1 Company Registration No. 548648 Independent Television News Limited Report and Financial Statements 31 December 2012 2 2 Report and Financial statements 2012 Contents The headlines 4 Statement from the Chairman and the Board 5 Statement from the Chief Executive 6 What we do 9 Board and Management Team 11 Directors’ report 14 Statement of directors’ responsibilities 19 Independent auditor’s report 20 Consolidated profit and loss account 22 Consolidated balance sheet 23 Company balance sheet 24 Consolidated cash flow statement 25 Consolidated statement of total recognised gains and losses 26 Notes to the financial statements 27 3 3 The Headlines 3.7 2.3 Operating profit £m 0.1 Operating profi t up 61% to £3.7m compared to £2.3m in 2011, and a £6.6m swing on 2009’s £2.9m loss. + 61% -2.9 09 10 11 12 > Group Revenue £m 108.7 98.5 96.2 98.2 Group revenues of £108.7m up 11% from £98.1m + 11% in 2011, with turnover at a record 13-year high. 09 10 11 12 > The return of 5 News restored our position as supplier of national news to all three commercial Public Service > Broadcasters. Two years after its launch, our multi-platform digital broadcast division doubled its revenues, produced > 118 broadcast hours and is already profi table. ITN Source completed the digitisation of the ITN ar- chive and became profi table for the fi rst time in recent > history. The revamped Channel 4 News swept the board with both BAFTA and RTS News Programme of the Year > Awards for 2012. The launch of the ground-breaking ITV News > Livestream website delivered a 213% traffi c uplift. 4 4 Statement from the Chairman and the Board ITN is a privately held company with four shareholder groups: ITV plc (40%); Thomson Reuters (20%); DMGT (20%); and UBM plc (20%) 2012 was a year of signifi cant achievement for ITN cured new contracts and added value from existing as the company continued to build a strong foun- clients. dation towards solid profi tability. Commercial rigour, coupled with renewed confi dence throughout the or- This improvement has been attained against the ganisation, translated on-screen success into posi- backdrop of an uncertain economic climate. Impor- tive fi nancial progress with both revenues and oper- tantly, it enabled us to invest in our most valuable ating profi t reporting double digit growth. resource - our employees. As a result, our workforce grew 7% over the three-year period in a challenged This third consecutive year of growth saw the culmi- media market, mostly through new business wins. nation of a three-year plan put in place to overhaul activities and deliver sustained improvement in per- While it is disappointing that the pension defi cit has formance. increased again, to £88.8m, we have agreed in prin- ciple with the scheme Trustees an affordable recov- In 2009, the Board of ITN decided to change course ery plan. The increase in defi cit is driven by the de- and establish a new leadership team with a proven cline in bond yields, a challenge faced by all defi ned track record in business management. A new Chief benefi t pension arrangements. Executive and Chief Financial Offi cer were appoint- ed and the executive team tasked to improve the A new approach to incentives was also put in place fundamental long-term commercial capability and with remuneration linked to profi t growth. This includ- fi nancial performance of ITN. ed annual profi t-linked bonuses and a Long Term In- centive Plan for key senior management. The Board Since then, excellent progress has been made to believes this has been a successful change of direc- streamline the business structure and processes, tion and that the remuneration policy at all levels has turnaround loss-making activities, win new business contributed to a more effective organisation. and accelerate the pace of change. Our strategy remains on course and the business is The strategy was simple: to cement ITN’s reputation now well-placed to capitalise on new opportunities. as the UK’s pre-eminent commercial television news The Board is confi dent that the management team producer and to establish profi table commercial will continue to deliver growth in line with the current businesses arising naturally from our news opera- trajectory and looks forward to reporting on further tions, with each part benefi ting from the collective progress. resources, skills and infrastructure of the wider ITN. The Board would like to thank the management Solid delivery against objectives has driven substan- team and employees of ITN for their unstinting hard tially enhanced profi tability and demonstrates the work and enthusiasm over these last three years. strength of the underlying business. It sees every part of ITN now profi table for the fi rst time, with turn- Maggie Carver, over at a record 13-year high as the company se- Chairman ITN 5 5 Statement from the Chief Executive “ Profi t from excellent TV news and businesses arising naturally from ITN’s strengths ” John Hardie, CEO The commercial and journalistic success of ITN in at Channel 5’s HQ and umbilically linked to ITN’s 2012 marked the natural culmination of a three year central technical nerve centre. In a fi rst year that’s revitalisation plan which has put the company on a seen the team generate several exclusives and re- stronger platform for continued growth and fi nancial ports from around the world, the daily fl agship pro- stability. A strong improvement in operating profi t for gramme at 5pm is watched by up to a million view- the third consecutive year refl ects progress across ers, with a later bulletin broadcast at 6.30pm and the board and, going into 2013, every part of ITN is regular short news updates throughout the day. now profi table. ITN Productions has gone from strength to strength, ITN’s progress has been guided by a focused building on last year’s numerous fast-turnaround strategy of producing excellent TV news pro- documentaries by growing its production slate of UK grammes and developing businesses that arise and international programming from seven hours in naturally from ITN’s strengths. We’ve rightly en- 2009 to 118 hours in 2012. Major new contracts such joyed a long-standing international reputation for as Channel 4’s Dispatches, award-winning one-offs TV journalism, but now that excellence in news is including Sri Lanka’s Killing Fields: War Crimes Un- coupled with good business practices: focusing punished and returning series commissions such as on profi table opportunities; applying commercial ITV’s The Agenda saw the division nominated for In- rigour; improving productivity; investing in cost-ef- dependent Production Company of the Year. fective and innovative digital technology; and in- spiring entrepreneurial initiative among our people. “ We broke new ground by innovating in the digital space ” “ An important milestone was the return of 5 News to ITN ” We broke new ground by innovating in the digital space with citizen journalism channel Truthloader ITV News and Channel 4 News have been the – the only YouTube-commissioned news channel long-term cornerstones of ITN but growth in other outside the US. The division is also fast expanding areas has signifi cantly broadened our business. its corporate arm making adverts, idents and adver- An important milestone was the return of 5 News tising funded programming for companies such as to the ITN fold. This has restored our unrivalled Procter & Gamble as well as developing content for position as supplier to all three commercial Public the private and public sectors. With this breadth of Service Broadcasters. The relaunched 5 News op- output, ITN Productions now acts like a standalone eration moved into a bespoke state-of-the-art news- indie and production house while still benefi ting from room and studio. The service is based remotely the larger structure of ITN. 6 6 Statement from the Chief Executive ITN Source also made an improved profi t contribu- of the ground-breaking Livestream website to uni- tion in 2012, partly driven by another busy year for versal acclaim and delivering a traffi c uplift in ex- the ITN Source News team providing facilities for cess of 200%; and two special live programmes for global broadcasters during the Diamond Jubilee, the Diamond Jubilee and the US Presidential Elec- Olympics and Paralympics. In addition, the archive tions. The RTS award-winning home news team business was profi table for the fi rst time in recent paved the way on developing the Jimmy Savile history. This was driven by an uplift in sales of ITN story with scores of exclusive news lines over the footage as a result of digitising the entire ITN ar- months as the scandal unfolded. A focus on spe- chive, as well as a signifi cant cost reduction. Content cialist journalism was reinforced by a raft of new was licensed to customers from ITN and partner ar- expert appointments, and the dedicated business chives for usage across multiple platforms including unit further enhanced the national news offering. feature fi lms, TV programmes and heritage projects. The Olympics was a huge opportunity for the “ Eight coveted RTS Awards ” ITV News London team as the Games came to the capital. The programme went up against the BBC rightsholders, ultimately emerging At the heart of ITN’s performance is of course as triumphant recipient of the prestigious RTS the high-quality, distinctive news program- Nations & Regions Programme of the Year. ming we produce for our core clients across ITV News, Channel 4 News and 5 News, all of Ten Tonight programmes were delivered to which have remained the jewels in our crown.