WIRELESS GROUP PLC Contents Summary of Results 2 Chairman’s Statement 3 Who We Are 5 • Radio GB 6 • Radio Ireland 8 • Digital Services 9 Strategic Report 10 Board of Directors 26 Corporate Governance 29 Corporate Social Responsibility 41 Report of the Board on Directors’ Remuneration 48 Report of the Directors 62 Statement of Directors’ Responsibilities in relation to the Group Financial Statements 65 Directors’ Statement of Responsibility under the Disclosure and Transparency Rules 65 Report of the Auditors on the Group Financial Statements 66 Group Income Statement 74 Group Statement of Comprehensive Income 75 Group Balance Sheet 76 Group Cash Flow Statement 77 Group Statement of Changes in Equity 78 Notes to the Group Financial Statements 79 Statement of Directors’ Responsibilities in relation to the Parent Company Financial Statements 124 Company Balance Sheet 125 Company Statement of Changes in Equity 126 Notes to the Company Financial Statements 127 Registered Office and Advisers 132 Report & Accounts 2015 1 WIRELESS WIRELESS GROUP PLC GROUP PLC Summary of Results Chairman’s Statement Financial highlights “The launch and establishment of our three new recently launched national radio Continuing operations* stations on D2 is a key priority for 2016. talkSPORT 2 and talkRADIO will leverage • Group revenue of £75.1m (2014 restated: £82.4m) talkSPORT’s brand heritage while Virgin Radio will have instant brand recognition.” • Group operating profit of £13.0m (2014 restated: £14.1m) • Pre-tax profits of £10.7m (2014 restated: £11.9m) Richard Huntingford Chairman • Exceptional profit of £6.9m from sale of Juice FM • Diluted adjusted earnings per share from continuing operations of 8.65p (2014 restated: 9.43p) Overview extended, your Board considered a £100m cash offer from ITV for our • Proposed final dividend of 7.60p post share consolidation In an eventful year, your Company launched UTV Ireland, was part of the television business as an opportunity to release immediate value for our consortium that won the licence to operate the second national digital shareholders while substantially improving our risk profile. That risk multiplex D2, sold Juice FM in Liverpool to Global Radio for £10m and profile was further enhanced by the transfer to ITV of our pension * As appropriate, references to profit include income from associates and joint venture but exclude discontinued operations and exceptional items agreed to sell its television business to ITV for £100m. With completion obligations under the defined benefit scheme. The completion of the of the sale of the television business taking place on 29 February 2016, sale to ITV was conditional upon clearances from the Broadcasting your Company, with its new name, is now a focused radio group with Authority of Ireland, the Competition and Consumer Protection Discontinued operations highly attractive assets, strong cash generation, a robust balance sheet Commission and the Minister for Communications, Energy and Natural and the potential to deliver double digit growth over the medium term. Resources. These clearances were duly received and completion of the • Sale of Television assets, including defined benefit pension scheme, for £100m sale took place on 29 February 2016. Of the £98m net cash proceeds, Results and dividends for the year* • Return of capital to shareholders of £55m £50.8m will be returned to shareholders on 1 April 2016 through the Group operating profit from continuing operations was £13.0m (2014 issue and redemption of B shares on 25 March 2016, while a further • Loss after tax on discontinued operations of £5.3m (2014 restated: profit after tax of £4.6m) restated: £14.1m) reflecting the World Cup comparative, adverse foreign £4.2m will be distributed by way of special dividend on 15 July 2016. exchange movements and increased competitive pressures in Ireland. After net interest costs of £2.2m (2014 restated: £2.2m) and foreign The Group’s banking facilities were fully repaid on 29 February 2016 with exchange losses, group profit before taxation and exceptional items was new facilities put in place on this date comprising a £30m dual-currency £10.7m (2014 restated: £11.9m). Exceptional items arose during the year Revolving Credit Facility and overdraft facility for 4 years. Targeted net Prospects highlights as a result of the profit on the sale of Juice FM of £6.9m plus an debt/EBITDA over this period is less than 2.00:1. exceptional tax credit of £2.2m largely due to the impact of a change in • Radio GB growth from UEFA Euro Football championships the rate of UK corporation tax on deferred tax balances. This resulted In March 2015, our Radio GB division was awarded the UK’s second • D2 stations successfully launched in March 2016 capitalising on listener demand for radio on digital platforms in a Group profit from continuing operations after tax and exceptional national DAB multiplex licence, D2, along with its two Sound Digital items of £17.6m (2014 restated: £9.2m). consortium partners, Bauer Media and Arqiva. Since then, extensive • 50% of 2016 forecast revenue for D2 stations already booked preparations have taken place which culminated in the successful • Strong market positions in Ireland leave us well placed to benefit from growing economy Losses after tax of £5.3m on discontinued operations, reflecting the launch of 3 new national radio services in March 2016. These are results of the television business, were incurred in the year (2014 talkRADIO, a talk-led service focussed on current affairs and • New £30m multi-currency revolving credit facility in place to February 2020 - targeted net debt/EBITDA over the period is less than 2:1 restated: profit after tax £4.6m). entertainment; Virgin Radio, a music service which brings the famous • Richard Huntingford appointed as Executive Chairman, John McCann, Group Chief Executive retiring in May 2016 Virgin Radio brand back to the UK under a 12 year brand licence Group net debt was lower at £45.8m (2014: £46.2m). agreement with Virgin Group; and talkSPORT 2, a complementary service to talkSPORT covering live action across a broader range of Dividends amounting to £6.9m (2014: £6.8m) were paid during the year, sports. representing a final ordinary dividend for 2014 of 5.43p per share and an interim ordinary dividend for 2015 of 1.82p per share as shown in note 13. In a post World Cup year, talkSPORT, with its focus on football, continued Richard Huntingford, Chairman, Wireless Group plc, said: to provide an essential service to loyal fans, recording on average more A final dividend of £5.2m representing 7.60p per share (post share than three million listeners every week. With strong demand for the “The new Wireless Group has a very exciting future as a focused radio business with market leading assets, a robust balance sheet and a consolidation as outlined in note 27) is proposed for approval at the younger, generally affluent male demographics of those listeners, strong management team. We are targeting double digit profit growth over the medium term which should deliver both significant income Annual General Meeting. If approved, warrants in respect of it will be advertisers were receptive to a significant increase in our spot despatched on 15 July 2016 to shareholders on the register at the close advertising rates. It’s worth noting that more than 10% of talkSPORT’s and capital growth for shareholders over the coming years.” of business on 20 May 2016. revenue now comes from its digital inventory. talkSPORT’s international broadcasting business, now in its fourth season, continues to achieve Review of activities double digit sales and profit growth with rights in place for three further UTV Ireland launched on 1 January 2015, having secured transmission seasons. on all major distribution platforms and rights to a broad range of popular Key dates programming, including all production of ITV Studios. Consumer We confirmed on 9 January 2015 that our local radio stations in GB were • 12 May 2016 – Annual General Meeting confusion around both re-tuning of digital receivers and also subject to a strategic review. This review was wide ranging and thorough programming inconsistencies with the long established UTV Northern and was intended to determine whether greater value could be derived • 20 May 2016 – Record date for payment of dividends Ireland was gradually addressed and UTV Ireland quickly established from disposals or from driving further profits from these stations. • 15 July 2016 – Payment of dividends itself as the second most watched channel in Ireland in weekday Despite receiving a number of attractive offers for those radio assets, peaktime. However, this performance was not matched at the weekend we concluded, with one exception, that the latter option was the correct • 22 August 2016 – Interim Results Announcement where the absence of consistently popular programming undermined choice. The one exception was our only youth orientated station, Juice overall audience delivery and therefore advertising revenue projections, FM in Liverpool, where we accepted Global Radio’s £10m offer. leading to revisions of profit expectations. With the path to profitability * As appropriate, references to operating profit includes income from associates and joint venture but excludes exceptional items and discontinued operations. 2 Report & Accounts 2015 Report & Accounts 2015 3 WIRELESS WIRELESS GROUP PLC GROUP PLC Chairman’s Statement Who We Are The Irish radio advertising market has been severely impacted by the Prospects years of deep recession in Ireland, falling by an estimated 50% from peak The launch and establishment of our three new recently launched to trough. Recovery in Irish domestic consumer demand has lagged the national radio stations on D2 is a key priority for 2016. talkSPORT 2 and In 2015 UTV Media plc comprised market leading television and radio businesses located very strong turnaround in the overall Irish economy but 2015 saw the talkRADIO will leverage talkSPORT’s brand heritage while Virgin Radio in the UK and Ireland, together with digital media assets.