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. On 29 February 2016, following Irish consumer gain confidence and Irish domestic consumption started will have instant brand recognition. All three stations will be supported to record good growth. Surprisingly, this confidence was not reflected by existing infrastructure and will benefit from cross promotion, thereby the sale of the television business, UTV Media plc changed its name to Wireless Group in the Irish radio advertising market which moved only slowly out of the helping to keep costs as low as possible. Our low cost model for these trough. A feature of 2015 was the increasingly competitive nature of the digital stations envisages breakeven being achieved at modest audience plc with a strategic focus on radio. radio market. Anticipating a return to strong advertising growth, radio delivery levels. Operating losses at the three stations are anticipated to station owners became more aggressive in terms of marketing and be circa £3.6m in 2016, moving to a small loss in 2017 and growing investment in talent, and discounted pricing remained prevalent. profitably beyond this. 50% of our forecast 2016 revenue for the D2 Wireless Group plc now incorporates: stations has already been achieved. Radio GB operates talkSPORT, the world’s biggest sports radio station; Sport magazine, the UK’s leading sports magazine; 12 independent local Board changes radio stations in England and Wales as well as a number of digital radio multiplexes throughout GB. After twenty-three years’ service on the Board, including sixteen as Chief talkSPORT has a commanding position in the UK radio market as the Executive, John McCann (62) decided in March 2016 that the sale of the premier sports radio station and will benefit from the summer Euro Company’s television business marked a very natural time for him to 2016 tournament. Both the size and the profile of its audience makes it Radio Irelandis the largest local radio operator in Ireland with seven stations broadcasting from Belfast, Cork, Limerick, Dublin and Drogheda and retire. John joined UTV as Financial Controller in 1983, becoming an attractive medium for advertisers seeking male audiences. While a an advertising sales house based in Dublin. Director and General Manager in 1990 and Chief Executive in 1999. major football tournament typically would drive a 10% increase in sales Under John’s leadership, UTV was transformed from its ITV regional over the course of a calendar year, talkSPORT is experiencing good licensee origins into one of the most successful media companies in the underlying sales growth in addition to the positive effect of the Euros Our Digital media businesses, Tibus and Simply Zesty, which provide digital support to the radio divisions alongside services to external customers. UK and Ireland, with market leading radio, television and digital media which augurs well for 2016. Our local radio stations are expected to assets. John will retire at the time of the AGM in May 2016. perform broadly in line with the UK radio market for the year as a whole. Where we are UK and Ireland On behalf of all shareholders and employees of the Company, I would The Irish economy is forecast to grow strongly in 2016 and beyond. 1. Wireless Group plc HQ, U105, like to thank John for his outstanding leadership, professionalism Consumer expenditure is also forecast to grow. This growth should Simply Zesty, Tibus and passionate commitment to the Company over so many years. translate into increased advertising expenditure and Irish advertising 2. LMFM He leaves the Company in a very healthy state and with our fondest agencies appear to be cautiously optimistic despite the backdrop of the 3. FM104, Q102, Radio Ireland sales house, best wishes. slowing global economy. Our radio stations in Ireland continue to enjoy Simply Zesty market leading positions in key urban areas across the country which 4. Cork’s C103 Coline McConville, who joined the Board in 2012, will also retire at the should leave them well placed to avail of market growth. At this stage, 5. Cork’s 96FM AGM in May 2016 and I would like to thank her for the very valuable we expect single digit Irish radio advertising growth in 2016 with the first 6. Limerick’s Live 95 FM contribution that she has made during her time on the Board. quarter softer due to a very strong comparative in January. 7. talkSPORT, talkSPORT International, At the same time I would like to thank my other colleagues on the Board, Conclusion Sport Magazine our management and staff for all their hard work and determination The new Wireless Group has a very exciting future. As a focused radio 8. Radio Wave during what has been an eventful and transforming year for the Group. business with market-leading assets and a strong management track 9. Pulse 1 and Pulse 2 record of growing audiences and revenues, I am confident that we can 10. Wish FM Having considered the nature of the continuing Group and the target double digit profit growth over the medium term. Our robust 11. Wire FM experienced existing management team, the Board has asked me to balance sheet and strong cash generation will support a progressive 12. Tower FM become Executive Chairman and to lead the Company’s growth strategy dividend policy allowing shareholders to look forward to both significant 13. Peak 107 as a focused radio group. I look forward to using my extensive experience income and capital growth from the Company over the coming years. 14. Signal 1 and Signal 2 of the radio industry and existing knowledge of the Company’s 15. Signal 107 businesses to ensure that the Company continues to focus all its efforts Richard Huntingford 16. Swansea Sound and The Wave 1 on delivering long-term value for shareholders. Chairman 17. Radio GB HQ 31 March 2016 8 12 9 2 talkSPORT broadcasts commentary in 10 17 3 11 multiple languages with partner stations 13 around the world.
6 14 15
4 5 16 7
UTV Media plc Board of Directors - (L to R Front Row) – J. McCann, R. Huntingford and H. Kirkpatrick. (L to R – Back Row) S. Kirkpatrick, R. Brennan, N. McKeown, C. McConville, S. Taunton and A. Anson.
4 Report & Accounts 2015 Report & Accounts 2015 5 WIRELESS WIRELESS GROUP PLC GROUP PLC
Radio GB Who We Are
• talkSPORT’s international arm has 69 broadcast partners around the world for its live Barclays Premier League, FA Cup and Capital One Cup match commentary during the 2015/16 season.
Our Content As the UK’s only dedicated sports radio station, talkSPORT sets the sports news agenda. With award-winning broadcasters and sporting legends from the worlds of football, rugby, cricket and athletics, the station’s presenters have a wealth of sporting knowledge and insight.
talkSPORT was a licenced radio broadcaster of the Rugby World Cup 2015, and brought listeners extended coverage of all 48 matches. The expert presenting team included Australian legend David Campese, former England and Lions hooker Brian Moore, Rugby World Cup winner Mike Tindall and Wales' most capped winger Shane Williams.
talkSPORT’s evening football show, Kick Off, won Best Radio Documentary at the prestigious Sports Journalists’ Association Awards, for a special documentary that looked at the mental health of sportsmen.
This year talkSPORT International partnered with the global on-demand streaming service Deezer, and was a big part of their expansion beyond music. The service also launched a brand new show Friday Night Football, featuring English live commentary of the Bundesliga.
In April Radio GB, as part of consortium Sound Digital, was awarded the
talkSPORT presenters second digital multiplex licence and in March 2016 re-launched Virgin Radio and launched two brand new stations, talkSPORT 2 and talkRADIO, truly expanding choice in the media marketplace. The former promises to be an exciting return for Virgin Radio, with a presenting line talkSPORT, based in London, is the world’s biggest sports radio station and the UK’s only up of first-class broadcasters playing the latest music and favourite classics. talkSPORT 2 will focus on sports rights and supporting station dedicated entirely to sport. talkSPORT is an official broadcaster of the Barclays magazine programming to attract a premier audience with in-depth live commentary of golf, cricket, rugby and US sports, as well as coverage Premier League, the FA Cup, England football internationals and the Capital One Cup, of football outside of the Premier League. talkRADIO is all set to be an and was also a licensed radio broadcaster of the Rugby World Cup in 2015. engaging speech station with credible radio personalities, covering news and current affairs, entertainment and lifestyle.
Internationally, as global audio partner of the Premier League, Radio GB also has interests in eight local and regional DAB digital Sport magazine consistently interviews the biggest stars in the world of talkSPORT broadcasts Barclays Premier League, FA Cup and League radio multiplexes. sport and has spoken exclusively to Cristiano Ronaldo, Jessica Ennis- Cup commentary with 69 broadcast partners around the world. The Hill, Novak Djokovic and Lewis Hamilton. station’s exclusive package of audio rights allows talkSPORT to Sport magazine is the leading sports title in the UK and the second most broadcast official live commentary of all 380 Barclays Premier League read men’s magazine in the UK. It is available as a print edition and Radio GB’s local stations hosted some exclusive interviews with big matches in a variety of languages to listeners outside of the UK and digitally on iPad, Kindle Fire and Android devices. The magazine looks names from the music industry including One Direction and Little Mix. Republic of Ireland. This year talkSPORT International partnered with forward to 2016, which will see its ten year anniversary. Cable and Wireless in the Caribbean and Eon in Australia, both until the Wish FM was awarded the top gong for Best Sports Coverage in the IRN 2018/19 season. Our Audience Awards for the Super League Grand Final rugby programme. Each of Radio GB’s 12 local radio stations has a unique place in their • talkSPORT is listened to by 3.1 million adults per week (Q4 2015) The local radio stations raised over half a million pounds, which went community, providing news, information and entertainment. and 84% of all talkSPORT listeners are male and 58% are ABC1 towards charities in their areas, and included Signal 107 raising £90,000 Our stations are: • Radio GB’s local stations are listened to by 1 million adults per week for a variety of local causes and Pulse 1 raising £100,000 for Kirklees • The Pulse 1 and 2 in West Yorkshire (Q4 2015) – 55% are female and 55% are aged between 15 and 44 Hospice. Signal 107 also tackled homelessness with the breakfast • Signal 1 and 2 in Staffordshire and Cheshire • Sport magazine has an audited weekly circulation of more than presenter Dicky Dodd sleeping on the streets for two nights to highlight • Swansea Sound and The Wave in South Wales 300,000 and readership of almost 450,000 with 60% of readers aged the problem. We also collected and distributed coats, hats and scarves • Peak 107 in North Derbyshire 25 to 34 and 81% categorised as ABC1 for those who needed them. • Radio Wave in Blackpool • talkSPORT’s website has more than 4.5 million average monthly • Tower FM in Bolton and Bury unique users, while our local radio stations attract over 400,000 users • Wire FM in Warrington, Widnes and Runcorn each month to their websites • Wish FM in Wigan and St Helens • talkSPORT is the most followed commercial radio station in the UK on • Signal 107 in Wolverhampton, Shrewsbury, Oswestry and Kidderminster Twitter with over 840,000 followers, and the station is also far past any other on Facebook, with 1.9 million Likes.
6 Report & Accounts 2015 Report & Accounts 2015 7 WIRELESS WIRELESS GROUP PLC GROUP PLC
Radio Ireland Who We Are
Our Content All seven Radio Ireland stations continue to provide a unique mix of Radio Ireland remains focused on the development of its presence in music, news, sport and current affairs, with a strong local/community the social/digital area. Engagement in these areas has improved focus. The ongoing focus on music research complemented by a strong dramatically throughout 2015 with these audiences being integrated into emphasis on local content and engagement continues to result in the its ongoing advertising sell. The assets are designed to be brand delivery of high quality locally relevant programming. extensions of the radio stations’ offering, giving the communities served the chance to interact, enter competitions, listen live, and engage via The breadth of Radio Ireland programming continues to be attractive to online and social media platforms. In 2015 investment was made in a audiences with output including live sports commentaries, specialist content team to specifically create and curate content for the web and music programming, programming on the arts and current affairs grow the audience across web and social. By the end of 2015 pageviews output. had increased by 29% year on year, whilst average monthly unique users grew by 85%. Facebook and Twitter followers across the stations also In 2015 Radio Ireland continued its involvement in major local events increased year on year with Facebook followers growing 69% to over across the entire calendar including sporting, charity, community and 750,000 and Twitter followers increasing by 42% to 190,000. arts events. All stations continued with charitable initiatives, with the highlights being €377,657 raised by Cork’s 96FM’s “Giving for Living” Radio Ireland’s initiative to promote music by emerging Irish talent, Radiothon, £180,000 raised by U105’s “Operation Purple” for the NI Select Irish, has gone from strength to strength during 2015. A Select Hospice and €87,464 raised by Live 95FM’s “95 Stop Tour for Limerick Irish act is chosen each month with significant airplay being afforded to kids”. As well as raising significant funds, these initiatives generate a new song by that act across our network of stations. Previous significant awareness for the charities involved. recipients include Gavin James, Kodaline and The Coronas.
Radio Ireland’s stations were successful at both the PPI Radio Awards and the Love Radio Awards for 2015. Of particular note was FM104 retaining the PPI Music Station of the Year Award along with Cork’s 96FM, LMFM and our national radio sales house success at the Love Radio Awards.
Limerick's Live 95 FM '95 Stop Tour' Family Fun Day
Radio Ireland is the largest operator of local radio stations in Ireland. Each station has its own unique blend of output, specifically focused on both the targeted audience demographic of that station and also relevant local content for its broadcast area.
Radio Ireland’s main point of difference in the marketplace is its delivery broadcasters. Our national radio sales house also sells airtime for two of a truly targeted urban audience across Ireland. This provides an client radio stations, Galway Bay FM and WLR FM in Waterford. efficient way of targeting urban adults which is highly desirable, Combined, the national radio sales house stations reach 1.02m adults particularly for national clients. on a weekly basis which is ahead of national stations 2FM, Newstalk and TodayFM but with the additional benefit of being firmly focused on key Radio Ireland comprises the following stations, each of which has urban areas. While much of its revenue comes from the combined market leading positions in Ireland’s main urban areas: package, similar amounts are generated by selling individual stations • FM104 and Q102 in Dublin at both a national and local level. • Cork’s 96FM and C103 • Limerick’s Live 95FM Our Audience Digital Services • LMFM in Louth/Meath • U105 in the Greater Belfast area Listenership Data Weekly Reach Market Share Tibus Tibus provides specialist Internet services for businesses and public Simply Zesty Simply Zesty is a digital advertising agency offering customers a range Radio Ireland’s collective stations serve a diverse age demographic mix 96FM / C103 – Cork 58.3% 32.4% organisations that run high-profile or business critical websites. Its core of creative digital marketing and technology services provided by a highly from FM104 targeting a 15-34 year old audience to U105 targeting a 45 Live 95FM – Limerick 69.5% 36.2% offering is centred on secure managed hosting and support for business applications. Tibus has 3200 clients across the UK and Ireland and experienced team of digital professionals. year old plus audience. The output of all stations is designed to be Q102 – Dublin 15.2% 5.5% attractive to the key housekeeper and housekeeper with child operates services from its locations in London, Dublin and Belfast. FM104 – Dublin 30.8% 10.9% demographics. Recent projects have included work for both public and private sector LMFM – Louth/Meath 46.5% 25.9% clients. Tibus also works extensively for the Group companies and Radio Ireland also consists of a national radio sales house which is based U105 – Belfast 27.0% 14.8% helped deliver a major live streaming project for Television and further in Dublin, providing a significant advertising alternative to the national enhancements for talkSPORT’s Barclays Premier League football Source – RAJAR Q4 2015 /JNLR / Ipsos MRBI 2015 – 4 coverage on the Internet.
8 Report & Accounts 2015 Report & Accounts 2015 9 WIRELESS WIRELESS GROUP PLC GROUP PLC
Strategic Report Strategic Report
Strategic Objectives Strategic Objective 1: Build audiences Following the sale of the Television business to ITV on 29 February 2016, Wireless Group plc is now a focussed radio group that will look to Radio GB Radio Ireland maximise shareholder return through: •Maintaining and developing highly attractive, market-leading assets 2015 was a year of continuity and evolution for talkSPORT, with a The Irish radio division consists of seven stations covering Dublin (2), •Maintaining a robust balance sheet stable presenter line-up ensuring a strong audience performance Cork (2), Limerick, Louth/Meath and Belfast. Our content in each •Driving strong cash generation across the year, whilst also providing a platform for investment in station is truly local with carefully chosen presenters and is designed •Targeting double digit profit growth over the medium term key events such as the Rugby World Cup. talkSPORT broadcast 164 to serve the preferences of each local area accordingly. Our ability to Future profitability will be generated by our Radio GB division, largely comprising the talkSPORT businesses and twelve local radio stations, live football commentaries across the year, ranging from Premier react and adapt to the ever changing needs of our audience is and by Radio Ireland, comprising seven radio stations based in the major urban areas in Ireland. In addition we have two much smaller League and FA Cup to Champions League and England paramount to our market leading success. digital services businesses, Tibus and Simply Zesty, who continue to provide services to the radio divisions alongside their external customers. Internationals. Each station is embedded in the very fabric of their local community The key Strategic Objectives that drive the Company’s business model are: talkSPORT’s distinctive, high quality programming output from through their local news and information content and also through 1. Build audiences talented presenters provides a very attractive audience environment. their involvement in community and charitable events. This 2. Create attractive propositions for advertisers which are sold effectively to maximise revenue Throughout 2015 talkSPORT continued to develop highly effective characteristic enhances the bond between listener and station 3. Maintain a low cost base whilst also capitalising on new opportunities audience campaigns, such as the Predictor, which are tailored to across the network. sporting events. Reflecting this smaller Group centred on radio, a cost reduction programme is being undertaken in 2016 which is planned to reduce costs Independent testing of the music being broadcast takes place on a by £3.0m per annum from 2017 onwards. talkSPORT leads the UK commercial radio industry in its successful regular basis to establish local audience appeal. exploitation of digital platforms, with an online footprint well ahead Within the Strategic Objectives of the Group the key priorities for 2016 are: of its peer group. talkSPORT.com average monthly unique users With the introduction of a dedicated content/digital team, Radio during the year exceeded 4.5 million, up 36% year on year, with 25 Ireland stations are moving with a changing media market. All Radio GB million monthly average page views, an increase of 23%. stations have active web platforms which contain sections for rolling - the successful launch of three new digital radio stations, Virgin Radio, talkSPORT 2 and talkRADIO local and national news, entertainment news, listen live, podcasts - to maintain talkSPORT’s leading audience performance talkSPORT also had more than 1.9m Facebook Likes in the year, up and show and presenter details. Radio Ireland’s websites average - to further develop talkSPORT International 536% and increasing Twitter followers on its primary account by 26% over 1.7 million page views per month. year on year to 848,000. Radio Ireland Radio Ireland’s stations have an active and growing presence on - to continue to achieve market leading positions In 2015 Sport magazine continued to provide a commercially Facebook and Twitter. A defined social strategy has led to growth in - to broaden audience appeal onto digital platforms complementary platform to talkSPORT. Sport magazine enjoys a all social media platforms, with Facebook having over 750,000 - to capitalise upon growing consumer confidence in the economy of the Republic of Ireland commercially appealing large UK male readership centred on followers and Twitter having over 190,000. Station content has had London thanks to its compelling mix of sports interviews and over 5 million views on YouTube and Instagram, Periscope and Vine Costs features. - to implement the cost reduction plan to reflect the new size of the Group and improve efficiencies. are utilised where appropriate. In March 2016 Wireless Group initiated a major expansion in its national radio business with the launch of two new national speech stations – talkRADIO and talkSPORT 2 – as well as the return of the iconic Virgin Radio brand under an exclusive licence agreement with Business Model Virgin Group. As a result of the sale of the Television business the Group is now managed across 2 key areas of business or activity – talkRADIO, talkSPORT 2 and Virgin Radio each boast a distinctive Radio GB and Radio Ireland. editorial format which will complement our existing portfolio and Tibus and Simply Zesty, our digital media businesses, remain within the overall group structure to the extent that they continue to provide a broaden our appeal to listeners and advertisers alike. As with our valuable service to the Radio businesses and generate profits from external customers. other stations our offering will include engaging websites and mobile applications developed by our in-house team. Wireless Group’s core business model is illustrated as follows: The Group’s 12 local radio stations in England and Wales benefit Create attractive propositions for Maintain a low cost base whilst from having a demonstrable commitment to a local presence and Build audiences advertisers – sold effectively to capitalizing on new opportunities to local programming. This provides a point of difference for listeners maximize revenue and sustains long term audience growth. Secure and retain broadcast and Sales teams aligned with customers’ Regular review of business structures to Engagement with our local radio network via digital platforms saw programme rights businesses to build long term reduce costs and maximize efficiencies sustained growth in 2015 with an average of 0.41 million monthly relationships unique users, up 14% year on year, and 2 million average monthly Produce popular regional and local Encourage identification of market page views, up 33% year on year. programmes Tailored flexible sales packages in place opportunities through station to maximize revenue development, use of new broadcast Recruit and retain key talent across the Reporting systems established to platforms or, if value-adding, Group demonstrate to customers the audience disinvestment impact of their advertising Related Non Financial KPIs Broadcast across multiple platforms Audience share including listener share and listening time Strong customer communication Visits to digital platforms including website page views and unique users
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Strategic Report Strategic Report Strategic Objective 2: Create attractive propositions for advertisers which are sold Strategic Objective 3: Maintain a low cost base whilst also capitalising on effectively to maximise revenue new opportunities
Radio GB Radio Ireland Radio GB Radio Ireland
The sales structures within talkSPORT and the local radio stations Through the success of our Urban Access national sales product and The business has a history of tight cost control and the recent UK The significant problems recently faced by the Irish economy and are tailored to the business structures of our customers. This can the strength of our local sales teams we have been able to maximise macroeconomic difficulties have brought greater importance to this, the commercial radio industry resulted in a protracted period of cost vary from large agency sales teams selling to agency customers our revenue opportunity, enabling us to remain the largest resulting in business practices that regularly question the need for cutting. This impacted all cost centres across Radio Ireland. As the acting on behalf of multinational businesses across several of the independent commercial radio operator in Ireland. expenditure items. Irish economy recovers this cost discipline is being maintained with talkSPORT stations to a local sales team targeting the needs of sole regular reviews of the radio stations taking place to ensure that any traders. Of paramount importance is the ease with which a customer Urban Access enables us to sell our market leading stations in a The launch of the three new stations in 2016 incorporates a strategy cost movements are directly linked to the maximisation of long-term can do business with us and our ability to maximise the business combined offering to agencies seeking national coverage of urban of minimising expenditure in order to reduce the business start-up profitability. opportunity. Strong commercial leadership and effective sharing of based audiences. Our local sales teams have established strong risk. All three stations are accommodated within existing premises best practice across the sales teams is essential. relationships with businesses seeking to get their message to a large and are utilising existing sales and support personnel where As the radio industry changes and we move into more digital, social audience in a defined geographical area in a cost effective manner. possible. and experiential solutions, such expansion is being carefully As customer requirements vary considerably it is vital that our sales managed, utilising existing resources where possible. offerings are tailored to their requirements and that through these With clients demanding new and innovative ways to use our medium The Board received an offer of £10m for the purchase of Juice FM. sales packages we encourage long term relationships. This is we’ve adapted our sales approach to deliver on this. Examples of As this represented a very substantial multiple of earnings the Board typically done through the use of seminar sales or sponsorship success in this area include the repackaging and selling of our Solus decided that it was in the best interests of shareholders to sell this opportunities designed to encourage customers to commit for Access package to one agency group for a long term contract, business and reduce the Group’s indebtedness. longer periods of time. This mitigates business risk particularly with locking in an 18month investment rather than selling it on a more the incremental costs of sports rights. traditional week by week basis.
Key sponsors have enjoyed a long-term presence on talkSPORT, Working closely with clients resulted in us taking the Gold and Group reflecting the benefits they have derived from an association with Bronze awards in the Client of the Year category in the Love Radio The sale of the Television business prompted a review of costs across the Group. It was recognised that the costs of the Central team needed talkSPORT as well as the station’s emphasis on account Awards. This is a joint entry between sales house and client, which to be reduced in order to re-size operations. At the same time a detailed review took place across the stations to identify further savings. management and campaign implementation. recognises clients who use radio best, and we were the only national Plans are currently being implemented to reduce the cost base by £3.0m from 2017 onwards. sales house to be awarded. Our customer strategy also takes account of the multiple delivery platforms that we can offer. This enables us to capitalise on The structure of our sales teams is well established with strong Related Financial KPIs increased digital and mobile listening. In 2015 talkSPORT achieved management focused on key business targets and regular reporting. Operating profit (before exceptional items) significant growth in in-stream audio advertising revenue through Profit before tax its in-house sales team. We anticipate further growth as this format JNLR analysis is used by each of the Radio Ireland stations to Cash flow continues to gain traction with media agencies. regularly review programme performance. This is used to provide Earnings per share key messaging to advertisers about the size and demographics of Through RAJAR analysis and digital measurement we regularly the audience achieved for their sales campaigns. feedback to customers on the size of audiences we have achieved and hence how successful their sales campaigns have been. We The sales team are also using new digital opportunities in continue to lobby within the commercial radio industry for enhanced conjunction with traditional radio advertising opportunities to drive audience reporting to take account of the changes in how audiences advertising revenues and fulfil the client need for a multi-platform listen to our programming. engaged conversation with consumers.
Related Financial KPIs Revenue
12 Report & Accounts 2015 Report & Accounts 2015 13 WIRELESS WIRELESS GROUP PLC GROUP PLC
Strategic Report Strategic Report
Relative risk Risk situation and assessment Mitigation factors Principal risks and uncertainties movement Board activities 1 Economic conditions and impact on Net • High quality programme content with strong Whilst there is ongoing The Board’s oversight of risks is considered to be an essential element in enabling the Group to meet its strategic objectives. During the year the Advertising Revenue (NAR) income stream branding and marketing will enable the Group’s macro-economic uncertainty, Board has undertaken the following activities: The majority of the Group’s revenue stream is market-leading stations to continue to be advertising agencies are sourced as on-air advertising (NAR) and, preferable to advertisers in difficult market predicting that the • Identifying and robustly assessing the most significant risks that could adversely impact the successful achievement of the Group’s being a discretionary spend product, it is conditions. commercial radio market will objectives and its continuing operations; and sensitive to economic conditions. continue to grow in 2016. The • The launch of the new D2 stations which will be Board therefore does not • Monitoring the quality of the risk control responses and mitigation actions that have been established by the Senior Management Team to A serious economic downturn would attractive to listeners and hence advertisers will believe that there has been a address these risks. significantly impact the Group's revenue enable the Group to grow profitable market material change to this risk. which would be compounded by the reliance share. Such activities support the production of a Board Corporate level risk register, and this register framework facilitates the Board to actively monitor on NAR. If this continued for a protracted the most significant risks and their management throughout the year. period of time, it would present a major • Continued focus on growing revenue streams challenge to the basis and potentially the from digital platforms to reduce the reliance on In January 2016, the Board undertook a comprehensive and robust assessment to ensure that the Board Corporate risk register illustrated the viability of the Group’s overall business NAR. risk profile of the Group and the most significant risks and that the current mitigation responses are reflective of the Board’s risk appetite. model.
Resulting from this exercise, the Board has determined those risks that would be considered as being the principal risks to the Group in terms of the potential impact that the risk arising could have on the Group’s: 2 Performance of new national digital radio • Specialist research and forecasting has been The launch of the digital stations (D2) commissioned in the preparation of the expected stations introduces a new • Business model and strategy; There clearly are risks associated with the audience performance figures. risk, primarily in the 2016 • Position and performance; launch of new radio stations into a highly start-up year. • Future developmental capability; and competitive market. Establishing an audience • Financial forecasts are judged to include • Solvency and liquidity. and being able to monetise this with conservative audience assumptions and advertisers can be challenging. It will take at operating costs have been minimised through The principal risks and associated factors that are considered to be most significant to the Group’s operations and to the achievement of its strategic least six months of broadcasting to get an the use of existing infrastructure and staffing objectives are described on the following pages. understanding of the size of the audience where possible. There has been an ongoing achievement of new D2 stations in 2016. focus on cost control. Details of the risk management system by which the principal and corporate-level risks are monitored and managed by the Group are set out in the Corporate Governance section. If listenership fails to reach the forecast • The launch of the D2 stations, whilst a new numbers, this could result in significantly venture, represents a relatively small element of Viability evaluation lower advertising revenues which may not be the Group’s overall operations. The venture is sufficient to cover the base-line operational not a new business activity and management It has been established that none of the individual risks in isolation would significantly compromise the Group’s viability but different combinations running costs. have considerable experience in the and scenarios of events could severely test viability. It was these combinations that were modelled for possible impacts over a three-year time establishment and operation of radio frame. This time frame was considered the most appropriate period as it is consistent with the Group’s strategy and planning cycle which follows stations. a rolling three-year period.
Using downside stress testing and sensitivity analysis the modelling exercise considered a number of severe but plausible scenarios based on the 3 Availability of sports broadcasting rights • The sellers of sports rights recognise talkSPORT The Board believes that there principal risks as outlined on the following pages and the financial impact of these on Group forecast revenue, operating profit, Net Debt/EBITDA Securing both exclusive and non-exclusive as a premium brand which they continue to wish has been no material change and cashflows over the three year period. sports rights directly influences talkSPORT’s to be associated with. to this risk. audience. The pricing of rights determines Based on this assessment, the directors confirm that they have a reasonable expectation that the Group will be able to continue in operation and the viability of broadcasting certain sports. • The financial return from sports rights is meet its liabilities as they fall due over the three year period to 31 December 2018. subjected to considerable assessment at the time of negotiation and also at regular Board assessment follow-ups.
The results of the assessment exercise have been subject to detailed scrutiny and challenge by the Audit Committee which considered the relevance • Other sports rights are identified as programme of the assumptions that had been made, the quantification of the impacts on financial performance based upon alternative scenarios of the principal alternatives. risks occurring and the various stress-testing applications utilised, all of which have been modelled over the three-year timeframe.
Based upon the review and evaluation work undertaken by the Audit Committee, the Chair of the Committee has been able to advise the Board of 4 Key customers • Strong programme content and audience The Board believes that there their assessment, and this supports the Board’s position with regards to the viability assessment of the Group over the three-year period. The advertising market is dominated by a performance encourages brand owners and has been no material change small number of global agencies. Specific advertising agencies to be associated with the to this risk. In accordance with provision C.2.2 of the UK Corporate Governance Code 2014, the Board has assessed the viability of the Group over a three-year large customers are critical to the stations station. period to December 2018, taking into account the Group’s current position and the potential impact of the principal risks documented on the and the loss of their business could result in a following pages in severe but plausible scenarios and the likely degree of effectiveness of current mitigating actions. The Board confirms that have significant reduction in revenue. • Considerable effort goes into developing good a reasonable expectation that the Group will continue to operate and meet its liabilities as they fall due for the next three years. agency relationships which means concerns can be raised at an early stage.
14 Report & Accounts 2015 Report & Accounts 2015 15 WIRELESS WIRELESS GROUP PLC GROUP PLC
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Relative risk Group Performance Review & Outlook Risk situation and assessment Mitigation factors movement Results and dividends for the year The Group profit from continuing and discontinued operations before exceptional items for the year and after taxation amounted to £3.3m (2014 5 Continuity of broadcast operations • Incident management response plans are in The Board believes that restated: £13.8m) of which £3.1m (2014 restated: £13.6m) is attributable to the members of the Company as detailed in the Group Income Statement. If an incident or event occurred that place at all locations to quickly recover from an there has been no The reason for this year on year reduction was primarily due to the performance of UTV Ireland. terminated or significantly disrupted event which includes substitute locations and material change to this broadcast output or IT services for a equipment sources being identified with an IT risk. Dividends amounting to £6.9m were paid during the year representing a final ordinary dividend for 2014 of 5.43p per share and an interim ordinary sustained period of time, this would result in contingency plan. dividend for 2015 of 1.82p per share as shown in note 13. the immediate loss of the ability of the affected business to earn revenue. • Physical location safety and preventative A final dividend of £5.2m, representing 7.60p per share, based on the issued share capital at the record date, is proposed for approval at the Annual measures inspections are routinely undertaken. General Meeting. If approved, warrants in respect of it will be despatched on 15 July 2016 to shareholders on the register at the close of business on 20 May 2016. • Regular maintenance undertaken of essential broadcasting equipment and IT systems. As outlined earlier in the Strategic Report the Group completed the sale of its Television business, UTV Limited and UTV Ireland Limited, to ITV on Modernisation programme established for the 29 February 2016. These have been classified as discontinued operations in the 2015 financial statements. The figures for the year ended 31 replacement of legacy systems and equipment. December 2014 have been restated, where required by IFRS 5, to reflect the discontinued operations.
During 2015 the Group was managed on the basis of three business divisions: Radio GB, Radio Ireland and Television. From 2016 the Group will be 6 Cyber-crime attacks on systems and data • Response plans are in place to manage a Due to the increased managed on the basis of two key radio divisions: Radio GB and Radio Ireland, along with the smaller digital services businesses of Tibus and Simply An attack could cause loss of broadcast sustained systems outage and related publicity number of reported Zesty. service to the audience and consequential consequences. cyber-crime attacks on loss of advertising revenue. businesses the Board Financial Key Performance Indicators • Security policies, standards and procedures are believes this risk has Performance from continuing operations during the year against the Group’s financial KPIs was as follows: established. increased.
• Prevention infrastructure configurations are 2015 2014 Change installed. (restated)* 1 Revenue £75.1m £82.4m (£7.3m) 2 Operating profit (before exceptional items) £12.5m £13.8m (£1.3m) 7 Strategic focus and business transition • Strategy, delivery tactics and achievement of the This is a new risk 3 Profit before tax ** £10.7m £11.9m (£1.2m) plans revised business model continue to be the key which the Board is 4 Free cash flow *** £2.7m £15.8m (£13.1m) The Board has set out a clear strategy for the focus for the Board at its meetings. closely monitoring. 5 Diluted adjusted earnings per share 8.65p 9.43p (0.78p) Wireless Group. However, as a consequence of the disposal of the Television business, • The two main radio divisions are not significantly * 2014 results have been restated to reflect the classification of the Television business as discontinued there will be significant change in 2016, impacted by the business change and the ** Includes associate and joint venture income but excludes discontinued operations and exceptional item of £6.9m in 2015 particularly at the Group Centre. There is a experienced local management are very clear *** This represents the cash generated by the Group’s operational activities in the period (before financing costs, tax, dividends, and other discretionary payments) risk that with the cost reductions announced about their operational targets. and the business change there could be a Financial KPI 1: Revenue lack of focus or momentum. • A steering group has been established to Group revenue from continuing operations has decreased by 9% to £75.1m (2014 restated: £82.4m). The reduction in revenue reflects the impact manage the transitional arrangements for the of the World Cup in the previous year, adverse foreign exchange impact and competitive pressures in Ireland and reduced activity in Simply Zesty. reduced Group Centre. 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. 8 People • The Group continues to review the business to Any changes to the A combination of vision, leadership and create a fit for purpose organisation Board structure can Financial KPI 2: Operating Profit (before exceptional items) innovation is essential for senior roles in the lead to an increase to Group operating profit from continuing operations before tax, finance costs and exceptional items has decreased by 10% to £12.5m (2014 restated: managerial team and failure to secure and • Succession and retention planning is in place for this risk. £13.8m). This reflects the reduction in revenue offset by cost savings across the divisions. retain the right people for senior and senior management posts. The succession plan business critical roles, or plan for the natural for the retirement of the CEO position has been For further information on the Group operating profit refer to the divisional performance reviews and to the segmental analysis of operating profit succession for these positions, could lead to actioned and will take effect in May 2016. in note 3. untimely loss of critical knowledge, experience and competitive advantage. • The Group remains committed to the Financial KPI 3: Profit before tax The appeal of our broadcasting talent recruitment, engagement, retention and reward Group profit before tax has decreased by 10% to £10.7m (2014 restated: £11.9m). This reflects the reduction in operating profit as highlighted supported by skilled and creative staff is a of experienced, quality management and talent. above. Foreign exchange losses of £0.1m and net financing costs of £2.2m are in line with the previous year. fundamental component of our business and failure to secure and retain talented people for these roles could impact the ability to maintain audience volume, performance and deliver growth.
16 Report & Accounts 2015 Report & Accounts 2015 17 WIRELESS WIRELESS GROUP PLC GROUP PLC
Strategic Report Strategic Report
Financial KPI 4 : Cash Flow (1) These facilities have been provided by a banking group comprising Bank of Ireland and Ulster Bank (a subsidiary of Royal Bank of Scotland).
2015 2014 Increase/ The required covenant ratios are: (decrease) (1) Net Debt to EBITDA ratio should not exceed 3.00: 1 £m £m £m (2) EBITDA to Net Interest Expense ratio should not be less than 3.25: 1
EBIT (2) 8.7 19.5 (10.8) The facility is secured by a fixed and floating charge over the Company’s assets. Depreciation and amortisation 3.0 1.9 1.1 Financial KPI 5: Diluted adjusted EPS EBITDA 11.7 21.4 (9.7) Diluted adjusted EPS of 8.65p, a decrease of 0.78p or 8.3% (2014 restated: 9.43p) reflecting the decrease in adjusted profit.
Capital expenditure (net) (3.2) (7.6) 4.4 Prospects Working capital movement (5.8) 3.2 (9.0) The successful sale of the Television business has significantly reduced the Group’s borrowings and hence financial risk, enabling a substantial Non-cash decrease in contingent consideration - (1.2) 1.2 return of capital to shareholders. The focus in Radio GB is now on launching the new D2 radio stations and capitalising on the audience growth associated with the UEFA Euro 2016 championship. In Ireland our priority is to translate the market leading audiences of our stations into revenue Free cash flow 2.7 15.8 (13.1) growth in an improving Irish economy.
Net financing costs (2.3) (1.8) (0.5) Tax (2.8) (2.5) (0.3) Dividends paid to equity shareholders (6.9) (6.8) (0.1) Dividends paid to non-controlling interests (0.1) (0.2) 0.1 Proceeds from sale of discontinued operations & subsidiary 9.9 0.9 9.0 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 0.7 0.5 0.2
Net cash flow - 2.8 (2.8) Repayment of borrowings (3.6) (3.9) 0.3 Proceeds from borrowings 0.7 3.9 (3.2)
Net (decrease)/increase in cash (2.9) 2.8 (5.7)
(1) Includes both continuing and discontinued operations (2) Earnings before interest, taxation, exceptional items and including dividend income from associates and joint venture
Free cash flow from operations decreased by £13.1m to £2.7m (2014: £15.8m), reflecting the negative working capital movement of £9.0m, the decrease in EBITDA of £9.7m and decrease in capital expenditure of £4.4m, which reflects the timing of agency and sports rights deals in Radio GB and the launch and first year of trading of UTV Ireland.
From the free cash flow of £2.7m (2014: £15.8m) the Group paid £2.3m on financing costs, £2.8m on tax and £6.9m on dividends to equity shareholders and received a total of £9.9m proceeds from the sale of Juice FM and contingent consideration from the sale of UTV Connect.
Note 23 Financial Liabilities includes details of the Group’s banking facilities. At 31 December 2015 facilities totalling £56.1m had been utilised leaving unutilised facilities of £14.4m, plus overdraft facilities of £5.5m and cash reserves of £9.9m.
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 4.50:1 (2014: 3.50:1) (2) EBITDA to Net Interest Expense ratio should not be less than 3.25:1 (2014: 3.25:1)
The required ratios were comfortably met as follows: (1) Net Debt to EBITDA ratio of 3.94:1 (2014: 2.15:1) (2) EBITDA to Net Interest Expense ratio of 6.16:1 (2014: 11.11:1).
The above facilities were fully repaid and cancelled with all security released on completion of the sale of the Television business on 29 February 2016.
On the same date new banking facilities comprising a £30m dual-currency Revolving Credit Facility (RCF) and an £8m overdraft facility were put in place.
The £30m RCF is available to the Group for the period to 29 February 2020 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 of the RCF.
18 Report & Accounts 2015 Report & Accounts 2015 19 WIRELESS WIRELESS GROUP PLC GROUP PLC
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Performance Review (continued) Local Radio
Radio GB Non financial KPIs Source 2015 2014* Change Revenue in the Radio GB division was £52.8m (2014: £56.4m). Radio GB’s total operating profit was £11.7m (2014: £11.3m). Audience: Radio GB division contributed 70% (2014 restated: 68%) to Group revenue and 72% (2014 restated: 64%) to Group operating profit. Average weekly reach RAJAR 1,002,000 1,007,000 -5,000 talkSPORT - the number of individuals listening to a station -0% for at least 5 consecutive minutes in an average Non financial KPIs Source 2015 2014 Change week
Audience: Average weekly hours RAJAR 8.3 hours 9.4 hours -1.1 hours - the number of hours spent listening to a station -12% Average weekly reach Radio Joint Audience Research 3.1m 3.2m -0.1m in an average week. - the number of individuals listening to a station (RAJAR) -3% for at least 5 consecutive minutes in an average Digital platforms: week. Average monthly unique users - Total for all Google Analytics 0.41m 0.36m +0.05m Average weekly hours RAJAR 6.4 hours 6.7 hours -0.3 hours local radio station websites +14% - the number of hours spent listening to a station -4% in an average week. Average monthly page views - Total for all local Google Analytics 2.0m 1.5m +0.5m radio station websites +33% Sport magazine weekly circulation Audit Bureau of Circulations 304,401 304,160 +241 (ABC) +0% *2014 non-financial KPIs restated to remove figures relating to Juice FM which was sold during 2015 Digital platforms: Revenue across the local radio businesses decreased by 2% to £20.4m (2014 : £20.8m), which compares to a local market up 3%. Average monthly unique users - Google Analytics 4.5m 3.3m +1.2m Radio GB division’s 12 continuing local radio stations in England and Wales recorded stable audience reach during the year. Particularly strong talkSPORT.com +36% performances were recorded by Wish FM which recorded a 39% increase, Tower FM (19% increase) and Pulse 2 (11% increase). Average monthly page views - talkSPORT.com Google Analytics 25.0m 20.4m +4.6m The decline in local radio average weekly hours in part reflects statistical variances in reported figures. Management will continue to closely +23% monitor this KPI in 2016.
Engagement with Radio GB’s local radio network via desktop and portable connected devices saw sustained growth, with an average of 0.41 million talkSPORT revenues were down 9% to £32.4m (2014: £35.6m) due to the World Cup comparative in the prior year. The performance for the year monthly unique users, up 14% year on year, and 2 million average monthly page views, up 33% year on year. benefited from the continuity in talkSPORT’s line-up of popular presenters, as well as its continued sports radio production expertise and premium sports rights. These editorial strengths were bolstered during the year by a significant editorial commitment to the 2015 Rugby World Cup. Once again our GB local radio network undertook a number of successful campaigns to foster community engagement during 2015. Highlights included Signal 1 and The Wave’s shoebox appeal where we delivered over 12,000 boxes filled with presents and essentials to children in Africa. In The station’s average weekly audience reach remained stable during 2015 at above the 3 million mark. Key shows also delivered strong performances addition, stations across the network also collected over 15,000 Easter eggs for disadvantaged local children and tens of thousands of Christmas with the Alan Brazil Sports Breakfast achieving reach figures of 1.4m and the Colin Murray show reaching a record high during the year of almost presents were collected across all stations and delivered in time for Christmas 2015. 1.1m. 2015 also saw record audiences for Matchday Live and Call Collymore. Christmas 2015 saw the return of our festive pop-up DAB stations in Swansea, Stoke on Trent and Bradford. These were extremely well received The decrease in talkSPORT’s average weekly hours reflects some cyclicality within listening figures and management are closely monitoring the with online listening alone totalling 125,000 sessions. figures with early analysis from 2016 already indicating some improvement.
talkSPORT International made further strides in 2015, entering into a range of new multi-year contracts. These included agreements with new partners such as Cable and Wireless plc, Deezer and Eon Sports Radio as well as existing partners such as TuneIn Radio, Onefootball and Citi FM Ghana. Over the course of 2015, talkSPORT International worked with partners in over 87 territories, operating in six different languages.
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 4.5 million, up 36% year on year, with 25 million monthly average page views, up 23%. talkSPORT ended the year with more than 1.9m Facebook Likes, up 536% and increasing Twitter followers on its primary account by 26% year on year to 848,000.
With a stable weekly print distribution of over 304,000, talkSPORT’s sister brand Sport is the largest sports magazine and second-biggest consumer men’s title in the UK market. Sport pioneered free magazine distribution when it was launched in September 2006 and is also available in iPad, Android and Kindle Fire HD formats. The magazine has undergone a significant redesign heading into 2016 – the year in which it celebrates its tenth anniversary.
20 Report & Accounts 2015 Report & Accounts 2015 21 WIRELESS WIRELESS GROUP PLC GROUP PLC
Strategic Report Strategic Report
Performance Review (continued) The focus remains 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 and community initiatives complement the music, news and Radio Ireland entertainment output. The radio market in 2015 continued to move away from recession with growth, in particular, being driven from non-traditional revenue streams. The Radio Ireland stations continue to expand their audiences into digital and social platforms as can be seen by the station’s strong growth both Data from agencies suggests that the Irish Radio market finished around flat to 2% growth in 2015, similar to 2014. In 2015 revenue in Radio Ireland on the web and on social networks. The strategic objective for Radio Ireland is to continue to grow the solid traffic levels across its network of decreased by 13% to £17.8m (2014: £20.5m) reflecting in the main adverse foreign exchange movements together with increased competition. dedicated websites, which will further improve in 2016 with a launch of new websites. Another priority will be to increase engagement on social Operating profit in the division was down 19% year on year to £4.4m (2014: £5.4m), a decrease of 12% excluding the impact of foreign exchange. platforms with our overall objective being to monetise these improvements. These 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. Radio Ireland division contributed 24% (2014 restated: 25%) to Group revenue and 27% (2014 restated: 30%) to Group operating profit. The average monthly page views across all station web-sites increased by 29% year on year, whilst average monthly unique users grew by 85%. This highlights the success of our new content team, as unique content brings people to the sites through social network posts. Facebook and Twitter followers across the stations also increased year on year with Facebook followers growing 69% to over 750,000 and Twitter followers Non financial KPIs Source 2015 2014 Change increasing by 42% to 190,000. Again the creation of engaging bespoke content, and subsequent analysis is driving this part of the business.
Audience:
Listened yesterday - daily reach (Urban Joint National Listenership 713,000 749,000 -36,000 Access)* Research -5% - the number of people who listened/tuned into a (JNLR ) station yesterday (average day)
Weekly reach (U105) RAJAR 237,000 189,000 +48,000 - the number of individuals listening to a station +25% for at least 5 consecutive minutes in an average week
Digital platforms:
Average monthly unique users – Total for all Google Analytics 0.37m 0.20m +0.17m radio station websites +85%
Average monthly page views – Total for all radio Google Analytics 1.72m 1.33m +0.39m station websites +29%
* figure includes the representative stations Galway Bay FM and WLR
Our national offering continues to provide a strong listenership with 713,000 people tuning into the Urban Access stations on a daily basis. There has been some slippage in audience as people moved more towards speech radio in the last quarter of 2015, possibly due to an interest in the upcoming general election. However, our reach number remains well ahead of national competitors and continues to command a premium as it is based in key urban areas. Competition remains very strong in the form of national advertising packages from other sales houses.
In terms of individual stations FM104 maintained the largest market share of any local station in Dublin with a market share of 10.9%. Within the 15-34 demographic this rises to 22.2% putting it ahead of all competitors including the national stations. Q102 delivers an all adult share of 5.5% in Dublin, rising to 6.8% of females and 6.4% of housekeepers with dependents, two key audiences. As a combined offering the stations deliver a 16.4% market share and 384,000 Dubliners tune into one of our Dublin stations every week, over 37% of the available audience.
The JNLR report for 2015 also brought good news for the stations in the other major cities, with Cork’s 96FM/C103, Limerick’s Live 95FM and LMFM all recording market leading performances in their respective areas. Cork’s 96FM/ C103 delivers a primetime market share of 32.4% and a weekly reach of 58.3%. Limerick’s Live 95FM delivers a primetime market share of 36.2% and a weekly reach of 69.5% and LMFM delivers a primetime market share of 25.9% and a weekly reach of 46.5%. In the Greater Belfast area, U105’s weekly reach increased dramatically to 237,000, a record audience for the station.
22 Report & Accounts 2015 Report & Accounts 2015 23 WIRELESS WIRELESS GROUP PLC GROUP PLC
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Performance Review (continued) In 2015, more than 80% of the total traffic to our digital platforms was mobile driven, while one in three visits originated from social media. As a result the Television division saw the consolidation of its traffic growth throughout 2015. Overall the sites and apps attracted an average of 1.5m Television unique visitors per month in 2015 – the vast majority of whom consumed content on u.tv - an increase of 36% year on year. The platforms cumulatively The results of the Television business are presented as discontinued operations in the Group Income Statement. The total loss incurred for this delivered an average of 16.3m monthly page views, an increase of 16% year on year. Over 8 million video streams were delivered by the UTV Player business was £5.3m (2014: profit £4.8m). Further detail is provided in note 11. in 2015, with a 60% (UTV Ireland)/ 40% (UTV) split.
In 2015 the revenue from the two continuing digital services businesses, Tibus and Simply Zesty, which sat within the Television segment during UTV Ireland launched successfully on the four major platforms of Sky, UPC, Saorview and Eircom’s eVision on 1 January 2015 along with a catch the year was £4.5m (2014: £5.6m). The decrease in revenue was due to a significant downturn in Simply Zesty. This business is currently being up service online. restructured to focus on its profitable activities. Operating profit in these businesses was £0.1m (2014: £1.0m) reflecting the decrease in revenue. The results of the digital services businesses contributed 6% (2014 restated: 7%) to Group revenue and 1% (2014 restated: 5%) to Group operating In 2015 UTV Ireland was reaching more than 2.3 million Irish viewers every week and UTV had created a strong mainstream television channel in profit. the Republic of Ireland, with long term licensing, programme supply and infrastructure in place.
Non financial KPIs Source 2015 2014 Change Despite achieving these audience levels it became apparent in the course of the year that the future prospects of UTV Ireland would be better as a part of a larger media business. When the Group received an offer from ITV to purchase UTV Ireland and UTV this was judged to be the best way to maximise shareholder value. Audience: During the year the Television division also included a specialist digital services business and full service digital agency, Tibus and Simply Zesty. UTV NI 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 Wireless Group plc. These include the platforms Audience: market share (peak-time) -To be the Broadcasters’ Audience 23.3% 24.7% -1.4% behind the UTV Player, talkSPORT digital, talkSPORT International, Irish Radio and the Group websites. most watched channel in NI Research Board (BARB) Key activities in 2015 centred around client deliveries for major hosting customers, primarily in London. Tibus continues to develop its presence in Audience: market share (news) -To be the most BARB 35.9% 35.4% +0.5% the key verticals of energy, oil and gas plus in banking and finance. Operational highlights included a significant investment in its core hosting watched news in NI platforms in Dublin. UTV Ireland Simply Zesty had a very challenging year in 2015 with reduced activity in key parts of the business. Following a review it was decided to restructure the activities undertaken, reduce the cost base and focus on a smaller number of activities. Audience: market share (peak-time) Nielsen /TAM Ireland 8.3% - +8.3%
Digital platforms: 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 UTV NI relevant to the Group are included within the Group Corporate Social Responsibility report. Average monthly unique users Google Analytics 1.2m 1.1m +0.1m This Strategic Report was approved by the Board on 31 March 2016 and signed on its behalf by the Chairman. +9%
Average monthly page views Google Analytics 14.5m 13.8m +0.7m Richard Huntingford +5% Chairman 31 March 2016 UTV Ireland
Average monthly unique users Google Analytics 0.3m - +0.3m
Average monthly page views Google Analytics 1.8m - +1.8m
UTV continued to be the most popular television channel in Northern Ireland in 2015, with a share of peak-time viewership of 23%, which is almost four times the audience of our nearest commercial competitor, Channel 4, which has a 6% share and ahead of BBC NI’s 19%.
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 36% across the year.
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, Britain’s Got Talent, X Factor, I’m a Celebrity and Downton Abbey.
The continued development of 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 Apps launched in Northern Ireland, followed by the launch of utv.ie as a responsive site and the UTV Player site and Apps on 1st January 2015 to accompany the launch of UTV Ireland. This was followed by the relaunch of u.tv as a fully responsive site in February 2015.
24 Report & Accounts 2015 Report & Accounts 2015 25 WIRELESS WIRELESS GROUP PLC GROUP PLC
Board of Directors Board of Directors
The following gives information on the Group Board of Directors as at 31 December 2015 and at the date of signing the financial statements. On 4 March 2016 the Group announced that John McCann will retire as Group Chief Executive at the Annual General Meeting in May 2016. Richard Huntingford, currently Non-Executive Chairman, will become Executive Chairman from this date. Coline McConville will also retire from the Board at the Annual General Meeting in May 2016. NON-EXECUTIVE DIRECTORS Richard Huntingford Stephen Kirkpatrick Coline McConville Róisín Brennan Chairman Non-Executive Director Non-Executive Director Non-Executive Director Richard is a highly experienced executive in the media Stephen is an experienced banking and corporate Coline has extensive management, operational and Róisín has extensive experience advising sector and has extensive leadership expertise at plc finance professional with considerable experience international media expertise across a range of public companies on corporate finance in Ireland. board level as a Non-Executive Chairman and Director. across a broad range of commercial operations. commercial markets.
Appointment to the board: 2012 Appointment to the board: 2012 Appointment to the board: 2012 Appointment to the board: 2014 Age: 59 Age: 52 Age: 51 Age: 51 Chair of Nomination Committee Chair of Audit Committee External Appointments: External Appointments: External Appointments: External Appointments: Non-Executive Director, Travis Perkins plc (2015 – present) Non-Executive Director, Musgrave Group plc (2015 – present) Chairman (Non-Executive), Creston plc (2011 – 31 March 2016) Executive Director, Corbo Limited (2015 - present) Non-Executive Director, TUI AG (2014 – present) Non-Executive Director, Coillte Teo (2014 - present) Chairman (Non-Executive), Crown Place VCT plc (2012 – present) Chief Executive, Corbo Limited (2010 – 2015) Non-Executive Director, Fevertree Drinks PLC (2014 – present) Non-Executive Director, DCC plc (2005 - present) Non-Executive Director, JPMorgan Mid Cap Investment Trust plc (2013 Non-Executive Director, Mutual Energy Limited (2010 – present) Non-Executive Director, Inchcape plc (2014 – present) Previous Experience: – present) Previous Experience: Previous Experience: IBI Corporate Finance Ltd (1990 - 2011) - Various senior positions Chairman, Prince’s Trust Trading Limited (2010 – present) Member of the Governing Council of Chartered Accountants Ireland Non-Executive Director, Wembley National Stadium Ltd (2012 – 2015) including Chief Executive (2006 -2008) and Executive Chairman Governor, Radley College (2010 – present) (2009 – 2012) Media Advisor, Actis (2012 – 2014) (2008 - 2011) Previous Experience: Head of Retail Credit, Bank of Ireland Group (2009 – 2010) Non-Executive Director, TUI Travel plc (2011 – 2014) Non-Executive Director, The Irish Takeover Panel (2000 - 2001) Chairman, Boomerang Plus plc (2008 -2012) Chief Executive, Bank of Ireland Northern Ireland (2006 – 2009) Director, Shed Media plc (2009 – 2010) Qualifications: Executive Chairman, Virgin Radio (2007 – 2008) Regional Director, North and Midlands, Bank of Ireland (2004 – 2006) Director, HBOS plc (2000 – 2009) B.C.L. University College Dublin (1982 - 1985) Chief Executive Officer, Chrysalis Group plc (1987 – 2007) Senior Business and Corporate Banking roles, Bank of Ireland European Media Advisor, LBO Candidate, Apax Partners (2006 – 2007) Fellow of Chartered Accountants Ireland Non-Executive Director, Virgin Mobile Holdings (UK) plc (2005-2006) (1995 – 2004) Chief Executive, Europe, Clear Channel International Ltd (2002 – 2006) Chairman, Channel 3 News Limited (2001) Senior Corporate Banking Manager, Ulster Bank (1993 – 1995) Chief Operating Officer, Clear Channel International Ltd (1998 – 2002) Non-Executive Director, Radio Advertising Bureau (1996-1999) Corporate Finance Specialist, KPMG LLP (1985 – 1993) Group Development Director, More Group plc (1996 – 1998) Board level advisor, KPMG (1975 – 1987) Qualifications: Associate, Strategic Consulting, McKinsey & Co Ltd (1994 – 1996) Qualifications: B.A. (Hons) Business Studies, University of Ulster Associate, Strategic Consulting, The L.E.K. Partnership (1989 – 1992) Fellow of the Institute of Chartered Accountants England & Wales Fellow of Chartered Accountants Ireland Qualifications: M.B.A. (Baker Scholar), Harvard Business School B.A. (Hons) Jurisprudence, University of New South Wales Helen Kirkpatrick MBE Andy Anson B.A. (Hons) Laws, University of New South Wales 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: 57 Age: 51 Senior Independent Director and Chair of Remuneration Committee External Appointments: External Appointments: Chief Executive Officer, Kitbag Limited (2011 - present) Non-Executive Director, Kingspan Group PLC (2007 – present) Non-Executive Director, British Olympic Association (2011 - present) Director, United Dairy Farmers Limited (2014 – present) Previous Experience: Non-Executive Director, Dale Farm Limited (2014 – present) Chief Executive Officer, England 2018 (2009 - 2011) Audit Committee Member, (Co-Opted) Queens University Belfast (2014 Chief Executive Officer, Association of Tennis Professionals (ATP) – present) 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, California Director, Enterprise Equity Venture Capital Group (2000 - 2006) (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 B.A. Mathematics, Oxford University (1983 - 1986) Member of the Chartered Institute of Marketing
26 Report & Accounts 2015 Report & Accounts 2015 27 WIRELESS WIRELESS GROUP PLC GROUP PLC
Board of Directors Corporate Governance
EXECUTIVE DIRECTORS STATEMENT FROM THE CHAIRMAN
John McCann Norman McKeown Dear Shareholder, Group Chief Executive Group Finance Director On behalf of the Board, I am pleased to present Wireless Group plc’s Corporate Governance Report for 2015. The Board is committed to high John took over leadership of UTV in 1999 and is Norman is a highly experienced finance professional standards of governance and behaviour through building a corporate culture that champions responsibility, integrity and accountability in all business responsible for transforming the business into a with extensive expertise across a broad range of operations. dynamic media group. He is a highly experienced businesses at plc level. business leader with significant management The Board is responsible to its shareholders and other stakeholders for the leadership, direction and management of the Group within an effective experience across media and financial sectors. Appointment to the board: 2009 controlled framework, in order to deliver sustainable long term success for the Group. The Board has a formal schedule of matters specifically Age: 58 reserved to it for decision. This schedule channels the Board’s focus to matters of strategy, accountability, competitive performance and value Appointment to the board: 1992 Previous Experience: creation, balanced with determining the nature and extent of the risks that the Board considers appropriate in the implementation of its strategy. Age: 62 Managing Director, Sepha Ltd (2005-2008) Previous Experience: Finance Director, Sepha Ltd (2000-2005) This Corporate Governance report aims to express how our commitment to high standards of governance has been demonstrated throughout the Non-Executive Director, Danske Bank Ltd (2005 – 2014) Group Finance Director, Lamont Holdings plc (1997-2000) year by describing how the main principles of the UK Corporate Governance Code (the “Code”) have been applied. This is covered in the following Non-Executive Director, Business in the Community Northern Ireland Divisional Finance Director, Scottish & Newcastle plc and Bass PLC sections: (2010 – 2014) (1984-1997) • Board structure Council Member, Chartered Accountants Ireland (2010 – 2014) Qualifications: • Board responsibilities Director and General Manager, Ulster Television plc (1990 – 1999) B.Sc. (Econ) Queen’s University, Belfast • Approach to risk management and internal control Financial Controller/Company Secretary, Ulster Television plc Fellow of Chartered Accountants Ireland • Support for the Board (1983 – 1990) • Communications with shareholders Rescue Executive, Industrial Development Board for Northern Ireland • Audit Committee Report (1981-1983) MEMBERSHIP OF BOARD COMMITTEES • Nomination Committee Report Financial Appraisal Executive, Department of Commerce (1980-1981) Audit Committee Audit Function, Ernst & Young (1974 -1980) The Board confirms that the Annual Report and Accounts for 2015, taken as a whole, are fair, balanced and understandable and provide the Qualifications: Stephen Kirkpatrick (in the Chair) information necessary for shareholders to assess the performance, strategy and business model of the company. Helen Kirkpatrick B.Sc. (Econ) Queen’s University, Belfast Andy Anson Fellow of Chartered Accountants Ireland The Board considers that for the year ended 31 December 2015, it has complied with the provisions of the UK Corporate Governance Code 2014. Róisín Brennan In conclusion, I hope that this Corporate Governance Report provides shareholders with a good insight into how the Group operates to maintain its Scott Taunton Remuneration Committee high standards of governance, with responsibility, integrity and accountability at its core. Chief Operating Officer Helen Kirkpatrick (in the Chair) Richard Huntingford Scott is a highly experienced commercial professional Stephen Kirkpatrick Richard Huntingford with responsibility for generating revenue across Coline McConville Chairman Radio GB. 31 March 2016 Nomination Committee Appointment to the board: 2005 Richard Huntingford (in the Chair) Age: 45 Helen Kirkpatrick External Appointments: Stephen Kirkpatrick Director, The Digital Radio Group (London) Limited Coline McConville Director, First Radio Sales Limited Andy Anson Previous Experience: Róisín Brennan Managing Director, UTV Radio (GB) (2005 – 2014) Group Business Development Director, UTV Media plc (2002 - 2005) Managing Director, UTV Internet Ltd (2000 - 2002) General Manager, DNA Limited, (1995 - 2000)
28 Report & Accounts 2015 Report & Accounts 2015 29 WIRELESS WIRELESS GROUP PLC GROUP PLC
Corporate Governance Corporate Governance
Board structure Board responsibilities The Board is made up of three Executive Directors, including the Chief Executive, and six Non-Executive Directors, including the Chairman. The The Board has a formal schedule of matters specifically reserved to it for decision and this is available on the corporate website: Non-Executive Directors are considered independent in both judgement and character by the terms of the Code. The Non-Executive Directors www.wirelessgroupplc.com. The Board meetings are structured around these matters with an agenda that covers: have a particular responsibility for bringing objective challenge, judgement and scrutiny to all matters of the Board. They critically challenge • Strategy development and associated risks proposed strategies and current operational performance, and ask searching questions to satisfy their information requirements before Board • Updates on operational performance and financial impacts decisions are made. All Board members are subject to annual election at the Annual General Meeting in May 2016. • Functional updates for each of the businesses • Update on the significant risks on the Board-Corporate Risk Register Biographies of the Directors are contained within the section on the “Board of Directors” and these details demonstrate the range of different skills • Updates on the risk management system activities and fields of experience that each Director brings to the Board. In combination, this gives an appropriate balance, challenge and judgement on the • Updates from the Audit, Remuneration and Nomination Committees 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. Whilst strategy is a regular topic at all Board meetings, in October 2015, the members of the Board attended a strategy day concentrating on the Group’s strategic objectives into the medium-term. The heads of each business were asked to provide a detailed analysis of their business model During 2015 the roles of the Chairman and the Group Chief Executive were separately held and defined in writing, with a division of responsibilities and operational activities, expected future trends and to identify where opportunities and growth potential may lie in their business and in the wider between them. The Chairman is responsible for the leadership of the Board ensuring its effectiveness in setting strategy, giving clear direction and marketplace. This approach built upon a similar process undertaken in the previous year to inform the Board of the proposed strategic direction leading on the Board agenda. The management of the Group is the responsibility of the Group Chief Executive who is in charge of running the at Divisional level, and to critically but constructively challenge the business model, in order to identify and continue to refine the strategic priorities businesses and achieving targeted performance through the delivery of the overall Board strategy. and objectives, as detailed in the Strategic Report.
At Board level, the Group Chief Executive is supported by two Executive Board Directors, being the Chief Operating Officer and the Group Finance Board effectiveness evaluation Director. The Group Chief Executive has established a Senior Management Team which is termed the Policy Group Team, which is made up of five The Chairman ensures that there is a formal and rigorous annual evaluation of the Board’s own performance, its Committees and of individual senior management executives (six throughout 2015). This Team has particular responsibility for the operational delivery of the Group’s strategic Directors. An internal evaluation was carried out in January 2016 to assess the performance of the Board during 2015 and this confirmed that the priorities and objectives, for the systems of internal control, and for risk management. Board and its Committees continued to have the correct balance of skills, experience and knowledge of the company, independence and diversity to operate effectively, as well as the assessment confirming that each Director continued to contribute effectively, demonstrating commitment to Following the announcement of the disposal of the Television business and of John McCann’s proposed retirement in May 2016, the Board having their role. It confirmed that the Board works well as a team whilst maintaining a strong level of independent judgement, that Board members trust considered the appropriate board structure and composition, requested that the Chairman assume the role of Executive Chairman of the Wireless and respect each other and that both Board and Committee business gets carried out efficiently and effectively. Group. In that regard, the Board (excluding the Chairman and led by the Senior Independent Director, Helen Kirkpatrick) considered that the role of Executive Chairman was appropriate given the size of the resulting Group, the existing management expertise and the Chairman’s experience Led by the Senior Independent Director, the Non-Executive Directors, evaluated the performance of the Chairman, and they confirmed that the in the radio business. Chairman had led the Board in a committed, focused and highly effective manner throughout the year.
The full Board met 11 times during 2015 at various Business Division locations across UK and Ireland, with attendance as follows: The last externally-facilitated evaluation review of the Board was undertaken for 2013 and the next external review is planned for 2016.
Approach to risk management and internal controls Board Members Attendance The Board has overall responsibility for the risk management and internal controls systems operating across the Group, and the Board is assisted Richard Huntingford 11/11 in their responsibilities by the work of the Audit Committee, and reliance on the Senior Management Team’s activities. Helen Kirkpatrick 11/11 Based upon the work undertaken during the year, the Board is satisfied that the Group complies with the Code provisions relating to risk Stephen Kirkpatrick 11/11 management and internal controls systems. Andy Anson 10/11 The Board has reached this conclusion based upon the ongoing activities sponsored by the Audit Committee, which have enabled the Board to Coline McConville 11/11 successfully deliver the following: Róisín Brennan 11/11 1. Identifying and robustly assessing the most significant risks that could adversely impact the successful achievement of the Group’s objectives and its continuing operations. John McCann 11/11 2. Monitoring the quality of the risk control responses and mitigation actions that have been established by the Senior Management Team to Scott Taunton 11/11 address these risks. 3. Assessing the potential impacts that the realisation of any of the principal risks could have on the viability of the Group over a three-year time Norman McKeown 11/11 frame. 4. Evaluating the effectiveness of the risk management framework and the processes for monitoring, updating and reporting on risks at the Business Divisions and those risks identified at the Board-Corporate level, by the Senior Management Team. The work of the Board is supported by three Committees who provide specialist assistance and have particular defined responsibilities. Board-Corporate level Audit Committee Nomination Committee Remuneration Committee The Board is responsible for identifying the major risks faced by the Group. It monitors these using a structured approach in the format of a Board- Corporate risk register which is colour-coded to prioritise the most significant risks for ongoing Board attention throughout the year. • Reviewing financial judgements and • Composition of the Board and • Framework for the Remuneration reporting Committees Policy The risk management approach has been designed to identify the risks using both a bottom-up and top-down approach, ensuring that the major • Monitoring the effectiveness of internal • Diversity on the Board • Remuneration package for Executive risks identified at the Business Divisions are considered for inclusion on the risk register, in addition to Group-wide risks and those risks of a control • Succession planning Directors and the Senior Management corporate nature covering strategy, markets and financial performance. • Monitoring the effectiveness of the risk • Induction process for new Directors Team management framework • Continuing professional development of • Target setting for performance related Towards the end of the financial year, the Board, assisted by the Audit Committee, has carried out a full review and robust assessment of the • Reviewing the relationship and the Directors remuneration schemes significant risks and mitigating actions. It has determined which of the risks are considered as being the principal risks to the Group, and hence performance of the Auditors • Design of share incentive plans have been subject to the viability testing exercise. Both the principal risks and the viability assessment are described in detail in the Strategic Review section of the Annual Report. See the Audit Committee Report See the Nomination Committee Report See the Remuneration Committee Report
30 Report & Accounts 2015 Report & Accounts 2015 31 WIRELESS WIRELESS GROUP PLC GROUP PLC
Corporate Governance Corporate Governance
Through the course of the year, the Board will use the Board-Corporate risk register as the platform to actively monitor the significant risks to the Communications with Shareholders Group. Such monitoring will include the provision of information and reports on specific risks areas as requested by the Board, which will be Communications with shareholders are given high priority and major shareholders have the opportunity to consult with the Chairman and the prepared by the Senior Management Team. Additionally, much reliance will be placed on the ongoing dialogue, both formal and informal, between Chair of the Remuneration Committee, who is also the Senior Independent Director. The Chairman ensures that the views of shareholders are the Chief Executive, the Chairman and the Chair of the Audit Committee, on the status and potential impact of the most significant risks on the fully communicated to the Board as a whole to promote a shared understanding of shareholder expectations. Group’s performance in the current environment. The Executive Directors provide regular presentations to shareholders, fund managers and analysts for the interim and final results. They also Business Division level provide strategy update briefings to promote open dialogue with investors and attend investor conferences. Further details of the presentations Whilst the Board is responsible for identifying the major risks faced by the Group at the Corporate-level, the Divisional Teams are responsible for and briefings to shareholders are contained on the corporate website: www.wirelessgroupplc.com. identifying the risks in each Business Division and determining the appropriate risk control responses required to manage, monitor and mitigate the identified risks, on a continuous basis throughout the year. The work of the Divisional Teams is both directed and overseen by the Senior The Board uses the Annual General Meeting, which is attended by all Directors, to communicate with private shareholders and institutional investors Management Team. 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 Towards the end of the year, each Business Division has undertaken a comprehensive risk assessment exercise to verify the most significant risks 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 prevalent in their business model and to identify any new risks that may have arisen. As this exercise is aligned with their business model it considers 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 strategic, operational, technical, infrastructure, financial and project risks. The impact and probability for the risks have been determined through to attend the meeting can vote online, by post or by returning a form of proxy. For proxy votes on each resolution, these are declared at the Annual scoring the risk both before and after controls have been applied. The outcome of the exercise is an updated risk register listing which uses a General Meeting after the vote from the shareholders present. All resolutions at the Annual General Meeting held in May 2015 had a significant colour-coded system to prioritise the focus of attention for the Divisions to their most significant risks. The Business Divisions are expected to use percentage “for” vote. their risk register listings as the platform for ongoing monitoring of their risk management activities throughout 2016. The Senior Independent Director, Helen Kirkpatrick, acts as a sounding board for the Chairman and serves as an intermediary for the other Effectiveness of the risk management system Directors. She is also available to shareholders for concerns which cannot be resolved by contact with the Chairman, the Group Chief Executive or The Senior Management Team carry out a quarterly oversight review of the risk processes operated at the Business Divisions which involves other Directors, or for which such contact may not be appropriate. monitoring the current status of their highest priority risks. Subsequent to each quarterly review, a report is prepared for the Board that is included as an agenda item at the next Board meeting. The information in this report enables the Board to evaluate the effectiveness of the risk management systems, processes and monitoring requirements, operating across all the Group’s businesses on an ongoing basis.
Principal risks and the viability assessment On behalf of the Board, the Audit Committee has reviewed the results of the detailed assessment exercise completed by the Finance Team relating to the prospects of the Group over a three-year forward period, taking account of the Group’s current position and principal risks.
The results of the assessment exercise have been subject to detailed scrutiny and challenge by the Audit Committee which considered the relevance of the assumptions that had been made, the quantification of the impacts on financial performance based upon alternative scenarios of the principal risks occurring and various stress-testing applications, all of which have been modelled over the three-year timeframe.
Based upon the review and evaluation work undertaken by the Audit Committee, the Chair of the Committee has been able to advise the Board of their assessment, and this supports the Board’s position with regards to the viability assessment of the Group over the three-year period. A detailed description of the work undertaken to support the viability statement is included in the Strategic Review section of the Annual Report.
Support for the Board All new Directors have a full induction programme and there is an ongoing performance development programme. 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 no plans to change the secretarial arrangements but this will be kept under review.
To enable the Board to discharge its duties, 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 the Senior Management Team’s performance against agreed objectives. Briefing papers are distributed by the Company Secretary to all Directors in advance of Board meetings.
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.
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.
32 Report & Accounts 2015 Report & Accounts 2015 33 WIRELESS WIRELESS GROUP PLC GROUP PLC
Corporate Governance Corporate Governance
AUDIT COMMITTEE REPORT The Audit Committee in action The members of the Audit Committee are all independent Non-Executive Directors. Stephen Kirkpatrick, Helen Kirkpatrick and Róisín Brennan Dear Shareholder, are qualified accountants and have recent and relevant financial experience and Andy Anson has broad commercial experience. The members of the Committee and their attendance at the meetings are as follows: On behalf of the members of the Audit Committee, I present the Audit Committee Report for 2015 detailing how the Committee has complied with the various provisions of the UK Corporate Governance Code 2014 (the “Code”). The report comprises sections covering: Audit Committee Attendance • The Audit Committee in action Stephen Kirkpatrick (Chair) 4/4 • The focus of our attention in 2015 - Matters related to financial judgements and reporting Andy Anson 3/4 - Matters related to internal controls, risks and risk management systems Róisín Brennan 4/4 - Matters related to the review of the Annual Report • Our relationship with the Auditors Helen Kirkpatrick 4/4
The Audit Committee, in serving the Board, has four core aims which guide its activities: 1. To monitor the integrity of financial information, financial reporting and disclosure The Chair of the Committee invites the Board members, the Internal Auditor and the External Auditor to attend the meetings. The Chair also meets 2. To determine the effectiveness of the internal controls systems established by Management, and compliance therewith with the Group Finance team, the Group Chief Executive, the Internal Auditor and the External Auditor, throughout the year in order to keep updated 3. To review the quality and effectiveness of the risk management systems established and operated by Management on all issues pertinent to the Audit Committee activities that are covered over the annual cycle. 4. To review the relationship and performance of the Auditors The Audit Committee is responsible for reviewing a wide range of matters including: Through these activities, the Audit Committee assists the Board in implementing its strategic objectives in an effective risk-managed environment, • Monitoring the integrity of the Group’s financial statements, disclosure and announcements relating to financial performance and ensuring that there is appropriate reporting and disclosures relating to the financial performance of the Group. • Determining the acceptability of accounting policies and practices • Reviewing and reporting to the Board on significant financial reporting judgements relating to the financial statements For assessing financial reporting, the Audit Committee members are significantly engaged with the Group Finance team and the External Auditors • Providing advice on whether the Annual Report and Accounts is fair, balanced and understandable in reviewing significant financial reporting judgements that have been made, determining the acceptability of accounting policies and practices, • Keeping under review the effectiveness of the internal control and risk management systems operated by Management and hence challenging the robustness of key assumptions in order to assess the integrity of the Group’s financial statements. • 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 For assessing the effectiveness of controls and the risk-managed environment, the Audit Committee seeks assurance from the Senior Management appointment and remuneration of the External Auditor Team that there is a sufficiently robust internal controls and risk management system in place to support the delivery of the Board’s strategy in line • Reviewing the whistleblowing arrangements by which employees may confidentially raise concerns about possible improprieties with the expectations of shareholders. Additionally, it relies upon the independent work of Internal Audit to review the effectiveness of Management’s arrangements and approach. The Chair of the Audit Committee provides the Board with a briefing and minutes on the activities of the Committee and its meetings.
Demonstrating the work we have undertaken during the year, we have included detail about the key issues and challenges that the Audit Committee For more information on the Audit Committee activities, its full terms of reference can be accessed on the corporate website: faced throughout an eventful year. We have provided an outline of how these issues were approached, the particular work needed to address such www.wirelessgroupplc.com. issues and the conclusions drawn. Matters related to financial judgements and reporting Finally, I am pleased to note that the developments made in the Group’s risk management framework have established a strong platform to The significant areas of judgement considered by the Committee relating to the accounts for the year ended 31 December 2015 and how these demonstrate our compliance with the requirements of the UK Corporate Governance Code 2014 and the guidance issued by the FRC “Guidance were addressed, are outlined below. Each of these areas received due focus from the External Auditor who provided detailed analysis and assessment on Risk Management, Internal Control and Related Financial and Business Reporting.” There is a detailed description of the risk management of the matters in their report to the Committee. activities in the year and the processes that have been followed in the Corporate Governance section. • Intangible asset impairment review I believe that this Audit Committee report ably demonstrates the work of the Audit Committee in 2015 and hope that this report will be viewed as The Committee considered the carrying value of the intangible assets in the 2015 financial statements through reviewing the methodology informative and useful for shareholders. 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 Stephen Kirkpatrick different discount rates used for UK and ROI business, and reviewed the robustness of sensitivity calculations. The Committee concluded the Chairman of the Audit Committee intangible assets were not impaired. 31 March 2016 • Revenue recognition The Committee reviewed 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 over the contract period would be recognised. Assurance was sought from management that the structure and terms were robustly supported by third-party agreements.
• Disposal of the Television business The presentation and disclosure of the activities, assets and liabilities of this discontinued business was considered by the Committee. This included reviewing the appropriateness of the carrying value of the disposal group, assessing the impact of the disposal on the primary statements and supporting notes as well reviewing the discussion of the disposal in the Chairman’s Statement and Strategic Report. The Committee concluded that sufficient appropriate disclosure relating to the disposal of this business has been made throughout the financial statements.
34 Report & Accounts 2015 Report & Accounts 2015 35 WIRELESS WIRELESS GROUP PLC GROUP PLC
Corporate Governance Corporate Governance
Matters related to internal control, risks and risk management systems Matters related to the review of the Annual Report
Design of the control environment and control systems Recognising the role and position of the Audit Committee in the governance structure, the Board asked the Committee to assist with the Code The Board has overall responsibility for the Group’s systems of internal control and it delegates the design of the systems to ensure the ongoing provision relating to the Annual Report and Accounts for 2015, taken as a whole, being fair, balanced and understandable. effectiveness of their operation to the Senior Management Team. The control systems are designed to manage rather than eliminate risk and thus such systems can only provide reasonable and not absolute assurance against material misstatement and loss. The co-ordination of input into the Annual Report is a Group-wide project, with guidance provided to the Business Divisions and support functions relating to their required contributions to the report. The Executive Team ensures that there is a robust verification process in respect of the factual The Board considers that the control framework established by the Senior Management Team is effective to manage and deliver the Group’s context of the submissions made and provide for reviews to be undertaken on an ongoing basis that are managed within time frames that coincide objectives. The key elements of the control framework that operated over the period covered by the financial statements, and up to the date of with the year-end audit processes undertaken by the External Auditor. signing the accounts, included: • Business planning and budget process - There is a comprehensive business planning and budget process, supported by regular financial and All key sections of the Annual Report, including all the statements made, are subject to a formal sign-off process by owners of each section. The operational reviews of the Business Divisions which monitor the key performance metrics enabling responsive action to be taken to address Audit Committee works closely with the Executive Team, and with other key staff in the Group, with the aim of ensuring consistency, clarity and variances that may arise. overall balance of the Annual Report. • Devolved management structure - The design of a devolved management structure with the delegation of authority and responsibility for The Audit Committee can confirm to the Board that based on their review, that the Annual Report 2015 is fair, balanced and understandable. 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 Our relationship with the Auditors 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. The Audit Committee invests significant time and attention throughout the year in evaluating the work of both the External and Internal Auditors, • Control environment reviews - The network of control systems overseen by the Senior Management Team and operated in each Business as these Auditors provide a valued and independent source of assistance to the Committee. The Audit Committee meets with both the External Division makes up the control environment for the Group, and each Divisional Team is expected to monitor its control systems carefully. and Internal Auditors without Management being present at various times during the year. Internal Audit review aspects of the control environment in the Business Divisions to provide an independent assessment of the strength of the reviewed systems and indicate where enhancements and changes are required. All significant control weaknesses are reported to the Internal Audit services Audit Committee. 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 Internal controls the Internal Audit plan and considered the findings and recommendations of the Internal Audit reports and the proposed actions to be taken by In addition to the review of internal financial controls, a key duty for the Audit Committee is to review the Group’s wider operational processes and Management to implement recommendations. The Committee actively monitored the progress made by Management in this respect by requiring activities, and the embedded internal operational controls in terms of managing the risks identified in these processes and activities. The Audit formal updates on progress on a quarterly basis. The Committee reviewed the effectiveness and performance of the Internal Audit function and Committee utilises the Internal Audit resource to assist them in their review responsibilities. Accordingly, the Audit Committee guides the remit of are satisfied with the performance, their independence and objectivity. the activities to be undertaken by Internal Audit during the year, with regards to the specific reviews of the internal controls systems to be undertaken. Areas for review are identified on the basis that they are significant for both risk mitigation purposes and for operational performance assurance, Audit firm tenure and appointment and thus the type of reviews undertaken continue to be reflective of the risk profile of the Group. The Group’s External Auditors are EY 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. EY has been involved with auditing the Group’s affairs for over 50 years and Additionally, the Audit Committee may request Management to provide them with specific commissioned reports relating to their internal controls there are no contractual restrictions on the Group with regards to their appointment. systems operating in their Business Divisions, outlining their view of the current effectiveness in managing the risks associated with such business activities and processes. 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 EY as part of Based upon the various reports received during the year and in-depth discussions and analysis, the Audit Committee do not consider that there conducting its review of the performance and effectiveness of the External Auditor. The review included assessing the scope, extent and effectiveness are any fundamental control issues of direction of the Auditor’s work, discussion of the Auditor’s judgements and quality of challenge in their audit process, reporting and disclosure. The Committee agreed the remuneration for audit services, the nature of any non-audit work undertaken and fee level, the independence of the Risk management systems current engagement team and the independence of their firm as a whole. Based on the Committee’s assessment, the members of the Audit The Board is responsible for complying with the Code requirements, relating to the following: Committee are satisfied with the performance of EY, their independence and objectivity. • The robust assessment of significant risks • The assessment of the mitigation and control responses established As has been Committee practice each year, the Audit Committee will continue to formally consider if there is a need to tender for its audit services • The assessment of the Group’s viability position in relation to the principal risks due to audit quality or independence reasons, and will make recommendations as appropriate. As there have been no such reasons raised, a • The review and assessment of the effectiveness of the risk management systems in operation resolution will therefore be put to shareholders at the AGM in May 2016 to reappoint EY as Auditors for a further year.
The Audit Committee have significant involvement in all of these aspects and activities and accordingly provide valuable assistance and guidance The tenure of our current audit firm is over 20 years and the Audit Committee recognises that a full tender exercise will need to be undertaken for to the Board to fulfil their assessment duties. the appointment of the auditors for its financial statements 2020, at the latest.
There is a detailed description of the risk management activities in the year, the processes followed and the outcomes delivered including the Audit and non-audit services viability assessment, in the Corporate Governance section. This section also outlines the respective involvements of the Senior Management Team, To ensure that the Auditor’s independence and objectivity is preserved in relation to its statutory auditing requirements, the Audit Committee has the Audit Committee and the Board members in operating an effective risk management system. 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 Whistleblowing processes 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 The Audit Committee has reviewed the whistleblowing arrangements by which employees may confidentially raise concerns about possible External Auditors and lists the types of work that are allowable and those which are prohibited. The policy covers factors such as tiered approval improprieties and considers them appropriate. The Chair of the Audit Committee can confirm that there have been no whistleblowing instances in 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 2015. in note 6 of the Notes to the Group Financial Statements and the policy is available on the corporate website: www.wirelessgroupplc.com.
36 Report & Accounts 2015 Report & Accounts 2015 37 WIRELESS WIRELESS GROUP PLC GROUP PLC
Corporate Governance Corporate Governance
In 2015, EY were engaged to provide transactional services and advice for the sale of one of the ILR stations in the GB Radio Division and the sale NOMINATION COMMITTEE REPORT of the Television business. The engagement of EY for these services was made only after considerable deliberation by the Audit Committee members which concluded that EY were best placed to advise on the transactional arrangements due to their breadth of understanding of the Group’s Dear Shareholder, businesses over many years, and accordingly the engagement would be in the best interests of the shareholders. On behalf of the Nomination Committee members, I present the Nomination Committee Report for 2015. The report comprises two sections: Acknowledging that the engagement would result in substantial non-audit service fees being incurred with EY, the Committee required a robust • The role of the Nomination Committee framework to be established that ensured that the independence and objectivity of the audit services would not be compromised by such a non- • The focus of our attention in 2015 audit services engagement. This framework delivered a comprehensive separation between the EY partners and team advising on transactional issues and the partners and team who undertake the audit services. Additionally, the Audit Committee pre-approved all advisory services and The members of the Committee and their attendance at the meetings are as follows: associated fees prior to commencement. This framework has assured and satisfied the Audit Committee that the transactional services provided by EY have not conflicted with the External Auditor role or impaired their independence and objectivity. Nomination Committee Attendance
Richard Huntingford (Chair) 3/3 Andy Anson 3/3 Róisín Brennan 3/3 Helen Kirkpatrick 3/3 Stephen Kirkpatrick 3/3 Coline McConville 3/3
Richard Huntingford Chairman of the Nomination Committee 31 March 2016
38 Report & Accounts 2015 Report & Accounts 2015 39 WIRELESS WIRELESS GROUP PLC GROUP PLC
Corporate Governance Corporate Social Responsibility
The role of the Nomination Committee
The Nomination Committee is responsible for the following: John McCann, Group Chief Executive, Wireless Group plc: • Reviewing the size, composition and diversity of the Board in terms of satisfying the principles of the UK Corporate Governance Code (the “The Group’s Corporate Social Responsibility mandate is an integral piece of our business “Code”) • Reviewing the specialist skills of the current Board members and allocating Committee responsibilities to the most suitable Board members strategy, interlinking all that we do to engage, support and respect not only the society and • Identifying the key skills required of individual Directors and for future appointments to the Board when vacancies arise • Considering tenure issues and succession planning environment within which the Group operates, but with those we come in contact with as • Conducting search procedures for proposed candidates for the Board • Overseeing the induction process for new Directors employees and within the wider community.” • Overseeing the continuing professional development and training of the Directors
The Chair of the Nomination Committee provides the Board with a briefing and minutes on the activities of the Committee and its meetings. The Group’s Corporate Social Responsibility activities demonstrate the ethical values the company upholds, fundamentally underpinning all Group For more information on the Nomination Committee activities, its full terms of reference can be accessed on the corporate website: operations and reinforcing stakeholder pride and loyalty in what the business does. As a Board level responsibility, Corporate Social Responsibility www.wirelessgroupplc.com. is actively discussed as part of the Board’s assessment of the moral integrity of the Group.
The focus of our attention in 2015 The Group’s Corporate Social Responsibility focus is in the following areas: • Ethical considerations and behaviour Board composition • Our people The Nomination Committee continued to review the composition of the Board to ensure that it contains the appropriate mix of specialist skills and • Community experience to allow it to discharge its responsibilities. • Society The Board comprises three Executive Directors and six Non-Executive Directors, all of whom are deemed as being independent per the Code • Suppliers provisions. In terms of diversity of the Board with respect to gender, three of the six Non-Executive Directors are women and this represents 33% • Environment of the total number of Board members.
The Board acknowledges that diversity relates to the entire Group and not just the Boardroom, hence the Board is strongly supportive of the Ethical Considerations and Behaviour Management Team’s objective of attracting a highly skilled, diverse workforce reflective of society, and that attraction and recruitment is in a manner that is fair and non-discriminatory. 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 The Nomination Committee also considered the composition of the three Committees and concluded that the mix and skills of the members of agreements and arrangements. each Committee were appropriately matched. Accordingly, as appropriate ethical behaviour is a Board priority, ethics are awarded high prominence across all business operations and staff are Succession planning expected to act responsibly, meeting legal and regulatory requirements in their dealings with fellow colleagues, suppliers, agents, partners and The principal focus for the Nomination Committee throughout 2015 continued to be succession planning arrangements for members of the senior customers. Executive Team and the Board. To ensure staff understand their ethical responsibilities, the Board has established a Code of Conduct which is issued to all staff on their initial Particular attention was given to the impact of the proposed sale of the Group’s Television business on the future composition of the Board and the engagement with the Group’s businesses clearly stating the principles of behaviour and conduct expected and what would be considered senior Executive team. Accordingly, the Committee was focused on ensuring that the Group would have the appropriate level and blend of executive unacceptable. management and Board resource for the reduced scale and scope of the Group’s operations once the sale of the Television business had been completed. 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, (iii) Gifts Performance evaluation and Hospitality, and (iv) Labour Standards. The Chairman ensures that there is a formal and rigorous annual evaluation of the Board’s own performance, its Committees and of individual Directors. An internal evaluation was carried out in January 2016 to assess the performance of the Board during 2015. Details of the evaluation are To further enforce the zero-tolerance to any unethical behaviour, there is a robust whistleblowing procedure in place to allow staff to report potential included in the Corporate Governance section. concerns in confidence.
To further support the Director’s performance and development, the Chairman ensures that each Director receives training that is tailored to the The following documents relating to conduct, policy and procedures can be accessed on the corporate responsibility section of the corporate individual. Directors have continued to attend briefing sessions provided by various professional and industry bodies and there have been continued website, www.wirelessgroupplc.com visits to the various Business Division locations across UK and Ireland. 1. Business Code of Conduct The last externally-facilitated evaluation review of the Board was undertaken for 2013 and the next external review is planned for 2016. 2. Anti-bribery and corruption policy 3. Anti-fraud policy 4. Hospitality and gifts policy 5. Whistleblowing procedures 6. Labour standards policy
40 Report & Accounts 2015 Report & Accounts 2015 41 WIRELESS WIRELESS GROUP PLC GROUP PLC
Corporate Social Responsibility Corporate Social Responsibility
The Group has provided 294 work placements in 2015. Such an initiative provides individuals with an insight into the industry and helps them gain Our People an understanding and an appreciation of the world of work. The Group believes that the performance of its people is a key driver of its growth and success. The Group believes that everyone learns throughout The Group recognises that central to its success is the recruitment, retention, development and motivation of its staff, contractors and freelancers. their career and it provides development opportunities at every level of the business. Not only does the Group want to attract the most talented people but it wants to enable people to achieve their best and want to develop their career within the business. Therefore ensuring our culture, The Group strives to achieve a supportive and inclusive work environment which promotes wellbeing and welfare, equality, respect and human working environment and processes are inclusive is also a priority. This is supported through the Group’s Training and Development Policy. 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 Performance, Reward and Recognition at Work, Social Media and Business Conduct. Managers and staff are updated and trained with regard to the content of these policies and have The Group’s culture is founded on the principle that everyone can make a difference and should strive to achieve continuous improvement. The support from the Human Resources department in implementing these policies. Group seeks to ensure that staff are provided with regular feedback on their performance in their respective roles in probationary and other performance review meetings. Wellbeing and Welfare The Group offers access to a 24/7 confidential and independent counselling service and an occupational health service. Such initiatives are supported The Group values its employees and by recognising their commitment it also builds engagement. It is critical that the Group’s reward strategy by health and safety measures, including display screen equipment assessments, safe driving training and media safety training. supports its 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 Equality, diversity and respect business offers appropriate reward, recognising the commitment and contribution of staff. Ensuring employee rewards and benefits remain market The Group is committed to championing diversity throughout our business. The Group acknowledges that it is better placed for success as a competitive is paramount. business when there is a balanced and diverse workforce including the most talented people regardless of gender or ethnicity. The Group is committed to maintaining a culture where everyone has the opportunity to deliver their full potential. Attractive remuneration packages are offered, including both financial and non-financial benefits. Flexible working arrangements are supported where appropriate, subject to business needs and operational requirements. The Group is a member of Employers for Childcare and offers a salary The Group is committed to providing equality of opportunity, dignity and respect to all employees, freelancers, contractors and job applicants. All sacrifice childcare voucher scheme. Staff also have the opportunity to join a Share Incentive Plan. The Group is committed to the Living Wage for employees and job applicants are treated fairly in selection for employment, promotion and training, with assessment being based on an individual’s all staff, other than those on formalised training programmes. aptitude and ability irrespective of gender, marital/family status, religious belief, political opinion, disability, age, nationality, race, ethnic origin, sexual orientation or membership of the travelling community. The Group’s policies ensure that it attracts a diverse pool of applicants and this is Communication, Consultation and Participation with Staff monitored on an ongoing basis. The aim of these policies is to ensure that all employees and potential employees are treated in a fair and equitable The Group is committed to an open culture and collaborative working with staff. The Group seeks both formal and informal feedback and maintains manner. Staff members who have a disability are supported fully in the work environment and have equal access to training and career development an open and participative approach to ensure a shared understanding of the company’s objectives and how staff can support these objectives. A opportunities. All appointments will continue to be based on merit measured against objective criteria and the skills and experience the individual staff representative committee involving senior management, staff and union representatives meets to consult and discuss key strategic and offers. operational issues.
Contractors and freelancers are crucial to the business and this is an area of recruitment and development that the business is dedicated to Regular management meetings take place with briefings to staff on Company performance, key developments and challenges for the business. investing in. The Group engages people with a wide range of skills on a variety of different working arrangements to meet its changing needs and The Group engages and consults with staff through joint working groups involving staff and senior management in areas such as health and safety, variable workforce requirements. environment, information technology, operations and sports/social activities. This communication flow is also supported via internal communications and face to face briefings. The Group believes it is important to encourage the understanding of diversity amongst its staff and appropriate training is provided to ensure respectful behaviour. The Group’s Code of Business Conduct sets out our business principles and what the Company expects from employees to Health and Safety ensure they conduct themselves appropriately and protect themselves as well as the Company’s reputation and assets. The policy covers conduct 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 towards employees (including the Whistle Blowing Policy), suppliers, customers, business partners (including bribery and corruption), shareholders undertakings ensuring that it meets all statutory requirements and, where appropriate, strives to establish health and safety practices that exceed and funders, and conduct in the community. these requirements across all of its operations.
The importance and contribution of diversity in the workplace is recognised with appropriate training provided to ensure respectful behaviour, The Group is committed to compliance with all workplace Health and Safety laws and regulations, to provide a safe and healthy working environment. including Dignity at Work training and appointing Equality Advisors in the Group. Breaches of the Equal Opportunities and Dignity at Work policies The Group has policies, guidance and working practices in place for effectively controlling hazards. Staff complete bespoke training and monitoring will be dealt with via the Group’s Disciplinary policy. systems enable the Group to learn and continuously improve.
Gender breakdown chart at 31 December 2015 The Group retains the services of an external health and safety consultancy to ensure that it remains compliant with legislation and to provide Male Female Total regular and relevant training to management and staff in each operational location. The engaged consultant carries out annual health and safety Board 63 9 audits, fire risk assessments and local ad hoc inspections in all of its premises providing a detailed report which enables corrective and preventative Senior management 40 15 55 measures to be put in place as necessary. Employees 495 415 910 541 433 974 All employees receive general health and safety awareness training, digital screen equipment 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 Learning and Development staff. All work for the statutory maintenance and inspection of mechanical, electrical and safety equipment is carried out by fully accredited specialist Through a mix of approaches including formal training, on the job experience, online and coaching, the Group ensures that staff have the appropriate contractors or staff members who have been specifically trained for the job. skills, experience, knowledge, competence and confidence to carry out their roles. The Group continues to foster close relationships with a broad network of colleges, universities and external agencies to support the development of future talent to the industry and to support future resourcing The Group has a well-established health and safety committee which meets on a monthly basis and has Group-wide representation. All accidents, requirements, business needs and operational requirements. incidents, near misses and other related topics are reported enabling performance to be monitored and responsive action taken if needed.
Across 2015 development areas addressed included management development, editorial and production training, engineering and operations, The Group continues to strengthen and formalise the governance structure for the coordinated management of health and safety with standardised health and safety, dignity at work, and a range of professional IT, Finance, HR and Compliance programmes/updates. In addition vacancies across documentation and reporting procedures in place, providing documentary evidence to support an annual assurance assessment report for the the Group are advertised internally to encourage people to develop their careers, either through promotion or a change of role. Supporting and Board. developing the leadership capabilities of new and potential managers is important to the business, both in terms of their current roles and succession planning.
42 Report & Accounts 2015 Report & Accounts 2015 43 WIRELESS WIRELESS GROUP PLC GROUP PLC Corporate Social Responsibility Corporate Social Responsibility
The Health and Safety incidents for 2015 are summarised in the following table: Employee Engagement and Fundraising Staff are encouraged to participate in and support fundraising and awareness initiatives on behalf of a range of charitable organisations. Some 2015 examples include: Total Number of Accidents Reported 2015 2014 • Radio GB local radio stations raised more than £520,000 for charities in its various regions in 2015. The Pulse in Bradford helped to raise £100,000 for Kirklees Hospice; Swansea Sound and The Wave raised £50,000 in its ‘Cash For Kids’ Appeal; The Wave in Blackpool raised £25,000 for the Impact of Accident RNLI, Blackpool Carer Centre and disabled local children; Signal 107 raised £90,000 for its local hospice, breast cancer charities and other local Number of Fatalities 0 0 deserving causes; Peak FM helped Ashgate Hospice raise over £150,000 for its Sparkle Walk and Signal Radio raised over £70,000 for Douglas Number of Serious Incidents 0 2 Macmillan Hospice as well as sending 15,000 Christmas shoe boxes via the Samaritans to children across Eastern Europe and Africa. Number of Minor Incidents 15 11 • Radio Ireland staff fundraising events ranged from a 100km cycle to coffee mornings being organised, with great success as well as a number of charitable donations many of which involved staff participating including a Radio Ireland team taking part in the Carathon charity match in aid Those Involved in the Accident of Pieta House and participation in the PHD Big Hug event. Accidents to Staff 14 11 Accidents to Public 0 2 • UTV personnel organised three charity coffee mornings in company headquarters raising funds for Action Cancer, the SHARE Village in Belfast Accidents to Contractors/Other 3rd Parties 1 0 which provides activity breaks for disabled children and Text Santa. A staff team also took part in the ‘Care Shops Challenge’. Teams across Northern Ireland went head-to-head to run an Action Cancer charity shop for one day with the aim of raising the highest total of funds. Causes of Accidents For months leading up to the challenge employees across Tibus, Simply Zesty, UTV and U105 donated their unwanted items to stock the shop. Slips, Trips and Falls 6 8 • Every Christmas UTV staff organise a ‘Giving Tree’ in the reception area where staff purchase and donate presents for local children in need. Lifting and Carrying 1 0 Hit by Objects 3 3 • The Group operates a ‘Give as You Earn’ scheme facilitating employees to give to a chosen charity directly via payroll. Other 5 2 Totals 15 13 CASE STUDY The 8th annual Cork’s 96FM Giving for Living Radiothon took place across three days in May 2015. 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 Radiothon was set up by Cork’s 96FM and Mercy University Hospital’s fundraising foundation in 2008. Since then, Giving for Living Radiothon has stakeholders such as suppliers. The Group considers its commitment to responsible and ethical trading with suppliers and policies on staff grown into one of the biggest – if not the biggest – radio station fundraising appeal in Ireland. It has raised in excess of €3.5million to date and development and well-being to be adequate and appropriate to address human rights issues given the nature of the Group’s operations. The has been recognised at the Irish Fundraising Awards. Group’s Labour Standards policy sets out its commitment with regard to human rights issues. Today, the station works with five local charity partners who all provide support to Cancer patients and their families. These are Mercy Hospital Community Foundation, CUH Charity, Breakthrough Cancer Research, Arc House and Marymount University Hospice. The event in 2015 alone raised an impressive €380,000. The Group plays an active role in the local communities where it operates. All the Divisions across the Group support the fundraising efforts of Station staff voluntarily give up time to work on Radiothon each year. Programming staff are heavily involved in pre-recording and editing charities and community initiatives in their areas, helping to raise significant revenue during the year for a range of vital local projects. interviews in the months leading up to the event. During the three days, the entire primetime programme schedule is broadcast from an outside Wireless Group plc is an active member of Business in the Community (BITC). The Group fully embraces the BITC’s membership strategy of being location at the Mercy University Hospital. Remote teams based at Cork University Hospital and Marymount Hospice also contribute. Sales and “committed to building a sustainable future by investing in our people, the planet and the places where we operate”. administrative staff help with fundraising. The Giving for Living Radiothon has had an unexpected bonus of team building within the staff. Community Initiative Support One of the cornerstones of Radiothon each year is “the biggest change collector box” at the central bus station in Cork City. In 2015, a new “Heel In Radio GB our local stations collected and distributed thousands of toys for children at Christmas – this year we distributed over 50,000 toys just Appeal” was introduced which saw many prominent local men run down Patrick Street in the City in high heels to raise money. This was organised before Christmas with Tower FM alone handing out 10,000 toys. Signal 107 tackled homelessness with the breakfast presenter Dicky Dodd by the team behind the flagship talk show, The Opinion Line. sleeping on the streets for two nights to highlight the problem. We also collected and distributed coats, hats and scarves for those who needed them.
Radio Ireland stations provided airtime for several charities during the year: Ronald McDonald House, ISPCC and Jack and Jill Foundation. As a policy any charities booking advertising campaigns automatically receive a 25 – 50% additional airtime bonus depending on the fundraising campaign.
The Television division supported a range of community based events in 2015 through gift in kind support and advertising match funding. UTV presenters signed up to promote the Business in the Community Digital Assist campaign to encourage citizens over 60 to go online. This included UTV presenters fronting the campaign and UTV staff providing production facilities to BITC to promote the initiative. UTV has supported Mela, Micheál Sheridan, Chief Executive Officer Northern Ireland’s leading ethnic diversity celebration, for the past 8 years. UTV presenters host this event which attracts in excess of 20,000 of the Mercy University Hospital Foundation says: attendees each year.
UTV is also media partner for innovative local charity Cinemagic. Cinemagic is an award winning festival that embraces the magic of film, television “Somebody once said that ‘Kindness is for all times, in all situations – not just when it suits you’. Throughout what was a and digital technologies to educate, motivate and inspire young people through film screenings, industry workshops, practical masterclasses, challenging period for Ireland economically, the team at Cork’s 96FM stood firm and raised the bar by tirelessly giving their all filmmaking projects and outreach activities. UTV staff and presenters regularly give their time to host masterclasses and tours of the studios. Two broadcasts in the run up to Christmas represented a unique collaboration between UTV and Cinemagic. A Christmas Star was the first to Giving For Living Radiothon. For the past 8 years, the staff and listeners of the station have raised millions and have Northern Irish and Irish Christmas movie. Narrated by Liam Neeson, the movie stars young people from Northern Ireland and some well-known changed the lives of so many men, women and children living with illness and cancer in Cork. We are thrilled to have been actors including Pierce Brosnan, Bronagh Waugh, Richard Clements, Kylie Minogue, and Downton Abbey's Robert James-Collier. It was made part of this exciting journey and we are thrilled to call the team at Cork’s 96FM our friends.” by some of the world's finest award winning industry professionals leading a team of young trainees who got their first credit on a feature film. A Christmas Star Believe - The Making of a Christmas Star was a one hour UTV documentary which followed the amazing journey of the making of the movie from the very first auditions to the star studded premiere.
44 Report & Accounts 2015 Report & Accounts 2015 45 WIRELESS WIRELESS GROUP PLC GROUP PLC Corporate Social Responsibility Corporate Social Responsibility
Society Environment
As well as giving tours of our studios, we also joined forces with many organisations in 2015 to promote access to broadcasting and digital content. 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 recognises the impact that the business’ operations can have on society and so the quality and content of output is of utmost importance. The Group’s environmental policies are aimed at encouraging high standards of environmental practice across all business activities. In addition Wireless Group plc is a major media group which endeavours to grow by operating reliably and responsibly. Group stations maintain high editorial to their economic benefits, new projects and activities are assessed as to their potential impact on various environmental factors. 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 The Group complied with the UK regulation linked to European Energy Efficiency directive regarding ESOS (Energy Savings Opportunity Scheme) through the integrity of output. and registered with the Northern Ireland Environment Agency during 2015. This required the Group to contract an external Lead Assessor to conduct an energy assessment audit on the largest facility as a representative sample of the similar operations across all group operated facilities. 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 Greenhouse Gas Emissions (CAP), the Press Complaints Commission (PCC) and the Authority for Television on Demand (ATVOD). Tonnes (tCO2e)
Suppliers Group-wide locations 2015 2014 Scope 1 579 666 The Group has a varied scope of suppliers from large multinational engineering and technology providers to major national broadcasters and small Scope 2 1,918 2,291 independent local companies. Central to the provision of programming and content for the Radio Divisions are major broadcast suppliers such as Total CO2 emissions 2,497 2,957 sporting / sponsorship bodies which sell the rights for national and international sporting event broadcasts, including football, rugby and cricket. Arqiva is the main source of transmission capabilities. A small set of specialist suppliers provide the essential technology for production and where Intensity: emissions per £m revenue 20.7 25.4 possible, the Group’s preference is to use local, independent production companies for its radio output. There is an impetus on continuing open and Intensity: emissions per employee 2.3 2.9 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 Scope 1 emissions are direct GHG emissions mainly due to fuel consumption of vehicles controlled by the Group and Natural Gas for heating. suppliers to trade in a responsible business manner. Choice of supplier will be influenced by their respective commitment to ethical, environmental Scope 2 emissions are indirect GHG emissions due to consumption of purchased electricity and social responsibilities. The tonnes of CO2 emitted are calculated using the latest 2015 Department for Environment, Food and Rural Affairs (DEFRA) government conversion factors for company reporting. The decrease in CO2 emissions in 2015 reflects a reduction in the DEFRA rates per MWh of GHG emissions from 2014 to 2015 and a decrease in electricity usage resulting from the disposal and relocation of some facilities during the year.
As 76.8% of the CO2 emissions are due to consumption of purchased electricity, the Group sources its suppliers who can mainly provide green power generation.
Waste production and recycling
Tonnes
Northern Ireland location only 2015 2014 Waste recycled 22 (96%) 20 (93%) Waste sent to landfill 1 (4%) 2 (7%) Total waste 23 22
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.
46 Report & Accounts 2015 Report & Accounts 2015 47 WIRELESS WIRELESS GROUP PLC GROUP PLC
Report of the Board on Directors’ Remuneration Report of the Board on Directors’ Remuneration
Information not subject to audit Policy Report Statement from the Chairman of the Remuneration Committee Remuneration Committee The following directors served as members of the Committee throughout the financial year ending 31 December 2015: Dear Shareholder Members Appointment Date I am pleased to present the Directors’ Remuneration Report for 2015 which outlines the remuneration of the Executive Directors for the year based Helen Kirkpatrick (Chairman) 29 August 2007 upon the arrangements in the three-year policy 2014 to 2016. The report has been prepared by the Remuneration Committee and is approved by Richard Huntingford 30 July 2012 the Board. Stephen Kirkpatrick 28 September 2012 Coline McConville 21 November 2012 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 The Committee held four meetings during the year with full attendance by all members at each meeting. non-financial targets. Role of the Committee There are two specific matters I bring to your attention. They are: The Remuneration Committee is responsible for making recommendations to the Board on the Group’s framework of executive remuneration • Our proposed new ten year Performance Share Plan 2016. It is the company’s intention to seek shareholder approval for the proposed Plan and its cost within agreed terms of reference. The Board approves the Remuneration Policy and puts it to the shareholders at the Annual General at the 2016 AGM; and Meeting at least once every three years. The Committee determines the contract terms, remuneration and other benefits for each of the Executive • Retrospective disclosure of performance against annual opportunity and long term incentive targets for 2015. 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 New Performance Share Plan Group. The Board itself determines the remuneration of the Chairman and Non-Executive Directors. A new long term incentive plan is required to replace the current Performance Share Plan 2006, which expires in May 2016. It should be noted that the 2006 Plan will be used to make the long term incentive awards in 2016. 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 The new Wireless Group Performance Share Plan 2016 will share many of the features of the expiring plan but has been updated to reflect current issued by the United Kingdom Department for Business, Innovation and Skills. Work carried out by New Bridge Street is scoped in advance by the legislation, best practice and corporate governance requirements. The Committee has consulted with major shareholders in respect of the proposed Remuneration Committee after considering the requirement of the Group and New Bridge Street responds to the terms of reference. The fee paid new ten year Performance Share Plan and has welcomed and been receptive of their views. to New Bridge Street for its services in respect of the year ended 31 December 2015 was £29,000 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 The main changes to terms of the new plan, as compared to the 2006 Plan, are summarised below. Street. Term Main change
Individual limit Annual awards not to exceed shares having a market value in excess of 100% of base annual Remuneration Policy salary. The Remuneration Policy has been designed to attract and retain high quality individuals within the Group, ensure that their focus is on performance Only in exceptional circumstances, for recruitment or retention purposes, to increase this beyond the short term so as to create sustained shareholder wealth, and reward individuals in relation to their successful performance. The Policy limit to 200% of base annual salary. 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. Holding period Participants normally required to retain all shares acquired on vesting for a period of two years. 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 Leaving employment Where a participant ceases employment and, at the Committee’s discretion, is considered a shareholder value. “good leaver” and the performance conditions have been met, the award will vest as if he had not ceased such employment. 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 Clawback Clawback provisions to apply for the five years of award grant and holding period. of office payments made until reviewed by the Remuneration Committee later in 2016. The Committee reserves the right to review the Policy more frequently where circumstances deem this necessary and revise where appropriate. The new Performance Share Plan will be used to grant awards to Executive Directors and selected employees within the Wireless Group. The Remuneration Committee believes that the implementation of the new plan will result in a strategically-focussed equity-based long-term incentive provision that will create a genuinely strong alignment of interests between management and shareholders.
We propose to seek approval of the new Performance Share Plan 2016 at the 2016 AGM in May. The previous Performance Share Plan 2006 has served us well; we have retained its key features whilst at the same time ensuring that it reflects best practice.
Retrospective disclosure of performance against targets Remuneration Policy for the year ended 31 December 2015 sets out performance against annual opportunity and long term incentive targets for 2015. The strategic goal to achieve Share of Commercial Impacts of between 13% and 15% in UTV Ireland was not met. The Group profit before tax target was not achieved. Consequently no annual bonus was earned in respect of the financial year.
Helen Kirkpatrick Chairman of the Remuneration Committee 31 March 2016 48 Report & Accounts 2015 Report & Accounts 2015 49 WIRELESS WIRELESS GROUP PLC GROUP PLC
Report of the Board on Directors’ Remuneration 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:
Maximum opportunity and link to Maximum opportunity and link to Element & purpose Operation Element & purpose Operation performance performance
Basic salary The basic salary of the Executive Directors is In reviewing potential increases in the Pension The Group operates a defined benefit The future rate of pension accrual for the To recognise the responsibilities, reflective of the sector competitive rates in Executive Directors’ basic salary, the To enable Executive Directors to save pension scheme which closed to new members under the UTV pension scheme is experience and skills of the Directors in attracting, rewarding and retaining the Committee is guided by general increases for their retirement through members in 2002. Executive Directors who in line with the rules of the scheme which this competitive and challenging necessary level of skills and experience for employees. An annual salary review is participation either in the UTV were in employment prior to this, and are are consistent for all staff within the scheme. market. Company pension scheme or a required in the media sector and FTSE Small carried out for all staff across the Group, members of the UTV pension scheme, personal pension plan. Cap. They are reviewed annually by the including Executive Directors. Where an accrue a pension benefit within this scheme. Committee taking into account changes in inflation based award is granted, this would To help attract, retain and motivate roles, responsibilities and specific retention be applied to the Directors, if considered high quality individuals. Benefits earned under the scheme which issues. appropriate. are in excess of the annual or lifetime allowances introduced by HMRC may be Certain Directors may be considered for accrued within an unfunded arrangement. additional increases recognising that their experience, remit and responsibilities have For Executive Directors appointed after 2002 Pension allowances are set at a level that is substantially increased in the year and new (and not a member of the UTV pension considered appropriate having regard to operational activities undertaken. scheme) a pension allowance based on a market practice - currently 15%. percentage of basic salary is paid by the Annual bonus The bonus scheme is designed to reward the A minimum of 25% of the bonus based on Company to the Executive Director. To reward Executive Directors for the executives for achieving demanding financial metrics becomes payable upon achievement of pre-determined performance targets set at this level. meeting the set performance targets. The performance targets based upon the Additionally, it is also designed to encourage, maximum total bonus payable to an Long Term Incentive Plan (LTIP) The Group has put in place a long term The Executive Directors may be granted annual results for the year and linked incentivise and recognise when there has Executive Director is capped at 100% of their To align Executive Directors’ interests incentive plan for certain senior executives, awards of up to a maximum of 80% of their to the strategic plans of the Group been exceptional performance achieved in basic salary and this becomes due upon with those of shareholders and further including the Executive Directors. Under this basic salary. agreed by the Board. incentivise consistent, strong challenging conditions. attaining exceptional performance which is a plan, awards may be payable in shares at the performance. pre-determined percentage growth. A end of a three-year vesting period, and to the These are payable in shares at the end of the The bonus will be a combination of cash and share awards to align with Up to 80% of the bonus will be based on key straight line mechanism operates for extent that pre-set performance conditions three-year vesting period, and to the extent shareholder interest. financial metrics with the balance subject to performance within these parameters. (The and targets are met. that the pre-set performance conditions and personal or strategic objectives. targets for 2016 are not disclosed as they are targets, as outlined in each of the plans, has commercially sensitive. These will be The performance conditions are aimed to been met. All such performance criteria will The share award element can range provided in the 2016 Annual Report.) align the Directors’ performance to be independently verified by the Group’s between 20% and 35% to be set at the shareholder value with at least 35% of the independent remuneration consultants, discretion of the Committee. One fifth of the total bonus payable is award being based on Total Shareholder New Bridge Street. awarded in shares. As a result of the 12 Return (TSR) versus the FTSE Small Cap. The financial performance conditions that month performance period before the award The performance conditions attached to the This award is deferred for five years as a are required to be met are the same for all may vest plus a requirement for the remainder of the awards are based on result of the three year performance period Executive Directors. Executive Director to hold the shares for a Earnings per share (EPS) growth before the award may vest plus a further two years, this award is deferred for performance conditions. EPS targets are to requirement for the Executive Director to three years. be set on a three year compound basis with hold the shares (after the settlement of any sufficiently challenging targets. tax liability) for a further two years. The Malus provisions apply to the annual bonus awards may be exercisable in the six month in the event of gross misconduct or a Under the rules of the plan, the Executive period from the date of vesting. material misstatement in the Group’s Directors are also entitled to the share financial statements. equivalent of the dividends accrued over the Malus provisions give the Committee three year performance period in respect of authority to reduce or cancel long term Benefits The taxable benefits comprise a car, fuel, Benefit provision is set based on the level any vested shares. incentive awards in the event of gross To provide market competitive non- private health insurance, life insurance and and requirements of the role. misconduct or a material misstatement in cash benefits to attract and retain high necessary business equipment. the Group’s financial statements. quality individuals.
50 Report & Accounts 2015 Report & Accounts 2015 51
WIRELESS WIRELESS GROUP PLC GROUP PLC
Report of the Board on Directors’ Remuneration Report of the Board on Directors’ Remuneration
Maximum opportunity and link to Pay for performance Element & purpose Operation 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. Share Incentive Plan This scheme comprises the Share Incentive Executive Directors are eligible to participate To motivate employees and encourage Plan under which employees allocate part of in the Company’s all-employee share John McCann, Group Chief Executive ownership of shares in the company. their pre-tax salary to purchase shares in scheme on the same terms as other the Company in line with HMRC guidelines. employees. The scheme operates within
specific tax legislation and, as is normal Minimum 100% £517K practice, there are no performance conditions.
On target 73% 16% 11% £712K The limit for this plan is set in line with
government guidelines. (From April 2014 this amounted to a limit of £1,800 per annum Maximum 36% 32% 32% £1,460K or £150 per month. Prior to this a limit of £1,500 per annum or £125 each month was 0 20 40 60 80 100
in place.) Fixed (Base salary, bene!ts & Pension) Bonus LTIP
Shareholding guidelines The Group has a policy requiring Executive Scott Taunton, Chief Operating Officer To demonstrate the Directors’ support Directors to hold the equivalent of one year’s and commitment to the Wireless Group average basic salary in Wireless Group plc Minimum 100% £404K and keep them focused on its shares at an average market value and can performance and align their interest to be achieved out of the conversion of vested those of shareholders. share awards. On target 75% 15% 10% £535K Directors have a period of five years from appointment to build up the holding. Maximum 38% 31% 31% £1,040K
0 20 40 60 80 100
Additional information Fixed (Base salary, bene!ts & Pension) Bonus LTIP
The following points are included for ease of reference and to clarify aspects of our Remuneration Policy. Norman McKeown, Group Finance Director
Malus and clawback
The policy contains malus provisions. These conditions will be enhanced with defined clawback provisions and brought forward for shareholder Minimum 100% £289K approval at the 2017 AGM.
Recruitment policy On target 75% 15% 10% Recruitment buyout awards are not within the policy. However, the Committee would exercise discretion if exceptional circumstances were to arise £387K and only if such buyout was deemed in the best interests of shareholders.
Bonus share awards Maximum 38% 31% 31% £763K The holding period for bonus shares is two years post vesting. 0 20 40 60 80 100
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 Fixed (Base salary, bene!ts & Pension) Bonus LTIP vested bonus shares.
Defined benefit scheme Policy on recruitment remuneration The defined benefit pension scheme is operated within UTV Limited and this transferred to ITV Broadcasting Limited from 29 February 2016 on In setting the remuneration of each Executive Director on their appointment, the Committee will apply the policies outlined above. New Directors completion of the sale of this company. 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.
52 Report & Accounts 2015 Report & Accounts 2015 53 WIRELESS WIRELESS GROUP PLC GROUP PLC
Report of the Board on Directors’ Remuneration Report of the Board on Directors’ Remuneration
Service agreements and exit payments The remuneration package for the Executive Directors consists of a combination of fixed and variable components each designed to incentivise All Executive Directors have a rolling service contract with the Group and no notice period exceeds twelve months. The service contract for John and provide reward for successful short and long term performance. McCann is dated 16 October 2007 and he will retire on 12 May 2016. Scott Taunton has a service contract dated 1 July 2006 and Norman McKeown has a service contract dated 24 November 2008. The details of the remuneration package are in line with the Remuneration Policy operating throughout the year ended 31 December 2015. The current arrangements and charges in respect of pensions, together with details of the long term incentive plans that are currently in place, are None of the service contracts makes any provision for a pre-determined amount of compensation being due in the event of early termination except outlined below. 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 graph below sets out the single total figure of remuneration of John McCann, the Group Chief Executive, over the last six years. The 33.9% decline in the single total figure for 2015 compared to 2014 compares to the Group’s employees retaining their salary at a consistent level over the The Remuneration Committee will consider any contractual amounts due to a good leaver in accordance with the rules applicable to each particular same period. 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 Single figure remuneration of Group Chief Executive 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 £’000 conditions have been met, but will normally be pro-rated on the basis of actual service over the performance period. 1200 1,064 1000 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 853 provided by the contract. LTIP awards and unvested deferred shares will lapse for those not regarded as good leavers. 810 800 782 613 Appointment letters and remuneration for the Non-Executive Directors 600 517 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 450 do not include notice periods in excess of twelve months. The appointment dates for the Non-Executive Directors are detailed in the Board of 400
Directors section. There is no provision for any pre-determined amount of compensation being due in the event of termination. 200
The remuneration of the Non-Executive Directors is determined by the Board based upon the recommendations of the Chairman and Chief 0
Executive. The remuneration of the Chairman is determined by the Board as advised by the Remuneration Committee. The Non-Executive Directors 2009 2010 2011 2012 2013 2014 2015 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 Variable pay Fixed pay pension contribution entitlement.
Fixed pay comprises base salary and taxable benefits while variable pay represents any annual bonus paid plus the value of shares vested under 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 the long term incentive plan. such a Committee. A separate fee is paid for being the Chair of the Board of a subsidiary company within the Group.
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 There was no increase to the Non-Executive fees in 2015. 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. Executive Directors’ remuneration
The remuneration policies and executive packages are designed to be competitive and encourage achievement of the Group’s strategic goals. The Percentage of maximum variable awards received wider economic conditions, shareholder feedback and the pay and employment conditions throughout the Group and FTSE small cap companies %
are all taken into consideration. 100
The graph below depicts the total cost of executive pay for the years ended 31 December 2015 and 2014 in relation to profit attributable to equity 80 shareholders, dividends paid and total staff costs. 88%
60
40 50% Total cost of executive pay in relation to Profit attributable to Shareholders, dividends paid and staff costs £’000
20 30% 40000 20% 21%
35000 0 2009 2010 2011 2012 2013 2014 2015 30000 Bonus LTIP’s 25000
20000 Shareholder views
15000 The resulting outcome of the shareholder advisory vote on the 2014 Report of the Board on Directors’ Remuneration was as follows: 10000
5000 For 90.4%
0 Against 9.6% Shareholder pro!t Dividends paid Sta" costs Executive pay 2015 2014 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.
In advance of the 2016 AGM, the Committee has consulted with major shareholders in respect of the proposed new long term incentive plan and has welcomed and been receptive of their views.
54 Report & Accounts 2015 Report & Accounts 2015 55
M
0
WIRELESS WIRELESS GROUP PLC GROUP PLC
Report of the Board on Directors’ Remuneration Report of the Board on Directors’ Remuneration
Remuneration Policy for the year ended 31 December 2015 Information subject to audit The details of the Directors’ Remuneration for the year ended 31 December 2015 are outlined in the section of this report headed ‘Information
subject to audit’. In reviewing the remuneration profile for 2015, shareholders are asked to note the following characteristics of the policy: Annual report on remuneration • By setting very challenging performance conditions and targets, the Remuneration Policy aims to reward the Executive Directors for their success. Single total figure of remuneration • 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. The remuneration of the Executive Directors for the year ended 31 December 2015 is set out below:
With respect to the performance objectives: Basic salary Bonus Taxable Pension LTIPs Total
• The share of commercial impacts for UTV Ireland in 2015 was 11.8% and thus the strategic objective of achieving between 13% and 15% was benefits remuneration not met. ££ £ £ £ £ • The profit before tax growth target from continuing operations was not met by 14%. Executive Directors Consequently no annual bonus was earned in respect of the financial year. John McCann 2015 471,500 - 45,824 --517,324 2014 465,750 94,300 42,988 - 179,253 782,291
Performance graph Scott Taunton 2015 317,700 - 8,031 78,441 - 404,172 This graph looks at the value, by 31 December 2015, of £100 invested in UTV on 31 December 2008 compared with that of £100 invested in the FTSE 2014 313,850 63,540 5,085 73,485 118,658 574,618 All-Share Media Index and the FTSE Small-Cap Index. The other points plotted are the values at intermediate financial year-ends. Norman McKeown 2015 270,250 - 18,761 --289,011 2014 248,000 47,000 17,089 7,875 71,527 391,491
Total shareholder return Source: Thomson Reuters Non-Executive Directors 400
350 Richard Huntingford 300 2015 100,000 ---- 100,000 2014 100,000 ---- 100,000 250
200 Helen Kirkpatrick Value (£) Value 150 2015 40,000 ---- 40,000 2014 40,000 ---- 40,000 100
50 Stephen Kirkpatrick 2015 40,000 ---- 40,000 0 31-Dec-08 31-Dec-09 31-Dec-10 31-Dec-11 31-Dec-12 31-Dec-13 31-Dec-14 31-Dec-15 2014 40,000 ---- 40,000
UTV Media FTSE All-Share FTSE Small Andy Anson 2015 35,000 ---- 35,000 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 2014 35,000 ---- 35,000 awards issued prior to 2014. The FTSE Small Cap sector has also been included as, in line with the Remuneration Policy, it represents the Coline McConville comparator sector for awards in 2014 and 2015 and for all new awards. 2015 35,000 ---- 35,000
2014 35,000 ---- 35,000
Róisín Brennan 2015 40,000 ---- 40,000 2014 21,667 ---- 21,667
The basic salary figure for Norman McKeown incorporates a 15% uplift from April 2014 in respect of his pension allowance.
The figures for Róisín Brennan for 2014 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 of UTV Ireland Limited from 1 October 2014.
The value attributable to the LTIPs in 2014 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.
Details of the Executive Directors’ pension are included in the Pensions section of this report.
56 Report & Accounts 2015 Report & Accounts 2015 57 WIRELESS WIRELESS GROUP PLC GROUP PLC Report of the Board on Directors’ Remuneration Report of the Board on Directors’ Remuneration
Pensions Targets Of the three Executive Directors, John McCann and Scott Taunton are both members of the UTV Company pension scheme. For Norman McKeown, The framework for the targets for EPS and TSR for the 2012 to 2015 plans is as follows: who is not a member of the UTV Company pension scheme, the Group made a contribution of £Nil (2014: £7,875), equating to an annualised 15% of his basic salary, into a Personal Pension Plan. This contribution ceased from 31 March 2014 and from then an equivalent sum has been included (i) The growth in diluted adjusted EPS in his basic salary as a salary supplement. The performance criteria is that the equivalent annual EPS growth over the qualifying three-year period is required to exceed average RPI The pension entitlements of the Directors included in the UTV Company pension scheme are as follows: by at least 3% per annum for the 2012 to 2014 awards and at least 2% per annum for the 2015 award 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 the 2012 to 2014 awards and at least 4% per annum for the 2015 award. For performance achieved exceeding average RPI by between the minimum and the Accumulated value of pension accrued superior target 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. Age at 31 December 2015 Normal retirement age At 31 December 2015 At 31 December 2014 ££(ii) The ranking of the Group’s TSR against a comparator group John McCann 62 60 - - Scott Taunton 44 60 64,043 57,996 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 2012 and 2013 plans, the comparator group comprises the FTSE All-Share Media sector. For the 2014 and 2015 awards, the comparator group is the FTSE Small Cap. To meet the superior target, this will require a ranking in 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 the upper quartile. For rankings between the median and upper quartile, the % of the TSR element of the award that will vest will be (Accounts and Reports) Regulations 2008 (as amended). calculated on a straight line basis.
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 Interests in the long term incentive plan 2011, he has been accruing part of his benefits in the pension scheme and part under an unfunded arrangement. As at 31 December 2015, an The details of the awards for the executives are set out in the tables below. amount of £512,000 (2014: £432,000) 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 Awards granted in 2012 on a cost neutral basis. The following Directors were granted awards under the Company’s long term incentive plan on 30 March 2012.
In the table above the accumulated value of the pension accrued relates to the total pension entitlement from the UTV Company pension scheme Awards End of Market price and the unfunded arrangement and is calculated after accounting for the member contributions paid during the year by Scott Taunton amounting At 1 January granted in At 31 December qualifying at date of to £28,593 (2014: £28,247). 2015 the year 2015 period award No. No. No. Long term incentive performance plans John McCann 310,928 - 310,928 31 Dec 14 143.12p 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 Scott Taunton 209,614 - 209,614 31 Dec 14 143.12p 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 Norman McKeown 132,756 - 132,756 31 Dec 14 143.12p 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. For the 2012 plan, the award was based on a combination of whether the EPS growth performance targets and the TSR performance ranking The performance conditions that have been set for the 2015 award are aimed to align the Directors’ performance to shareholder value and were 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 selected by the Remuneration Committee. not vest. In respect of the TSR targets, which relates to 35% of this award, the Company’s 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 Further details of the plans and awards for the executives, from 2012 onwards, are given below and are set out in the Interests in the Long Term 2012 award. Incentive Plan tables. In addition to 22.4% of the awards granted in 2012, in line with the rules of the plan, the Executive Directors were entitled to the share equivalent Performance criteria of the dividends that were accrued over the three year performance period of these vested shares. This resulted in an additional 8,779 shares, The performance criteria for the grant of awards outlined in the plans awarded annually from 2012 to 2015 are based on the combined performance 5,917 shares and 3,747 shares being granted to John McCann, Scott Taunton and Norman McKeown respectively. elements of: • the growth in diluted adjusted earnings per share from continuing operations (EPS) over the qualifying three-year period commencing in the These awards vested on 16 January 2016. The market price of the Company’s shares at the date of vesting was 181.90p. financial year in which the award was first granted, and • the ranking of the Group’s total shareholder return (TSR) against a comparator group, over the next three years commencing with the date on Awards granted in 2013 which the awards were first granted. The following Directors were granted awards under the Company’s long term incentive plan on 3 October 2013. Awards End of Market price 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 At 1 January lapsed in At 31 December qualifying at date of being met and the remaining 35% is based on the TSR targets being achieved. 2015 the year 2014 period award No. No. No. Framework for the targets set John McCann 245,824 (245,824) - 31 Dec 15 187.13p 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 Scott Taunton 165,664 (165,664) - 31 Dec 15 187.13p 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 Norman McKeown 112,224 (112,224) - 31 Dec 15 187.13p 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.
For the 2013 plan, the award was based on a combination of whether the EPS growth performance targets and the TSR performance ranking targets were achieved. As neither performance target was met, the award in the 2013 plan did not vest.
58 Report & Accounts 2015 Report & Accounts 2015 59 WIRELESS WIRELESS GROUP PLC GROUP PLC
Report of the Board on Directors’ Remuneration 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. No Director had any interests in the shares of any subsidiary company. Awards End of Market price At 1 January granted in At 31 December qualifying at date of The market price of the Company’s ordinary shares as at 31 December 2015 was 175.00 pence and the range during the year was 139.00 pence 2015 the year 2015 period award to 204.00 pence. No. No. No. John McCann 149,054 - 149,054 31 Dec 16 246.89p The Report of the Board on Directors’ Remuneration was approved by the Board on 31 March 2016 and signed on its behalf by Helen Kirkpatrick, Scott Taunton 100,449 - 100,449 31 Dec 16 246.89p Chairman of the Remuneration Committee. Norman McKeown 68,046 - 68,046 31 Dec 16 246.89p Helen Kirkpatrick Chairman of the Remuneration Committee Awards granted in 2015 31 March 2016 The following Directors were granted awards under the Company’s long term incentive plan on 18 November 2015. Awards End of Market price At 1 January granted in At 31 December qualifying at date of 2015 the year 2015 period award No. No. No. John McCann - 209,730 209,730 31 Dec 17 179.85p Scott Taunton - 141,317 141,317 31 Dec 17 179.85p Norman McKeown - 104,531 104,531 31 Dec 17 179.85p
Directors’ interests in shares The figures in the table below represent the shareholdings in the ordinary share capital of Wireless Group plc beneficially owned by Directors and their family interests, other than in respect of options or other rights to acquire ordinary shares: 31 December 31 December 2015 2014 Executive Directors John McCann 555,853 554,524 Scott Taunton 343,349 342,020 Norman McKeown 214,603 213,274
Non-Executive Directors Richard Huntingford 25,000 25,000 Helen Kirkpatrick 20,000 20,000 Stephen Kirkpatrick 8,666 8,666 Andy Anson - - Coline McConville - - Róisín Brennan - - On 16 January 2016, 22.4% of the awards granted in 2012 under the Company’s long term incentive plan, vested. This resulted in an additional 8,779 shares, 5,917 shares and 3,747 shares being granted to John McCann, Scott Taunton and Norman McKeown respectively.
Other than the shares granted on the vesting of these awards, no Directors have acquired or disposed of any ordinary shares in the Group during the close period from 21 January to 30 March 2016 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 Wireless Group 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 build up this holding. This requirement was met at 31 December 2015.
John McCann, Scott Taunton and Norman 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 1,054 ordinary shares through the SIP. As at 31 December 2015 252,461 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.
60 Report & Accounts 2015 Report & Accounts 2015 61 WIRELESS WIRELESS GROUP PLC GROUP PLC
Report of the Directors Report of the Directors For the year ended 31 December 2015 For the year ended 31 December 2015 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, To be presented at the Annual General Meeting of the Company to be held on 12 May 2016. 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’. 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 J McCann and S Taunton who were trustees of the UTV Pension Scheme resigned upon the sale of the Television business. The Company 31 December 2015. 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, in relation to their tenure as Trustees, as 2. Business development review at the date of approving the ‘Report of the Directors’. 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 10. Corporate governance Review. The information required to be disclosed under DTR7.2 is provided within the Corporate Governance Section and point 13 of this report.
3. Going concern 11. Financial instruments The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in The Group’s financial risk management objectives and policies and details of the Group’s exposure to credit risk, liquidity risk and cash flow the Group and divisional performance reviews. The financial position of the Group, its cash flows, liquidity position and borrowing facilities risk are outlined in note 29. are described above. In addition, note 29 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 12. Substantial shareholdings risk and liquidity risk. 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 2015. The Group has successfully strengthened its position through the disposal of the Television businesses and Juice FM enabling it to substantially At 31 December 2015 At 30 March 2016 reduce bank borrowings and focus on cash generation. The Directors have reviewed the 2016 budgets and subsequent forecasts in light Ordinary Percentage of Ordinary Percentage of of current economic conditions and are satisfied that, along with the secured new debt financing to 2020 and the continued profitability of Shares that class Shares that class 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. Fidelity International 9,778,013 10.20% 6,984,295 10.17% 4. Fair, balanced and understandable JO Hambro Capital Management 8,902,326 9.28% 6,858,804 9.99% 7.94% 7.89% After considering matters related to financial judgements and reporting, and matters related to strategy, operation of the business model Aberforth Partners 7,617,902 5,418,287 6.44% 6.53% and associated risk factors, and taking advice and guidance from both the Audit Committee and the External Auditors, the Board confirms Miton Asset Management 6,179,403 4,482,630 6.09% 6.08% that its Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for GVQ Investment Management 5,844,588 4,174,705 5.71% 5.70% shareholders to assess the Group’s performance, business model and strategy. Columbia Threadneedle Investments 5,478,771 3,913,407 Milestone Trust 4,000,000 4.17% 2,857,142 4.16% 5. Employees Invesco Perpetual 3,883,987 4.05% 2,774,276 4.04% 3.32% 3.35% Further information on employees including the Group’s policy on disabled employees and employee involvement can be found in the ‘Our Henderson Global Investors 3,188,387 2,300,690 3.23% 3.23% People’ section of the Corporate Social Responsibility report. John McGuckian 3,097,483 2,217,294
6. Environmental practices, Greenhouse gas emissions and Community and Society Up to 30 March 2016 except for the holdings of ordinary shares listed above, no party has notified an interest in the ordinary shares of the Further information on the Group’s environmental practices, Greenhouse gas emissions and community and society can be found in the Company which is required to be recorded in the register under DTR5. ‘Environment’ and ‘Community’ and ‘Society’ sections in the Corporate Social Responsibility report. 13. Additional information for shareholders 7. Political donations The following provides the additional information required for shareholders as a result of the implementation of the Takeovers Directive into No donations were made for political purposes during the year (2014: £Nil). UK Law.
8. Directors and their interests At 31 December 2015, the Company’s issued share capital comprised: The Directors of the Company during the year were those shown in ‘Board of Directors’. On 4 March 2016 the Group announced that John McCann will retire as Group Chief Executive at the AGM in May 2016. Richard Huntingford, currently Non-Executive Chairman, will become Number Value Executive Chairman from this date. Coline McConville will also retire from the Board at the AGM in May 2016. Thousands £000 Ordinary shares of 5p each 95,903 4,795 In accordance with Article 127 of the Company’s Articles of Association, Executive Directors, S Taunton and N McKeown are required to retire and offer themselves for re-election at the Annual General Meeting in 2016. However, while not mandatory, in line with the Code of The Company is not aware of any agreements between shareholders that may result in restrictions on the transfer of securities and FTSE350 recommendations relating to the annual election of Directors by shareholders, the Board has determined that all Directors, both for voting rights. Executive and Non-Executive, will be subject to an election process at the Annual General Meeting on 12 May 2016. Ordinary shares The Directors’ interests in the shares of the Company are disclosed in the ‘Report of the Board on Directors’ Remuneration. 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.
62 Report & Accounts 2015 Report & Accounts 2015 63 WIRELESS WIRELESS GROUP PLC GROUP PLC
Report of the Directors Statement of Directors’ Responsibilities in For the year ended 31 December 2015 Relation to the Group Financial Statements 13. Additional information for shareholders (continued) There are no restrictions on the transfer of ordinary shares in the Company other than: The Directors are responsible for preparing the Annual Report and the Group financial statements in accordance with applicable United Kingdom • Certain restrictions may from time to time be imposed by laws and regulations (for example, insider trading laws and market law and those International Financial Reporting Standards as adopted by the European Union. 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 Under Company Law the Directors must not approve the Group financial statements unless they are satisfied that they present fairly the financial of the Company to deal in the Company’s securities. 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: 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 • select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors and then 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 apply them consistently; appointment must offer themselves up for re-election at the Annual General Meeting. Any Non-Executive Director who at the date of the •present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable Annual General Meeting had held office for nine years or more shall be subject to re-election at each Annual General Meeting. However, in information; line with the Code of FTSE350 recommendations relating to the annual election of Directors by shareholders, the Board has determined that • provide additional disclosures when compliance with the specific requirements in International Financial Reporting Standards is insufficient to all Directors, both Executive and Non-Executive, will be subject to an election process at the Annual General Meeting in 2016. enable users to understand the impact of particular transactions, other events and conditions on the Group’s financial position and financial performance; Significant interests •state that the Group has complied with International Financial Reporting Standards, subject to any material departures disclosed and Directors’ interests in the share capital of the Company are set out in the Report of the Board on Directors’ Remuneration. Major interests explained in the financial statements. (i.e., those greater than 3%) of which the Company has been notified are shown in point 12 to this report. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s transactions and disclose Directors’ powers to issue or purchase shares with reasonable accuracy at any time the financial position of the Group and to enable them to ensure that the Group financial statements comply 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. 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 Such authority is limited to 5% of the Company’s ordinary shares in issue. taking reasonable steps for the prevention and detection of fraud and other irregularities.
Company share schemes At 31 December 2015 the UTV Employee Benefit Trust, which is a discretionary trust for the benefit of Group employees, held 53,000 shares (2014: 53,000 shares) being 0.06% (2014: 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 Directors’ Statement of Responsibility under the Report. The voting rights in relation to these shares are exercised by the trustees. Disclosure and Transparency Rules 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 The Directors confirm to the best of their knowledge that: can be terminated by the bank upon the provision of 60 days notice. •The Group financial statements, which have been prepared in accordance with International Financial Reporting Standards as adopted by In the event of change of control of the Company the Directors’ service contracts provide that the Company shall pay remuneration in respect the European Union, give a true and fair view of the assets, liabilities, financial position and profit of Wireless Group plc and the undertakings of any unexpired notice period on termination of employment. 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 14. Auditors and performance of the business and the position of Wireless Group plc and the undertakings included in the consolidation taken as a Ernst & Young LLP has expressed their willingness to continue in office as auditors and a resolution proposing their re-appointment will be whole together with a description of the principal risks and uncertainties that they face. submitted at the Annual General Meeting. The financial statements were approved by the Board on 31 March 2016 and the above responsibility statement was signed on its behalf by the 15. Directors’ statement as to disclosure of information to auditors Chairman. 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 Richard Huntingford Company’s auditors are unaware, and Chairman • 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 31 March 2016 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 31 March 2016
64 Report & Accounts 2015 Report & Accounts 2015 65 WIRELESS WIRELESS GROUP PLC GROUP PLC
Report of the Auditors Report of the Auditors on the Group Financial Statements on the Group Financial Statements
Independent auditor’s report to the members of Wireless Group plc Overview of our audit approach
Our opinion on the financial statements Risks of material misstatement • Revenue recognition • Carrying value of goodwill and intangible assets • Disposal of TV businesses 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 2015 and of Audit scope • We performed an audit of the complete financial information of three components the group’s profit for the year then ended; and audit procedures on specific balances for a further eleven components. • the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; and • The components where we performed full or specific audit procedures accounted for •the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting 96% of the Profit before Tax, 100% of Revenue and 100% of Total assets. Practice; and • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the group Materiality • Overall Group materiality of £537,000 which represents 5% of PBT pre-exceptional financial statements, Article 4 of the IAS Regulation. items. What we have audited Our assessment of risk of material misstatement The Wireless Group plc’s financial statements comprise: We identified the risks of material misstatement described below as those that had the greatest effect on our overall audit strategy, the allocation of resources in the audit and the direction of the efforts of the audit team. In addressing these risks, we have performed the procedures below which were designed in the context of the financial statements as a whole and, consequently, we do not express any opinion on these individual Group Parent company areas.
Group Income Statement for the year ended 31 December 2015 Risk Our response to the risk What we concluded to the Audit Committee Group Balance Sheet at Company Balance Sheet at Revenue Recognition (£75m, PY £82m) 31 December 2015 31 December 2015 Refer to the Audit Committee Report (page 34) Group Statement of Comprehensive Income for the year In relation to the revenue recognition risk Based on our procedures we did not identify and Notes 2 and 3 to the Consolidated Financial ended 31 December 2015 arising from major advertising sales any material errors in the recognition of Statements contracts which incorporate pricing and other revenue in the year ended 31 December Group Statement of Changes in Equity for the year features related to more than one year we: 2015. Auditing standards require that we consider ended 31 December 2015 • reviewed the terms of these contracts to the risk of fraud or management override of identify and understand the pricing and internal controls in revenue recognition. Group Cash Flow Statement for the year ended performance obligations under these 31 December 2015 contracts; We have evaluated that the key risks of • discussed with management the revenue misstatement due to management Notes 1 to 32 to the Group financial statements for the year ended Notes 1 to 11 to the Company financial statements for the business rationale for these override, fraud and error specifically relates 31 December 2015 period ended 31 December 2015 arrangements; to: • considered the appropriateness of • the recognition of revenues from major management’s revenue recognition The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and International advertising sales contracts which policies in respect of those contracts in Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been applied in the incorporate pricing and other features light of the requirements of IAS 18 preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally related to more than one year as this “Revenues” (“IAS 18”); Accepted Accounting Practice), including FRS 101 “Reduced Disclosure Framework”. involves judgement over the amount and • assessed the reasonableness of the timing of revenues recognised under timing and amount of revenue recognised these contracts; in the year ended 31 December 2015 in • the claw back of advertising revenues light of these policies and IAS 18’s where the pricing is based upon audience requirements; and ratings as this involves judgement over • substantively tested a sample of revenue the amount of any revenues to be transactions. potentially rebated; • the recognition of revenues from digital We also selected a sample of other services as this involves judgement over advertising and sponsorship sales contracts future cost elements and the percentage across the Group’s components and of completion; performed the above procedures. • manual journal adjustments to revenues made as a result of overriding existing processes or controls.
66 Report & Accounts 2015 Report & Accounts 2015 67 WIRELESS WIRELESS GROUP PLC GROUP PLC
Report of the Auditors Report of the Auditors on the Group Financial Statements on the Group Financial Statements
Risk Our response to the risk What we concluded to the Audit Committee Risk Our response to the risk What we concluded to the Audit Committee
In respect of advertising revenue rating claw As a consequence of the recognition of an We further considered management’s back risk, we reviewed management’s impairment charge in respect of the Radio sensitivity analysis showing the impact of a estimates of the amount of revenues to be Ireland cash generating unit (“CGU”) in 2011 reasonable change in impairment potentially rebated and challenged the and challenging market conditions within the assumptions to determine whether an appropriateness of assumptions made by Republic of Ireland in 2012 and 2013, the impairment charge was required. This management following the outcome of carrying value of goodwill and intangibles consideration included undertaking our own similar assumptions made at the prior year assets allocated to that CGU had in recent such sensitivity analysis in respect of each of end. years closely matched its recoverable the Group’s CGUs, with increased focus on amount. Although market conditions within the Radio Ireland CGU, including scenarios In relation to digital services revenue the Republic of Ireland improved during 2014 generated based upon external analyst recognition risk, we reviewed management’s and 2015 the Radio Ireland business reports and internal EY economic projections. estimates of the percentage of completion continues to experience limited growth which We ensured that the financial statement and future costs to be incurred and has been offset by cost management and disclosures, particularly those in Note 16 to challenged the appropriateness of consequently the extent to which the the Group financial statements, met the assumptions made by management recoverable amount of that CGU’s goodwill requirements of accounting standards. following the outcome of similar and intangibles assets exceeds their carrying assumptions made at the prior year end. value has remained stable. However, as this excess remains modest we continued to In relation to the revenue manual journal apply an increased focus on management’s entry risk, we selected a sample of journal annual impairment review in respect of that entries recorded in the general ledger and CGU. other adjustments made in the preparation of the financial statements (including those in respect of revenues) and considered the Disposal of TV businesses appropriateness and validity of manual journal entries posted around the year end. Refer to the Audit Committee Report (page 34) For transactions close to the period end we and Note 32 to the Consolidated Financial tested that cut-off procedures were Statements appropriately applied. In the current year we identified a new risk We assessed the presentation and disclosure Based on our procedures we did not identify relating to the disposal of the TV businesses. of the activities of these businesses in view of any material errors in the treatment of the In February 2016 the Group completed the the requirements of IFRS5. disposal of the TV businesses in the year Carrying value of goodwill and intangibles sale of UTV Limited and UTV Ireland Limited ended 31 December 2015. assets with indefinite lives – 31 December to ITV Broadcasting Limited. This resulted in We reviewed management’s determination 2015: £166.7m (31 December 2014: the assets, liabilities and result of the disposal of the assets and liabilities which constitute No impairments arose from this £172.2m) group are subject to the measurement and the disposal group and similarly reviewed the assessment. presentation requirements of IFRS 5 – date at which the decision to deem those Refer to the Audit Committee Report (page 34) We performed audit procedures on the Based on our procedures, we consider the Non Current Assets Held for Sale and assets and liabilities as a disposal group was and Notes 15 and 16 to the Consolidated impairment models prepared for all CGUs. cash flow and discount rate assumptions Discontinued Operations made. Financial Statements used by management in The Wireless Group We obtained and considered management’s impairment models for the continuing CGUs We ensured that management had assessed The Group has significant goodwill and impairment testing, considering the are within acceptable ranges and that that the value of the disposal group is the intangible assets with indefinite lives (At 31 calculation methodology, sources for key reasonably possible changes in the key lower of the carrying value of the assets and December 2015 - £166.7m) that are required assumptions and sensitivities applied. assumptions would not cause an fair value less costs to sell (“FVLCS”.) to be tested annually for impairment. impairment to arise. We focused on this area due to both the We challenged the key assumptions behind We reviewed the consequential disclosure significance of the carrying value of these each impairment model (including where The financial statement disclosures, impact on other areas within the financial assets and because the recoverable value of relevant an assessment of the historical particularly those in Note 16 to the statements including the chairman’s these assets is based on forecasting and accuracy of management’s forecasting), Consolidated financial statements, statement and segmental analysis. discounting future cash flows using being discount rate, long term growth rate materially comply with the applicable assumptions which are inherently and revenue growth. requirements of the accounting standards. judgemental and which could be influenced The first two risks above are consistent with those in the prior year. The third risk is new in the current year as outlined above. In 2014 the valuation by management bias. As part of our work we utilised EY valuations of the defined benefit pension scheme assets and liabilities was also considered to be an area of focus. However, as there have been no changes specialists to assist in our assessment of to the financial or demographic assumptions in 2015 and the pension asset (£54k) forms part of the assets of the disposal group, auditing this The significant assumptions and their management’s impairment models. asset no longer constitutes a significant proportion of audit effort or audit strategy. rationale are disclosed in Note 16 to the Group financial statements.
68 Report & Accounts 2015 Report & Accounts 2015 69 WIRELESS WIRELESS GROUP PLC GROUP PLC
Report of the Auditors Report of the Auditors on the Group Financial Statements on the Group Financial Statements
The scope of our audit Performance materiality
Tailoring the scope The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that the Following our assessment of the risk of material misstatement to the Group financial statements, we selected fourteen (2014: fourteen) components aggregate of uncorrected and undetected misstatements exceeds materiality. which represent the principal business units within the Group’s three reportable segments. Two of these reportable components have been classified as discontinued operations for the year. On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was that performance materiality was 50% of our planning materiality, namely £268,500. Our objective in adopting this approach was to ensure that total detected and Of the fourteen components selected we performed an audit of the complete financial information of four components (full scope components), undetected audit differences in all accounts do not exceed our materiality level. which were selected based on their size or risk characteristics. For the remaining ten 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 Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement accounts is undertaken based in the group financial statements either because of the size of these accounts or their risk profile. on a percentage of total performance materiality. The performance materiality set for each component is based on the relative scale and risk of the component to the Group as a whole and our assessment of the risk of misstatement at that component. In the current year, the range of The twelve components designated as continuing account for 100% of revenue (2014: 100%), 96% of profit before tax from continuing operations performance materiality allocated to components was £25,000 to £191,000. (2014: 97%) and 90% of total assets (2014:87%), although for components where a specific scope audit was performed, not all balances that comprise these coverage percentages have been audited. Reporting threshold
For the current year, the continuing full scope components contributed 72% of the Group’s revenue (2014: 72%), 101% of the Group’s profit before An amount below which identified misstatements are considered as being clearly trivial. tax from continuing operations (2014: 96%) and 17% of the Group’s total assets (2014:18%). The specific scope components contributed 28% of the Group’s revenue (2014: 28%), 5% of the Group’s profit before tax from continuing operations (2014: 1%) and 73% of the Group’s total assets (2014:69%). We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of 5% of planning materiality (£25,000), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. 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 We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant range of performance materiality allocated to components was £25,000 to £191,000. qualitative considerations in forming our opinion.
In addition, certain Group functions including those covering intangibles, taxation, pensions, long term incentive plans and the Parent Company Scope of the audit of the financial statements 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 An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that procedures for any significant balance sheet items in excess of performance materiality at the Group level. 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 Involvement with component teams disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. The Senior Statutory Auditor of the Group leads the audit for two of the components which accounts for 109% of profit before tax from continuing In addition, we read all the financial and non-financial information in the Annual Report and Accounts to identify material inconsistencies with the operations. The audit of the remaining twelve components designated as continuing is led by a partner and conducted by audit teams from the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, 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 knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies team to operate on an integrated basis throughout the audit process, including for example shared access to audit working papers, regular we consider the implications for our report. 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 Respective responsibilities of directors and auditor meetings between the component audit team and component management. As explained more fully in the Directors’ Responsibilities Statement set out on page 65, the directors are responsible for the preparation of the Our application of materiality 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 financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in the Auditing Practices Board’s Ethical Standards for Auditors. forming our audit opinion. 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 Materiality 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 The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of 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 users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures. the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
We determined materiality for the Group to be £537,000, which is 5% of profit before tax from continuing operations and excluding exceptional items. 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 current and future business value and therefore a focus for shareholders. We excluded the £6.9m exceptional profit on sale of subsidiary as it is non-recurring in nature.
During the course of our audit, we reassessed initial materiality from an amount of £498,000 based on pre year end forecasts to the amount indicated above once actual results were available.
70 Report & Accounts 2015 Report & Accounts 2015 71 WIRELESS WIRELESS GROUP PLC GROUP PLC
Report of the Auditors Report of the Auditors on the Group Financial Statements on the Group Financial Statements
Opinion on other matters prescribed by the Companies Act 2006 Statement on the Directors’ Assessment of the Principal Risks that Would Threaten the Solvency or Liquidity of the Entity In our opinion:
•the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and ISAs (UK and Ireland) We are required to give a statement as to whether we have anything material We have nothing •the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is reporting to add or to draw attention to in relation to: material to add or to consistent with the financial statements. • the directors’ confirmation in the annual report that they have carried out a draw attention to. robust assessment of the principal risks facing the entity, including those Matters on which we are required to report by exception that would threaten its business model, future performance, solvency or liquidity; • the disclosures in the annual report that describe those risks and explain ISAs (UK and Ireland) We are required to report to you if, in our opinion, financial and non-financial We have no exceptions how they are being managed or mitigated; reporting information in the annual report is: to report. • the directors’ statement in the financial statements about whether they • materially inconsistent with the information in the audited financial considered it appropriate to adopt the going concern basis of accounting in statements; or preparing them, and their identification of any material uncertainties to the • apparently materially incorrect based on, or materially inconsistent with, entity’s ability to continue to do so over a period of at least twelve our knowledge of the Group acquired in the course of performing our months from the date of approval of the financial statements; and audit; or •the directors’ explanation in the annual report as to how they have assessed • otherwise misleading. the prospects of the entity, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether In particular, we are required to report whether we have identified any they have a reasonable expectation that the entity will be able to continue in inconsistencies between our knowledge acquired in the course of performing operation and meet its liabilities as they fall due over the period of their the audit and the directors’ statement that they consider the annual report and assessment, including any related disclosures drawing attention to any accounts taken as a whole is fair, balanced and understandable and provides necessary qualifications or assumptions. the information necessary for shareholders to assess the entity’s performance, business model and strategy; and whether the annual report appropriately addresses those matters that we communicated to the audit committee that we consider should have been disclosed. Keith Jess (Senior Statutory Auditor) Companies Act 2006 reporting We are required to report to you if, in our opinion: We have no exceptions For and on behalf of Ernst & Young LLP, Statutory Auditor • adequate accounting records have not been kept by the parent company, to report. or returns adequate for our audit have not been received from branches Belfast not visited by us; or 1 April 2016 • the parent company financial statements and the part of the Directors’ 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.
Listing Rules review We are required to review: We have no exceptions requirements • the directors’ statement in relation to going concern, set out on page 62, to report. and longer-term viability, set out on page 14; and • the part of the Corporate Governance Statement relating to the company’s compliance with the provisions of the UK Corporate Governance Code specified for our review.
72 Report & Accounts 2015 Report & Accounts 2015 73 WIRELESS WIRELESS GROUP PLC GROUP PLC
Group Income Statement Group Statement of Comprehensive Income For the year ended 31 December 2015 For the year ended 31 December 2015
Results Results Notes 2015 2014 before before (restated) Exceptional Exceptional Exceptional Exceptional £000 £000 Items Items Total Items Items Total 2015 2015 2015 2014 2014 2014 Profit for the year 12,303 13,800 Notes (restated) (restated) £000 £000 £000 £000 £000 £000 Other comprehensive income Continuing operations Revenue 3 75,074 - 75,074 82,422 - 82,422 Items that may be reclassified subsequently to profit or loss: Operating costs 4 (62,571) - (62,571) (68,601) - (68,601) Exchange difference on translation of foreign operations (2,579) (3,444) Income tax relating to items that may be reclassified 32 (32) Operating profit from continuing operations 12,503 - 12,503 13,821 - 13,821 before tax and finance costs (2,547) (3,476) - Share of results of associates and joint venture 475 475 314 - 314 Profit on sale of group undertaking 5 - 6,871 6,871 - - Other comprehensive loss for the year, net of tax 28 (2,547) (3,476) ––––––– –––– ––– Profit from continuing operations before tax ––– –––– –– ––––––– Other comprehensive income for the year from discontinued operations, net of tax 28 1,072 353 and finance costs 3 12,978 6,871 19,849 14,135 - 14,135
Finance revenue 8 37 - 37 50 - 50 Total comprehensive income for the year, net of tax 10,828 10,677 Finance costs 9 (2,221) - (2,221) (2,220) - (2,220) Foreign exchange loss (58) - (58) (50) - (50) ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– Profit from continuing operations before tax 3 10,736 6,871 17,607 11,915 - 11,915 Attributable to: Equity holders of the parent – continuing operations 14,834 5,610 Taxation 10 (2,220) 2,191 (29) (2,672) - (2,672) Equity holders of the parent – discontinued operations (4,203) 4,910 ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– Non-controlling interest 197 157 Profit from continuing operations after tax 8,516 9,062 17,578 9,243 - 9,243 10,828 10,677 Discontinued operations (Loss)/profit from discontinued operations 11 (5,251) (24) (5,275) 4,557 - 4,557 ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– Profit for the year 3,265 9,038 12,303 13,800 - 13,800 ––––––– ––––––– –––––– ––––––– ––––––– –––––– Attributable to: Equity holders of the parent 3,068 9,038 12,106 13,643 - 13,643 Non-controlling interest 197 - 197 157 - 157 ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– 3,265 9,038 12,303 13,800 - 13,800 ––––––– ––––––– –––––– ––––––– ––––––– ––––––
Earnings per share 2015 2014 Continuing operations (restated) Basic 12 18.13p 9.48p Diluted 12 18.08p 9.43p Adjusted 12 8.68p 9.48p Diluted adjusted 12 8.65p 9.43p
Continuing and discontinued operations Basic 12 12.63p 14.23p Diluted 12 12.59p 14.16p Adjusted 12 3.26p 14.42p Diluted adjusted 12 3.25p 14.35p
74 Report & Accounts 2015 Report & Accounts 2015 75 WIRELESS WIRELESS GROUP PLC GROUP PLC
Group Balance Sheet Group Cash Flow Statement At 31 December 2015 For the year ended 31 December 2015 Notes 2015 2014 Notes 2015 2014 ASSETS £000 £000 £000 £000 Non-current assets Operating activities Property, plant and equipment 14 5,701 17,360 Profit before tax (i) 13,404 17,044 Intangible assets 15 166,696 172,163 Adjustments to reconcile profit before tax to Investments accounted for using the equity method 17 1,053 900 net cash flows from operating activities Deferred tax asset 10 719 1,531 Foreign exchange loss/(gain) 44 75 Net finance costs 2,239 2,357 174,169 191,954 Share of results of associates and joint venture (475) (272) Consideration receivable from disposal of discontinued - (1,175) Current assets operations Inventories 18 1,584 2,390 Exceptional profit on the sale of group undertaking (6,871) - Trade and other receivables 19 16,986 23,502 Depreciation of property, plant and equipment 14 3,016 1,936 Financial asset 20 - 275 Loss from sale of property, plant and equipment 12 32 Cash and short term deposits 21 9,934 12,886 Share based payments 266 303 Difference between pension contributions paid and amounts (740) (2,454) 28,504 39,053 recognised in the income statement Increase in inventories (1,138) (632) Assets of disposal group 11 22,611 - Increase in trade and other receivables (4,188) (1,031) (Decrease)/increase in trade and other payables (303) 4,783 TOTAL ASSETS 225,284 231,007 (Decrease)/increase in provisions (135) 70
EQUITY AND LIABILITIES Cash generated from operations before exceptional costs 5,131 21,036 Equity attributable to equity holders of the parent Equity share capital 28 55,557 55,557 Tax paid (2,790) (2,480) Capital redemption reserve 28 50 50 Treasury shares 28 (104) (104) Net cash inflow from operating activities 2,341 18,556 Foreign currency reserve 28 989 3,571 Retained earnings 51,958 45,428 Investing activities Interest received 41 51 Equity attributable to equity holders of the parent 108,450 104,502 Proceeds on disposal of property, plant and equipment 9 20 Purchase of property, plant and equipment (3,171) (7,622) Non-controlling interest 114 53 Income received from associates and joint venture 321 235 Proceeds from the disposal of discontinued operations 325 900 TOTAL EQUITY 108,564 104,555 Proceeds from disposal of a group undertaking 9,542 -
Non-current liabilities Net cash flows from investing activities 7,067 (6,416) Financial liabilities 23 52,322 55,399 Pension liability 30 - 1,971 Financing activities Provisions 25 381 372 Borrowing costs (2,311) (1,816) Deferred tax liabilities 10 30,853 34,266 Dividends paid to equity shareholders (6,909) (6,766) Dividends paid to non-controlling interests (136) (210) 83,556 92,008 Acquisition of treasury shares - (506) Repayment of borrowings (3,611) (3,940) Current liabilities Proceeds from borrowings 687 3,879 Trade and other payables 22 19,446 28,058 Financial liabilities 23 3,422 3,668 Net cash flows used in financing activities (12,280) (9,359) Tax payable 1,397 1,909 Provisions 25 665 809 Net (decrease)/increase in cash and cash equivalents (2,872) 2,781
24,930 34,444 Net foreign exchange differences (80) (80) Cash and cash equivalents at 1 January 12,886 10,185 Liabilities of disposal group 11 8,234 - Cash and cash equivalents at 31 December 21 9,934 12,886 TOTAL LIABILITIES 116,720 126,452
TOTAL EQUITY AND LIABILITIES 225,284 231,007
(i) Includes both continuing and discontinued operations. The financial statements were approved by the Board of Directors and authorised for issue on 31 March 2016. They were signed on its behalf by:
Richard Huntingford Norman McKeown 76 Report & Accounts 2015 Report & Accounts 2015 77 WIRELESS WIRELESS GROUP PLC GROUP PLC
Group Statement of Changes in Equity Notes to the Group Financial Statements For the year ended 31 December 2015 For the year ended 31 December 2015
Equity Capital Foreign Share Non- 1. Corporate information share redemption Treasury currency Retained holder controlling The Group’s financial statements for the year ended 31 December 2015 were authorised for issue by the Board of the Directors on 31 March capital reserve shares reserve earnings equity interest Total 2016 and the balance sheets were signed on the Board’s behalf by Richard Huntingford and Norman McKeown. Wireless Group plc is a public £000 £000 £000 £000 £000 £000 £000 £000 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. At 1 January 2014 55,557 50 (123) 6,950 38,531 100,965 106 101,071 The principal activities of the Group are described in the Strategic Report.
Profit for the year - - - - 13,643 13,643 157 13,800 2. Summary of accounting policies Basis of preparation and statement of compliance with IFRSs Other comprehensive (loss)/income in the The accounting policies which follow set out those policies which apply in preparing the financial statements for the year ended 31 December year [note 28] - - - (3,379) 256 (3,123) - (3,123) 2015. 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 2015 and applied in accordance Total net comprehensive (loss)/income in with the Companies Act 2006. the year - - - (3,379) 13,899 10,520 157 10,677 The Group has adopted the following new standards that are relevant for the preparation of the financial statements for the year ended 31 Acquisition of treasury shares - - (506) - - (506) - (506) December 2015: Amendment to IAS 19: Employee Contributions, IFRS Improvements 2010 – 2012 Cycle and IFRS Improvements 2011 – 2013 Treasury shares issued - - 525 - (525) - - - Cycle. The application of these new standards effective from 1 January 2015 has not had an impact on the Group’s financial statements. Share based payment - - - - 303 303 - 303 In October 2015 the Group entered into a conditional agreement to sell its Television business to ITV. The sale of this business was completed Equity dividends paid - - - - (6,780) (6,780) (210) (6,990) on 29 February 2016. Consequently the Group Income Statement reflects the classification of this business as discontinued operations for both 2015 and 2014. The 2014 discontinued figures also include the results of certain New Media businesses which were classified as discontinued At 31 December 2014 55,557 50 (104) 3,571 45,428 104,502 53 104,555 in the 2014 financial statements.
The Group and Company financial statements are presented in sterling and all values are rounded to the nearest thousand (£000) except when Profit for the year - - - - 12,106 12,106 197 12,303 otherwise indicated.
Other comprehensive (loss)/income in the Basis of consolidation year [note 28] - - - (2,579) 32 (2,547) - (2,547) The Group financial statements comprise the financial statements of Wireless Group plc (‘the Company’) and its subsidiaries (together, ‘the Other comprehensive income from Group’). The financial statements of subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting discontinued operations - - - (3) 1,075 1,072 - 1,072 policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist.
Total net comprehensive (loss)/income in A subsidiary is an entity controlled, either directly or indirectly, by the Company. An investor controls an investee when it is exposed, or has the year - - - (2,582) 13,213 10,631 197 10,828 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 Share based payment - - - - 266 266 - 266 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 Equity dividends paid - - - - (6,949) (6,949) (136) (7,085) transferred out of the Group. All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full. At 31 December 2015 55,557 50 (104) 989 51,958 108,450 114 108,564 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 sources of 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 16). 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 30).
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.
78 Report & Accounts 2015 Report & Accounts 2015 79 WIRELESS WIRELESS GROUP PLC GROUP PLC
Notes to the Group Financial Statements Notes to the Group Financial Statements For the year ended 31 December 2015 For the year ended 31 December 2015
2. Summary of accounting policies (continued) 2. Summary of accounting policies (continued) In the Cash Flow Statement, the cash flows of foreign operations are translated into sterling at the average exchange rate for the period. Intangible assets As permitted by IFRS 1, the Group elected to deem cumulative currency translation differences to be £Nil as at 1 January 2004. Accordingly, the Intangible assets acquired separately are capitalised at cost and those arising from a business acquisition are capitalised at fair value as at the gain or loss on disposal of a foreign operation does not include currency translation differences arising before 1 January 2004. 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 Investment in associate statement. 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 Intangible assets created within the business are not capitalised and expenditure is charged against profits in the year in which the expenditure ending 31 December are used by the Group to apply the equity method. Where necessary, adjustments are made to recognise the Group’s is incurred. share of any audit adjustments recognised in the audited financial statements of the associate not previously recognised in the Group financial Intangible assets are tested for impairment annually either individually or at the cash generating unit level. 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 Useful lives are also examined on an annual basis and adjustments, where applicable, are made on a prospective basis. A summary of the the share of the results of operations of the associate. Where there has been a change recognised directly in the associates’ equity, the Group policies applied to the Group’s intangible assets is as follows: recognises its share of any changes and discloses this, when applicable in the statement of comprehensive income. • Value attributable to radio licences acquired - indefinite life • Customer relationships were amortised evenly over their expected useful lives of three years Investment in joint venture • Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and The Group has a contractual arrangement with another party which represents a joint venture. This takes the form of an agreement to share the carrying amount of the asset and are recognised in the income statement when the asset is derecognised. control over another entity. Goodwill The Group recognises its interest in the joint venture’s assets and liabilities using the equity method of accounting. The investment in joint Business combinations are accounted for using the acquisition method. The costs of an acquisition is measured as the aggregate of the 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 consideration transferred, measured at the acquisition date fair value and the amount of any non-controlling interest in the acquiree. Acquisition impairment in value. The Group income statement reflects the share of the results of operations of the joint venture. costs incurred are expensed and included in operating costs.
The joint venture has a financial reporting year ending 30 September. The financial statements of the joint venture for the 12 months ending 31 Any contingent consideration to be transferred by the Group will be recognised at fair value at the acquisition date. Subsequent changes to the December are used by the Group to apply the equity method. Where necessary, adjustments are made to recognise the Group’s share of any fair value will be recognised in accordance with IAS39 either within the Income Statement or in other comprehensive income. 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. 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 Property, plant and equipment separability criterion are recognised separately from goodwill. Following initial recognition, goodwill is measured at cost less any accumulated Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in value. Cost includes borrowing costs for impairment losses. Goodwill in respect of an acquired subsidiary is recognised as an intangible asset. Goodwill in respect of an acquired long term construction projects if recognition criteria are met. associate or joint venture is included within investments accounted for using the equity method. 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: Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. • Freehold and long leasehold buildings: 4 - 5% • Leasehold improvements: 10 - 15% Where the fair value of the interest acquired in an entity’s assets, liabilities and contingent liabilities exceeds the consideration paid, the excess • Equipment and vehicles : 10 - 33% depending on type is recognised immediately as a gain in the income statement.
The residual values are based on prices prevailing at the balance sheet date. Useful lives and residual values are reviewed annually and any As at the acquisition date, any goodwill acquired is allocated to each of the cash-generating units expected to benefit from the combination’s adjustments applied prospectively. 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 No provision for depreciation is made in respect of freehold land. 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 The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the circumstance is measured on the basis of the relative values of the operation disposed of and the portion of the cash generating unit retained. 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 As permitted by IFRS 1, the Group elected not to apply IFRS ‘Business Combinations’ to business combinations that were recognised before 1 is the greater of net selling price and value in use. 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. 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 Impairment of assets cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs. Impairment losses are recognised 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 in the income statement. 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 An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the asset unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. 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. 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.
80 Report & Accounts 2015 Report & Accounts 2015 81 WIRELESS WIRELESS GROUP PLC GROUP PLC
Notes to the Group Financial Statements Notes to the Group Financial Statements For the year ended 31 December 2015 For the year ended 31 December 2015
2. Summary of accounting policies (continued) 2. Summary of accounting policies (continued) An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer The Group also operates defined contribution pension schemes. Contributions are charged to the income statement as they become payable exist or may have decreased. If such indications exist, the recoverable amount is estimated. A previously recognised impairment loss is only in accordance with the scheme’s rules. 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 Leases the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating 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 lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term. 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. Treasury shares Wireless Group plc shares held by the Group are classified in shareholders’ equity as ‘treasury shares’ and are recognised at cost. Consideration Programmes and sundry stocks 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 Programmes completed but not transmitted and programmes in the course of production are recognised within inventories at cost. Acquired taken to revenue reserves. No gain or loss is recognised in the performance statements on the purchase, sale, issue or cancellation of equity programme rights are recognised within inventories at the lower of purchase cost and net realisable value on the commencement of the period shares. 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 Borrowing costs selling expenses. 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 Trade and other receivables period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. 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 Exceptional items are written off when the probability of recovery is assessed as being remote. 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 Cash and cash equivalents the elements of financial performance in the year, so as to facilitate comparison with prior periods and to better assess trends in financial 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 performance. three months or less. Revenue For the purpose of the consolidated cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net 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. of outstanding bank overdrafts. Key classes of revenue are recognised on the following basis: • Advertising and sponsorship: on transmission Interest bearing loans and borrowings • Provision of internet and digital infrastructure services: on delivery Obligations for loans and borrowings are recognised when the Group becomes party to the related contracts and are measured initially at the • Provision of other sundry services: on delivery fair value of consideration received less directly attributable transaction costs. • Interest: as interest accrues using the effective interest method 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. 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 Gains and losses are recognised in net profit or loss when the liabilities are derecognised or impaired, as well as through the amortisation 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, process. which ends on the date on which the employees become fully entitled to the reward.
Provisions Fair value is estimated using appropriate models for the particular awards under consideration. In valuing equity settled transactions, no 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 account is taken of any vesting conditions, other than the performance conditions linked to the price of the shares of the Company (market of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the 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 obligation. Provisions are determined by the expected cash flows which, where material, are discounted at a rate which reflects current market be non-vesting conditions. These are also taken into account in determining the grant date fair value. assessments of the time value of money and the risks specific to the liability. No expense is recognised for awards that do not ultimately vest, except for equity-settled transactions where vesting is conditional upon a Pensions and other post employment benefits market or non-vesting condition, which are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, The Group operates a defined benefit pension scheme which requires contributions to be made to separately administered funds. The cost of provided that all other performance and/or service conditions are satisfied. 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 At each balance sheet date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired straight-line basis over the vesting period or immediately if the benefits have vested. 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 Re-measurement gains and losses, and taxation thereon, are recognised in other comprehensive income and are not re-classified to profit or cumulative expense since the previous balance sheet date is recognised in the income statement, with a corresponding entry in equity. 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 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 assumptions underlying the plan liabilities and actual experience during the year or changes in the assumptions used in the valuation of the cost based on the original award terms continues to be recognised over the original vesting period. In addition, an expense is recognised over plan liabilities. 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 The defined benefit liability or asset recognised in the balance sheet comprises the present value of the benefit obligation using a discount rate is negative. 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.
82 Report & Accounts 2015 Report & Accounts 2015 83 WIRELESS WIRELESS GROUP PLC GROUP PLC
Notes to the Group Financial Statements Notes to the Group Financial Statements For the year ended 31 December 2015 For the year ended 31 December 2015
2. Summary of accounting policies (continued) 2. Summary of accounting policies (continued) 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 The Group measures financial instruments such as derivatives at fair value on the date on which a derivative contract is entered into with 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 subsequent re-measurement at fair value at each balance sheet date. The fair value of derivative financial instruments is based on appropriate 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 valuation techniques which use market observable inputs such as prevailing market rates at each balance sheet date. Derivatives are carried value being treated as an expense in the income statement. as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Taxation At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which it wishes to apply hedge 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 accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging tax charge or credit. instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the effectiveness of changes in the hedging instrument’s fair value in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged Current taxation risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair values or cash flows and are assessed on an ongoing Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated. rates and laws that are enacted or substantively enacted by the 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 Deferred taxation in equity and the ineffective portion is recognised immediately in the income statement. If the cash flow hedge of a firm commitment or Deferred tax is provided in full, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets 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 and liabilities and their carrying amounts for financial reporting purposes. 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 Deferred tax liabilities are recognised for all taxable temporary differences: same period in which the hedged item affects net profit or loss. •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 ombination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the income statement as •in respect of taxable temporary differences associated with investments in subsidiaries, associates and interest in joint ventures, they arise. 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. 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 Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused the income statement. 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 Dividends liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor Final dividends are recorded in the Group’s accounts in the period in which they are approved by the Company’s shareholders. Interim dividends taxable profit or loss; and are recorded in the period in which they are paid. • 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 New standards and interpretations not applied future and taxable profit will be available against which the temporary differences can be utilised. 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. 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. International Accounting Standards (IAS / IFRSs) Effective date* 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 IFRS 16 - Leases 1 January 2019 is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. IFRS 9 (2014) - Financial Instruments: Classification and Measurement 1 January 2018** Tax relating to items recognised directly in equity is also recognised directly in equity either in the statement of other comprehensive income or IFRS 15 – Revenue from Contracts with Customers 1 January 2018* the statement of changes in equity in line with recognition of the item to which the tax relates. Amendments to IAS 12: Income Taxes 1 January 2017 Amendments to IAS 7: Statement of Cash Flows 1 January 2017 Sales taxation IFRS Improvements 2012 – 2014 Cycle 1 January 2016 Revenues, expenses and assets are recognised net of the amount of sales tax except: Amendments to IAS1: Disclosure Initiative 1 January 2016 •where the sales tax incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the sales Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and Depreciation and Amortisation 1 January 2016 • receivables and payables are stated with the amount of sales tax included. Amendments to IFRS 11: Accounting for Acquisitions of Interests in Joint Operations 1 January 2016
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 * 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 sheet. date given is the mandatory effective date for adoption in the EU.
Derivative financial instruments and hedging activities During the year the Group entered into new foreign exchange forward contracts designed to hedge against the risks of fluctuation in foreign exchange rates for forecast sterling transactions within a subsidiary with Euro as its functional currency. These contracts are classified as cash flow hedges as they hedge the exposure to variability in cash flows attributable to a particular risk associated with a highly probable forecast transaction. These foreign exchange forward contracts are held by UTV Ireland which is classified as a discontinued operation in these financial statements. The Group had no derivative financial instruments in 2014.
84 Report & Accounts 2015 Report & Accounts 2015 85 WIRELESS WIRELESS GROUP PLC GROUP PLC
Notes to the Group Financial Statements Notes to the Group Financial Statements For the year ended 31 December 2015 For the year ended 31 December 2015
2. Summary of accounting policies (continued) 3. Revenue and segmental analysis The first phase of IFRS 9, which addressed classification and measurement of financial assets was published in November 2009, and was (a) Operating segments subsequently amended in October 2010 and November 2013, to include classification and measurement requirements of financial liabilities The tables below present revenue and segment result information regarding the Group’s operating segments for the years ended 31 December and hedge accounting requirements. IFRS 9 (2013) has a tentative mandatory effective date to 1 January 2018. At this time the Group continues 2015 and 2014. These business segments all operate as part of the Group’s continuing operations. 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 Revenue represents the amounts derived from the provision of goods and services which fall within the Group’s ordinary activities, stated net receivables and has not designated liabilities using the fair value option, consequently the classification and measurement aspects of IFRS 9 of value added tax. Revenue is principally generated from advertising and sponsorship. Transfer prices between business segments are set (2013) are unlikely to have a significant impact on the Group if that position remains unchanged by 2018. The changes in impairment on an arm’s length basis in a manner similar to transactions with third parties. 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. The Group entered into derivative financial instruments during the year which are Following the agreement in 2015 to sell the main Television segment businesses, UTV and UTV Ireland as outlined in note 11, and the included within the Television business disposal group. Should the continuing Group enter into any derivative financial instruments in the future classification of these businesses as discontinued operations, Tibus and Simply Zesty which were previously included within the Television the IFRS 9 (2013) hedging model more closely aligns hedge accounting with risk management activities undertaken by the Group when hedging segment are now included as a separate segment, renamed Digital Services. its financial and non-financial risk exposures. The following tables present revenue, profit before tax and business segment information regarding the Group’s business segments for the IFRS 15 outlines the principles an entity must apply to measure and recognise revenue. The core principle is that an entity will recognise years ended 31 December 2015 and 2014. The figures for the year ended 31 December 2014 have been restated to reflect the change in revenue at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services segments noted above. 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, Revenue identifying the separate performance obligations in the contract, determining the transaction price, allocating the transaction price to the Year ended 31 December 2015 separate performance obligations and recognising revenue when (or as) the entity satisfies the performance obligation under the contract. Radio Digital The standard also provides more detailed requirements than current IFRS, including for arrangements with multiple performance obligations, Radio GB Ireland Services Total which may impact the timing of revenue recognition. The standard’s disclosure requirements are also more extensive. The standard’s £000 £000 £000 £000 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 Sales to third parties 52,810 17,750 4,514 75,074 the impact of adopting IFRS 15. Intersegmental sales 690 1,254 935 2,879 Although the Directors evaluation of the effect of adopting the other standards and interpretations has not yet been completed, it is not expected 53,500 19,004 5,449 77,953 that their adoption will have a material impact on the Group’s financial statements in the period of initial application.
Year ended 31 December 2014 Radio Digital Radio GB Ireland Services Total (restated) (restated) £000 £000 £000 £000
Sales to third parties 56,396 20,463 5,563 82,422 Intersegmental sales 649 1,223 1,207 3,079
57,045 21,686 6,770 85,501
86 Report & Accounts 2015 Report & Accounts 2015 87 WIRELESS WIRELESS GROUP PLC GROUP PLC
Notes to the Group Financial Statements Notes to the Group Financial Statements For the year ended 31 December 2015 For the year ended 31 December 2015
3. Revenue and segmental analysis (continued) 3. Revenue and segmental analysis (continued) (a) Operating segments (continued) (a) Operating segments (continued)
Results Other segmental information Year ended 31 December 2015 Depreciation Radio Digital Year ended 31 December 2015 Radio Digital Radio GB Ireland Services Total Radio GB Ireland Services Total £000 £000 £000 £000 £000 £000 £000 £000 Segment operating profit 11,737 4,382 124 16,243 Continuing operations 895 278 334 1,507
Discontinued operations 1,509 Central costs (3,740) Associate and Joint Venture income 475 3,016 Profit before exceptional costs, tax and finance costs 12,978 Year ended 31 December 2014 Exceptional items 6,871 Radio Digital 19,849 Radio GB Ireland Services Total (restated) (restated) Net finance cost (2,184) £000 £000 £000 £000 Foreign exchange loss (58) Continuing operations 808 284 389 1,481 Profit before taxation 17,607 Discontinued operations 455
1,936 Year ended 31 December 2014
Radio Digital (b) Geographic information Radio GB Ireland Services Total Turnover is generated from GB and Ireland. The following tables present revenue information regarding the Group’s geographical segments (restated) (restated) for the years ended 31 December 2015 and 2014. Revenues relating to advertising are analysed based on the geographical location of the sales £000 £000 £000 £000 agencies through which the advertising revenues are registered. It is not possible to accurately analyse advertising revenue based on customer location. Segment operating profit 11,331 5,384 954 17,669 Revenue from continuing operations Year ended 31 December 2015 Central costs (3,848) Associate and Joint Venture income 314 Ireland GB Total £000 £000 £000 Profit before exceptional costs, tax and finance costs 14,135 Sales to third parties 22,264 52,810 75,074 Exceptional items -
14,135 Year ended 31 December 2014 Net finance cost (2,170) Foreign exchange loss (50) Ireland GB Total Profit before taxation 11,915 (restated) (restated) (restated) £000 £000 £000
Sales to third parties 26,026 56,396 82,422
88 Report & Accounts 2015 Report & Accounts 2015 89 WIRELESS WIRELESS GROUP PLC GROUP PLC
Notes to the Group Financial Statements Notes to the Group Financial Statements For the year ended 31 December 2015 For the year ended 31 December 2015
3. Revenue and segmental analysis (continued) 4. Operating Costs (b) Geographic information (continued) Continuing Discontinued operations operations Total 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 2015 and 2014. 2015 2014 2015 2014 2015 2014 (restated) (restated) (restated) Year ended 31 December 2015 £000 £000 £000 £000 £000 £000
Purchase of programmes and programme rights 2,146 2,562 25,277 11,061 27,423 13,623 Ireland GB Total Cost of inventory expensed 1,456 1,402 606 356 2,062 1,758 £000 £000 £000 Sales related costs 6,341 7,616 4,114 5,771 10,455 13,387 Other programme and operating costs 23,642 26,429 6,655 5,003 30,297 31,432 Property, plant and equipment 2,990 2,711 5,701 Staff costs (note 7) 25,123 26,967 11,329 8,223 36,452 35,190 Intangible assets 74,255 92,440 166,695 Depreciation of property, plant and equipment 1,507 1,481 1,509 455 3,016 1,936 Investments - 1,053 1,053 Amortisation of deferred costs - - - 55 - 55 Licence payments 509 494 10 12 519 506 77,245 96,204 173,449 Operating lease rentals - equipment & motor vehicles 383 468 7 5 390 473 - land and buildings 1,601 1,331 - - 1,601 1,331 Income from sub-leases (137) (186) - - (137) (186) Year ended 31 December 2014 Write off of deferred consideration ------Loss/(profit) on disposal of property, plant and equipment - 37 12 - 12 37 Ireland GB Total (restated) (restated) 62,571 68,601 49,519 30,941 112,090 99,542 £000 £000 £000
Property, plant and equipment 3,125 2,824 5,949 Intangible assets 77,865 94,298 172,163 5. Exceptional item Investments - 900 900 On 8 October 2015 the Group completed the sale of Juice Holdco Limited, trading as Juice FM, to Global Radio Holdings Ltd, a subsidiary of 92,400 98,022 179,012 This is Global Limited. This resulted in a profit on disposal before tax of £6,871,000.
Profit on disposal of subsidiary 2015 £000
Proceeds from sale 10,421 Transitional and wind-up costs Net assets disposed of: - Licence (1,858) - Other net assets (813) Professional fees (879)
Profit from disposal of subsidiary 6,871
The exceptional tax credit reflects £334,000 arising from the release of the deferred tax liability in respect of the radio licence disposed of with the sale of Juice Holdco Limited plus an additional deferred tax credit of £1,833,000 (2014: £Nil) due to the change in the UK deferred tax rate from 20% to 18%. This is outlined further in note 10(c).
90 Report & Accounts 2015 Report & Accounts 2015 91 WIRELESS WIRELESS GROUP PLC GROUP PLC
Notes to the Group Financial Statements Notes to the Group Financial Statements For the year ended 31 December 2015 For the year ended 31 December 2015
6. Auditor’s remuneration 8. Finance revenue
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 2015 2014 and for other services provided to the Group. £000 £000 2015 2014 £000 £000 Bank interest received and receivable 37 50 Fees payable to the company’s auditor for the audit of the company’s annual accounts 43 43
Fees payable to the company’s auditor and its associate for other services: 9. Finance costs The audit of the company’s subsidiaries pursuant to legislation 236 239 Audit-related assurance services 28 28 Tax compliance services 14 14 2015 2014 Tax advisory services 5 84 (restated) Corporate finance services 486 - £000 £000
769 365 Bank loans and overdrafts 2,221 2,220
Fees in respect of the UTV Pension Scheme: Audit 6 5
The Corporate finance services relate to the sale of Juice Holdco Limited and the Television business. 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.
7. Staff costs Continuing Discontinued operations operations Total 2015 2014 2015 2014 2015 2014 (restated) (restated) (restated) £000 £000 £000 £000 £000 £000
Wages and salaries 21,753 23,595 9,832 7,024 31,585 30,619 Redundancy costs - - - 133 - 133 Social security costs 2,237 2,386 923 688 3,160 3,074 Other pension costs 1,133 986 574 511 1,707 1,497
25,123 26,967 11,329 8,356 36,452 35,323
Included within wages and salaries is a charge of £266,000 (2014: charge of £303,000) and a credit within social security costs of £50,000 (2014: charge of £34,000) relating to the share-based payments.
The average monthly number of employees during the year was made up as follows: 2015 2014 (restated) No. No.
Radio GB 413 409 Radio Ireland 271 278 Digital Services 60 57 Central 25 23
769 767
In addition to the above, during the year the average monthly number of employees for the discontinued operations was 317 (2014: 243).
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’. 92 Report & Accounts 2015 Report & Accounts 2015 93 WIRELESS WIRELESS GROUP PLC GROUP PLC
Notes to the Group Financial Statements Notes to the Group Financial Statements For the year ended 31 December 2015 For the year ended 31 December 2015
10. Taxation 10. Taxation (continued) (a) Tax on profit on ordinary activities (b) Factors affecting the tax charge for the period 2015 2014 The tax assessed for the period is lower than the effective standard rate of corporation tax in the UK of 20.25% (2014: 21.50%). The differences £000 £000 are reconciled below: 2015 2014 Current income tax: £000 £000 UK corporation tax on profits for the year (3,294) (2,962) (restated) Adjustments in respect of previous years 369 431 Profit from continuing operations before tax 17,607 11,915 (Loss)/profit from discontinued operations before tax (4,203) 5,129 (2,925) (2,531) Profit on ordinary activities 13,404 17,044 Foreign tax: ROI corporation tax on profits for the year - (116) Profit/(loss) on ordinary activities multiplied by effective standard Adjustments in respect of previous years 30 (27) rate of corporation tax in the UK of 20.25% (2014: 21.50%) (2,714) (3,664)
30 (143) Effects of: (Expenses)/income not allowed for tax purposes (76) 148 Utilisation of tax losses previously not recognised 43 175 Total current tax (2,895) (2,674) Tax losses on which no deferred tax asset has been recognised (2,068) (317) Tax overprovided in previous years 156 414 Deferred tax: Exceptional deferred tax credit 2,167 - Origination and reversal of timing differences (280) (580) Non-taxable profit of sale of subsidiary 1,391 - Adjustments in respect of previous years (93) 10 Tax charge for the period (1,101) (3,244) Tax charge in the income statement on operating activities (3,268) (3,244)
Exceptional deferred tax credit 2,167 - (c) Exceptional credit Total tax charge (1,101) (3,244) 2015 2014 £000 £000 The tax charge in the Income Statement is disclosed as: Tax charge on continuing operations (29) (2,672) Disposal of licence 334 - Tax charge on discontinued operations (1,072) (572) Change in UK deferred tax rate 1,833 -
Tax charge in the income statement (1,101) (3,244) 2,167 -
Tax relating to items in the Statement of Comprehensive Income Deferred tax: As outlined in note 5, on 8 October 2015 the Group completed the sale of Juice Holdco Limited to Global Radio Holdings Ltd. Juice Holdco Actuarial gain on pension schemes (241) (72) Limited owns the radio licence for Juice FM which was valued at £1,858,000. The £334,000 exceptional credit reflects the release of the deferred Valuation of long term incentive plan 32 (32) tax liability attributable to this licence on the sale of this asset. Exceptional deferred tax credit (39) - In the Finance Bill which was passed into law on 18 November 2015 the UK corporation tax was reduced to 19%, effective from 1 April 2017, Tax charge in the statement of comprehensive income (248) (104) and to 18%, effective from 1 April 2020. 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 18%. This resulted in a net credit of £1,833,000 in the year.
(d) Unrecognised tax losses The Group has tax losses which arose in the UK of £12,817,000 (2014: £13,703,000) and tax losses which arose in the Republic of Ireland of €13,216,000 (2014:€3,661,000) 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.
94 Report & Accounts 2015 Report & Accounts 2015 95 WIRELESS WIRELESS GROUP PLC GROUP PLC
Notes to the Group Financial Statements Notes to the Group Financial Statements For the year ended 31 December 2015 For the year ended 31 December 2015
10. Taxation (continued) 10. Taxation (continued) (e) Temporary differences associated with Group investments (f) Deferred tax (continued) At 31 December 2015, there was no recognised deferred tax liability (2014: £Nil) for taxes that would be payable on the unremitted earnings of Deferred tax asset certain Group subsidiaries and joint ventures as the Group has determined that the undistributed profits of its subsidiaries will not be distributed 2015 2014 in the foreseeable future. £000 £000
A deferred tax liability has not been recognised on the temporary differences associated with investments in subsidiaries, associates and joint Pension liability - 394 ventures. The aggregate value of these differences amount to £1,007,000 (2014: £2,024,000). It is likely that the temporary timing differences Decelerated capital allowances 285 333 would qualify for the UK dividend exemption and therefore no tax liability is expected to arise. Other temporary differences 512 778 Tax losses carried forward 6 26 There are no income tax consequences attaching to the payment of dividends by the Group to its shareholders. Deferred tax asset 803 1,531 (f) Deferred tax The deferred tax included in the balance sheet is as follows:
Deferred tax liability 2015 2014 2015 2014 £000 £000 £000 £000
Valuation of intangible assets on acquisition 30,831 33,817 Balance at 1 January 1,531 1,952 Accelerated capital allowances 388 449 Charged to the income statement (588) (317) Pension asset 10 - Charged to the statement of comprehensive income (39) (104) Charge due to change in UK corporation tax rate (101) - Deferred tax liability 31,229 34,266 Deferred tax asset 803 1,531
2015 2014 £000 £000
Balance at 1 January 34,266 35,066 The deferred tax included in the Group income statement is as follows: (Credit)/charge to the income statement (3) 253 2015 2014 Foreign exchange movement (766) (1,053) £000 £000 Credit due to sale of a radio licence (334) - Credit due to change in tax rates (1,934) - Accelerated capital allowances 29 (38) Tax losses carried forward (43) (36) Deferred tax liability 31,229 34,266 Other temporary differences (266) (506)
Deferred income tax expense on operational activities (280) (580) Adjustment in respect of previous years (93) 10 Exceptional deferred tax credit 2,167 -
Total deferred tax charge 1,794 (570)
96 Report & Accounts 2015 Report & Accounts 2015 97 WIRELESS WIRELESS GROUP PLC GROUP PLC
Notes to the Group Financial Statements Notes to the Group Financial Statements For the year ended 31 December 2015 For the year ended 31 December 2015
11. Discontinued operations 11. Discontinued operations (continued) The activities of UTV Connect and the portals, UTV Drive, Recruit NI and PropertyPal were ceased or disposed of in 2014 for a cash consideration The major classes of assets and liabilities of the Television business classified as held for sale at 31 December are as follows: of £1,175,000 of which £275,000 was contingent and remained outstanding at 31 December 2014, as detailed in notes 20 and 29(b). The resultant gains or losses on disposal were recognised within discontinued operations in the Income Statement in 2014. In 2015 the Group received the full contingent consideration of £325,000 in respect of the milestones under the earn out agreement. 2015 Assets £000 Net loss on disposal of discontinued operations. Property, plant and equipment 11,311 Deferred tax asset 84 2014 Inventories 1,923 £000 Trade and other receivables 9,224 Financial asset 15 Proceeds from sale 1,175 Pension asset 54 Transitional and wind-up costs (1,287) Professional fees (74) Assets of disposal group held for sale 22,611 Redundancy costs (note 7) (133) Liabilities (319) Deferred tax liabilities 376 Current tax charge - Trade and other payables 7,235 Tax payable 623 Loss from disposal of discontinued operations (319) Liabilities directly associated with assets of disposal group held for sale 8,234
In October 2015 the Group entered into a conditional agreement for the sale of UTV Limited and UTV Ireland Limited, to ITV Broadcasting Net assets directly associated with disposal group 14,377 Limited for a cash consideration of £100 million on a cash-free debt-free basis. On 1 December 2015 the shareholders of the Company approved the plan to sell these companies. The sale was completed on 29 February 2016. At 31 December 2015 these Television businesses were classified as a disposal group held for sale and as discontinued operations. With UTV Limited and UTV Ireland Limited being classified Amounts included in accumulated Other Comprehensive Income related to the disposal group (2,028) as discontinued operations, what was previously the Television segment in the segmental analysis in note 3 has been renamed, Digital Services, reflecting the two businesses within this segment which remain within the Group.
The results of the discontinued operations for 2015 and 2014 are presented below. The 2014 amounts have been restated to include the results The fair value of derivative financial assets relating to foreign exchange forward contracts is determined by calculating the present value of of the discontinued TV businesses, in addition to the UTV Connect and portal businesses accounted for as discontinued last year. future cash flows, estimated using forward rates from third party market price quotations. The inputs used in these calculations are at level 2 in the fair value hierarchy. The terms of the foreign currency forward contracts match the terms of the expected highly probable forecast transactions. As a result, no hedge ineffectiveness arises requiring recognition through profit or loss. The changes in counterparty credit risk 2015 2014 had no material effect on the hedge effectiveness assessment. The cash flow hedges of the expected future sterling payments were assessed restated to be highly effective, and as at 31 December 2015, a net unrealised gain of £15,000 was included in other comprehensive income in respect £000 £000 of these contracts.
Revenue 45,357 36,556 The Television business has tax losses which arose in the Republic of Ireland of €13,216,000 (2014:€3,661,000) that are available indefinitely Operating costs (note 4) (49,519) (30,941) for offset against future taxable profits of the company in which the losses arose. Deferred tax assets have not been recognised in respect of these losses. Operating (loss)/profit (4,162) 5,615 Share of results of joint venture - 48 At 31 December 2015 the discontinued New Media businesses had net liabilities of £82,000 (2014: £290,000). In 2014 this included the Interest payable (55) (189) contingent consideration receivable of £275,000 outlined in note 20. Foreign exchange gain/(loss) 14 (26) The net cash flows incurred by the Television disposal group are, as follows: (Loss)/profit before tax from discontinued operations (4,203) 5,448 Current tax charge (1,072) (572) 2015 2014
(Loss)/profit for the year from discontinued operations (5,275) 4,876 £000 £000 Operating (5,445) 2,499 Net loss on disposal of discontinued operations - (319) Investing (1,643) (5,820) Financing - -
Total (loss)/profit from discontinued operations (5,275) 4,557 Net cash (outflow)/inflow (7,088) (3,321)
The discontinued New Media operations created a net cash inflow from operating activities of £29,000 (2014: outflow £366,000) and a cash inflow from investing activities of £325,000 (2014: inflow of £900,000) which are included in the Group Cash Flow statement.
98 Report & Accounts 2015 Report & Accounts 2015 99 WIRELESS WIRELESS GROUP PLC GROUP PLC
Notes to the Group Financial Statements Notes to the Group Financial Statements For the year ended 31 December 2015 For the year ended 31 December 2015
12. Earnings per share 12. Earnings per share (continued) 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 Earnings per share average number of shares in issue during the year. 2015 2014 (restated) Adjusted earnings per share are calculated based on the profit for the financial year attributable to equity holders of the parent adjusted for From continuing operations 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. Basic 18.13p 9.48p
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 Diluted 18.08p 9.43p 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. Adjusted 8.68p 9.48p 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 Diluted adjusted 8.65p 9.43p
2015 2014 From continuing and discontinued operations Continuing Discontinued Continuing Discontinued Operations Operations Total Operations Operations Total Basic 12.63p 14.23p (restated) (restated) £000 £000 £000 £000 £000 £000 Net profit/(loss) attributable to equity Diluted 12.59p 14.16p holders 17,381 (5,275) 12,106 9,086 4,557 13,643 Adjustments to net financing costs - 55 55 - 187 187 Exceptional items (9,062) 24 (9,038) - - - Adjusted 3.26p 14.42p
Total adjusted and diluted profit attributable to equity holders 8,319 (5,196) 3,123 9,086 4,744 13,830 Diluted adjusted 3.25p 14.35p
From discontinued operations
Basic Weighted average number of shares (5.50)p 4.75p
2015 2014 Diluted (5.49)p 4.73p thousands thousands
Shares in issue 95,903 95,903 Adjusted (5.42)p 4.95p Weighted average number of treasury shares (53) (23)
Weighted average number of shares for basic and Diluted adjusted (5.40)p 4.92p adjusted earnings per share (excluding treasury shares) 95,850 95,880 Effect of dilution of the Long Term Incentive Plan 238 467 Effect of dilution of the share award element of executive bonus 33 -
96,121 96,347
100 Report & Accounts 2015 Report & Accounts 2015 101 WIRELESS WIRELESS GROUP PLC GROUP PLC
Notes to the Group Financial Statements Notes to the Group Financial Statements For the year ended 31 December 2015 For the year ended 31 December 2015
13. Dividends 15. Intangible assets 2015 2014 Customer Equity dividends on ordinary shares £000 £000 Licences Goodwill Relationships Total Declared and paid during the year £000 £000 £000 £000 Final for 2014: 5.43p (2013: 5.25p) 5,205 5,035 Cost Interim for 2015: 1.82p (2014: 1.82p) 1,744 1,745 At 1 January 2014 191,221 80,997 259 272,477 Exchange adjustment (3,201) (4,733) - (7,934) Dividends paid 6,949 6,780 At 31 December 2014 188,020 76,264 259 264,543 Disposal (1,858) - - (1,858) Proposed for approval at Annual General Meeting (not recognised as a liability at Exchange adjustment (2,322) (3,434) - (5,756) 31 December) Final dividend for 2015: 7.60p (2014: 5.43p) 5,218 5,208 At 31 December 2015 183,840 72,830 259 256,929
The proposed final dividend for 2015 has been based on the issued share capital at the record date, following the share consolidation as outlined in note 27. Impairment and amortisation At 1 January 2014 48,400 46,679 259 95,338 Exchange adjustment 14. Property, plant and equipment - (2,958) - (2,958) Freehold land Leasehold Equipment Total and buildings improvements and vehicles £000 At 31 December 2014 48,400 43,721 259 92,380 £000 £000 £000 Exchange adjustment - (2,147) - (2,147) Cost At 1 January 2014 8,336 1,863 19,741 29,940 At 31 December 2015 48,400 41,574 259 90,233 Exchange adjustment (103) (56) (267) (426) Additions 385 20 7,231 7,636 Disposals - - (192) (192) Net book value
At 31 December 2014 8,618 1,827 26,513 36,958 At 31 December 2015 135,440 31,256 - 166,696 Exchange adjustment (75) (40) (438) (553) Additions 262 16 2,986 3,264 Disposals - (613) (3,898) (4,511) At 31 December 2014 139,620 32,543 - 172,163 Assets of disposal group (7,711) - (13,875) (21,586)
At 31 December 2015 1,094 1,190 11,288 13,572 At 1 January 2014 142,821 34,318 - 177,139
Depreciation and impairment 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 At 1 January 2014 2,766 526 14,774 18,066 the regulatory requirements of the licence. Similar licences have been successfully renewed at insignificant cost in the past, and consequently Exchange adjustment (34) (22) (208) (264) the Group has concluded that these assets have indefinite useful life but will be subject to annual impairment testing. Charge for the year 14 179 1,743 1,936 Disposals - - (140) (140) The recoverable value of the licences is measured using discounted cash flow forecasts and the valuation model at 31 December 2015 indicated no impairment on these assets (2014: £Nil) as explained in note 16. At 31 December 2014 2,746 683 16,169 19,598 Exchange adjustment (16) (8) (159) (183) On 8 October 2015 the Group completed the sale of Juice Holdco Limited to Global Radio Holdings Ltd. Juice Holdco Limited owns the radio Charge for the year 2 153 2,861 3,016 licence for Juice FM which was valued at £1,858,000. Disposals - (460) (3,825) (4,285) Assets of disposal group (2,496) - (7,779) (10,275)
At 31 December 2015 236 368 7,267 7,871
Net book value At 31 December 2015 858 822 4,021 5,701
At 31 December 2014 5,872 1,144 10,344 17,360
At 1 January 2014 5,570 1,337 4,967 11,874
At 31 December 2015 the Group had entered into Sterling contractual commitments for the acquisition of property, plant and equipment amounting to £562,000 (2014: £448,000).
102 Report & Accounts 2015 Report & Accounts 2015 103 WIRELESS WIRELESS GROUP PLC GROUP PLC
Notes to the Group Financial Statements Notes to the Group Financial Statements For the year ended 31 December 2015 For the year ended 31 December 2015
16. Impairment of goodwill and intangible assets with indefinite lives 16. Impairment of goodwill and intangible assets with indefinite lives (continued)
Goodwill acquired with business combinations and intangibles with indefinite lives have been allocated at acquisition to the cash generating Revenue forecast units that are expected to benefit from that business combination. The cash generating units under which these assets are considered are: • talkSPORT Revenue forecasts used in the calculation of value in use are based on available market information including independent forecasts. Current • Local Radio results and forecasts reflect the present wider economic uncertainty and the recent upturn in advertising revenue in the Republic of Ireland. • Radio Ireland • Digital Services In GB industry forecasts are predicting that the market will be up by 3% to 4% in 2016. In Ireland, whilst there are no formal radio industry forecasts, local economists and sales agencies are indicating that for 2016 the market will show modest growth. The 2016 budgets for the These cash generating units are all within the continuing operating segments of the Group and represent the smallest identifiable group of radio divisions have been set based on these assumptions with each of these three cash generating units forecasting growth of 1% to 6% with assets that generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets. the higher range reflecting the impact of developments into the international market by talkSPORT. Given the strength of the Wireless Group radio offering and the consistent out-performance of the market, management believe that Wireless Group Radio is well positioned to take The recoverable amount of each cash generating unit has been determined using value in use calculations. The key assumptions included advantage of growth opportunities. 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 2016 budgets approved by the Board, internal forecasts of future growth From 2017 through to 2020 it is forecast Radio GB, will deliver revenue growth of between 2.0% per annum to 4.0% per annum (before accounting over the period 2017 to 2020, with cash flows beyond this five year period extrapolated using expected long term growth rates. Further for any significant enhancements as a result of major sporting events). For Radio Ireland, revenue growth of between 4.0% and 5.5% per information on the assumptions used is detailed below. annum is forecast for the period 2017 to 2020 reflecting the expected improvement in this economy.
These value in use calculations at 31 December 2015 indicated no impairment on the licences or goodwill (2014: £Nil) associated with continuing Revenue from the Digital Services cash generating unit is derived from a range of internet hosting, web-design products plus digital marketing operations. and social media services. It is expected that revenue in this cash generating unit will grow by about 18% in 2016 as this business benefits from the ongoing restructuring of this business to match market demands and the engagement of new customers. From 2017 through to Carrying amount of goodwill and licences allocated to cash-generating units 2020 it is forecasted to deliver ongoing revenue growth of between 2% per annum and 5% per annum reflecting the continuing growth in this market. talkSPORT Local Radio Radio Ireland Digital Services Total The revenue growth rate used beyond 2020 is 2.25% (2014: 2.25%) being consistent with the long term average growth rate for the industry. 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 Sensitivity to changes in assumptions With regard to the assessment of the recoverable amount of the cash generating units, management have considered reasonable possible Goodwill - - 10 10 20,327 21,412 10,919 11,121 31,256 32,543 changes in the above key assumptions and it is believed no reasonably possible change in any of the above key assumptions would cause the Licences 48,024 48,024 44,405 46,263 43,011 45,333 - - 135,440 139,620 carrying value of those units to exceed their estimated recoverable amount.
48,024 48,024 44,415 46,273 63,338 66,745 10,919 11,121 166,696 172,163
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 9.7% (2014: 10.2%) and 8.6% (2014: 9.2%), 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 three UK based cash generating units is 8.2% (2014: 8.7%) while that of its Republic of Ireland based cash generating unit (Radio Ireland) has been estimated at 7.8% (2014: 8.3%). 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.
104 Report & Accounts 2015 Report & Accounts 2015 105 WIRELESS WIRELESS GROUP PLC GROUP PLC
Notes to the Group Financial Statements Notes to the Group Financial Statements For the year ended 31 December 2015 For the year ended 31 December 2015
17. Investments 17. Investments (continued) (a) Group (a) Group (continued) 2015 2014 Joint Venture 2015 2014 £000 £000 £000 £000 Investments accounted for using the equity method 1,053 900 Non-current assets 26 7 Current assets 4,437 4,168 This investment in the Group accounts at 31 December 2015 comprises: Current liabilities (3,680) (3,573) • a 30.2% share in Digital Radio Group (London) Limited, a commercial radio business; Non-current liabilities - - • a 30% share of Sound Digital Limited, which has been awarded 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 Equity 783 602 • 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 Group’s share of net assets in joint ventures 392 301 by subsidiary undertakings of Wireless Group plc. They are all currently, or are in the future expected to, contribute to the Group’s strategy to Goodwill recognised on consolidation 436 436 grow its audience and revenues through multiple platforms and markets. Group’s carrying amount of the investment 828 737 On 30 June 2015 the Group sold its 24.9% share in French Radio London Limited and on 8 October 2015 it sold its 25% share in Muxco North East Wales & West Cheshire Limited. These sales resulted in a profit on disposal amounting to £21,000 which is included in the share of results of associates and joint ventures line in the Income Statement. Net current assets includes £1,160,000 (2014: £1,047,000) of cash. 2015 2014 The following illustrates the summarised financial information of the Group’s associate and joint venture undertakings, all of which are included £000 £000 within continuing operations: Revenue 2,086 1,894 Associate Undertakings Cost of sales (238) (209) 2015 2014 Administrative expenses (1,269) (1,274) £000 £000 Finance costs 2 (1) Non-current assets Current assets 1,669 1,346 581 410 Current liabilities (923) (780) Income tax expense - - Non-current liabilities - (36) Profit for the year 581 410 Equity 746 530
Total comprehensive income for the year 581 410 Group’s carrying amount of the investment 225 163
Net current assets includes £1,461,000 (2014: £1,138,000) of cash. Group’s share of profit for the year 290 205 2015 2014 £000 £000
Revenue 1,341 1,460 The joint venture had no contingent liabilities or capital commitments as at 31 December 2015 and 2014. First Radio Sales Limited cannot Cost of sales (604) (776) distribute its profits without the consent from the two venture partners. Administrative expenses (62) (218) Finance costs (1) (2)
674 464 Income tax expense (140) (117)
Profit for the year 534 347
Total comprehensive income for the year 534 347
Group’s share of profit for the year 164 109 Profit realised on disposal of shares in associate undertakings 21 -
Recognised in the Group Income Statement 185 109
The associates had no contingent liabilities or capital commitments as at 31 December 2015 and 2014.
106 Report & Accounts 2015 Report & Accounts 2015 107 WIRELESS WIRELESS GROUP PLC GROUP PLC
Notes to the Group Financial Statements Notes to the Group Financial Statements For the year ended 31 December 2015 For the year ended 31 December 2015 17. Investments (continued) 17. Investments (continued) (b) Group undertakings (b) Group undertakings (continued)
The following were subsidiaries of the Company at 31 December 2015: The following were subsidiaries of the Company at 31 December 2015: Country of incorporation Percentage of Nature of business Country of incorporation Percentage of Nature of business shares held shares held UTV Limited Northern Ireland 100% Commercial Television Tower 107.4 FM Limited England * 100% Non-trading UTV Ireland Limited Republic of Ireland * 100% Commercial Television Wolverhampton Area Radio Limited England * 100% Non-trading Wireless Group New Media Limited Northern Ireland 100% Holding company Perfecttaste Limited England * 100% Non-trading The Internet Business Limited Northern Ireland * 100% Web development Soccerbet Limited England * 100% Non-trading Simply Zesty Limited Republic of Ireland * 100% Social Media agency Talk Radio UK Limited England * 100% Non-trading Simply Zesty UK Limited England * 100% Social Media agency TWG Payments Limited England * 100% Non-trading Direct Net Access Limited Northern Ireland * 100% Non-trading Independent Radio Group Limited England * 100% Non-trading Wireless Connect Limited Northern Ireland * 100% Non-trading Forever Broadcasting Limited England * 100% Non-trading Recruitment NI Limited Northern Ireland * 100% Non-trading Wireless Radio Limited England * 100% Non-trading Wireless Drive Limited Northern Ireland * 100% Non-trading Wireless Radio (ROI) Limited Republic of Ireland 100% Holding company Anotherway Republic of Ireland * 100% Holding company * held by a subsidiary undertaking 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 18. Inventories City Broadcasting Limited Republic of Ireland * 100% Commercial Radio The Independent Broadcasting Corporation Limited Republic of Ireland * 100% Commercial Radio 2015 2014 Capital Radio Productions Limited Republic of Ireland * 100% Commercial Radio £000 £000 Babstova Limited Republic of Ireland * 100% Non-trading U105 Limited Northern Ireland * 100% Commercial Radio Programme and programming rights 1,584 2,387 Wireless Group Media (GB) Limited England 100% Holding company Sundry stocks - 3 talkSPORT Limited England * 100% Commercial Radio Switchdigital (Scotland) Limited Scotland * 92% Commercial Radio 1,584 2,390 Switchdigital (London) Limited England * 80.5% Commercial Radio Switchdigital (B&H) Limited England * 100% Commercial Radio Switchdigital (S&S) Limited England * 100% Commercial Radio The Wireless Group Holdings Limited England * 100% The Wireless Group ILRs Limited England * 100% 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 FM Limited England * 100% Non-trading Wire FM (1997) Limited England * 100% Non-trading Grand Central Broadcasting Limited England * 100% Non-trading
* held by a subsidiary undertaking
108 Report & Accounts 2015 Report & Accounts 2015 109 WIRELESS WIRELESS GROUP PLC GROUP PLC
Notes to the Group Financial Statements Notes to the Group Financial Statements For the year ended 31 December 2015 For the year ended 31 December 2015 19. Trade and other receivables 21. Cash and short term deposits
2015 2014 2015 2014 £000 £000 £000 £000
Trade receivables 11,693 17,290 Cash at bank and in hand 5,133 8,347 Other receivables 1,625 1,041 Short term deposits 4,801 4,539 Prepayments and accrued income 3,668 5,171 9,934 12,886 16,986 23,502
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 Trade receivables are non-interest bearing and are generally on 30 day terms and are shown net of a provision for impairment. The amount one day and three months depending on immediate cash requirements of the Group, and earn interest at the respective short term deposit of the provision netted against the gross trade receivables balance was £1,122,000 at 31 December 2015 (2014: £1,961,000). rates. The ageing of net trade receivables are as follows:
Neither 22. Trade and other payables past due ¦------Past due but not impaired------¦ nor impaired 2015 2014 31 – 60 61 – 90 >91 £000 £000 Total days days days £000 £000 £000 £000 £000 Trade payables 5,572 9,162 Other payables 794 814 2015 11,693 6,085 3,471 1,060 1,077 Other taxation and social security 2,258 3,680 Accruals and deferred income 10,822 14,402 2014 17,290 10,674 4,630 1,679 307
Movements on the provision against trade receivables are as follows: 19,446 28,058
2015 2014 23. Financial liabilities £000 £000 2015 2014 Opening balance 1,961 2,643 £000 £000 Transferred to disposal group (448) - Current Foreign exchange (18) 232 Current instalments due on bank loans 3,422 3,668 (Release)/charge for the year 151 (838) Utilised (524) (76) Non-current Non-current instalments due on bank loans 52,322 55,399 Closing balance 1,122 1,961
55,744 59,067 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. 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 2015 are stated net of £345,000 (2014: £509,000) of deferred 20. Financial asset financing costs. The effective interest rate of the bank loans in 2015 is 3.26% (2014: 3.04%). 2015 2014 £000 £000
Contingent consideration - 275
Contingent consideration receivable in 2014 relates to amounts due in respect of the disposal of certain of the Group’s New Media businesses during the year (see note 29(b)).
110 Report & Accounts 2015 Report & Accounts 2015 111 WIRELESS WIRELESS GROUP PLC GROUP PLC
Notes to the Group Financial Statements Notes to the Group Financial Statements For the year ended 31 December 2015 For the year ended 31 December 2015 23. Financial liabilities (continued) 25. Provisions Movements on the bank loans during the year were due to mandatory repayments on the term loan plus a £0.7m draw down on the revolving credit facility. The balance at 31 December 2015 comprises of the following: Onerous leases Dilapidation Total 2015 2014 £000 £000 £000 £000 £000 At 1 January 2015 Senior facilities £65m 5 year revolving credit loan “A” 50,569 49,879 - Current 14 795 809 Senior facilities €25m 5 year amortising term loan 5,520 9,697 - Non-current - 372 372
56,089 59,576 14 1,167 1,181 Less current instalment on bank loans (3,680) (3,879) Utilised (14) - (14) 52,409 55,697 (Released)/created during the year - (121) (121)
At 31 December 2015 - 1,046 1,046 The Group’s banking facilities as at 31 December 2015 were refinanced on 31 May 2012 and comprise a £65m multi-currency Revolving Credit Facility (RCF), and a €25m amortising Term Loan Facility (TLF). Analysed as: - Current - 665 665 The TLF was repayable by instalments of €2.5m, the first of which was paid on 31 December 2012, with further instalments due in June and - Non-current - 381 381 December each year to 31 December 2016 and a final payment of €2.5m due on 31 May 2017. - 1,046 1,046 As at 31 December 2015 the £65m RCF was available to the Group for the period to 31 May 2017 when any amounts drawn were to be repaid or refinanced. A commitment fee of 40% of the applicable margin was payable quarterly on any undrawn portion. The provisions relate to estimated dilapidation cost obligations arising under property operating leases entered into by the Group and committed These facilities were provided by a banking group comprising Bank of Ireland, Ulster Bank (a subsidiary of Royal Bank of Scotland) and Danske rental costs on currently unoccupied properties. The timing of these liabilities depends on each individual lease and the likelihood of subletting. Bank. The leases are between 1 and 99 years in duration and have zero to 57 years outstanding.
The applicable margins contracted on these financial liabilities ranged from 2.00% to 4.00% depending on the Net Debt to EBITDA ratio. The applicable margins paid in the 2015 financial year are detailed below: 26. Share based payments (a) Long term incentive plan Applicable margin The Company currently has a long term incentive plan for certain UTV senior executives. Executives were granted awards, with an exercise Senior Facilities From To price of zero, of up to 100% of basic salary in 2012 and 2013 and up to 80% of the basic salary in 2014 and 2015, which are payable in shares at 2.25% 1 January 2015 30 June 2015 the end of three years to the extent that performance criteria are met. 2.50% 30 June 2015 30 September 2015 3.00% 30 September 2015 30 December 2015 Granted awards under the Company’s long term incentive plan that were outstanding at the end of the year had the following market prices 4.00% 31 December 2015 - at the date of award (based on the average price in the five days prior to the award): Market On completion of the sale of the Group’s television businesses on 29 February 2016, the above facilities were fully repaid and cancelled with price on 2015 2014 all security released. New Group facilities were put in place at this date. Further details are provided in note 32 Post Balance Sheet Event. End of qualifying period grant date No. No.
31 December 2014 143.12p - 943,517 31 December 2015 187.13p 751,112 751,112 24. Obligations under leases and hire purchase contracts 31 December 2016 246.89p 455,432 455,432 Obligations under operating leases 31 December 2017 179.85p 661,437 -
The Group has entered into commercial leases for certain properties, motor vehicles and equipment. These leases have an average duration These awards have two performance conditions applied: 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 •65% is based on growth in diluted, adjusted earnings per share (EPS) per annum over the three financial year period commencing entering into these leases. Future minimum rentals payable under operating leases are as follows: 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 2015 2014 year period commencing with the financial year in which the awards were granted. For the 2012 and 2013 plans, the comparator group £000 £000 comprises the FTSE All-Share Media sector. For the 2014 and 2015 awards, the comparator group is the FTSE Small Cap. Not later than one year 1,493 1,425 EPS performance condition After one year but not more than five years 4,187 4,184 For the EPS portion of the award, no award will vest unless the Company’s equivalent annual EPS growth over the three financial years After five years 5,986 6,937 commencing with the financial year in which the award is granted exceeds average RPI by at least 3% per annum for the 2012, 2013 and 2014 awards and at least 2% per annum for the 2015 awards. If this level of growth is achieved, 25% of the award will vest. Additional vesting will 11,666 12,546 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% for the 2012 to 2014 awards and at least 4% for the 2015 award.
112 Report & Accounts 2015 Report & Accounts 2015 113 WIRELESS WIRELESS GROUP PLC GROUP PLC
Notes to the Group Financial Statements Notes to the Group Financial Statements For the year ended 31 December 2015 For the year ended 31 December 2015 26. Share based payments (continued) 26. Share based payments (continued) (a) Long term incentive plan (continued) (b) Share Incentive Plan 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 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 multiplied by the number of shares under award and the percentage vesting based on EPS performance spread over the period of vesting. It 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 is assumed that all recipients of awards will fulfil their service conditions. 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 (pre 5 April 2014: £1,500) or a maximum of £150 per month post 5 April 2014 (£125 per month up to 5 April Awards granted in 2012 2014). During the year, 61,263 shares were purchased by the trustees of the SIP on behalf of 92 employees at a total cost of £121,000. The EPS growth from 2011 to 2014 did not reach the minimum performance criteria and therefore this element of the 2012 awards did not vest and expired at the end of the financial year.
Awards granted in 2013, 2014 and 2015 27. Authorised and issued share capital Based on current market forecasts, it is not expected that the 2013, 2014 or 2015 EPS performance criteria will be achieved to satisfy the Analysis by item recognised in other comprehensive income for each component of equity: vesting of these awards and therefore no charge has been made to the accounts in respect of these awards (2013: £Nil). Allotted, issued TSR performance conditions Authorised and fully paid Authorised shares The amount of the award that vests to each senior executive increases in accordance with the level of performance achieved. Under the TSR 2015 2014 2015 2014 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 £000 £000 £000 £000 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 10,000 10,000 4,795 4,795 upper quartile up to a maximum of 100% if the ranking is in the upper quartile. Ordinary shares of 5p each (2014: 5p each) Redeemable preference shares of £1 each (2014: £1 each) 50 50 - - 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 10,050 10,050 4,795 4,795 the terms and conditions upon which the awards were granted. The following table lists the inputs to the model used for the awards granted At 31 December 2014 and 2015 and the derived fair value of each share awarded. 2015 2014 Ordinary shares issued and fully paid Dividend Yield (%) 0 0 Expected share price volatility (%) 31.2 34.7 Authorised Issued Risk-free interest rate (%) 0.84 1.07 Number nominal nominal Expected life of options (years) 3 3 value Number value Share price (p) 179.25 242.00 thousands £000 thousands £000 Fair value derived (p) 81.36 163.16 200,000 10,000 95,903 4,795 The expected share price volatilities are calculated based on the movements in the historical return index (share price with dividends reinvested) At 31 December 2014 and 2015 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). Redeemable preference share capital Issued 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 nominal 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 Number value right is settled in shares. thousands £000 No other feature of awards granted was incorporated into the measurement of the fair value. At 31 December 2014 and 2015 50 - The valuation of these awards at 31 December 2015 has resulted in a charge to the accounts of £266,000 (2014: £303,000).
Awards granted in 2012 On 19 January 2016 the company issued 218,374 new Ordinary shares of 5 pence each which ranked pari passu in all respects with the At 31 December 2014, the Company’s shares ranked between the median and upper quartile of the FTSE All-Share Media sector and Company's existing Ordinary Shares. Following the issue of these new Ordinary Shares, the Company's total issued share capital consisted consequently 64% of the TSR element, which relates to 35% of this award, will vest. This represents 22.4% of the total 2012 award. This of 96,120,902 Ordinary Shares of 5 pence each. element of the 2012 award was still outstanding at 31 December 2015 but vested in January 2016. At a General Meeting on 23 March 2016, a resolution was passed to adopt new Articles of Association of the Company and to approve the During the year there was a £50,000 release (2014:£23,000 charge) from the balance accrued for the NIC payable on the vesting of these return of capital pursuant to the B Share Scheme and the related Share Capital Consolidation. awards. The impact of this resolution was that following the adoption of the new Articles of Association, the directors of the Company were authorised: Awards granted in 2013 (i) to capitalise the Company's share premium account into redeemable preference shares of 52.81 pence ("B Shares"); Based on the ranking of the Company’s shares at 31 December 2015 in the FTSE All-Share Media sector, the set comparator group for the (ii) to issue the B shares to shareholders for each corresponding existing ordinary share held; 2013 awards, these awards will not vest and thus lapsed at the year end. (iii) to redeem each B share for 52.81 pence on 25 March. Awards granted in 2014 and 2015 As part of this resolution, a Share Capital Consolidation was also approved whereby shareholders would automatically exchange each holding Based on the ranking of the Company’s shares at 31 December 2015 in the FTSE Small Cap sector, the set comparator group for the 2014 and of 7 Existing Ordinary Shares of 5 pence each for 5 New Ordinary Shares of 7 pence each with effect from the close of business on 23 March 2015 awards, neither of these awards are expected to vest. 2016. All awards may be exercisable in the six month period from the date of vesting. As a consequence, from 24 March 2016, the issued share capital of the Company comprised 68,657,787 ordinary shares of 7 pence each. 114 Report & Accounts 2015 Report & Accounts 2015 115 WIRELESS WIRELESS GROUP PLC GROUP PLC
Notes to the Group Financial Statements Notes to the Group Financial Statements For the year ended 31 December 2015 For the year ended 31 December 2015 28. Share capital and reserves 29. Financial risk management (a) Capital structure and financial risk management Year ended 31 December 2015 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.
Foreign The main risks arising from the financial instruments are cash flow interest rate risk, foreign currency risk, credit risk and liquidity risk. The currency Retained Board reviews and agrees policies for managing each of these risks and they are summarised below. The Group’s accounting policy in reserve earnings Total relation to derivatives is set out in note 2. £000 £000 £000 Actuarial gain on defined benefit pension schemes It is, and has been throughout the year under review, Group policy not to trade in financial instruments. (net of tax) - 1,060 1,060 Tax on long term incentive plan - 32 32 Capital management Exchange loss on translation of foreign operations (2,582) - (2,582) The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in Net gain on cashflow hedge (net of tax) - 15 15 order to support its business and maximise shareholder value.
Other comprehensive income in the year (2,582) 1,107 (1,475) 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 Cash flow hedge changes were made to the objectives, policies or processes during the years ending 31 December 2015 and 31 December 2014. Details on At 31 December 2015 there was a gain on cash flow hedges of £15,000 which reflected the unrealised gains and losses incurred on the foreign the capital structure are disclosed in note 23, note 27 and the Strategic Review. exchange forward contracts designated as hedges of the exposure to foreign exchange risk on forecast sterling transactions within UTV Ireland. Some of the foreign exchange forward contracts matured during 2015 and the related amounts recognised were transferred to the Cash flow interest rate risk income statement. Due to the immaterial nature of the balance at 31 December 2015, which forms part of the Television disposal group, it The Group’s exposure to the risk for changes in market interest rates relate primarily to the medium term debt obligations with a floating has been included within retained earnings and a separate cash flow hedge reserve has not been presented. 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 Year ended 31 December 2014 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 Foreign weekly. The Board will keep this policy under review throughout the 2016 financial year. currency Retained reserve earnings Total Foreign currency risk £000 £000 £000 During the year the Group used foreign exchange forward contracts to manage some of its transaction exposures. Foreign exchange forward Actuarial gain on defined benefit pension schemes contracts measured at fair value through OCI were designated as hedging instruments in cash flow hedges of forecast purchases in GBP (net of tax) - 288 288 sterling within UTV Ireland. As the UTV Ireland business has now been sold the foreign currency risk to the continuing Group has been Tax on long term incentive plan - (32) (32) minimised. Exchange loss on translation of foreign operations (3,379) - (3,379) Aside from the discontinued UTV Ireland business the Group has minimal transactional currency exposure arising from sales or purchases Other comprehensive income in the year (3,379) 256 (3,123) by an operating unit in currencies other than its functional currency. Approximately 3.6% (2014: 3.5%) of the continuing Group’s sales are denominated in currencies other than the functional currency of the operating unit making the sale, whilst 0.2% (2014: 1.5%) of the continuing Equity share capital Group’s costs, are denominated in currencies other than the unit’s functional currency. 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. 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. Historically the Group sought to mitigate the effect of the currency risk created by the Foreign currency reserve euro cash flow from the ROI operations, by creating a natural hedge with the euro denominated borrowings. With the sale of the Group’s The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of Television Businesses on 29 February 2016 and the repayment of all the Group’s sterling and euro borrowings from the sale proceeds, no foreign subsidiaries. natural hedge is in place from 29 February 2016. Group Treasury will seek to mitigate the effect of any currency risk identified by using forward contracts or other Treasury products approved by the Board. Capital redemption reserve This balance was created on redemption of 50,000 redeemable preference shares on 19 December 2007. 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 Treasury shares subject to credit verification procedures. In addition, receivable balances are monitored on an on-going basis with the result that exposure Treasury shares represent the cost of Wireless Group plc shares purchased in the market and held by the UTV Employee Benefit Trust to to bad debts is normally not significant. Other financial assets comprise of cash and cash equivalents which are therefore subject to minimal contribute towards the anticipated entitlement of senior executives to the vesting of awards in the long term incentive plans. credit risk. As the Group trades only with recognised third parties there is no requirement for collateral.
At 31 December 2015 the Group held 53,000 (2014: 53,000) of its own shares at an average cost of £1.97 (2014: £1.97). The market value of Liquidity risk these shares at 31 December 2015 was £93,000 (2014: £93,000). 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 23. 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.
116 Report & Accounts 2015 Report & Accounts 2015 117 WIRELESS WIRELESS GROUP PLC GROUP PLC
Notes to the Group Financial Statements Notes to the Group Financial Statements For the year ended 31 December 2015 For the year ended 31 December 2015 29. Financial risk management(continued) 29. Financial risk management (continued) (a) Capital structure and financial risk management (continued) (c) Interest rate risk Management monitors rolling forecasts of the Group’s liquidity reserve (comprising undrawn bank facilities and cash and cash equivalents) The following table demonstrates the sensitivity of the Group’s profit before tax to a reasonably possible change in interest rates on floating on the basis of expected cash flows. This monitoring includes financial ratios to assess headroom under financial covenants on bank facilities 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 and takes into account the accessibility of cash and cash equivalents. considered material to the financial position of the Group and therefore no disclosure has been made.
(b)Fair values 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 Set out below is a comparison by category of carrying amounts and fair values of the Group’s financial assets and liabilities excluding cash as a decrease in rates is not considered to be reasonably possible. and cash equivalents, trade receivables and payables, that are carried in the financial statements. Increase Effect on in basis profit before Carrying amount Fair value points tax £000 2015 2014 2015 2014 2015 Sterling +50 (230) £000 £000 £000 £000 Euro +50 (70) Financial assets Contingent consideration - 275 - 275 2014 Derivative financial assets 15 - 15 - Sterling +50 (230) Euro +50 (70) Financial liabilities Interest-bearing loans and borrowings 55,744 59,067 55,744 59,067 (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 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: The Group has established procedures to minimise risk of default by trade debtors including detailed credit checks undertaken before a • Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities; customer is accepted. Historically, these procedures have proved effective in minimising the level of impaired and past due debtors. •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, (e) Foreign exchange risk •Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable The Group has previously demonstrated the sensitivity to a reasonably possible change in the euro exchange rates of the Group’s profit before market data. tax by an operating unit where the euro was not their functional currency. This operating unit was discontinued during 2014.
With the exception of the contingent consideration receivable, which is considered as falling within level 3, the Group’s other financial assets (f) Liquidity risk and liabilities are considered as falling within level 2 of this hierarchy. For assets and liabilities that are recognised in the financial statements The table below summarises the maturity profile of the Group’s financial liabilities at 31 December 2015 and 2014 based on contractual on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation undiscounted payments. In the table below interest rates on variable rate loans have been based on forward curves plus contracted applicable at the end of each reporting period. There have been no transfers between level 1, 2 or 3 of the hierarchy during the current and previous margins estimated based upon the Group’s debt covenant forecasts. years. On Less than 3 to 12 1 to 5 >5 demand 3 months months years years Total Management have assessed that the fair value of cash and cash equivalents, trade and other receivables and trade and other payables £000 £000 £000 £000 £000 £000 approximate their carrying amounts largely due to the short-term maturities of these instruments. The fair value of interest bearing loans Year ended 31 December 2015 and borrowings are also a close approximation to their carrying value given that they bear interest at floating rates based on Libor/Euribor. Interest bearing loans and borrowings - 620 5,418 53,097 - 59,135 Trade and other payables 496 12,612 3,631 363 86 17,188 Derivative financial assets reflect the change in fair value of foreign exchange forward contracts entered into during the year and designated as cash flow hedges to hedge highly probable forecast payments in GB pounds sterling (GBP) within UTV Ireland. Further information is 496 13,232 9,049 53,460 86 76,323 included in note 11.
Contingent consideration receivable in 2014 related to amounts due in respect of the disposal of certain of the Group’s New Media businesses On Less than 3 to 12 1 to 5 >5 during that year. The fair value of these amounts was measured using the present value of the probability-weighted average of pay out demand 3 months months years years Total associated with each possible outcome of customer profitability milestones achieved under the related disposal agreement. In 2015 the Group £000 £000 £000 £000 £000 £000 received the full earn out of £325,000 in respect of the milestones under the agreement. 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
Details of how the Group manages the liquidity risk arising from the above analysis are provided in note 29(a). As disclosed in note 29(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 2014 and 2015 is disclosed in note 23 and is available either on demand or within 3 months.
118 Report & Accounts 2015 Report & Accounts 2015 119 WIRELESS WIRELESS GROUP PLC GROUP PLC
Notes to the Group Financial Statements Notes to the Group Financial Statements For the year ended 31 December 2015 For the year ended 31 December 2015 30. Pensions and other post retirement benefits 30. Pensions and other post retirement benefits (continued) 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. 31 31 The assets and liabilities of the scheme at 31 December are: December December 2015 2014 2015 2014 Assumptions £000 £000 Rate of general increase in salaries 3.50% 3.40% Pension in payment increase Equities 65,635 63,819 3.00% 2.90% Discount rate Bonds 33,549 33,637 3.80% 3.60% Inflation Cash 263 487 3.00% 2.90% Assumed life expectancy for a 65 year old Fair value of scheme assets 99,447 97,943 - Male: pensioner Present value of scheme liabilities (99,393) (99,914) 23.6 23.6 - Female: pensioner 25.2 25.2 - Male: non-pensioner Surplus/(deficit) in the scheme 54 (1,971) 25.8 26.4 - Female: non-pensioner 27.5 28.1
Changes in the present value of the defined benefit obligations are analysed as follows: The amounts recognised in the Group Income Statement and in the Group Statement of Comprehensive Income for the year are analysed as £000 follows: At 1 January 2014 (92,321) 2015 2014 Service cost (754) £000 £000 Members contributions (199) Benefits paid 3,807 Recognised in the Income Statement Interest cost on scheme liabilities (4,174) Current service cost (734) (629) Actuarial gains and losses (6,273) Administrative expense (238) (125) Interest cost (3,543) (4,174) At 31 December 2014 (99,914) Interest income 3,488 3,987 Service cost (734) Members contributions (197) Recognised in arriving at operating profit (1,027) (941) Benefits paid 3,427 Interest cost on scheme liabilities (3,543) Actuarial gains and losses 1,568 Recognised in the Statement of Comprehensive Income Return on scheme assets (excluding interest income) (228) 6,633 At 31 December 2015 (99,393) Other actuarial gains and losses: Effect of changes in demographic assumptions - (212) Effect of changes in financial assumptions 1,568 (10,010) Changes in the fair value of the schemes assets are analysed as follows: Effect of experience adjustments - 3,949 £000
Actuarial gain/(loss) recognised in the statement At 1 January 2014 87,723 of comprehensive income 1,340 360 Interest income 3,987 Employer contribution 3,208 Members contribution 199 Pension costs are assessed in accordance with the advice of a professionally qualified actuary and are accounted for on the basis of charging Administrative expenses (147) the cost of providing pensions over the period during which the Group derives benefit from the employees’ services. Benefits paid (3,660) Actuarial gains and losses 6,633 Scheme assets are stated at their market value at the respective balance sheet dates. At 31 December 2014 97,943 Interest income 3,488 Employer contribution 1,712 Members contribution 197 Administrative expenses (238) Benefits paid (3,427) Actuarial gains and losses (228)
At 31 December 2015 99,447
120 Report & Accounts 2015 Report & Accounts 2015 121 WIRELESS WIRELESS GROUP PLC GROUP PLC
Notes to the Group Financial Statements Notes to the Group Financial Statements For the year ended 31 December 2015 For the year ended 31 December 2015 30. Pensions and other post retirement benefits (continued) 32. Post balance sheet event The net defined benefit surplus (2014: obligation) comprises assets of £566,000 (2014: obligations of £1,539,000) from plans that are wholly or On 29 February 2016, UTV Media plc completed the sale of the entire issued share capital of UTV Limited and its wholly owned subsidiary UTV partly funded and obligations of £512,000 (2014: £432,000) arising from unfunded plans. Ireland Limited, to ITV Broadcasting Limited.
The cumulative amount of actuarial gains and losses recognised since 1 January 2004 in the Group statement of comprehensive income is In line with the terms of the sale and purchase agreement with ITV, the Company agreed to cease using the “UTV” name with effect from £3,289,000 of losses (2014: £4,629,000 loss). The Directors are unable to determine how much of the pension scheme deficit, recognised on completion. Following approval from the Company’s board of directors (in accordance with the Company’s articles of association), the Company 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 announced that it had changed its registered name from “UTV Media plc” to “WIRELESS GROUP PLC” with immediate effect. 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 Company received net cash proceeds, after transaction costs, of approximately £98 million from the Sale and intends to return a total of approximately £55 million of cash to shareholders. The most significant factor in deriving the pension liability is the discount rate. In applying sensitivity to this factor of plus or minus 0.25% (2014: 0.5%) the impact on the scheme liabilities could be a decrease of 4.0% (2014: 7.9%) or an increase of 4.3% (2014: 9.0%). However The Group’s banking facilities were refinanced on the 29 February 2016 and comprise a £30m dual-currency Revolving Credit Facility (RCF), movements in this sensitivity could result in other offsetting factors such as salary inflation. and an £8m overdraft Facility.
The payments from 1 January 2016 to 29 February 2016 made to the defined benefit plan amounted to £80,000. On 29 February 2016 the The £30m RCF is available to the Group for the period to 29 February 2020 when any amounts drawn will be repaid or refinanced. A scheme transferred with UTV Limited to ITV Broadcasting Limited who will be responsible for the funding of the scheme’s obligations in future commitment fee of 40% of the applicable margin is payable quarterly on any undrawn portion of the RCF. years. These facilities have been provided by a banking group comprising Bank of Ireland and Ulster Bank (a subsidiary of Royal Bank of Scotland). 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 The required covenant ratios are: scheme. Contributions in the year amounted to £735,000 (2014: £719,000). (1) Net Debt to EBITDA ratio should not exceed 3: 1 (2) EBITDA to Net Interest Expense ratio should not be less than 3.25: 1 31. Related party transactions The Facility is secured by fixed and floating charge over the Company’s assets. 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 applicable margins contracted on the financial liabilities range from 1.25% to 2.25% depending on the Net Debt to EBITDA ratio. the year end are summarised below. Payments are made and debts collected under normal trade terms.
2015 2014 £000 £000
Sales to associated companies 30 40
Sales by associated companies 195 132
Amounts owed by associated companies - -
Sales to joint venture - -
Charges from joint venture 545 628
Amounts owed by joint venture 836 1,039
Amounts owed to joint venture 13 15
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 2015 2014 £000 £000
Short-term employee benefits 1,288 1,477 Post employment benefits 67 81 Share-based payments 177 197
1,532 1,755
122 Report & Accounts 2015 Report & Accounts 2015 123 WIRELESS WIRELESS GROUP PLC GROUP PLC
Statement of Directors’ Responsibilities in relation to Company Balance Sheet the Parent Company Financial Statements At 31 December 2015
2015 2014 The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Notes £000 £000 Fixed assets Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare 3 139,616 249,350 the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and Investments applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair Current assets 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 5 5,343 3,981 Directors are required to: Debtors: amounts due within one year 6 20,949 20,949 • select suitable accounting policies and then apply them consistently; Debtors: amounts falling due after one year 14 20 • make judgements and estimates that are reasonable and prudent; and Cash at bank and in hand •state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the 26,306 24,950 financial statements. 4 98,000 - The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and Asset held for sale disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements Total assets 263,922 274,300 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. Creditors: amounts falling due within one year 7 (52,572) (59,813)
Net current liabilities (26,266) (34,863)
Total assets less current liabilities 211,350 214,487
NET ASSETS 211,350 214,487
Capital and reserves Called up share capital 8 4,795 4,795 Capital redemption reserve 8 50 50 Share premium account 50,762 50,762 Profit and loss account 155,743 158,880
EQUITY SHAREHOLDERS FUNDS 211,350 214,487
The financial statements were approved by the Board of Directors and authorised for issue on 31 March 2016. They were signed on its behalf by:
Richard Huntingford Norman McKeown
124 Report & Accounts 2015 Report & Accounts 2015 125 WIRELESS WIRELESS GROUP PLC GROUP PLC
Company Statement of Changes in Equity Notes to the Company Financial Statements For the year ended 31 December 2015 For the year ended 31 December 2015
Capital 1. Statement of compliance with FRS101 Equity share redemption Share premium Retained Wireless Group plc is incorporated and domiciled in Northern Ireland. These financial statements were prepared in accordance with Financial capital reserve account earnings Total Reporting Standard 101 Reduced Disclosure Framework (FRS 101). The Company’s financial statements are presented in Sterling and all £000 £000 £000 £000 £000 values are rounded to the nearest thousand (£000) except when otherwise indicated.
At 1 January 2014 4,795 50 50,762 166,450 222,057 The results of Wireless Group plc are included in the consolidated financial statements of Wireless Group plc which are available from Ormeau Road, Belfast, BT7 1EB.
Loss for the year - - - (1,093) (1,093) Share based payment - - - 303 303 2. Accounting policies Equity dividends paid - - - (6,780) (6,780) Basis of preparation The accounts are prepared under the historical cost convention, and in accordance with Financial Reporting Standard 101 Reduced Disclosure At 31 December 2014 4,795 50 50,762 158,880 214,487 Framework. There were no material amendments on the adoption of FRS 101.
The accounting policies which follow set out those policies which apply in preparing the financial statements for the year ended 31 December Loss for the year - - - (13,454) (13,454) 2015. The Company has taken advantage of the following disclosure exemptions under FRS 101: Share based payment - - - 266 266 • the requirements of paragraphs 45(b) and 46-52 of IFRS 2 Share based Payment Dividends received from subsidiary - - - 17,000 17,000 • the requirements of paragraph 33 (c) of IFRS 5 Non current Assets Held for Sale and Discontinued Operations Equity dividends paid - - - (6,949) (6,949) • the requirements of paragraphs 10(d), 10(f), 16, 38(a)-(d), 39(c), 40(a)-(d), 111 and 134-136 of IAS 1 Presentation of Financial Statements; • the requirements of IAS 7 Statement of Cash Flows; At 31 December 2015 4,795 50 50,762 155,743 211,350 • the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors •the requirements of paragraph 17 of IAS 24 Related Party Disclosures; and the requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or more members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member
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.
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 Board do not consider there to be any key sources of judgement or estimation uncertainty that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities in the next financial year.
Investments Investments in subsidiaries are held at historical cost less any provisions for 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.
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.
126 Report & Accounts 2015 Report & Accounts 2015 127 WIRELESS WIRELESS GROUP PLC GROUP PLC
Notes to the Company Financial Statements Notes to the Company Financial Statements For the year ended 31 December 2015 For the year ended 31 December 2015 2. Accounting policies (continued) 3. Investments Assets in disposal groups classified as held for sale Non-current assets and disposal groups are classified as held for sale only if available for immediate sale in their present condition, a sale is £000 highly probable and expected to be completed within one year from the date of classification. Such assets are measured at the lower of carrying Cost amount and fair value less costs to sell and are not depreciated or amortised. At 1 January 2015 331,155 Additions 266 Cash and cash equivalents Asset held for sale (191,805) 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. At 31 December 2015 139,616 Share based payments Impairment The Group has a long term incentive share scheme under which it makes equity-settled share-based payments to eligible employees. The At 1 January 81,805 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 Charge for year 12,000 period, which ends on the date on which the employees become fully entitled to the reward. Asset held for sale (93,805) Fair value is estimated using appropriate models for the particular awards under consideration. In valuing equity settled transactions, no At 31 December 2015 - 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 Net book value to be non-vesting conditions. These are also taken into account in determining the grant date fair value. At 31 December 2015 139,616 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 At 31 December 2014 249,350 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. Additions during the year related to the cost of long term incentives share scheme under which the company makes equity-settled share- based payments to eligible employees of subsidiary undertakings. 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, The impairment of £12m during the year related to the Company’s investment in UTV Limited. This investment has been written down to provided that all other performance and/or service conditions are satisfied. £98 million reflecting the consideration, after accounting for professional fees, received on the sale of this company to ITV Broadcasting Limited.
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 subsidiary companies held by Wireless Group plc are recorded in the Group accounts in note 17. 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. 4. Asset held for sale 2015 Where an equity-settled award is cancelled (where non-vesting conditions within the control of either the entity or the employee are not met), £000 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 Investment in UTV Limited 98,000 value being treated as an expense in the income statement. The Company’s investment in UTV Limited was classified as held for sale at 31 December 2015. UTV Limited was sold to ITV Broadcasting Limited on 29 February 2016. Further information on the sale is included in note 11.
5. Debtors: amounts due within one year 2015 2014 £000 £000
Amounts due from group undertakings 4,079 3,981 Prepayments 1,264 -
5,343 3,981
Prepayments comprise costs incurred in relation to proposed disposal of Television businesses, UTV Limited and UTV Ireland Limited.
128 Report & Accounts 2015 Report & Accounts 2015 129 WIRELESS WIRELESS GROUP PLC GROUP PLC
Notes to the Company Financial Statements Notes to the Company Financial Statements For the year ended 31 December 2015 For the year ended 31 December 2015
6. Debtors: amounts falling due after more than one year 8. Share capital and reserves (continued)
2015 2014 The impact of this resolution was that following the adoption of the new Articles of Association, the directors of the Company were authorised: £000 £000 (i) to capitalise the Company's share premium account into redeemable preference shares of 52.81 pence ("B Shares"); (ii) to issue the B shares to shareholders for each corresponding existing ordinary share held; Preference share capital 20,949 20,949 (iii) to redeem each B share for 52.81 pence on 25 March.
As part of this resolution, a Share Capital Consolidation was also approved whereby shareholders would automatically exchange each holding This debtor represents redeemable preference shares in Anotherway (an unlimited company), a subsidiary company of Wireless Group plc of 7 Existing Ordinary Shares of 5 pence each for 5 New Ordinary Shares of 7 pence each with effect from the close of business on 23 March which is incorporated in the Republic of Ireland. 2016.
As a consequence, from 24 March 2016, the issued share capital of the Company comprised 68,657,787 ordinary shares of 7 pence each.
7. Creditors Capital redemption reserve This balance was created on redemption of 50,000 redeemable preference shares on 19 December 2007. 2015 2014 £000 £000
Accruals 1,123 91 9. Dividends 2015 2014 Amounts owed to group undertakings 51,449 59,722 Equity dividends on ordinary shares £000 £000 Declared and paid during the year 52,572 59,813 Final for 2014: 5.43p (2013: 5.25p) 5,205 5,035 Interim for 2015: 1.82p (2014: 1.82p) 1,744 1,745
8. Share capital and reserves Dividends paid 6,949 6,780
Ordinary share capital Proposed for approval at Annual General Meeting (not recognised as a liability at 31 December) Authorised Authorised Issued Issued Final dividend for 2015: 7.60p (2014: 5.43p) 5,218 5,208 Number Nominal Number Nominal value value thousands £000 thousands £000 The proposed final dividend for 2015 has been based on the issued share capital at the record date, following the share consolidation as outlined in note 8. At 31 December 2014 and 2015 200,000 10,000 95,903 4,795
Redeemable preference share capital 10. Related party transactions Authorised Authorised Issued Issued Number Nominal Number Nominal As outlined in note 2 the company has taken advantage of the exemption in IAS 24 “Related Party Disclosures” from disclosing transactions value value between two or more members of a group, provided that any subsidiary which is party to the transaction is wholly owned by such a member. thousands £000 thousands £000 There were no other transactions which fall to be disclosed under the terms of IAS 24.
At 31 December 2014 and 2015 50 50 - -
11. Post balance sheet event At 31 December 2015 the Group held 53,000 (2014: 53,000) of its own shares at an average cost of £1.97 (2014: £1.97). The market value of On 29 February 2016, UTV Media plc completed the sale of the entire issued share capital of UTV Limited and its wholly owned subsidiary UTV these shares at 31 December 2015 was £93,000 (2014: £93,000). Ireland Limited, to ITV Broadcasting Limited.
Equity share capital In line with the terms of the sale and purchase agreement with ITV, the Company agreed to cease using the “UTV” name with effect from The balance classified as equity share capital includes the total net proceeds (both nominal value and share premium) on issue of the Company’s completion. Following approval from the Company’s board of directors (in accordance with the Company’s articles of association), the Company equity share capital, comprising £0.05p ordinary shares. announced that it had changed its registered name from “UTV Media plc” to “WIRELESS GROUP PLC” with immediate effect.
On 19 January 2016 the company issued 218,374 new Ordinary shares of 5 pence each which ranked pari passu in all respects with the The Company received net cash proceeds, after transaction costs, of approximately £98 million from the Sale and intends to return a total of Company's existing Ordinary Shares. Following the issue of these new Ordinary Shares, the Company's total issued share capital consisted approximately £55 million of cash to shareholders. of 96,120,902 Ordinary Shares of 5 pence each.
At a General Meeting on 23 March 2016, a resolution was passed to adopt new Articles of Association of the Company and to approve the return of capital pursuant to the B Share Scheme and the related Share Capital Consolidation.
130 Report & Accounts 2015 Report & Accounts 2015 131 WIRELESS GROUP PLC
Registered Office and Advisers
Registered Office Ormeau Road Belfast BT7 1EB
Registered Number: NI 065086 Company Secretary: Norman McKeown BSc (Econ) FCA
Corporate Website www.wirelessgroupplc.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 5UB BT1 5EB
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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
Brokers and financial advisers Numis Securities Limited Goodbody Corporate Finance The London Stock Exchange Building Ballsbridge Park 10 Paternoster Square Ballsbridge London Dublin 4 EC4M 7LT
132 Report & Accounts 2015