments of €2.5m, the ﬁrst of which was paid on 31 December 2012, with further instalments due in June and December each year to 31 December 2016 and a ﬁnal payment of €2.5m due on 31 May 2017.

The £65m RCF is available to the Group for the period to 31 May 2017 when any amounts drawn will be repaid or reﬁnanced. A commitment fee of 40% of the applicable margin is payable quarterly on any undrawn portion.

These facilities have been provided by a banking group comprising Bank of Ireland, Ulster Bank (a subsidiary of Royal Bank of Scotland) and Danske Bank.

The applicable margins contracted on the ﬁnancial liabilities range from 2.00% to 3.50% depending on the Net Debt to EBITDA ratio. The applicable margins paid in the current ﬁnancial year are detailed below:

Applicable margin Senior Facilities From To 3.00% 1 January 2014 30 March 2014 2.50% 31 March 2014 29 September 2014 2.25% 30 September 2014 31 December 2014

23. Obligations under leases and hire purchase contracts Obligations under operating leases The Group has entered into commercial leases for certain properties, motor vehicles and equipment. These leases have an average duration of between 1 and 99 years generally with an option for renewal at the end of lease term. There are no restrictions placed upon the lessee by entering into these leases. Future minimum rentals payable under operating leases are as follows:

2014 2013 £000 £000

Not later than one year 1,425 1,517 After one year but not more than ﬁve years 4,184 3,130 After ﬁve years 6,937 1,986

12,546 6,633

109 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

24. Provisions Onerous Dilapidation Total leases £000 £000 £000

At 1 January 2014 31 669 700 - Current 14 397 411 - Non-current

45 1,066 1,111

Utilised (31) - (31) Created during the year - 101 101

At 31 December 2014 14 1,167 1,181

Analysed as: - Current 14 795 809 - Non-current - 372 372

14 1,167 1,181

The provisions relate to estimated dilapidation cost obligations arising under property operating leases entered into by the Group and committed rental costs on currently unoccupied properties. The timing of these liabilities depends on each individual lease and the likelihood of subletting. The leases are between 1 and 99 years in duration and have zero to 58 years outstanding.

25. Share based payments (a) Long term incentive plan The Company currently has a long term incentive plan for certain UTV senior executives. During 2011, 2012, 2013 and 2014 executives were granted awards, with an exercise price of zero, of up to 100% of basic salary which are payable in shares at the end of three years to the extent that performance criteria are met.

Granted awards 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 (based on the average price in the ﬁve days prior to the award): Market 2014 2013 price on No. No. grant date End of qualifying period

31 December 2013 135.10p - 955,613 31 December 2014 143.12p 943,517 1,030,856 31 December 2015 187.13p 751,112 825,931 31 December 2016 246.89p 455,432 -

These awards have two performance conditions applied: • 65% is based on growth in diluted, adjusted earnings per share (EPS) per annum over the three financial year period commencing with the financial year in which the awards were granted and • 35% is based on the ranking of the Company’s total shareholder return (TSR) against a comparator group over the three financial year period commencing with the financial year in which the awards were granted. For the 2011 to 2013 plans, the comparator group comprises the FTSE All-Share Media sector. For the 2014 award, the comparator group is the FTSE Small Cap.

110 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

25. Share based payments (continued) (a) Long term incentive plan (continued) EPS performance condition For the EPS portion of the award, no award will vest unless the Company’s equivalent annual EPS growth over the three ﬁnancial years commencing with the ﬁnancial year in which the award is granted exceeds average RPI by at least 3% per annum. If this level of growth is achieved, 25% of the award will vest. Additional vesting will be achieved on a straight line basis for further growth above this up to the maximum 100% for EPS growth in excess of average RPI by at least 6%.

In determining the fair value of the awards, the fair value of the EPS portion of the awards is equal to the share price at the time of grant multiplied by the number of shares under award and the percentage vesting based on EPS performance spread over the period of vesting. It is assumed that all recipients of awards will fulﬁl their service conditions.

Awards granted in 2011 The EPS growth from 2010 to 2013 did not reach the minimum performance criteria and therefore this element of the 2011 awards did not vest and expired at the end of the ﬁnancial year.

Awards granted in 2012, 2013 and 2014 Based on current market forecasts, it is not expected that the 2012, 2013 or 2014 EPS performance criteria will be achieved to satisfy the vesting of these awards and therefore no charge has been made to the accounts in respect of these awards (2013: £Nil).

TSR performance conditions The amount of the award that vests to each senior executive increases in accordance with the level of performance achieved. Under the TSR portion of the award, no award will vest unless the Company’s TSR compared to the TSR of the members of the comparator group is ranked at the median over the three ﬁnancial year period commencing with the ﬁnancial year in which the awards were granted. If this level is achieved then 25% of the award will vest. Additional vesting will be achieved on a pro rata basis if the ranking is between the median and upper quartile up to a maximum of 100% if the ranking is in the upper quartile. For the TSR portion of the awards the fair value of the awards has been derived using the Monte-Carlo simulation model, taking into account the terms and conditions upon which the awards were granted. The following table lists the inputs to the model used for the awards granted and the derived fair value of each share awarded. 2014 2013 Dividend Yield (%) 0 0 Expected share price volatility (%) 34.7 35.2 Risk-free interest rate (%) 1.07 0.75 Expected life of options (years) 3 3 Share price (p) 242.00 185.00 Fair value derived (p) 163.16 124.92

The expected share price volatilities are calculated based on the movements in the historical return index (share price with dividends reinvested) over a period of time commensurate with the remaining term of the award (i.e. the period from the date of grant to the end of the performance period).

On vesting of the awards the participants are entitled to cash or shares equal in value to the dividends that would have been paid on those shares between the date of grant and the date of vesting. The fair value of the awards has been calculated on the assumption that the dividend right is settled in shares.

No other feature of awards granted was incorporated into the measurement of the fair value.

The valuation of these awards at 31 December 2014 has resulted in a charge to the accounts of £303,000 (2013: £360,000).

111 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

25. Share based payments FRQWLQXHG (a) Long term incentive plan (continued) Awards granted in 2011 At 31 December 2013, the UTV shares ranked between the median and upper quartile of the FTSE All-Share Media sector and consequently 59% of the TSR element, which relates to 35% of this award, vested during the year. This represented 20.7% of the total 2011 award. Details of the weighted average share prices at the date of exercise are shown in the Directors Remuneration Report.

Awards granted in 2012 At 31 December 2014, the UTV shares ranked between the median and upper quartile of the FTSE All-Share Media sector and consequently 64% of the TSR element, which relates to 35% of this award, will vest. This represents 22.4% of the total 2012 award. An additional £23,000 (2013:£68,000) was accrued for the NIC payable on the vesting of these awards.

Awards granted in 2013 At 31 December 2014, UTV’s TSR ranked in the upper quartile of the FTSE All-Share Media sector, the set comparator group for the 2013 awards. Based on this it is expected that 59% of the TSR elements of the awards granted in 2013 will vest. This represents 20.7% of the total 2013 award. An additional £11,000 (2013:£22,000) was accrued for the NIC payable on the vesting of these awards.

Awards granted in 2014 Based on UTV’s ranking at 31 December 2014 in the FTSE Small Cap sector, the set comparator group for the 2014 awards, these awards are not expected to vest. All awards may be exercisable in the six month period from the date of vesting.

(b) Share Incentive Plan The all-employee SIP enables eligible UK based employees to buy shares in the Company out of pre-tax salary, subject to a limit in line with government guidelines which from 5 April 2014 was set at £1,800, or if lower, 10% of the employee’s pre-tax salary. (Prior to this, the government guidelines were set at £1,500, or if lower, 10% of the employee’s pre-tax salary.) This may be deducted from the pre-tax salary in one lump sum up to a maximum of £1,800 (2013: £1,500) or a maximum of £150 per month post 5 April 2014 (£125 per month up to 5 April 2014). During the year, 48,875 shares were purchased by the trustees of the SIP on behalf of 98 employees at a total cost of £104,000.

112 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

26. Authorised and issued share capital Authorised shares Authorised Allotted, issued and fully paid 2014 2013 2014 2013 £000 £000 £000 £000

Ordinary shares of 5p each (2013: 5p each) 10,000 10,000 4,795 4,795 Redeemable preference shares of £1 each (2013: £1 each) 50 50 - -

At 31 December 2013 and 2014 10,050 10,050 4,795 4,795

Ordinary shares issued and fully paid

Number Authorised Number Issued nominal nominal value value thousands £000 thousands £000

At 31 December 2013 and 2014 200,000 10,000 95,903 4,795

Redeemable preference share capital Number Issued nominal value thousands £000

At 31 December 2013 and 2014 50 -

27. Share capital and reserves Analysis by item recognised in other comprehensive income for each component of equity: Year ended 31 December 2014 Foreign Cashﬂow Retained Total currency hedge earnings reserve reserve £000 £000 £000 £000

Actuarial gain on deﬁned beneﬁt pension schemes (net of tax) - - 288 288 Tax on long term incentive plan - - (32) (32) Exchange loss on translation of foreign operations (3,379) - - (3,379)

Other comprehensive income in the year (3,379) - 256 (3,123)

Year ended 31 December 2013 Foreign Cashﬂow Retained Total currency hedge earnings reserve reserve £000 £000 £000 £000

Actuarial loss on defined benefit pension schemes (net of tax) - - 3,786 3,786 Tax on long term incentive plan - - 144 144 Exchange loss on translation of foreign operations 932 - - 932 Net gain on cashflow hedge (net of tax) - 251 - 251

Other comprehensive income in the year 932 251 3,930 5,113

113 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

27. Share capital and reserves FRQWLQXHG Equity share capital The balance classiﬁed as equity share capital includes the total net proceeds (both nominal value and share premium) on issue of the Company’s equity share capital, comprising £0.05p ordinary shares.

Foreign currency reserve The foreign currency translation reserve is used to record exchange differences arising from the translation of the ﬁnancial statements of foreign subsidiaries.

Cash flow hedge reserve In 2012, the cash flow hedge reserve reflected the unrealised gains and losses incurred on the interest rate swap designated as a hedge of the expected floating rate interest payments on the bank loans. These swaps matured in 2013 with the amounts recognised with this reserve at termination transferred to the income statement.

Capital redemption reserve This balance was created on redemption of 50,000 redeemable preference shares on 19 December 2007.

Treasury shares Treasury shares represent the cost of UTV Media plc shares purchased in the market and held by the UTV Employee Beneﬁt Trust to contribute towards the anticipated entitlement of senior executives to the vesting of awards in the long term incentive plans.

At 31 December 2014 the Group held 53,000 (2013: 56,488) of its own shares at an average cost of £1.97 (2013: £2.17). The market value of these shares at 31 December 2014 was £104,000 (2013: £121,000).

28. Financial risk management (a) Capital structure and financial risk management The Group’s principal financial instruments comprise bank loans, and cash and short-term deposits. The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.

The main risks arising from the ﬁnancial instruments are cash ﬂow interest rate risk, foreign currency risk, credit risk and liquidity risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below. The Group’s accounting policy in relation to derivatives is set out in Note 2.

It is, and has been throughout the year under review, Group policy not to trade in ﬁnancial instruments.

Capital management The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made to the objectives, policies or processes during the years ending 31 December 2014 and 31 December 2013. Details on the capital structure are disclosed in note 22 and the Strategic Review.

Cash flow interest rate risk The Group’s exposure to the risk for changes in market interest rates relate primarily to the medium term debt obligations with a floating interest rate. The Group’s policy is to manage its total interest cost using a mix of fixed and variable rate debts, with between 40% and 60% of its total committed borrowing facilities at fixed rates of interest. The Group has historically entered into interest rate swaps in order to hedge cash flow interest rate risk on the Group’s debt obligations. These swaps matured on 28 June 2013.

The Board members currently believe that the cost of entering new interest rate swap contracts does not represent good value for shareholders. Interest rate swap prices are reviewed by the Board on a monthly basis and the Group Finance Director reviews the situation weekly. The Board will keep this policy under review throughout the 2015 ﬁnancial year.

114 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

28. Financial risk management FRQWLQXHG (a) Capital structure and ﬁnancial risk management (continued) Foreign currency risk The Group has minimal transactional currency exposure arising from sales or purchases by an operating unit in currencies other than its functional currency. Approximately 3.5% (2013: 5.0%) of the Group’s sales are denominated in currencies other than the functional currency of the operating unit making the sale, whilst 1.5% (2013: 3.9%) of costs are denominated in currencies other than the unit’s functional currency.

As a result of signiﬁcant investment operations in the Republic of Ireland, the Group’s income statement and balance sheet can be affected by movements in the euro/sterling exchange rates. The Group seeks to mitigate the effect of the currency risk created by the euro cash ﬂow from the ROI operations, by creating a natural hedge with the euro denominated borrowings.

Credit risk The Group trades only with recognised, creditworthy third parties. It is the policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an on-going basis with the result that exposure to bad debts is normally not significant. Other financial assets comprise of cash and cash equivalents which are therefore subject to minimal credit risk. As the Group trades only with recognised third parties there is no requirement for collateral.

Liquidity risk The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans, finance leases and hire purchase contracts. Details of the Group’s committed borrowing facilities are given in note 22. Group policy is that funding is reviewed in line with operational cash flow requirements and investment strategy. Repayment terms and conditions are approved by the Board in advance of acceptance of any facility. Management monitors rolling forecasts of the Group’s liquidity reserve (comprising undrawn bank facilities and cash and cash equivalents) on the basis of expected cash flows. This monitoring includes financial ratios to assess headroom under financial covenants on bank facilities and takes into account the accessibility of cash and cash equivalents.

115 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

28. Financial risk management (continued) (b) Fair values Set out below is a comparison by category of carrying amounts and fair values of the Group’s ﬁnancial assets and liabilities excluding cash and cash equivalents, trade receivables and payables, that are carried in the ﬁnancial statements. Carrying amount Fair value 2014 2013 2014 2013 (restated) (restated) £000 £000 £000 £000 Financial assets Contingent consideration 275 - 275 -

Financial liabilities Interest-bearing loans and borrowings 59,067 59,805 59,067 59,805

The Group uses the following hierarchy as set out in IFRS 7 “Financial Instruments: Disclosures” for determining and disclosing the fair value of financial instruments by valuation technique: • Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities; • Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly; and, • Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

There have been no transfers between level 1, 2 or 3 of the hierarchy during the current and previous years.

Management have assessed that the fair value of cash and cash equivalents, trade and other receivables and trade and other payables approximate their carrying amounts largely due to the short-term maturities of these instruments. The fair value of interest bearing loans and borrowings are determined using discounted cash flows using a rate that reflects the entity’s borrowing rate as at the end of the reporting period. The inputs used in these discounted cash flow calculations are at level 2 in the fair value hierarchy.

Contingent consideration receivable relates to amounts due in respect of the disposal of certain of the Group’s New Media businesses during the year. The fair value of these amounts is measured using the present value of the probability-weighted average of pay out associated with each possible outcome of customer proﬁtability milestones achieved under the related disposal agreement. In January 2015 the Group received the full earn out of £175,000 in respect of the ﬁrst milestone and the range of possible outcomes in respect of the remaining earn out milestone is considered by the Directors to not be materially different from the estimated fair value at 31 December 2014. Changes in the fair value of these amounts during the year are not material to the Group Income Statement. The fair values estimate of the contingent consideration is considered by the directors to fall within the level 3 fair value hierarchy.

In 2013, the Group’s New Media businesses were classiﬁed as discontinued operations reﬂecting the planned sale of these businesses. As disclosed in note 10 impairments were recognised in 2013 in order to write down certain assets within these businesses to their recoverable amount. The fair values estimated as part of these impairments were considered by the directors to fall within the level 3 fair value hierarchy. The fair values of non-current assets were measured based upon an assessment of whether the assets concerned were likely to be sold as part of the disposal process and if so the value indicated by potential purchasers. The fair values of trade and other receivables were based on an estimate of the probability of recovery in view of the planned exit from these businesses. The carrying values of intangible assets allocated to the discontinued operations were measured on the basis of the relative values of the businesses disposed of and the portion of the cash generating unit the business was part of and which has been retained.

116 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

28. Financial risk management FRQWLQXHG (c) Interest rate risk The following table demonstrates the sensitivity of the Group’s profit before tax to a reasonably possible change in interest rates on floating rate borrowings, on cash on short term deposit and on interest rate swap, with all other variables held constant. The effect on equity is not considered material to the financial position of the Group and therefore no disclosure has been made.

Due to current low interest rates and the positive turnaround in the economy, the analysis considers only the impact of a rise in interest rates as a decrease in rates is not considered to be reasonably possible. Increase Effect in basis on proﬁt points before tax £000 2014 Sterling +50 (230) Euro +50 (70)

2013 Sterling +50 (148) Euro +50 (72)

(d) Credit risk There are no signiﬁcant concentrations of credit risk within the Group. The maximum credit risk exposure relating to ﬁnancial assets is represented by the carrying value as at the balance sheet date.

The Group has established procedures to minimise risk of default by trade debtors including detailed credit checks undertaken before a customer is accepted. Historically, these procedures have proved effective in minimising the level of impaired and past due debtors.

(e) Foreign exchange risk The following table demonstrates the sensitivity to a reasonably possible change in the euro exchange rates with all other variables held constant, of the Group’s proﬁt before tax by an operating unit where the euro is not their functional currency (due to changes in the fair value of monetary assets and liabilities). The potential change in the euro exchange rates are based on market forecasts. Increase/ Effect decrease in on proﬁt Euro rate before tax £000 2014 Euro +7% (18) -7% 21

2013 Euro +5% (38) -5% 42

117 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

28. Financial risk management (continued) (f) Liquidity risk The table below summarises the maturity proﬁle of the Group’s ﬁnancial liabilities at 31 December 2014 and 2013 based on contractual undiscounted payments. In the table below interest rates on variable rate loans have been based on forward curves plus contracted applicable margins estimated based upon the Group’s debt covenant forecasts.

On Less than 3 to 12 1 to 5 >5 years Total demand 3 months months years £000 £000 £000 £000 £000 £000 Year ended 31 December 2014 Interest bearing loans and borrowings - 439 5,210 58,362 - 64,011 Trade and other payables 403 18,190 5,014 88 112 23,807

403 18,629 10,224 58,450 112 87,818

On Less than 3 to 12 1 to 5 >5 years Total demand 3 months months years £000 £000 £000 £000 £000 £000 Year ended 31 December 2013 Interest bearing loans and borrowings - 563 5,767 62,170 - 68,500 Trade and other payables 1,021 11,700 6,746 372 - 19,839

1,021 12,263 12,513 62,542 - 88,339

Details of how the Group manages the liquidity risk arising from the above analysis are provided in note 28(a). As disclosed in note 28(a) the Group takes into account the accessibility of cash and cash equivalents in managing the liquidity risk in the above analysis, the amount of which at 31 December 2013 and 2014 is disclosed in note 21 and is available either on demand or within 3 months.

118 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

3HQVLRQVDQGRWKHUSRVWUHWLUHPHQWEHQHƬWV The Group operates a deﬁned beneﬁt pension scheme in Northern Ireland (‘The UTV Scheme’). The UTV Scheme is funded by the payment of contributions to separately administered trust funds and is governed by Trustees, which consist of a number of employer and employee representatives. In addition, the scheme contains an unfunded element as described in the Report of the Board on Directors’ Remuneration. The assets and liabilities of the scheme at 31 December are: 2014 2013 £000 £000

Equities 63,819 61,913 Bonds 33,637 25,589 Cash 487 221

Fair value of scheme assets 97,943 87,723 Present value of scheme liabilities (99,914) (92,321)

Deﬁcit in the scheme (1,971) (4,598)

The amounts recognised in the Group Income Statement and in the Group Statement of Comprehensive Income for the year are analysed as follows: 2014 2013 £000 £000

Recognised in the Income Statement Current service cost (754) (831) Interest cost (4,174) (3,989) Interest income 3,987 3,465 Curtailment gain - 782

Recognised in arriving at operating proﬁt (941) (573)

Recognised in the Statement of Comprehensive Income Return on scheme assets (excluding interest income) 6,633 8,283 Other actuarial gains and losses: Effect of changes in demographic assumptions (212) - Effect of changes in ﬁnancial assumptions (10,010) (3,513) Effect of experience adjustments 3,949 341

Actuarial gain/(loss) recognised in the statement of comprehensive income 360 5,111

Pension costs are assessed in accordance with the advice of a professionally qualiﬁed actuary and are accounted for on the basis of charging the cost of providing pensions over the period during which the Group derives beneﬁt from the employees’ services.

119 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

3HQVLRQVDQGRWKHUSRVWUHWLUHPHQWEHQHƬWV FRQWLQXHG Scheme assets are stated at their market value at the respective balance sheet dates. 31 31 December December 2014 2013 Assumptions Rate of general increase in salaries 3.40% 3.80% Pension in payment increase 2.90% 3.30% Discount rate 3.60% 4.60% Inﬂation 2.90% 3.30%

Assumed life expectancy for a 65 year old - Male: pensioner 23.6 23.4 - Female: pensioner 25.2 25.4 - Male: non-pensioner 26.4 25.6 - Female: non-pensioner 28.1 27.8

Changes in the present value of the deﬁned beneﬁt obligations are analysed as follows: £000

At 1 January 2013 (90,272) Service cost (831) Curtailment 782 Members contributions (203) Beneﬁts paid 3,918 Settlement payment 1,446 Interest cost on scheme liabilities (3,989) Actuarial gains and losses (3,172)

At 31 December 2013 (92,321) Service cost (754) Members contributions (199) Beneﬁts paid 3,807 Interest cost on scheme liabilities (4,174) Actuarial gains and losses (6,273)

At 31 December 2014 (99,914)

Changes in the fair value of the schemes assets are analysed as follows: £000

At 1 January 2013 77,863 Interest income 3,465 Employer contribution 1,827 Members contribution 203 Beneﬁts paid (3,918) Actuarial gains and losses 8,283

At 31 December 2013 87,723 Interest income 3,987 Employer contribution 3,061 Members contribution 199 Beneﬁts paid (3,660) Actuarial gains and losses 6,633

At 31 December 2014 97,943

120 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

3HQVLRQVDQGRWKHUSRVWUHWLUHPHQWEHQHƬWV FRQWLQXHG The net deﬁned beneﬁt obligation comprises £1,539,000 (2013: £4,329,000) from plans that are wholly or partly funded and £432,000 (2013: £269,000) arising from unfunded plans.

The cumulative amount of actuarial gains and losses recognised since 1 January 2004 in the Group statement of comprehensive income is £4,629,000 of losses (2013: £4,989,000 loss). The Directors are unable to determine how much of the pension scheme deﬁcit, recognised on transition to IFRSs and taken directly to equity, of £831,000 in the Group is attributable to actuarial gains and losses since inception of those pension schemes. Consequently, the Directors are unable to determine the amount of actuarial gains and losses that would have been recognised in the Group statement of comprehensive income before 1 January 2004.

The following payments are expected to be made in the future years out of the deﬁned beneﬁt plan obligation:

£000

Within the next year 3,866 Between two to ﬁve years 17,955 Between ﬁve and ten years 24,500

The average duration of the deﬁned beneﬁt plan obligation at the end of the reporting period is 17 years.

The regulatory framework in the UK requires the Trustees and Group to agree upon the assumptions underlying the funding target, and then to agree upon the necessary contributions required to recover any deficit at the valuation date. There is a risk to the Group that adverse experience could lead to a requirement for the Group to make further contributions to recover any deficit. The estimated normal Group contributions for the next financial period are £513,000 (2013: £412,000). In 2014 the Group made additional funding towards the actuarial deficit on the UTV scheme amounting to £1,209,000 (2013: £1,209,000). The Group has also agreed to fund a further £1,209,000 in 2015 in addition to normal contributions. This revised schedule of payments was agreed on 28 September 2012.

In addition, during the period, the option was exercised to transfer properties back to Group from the scheme for an agreed contribution of £1,450,000. For accounting purposes these transactions are treated as part of the schedule of contributions and hence are accounted for on a cash basis, with no de-recognition of the properties or recognition of any future liabilities in the Group’s ﬁnancial statements.

The Group also operates a number of deﬁned contribution pension schemes and personal pension schemes in Northern Ireland, the Republic of Ireland and Great Britain. Contributions are charged in the income statement as they become payable in accordance with the rules of the scheme. Contributions in the year amounted to £719,000 (2013: £510,000).

The most signiﬁcant factor in deriving the pension liability is the discount rate. In applying sensitivity to this factor of plus or minus 0.5% (2013: 0.5%) the impact on the scheme liabilities could be a decrease of 7.9% (2013: 7.8%) or an increase of 9.0% (2013: 9.2%). However movements in this sensitivity could result in other offsetting factors such as salary inﬂation.

121 UTV Media plc Report & Accounts 2014 Notes to the Group Financial Statements )RUWKH\HDUHQGHG'HFHPEHU

30. Related party transactions During the year the Group made sales in the normal course of business to its associated companies and was charged commission by its joint venture. In addition, the joint venture collects trade receivables on behalf of the Group. Transactions entered into and the trading balances at the year end are summarised below. Payments are made and debts collected under normal trade terms.

2014 2013 £000 £000

Sales to associated companies 40 541

Sales by associated companies 132 -

Amounts owed by associated companies - -

Sales to joint venture - 50

Charges from joint venture 628 422

Amounts owed by joint venture 1,039 826

Amounts owed to joint venture 15 11

The key management personnel in the Group are the Directors. Details of transactions with the Directors are included within the ‘Report of the Board on Directors’ Remuneration’.

Compensation of key management personnel 2014 2013 £000 £000

Short-term employee beneﬁts 1,477 1,190 Post employment beneﬁts 81 263 Share-based payments 197 267

1,755 1,720

122 UTV Media plc Report & Accounts 2014 Statement of Directors’ Responsibilities in Relation to the Parent Company 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 have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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. In preparing those financial statements, the Directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and estimates that are reasonable and prudent; and • state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements.

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 to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

123 UTV Media plc Report & Accounts 2014 Company Balance Sheet $W'HFHPEHU

2014 2013 Notes £000 £000 Fixed assets Investments 3 249,350 249,047

Current assets Debtors: amounts due within one year 4 3,981 3,860 Debtors: amounts falling due after one year 5 20,949 20,949 Cash at bank and in hand 20 19

24,950 24,828

Creditors: amounts falling due within one year 6 (59,813) (51,818)

Net current liabilities (34,863) (26,990)

Total assets less current liabilities 214,487 222,057

NET ASSETS 214,487 222,057

Capital and reserves Called up share capital 7 4,795 4,795 Capital redemption reserve 8 50 50 Share premium account 8 50,762 50,762 Proﬁt and loss account 8 158,880 166,450

EQUITY SHAREHOLDERS FUNDS 214,487 222,057

The ﬁnancial statements were approved by the Board of Directors and authorised for issue on 26 March 2015. They were signed on its behalf by:

John McCann Norman McKeown

124 UTV Media plc Report & Accounts 2014 Notes to the Company Financial Statements )RUWKHSHULRGHQGHG'HFHPEHU

1. Basis of preparation The accounts are prepared under the historical cost convention, and in accordance with applicable UK accounting and ﬁnancial reporting standards.

The Company has taken advantage of the exemption provided under section 408 of the Companies Act 2006 not to publish its individual income statement and related notes. The Company is also exempt from the disclosures required by FRS 29 as the Group accounts include such disclosures.

2. Accounting policies Fixed asset investments Fixed asset investments are stated at cost less any provisions for permanent impairment in value. The carrying values of investments are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Where merger relief is available the cost is based on the nominal price of the shares issued.

Financial assets Financial assets are recognised when the Company becomes party to the contracts that give rise to them and are classified as loans and receivables. When financial assets are recognised initially, they are measured at fair value, being the directly attributable transaction cost. Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required. The Company has no financial assets classified as held for trading or held to maturity in the current period.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, do not qualify as trading assets and have not been designated as either fair value through profit and loss or available- for-sale. Such assets are carried at amortised cost using the effective interest method if the time value of money is significant. Gains and losses are recognised in income when the loans and receivables are derecognised or impaired, as well as through the amortisation process.

Called up share capital Ordinary shares are classiﬁed as equity. Incremental costs directly attributable for the issue of new shares or options are shown in equity as a deduction from the proceeds.

Dividend distribution Dividend distribution to the Company’s shareholders is recognised as a liability in the ﬁnancial statements in the period in which the dividends are approved by the Company’s shareholders. Interim dividends are recognised when paid.

The cost of equity-settled share based payments is recognised, by the Company as an increase in the value of its investment in subsidiaries together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulﬁlled. The cumulative cost recognised for equity-settled share based payments at each reporting date until the vesting date reﬂects the extent to which the vesting period has expired and the Company’s best estimate of the number of equity instruments that will ultimately vest. The cost for the period represents the movement in cumulative expense recognised as at the beginning and end of that period.

125 UTV Media plc Report & Accounts 2014 Notes to the Company Financial Statements )RUWKHSHULRGHQGHG'HFHPEHU

2. Accounting policies FRQWLQXHG Share based payments (continued) Where the terms of an equity-settled payments award are modified or a new award is designated as replacing a cancelled or settled award, the cost based on the original award terms continues to be recognised over the original vesting period. In addition, an expense is recognised over the remainder of the new vesting period for the incremental fair value of any modification, based on the difference between the fair value of original award and the fair value of the modified award, both as measured at the date of modification. No reduction is recognised if this difference is negative.

3. Investments £000 Cost At 1 January 2014 330,852 Additions 303

At 31 December 2014 331,155

Impairment At 1 January and 31 December 2014 81,805

Net book value At 31 December 2014 249,350

At 31 December 2013 249,047

Additions during the year related to the cost of the long term incentives share scheme under which the company makes equity- settled share-based payments to eligible employees of subsidiary undertakings.

The key subsidiary companies held by UTV Media plc are recorded in the Group accounts in note 16.

4. Debtors: amounts due within one year 2014 2013 £000 £000

Amounts due from group undertakings 3,981 3,860

5. Debtors: amounts falling due after more than one year 2014 2013 £000 £000

Preference share capital 20,949 20,949

This debtor represents redeemable preference shares in Anotherway (an unlimited company), a subsidiary company of UTV Media plc which is incorporated in the Republic of Ireland.

126 UTV Media plc Report & Accounts 2014 Notes to the Company Financial Statements )RUWKHSHULRGHQGHG'HFHPEHU

6. Creditors 2014 2013 £000 £000

Accruals 91 76 Amounts owed to group undertakings 59,722 51,742

59,813 51,818

7. Authorised and issued share capital Ordinary share capital Authorised Authorised Issued Issued Number Nominal Number Nominal value value thousands £000 thousands £000

At 31 December 2013 and 2014 200,000 10,000 95,903 4,795

Redeemable preference share capital Authorised Authorised Issued Issued Number Nominal Number Nominal value value thousands £000 thousands £000

At 31 December 2013 and 2014 50 50 - -

At 31 December 2014 the Group held 53,000 (2013: 56,488) of its own shares at an average cost of £1.97 (2013: £2.17). The market value of these shares at 31 December 2014 was £93,000 (2013: £121,000).

8. Reconciliation of movements in shareholders’ funds Called Capital Share Proﬁt up share redemption premium and loss capital reserve account account Total £000 £000 £000 £000 £000

Balance at 31 December 2012 4,795 50 50,762 174,681 230,288 Loss for the year - - - (1,972) (1,972) Dividends paid - - - (6,678) (6,678) Share based payment - - - 419 419

Balance at 31 December 2013 4,795 50 50,762 166,450 222,057 Loss for the year - - - (1,093) (1,093) Dividends paid - - - (6,780) (6,780) Share based payment - - - 303 303

Balance at 31 December 2014 4,795 50 50,762 158,880 214,487

9. Related party transactions The company has taken advantage of the exemption in FRS8 “Related Party Disclosures” from disclosing transactions with other wholly owned members of the UTV Media plc Group. There were no other transactions which fall to be disclosed under the terms of FRS8.

127 UTV Media plc Report & Accounts 2014 5HJLVWHUHG2ƯFHDQG$GYLVHUV

5HJLVWHUHG2ƯFH Ormeau Road Belfast BT7 1EB

Registered Number: NI 065086 Company Secretary: Norman McKeown BSc (Econ) FCA

Corporate Website www.utvmedia.com

Auditors Registrars Ernst & Young LLP Computershare Investor Services PLC 16 Bedford Street The Pavilions Belfast Bridgwater Road BT2 7DT Bristol BS13 8AE

Bankers Solicitors Bank of Ireland Travers Smith Corporate & Retail Banking 10 Snow Hill 1 Donegall Square South London Belfast EC1A 2AL BT1 5LR

Ulster Bank Limited A&L Goodbody Corporate Banking 42-46 Fountain Street 11-16 Donegall Square East Belfast Belfast BT1 5EB BT1 5UB

Danske Bank Arthur Cox Corporate Banking Earlsfort Centre Donegall Square West Earlsfort Terrace Belfast Dublin 2 Co Antrim BT1 6JS

National Westminster Bank PLC G L MacLaine & Co Manchester City Ofﬁce 13 Lombard Street Bolton Customer Service Centre Belfast De Havilland Way BT1 1RH Bolton BL6 4YU

%URNHUVDQGƬQDQFLDODGYLVHUV Numis Securities Limited Goodbody Corporate Finance The London Stock Exchange Building Ballsbridge Park 10 Paternoster Square Ballsbridge London Dublin 4 EC4M 7LT

128 Ormeau Road, Belfast, BT7 1EB Tel: +44 (0) 28 9032 8122 www.utvmedia.com