Annual Report and Accounts Scotland’s media brand of choice. 2009 Annual Report and Accounts 2009 www.stv.tv Investor Information Registrars Share Price Information Capita Registrars, The share price of STV Group plc is published in most Northern House, Woodsome Park newspapers and also in the United Kingdom on Ceefax and Fenay Bridge, Huddersfi eld Teletext. The current price of the Company’s shares (delayed West Yorkshire HD8 0LA by up to 15 minutes) can be obtained from the Company’s Tel: 0871 664 0300* website www.stvplc.tv Tel: (overseas) +44 20 8639 3399 Fax: +44 (0) 1484 600 911 Individual Savings Accounts (ISAs) Email: [email protected] The Company has Maxi and Mini ISAs which offer United Website: www.capitashareportal.com Kingdom resident shareholders a simple, low-cost and tax-effi cient way to invest in the Company’s shares. Independent Auditors Full details and an application form are available from PricewaterhouseCoopers LLP Stocktrade, a division of Brewin Dolphin Securities Limited, on: 0131 240 0441. Solicitors Herbert Smith LLP; Burness LLP Dividend Reinvestment Plan STV Group plc operates a Dividend Reinvestment Plan to Principal Bankers provide United Kingdom shareholders with a facility to invest Bank of Scotland plc cash dividends by purchasing further STV Group plc shares. Further details are available from the Registrar on: Stockbrokers 0871 664 0381*. RBS Hoare Govett Limited Your Shareholding Investment Bankers You can check your shareholding at any time by visiting the Report of the Directors Hawkpoint Partners Limited; Greenhill & Co. Registrar’s website at: www.capitashareportal.com 02 Chairman’s Statement Secretary and Registered Offi ce Capita Share Dealing Services 04 Chief Executive Offi cer’s Review Jane E A Tames Capita offer a quick and easy share dealing service to buy 06 Broadcasting STV Group plc or sell STV Group plc shares. An online telephone dealing 10 Content Pacifi c Quay facility is available providing STV Group plc shareholders with 14 Ventures Glasgow G51 1PQ an easy to access and simple to use service. There is no need 18 Non - Core Business Tel: 0141 300 3074 to pre-register and there are no complicated forms to fi ll in. 18 The Future Email: [email protected] The online and telephone dealing services allow you to trade 19 STV KPI’s 2010-2012 “real time” at a known price which will be given to you at 20 Social Responsibility Company Registration Number SC203873 the time you give your instruction. For further information 26 Chief Financial Offi cer’s Report on this service, or to buy and sell shares, please contact: 34 Board of Directors Annual Report on Internet www.capitadeal.com (online dealing); 0871 664 0454** 36 Corporate Governance The 2009 Annual Report of STV Group plc including the (telephone dealing). 44 Remuneration Committee Report fi nancial statements is available at: www.stvplc.tv Accounts Amalgamation of Accounts * Calls cost 10p per minute plus network extras. Lines are open 8:30am – 5:30pm, Monday to Friday. 62 STV Group plc Consolidated Financial Statements – Shareholders who receive duplicate sets of Company mailings Independent Auditors’ Report to the Members because they have multiple accounts should write to the ** Calls cost 10p per minute plus network extras. of STV Group plc Registrars to have the accounts amalgamated. Lines are open 8am – 4:30pm, Monday to Friday. 64 Consolidated Income Statement 64 Consolidated Statement of Comprehensive Income Investor Relations For investor enquiries please contact: 65 Consolidated Balance Sheet Kirstin Stevenson 66 Consolidated Statement of Changes in Equity PR Manager 67 Consolidated Statement of Cash Flows STV Group plc 68 Notes to the Financial Statements Pacifi c Quay 98 STV Group plc Company Financial Statements – Glasgow G51 1PQ Independent Auditors’ Report to the Members Tel: 0141 300 3670 of STV Group plc Email: [email protected] 100 Company Balance Sheet 101 Notes to the Company Financial Statements 104 Five-Year Summary of Consolidated Financial Statements 105 Investor Information created by Navyblue created Scotland’s most infl uential, relevant, innovative and trusted media brand... with ambitious plans for the future Highlights · Strong performance against 2009 original KPI growth targets · Launch of STV Player, which now attracts 1m page views per month · STV Productions wins fi rst ever series commission from BBC2 · Launch of extensive interactive website, STV Local and new classifi ed business, STV Jobs · Dynamic programming strategy implemented, with strong schedule for 2010 · 100th episode of Taaggartggart broadcast on ITV1 and STV. Co-commission confi rmed for brand new series of Taaggartggart Annual Report and Accounts 2009 01 Chairman’s Statement 2009 has been a profi table and busy year There is no doubt that 2010 will be a year of considerable for STV. Less than three years ago, the new changes, which will impact on our business. We have the Digital Britain Report, which supports much of what we have asked Board and management team implemented for including the very sensible recommendation that STV have a turnaround strategy to refocus the direction the same rights as an independent producer. If implemented and improve the fi nancial health of what after the current consultation period this will provide a was then a heavily debt-laden and drifting real fi llip to the independent production sector in Scotland, company. While it required that the employees fast-tracking the development of a vibrant creative cluster go through, what has been at times, a painful and creating new jobs. process, all rose to the challenge and we We welcomed the proposals, confi rmed in the Digital Britain now have a properly results orientated Report, recognising the important role that strong, relevant, organisation. We are substantially leaner, home-grown, news production plays in this multi-platform a great deal fi tter and have demonstrated digital age. We believe Scotland can only be best served within our new found resilience by weathering the news environment by a robust alternative to BBC Scotland. one of the worst economic downturns Government has accepted that the commercial economics of the digital age impinge on this and have proposed that a ever to have confronted the country and, small proportion of the money set aside to inform and assist in particular, advertising supported media. consumers with digital switchover be used to fund three pilots to be tendered for, one of which is here in Scotland. Despite continuing to cut costs throughout the year, while investing in new programmes, our share price continued As one of two bidders, we have formed a strategic partnership to disappoint and management took the initiative to align with Bauer Media, owner of the largest commercial radio their remuneration with shareholders interests by voluntarily network in Scotland, and ITN with a worldwide reputation reducing their salaries and waiving all bonus potential for in news gathering, presentation and distribution. Our current the year. news output is highly regarded by viewers but our plans build on that taking news to a new and exciting level, providing Adapting to the changing media landscape and positioning a vibrant multi-platform service across Scotland, available STV as Scotland’s media brand of choice has been an to others not simply consortium members. overriding theme for us this year, coupled with our pledge to fulfi l our commitments as a commercial public service We appreciate and understand that the Conservative party broadcaster. We have a clear strategy, driven by a strong is looking at other solutions involving deregulation and dozens and dedicated leadership team. As we go into 2010, we will of highly localised advertising supported news outlets but outline new KPI targets for the business and I am confi dent the latter is untested on a standalone basis and deregulation, that these ambitious yet realistic targets will be met. while necessary, takes time. In Scotland we believe that the current Government’s proposed pilot be allowed to go ahead in order that a strong news alternative to the BBC continues across the country and on our proposed expanded local platforms. Our suggestion also includes our willingness to serve the Scottish Borders, Dumfries and Galloway, currently outside our licence area and which currently receive their news from Sunderland. 02 STV Group plc STV is Scotland’s most popular peak time TV station We hope to see the introduction of product placement within We are very much committed to investing in new, high programmes by the end of the year, presenting new revenue quality Scottish productions and creating a diverse schedule generating opportunities for the business. We will fully explore for viewers. Our decision to opt out of some network material the possibilities that this will allow where it delivers revenue in 2009 related to cost, relevance, the appeal of network for the company and enhances the viewers’ experience. programmes, and the time slot. While over 90% of our schedule is currently comprised of network material, and A major theme for STV in 2010 will continue to be working in we welcomed the opportunity to inject more high quality, partnership and developing new partnerships. We are keen to well funded home-grown production into the STV schedule. extend our groundbreaking Memorandum of Understanding We recognise that some of our scheduling decisions in 2009 with the BBC from whom we received our fi rst series did not work for us, particularly on Sunday evenings, and we commission during the year. We have also announced an have taken this on board by making changes to our approach innovative partnership for the commissioning of six new for 2010. Key for us is that our schedule be of good quality, episodes of Taggart with ITV and UKTV. relevant and affordable and that, as Scotland’s biggest commercial broadcaster, we remain true to our roots by 2010 is the last year of the onerous contract arrangement investing in the creative economy by producing programmes that Pearl & Dean entered into some years ago with the in and relevant to Scotland.