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Transforming ITV ITV Plc Report and Accounts 2010 117 ITV plc ITV 2010 accounts and Report ITV plc The London Television Centre Upper Ground London SE1 9LT www.itv.com investors: www.itvplc.com Transforming ITV ITV plc Report and accounts 2010 117 Financial record 2010 2009 2008 2007 2006 ITV today Broadcasting & Online ITV Studios £m £m £m £m £m ITV is the largest commercial ITV content is funded by advertising and ITV Studios comprises ITV’s UK production Results Revenue 2,064 1,879 2,029 2,082 2,181 television network in the UK. sponsorship revenues as well as viewer operations, ITV’s international production competitions and voting. ITV1 is the largest companies and ITV Studios Global Earnings before interest, tax and amortisation (EBITA) before exceptional items 408 202 211 311 375 It operates a family of channels commercial channel in the UK. It attracts Entertainment. Amortisation of intangible assets (63) (59) (66) (56) (56) including ITV1, and delivers the largest audience of any UK commercial ITV Studios produces programming for Impairment of intangible assets – – (2,695) (28) (20) broadcaster and has the greatest share of content across multiple platforms ITV’s own channels and for other UK and Share of profits or (losses) of joint ventures and associated undertakings (3) (7) (15) 2 8 the UK television advertising market at via itv.com and ITV Player. international broadcasters. 45.1%. ITV’s digital channels continue to Investment income – – 1 1 3 ITV Studios produces and sells grow their audiences and most recently A wide range of programme genres are Exceptional items 19 (20) (108) (9) 4 programmes and formats in saw the launch of high definition (HD) produced, including: drama, soaps, Profit/(loss) before interest and tax 361 116 (2,672) 221 314 the UK and worldwide. versions of ITV1 on Freeview and Sky, entertainment, factual, daytime, arts, Net financing costs (75) (91) (60) (33) (26) and ITV2, 3 and 4 on Sky. ITV1+1 also current affairs, quiz and game shows. Profit/(loss) before tax 286 25 (2,732) 188 288 recently launched. It has a growing portfolio of international Taxation (16) 69 178 (50) (66) production offices around the world, ITV’s broadcast assets include the multiplex Profit/(loss) after tax 270 94 (2,554) 138 222 including in the US, Germany, Australia, operator SDN, which continues to grow its Sweden, Spain and France. Non-controlling interests (1) (3) (2) (1) (3) revenues, and operates one of the six digital Profit/(loss) for the financial year 269 91 (2,556) 137 219 terrestrial multiplex licences in the UK that ITV Studios Global Entertainment is Basic earnings/(loss) per share 6.9p 2.3p (65.9)p 3.5p 5.5p make up Freeview. ITV’s international distribution, home entertainment, publishing, merchandising Dividend per share – – 0.675p 3.15p 3.15p Online, ITV is focused on delivering ITV and licensing business. It has over 35,000 programming across multiple platforms hours of original and formatted programmes including itv.com, video on demand on Consolidated statement of financial position that it distributes to broadcasters in 240 cable television and other ‘closed’ platforms, Share capital 389 389 389 389 401 territories worldwide. mobile devices and games consoles. itv.com Reserves 272 (44) 137 2,844 2,755 includes ITV Player, which allows users to Total equity attributable to equity shareholders of the parent company 661 345 526 3,233 3,156 access catch-up and watch clips from the Non-controlling interests 2 1 8 6 7 best ITV programmes. Online revenues are Net assets 663 346 534 3,239 3,163 primarily sourced from advertising. Represented by: Property, plant and equipment and intangible assets 1,120 1,191 1,360 4,084 4,088 Total revenue (including internal) EBITA before exceptional items Investments 5 6 71 89 103 Broadcasting & Online Broadcasting & Online Distribution rights 12 16 13 7 11 20% Inventory 284 388 516 440 400 £1,771m 24% £327m Trade and other receivables (including assets held for sale and derivative ITV Studios 76% ITV Studios 80% financial instruments) 511 565 528 472 548 Deferred tax asset 73 50 – – – £554m £81m Total assets 2,005 2,216 2,488 5,092 5,150 Net debt (188) (612) (730) (668) (734) Deferred tax liability – – (55) (75) (7) Other liabilities (1,105) (1,182) (1,085) (1,079) (1,219) Provisions (49) (76) (84) (31) (27) 663 346 534 3,239 3,163 This financial record sets out the balance sheet and results of the Group since its formation following the merger of Granada plc and Carlton Communications plc. Cash and cash equivalents are included within net debt. ITV’s Directors’ report The Directors’ report is prepared in line with the relevant In setting out the Company’s main risks and uncertainties, The Directors’ report explains in detail how we have provisions of the Companies Act 2006. In preparing the an indication of likely future developments, and in other performed this year and sets out a fair review of the Directors’ report the Company has had regard to the content, this report and accounts contains statements business, a balanced and comprehensive analysis of our guidance issued by the Accounting Standards Board in its which, by their nature, cannot be considered indications performance, the use of financial and non-financial key Reporting Statement on narrative reporting. The Directors’ of likelihood or certainty. The statements are based on performance indicators to explain how much progress report is intended to provide shareholders with a greater the knowledge and information available at the date of we have made, a description of the principal risks and understanding of the Company, of its position in the preparation of the Directors’ report, and what are believed uncertainties facing the Company, and an indication markets within which it operates, and of its prospects. to be reasonable judgements. A wide range of factors may of likely future developments. cause the actual outcomes and results to differ materially from those contained within, or implied by, these various forward-looking statements. Nor should any of these Designed and produced by Radley Yeldar www.ry.com statements be construed as a profit forecast. Printed by Granite Communications Ltd. ISO 14001 and FSC accredited 01 Overview Strategy & operations Performance & financials Responsibility Governance Financial statements Financial summary Group external revenues We need to be £2,064m 09/ £1,879m EBITA before exceptional items* £408m 09/ £202m a lean ITV that can Adjusted cash flow* £517m 09/ £345m create world class Profit before tax £286m 09/ £25m Basic earnings per share content, executed 6.9p 09/ 2.3p Adjusted earnings per share* across multiple 6.4p 09/ 1.8p Net debt £188m 09/ £612m platforms and sold *See definitions on page 26 around the world. Contents Overview Financial statements ITV today ifc Statement of directors’ responsibilities 67 Financial summary 01 Independent auditor’s report 68 Chairman’s statement 02 Introduction and table of contents 69 Consolidated income statement 70 Directors’ report Consolidated statement of comprehensive income 71 Strategy & operations Consolidated statement of financial position 72 A strategy for the future 04 Consolidated statement of changes in equity 73 2011 and beyond 24 Consolidated statement of cash flows 74 Notes to the accounts 75 Performance & financials ITV plc Company Financial Statements 111 Key Performance Indicators 26 Notes to the ITV plc Company Financial Statements 112 Financial and performance review 28 Risks and uncertainties 38 Other information Shareholder information 115 Responsibility 40 Financial record 117 Governance Board of directors 46 Corporate governance 48 Audit Committee report 53 Remuneration report 56 Other governance and statutory disclosures 66 02 ITV plc Report and accounts 2010 Chairman’s statement by Archie Norman ‘Over the next ten years the global market will change beyond recognition’ Dear Shareholder The transformation imperative In embarking on a transformation of I arrived as Chairman a little over a year this extent there are a number of critical ago as ITV emerged from one of the most ingredients for success. The first of these troubled periods in its history. Since then is strong leadership. It is therefore very we have embarked on a far reaching important that Adam Crozier joined us at programme of change. the end of April as Chief Executive. Under The problems ITV experienced in 2009 his unswerving direction the foundations were in part an inevitable consequence of change have already been laid and of high gearing and recession. However, momentum is starting to build within they showed up in sharp relief our the business. The top team has been dependence on a narrow and increasingly rebuilt and a new talented leadership volatile source of revenue in free to air team is now in place. television advertising. And they highlighted Second we require clarity of vision and a longer term trends which pose serious clear road map for change. Transformation challenges for the traditional television requires a sense of ‘time and place’ because model. Over the next ten years the global it is vital that everyone at ITV knows what market will change beyond recognition. is required of them and where we are in In the short term we can improve our the journey. Therefore the team has set operating capability and performance. out a five-year transformation plan that In the long term we face a has been briefed to shareholders and to transformational imperative. everyone in the business. That plan is set out with great lucidity in this report. 03 Overview Strategy & operations Performance & financials Responsibility Governance Financial statements We are very much in the first phase which Changed Board and Governance ‘In the short term involves building the foundations and Since I arrived we have reduced the size we can improve our ‘fixing the basics’.
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