UTV Media plc Report and Accounts 2009 UTV Media plc Report and Accounts 2009 3 Contents n Summary of Results 5 n Chairman’s Statement 6 n Business Review 8 n Financial Review 12 n Radio GB 16 n Radio Ireland 18 n Television 20 n New Media 22 n Board of Directors 23 n Corporate Governance 24 n Corporate Social Responsibility 33 n Report of the Board on Directors’ Remuneration 40 n Report of the Directors 48 n Statement of Directors’ Responsibilities in relation to the Group Financial Statements 53 n Directors’ Statement of Responsibility under the Disclosure Transparency Rules 53 n Report of the Auditors on the Group Financial Statements 54 n Group Income Statement 56 n Group Statement of Comprehensive Income 57 n Group Balance Sheet 58 n Group Cash Flow Statement 59 n Group Statement of Changes in Equity 60 (1) n Notes to the Group Financial Statements 61 n Statement of Directors’ Responsibilities in relation to the Parent Company Financial Statements 110 n Report of the Auditors on the Parent Company Financial Statements 111 n Company Balance Sheet 113 (1) n Notes to the Company Financial Statements 114 n Registered Office and Advisers 118 (1) refer to page 4 for full listing of notes UTV Media plc 4 Report and Accounts 2009 Contents Notes to the Group Financial Statements 1: Corporate information 61 2: Summary of accounting policies 61 3: Revenue and segmental analysis 71 4: Exceptional items 74 5: Group operating costs 74 6: Auditor’s remuneration 75 7: Staff costs 75 8: Finance revenue 76 9: Finance costs 76 10: Taxation 77 11: Discontinued operations 80 12: Earnings per share 81 13: Dividends 82 14: Property, plant and equipment 82 15: Intangible assets 83 16: Impairment of goodwill and intangible assets with indefinite lives 84 17: Investments 85 18: Business combinations 88 19: Derivatives 89 20: Inventories 89 21: Trade and other receivables 90 22: Cash and short term deposits 91 23: Trade and other payables 91 24: Financial liabilities 92 25: Obligations under leases and hire purchase contracts 93 26: Provisions 94 27: Share based payments 94 28: Authorised and issued share capital 97 29: Reconciliation of movements in equity 98 30: Derivatives and other financial instruments 98 31: Pensions and other post retirement benefits 103 32: Related party transactions 109 33: Capital commitments 109 Notes to the Company Financial Statements 1: Basis of preparation 114 2: Accounting policies 114 3: Investments 115 4: Debtors: amounts due within one year 116 5: Debtors: amounts due after more than one year 116 6: Creditors 116 7: Authorised issued share capital 116 8: Reconciliation of movement of shareholders’ funds 117 9: Related party transactions 117 UTV Media plc Report and Accounts 2009 5 Summary of Results John B McGuckian Chairman Financial highlights on continuing operations n Group revenue down by 6% to £112.1m (2008: £119.7m) n Group operating profit is £23.7m (2008: £28.3m) n Pre-tax profits before exceptional items of £18.1m (2008: £20.7m) n 18% reduction in net debt from £107.6m to £88.5m n Annualised cost savings of £6.0m achieved in 2009 n Net finance costs down 29% to £5.8m (2008: £8.1m) n Exceptional costs before tax of £0.6m (2007: £4.5m) n Proposed final dividend of 2.00p (2008: 2.00p) resulting in a full year dividend of 2.00p (2008: 5.30p) Operational highlights and prospects n Continuing strong audience delivery across both Radio and Television n GB Radio and Television revenue have turned positive in the first four months of 2010, whilst the rate of decline in Irish Radio has slowed n GB Radio expanded by the acquisition of Sport magazine which complements the strong sports-led offering to advertisers n Valley Radio and Central Radio, which accounted for £0.6m of loss from discontinued operations, were disposed of during the year n Subsequent to the year end, greater operational flexibility has been facilitated by the renegotiation of key banking covenants at favourable market rates John McCann, Group Chief Executive, UTV Media plc, said: “The current, prolonged downturn is unprecedented. Despite that, I believe today’s results demonstrate the robustness of UTV Media. They are also testament to the hard work in very difficult conditions of everyone in the company. I am particularly pleased that throughout the difficulties we have been able to significantly improve our capital position. The reduction in net debt by 18% and cost savings ahead of target, mean that the company is in a strong position to tackle the new financial year. I am acutely aware that any recovery is very fragile, but I am pleased that we have seen some improvements in the advertising market so far this year.” Key Dates n 18 May 2010 – date of Annual General Meeting n 28 May 2010 – record date for payment of dividends n 15 July 2010 – payment of dividends UTV Media plc 6 Report and Accounts 2009 Chairman’s Statement “Your company responded to the unprecedented downturn in advertising revenue across the media sector by disposing of loss making activities, restructuring various parts of the business, imposing a general pay freeze and further tightening cost control.” UTV Board of Directors Introduction would allow most of the cash flow generated from operations to The strong underlying performance of your company in the be utilised in paying down borrowings. The dividend will be paid severest recession in a generation is evident in this report. on 15 July 2010 to all shareholders on the Register at the close of Your company responded to the unprecedented downturn in business on 28 May 2010. advertising revenue across the media sector by disposing of loss making activities, restructuring various parts of the business, Radio imposing a general pay freeze and further tightening cost control. Revenue from continuing radio operations was £68.0m (2008: This delivered group operating profit of £23.7m (2008: £28.3m) £70.2m), representing more than 60% of group turnover. Of that Strong cash flow and strict working capital management also amount, £43.2m (2008: £45.3m) was generated in our GB Radio proved very effective, with net debt being substantially reduced division and £24.8m (2008: £24.9m) was derived from our Irish by £19.1m to £88.5m (2008: £107.6m). Overall, and in the context radio operations. of the most challenging market conditions we have experienced, your company emerged from 2009 with pre-tax profits before With the continued deterioration of the advertising markets, we exceptional items from continuing operations of £18.1m (2008: implemented a further cost reduction plan which resulted in £20.7m). some redundancies and a reappraisal of all expenditure. We also adopted a robust approach to radio stations which could not be Results from continuing operations brought to profitability within a reasonable timeframe and as a Group revenue, from continuing operations, was £112.1m (2008: result we disposed of Valleys Radio and Central Radio in our GB £119.7m). Within this, the effect of acquisitions boosted turnover Radio division. By contrast, we saw an opportunity to generate by £3.9m, while foreign exchange movements added £2.2m. profits within such a timeframe and to complement our already strong sports-led offering to advertisers by acquiring the loss- Continuing group operating profit, including associates, before making Sport magazine for a nominal sum. This publication was exceptional items, was £24.0m (2008: £28.6m), with radio quickly integrated into our existing sales operation, its cost base operating profit of £16.7m (2008: £18.9m) accounting for 70% was significantly reduced and revenue of £1.8m was generated of the total. Television operating profit declined to £5.3m (2008: during the period. As we forecast in our business plan for the £7.7m) and new media operating profit was maintained at £2.0m. magazine, it made a small loss in the period of £0.3m. Overall, our GB Radio division delivered operating profit of £9.4m (2008: Net interest and finance charges were significantly lower at £10.6m). On a like for like basis, advertising revenue from our GB £5.8m (2008: £8.1m), and we incurred a small loss on foreign radio division was down by 8%. exchange of £0.1m (2008: Gain £0.3m). Pre-tax exceptional costs on continuing operations of £0.6m (2008: £4.5m) comprised Market conditions were also difficult in the Irish radio market. restructuring costs in GB radio and television and our share of Revenue of £24.8m was maintained with the favourable impact of business closure costs in radio Ireland. foreign exchange movements accounting for £2.2m and the full year effect of the acquisition of FM104 in April 2008, accounting Dividend for an additional £1.9m of revenue. Excluding these elements, Your Board has reviewed dividend policy in light of changed Irish radio advertising revenue was down by 16% on a like for like credit conditions and the economic downturn. A key priority is basis. Cost reduction was also a key feature of our radio business to realign the group financial structure with new market norms in Ireland, mitigating the revenue downturn and contributing to an and, consequently, to further reduce net debt. We recommend, operating profit of £7.0m (2008: £8.0m). therefore, a dividend of 2.00p (2008: 5.30p) for the year, which UTV Media plc Report and Accounts 2009 7 Chairman’s Statement Television affected the overall performance of our television advertising Conditions in the television market were difficult with turnover revenue which, nevertheless, is expected to be up by 2% in the for this division down by £5.5m to £32.5m (2008: £38.0m).