GD0040/13 annual report 2012/13 Radio Manx Limited Financial statements for the year ended 31 March 2013 Radio Manx Limited Chairman’s statement The past year has not been without its challenges for those at Manx Radio. It has been a year in which, thankfully, we’ve experienced some broadcasting ‘highs’ with our coverage of events such as the TT, The Guild, our Christmas schedule and our reporting on the impact and tragedy of March’s freak storm. Unfortunately, we also suffered a significant ‘low’ as, at the start of the year, we had no option other than to take £165,000 out of our programme and news budgets simply to break even. As local content is the cornerstone on which Manx Radio is built, and the reason we attract so many listeners, a lack of investment in this key area attacks our very foundations, impacts upon the breadth of broadcasting we can achieve and questions our very survival as a public service broadcaster. The Value for Money (VFM) Report of 2006 recommended that Manx Radio’s subvention should be sufficient to provide stability and independence and it was recognised that without this there could be no sustainability. However, our subvention is now around £328,000 less than the figure set by the agreed formula. To make matters worse, due to the licensing of two competing commercial radio stations in the Island, Manx Radio’s commercial revenues have fallen by over 20% in the period 2001 to 2013 whilst inflation, over the same twelve year period, has risen by 53.6%. Irrespective of how effectively Manx Radio is run, it is inconceivable that the station can continue to deliver what the public of the Island (and further afield) so clearly want and expect from their national public service broadcaster, against a background of continually falling revenues. The Directors felt strongly that there should be an informed public debate about the future of the station so we approached The Treasury to request an internal audit be commissioned so that interested parties could review the independent report and be able to assess how well the company managed its finances. Among its conclusions, the resultant Treasury Internal Audit Report (paragraph 1.5) identifies that “this review has found no evidence that would go against the view that Manx Radio is operating efficiently and at a low cost given its output, as communicated by Manx Radio’s Directors”. Following publication of the Report, Public Service Broadcasting was again in the spotlight with, eventually, a Tynwald debate resulting in the appointment of a Select Committee of three Members to examine the issues. Manx Radio, in our submission to the Select Committee, also put forward the Directors’ views as to how we believe the station should be structured and financed for a sustainable future. We have suggested that the model utilised by Welsh TV broadcaster S4C could satisfy the three primary aims of Tynwald that were never implemented successfully following the Darwin report of 2002, namely: 1. That the Public Service Broadcaster should be independent from Government 2. That a robust funding formula be implemented and subjected to pre- determined reviews 3. The Public Service Broadcaster should be differentiated by a longer licence term to its commercial competitors It is these specific factors that differentiate Manx Radio as a public service broadcaster from the other Island operators and, thereby, enables it to effectively scrutinise those in office and re-invest any profits into improving our programming. Although our competitors broadcast more than ‘pure’ music, their limited speech output is only there because it is seen as a commercial benefit trying to maintain listenership and drive profits. Wisely, the Select Committee has appointed an experienced external consultant to further review the station. In due course, we hope that the outcome of the Select Committee’s investigations will ensure that the nation’s public service broadcaster is structured to show clear independence from Government and financed so that its essential activities are sustainable for the nation. 1 Radio Manx Limited Chairman’s statement (continued) I started this statement expressing my disappointment that we have had to cut so much from our programme and news budgets simply to break even. I should like to emphasise, it is only through the dedicated work of all the staff, freelance contributors and my fellow non-executive directors that we have indeed been able to meet our break even target, announcing a small profit of £7,773. We owe them all a debt of gratitude. I should like to make specific mention of our Managing Director, Mr Anthony Pugh and our dedicated Chairman of the Audit Committee, Mrs Alison Jones ACA, whose outstanding contribution is appreciated by everyone. In 2014 we celebrate our 50th Anniversary. I hope by then we shall have the independence and security of tenure that Manx Radio deserves as a valuable and unique asset, owned, controlled and operated here in the Isle of Man, with the independence and sustainability that can last for another 50 years. 2 Radio Manx Limited Directors' Report for the year ended 31 March 2013 The directors have pleasure in submitting their annual report together with the audited financial statements for the year ended 31 March 2013. Principal activity The principal activity of the company is the operation of a commercial radio station known as "Manx Radio" by virtue of a licence issued by the Communications Commission under the Broadcasting Act 1993. Results and dividend The company made a profit for the financial year of £7,773 (2012: Loss £39,884) which has been added to reserves (2012: deducted from reserves). The directors do not recommend the payment of a dividend (2012: £nil). Directors The directors of the company holding office during the year and to date were: D A Pugh C R Guard A J Jones M N Grace D North D S Leeming J N Marsom M L Tyley Audit committee The Audit Committee comprises three non- executive directors, namely Mrs A J Jones (Chairman), Mr M N Grace and Mr C R Guard and meets not less than three times per year. Auditors PricewaterhouseCoopers LLC, being eligible, has indicated its willingness to continue in office in accordance with Section 12(2) of the Isle of Man Companies Act 1982. Secretary The secretary holding office during the year and to date was Mr D A Pugh. 3 Radio Manx Limited Statement of Directors' responsibilities in respect of the Directors’ Report and the financial statements The Directors are responsible for preparing the Directors’ Report and the financial statements in accordance with applicable Isle of Man law. Company law requires the directors to prepare financial statements for each financial year. The directors have elected to prepare the financial statements in accordance with United Kingdom Accounting Standards. The financial statements are required by law to give a true and fair 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 directors are required to: select suitable accounting policies and then apply them consistently; make judgments and estimates that are reasonable and prudent; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors confirm that they have complied with the above requirements in preparing the financial statements. The directors are responsible for keeping proper accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements comply with the Companies Acts 1931 to 2004. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors are responsible for the maintenance and integrity of the company’s website. Legislation in the Isle of Man governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 4 Independent auditor’s report to the members of Radio Manx Limited Report on the Financial Statements We have audited the accompanying financial statements of Radio Manx Limited which comprise the balance sheet as of 31 March 2013 and the profit and loss account for the year then ended and a summary of significant accounting policies and other explanatory notes. Directors’ Responsibility for the Financial Statements The directors are responsible for the preparation and fair presentation of these financial statements in accordance with applicable Isle of Man law and United Kingdom Accounting Standards and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. This report, including the opinion, has been prepared for and only for the company’s members as a body in accordance with Section 15 of the Isle of Man Companies Act 1982 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.